Plaintiff v Defendant

"272. Margin of error allowed in description of boundaries

From and after the first day of August One thousand eight hundred and ninety the dimensions of the boundaries of any parcel of land as stated in any document of title now made or hereafter to be made relating to such land, or as represented on any plan drawn on and referred to in any such document of title, shall unless such construction is expressly negatived or modified by such document of title or contract be construed as though the phrase "a little more or less" immediately followed and referred to the dimensions so stated or represented; and such phrase shall in all cases whether so implied or expressed be deemed to cover any difference between the dimensions so stated or represented as aforesaid and the actual dimensions of such boundaries as found by admeasurement on the ground, when such difference does not exceed the following limits, that is to say, a limit of 50 millimetres for any one boundary line irrespective of its length where the length does not exceed 40·30 metres, but where it exceeds 40·30 metres a limit equivalent to one in five hundred computed upon the total length of such boundary line. No action shall be brought by reason or in respect of such difference (whether of excess or deficit) where it does not exceed the aforesaid limits; and in any case where such difference does exceed such limits an action for damages or compensation in respect thereof shall lie in respect of such excess only."

8 Alternatively, it argues that, if there was an encroachment into the airspace above the land of the plaintiff, it did not constitute a trespass because it was of such a trifling nature. In addition, in relation to the allegation of trespass resulting from any encroachment into the airspace by the cladding on the southern end of the western wall above the MCG Hotel, the alternative argument is put that any encroachment did not come within the principles to be applied in determining whether there has been a trespass. This issue is not raised in relation to any encroachment by other cladding in the other locations if held to be more than trifling; for applying those principles, the defendant concedes that non-trifling intrusion in those areas would constitute trespass.

9 If the plaintiff makes out its case of trespass in relation to the cladding other than the cladding immediately above the MCG Hotel, the defendant through its counsel has said that it will volunteer an undertaking in appropriate terms for the removal of the cladding and an injunction will not be necessary. Subsequent to the hearing it submitted a detailed statement of undertakings and proposals.[4]

10 If the plaintiff makes out its case of trespass in respect of the cladding immediately above the MCG Hotel, the defendant argues that the Court should not order a permanent mandatory injunction because it would not in the circumstances of this case be an appropriate exercise of the Court's discretion. Instead a damages award should be made.

Issues to be decided

11 In light of the positions now taken by the parties, the resolution of the dispute depends upon the determination of the following issues:

•

The location of the actual common title boundary between the parties' land situated at 178 and 176 Wellington Parade;

•

Whether and to what extent the cladding on the western wall of 176 Wellington Parade extends over that common title boundary;

•

If an encroachment of the cladding is established at any point, whether it constitutes trespass of the plaintiff's land at that point;

•

If the plaintiff establishes that any of the cladding constitutes a trespass of that land, the appropriate remedy.

Issue - the location of the actual title boundary between the properties

12 The plaintiff's case is that the actual title boundary between its property and that of the defendant is that which coincides at site level with the eastern wall of the MCG Hotel and the western wall of the building on the Break Fast land. This is the opinion of the surveyor called for the plaintiff, Mr Nicholson. The defendant's case is that the actual title boundary is located 20 millimetres to the west of the eastern wall of the MCG Hotel at site level and the western wall of its building. It relies upon the evidence of its surveyor Mr Norman.

13 Extensive evidence was given by both experts. They had different explanations for why they differed. Both were in agreement that, if the frontage dimensions shown on the title of 176 Wellington Parade were used to locate the starting point of the disputed title boundary by proceeding west from the appropriate starting point in Powlett Street, the title boundary as shown in the title appears to be 20 millimetres to the west of the eastern wall of the MCG Hotel. Mr Nicholson gave evidence, however, that establishing the location of the disputed title boundary by starting from Clarendon Street and applying the dimensions shown on the title of 178 Wellington Parade, produces a title boundary that is aligned with the eastern wall of the MCG Hotel and the western wall of the defendant's building. For much of the trial this also appeared to be the position of the defendant[5] but, in the course of his evidence, Mr Norman expressed the opinion that Mr Nicholson had made errors in his alignment of Clarendon Street and that, if they had not been made, he would have placed the title boundary where he, Mr Norman placed it. This had not been put to Mr Nicholson when he was first cross-examined. I will refer again later to this issue.

14 Both surveyors had embarked upon the task of re-establishing the boundaries of the two allotments. They had the benefit of similar surveys having been done in the 1970s for both allotments.

15 178 Wellington Parade had been resurveyed in 1974 because of an application to consolidate the titles - CP 100781. 176 Wellington Parade had been resurveyed in 1976 pursuant to an application under s.99 Transfer of Land Act 1958 to accord with the occupation defining the boundaries. Those surveys had been based on adverse possession and monumentation[6] and the intent of the surveys was to adopt the wall of the structures that existed at the time. The MCG Hotel was in its present location at the time of those surveys. The s.99 application survey also resulted in small adjustments in a westerly direction to the southern section of the eastern boundary shown on the title of 178 Wellington Parade.

16 Having regard to the survey history, it is surprising that there should be any discrepancy of the kind identified in this case in the measurement of the Wellington Parade boundaries and the location of the common boundary. Several possibilities were canvassed. For example, the field notes of the 1976 survey of 176 Wellington Parade reveal that, after the field notes were submitted to the Examining Draftsman, a change was made to increase the dimension of the frontage of 176 Wellington Parade by approximately 30 millimetres. It has not been possible to establish precisely why that occurred. The only evidence is the Examining Draftsman's Report which appears to have required that that change be made but the reason is not clear. The longer dimension is said to be calculated from the field notes. How that was done is unclear. Absent evidence from those involved it would be unwise to draw any conclusion. The possibility exists, however, that an error was made at that time. Mr Nicholson's opinion was that the 20mm difference found by he and Mr Norman was probably due to the age of the original survey. He referred to the fact that the equipment and techniques employed now are much more accurate than those employed at the time of those surveys. Mr Norman floated the possibility that the difference may be explained on the basis that the measurements in the 1970s were conducted by ignoring the render on the eastern wall of the MCG Hotel or because the render was not there. This was no more than a possible hypothesis. He did not himself investigate the depth of the render and Mr Nicholson was not cross-examined about that issue even though he was recalled for further cross-examination on related matters. There was also no evidence that the render that can be seen today did not exist at the time of the surveys conducted in the 1970s.

