Keith James Wherry v Trustees of the Sisters of Charity of Australia

In my judgment, it would be self-evidently unconscionable for the Applicant to claim relief under the Act in the circumstances of this case, where, according to my earlier analysis, his entitlement thereunder wholly depends upon his purchase of the Residential Property in 1998 pursuant to a Contract for Sale which fully disclosed the existence of the encroachment and in terms of which he expressly waived his rights as purchaser to raise objections or requisitions or to claim compensation or to rescind the contract.

In so holding, I would reject the Applicant's arguments concerning the effects of Special Condition 31 of the Contract for Sale. The meaning of the Special Condition is plain and is well established by existing authority in the law of vendor and purchaser. But transcending the importance of that plain meaning is the fact that the relevant encroachment is from a building erected on the Vendor's property (the School Property) which for 32 years prior to the purchase by the Applicant of the Residential Property existed in a manner that, because of the Respondent's unity of title to both properties, did not involve any unlawfulness or trespass. Indeed, it did not in truth constitute an encroachment during this period. Where the Applicant's entitlements under the Act entirely derive from his purchase of the Residential Property pursuant to that Contract for Sale, which was the act which destroyed the Respondent's unity of title and eo instanti created the encroachment, it is wholly artificial and inadequate, as the Applicant's argument would have it, to confine the effect of Special Condition 31 to its normal incidence in the law of vendor and purchaser.

In my judgment (and notwithstanding the fact that the proposition was not argued) Special Condition 31, in the circumstances of the case, is reasonably capable of supporting the implied reservation of an easement of support in respect of the encroachment in favour of the School Property: see Peter Butt's "Land Law" (1996) 3rd ed at par 1636 to par 1651 (inclusive) either arising from the construction of the Contract for Sale or as an "easement of necessity": see Wheeldon v Burrows (1879) 12 Ch D31; Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738. However, since the case was not argued upon this basis, I propose to consider the application and cross-application as if they each sought claimable relief under the Act.

In so concluding, I do not think any significance turns upon the fact that the encroachment comprising the pad footing to the encroaching support column was not disclosed in the Survey annexed to the contract for sale since it is a minor and obvious ancillary feature, of that encroaching column.

Section 3(2) of the Act empowers the Court to "make such orders as it may deem just" with respect to: - (a.) the payment of compensation to the adjacent owner; (b.) the conveyance, transfer of lease or easement in respect of the land upon which the encroachment extends; and (c.) the removal of the encroachment.

Section 3(3) empowers the Court "to grant or refuse the relief or any part thereof as it deems proper in the circumstances of the case" and stipulates a number of matters for consideration in the "exercise of that discretion".

As I have earlier noted, ultimately, in the present case there was agreement that the encroachment should be the subject of an appropriate easement granted appurtenant to the School Property.

The only matter in dispute is the Applicant's claim to compensation in respect of the grant of the easement and the Applicant's separate claims to compensation for additional building costs and for loss of rental income, as detailed earlier in this judgment.

It is to be recalled that the Respondent resists all of the Applicant's claims to compensation (save perhaps for the payment of minimum compensation in terms of s 4(1) of the Act by virtue of the land value of the land, the subject of the conceded easement).

Although the matter was not the subject of detailed argument, I am of the opinion that when the Act refers to "compensation" payable to the adjacent owner, it is referring exclusively to compensation payable in respect of any grant to the encroaching owner of some title to allow the encroachment to continue to exist, on the land of the adjacent owner.

This conclusion, I think, inevitably flows from the proper interpretation of s 3 and s 4 of the Act, in the light of the express objects of the Act. Properly interpreted, the reference in s 3(1) to the payment of compensation to the "adjacent owner" is limited to "compensation" of the type specified in s 4 of the Act, subsection (1) of which specifies "minimum compensation" and subsection (2) of which specifies the matters that the Court shall have regard to "in determining whether the compensation shall exceed the minimum and if so, by what amount".

