Wily v Endeavour Health Care Services Pty Ltd (No 5)

The case involved Wily, the mortgagor, and Endeavour Health Care Services Pty Ltd, the mortgagee. The dispute centred around the enforceability of an option to purchase a property granted to the mortgagee by the mortgagor. The case was heard in the Supreme Court of New South Wales. The primary issue was whether the option to purchase constituted a clog on the equity of redemption, making the transaction unenforceable. Another significant legal question was whether the rule against clogs on the equity of redemption applies to a single judge and whether unconscionability is the only basis for declaring such a collateral advantage unenforceable.

The court examined whether the option to purchase was, in substance, a mortgage and thus a clog on the equity of redemption. It considered the legal precedents that establish the rule against clogs on the equity of redemption and whether this rule is binding on a single judge. The court also deliberated on whether unconscionability is the sole basis for the unenforceability of a collateral advantage. The decision hinged on whether the transaction was, in effect, a disguised mortgage, which would render it void under the clog rule.

In its ruling, the court held that the option to purchase was not, in substance, a mortgage and therefore did not constitute a clog on the equity of redemption. It found that the rule against clogs on the equity of redemption applies to a single judge and that unconscionability is not the only basis for declaring a collateral advantage unenforceable. The court concluded that the option to purchase was a legitimate transaction and enforceable, provided that it did not result in unconscionability.

The final orders of the court upheld the enforceability of the option to purchase. The court dismissed the claim brought by the mortgagor, Wily, and ruled in favour of the mortgagee, Endeavour Health Care Services Pty Ltd.