17 In the end a choice has to be made between the opinions. In my view, the opinion of Mr Nicholson is to be preferred. Mr Norman was given the opportunity to be specific about the particular matters that he had relied upon in forming his opinion about the location of the starting point of the actual north-south boundary. The only specific matter he identified was the taking of the measurement from Powlett Street using the dimensions on the title of 176 Wellington Parade. This appeared to be the decisive matter as far as he was concerned but his approach involved giving primacy to it over monumentation. It is well established, however, that monumentation takes precedence over later survey measurements.[7] Mr Nicholson on the other hand gave primacy to monumentation. I am also satisfied that Mr Nicholson's re-establishment survey was significantly more thorough than that of Mr Norman. Mr Norman had relied on earlier surveys he had conducted. He did not, for example, as Mr Nicholson in fact did, attempt to survey the whole block bounded by Wellington Parade, Clarendon Street, George Street and Powlett Street or take into account features (such as a pillar in George Street) in identifying the line of the boundary.

18 There were also signs of partisanship. As noted above, he volunteered, during cross-examination, a criticism of Mr Nicholson that he had in effect made an error which had resulted in changing the location for survey purposes of the corner of Clarendon Street and Wellington Parade from which he had made his measurements using the title measurements for 178 Wellington Parade. Mr Norman said that Mr Nicholson had said in his report that the boundaries that he, Mr Nicholson, had adopted had resulted in a step in the Clarendon Street alignment which he had attempted to rectify by putting a bend in that alignment. He argued that this had resulted because Mr Nicholson had in fact displaced "the title ... from its correct position".

19 This was an important assertion. If true, it would explain the differences in their measurements. It also involved a serious criticism of Mr Nicholson's work and expertise. It arose, however, from a misinterpretation of Mr Nicholson's Survey Report. What Mr Nicholson had done was introduce a bend in the alignment of Clarendon Street at the northwest corner of the certificate of title and amend the angle at the south-western corner. This was required to maintain the title angle for the corner of the property at George and Clarendon Street - Mosspennock House. He did not, however, make any change to the location of the corner of Clarendon Street and Wellington Parade. The alignment changes were made by Mr Nicholson as a result of his survey of the whole block, including the Clarendon Street boundary. Mr Norman himself has not recently surveyed the Clarendon Street boundary. The issues identified by Mr Nicholson required the alignment of Clarendon Street to be changed whether his eastern boundary of 178 Wellington Parade or that of Mr Norman was adopted.

20 Finally, I note that Mr Nicholson and Mr Norman agreed on a joint report but Mr Norman was not permitted by his client to sign it. As to the variation in the common boundary positions between the two properties, the document records their agreement that:

"The variation ... represents about a 0.01 metres. This variation is resultant on the age of the original surveys and a variation between the dimensions of Title Vol 9262 Fol 922 [176 Wellington Parade] and the position of occupation located in the 1976 surveys."

21 For these reasons, I prefer and I accept the evidence of Mr Nicholson as to the location of the actual title boundary.

Whether and to what extent the defendant's cladding extends to the west over the common title boundary

22 Accepting the location of the common title boundary identified by Mr Nicholson, his evidence was that the cladding on the western wall of the defendant's building extended over the plaintiff's land by between three and six centimetres. More specifically, the cladding along the northern end of the wall of the defendant's building extended in his opinion between five and six centimetres into the air space over the land of the plaintiff, along the top of the building by up to six centimetres and, at the common front corner, by between three and six centimetres. Mr Norman also measured the extent to which the cladding protruded from the wall. He gave evidence, as recorded in his Order 44 statement, that for the first 6.64 metres to the north from the Wellington Parade frontage of the building to which the cladding was attached, the cladding protruded from the western wall by approximately 7 centimetres. He also said that at 6.64 metres from the Wellington Parade frontage, there is a step in the western boundary - it turns at a right angle to the west for a distance of .39 metres and then continues North. Mr Norman expressed the opinion that the cladding along the top of the wall protruded approximately five centimetres from the wall. He said that the lower portion of the cladding at the northern end of the western wall protruded from the wall by six centimetres.

23 Reference should be made to the document prepared by Mr Nicholson and, I am satisfied, agreed to by Mr Norman on about 16 October 2006. It indicates the extent to which they were able to agree on significant matters. As to the extent to which the cladding protruded from the western wall of 176 Wellington Parade, the following agreements were reached:

• the common front corner, between three and six centimetres;

• of the cladding at the top of the building, up to six centimetres;

• at the northern end, between five and six centimetres.

24 It may be said, therefore, that there is substantial agreement between the two surveyors about the extent to which the cladding does protrude from 176 Wellington Parade. The extent to which it overlaps the boundary depends upon where the common title boundary is placed - but even then, Mr Norman conceded that, using his boundaries, the overlaps varied from two to four centimetres. For the purpose of determining this matter, however, I will rely on the evidence of Mr Nicholson.

