John Llavero v Brett Anthony Shearer

Judgment 1The plaintiffs and the first and second defendants are neighbours at Stanmore. The plaintiffs are the proprietors of number 100 and the first and second defendants, number 106. Despite the numbering the two properties actually adjoin. The third defendant is a builder who was retained by the first and second defendants. 2The first and second defendants, to whom I will refer as "the Shearers", purchased number 106 in about October 2009. They had plans for extensive renewal of the property and in connection with that renewal retained Mr and Mrs Sission as their architects. Mrs Patricia Sission appears to be the person with the carriage of the brief. The third defendant to whom I shall refer as "the Builder" carried out the works. 3The issues in this litigation concern (A) whether works done by the defendants caused the natural support of No 100 to be detrimentally affected; and (B) a problem with an encroachment onto No 100. 4I will first provide an outline of the pleadings, the principal facts and basic legal principles and then list and deal with the particular issues that arise. 5The renewal of number 106 included putting in a new driveway and removing a lot of vegetation. In November 2009 the Shearers commenced the work of lopping and removing trees and shrubs along part of the dividing fence between numbers 106 and 100. 6Mrs Shearer went away to Malaysia on the 13th of November 2009 and Mr Shearer to Bali on the 18th of November 2009 with the couple's three children. They met up in Bali and returned back to Sydney early in the morning of 3 December 2009. 7The contract between the Shearers and the third defendant is oral. I will come to it in more detail later. The actual content of the contract was that the third defendant was retained to carry out the works which were contained in the scope of works prepared by Mrs Sission. The Shearers allege various implied terms in the contract and that is a matter which will need to be resolved. 8Before the Shearers left Australia, Mrs Shearer particularly gave Mr Andy Cosco, controller of the third defendant, instructions as to what he should do. Those instructions included the removal of various trees and undergrowth and other vegetation. At about the same time Mrs Sission's role in supervising the work ceased and the Builder - through its sole director and principal builder Andy Cosco - accepted the directions of Mrs Shearer as to what to do and how to go about it. Of course during the period where Mrs Shearer was overseas there were no direct instructions, but Mr Cosco says that she and he corresponded by email. 9In late November 2009 three trees, which had been marked by an officer of the local Council as able to be removed notwithstanding that their species was covered by a tree preservation order, and other trees and undergrowth were removed by arborists contracting to the Builder. The removal of the trees and vegetation did affect the existing dividing fence and part of it collapsed. The next event was that subcontractors excavated about 26 metres along the common boundary between 100 and 106 (the whole of the common boundary being about 62 metres in length). 10The plaintiffs say that the Shearers excavated so that part of the plaintiffs' land was excavated, then they erected a retaining wall with inadequate backfill for the excavation. Paragraph 17 of the Amended Statement of Claim reads as follows: Breach of the Duty of Care Owed by each of the Defendants 17. At all material times, in carrying out the works on the Neighbouring Land [that is 106], or in permitting or directing the works to be carried out, the first, second and third defendants, and each of them, owed the plaintiffs a duty to exercise reasonable care and skill not to do anything on, or in relation to, the Neighbouring Land that would remove the support provided by it to the Land. 11The "Land" is defined as number 100. The particulars given referred to s177 of the Conveyancing Act 1919. It was then pleaded that in breach of the duty of care the defendants removed the support provided to the plaintiffs' land. The particulars are the removal of trees, the excavation, the storage of building materials on the land immediately adjacent to an embankment and leaving the excavation untreated for about a month. 12The Statement of Claim contains a number of other causes of action as well including (a) trespass by building a retaining wall partly on the plaintiffs' land; and (b) breach of statutory duty under environmental planning legislation. These were not pressed at the trial. 13The plaintiffs originally claimed that because of the defendants' actions there would have to be very expensive stabilisation of the plaintiffs' house. However, after a series of expert reports most of these allegations were discontinued. This was because all the experts came to the view that there was virtually no material which would support any substantial movement of the plaintiffs' house because of the defendants' excavations. 14Orders were made in directions hearings that the parties submit Statements of Issues. The plaintiffs' document contained five paragraphs of issues: (1)Did the defendants breach their admitted duties of care owed to the Llaveros? (2)What is the extent of the defendants' relative responsibilities for such breach? (3)What is the quantum of the plaintiffs' damages? (4)What is the extent of the encroachment by 106 XXX Road on 100 XXX Road? (5)What is the amount of compensation to which the Llaveros are entitled for the encroachment? 15This seemed to put the issues that I had to decide in two categories: (a) was there a breach of s 177 of the Conveyancing Act 1919 and if so what were the quantum of damages and by whom should those damages be payable; and (b) issues under the Encroachment of Buildings Act 1922. 16I found the Shearers' Statement of Issues rather difficult to comprehend. I asked for a revision, one was supplied which did not make me any more satisfied and despite my hints no further document was submitted. The summary of the document is as follows: 17Question 1: Was the work undertaken by or on behalf of the third defendant to the boundary between the first and second defendant's property and the plaintiffs' property, namely the construction of a new retaining wall and associated excavation and the removal of certain trees, performed negligently and/or in breach of statutory duty? 18It was difficult to work out what is meant by the words "work undertaken by or on behalf of the third defendant". Certainly the Builder physically carried on the work, but there is a real issue as to whether it did so as the agent of the Shearers or on its own account. The statement seems to suggest it was done on its own account and so does not focus on the real issue, that is, whether there has been a breach of s 177 of the Conveyancing Act. It also brings in the concept of negligence. 19Question 2: If the answer to question (1) is "yes", did the work therein referred to cause or contribute to the cracks in the dwelling of the [plaintiffs'] land and other alleged defects. (a)To the extent all the work requested by the plaintiffs caused or contribute to the defects. Are those defects properly regarded as having been caused by the plaintiffs and not by the defendants; and (b)Are the plaintiffs estopped from seeking relief? 20This seems to fit in with the submissions of the Shearers that actually the plaintiffs asked for the work to be done. For reasons which I set out subsequently I do not accept this evidence. I will deal with the matter in more detail in due course. 21Question 3: Is merely consequential. 22Question 4: To what extent, if at all, are the first and second defendants on the one hand and the third defendant on the other liable to the plaintiffs in respect of the loss suffered by the plaintiffs identified in question (3), question (3) refers to the loss suffered by the plaintiffs in connection with the alleged defects. 