Security Trust Co v The Royal Bank of Canada: PC 1 Dec 1975

(Bahamas) A company, Fisher agreed to buy land with part of the purchase price to be paid by a fixed date and the balance secured by a mortgage to the vendor. A conveyance and a mortgage were duly executed and held in escrow pending payment of the agreed proportion of the price. Fisher failed to pay the stipulated sum on the fixed date. Fisher then granted a debenture, creating a fixed charge on its existing property and a floating charge on future property. A receiver was subsequently appointed under the debenture. The contract was eventually completed. In the subsequent litigation, the question arose whether the charge over the property created by the debenture took priority over the vendor’s mortgage. The Judicial Committee of the Privy Council, allowing the vendor’s appeal, held that Fisher’s interest in the land was merely an equity of redemption subject to the vendor’s mortgage, and that the mortgage accordingly took priority over the charge created by the debenture. Lord Cross limited the extent of the law of escrow: ‘On fulfilment of the condition subject to which it was delivered as an escrow, a deed is not taken to relate back to the date of its delivery for all purposes, but only for such purposes as are necessary to give efficacy to the transaction – ut res magis valeat quam pereat (see Butler and Baker’s case (1591) 3 CoRep 25a). Thus, the fact that the grantor has died before the condition of an escrow is fulfilled does not entail the consequence that the disposition fails. If and when the condition is fulfilled the doctrine of relation back will save it, but notwithstanding the relation back for that limited purpose the grantee is not entitled to the rents of the property during the period of suspense or to lease it or to serve notices to quit.’


Lord Cross


[1976] AC 503, [1975] UKPC 23, [1976] 1 All ER 381, [1976] 2 WLR 437




England and Wales


CitedIn re Connolly Brothers Ltd (No. 2) CA 1912
A company had granted a debenture over all its assets, present and future, but wishing to acquire an additional property, it approached a third party who agreed to finance the purchase against a charge. It contracted to buy the property at pounds . .

Cited by:

CitedAlan Estates Ltd v WG Stores Ltd and Another CA 1-Jul-1981
The proposed tenant wanted to get into possession, and was given a key and paid a quarter’s rent to the lessor’s solicitors to be held as stakeholders, before the lease had been formally granted. An undated lease and counterpart were executed and . .
CitedCook v The Mortgage Business Plc CA 24-Jan-2012
The land owners sought relief from possession orders made under mortgages given in equity release schemes: ‘If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee’s right to . .
CitedLloyds Bank plc v Rosset CA 13-May-1988
Claim by a wife that she has a beneficial interest in a house registered in the sole name of her husband and that her interest has priority over the rights of a bank under a legal charge executed without her knowledge. The case raises a point of . .
Lists of cited by and citing cases may be incomplete.

Land, Equity, Contract

Updated: 30 January 2022; Ref: scu.252352