Metropolitan Trust v. Morenish Land Developments Ltd., [1981] 1 SCR 171

Supreme Court of Canada

Metropolitan Trust v. Morenish Land Developments Ltd., [1981] 1 S.C.R. 171

Date: 1981-01-27

The Metropolitan Trust Company, Canada Grundstuecksentwicklungen Lehndorff Vermoegensverwaltung G.m.b.H. & Co., W.B. Sullivan Construction Limited and R.J. Prusac (Plaintiffs) Appellants;

and

Morenish Land Developments Limited (Defendant) Respondent.

1980: November 5; 1981: January 27.

Present: Laskin C.J. and Martland, Ritchie, Estey and Mclntyre JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Mortgages—Interest—Calculation—Payment clause providing for interest at stated rate per annum and for interest due and payable monthly.

The issue in this appeal is the proper calculation of interest payable under a mortgage. The payment clause made no provision for the compounding of interest except after default. There was no reference to the interval for the calculation of interest and no explanation as to whether interest should be calculated in advance or not in advance. Interest was to be payable monthly at a rate of thirteen per cent per annum. The mortgage contained no further terms relating to interest calculation.

The mortgagee’s interpretation assumed that the mortgage provided for interest at the rate of thirteen per cent per annum calculated yearly and payable monthly. The mortgagor, on the other hand, claimed that the mortgagee was to receive by way of interest at the end of the year a sum equal to thirteen per cent per annum on the principal sum and relied on the “re‑investment principle”.

At first instance, the appellant-mortgagee’s position was adopted but due to conflicting jurisprudence the case was referred to the Ontario Court of Appeal which reversed the lower court, finding in favour of the respondent-mortgagor.

Held: The appeal should be allowed.

The interest clause prescribed a nominal rate of interest unqualified by any provision requiring the lender to reinvest interest as and when paid during an interest calculation period. Interest received during the year was not, by the terms of the contract, required to be productively employed for the remainder of the year, and hence

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the rate was a nominal or pure rate of interest to be used in calculating the amount to be paid to the borrower. The “deemed reinvestment” principle was not applicable even had the mortgage provided that interest be computed and paid monthly. This doctrine was not established in the mortgage and was not imported as a rule of law. The interpretation of this precise financial arrangement rested squarely on the language chosen by the parties.

Re Fobasco Ltd. and Abrams et al. (1977), 13 O.R. (2d) 342; Standard Reliance Mortgage Corporation v. Stubbs (1917), 55 S.C.R. 422, considered. In re Rogers’ Trusts (1860), 1 DR. & SM. 338; applied; Re Miglinn and Castleholm Construction Ltd. (1974), 5 O.R. (2d) 444; Re Tilson et al. and Dougherty (1975), 8 O.R. (2d) 203; Hudolin v. Premier Trust Co. (1977), 17 O.R. (2d) 257, distinguished.

APPEAL from a decision of the Court of Appeal for Ontario[1], on a motion referred by Dupont J. Appeal allowed.

S.G. Fisher, Q.C., and W.G. Horton, for the appellants.

R.J. Arcand and J.A. Ballard, for the respondent.

The judgment of the Court was delivered by

ESTEY J.—A practical question has arisen between the parties as to how much is owing for the discharge of a mortgage, the repayment clause of which is as follows:

Provided this Mortgage to be Void upon payment of EIGHT MILLION TWO HUNDRED THOUSAND ($8,200,000.00)—Dollars of lawful money of Canada with interest at nineteen (19%) per centum per annum as follows:

the said principal sum of $8,200,000.00 shall become due and payable on the 16th day of August 1977 and interest monthly at the said rate as well after as before maturity and both before and after default on such portion of the principal as remains from time to time unpaid on the 16th days of each and every month in each year until the principal is fully paid; the first payment of interest to be computed from the 16th day of August, 1974 upon the whole amount of principal hereby secured, to become due and payable on the 16th day of September, next 1974.

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AND it is hereby agreed that in case default shall be made in payment of any sum to become due for interest at any time appointed for payment thereof as aforesaid, compound interest shall be payable and the sum in arrear for interest from time to time, as well after as before maturity, shall bear interest at the rate aforesaid, and in case the interest and compound interest are not paid in one (1) month from the time of default a rest shall be made, and compound interest at the rate aforesaid shall be payable on the aggregate amount then due, as well after as before maturity, and so on from time to time, and all such interest and compound interest shall be a charge upon the said lands.