23As I indicated at the time this statement is ambiguous, it does not indicate whether what is being said is that there should only be proportionate liability under the Civil Liability Act 2005 or whether there should be some contractual or equitable obligation of contribution. In oral submissions Ms Ashworth, who appeared for the Shearers, tried to get the best of both worlds. 24Questions 5 to 8 deal with the Encroachment of Buildings Act, unfortunately the numbering has gone arie. 25Question 9 asks whether the Shearers are entitled to indemnity or contribution from the Builder. 26The Builder's issues were: whether it or the Shearers had breached any duty of care or statutory duty; the amount of compensation, if any; and then the issue of indemnity or contribution pleaded in the first cross claim. 27There were two Cross-Claims. The first Cross-Claim was by the Shearers against the Builder for contribution. The second Cross-Claim was by the plaintiffs against the Shearers for orders under the Encroachment of Buildings Act 1922 or the grant of an easement under s 88K of the Conveyancing Act 1919. 28The proceedings came on for hearing before me on 15, 16 and 17 September 2014. Mr T J Hancock of counsel appearing for the plaintiff, Ms F Ashworth for the Shearers and Mr G Carolan for the Builder. 29Ms Ashworth insisted (T249) that: I have not and do not consent to or acquiesce in the plaintiffs' running a case outside the pleadings. It is the pleaded case to which the first and second defendants are responding. 30This was odd as the pleaded case had been very much watered down by the time it got to Court and secondly the Shearers own pleadings would not be pleadings to which they would want to be confined. However I will try and deal with the matter in the way Ms Ashworth would like it to be considered. 31I will first make some brief observations on the general principles of law applicable, then set out the terms of s 177 of the Conveyancing Act 1919, then deal with the questions of fact, after which I will list a series of questions which I now need to consider and then end up with the result of my deliberations. 32Section 177 of the Conveyancing Act 1919 was inserted into this statute in 2000 as a result of the consideration of the Law Reform Commission of NSW which had culminated in their report number 84. 33At common law a person was entitled to support from neighbouring land. However, the support was only to the land in its natural state and not to any structure thereon. There was also great doubt as to how far the common law principle applied to Torrens system land because the common law rule was considered in terms of some sort of implied easement and it was of course a type of easement that was not registered on the title. 34Section 177(1)-(4) of the Conveyancing Act 1919 provides: 1.For the purposes of the common law of negligence, a duty of care exists in relation to the right of support for land. 2.Accordingly, a person has a duty of care not to do anything on or in relation to land (the supporting land) that removes the support provided by the supporting land to any other land (the supported land). 3.For the purposes of this section, supporting land includes the natural surface of the land, the subsoil of the land, any water beneath the land and any part of the land that has been reclaimed. 4.The duty of care in relation to support for land does not extend to any support that is provided by a building or structure on the supporting land except to the extent that the supporting building or structure concerned has replaced the support that the supporting land in its natural or reclaimed state formally provided to the supported land. 35What is odd, is that it is not made clear whether the statutory duty to support adjoining land is, as at common law, the duty to support that land in its natural state or also to support buildings on it. 36Section 177(8) abolishes any right at common law to bring an action in nuisance in respect of the removal of support provided by supporting land to supported land. The section however does not actually abolish the common law right of support. What it seeks to do is to make the only action available to a person who has lost support, an action in negligence. 37The common law rule was sometimes called the rule in Dalton v Angus after the leading case of Dalton v Henry Angus & Co. (1881) 6 App Cas 740. The basic principle in that case was that there was a natural right of support to the natural surface of the adjoining land but not the buildings on that land. However, this was subject to the qualification that where land subsides due to a loss of support and not from the additional weight of buildings thereon damages are recoverable for injury to the building in addition to damages for land subsidence. The NSW Law Reform Commission cited this law in its report number 84 at [2.3] and the proviso is well supported by authorities such as Brown v Robins (1859) 4 H & N 186; 157 ER 809; Stroyan v Knowles (1861) 6 H & N 454; 158 ER 186; Public Trustee v Hermann [1968] 3 NSWR 94; 88 WN (Pt1) (NSW) 442 and Pantalone v Alouie (1989) 18 NSWLR 119 at 129. 38Strangely enough, neither s 177 nor the Law Reform Commission's Report actually abolishes the rule in Dalton v Angus. The Law Reform Commission does not appear to have sought to abolish this natural right of property or to have affected it. All it really did was to streamline the law, remove some of the historical anomalies, abolish the cause of action in nuisance and allow one in negligence. 39However, from page 28 of the Report onwards there is an attack on the rule in Dalton v Angus and in particular quoted the dictum of Stephen J in Stoneman v Lyons [1975] HCA 59; 133 CLR 550 at 567: I regard it as at least arguable that, as the law of negligence now stands, the threatened burdening of land with an easement of support in favour of a building next door does not entail the consequence that the owner of the land thus threatened may excavate up to his own boundary regardless of the effect upon his neighbour's building. 40One of the few local cases on the subject is Economy Shipping Pty Ltd v ADC Buildings Pty Ltd [1969] 2 NSWR 97. That is a case where an excavation in York Street, Sydney meant that the building next door would fall into the excavation were it not for the fact that an early injunction was obtained to prevent the ultimate damage. At page 101 Helsham J said: The law is clear that an owner of land has a right to the lateral support of his land by adjacent land as one of the ordinary rights of property. 41No actual authority was quoted and cited by his Honour but the proposition is clearly right. I should note however that in the Economy Shipping case the Judge found that the collapse of the subject land would have happened as a result of the excavation without the additional weight of the building on the plaintiff's land. 42In his supplementary submissions in reply Mr Hancock put that the reference in s 177(2) to "supported land" includes buildings on the supported land. I am not too sure whether that is so. However, as Mr Hancock points out Macready AsJ so held in Piling Contractors (Qld) Pty Ltd v Prynew Pty Ltd [2008] NSWSC 118 at [52]-[55] and Beech-Jones J followed this in Jukes v Larter [2012] NSWSC 369 at [29]. I do not need to decide the point in the present case and so I merely list the authorities and my doubts. 43I do not have to decide the point in the present case because, as will appear later, the plaintiffs' case that his building has been affected by the excavation is not made out on the evidence. 