Litigators and litigants who are familiar with the courts’ discretion to award interest on damages will be aware that from 1 July 2010, the basis for the calculation of pre-judgment interest changed whereby interest is calculated by reference to the Reserve Bank of Australia Cash Rate plus 4%.
This new method of calculating interest is intended to apply throughout Australia with amendments having already being made to the NSW Courts Practice Notes and the Federal Court Practice Notes.
We have developed a Pre-Judgment Interest Calculator to make these detailed calculations easy for you to work out in a matter of seconds by completing the 3 key inputs:
Date Interest Accrues
This might typically be the date on which loss has been assessed (usually the date of the cause of action) or the date of commencement of the litigation proceedings.
This is the Australian dollar value amount of the damages which is subject to the interest calculation. This amount should be an after-tax amount if the underlying amount would have been subject to tax. This amount might represent the net present value as at the date of the cause of action or some other undiscounted value at some historic point in time.
Hearing Date: This is the date you want the simple interest to be calculated to.
How the Pre-Judgment Interest Calculator works:
Interest is calculated using the following methodology contained in the NSW Courts Practice Notes being:
- in respect of the period from 1 January to 30 June in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
- in respect of the period from 1 July to 31 December in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced
Pre-judgment interest is calculated by reference to the Reserve Bank of Australia Cash Rate plus 4% calculated in six month periods. Interest is calculated on a simple basis (not compounding).
The Pre-Judgment Interest Calculator has been updated to include the RBA Cash Rate up to 31 December 2014. Next Update: 1 January 2015