The bank lent on three properties to three borrowers. The borrowers defaulted but the bank sued only one of the borrowers and for possession of two of the properties. A cross-claim was made by the other two borrowers by way of set off in relation to the third property, namely that the bank failed to take reasonable care to ensure it was sold at market value and this claim succeeded. However even though the cross-claim was successful, the bank was found entitled to possession and a money judgment against the borrower sued for a considerable amount. The court noted that the bank achieved greater success than the borrowers. Since the borrower still owed a considerable amount to the bank even allowing for the set-off of the successful cross-claim by his co-borrowers, the court gave judgment for the balance rather than separate judgments in relation to the claim and cross-claim.
The court also gave the bank 25% of its costs against the borrowers on a party-party basis, noting:
This case is not one where a claimant has failed in relation to some issues but has, overall, been successful. The parties against “whom the judgment goes” in this case are Mr and Mrs Pola. They had been successful in relation to one issue but have, overall, been unsuccessful in the proceedings.
The court also noted that the borrowers had abandoned a large number of issues during the course of trial.
While the bank was contractually entitled to its indemnity costs, the court found that the borrowers did not challenge the bank’s mortgages or its rights to sell as mortgagee and the costs incurred in defending the cross-claim were not costs in connection with enforcing the mortgages and so fell outside the contract.
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