(The underlined portions represent what the parties filled in on a printed form.)

The issue is concerned solely with the amount of interest owing. Since the parties have agreed upon all mathematical considerations the issue narrows down to the proper interpretation of those parts of the payment clause relating to interest. For completeness, reference should be made to a further clause in the mortgage which revealed that the mortgagor had prepaid six per cent of the interest due during the term of the mortgage and “accordingly interest is only chargeable in accordance with this mortgage at the rate of thirteen per cent per annum”.

If one reduces the repayment clause to only those words dealing with the calculation and payment of interest, it reads as follows:

…with interest at nineteen (19%) per centum per annum …payable …monthly at the said rate as well after as before maturity and both before and after default on such portion of the principal as remains from time to time unpaid on the 16th days of each and every month in each year until the principal is fully paid; the first payment of interest to be computed from the 16th day of August, 1974 upon the whole amount of principal hereby secured, to become due and payable on the 16th day of September, next 1974.

It is to be noted that:

(a) no provision is made in the payment clause for the compounding of interest although such provision is made in the portion dealing with the calculation and payment of interest in the event of default;

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(b) there is no reference to the interval for the calculation of interest, either half yearly, quarterly, monthly, or at any other periodic interval;

(c) there is no explanation as to whether the interest shall be calculated in advance or not in advance;

(d) while the first payment of interest is described as being computed from a specific date and payable on a specific date one month later, no direction is made as to how subsequent payments of interest are to be computed except that interest shall become due and payable on the unpaid principal from time to time outstanding on the 16th days of each and every month.

The term of the mortgage ran from the 16th day of August, 1974 until the 16th day of August, 1977 when the entire principal sum secured fell due and became payable. The parties agreed that during the term of the mortgage the method of calculation of interest used by the mortgagee was as follows:

The subject mortgage calls for interest monthly at the rate of 19 per cent per annum. Six per cent interest on the full amount advanced and secured by the mortgage for the full term of the mortgage was paid in advance. No further calculations were made with respect to the interest paid in advance and for the purpose of all further calculations of interest the annual rate of 13 per cent was applied.

In calculating the amount due for interest on each monthly interest payment date the following calculation was made:

The principal balance outstanding on the immediately preceding interest payment date was multiplied by 13 and divided by 100 and the result was multiplied by the number of days between the immediately preceding interest payment date and interest payment date in question and the resulting figure was divided by the number of days in the year.

In many instances payments were received in return for partial discharges between normal interest payment dates. In such cases the payments were applied first in reduction of interest accrued on the previous principal balance on a per diem basis to the date of the payment. The balance of the payment was then applied in reduction of the principal balance outstanding under the mortgage. Interest on the new principal

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balance would then be calculated on the same basis for the balance of the normal interest payment period to determine the amount of interest owing on the next normal interest payment date.

(Excerpted from that part of the appellants’ factum with which the respondent agreed.)

The mortgagee, by this method of calculation, interprets the mortgage to say that interest shall be computed at the rate of thirteen per cent per annum and payable monthly on the 16th day of each month on the principal balance outstanding during that month. This interpretation assumes that the mortgage provides for interest at the rate of thirteen per cent per annum calculated yearly and payable monthly on the 16th day of each and every month on the balance outstanding during the monthly period just completed. The mortgagor, on the other hand, says that the overriding consideration is that the mortgagee shall have received by way of interest at the end of the term of the mortgage a sum equal to thirteen per cent per annum on the principal sum from time to time outstanding. Interest under the mortgage was to be calculated annually and paid monthly rather than calculated monthly and paid monthly. The mortgagor claimed that the amount required to discharge the mortgage on August 16, 1977 was $1,642,454.40 based upon the fact that interest had been erroneously calculated monthly and paid monthly. In taking this position, the mortgagor relies upon the “re-investment principle”.

The mortgage includes a provision entitling the mortgagor to prepay the principal sum in whole or in part. It is difficult to find anything in the mortgagor’s proposed interpretation of the terms to cover the computation of interest on a fluctuating principal outstanding. If the calculation were made at the beginning of the year, the mortgagee would be overcompensated; and if such calculation were made at the end of the year, the mortgagee would be undercompensated; but if the calculation is made at various times in the year by reference to the fluctuating principal outstanding, then the mortgagor’s interpretation of the interest clause is inadequate to the task unless the further assumption is made that there will be an interest adjustment at the end of the year to bring the net cost of

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money during the year to an amount which precisely equals thirteen per cent per annum on the various amounts from time to time outstanding. There appears to be no evidence in the record (unless it be in two illegible computer print-outs to which reference was not made during argument before this Court) which explains how, or if at all, this is possible without a further articulation of the interest calculation.

