Interest on Money Claims Act 2016

1: Title
This Act is the Interest on Money Claims Act 2016.
2: Commencement
This Act comes into force on 1 January 2018 Preliminary provisions
3: Primary purpose
1: The primary purpose of this Act
2: That purpose is to be achieved by the award of interest in accordance with the following principles:
a: interest is to be awarded on all money claims except those expressly excluded by this Act
b: interest is to be paid from the day on which the money claim is quantified until the day of payment:
c: the interest rate to be used for the purposes of this Act
i: the rate is to be capable of fluctuating in accordance with changes in the retail 6-month term deposit rate published by the Reserve Bank of New Zealand; and
ii: interest is to be compounded so that it yields the per annum simple interest rate over the period of a year; and
iii: interest is to be calculated using a calculator that is publicly available on an Internet site maintained by or on behalf of the Ministry:
d: in special circumstances, a court is to have power to award any interest or compensatory lump sum it may direct, or make no award.
4: Additional purpose
This Act see Schedule 2
5: Application
This Act
6: Interpretation
1: In this Act court
a: does not include a tribunal or an arbitral tribunal; and
b: in relation to a matter, means the court by or before which the matter falls to be determined daily effective rate initial amount section 11 section 10 17 18 interest
a: in relation to the payment or non-payment of interest under another Act or a contract, includes the payment of any amount, however calculated, as compensation for a delay in payment; and
b: in relation to a claim for, or an award of, interest under this Act section 18 24 interest rate section 12(3) Internet site calculator section 13 judgment debt Act last day
a: the day specified in section 9(1)﻿(b)
b: if the period is specified under section 9(2)﻿(b) Ministry Act money judgment
a: means a judgment or an order given or made by a court in a civil proceeding that requires the payment of money; and
b: includes a judgment obtained by default or in accordance with a summary judgment procedure pay prescribed section 27 start date
a: the date on which the period begins under section 9(1)﻿(a)
b: if the period is specified under section 9(2)﻿(b)
2: An example used in this Act
a: the example is only illustrative of the provision to which it relates and does not limit the provision; and
b: if the example and the provision to which it relates are inconsistent, the provision prevails.
7: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 1
8: Act binds the Crown
This Act
1: Award of interest
Interest to be awarded
9: Period for mandatory award of interest
1: When giving a money judgment, a court must award interest under this Act
a: begins either—
i: on the day on which the cause of action arose; or
ii: if the amount on which interest is to be awarded was not quantified at the day on which the cause of action arose, on a later day that the court specifies in the judgment as the day at which that amount was quantified; and
b: ends on the day on which the judgment debt (including all interest payable under this Act
2: Subsection (1) applies unless—
a: this Act Act
b: the court, in accordance with this Act
3: Despite subsections (1) and (2), interest under this Act
a: after the proceeding has been commenced but before the date of judgment, in or towards satisfying a party’s liability; or
b: after the date of judgment, towards satisfying a judgment debt.
10: Mandatory award of interest
1: In every money judgment, a court must award interest under this section as compensation for a delay in the payment of money.
2: Subsection (1) does not apply if this Act
3: If, after a proceeding for a money claim is commenced but before a money judgment is given, any amount is paid so that the entire amount due, except for interest, is paid, then (unless this Act
a: the party who had the money claim is still entitled to interest under this section; and
b: the court must award interest under this section although the judgment requires no other payment to satisfy the liability of a party.
11: Initial amount
1: When the court awards interest under section 10 initial amount
2: The initial amount in respect of a period must include any amount paid in or towards satisfying a party’s liability after a proceeding for a money claim is commenced but before a money judgment is given if that period begins at a date earlier than the date of that payment.
3: The initial amount in respect of a period must include accrued interest on any amount on which interest is awarded, for any earlier period specified in the judgment, under—
a: section 10 Act
b: any other Act; or
c: a contract.
12: Calculation of interest awarded under section 10
1: Interest awarded under section 10 sections 14 15 Act
2: For the purposes of subsection (1), interest accrued over any particular year is to be added to the principal in the subsequent year.
