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[2026] NSWSC 1299
General information, not legal advice.
Supreme Court of NSW
2026-10-22
Pike J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Xu v Martin [2026] NSWSC 1299
Hearing dates: On the papers
Date of orders: 22 October 2026
Decision date: 22 October 2026
Jurisdiction: Equity - Real Property List
Before: Pike J
Decision: (1) The summons be dismissed.
(2) There be no order as to costs, to the intent that each party pay their own costs of the proceedings.
Catchwords: COSTS — proceedings resolved without a hearing on the merits — blow by blow account from parties as to what occurred - encroaching structures on adjoining residential land — defendants accepted boundary determination and agreed to remove encroachments before commencement of proceedings — removal not completed within initially indicated timeframe — successive rectification works and surveys during proceedings — whether commencement and continuation of proceedings reasonable — whether defendants acted unreasonably — whether eventual removal constituted capitulation — where plaintiff obtained principal relief but did not pursue additional claims — proceedings dismissed following resolution of substantive dispute – each party to pay their own costs of the proceedings
Original judgment source is linked above.
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 98
Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 42.19, 42.20
Cases Cited: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32
Bridge Street Capital No.2 Pty Ltd v Manta Group Pty Ltd & Ors [2025] NSWSC 1072
Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302
Fordyce v Fordham [2006] NSWCA 274
McIntosh v Morris [2021] NSWCA 225
Nadilo v Eagleton (2021) 250 LGERA 89; [2021] NSWCA 232
Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84
ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270
Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107
Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Texts Cited: Nil
Category: Costs
Parties: Jian Min Xu (Plaintiff)
Royalston Douglas Martin (First Defendant)
Meredith Anne Martin (Second Defendant)
Representation: Counsel:
B Collingwood (Plaintiff)
M Harker (Defendants)
Solicitors:
Bannermans Lawyers (Plaintiff)
Finn Roache Lawyers (Defendants)
File Number(s): 2025/00259203
Publication restriction: Nil
These proceedings concern adjoining residential properties at 43 and 45 X Road, Lane Cove North. The plaintiff, Jian Minh Xu, owns No 43. The defendants, Mr and Mrs Martin, own No 45. The principal relief sought by the plaintiff in the proceedings was an order requiring the defendants to remove structures encroaching upon her land.
The encroachments have now been removed. On 17 July 2026, the Court noted, in orders made by consent, that the substantive dispute had been resolved and that the only remaining issue for determination was costs. These reasons determine that issue and the appropriate disposition of the proceedings.
I have had the benefit of two detailed affidavits made by the plaintiff, which in turn refer to and incorporate parts of substantive affidavits made by her in the proceedings. The first defendant made an affidavit on 13 August 2026. The plaintiff provided detailed submissions in chief and in reply to the detailed submissions of the defendants.
The plaintiff seeks an order that the defendants pay her costs of the proceedings, together with the costs of this application, as agreed or assessed. She contends that the defendants’ failure to complete the removal within the time they had indicated was unreasonable and made the proceedings necessary, and that she obtained the substance of the relief which occasioned them.
The defendants seek dismissal of the proceedings with no order as to costs. They contend that they had agreed to remove the encroachments before the proceedings were commenced and subsequently did what they had already undertaken to do. They also rely upon the plaintiff’s decision not to pursue her other claims. Alternatively, they seek their costs of the plaintiff’s claims concerning personal entry onto the plaintiff’s land and interference with survey marks, in circumstances where they were simply not pursued.
For the reasons which follow, I am satisfied that the appropriate exercise of the costs discretion is to order that there be no order as to costs, to the intent that each party pay their own costs of the proceedings. The proceedings should otherwise be dismissed, the substantive dispute having been resolved.
The affidavits filed on the costs application were extensive. They also incorporated material from the substantive affidavits filed in the proceedings.
Each side sought to give a very detailed blow by blow account of what occurred in relation to the dispute, both before and after the proceedings were commenced. Interspersed into the chronological narrative was each side’s perspective as to why they contended they had behaved reasonably.
Neither party sought an oral hearing and no deponent was therefore cross-examined.
It is necessary to address the chronology in a little detail. I do not propose, however, to descend into the minutiae of every factual issue raised by the parties. My focus is on what is necessary to decide the costs question.
In June 2022, the plaintiff engaged C&A Surveyors to survey the common boundary for the purpose of constructing a new dividing fence. That survey identified encroachments associated with the defendants’ carport and garage. Those structures had been in place since 1984. One of the identified encroachments was that the defendants’ carport, and the eave and gutter of their garage, encroached about 11cm onto the plaintiff’s land. The survey also referred to differences between title and survey dimensions and recommended a redefinition survey be lodged with NSW Land Registry Services.
