Question.

“Once a mortgage always a mortgage, there should be no clog

on Equity of Redemption.” Discuss.

Name: Ojumah Okiemute Anita

Matric Number: Law/2016/305
Course Title: Equity and Trusts I
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1.1 Introduction
A mortgage is a conditional conveyance in form of immovable property such as land or other
tiled properties made by a debtor to a creditor against the promise for a payment of a loan with
or without interest at a future date that may give rise to pecuniary liability.
In Santley v Wilde, Sir Nathaniel Lindsey argued that mortgage as a conveyance of land or an
assignment of chattels as a security for the payment of a debt or the discharge of some other
obligation for which it is given.1
J.O Fagbunmi describes mortgage as
The nature of a mortgage transaction involves a Mortgagor who gives security and takes the
loan, the Mortgagee who is the transferee of the interest and advances the loan, and the
Mortgage sum (debt) which is the sum of money over which the interest is transferred.
Two types of mortgages are recognized viz legal and equitable. For both to be recognized as
mortgages, they need to meet the requirements of the laws governing mortgages.

Today, the general law regulating interest in land in Nigeria is the Land Use Act, 1987.
Mortgages created in states in the North East, North West (except Kaduna state).North Central,
as well as, the Eastern regions are regulated by the Conveyancing Act of 1881, originally an
English legislation and one of the relics of our colonial history. However, mortgages created in
Delta, Edo, Ekiti, Osun, Ondo, Ogun, and Oyo states are regulated by the Property and
Conveyancing Law, 1959, as passed by the respective State legislatures. In Lagos, the
mortgage landscape is regulated by the Mortgage and Property Law of Lagos State, 2010.

The duties of a mortgagor 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.
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 fulfills the conditions in the deed, demand that
the mortgagor does not diminish the value of the mortgaged property, sue the mortgagor, and to
realize security. The modes of realizing security include; by appointing a receiver, by taking
possession of the mortgaged land, and by foreclosure.
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.

2.1 Equity Of Redemption And The Equitable Right To Redeem

1
Santley v. Wilde [1899] 2 Ch. 474
To understand the concept of equity of redemption, it is important to understand the influences
of equity upon money lending transactions involving the security of real property over many
centuries. At the inception of common law mortgage took form of a pledge and this pledge could
be either one of two forms:

1. Vivum vadium (living pledge): Herein, there is an agreement that the lender or the mortgagee
should enter into possession of the land and take the rents and profits in discharge of both the
principal sum and the interest of the loan.

2. Mortuum Vadium (Dead pledge): Herein, what the lender or mortgagee is entitled to take out
of the rents in discharge of the pledge is the "interest only'.

Under the old system mortgage in the 15th century, the legal title of the borrower was conveyed
to the mortgagee and upon redemption of the debt, the mortgagor was entitled to a
reconveyance of the land which had been the subject of the security. If the mortgagor was one
day late in repayment under the mortgage deed, the legal title could vest in the mortgagee and
the mortgagor would be deprived of their land, regardless of how much remained outstanding.
That amount would still be recovered at common law from the mortgagor, notwithstanding the
forfeiture of the land.
Here, this is harsh. The lending of money for usurious rates of interest in commerce was not
only looked upon by ecclesiastical authorities with suspicion, but the Courts of Chancery also
became alert to discover a want of conscience in terms imposed by lenders. Equity therefore
interfered and began to relieve what was a penalty.
Kreglinger v new Patagonia meat and cold store co ltd 1914 per Viscount Haldane LC.
In the words of Viscount Haldane:
"what made the hardship on the debtor a glaring one was that the debt still remained
unpaid and could be recovered from the feoffor (mortgagor/debtor) notwithstanding that
he had actually forfeited the land to his feoffee (mortgagee).2

The mortgagor has a legal right to redeem the mortgaged property and this right is specifically
reserved in the mortgage deed. However, the time at which the property is to be redeemed is
stated in the deed and unless this is strictly complied with, the mortgagor can no longer exercise
his legal right to redeem at Common Law. The result of this rule was to deprive the mortgagor of
his property which was only intended to be a security for a loan, and unjustly enrich the
mortgagee since the security was usually of greater value than the loan. Therefore, equity
intervened and conferred a right to redeem at any time after the contractual date for redemption
has passed.

There is a distinction between an equitable right to redeem and the equity of redemption. The
need for this distinction was emphasized by Lord Parker when he said, “

2
Kreglinger v. New Patagonia Meat and Cold Storage co ltd (1914)
 "The equity to redeem, which arises on failure to exercise the contractual right of
redemption, must be carefully distinguished from the equitable estate, which from the
first, remains in the mortgagor, and is sometimes referred to as an equity of
redemption."3

It is evident therefore that the rule of equitable right to redeem does not arise until the
contractual date for redemption has passed, the equity of redemption arises immediately the
mortgage is made.
This view was supported by Lord Hardwicke, L.C, when he describes the equity of redemption
as follows:
“ an equity of redemption has always been considered as an estate in the land, for it may
be devised, granted, or entailed with remainder, and such entail and remainders may be
barred by a fine and recovery, and therefore cannot be considered as a mere right only,
but such an estate whereof there may be a seisin; the person, therefore, entitled to the
equity of redemption is considered as the owner of the land… The interest of the land
must be somewhere and cannot be in abeyance, but it is not in the mortgage, and
therefore much remain in the mortgagor.” 4

