it might, therefore, well have been doubted whether the result of the cases was not to establish the following propositions: (1) that 'excessive' means excessive in proportion to the risk incurred by the lender, and that in determining whether interest is excessive, it is necessary to look rather at what it would have been reasonable for the borrower to pay than at what he in fact agreed to pay; (2) that the rate of interest may be so excessive as of itself to justify the Court in setting aside the transaction as 'harsh and unconscionable'; (3) that no general definition of the meaning of the words 'harsh and unconscionable' can be, or ought to be, framed by the Courts, but that each individual case is to be left to the unfettered discretion of the judge who tries it. If these propositions correctly represented the present state of the law, the result could hardly be said to be very satisfactory. As pointed out by Channell J. in Carringtons Lim. v. Smith, if judges are empowered to fix a maximum rate of interest, the usury laws would in effect be re-established. Moreover, the validity of all transactions with money-lenders would remain doubtful until tested by judicial decision, and the inevitable differences in point of view arising from differences of training and temperament in the judges, would, in the absence of any fixed principles, immensely increase this state of uncertainty. And in this connexion it may perhaps be said that there are already indications of some divergence of opinion between the Chancery and Common Law Judges as to the manner in which the Act is to be applied.

In Carringtons Lim. v. Smith, however, Channell J. expressly repudiates the doctrine that every judge is to be a law unto himself as far as the Act is concerned. He says, 'I think, however, that the words of the Act do of themselves show quite clearly that an effort has been made (possibly without much success) to define the transactions which the Court may reopen. There seem to me to be clear indications that it was not intended to give jurisdiction to a judge to reopen transactions merely if in his individual opinion too much interest had been charged. Further, I think any Court ought to lean against any such construction of an Act of Parliament. The function of a judge in this country, and I should think in all civilized countries, is to ascertain and declare the rules of law (or of equity as distinguished from law), and to decide the rights of the parties before him according to those rules, and not according to his own idea of abstract right or justice. When, before the Judicature Act, a bill was dismissed for want of equity, what was meant was that the suitor had not brought the case within the rules according to which the Court of Equity gave relief, and not that there was no abstract equity or justice in his case. It would, in my opinion, be

mischievous in the extreme if the Legislature were, even in a limited class of cases, such as those between money-lenders and borrowers, to give the judges jurisdiction to decide cases without some definite rule to go by, and I do not think they have done it, although in the Act now under consideration there is considerable difficulty to find the rule.' The facts as found in this case were that the parties negotiated on equal terms, the nature of the contract was thoroughly understood by the borrower, who was a business man, and the rate of interest was 75 per cent. per annum. The risk incurred by the lender was in fact small, but there was no evidence that he knew, or ought to have known, how safe the matter really was. On these facts, Channell J. decided that, in considering what rate of interest is to be deemed 'excessive,' 'having regard to the risk and all the circumstances of the case,' the risk is not to be taken as the only criterion, but that among the 'circumstances' to be considered the most important is-at any rate in the case of a loan without security-what rate a borrower, who has thoroughly understood all the transaction and knows all the facts of the case much better than the Court can possibly de,' and who is under no particular pressure, has been quite willing to pay; and he held that under such circumstances the rate so agreed cannot be said to be excessive.' The judgment is thus based on the construction of the word 'excessive,' but the learned judge added that he could not see how on the facts the transaction could possibly be said to be harsh and unconscionable. Whatever might come within the true meaning of those words as used in the Act, they certainly did refer in some. way to the conduct of the money-lender.

The decision thus supplies some basis for a definition of the term excessive,' and is also an authority for the proposition that the words harsh and unconscionable' are at any rate susceptible of judicial definition.

With regard to the former question it is suggested that the following rules may be deduced from Carringtons Lim. v. Smith: (1) Where the parties contract on equal terms and the loan is without security, no rate of interest, which the borrower has voluntarily agreed to pay, can be regarded as excessive. (2) Where security is taken, the Court may also consider the market rate' for loans on similar security and may perhaps be entitled to hold the rate charged excessive, even though the parties contracted on equal terms, and the borrower voluntarily consented to such rate (cf. Part v. Bond, 93 L. T. 49, where, however, there was evidence that the borrower was not fully capable of protecting herself). (3) If the parties do not contract on equal terms, the Court will, of necessity, have to apply an objective standard in determining the question, and the

extent of the risk as known to the lender will be the most important fact to be considered.

As stated previously, the following words in the section, 'and that, in either case, the transaction is harsh and unconscionable,' have not as yet been judicially construed. It is submitted with hesitation that some assistance may be obtained from an examination of the equitable doctrine under which relief was granted to expectant heirs. It is true that in Re a Debtor, Romer L. J. stated that these words 'ought not to receive a limited or artificial meaning by reference to the rules of equity before the Act,' and that in Saunders v. Newbold, Kekewich J. said, that he understood that the object of the Legislature was to get rid of the fetters which by tradition had been imposed upon the Court of Chancery, or which the Court had imposed on itself, in reopening transactions which might be more or less harsh and unjust. The discretion conferred upon the Court by section 1 of the Act was extremely large, but he thought the construction of the section was reasonably clear, and that it was impossible to limit it in the manner which had been suggested by the plaintiff to cases in which the Court of Chancery would formerly have interfered. He was, however, relieved from all difficulty by the decision of the Court of Appeal in Re a Debtor.' But it must be remembered that at the time the Act was passed it was-as will be shown hereafter-at any rate doubtful whether the doctrine of equity had any application to persons who did not fall within the class of expectant heirs, and it is possible that Romer L. J. and Kekewich J. merely intended to emphasize the fact that the scope of the Act is not-as was supposed prior to the decision in In re a Debtor-confined to persons falling within that class. On the other hand, the words 'harsh and unconscionable' and words of similar significance were frequently employed by Chancery Judges in describing that class of 'hard bargains' against which equity would grant relief in the case of expectant heirs. In the light of the Chancery cases a 'harsh' transaction would appear to mean one to which a reasonable man would not have acceded unless in great distress,' and 'an unconscionable transaction,' one in which an unconscientious advantage has been taken of the position of the borrower' (cf. Beynon v. Cook, L. R. 10 Ch. 389; Neville v. Snelling, 15 Ch. D. 703; Middleton v. Brown, 47 L. J. Ch. 411). It seems unlikely that this similarity of expression can be a mere coincidence, since the equity decisions were much discussed before the Select Committee of the House of Commons upon whose report the Act was framed. Moreover, the kind of contracts against which expectant heirs sought relief were usually contracts of loan, and frequently contracts with professional money-lenders (cf. Earl of