44I should note here that in paragraph 17(b) of the Shearer's defence the allegation is made that the statutory duty under s 177 of the Conveyancing Act 1919 does not create any liability for omissions. No argument was presented during the case to support this proposition and I would have thought that at the very least, if a person allows their supporting land to be eroded to such an extent that the land next door lacks support there is a breach of the duty referred to in s 177 of the Conveyancing Act 1919. 45One other matter of law should be mentioned before I deal with the facts of the case. Strangely this point was not even argued before me. There are a number of situations where a person owes a non-delegable duty of care. The prime situation is where a school is committed to look after children it will be liable even though the fault which caused the injury of the child happens whilst there is a swimming lesson which has been subcontracted to an independent contractor. Although there is some doubt about the matter, the weight of authority appears to be that one's duty not to deprive one's neighbour's land of support is one such situation. The plurality of the High Court discussed the matter in Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; 179 CLR 520 at 550 and following. Earlier cases are discussed in the NSW Law Reform Commission's Report see e.g. Bower v Peate (1876) 1 QBD 321 and Alcock v Wraith (1991) 59 BLR 20; [1991] TLR 600. 46The facts and findings can most conveniently be dealt with under the following headings: A: The case on loss of support 1.Did (a) the first and second defendants or (b) the third defendant or (c) both of them, breach their duty of care with respect to supporting the plaintiffs' land? 2.Is there any operative estoppel to prevent the plaintiffs from obtaining relief in respect of any such breach? Is there any contributory negligence? 3.What is the extent of the defendants' relative responsibilities for such breach? Is there any claim for contribution between the defendants? 4.What is the amount of the plaintiffs' damages? B: Encroachment of Buildings Act 1922 (NSW) 5.Overview. 6.What is the extent of the encroachment by Number 106 on Number 100? 7.What is the amount of compensation to which the plaintiffs are entitled in respect of the encroachment? 8.Should there be a grant of easement under s 88K of the Conveyancing Act 1919. 9.What consequential orders should be made? C: Generally 10.What is the result of the case and what orders should be made. 47I will deal with these matters in turn.

A1 - Loss of Support 48It is necessary to look at the evidence given by the principal parties and their spouses. Mr Llavero says that on about the 3rd of November 2009 demolition works commenced on Number 106. On about 4 November 2009 Mrs Bronwyn Shearer came to his home and introduced herself. She said to both Mr and Mrs Llavero: We should talk about the fence. 49Mr Llavero said he replied: When you remove part of the vegetation which interferes with the construction of the fence, we can discuss the fence again. 50A few days later, Mr Shearer came to the Llaveros' house with his laptop computer and showed the Llaveros the renovation project for his house. Mr Llavero said that he said to Mr Shearer: The tree behind our laundry must be removed before any fence repairs begin. 51Mr Shearer allegedly said: If I do not succeed with the Council to have the tree removed, then I will do an application in the Land and Environment Court to remove the tree. 52The Builder then lowered the ground level of the neighbouring property which exposed tree roots. On 10 November 2009 tradesmen started to remove vegetation and when the worker reached the tree behind the laundry Mr Llavero heard the Builder say: She doesn't want to remove this tree. 53On 13 November 2009 the workers began to remove the boundary fence. Mr Llavero says he told them to stop but the workers just carried on. 54Mrs Llavero says that on or around the 13th of November 2009 she observed workers on the neighbouring property remove part of the fence on the common boundary. She says she told them not to do that but they ignored her. On 16 November 2009 she observed workers using an excavator to remove soil from the neighbouring property and from her own property. The same day she saw workers using a saw to remove the front fence on the common boundary. Her protests were ignored. On the same day she observed workers cutting the concrete path inside her property, the cut was approximately 50cm wide. Again she protested but the workers ignored her. She noticed that the hot water system which sits on the side path had started to drip and her telephone line had been cut. 55She then says that she observed cracks appearing on the internal floors, walls, ceilings and cornices of her house and gaps appearing between the walls and the floor. On the 8th of December 2009 she says she observed workers build a block wall inside the western boundary of her property. She said do not do that and kicked one of the bricks and the worker replied leave me to do my work. 56Mr Shearer says that on the evening of the 29th of October 2009 Mr Llavero invited him over onto Number 100 and took him on a tour of that property. He brought his laptop with him and showed the Llaveros a copy of the design plans which he intended to implement. He said: Here are the trees marked for removal. Have a quick look at the report so that you will understand what is happening. Also, the fence is rotting and will need to be replaced. 57Mr Llavero replied: That's fine. Just make sure the palings of the fence are as high as possible. 58He had no further contact with Mr Llavero until after he returned from his holiday on 3 December 2009. He says that on that day he was shocked to see that the front concrete path of the driveway had been ripped up, the boundary fence had been demolished, several trees that were meant to be retained had been removed and the phone line had been broken. He says that he spoke to Andy Cosco who is the principal of the Builder, who told him that he was just speeding up the process and not to worry that Council Approval hadn't been formally obtained, it would be shortly. 59Mr Shearer says he then went and collected his dog from the kennel in which it had been residing during their holidays and later that day the Llaveros approached himself and his wife and Mrs Llavero said: I can't believe that you pulled the fence down. We never said that you could do that. Mr Llavero said: Also our hot water seems to be dripping. Your builder better fix that. Mrs Shearer said: Sorry. We didn't tell our builder to do a lot of this stuff. There was further discussion and Mr Llavero said: Also, when you do the fence, make sure it's a high one. We like our privacy. 60Mrs Shearer then drew a diagram of the fence and handed it to the Llaveros. On the 8th of December 2009 the Builder poured the concrete for the driveway and constructed the front half of the paling fence between Number 106 and Number 100. On about the 10th of December 2009 the Builder built the cinderblock foundation for the front half of the fence between 106 and 100 and filled the blocks with concrete. 61Mrs Shearer swore that on about the 18th of October 2009 she visited Mrs Llavero at Number 100 and introduced herself and told her that she would be doing renovations. She says that Mrs Llavero said: If you are doing renovations you must remove the trees on the borderline of our properties because they're damaging our house and making it crack. 