17 BPR 33,381
G & R Wills & Co Ltd v Adelaide Corporation [1962] HCA 61
(1962) 108 CLR 1
Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53
Source
Original judgment source is linked above.
Catchwords
17 BPR 33,381
G & R Wills & Co Ltd v Adelaide Corporation [1962] HCA 61(1962) 108 CLR 1
Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53
HIS HONOUR: These proceedings after my initial judgment of 18 December 2015 ([2015] NSWSC 1937) are solely involved with the Encroachment of Buildings Act 1922 (NSW) (the Act) with respect to buildings in Alexandria. The Plaintiff's land fronts Wyndham Street, Alexandria, and it joins at the rear the Defendant's land which fronts onto Botany Road, a parallel street. It is common ground at least from December last year that there is an encroachment by the Defendant's building onto the Plaintiff's land in that purlins which support the roof of a building on the Defendant's land rest upon a one skinned wall which is wholly upon the Plaintiff's land. The remaining issue is whether the Plaintiff is entitled to compensation and if so for what amount and costs.
XR Property Developments Pty Limited v Denning Real Estate Pty Limited [2016] NSWSC 556 | Case summary | Zoe
Section 3 of the Act provides that when an application is before the Court, the Court may make such orders as it may deem just with respect to the payment of compensation to the adjacent owners and various other alternatives.
Section 4 provides as follows:
4 Compensation
(1) The minimum compensation to be paid to the adjacent owner in respect of any conveyance, transfer, lease, or grant to the encroaching owner shall, if the encroaching owner satisfies the Court that the encroachment was not intentional and did not arise from negligence, be the land value of the subject land, and in any other case three times such land value.
(2) In determining whether the compensation shall exceed the minimum, and if so by what amount, the Court shall have regard to:
(a) the value, whether improved or unimproved, of the subject land to the adjacent owner,
(b) 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,
(c) the circumstances in which the encroachment was made.
As a result of open offers being made by each party to the other and the discussion that followed, the principal issues in the case were settled on the basis that the Plaintiff would give the Defendant a licence to occupy the encroaching area, an area of approximately one square metre, for some 14 months. The rationale was that although the Plaintiff had intended to demolish the structure on which the Defendant's purlins rested, it was able to reschedule its building program so that it would not inconvenience it greatly to leave the relevant wall in situ for another 14 months.
A Deed of Licence has been prepared. When the case came back before me on 29 April 2016 Ms IJ King appeared for the Plaintiff and Mr M Ashhurst SC appeared for the Defendant. Mr Ashhurst's material included a draft Deed of Licence which set the licence fee at $3250 excluding GST. Ms King protested that that figure had never been agreed upon. It appeared that might have been so but after discussion it was agreed on. Where there is a grant of an easement or the like in order to cure any encroachment it is often the case that only nominal compensation is awarded because the compensation is really the licence fee or the cost of the grant of the easement. This was the attitude taken by Harvey J in Re Marsh (1941) 42 SR (NSW) 21 which I followed recently in Llavero v Shearer [2014] NSWSC 1336; 17 BPR 33,381 at [132]. I said in Llavero at [148] that perhaps when a licence is granted the better method of fixing the compensation is by applying the concept of negotiating damages. I noted in Llavero's case that neither party took up that suggestion and so I did not apply it. Although Llavero's case was cited in the instant case no one took up that proposition and accordingly I have just passed it by.
In addition to compensation for loss of land there is also to be included compensation for disturbance. In presumption cases generally the word "disturbance" covers matters such as where a private dwelling is wholly resumed; loss on carpets, blinds and curtains; legal fees on purchase of comparable property; removal expenses and the like. For industrial land it can also include loss of profits due to increased working costs such as where a person has a large building in which he or she can conduct the whole of his or her activities and now has to conduct them in two separate buildings (see e.g. G & R Wills & Co Ltd v Adelaide Corporation [1962] HCA 61; (1962) 108 CLR 1 and generally Rost R D and H D Collins, Land Valuation and Compensation in Australia (Commonwealth Institute of Valuers, 1971), p 479ff.). The only claim made for disturbance is a claim that the Plaintiff's building program was disrupted by finding the encroachment because it could not have the relevant wall and the nearby wall mechanically demolished but would now have to have it demolished by hand in due course at a cost of an extra $60,000.
