Warnborough Ltd. v Garmite Ltd.

Warnborough Ltd. v Garmite Ltd.

The enforceability of the options as 'clogs' on the equity of redemption cannot be determined on summary judgment by reference only to the transaction documents. The true nature of the transaction must be established at trial after full investigation of the facts. The appeal is allowed and the Master's order dismissing Garmite's application is restored.

Parties
Appellant/claimant: Warnborough Ltd; Respondent/defendant: Garmite Ltd
Jurisdiction
England and Wales
Judgment Date
05 November 2003
Procedural Posture
Civil Appeal / Second Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal allowed; summary judgment refused; Master's order restored
Legal Topics
Clog on the Equity of Redemption, Options to Purchase Property, Summary Judgment, Mortgages, Specific Performance
Property Law Equity Civil Procedure Clog on the Equity of Redemption Options to Purchase Property Summary Judgment Mortgages Specific Performance

Case Brief

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Parties

Warnborough Ltd

Appellant/claimant

Garmite Ltd

Respondent/defendant

Procedural Posture

Civil Appeal / Second Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether an option to purchase real property is unenforceable as a 'clog on the equity of redemption' when granted contemporaneously with a mortgage transaction
  2. 2 Whether summary judgment was appropriate on the 'clog' issue

Ratio Decidendi

The enforceability of the options as 'clogs' on the equity of redemption cannot be determined on summary judgment by reference only to the transaction documents. The true nature of the transaction must be established at trial after full investigation of the facts. The appeal is allowed and the Master's order dismissing Garmite's application is restored.

Court Disposition

Appeal allowed; summary judgment refused; Master's order restored

Orders

  • Warnborough's appeal allowed
  • Master's order dismissing Garmite's application restored