62Mrs Shearer said she returned from holidays to find that the Builder had removed trees, including trees that were not approved by the local council for removal and which were affected by a Tree Preservation Order. She said she did not authorise the removal of those trees. She also found that the excavation work which the Builder had carried out had been done which she had not authorised, and as a result of the driveway being dug up, the phone line had been cut. Later on the 3rd of December 2009 she was confronted by Mr and Mrs Llavero who said: Your builder has ripped out the boundary fence and in doing so has left our house completely unsupported. I never gave my permission for my fence to be pulled down. Mrs Shearer says she replied: I am so sorry. I had no idea that the builder was going to commence any sort of works in relation to the boundary fence. I didn't provide my instructions for that to happen. Mr Llavero said: Well a lot of damage has been done. Your builder is going to have to put in a retaining wall immediately. Mr Llavero also said: Also I am concerned that there has been damage done to a water pipe in our hot water system because it has started to drip and leak. If there is damage then it must be repaired. Also the foundation for the paling fence needs to be built urgently so that the dirt from our property doesn't fall away. Be sure that when the builder puts the fence in that it sits equally on the border line... Also I want you to remember that we want the highest possible fence. 63Mr Cosco swears that at all times in doing work on the boundary he acted on instructions from Mr and Mrs Shearer. Mr Cosco said he first spoke to the Llaveros about the 21st of October 2009 and they invited him into their home. He said he noticed extensive cracking in the walls and ceilings in the rooms they walked through. He said that after this first meeting he had many conversations with Mr Llavero over the next month who regularly inspected the progress of work at Number 106. 64The Builder's team cut down heavy shrubbery along the boundary fence on about the 10th of November 2009. The concrete pathway on the Number 100 side had been constructed after 1987 since it embedded the posts up to the palings. The fence itself had rotted posts and was unstable. The dilapidated fence was held up by props. Between the posts, a row of bricks without mortar had been stacked which supported the edge of the concrete pathway at Number 100, but loose bricks had collapsed into Number 106. The exposed soil under the concrete path was rubble backfill. At about this time Mr Llavero said to Mr Cosco: I'll get more light in the windows now. The fence is rotten. I'm happy it is being replaced. 65Mr Cosco says that on or about the 17th of November 2009, Mr Llavero inspected the cleared boundary and said: Make sure you put back the new fence right on the boundary. Mr Cosco replied: Of course. I have the old survey that has the offset measurements from 106. 66When the excavation was being done on about the 30th of November 2009, Mr Llavero said to him: I want the retaining wall rebuilt as soon as possible. To which Mr Cosco agreed. He says that the Llaveros did not inform him of any new cracking at any time between 18 of November 2009 and when he ceased work on 29 January 2010. 67Mr Russell, the Builder's principal worker gave detailed evidence as to what was in fact done. 68Initially the Llaveros claimed that their house had cracked as a result of the excavation and the consequent removal of support. They also made claims that their house had been detrimentally affected in other ways. However, the cracking was the main thrust of the attack. 69A number of people gave evidence and there were photographs of the plaintiffs' house. It seems to me to be almost beyond question that there were settlement cracks in the plaintiffs' house before the excavation took place. The house had not been repainted for some considerable time yet there is evidence to show that there were old cracks which had been filled in before the last repainting had taken place. 70There was also expert evidence from geotechnical engineers and from civil engineers. A series of joint reports from various experts were placed in evidence and the geotechnical and civil engineers gathered in court in a concurrent evidence session. Despite Mr and Mrs Llaveros' stringent denials, the bulk of the evidence convinces me that there was cracking in their house before the excavation took place. 71The expert evidence confirms that the excavation did not cause any settlement or cracking of the plaintiffs' house. The joint report of the geotechnical engineers, Mr Nicholas Smith and Dr Peter Redman, was that they observed cracks distributed widely through Number 100, both on the western and eastern parts of Number 100 (assuming the road is north), with no indication of a bias towards the western side, being the side adjacent to Number 106. They reported: The form and distribution of cracking internally at # 100 was consistent with shrink-swell behaviour of a structure with old footings. This is the form of ground movement referred to in our conclave report dated 19 August 2014. The largest crack, for example, occurs in the north-south wall of Bed 2 on the east or hall side. This is consistent with a hogging (doming) deformation pattern in the main north-south direction, the longest dimension of the house at # 100. 72They concluded that even if there had been a small influence on ground movement because of the works at Number 106, it would have been overshadowed by the ongoing general shrink-swell behaviour of the ground. In their earlier report the experts agreed that excavations outside the line of influence, which these were, would not be expected to impact on the footings or if they did it would be very small. The effects of the work according to Dr Redman would be negligible. Mr Smith thought it would be small and could influence existing cracking, but would not expect the movements to be the cause of the cracking observed. The structural engineers for the different parties, Mr Stubbs (plaintiffs), Mr Topolinski (Shearers) and Mr Wright (Builder) came to the same view. 73As mentioned earlier, the experts were cross examined in a concurrent evidence session, they adhere to their reports. Moreover the five experts who took part in the session were virtually unanimous in their views that the excavation work had not been the cause of the cracking in Number 100 and that there was very little effect indeed. 74Accepting the inevitable, Mr Hancock then focused his case on obtaining damages. Mr Hancock said at the first day of hearing (T3): As soon as the cut was made my client began to complain about shifting and cracking in their house and a dispute arose between the parties. A retaining wall was constructed on 9 and 10 [December] 2009. It was then thought that the foundations of my clients' property had been undermined and that rectification works involving underpinning and repair of the foundation works would be required. As a result of the recent conclaves...the position now is that the experts are agreed that underpinning is not required. The plaintiffs' claim is now that when the wall was constructed it was not constructed in a way which was adequate to restore support to Number 100...the cost of repairing that, according to the plaintiffs' expert, Mr Hickey, would be $34,000 plus GST, that is $37,500, that would include repairs to the internal cracking. 75The evidence about the path was not very favourable to the plaintiffs' case. There was no satisfactory material as to when it was laid down but it was obviously some time ago. The photographs of the path before the events of 2009 show worn concrete and a rough surface. The geotechnical experts say that the path did in fact serve a useful purpose in keeping moisture from the soil underneath so that the doming effect of swelling and shrinking was not as pronounced. However, the excavations and the observations made of the excavated path show that the path was not properly constructed, in that, underneath the surface was fill composed of waist building materials that was not properly compacted. 