Australian International Academy of Education Limited v Dr Nirmal Taluja & Ors

Judgment 1In these proceedings, the plaintiff sought specific performance of an agreement for lease which had been entered into between the first defendant and the second defendant and which the plaintiff claimed the second defendant had assigned to it. The first defendant resisted the plaintiff's claim both on the basis that the agreement for lease was unenforceable and on the basis that the assignment on which the plaintiff relied was ineffective. The first defendant also filed a cross-claim against the plaintiff and the second defendant in the proceedings seeking orders that the agreement for lease and assignment be rectified. The second defendant was not legally represented at the hearing of the matter. However, at the commencement of the hearing on 20 June 2011, I gave leave to Ms Silma Ihram, a director of the second defendant, to represent it. 2On 6 July 2011, I delivered judgment in this matter ( Australian International Academy of Education v Taluja [2011] NSWSC 647) in which I found substantially in the plaintiff's favour both on the question whether the lease was enforceable and on the question whether it had been validly assigned to the plaintiff. I dismissed the cross-claim. However, I reserved the question of costs and directed that, if the parties could not reach agreement in relation to costs, the plaintiff should provide written submissions to my Associate by Friday, 29 July 2011 and the defendants should provide written submissions in relation to costs on or before 5 August 2011. I indicated that I would deal with the question of costs in chambers. 3On 29 July 2011, my Associate was provided with consent orders signed by the legal representative of the plaintiff and counsel for the first defendant dealing with the question of costs as between the plaintiff and first defendant (including costs of the cross-claim). However, pending resolution of the position of the second defendant, I have not made those orders. 4On 4 August 2011, I received submissions from Ms Ihram in relation to the second defendant's costs. Ms Ihram submits that, although the second defendant was not legally represented at the hearing, it incurred costs in the proceedings - in particular, in defending the cross-claim - and those costs should be paid by the first defendant. Those costs fall into two broad categories. First, there are costs claimed by Ms Ihram herself in connection with the proceedings. Some of those costs relate to Ms Ihram's appearances at court during the hearing. However, some of the costs also relate to time spent by Ms Ihram in searching for and producing documents in response to notices to produce served by the first defendant on the second defendant. Secondly, the second defendant claims legal costs for advice it received in connection with defending the claims made against it. 5Ms Ihram also submits that the second defendant's costs should be paid on an indemnity basis. 6It appears that Ms Ihram's submissions were not served on the other parties. In those circumstances, my Associate sent copies of the submissions to the other parties on 9 August 2011 and invited any submissions in response by 16 August 2011. 7The first defendant resists the second defendant's claim on two bases. First, she says that it is not now open for the court to vary the costs orders made by it. In making that submission, she relies on the decision of the High Court in Aktas v Westpac Banking Corporation Ltd (No 2) [2010] HCA 47. Secondly, the first defendant submits that the court should not permit the second defendant to recover costs in circumstances where it was not represented by a legal practitioner. In addition, the first defendant submits that the second defendant should not recover its costs on an indemnity basis in any event. 8In my opinion, there is no merit in the first defendant's first submission. The submission appears to have proceeded on the misapprehension that the court had already made orders in terms of the short minutes of order signed on behalf of the plaintiff and first defendant. However, as I have said, no order for costs has yet been made by the court. Even if it had, I do not see how the second defendant's application for costs could be seen as an application to vary a costs order made by consent between the plaintiff and the first defendant. 9As to the question whether the second defendant is entitled to recover costs at all, in Cachia v Hanes (1994) 179 CLR 403 at 410-15, the High Court made it clear that a litigant in person is not entitled to be compensated by a costs order for the time he or she has spent in connection with court proceedings. That is because an order for costs is intended to operate as reimbursement for the actual costs and expenses incurred by the litigant and not as recompense for the time spent in connection with the proceedings. However, a litigant in person is no less entitled to be reimbursed for costs and expenses incurred in court proceedings than is a party who is represented: see Cachia v Isaacs (NSWCA, 23 March 1989, unreported). Consequently, to the extent that a litigant in person incurs legal costs in connection with court proceedings - such as legal costs for assistance in preparing affidavits or submissions or in answering a subpoena or notice to produce - those costs are recoverable. In addition, a litigant in person may be entitled to recover for time spent in connection with court proceedings where costs are recoverable on that basis in accordance with the rules of court. For example, if a litigant in person is served with a subpoena, then normally the costs incurred in complying with that subpoena, including recompense for time spent in searching for documents, would be recoverable: UCPR r 33.11. 10There is no reason why different principles should operate in this case. Ms Ihram was a director of the second defendant and it is in that capacity she sought to appear. Her position was equivalent to the position of a litigant in person. 11In addition, there is no reason why a costs order would not normally be made in favour of the second defendant against the first defendant in this case. The second defendant was joined in the proceedings because of the position taken by the first defendant that the agreement for lease and the assignment of the agreement for lease from the second defendant to the plaintiff was invalid. It was proper for the plaintiff to join the second defendant in those circumstances. Given that, it would be appropriate to make a Sanderson order in favour of the second defendant: see Sanderson v Blyth Theatre Co [1903] 2 KB 533. In addition, the first defendant filed a cross-claim against the second defendant. The plaintiff succeeded and the first defendant's cross-claim failed. In those circumstances, the first defendant should pay the second defendant's costs of the cross-claim. 12As I have said, the second defendant is not entitled to recover costs represented by the time Ms Ihram spent as a director of the second defendant in defending the claim. But equally, there is no reason why the second defendant should not recover costs incurred by it simply because it was not represented at the hearing by a legal practitioner. If the parties cannot agree on the amount of those costs, then that is a matter for assessment. 13As to the second defendant's claim for costs on an indemnity basis, in my opinion, there is no basis for an indemnity costs order in this case. As I have said, it was appropriate for the plaintiff to join the second defendant in circumstances where there was a question concerning the validity of the agreement for lease and the assignment. The claim that the lease was invalid could not be said to have been without any merit having regard to the terms of s 76A(1) of the Environmental Planning & Assessment Act 1979. Other issues raised by the second defendant were more speculative. But I do not think that it can be said that, in the circumstances of this case, it was improper for them to have been raised. It follows that it would not be appropriate to make an order for indemnity costs. 14I will make orders in terms of the short minutes of order signed on behalf of the plaintiff and first defendant. The first defendant should pay the second defendant's costs.