Hofer v Howell Developments Pty Limited

The requirements of the Local Government Act 1919 (other than the requirements for the registration of plans) have been complied with by the above-mentioned applicant in relation to the proposed subdivision above described, and more particularly set out on the accompanying plan marked "covered by Town Clerk's certificate of 4 June 1940". 4. The plan of subdivision does not align with the new common wall. The common boundary is shown as being three foot six inches clear of the wall of the Masonic Temple, so that the town hall building encroaches across that distance over the respondent's land, No. 8 Gap Road, to the common wall of the two buildings. A plan of survey dated 20 October 1999 shows that the Town Hall building encroaches onto No. 8 Gap Road by 1.37 metres, for a width of 12.195 metres. The survey also shows encroachments by brick wing walls on other side of the former town hall building onto No. 8 Gap Road. After subdivision the town hall retained its frontage to Military Road and the Masonic Temple had a frontage to Gap Road.

The Trustees of the Masonic Lodge sold the former town hall building to Mr E F Wiseman in 1941, who seems to have then used it as a cinema known as the Rex Theatre. Over the next decade or so the former town hall building passed through a number of owners who used it as a cinema. By 1959 it has variously been known as the Rex Theatre, Rivoli, New Rex and the Village Cinema. The use of the building as a cinema ended in about 1964 when became a theatre-restaurant. In 1965 the building was sold to Mr and Mrs Ben Bronk who used it as a museum of vintage cars. In 1979 the present applicant, Mrs Hofer, became the owner.

The town hall building has undergone a number of physical changes since it was acquired by the applicant. In particular, a residential flat has been created on a mezzanine floor above the former town hall auditorium. The former auditorium and part of the ground floor facing Military Road is used as an antique centre. There is also a café on the ground floor. The applicant licenses various spaces within the building to antique dealers or artists, as well as using some of the space herself. Other alterations to the building have included a new fire-rated ceiling over the main auditorium, a new metal roof and some structural strengthening of the roof.

In 1976 the Trustees of the Masonic Lodge sold the Masonic Temple at No. 8 Gap Road to Mr and Mrs J Cook, who converted it to residential use. The respondent acquired that property by contract of sale dated 9 March 1999. The sole director, secretary and shareholder of the respondent is Mr P R Howell, who is at present carrying out internal renovations to the former Masonic Temple for use by him and his family as their home.

The applicant's building is listed as a heritage item under the Woollahra Local Environmental Plan 1995. Two heritage experts have given evidence: Mr R R Howard (called by the applicant) and Mr G L Brooks (called by the respondent). Mr Howard states that removal of the encroaching portion of the applicant's building would diminish the architectural integrity and, therefore, the heritage value of an identified heritage item; and it would also affect the heritage attributes of the former Masonic Temple at No. 8 Gap Road to which it remains physically connected. Mr Howard concedes, however, that the building no longer evokes the volume of a town hall or a cinema. He also concedes that the connection between the two buildings can hardly be seen from the public domain. Mr Howard nevertheless states that removal of the encroachment would further deplete an already truncated heritage structure and involve the demolition of significant original building fabric. It would, in Mr Howard's opinion, separate two buildings that have been historically and physically linked for three-quarters of a century, effectively removing all apparent evidence of this important association.

In Mr Brooks' opinion the encroachment could be removed without any adverse impact on the overall heritage significance of the former town hall building. He notes that since 1926 and certainly since 1940 the two buildings have had separate functions. They are not, in his opinion, considered as one building but as separate but joined buildings. The encroaching portion of the former town hall building, in Mr Brooks' opinion, is of relatively low significance compared to the front of the building and the architectural composition of the two-storey section of the front of the building. If the encroachment is to remain then Mr Brooks raises the question of who is obliged to maintain the box gutter at the junction of the two buildings, within No. 8 Gap Road.

The applicant had commissioned a report by another heritage expert, Mr D Sheedy, in 1993. On 22 July 1993 Mr Sheedy furnished a report on the heritage significance of the former town hall building. His report states that unsympathetic alterations and a lack of proper maintenance over a long period have made it virtually impossible to restore the building to the significant earlier period, particularly as no internal evidence remains to enable such an operation to be carried out. Mr Sheedy, states, however, that the facade of the building facing Military Road does retain a significant architectural presence reminiscent of its original past use as a town hall. His report states that the building does not retain sufficient historical fabric, with the exemption of the front of the building and its facade, to justify recognition as a heritage item. Because the two-storey front facade retains most of its original fabric, Mr Sheedy recommends that this part be regarded as having conservation value.

