Palk v Mortgage Services Funding plc [1993] Ch 330

Facts

  • Mrs. Palk, a mortgagor, sought to sell her property to repay the mortgage debt owed to Mortgage Services Funding plc.
  • The mortgagee objected to the sale, arguing the proposed sale price was insufficient to cover the outstanding debt and that delaying the sale might allow the property's value to increase.
  • Mrs. Palk claimed the sale was necessary to avoid further financial hardship and asserted the property's value was unlikely to rise significantly in the near future.
  • The court was required to determine whether to order the sale of the property under Section 91(2) of the Law of Property Act 1925, considering the interests of both parties and the property's market prospects.

Issues

  1. Whether the court could order the sale of mortgaged property under Section 91(2) of the Law of Property Act 1925 over the objection of the mortgagee.
  2. How the court should balance the financial interests and hardship of the mortgagor against the mortgagee’s opposition, particularly regarding speculative future property values.

Decision

  • The Court of Appeal upheld the decision to order the sale of the property.
  • It found that the purpose of Section 91(2) is to allow intervention when a mortgagor’s financial circumstances necessitate a sale to discharge the mortgage debt, despite mortgagee objection.
  • The mortgagee’s opposition did not outweigh the equitable need to address the mortgagor’s financial hardship.
  • The speculative argument for waiting on future property appreciation was rejected given the current decline in value and lack of certainty about future recovery.

Legal Principles

  • Section 91(2) of the Law of Property Act 1925 grants the court broad discretion to order the sale of mortgaged property at the request of the mortgagor or interested parties.
  • The court must exercise this discretion by balancing the equitable interests of both mortgagor and mortgagee, focusing on practicality and the actual financial circumstances.
  • The mortgagor’s need to mitigate further financial hardship may outweigh speculative or tactical arguments from the mortgagee concerning potential future value increases.
  • The case sets a precedent that practical and equitable considerations underlie the resolution of mortgage sale disputes.

Conclusion

Palk v Mortgage Services Funding plc [1993] Ch 330 clarified the court’s discretionary power under s 91(2) of the Law of Property Act 1925 to order the sale of mortgaged property, emphasizing the fair balancing of interests and rejecting mere speculation about future value in the face of present financial hardship.

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Job Test Prep
One-time Fee
$90-350

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal