Usury, in legal terms, is a rate of interest on a debt which is in excess of the percentage allowed by law. As it stands, our law allows a maximum interest of eight per cent per annum.
The reasons for the criticism of usury tend to tread on common ground, ranging most notably from the concept of income which is not earned, double charging, economic instability and, perhaps the most common, the exploitation of the needy. Historically, societies and religious denominations alike have all had something quite different to say about the matter.
Our law lays down the basic rules in articles 1852 and 986 (2) of the Civil Code. In their direct simplicity, these stipulations of the law state that the rate of interest cannot exceed eight per cent per annum and that any higher interest agreed upon shall be reduced to the said rate. If a higher interest than that fixed by law has been paid, the excess is to be deducted from the capital. Any obligation to pay a rate of interest exceeding eight per cent per annum is void in regard to the excess.
In its judgment of October 26 in the names ‘Oleg Anatolyevich Sklyarov u Maria Dolores sive Doris Sklyarov u fil-verbal tas-seduta tat-12 ta’ Marzu 2019, il-Qorti ordnat il-korrezzjoni fl-okkju fis-sens illi kunjom ir-rikorrenti irid jaqra Azzopardi v Anthony Mallia u Kristina Aleksandrovna Mallia’, the First Hall of the Civil Court was tasked with a related issue.
In virtue of a public deed dated May 3, 2016, the plaintiffs constituted themselves as debtors in favour of the defendants for the sum of €70,000. Said constitution was affected following a loan, in the said sum, which the plaintiffs required for business purposes and which the plaintiffs had demanded and obtained from the defendants. The sum was to be repaid within two months, interest free. Notably, the monies were not paid in the presence of the publishing notary but in the defendants’ car following the conclusion of the deed.
According to the plaintiffs, the sum loaned was in actual fact that of €50,000 with the remaining balance being illicit interest.
On July 13, 2016, the two-month period was extended by a further two months and on a subsequent occasion, the defendants attempted to settle with the plaintiffs by means of post-dated cheques which the plaintiffs refused.
The plaintiffs argued that they settled the sum of €40,000 after having borrowed the monies from a third party for the sole purpose of settling this debt. Following judicial action by the defendants, the plaintiffs proceeded to suit, requesting the court to declare the public deed of May 3, 2016, and any subsequent extensions thereto null on the basis of unlawful consideration.
After an attentive recital of relevant jurisprudence on the matter, the court immediately proceeded to declare it was absolutely not believing the version of events given by the defendants
The defendants rebutted by denying any unlawful doing, claiming that they had not been paid, and that the deal was for them to be paid 20 per cent on profits generated by the plaintiffs and not by way of interest.
After an attentive recital of relevant jurisprudence on the matter, the court immediately proceeded to declare it was absolutely not believing the version of events given by the defendants.
In the filing of civil litigation, when assessing the evidence brought before it, the criterion embraced by our courts is not whether the judge absolutely believes the explanations provided to him or her, but whether these same explanations are, in the various circumstances of life, plausible. This is on the balance of probabilities. This is in contrast to what applies in the field of criminal law where guilt must result without any reasonable doubt. It is, in fact, accepted that not any kind of conflict should leave the court in such a state of perplexity, rendering the presiding judge unable to decide with a clear conscience.
Pivotal in assisting the court in arriving at its final decision was the testimony rendered by a different notary whom the litigants had consulted before actually choosing to consult the notary who published the deed in question. She did indeed testify that the litigants wanted to conclude an agreement with the sum of €50,000 being the capital and the sum of €20,000 being interest thereon. Said notary, in fact, refused to publish such a deed.
The court further noted that had the defendants’ version of events been credible, why would the contract in question not have stipulated the margin of 20 per cent on profits? The fact that one of the defendants was unemployed and would often visit the plaintiffs’ residence to demand and exact payment didn’t help. Neither did the fact that the alleged sum of €70,000 was not paid before the publishing notary. Why would it not be paid before the notary if there was nothing fishy with the deal, the court asked.
And yet, the court noted, the plaintiffs had failed to provide sufficient proof of the payment of the alleged sum of €40,000! Under cross-examination, one of the plaintiffs had departed from the original sworn statement provided to the court. In the latter, he had claimed that he had borrowed money from a third party to settle the debt with the defendants, which he claimed he did; while under cross-examination, he testified that this was also a loan for business purposes.
The weight of evidence imposes a burden on the party alleging the fact. Such a burden is equally shared between the litigants, whether the plaintiff or the defendant, in respect of the version of events being claimed.
For the above reasons, the court acceded to the plaintiffs’ requests, limitedly declaring the public deed of May 3, 2016, and any subsequent extensions thereto null on the basis of unlawful consideration only in so far as interest in excess of the rate of eight per cent per annum on the capital sum of €50,000.
Keith Borg is a partner at Azzopardi, Borg & Abela Advocates.