3: In this section, interest rate A
a: base rate
i: the average of the 6 observations for the retail 6-month term deposit rate most recently published by the Reserve Bank of New Zealand before day A; or
ii: if some other indicator interest rate is prescribed as the base rate that applies for the purposes of this section from a specified date, the prescribed rate, if day A is after the specified date; and
b: premium
i: 0.15%; or
ii: if some other percentage is prescribed as the premium that applies for the purposes of this section from a specified date, the prescribed premium, if day A is after the specified date.
4: For the purposes of subsection (3)﻿(a)﻿(i), every observation for the retail 6-month term deposit rate published by the Reserve Bank of New Zealand—
a: before this Act comes into force is deemed to have been published on the first day of the month following the month to which the observation relates; and
b: after this Act comes into force is published on the date that it is first published on the Internet site of the Reserve Bank of New Zealand. Example
Assumed facts Interest on a debt of $10,000 is to be calculated in respect of 15 November 2012. For 15 November 2012, the 6 most recent observations for the retail 6-month term deposit rate that had been published by the Reserve Bank of New Zealand* at that date are 4.13%, 4.11%, 4.11%, 4.10%, 3.96%, and 3.95%, being the rates observed on the last business day of the months from May 2012 to October 2012. The average of these 6 observations is 4.06%. This is the base rate. The base rate and the premium, namely, 0.15%, are added, with the result for 15 November 2012 being 4.21%. This is a per annum simple interest rate. This is required to be converted to a daily effective rate. The formula for this conversion is as follows: Daily effective rate = ((1+"per annum simple interest rate as %"/100)^(1/365)-1) x 100 The result of applying this formula to 4.21% is as follows: Daily effective rate = 0.0112986952452543. This is the interest rate expressed as a daily effective rate for 15 November 2012. If the debt was not paid on 16 November 2012, the amount on which interest would accrue would be the $10,000 plus the interest in respect of 15 November 2012 as calculated without rounding. * See
13: Internet site calculator
1: The chief executive of the Ministry must—
a: establish and maintain a calculator to be used for the purposes of this Act
b: make the calculator publicly available at all reasonable times on an Internet site maintained by, or on behalf of, the Ministry.
2: The chief executive of the Ministry must ensure that the calculator—
a: allows interest to be—
i: calculated at the relevant interest rate or interest rates expressed as a daily effective rate; and
ii: calculated at daily intervals; and
b: complies with any prescribed rules or requirements governing the establishment or operation of the Internet site calculator.
3: The calculator is presumed, unless the contrary is shown, to have been established and maintained in accordance with subsection (2).
4: The court, on an application by a party to a proceeding made before the judgment is sealed or, if permitted by the rules of court, any later date permitted by those rules, may make such orders as it considers just if it is satisfied that the Internet site calculator has not allowed interest to be calculated in accordance with subsection (2)﻿(a), resulting in an error in an award of interest made in the proceeding.
5: However, no action lies against the Crown, the Reserve Bank of New Zealand, or an officer or employee or Minister of the Crown or the Reserve Bank of New Zealand, or any other person, to recover any damages or other amount for any loss, damage, or other adverse effect due directly or indirectly to any act or omission in respect of the establishment and operation of the Internet site calculator.
6: No person is exempted from liability under subsection (5) for any act or omission that constitutes bad faith on the part of that person.
14: Calculation if judgment debt paid in full in 1 payment
1: If a party pays, or were to pay, a judgment debt in full in 1 payment, the amount payable is to be calculated using the Internet site calculator by inserting the initial amount, the start date, and the last day.
2: The resulting amount is the total amount, including interest, that is required to satisfy the judgment debt. Example
Assumed facts On 15 March 2012, the debtor purchased goods from the creditor for $10,000 and failed to pay for them. On 1 July 2012, a court gave judgment in respect of the goods sold for an amount of $10,000 plus interest under this Act Calculation The start date (15 March 2012), the last day (15 December 2012), and the initial amount ($10,000) are entered into the Internet site calculator. Using that information, the total amount, including interest, required to satisfy the judgment debt on 15 December 2012 is calculated. That total amount is $10,323.25. All calculations are made by the Internet site calculator.
