Pre-Judgment Interest in Ontario Small Claims Court

How Pre-Judgment Interest Works

When you file a claim in Ontario Small Claims Court, you can claim pre-judgment interest on the money owed under sections 127 and 128 of the Courts of Justice Act (CJA). Under section 128, the statutory period runs from the date the cause of action arose to the date of the order; a contract or another statutory interest right may set a different basis.

You do not need the defendant's agreement to claim statutory interest, but you must specifically claim it in your Plaintiff's Claim (Form 7A). The court may vary or disallow interest where the Courts of Justice Act permits.

The Interest Rate

There are two scenarios:

Contractual rate. If your contract contains an explicit, legally binding interest rate on overdue payments (e.g., "2% per month on overdue invoices"), that agreed rate may apply. You claim contractual interest and cite the specific clause.

Statutory rate. If there is no other legally binding interest rate, section 127 of the Courts of Justice Act sets the prejudgment rate by the quarter in which the proceeding is commenced. It uses the Bank of Canada's bank rate at the end of the first day of the last month of the preceding quarter, rounded to the nearest tenth of a percentage point. The Ministry publishes the quarterly table; use the rate for the quarter your proceeding began, not the quarter the cause of action arose or each later quarter.

The Ministry publishes the quarterly rate table on the Ontario government website. Check it before completing Form 7A.

The Calculation Formula

Pre-judgment interest for a fixed (liquidated) amount uses simple interest:

Interest = Principal × Rate × Days ÷ 365

For example, if you are owed $10,000, the applicable quarterly rate is 5% per year, and 180 days have passed since the cause of action arose:

$10,000 × 0.05 × 180 ÷ 365 = $246.58

For unliquidated claims — where the court has to assess the amount of damages — the judge has discretion over how to apply interest.

The prejudgment rate is tied to the quarter the proceeding began. It does not switch to a new rate each quarter while that proceeding is pending.

Common Mistakes

Not claiming interest at all. The Form 7A interest section exists for a reason. Fill it out with the start date (date of breach or demand), the rate (contractual or statutory), and the calculated amount up to the date of filing. The court will adjust the final amount to cover the period up to judgment.

Using the wrong start date. Under section 128, statutory interest generally runs from when the cause of action arose. For an unpaid invoice, that is generally when payment became due; for property damage, it is generally when the loss occurred. If the agreement makes payment due on demand, the demand date can determine when the cause of action arose; a demand letter does not otherwise change the statutory start date by itself.

Confusing pre-judgment and post-judgment interest. Pre-judgment interest runs from the cause of action to the order date under section 128. Post-judgment interest runs from the order date until the defendant pays under section 129. Its rate is based on the Bank of Canada's bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the order is made, rounded up to the next whole number if fractional, plus 1%. Do not carry your pre-judgment rate forward.

Claiming Interest on Form 7A

In the interest section of Form 7A, you will need to state:

• Whether the interest rate is contractual or statutory
• The applicable percentage rate
• The start date for the interest calculation
• The calculated amount of interest accrued to the filing date

Update the total amount on the day you file: principal + accrued interest = the total claim (still subject to the $50,000 ceiling, exclusive of interest and costs, for jurisdictional purposes).

Our Ontario Small Claims Court filing guide includes a pre-judgment interest calculator tool and a worked example showing exactly how to complete the interest section of Form 7A.

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