The parties are agreed that the difference between the mortgagee’s proposed method of calculation of interest and that proposed by the mortgagor is $167,265.48.

The issue is narrowed down by the parties’ agreement that we are not here concerned with a mortgage under which the payments of principal and interest are blended. Accordingly, we are not directly concerned with ss. 6, 7 and 8 of the Interest Act, R.S.C. 1970, c. 1-18, since s. 2 of that Act states as follows:

2. Except as otherwise provided by this or by any other Act of the Parliament of Canada, any person may stipulate for, allow and exact, on any contract or agreement whatever, any rate of interest or discount that is agreed upon.

The parties have made no reference to any other Act of Parliament relating to the issue. We are therefore left for the settlement of this dispute with the terms of the mortgage itself. The problem is a simple contest between the opening specification that interest payable shall be at nineteen per cent per annum without any reference to compounding or computation and payment of interest, and the second reference to interest which makes it payable monthly without any reference to “not in advance”. Dupont J., hearing the application in the first instance in Weekly Court, concluded that the appellant-mortgagee’s position was “the more convincing in the light of existing case law”, but as that conclusion was contrary to that reached with reference to an identical interest payment clause in a mortgage by a fellow member of the High Court

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of Ontario in Re Fobasco Ltd. and Abrams et al.[2], he elected to refer the case to the Court of Appeal of Ontario pursuant to the provisions of s. 35 of The Judicature Act, R.S.O. 1970, c. 228. Arnup J.A., on behalf of the Court, after a thorough review of the authorities, came to the conclusion that the interpretation placed upon the interest payment clause in the mortgage by the respondent-mortgagor was correct and directed the payment out of moneys in court to the respondent-mortgagor accordingly.

There is an amazing paucity of discussion in the courts as to the meaning of the common commercial expression “per centum per annum”. Both counsel relied upon the judgment of Anglin J. in this Court in Standard Reliance Mortgage Corporation v. Stubbs[3]. In the mortgage then before the Court the mortgagor was required to pay a specified constant sum monthly, which included both interest and principal, and thereafter the mortgage stipulated that the rate of interest chargeable on the principal was “ten per cent per annum”. The Court found this to be a blended mortgage and consequently applied the Interest Act, supra. Nonetheless, the courts addressing that issue, in those proceedings, were required to interpret the expression “ten per cent per annum” where it appeared without any qualification concerning compounding or payment in advance or not in advance. By reason of the blended monthly payment, however, the mortgage did provide in effect for interest payable monthly, calculated at the rate of ten per cent per annum. Some of the discussion, particularly at p. 439 of the report, appears to deal with the question of interest under mortgages generally. Anglin J. observed:

Ten per cent per annum computed monthly is a rate materially higher than ten per cent per annum computed yearly.

This, of course, is of no assistance in answering the question as to what interest is payable under a given mortgage provision. Later on the same page it is said:

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If the rate be stated to be say 10% per annum, although this is not an explicit statement that the interest is to be computed yearly, such a computation is implied, and I should regard it as a sufficient statement to that effect and as precluding the computation of interest on any other than a yearly basis.

This statement is no doubt satisfactory so far as it goes, but it is not, in its terms, broad enough to embrace the present situation where the mortgagor can prepay the principal secured in whole or in part, possibly on several occasions in a single year. It must also be considered in the context of that which follows later in the same paragraph:

Unless the contrary is expressly stipulated, I would read a reservation of interest at 10% per annum as precluding computation of interest in advance. That the interest in such a case is to be computed “not in advance” is, I think, the reasonable implication from the stipulation. [Underlining added]

This, of course, is an interpretation of the words “10% per annum” when the interest clause in question contained no further direction as to the payment of interest and the words “per annum” were nowhere qualified. The statement in the mortgage in fact was:

…the rate of interest chargeable thereon… is 10 per cent per annum as well before as after default…

His Lordship found this wording to be a “sufficient statement of the rate of interest that is to be calculated yearly and not in advance”. In this appeal, of course, the words “per cent per annum” are followed by an explicit direction as to how the interest shall be paid and the issue therefore before us is quite different, namely what inference, if any, is to be drawn from the express provision for monthly payment of interest?