25 The defendant submits that to so find does not determine the issue. The defendant argues that consideration must be given to the effect of s.272 Property Law Act 1958. Counsel has submitted that the opening part of the section requires the dimensions on title documents to be construed as though the phrase "a little more or less" was included. Counsel argues that this applied to the measurements in issue in the present case - particularly along the frontages of the two properties, they being relevant to the determination of the location of the north south boundary at Wellington Parade. Counsel submits that the effect of the legislation, in importing those words, is to introduce a margin for error or tolerance in determining the dimensions of any boundary stated in the document of title. Counsel submits that, applying the provision, the relevant tolerance is five centimetres. Counsel further submits that the effect of the provision and the margin for error was either to extend or shorten the southern and northern title boundaries on the certificate of title for 176 Wellington Parade by up to the tolerance. Counsel contends that this meant that the western boundary of 176 Wellington Parade could be up to 5 centimetres further to the west as a result of the provisions. Counsel submits that no matter how accurate the measurement by survey, the surveyor's opinion did not fix boundaries as a matter of law and did not override the language of the statute - the titles fixed the boundaries. Counsel argues that, should the Court accept Mr Nicholson's evidence, there is encroachment of up to 6 centimetres. But when s.272 is applied in an appropriate manner, the plaintiff can only demonstrate, because of the operation of s.272, an unacceptable encroachment of at most one centimetre.

26 Counsel for the defendant relies upon this argument to reduce the significance of any alleged encroachment to the point that, it is submitted, the result was no encroachment or a trifling encroachment which either should not be viewed as a trespass or should be regarded as insufficient to warrant the exercise of the discretion to grant the injunction sought.

27 Counsel for the plaintiff submits that the section addressed only the accuracy of dimensions on a Certificate of Title in relation to the parcel of land concerned and was directed to vendor and purchaser disputes. Counsel argues that the inclusion of the words "more or less" did not allow a landowner to assert the right to occupy up to 50mm over the title boundary. Counsel also argues that the section does not enable the Court to ignore the fact that the plaintiff has been in actual occupation of the land.

28 Detailed submissions have been made about the construction of this provision and its relevance by both parties. Counsel for the defendant has relied upon the second reading speech when the legislation was first introduced in 1885. In particular, counsel referred to the following passages:[8]

"The Hon. N. THORNLEY moved that this bill be read a second time. He explained that the object of the measure was to carry out two of the recommendations contained in the report of the Royal Commission on Land Titles and Surveys, the other recommendations of that body having been adopted in the Transfer of Land Statute Amendment Bill, which had already passed the Council. The first of the two recommendations was -

'That an Act should be passed in this colony declaring that the boundaries, as originally set out on the ground, and that are represented by the original marks, buildings, fences, or other improvements, are the true boundaries of allotments, notwithstanding any discrepancies in the measurements that may be found to exist between the boundaries so marked and the description of same in the titles; and so to validate the boundaries as they exist on the ground and are recognised by adjoining owners, and enable the titles to be brought into harmony therewith.'

The other recommendation was -

'That no action shall lie where the difference of measurement in question in towns does not - exceed 2 inches, and in country districts one in a thousand.'"

"Therefore it was unnecessary to occupy the attention of the Council beyond stating that the Bill provided that Crown survey boundaries, as marked on the ground, should be deemed the true boundaries; and that, in the event of the marks having been removed or obliterated, where those marks had been followed up by fences or building which had been in existence for fifteen years without interruption, the existence of those fences and buildings should be regarded as evidence of the true boundaries. It also provided that no action should lie in the case of a difference of measurement which did not exceed the limit referred to by the Royal Commission. This latter provision he considered a most admirable one, and particularly in view of the fact that owners had frequently been put to great cost and inconvenience simply through trifling differences in measurement."

29 Counsel for the plaintiff submits that these passages did not assist the defendant's construction but rather assist the plaintiff's construction. I agree that that is so - in particular, they give primacy to monumentation over the title measurements. What the legislation does is introduce flexibility into the dimensions shown on the title documents so that minor discrepancies between them and the monumentation cannot give rise to disputation and the monumentation will prevail.

30 Counsel for the plaintiff has also submitted that consideration of the judgment of Cussen, J in National Trustees Executors and Agency Co v Hassett[9] supports its construction of the section in that, in dealing with the situation that the common title boundary did not reflect actual occupation, the issues were to be determined not by the application of the predecessor of s.272, but by consideration of what was in fact occupied and by whom. Cussen J in fact gave precedence to monumentation.[10]

31 In relation to the effect of s.272, there appears to me to be a major problem with the analysis advanced for the defendant. In my view it cannot be used in the way the defendant seeks to use it. The section expressly introduces a margin of error for the dimensions appearing on title documents. It does not introduce such margins for error when it refers to the actual title boundary "as found by admeasurement on the ground".[11] As a result, it cannot have any application to the question of the extent of any encroachment over the actual title boundary by the cladding. At best for the defendant, it would raise an issue as to the extent of the encroachment in relation to the boundaries as described on the title. But that is not the issue. The issue is the extent of encroachment over the actual title boundary between the two properties. Further, assuming for present purposes that Mr Norman's opinion is the correct opinion about the location of the boundary as shown on the title of 176 Wellington Parade, the actual title boundary determined by monumentation is 20 millimetres to the east. If that analysis were to be accepted, then the effect of s.272 is that the actual common title boundary comes within the boundaries of the "more or less" dimensions shown on the title of 176 Wellington Parade. Section 272, therefore, does not assist the defendant.

32 Accordingly, I proceed to the next issue on the basis that the cladding intrudes into the air space over the plaintiff's land to the extent identified by Mr Nicholson.

