D and F, who both had beneficial interests in a house, took out a mortgage with bank P, but F had forged D’s signature on certain documents giving charges over the house. After F’s death, D fell into arrears and P sued for possession under s.14 of TLATA 1996. Neuberger J did not make the possession order. He held that the 1996 act had been intended to change the law, not merely codify it. Under the court’s discretionary powers arising under the act for trusts of land, the correct approach is that “once the relevant factors to be taken into account have been identified, it is a matter for the court as to what weight to give to each factor in a particular case”. In assessing whether there ought to be a sale Neuberger J took account of the fact that P had a 25% equity that was useless without a sale, while D did not want to sell her home to which she was emotionally attached. He therefore made an order that the 25% share was to be treated as a loan that D could pay off at an appropriate rate of interest, and failure to do this would lead to repossession by P.
This demonstrates (1) that the law has moved away from the necessary conclusion that default = repossession, and the more flexible approach of loan restructuring can be made instead, based on reaching a compromise between the interests of the parties. (2) The noting that the home had an emotional value means that courts may draw an asset-home distinction, to be treated differently. (3) because this position seems more pro-co owner and anti-lender, the banks are simply more likely to bring proceedings under insolvency procedures, as in Slayford (below). Also NB the defendant in this case was pecunious and had a reasonable chance of successfully buying the lender out: exceptional.