## Facts

- Mr. Jones mortgaged his property to Mr. Morgan as security for a loan.
- The mortgage agreement included a clause granting Mr. Morgan an option to purchase the property at a fixed price, exercisable at any time after the loan was repaid.
- Mr. Jones argued that this clause constituted an impermissible clog on his equity of redemption and was therefore unenforceable.
- The trial court had ruled in favour of Mr. Morgan, upholding the validity of the option clause.
- Mr. Jones appealed to the Court of Appeal, challenging the clause as an undue restraint on redemption.

## Issues

1. Whether the option clause allowing the mortgagee to purchase the property after repayment was a void clog on the equity of redemption.
2. Whether such a clause unfairly restrained the mortgagor’s right to redeem free of unreasonable conditions.

## Decision

- The Court of Appeal held that the option clause was a void clog on the equity of redemption.
- The clause granted Mr. Morgan a significant and ongoing advantage by enabling the purchase of the property at a fixed price, regardless of its market value, even after redemption.
- The option was not necessary to protect the mortgagee’s legitimate interests.
- Any term that imposes an unreasonable or perpetual restraint on the mortgagor’s right to redeem is unenforceable.
- The judgment clarified that such post-redemption options are void unless they can be justified as reasonable and necessary.

## Legal Principles

- The equity of redemption gives the mortgagor the right to regain title to the property upon repayment and must not be fettered by unreasonable restraints.
- Any term in a mortgage agreement that unduly restricts the right to redeem (a clog) is void unless reasonable and necessary to protect the security interest of the mortgagee.
- Post-redemption options in favour of the mortgagee are closely scrutinized for fairness and balance between the parties’ interests.

## Conclusion

The Court of Appeal affirmed that a mortgagor’s right to redeem must remain unfettered, holding that post-redemption purchase options that operate as unreasonable restraints are void, thereby reinforcing equitable protection for mortgagors in mortgage transactions.


Jones v Morgan [2001] EWCA Civ 995