The appellant mortgaged his family homestead farm for $350,000 and subsequently defaulted on the mortgage.
The mortgagees obtained a default judgment for foreclosure.
The appellant moved to set aside the default judgment, which was dismissed by the motion judge.
On appeal, the Court of Appeal found that the motion judge made four material errors in his analysis: (1) mischaracterizing the appellant's mental frailties as merely a competency issue rather than considering their impact on his responsiveness; (2) viewing the appellant's substantial interest in the property solely as sentimental attachment rather than recognizing the substantial equity remaining after mortgage repayment; (3) confining the "reasonable prospect of repayment" analysis to refinancing rather than considering repayment through sale; and (4) failing to properly weigh the magnitude of the windfall to the mortgagees against the severe prejudice to the appellant.
The Court found that a sale of the property would generate net equity of approximately $250,000 to $337,000 after full repayment of the mortgage, and that the mortgagees would suffer no prejudice while the appellant would lose his life's savings.
The appeal was allowed and the foreclosure was converted to a judicial sale.