This guide explains how to calculate pre-judgment interest on damages in NSW, with current RBA cash rates, the formula, worked examples, and the key cases and statutory provisions you need to cite.
The statutory framework
Pre-judgment interest in NSW is governed by s 100 of the Civil Procedure Act 2005 (NSW). The power is discretionary — the court "may" include interest in the judgment sum, calculated "at such rate as the court thinks fit":
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit —
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
Although the rate is discretionary, the established convention in NSW is to apply the RBA cash rate plus 4% for economic loss. This convention derives from Practice Note SC Gen 16 and is followed by practitioners and the courts as the standard approach.
Two important limits:
- No compound interest — s 100(3)(a) provides that the section "does not authorise the giving of interest on any interest awarded under this section."
- Settlement offer cut-off — s 100(4)-(5) provides that if the defendant made an "appropriate settlement sum" (one within 10% of the eventual judgment), the court may not award interest from the date that offer was first made, unless special circumstances warrant it.
Pre-judgment interest vs post-judgment interest
These are different regimes. Do not confuse them.
| Pre-judgment interest | Post-judgment interest | |
|---|---|---|
| Provision | s 100 CPA 2005 | s 101 CPA 2005 |
| Rate | RBA cash rate + 4% (convention) | RBA cash rate + 6% (UCPR r 36.7) |
| Nature | Discretionary ("may") | Prescribed (automatic unless court orders otherwise) |
| Purpose | Compensate plaintiff for being kept out of money | Incentivise prompt payment of judgment |
At the current RBA cash rate of 3.85% (effective 21 May 2025):
- Pre-judgment rate: 3.85% + 4% = 7.85%
- Post-judgment rate: 3.85% + 6% = 9.85%
Economic loss vs non-economic loss: different rates
This is the distinction most commonly missed. The RBA + 4% rate applies to economic loss — that is, past earnings, out-of-pocket expenses, and other financial losses that the plaintiff has been deprived of for a quantifiable period.
For non-economic loss (general damages / pain and suffering), a lower rate applies. The High Court settled this in MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657. The reasoning is that damages for non-economic loss are assessed at current values — they already incorporate inflation — so applying a commercial rate that includes an inflationary component overcompensates the plaintiff:
"To award interest at commercial rates for periods of pre-trial pain and suffering appears to be a breach of the principle that a plaintiff in a personal injuries action should not receive a sum for general damages greater than the sum which, so far as money can do so, will put him in the same position as he would have been in if the tort had not been committed."
— MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657
The Court endorsed a fixed rate of 4% for non-economic loss interest, following Wheeler v Page (1982) 31 SASR 1, and overruled the earlier decision in Cullen v Trappell [1980] HCA 10 on this point.
In practice, interest on non-economic loss is often claimed at 2% or not at all, depending on the nature of the claim and the court. The important point is: do not apply the RBA + 4% rate to general damages.
The formula
Pre-judgment interest on economic loss is calculated using simple interest:
Interest = (principal × rate ÷ 100) × (days ÷ 365.25)
Where:
- principal = the damages amount on which interest is claimed
- rate = RBA cash rate + 4% for the relevant period
- days = number of days in the period
- 365.25 = accounts for leap years
Splitting the calculation across rate changes
This is where most errors occur. The RBA cash rate is not static — it changes over time, sometimes frequently. If your claim period spans multiple rate changes, you must split the calculation into sub-periods and apply the correct rate to each.
Prior to May 2022, the RBA cash rate was relatively stable and the convention was to use semi-annual rate bands (the last published rate before 1 January and 1 July each year). Since May 2022, the RBA has changed rates frequently — 12 changes in 18 months — requiring granular tracking of each rate change.
Step-by-step method
- Identify your period: date of injury (or when the loss accrued) to date of assessment
- Get the rate history: list every RBA cash rate change within your period
- Create rate bands: each band runs from one rate change to the next
- Calculate days: for each band, count the days that overlap with your claim period
- Apply the formula: calculate interest for each band separately
- Sum the results: total pre-judgment interest is the sum of all bands
Worked example 1: single rate band
Scenario: $10,000 in past medical expenses incurred on 1 March 2020, assessed on 30 April 2020.
The entire period falls within a single rate band (H1 2020: RBA cash rate 0.75%).
| Principal | $10,000 |
| RBA cash rate | 0.75% |
| Pre-judgment rate | 0.75% + 4% = 4.75% |
| Days | 61 |
Interest = ($10,000 × 4.75 ÷ 100) × (61 ÷ 365.25)
= $475.00 × 0.16700
= $79.33
Worked example 2: multiple rate bands
Scenario: $10,000 in past economic loss, accrued from 1 November 2019 to 29 February 2020.
This period spans two semi-annual rate bands:
| Band | Period | RBA Rate | Pre-Judgment Rate | Overlap Days |
|---|---|---|---|---|
| H2 2019 | Jul–Dec 2019 | 1.25% | 5.25% | 61 days (1 Nov – 31 Dec) |
| H1 2020 | Jan–Jun 2020 | 0.75% | 4.75% | 60 days (1 Jan – 29 Feb) |
Band 1:
Interest = ($10,000 × 5.25 ÷ 100) × (61 ÷ 365.25) = $87.68
Band 2:
Interest = ($10,000 × 4.75 ÷ 100) × (60 ÷ 365.25) = $78.03
Total interest: $87.68 + $78.03 = $165.71
Weighted average rate across the period:
((5.25% × 61) + (4.75% × 60)) ÷ 121 = 5.00%
Worked example 3: large principal, modern rates
Scenario: $500,000 in past economic loss, 1 January 2024 to 1 January 2026.
