Payment of principal upon default
17(1) Despite any agreement to the contrary, where default has been made in
the payment of any principal money secured by a mortgage of freehold or leasehold property, the mortgagor or person entitled to make such payment may at
any time, upon payment of three months interest on the principal money so
in arrear, pay the same, or the mortgagor or person entitled to make such
payment may give the mortgagee at least three months notice, in writing, of the
intention to make such payment at a time named in the notice, and in the event
of making such payment on the day so named is entitled to make the same
without any further payment of interest except to the date of payment.
(2) If the mortgagor or person entitled to make such payment fails to make
the same at the time mentioned in the notice, the mortgagor or person is
thereafter entitled to make such payment only on paying the principal money
so in arrear and interest thereon to the date of payment together with three
months interest in advance.
 Some fairly straightforward observations regarding s. 17 of
the Mortgages Act can be made without controversy:
(a) the provision is designed primarily as a protection for mort-
gagors (and subsequent encumbrances entitled to redeem) by
reducing what had historically been an equitable rule requir-
ing a mortgagor to pay six months interest to claim a right to
relief to payment of only three months interest: O’Shanter
Development Co. v. Gentra Canada Investments Inc. (1995),
25 O.R. (3d) 188,  O.J. No. 2546 (Div. Ct.), at para. 12;
(b) the rule has no application where the secured creditor mortgagee seeks to realize on his or her security by way of power
of sale proceedings: O’Shanter, at para. 13.
 There has been a simmering dispute over a number of years
as to where between those two points the line is to be drawn
between allowing and disallowing s. 17 claims by mortgagees.
 In 58 Cardill Inc. v. Rathcliffe Holdings Ltd.,  O.J. No.
5900, 2017 ONSC 6828 (S.C.J.), Sanfillippo J. recently had the
occasion to consider the case of a creditor who enforced its mortgage security by way of privately appointed receiver. It was claimed
that such a receiver, although appointed by the secured creditor,
could be distinguished from a creditor invoking power of sale proceedings. Sanfillippo J. held that the creditor in that case was not
entitled to claim three months of interest and there was distinction
to be drawn between a creditor acting under power of sale or
through a private receiver. This decision was recently upheld by
the Court of Appeal (at  O.J. No. 4108, 2018 ONCA 672). In
upholding the decision, the court referred to the well-known “two
hats” dictum of Houlden J.A. in Peat Marwick Ltd. v. Consumers’