05 June 2013

Subjects: Costs

The borrowers defaulted and the lender had been given an order for possession. The borrower refinanced the mortgage debt but had also been ordered to pay the lender’s enforcement expenses (which was a term of the loan agreement).

The borrowers brought an application under the Legal Profession Act requesting taxation of the fees of the lender’s solicitor. The lender argued that the borrower had no right to request taxation of the legal fees because the borrower did not fall within the definition in the Legal Profession Act of a person who has paid legal costs, rather they had merely paid the expenses of the lender on enforcement (which happened to include legal fees).

The court was of the view that the correct approach is that a person will fall within the definition of a person liable to pay legal costs (under the Legal Profession Act) if the person’s property may lawfully be applied in paying the legal fees or in reimbursing another person for legal fees which the other person has paid to the solicitor. The judge decided that there should be a broad approach to the definition in the legislation, because the provisions are remedial in nature and for the purpose of permitting the court to supervise the conduct of its officers. He held that the borrowers were entitled to request a taxation of the solicitor’s costs.

Click here to read the full judgment

Matthew Bransgrove, Partner

Matthew Bransgrove has practised exclusively in the field of mortgage law and mortgage related litigation since 1998. He is author of Avoiding Mortgage Fraud in Australia (2015) Lexis Nexis. He is co-author of The Essential Guide to Mortgage Law in NSW (2008) Lexis Nexis and its successor The Essential Guide to Mortgage Law in Australia (2013) Lexis Nexis.

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