Palk v Mortgage Services Limited
Court of Appeal 31 July 1992 (Guardian Law Report 19 August 1992)

Mr and Mrs Palk defaulted on a £300,000 mortgage. They wished to sell the house to prevent the debt increasing even though this would leave a debt outstanding to the mortgage company, because the debt was increasing by about £30,000 a year, more than could be expected from a recovery in the property market or from letting the property. If the debt was reduced, future interest additions would be minimised. Mr and Mrs Palk applied to the County Court under the Law of Property Act 1925 for an order that the house be sold. The County Court judge dismissed the application and held that an order for sale could only be made against the wishes of the lender if the sale would discharge the debt. Mr Palk was now bankrupt so Mrs Palk appealed. The Appeal Court held that the company should not be able to prevent a sale in the hope that the property market would recover, particularly because they were holding out the threat of being able to pursue Mrs Palk for their losses.