The Chairman, War Service Homes Commission:

The War Service Homes Commissioner has forwarded the following memorandum for advice:

The sections of the Act particularly bearing on this matter are sections 30 and 45. Section 30 deals with the rate of interest to be charged in respect of any purchase money or advance and section 45 with arrears.

Your opinion is desired upon the following points:

1. Is the interest to be charged under section 30 simple or compound?
2. Where the time for making any payment is extended under section 45, is the interest to be charged thereunder to be calculated upon the full amount of the arrears including both principal and interest, thereby making such interest compound?
3. Where applicants fall in arrears without any payment being actually and specifically extended under section 45 is the payment automatically extended under that section?
4. If yes, is interest on the arrears to be charged on the same basis as in (b)?

Section 30 provides the rate of interest chargeable in respect of any purchase money or advance. Where interest for any year has not been paid at the due date, I think it is competent for the Commissioner to charge interest at the specified rate upon the amount so unpaid. Such interest would, in my opinion, be covered by the expression 'charged to any purchaser or borrower in respect of any purchase money or advance'.

The payments referred to in section 45 cover payments of interest and sub-section (2) contemplates the payment during the extended period of interest on other interest which is overdue.

Section 45 does not provide for the automatic extension of the time for payment of arrears. An extension granted under that section, so long as the conditions of the grant are observed, prevents the Commissioner exercising his rights of recovery against the debtor. Where no extension has been granted the Commissioner may, subject to the Act, have recourse to the security. Where interest is in arrear, whether an extension under section 45 has been granted or not, the Commissioner may, in my opinion, charge interest on that interest.

[Vol. 18, p. 71]