Chap. XXXVII. (v.)

Sub-sect. 2.
Leases by

however, grant leases under the Settled Land Act, 1882, s. 50, without the consent of the mortgagee, unless the mortgagee is actually in possession (g).

Where a lease is granted by a mortgagor in possession under the Conveyancing Act, the mortgagee on giving notice to the tenant and going into possession is entitled by virtue of the Act to enforce the covenants in the lease in the same manner as if he had been a party to it (h).

A mortgagee is not bound by any agreement collateral to the lease made between the mortgagor and his lessee (i).

Where a lease is granted by a first mortgagee and the mortgagor, the lessee must take by the better title. The better title under the Act is given by the mortgagor in possession. Therefore the lessee is bound by the restrictive covenants of the mortgagor in a second mortgage, and will not be deemed to take under the paramount title of the first mortgagee (k).

Sub-sect. 2 of sect. 18 of the Act of 1881 empowers mortmortgagees in gagees in possession to grant leases of the mortgaged lands in accordance with the provisions contained in the following subsections. This question will be considered later (1).

possession.

Sub-sect. 3.
No power to

leases.

Mortgagors are not empowered under sect. 18 to grant mining grant mining leases of the mortgaged land, inasmuch as such leases involve the abstraction of corpus of the property so as prejudicially to affect the security. But the provisions of the section, with such modification as may be necessary, may be extended by the terms of the mortgage deed so as to enable a mortgagor to grant mining leases (m). It will be observed that mining leases are not excepted from the statutory power of leasing given by the Settled Land Act, 1882, to limited owners of settled lands which are in mortgage.

Sub-sect. 6. Best rent to be reserved.

Sect. 18 requires the lease to reserve the best rent that can reasonably be obtained. In estimating what is the best rent in each case, the particular circumstances must be regarded as a whole; and if the lease was granted in good faith and between independent contracting parties, the Court would not interfere unless satisfied that the inadequacy was substantial (»).

Chap.

By virtue of sects. 10, 11 of the Conveyancing Act, when a mortgagor in possession has granted a lease under sect. 18, the XXXVII. (v.) mortgagee upon giving notice of his intention to take possession becomes the reversioner and is entitled to the benefit of the cove- Sub-sect. 7. Covenants nants and conditions in the lease, and is subject to the obligation and condition of the covenants entered into by the mortgagor (0).

of re-entry.

The mortgagor must deliver to the mortgagee a counterpart Sub-sect. 8. within one month after making the lease (p). If the mortgage counterpart. Delivery of is of an undivided share of land, and the mortgagor concurs with the other co-owners in granting a lease under this section, he must either obtain their consent to the delivery of the counterpart to the mortgagee or he must obtain a duplicate counterpart from the lessee. If a counterpart has been executed by the lessee, the non-delivery thereof to the mortgagee will not prevent the lease from being binding on the mortgagee in favour of the lessee, who is not concerned to see that the counterpart is delivered to the mortgagee (p); but the lessee and those claiming under him will be protected by production. of the lease executed by the lessor. The omission to deliver the counterpart would not invalidate the lease, but it would make the statutory power of sale immediately exerciseable (7).

For the purposes of the Act, "building purposes include the Sub-sect. 9. Building erecting and the improving of, and the adding to and repairing leases. of, buildings; and a building lease is a lease for building purposes or purposes connected therewith" (r). Sect. 18, subsect. 9, of the Act, by enacting that building leases shall be made for the considerations therein mentioned (which are in effect considerations that the lessee shall carry out building purposes), seems impliedly to allow that such considerations may be regarded in fixing the best rent. If it is desired that the mortgagor shall not be able to grant under his statutory power a valid lease, reserving for five years a comparatively low or even nominal rent in consideration of the lessee having carried out, or undertaking to carry out, building operations involving large capital expenditure on his part, a contrary intention must be expressed in the mortgage deed under sub-sect. 13. It would seem, by analogy, that a past voluntary expenditure,

Sutherland, (1893) 3 Ch. 169, 193;
Renner v. Tolley, W. N. (1893) 90.
(0) Municipal Soc. v. Smith, 22
Q. B. D. 70; Wilson v. Queen's Club,

(1891) 3 Ch. 522.

(p) Conv. Act, 1881, s. 18, sub-s. 11.
(q) Ibid. s. 20.
(r) Ibid. 8. 2 (x).

Chap.

(v.)

Repairing lease.

Sub-sect. 13.

