The mortgagees of shares in a brewery wanted to a director to be able later to acquire the shares. They could not grant an option. They sold the shares to the director, as mortgagees, and lent the purchase price, interest free. The director could require the mortgagees to buy back the shares at the original purchase price. The result was as if they had granted an option. The mortgagor sought to have the transactions set aside, arguing that: ‘ . . it is said that the mortgagee exercised his power of sale with an indirect motive, not with the view of realizing his security, but with the object of conferring a benefit upon the defendant Garrard by giving him an option masquerading as a sale.’
Held: Russell J said: ‘I am unable accordingly to inquire into the motives of the defendants Bass, or to hold that the sale is vitiated because they desired to confer a benefit on the purchaser by selling to him upon terms, which included a fair price.’
Russell J
[1922] 2 Ch 449
England and Wales
Citing:
Applied – Nash v Eads CA 1880
Sir George Jessel MR: ‘The mortgagee was not a trustee of the power of sale for the mortgagor, and if he was entitled to exercise the power, the Court could not look into his motives for so doing. If he had a right to sell on June 1, and he then . .
Cited by:
Cited – Meretz Investments Nv and Another v ACP Ltd and others ChD 30-Jan-2006
The applicant challenged the exercise of a power of sale under a mortgage, saying that the mortgagee’s purposes included purposes not those under the mortgage. The parties had been involved in an attempted development of a penthouse.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 10 December 2021; Ref: scu.241334
