On 2 November 2016, I delivered an ex tempore judgment on these proceedings. I made the orders sought by the plaintiff, Mr John Francis Mahony, in terms of paragraph 1 to 8 of the amended summons dated 26 October 2016, for the judicial sale of the property at 28 Huntingwood Drive, Huntingwood (Huntingwood Property). I then dismissed the cross claim by the first defendant, Mr Yousseff El Bayeh, filed 30 September 2016, on the basis that he failed to appear as required before the court. The present judgment is for the purpose of determining costs in the proceedings.
I made an order on 2 November 2016 for Mr El Bayeh to provide submissions on the issue of costs by 11 November 2016. Mr Mahony had previously provided short written submissions on 1 November 2016 to support his claim for costs on an indemnity basis. Mr El Bayeh made no submissions on costs.
[2]
History of the proceedings
As I have canvassed the history of proceedings in much detail in the ex tempore judgment earlier, I will only recount the salient procedural history here.
Mr El Bayeh was a former client of Mr Mahony's and owed Mr Mahony legal costs and disbursements for work done over a period of time. Shortly put, on 20 May 2015, the parties entered into a deed by which, relevantly, Mr El Bayeh covenanted that he would use all reasonable endeavours to sell the Huntingwood Property to repay the agreed sum of $56,463 owning by a certain date. Mr El Bayeh granted a mortgage over the Huntingwood Property to Mr Mahony, which Mr Mahony agreed not to register until Mr El Bayeh breached the covenants under the deed.
Through various enquiries in the year that followed, Mr Mahony discovered that Mr El Bayeh had not used his best efforts to market the Huntingwood Property and had in fact obstructed his agent from properly doing so.
Mr Mahony therefore brought these proceedings on 13 May 2016 in which primarily, he sought an order that the first defendant lodge with the Registrar General the certificate of title of the property to enable Mr Mahony to register the second mortgage. Mr Mahony also sought the same order against the second and third defendants against the possibility that they held the certificate of title.
The proceedings came on for hearing before me on 1 September 2016. I permitted Mr Albert David, who was apparently Mr El Bayeh's accountant and a director of one of the defendants, to provide assistance to Mr El Bayeh as he was a litigant in person with a limited grasp of the English language. At the end of the hearing I reserved judgment. While the judgment was reserved, Mr El Bayeh, on 30 September 2016, filed in the Registry a notice of motion seeking leave to file and serve a cross claim.
The notice of motion was referred to me and was listed on 19 October 2016. Before the matter came on, I received from Mr Mahony a notification of an application by him to file an amended summons. Primarily, the amended summons sought an order that the property be sold subject to the supervision of the court. On that day, I stood the matter over to 26 October 2016, for judgment on Mr Mahony's claim, and to deal with Mr El Bayeh's notice of motion.
26 October 2016 was the first time when the defendants did not appear. On that day, I granted Mr Mahony leave to amend his summons. I also made consequential directions, including for service of the amended summons and other orders on Mr El Bayeh. In particular, I gave Mr El Bayeh a further opportunity to serve additional evidence by 1 November 2016.
On 1 November 2016, Mr El Bayeh again did not appear, and did not serve further evidence. I satisfied myself that in those circumstances, I should make the orders in the amended summons (save for the order sought for indemnity costs), and dismiss Mr El Bayeh's cross claim.
[3]
Legal principles
Unless the court orders otherwise, costs payable by court order or under the rules are to be assessed on the ordinary basis: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.2.
Whilst the court has power to make an order for costs on an indemnity basis, the question is whether the court should so exercise its discretion in the particular case. In Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248 at 232 - 234, Sheppard J summarised some relevant principles concerning indemnity costs, including some of the circumstances in which courts have ordered that costs be paid on an indemnity basis. These circumstances include the undue prolongation of a case by groundless contentions.
Generally speaking, courts are more reluctant to make orders for indemnity costs against litigants in person than against legally represented litigants, although, in an appropriate case, they will make such an order. In Bhagat v Royal and Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at [13] Hodgson CJ in Eq observed:
... I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they would otherwise be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.
See also Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537 at [31].
In exercising its discretionary power to award costs, the court will have to consider its duty to all parties to ensure that the trial is conducted in a fair and timely fashion and without significant difficulties and unnecessary expense for the parties against whom an unrepresented litigant proceeds.
