Subject as already stated (p) a mortgagee may stipulate for the payment after default of any rate of interest whatsoever not exceeding the rate of interest payable before default (q), but in order to provide effectually for the payment of interest at a stated rate after default, the parties must use language showing clearly and unambiguously that they intend such rate to apply not only ad diem but also post diem, and in the absence of unequivocal language there is no presumption that the parties intended to provide for a breach of the contract (r).

A stipulation that interest at a stated rate shall be payable "whether before or after default," "as well after as before maturity" or otherwise unequivocally expressed (s) will be effectual to provide for payment at the contract rate after default, but a stipulation that interest shall be payable at a stated rate upon the principal money "until paid," "until payment in full" or "until such principal money and interest shall be fully paid and satisfied" will be construed as providing merely for payment at the contract rate until the day fixed for payment of the principal (t). The words "so long as the sum of £3000 or any part thereof should remain due on the security of the said indenture" were held to be susceptible of the construction that interest was to be paid at the contract rate after as well as before default (u). On the other hand, in the case of a mortgage containing a stipulation that "on default of payment of any of the instalments hereby secured . . . interest at the rate above mentioned shall be paid on all sums so in arrear" it was held that the whole principal sum, which became due by virtue of an acceleration clause, was not a sum "so in arrear" on which the mortgagee would be entitled to interest at the contract rate after the day named in the mortgage for the payment (v).

(n) R.S.C. 1886, c. 127, s. 2.

(o) Plenderleith v. Parsons, 1907, 14 O.L.R. 619; British Canadian Loan and Agency Co. v. Farmer, 1904, 15 M.R. 593; Kerr v. Colquhoun, 1911, 2 O.W.N. 521.

(p) See Sec. 312, supra.

(q) As to a stipulation for a higher rate after default, see Sec. 314, infra.

(r) St. John v. Rykert, 1884, 10 Can. S.C.R. 278; Cook v. Fowler, 1874, L.R. 7 H.L.. 27, at p. 37, 14 R.C. 546, at p. 555.

Where a mortgagor continued to pay interest after default at the rate stipulated for during the currency of the mortgage, and it appeared that both the mortgagor and the mortgagee were ignorant of the law on the subject and believed that interest at the mortgage rate was payable after default, it was held that the excess could not be recovered back as money paid under mistake, and that the mortgagor could not require it to be applied in reduction of the principal (w). The fact that interest has been paid after default at the mortgage rate does not however give rise to any implied contract to continue to pay at that rate (x).

(s) Muttlebury v. Stevens, 1886, 13 O.R. 29, at p. 31; Imperial Trusts Co. v. New York Security and Trust Co., 1905, 10 O.L.R. 289; Pringle v. Hutson, 1909, 19 O.L.R. 652; Credit Foncier Franco-Can-adien v. Schultz, 1893, 9 M.R. 70.

(t) St. John v. Rykert, supra; Powell v. Peck, 1888, 15 O.A.R. 138; People's Loan and Deposit Co. v. Grant, 1890, 18 Can. S.C.R. 262; Freehold Loan Co. v. McLean, 1891, 8 M.R. 116.

(u) Popple v. Sylvester, 1882, 22 Ch.D. 98.

(v) Biggs v. Freehold Loan and Savings Co., 1901, 31 Can. S.C.R. 136, reversing 26 O.A.R. 232.

In the absence of an unequivocal stipulation for payment of interest after default at the contract rate the mortgagee will be entitled after default to interest by way of damages at 5% in respect of the period since the 7th of July, 1900 (y), and if default occurred before the date, 6% in respect of the period intervening between default and that date (z). Some of the earlier decisions in Ontario were in favour of the view that the rate of interest to be allowed by way of damages depended upon the ordinary value of money during the period of default (a) and that the rate stipulated for before default might be taken into consideration or might be allowed as being a reasonable rate after default (b). It now appears to be settled, however, that if the mortgagee does not stipulate expressly for a particular rate by way of damages after default, the rate allowed will be the rate mentioned in the Interest Act (c).