Whether the encroachment into the plaintiff's air space constitutes a trespass

33 The parties relied on the same authorities in their submissions on the principles to be applied in determining issues of trespass in this case.[12] In particular, both counsel referred to the test formulated by Hodgson J in LJP Investments:

"I think the relevant test is not whether the incursion actually interferes with the occupiers actual use of the land at the time but rather whether it is of such a nature and at a height which may interfere with the ordinary uses of the land which the occupier may see fit to undertake."

Thus a trespass occurs if the incursion or encroachment is at a height or location which "may" interfere with the ordinary use of land. A fortiori, it will be a trespass if it intrudes into air space which is necessary for the ordinary use of the land. The older cases would suggest that any intrusion by structural projections or fixtures intruding at any height would constitute a trespass, but I proceed on the basis that the test formulated by Hodgson J correctly reconciles the authorities and should be applied in such cases.

34 Counsel for the defendant has submitted that it is relevant in determining whether there is a trespass by intrusion into air space to consider first whether the encroachment is trifling.

35 Counsel submits that in this instance the encroachment along the wall by the cladding is a very minor one and confined to the extreme eastern portion of the air space over the plaintiff's land and may fairly be described as so trivial as not to amount to a trespass. Counsel relies on cases such as Attorney General (Ex rel Rosman) v. Municipal Council of Mosman,[13] Margiz Pty Ltd v Proprietors Strata plan Number 3234,[14] and Burton v Winters.[15]

36 In relation to the air space above the MCG Hotel at the southern end of the western wall of the defendant's building, the defendant also argues that, trifling or not, the plaintiff is not realistically able to put that space to any use and that applying Hodgson J's test, trespass cannot be established.

37 As to whether the encroachments are trifling, the effect of the encroachments is to prevent the plaintiff building to the boundary wherever there is cladding. This interference is continuing. The extent of any particular intrusion by a panel of up to six centimetres might be thought minor. But when all the panels are considered in combination and regard is had to the height and length of the interference, it seems to me that, on the objective evidence, the interference is not trifling.

38 The plaintiff also relies upon the evidence of Mr Kolomanski, the Victorian Development Director of the plaintiff, which is a wholly owned subsidiary of Thakral Holdings Limited. He gave evidence of the impact of the existence of the cladding on the plaintiff's proposed development. He identified the following consequences:

• Partly because of the cladding issue, he has stood down the entire project team because he did not wish to spend approximately a quarter of a million dollars producing documents which might need to be reviewed and changed and could result in errors. He was also unable to start negotiation on the design and construct contract because he does not know what the detail of the eastern wall will be because he doesn't know whether the cladding will be allowed, removed or partially removed. He could not say whether the delay would ultimately cause any loss and damage because of other factors delaying progress.

• If the cladding were to remain, there would need to be an enquiry to meet occupational health and safety concerns because one of the panels has fallen and there is a potential danger from other falling panels. This could not be dealt with until the first occupational health and safety meeting at the site.

• If the cladding were to remain, then the design detail would be rather strange. The masonry of the building erected would have to make allowances for the cladding and that could give rise to water proofing problems. He said that the cladding could not be maintained and if more cladding failed, there could be exposure of the elements inside it. If a cladding panel fell, there could also be safety concerns. He also had concerns about what the final appearance of that wall might be like if he had to incorporate the presence of the cladding panel. He said that in the worst case scenario it could be that making allowances for the cladding would detract from the design and affect the value of the development.

39 Having regard to the objective evidence and the evidence of Mr Kolomanski as to the practical consequences of the panels, it is clear that that the encroachment is not trifling. It creates major issues for anyone wishing to construct a building up to the boundary line of a height similar to or greater than that of the defendant's building.

40 This conclusion applies without qualification to any proposed building adjacent to the cladding on the northern end of the western wall of the defendant's building and along its top. The plaintiff is wishing to use the land to build a structure that will in fact be built along the boundary and it wishes to use the air space for that purpose. This is an ordinary use of the land. The encroachment is not trivial and plainly constitutes a trespass. I do not understand the defendant to be seriously suggesting otherwise in the event I find that the encroachment is not trifling.

41 As to the cladding at the southern end of the western wall, it provides a significant encroachment for anyone wishing to build on the plaintiff's land on the boundary. It is placed above the MCG Hotel and runs for a distance of 6.64 metres from Wellington parade to the north. The question to be resolved here is whether in all the circumstances a trespass has occurred.

42 Counsel for the defendant has submitted that the test formulated by Hodgson J was not satisfied in respect of that cladding for several reasons. It is put that the plaintiff is not realistically able to use the air space above the MCG Hotel for a distance of 6.64 metres from Wellington Parade to the north. Counsel relies on the fact that the plaintiff, under the amendment to the planning scheme, is able to develop the land with a new building with a set-back of 13.3 metres from Wellington Parade - well to the north of the air space in question. Therefore, the section of air space in question could not be used by the plaintiff in its presently approved development. In addition, counsel has submitted that it is highly unlikely, to the point of being unrealistic, to suggest that that air space would ever be put to use in the future because of its limited width, the existing heritage overlay and likely opposition in the community to the demolition of the MCG Hotel, which demolition is required to enable that air space to be used.

43 The plaintiff submits, however, that the intrusion into air space is in the same class as that in Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd[16] and comes within the test formulated by Hodgson J for a number of reasons.

44 Counsel for the plaintiff argues that the reality is that the precise location of the proposed apartment development is still uncertain because the application for a permit is not yet resolved. A number of possible uses of the land exist which include the area presently occupied by the MCG Hotel. Counsel pointed out that the present options range from:

• zero set-back from Wellington Parade - the preferred option of the Melbourne City Council;

• an intermediate set-back from Wellington Parade of between 3.5 and 5.5 or 6 metres;

• a set-back of approximately 13.3 metres from Wellington Parade in accordance with the Planning Scheme Amendment.