Aylesford v. Morris, L. R. 8 Ch. 484; Crofts v. Graham, 2 D. J. & S. 155; Rae v. Joyce, 29 L. R. Ir. 500; Kevans v. Joyce [1896] 1 I. R. 442), and, therefore, the evil, for which the equitable doctrine provided a remedy under certain circumstances, was similar to that which the Money-Lenders Act was intended to meet. It is submitted, therefore, that a consideration of the main grounds on which courts of equity have granted relief to expectant heirs may help to elucidate the problem.

Put shortly, the rule of equity was that a hard bargain with an expectant heir (which term includes not only legal reversioners, but all persons who have the hope of succession to property by reason of the expectation of a devise or bequest on account of the supposed or presumed affection of the ancestor or relative: Beynon v. Cook, L. R. 10 Ch. at p. 391) would be set aside and the onus was upon the person dealing with the expectant heir to show that the bargain was a fair one. Historically, the doctrine seems to have been originally based on grounds of public policy, since in many of the older cases stress was laid on such considerations as the desira

bility of preserving family estates and preventing 'a fraud on the ancestor.' But in more recent times it has been held that an expectant heir is not entitled to relief unless he can show some equity' more directly personal to himself' (Aylesford v. Morris, L. R. 8 Ch. per Lord Selborne at p. 492; O'Rorke v. Bolingbroke, 2 App. Ca. 814, per Lord Hatherley at p. 833). Speaking generally, relief was granted mainly on the ground that, though the plaintiff might be sui juris and the contract unimpeachable on the ground of fraud, mistake, or undue influence, yet the parties did not negotiate on equal terms, and an unfair advantage was taken of the plaintiff's position. In nearly all the reported cases one or other of the following circumstances has been treated as a determining factor in the decision-the fact that the plaintiff was prevented by his very position from obtaining competent advice, that he was youthful, ignorant, reckless, or inexperienced, that he was under the pressure of poverty or illness, or that the bargain itself was intrinsically unfair, e. g. by reason of stringent conditions for repayment. Inadequacy of consideration has never been regarded as the only matter to be considered, though of course if it were once shown that the contracting parties were not on equal terms the Court would grant relief unless satisfied that the consideration was in fact adequate.

The above statement may seem inconsistent with such cases as Wiseman v. Beake (2 Vern. 121), Edwards v. Brown (2 Coll. 100), Edwards v. Burt (2 De G. M. & G. 62), and Jones v. Ricketts (31 L. J. Ch. 753), in which sales of reversions by middle-aged

reversioners, who were under no special pressure and perfectly able to protect themselves, were set aside merely on the ground that the price given was a little less than the true value of the property. But it may be doubted whether these cases do not go further than more recent and authoritative statements of the doctrine warrant, and at all events the hard and fast rule which they enforced was confined to reversionary interests. They led to the passing of the Sales of Reversions Act, 1867, which provides (s. 1) that no purchase (which is defined as including mortgage) made bona fide and without fraud or unfair dealing of any rever sionary interest shall hereafter be reopened or set aside merely on the ground of undervalue.' This statute leaves untouched trans→ actions not made bona fide, or in which there has been fraud or unfair dealing, and has no application to loans on personal security (Beynon v. Cook, L. R. 10 Ch. 389; Aylesford v. Morris, L. R. 8 Ch. 484; O'Rorke v. Bolingbroke, 2 App. Ca. 833).

So far, therefore, the doctrine of equity remained unaffected, but, though in theory unchanged as regards cases where the statute does not apply, it has not since 1867 reappeared in its extreme form. Since that date-with the possible exception of Kevans v. Joyce ([1896] 1 I. R. 442)-in no reported case has an expectant heir who was in all respects competent to protect himself and not under pressure obtained relief merely on the ground of inadequacy of consideration, and it has never been suggested that a borrower on personal security has a higher claim to relief than the mortgagor of a reversion. On the other hand, in all the cases especial stress is laid on the weakness of the borrower and the unconscientious advantage taken of such weakness by the lender, whereas, if the only conditions precedent to granting relief had been that the plaintiff should be shown to be an expectant heir and the consideration inadequate, such topics would have been entirely irrelevant. As regards mortgages of reversions, at any rate, it is submitted that the Sales of Reversions Act would prohibit the application of the doctrine to cases where the parties contract on equal terms (cf. Rae v. Joyce, 29 L. R. Ir. 500, per O'Brien L. J. at p. 520), and, it may be added in this connexion, that the Sales of Reversions Act can only be reconciled with the first section of the Money-Lenders Act on the assumption that the view expressed by Channell J. in Carringtons Lim. v. Smith, viz. that a high rate of interest does not per se render a transaction 'harsh and unconscionable,' is correct. Such, indeed, was Lord Chelmsford's view of the equitable doctrine in 1867: Webster v. Cook, L. R. 2 Ch. 542.

It seems, therefore, untrue to say that the rule of equity was