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[2026] NSWSC 1122
Supreme Court of NSW
2026-09-18
Harrison AJ
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Conway v Sun [2026] NSWSC 1122
Hearing dates: 15 September 2026
Date of orders: 18 September 2026
Decision date: 18 September 2026
Jurisdiction: Common Law
Before: Harrison AJ
Decision: (1) Order the plaintiffs to pay the defendants’ costs of the proceedings, including the costs of the costs hearing before me.
(2) Otherwise dismiss the proceedings.
Catchwords: COSTS – dispute concerning lease of residential premises – where principal issues centred around tenants’ entitlement to abatement of rent and termination of the lease for non-payment of rent – where tenants sought reinstatement of possession following termination – where status quo restored by decision of Walton J in September 2025 – where no practical utility in maintaining the proceedings which had effectively become spent – where costs of the proceedings the only remaining issue following plaintiffs’ proposal to discontinue – whether the plaintiffs should pay the costs of the proceedings – whether the Court should otherwise order
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), Sch 4, subcl 5(7)
Uniform Civil Procedure Rules 2005 (NSW), rr 42.19, 42.20
Cases Cited: Benjamin & Khoury Pty Ltd v Rahme (No 4) [2023] NSWSC 1162
Conway v Sun [2025] NSWSC 1135
Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274
McMillan Investment Holdings Pty Ltd v Mangos (No 3) [2023] NSWSC 1327
Re the Minister for Immigration and Ethnic Affairs of the Commonwealth; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Category: Costs
Parties: Vashti Elizabeth Conway (First Plaintiff)
Farshad Amirbeaggi (Second Plaintiff)
Quidi Sun (First Defendant)
Jianchao He (Second Defendant)
Representation: Counsel:
A Fernon SC (Plaintiffs)
E W Young (Defendants)
Solicitors:
Yates Beaggi Lawyers (Plaintiffs)
Bloomsbury Legal (Defendants)
File Number(s): 2025/339784
Publication restriction: Nil
HIS HONOUR: These proceedings were commenced by summons filed on 4 September 2025. By their amended summons filed on 16 September 2025, the plaintiffs sought final relief that orders made by the NSW Civil and Administrative Tribunal (NCAT) on 1 September 2025 be set aside and that they be granted relief against forfeiture. The plaintiffs asserted that NCAT had no jurisdiction to make the 1 September 2025 orders in circumstances where it was aware that an issue that was before NCAT was also before the District Court of NSW: see Sch 4 subcl 5(7) of the Civil and Administrative Tribunal Act 2013.
Walton J heard the plaintiffs’ application for interlocutory relief on 25 September 2025. His reasons for judgment, published on 29 September 2025, contained the following summary:
“[1] On 13 June 2024, the plaintiffs in this proceeding, Vashti Elizabeth Conway and Farshad Amirbeaggi entered into a residential tenancy agreement (‘the Agreement’) with respect to the property (‘the premises’) for 104 weeks. The rent payable under the Agreement was initially $5,000 per week. That amount increased to $5,500 per week after the first year of the tenancy.
[2] The landlords shown under the Agreement were Quidi Sun and Jiamchao He (‘the landlords’).
[3] On 19 August 2024, Mrs Conway filed a Tenancy and Social Housing Application (‘the application’) with the New South Wales Civil and Administrative Tribunal (‘NCAT’ or ‘the Tribunal’) (‘the proceedings’). In the application, Mrs Conway nominated that there is a dispute regarding ‘repairs’ and sought an order, inter alia, that the rent be abated to $3,000 per week from the commencement of the Agreement until the landlords completed ‘the works required to the property to achieve the standard and quality at which the property was advertised and upon which the lease was negotiated’.
[4] On 3 October 2024, Mrs Conway filed an affidavit in the proceedings in which she elaborated upon the claims made by the plaintiffs. The further orders sought included repairs to the timber flooring of the premises; costs associated with moving and storing furniture or seeking alternative accommodation during the execution of the repairs; and compensation for loss of enjoyment of the premises.
