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April 15, 1987 |
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| Re 459745 Ontario Ltd. and Wideview Holdings Ltd. et al. |
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59 O.R. (2d) 361
[1987] O.J. No. 359
Also reported at 37 D.L.R. (4th) 765 |
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ONTARIO
HIGH COURT OF JUSTICE
REID J. |
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Larry J. Levine, Q.C., for applicant.
Maxwell M. Steidman, Q.C., for respondents. |
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| Mortgages — Interest — Penalty — Mortgage requiring mortgagor to pay three months' interest on default — Requirement in nature of bonus or penalty and void — Interest Act, R.S.C. 1970, c. I-18, s. 8. |
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| The applicant mortgaged certain lands to the respondents. When the mortgage matured, the applicant did not repay it, but sought refinancing. The respondents then delivered a notice of sale, claiming three months' interest payable on default in accordance with the term in the mortgage. On consent, the amount due under the notice, including the three months' interest, was paid into court and the sale proceedings stayed pending the outcome of the application for an order declaring that the three months' interest claim was void and for payment out of the three months' interest. |
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| Held, the application should be granted. |
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| The clause requiring three months' interest on default amounted to a bonus or penalty, which had the effect of increasing the interest rate beyond that stipulated by the mortgage, contrary to s. 8 of the Interest Act, R.S.C. 1970, c. I-18. |
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