A4.422 What constitutes payment of interestThere have been many decisions of the courts as to the meaning of 'upon payment of any interest' and 'at the time of the payment'. Many of these were concerned with capitalisation of interest, ie adding the amount of interest in arrear to the amount of the debt or mortgage.To summarise, it was established by Paton1 that the capitalisation of interest does not constitute payment and in Oswald2 that when interest has been capitalised and the debt is subsequently discharged, then any amount actually paid in respect of the capitalised interest is a payment
There have been many decisions of the courts as to the meaning of 'upon payment of any interest' and 'at the time of the payment'. Many of these were concerned with capitalisation of interest, ie adding the amount of interest in arrear to the amount of the debt or mortgage.
To summarise, it was established by Paton1 that the capitalisation of interest does not constitute payment and in Oswald2 that when interest has been capitalised and the debt is subsequently discharged, then any amount actually paid in respect of the capitalised interest is a payment
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