Lewis v Love [1961] 1 WLR 261

Key points

  • Whether a term is a clog on the equity of redemption is a matter of substance not form
  • An option can in substance be part of the mortgage contract despite being in a separate agreement

Facts

  • The mortgagor (C) granted to the mortgagee (D) an option to purchase part of the mortgaged land was contained in a separate but contemporaneous document
  • D sought to exercise the option
  • C sough declaration that the option was void as a clog on the equity of redemption
  • D argued that the doctrine of clog on the equity does not apply where the clog was not imposed as part of the original mortgage transaction

Held (High Court)

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

Plowman J

  • Reeve v Lisle established what has to be looked at in the case of a mortgage transaction is the substance of the matter and not the form in which the bargain is carried out
  • The object and purpose with which the documents were entered into must be inquired into
  • Here, the loan was made on condition of the option being granted
  • Thus the doctrine of clogging the equity applies and the option is invalid as it prevents C from getting back the piece of land