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    Knightbridge Estates v Byrne

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    17 views23 pages

    Knightbridge Estates V Byrne

    Uploaded by

    Taylor Edward

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 23
    | ALC. AND PRIVY COUNCIL. [HOUSE OF LORDS. KNIGHTSBRIDGE ESTATES TRUST,) , ' TIMITED 5... , eee) _j APPELLANTS; AND BYRNE and Otners (TRUSTEES OF ROYAL LIVER FRIENDLY SOCIETY) | Reseonnenrs. Mortgage—Real estate—Demise for long term—Covenant for repayment by eighty half-yearly instalments—Rule against perpetuities—Clog on equity of redemption—Whether a mortgage of real property a “* debenture" —Companies Act, 1929 (19 & 20 Geo. 5, ¢. 23), 88. 74, 380. The appellants in r93r mortgaged their frechold properties to the respondents to secure a loan of 310,000! By the deed the appellants covenanted to repay the money so borrowed with interest by eighty half-yearly instalments. By clause 2 of the deed the appellants demised the mortgaged land to the respondents for a long term of years with the usual proviso for cesser. A few years later the appellants, being desirous of redeeming the mortgaged property by. the“ repayment ofthe principal sum borrowed, notwithstanding the stipulation contained in the deed as to the repayment by eighty half-yearly instalments, sought a declaration that they were so entitled to redeem at any time by giving the usual notice Held, (x.) that the mortgage was a “debenture” within s. 74 of the Companies Act, 1929, having regard to the ‘definition in s. 380, and therefore was not rendered invalid by reason of being redeemable only after forty years; (z.) that the rule_against perpetuities has no application to mortgages; and (3.) that the appellants were not entitled to the declaration claimed. Decision of Court of Appeal [1039] Ch. 441 affirmed. APPEAL from a decision of the Court of Appeal (1), varying a decision of Luxmoore J. (2) — The questionat issue was whether the appellants were entitled to redeem on the usual notice a mortgage dated November 6, 1931, and made between the appellants as borrowers, and the respondents” as mortgagees, notwithstanding (2) [2939] Ch. 44x. (2) [938] Ch. 741. *Present: Viscount Maucuam, Lorp Arkin, Lorp Wricut, Lorp Romer, and Lorp Porrzr. 6x3 HL. (E)* 1940 April 2, 3, 4, if i or4 HLL. (E) 1940 Kwiots- ‘BRIDGE Estates Trust, Lo. Byrwe. HOUSE OF LORDS (1940) a provision in the mortgage for repayment by eighty half-yearly instalments of which the last would not fall due till November 6, 1971. It was claimed-by the appellants, and denied by the respondents, that the attempt to postpone the right of redemption for a term of forty years constituted aa illegal clog upon the equity of redemption. The appellants consequently claimed a declaration that, notwithstanding the provisions of the mortgage, they were entitled on the usual notice to redeem the mortgage upon payment of the principal money secured thereby with interest to the date of redemption and the proper costs of the respondents thereunder. _ In addition to contesting the appellants’ claim on general grounds, the respondents pleaded that the mortgage was a debenture within the meaning of s. 74 of the Companies Act, 1929, and was therefore exempt from the equitable rule against the clogging of an equity of redemption. Luxmoore J. held that the provision in the mortgage deferring redemption for a period of forty years, taken in con- junction with various clauses in the deed which he regarded as unusual and oppressive, was unreasonable, and constituted an unlawful clog upon the right of the appellants, who were therefore entitled to redeem the mortgage on the usual notice. Luxmoore J. further held that the rule against perpetuities had no application to mortgages, and, further, that a common mortgage of frecholds was not a debenture within the meaning of s. 74 of the Companies Act, 1929.

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