Standard Bank of South Africa Limited v Meyer [2023] ZAFSHC 241 (22 June 2023)

The Standard Bank of South Africa Limited (the plaintiff) instituted action against Marthinus Tobias Meyer (the defendant) due to Meyer defaulting on payments for a home loan agreement and bond.

The bank initially claimed R219,581.09 plus interest and sought to have Meyer's immovable property declared executable. There were multiple hearings and postponements as Meyer made some intermittent payments to reduce the arrears.

By December 2022, Meyer had paid enough to settle the arrears, leaving only the issue of legal costs to be resolved. The bank sought costs on an attorney and client scale as per the loan agreement. Meyer argued the bank should only get party and party costs up to the first summary judgment application.

The home loan agreement provided for costs on an attorney-client scale if the bank had to take legal action to recover the debt.

The key issue before the court was determining the appropriate costs order, given the history of the proceedings and payments made. The court ultimately ordered Meyer to pay the bank's costs on an attorney and client scale, finding no justification to deviate from the contractual agreement on costs despite Meyer's arguments.

So in summary, it was an action to recover an outstanding home loan debt that evolved into a dispute primarily over legal costs once the arrears were settled.

The general principle of law illustrated by this case is that a court retains discretion over costs awards, even when there is a contractual agreement between parties regarding costs. Specifically:

The court's discretion to award costs is wide, unfettered and equitable, and should be exercised judicially considering all relevant factors.

While a court would normally give effect to parties' contractual agreements on costs, it retains the discretion to depart from such agreements if there are good grounds to do so based on the circumstances of the case.

A court should not allow its discretion over costs to be completely ousted by agreement between the parties.

The court can consider factors like the nature of the litigation, conduct of the parties, and appropriateness of the costs in deciding whether to uphold or depart from a contractual costs agreement.

However, the court should have good reasons for departing from a contractual costs agreement, given the principle of freedom of contract.

In this case, the court found no compelling reasons to depart from the contractual agreement for attorney-client costs, despite the defendant's arguments. This illustrates that while the court retains discretion, it will generally uphold contractual costs provisions absent strong justification to do otherwise.

In essence, the court applied the general rule that contractual agreements on costs should be upheld, absent compelling reasons to deviate. It found no such reasons here and enforced the costs provision in the loan agreement against Meyer.

The court relied on the following case law in its reasoning process:

Ferreira v Levin N.O. and others; Vryenhoek and others v Powell N.O. and others [1995] ZACC 13

The court cited this case for the principle that successful parties should usually be awarded their costs, and this rule should only be departed from where good grounds exist.

Intercontinental Exports (Pty) Ltd v Fowles 

The court cited this Supreme Court of Appeal case to affirm that a court's discretion to award costs remains unfettered and equitable, notwithstanding any agreement between the parties on costs. The court quoted paragraphs 25-26 of this judgment extensively to support the principle that while a court would normally give effect to parties' agreement on costs, it retains discretion to depart from such agreement if good grounds exist.