New Act will see single statutory system for interest on money claims
The Interest on Money Claims Act 2016 comes into force on 1 January 2018 with the aim of introducing a single statutory system and provide greater certainty for court-awarded interest on money claims. Interest will now be paid from the day on which the money claim is quantified (for example, cause of action) until the day of full and final payment.
As well as establishing an end-to-end process for awarding interest, the Act also introduces a publicly accessible online calculator administered by the Ministry of Justice to enable parties to calculate how much interest is applicable on an outstanding debt. The calculator has been released ahead of 1 January 2018 along with responses to frequently asked questions.
Application of the Act
The Act applies to all money judgments, which are defined as a judgment or order made by a court in a civil proceeding that requires financial payment. It also includes a judgment obtained by default or in accordance with a summary judgment procedure.
Section 25 procedural requirements
Section 25 says a court may not award interest under the Act unless, the party making the claim states in either their statement of claim or a counterclaim:
- The relevant section of the Act under which interest is claimed, and
- As accurately as possible, the period for which interest is claimed.
If a claim for interest is made under ss17, 18, 22 or 24 of the Act, the statement of claim or counterclaim must include either the amount or rate of interest claimed. It should be noted the court cannot award interest in excess of the amount claimed or at a rate exceeding the one claimed.
Section 25(4) says a court can make an award of interest where it has accepted an amended statement of claim or counterclaim filed in accordance with the rules of the court and the document complies with the procedural requirements.
The old legislation continues to apply for any civil proceedings commenced before 1 January 2018.
Last updated on the 20th December 2017