[5] On 25 February 2025, those proceedings were transferred to the District Court of New South Wales by Member Terceiro of the Consumer and Commercial Division of NCAT. In a short decision, Member Terceiro stated that he had transferred the proceedings of his own motion because, inter alia, the amount sought by the plaintiffs exceeded the maximum statutory limit of the Tribunal for claims brought under the Residential Tenancies Act 2010 (NSW) (‘RTA’) and also exceeded the maximum claim amount of $100,000 for consumer claims under the Fair Trading Act 1987 (NSW). Member Terceiro also found:
‘The final issue is whether the NSW District Court has jurisdiction to determine the claim. In this regard, it seemed to me that the claims being put by the applicant were more properly characterised as consumer claims and allegations of misleading and deceptive conduct contrary to the relevant provisions of the FTA and the Australian Consumer Law 2010…’
[6] On 1 July 2025, Mrs Conway filed a Statement of Claim (‘SOC’) in the District Court seeking orders for damages for breach of the Agreement; damages and compensation pursuant to s 236 of Sch 2 of the Competition and Consumer Act 2010 (Cth) (‘ACL’) and orders pursuant to s 237 of the ACL varying the Agreement, including that no rent was payable under the Agreement from its inception until the date of any orders made by the Court. Various pleadings were made, including that the plaintiffs had, since occupation of the premises, made numerous requests to the landlords to repair damage, but the landlords refused to affect the repair.
[7] On 23 July 2025, the agent for the landlords issued a Notice to Terminate Tenancy Agreement due to the non-payment of rent (‘Notice of Termination’). I will return to the non-payment of rent below.
[8] On the same day, Mrs Conway filed a Notice of Motion (‘the District Court Motion’) in the District Court proceedings, seeking that the Notice of Termination be set aside, and that the rent payable under the Agreement be reduced to such sum as the court ‘reasonable [sic] determines’.
[9] On 8 August 2025, the landlords brought an application, described as an ‘application notice’ (‘the Termination Application’). In that Application, the landlords sought an order to terminate the Agreement due to the plaintiffs’ non-payment of rent for more than 14 days pursuant to s 88 of the RTA and an order for vacant possession of the premises. The landlords also sought an order for the plaintiffs to pay rent arrears.
[10] On the same day, the Tribunal gave notice of a conciliation and hearing of the termination application, scheduled for 1 September 2025.
[11] In the affidavit of Sheng Xu, the managing agent of the premises filed in these proceedings (‘the Xu affidavit’), it was posed that as at 1 September 2025 the plaintiffs were in arrears of rent of more than 14 days in the total amount of $43,725. He also deposed that as at 19 September 2025, total rent arrears and occupation fees owing were $57,867.86.
[12] On 1 September 2025, the Tribunal constituted by Mr D Nash, General Member, made orders terminating the Agreement effective that day and giving vacant possession to the landlords (collectively, ‘the Tribunal orders’). The Tribunal suspended the operation of the order of possession until 3 November 2025 and ordered that the plaintiffs pay the landlords a daily occupation fee.
[13] The Tribunal gave reasons for decision which were annexed to the orders but dated 3 September 2025 (‘Reasons for Decision’). In his reasons for his decision, Mr Nash nominated, as the central basis for his decision, that the plaintiffs had breached the Agreement by failing to pay rent. He also dealt with, by way of rejection, an application by the plaintiffs for an adjournment upon the basis that the Tribunal did not have jurisdiction to deal with the termination application because of the existence of the SOC and the District Court Motion.”
“(1) Until further order and subject to compliance with Orders 2 and 3 below, Orders 1 to 5, made by the NSW Civil and Administrative Tribunal on 1 September 2025 in proceedings 2025/00304123, are stayed.
(2) By 7 October 2025, the plaintiffs pay the defendants the rental arrears in respect of the property.
(3) Until further order, the plaintiffs pay the defendants rent pursuant to the residential tenancy agreement dated 13 June 2025 between the plaintiffs and the defendants at $5,500 per week.
(4) The proceedings be listed for directions before the Registrar for timetabling of the proceedings on 3 October 2025.”
The agreed form of the orders did not include any order dealing with costs. Walton J was apparently not asked to, and did not, make any order that either dealt with or even referred to costs.
The NCAT dispute that was transferred to the District Court remains on foot. It is listed for hearing commencing on 16 November 2026 with an estimate of three days. That dispute relates to the plaintiffs’ original contention that they were entitled to an abatement of rent by reason of defects with the property. The plaintiffs have otherwise now paid all rent due under the terms of their lease to when they vacated the premises on 29 June 2026, although they only did so on 4 September 2026.
