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Revised Statutes of Newfoundland 1990


CHAPTER U-1

AN ACT TO PROVIDE FOR THE RELIEF OF PERSONS FROM CERTAIN UNCONSCIONABLE TRANSACTIONS

Analysis

1. Short title

2. Definitions

3. Court may reopen transaction

4. Exercise of powers of court

5. Burden of proof

6. Factors to be considered by court

7. Relief in Trial Division

8. Saving genuine holder for value and existing jurisdiction


Short title

1. This Act may be cited as the Unconscionable Transactions Relief Act.

RSN1970 c382 s1

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Definitions

2. In this Act

(a) "cost of the loan" means the whole cost to the debtor of money lent and includes interest, discount, subscription, premium, dues, bonus, commission, brokerage fees and charges, but not actual lawful and necessary disbursements made to the Registrar of Deeds, the Registrar of the Supreme Court, the sheriff or a city or a town clerk of a municipality;

(b) "court" means a court having jurisdiction in an action for the recovery of a debt or money demand to the amount claimed by a creditor in respect of money lent;

(c) "creditor" includes the person advancing money lent and the assignee of a claim arising or security given in respect of money lent;

(d) "debtor" means a person to whom or on whose account money lent is advanced, and includes a surety and endorser or other person liable for the repayment of money lent or upon an agreement or collateral or other security given in respect of it; and

(e) "money lent" includes money advanced on account of a person in a transaction which, whatever its form may be, is substantially one of money-lending or securing the repayment of money so advanced and includes a mortgage.

RSN1970 c382 s2; 1986 c42 Sch B

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Court may reopen transaction

3. Where, in respect of money lent, the court finds that having regard to the risk and to the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable the court may

(a) reopen the transaction and take an account between the creditor and the debtor;

(b) notwithstanding a statement or settlement of account or an agreement purporting to close previous dealings and create a new obligation, reopen an account already taken and relieve the debtor from payment of a sum in excess of the sum determined by the court to be fairly due in respect of the principal and the cost of the loan;

(c) order the creditor to repay the excess where it has been paid or allowed on account by the debtor; and

(d) set aside either wholly or in part or revise or alter a security given or agreement made in respect of the money lent, and, where the creditor has parted with the security, order the creditor to indemnify the debtor.

RSN1970 c382 s3

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Exercise of powers of court

4. The powers conferred by section 3 may be exercised in an action or proceeding

(a) by a creditor for the recovery of money lent;

(b) by the debtor notwithstanding a provision or agreement to the contrary and notwithstanding that the time for repayment of the loan or an instalment of it has not arrived; or

(c) in which the amount due or to become due in respect of money lent is in question.

RSN1970 c382 s4

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Burden of proof

5. In an action taken under this Act the burden of proof is on the creditor to establish that having regard to the risk and to the circumstances the cost of the loan is not excessive and is not harsh and unconscionable.

1977 c28 s1

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Factors to be considered by court

6. (1) In determining whether the cost of a loan is excessive the court shall consider

(a) the interest rates prevailing at the time the loan was entered into for loans of a similar nature, including the prime rate of interest charged by the chartered banks to their most credit-worthy customers;

(b) the degree of risk assumed by the creditor; and

(c) the cost of a similar loan to a debtor in similar circumstances.

(2) In determining whether the transaction is harsh and unconscionable the court shall consider

(a) whether the debtor was unable to protect his or her own interests because of physical or mental disability, age, illiteracy, ignorance or inability to understand the nature of the lending transaction;

(b) whether the debtor was subject to undue pressure to enter into the lending transaction; or

(c) whether, at the time the loan was entered into, there was no reasonable probability of full payment of the principal amount of the loan and the cost of the loan.

1977 c28 s1

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Relief in Trial Division

7. (1) In addition to a right that a debtor may have under this or another Act or otherwise in respect of money lent, the debtor may apply for relief under this Act to a judge of the Trial Division and the judge on the application may exercise the powers of the court under section 3.

(2) An application made under subsection (1) may be heard by a judge in chambers or the judge may direct an issue.

1986 c42 Sch B

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Saving genuine holder for value and existing jurisdiction

8. Nothing in this Act affects the rights of a genuine assignee or holder for value without notice or derogates from the existing powers or jurisdiction of a court.

RSN1970 c382 s6

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