However when one looked into that claim one could see that it did not stand up for examination. First, the wall could not be mechanically demolished in any event because it contains asbestos which will have to be carefully removed. Secondly, Mr Lipari's evidence at paragraph [51] suggests that because it is unstable it cannot be demolished mechanically anyhow. Mr Lipari says that it will be necessary to remove the footings at the base of the concrete wall using a concrete saw rather than a jackhammer but that appears to be a relatively minor extra cost. I cannot see any substantial evidence of disturbance. However I would add a notional $500 for the inconveniences and matters such as I have just adverted to. It is quite clear on the authorities, some of which I have already referred to in Llavero's case, that the true construction of the statute does not require me to order compensation and if I am not required to order compensation I am not required to order any minimum. The Plaintiff itself relies on Marsh's case as good guidance, and in setting the compensation as at the licence fee plus $500, I have followed it. I would however note that the Act itself does seem to be rather strangely structured. Under s 3 the Court has been given a very wide discretion as to the ordering of compensation. Section 4 at first glance seems to cut down that discretion by granting a minimum of compensation. However the cases show that that has not been the way in which it has been construed and that s 4(2)(b) seems only to relate to the minimum compensation in s 4(1) rather than to s 3(2). I merely make these observations; they have no real relevance in the present case.
This brings me to the question of costs. As I noted in my earlier judgment the problem was brought about because the previous owner of both blocks of land when it had its buildings constructed did not pay particular regards to where it subdivision line was going to take place in later years. It is accepted that this is an unintentional encroachment. Nonetheless, there is an encroachment and the Defendant is not entitled to maintain its encroachment once its existence came to light. I held there was no continuing trespass because there was no initial trespass and if there is no initial trespass there can be no continuing trespass. Notwithstanding this, the use of the Plaintiff's land without consent for the Defendant's purlins is something that the Plaintiff is not required to continue to countenance.
When the matter was raised the Defendant countered by making a series of allegations against the Plaintiff as to how its building work had detrimentally affected the Defendant. It did not actually deal with the problem of encroachment and solicitor's letters went back and forth dealing with all sorts of disputes the parties had between them. Thus it was necessary for the Plaintiff to commence these proceedings in order to pave the way to a solution.
The proceedings started in earnest with counsel on both sides including Senior Counsel for the Defendant and a view was held on site. However in the latter part of 2015 the parties both realised that commercially speaking this particular dispute between them could be settled by a licence at the appropriate fee. Thereafter the only expense appears to have been a report from a valuer which both parties have accepted as to the value of the land in dispute or easement or licence to be granted to deal with the problem and both parties have accepted that valuation. It is reflected in the licence fee. Both parties seek some order for costs in their favour.
The Defendant points out that the Plaintiff got nowhere near what it sought and in particular its case in nuisance and in trespass were dismissed and it ended up with compensation of less than $4000 taking into account the licence fee. However the Plaintiff was virtually forced to take this litigation to protect its own land so that at the very least the Plaintiff would be entitled to the costs of issuing the proceedings, the initial affidavits and the return day. The High Court recently in Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 90 ALJR 270 made it clear that it was not appropriate to decide questions of costs by working out who had succeeded on what issue and it was usually more appropriate just to make a general order for costs even though the Plaintiff had not succeeded on all issues. That decision is merely by way of guidance even though it is binding because it recognises that each case will be dealt with on its own facts. I must also note that under s 14 of the Act "the Court may make such order as to the payment of costs, charges and expenses and it may deem just in the circumstances and may take into consideration any offer of settlement made by either party."
Section 14 has only been mentioned on a few previous occasions, none of any real note. The mention of taking into account offers of settlement give the flavour of there being a very pragmatic general discretion in the Court to deal with questions of costs. I believe that it is relevant to look at the situation where a person seeks relief against a restrictive covenant. The common practice is that persons being served with applications to vary a covenant are entitled to their reasonable and proper costs necessary incident to the application to get legal advice as to it and to put on reasonable evidence though if the application develops into adverse litigation costs normally follow the event (see e.g. Re Rose Bay Bowling and Recreation Club Ltd (1935) 52 WN (NSW) 77). By analogy it seems to me that the Plaintiff would be entitled to its costs up until the time when the Defendant had a fair opportunity to investigate and to react. It is difficult for me to draw the line but doing the best I can I would consider that the Plaintiff is entitled to its costs up to 18 December 2015 on the ordinary basis other than the costs of the view which each party should bear its own costs. Each party should bear its own costs after 18 December 2015.
Accordingly I note that the parties will enter into a licence agreement over the encroachment in the form attached to the Defendant's submissions on quantum of 26 April 2016. I order that compensation in addition for disturbance to the amount of $500 be paid by the Defendant to the Plaintiff. I order that the Defendant pay the Plaintiff's costs up to and including 18 December 2015 on the ordinary basis other than the costs of the view. The costs of the view and the costs after 18 December 2015 are to be borne by the party incurring them.
[3]
Amendments
05 May 2016 - Representation field counsel amended.
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Decision last updated: 05 May 2016