45 In my view building in the air space above the MCG Hotel and up to the eastern boundary of 178 Wellington Parade is an example of an ordinary use of the land particularly in that area. Subject to planning permission, any owner would be entitled to regard all the land, including any part of it along the entire eastern boundary, as land the ownership of which entitled him or her to use in any building development. The fact that the building on the land immediately below the cladding has a heritage listing, and that, therefore, that land may not ultimately be available for use in any development, does not, in my view, detract from the proposition that using that land for the proposed development is an ordinary use of the land which an owner may see fit to undertake. If it was clear that the presence of the MCG Hotel would prevent the owner of the land from ever erecting any structures above it adjacent to any of the cladding, the situation might be different. But the Melbourne City Council has argued that there should be a zero set-back from Wellington Parade. This would require demolition of the MCG Hotel and highlights the fact that a building development abutting on to the eastern boundary of the land at the southern end of the land is an ordinary use and a realistic one notwithstanding that it would involve the demolition of the heritage listed MCG Hotel. I note that the heritage listing is not an insurmountable obstacle. It arose from social not architectural features. As Mr Kolomanski put it, the heritage listing arose not from the fabric of the building but from the social matter connected to the site. It is believed that the rules for Australian Rules Football were written in or about 1859 or 1860 on the premises of the Hotel. Mr Kolomanski said that their advice is that if they construct something sympathetic to the social issue of the site, then it will be acceptable. I accept his evidence about how that could be done.

46 Alternatively, it follows, at the very least, that the intrusion of the cladding in to the air space above the MCG Hotel may interfere with the ordinary use of that portion of the land on which the hotel sits.

47 For these reasons, I am persuaded that the cladding immediately above the MCG Hotel also constitutes a trespass of 178 Wellington Parade.

Should an injunction be granted? - the issues

48 The plaintiff seeks a permanent mandatory injunction. Counsel for the plaintiff has submitted that the common law zealously protects freehold property rights by injunction often without reference to the extent of infringement of those rights.[17] The defendant accepts that in cases of continuing trespass to land, the plaintiff is prima facie entitled to an injunction and courts will generally be reluctant to award damages instead of an injunction where an award of damages would amount to a compulsory sale.

49 The law places great importance on the right of owners of freehold land to control its use.[18] A statement often cited is that of A L Smith, LJ in Shelfer v City of London Electric Lighting Co[19]:

"Many judges have stated, and I emphatically agree with them, that a person by committing a wrongful act (whether it be a public company for public purposes or a private individual) is not thereby entitled to ask the Court to sanction his doing so by purchasing his neighbour's rights, by assessing damages in that behalf, leaving his neighbour with the nuisance, or his lights dimmed, as the case may be.

In such cases the well known rule is not to accede to the application, but to grant the injunction sought, for the plaintiff's legal right has been invaded, and he is prima facie entitled to an injunction.

There are, however, cases in which this rule may be relaxed, and in which damages may be awarded in substitution for an injunction as authorised by this section.

In any instance in which a case for an injunction has been made out, if the plaintiff by his acts or laches has disentitled himself to an injunction the Court may award damages in its place. So again, whether the case may be for a mandatory injunction or to restrain a continuing nuisance, the appropriate remedy may be damages in lieu of an injunction, assuming a case for an injunction to be made out.

In my opinion, it may be stated as a good working rule that -

(1.) If the injury to the plaintiff's legal rights is small,

(2.) And is one which is capable of being estimated in money,

(3.) And is one which can be adequately compensated by a small money payment,

(4.) And the case is one in which it would oppressive to the defendant to grant an injunction:-

then damages in substitution for an injunction may be given.

There may also be cases in which, although the four above-mentioned requirements exist, the defendant by its conduct, as, for instance, hurrying up his building so as if possible to avoid an injunction, or otherwise acting with a reckless disregard to the plaintiff's rights, has disentitled himself from asking that damages may be assessed in substitution for an injunction.

It is impossible to lay down the rule as to what, under different circumstances in each case, constitutes either a small injury, or one that can be estimated in money, or what is a small money payment, or an adequate compensation, or what would be oppressive to the defendant. This must be left to the good sense of the tribunal which deals with each case as it comes up for adjudication ... Each case must be decided upon its own facts; but to escape the rule it must be brought within the exception."

50 In a case dealing with a trespass in the form of discharging water over the plaintiff's land accompanied by an intention to repeat that act from time to time, the Full Court of this State in Beswicke v Alner[20] stated (per Cussen J):

"We think, for reasons which are made plain in the authorities shortly to be cited, that in this case an action for damages would not afford an adequate remedy, and that we should give effect to the rule that where the plaintiff has established an invasion of the common law right and there is ground for believing that without an injunction there is likely to be a repetition of a wrong, he is, in the absence of special circumstances, entitled to an injunction against that repetition. In this case there are no such circumstances and the defendant has definitely expressed his intention of repeating the wrongful works."

51 Hodgson J in LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd[21] adopted McNair J's treatment[22] of the principles stated by Smith, LJ in Shelfer above in the following passage:

"... The plaintiff is prima facie entitled to an injunction. However, there may be a case where damages is the appropriate remedy for example where the plaintiff is disentitled by his acts or by laches. Furthermore if the injury to the plaintiff's rights is small, capable of being estimated in money and adequately compensated by money payment, and if the grant of an injunction would be oppressive to the defendant, then an injunction may be refused. However, the defendant may be disentitled to this approach, for example, by reckless disregard of the plaintiff's rights."

Furthermore, as was pointed out by Buckley J in Cowper v Laidler ... (at 341), the jurisdiction to give damages instead of an injunction is not to be exercised so as 'to enable the defendant to purchase from the plaintiff against his will his legal right to the easement'."