Accordingly, the relief provided for under the Act does not include compensation in the nature of damages for trespass or nuisance or other tortious act. The perceived deficiencies in the law which gave rise to the enactment of the Act in 1922 (such as are discussed in Boed's case) do not involve, as I would understand it, deficiencies in the law of trespass or nuisance etc.

It is true that s 4(2)(b) of the Act refers to "the loss and damage which has been or will be incurred by the adjacent owner through the encroachment and through the orders proposed to be made in favour of the encroaching owner" cf s 3(3)(d). However, this reference does not elevate into claimable compensation directly payable under the Act, such "loss and damage".

Nonetheless such "loss and damage" is relevant to the questions posed by s 4(2) of the Act, namely (i) whether compensation should exceed the minimum and (ii) if so, by what amount?

Another preliminary observation to make is that despite the Act's reference in s 4(1) to "minimum compensation", the question of whether or not there should be an order for payment of compensation to the adjacent owner, is entirely within the Court's discretion as conferred by s 3(2) and (3) of the Act: see Morris v Thomas (1991) 73 LGRA 164.

The parties have agreed (upon the basis of their respective valuer's reports) that the agreed value of "land value" of the area of the Residential Property, the subject of the encroachment, is $3,740.

The Applicant claims that the minimum compensation calculable in accordance with s 4(1) is $11,340 because the Respondent has not satisfied the Court "that the encroachment was not intentional and did not arise from negligence".

In making this submission, the Applicant directly encountered the difficulty posed by the present case of identifying the precise occasion or circumstance when the encroachment came into existence.

He dealt with this difficulty by making alternate submissions. If the encroachment came into existence in 1966 when the School building was erected, there was nothing in the evidence whereby the Court could be satisfied that the encroachment had not been intentional or had not arisen from negligence, whereas if the encroachment had come into existence upon the destroying of the Respondent's unity of title when the Applicant purchased the Residential Property, the Court would be satisfied, as a matter of inference, that the encroachment had been created by the negligence of the Respondent's Solicitors in failing to expressly reserve from the conveyance of the Residential Property the easement for support.

In my opinion, neither of these alternate submissions is sound and I reject them. I have earlier given my reasons for my opinion that the encroachment did not come into existence in 1966 when the School building was erected. But let it be assumed, that contrary to my view, it did. Given the Respondent's unity of title to both parcels of land, the "encroachment" was neither trespassory nor unlawful for any other reason. The question of whether it was created intentionally or unintentionally, negligently or not negligently, simply would not arise on the occasion of the erection of the 1966 building because of the Respondent's unity of title to both parcels of land.

The Applicant's alternative submission must also be rejected because of the express incorporation into the Contract for Sale of Special Condition 31, especially if my view be correct that in the circumstances of this case that Special Condition had the effect of reserving by implication or by necessity, the necessary easement for support.

Accordingly, I find that minimum compensation calculable in accordance with s 4(1) of the Act is the agreed "land value" of $3,740.

This brings me finally to consider whether the compensation payable to the adjacent owner should exceed the minimum compensation (as claimed by the Applicant) or whether in the present case there should be no compensation payable (as asserted by the Respondent).

The Applicant's claim for additional compensation (ie in excess of the minimum compensation) is founded upon asserted "loss or damage that he incurred through the encroachment" by virtue of his decision not to immediately implement the approval that he had obtained in January 1999 from South Sydney Council for the garage building incorporating a first floor studio flat, because of his ongoing discussions with the Respondent concerning the encroachment, which discussions continued, but without fruitful results, until the commencement of the present proceedings on 12 November 1999.

Those discussions were in the form of a considerable body of correspondence passing between the Applicant and the Respondent. The correspondence began in June 1998 immediately following exchange of contracts and until the Respondent's letter dated 21 May 1999 there had been no mention of the removal of the encroachment.

