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Supreme Court of Denmark

Increase of mortgage administration fees 

Case no. 168/2018

Judgment delivered on 19 June 2019

Totalkredit A/S

Increasing administration fees on mortgages was lawful, and the fee increases could not be set aside

The case concerned the issue of whether there was a legal basis in the Danish mortgage bank Totalkredit’s agreements with A, B and C to raise the administration fees payable on their mortgages, and whether the increases could be set aside under the Danish Contracts Act, if relevant.

The Supreme Court held that the agreements gave Totalkredit the right to raise the fees on the grounds cited by Totalkredit.

The Supreme Court also ruled that mortgage agreements must be considered to give the mortgage bank greater scope for unilaterally modifying the agreement than what would otherwise be allowed under the rules of the Contracts Act in respect of agreements between a seller or supplier and a consumer, that the mortgage bank is entitled to exercise a wide commercial discretion in assessing the need to raise its administration fee, the amount of the fee and the distribution of the increase among the different groups of borrowers, and that the increases were objectively justified and could not be regarded as being arbitrary or unreasonable. Accordingly, the Supreme Court found no basis for overruling the discretion of Totalkredit. There was thus no basis for setting aside the increases of the administration fees.

The High Court had reached the same conclusion.

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