Whild v GE Mortgage Solutions [2012] VSC 322

The lender won and obtained an order for possession and now sought its costs.

The judge noted that costs should ordinarily reflect the contract between the lender and borrower (which normally grants the lender its costs on an indemnity basis) however this can be overruled by the judge in the circumstances of the case.

If the parties have agreed the basis of taxation it would, I think, be an improper exercise of the court’s discretion to direct the taxation on some other basis, unless satisfied that there had been some conduct on the part of the mortgagee disentitling him to costs or to costs on the agreed basis.

There was nothing unusual about this case so the court found that the general rule that costs follow the event should apply and permitted  the lender to recover all reasonable enforcement costs on a solicitor and client basis under the terms of the mortgage.

The judge also made an interesting comment unnecessary for the case before him but useful to lenders:

A mortgagee is not to be deprived of a contractual right to add costs to the security merely by reason of an order for payment of costs made without reference to the mortgagee’s contractual rights (and so without any adjudication as to whether or not the mortgagee should be deprived of those costs).

What this means is that if the “usual order as to costs” is made (which is usually done with a default judgement) then the lender can still deduct its full legal costs from the sale proceeds of the security.

Contact Bransgroves if you want the costs provisions of your security documents reviewed.

Click here to read the full judgment.

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