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Challenging discharge fees

Challenging discharge fees

By Ben Wyatt

How do you challenge those bank legal fees for discharge of mortgage? In the LIJ June 2017 costing column I wrote about legal fees and charges that a bank/mortgagee could claim where a client had fallen into default. The basis on which legal costs could be claimed was set out but the process whereby a challenge to those costs could be made was not explored. This column will set out the steps that allow a client to challenge those fees in the Costs Court of the Supreme Court using the Supreme Court Scale (likely on an indemnity basis) as the basis for the mortgagee’s solicitor’s fees. The Legal Profession Uniform Law is the starting point to assert the basis for any costs claimed in the Costs Court. An application to the Costs Court is made pursuant to s198 of the Uniform Law. That usually means there is no fee on the filing of the summons because it is in effect a taxation between solicitor and client. It just so happens to be that the solicitor is the solicitor of the bank/lender and the client is not the client of the solicitor – more commonly referred to as a third party payer. The application needs to be made within 12 months of the invoice for costs being received and becoming due and payable. This may not be so simple to ascertain as often the bill is not passed on by the bank or its solicitor. If the bill is not readily available a simple request should trigger an obligation to provide a copy of the bill(s) to you or your client. Order 63.61 of the Supreme Court Rules deals with costs that are payable to a solicitor by a person other than the client. Here, that can be read to mean that the costs between a solicitor and the bank are payable by the mortgagor (your client). As the rule makes clear, subject to any order of the Court or any agreement between the mortgagee or landlord, and the client, those costs should be taxed on a standard basis as defined by rule 63.30 of the Supreme Court Rules. In brief, that means that the costs claimed by the bank’s/mortgagee’s solicitors should be of a reasonable sum and of a reasonable nature and the onus of proving them to be so falls on the solicitor for the bank. If that rule is ousted by the wording in the mortgage or the loan agreement, as is likely, then the costs will generally be assessed on an indemnity basis. All that means is the costs are based on the Supreme Court scale on an indemnity basis and while the costs should not be unreasonable in nature or sum, the onus of proving that they are unreasonable falls on the client (the mortgagor/lessee), thus reversing the onus. Ben Wyatt is a principal lawyer at Sladen Legal and a member of the LIV Costs Committee.

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