76The plaintiffs say that no matter what was the pre-existing state of the path it was affected by the defendants' work and it will need to be replaced. As the result of the Builder's work, the current state of the path is not properly compacted and will fail. The riposte to that is that the major part of the path is still poorly supported by the loose fill that's been there for many many years, that the work done by the defendants did not detrimentally effect it and that the "repairs" required by the plaintiffs involve putting in drainage which was never there before, giving the plaintiffs a much better path. That betterment factor, they say, should not be laid at the feet of the defendants. 77There is then the side issue as to whether the retaining wall has been properly built and properly filled so as to make it able to support the land on Number 100 properly. 78The joint experts have costed out the work needed to dig up the path, lay the appropriate drainage lines, refill and properly compact at $13,219.51. The plaintiffs' case was put well by Mr Hancock in his closing submissions which I set out in the following paragraph. 79The plaintiffs say that when the Builder excavated he left the plaintiffs' land exposed and unprotected for a period of 4 weeks. In making the excavation the relevant defendants removed the support that the plaintiffs' land once had. They attempted to restore that support by building the retaining wall, but, the retaining wall was not properly built and in particular behind it on the Number 106 side, was inadequate so that the retaining wall did not have the stability it required to protect and support the plaintiffs' land. Furthermore when restoring the support, or attempting to restore the support, the fill was such that the plaintiffs' path was damaged and needs to be replaced. 80There is no doubt that Number 100 is at a slightly higher level than Number 106. It also seems to be assumed by everybody that support of the higher ground on Number 100 is required. Though this prevents part of the soil of Number 100 flowing into Number 106, it also has problems with preventing the water that would otherwise naturally flow from Number 100 on to Number 106 from so flowing. (See Gartner v Kidman [1962] HCA 27; 108 CLR 12). 81There was some evidence as to the construction of the wall, it included a plastic membrane and it was put by Mr Hancock to the experts that this would stop water flowing through the wall. Mr Topolinski denied this and said that the membrane is what he called a 'vapour barrier' it was not completely impermeable and it would in any event have joints which would allow some egress of water. However, it was agreed that water generally would not be able to flow as easily from 100 to 106. The point was made that in a film that was shown the gutters on Number 100, according to the plaintiffs partly because of a Lilly Pilly tree on Number 106, would continually overflow and poor water onto the pathway which has nowhere to go unless the levels of the path move it towards the street. However it did not seem to me that this evidence really went anywhere. 82The basal problem is that the plaintiffs' land was not well supported to a "Rolls Royce standard" before the excavation, there was no drainage and there was a very poor retaining wall. The plaintiffs' case seems to be that because the defendants have excavated and, unless something is done, that excavation has deprived the plaintiffs' land of support. Accordingly, the plaintiffs are entitled to that support which is a "Rolls Royce job" even though as a result the plaintiffs' land will enjoy a benefit. 83The costing of Mr Hickey and Mr Daniels, which is in PX11, if the concrete path is to be cut and then the existing concrete removed and taken off the site, there is then to be excavation for an additional depth so that a stormwater line with the appropriate fall can be installed, the stormwater line has then got to be put in, then coarse sand has then got to be placed in and compacted before the concrete is put back on top. 84If this were done it would put the plaintiffs in a position where they would have a new concrete path instead of the former deteriorated concrete path and they would have drainage inside their path when they had none before. They would have a path properly compacted when it was not properly compacted before and that betterment has very little to do with the fact that the inadequate support had been removed and better, though still possibly inadequate, support returned. 85Much the same can be said about the claim about the backfill of the retaining wall. There is a little bit of doubt as to just what back fill there is. There is some claim that it is blue metal gravel, which everyone agrees would be adequate, and some suggestion that there is not. But whatever there is, it is at least as good as the support that the existing structure gave. 86Accordingly, in my view the plaintiffs are not entitled to any damages under the possible lack of support that occurred with the defendants' work. 87I should deal with two other matters. The first is that the defence of the first and second defendants is not the sort of document one normally expects to find in the Equity Division. It does not admit matters which one would have thought a person of reasonable intelligence would be able to either admit or deny and in equity the efficient functioning of the Court does depend on people actually directing their minds to what they really do not know and cannot admit as opposed to that which they would just want to put the plaintiff to proof. However, when the defence was filed, this case was in the District Court so that any shortcoming can be excused in this case. 88The other matter is the question of credit. The principal witnesses gave different accounts and indeed there were some wildly different accounts of how often the parties spoke together in November-December 2009 and whether anyone went inside the plaintiffs' house. Apart from the principal witnesses there was evidence given by two of the plaintiffs' children, Dom Llavero and Santi Llavero. 89Dom Llavero gave his evidence in a very impressive matter but his evidence that there were cracks that emerged only after the work done on Number 106 just does not correlate with the evidence of the experts and others that this could not be so. The other witness that I found particularly impressive was Mr Andy Cosco the Builder. He gave his evidence carefully and clearly. He said that he prepared his affidavit over a considerable period of time by himself with assistance of his father. He looked at his site diary and other documents when putting it together and he was subject to strong cross examination but did not wilt in any way. 90I have already set out the material parts of his affidavit. It was put to him that Mr Llavero denied that he, Andy Cosco, had been inside Number 100. He maintained his view. He gave detailed evidence as to how he measured the line where he cut the path: he worked on a previous survey and then measured and checked his measurement before he did any cutting or excavating. He had a subcontractor, Balmain Earthworks, dig the trench, but again he supervised. He said that he did backfill the retaining wall with blue-metal gravel and he reaffirmed that Mrs Shearer did say to him, before she left for overseas: Only do the fence and the retaining wall up to the tree for now. I want it done and I will pay the lot. Brett will sort things out with the neighbours. 91It was put to him that he had whilst the Shearers were overseas done work which was not authorised and he persistently denied it. It was put to him there was some damage to the telephone wire and he readily admitted that, so he was not just denying everything for the sake of denying it. 92As I have already remarked, I was impressed with Mr Cosco's evidence. I have no hesitation in accepting his evidence and, indeed, the evidence of his offsider, Mr Russell. I prefer Mr Cosco's evidence when it conflicts with the Shearers or that of the Llaveros. 