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Legal Services Act 2011

Legal aid - How Commissioner may enforce conditions of grant - Deduction notices

41E: Deduction notices issued to banks

You could also call this:

"What happens when a bank gets a notice to take money from someone's account"

Illustration for Legal Services Act 2011

When a bank gets a deduction notice, money in the aided person's account is affected. The money is deemed to be held in trust for the Commissioner and is a debt due to the Commissioner. You can recover this debt in a court or tribunal. If you have money in a bank account, it includes any interest on that money. This applies whether the money is in a current account or a term deposit. You can still withdraw the money, but the bank has to follow the deduction notice. A bank is a person or business that does banking in New Zealand, like a credit union or building society. You can find more information about credit unions in the Friendly Societies and Credit Unions Act 1982 and about building societies in the Building Societies Act 1965. The Reserve Bank of New Zealand is not usually considered a bank in this context, except in certain situations, as outlined in the Reserve Bank of New Zealand Act 2021. If you have a joint bank account with someone else, the money is still considered yours if you can withdraw it without the other person's signature. This means the bank has to follow the deduction notice for that money. You can read more about deduction notices in section 41B.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5588341.

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Topics:
Money and consumer rights > Banking and loansMoney and consumer rights > TaxesCrime and justice > Courts and legal help
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41D: Discharge of obligation, or

"You don't have to pay back money already taken from you."

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41F: Making of deductions, or

"Taking money owed to the government from someone's payment"

Part 2Legal aid
How Commissioner may enforce conditions of grant: Deduction notices

41EDeduction notices issued to banks

  1. Where the third party is a bank, any money held by the bank to the credit of the aided person is subject to the provisions of section 41B and the amount required to be deducted under the deduction notice is, without prejudice to any other remedies against the aided person or any other person, deemed to be held in trust for the Commissioner and is a debt due to the Commissioner and may be recovered in any court or tribunal of competent jurisdiction.

  2. For the purposes of this section, bank means a person carrying on in New Zealand the business of banking, a credit union within the meaning of the Friendly Societies and Credit Unions Act 1982, and a building society within the meaning of the Building Societies Act 1965; but does not include the Reserve Bank of New Zealand continued under the Reserve Bank of New Zealand Act 2021 (except in relation to an account maintained by that bank for an employee of the bank).

  3. For the purposes of this section, money held by the bank to the credit of the aided person includes money, and any interest on money, that is on deposit or deposited with a bank to the credit of the aided person, whether or not—

  4. the deposit or depositing is on current account:
    1. the money is to be at interest at a fixed term or without limitation of time:
      1. the aided person has made any application to withdraw or uplift the money.

        1. For the purposes of this section, money on deposit with a bank is deemed to be to the credit of the aided person if the money—

        2. is held in a joint bank account in the name of the aided person and 1 or more other persons; and
          1. can be withdrawn from the account by or on behalf of the aided person without a signature being required at the time of that withdrawal from, or on behalf of, the other person or persons.

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            Notes
            • Section 41E: inserted, on , by section 14 of the Legal Services Amendment Act 2013 (2013 No 43).
            • Section 41E(2): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).