High Court Limits First Citizens Bank’s Post-Judgment Interest to Five Percent

A High Court judge has determined that First Citizens Bank cannot charge over five percent interest after a judgment in a loan case, despite a higher rate stated in the original loan agreement. Justice Frank Seepersad made the ruling on July 9, following a dispute where the bank sought to enforce a post-judgment interest rate of 10.25 percent. Instead, the court confirmed that the statutory rate of five percent, as mandated by the Remedies of Creditors Act, must be applied.

The case centered around a borrower who had defaulted on a loan, leading to a court judgment on June 4 that mandated the payment of $157,986.47 to settle the outstanding debt and associated costs. The primary matter for the court’s consideration was the applicable interest rate on this judgment amount until it is fully paid.

Justice Seepersad emphasized that while the loan agreement included a clause for accruing interest post-judgment, such terms do not supersede the authority of the court. He remarked that legal judgments should not serve as tools for profit, especially since they can be enforced for a maximum of 12 years.

Expressing concern for the borrower’s situation, the judge noted the individual’s unemployment and financial difficulties, stating it would be unjust to impose the higher interest rate.

Justice Seepersad also warned financial institutions to exercise compassion in their enforcement actions, urging them to avoid a harsh, merciless approach reminiscent of the character Shylock from Shakespeare’s The Merchant of Venice, who demanded a “pound of flesh.”

This ruling reinforces that the five percent statutory interest rate is the legal standard in post-judgment cases, as per the Supreme Court of Judicature Act, the Remedies of Creditors Act, and the Civil Proceedings Rules.