Prior to that letter, the correspondence had proceeded upon the basis of the Applicant seeking to acquire by purchase or by lease, an additional area of the School Property adjacent to the northern boundary towards the rear section of the Residential Property, so that the Applicant's planned garage/studio development could be accommodated to provide more generous carparking accommodation for the Applicant's vintage cars.

In her affidavit sworn 6 July 2000, Sister Cunliffe, Superior General and Congregational Leader of the Sisters of Charity, explained the circumstances of her writing to the Applicant on 21 May 1999 expressing the willingness of the College "to remove the encroachment, in preference to" the sale or lease that had been sought by the Applicant. In writing that letter, Sister Cunliffe had not consulted an engineer to advise on the feasibility of removing the encroachment. Nor had she any idea of the cost involved in removing the encroachment. (Mr McGrath, a Consulting Structural Engineer was later to estimate the cost of removal of the encroachment to be $128,000 - vide his report annexed to his affidavit sworn 26 June 2000).

Thereafter, the Applicant, in his correspondence emphasised that the delay in "resolving the problem" had prevented him from proceeding with his garage/studio proposal at the rear of the Residential Property.

I have earlier detailed the Applicant's alleged loss or damage caused by the encroachment. It proceeds, as it must, upon the basis that but for the existence of the encroachment, he would have undertaken the garage/studio proposal at the same time that he undertook the extensive renovations to the terrace house located on the Residential Property with the probability that the entire project would have been completed by September 1999 (when the renovations were completed).

As I have earlier indicated, the Respondent (whilst reserving to itself, without objection from the Applicant, the opportunity to adduce evidence of the details of the claims), submits that the Court should reject outright, as a matter of principle, the Applicant's claim to compensation based upon this alleged loss or damage.

In support of his claim to additional compensation, the Applicant places considerable reliance upon the decision of Dunn J of the Queensland Supreme Court in Re Melden Homes No 2 Pty Ltd's Land (1976) Qd R 79 dealing with the Queensland statutory equivalent to the Act. In that case, his Honour says the following in respect of "compensation" at 81:

The Act does not define compensation nor specify how it is to be calculated. The ordinary meaning of the word is recompense or amends . As the legislation is remedial in character, the Court should not in my opinion be unduly critical or restrictive when an applicant for compensation specifies any head of loss or damage, so long as that head of loss or damage has arisen by reason of the encroachment, and not by reason of for instance a combination of the encroachment and unreasonable conduct.

When the statute speaks of loss and damage , I do not understand it to mean avoidable loss and damage. Any person whose land suffers an encroachment must in my opinion take all reasonable steps to mitigate his loss and ought not be treated as having suffered damage if there is a loss which could have been avoided but is not avoided either because of an unreasonable action or because of inaction.

Notwithstanding these dicta, I adhere to the view that I have earlier expressed that compensation payable to the adjacent owner under the Act is compensation that is payable in respect of the transfer or lease or grant of easement in respect of the adjacent owner's land that is the subject of the encroachment. It does not extend to compensation otherwise arising.

In the present case, I find that the Applicant has not demonstrated that his alleged loss or damage (as detailed in his compensation claim) was "incurred through the encroachment".

Rather, I find that the Applicant's evidence demonstrates that until the Respondent notified him on 21 May 1999 that it was willing to remove the encroachment "in preference to" the sale or lease of the additional area of the School Property that the Applicant had been seeking from the Respondent, the delay in implementing the approved garage/studio project had been caused by the Applicant's decision to await the outcome of his negotiations with the Respondent because he preferred to have a larger area of land to build a more generously proportioned garage/studio. This was the true cause of his delay, and necessarily so, because a more generously proportioned development would obviously require a further approval from the Council.

Following this advice from the Respondent only a few months were to pass before the Applicant advised the Respondent (on 9 September 1999) of his decision to seek relief under the Act for an order for removal of the encroachment.