The argument presented to this Court revolved around the application of what is shortly referred to as “the reinvestment principle”. It has long been said, as was reported in Standard Reliance, supra, that interest at the rate of ten per cent per annum calculated monthly is more than ten per cent per annum calculated yearly. This is so only if one assumes the recipient of the monthly payment puts the money to work during the balance of the year

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and consequently accumulates interest on interest. Such is not the case if x per cent per annum is payable annually. If one does not make the assumption that the interest is reinvested during the balance of the year then ten per cent per annum is the same whether paid annually or monthly. Hence the issue here really involves the application, as a quasi-rule of law, of the reinvestment principle.

The settlement of this question is not made easier by the realization that the investment world, according to the material put before the courts by the appellant, has for some time carried on business on the basis that the reinvestment principle does not operate unless expressly invoked by the terms of the mortgage.

Arnup J.A., speaking for the court below, concluded:

…that the mortgage is to be read as if the provision for interest were for interest at 13% per annum calculated yearly not in advance, but payable monthly.

He thereupon applied the so-called “reinvestment principle” taking care to point out that such does not involve a rule of law:

Rather it is a part of the exercise of logic by which, in addition to the persuasive value of the mathematics concerned, one can be satisfied that a mortgagee who is entitled to receive x% per annum calculated yearly is not being cheated if at the end of the first month he receives less than 1/12 x, and so on throughout the year. By the use of the proper interest factor, and by applying the logic of the theory of reinvestment of the proceeds of interest payments made from time to time, the mortgagee at the end of 12 months will end up with precisely what his contract entitles him to, namely, x% on the principal advanced and outstanding, calculated yearly, not in advance.

The problem must, of course, be approached as fundamentally one of contract construction. Where the term “per annum” is unqualified by other expressions in the mortgage, the cases have consistently found that it means calculated and payable per annum. However, it also must be borne in mind that interest, however payable, accrues on a per diem basis, as was stated by the

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Vice Chancellor in In re Rogers’ Trusts[4], at p. 341:

In the present case, the interest payable on the debentures, though payable half-yearly, is not an entirety, but is an accumulation of each day’s interest, which accrues de die in diem; and which, though not presently payable, is still due.

The Court observed that while the instrument in question was a debenture it stood “in the same position as a mortgage”.

Here the mortgage does not stipulate that interest shall be calculated in advance or not in advance, nor does it stipulate expressly that interest shall be calculated annually or monthly. One question therefore which must be answered is whether the expression “nineteen per cent per annum” controls or dominates the expression “payable monthly… on such portion of principal as remains from time to time unpaid…”. Since the Interest Act, supra, does not apply, we are not assisted by the requirement in s. 6 of the Act that a mortgage state the rate of interest chargeable calculated yearly or half yearly not in advance. I therefore find the cases dealing with blended payments which import the terms of the Interest Act, supra, to be of little or no assistance construing the contractual provision set out in this mortgage. If, for example, the terms of the contract, given their plain meaning, have the effect of establishing a higher real rate of return on the principal sum, the result is not invalidated because of the difference between the nominal rate and the effective rate. This is of vital concern under the Interest Act but otherwise wholly dependent on the terms of the mortgage.

Furthermore, we are not concerned with considerations relating to compound interest, or even the distinction between interest in advance or not in advance, as none of these expressions are employed in the mortgage. Similarly, the text by H. Woodard, Canadian Mortgages, 1959, is quoted by Arnup J.A. and by other courts where interest computation has come up for examination, but it is of little or no assistance in resolving the

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problems here. It must be recognized at once that the learned author’s observations on expressions frequently occurring in mortgages are predicated on the proposition that:

…all interest mathematics are based on the theory that the lender re-invests the interest received from time to time, at the same rate [as specified in the mortgage].

Aside from the fact that there is no such rule or principle of law (and Arnup J.A. indeed has pointed this out), the discussion of the reinvestment theory, in the portion of the text quoted by the Court of Appeal, is directed to the circumstance arising where interest is payable more frequently than once in each compounding or computation interval. Here we are not concerned with compound interest but rather with an agreed procedure for the payment of interest as expressed in the mortgage. There is nothing in the mortgage contract establishing a deemed reinvestment mechanism and, as already stated, the doctrine is not imported as a principle of law.

