8 May 2014

Legal aid debt keeps climbing

7:19 pm on 8 May 2014

Tens of thousands of New Zealanders are being charged 8 percent interest on outstanding legal aid debt.

In September last year, the Legal Services Amendment Act came into effect, with interest being added on debts six months from then in March.

Hamilton Courthouse.

Hamilton Courthouse. Photo: PHOTO NZ

The Ministry of Justice says total legal aid debt to the Crown is about $109 million.

Radio New Zealand News has received documents under the Official Information Act, which reveal 40,136 people are being charged interest as at 18 March. Of those, 3067 are for debts of $5000 or more.

The OIA documents say all legal aid debts have a six-month grace period before interest is charged, with interest calculated daily and added weekly to the principal amount.

Criminal Bar Association president Tony Bouchier believes very little of the debt will be paid back.

"The idea of legal aid is for people who are suffering financial hardship ... the idea that they can repay the debt is absolutely foolish in our view ... if people cannot afford a lawyer, they should get a free lawyer," he said.

The Justice Ministry said people were told the maximum amount they might have to repay when the legal aid was granted. Repaying it depended on how much someone earned, if they owned property and if they were likely to gain money or assets as a result of a court case.

He said some people signed on to legal aid in desperation.

"They are prepared to sign anything under the circumstances, so long as they have a lawyer that can represent them," he said.