This advice was ultimately met by advice from the Respondent's Solicitors (letter dated 8 October 1999) of the Respondent's desire to obtain an easement and enquiring as to "appropriate compensation" which in turn led to the Applicant's rejection of the Respondent's request and advice that he had instructed Counsel to settle an application under the Act seeking "the removal of the encroachment".

Another relevant fact to be noted in respect of the Applicant's claim to additional compensation is the fact that the Contract for Sale was subject to Special Condition 38 which specifically contemplated the Applicant undertaking the garage/studio development in the Contract whereby the Applicant had expressly waived his rights in respect of the encroachment by virtue of Special Condition 31. Special condition 38 was in the following terms:

Special Condition 38 The Vendors will furnish the Purchaser(s) with a letter addressed to the South Sydney City Council authorising the Purchaser(s) to lodge a Development Application and/or Building Application in respect of the subject property including use as a domestic residence and the construction of garage/studio flat at the rear of the property, enclosed conservatory, new windows and Juliette balconies and other domestic improvements.

Again, I find on the evidence that any delay occasioned in this later period in the Applicant's undertaking the approved garage/studio project, was caused by the Applicant's decision to seek relief under the Act for the removal of the encroachment (which significantly was not the relief ultimately claimed by the Applicant on the hearing of his application when the claim for removal of the encroachment was abandoned).

The combined effect to be given to these Special Conditions in the Contract for Sale is that the parties contemplated the Applicant seeking to develop the rear section of the Residential Property by the proposed garage/studio development in the knowledge of the existence of the encroachment, in respect of which the Applicant had expressly waived his rights to object or to rescind or to claim compensation. Given these contractual arrangements, the true cause of any loss or damage sustained by the Applicant in not implementing at an earlier stage the approved garage/studio project was entirely due to the Applicant's desire to acquire more land from the Respondent in order to build a more commodious and generously proportioned garage/studio and to enter into and pursue negotiations with the Respondent in order to secure this desire. These negotiations having failed following the Respondent's advice on 21 May 1999, the Applicant's tack was thereupon to press for the removal of the encroachment, without, I infer abandoning the hope that this stance might induce the Respondent to change its mind about the sought after additional land being acquired by the Applicant from the School Property to give effect to the Applicant's desire for a larger development of the rear land.

The ultimate failure of the Applicant to successfully negotiate for the grant of more land from the School Property and the ultimate decision of the Applicant in the present proceedings not to press for an order for the removal of the encroachment, in my judgment provides a very insecure and unpromising base for any claim for additional compensation in the present case.

Having regard to these crucial findings, I can summarise my consideration of the three matters enumerated in s 4(2) as follows: (a.) "The value……., of the subject land to the adjacent owner"

The evidence does not suggest any value to the adjacent owner of the subject land higher than its land value, except for the suggestion in the evidence of Mr Timewell, consulting engineer, that the construction of footings for the approved garage/studio will need to employ a different method because of the existence of the encroachment, incurring an additional cost of $1700. (b.) " the loss or damage which has been or will be incurred by the adjacent owner through the encroachment and through the orders proposed to be made in favour of the encroaching owner"

There has been no loss or damage that has been incurred by the adjacent owner through the encroachment. There may be a loss or damage that will be incurred by the adjacent owner through the encroachment and/or the Court's proposed order if Mr Timewell's advice is adopted for the construction method of the footings (ie $1700); (c.) " the circumstances in which the encroachment was made "

The encroachment came into existence in law when the Respondent's unity of title was destroyed by the sale to the Applicant of the Residential Property. That sale was subject to Special Condition 31, which in my opinion supports a finding that an easement for support was impliedly reserved. Prior thereto, for 32 years, the encroachment apparently and continuously existed, without involving any trespass or other unlawfulness.

Having regard to these findings, I am of the opinion that no case has been established for compensation to exceed " minimum compensation ".

This brings me finally to consider the question urged by the Respondent that in the circumstances of this case, no compensation should be ordered.

This question is to be answered specifically by reference to the statutory considerations enumerated in s 3(3) of the Act.

