This case illustrates that a lender’s settlement offer to husband and wife borrowers who jointly own property should be addressed to each of them individually especially when it is clear that different defences have been raised by each of them.
The lender succeeded against the husband but not the wife at trial, who successfully ran unconscionability as a defence to the lender’s action for possession. The lender was given judgment for the full amount of the debt but the mortgage was only held to be enforceable as against the husband’s interest, not the wife’s. The lender made an offer of compromise to the husband and wife borrowers jointly that was some $500,000 less that the debt owed by them and sought indemnity costs against the husband on the basis that the offer was not accepted and it was a better outcome than what was obtained at trial. However it was not better because the offer of compromise was judgment for possession, including that part of the property owned by the wife to which the lender was found not to be entitled and judgment against both in the sum of $1,900,000.
The court found that the offer of compromise was made jointly to the husband and wife and not capable of acceptance by the husband alone, given one of the orders sought was for possession of jointly owned real estate. The court also found that it was apparent to the lender that she proposed different defences to those of her husband and ought to have alerted them to the need to deal with the borrowers separately. In any event, the lender did not win a more favourable result at trial. If the lender had drafted its offer of compromise separately to the husband, then the lender could have got all their costs on an indemnity basis from the husband rather than simply their ordinary costs.
The court ordered the lender to pay the costs of the wife and the husband to pay the costs of the lender on an ordinary basis.
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