The plaintiff submits that she showed the survey marks to the defendants’ son on 8 June 2022. The defendants say that the survey itself was not provided to them at this point and that no issue concerning an encroachment was raised until 2023. It is unnecessary to determine precisely what was communicated in June 2022. In any event, by September 2023, the plaintiff had expressly raised the alleged encroachments with the defendants.
The defendants obtained a survey in about November 2023 which, on their account, showed no encroachment. Correspondence followed between the plaintiff’s solicitors and the defendants in January, February and March 2024. The plaintiff sought removal of the structures. The defendants disputed the asserted encroachments. The plaintiff’s solicitors proposed that a boundary determination be obtained.
On 21 August 2024, the plaintiff applied for a boundary determination. The Registrar-General issued the determination on 12 February 2025. It identified certain encroachments, described in the defendants’ submissions as approximately: (i) 13 centimetres in respect of the garage eave and gutter; (ii) 13 centimetres in respect of the carport gutter, and; (iii) 3 centimetres in respect of a carport post.
The defendants accepted that boundary determination. From that point, there was no continuing dispute between the parties that the identified encroachments were to be removed. The dispute which is relevant for present purposes concerns the time taken to achieve that result and whether the plaintiff acted reasonably in commencing proceedings before it had been achieved, and whether the defendants acted unreasonably in any relevant respect.
On 18 March 2025, the plaintiff wrote requiring removal within 14 days. The first defendant (Mr Martin) replied on 23 March 2025. He explained that he was overseas and said that the defendants would remove the encroachments as soon as possible upon his return.
A plumber removed the carport gutter and downpipe in early April 2025. That work did not remove all of the encroachments identified in the boundary determination.
In an email of 10 April 2025, Mr Martin confirmed the gutter and downpipe work. He explained that the other work was more complicated because roofing needed to be removed and the integrity of the buildings considered. He referred to consultation with a licensed builder and said that, because of the builder’s workload and the plaintiff’s request for a check survey, those components could not be completed until the end of May 2025.
The plaintiff replied on 12 April 2025, insisting upon completion by 25 April 2025. In a further email of 15 April 2025, Mr Martin referred to the remaining work having been identified and scoped and to a registered builder having been engaged. He said “we feel we are doing everything possible to address the issues”.
The remaining encroachments were not removed by the end of May 2025. Following further correspondence from the plaintiff, Mr Martin wrote on 1 June 2025 that he was waiting for contractors to become available. He explained that more urgent work caused by the weather had prevented their attendance on what was a minor job. He did not give a replacement completion date.
The parties were also in dispute about the proposed dividing fence. The plaintiff had pursued that issue in the NSW Civil and Administrative Tribunal. Some of the correspondence in May 2025 concerned those proceedings. The plaintiff’s evidence also refers to a further warning on 10 June 2025 that she would seek legal action if the encroachments were not removed.
On 25 June 2025, Finn Hawkins (Mr Hawkins) attended the defendants’ property and conducted work to the carport posts. However, Mr Hawkins conducted work on the incorrect post. That is, work was completed on a post which was not an encroachment. While the defendants accept that Mr Hawkins worked on the wrong post, they contend that they did not discover this error until September 2025. Consequently, the June work did not remove the relevant encroachment.
The plaintiff commenced these proceedings by summons on 7 July 2025. She was then self-represented. She sought to commence the proceedings by approaching the duty judge seeking urgent interim orders.
In addition to the removal of the remaining encroaching structures, she sought a declaration concerning trespass, injunctions concerning entry onto her land, interference with survey marks and the installation or maintenance of structures over her land, and damages, including aggravated damages.
The allegations supporting those additional prayers extended beyond the presence of the structures. They included alleged entry onto the plaintiff’s land by Mr Martin and his son and alleged interference with survey marks. An allegation concerning entry by a contractor was subsequently advanced. Those allegations have not been adjudicated.
Mr Martin says that, upon learning on 4 September 2025 that the wrong post had been worked on, he promptly arranged for Mr Hawkins to return. Further work was carried out in early September 2025. There is a difference between the accounts as to whether that attendance occurred on 8 or 9 September 2025. Nothing turns on that difference.