Hodgson J went on to consider the absence of laches, the fact that the plaintiff had made an unreasonable demand for payment, that there was no substantial injury to the plaintiffs and that compensatory damages would be nominal. He also considered that an injunction could not be said to be greatly oppressive to the defendant. (The incursion was by scaffolding). His Honour concluded that the case came down to the question of:[23]

"Whether one person should be permitted to use the land of another person for conceivable commercial gain for himself, simply because his use of the other person's land causes no significant damage to the other person's land. As a matter of general, though not universal principle, I would answer this question 'no'."

52 Counsel for the defendant has submitted that, nonetheless, the remedy is discretionary and that there are several reasons why an injunction should not be granted in this case.

• One consideration advanced is the alleged trivial nature of any encroachment. For reasons indicated above, I have rejected that argument.

• It is also put that the plaintiff had disregarded the encroachment for some five years. On the evidence, however, the plaintiff was not aware of the encroachment until late 2005.

• Counsel has also submitted that the plaintiff on the evidence was in truth not concerned about the effect of the intrusion into the air space but rather the effect of the OAMPS sign on the amenity of the proposed penthouses which were intended to be at a height which is level with the height of the sign. It is true that this was an issue raised by the plaintiff, and was the major issue raised by the plaintiff at the time planning permission was sought by the tenant of the defendant for the construction of the sign at the top of the southernmost part of the western wall. The evidence, however, does not support the conclusion that that is the reason for the present proceedings. The present proceedings were pursued once the plaintiff became aware that the cladding encroached into areas where it was intending to erect the proposed apartment building.

• It is put that it is relevant in determining whether an injunction be granted to consider the open offer made by the defendant on 31 October 2006. I turn to the issues raised by this offer and a later offer.

53 The first open offer was made on 31 October 2006, approximately four months after these proceedings were issued. It was in the following terms:

"We are of the view that your client's claim detailed in the statement of claim dated 8 June 2006 will fail to succeed in light of paragraph 5 of our client's amended defence dated 18 August 2006.

As is pleaded in paragraph 5 of our client's amended defence dated 18 August 2006, our client:

(a) does not admit that the cladding affixed to its western boundary wall projects into your client's airspace;

(b) however if your client establishes that it does, our client contends that it is entitled to rely on:

(i) section 272 of the Property Law Act 1958 (Vic) and

(ii) the fact that the encroachment is minimal and of no practical significance to your client's proposed development as detailed in your client's proposed development plan contained in document number 28 of your client's discovery.

Further, your client's discovery fails to demonstrate any practical significance or impediment to your client's proposed development which our client's cladding or sign poses.

In addition, there is no evidence that our client's cladding is a danger or poses a nuisance as your client has pleaded.

We confirm that the proposed development (as revealed by your client's discovered document No. 28) commences 13.3 metre from the street front of Wellington Parade on the western boundary extending north ("the Development Commencement Mark").

It follows therefore that the presence of the cladding can only affect the proposed development from the Development commencement Mark and beyond.

Our client wishes to makes an open offer to your client which it will rely upon during the course of the trial. Our client is prepared to remove at its own cost any cladding from the Development Commencement Mark and beyond.

This offer remains open for acceptance until the conclusion of closing argument at the trial of this matter."

54 It should be noted that this offer related only to the cladding immediately affected by the proposed development and makes no proposals as to costs or damages. It should also be noted that this offer contained an admission as to encroachment and indicated a willingness and ability to remove the cladding at the top and at the rear and contained no suggestion that this involved any hardship for the defendant. Thus it was still seeking to obtain some advantage from its encroachment and was not proposing to offer any compensation to the plaintiff by way of damages or compensation for legal costs. It also should be remembered that the cladding confers a commercial benefit by improving and modernising the appearance of the building.

55 The defendant has now put forward a more complicated offer and proposal. It was foreshadowed in defence counsel's final submissions and produced after the hearing had concluded. It has been set out in an attachment.[24] It again shows the defendant seeking to retain as much of the cladding as may be possible depending on the location of the ultimate apartment building that is approved.

56 The plaintiff submits that the first open offer should also be viewed in light of the reaction of the defendant up to and after its making. The plaintiff in particular relies upon the following:

• On 28 November 2005, surveyors, Kenneth and Tyrrell Surveying, wrote to Mr Kolomanski confirming that the cladding encroached on the plaintiff's land by up to 60 millimetres. On 8 December 2005 Mr Kolomanski forwarded a copy of the letter to the defendant asking that the cladding be removed. There was no response. Mr Kolomanski rang both the directors of the defendant seeking a response. On 11 January 2006 the plaintiff wrote to the defendant stressing the urgency of the matter and indicating that if the cladding was not removed within 14 days it would issue proceedings. One of the directors of the defendant, Mr Voukidis wrote to him on 18 January 2006 and, in the course of doing so, alleged that Mr Kolomanski had indicated that the plaintiff would overlook the infringement if the sign application was withdrawn. On 18 January 2006 Mr Kolomanski wrote and denied that any such proposal had been made. This letter did not provoke a response from Mr Voukidis. On 31 January 2006, Mr Nicholson provided a survey to the plaintiff and this was forwarded to the defendant on 1 February 2006 with a request that the cladding be removed forthwith. Having received no response Mr Kolomanski then rang Mr Voukidis. He says that Mr Voukidis told him to sue. Mr Voukidis denies this. Having regard to the lack of response prior to and after that point, I think it probable that that was the essence of his response. By letter dated 2 February 2006, Best Hooper, wrote on behalf of the plaintiff to the defendant. The defendant's solicitors, Rigby Cooke, responded a week later on 9 February 2006 saying that their client wished to have its own survey conducted. On the same day the defendant attempted to raise a false issue about cracking to the building at 176 Wellington Parade, an issue that has not been pursued.

