Counting the cost

Lenders who seek possession of a property will invariably incur legal costs in doing so.  If a matter is defended, such costs can be significant.  However, the terms and conditions of most mortgages contain a right to add such costs to the security, increasing the borrower’s indebtedness.

A challenge to this right is rarely successful when an order is granted, save for limited scenarios such as perceived shortcomings in pre-action-protocol compliance or conduct in proceedings.

However, what is the position when a lender discontinues a claim, and is ordered to pay the Defendant’s costs?  Can the lender still rely on their contractual right to add these costs to the security?  This was one issue addressed in the case of The Co-Operative Bank Plc v Phillips [2014] EWHC 2862 (Ch) (21 August 2014).

Paul Sagar explains more. Click here to see the full article. Counting the cost