Since in the course of these reasons I have already dealt with each of the matters, I shall very briefly recapitulate my findings in respect of each of the statutory considerations as follows:

Matter (a) The Applicant's claim for compensation ultimately conceded the grant of the necessary easement, whereas originally the Applicant's compensation claim was additional to its claim for the removal of the encroachment. Matter (b) The agreed land value of the subject land is $3,740. The land is not improved other than by the existence of the encroachments. The encroachments are minor in extent and area, being located along the rear boundary of the Residential Property. Matter (c) The encroachments are part of the school building erected in 1966 providing boarding house accommodation for 54 students at St Vincent's College. Matter (d) The loss or damage that will be incurred by the adjacent owner is the loss of use of the small area of encroachment, together with the possibility of incurring $1, 700 additional costs in constructing the footings for the approved garage/studio building. Matter (e) The estimated cost of removing the encroachments is $128,000. The encroachment came into legal existence when the Respondent's unity of title was destroyed upon the sale to the Applicant of the Residential Property in 1998 under a contract for sale which contained Special Condition 31. Prior thereto, the encroachment physically existed continuously and apparently for 32 years and because of the Respondent's unity of title in respect of both parcels of land it involved no element of trespass or other form of unlawfulness. Matter (f)

Having regard to these findings, I am of the opinion that in the circumstances of this case no compensation should be awarded to the adjacent owner in respect of the conceded easement. This conclusion is reinforced, if the true effect of Special Condition 31 be as I have held it to be (despite the fact that it was not so argued) namely that there was created by virtue of the Contract (and subsequent conveyance) severing the unity of title, an easement for support arising by implication or by necessity.

For all the foregoing reasons, the Applicant's application must be dismissed in its entirety.

However, the conceded easement should be granted in respect of the encroachment upon the usual terms that the Cross Applicant pay the Cross Respondent's costs of preparing the necessary easement.

The easement should be granted (notwithstanding my opinion that it already exists by virtue of its reservation by implication or by necessity) so that the Respondent may overcome any disadvantage that it might suffer vis a vis any future owner of the Residential Property by virtue of the operation of the Real Property Act 1900: cf Kebewar.

Accordingly, I make the following orders:

1. Applicant's Application be dismissed.
2. Cross application be granted to the extent that an easement for support be created in respect of the encroachments upon No 80 Victoria Street, Potts Point subject to the Cross Applicant paying the Cross Respondent's costs of preparing the easement documentation.
3. In other respects, the Cross Application be dismissed.
4. Question of costs be reserved.

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.

62. I have earlier detailed the Applicant's alleged loss or damage caused by the encroachment. It proceeds, as it must, upon the basis that but for the existence of the encroachment, he would have undertaken the garage/studio proposal at the same time that he undertook the extensive renovations to the terrace house located on the Residential Property with the probability that the entire project would have been completed by September 1999 (when the renovations were completed).

63. As I have earlier indicated, the Respondent (whilst reserving to itself, without objection from the Applicant, the opportunity to adduce evidence of the details of the claims), submits that the Court should reject outright, as a matter of principle, the Applicant's claim to compensation based upon this alleged loss or damage.

64. In support of his claim to additional compensation, the Applicant places considerable reliance upon the decision of Dunn J of the Queensland Supreme Court in Re Melden Homes No 2 Pty Ltd's Land (1976) Qd R 79 dealing with the Queensland statutory equivalent to the Act. In that case, his Honour says the following in respect of "c_ompensation_" at 81:

The Act does not define compensation nor specify how it is to be calculated. The ordinary meaning of the word is recompense or amends_. As the legislation is remedial in character, the Court should not in my opinion be unduly critical or restrictive when an applicant for compensation specifies any head of loss or damage, so long as that head of loss or damage has arisen by reason of the encroachment, and not by reason of for instance a combination of the encroachment and unreasonable conduct._

When the statute speaks of loss and damage_, I do not understand it to mean avoidable loss and damage. Any person whose land suffers an encroachment must in my opinion take all reasonable steps to mitigate his loss and ought not be treated as having suffered damage if there is a loss which could have been avoided but is not avoided either because of an unreasonable action or because of inaction._

66. Notwithstanding these dicta, I adhere to the view that I have earlier expressed that compensation payable to the adjacent owner under the Act is compensation that is payable in respect of the transfer or lease or grant of easement in respect of the adjacent owner's land that is the subject of the encroachment. It does not extend to compensation otherwise arising.

