Understanding Pre and Post Judgment Interest in Litigation

Hi Everyone, it's Kristy from Clearly Legal.

Today, I want to chat about pre-judgment and post-judgment interest.

Litigation comes with costs, and you are allowed interest on those costs. This extra amount comes from pre-judgment interest and post-judgment interest. Understanding these concepts can help you better manage your expectations and ensure you receive the full amount owed to you.

The question of why we get to charge interest at all might be a different blog...

What Is Pre-Judgment Interest?

Pre-judgment interest is the interest calculated on the amount you are owed from the cause of action date until the court issues its judgment. The cause of action is the date when the legal claim first arose, such as when a contract was breached or damages occurred.

How Pre-Judgment Interest Is Calculated

The key ingredients for the formula:

• The principal amount owed

• The interest rate set by the CJA, or your legally valid and binding contractual agreement

• The time period from the cause of action to the judgment date

The formula (taken from the Ontario Government website - it is the resource I use each time I calculate, clerk and mentor).

Amount of Claim X Interest Rate / 365 X the number of days.

I invite you to read this blog and reach out to me directly for an example.

What Is Post-Judgment Interest?

Once the court issues a judgment, the clock starts ticking on post-judgment interest. This interest applies from the judgment date until you receive payment or calculate how much interest is owed. Post-judgment interest encourages timely payment by the losing party. If they delay payment, the amount they owe grows.

How Post-Judgment Interest Is Calculated

The key ingredients for the formula:

• The principal amount owed, plus any costs award you have.

• The interest rate set by the CJA, or your legally valid and binding contractual agreement

• The time period from the judgment to the date you are commencing your enforcement of the judgment.

The formula (taken from the Ontario Government website - it is the resource I use each time I calculate, clerk and mentor).

Amount of Claim (plus any costs) X Interest Rate / 365 X the number of days.

I invite you to read this blog and reach out to me directly for an example.

How I Can Help You Save Time and Money

Calculating pre and post judgment interest is, in my opinion, procedural. I have been working with these calculations for years, helping lawyers manage enforcement. Lawyers, if you would love to handle your calculations and enforcement to me, contact me at kristy@clearlylegal.ca and we'll chat.