Courts add prejudgment interest to a damages award to reflect that time has passed. If someone should have paid you earlier, but you only receive the money later (after a lawsuit), the court may add interest for the period in between. This is meant to reflect the time value of money, because receiving $10,000 today is not the same as receiving $10,000 years later. If you want to calculate prejudgment interest accurately, you need the correct dates and the correct damages amount. This guide explains how to calculate prejudgment interest in Ontario.
Step 1: Identify the Four Key Inputs
The “cause of action” date: To calculate prejudgment interest, first identify the “cause of action” date. This means the date the legal wrong occurred. For example, this is the date when the loss happened or when someone should have paid you but did not.
The date when the lawsuit started: Next, identify when the lawsuit started. Use the earlier of the date the Notice of Action was issued or the date the Statement of Claim was issued.
The amount of money the court awarded (excluding costs): Then, identify how much money the court awarded. Use the damages amount only. Do not include legal costs or disbursements. Section 128(1)(4)(c) of the Courts of Justice Act excludes costs from prejudgment interest.
The judgment date: To calculate prejudgment interest, first identify the “cause of action” date. This means the date the legal wrong occurred. In practical terms, it is when the loss happened or when the payment should have been made.
Step 2: Use Courtready’s Ontario Prejudgment Interest Calculator
Once you have the four inputs above, the simplest way to calculate prejudgment interest is to use Courtready’s free tool. It is designed to help you run the calculation quickly and consistently.
Use Courtready’s Ontario Prejudgment Interest Calculator here.
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