93The events to which the two sets of neighbours depose happened 4 years ago. There is a large amount of emotional ill feeling towards the Shearers by the Llaveros and the affidavits of the Shearers show, and this was not disputed, that in particular Mrs Llavero has been extremely acerbic in her remarks towards her neighbours and has shouted those out quite volubly. It also seems to me that in the light of Mr Cosco's evidence that when the Shearers came back from holidays and realised the mess that had been caused they started deliberately to distance themselves from any liability for what may have occurred. 94In the long run it does not matter but in case the matter goes further I needed to make these comments on credit. 95It follows that questions A(1)(a), (b) and (c) should each be answered 'No'. 96 A 2, 3 and 4: In light of my answer to question 1 it is not necessary to deal with any of these, but in case the matter should go further I need to deal with each briefly. 97A 2: The case on estoppel was not put to me in a very clear fashion. It seems from what was said that two types of estoppel were relied upon (a) Anschun estoppel and (b) estoppel in pais. Paragraphs 33 to 38 of the defence appear under the heading "Estoppel". Paragraph 34 says that the plaintiffs requested that the first and second defendants remove the trees, provided their consent to the removal of the trees and because of that request they are estopped from making their complaint. 98The estoppel in pais seems to me to fall to the ground because this state of affairs was never established on the evidence. Even though I did not accept the whole of the evidence of either the plaintiffs or the first two defendants, it seems relatively clear that the active parties were the Shearers. The Shearers approached the Llaveros and told them what they were going to do and, as part of what they wanted to do, including putting a driveway up against the boundary of Number 100, they wanted to remove trees and vegetation and the natural consequence of this was that the fence had to be removed. I can find no basis at all for finding that it was the Llaveros who requested that this work be done. 99Furthermore insofar as the case on estoppel trespassed into some sort of proprietary or promissory estoppel category, I can find no evidence of any detriment to the Shearers which would support any such estoppel. 100So far as Anschun estoppel, not only was this not pleaded, but it is very difficult to make any finding on the evidence that even though there were proceedings between the parties in the Local Court, the Land Environment Court and the CTTT, that anyone of those opportunities could have been availed of to amount to the present claim. 101It is odd that in the claim for estoppel there was no suggestion of acquiescence. There is discussion in the cases that if a land owner acquiesces in the encroachment then he or she is not entitled to relief under principles such as that discussed in Ramsden v Dyson (1866) LR1HL 129. However, this matter was neither pleaded nor argued. 102As to contributory negligence, there is some doubt in my mind as to whether, as a matter of principle, contributory negligence does arise in this particular case. But if it does, there was no breach of the plaintiffs' duty of self-care. Further, insofar as it alleged that it was the plaintiffs' consent to have the work done, or that they have not put in proper drainage or built their house in the proper manner, the answer is that this is not contributory negligence. If the plaintiffs' house was in a poor state of construction then the defendants cannot take any advantage of that, in analogy to what is known as the "eggshell skull rule". 103A3. It was submitted that should I find defendants liable to the plaintiffs, the principles of Proportionate Liability contained in the Civil Liability Act 2002 or a claim for contribution allowed under contract or in equity would apply. This question also arises on one of the cross claims. 104As I indicated in my earlier comments, the better view is that if a land owner is involved with removing his or her neighbour's support then that is a tort which involves breach of a non-delegable duty to the neighbour, so that the land owners are liable even though they may have retained a competent independent contractor. 105Accordingly, in my view, had there been any damage, the first and second defendants would have been liable for that damage. The third defendant, which was the actual contractor which was responsible for the damage, would also have been liable, I suppose they would have been classed as tortfeasors. This would mean that the proportionate liability rules in the Civil Liability Act would apply and there would have to be some apportionment. As to this I would have thought that the first and second defendants were in control, I accepted the Builder's as against their evidence and I would have thought that the proper proportion would be 80% to the first and second defendants and 20% to the third defendant. Equitable doctrine of contribution does not come into the picture because of the proportionality. 106A4. Because of the answer I gave to question A1 - Nil. 107B5. The Encroachment of Buildings Act 1922 provides a relatively simple way of solving the problem that arises when a neighbouring structure encroaches on to the land next door. 108The implementation of that Act is committed to the Land and Environment Court by the Statute. However, this Court has taken the view, since at least 1993 (see, Cantamessa v Sanderson (1993) 5 BPR 13127), that it is appropriate when litigation involves both the Encroachment of Buildings Act and some other matter which is properly within the jurisdiction of this Court and not properly within the jurisdiction of the Land and Environment Court, for this Court to hear the whole matter. 109The ambit of the Act was considered by Gibbs J, when a judge of the Queensland Supreme Court, in Haddans Pty Ltd v Nesbitt [1962] QWN 44. His Honour said at p 99 that the Act confers on the Court the most ample discretion in determining the matters that arise under the legislation. 110Although at first blush it might appear that there are certain matters where the Court has no discretion, for instance the amount of compensation that may be granted, the cases show this is not so. Thus, in Re Melden Homes (No 2) Pty Ltd's Land [1976] Qd R 79, Dunn J held that there was no requirement to award any compensation when the encroaching owner had already made amends by conveying some other land. 111B6: It seems fairly clear from the evidence on both sides that the encroachment is an area of between 1.98 and 2.1 square metres and that it is appropriate to take 2 square metres. 112B7. Mr Hancock says, and the evidence supports this, that the value of 2sqm in this area is about $3,700. 113Under the Encroachment of Buildings Act 1922, s 4(1): The minimum compensation to be paid to the adjacent owner in respect of any conveyance, transfer, lease, or grant to the encroaching owner shall, if the encroaching owner satisfies the Court that the encroachment was not intentional and did not arise from negligence, be the land value of the subject land, and in any other case three times such land value. 114Mr Hancock says that the defendants have not shown that the encroachment was not intentional nor negligent and therefore the minimum award is three times the value, about $11,200. 115Subsection 2 of s 4 then sets out, if the minimum compensation is to be exceeded, what factors the court should take into account. But neither party seeks anything above the minimum. 