From a practical viewpoint, the assumption that the lender will reinvest interest payments when received at the rate specified in the mortgage is tantamount to establishing, without express agreement between the parties, a mythical interest fund owned by the mortgagee (since the interest has been paid to him under the contract by the mortgagor) but whose mythical earnings are credited to the mortgagor (because they reduce his interest liability) without any right in ownership, statutory provision, or term of contract to support the practice. Furthermore, the assumed reinvestment proceeds are not subjected to any charge or credit for the cost of reinvestment incurred by the mortgagee, his bad debts in the lending business, fluctuating interest rates, and indeed, are calculated without any reference to the capacity or ability of the mortgagee in fact to reinvest the proceeds.

A different situation may well arise where the mortgage specifically provides for a calculation period different from the payment period. We are not here concerned with any such conflict; nor are we concerned with the situation where principal payments are made after the date upon which

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interest is calculated and before the date on which interest is payable.

The exercise of prepayment privileges is another matter. Unless, as in the Rogers’ case, supra, interest is taken to accrue daily, the necessary flexibility to accommodate intermittent prepayments by the mortgagor would not be present. Here the mortgage specifies that interest shall be payable on such portion of the principal as remains from time to time unpaid. This terminology does not conflict with the presumption in Rogers, supra. On the other hand, if the mortgagor is correct and interest is calculated at the end of the year on the principal then outstanding, it would not be possible (without additional terms in the contract) to give credit for prepayment of principal during the year in respect of which interest has already been paid monthly. If it is possible to make such a calculation when a sequence of prepayments occurs within a one-year period, such would certainly entail a considerable calculation, probably in practice beyond the competence of all but a tiny minority of mortgagors.

Mention was made above of a reference late in the mortgage that:

…accordingly interest is only chargeable in accordance with this mortgage at the rate of thirteen per cent (13%) per annum;

This is no more than a restatement of the nominal rate of interest applicable in accordance with the other terms of the mortgage and neither adds to nor subtracts from the claim made by the mortgagee.

There have been a number of lower court decisions in Ontario as well as elsewhere concerning the computation and payment of interest, and the Court of Appeal, in examining those authorities, applied the principles derived mainly from three of them: Re Miglinn and Castleholm Construction Ltd.[5]; Re Tilson et al. and Dougherty[6]; and Re Fobasco Ltd. and Abrams et al, supra. In the cases of Miglinn and Tilson, supra, the courts

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were concerned primarily with the application of the Interest Act, supra, to blended payments of principal and interest made under a mortgage, whereas in Fobasco, supra, the repayment provision is identical, word for word, to that in the mortgage now before us. In the Divisional Court decision in Tilson, supra, Goodman J., speaking for the court, introduced the concept of reinvestment of interest as received from time to time at a deemed rate of interest equal to that stipulated in the mortgage. Fobasco, supra, applied this concept to the construction of the clause identical to the present one. Keith J. concluded:

…that when a specific rate of interest is contracted for, compounded annually but payable monthly, not in advance, the monthly payments must not be such as to result in a higher yield to the mortgagee than that stipulated for. (p. 345)

This conclusion is reached after reference to the Tilson case, supra, and to Canadian Mortgages by Woodard, supra. The reference to compounded interest may be unintended as there is no reference to compounding in the repayment clause of the mortgage but more likely is the result of a concession made by counsel in that case that the reinvestment principle is applicable to mortgage interest but only where payments are blended and where compounding is to be effective at longer than monthly intervals. This, of course, is not the case here. Cases such as Tilson and Miglinn, and indeed Standard Reliance, supra, dealing with the problem of blended payments, are helpful only where terms common to mortgages without blended payments are before the court.

An analysis of these cases brings us back to the applicability or otherwise of the concept or principle of reinvestment. We are concerned here with an interest clause which prescribes a nominal rate of interest, that is to say a rate of interest which is unqualified by any provision requiring the lender to reinvest interest as and when paid during an interest calculation period. Interest received during a year is not, by the terms of the contract, required

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to be productively employed for the remainder of the year, and hence the rate is a nominal or pure rate of interest to be used in calculating the amount to be paid by the borrower. When one is considering a mortgage repayment clause specifying blended payments of principal and interest to which s. 6 of the Interest Act, supra, applies, the statute requires a statement of “the rate of interest chargeable thereon calculated yearly or half yearly, not in advance”. The issue is different when the Interest Act, supra, does not apply because the parties are free to reach any agreement with respect to the payment of interest. The issue here is simply, what interest is required by the terms of the contract? In Miglinn, supra, and other cases in the Ontario courts, including Hudolin v. Premier Trust Co.[7], the courts were concerned with blended payments and the application of s. 6, and in the latter case with a repayment clause substantially different from that before us now. In Hudolin, supra, the interpretation of the clause was affected by the consideration that payments during the interest computation interval were applied against principal and when the mortgagor was not credited with such payments the nominal rate of interest was not properly applied; or put another way, interest paid was not that which the application of the nominal rate required. The interest stipulation there further proscribed the charging of interest in advance.

