An action for foreclosure or sale may be brought so soon as default is made in payment of any part of the principal or interest in the absence of an express or implied provision to the contrary in the mortgage (r), but an action on the covenant for payment will lie only in respect of such instalments of principal or interest as are overdue under the terms of the mortgage.

It is usual in Ontario to insert in a mortgage the short form of acceleration clause contained in schedule B to the Short Forms of Mortgages Act (s), as follows:

Provided that in default of the payment of the interest hereby secured, the principal hereby secured shall become payable.

If the mortgage is expressed to be made in pursuance of the statute the foregoing clause has the same effect as if it were in the following terms (t):

Provided always, and it is hereby further expressly declared and agreed by and between the parties to these presents, that if any default shall at any time happen to be made of or in payment of the interest money hereby secured or mentioned or intended so to be, or any part thereof, then and in such case the principal money hereby secured or mentioned, or intended so to be, and every part thereof shall forthwith become due and payable in like manner and with like consequences and effects to all intents and purposes whatsoever, as if the time herein mentioned for payment of such principal money had fully come and expired, but that in such case the said mortgagor, his heirs, executors, administrators or assigns, shall on payment of all arrears under these presents, with lawful costs and charges in that behalf at any time before any judgment in the premises recovered, or within such time as, by the practice of the Supreme Court, relief therein could be obtained be relieved from the consequences of non-payment of so much of the money secured by these presents, or mentioned, or intended so to be, as .may not then have become payable by reason of lapse of time.

(p) Massey v. Sladen, 1868, L.R. 4 Ex. 13.

(q) Haldane v. Johnston, 1853, 8 Ex. 689; Bell v. Antwerp, London and Brazil Line, [1891] 1 Q.B. 103; The Eider, [1893] P. 119. (r) See chapter 24, Action for Foreclosure or Sale, Sec. 231. (s) R.S.O. 1914, c. 117, schedule B, clause 16. (t) See chapter 35, Short Forms of Mortgages Act, Sec. 381.

It was formerly contended, and in one case it was held that a proviso of this kind was in the nature of a penalty against which equity would relieve (u), but it is now well settled that such a provision is to be regarded as the contract of the parties and not in the nature of a penalty against which relief will be granted (v).

In Sterne v. Beck (w) Knight Bruce, L.J. said:-

"The deed provided for payment of the debt by instalments . . . and further provided that in a certain event payment of the debt should be accelerated. It did not provide that the amount payable should be increased, but only provided that instead of being paid at future periods with interest up to these periods it should become payable at once with interest up to that time. To a proviso of such a nature none of the principles of equity relating to relief in the case of penalties are in my opinion applicable."

It will be observed that the extended form of acceleration clause contained in schedule B to the Short Forms of Mortgages Act contains a provision relieving the mortgagor in certain circumstances from the consequences of non-payment. It has been held that the effect of this provision is to give the mortgagor the right in every case,except where a judgment has been recovered, to pay the arrears with lawful costs and charges, and to be relieved from the consequences of his default, and that the provision applies to proceedings taken under the power of sale (x). The provision also preserves to the mortgagor the benefit of rules of practice enabling him to apply for a stay of proceedings in an action for foreclosure or sale (y).

(u) Knapp v. Cameron, 1858, 6 Gr. 559.

(v) Tylee v. Hinton, 1878, 3 O.A.R. 53, at p. 60; Graham v. Ross, 1884, 6 O.R. 154; Wilson v. Campbell, 1893, 15 O.P R. 254; Leeds and Hanley Theatre of Varieties v. Broadbent, [1898] 1 Ch. 343; National Trust Co. v. Campbell, 1908, 17 M.R. 587; but see Schwartz v. Williams, 1915, 35 O.L.R. 33, 27 D.L.R. 733.

(w) 1863, 1 DeG. J. & S. 595, at p. 600.

In Manitoba (z) and in Saskatchewan (a) there are statutory provisions to similar effect relieving the mortgagor from the consequences of default on payment of the arrears and costs at any time prior to the sale or foreclosure, "notwithstanding any provision to the contrary."

After judgment has been recovered in an action on the covenant alone, relief will not be granted. Thus, where by virtue of an acceleration clause the whole of the mortgage money has become due by default of payment of interest, and judgment has been recovered for the whole by the mortgagee against the mortgagor in an action solely upon the covenant for payment contained in the mortgage deed the defendant is not entitled, upon payment of interest and costs, to have the judgment and execution issued thereon set aside (b).

In Wilson v. Campbell (c) Boyd, C. said:-

(x) Todd v. Linklater, 1901, 1 O.L.R. 103.

(y) Todd v. Linklater, supra. Former rules 388, 389, 390, referred to in the judgment, have been replaced by rule 485, which is discussed in chapter 24, Action for Foreclosure or Sale, Sec. 242.

(z) The Real Property Act, R.S.M. 1913, c. 171, s. 126. This provision has been held to be applicable to a mortgage under the "old system." National Trust Co. v. Campbell, 1908, 17 M.R. 587.

(a) Statutes, 1917 (2nd sess.), c. 18, s. 115; Wasson v. Harker, 1912, 5 S.L.R. 364, 8 D.L.R. 88; Canada Trust v. Layton, 1916, 9 S.L.R. 244, 30 D.L.R. 283. The Saskatchewan provision is quoted in chapter 24, Action for Foreclosure or Sale, Sec. 248.

(b) Wilson v. Campbell, 1893, 15 O.P.R. 354.