Facts
- A mortgage over business premises was granted by the claimants to the defendant in return for a £36,000 loan
- The agreement linked the mortgage’s interest rate with the exchange rate between the pound sterling and the swiss franc
- A dramatic change in the exchange rate caused a significant increase in the rate of interest charged
Issue
- Could the interest rate link term be avoided as is destroyed the equity of redemption possessed by the claimants?
Decision
- No
Reasoning
- For a term to destroy the mortgagor’s equity of redemption, it would have to be unconscionable or contrary to public policy
- It was not enough that the term was merely unreasonable as both parties were of equal bargaining power
