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The interest rate courts can award for the recovery of debts or damages will be increased to bring it into line with current market borrowing rates, Courts Minister Rick Barker said today.

The new rate will be set at 8.4 per cent and will take effect from 1 July 2008. The rate is currently set at 7.5 per cent.

"The Judicature Act 1908, the District Courts Act 1947, the Disputes Tribunals Act 1988, allow the courts and the Disputes Tribunal to award interest, not exceeding the prescribed rate for the recovery of debts or damages," Mr Barker said. 

The Administration Act 1969 provides for the award of interest on legacies and annuities. 

The Trustee Act 1956 provides for the recovery of interest for trustees who pay insurance policy premiums. In all cases interest is simple, not compound.  These statutes also allow the Governor-General in Executive Council to adjust the set rates.

"The change is also necessary because the rate set down in the Judicature Act is used by a number of other statutes.  These include the Companies Act; Injury Prevention, Rehabilitation, and Compensation Act; Land Transfer Act; Life Insurance Act; Maori Reserved Land Amendment Act 1997; Mutual Insurance Act; and the High Court Rules," Mr Barker said.

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