• The case of Lewis v Love [1961] 1 WLR 261 concerned 2 separate documents. It was held that it was a matter of substance not form whether a term is a clog on the equity of redemption. In substance, an option can be part of a mortgage agreement whilst being contained in a separate agreement.

Facts of Lewis v Love [1961] 1 WLR 261

  • C mortgager granted D mortgagee the option to purchase part of the mortgaged land which was contained in a separate document
  • D sought to exercise this option
  • C then sought declaration that this option was void as a clog on the equity of redemption
  • D argued otherwise as it was not imposed as part of the original mortgage agreement

Issues in Lewis v Love [1961] 1 WLR 261

  • Did the doctrine of clog on the equity apply where the clog was imposed by a separate agreement and not the mortgage transaction?

Held by the High Court

The option to purchase was void as being a clog on the equity, and therefore the C succeeded.

Justice Plowman

Justice Plowman cited a number of cases relating to the application of clogging the equity [267]:

  • Citing the case of Reeve v Lisle [1902], Justice Plowman believed it to establish “what has to be looked at in the case of a mortgage transaction is the substance of the matter and not the form in which the bargain is carried out.”

Within the same case, Lord Halsbury stated it was not sufficient to “merely … look at the documents themselves for the purpose of discovering what the true transaction is, but that the object and purpose with which the documents were entered into must be inquired into” [268]

Applying this to the current case, it seemed to Justice Plowman “that the object and purpose with which these documents were entered into was as part of a bargain whereby the plaintiff was to get a loan of £6,500, and the defendants were to get an option to purchase part of his property” [268]

  • Therefore, this would be clogging the equity, and the option would be invalid as it would prevent C from getting back that part of the land