Published: Wed, 07 Mar 2018
Biggs v Hoddinott  2 Ch 307
Collateral advantage upheld and did not clog the equity of redemption of a mortgage deed
The plaintiff (B) was a brewer. The defendants (H) were the owners of a hotel. The plaintiff had a mortgage over the hotel. The mortgage deed contained a joint and several covenant under which H would deal exclusively with B, for all beer and malt liquor sold on the mortgaged premises.
B sought an injunction for breach of the joint and several covenant. H claimed that they were entitled to redeem the mortgage early. Counsel for H argued that the covenant binding them to buy all beer and liquor from B during the term of the mortgage was a collateral advantage stipulated for by B in the deed and that a mortgagee is not entitled to anything more than the principal, interest and costs under the mortgage deed. Such an unfair collateral advantage should not be upheld.
The Court of Appeal held that there was nothing unreasonable or oppressive in the proviso which prevented the mortgage being redeemed for five years. There was also nothing unreasonable about the covenant in relation to the supply of beer and liquor from B. There was nothing in this particular covenant which clogs the equity of redemption. Romer J noted that the right to redeem under the mortgage stood exactly the same whether the covenant to take beer from B was contained in the mortgage deed or not. Whilst B obtained a collateral advantage, this was deliberately entered into by the parties while on equal terms and without improper pressure or unfair dealing. Accordingly, the Court upheld the deed as agreed upon between the parties.
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