It is agreed between the parties that there is no longer any utility in the final relief sought by the plaintiffs in their amended summons. The only issue that remains for determination by me is the question of costs. The plaintiffs rely upon the fact that there remain still undetermined issues for adjudication in the upcoming District Court proceedings and that the costs of these proceedings should either abide the result in that Court or alternatively that no order be made for the costs in these proceedings. The defendants maintain that the effect of the orders made by Walton J was that the plaintiffs were granted relief against forfeiture and that that outcome triggered the usual outcome that a party obtaining such relief should pay the landlords’ costs.
The defendants submit that the plaintiffs deliberately chose to not pay the outstanding rent to the defendants. They only paid that outstanding rent, for a short period, upon being ordered to do so by this Court. Even then, they were in breach of this Court’s orders, refusing to pay rent from 25 May 2026 until 29 June 2026, and then only paying the outstanding monies on 4 September 2026 after a written complaint from the defendants’ solicitor.
The defendants submit that there are numerous bases upon which these proceedings should never have been necessary, with the result that the defendants have incurred unnecessary costs.
First, if the plaintiffs had simply continued to pay rent according to the terms of the lease, these proceedings would never have been necessary. The second NCAT proceedings would not have been commenced and the orders for possession returning the property to the defendants due to the plaintiffs’ breaches of the covenant to pay rent would never have been made. The defendants contend in effect that the plaintiffs took things into their own hands by asserting a right to abate rent before the issue could be determined in an appropriate tribunal. The defendants maintain that their own response was reasonable and predictable and that whatever flowed thereafter was the result of the plaintiffs’ peremptory decision to withhold rent.
Walton J required the plaintiffs to make good their outstanding rental arrears, and to continue to abide by the terms of their lease whilst it remained on foot. Despite the relatively extensive history of litigation with the defendants which the defendants say was entirely caused by the plaintiffs, they then chose to flout Walton J’s orders, constituting a prima facie contempt of court that has only been purged as recently as 4 September 2026. The plaintiffs’ unilateral decision to withhold rent while retaining the benefit of continued occupation of the premises was never an appropriate course, and was the root cause of the second NCAT proceedings. These proceedings were commenced as a de facto appeal from NCAT’s orders in which possession of the premises was given to the defendants.
Secondly, if the plaintiffs were dissatisfied with the NCAT orders in which possession of the premises was given to the defendants, they could simply have chosen to appeal from that decision to NCAT’s Appeal Panel in the ordinary way.
Thirdly, it was readily apparent from Walton J’s orders that a final hearing of the substantive issues was never going to be required. His Honour’s orders provided for the defendants to be put back in the position they would have been if the plaintiffs had not been in breach of the covenant to pay rent. The plaintiffs’ entitlement to remain in possession of the premises was clearly based upon their continued adherence to and compliance with the terms of the lease. There was therefore never going to be a need for the grant of final relief provided that the plaintiffs continued to abide by the regime put into effect by Walton J “until further order”.
Fourthly, the date set for the earing of the plaintiffs’ claim for final relief was listed on 7 May 2026, several months after the lease had expired.
The defendants attempted to resolve the proceedings by way of a Calderbank offer as long ago as 10 October 2025 on terms that would follow in circumstances where relief against forfeiture had been granted. That offer was not accepted. The plaintiffs now say that there should be no order as to costs.
The purpose of costs orders is to do justice between the parties and accordingly the discretion is wide. It allows for the infinite variations in circumstances of different cases. The defendants submitted that it would not do justice between the parties for them to be left to bear their own costs in circumstances where these proceedings should never have been necessary and could quite properly and reasonably have been avoided in the first place or at least terminated long ago. That is particularly so where a “final hearing” was realistically never going to be necessary and patently lacked any practical utility. The relief granted by Walton J was effectively relief against forfeiture. Even if it were not, the plaintiffs should pay the defendants’ costs of securing cognate relief.
The defendants submitted that the plaintiffs should pay the defendants’ costs of the proceedings on the ordinary basis until 10 October 2025, and indemnity costs thereafter. The proceedings should otherwise be dismissed.
The plaintiffs’ submissions on costs commenced with two uncontroversial statements. First, the only remaining substantive issues between the parties requiring resolution are those to be decided in the upcoming contest in the District Court in November. Secondly, there is no longer any utility in pursuing relief claimed in the amended summons apart from the question of costs. The submissions continued as follows.
The defendants contend that they should be paid their costs. The plaintiffs contend that no order as to costs should be made in these proceedings or alternatively that the costs should abide the outcome in the District Court.
