Toomes v Conset (1745) 3 Atk 261
Equity requires consideration of substance rather than form of transaction
The property in question was the subject of a lease for sixty years. This lease had been granted as a collateral security against the sum of £3500. Upon expiry of the lease, the plaintiff (T) pled to be let into possession of the premises and for the security to be vacated or satisfaction thereof to be entered on the record.
T sought a reconveyance of the said premises as the collateral security was expired in order to allow for his continued possession of the premises.
The Court of Chancery refused to allow a deed of mortgage which contained an agreement which allowed the lender to absolutely purchase (i.e. a proviso for redemption). According to the Lord Chancellor, allowing this would put the borrower at a disadvantage vis-à-vis the lender. The borrower is distressed at the time of the deed of mortgage and would be inclined to submit to any terms proposed by the lender. As the lease of sixty years had expired, T was only entitled to a conveyance of the premises in question, and to possession thereof, upon payment of what was due to the defendant. This case demonstrates the longstanding principle of equity that the substance of the transaction shall be considered rather than the form. The Court will treat a mortgage as a mortgage and nothing but a mortgage. This is now been an established principle for centuries (Grangeside Properties v Collingwoods Securities  1 WLR 139).