Mr Howell, who is a property developer of some twenty years experience, states that he will would like to restore the former Masonic Temple so that it is a freestanding home. The dining area on the ground floor is poorly served by natural light and if the encroachment is removed it would enable him to install windows to that area. In his opinion if both buildings are freestanding it will enhance the financial value of both properties and eliminate conflict in relation to the maintenance of both buildings. Conflict has already occurred during the renovation and painting of the respondent's building. In Mr Howell's opinion, removal of the encroachment would make access easier for repairs to and maintenance of both buildings and allow both buildings to be more easily and adequately provided for by way of weather and dampness protection.

The applicant, on the other hand, opposes the removal of the encroachment. She does not wish to lose the space occupied by the encroaching section of her building. She does not wish to loose the French doors on the side walls which would have to be removed if a new rear wall is to be erected within the property boundary. She would lose space presently licensed to others and is concerned that any works involving the erection of a new rear wall to her building will result in disturbance to the businesses of her licensees and herself. If she were to lose any licensees then, in her experience, it would take several months to find other licensees in their stead.

In my opinion the heritage significance of the building is derived principally from its front facade and the front portion of the building facing Military Road. I prefer the opinions of Mr Brooks and Mr Sheedy to those of Mr Howard. My reasons for doing so are based principally upon the fact that the rear of the building has be " pruned back " by two major alterations, the first in 1926 when the rear part was demolished to make way for the Masonic Temple and the second in 1940 when the stage was removed and the present common wall was erected. Moreover, the rear of the building cannot be readily seen from any public place and this is confirmed by a view of the building taken in the presence of the parties and their representatives. There are also the many internal alterations to the fabric of the building which have destroyed its former sense of style as a town hall. I am also of this opinion because the use and function of the two buildings have been separate since about 1926 and certainly since about 1940 when the Trustees of the Masonic Lodge sold the Town Hall. In my opinion the evidence suggests that that part of the applicant's building which encroaches into No. 8 Gap Road could be removed without adversely affecting the heritage significance of the remainder of the building.

There are other practical considerations which suggest that the encroachment should be removed. There is, as noted by both Mr Brooks and Mr Howard, the question of maintenance of both that part of the applicant's building which encroaches and that part of the respondent's building to which it is attached. The existence of the encroachment acts as a severe constraint on the use of the building at No.8 Gap Road, particularly the lack of natural light to the dining area on the ground floor. The opinion of Mr Howell that the value of both premises would be enhanced if they are not attached to each other is confirmed by the valuation evidence. Mr F K Egan, the valuer called by the respondent, expressed the opinion, by reference to comparable sales, that detached buildings are on average valued twenty percent higher than attached buildings. Mr G C McMonigal, the valuer called by the applicant, conceded that a free standing dwelling will generally attract a higher value than an attached dwelling, although he was not prepared to put a figure on the difference.

There is no doubt, according to the evidence of the structural engineers called by each party, that the encroachment can be removed and a new rear wall to the applicant's building can be erected without adversely affecting the structural stability of that building. There was a difference between the structural engineers (Mr P Tinslay and Mr P G Allsopp on behalf of the applicant and Mr V J Scalaro on behalf the respondent) as to the details of the method of construction required. There was also a suggestion that there might be some differential settlement between a new rear wall and the existing building. Mr A Zenon, a geotechnical engineer, stated that bedrock is very close to the surface at the rear of the building on the applicant's land and if any new footing is piered to the rock then any settlement would be " infinitesimal ". The existing building has been in existence for almost one hundred years and any settlement of the existing building is likely to have occurred many years ago. It follows that the risk of differential settlement is remote, provided that any new rear wall and its footing is properly constructed.

The removal of the encroachment and the construction of a new rear wall within the applicant's property boundary has been costed. Mr E Bergman has furnished a quote for the respondent, based on Mr Scalaro's design, in the sum of $53,420 (including GST). Mr R Kirk has furnished a quote for the applicant, based on Mr Allsopp's design, in the sum of $84,000 subject to further site investigation. The applicant states that there will be additional costs, particularly those related to the loss of income and loss of business due to disturbance caused by building works. I note, however, that a temporary wall could be erected within her building to provide a separation between any building works and the rest of the building.

The alternative sought by the applicant, that of allowing the encroachment to remain, raises the question of the amount of compensation payable to the respondent. Mr Egan, the valuer called by the respondent, notes that there would be a total exclusion from the servient tenement of the strip of land occupied by the encroachment. Adopting a rate per square metre based upon the value of the property, Mr Egan has valued the strip over which the encroachment extends at $75,000. In addition, however, Mr Egan has placed a value of $250,000 on the loss of amenity to the respondent's land as a consequence of the encroachment being where it is. The applicant's valuer, Mr McMonigal, states that the freehold value of the strip of land the subject of the encroachment is $50,000 and the value of an easement over the same land the subject of the encroachment $5,000. It seems to me , however, since the respondent would be totally deprived of any use of the land occupied by the encroachment, then the amount of compensation payable should be the value of the land. I thus reject Mr McMonigal's valuation of $5,000 for an easement in this instance.

