Costs and Interest in Small Claims Court

The dollar amount at the centre of a dispute is rarely the whole financial picture. Costs and interest can meaningfully change what a winning party actually receives — or what a losing party actually owes — and understanding both helps you evaluate a case realistically from the start.

Two separate things: costs and interest

"Costs" and "interest" are often mentioned together, but they're different concepts. Costs relate to expenses connected to running the case itself — things like filing fees. Interest relates to the time value of money owed — compensation for the period during which you were kept out of money you were entitled to.

What "costs" generally means

In Small Claims Court, "costs" generally refers to certain expenses connected to bringing or defending a case — most commonly, fees paid to the court. A winning party may be able to recover some of these costs from the losing party, though this isn't automatic or guaranteed, and the scope of what's recoverable is generally limited compared to higher courts.

How a court generally decides costs

A court generally has discretion over whether to award costs and how much, considering factors like the outcome of the case, how each party conducted themselves during the process, and whether either side made or rejected a reasonable settlement offer along the way. This discretion is exactly why conducting your case reasonably — and keeping records of your costs as they're incurred — matters even before a case concludes.

How offers to settle can affect costs

One of the more significant ways costs get decided involves formal offers to settle — see offers to settle. Generally, rejecting a reasonable formal offer and then achieving a less favourable result at trial can affect how a court approaches costs, which is exactly the incentive the system is designed to create.

Prejudgment interest

Prejudgment interest compensates you for the period between when you were owed money and when a judgment is actually issued — recognizing that money owed to you today is worth more than the same amount owed to you years from now. See the prejudgment interest calculator for an estimate, and make sure you've included a claim for this interest, not just the underlying amount, when you prepare your case.

Postjudgment interest

Postjudgment interest applies for the period after a judgment is issued but before it's actually paid, recognizing that a judgment that sits unpaid continues to represent a real cost to the person who's owed the money. See the postjudgment interest calculator, particularly relevant if you're pursuing judgment enforcement against a judgment that remains outstanding.

Claiming both costs and interest

When you prepare a claim, think beyond the underlying amount owed — consider whether you're also claiming prejudgment interest and, where applicable, costs. Leaving these off your claim from the outset can mean missing out on amounts you may otherwise have been entitled to.

If you're the one who may have to pay

If you're a defendant facing a claim, factor potential costs and interest into your own evaluation of the case, not just the headline amount being claimed. A seemingly modest underlying claim can grow meaningfully once interest that's accrued over time, and potential costs, are added — this is part of what makes evaluating settlement offers honestly, as discussed in offers to settle, so important.

Common mistakes

• Forgetting to claim prejudgment interest as part of the original claim.
• Assuming costs will automatically cover a lawyer's or paralegal's full fee, when they're generally more limited than that.
• Not tracking postjudgment interest on a judgment that remains unpaid.
• Rejecting a reasonable offer without considering its cost implications if the case ultimately turns out less favourably.

Frequently asked questions