15: Calculation if judgment debt paid in instalments
1: If a party has paid an instalment or instalments of a judgment debt, the balance required to pay the judgment debt in full on a particular date is to be calculated using the Internet site calculator by entering the initial amount, the start date, the last day, the amount of each instalment, and the date of payment of each instalment.
2: The resulting amount is the total amount, including interest, required to satisfy the balance of the judgment debt in full on the particular date. Example
Assumed facts On 15 July 2012, a court gave judgment for negligent advice for a sum of $10,000 damages plus interest under this Act section 9 Calculation The start date (15 July 2012), the last day (15 December 2012), and the initial amount ($10,000) are entered into the Internet site calculator. Using that information, the total amount from which the value of the instalments will be subtracted is calculated. This total amount is $10,177.63. Then the amount of each instalment and the corresponding date of payment are entered into the Internet site calculator ($1,000 on 15 October 2012 and 15 November 2012). After the 2 instalments are entered, a total value of instalments is calculated. This amount is $2,010.31. The total value of instalments is subtracted from $10,177.63 to give the total amount, including interest, required to satisfy the judgment debt on 15 December 2012. That amount is $8,167.32. All calculations are made by the Internet site calculator.
16: References to paying debt in full or paying instalments
In sections 14 15
17: Discretion if money judgment expressed in foreign currency
1: If an initial amount specified in a money judgment in respect of a period is expressed in a foreign currency, the court may,—
a: instead of awarding interest to be calculated as provided in sections 12 to 16
b: determine the manner (with or without compounding) by which interest at that rate is to be calculated.
2: The court may not award interest under this section on an amount for any period unless interest could have been, but was not, awarded as provided in sections 10 to 16
18: Discretion in special circumstances
1: If, in the opinion of the court, special circumstances make it inequitable to award interest in a money judgment under sections 10 to 16 section 17
a: award interest on all or part of the amount of the money judgment at the rate and calculated in the manner (with or without compounding) that the court directs; or
b: award a lump sum as compensation for a delay in the payment of all or part of that amount; or
c: determine not to award interest or a lump sum.
2: The court may not award interest under this section on an initial amount for any period unless interest could have been, but was not, awarded as provided in sections 10 to 16
2: Where interest is not to be awarded
19: No interest to be awarded on penalty
A court may not award interest under this Act
20: Restrictions on award of interest for certain specified periods
1: A court may not award interest under this Act
2: A court may not award interest under this Act
21: No interest to be awarded for period contrary to provisions of another Act
1: A court may not award interest under this Act
2: A court may not award interest under this Act
22: Award of interest if contract makes relevant provision
1: This section and section 23
2: A court may award interest for a period to which this section applies in accordance with the rights and obligations of the parties specified in the contract.
3: Subsection (2) applies despite—
a: Part 1 section 24
b: any rule of law that after judgment is given rights and obligations under a contract merge in the judgment.
4: A court may not award interest under this Act
5: A court may not award interest under Part 1 section 24
23: Rules of interpretation for contractual provisions
Unless the contract expressly provides otherwise, a provision in the contract as to—
a: the payment or non-payment of interest on an unpaid amount payable under, or for the breach of, the contract must be taken to apply for the purposes of section 22
b: a rate of interest payable on any unpaid amount must be taken to be inconsistent with an award of interest under Part 1 section 24
24: Special provision for interest or lump sum relating to contracts entered into before commencement
1: This section applies to the period before the date of a money judgment if the judgment is given for an amount under, or for breach of, a contract entered into before the coming into force of this Act
2: Where this section applies to a period before the date of a money judgment,—
a: the court may not award interest under Part 1
b: the court may—
i: award interest on all or part of the amount of the money judgment at a rate not exceeding the rate prescribed for the purposes of this section, calculated in the manner (with or without compounding) that the court directs; or
ii: award a lump sum that is not greater than could be awarded under subparagraph (i) as compensation for a delay in the payment of all or part of that amount; or
iii: determine not to award interest or a lump sum. Section 24(2)﻿(b)﻿(i) 5% per annum prescribed as maximum rate of interest 12 April 2019 regulation 4 Interest on Money Claims Regulations 2019
3: Supplementary and miscellaneous provisions
25: Court may not award interest unless procedural requirements complied with
1: A court may not award interest under a section of this Act Examples
In the case of the example in section 14, the creditor would specify in its statement of claim section 10 as the section under which interest is claimed and 1 March 2012 to the date of payment as the period for which interest is claimed. In the case of the example in section 15, the plaintiff would specify in its statement of claim section 10 as the section under which interest is claimed and the date of judgment to the date of payment as the period for which interest is claimed. If the plaintiff wanted to claim that special circumstances make it inequitable to award interest under sections 10 to 16, or section 17, the plaintiff could specify in its statement of claim section 18 as the section under which interest is claimed (the plaintiff would also specify the period for which interest is claimed).
