Jones v Morgan [2001] EWCA Civ 995

Key point

  • The court will look at the substance of the bargain between the parties to determine whether a right relating to mortgaged property is independent from the mortgage contract or part of it
  • The mere fact that there was a large amount of time that passed between the execution of the mortgage and the grant of the right does not necessarily mean that the right is


  • A loan and mortgage was entered into between D mortgagee and C mortgagor in 1994 to finance the development of the mortgaged land
  • C had provided assurances to D that he would have a share in the land, but this was not contracted in 1994
  • An option to buy a half share of the mortgaged land was granted to the mortgagee in an refinancing agreement in 1997
  • The mortgagee, C, sought to enforce the option


  • Was the option void as a clog on the equity of redemption?

Held (Court of Appeal)

  • The option was void as a clog on the equity of redemption

Chadwick LJ

  • ‘The question, in each case, is whether the arrangement made after the mortgage has been granted is “in substance and in fact subsequent to and independent of the original bargain”‘
  • t seems to me artificial to regard the 1997 agreement as being, in substance, independent of the 1994 mortgage transaction’
  • ‘It was, throughout, the intention of the parties to the mortgage transaction that the appellant [the mortgagee] should have a share of the development. The 1997 agreement sought to give effect to that intention.’

Lord Phillips MR

  • In obiter, ‘the doctrine of a clog on the equity of redemption is, so it seems to me, an appendix to our law which no longer serves a useful purpose and would be better excised.’
  • The 1997 agreement varied the loan and the mortgage that secured it but did not alter the nature of the contract. It was, in effect, a re-financing agreement. Clause 2 was inserted as an integral part of the re-financing agreement. It was not part of a collateral contract.’

Pill LJ dissenting

  • The right to buy the half-share was a separate agreement and was not a clog