The defendants obtained a survey from Kasem Masri (Mr Masri) on 30 September 2025. Further work was then arranged with Lance Boxsell and undertaken in October 2025, to remove encroachments identified by Mr Masri in his survey. A subsequent survey by Mr Masri, dated 31 October 2025, recorded no encroachments. The plaintiff received that survey in early November 2025.
The plaintiff remained concerned and engaged Jonathon Saxon (Mr Saxon) of Project Surveyors. Mr Saxon inspected the properties on 20 November 2025. His report, dated 30 November 2025 and served on 11 December 2025, identified some remaining encroachments. The defendants describe those as between 1 and 3 centimetres.
The defendants contend that, rather than litigate the difference between the surveyors, they elected to remove the further items identified by Mr Saxon. Work occurred in March 2026. A further inspection by Mr Saxon in April 2026 identified a remaining encroachment, and additional work again occurred on 11 May 2026.
On 28 May 2026, the plaintiff attended a joint inspection with Mr Saxon, Mr Martin and the defendants’ contractor. Mr Saxon’s report dated 5 June 2026 confirmed that the remaining encroaching structure had been removed.
Settlement correspondence had commenced in February 2026. On 17 June 2026, following the confirmation of removal, the plaintiff offered to resolve the proceedings upon payment of $56,649.37 (which included an amount for aggravated damages), or alternatively, payment of her costs as agreed or assessed, together with discontinuance. On 8 July 2026, the defendants offered to pay the plaintiff $20,000 in return for a discontinuance of the proceedings. Neither offer was accepted.
The notation made by the Court on 17 July 2026 recorded the position which the parties had reached: the substantive dispute had been resolved, and costs remained for determination. The plaintiff no longer pursues any substantive relief in the summons.
The power to award costs is conferred by s 98 of the Civil Procedure Act 2005 (NSW) (CPA). Subject to the rules and other applicable legislation, costs are in the discretion of the Court. That discretion must be exercised judicially. The overriding purpose in s 56 of the CPA is also relevant. Costs are compensatory, rather than punitive.
Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides for costs to follow the event unless some other order should be made. Where proceedings have ended without a determination on the merits, however, the Court is deprived of the outcome which ordinarily guides the exercise of that discretion.
The applicable principles are well established: Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6. They were considered by the Court of Appeal in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 (Nichols), particularly at [8]-[9] and [25]-[30], and were summarised by Faulkner J in Bridge Street Capital No.2 Pty Ltd v Manta Group Pty Ltd & Ors [2025] NSWSC 1072 at [49]-[54], upon which the plaintiff relies.
If the parties have acted reasonably in commencing and defending proceedings, and have continued to act reasonably until their resolution, the usual order is that there be no order as to costs. That is not an inflexible rule. Costs may be awarded where one party’s unreasonable conduct has occasioned the litigation or its continuation. Questions of reasonableness of conduct needs to be viewed practically and substantively: see Nadilo v Eagleton (2021) 250 LGERA 89; [2021] NSWCA 232 at [94] per Preston CJ of LEC.
Another relevant consideration is whether one party has effectively surrendered to the other, as distinct from a settlement or supervening event which has removed the dispute without a clear victory on either side: ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 at 552-553; [2000] FCA 270; Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5]. The circumstances must be examined. A finding of capitulation or surrender will be made where the Court is sufficiently confident that one party would almost certainly have succeeded had the matter proceeded to trial.
The fact that a plaintiff has obtained a practical benefit does not, by itself, establish an entitlement to costs. Unreasonable conduct by the defendant is necessary.
Importantly, the Court is not to conduct a hypothetical trial to determine costs. In Nichols at [8], Basten JA emphasised that a conclusion of relevant unreasonableness must be apparent from known circumstances which are not in dispute. If the proposed conclusion requires the Court to resolve substantial conflicts in the evidence, that exercise should not be undertaken merely to decide who bears the costs.
The defendants also rely on rr 42.19 and 42.20. Rule 42.19 concerns discontinuance. Rule 42.20(1) provides, in substance, that upon dismissal the plaintiff pays the defendants’ costs to the extent of the dismissal, unless the Court orders otherwise. These are default provisions, not presumptions, but departure requires a sound positive ground: Fordyce v Fordham [2006] NSWCA 274 at [84]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [53]-[54], [69]-[74].
The plaintiff’s success must accordingly be considered with the circumstances in which it was obtained, rather than being treated as sufficient in and of itself: Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107 at [23]. It is also necessary to consider the claims which the plaintiff no longer pursues and any conduct which would justify withholding or reducing an otherwise appropriate costs order.
