Santley v Wilde (1899) 2 Ch 474

Key point

  • This case laid down the clogs and fetters doctrine, under which a provision in a mortgage that prevents redemption is void

Facts

  • A lease for 10 years of a theatre was mortgaged for a loan of 5 years
  • The mortgagee was given an additional right to a third of the profits from the underlease for the full 10 years
  • After paying off the principal and interest of the loan, the mortgagor sought to redeem the mortgage but the mortgagee decline to reassign the lease back to him
  • The mortgagor brought an action for redemption, which was granted by Byrne J

Held (Court of Appeal)

  • Appeal allowed; the mortgagor is not entitled to redeem the mortgage
  • The right to a share of profits from the underlease was secured by the mortgage, which thus cannot be redeemed until the 10 years is up

Lord Lindley MR

  • ‘Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption, and is therefore void.’
  • ‘It follows from this that ‘once a mortgage always a mortgage,’ but I do not understand that this principle involves the further proposition that the amount or nature of the further debt or obligation, the payment or performance of which is to be secured, is a clog or fetter within the rule.’
  • In this case, a right to a share of profits of the underlease is not a clog

Commentary

  • This case was rejected in both Noakes v Rice and Bradley v Carritt
  • However, in Kreglinger, it was held that terms like right to profits in the current case can be valid as a contract independent from the mortgage and thus not