The introduction of the equitable right to redeem was an attempt to prevent injustice to the
mortgagor and certain rules were evolved to strengthen the mortgagor’s protection.
One of the rules can be classified “once a mortgage always a mortgage, there must be no clog
or fetter on the equity of redemption”.
The maxim “once a mortgage always a mortgage means that once a transaction on proper
construction, is seen to be a mortgage, equity will not allow the introduction of any clause which
will render the mortgagor’s equitable right to redeem this property ineffective. Any attempt to
prevent a conveyance is said to be a “clog” on the equity of redemption”.
This rule was given consideration in Kreglinger v. New Patagonia Meat and Cold Storage Co.
Ltd.5 The appellants and respondents were commercial firms. The appellants (mortgagee) were
a firm of merchants and wool brokers, the respondent (mortgagor) carried on the business of
preserving and canning meat and of boiling down the carcasses of sheep and other animals.
Under the mortgage agreement, the mortgagee was not to demand repayment till after five
years if the interest was duly paid, but the mortgagor was at liberty to pay off the loan earlier. As
a security for the loan, the mortgagor was to sell sheepskins only to the mortgagee for a period
of five years so long as the latter was willing to buy at a price equal to the best price offered by
anyone else and the respondents were to pay to the appellants a commission of 1d. per cent on
the sale price of all sheepskins sold by the respondents to anyone else.
The mortgagor paid off the loan in three years and claimed to be free from the whole
agreement. The House of Lords, unanimously affirming the agreement, held that the stipulation
for pre-emption formed no part of the mortgage transactions, but was a collateral contract
entered into as a condition of the mortgagor obtaining the loan; that it was not a clog on the
equity of redemption or repugnant to the right to redeem.

3
Kreglinger v. New
4
See In Re Spencer Wells [1933] ch 29
5
[1914] A.C.25
3.1 Equity Of Redemption And The Application Of These Rules In Nigeria
His rule has been judicially considered in Nigerian cases. In Ogunro v. Ogunro & Ors6 a
covenant that part of the mortgaged property was to be conveyed to the mortgagee was
considered as a clog on the equity of redemption and was therefore illegal and unenforceable.
In that case the first defendant mortgaged his property to the second defendant, the right to
redeem the mortgaged property being expressly reserved. The evidence was that the
mortgaged property was not redeemed at the stipulated time. The first defendant received a
loan from the plaintiff to enable him to redeem the mortgage and as a security for the loan, there
was a deed of transfer of the equity of redemption to the plaintiff. There was a provision which
stated that in addition to the repayment of the loan in consequence of which the equity of
redemption would be re-assigned to the assignor by the assignee, the mortgagor would convey
in fee simple to the mortgagee an area pf land measuring 60ft. Front by 100 ft side laying at the
back of the building of the mortgaged property. The plaintiff gave notice of the assignment of the
equity of redemption to the second defendant. The plaintiff sought a court order to compel the
first defendant to convey a portion of the mortgaged property to him in accordance with the
provision of the mortgage deed. This claim was rejected on the ground that it was a clog on the
equity of redemption. Any provision in a mortgage deed which has the effect of giving additional
benefit to the mortgagee other than the realization of his security is void and unenforceable
unless such a provision can be construed as an undertaking separate from the mortgage or
where it is neither a penalty nor repugnant to the right to redeem.

In Seidu Olowu v. Miller Brothers7 the question was whether the plaintift could exercise his
power of redemption in a transaction which he claimed to be a mortgage but which the
defendant insisted was a sale.
The plaintiff's arguments were upheld by the trial Judge, who said that although the deed did not
strictly fulfil the requirements of either a deed of conveyance on a purchase or a deed of
mortgage, nevertheless, it satisfied the definition of a mortgage as being a "security created by
contract for the payment of a debt already due or become due." On appeal, the decision was
reversed because the intention of the parties to be gathered from the transaction and affirmation
of the plaintiff under cross-examination was that a conditional sale which was defeasible upon
the condition that the respondent paid to the appellants, the stipulated sum at the end of five
years period, and since this condition had not been compiled with, the property vested in the
appellants.
The rights to redeem may be lost by lapse of time. Thus s.7 of the Real Property Limitation Act,
1874, provides that when a mortgagee has been in possession of the mortgaged property for a
period of 12 years, unless there is an acknowledgement of the title of mortgagor or the right of
redemption in writing signed by the mortgagee, the title of the mortgagor is thereafter
extinguished.8

4.1 Conclusion
The maxim 'once a mortgage always a mortgage' provides that the true nature of the mortgage
can never be changed. The mortgage and the right of redemption are inseparable i.e. the right
6
[1960] L.L.R 20
7
[1922] 3. N.L.R, 110
8
See John Mills v. Awooner (1940) 6. N.L.R, 114
of redemption can never be limited or closed as it will always remain in the mortgage deed. Any
clause/ condition/ stipulation is included in the mortgage deed by the mortgagee, which is
unreasonable and against public policy, as it put absolute restraint on the mortgagor's right to
redemption is void.