Ontario prejudgment interest, explained

What prejudgment interest is

Prejudgment interest is interest that a court adds to a money judgment to compensate the successful party for the time between when the cause of action arose and when the judgment is entered. In Ontario, the ordinary rule is set out in section 128 of the Courts of Justice Act.

When it starts and stops

Prejudgment interest generally runs from the date the cause of action arose (for example, the date of the accident, the date of breach of contract, or the date of loss) up to the date of the order. Different rules can apply to non-pecuniary damages in personal injury cases and to specific statutory claims - check the section 128 wording that applies to your claim.

Which rate applies

The default rate is the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, plus or minus adjustments set out in the Act. Ontario publishes a quarterly table so you do not have to work this out from first principles. Confirm the rate for the quarter your proceeding was commenced, not the quarter of the loss.

How the calculation works

Section 127 provides for simple interest - not compound. The calculation is principal × rate × (days ÷ 365), using the actual number of calendar days. Leap years produce 366 days, which is slightly more than a full non-leap year.

Ask for it in the pleading

Prejudgment interest is ordinarily claimed in the originating document. A Statement of Claim or Plaintiff's Claim that simply asks for damages, without also asking for prejudgment interest under the Courts of Justice Act, invites an argument about whether interest was sought at all - and on a default or uncontested judgment the registrar works from what the document actually says. If your claim is silent, deal with it before judgment rather than after.

Loss that accrues over time

Prejudgment interest is easy where a single loss crystallises on one date. It is harder where the loss builds up - lost income month by month, a series of unpaid invoices, or repair costs incurred across a year. In those cases interest does not properly run on the whole figure from the earliest date. Past pecuniary loss is commonly calculated in segments, each running from the point the particular amount was incurred, and personal injury claims have their own treatment for non-pecuniary damages. If your loss is not a single dated amount, calculate each component separately rather than entering one lump sum.

Verification workflow before you file

1. Fix the commencement date from the court's own record - the issue date stamped on the originating process, not the date you signed or served it.
2. Identify the calendar quarter that date falls in, then read the prejudgment rate for that quarter from the Ministry table, together with the notes printed above the table.
3. Fix the interest start date from the pleaded facts. Write down, in one sentence, why the cause of action arose on that date; if you cannot, the date is not yet settled.
4. Break the claim into components that each have their own start date, and calculate each separately.
5. Re-read the claim to confirm prejudgment interest is actually pleaded, and note the statutory basis you are relying on.
6. Recalculate the total independently - by hand or in a spreadsheet - and reconcile it against the figure you intend to put before the court.

When the ordinary rule can be displaced

A different rate or period can apply where the parties have agreed one, where a statute prescribes one, or where the court orders otherwise under section 130 in the interests of justice. If a written contract between the parties sets an interest rate for the underlying debt, that rate - not the statutory rate - usually governs prejudgment interest on that debt.

Section 130 also works in the other direction. The court can reduce or refuse interest, and delay in advancing a proceeding is one of the factors it may weigh. A long dormant file is not a reliable interest-generating asset.

Next steps

Once your dates and rate are settled, run the figures through the Ontario Court Interest Calculator in prejudgment mode and keep the per-period breakdown with your file. If judgment has already been granted, the interest that accrues from that point is a separate calculation - see the postjudgment interest guide. Where the amount is material, or the loss accrued in stages, have the calculation checked by a lawyer or licensed paralegal before it is filed.