116It is to be noted that in s 4 the compensation is to be paid not for the fact that there is an encroachment but because of the loss of property by virtue of a transfer lease or grant to the encroaching owner of the land over which there is an encroachment. 117The question arises as to what is meant by "the subject land". Does it mean the whole fee simple or does it mean the capital value of that part of the land which is taken by way of conveyance, transfer, lease or grant (of easement) to the encroaching owner? It would seem to me to be the second, a view consistent with Roper J's decision in Re Marsh (1941) 42 SR (NSW) 21; 59 WN (NSW) 17, which I will consider subsequently. However, no argument was put to me on this point. 118On this view, the question of compensation does depend on what sort of relief should be given in respect of the encroachment, if any. 119Ms Ashworth submits that the encroachment was so small that no relief should be given at all. She referred me to the decision of Bignold J in the Land and Environment Court of Butland v Cole (1995) 87 LGERA 122. In that case there was an encroachment by a retaining wall and a small section of a concrete fishpond, encroaching by up to 65cm for about 13m long. Bignold J refused any compensation and refused to remove the encroachment. 120I must confess I have some trouble about that decision because, even though it is understandable in a case like Butland v Cole (and the bad relations between neighbours in the instant case is analogous), that decision leaves the encroachment there and subsequent purchases of either piece of land may well be prejudiced. It seems to me that generally speaking when an application is made under the Encroachment of Buildings Act the encroachment should be regularised or removed and once cannot just ignore it as being trivial. 121However, my doubts are not shared by other judges. Butland v Cole has been approved by a number of eminent judges, such as by Pearlman CJ in Anagnostou v Vinicio (1995) 87 LGERA 232, by Debelle J in Farrow Mortgage Services v Boscaini Investments Pty Ltd (1996) 189 LSJS 337 and see also Hogarth v Karp (2013) 118 SASR 44. 122In Kell v Wales (30.5.1994, unreported) a decision of Stein J in the NSW Land and Environment Court, the Court had to consider a small encroachment, mainly an encroachment of between 12 and 13 centimetres for a little over 13 metres, most of which was between 300 and 400 millimetres below the surface. The case was between neighbours who disliked each other. The neighbour on whose land the encroachment came sought its removal rather than compensation and reluctantly Stein J granted that order. However his Honour did say that with respect to a smaller encroachment, if that had been the only one, he would have not made any order. 123I next should consider the decision of the Court of Appeal in Cuthbert v Hardie (1999) 17 NSWLR 321, a decision which reversed a decision of mine. That case involved whether a tiled extension to the coping of a swimming pool and a small pump housing and filter associated therewith were "buildings" for the purposes of the Encroachment of Buildings Act. The Court of Appeal held not. [There was no debate in the present case as to whether the retaining wall and associated construction was a "building" within the meaning of the Act: that was conceded]. 124Although this point was not the focus in that case, Hope AJA when giving the judgment of the Court, consisting of Gleeson CJ, Clarke JA and himself, said with respect to cases of de minimis encroachments, that there would be encroachments of such a kind that the legal rights of those affected by it may best be adjusted by permitting it to remain in place. If the Court came to that view and did not consider that subsequent proprietors might be affected, then it would be a proper exercise of the discretion under s 3 to decline to make an order. 125In Bunney v South Australia (2000) 77 SASR 319 at 326, Debelle J said that the Act conferred on the Court a very wide discretion, though one which must be exercised having regard to the scope and objectives of the Act. In my respectful view this states the true rule. So long as one keeps in mind that the encroachment does not just affect the present owners of the relevant land, a Court may take the view that no order should be made with respect to the encroachment or that no compensation should be paid. 126Thus, when there is an encroachment, the Court may (and this list is not exhaustive) (a) make no order, (b) order removal of the encroachment,(c) license the encroachment with or without fee, (d) grant an easement to legitimize the encroachment or (e) order a conveyance. 127The compensation to be paid needs to cover two heads of damage (a) loss of property rights and (b) damages for disturbance. In the present case, factor (b) is irrelevant. 128The compensation for loss of property rights must be based on the aspect of property that was lost by the encroachment and the order. However, as I noted earlier, despite the apparent mandatory terms of s 4, the circumstances of the case may show that, in justice, there should be no compensation, see, eg, Re Melden Homes No 2 Pty Ltd's Land [1976] Qd R 79. 129It may well be appropriate to grant an easement or perhaps order the affected owner to grant a licence and then make sure, by having the Court's order recorded in the Torrens register, that the licence is brought to the notice of subsequent owners. 130In my view the grant of an easement, or perhaps a licence would be the appropriate remedy. One of the circumstances that I have to look at when exercising the discretion as to what order to make is the circumstances in which the encroachment came about. In the present case it came about through discussion about replacing the fence and the erection of a retaining wall. It was common ground that there would be a new dividing fence on the boundary and that there would be a new retaining wall. The retaining wall involves an encroachment. In those circumstances the least order necessary to preserve the legal status of the plaintiffs' land should be made. 131Even before the present Act, under the general law, an easement was granted as the solution to an encroaching problem in Waddington v Naylor (1889) 60 LT 480 see the note by Mr A D McKenzie in (1941) 15 ALJ 82 at 84. 132That course was also adopted by Roper J in Re Marsh (1941) 42 SR (NSW) 21; 59 WN (NSW) 17. In that case Roper J considered that it was appropriate merely to grant an easement to protect encroaching guttering etc. and ordered that the applicant pay the respondent's costs of the summons, the costs and expenses reasonably incurred in respect of the grant of easement and five pounds in compensation. His Honour did not seem at all concerned with the statement of minimum compensation in s 4. This reinforces my view that the compensation is not based on the fee simple value of the land, except when there is a conveyance and one must value, in the case of an easement, the value of the easement or licence as the case may be. 133In the article by A D McKenzie, referred to earlier, the learned author says at page 85: Presumably it [the Court] would not compel a conveyance in fee simple if it thought justice would be done for an order for the grant of a lesser interest. 134I wholeheartedly agree. 135There have been more recent cases which have followed the approach taken in Re March. In Kostis v Devitt (1979) 1 BPR 9231, one of the leading cases in this area of the law, Powell J seems to have approached the matter on a similar basis, though Powell J does not deal with compensation. Cantamessa v Sanderson (1993) 6 BPR 13127 is a further example. 136Ms Ashworth submits that if the Court is not willing to make no order because of the trivial nature of the encroachment, the proper order is for a conveyance to the Shearers' of the land covered by the encroachment. This order, would, of course bring with it the minimum compensation of $11,100. 