• The proceedings were commenced in June 2006. Counsel submitted that even though the defendant had said in February 2006 that it proposed to obtain a survey, it did not attempt to obtain a survey until August 2006, two months after the proceedings were issued. The survey conducted by Mr Norman used an earlier survey he had made but added material showing what he regarded as the encroachment at the southern end. At that point, therefore, the defendant had one expert who had confirmed that there was an encroachment - if there had been any doubt. The issue raised was the extent of the encroachment.

• Later, on 13 October 2006, approximately two weeks before the first offer, an attempt to obtain a joint survey report as to the extent of the encroachment was unsuccessful because of the intransigent position taken by the defendant which instructed Mr Norman not to sign a document which purported to record what he and Mr Nicholson had agreed.

• On 25 October 2006, Mr Norman was engaged to "continue with the survey" for the purpose of an Order 44 statement. His statement was produced on 28 November 2006. His evidence based on that statement is referred to above. The first open offer was made on 31 October 2006.

• Counsel has also referred to the fact that agents engaged by the defendant to sell 176 Wellington Parade approached Mr Kolomanski to see if the plaintiff would be interested to buy it. There is a disagreement between him and the agent as to whether the agent suggested that it could be sold to the plaintiff at a discount. He and Mr Voukidis gave evidence that they wished to try to sell the property to the plaintiff at a premium because of its location and the plaintiff's interest in developing in that area. The agent did concede, however, that they discussed the cladding issue. It would not be the first time a vendor's agent tried to interest a potential purchaser by suggesting that a property might be obtained at a discount. The evidence, however, is inconclusive.

• Counsel has also drawn attention to the defendant's expert raising late in these proceedings the suggestion about the surveying error by Mr Nicholson and the fact that the defendant sought to rely upon it.

57 The defendant plainly refused to face up to the problem and made some half-hearted attempts to find a solution by way of settlement - for example, the attempt to suggest that a deal might be struck on the basis that the sign application did not go ahead. They allowed the matter to drag on and did nothing notwithstanding that by February 2006 the defendant knew that the plaintiff then had two surveyors who had identified encroachment by the cladding of up to six centimetres. If it had looked at its as built drawings in respect of the cladding, it would have observed that the cladding would overhang the plaintiff's property if the western side of its building was on the boundary. What motivated the defendant's behaviour was in part the loss of the improvement to the appearance of the building that would be involved if the cladding was removed. This fact is relied upon by the defendant as part of the case for saying that removal would cause undue hardship. I turn to that issue.

58 The defendant argues that it is relevant to consider the hardship that would flow to the defendant from having to remove the cladding should that be ordered. I note that Bryson J stated in Bendal Pty Ltd v Mirvac Project Pty Ltd & Anor[25] that where the question is whether a person was using another's property, that person's hardship is not deserving of consideration. I proceed on the basis, however, that it is relevant although at best a two edged sword for the defendant.

59 Counsel for the defendant has argued that not only is there the cost of the removal of the cladding which is of the order of $300,000 but there is also the loss of the improvement to the appearance of the building which had been achieved by the cladding. While, however, the proposed development by the plaintiff would conceal much of the area which the defendant had attempted to improve in appearance by the cladding, nonetheless, the defendant argues that other areas would remain without the benefit of the cladding such as at the southern end of the western wall. Counsel submits that the injunction sought was more like the demolishing of a building than the removal of a hoarding. Thus while, according to the defendant, the issue is apparently trivial for the plaintiff, it is of considerable significance for the defendant.

60 In putting its case on the issue of hardship, the defendant is acknowledging that it gained an improvement to the building from placing the cladding on the building and it will lose that benefit if the injunction is granted - a benefit gained by encroaching upon the airspace above the plaintiff's land. Improving the appearance of a commercial building confers a commercial benefit. As Hodgson J said in LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd[26], as a general principle a person should not be permitted to use the land of another for considerable commercial gain for himself simply because his use of the other person's land causes no significant damage to that land.

61 Finally, there is the relevant issue of the extent to which the defendant knowingly brought about the encroachment. For the defendant it is submitted that the defendant did not knowingly bring about the encroachment. Consideration by the defendant's representatives of the "as built" drawing provided to the owners as an accurate record of what had been constructed would have drawn their attention to the probable intrusion. But there is insufficient evidence to support a finding that they knowingly brought about the encroachment. The highest it can be put for the plaintiff is that the defendant ought to have known that the cladding would intrude into the air space of the neighbouring property. But the fact is that the defendant only has itself to blame for the situation in which it finds itself. This is relevant to the issue of hardship.

Conclusion

62 On the authorities, the plaintiff has a strong prima facie entitlement to the injunction sought. The encroachment into the air space over the plaintiff's land is a continuing one and interferes in the actual and potential ordinary use of the plaintiff's land. The encroachment confers a commercial benefit on the defendant. There are no special countervailing considerations. There has been no relevant delay by the plaintiff. The defendant has made no serious offers to resolve the issues. It has not offered to pay costs and made no reasonable offer of damages.[27] Its latest offer will involve more complications, delays and costs. The history of the matter makes the proposal of undertakings an unrealistic one. True there will be hardship for the defendant if the injunction sought is granted. But, assuming the defendant did not know that the cladding encroached, the fact that it would encroach and did so was easily ascertainable by it before and after its erection of the building and the placement of the cladding. It may be fairly described as having gone ahead in negligent disregard of its neighbour's rights. The awarding of damages would be inappropriate in this case because it would have the result of enabling the defendant to acquire from the plaintiff against its will the legal right to use the air space.

63 I have come to the conclusion, therefore, that this is a clear case where an injunction should be granted requiring the removal of all the cladding.