However, given what the plaintiffs describe as “the stance taken by the defendants to claim their costs of these proceedings”, the plaintiffs contend that it is appropriate that the defendants pay the costs of and incidental to the costs hearing before me. Given what the plaintiffs describe as “the inutile nature of the relief sought”, the amended summons can be withdrawn or dismissed.
The plaintiffs submit that those circumstances do not, and should not, give rise to an order for costs being made in favour of the defendants pursuant to UCPR 42.19(2), 42.20(1) or otherwise: see Benjamin & Khoury Pty Ltd v Rahme (No 4) [2023] NSWSC 1162 at [72]-[76], McMillan Investment Holdings Pty Ltd v Mangos (No 3) [2023] NSWSC 1327 at [128] and Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274.
Alike with those authorities, the plaintiffs submitted that this is a case in which neither party won nor lost. Rather, they became “spent” or lacking any purpose. The appropriate costs order is therefore that each party should pay their own costs. That in summary is said to be because:
(a) There is no presumption in favour of a costs order. (b) Whilst a surrender by one party may justify a costs order against it, that is not what occurred in this case. (c) These proceedings have only been rendered inutile due to supervening matters, namely the passage of time and the fact that the plaintiffs have vacated the leased premises. There is no longer the prospect of an event or outcome being determined in these proceedings by reference to which costs might be determined. (d) The plaintiffs did not conduct themselves unreasonably, as discussed in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6. They sought and obtained a stay of the 1 September 2025 NCAT orders, on the basis that there was a serious question to be tried. They still have a reasonably arguable case but there is no point in arguing it.
It is trite to observe that the plaintiffs were required by the terms of their lease to make timely payments of rent to the defendants in the agreed weekly amount of $5,500. In the events that occurred, the plaintiffs withheld rent upon the basis of their contention that they were entitled to do so as the result of defects with the leased premises. In such circumstances, and pending the determination or adjudication of whether the right to withhold rent had arisen, all tenants, and the plaintiffs in these proceedings, necessarily expose themselves to the possibility that their landlord will dispute their claims for abatement of rent and insist that rent be paid in full. In such cases, and in the present case, that failure to pay unabated rent will give rise to the theoretical possibility that the landlord will take steps to terminate the lease for breach of the rent covenant. That is what happened in this case.
The plaintiffs challenged the NCAT finding that the defendants had validly terminated the lease for non-payment of rent. That challenge was based on jurisdictional grounds and it was upheld by Walton J: see Conway v Sun [2025] NSWSC 1135. Although it lurked in the background in the course of the proceedings before his Honour, he did not determine whether the plaintiffs were entitled to pay less than the full amount of the rent due under the lease to reflect their complaints about the state of the premises. So much is unambiguously reflected in the orders that his Honour made, requiring the plaintiffs to pay all outstanding arrears of rent at the agreed weekly rate and that they continue to do so.
The effect of his Honour’s orders was to restore the status quo. The plaintiffs’ right to possession had been reinstated. Their claim to have been entitled to seek or to claim a reduction in rent by way of abatement was for another court to decide. The defendants correspondingly lost the benefit of their erstwhile successful termination and the plaintiffs were ordered, if order were necessary, strictly to comply with the terms of the covenant to pay rent until such time as their claimed entitlement to abate rent were decided. Significantly, the quantum of any abatement claim was never litigated in these proceedings by the plaintiffs and, as I have indicated, remains to be determined.
After his Honour’s thorough and detailed judgment, the parties’ relationship staggered on. Rent was paid from time to time but begrudgingly, and not always on time. The asserted problems with the premises were not remedied. Neither party showed much, if any, interest in these proceedings for the obvious reason that there was nothing left to litigate, and certainly nothing worth restoring these proceedings for given the looming expiration of the lease on the one hand and the pending District Court litigation later this year on the other hand. Presumably the financial adjustments that the plaintiffs seek and which the defendants oppose will finally be resolved there.
The significant burden of the defendants’ submissions on this costs dispute is that the plaintiffs are the authors of their own misfortune. They chose to withhold rent when there was a significant risk that the defendants would take steps to re-enter. A more cautious approach might have seen some other court or tribunal deciding whether or not the plaintiffs could pay less than the full amount of the rent without simultaneously imperilling their lease. As the defendants submit, the need to take steps to challenge the NCAT’s mistake on jurisdictional grounds would never have arisen if the plaintiffs had taken that course. As things stand on the evidence before me, I have no way of assessing the merits of the plaintiffs’ complaints that the premises were substandard.
