Majority
ALBERT NIGHTINGALE and
APPELLANTS; *o.,5 MORRIS NIGHTINGALE ....
AND
JOHN SAMEK, DAVID SYCH and MARY TRAVINSKI .R.E.S.N.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO
Judgment of the Court
HALL J.:-This appeal involves the interpretation to be placed on the repayment clause in a mortgage granted by the appellants to the respondents on March 12, 1965, covering an hotel property in Toronto for the principal sum of $315,000. The repayment clause in the mortgage reads as follows:
PROVIDED THIS MORTGAGE TO BE VOID on payment of THREE HUNDRED & FIFTEEN THOUSAND ($315,000.00) Dollars of lawful money of Canada with interest at six & one-half (61%) per centum per annum calculated quarter-yearly, not in advance, as well after as before maturity and both before and after default, as follows:- The sum of THREE HUNDRED AND FIFTEEN THOUSAND DOLLARS ($315,000.00) with interest thereon at the aforesaid rate computed from the 23rd day of March 1965, shall become due and be paid in instalments of $7,002.00 each, on the 23rd day of March, June, September and December in each and every year from and including the 23rd day of June 1965 to and including the 23rd day of December 1984, (such instalments to be applied FIRST in payment of the interest due from time to time, calculated at the said rate of 6j% per centum per annum, and the BALANCE to be applied in reduction of the principal sum) and the BALANCE of the said principal sum of THREE HUNDRED AND FIFTEEN THOUSAND DOLLARS with interest thereon as aforesaid shall become due and payable on the 23rd day of March 1985.
The appellants contend: (1) that the payments of interest and principal as stated in this clause are "blended payments" within the meaning of s. 6 of the Interest Act, R.S.C. 1952, c. 156; (2) that being blended payments the mortgage does not contain a statement sufficient to satisfy the requirements of said s. 6 showing the amount of such principal money and the rate of interest chargeable thereon calculated yearly or half-yearly not in advance; (3) that in consequence no interest whatever is payable under the said mortgage.
Whenever any principal money or interest secured by mortgage of real estate is, by the same, made payable on the sinking fund plan, or on R.C.S.
The learned trial judge, Brooke J., dismissed the appellants' application for- a declaration that no interest was payable, holding that the payments to be made under the mortgage in question were not blended payments. He did not deal with appellants' contention #2 above. The Court of Appeal for Ontario, after hearing argument on the blended payment issue only, dismissed the appeal without giving reasons.
I would dismiss the appeal on the ground that the quarterly payments required to be made by the mortgagor are not blended payments of principal money and interest within the meaning of the word "blended" as used in s. 6 of the Interest Act. Section 2 of that Act reads as follows: The rate of interest agreed upon as set out in the mortgage in this case is 61 per cent payable quarterly. The purpose of s. 6 of the Interest Act is to protect a mortgagor from having concealed from him the true rate of interest which he is paying.
In the case at bar there is no concealment. The amount of principal and the rate of interest are clearly stated. On each quarterly payment date the mortgagor is required to pay interest at 6; per cent on the principal outstanding and to pay on account of principal the difference between the amount of such interest payment and the sum of $7,002. This is the plain effect of the repayment clause; it appears to me impossible to say that this brings about the result that the payments of principal and interest are "blended", that is to say, "mixed so as to be inseparable and indistinguishable". They are distinguished by the very wording of the clause: