UGANDA CHRISTIAN UNIVERSITY

P.O. BOX 4, MUKONO

ADVANCED ASSIGNMENT

NAME : ISAAC CHRISTOPHER LUBOGO

REG.NO. : 2002/LLB/081

COURSE : BACHELOR OF LAWS

YEAR : ONE (2003-2004)

SUBJECT : LAND TRANSACTIONS

LECTURER : M/S ROSE NAKAYI

QUESTION:
‘ONCE A MORTGAGE, ALWAYS A MORTGAGE’ DISCUSS
THIS STATEMENT IN LIGHT OF LAW RELATING TO THE
RIGHT OF REDEMPTION.

DATE : 20 Jan. 04
A mortgage from time immemorial particularly the
merchant era has developed as a concept of security to
provide security to the commercial world. It is defined as

‘Any mortgage, charge, intrest, debenture, loan

agreement or any other incumberance whether legal or
equitable which constitutes a charge over an estate or
interest in land in Uganda or partly in Uganda and
elsewhere and which is registered under the Act’1.

It has also been argued in STANLEY.V. WILD2 by Lindley

M.R as ‘a conveyance of land or an assignment of chattels
as a security or the payment of adept or the discharge of
some other obligation for which it was given.’ Further
emphasised a mortgage is a form of security and not an
absolute transfer of property.3

Two types of mortgages are recognised4 viz legal and

equitable. But for both to be recognised as mortgages,
they need to be registered under the Registration of Titles
Act Cap 205. Sec. 114 RTA provides for legal mortgages.
It allows a registered proprietor of land registered under
the Act to mortgage the same by signing a mortgage deed
a form of which is set out in schedule eleven of the Act.
Upon execution of the mortgage, it must be stamped as
required by the law and registered under the RTA as an
incumberance over the land. Sec. 138 RTA provides for
equitable mortgages to be created by way of deposit of a
title by a registered proprietor to another person with the
intention of creating security. It may be accompanied by a
memorandum for purposes of evidence but is not
mandatory.

1
sec 18 of the mortgage decree
2
[1999] 2 CH 474
3
sec 115 of the RTA cap 205
4
sec 18 mortgage decree
The mortgage must then cause a caveat to be entered5
this caveat then constitutes registration as required by
Sec. 18 MD. if the mortgage does not register the caveat,
then he is not treated as a mortgagee in terms of the
Mortgage Decree i.e. he cannot avail himself of the
remedies available to a mortgageee under the Decree.
The duties of a mortgagor to include; to repay the
mortgage money, to perform and observe other covenants
in the mortgage and to preserve or keep the mortgaged
property from diminishing in value.6
The above duties of a mortgagor conversely amount to
the rights of a mortgagee. These include the right to; be
paid, demand that the mortgagor fulfils the conditions in
the deed, demand that the mortgagor does not diminish
the value of the mortgaged property, sue the mortgagor,
and to realise security. Sec. 2 of the Mortgage Decree
provides for the modes of realising security and these
include; by appointing a receiver, by taking possession of
the mortgaged land, by foreclosure7

The greatest right of a mortgagor is the right of

redemption. Under equity of redemption a mortgage
presupposes that a mortgagor has conveyed his land and
given up his interest. Redemption means that, the
mortgagee can acquire that interest after payment of the
mortgage money. However, where and when the
mortgagor defaults in payment, equity would afford the
mortgagor an opportunity to redeem the property if there
has not been any foreclosure or sale by the mortgagee.
Courts of law have had to strike out clauses on deed or
documents whose effect is to take away the right of
redemption or to make its enjoyment by the mortgagor
difficult or impossible. Such clauses that tend to frustrate

5
sec 148 RTA
6
sec 1 of the mortgage decree
7
see also sec 3-10 of the mortgage decree
the right of redemption are termed as a clog on equity
of redemption.
In the case of REAVE V.LESLIE8 property was mortgaged
to secure a loan of money, At a later date it was
agreed if within five years the mortgages should
elect to enter into partnership with the mortgagors,
they should be entitled to do so on the terms, inter
alia, that the mortgagors should be relieved of the
liability to repay the loan and that a ship (which was
part of the security) should be transferred free from
the mortgage for the purposes of the partnership.
The House of Lords construed these two transactions
as being separate and independent and held that the
agreement was binding on the mortgage.

Futher more it has been argued in the case of LEWIS. V

FRANK LOVE Ltd9

Facts; in 1955, the plaintiff who was indebted to

mortgages for a little over 6000 pounds under the
mortgage on which judgment had been recovered,
arranged with the defendant’s that they would lend
him 6,500 pounds to enable the debt to the
mortgagee judgment creditors to be repaid and to
provide some surplus for other purposes on terms,
among others, that they should have an option to
purchase part of the property comprised in the
mortgage. The transaction was carried out by a
transfer of the existing mortgage to the defendant
for 6,070 and by a contemporaneous written
agreement between the plaintiff and the defendant’s
granting them the option on condition that they did
not require payment of the principal sum secured by
the mortgage for two years. The defendants having
8
(1902) AC 461
9
[1961] 1 ALL ER 446
 purported to exercise the option but not having
advanced the remainder of the 6,500.

It was held; the principle on which a clog on the equity of

redemption had been held to be void applied to the
transfer of amount where one of the terms arranged
between the mortgagor and the transferee was that the
transferee should have an option to purchase in return for
taking the transfer, accordingly, looking at the substance
of the transaction and not at the form in which it was
carried out, the defendants option to purchase was a clog
on the plaintiff’s equity of redemption and was therefore
void.

Further in the case of STANLEY V. WILDE. Lindley MR put

the principle in the following terms;
“…… the security is redeemable on the payment or
discharge of such debt or obligation, any provision to the
contrary notwithstanding……. any provision inserted to
prevent redemption on payment of performance of the
debt or obligation for which the security was given is what
is meant by a clog or fetter on the equity or redemption
and is therefore void. It follows from this that “once a
mortgage always a mortgage.”