The appellants appealed a decision regarding the calculation of interest on a mortgage.
The mortgage provided for interest at 13% per annum, payable monthly, but did not specify whether it was calculated in advance or compounded.
The respondent mortgagor argued for the application of the 'reinvestment principle', which would result in a lower effective interest rate.
The Supreme Court of Canada allowed the appeal, holding that the reinvestment principle is not a rule of law and does not apply unless expressly invoked in the mortgage contract.
The mortgagee was entitled to interest calculated monthly at the nominal annual rate.