137It seems to me that such an order would be overkill in the present case. 138Moreover, it would cause considerable expense to the Shearers in the costs of survey, preparing plans of subdivision etc. It would seem that the dispensation re small subdivisions provided for by s 330 of the Local Government Act 1919 (see Kotsis v Devitt) has been repealed and not replaced. 139I should mention here that the plaintiffs' prime position is that the encroachment should be removed with restoration of the land to the condition in which it was before the encroachment. 140For reasons which I have already given, this gets the plaintiffs nowhere as the land was not properly supported before the defendants commenced their work. 141There was some discussion before me as to whether the retaining wall and the fence on top associated with it were a "dividing fence" within the meaning of the Dividing Fences Act 1951. There is indeed quite a valid argument that this is so, see, eg, Kontikis v Schreiner (1989) 16 NSWLR 706. This was not a point which concerned judges in similar cases such as the Kells case, it was very lightly touched upon in the evidence in this case and I do not consider there is quite sufficient evidence to show that in this case a retaining wall was part of a dividing fence. 142I should note that Ms Ashworth says that as such an easement would have no marketable value the compensation should be nil. This may be correct as a statement of fact, but, it fails to deal with the matter that what the Court is looking for is compensation for the landowner affected. There is, of course, no unimproved capital value of an easement. I do not consider that this fact is a good guide to the proper compensation in the instant case. Even in Marsh Roper J gave nominal compensation and I would have thought somewhere near $1,000 in present day monies was relatively nominal. 143The approach in Marsh was to grant an easement and give a nominal amount of 5 pounds in compensation. If there is only an easement to be granted, then it seems to me that the unimproved value of the fee simple is not automatically the measure of damages, but rather a discounted amount, because an easement is being taken from the congerie of rights in the land owned by the Llaveros. 144One must value the loss to the owner, though "value" must not depend merely on disappointed hope. See, eg, C. A. Macdonald Ltd v South Australian Railways Commissioner [1911] HCA 14; 12 CLR 221 at 232 cited in Re Melden Homes (supra). 145If one takes 10% then this would make the compensation one tenth of $3,700. 146The encroachment was either intentional or negligent or to put it more properly, the encroacher has not shown that it was neither intentional nor negligent, so that the compensation should be three times $370, namely $1,110. 147Another way of looking at it is to deal with the case in the way in which some recent English decisions have assessed damages for trespass or breach of a restrictive covenant. The approach being to work out what would be an appropriate licence fee between parties negotiating at arms' length for a licence to retain the encroachment. In Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd (2006) 2 EGLR 29, Neuberger LJ, as His Lordship then was, used the term "negotiating damages" to refer to this concept and I will do the same. 148Negotiating damages is a concept that has been applied in many situations in England, see eg Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 (the first reported case on the point), the Lunn Poly case, Horsford v Bird [2006] UKPC 3 at [28], Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370 at 2386 [PC] and Eaton Mansions (Westminister) Ltd v Stinger Compania de Inversion SA [2012] EWHC 3354 (Ch) at [47] etc. The concept is also covered in McGregor on Damages 19th ed (2014) at [37-046]. 149It seems to me that the present case would be one in which negotiating damages could provide proper relief. However, (despite hints from the bench) it was not embraced by any party and thus I merely mention it. 150Accordingly, I will order compensation of $1,100 against the Shearers. 151B8. In the second cross claim the first and second defendants sought the grant of an easement under s 88K of the Conveyancing Act 1919 or alternatively an order that there be a conveyance to the first and second defendants of the part of a land found to constitute an encroachment, an order I don't really understand. 152In view of the order I have made under the Encroachment of Buildings Act, it is unnecessary to consider this cross claim. 153I should note, however, that this claim should not have been made in a second cross claim, but rather by amendment to the statement of claim. 154B9. I do not consider that the circumstances of this case call for any consequential orders other than those that ordinarily follow an order under the Encroachment of Buildings Act. 155C10. Accordingly, I will stand the matter over for short minutes. The short minutes should be brought in at 9:30am on Friday 3 October 2014 which is the last day of my current sittings. However, if this is inconvenient to counsel, in view of the fact that a form of easement has to be drawn up, then I will adjourn the matter either to when I return to Court in February 2015 or for disposal by the Duty Judge. 156As to costs, I will hear counsel in due course. The plaintiffs are entitled to some costs because of the Encroachment of Buildings Act point; however, the plaintiffs must pay costs of the issue of support. 157I should note that it should have been apparent quite early in the hearing that this case would largely be decided on the expert evidence and that there was almost unanimity among the experts. I indicated that this was my preliminary view on more than one occasion. However, not only did the Shearers' counsel continue to press peripheral matters of defence, she also spent a considerable amount of time cross examining the Llaveros on matters of credit. The thought crossed my mind that she had instructions to abuse, but, of course, I put that thought aside as for a barrister to take that course would be most unprofessional. These tactics, however, lengthened the case by up to a day and my present view is that I should not allow the Shearers any costs for the second day of the hearing. 158I would think that the costs payable in respect of the failed principal proceedings for a three day hearing in the Supreme Court would far outweigh the $1,000 compensation and the costs of the Encroachment of Buildings Act issue. Accordingly, I consider the short minutes should reflect this by allowing an offset against what will be payable by the plaintiffs to the defendants. 159The plaintiffs of course must pay the third defendants' costs as it is not seeking any relief under the Encroachment of Buildings Act. 160It may be that working out the conveyancing necessities will take more than a few days. As there is no particular urgency in the case it can go back into my list for final orders in late February 2015 if the parties so wish, with liberty to apply to the Duty Judge if a problem arises in the meantime. 161I should conclude by referring to what Pearlman CJ said in Anagnostou v Vinicio (1995) 87 LGERA 232 at 236 (a case under the Encroachment of Buildings Act) with the hope that after at least four pieces of expensive litigation, peace may reign: "'peace' is not in the province of the Court to give. It never is in the case of a neighbourhood dispute. The only 'peace' that will come in a neighbourhood dispute is the peace that comes from the two neighbours. Unless the two neighbours are prepared to live together and live in harmony and work towards that, then there is nothing that a third party, let alone a court, can do to effect harmony."

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 October 2014