Contrary intention.

Execution of mortgage deed by mortgagee to entitle him

to benefit of

contrary intention.

Sub-sect. 15. Leases of copyholds.

that is, money laid out by the lessee without any reference to the lease, cannot be treated as a consideration under subsect. 9 (8).

The consideration of "having repaired buildings" will not be satisfied by part repairs effected by the lessee without any binding obligation or contract on his part (s).

It is not unusual in practice to insert in mortgages a proviso excluding or modifying the provisions of this section, on the ground that the powers thereby conferred upon mortgagors are unduly extensive.

Where it is intended to exclude the operation of this section, this should be done in express terms, and not merely by giving different powers of leasing to the mortgagor, which might be construed as collateral to and not in substitution of the statutory powers.

If the operation of the section is simply negatived, the concurrence of the mortgagee in leases will be required, as was the case before the passing of the Act.

Sub-sect. 13 requires that the contrary intention should be expressed not merely in the mortgage deed, but "by the mortgagor and the mortgagee in the mortgage deed, or otherwise in writing." But, notwithstanding these words, it does not seem necessary, in order to express a contrary intention, that the mortgagee should execute the mortgage deed. The mere acceptance by him of the security binds him. No doubt the execution of the deed by the mortgagor alone would bind him, as between himself and the mortgagee, not to grant such a lease, and the mortgagee, although he had not himself executed the deed, might restrain the mortgagor from doing so; but it seems doubtful whether, after the lease had been granted, the mortgagee, unless he had executed the mortgage deed, could treat the lease as void as against a person who was not a party to that deed and had taken his lease bonâ fide and without notice that the mortgagor's statutory powers of leasing had been therein expressed to be excluded.

The effect of sub-sect. 15 is to render the powers of leasing conferred by this section inapplicable, except by licence of the lord, to copyholds in manors where there is no custom to lease without such licence.

(s) Re Chawner's Settled Estates, (1892) 2 Ch. 192.

ment.

The powers of leasing given by sect. 18 apply to mortgages Chap. made after, but in pursuance of agreements made before, the XXXVII. commencement of this Act. So where an agreement for a mort- (v.) gage made before the commencement of the Act provided that Sub-sect. 16. Mortgage a mortgage should be executed containing a power of sale and after the Act all other "usual clauses," it was held that the mortgagor was under agreenot entitled to have the operation of this section excluded (t). The words "so far as circumstances admit" apparently render Sub-sect. 17. inapplicable to parol agreements sub-sect. 7, as to covenant for payment of rent and condition of re-entry, and sub-sect. 8, as to delivery of a counterpart, and also permit an agreement to pay rent to be substituted for a covenant in agreements in writing not under seal for leasing or letting.

(t) Re Nugent and Riley's Contract, 49 L. T. 132. See Farmer v. Pitt, (1902) 1 Ch. 954.

Parol leases

and tenancies.

Right to redeem inherent to mortgage.

No redemption where conditional sale.

Title to re

deem must be shown.

CHAPTER XXXVIII.

OF REDEMPTION.

SECTION I.

OF THE RIGHT TO REDEEM GENERALLY.

i.-Who are entitled to redeem.-It has been seen that the right of redemption is inherent to and inseparable from a mortgage transaction, whether, as is usually the case, the right is vested in the mortgagor by an express proviso to that effect contained in the mortgage deed, or whether it is to be reasonably inferred from the circumstances of the transaction that the instrument was intended to operate by way of security, and not as an absolute conveyance (a). This inherent. right is, however, enforceable only by the persons, subject to the conditions, and in the manner hereafter stated.

If the transaction be by way of sale, but reserving to the vendor a right of repurchase within a limited time or in a certain event, it is not a mortgage, and if the condition of repurchase is not strictly complied with, the grantee's title will become absolute so as to deprive the grantor of any right of redemption (b).

It is a general principle that no person shall be entitled to redeem but he who can show a good right to redeem; for the mortgagee is entitled to hold the property against all persons who cannot clearly establish a paramount title (c). So where a person claiming under the heir general sought to redeem a mortgage on the fee, and the mortgagee by his answer set up a deed of entail entitling another person to the equity of redemp

(a) See ante, p. 11.

(b) Perry v. Meadowcroft, 4 Beav. 202; Alderson v. White, 2 De G. & J.

97. As to conditional sales, see ante, p. 22.

(c) 2 Eq. Ca. Abr. 599. See Tyson v. Cox, T. & R. 395.