Nationally harmonised court interest rates
As of 1 July 2010, the manner in which interest is calculated in court proceedings, both before and after judgment, has changed. The changes are of wide significance and make calculating pre and post judgement interest more complex.
Court interest rates apply in respect of most judgments and are called up in and adopted by many many statutes including the Building and Construction Industry Security of Payments Act (NSW) 1999, the Commercial Arbitration Act (1984) and the Retail Leases Act (1994), just to name a few.
The Uniform Civil Procedure Rules with Amendments no. 32 and 34 to the Civil Procedure Act 2005 have disposed with intermittent announcements of the applicable rates and replaced them with a mechanism more attuned to the market place, which is intended to apply throughout the country.
Post-judgment interest
From 1 January to 30 June in any year, the rate applicable is that 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
From 1 July to 31 December, the applicable rate is that 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced.1
The changes do not have retrospective effect. So interest calculations for the period up to and including 30 June 2010 should be calculated with reference to the rates in Schedule 5 of the Civil Procedure Act.
Pre-judgment interest
Interest in respect of the period before judgment is delivered is to be calculated as follows:
- From 1 January to 30 June in any year, the applicable rate is that 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced
- From 1 July to 31 December in any year, the applicable rate is that 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
Where a contractual or statutory rate of interest does not apply, in liquidated statement of claims filed after 1 July 2010, the interest calculation for the entire pre-judgment period should be based on the new harmonised formula for pre-judgment interest.2
The new regime brings to an end to the arbitrary list of rates in Schedule 5, other than for post-judgment interest up to 30 June 2010. Whereas rates rarely altered under the old regime, the new regime will strike a new rate every six months.
Calculating pre and post judgment interest has just become a more complex proposition.
1. Uniform Civil Procedure Rule 36.7(1) – prescribed rate at which interest is payable under section 101 of the Civil Procedure Act 2005:
2. Uniform Civil Procedure Rule 6.12(8)
For more information, please contact:
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Sydney |
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Robert Riddell |
t (02) 9931 4940 |
