The appellants sought to enforce an option granted them under an agreement by the respondents in consideration for a loan on the security of a mortgage. The loan having been repaid prior to the expiry of the option, the respondents declined to further implement the agreement, on the ground that the option granted to the appellants was of the nature of a collateral advantage limiting the debtor’s right of redemption.
Held that the stipulation in the agreement did not limit the right of redemption, and was therefore valid.
Observed per Lord Parker-There is now no rule in equity which precludes a mortgagee from stipulating for any collateral advantage, provided it is not either (1) unfair and unconscionable, or (2) in the nature of a penalty clogging the equity of redemption, or (3) inconsistent with the contractual and equitable right to redeem.
Observed per Lord Chancellor-The same general principles apply to a floating charge (vide De Beers, Limited v. British South Africa Company, 1912 A.C. 52, where there are dicta to the contrary).
Observations per Lord Chancellor on ‘the true limits of the use of authority.’
Lord Chancellor (Viscount Haldane), Earl of Halsbury, Lords Atkinson, Mersey, and Parker
[1913] UKHL 843, 51 SLR 843
Bailii
England and Wales
Contract, Land
Updated: 04 January 2022; Ref: scu.632759