67. In the present case, I find that the Applicant has not demonstrated that his alleged loss or damage (as detailed in his compensation claim) was "incurred through the encroachment".

68. Rather, I find that the Applicant's evidence demonstrates that until the Respondent notified him on 21 May 1999 that it was willing to remove the encroachment "i_n preference to_" the sale or lease of the additional area of the School Property that the Applicant had been seeking from the Respondent, the delay in implementing the approved garage/studio project had been caused by the Applicant's decision to await the outcome of his negotiations with the Respondent because he preferred to have a larger area of land to build a more generously proportioned garage/studio. This was the true cause of his delay, and necessarily so, because a more generously proportioned development would obviously require a further approval from the Council.

69. Following this advice from the Respondent only a few months were to pass before the Applicant advised the Respondent (on 9 September 1999) of his decision to seek relief under the Act for an order for removal of the encroachment.

70. This advice was ultimately met by advice from the Respondent's Solicitors (letter dated 8 October 1999) of the Respondent's desire to obtain an easement and enquiring as to "appropriate compensation" which in turn led to the Applicant's rejection of the Respondent's request and advice that he had instructed Counsel to settle an application under the Act seeking "the removal of the encroachment".

71. Another relevant fact to be noted in respect of the Applicant's claim to additional compensation is the fact that the Contract for Sale was subject to Special Condition 38 which specifically contemplated the Applicant undertaking the garage/studio development in the Contract whereby the Applicant had expressly waived his rights in respect of the encroachment by virtue of Special Condition 31. Special condition 38 was in the following terms:

The Vendors will furnish the Purchaser(s) with a letter addressed to the South Sydney City Council authorising the Purchaser(s) to lodge a Development Application and/or Building Application in respect of the subject property including use as a domestic residence and the construction of garage/studio flat at the rear of the property, enclosed conservatory, new windows and Juliette balconies and other domestic improvements.

72. Again, I find on the evidence that any delay occasioned in this later period in the Applicant's undertaking the approved garage/studio project, was caused by the Applicant's decision to seek relief under the Act for the removal of the encroachment (which significantly was not the relief ultimately claimed by the Applicant on the hearing of his application when the claim for removal of the encroachment was abandoned).

73. The combined effect to be given to these Special Conditions in the Contract for Sale is that the parties contemplated the Applicant seeking to develop the rear section of the Residential Property by the proposed garage/studio development in the knowledge of the existence of the encroachment, in respect of which the Applicant had expressly waived his rights to object or to rescind or to claim compensation. Given these contractual arrangements, the true cause of any loss or damage sustained by the Applicant in not implementing at an earlier stage the approved garage/studio project was entirely due to the Applicant's desire to acquire more land from the Respondent in order to build a more commodious and generously proportioned garage/studio and to enter into and pursue negotiations with the Respondent in order to secure this desire. These negotiations having failed following the Respondent's advice on 21 May 1999, the Applicant's tack was thereupon to press for the removal of the encroachment, without, I infer abandoning the hope that this stance might induce the Respondent to change its mind about the sought after additional land being acquired by the Applicant from the School Property to give effect to the Applicant's desire for a larger development of the rear land.

74. The ultimate failure of the Applicant to successfully negotiate for the grant of more land from the School Property and the ultimate decision of the Applicant in the present proceedings not to press for an order for the removal of the encroachment, in my judgment provides a very insecure and unpromising base for any claim for additional compensation in the present case.

