There is an impediment as regards the exercise of such power of sale as envisaged under the Act.  The Amendment impedes the exercise of such powers and leaves in doubt the reliability of this particular remedy especially when it is subjected to a continuous interruption.

Under the RLA a chargee has fewer remedies than would avail to a mortgagee under ITPA, infact the RLA severely restricts other remedies apart from the statutory power of the sale.  Section 80 declares that a chargee may not enjoy a right of entry therefore there can be no taking of possession neither can a chargee proceed by way of foreclosure.  Similarly under S. 84 of RLA a Chargee has no right of consolidation unless his sale is expressly reserved in at least one of the charges.  One is better of dealing with this particular transactions under the ITPA than under the RLA from the perspective of the person providing the

The Judicial approach to the exercise and/or enjoyment of the Right of Redemption.

At common law, failure to make repayment of the amounts advanced and any other interests accrued automatically led to extinction of rights so if at the legal date of redemption no repayment has been made, common law treated the right of redemption to have ceased.  Through intervention of equity this position has been substantially altered in the sense that indulgence is granted to the borrower even long after the expiry of the actual date, the legal date of redemption.  That is premised on the understanding that the basic character of the transaction i.e. that of a mortgage transaction should not be undermined and once a mortgage the transaction remains a mortgage.

Both the ITPA and the RLA grant the right to redeem which is granted in absolute terms and there is no element of a fetter or clog even from a statutory standpoint and accordingly the borrower may move to redeem his property at any time after the principal sum has become due and payable an there is no requirement to issue a notice of such intention.  Section 72(1) of the RLA makes it clear that any agreement between the Chargor and Chargee to deprive the Chargor his equitable right of redemption shall be void for all purposes.  Under both legislation the right of redemption is inviolable.  In any case if no date of redemption is specified in the instrument of the charge it is the position in the RLA that the sums shall be deemed to be payable 3 months after a demand in writing from the Chargee to the Chargor seeking for repayment of such an amount as may be due.  In the event that the Chargor wishes to express his right of redemption after 3 months following the demand, there is a requirement that he shall serve 3 months notice or pay 3 months in lieu thereof at the time of redeeming the property.  Based on this points the courts have approached the issue of  guaranteeing this right and protecting it wherever it is necessary to do so.

There are a number of case law to support that situation.

In Saleh V. Eljofri (1950) 241 KLR the court held that a borrowers equity of redemption was an essential element of every mortgage transaction and that failure to repay the mortgage on the agreed contractual date of redemption did not debar the borrower from exercising his right to redeem the mortgage property.

Similarly in Industrial and Commercial Dev Corp V. Kariuki and Gatheca Resources Ltd the court underscored the fact that the right of redemption subsists until such a time that a transfer has been duly registered.  Accordingly anytime before such an exercise is undertaken in exercise of this equity of redemption, the Chargor can proceed and make good on the amounts due in exercise of this particular right.  This is guided by the understanding that the borrower both under the ITPA and RLA is entitled to redeem his property unconditionally at any time after the principal amount has fallen due and that right cannot be impeded.  There is an exception to this under S. 91 of the Companys Act we have a situation where the rights of redemption can be precluded if one enters into an arrangement involving irredeemable debentures.  Creation of these debentures would appear to offer some sort of departure from the holdings of the courts that this right cannot be displaced.

In the case of Fairclough and Swan Bakery Co. Ltd (1912) AC 565 there was a clause that purported to postpone the right to redeem on the part of the mortgagor for about 20 years in the estimation of the court this particular clause rendered the property virtually irredeemable and that was a violation of the mortgagor’s right of redemption and accordingly such a clause could not stand and the court agreed that the borrower had the right to redeem at an earlier date other than the one stated if he was in a position to solve his debts.  In the words of MacNaghten J. equity will not permit any device or contrivance being part of the mortgage transaction or contemporaneous  with it to prevent or impede redemption.

In the case of Lewis V. Frank love Ltd (1961) the arrangement was that the borrower and the personal reps of the lender agreed that if the said personal reps did not demand for the repayment of the mortgage debt for a period of 2 years, the borrower would grant them and option to purchase part of the mortgage property.  In the opinion of the court this agreement constituted a clause that amounted to a fetter on the borrowers redemption of equity and could therefore not stand and accordingly it was void since it amounted to a clog on the equity of redemption.

In Davies and Simmons 1934 Ch. 442 the court declined to uphold an agreement  by virtue of which the mortgage property would belong absolutely to the Mortgagee in the event that the borrower died before him because that sort of condition tended to fetter and clog the equity of redemption the idea being that the mortgage transaction essentially retains its character as such and anything that is introduced which would substantially alter this character would not be upheld by the courts because it undermines that the institution.

There are instances where the courts have upheld existences of terms and conditions which would appear to assume the character of a fetter or clog but for the fact that they are collateral advantages that subsist alongside such terms and conditions which effectively alter their nature so that they are not seen as fetters and clogs but rather reasonable.  The courts jealously guard the mortgagors equity of redemption and anything inconsistent with enjoyment of the mortgagor’s rights is resisted.  The other side of the coin is that in situations where such conditions that would appear to be fetters and clogs, are there but it is the understanding that provided that these conditions and terms are not oppressive or unconscionable the courts will disregard the clauses and give them effect.  There are a number of judicial decisions which represent this standpoint

In Knightsbridge Estates Trust Ltd V. Bryne (1940) AC 613 the agreement was to the effect that the mortgagors would repay a loan advanced to them amounted to Pounds 360 for a period stretching 40 years.  They later changed their stand because they had found an alternative lender that would give preferential interest rates and wished to borrow from that other source and sort to do that before the other period ran.  In any event the stipulation in relation to the forty year period postponed the exercise of their right of redemption.  This was unreasonable and therefore void. The court held that there was nothing oppressive in this particular arrangement and the mortgagors has been indulged and accommodated based on very fair terms and Lord Green observed that equity does not reform mortgage transactions because they are unreasonable but it is concerned to see that essential requirements of such transactions are observed and unconscionable terms are not endorsed.

In Krellinger V. New Patagonia Meat and Cold Storage Co. Ltd, (1914) AC 25 the arrangement was that the Respondents would be provided with a loan which was to be secured by a floating charge.  A further stipulation in the mortgage instruments was to the effect that for a period of 5 years from the date of the mortgage the company would not sell sheep skins to persons other than the lenders provided that the lenders paid the best price obtainable in the market within the material period.  When the matter became contentious it reached the courts and in the opinion of the court the agreement was valid because the stipulation that was restrictive was in fact a collateral contract outside the main mortgage transaction and conferred collateral advantages and so the courts would not interfere.

In Multi Service Bookbinding Co.V. Marden 1978 Vol 2 WLR 535 the court was categorical that a collateral provision in a mortgage which does not clog the equity of redemption would stand and can only be objected to on the grounds of it being unfair or unconscionable.  Such a transaction would not be impeached.

In Noakes V.Rice the court stated that if provisions in a mortgage transaction though unreasonable are not unconscionable in any way, no subsequent events will operate to invalidate the transaction.  The court declined to intervene in the commercial transaction foreseeing a drop in the value of the British pound.

In the clearest of cases, where there is an impediment in the right of redemption the courts will strike down the transaction for being void on the other hand in those other situations where the parties bind themselves to terms to terms that amount to clogs and fetters but include collateral advantages would be saved.


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