Maanicka Naicker v. Macnicol

Facts

• A mortgage deed contained a clause requiring the mortgagor to sell all agricultural produce exclusively to the mortgagee
• This obligation was to continue even after the mortgage debt was fully repaid
• The mortgagor challenged the clause after repaying the debt

Issue

1. Whether a stipulation for a collateral advantage (exclusive dealing clause) that continues after the mortgage is redeemed is a valid condition or a clog on equity of redemption.

Held

• The clause is void as a clog on the equity of redemption. A mortgage creates a security interest. Once the security purpose is achieved (debt repaid), all collateral advantages must end. A condition that binds the mortgagor beyond redemption is inconsistent with the nature of a mortgage.

Ratio Decidendi

"Once a mortgage, always a mortgage" means that no condition in a mortgage can survive the discharge of the mortgage debt. Collateral advantages that operate during the mortgage term may be valid, but those that continue after redemption fetter the property beyond the security purpose and are void.