(w) Stewart v. Ferguson, 1899, 31 O.R. 112; McKenzie v. Mc-Leod, 1909, 39 N.B.R. 230; but see Daniell v. Sinclair, 1881, 6 App. Cas. 181, 18 R.C. 144, and Kerr v. Colquhoun, 1911, 2 O.W.N. 521; In re Jones's Estate, [1914] 1 I.R. 188.

(x) Cook v. Fowler, 1874, L.R. 7 H.L. 27, 14 R.C. 546; In re Roberts, 1880, 14 Ch.D. 49.

(y) See the Interest Act, s. 3, supra, Sec. 312.

(z) See R.S.C. 1886, c. 127, s. 2, supra, Sec. 312.

(a) Archbold v. Building and Loan Association, 1888, 15 O.R. 237, S.-C. 16 O.A.R. 1.

(b) Simonton v. Graham, 1881, 8 O.P.R. 495; McDonald v. Elliott, 1886, 12 O.R. 98; Muttlebury v. Stevens, 1886, 13 O.R. 29; Powell v. Peck, 1888, 15 O.A.R. 138. Cf. Cook v. Fowler, 1874, L.R. 7 H.L. 27, 14 R.C. 546; In re Roberts, 1880, 14 Ch. D. 49; Mellersh v. Brown, 1890, 45 Ch.D. 225.

(c) People's Loan and Deposit Co. v. Grant, 1890, 18 Can. S.C.R. 262; Freehold Loan Co. v. McLean, 1891, 8 M.R. 116; Manitoba and Northwest Loan Co. v. Barker, 1892, 8 M.R. 296; Cunningham v.

As regards the rate to be allowed for damages after default there is no distinction between actions for foreclosure and redemption and actions on the covenant (d).

A judgment on the covenant for payment carries interest from its date at 5% per annum (e). The mortgage debt is merged in the judgment. If the covenant to pay interest is merely incidental to the covenant to pay the principal, as, for instance, if the covenant is to pay interest on principal remaining unpaid, the interest will no longer be paid at the contract rate under the covenant to pay interest but at the statutory rate under the judgment (f). If, however, the covenant is to pay interest on the principal money remaining due on the security of the mortgage, the covenant remains operative notwithstanding the judgment (g) and if it provides for payment at the named rate after maturity, that rate will be payable.

A judgment on the covenant for payment causes a merger only of the personal claim against the covenantor, and does not affect the right to claim interest at the contract rate in a proceeding with regard to the mortgage (h) or any collateral security held by the mortgagee (i).

Hamilton, 1897, 5 B.C.R. 539; Hanford v. Howard, 1896, 1 N.B. Eq. 241.

(d) Powell v. Peck, supra; Cook v. Fowler, supra; People's Loan and Deposit Co. v. Grant, supra.

(e) The Judicature Act, R.S.O. 1914, c. 56, s. 35; the Interest Act, R.S.C. 1906, c. 120, s. 3.

(f) Ex parte Fewings, In re Sneyd, 1883, 25 Ch.D. 338, at p. 353.

(g) Popple v. Sylvester, 1882, 22 Ch.D. 98, as explained in Economic Life Assurance Society v. Usborne, [1902] A.C. 147, at p. 152. As to this fine distinction drawn in the English cases, see further 21 Halsbury, Laws of England, p. 226, note (f); Lowry v. Williams, [1895] 1 I.R. 274.

(h) Economic Life Assurance Society v. Usborne, supra; Lowry v. Williams, supra.

(i) Wegg Prosser v. Evans, [1894] 2 Q.B. 101, [1895] 1 Q.B. 108.

In Ontario where a charge on land is created under the Land Titles Act there is an implied covenant that if the principal sum or any part thereof shall remain unpaid at the appointed time interest shall be paid half-yearly at the appointed rate on so much of the principal sum as for the time being shall remain unpaid (j).