Noakes v Rice [1902] AC 24

• Plaintiff, a mortgagor, was a pub, and agreed to purchase all alcohol from Defendant, mortgagee, even once no more money was owing.

• The HL said that collateral advantages are invalid where they represent a clog on the right of redemption and, having paid off the debt, Plaintiff was entitled to have the security interest returned to them and were not bound by the term requiring exclusive purchasing from Defendant. 

Lord Macnaghten

• Redemption is inherent to a mortgage, and therefore, once the debt has been repaid the land “as free and unfettered to all intents and purposes as if the land had never been made the subject of the security”.

Lord Davey

Once a mortgage always a mortgage and nothing but a mortgage.

• Hence no clog or fetter on the right to redeem is valid.