The equity of redemption - Mortgages

A mortgage will be rendered void for undue influence: Barclays Bank v O'Brien

Undue influence can exist in two forms: RBS v Etridge (No 2)
Actual: in which there are threats/ violence/ pressure
Presumed: where there is a relationship of trust and confidence and the C suffers a 'manifest disadvantage' from the deal

The 'Etridge Protocol' requires mortgagees to ensure that a person in a relationship of trust and confidence, where there seems to be no benefit in them signing the mortgage, receives 'separate and independent' legal advice and that the mortgagee receives written confirmation of this. This ensures that undue influence cannot be argued against the enforcement of the mortgage.

An option to purchase will be rendered void in the agreement because it purports to prevent the point of a mortgage that has been redeemed e.g. the mortgagor should get the property back in the same state in which it was mortgaged on redemption of that mortgage.

Samuel v Jarrah Timber: option to purchase stock that was security for mortgage was void

Reeve v Lisle: the option to purchase is not void when it is part of another contract, unconnected with the mortgage agreement (made 12 days later)

Noakes v Rice: an agreement with a brewery to only sell their liquor was valid only up until the mortgage had been redeemed. Once the mortgage is paid, the owner should get back their land and be free in its use and enjoyment e.g. deciding who's liquor to sell

The court has the power to alter or remove oppressive or unconscionable terms

Multiservice Bookbinding v Marden: not where a term is merely unreasonable, but where it is inserted in a 'morally reprehensible manner', so it offends the conscience of the man inserting it

Cityland Properties v Dabrah: the courts changed the interest rate from a level that was unconscionable, to one more reasonable

Kreglinger v New Patagonia Meat and Cold Storage: a solus tie may be enforceable provided it is not: unusual, affects the equity of redemption, or is inconsistent with the right to redeem. Here, the option to purchase sheepskins was held to be a separate contract, thus valid.

Esso Petroleum v Harpers Garage: the court held a five-year restraint of trade was reasonable, but not the 21-year restraint placed on the other garage.

Noakes v Rice: enforceable until the end of the duration of the mortgage.

The right to redemption cannot be unreasonably postponed by the mortgagee

Fairclough v Swan Breweries: postponing the right to redeem the mortgage until six-weeks before the end of the leasehold, meant the mortgagor would get back a virtually worthless estate (void)

Knightsbridge Estates v Byrne: the fact that they were businessmen operating at 'arm's length' meant that the postponement was valid - balanced relationship (commercial transactions - debenture therefore, exempt from the rules on equity of redemption)