The notation made on 17 July 2026 recorded resolution of the substantive dispute. It did not itself dismiss the summons or determine costs. As the plaintiff no longer seeks substantive relief, I agree with the defendants that dismissal is the appropriate means of bringing the proceedings to an end.
Rule 42.20(1) of the UCPR is therefore engaged. It is for the plaintiff to persuade me that the Court should order otherwise than that the plaintiff pay the defendants' costs of the proceedings.
It is clear, however, that the proceedings have come to an end in circumstances where all of the encroachments have been removed and the plaintiff has obviously determined not to prosecute her other claims. The plaintiff has thus achieved some practical success, but not complete success on the claims made.
As the above authorities make clear, the fact that the plaintiff has achieved some practical success does not, in and of itself, provide a basis for her to receive her costs. Some unreasonable conduct by the defendants must be demonstrated. I do not discern any conduct of the defendants which provides a basis for the defendants to be ordered to pay the plaintiff’s costs of the proceedings.
Prior to the boundary determination, there was a legitimate dispute as to the location of the boundary and thus whether there were any encroachments. The alleged encroachments relate to structures which have been in place since 1984. The boundary determination found that there were some encroachments, although it must be observed that they were of a relevantly minor nature. The encroachments were not such as to have a serious impact on the plaintiff’s use and enjoyment of her property. They potentially impacted a new dividing fence which the plaintiff wished to erect where there had not previously been a dividing fence. There is no suggestion in the evidence, however, of any urgency in the encroachments being removed.
The defendants accepted the outcome of the boundary determination and indicated to the plaintiff, by email dated 23 March 2025, that they would remove the encroachments as soon as possible. There is absolutely no reason to doubt that this was the genuinely held position of the defendants at the time. I am also comfortably satisfied that it continued to be their intention at all times thereafter.
Work was then done to remove some, but not all, of the encroachments.
There was a delay in the removal of what was then thought to be the remaining encroachments. A tradesman also did work to the wrong carport post. The defendants encountered some difficulty in locating contractors willing and available to undertake the required works.
The plaintiff was, perhaps understandably, concerned at the time being taken to remove all of the encroachments. There was, however, nothing that could have reasonably suggested to her that the defendants were no longer prepared to do what they said they would do, namely remove all of the encroachments as soon as possible. No doubt as a result of her concern, she commenced these proceedings. The fact that the plaintiff was concerned at the time being taken and that, looked at from her point of view, this concern was perhaps understandable, it does not follow that the defendants acted unreasonably in not performing the removal within the time required by the plaintiff.
At no stage did the defendants indicate that they would not remove the encroachments. I do not regard the time taken as indicating any implicit refusal to do the work.
In the third quarter of 2025, further work was done pursuant to a further survey. Mr Masri, the surveyor, indicated that there were no further encroachments. The plaintiff did not agree. She engaged Mr Saxon who identified a small number of even more minor encroachments. These were then attended to.
Once agreement was reached by both sides, that all encroachments had been removed, the proceedings came to an end. The plaintiff, obviously enough, did not pursue the other claims made in the proceedings, including the claim for aggravated damages, trespass and the like.
Both parties have no doubt incurred not insignificant legal costs.
Whilst the removal of the encroachments no doubt took much longer than the plaintiff would have liked, I am not satisfied, in all of the circumstances, including the nature of the encroachments and the time that they have been there, that the defendants have behaved unreasonably so as to make it appropriate for them to pay the plaintiff’s costs of the proceedings.
I am also not satisfied that the present case is a case where it could be said that the defendants have capitulated or surrendered. They did not. There was never a position of opposition from which it could be said that they surrendered or capitulated. They simply completed doing what they always said they would do, namely remove the encroachments as soon as possible.
The plaintiff also abandoned the other claims which she had made, which included a claim for aggravated damages.
The appropriate costs order, consistent with Lai Qin and like cases, is that there be no order as to costs, to the intent that each party pay their own costs of the proceedings.
The substantive dispute was resolved by removal of the remaining encroachments. The plaintiff thus achieved some practical success. In the absence of any unreasonable conduct on the part of the defendants, I am satisfied that the appropriate order is that there be no order as to costs, to the intent that each party pay their own costs of the proceedings.
The Court orders that:
The summons be dismissed.
There be no order as to costs, to the intent that each party pay their own costs of the proceedings.
**********
Xu
Martin
(2021) 250 LGERA 89
(2018) 97 NSWLR 681
(2000) 101 FCR 548
(1997) 186 CLR 622