2: If a party claims interest under section 17 18 22 24
a: the party must specify in that party’s statement or notice of claim or counterclaim the amount or rate of interest claimed; and
b: the court may not award interest—
i: exceeding the amount claimed under paragraph (a); or
ii: at a rate exceeding the rate claimed under paragraph (a).
3: Nothing in this section prevents interest being claimed in a statement or notice of claim or counterclaim in the alternative.
4: Nothing in this section prevents a court from making an award of interest where the court has at any time made or accepted an amendment to a statement or notice of claim or counterclaim in accordance with the rules of court and where that statement or notice of claim or counterclaim, as amended, complies with the requirements in subsections (1) and (2).
26: Preservation of common law and equitable rights
1: This Act
2: However, a court may not award interest under this Act
27: Regulations
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations for all or any of the following purposes:
a: prescribing an indicator interest rate (or a formula or other methodology for setting another indicator interest rate) as the base rate for the purposes of section 12(3)
b: prescribing a percentage as the premium for the purposes of section 12(3)
c: prescribing rules or requirements governing the establishment or operation of the Internet site calculator:
d: prescribing the rate of interest for the purposes of section 24(2)﻿(b)﻿(i)
e: prescribing when a judgment debt or an instalment of a judgment debt is paid or deemed to be paid for the purposes of any provision of this Act
f: providing for any other matters contemplated by this Act or necessary for its administration or necessary for giving it full effect.
2: Regulations for the purposes of subsection (1)﻿(e) may make different provision for different methods of payment, and for different circumstances relating to a payment or method of payment (including, without limitation, circumstances concerning the location of persons involved in a payment and any regulatory requirement, limitation, or other matter that may affect when, how, by whom, or the time within which a payment may be made).
3: The Minister may recommend the making of regulations under subsection (1)﻿(a) or (b) only if the Minister is satisfied that the change to the interest rate in section 12(3)
a: simple, accessible, and predictable law:
b: commercially realistic, and fair, compensation for creditors:
c: a method of calculating interest owed using a published interest multiplier that is updated regularly and administratively, and is easy to use.
4: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 27(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
28: Calculation of interest for amounts under other enactments
The provisions set out in Schedule 2
29: Amendments to other enactments
The enactments specified in Schedule 3 2018-01-01 Accident Compensation Act 2001 Administration Act 1969 Arbitration Act 1996 Companies Act 1993 Disputes Tribunal Act 1988 District Court Act 2016 Employment Relations Act 2000 Holidays Act 2003 Insolvency Act 2006 Land Transfer Act 1952 Life Insurance Act 1908 Maori Reserved Land Amendment Act 1997 Prisoners' and Victims' Claims Act 2005 Public Works Act 1981 Retirement Villages Act 2003 Sharemilking Agreements Act 1937 Te Ture Whenua Maori Act 1993 Trustee Act 1956 Waste Minimisation Act 2008 Weathertight Homes Resolution Services Act 2006 Cadastral Survey (Fees) Regulations 2003 Electricity Industry (Enforcement) Regulations 2010 Financial Markets Conduct Regulations 2014 Gas Governance (Compliance) Regulations 2008 High Court Rules 2016 Land Information New Zealand (Fees and Charges) Regulations 2003 Land Transfer Regulations 2002 Retirement Villages (General) Regulations 2006 Sharemilking Agreements Order 2011