Noakes and Co Ltd v Rice: HL 17 Dec 1901

Rule Against Clog on equity of Redemption

A mortgage of a leasehold public house contained a covenant with the mortgagee, a brewery, that the mortgagor and his successors in title would not, during the continuance of the leasehold term and whether or not any money should be owing on the security of the mortgage, sell malt liquor in the public house other that that purchased from the brewery.
Held: The covenant was not enforceable after redemption of the charge.
Lord MacNaghten said of the rule preventing a clog on the equity of redemption of a mortgage: ‘Redemption is of the very nature and essence of a mortgage, as mortgages are regarded in equity. It is inherent in the thing itself. And it is, I think, as firmly settled now as it ever was in former times that equity will not permit any device or contrivance designed or calculated to prevent or impede redemption. It follows as a necessary consequence that, when the money secured by a mortgage of land is paid off, the land itself and the owner of the land in the use and enjoyment of it must be as free and unfettered to all intents and purposes as if the land had never been made the subject of the security.’
Lord Lindley said: ‘My Lords, I agree in thinking that the covenant contained in this mortgage, and by which the mortgagees have attempted to convert the house mortgaged from a free public-house into a tied public-house even after redemption, is invalid. I see no answer to the objection taken to it that upon payment off of the mortgage money the mortgagor cannot get back what he mortgaged, namely, a free public-house.’
Earl of Halsbury LC, Lord MacNaghten, Lord Lindley
[1902] AC 24, [1901] UKHL 3
England and Wales
Cited by:
CitedG and C Kreglinger v The New Patagonian Meat and Cold Storage Company HL 20-Nov-1913
Mortgagor’s collateral dvantage is not a clog
The appellant woolbrokers had lent the respondent andpound;10,000 with a floating charge over its undertaking. The loan agreement provided that, for five years, the appellants would have first refusal over all sheepskins sold by the company. The . .
CitedJones v Morgan CA 28-Jun-2001
The claimant appealed against an order refusing him enforcement an agreement for the purchase of a one half share in a property. The judge had found the agreement to be unconscionable.
Held: The appeal was dismissed. The judge had wrongly . .

Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.443246