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Kreglinger v New Patagonia Meat Company [1914] AC 25

By Oxbridge Law TeamUpdated 04/01/2024 07:13

Judgement for the case Kreglinger v New Patagonia Meat Company

  • Under the terms of a mortgage, the mortgagee was to have the right of first refusal on products produced by the mortgagor.

  • Mortgagor claimed that this collateral advantage could not have effect once the debt was repaid as this would infringe the principle of redemption.

  • HL rejected this, overturning its previous position and enforce freely made contractual obligations instead.

  • It ruled that collateral advantages continue to operate once the debt is repaid except where:

    1. It is unreasonable/unfair; or

    2. If it operates as a penalty, clogging equity of redemption; or

    3. Is repugnant to the right to redeem (per Lord Parker). 

Lord Parker

  • There is no reason why a term of a mortgage agreement should be invalidated on grounds not applicable to other types of mortgage.

  • Unconscionability, duress and undue influence (and nowadays the protection under UTCCR, UCTA and consumer credit legislation) are adequate protection for borrowers against exploitation. 

Viscount Haldane LC

  • The rules on not clogging mortgages have turned into technicalities capable of defeating their actual purpose. 

Lord Mersey

  • The rule of equity on redemption has to be strictly confined lest it wander into areas it ought not to enter, like “an unruly dog”. 

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987 total pages
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Land Law notes fully updated for recent exams at Oxford and Cambridge. ...