This period spans multiple rate changes in the post-2022 granular era:
| Band | RBA Rate | Pre-Judgment Rate | Overlap Days |
|---|---|---|---|
| 8 Nov 2023 – 18 Feb 2025 | 4.35% | 8.35% | 414 days |
| 19 Feb 2025 – 20 May 2025 | 4.10% | 8.10% | 91 days |
| 21 May 2025 – 1 Jan 2026 | 3.85% | 7.85% | 225 days |
Band 1: ($500,000 × 8.35 ÷ 100) × (414 ÷ 365.25) = $47,318.28
Band 2: ($500,000 × 8.10 ÷ 100) × (91 ÷ 365.25) = $10,089.35
Band 3: ($500,000 × 7.85 ÷ 100) × (225 ÷ 365.25) = $24,170.91
Total interest: $81,578.54
On a $500,000 principal over two years, that is a material component of the claim — roughly 16% of the principal amount. Getting this wrong, or omitting it, is a significant oversight.
Current RBA cash rates
As at March 2026, the recent rate history is:
| Effective Date | RBA Cash Rate | Pre-Judgment Rate (RBA + 4%) |
|---|---|---|
| 21 May 2025 | 3.85% | 7.85% |
| 19 Feb 2025 | 4.10% | 8.10% |
| 8 Nov 2023 | 4.35% | 8.35% |
| 7 Jun 2023 | 4.10% | 8.10% |
| 3 May 2023 | 3.85% | 7.85% |
| 8 Mar 2023 | 3.60% | 7.60% |
| 8 Feb 2023 | 3.35% | 7.35% |
| 7 Dec 2022 | 3.10% | 7.10% |
| 2 Nov 2022 | 2.85% | 6.85% |
| 5 Oct 2022 | 2.60% | 6.60% |
The RBA publishes the cash rate at rba.gov.au/statistics/cash-rate. Historical rates going back to 1976 are maintained in the NSW Supreme Court Practice Note SC Gen 16 schedule.
Common errors
1. Using a single rate for the entire period. If the RBA cash rate changed during the claim period, you must split the calculation. Using the current rate for a claim that accrued in 2020 will overstate the interest.
2. Applying the economic loss rate to non-economic loss. Per Gogic, non-economic loss should attract a lower rate. Applying RBA + 4% to general damages is technically incorrect and may be challenged.
3. Wrong day counts. Off-by-one errors in counting days between dates are common. Be precise about whether your start and end dates are inclusive or exclusive. The convention is to include the start date and exclude the end date.
4. Forgetting leap years. Using 365 instead of 365.25 as the denominator produces a small but unnecessary error. Over a long period and large principal, it adds up.
5. Claiming interest on future losses. Pre-judgment interest compensates for past deprivation. Future losses are discounted to present value using the prescribed discount rate — they do not attract pre-judgment interest.
Key cases
| Case | Citation | Principle |
|---|---|---|
| MBP (SA) Pty Ltd v Gogic | [1991] HCA 3; (1991) 171 CLR 657 | Non-economic loss interest should be at a lower rate than economic loss; endorsed 4% fixed rate |
| Batchelor v Burke | [1981] HCA 30; (1981) 148 CLR 448 | Purpose of pre-judgment interest is to compensate for being kept out of money |
| Todorovic v Waller | [1981] HCA 72; (1981) 150 CLR 402 | Framework for assessing damages for personal injury |
| Wheeler v Page | (1982) 31 SASR 1 | Origin of the 4% fixed rate for non-economic loss |
| Cullen v Trappell | [1980] HCA 10; (1980) 146 CLR 1 | Overruled by Gogic on the rate applicable to non-economic loss |
Frequently asked questions
Is pre-judgment interest mandatory in NSW?
No. Section 100 CPA is permissive — the court "may" include interest. However, it is routinely awarded on past economic losses and is expected to be claimed in any properly prepared schedule of damages.
Can I claim compound interest?
No. Section 100(3)(a) expressly prohibits interest on interest.
What rate do I use for non-economic loss?
A rate lower than RBA + 4%. Following Gogic, the conventional rate is around 2%, though some practitioners claim 4% flat (the rate endorsed in Gogic via Wheeler v Page). Check recent decisions in your specific area of practice for current judicial treatment.
What happens if the defendant made a settlement offer?
Under s 100(4)-(5), if the defendant offered an "appropriate settlement sum" — one where the judgment doesn't exceed the offer by more than 10% — the court may decline to award interest from the date that offer was made. This is a significant tactical consideration.
Where do I find historical RBA cash rates?
The RBA publishes daily cash rate data at rba.gov.au/statistics/tables. Download the "Interest Rates and Yields — Money Market — Daily — F1" spreadsheet. The relevant rate is the last published cash rate before the start of each semi-annual period (pre-2022) or each rate change date (post-2022).
Automate the calculation
The manual process works, but it is time-consuming — particularly for claims spanning the post-2022 period where the RBA changed rates twelve times in eighteen months. Each rate change creates a new calculation band, and the arithmetic is tedious to do by hand.
Claim Cal automates pre-judgment interest calculations using historical RBA cash rates going back to 1976. Enter the principal amount, the start and end dates, and it splits the calculation across every rate change automatically. It also handles the distinction between economic and non-economic loss rates.
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