Interest and Costs on Judgments
A judgment is often worth more than the bare debt — interest and costs can be added — but the rules on what you can recover are specific.
What you'll learn
- Understand when interest can be added to a debt or judgment
- Distinguish contractual interest from court-awarded interest
- Recognise how costs may be recovered
- Appreciate that recovery is bounded by rules and discretion
6 min read
Two kinds of interest
Interest on a debt generally comes from one of two sources. The first is contractual: if your terms of trade provide for interest on overdue amounts, you may be able to claim it as part of the debt. The second is court-related: courts can award interest on judgments, both up to the date of judgment and on the judgment amount afterward. The two operate differently, and you should be clear about which you are relying on.
Recovering costs
Successful litigants can often recover some of their legal costs, but rarely all of them. Costs are usually subject to the court's discretion and to scales or assessment, and the amount actually recovered may be less than what you spent. The general expectation that a losing party contributes to the winner's costs is an important factor in deciding whether to litigate — but it is not a guarantee of full reimbursement.
Limits and discretion
What you can recover by way of interest and costs is bounded. Rates, methods of calculation, and the approach to costs vary by jurisdiction and over time, and much is subject to judicial discretion. You cannot recover more than the rules allow, and inflated or unsupported claims for interest or costs can be reduced. Clear terms of trade and good records make any claim for interest and costs easier to support.
A note on advice
This is general information only and not legal advice. Entitlements to interest and costs, the applicable rates, and the way they are assessed differ across Australian jurisdictions and change over time. For advice on what you can claim in your matter, consult a lawyer. To include interest where your terms allow, you can prepare a demand with the free Letter of Demand Generator.
Key takeaways
- Interest may be contractual or awarded by a court.
- Costs are often recoverable in part, not in full.
- Recovery is subject to rules and the court's discretion.
- Clear terms of trade and records support any claim.
Frequently asked questions
Can I always add interest to an overdue invoice?
Generally only if your terms of trade provide for it, or once a court awards it. This is general information, not legal advice.
Will I get all my legal costs back if I win?
Usually only a portion; costs are subject to discretion and assessment and rarely fully reimbursed.
Does interest run after judgment?
Courts can award interest on judgment amounts, but rates and rules vary by jurisdiction and over time.
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