During the course of argument a question was raised whether the deemed reinvestment principle should apply even if the mortgage provided that interest was to be computed and payable monthly but at an annual rate. Counsel for the respondent rejected this position and agreed with the view of counsel for the appellants that if the mortgage provided that interest should be calculated and payable monthly at an annual rate the mortgagee should succeed.

Although the line of reasoning which commends itself to me is that based upon the interpretation of a mortgage contract reached by parties free from

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any strictures of the Interest Act, supra, it may be that in the process one is in reality reaching a policy decision on the appropriate interpretation of the expressions “per cent per annum” and “due and payable” all occurring in the absence of any provision forbidding the calculation of interest “not in advance”. Whatever policy view one might take, we are here concerned with a rather precise financial arrangement entered into by contract in the form of a mortgage and I found my conclusion as to its interpretation squarely on the language chosen by the parties and giving it a meaning unvarnished by any mathematical practices and theories, and accordingly, I must, with the greatest respect, reach a conclusion quite different from that of the Court of Appeal.

Applying the foregoing principles and conclusions to the mortgage at hand the appellant, in my view, is entitled under the wording adopted in the mortgage by the parties to recover interest at the rate of thirteen per cent per annum computed monthly on the 16th day of each month during the term of the mortgage, with credit to the mortgagor for such prepayment privileges as have been exercised, and that the mortgagee-appellant may do so without the requirement of crediting the mortgagor-respondent with any deemed interest accumulation in respect of any such monthly payments.

These proceedings originated by a Notice of Motion purporting to be made under s. 11 of The Mortgages Act, R.S.O. 1970, c. 279, and Rule 612 of the Rules of Court, wherein the respondent-mortgagor sought a discharge of the mortgage on payment into court of a specified sum of money and for such “further order of this Court deeming and declaring the rights of the parties under the mortgage”. The respondent in its statement of fact and law filed in response to the application asked (amongst other things) that the Court:

(ii) direct that out of the monies standing in Court to the credit of this action there be paid out to the mortgagee:

(a) the sum of $168,195.04;

(b) interest thereon at the rate of 13% per annum from August 16, 1977;

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(c) the mortgagee’s costs of this application on a solicitor and client basis.

(iii) direct that to the extent that there is a balance of monies in Court after payment out as aforesaid that such balance be paid out to the applicant;

(iv) adjudge, order and direct that to the extent there are not sufficient monies in Court to make payment out as aforesaid in paragraph (ii) above, that the mortgagee do recover the deficiency from the applicant and from W.B. Sullivan Construction Limited and R.J. Prusac.

While the Notice of Motion and the orders issued in the courts below all make reference to subs. 8 of s. 11 no doubt the reference was intended to be to subss. 3 and 4. Section 11, however, nowhere authorizes the Court to make an order for the payment of a deficiency by the mortgagor to the mortgagee when the moneys in court are less than the moneys found to be owing. I proceed on the basis that, since this was never the subject of protest or argument either here or below so far as the record reveals, the parties are agreed that an order in the nature of a declaration as to the moneys owing will suffice for the final disposition of the issue.

As the parties have agreed here and throughout these proceedings that if the mortgagee’s interpretation of the mortgage be correct, the respondent-mortgagor owes to the appellant‑mortgagee “the sum of $168,195.04 plus interest thereon at thirteen per cent per annum from the 16th of August, 1977”; and as I have concluded for reasons aforesaid that the appellant-mortgagee was in law correct, the order of the Court of Appeal should be set aside and an order made as sought by the appellant in its statement before the Court of first instance as set out above; with costs to the appellant throughout.

Lest there be any doubt about the meaning of the agreed interest of thirteen per cent mentioned above, it shall be thirteen per cent per annum simple interest from August 16, 1977, until paid.

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Appeal allowed with costs

Solicitors for the appellants: McMillan, Binch, Toronto.

Solicitors for the respondent: McLean, Lyons & Kerr, Toronto.