Property was charged in 1973. The principal was be repayable in 1988 with interest. There was no provision by which a default made the power of sale exercisable or the advance repayable. When the borrower defaulted, the mortgagee had to apply to court for an order for sale in lieu of foreclosure under section 91(2) of the 1925 Act.
Held: The order was made. As to the proceeds: ‘The plaintiffs will of course be entitled, having paid the expenses of the sale, to discharge all arrears of interest down to date; that will leave a principal sum outstanding, the principal sum of andpound;19,000. There will remain in the hands of the plaintiffs, after discharging arrears of interest, and if the sale produces only the andpound;18,000 expected, a sum of, say, andpound;15,000. Now, in my mind, as the plaintiffs will have that sum of andpound;15,000 in hand they will be unable to say in future as regards that andpound;15,000 ‘Payment is not yet due, therefore we can invest it. Interest at the high rate secured by the mortgage will continue to accrue, and we will give credit for the interest produced by investing the money at a rate inevitably less than the mortgage rate.’ It seems to me that either as a necessary consequence, or as a matter of a condition which I can impose, the plaintiffs must treat any money which is in hand after payment of expenses and interest down to date as being in satisfaction pro tanto of the principal secured by the mortgage, and of all future interest on the principal so satisfied. That seems to me to be fair to both parties and to produce an equitable result.’
Judges:
Templeman J
Citations:
[1977] Ch 99
Statutes:
Law of Property Act 1925 91(2)
Jurisdiction:
England and Wales
Cited by:
Cited – West Bromwich Building Society v Wilkinson HL 30-Jun-2005
The Society had taken possession of a property in 1989. It located the defendants many years later and sought payment of the excess after deduction of the proceeds of sale, and for interest. The borrowers claimed the debt was expired by limitation . .
Lists of cited by and citing cases may be incomplete.
Land, Limitation
Updated: 13 July 2022; Ref: scu.228176