64 I will give the parties an opportunity to make submissions on their precise forms of orders to be made.

(Note: arrows point to areas of cladding)

(a) The Defendant agrees to pay nominal damages to the Plaintiff with respect to the encroaching cladding at any point north of the Development Commencement Mark (Area "A" on the accompanying diagram) and further agrees to (and will undertake to and consent to any order to) remove all such cladding forthwith at its own expense if the Plaintiff does construct its planned development of 176 Wellington Parade in any part of Area "A" pursuant to it's current right to do so (per Amendment C-101).

(b) The Defendant agrees to pay nominal damages to the Plaintiff with respect to the encroaching cladding between the Development Commencement Mark and Step Mark (Area "B" on the accompanying diagram) and further aggress to (and will undertake to and consent to any order to) remove all such cladding forthwith at its own expense if the Plaintiff obtains any further permission to and does construct its planned development of 176 Wellington Parade in any part of Area "B".

(c) The Defendant agrees to pay damages to the Plaintiff with respect to the encroaching cladding between the Step and Wellington Parade (Area "C" on the accompanying diagram & being an area of 0.39 metres x 6.64 metres);

(d) With respect to Area "C", the Defendant will (and will undertake to and consent to any order to) do any one of the following/pay damages assessed on any one of the following:

i. purchase all of Area 'C" from the Plaintiff (and agree to allow by easement or other right any encroachment of the MCG Hotel into Area "C" so long as the MCG Hotel remains);

ii. purchase any lesser part of Area "C" from the Plaintiff which is sufficient to incorporate all of the cladding affixed in Area "C";

iii. lease all or part of Area "C" sufficient to incorporate all of the cladding for a period of (say) 99 years;

iv. enter into any other contract, agree to any easement or other like right or make any other arrangement which provides for suitable compensation to the Plaintiff for the retention of the cladding in Area "C".

5. The Defendant will give an undertaking to the Court in a form suitable to the Court with respect to the above matters if considered necessary.

6. The Defendant notes that the open offer contained in Exhibit "P1" expired at the conclusion of submissions in the proceeding on 13 February 2007.

7. The statement at paragraph 4 hereof is provided to the Court for the purpose of assisting the Court in determining that damages for any encroaching cladding is the appropriate remedy and in fashioning a suitable remedy. The area of most particular concern is the cladding currently affixed in Area "C".

8. The statement at paragraph 4 hereof is not intended to suggest that the Court here specifically order a sale, lease or easement, etc. (although the Defendant would agree in principle to such arrangements as stated) but so as to direct the Courts attention to the issue of damages as the better remedy and make the Defendant's position clear.

9. Quantum is an issue for a later time, if damages are considered appropriate.

10. The statements regarding Areas "A" and "B" are made because, as a matter of common sense, it is not yet know if the Plaintiff will construct in these areas but if it does, the Defendant will act as stated - having paid nominal damages in the interim.

I certify that this and the 1-1 preceding pages are a true copy of the reasons for Judgment of Smith, J of the Supreme Court of Victoria delivered on 2 April 2007.

DATED this second day of April 2007.

[1] For extract from title see Attachment A.

[2] For extract from title see Attachment B.

[3] See Attachment C, photograph of the western face and the cladding.

[4] See Attachment D.

[5] Note: Mr Norman did a survey of 178 Wellington Parade in 1996. He recorded the frontage measurement as 120.89 metres. Mr Nicholson's measurement was 120.88 metres. Mr Norman also showed the north western corner of 176 Wellington Parade abutting the boundary.

[6] The physical evidence of long term occupation by the owners of the properties shown on the titles.

[7] Overland v Lenehan (1901) 11 QLJ 59 at 65-66; Donaldson v Hemmant (1901) 11 QLJ 34 at 40-41; Ex. P34 - Title Boundaries in Victoria - Australian Surveyor March 1980 vol 30 No. 1; National Trustees v Hassett at 411-412; Discrepancies in Boundaries of Land in Torrens Titles (1931) 4 ALJ 351 and P36 - Surveyors' Board Guidelines.

[8] Hansard, Legislative Council, 18th November 1885, 1893.

[9] [1907] VicLawRp 77; [1907] VLR 404.

[10] At 416.

[11] Cf. ibid, at 411.

[12] Bernstein of Leigh (Baron) v Skyviews & General Ltd [1977] EWHC 1; [1978] 1 QB 479, Anchor Brewhouse Developments Ltd v Berkley House (Docklands Developments) Ltd [1987] 2 EGLR 173 [38 BLR 87], LJP Investment Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 490, 8 Bendal Pty Ltd v Mirvac Project Pty Ltd & Anor (1991) 234 NSWLR 464. See also Lawlor v Johnson [1905] VicLawRp 105; [1905] VLR 714.

[13] (1910) 11 SR. (NSW) 133.

[14] (1993) 30 NSW LR 364.

[15] [1993] at 1077.

[16] Above.

[17] Beswicke v Alner, [1926] VicLawRp 10; [1926] VLR 72; 75-6; Mayfair Trading Co Pty Ltd v Dreyer [1958] HCA 55; (1958) 101 CLR 428 at 451.

[18] Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464, 467-9; Plenty v Dillon [1991] HCA 5; (1991) 171 CLR 635 and cases in fn 12 above.

[19] [1895] 1 Ch 287 at 322-323.

[20] [1926] VLR 73 at 76.

[21] (1989) 24 NSWLR 491 at 496; and see Di Napoli v New Beach Apartments Pty Ltd [2004] NSWSC 52 [28].

[22] Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 324.

[23] Above, at 497.

[24] See Attachment D.

[25] (1991) 23 NSWLR 464, 472.

[26] At 497.

[27] Graham v KD Morris [1974] Qd R 1; Tipler v Fraser [1976] Qd R 272.