[4]
Consideration of conduct of parties in the proceedings
The plaintiff sought indemnity costs on the basis that the proceedings were defended in circumstances where Mr El Bayeh had no valid defence, and where it was obvious from the evidence that he ignored his obligations under the deed to keep the Huntingwood Property on the market for sale.
In my reasons of 2 November 2016, I explained that I accepted the affidavit evidence of Mr Mahony, in circumstances where the evidence was entirely unchallenged. Mr Mahony provided substantial evidence demonstrating that the Huntingwood Property was not on the market for sale for a prolonged period, in particular, by communicating with the agents appointed by Mr El Bayeh for that purpose. When the Huntingwood Property was finally marketed, there is then evidence that Mr El Bayeh resisted attempts by his agent to secure a successful sale. Mr El Bayeh did not file any evidence to the contrary, or to demonstrate a reasonable basis for opposing the summons.
Mr El Bayeh is a litigant in person who had some, albeit perhaps limited, assistance or support during the hearing by Mr David. Before me on 1 September 2016, Mr El Bayeh attempted to make a number of assertions and explanations as to the various difficulties he faced (T 12-13). Rather than simply relying upon evidence from the bar table, I gave Mr El Bayeh a further opportunity to file his affidavit evidence on 26 October 2016. In the absence of Mr El Bayeh doing so, the court ultimately received no evidence in support of Mr El Bayeh's contention.
The interests of justice depend on the circumstances of each case. In considering this case, I have taken into account Mr El Bayeh's limited grasp of the English language, lack of knowledge of the law, and an unfamiliarity with court practices and procedures. However, Mr El Bayeh ought to have appreciated the inappropriateness of his repeated failure to put forward any relevant evidence to explain his position. Further, recognition that it was highly inappropriate to disregard court attendances does not require any particular legal skill or knowledge. While the lack of legal representation may be said to play a part in his failure to proceed with the proceedings properly, I find Mr El Bayeh's actions to have significantly impeded the proceedings, and that he failed to present his case at least reasonably responsibly as a litigant in person ought to.
I interpolate and add that Mr Mahony is entitled to his costs occasioned by the amendment to the summons. Mr Mahony originally sought an order for the release of the certificate of title to enable him to register his mortgage. Then, by way of amended summons, Mr Mahony sought an order for the judicial sale of the Huntingwood Property, which he was entitled to at law as an equitable remedy: see King Investment Solutions v Hussain [2005] NSWSC 1076. I accept that Mr Mahony is entitled to costs occasioned by the amendment in circumstances where it became apparent in the proceedings that Mr El Bayeh would continue opposing every effort to comply with his obligations under the deed, and the most direct and effective remedy for Mr Mahony in this instance would be to seek an order for judicial sale directly to recover money owning to him.
It is plain enough that the conduct of the litigation by Mr El-Bayeh has been most unsatisfactory and unnecessarily increased Mr Mahony's costs. I therefore order that Mr El Bayeh pay Mr Mahony's costs of the summons on an indemnity basis, in circumstances where no countervailing reason has been shown for not making such an order.
I will now consider Mr El-Bayeh's cross claim. I outlined in my earlier judgment that the cross claim was not pleaded in proper form, but it appeared that the first defendant wished to allege against the plaintiff various causes of action based upon negligence as a solicitor and failing to act on the first defendant's instructions, and sought damages on those bases. I forewarned Mr El Bayeh that the cross claim had not been properly pleaded and was unsubstantiated by evidence. Importantly, there is a real question as to whether this filing of the cross claim would be allowed in these proceedings that relate to the production of the certificate of title and an order for judicial sale. Ultimately, those questions did not have to be considered as Mr El Bayeh did not appear in court as required on 26 October 2016 and 2 November 2016, when the motion was set down for hearing. I therefore dismissed Mr El Bayeh's cross claim on the last occasion. In these circumstances, I find that Mr El Bayeh should pay Mr Mahony's costs of the notice of motion for leave to file the cross claim on the ordinary basis.
[5]
Order
I therefore make the following orders:
1. Mr El Bayeh to pay Mr Mahony's costs of the proceedings on the summons and amended summons on the indemnity basis; and
2. Mr El Bayeh to pay Mr Mahony's costs of the notice of motion for an order giving leave to file the cross claim on the ordinary basis.
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Decision last updated: 31 March 2017