Target Home Loans Ltd v Clothier [1994] 1 All ER 439
Not in best interests to allow lender to have opportunity to sell property whilst in arrears
Facts
The respondents took a mortgage on their home. The appellant lender sought an order for possession after repayments were not made. The initial hearing was adjourned to allow the respondents to finalise sale of part of the land. The appellants appealed to the Court of Appeal against this adjournment. By the date of the hearing the sale of the land had not been completed. However, a letter from an estate agent expressed the view that the whole property would shortly be sold.
Issues
The key question for the Court of Appeal to consider was whether there was a prospect of an early sale of the property and, if so, whether it was in the best interests of all concerned for that early sale to be affected by the appellant or by the respondents.
Decision/Outcome
The appeal was granted. There was no evidence that the respondents were likely to discharge the sums due under the mortgage within a reasonable time and there was clearly no way that the sums due were likely to be discharged without the sale of the property. However, since the prospects of an early sale were best served by allowing the respondents to remain in possession, the order for possession was deferred for three months. Counsel for the respondent rightly observed that an occupied house is far more likely to look attractive and to interest buyers than one which has been repossessed by a mortgage company.
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Updated 20 March 2026
This case summary accurately reflects the decision in Target Home Loans Ltd v Clothier [1994] 1 All ER 439. The case remains good law as an illustration of the court’s discretion under s.36 of the Administration of Justice Act 1970 (as amended by s.8 of the Administration of Justice Act 1973) to adjourn or defer possession proceedings where there is a reasonable prospect that the mortgagor will be able to pay sums due. The principle that an occupied property is more likely to attract buyers, and that courts may defer possession to allow a mortgagor-led sale, continues to be applied in subsequent case law. There have been no statutory changes that alter the legal position described. Readers should note, however, that this is a brief summary only and does not address the full scope of the court’s discretion under s.36, nor more recent developments such as the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property, which now shapes how lenders must approach arrears before issuing proceedings.