Costs should ordinarily follow the event. But what is the event? The plaintiffs’ challenge to the NCAT decision was a win for them. The order that they continue to pay unabated rent was, however, at odds with their precipitating decision to claim a rent reduction.
For all practical purposes, the usefulness of these proceedings evaporated with the making of Walton J’s orders. They became spent in real terms. There was no supervening event that removed or modified the subject matter of the dispute so as to render the proceedings inutile, save for the obvious fact that they could hardly have been expected to survive the end of the lease or the plaintiffs’ surrender of possession. It seems to me that the continuing existence of the proceedings hovered over the parties like a mist, evaporating finally without incident. The continued utility of these proceedings, or the complete lack of it, was not something about which either party became excited until the question of how to bring them to an end, and the related question of who should pay the costs, inevitably received attention.
It is interesting to observe that his Honour was not requested to make costs orders at the conclusion of what appears to have been a hard fought contest on several significant issues. It is difficult not to be left with the impression that the issue did not warrant the attention of the parties at the time. The plaintiffs’ claim for costs in the amended summons was never referred to by his Honour in his judgment. I am asked to deal with the issue a year later.
UCPR 42.20(1) is relevantly in these terms:
42.20 Dismissal of proceedings etc
(1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant’s costs of the proceedings to the extent to which they have been dismissed.
The plaintiffs have submitted that I should order otherwise.
I disagree. These proceedings were entirely avoidable. The jurisdictional issue upon which the plaintiffs succeeded was not the defendants’ fault. Their entitlement to seek to recover possession was reasonable in the circumstances. Apart from the jurisdictional glitch, the plaintiffs were in the position of defaulting tenants in need of equitable relief. The effect of his Honour’s decision was to give them that relief. The passage of time since 29 September 2025 has not relevantly altered the forensic or procedural landscape since his Honour’s judgment was published.
Nor is the District Court litigation an obvious forum for the resolution of a costs dispute in this Court. If the plaintiffs are able to demonstrate the validity of their abatement claim, their self-help actions may be vindicated by reference to the issues calling for determination in that Court. These proceedings do not suggest an obvious or principled basis for referring the present costs dispute to that Court.
The plaintiffs were effectively required by Walton J to put the defendants in the position they would have been if rent had been paid in a timely fashion in accordance with the lease. The costs of the proceedings and the costs of this application should in my view be paid by the plaintiffs.
Finally, the plaintiffs and the defendants all served offers of compromise. The defendants’ offer was served on 10 October 2025, shortly after his Honour’s decision. It offered to settle the proceedings on the basis that they be dismissed, that the plaintiffs pay their costs in the fixed sum of $40,000, that “the existing stay order [be] discharged” and that the plaintiffs be permitted to continue to reside at the premises. It was also conditioned upon the plaintiffs paying the rent in full, vacating the premises on or before 22 June 2026 and otherwise complying with the terms of the lease.
It is a little difficult to understand what this offer was intended to achieve. The plaintiffs had by this time already become the beneficiaries of his Honour’s orders. In practical terms, his Honour had restored the plaintiffs to possession of the property provided they complied with the terms of the lease. The “stay” orders made by NCAT had for all relevant purposes been overtaken by his Honour’s decision.
More significantly, however, the offer of compromise is presently meaningless. There is no outcome or result in these proceedings that is more or less favourable than the offer that was made against which to assess its effect. The defendants’ offer was made after Walton J’s decision and, as the parties have emphasised, nothing much has happened since then in these proceedings which have, for practical purposes, run out of steam.
The plaintiffs’ offer of compromise was equally beside the point. It was dated 19 May 2026. They offered to discontinue in this Court with the parties’ reasonable costs of these proceedings to be payable by the unsuccessful party in the District Court. Whatever that offer was intended to achieve, it had then and it has now no effect upon the issue I am asked to decide. It may at one level amount to a recognition by the plaintiffs of the terms of UCPR 42.20(1). However, I have not had regard to that possibility in coming to my conclusions on this application and as the plaintiffs have emphasised, the rule specifically contemplates the prospect that the court may otherwise order.
**********
Conway
Sun
(2006) 67 NSWLR 497
(1997) 186 CLR 622