Once a Mortgage, Always a Mortgage

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Title of paper: ³Once a mortgage, always a mortgage.´ (per Lord Eldon in Seton v Slade (1802) 7 Ves. 265. Critically analyze this statement in light of the proposition that the equitable right to redeem can be exercised in any transaction which is, on its proper construction, a mortgage.

A mortgage may be defined as ³a conveyance or other disposition of an interest in property designed to secure the payment of money or discharge of some other obligation´ . To state it more blatantly a mortgage is termed as a secured/insured loan in which the person or institution which lends money (known as the mortgagee) is granted rights over the property, the borrower (known as the mortgagor) is granted rights in kind which allow him to defend his interest and maintenance of the terms of the agreement. It is also important to not the words ³other obligations´ which have constitute agreements which require specific performance of one party or collateral advantage. It is reasonable to assert that the primary right which rests within a mortgagor is that of redemption, whereby the agreement has come to its end, where by responsibilities of the agreement have been met thus fulfilling his obligation. This may be brought about through two different forms. His legal right of redemption is as it is set out within the device of transaction of the agreed duration of payment. Therefore the parties agree that upon a specified date the agreement would have run its course and the mortgagor has a legal right to assert a full title free from charge on the assumption that the mortgagor has fulfilled his obligation outline within the payment schedule, defaulting on this schedule would, in times gone by, see the mortgagor
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Cheschire and Burn, Modern Law of Real Property, 15th edn, 1994 London: Butterworths, p 657

interest be subsumed into that of the mortgagee. The second means of redemption was seen as a solution to the strictness of the legal means. That being the equitable path whereby mortgagor is able redeem at any time after the contractual date, this comes into effect only when the redemption date has passed and may not be unduly restricted. This brings reference to the judgement of Lord Eldon who said ³Once a mortgage, always a mortgage.´2 Lord Eldon¶s judgement has been acknowledges as the general maxim of equity in regards to mortgages. Lord Nottingham may be quoted giving reason to such a position, ³In natural justice and equity, the principal right of the mortgagee is to the money, and his right to the land is only as a security for the money´3. This followed the position that while in law the Mortgagee is the legal owner of the property, in equity such institution or individual lender possesses a mere interest while it is the mortgagor, in equity who is owner, with limited legal authority. The powers of the equity of redemption extend beyond a form of recourse in default of schedule but also the courts are adamant not allow the right of redemption to be blocked or ³clogged´. The judgement of Kindersley V-C ³no doubt that the broad rule is this: that the Court will not allow the right of redemption in any way to be hampered or crippled in that which the parties intended to be a security either by any contemporaneous instrument with the deed in question, or by anything which this Court would regard as a simultaneous arrangement or part of the same transaction.´ 4 affirms such a point. The view of the court may is that it will not allow mortgagee to utilize a finical superiority to enforce an advantageous terms to a victim who merely is seeking assistance. Attempts to clog the equity of redemption have taken many forms.
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Seton v Slade (1802) 7 Ves. 265 Thornborough v Baker (1875) 36 ER 1000 4 Gossip v Wright (1863) 32 LJ Ch 648

The courts have refused to validated any clause within a mortgage or subsequent contractual relations in which it may be inferred that the mortgager utilized pressure to have the mortgagee forego his right to redeem either explicitly as illustrated in the case of Samuel v Jarrah Timber and Wood Paving Corporation Ltd5, or where it the court may find that contract stipulates for a unreasonably length period in which the mortgage is irredeemable as illustrated within the case of Knightsbridge v Byrne6. It is important to note in the this case it was held that a 40 year irredeemable
period was valid due to that the parties were commercially experienced companies. The case of

Fairclough v Swan Brewery7 a clause preventing the mortgagor from redeeming leased property until shortly before the termination of the lease was voided because it made the right to redeem illusory. Lord McNaughton in his deliberation took the stance that the mortgage was clearly intended to
be irrevocable should the lease have ended a week after the mortgage¶s fulfilment. The principles of equity in equity have also been illustrated to work in the favour of the mortgagor such as in the case of Biggs v Hoddinott8 where a solus agreement was upheld and enforced restricting a hotel owner to sell only a specific brand of beer, for the 5 year duration of the mortgage, and sought to redeem after only two upon completion of payment after two years had passed. This of course it to be evaluated in contrast of Noakes v Rice9where the courts restricted the notion that upon completion of a mortgage a restricting clause is still in effect where a lessee covenanted to only sell a specific brand of malt liquor during and following the completion of his mortgage. The courts held such a term invalid as should it be effected the mortgagor would not redeem a free deed but one still fettered by the influence of the agreement which in all other forms and rationales no longer existed.

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[1904] AC 323 at 329 [1939] Ch 441

[1912] AC 565
[1898] 2 CH 307 [1902] Ac 24

Thus as evident through case law Lord Eldon¶s words are applicable to the concept of equity of redemption as the doctrine will empower not only mortgagees but also mortgagors to uphold and act reasonably within their respective roles as it pertains to mortgages.

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