75. Having regard to these crucial findings, I can summarise my consideration of the three matters enumerated in s 4(2) as follows:

(a.) "The value......., of the subject land to the adjacent owner"

The evidence does not suggest any value to the adjacent owner of the subject land higher than its land value, except for the suggestion in the evidence of Mr Timewell, consulting engineer, that the construction of footings for the approved garage/studio will need to employ a different method because of the existence of the encroachment, incurring an additional cost of $1700.

(b.) "the loss or damage which has been or will be incurred by the adjacent owner through the encroachment and through the orders proposed to be made in favour of the encroaching owner"

There has been no loss or damage that has been incurred by the adjacent owner through the encroachment. There may be a loss or damage that will be incurred by the adjacent owner through the encroachment and/or the Court's proposed order if Mr Timewell's advice is adopted for the construction method of the footings (ie $1700);

(c.) "the circumstances in which the encroachment was made"

The encroachment came into existence in law when the Respondent's unity of title was destroyed by the sale to the Applicant of the Residential Property. That sale was subject to Special Condition 31, which in my opinion supports a finding that an easement for support was impliedly reserved. Prior thereto, for 32 years, the encroachment apparently and continuously existed, without involving any trespass or other unlawfulness.

76. Having regard to these findings, I am of the opinion that no case has been established for compensation to exceed "minimum compensation".

77. This brings me finally to consider the question urged by the Respondent that in the circumstances of this case, no compensation should be ordered.

78. This question is to be answered specifically by reference to the statutory considerations enumerated in s 3(3) of the Act.

79. Since in the course of these reasons I have already dealt with each of the matters, I shall very briefly recapitulate my findings in respect of each of the statutory considerations as follows:

The Applicant's claim for compensation ultimately conceded the grant of the necessary easement, whereas originally the Applicant's compensation claim was additional to its claim for the removal of the encroachment.

The agreed land value of the subject land is $3,740. The land is not improved other than by the existence of the encroachments. The encroachments are minor in extent and area, being located along the rear boundary of the Residential Property.

The encroachments are part of the school building erected in 1966 providing boarding house accommodation for 54 students at St Vincent's College.

The loss or damage that will be incurred by the adjacent owner is the loss of use of the small area of encroachment, together with the possibility of incurring $1, 700 additional costs in constructing the footings for the approved garage/studio building.

The estimated cost of removing the encroachments is $128,000.

The encroachment came into legal existence when the Respondent's unity of title was destroyed upon the sale to the Applicant of the Residential Property in 1998 under a contract for sale which contained Special Condition 31. Prior thereto, the encroachment physically existed continuously and apparently for 32 years and because of the Respondent's unity of title in respect of both parcels of land it involved no element of trespass or other form of unlawfulness.

80. Having regard to these findings, I am of the opinion that in the circumstances of this case no compensation should be awarded to the adjacent owner in respect of the conceded easement. This conclusion is reinforced, if the true effect of Special Condition 31 be as I have held it to be (despite the fact that it was not so argued) namely that there was created by virtue of the Contract (and subsequent conveyance) severing the unity of title, an easement for support arising by implication or by necessity.

81. For all the foregoing reasons, the Applicant's application must be dismissed in its entirety.

82. However, the conceded easement should be granted in respect of the encroachment upon the usual terms that the Cross Applicant pay the Cross Respondent's costs of preparing the necessary easement.

83. The easement should be granted (notwithstanding my opinion that it already exists by virtue of its reservation by implication or by necessity) so that the Respondent may overcome any disadvantage that it might suffer vis a vis any future owner of the Residential Property by virtue of the operation of the Real Property Act 1900: cf Kebewar.

2. Cross application be granted to the extent that an easement for support be created in respect of the encroachments upon No 80 Victoria Street, Potts Point subject to the Cross Applicant paying the Cross Respondent's costs of preparing the easement documentation.

3. In other respects, the Cross Application be dismissed.