- Pre-judgment interest runs on the damages a court awards, calculated from the date the cause of action arose — generally, when the breach happened — up to the date of judgment.
- Both rates are set periodically by the province rather than fixed once and left unchanged, so the applicable rate depends on when the relevant period fell.
Winning a contract claim in Ontario often takes months, sometimes longer, to work through the court system. During that time, the money you were owed sat unpaid. Pre-judgment interest on a contract claim is designed to address exactly that gap — compensating you for the time value of money between when the breach happened and when a judgment is finally issued.
This article explains how pre-judgment interest works under Ontario’s Courts of Justice Act, how it differs from post-judgment interest, and what to expect when interest is added to a damages award.
What Pre-Judgment Interest Covers
Pre-judgment interest runs on the damages a court awards, calculated from the date the cause of action arose — generally, when the breach happened — up to the date of judgment. The idea is straightforward: if you had been paid what you were owed on time, you could have used or invested that money in the meantime. Pre-judgment interest is meant to approximate that lost benefit.
This is a statutory feature of Ontario civil litigation, set out in the Courts of Justice Act, and it generally applies unless the court decides otherwise or the parties’ contract already addresses interest.
How the Timeline Works
- Breach occurs. This is generally the point from which pre-judgment interest starts running, though the exact starting date can depend on the nature of the claim.
- The claim is filed and proceeds through the court system. Interest continues to accrue during this period, regardless of how long the litigation takes.
- Judgment is issued. The court calculates pre-judgment interest on the damages awarded, covering the period from the breach to the judgment date, and adds it to the award.
- Post-judgment interest takes over. From the date of judgment forward, a separate rate applies to the unpaid judgment amount until it is actually paid.
Pre-Judgment vs. Post-Judgment Interest
| Pre-Judgment Interest | Post-Judgment Interest | |
|---|---|---|
| Governing provision | Courts of Justice Act, s. 128 | Courts of Justice Act, s. 129 |
| Runs from | The date the claim arose (generally the breach) | The date judgment is issued |
| Runs until | The date of judgment | The date the judgment is actually paid |
| Rate set | Quarterly by the province | Quarterly by the province |
Both rates are set periodically by the province rather than fixed once and left unchanged, so the applicable rate depends on when the relevant period fell. As of mid-2026 both rates were low single-digit percentages and had held steady for several consecutive quarters, but the rates are reviewed every quarter — always confirm the current figures for the specific periods in your case, including any figure quoted in an article like this one, before relying on them.
When the Rate or Period Can Differ
A contract itself sometimes specifies its own interest rate for late payment or breach, which can override the default statutory approach depending on how the contract is worded. Courts also retain some discretion over how pre-judgment interest is applied where the default approach would produce an unfair result on the facts of a particular case. Because both the applicable rate and any contractual override depend on the specific facts and dates involved, this is an area worth confirming with a lawyer rather than estimating on your own.
Why This Matters for Case Strategy
Pre-judgment interest can add a meaningful amount to a final award, particularly in claims that take a long time to resolve or involve a breach that happened well before the claim was filed. When assessing whether to pursue a claim, negotiate a settlement, or accept an offer, it is worth factoring in the interest that has already accrued and will continue to accrue while the matter is outstanding.
Frequently asked questions
Do I need to ask for pre-judgment interest, or does the court add it automatically?
Pre-judgment interest is generally available under the Courts of Justice Act without a special contractual term, but it is still good practice to specifically claim it in your court documents so the court addresses it directly in the judgment.
Does pre-judgment interest apply in Small Claims Court too?
Yes, the same statutory framework generally applies across Ontario’s civil courts, including Small Claims Court, though the exact figures and any court-specific limits on costs and interest can vary — confirm the specifics for your claim type with a lawyer.
What if my contract already has its own interest clause?
A contractual interest term can apply instead of, or alongside, the statutory rate, depending on how it is worded and whether it covers the same period. This is a common area of dispute, so precise contract wording matters.
Can the interest rate change partway through my case?
Yes. Because the rate is set quarterly, a long-running case can span periods with different applicable rates. Calculating the correct blended rate for the full pre-judgment period is one of the more technical parts of finalizing a damages award.
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