Knightsbridge Estates Trust Ltd v Byrne
A postponement of the right to redeem a mortgage of freehold land for 40 years was valid, because it was a commercial agreement between parties of equal bargaining power.
Facts
Knightsbridge Estates mortgaged its freehold properties to the trustees of a friendly society, to secure a loan of £310,000. The mortgage provided that the loan was to be repaid in 80 half yearly instalments over 40 years, and that the mortgagor could not redeem earlier. When interest rates fell, Knightsbridge wanted to repay the loan early and borrow more cheaply elsewhere, and argued that the postponement was void.
Legal principle
The Court of Appeal held that the postponement was valid. Sir Wilfrid Greene MR said that equity does not reform mortgage transactions because they are unreasonable, and that a postponement of the right to redeem is not invalid simply because it is for a long period. The mortgage was a commercial agreement between two large companies, negotiated with professional advice, and it was not oppressive or unconscionable. The right of redemption was not illusory, because the property was freehold. The House of Lords dismissed an appeal on a different ground, under the Companies Act.
Related cases on mortgages
- Barclays Bank plc v O'Brien [1994] 1 AC 180
- Biggs v Hoddinott [1898] 2 Ch 307
- 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
Studying land law? Our tutors help you understand and apply cases like this in essays, problem questions and exams. Request a quote or browse our law notes.
This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
