Biggs v Hoddinott
A tie requiring a mortgagor to buy beer only from the mortgagee while the mortgage continues is valid.
Facts
Mr Hoddinott, a publican, mortgaged his hotel to Biggs, a brewer. He agreed that the mortgage could not be redeemed for five years, and that, during the mortgage, he would buy all his beer from the brewer. When the brewer sued on the mortgage, the publican argued that the tie was an unlawful collateral advantage that made the mortgage invalid.
Legal principle
The Court of Appeal held that the tie was valid. Lindley MR said that a collateral advantage given to a mortgagee in addition to interest is valid as long as it is not unconscionable and does not continue after redemption. A brewer who lends money to a publican has a legitimate interest in the sale of its beer, and the tie was a fair part of the bargain. The case is contrasted with Noakes v Rice, where the tie continued after redemption.
Related cases on mortgages
- Barclays Bank plc v O'Brien [1994] 1 AC 180
- Cheltenham & Gloucester Building Society v Norgan [1996] 1 WLR 343
- CIBC Mortgages plc v Pitt [1994] 1 AC 200
- Cityland and Property (Holdings) Ltd v Dabrah [1968] Ch 166
- Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949
- Fairclough v Swan Brewery Co Ltd [1912] AC 565
- Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317
- Horsham Properties Group Ltd v Clark [2008] EWHC 2327 (Ch), [2009] 1 WLR 1255
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