The exercise of the Court's discretion under section 3 of the Encroachment of Buildings Act is unconfined. In my opinion I should exercise the Court's discretion by making an order for the removal of the encroachment. I have come to this opinion for the following reasons. (1) By removing the encroachment both the applicant and the respondent would each get a detached building which would be more valuable than an attached building. According to Mr Egan, whose evidence on this aspect I have no reason to doubt, the value of each property would result in a windfall to each party of something in the vicinity of twenty percent, particularly since the applicant's valuer, Mr McMonigal, conceded that detached dwellings attract higher value than attached dwellings, although he did not quantify the difference. (2) Removal of the encroachment would enhance the amenity of the lower floor of the respondent's building and enable the respondent to install windows to provide natural light to the adjourning dining area. (3) The heritage considerations are not such as to require retention of the encroachment, particularly since the rear of the applicant's building has been " pruned back " on two previous occasions and the internal changes to the building have destroyed the experience and sense of style of the former use and space of the town hall. The use of the two buildings has been for separate and unrelated purposes since 1926 and certainly since 1940 when the Trustees of the Masonic Lodge sold the former town hall building. (4) Removal of the encroachment will obviate any difficulties which may arise in the maintenance of both the encroaching building and the respondent's building. Allowing the encroachment to remain, on the other hand, will result in the potential for ongoing conflict between the adjoining land owners over the responsibility for maintenance of both buildings in the vicinity of the encroachment. (5) Removal of the encroachment and the erection of a new rear wall to the applicant's building will not impact adversely on the structural stability of that building. On the contrary, the work is likely to result in strengthening of the structural stability of the applicant's building. (6) The cost of removing of encroachment and the erection of a new rear wall to the applicant's building is not such as to outweigh the compensation which would be payable to the respondent if the encroachment were to remain. The cost of the building works is likely to be within the range of the two quotes in evidence, that it to say between $53,420 and $84,000, depending upon whether the applicant chooses to adopt Mr Allopp's design for the work or Mr Scalaro's design for the work. The quote for $84,000 is likely to be less if the applicant were to accept the respondent's offer of access over No. 8 Gap Road for the doing of the work. (7) The cost to the applicant of removing the encroachment is alleviated somewhat by the respondent's offer of $25,000 toward the costs thereof. The respondent's further offer to allow the builder access to the works trough No. 8 Gap Road would be likely to further reduce those costs. (8) Removal of the encroachment would involve some temporary inconvenience to the occupation and use of the rearmost part of the applicant's building. It is reasonably clear, however, that the overall benefits of the work would outweigh such short-term inconvenience. (9) When both of the applicant and the respondent purchased their respective properties it can be assumed that they either knew or ought to have known of the existence of the encroachment. 19. I therefore make the following orders: 1. Order that on or before 30 May 2001 the applicant remove so much of the building on No. 17 Military Road, Watsons Bay which encroaches on No. 8 Gap Road, Watsons Bay. 2. I reserved the question of costs. 3. I reserved liberty to apply. 4. The exhibits may be returned.

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(4) Removal of the encroachment will obviate any difficulties which may arise in the maintenance of both the encroaching building and the respondent's building. Allowing the encroachment to remain, on the other hand, will result in the potential for ongoing conflict between the adjoining land owners over the responsibility for maintenance of both buildings in the vicinity of the encroachment.

(5) Removal of the encroachment and the erection of a new rear wall to the applicant's building will not impact adversely on the structural stability of that building. On the contrary, the work is likely to result in strengthening of the structural stability of the applicant's building.

(6) The cost of removing of encroachment and the erection of a new rear wall to the applicant's building is not such as to outweigh the compensation which would be payable to the respondent if the encroachment were to remain. The cost of the building works is likely to be within the range of the two quotes in evidence, that it to say between $53,420 and $84,000, depending upon whether the applicant chooses to adopt Mr Allopp's design for the work or Mr Scalaro's design for the work. The quote for $84,000 is likely to be less if the applicant were to accept the respondent's offer of access over No. 8 Gap Road for the doing of the work.

(7) The cost to the applicant of removing the encroachment is alleviated somewhat by the respondent's offer of $25,000 toward the costs thereof. The respondent's further offer to allow the builder access to the works trough No. 8 Gap Road would be likely to further reduce those costs.

(8) Removal of the encroachment would involve some temporary inconvenience to the occupation and use of the rearmost part of the applicant's building. It is reasonably clear, however, that the overall benefits of the work would outweigh such short-term inconvenience.

(9) When both of the applicant and the respondent purchased their respective properties it can be assumed that they either knew or ought to have known of the existence of the encroachment.

1. Order that on or before 30 May 2001 the applicant remove so much of the building on No. 17 Military Road, Watsons Bay which encroaches on No. 8 Gap Road, Watsons Bay.