The Applicant had no legal or expert basis to argue that the Respondents should be liable for the cost of the replacement of the Applicant's block wall, as is clear from the AC's judgment, see [31], [33], [35], [36] inter alia.
The length of time over which events occurred (essentially from 2016 in light of evidence of earlier events I did not allow to be read) and the amount of resources that the Applicant used to pursue the claims was not in accordance with the just, quick and cheap resolution of these matters as required by the Class 2 Practice Note - Tree Applications, which caused the Respondents to incur significant costs and were unreasonable. The Applicant initially sought $444,268 (reduced during the hearing by $141,892.03 originally claimed for rental reduction).
The Applicant acted unreasonably in commencing proceedings when mediation under the Dividing Fences Act was in train. The Applicant acted improperly in providing quotes for work that were not provided by an independent builder.
The Applicant and its experts either relied on briefs provided by the Applicant or its solicitor without inspecting the site or did not take the opportunity to inspect the site or, having inspected it maintained their unreasonable opinions. In the case of the Applicant and its solicitor, they had the opportunity to inspect the site and make the same on-site observations as the AC and nonetheless continued the proceedings. For example, Mr Grieve inspected the site accompanied by Mr Kladis and his solicitor on 8 June 2023, as noted in Mr Grieve's report. Mr Kladis and his solicitor were able to inspect exactly what Mr Grieve inspected on 8 June 2023 making it unreasonable to continue the claim from that date.
Further the on-site observations of the AC were that there was a lack of evidence to support the Applicant's claim that the trees had damaged the wall, on-site observations apparently not made by the Applicant, its lawyers, or its experts.
The Applicant's behaviour was unreasonable during the hearing and the proceeding was maintained when the claim did not have reasonable prospects of success or to maintain the claim was unreasonable.
[2]
The no discouragement principle applies and is the basis for the costs regime in Class 2 matters. It would not be fair and reasonable for costs to be paid by the Applicant to the Respondents. There is no indication in the judgment of the AC that a costs order would be fair and reasonable, or that the application should never have been contemplated, or that in commencing or conducting proceedings the Applicant acted so unreasonably that an order for costs would be fair and reasonable. The AC's finding at [8] that the Applicant had made reasonable efforts to resolve the proceedings goes some way to concluding that the Applicant did not commence the proceedings unreasonably.
The Applicant gave evidence that it relied on expert evidence in bringing its claim and that was reasonable behaviour on its part as has been accepted in several cases. For the Applicant to rely and act upon the advice of its structural engineers and arborist, does not, without more, constitute unreasonable behaviour in the maintenance of its claim, Carey v Pattinson (No 2)[2020] NSWLEC 177 at [45], McLaren v Lewis (No 2)(2011) 183 LGERA 344; [2011] NSWLEC 176 at [23]- [24].
The AC identified weaknesses in the Applicant's expert opinions. These weaknesses were attributed to how the experts' investigations did not include uncovering whether the tree roots themselves grew against the common wall. To cure this inadequacy, the Applicant would have required the Respondents to consent to the root mapping on their land, however, that luxury was not open to the Applicant. The experts thus did 'the best they could' in the circumstances.
Further, there is no formal requirement for root mapping to have been carried out in order for the Applicant to have had 'reasonable prospects of success'. There are, for example, numerous cases where the Court has been satisfied that a tree's roots have caused damage to a building despite there being no evidence of root mapping having been undertaken, see for example Owners Strata Plan 31839 v Alafaci[2016] NSWLEC 1083. Whilst root mapping may have provided further certainty as to the cause of the damage to the wall, the Applicant submits that was not, of itself, a necessary precondition to the Court's jurisdiction to make orders in relation to the trees.
In the present case, each of the experts explained their reasoning as to why they considered the trees were responsible for the damage to the wall. Mr Allouche's reasoning is summarised at [20] of the judgment, while Mr Ell's and Mr Topolinsky's views are summarised at [22]-[23] and [24]-[27], respectively. Whilst their opinion was not accepted by the Court, that does not mean there were no reasonable prospects of success.
The existence of conflicting views as to the cause of the wall merely gave rise to an evidential contest to be determined by the Court. The simple fact that the Applicant's application was dismissed, that the arborist's and engineers' expert evidence was not accepted by the Court, and that the Respondents' expert evidence was preferred, does not make it fair and reasonable that the presumptive rule that each party bear their own costs be displaced, Carey v Pattinson (No 2) at [49].
[3]
Rule 3.7(2) of the LEC Rules states that costs should only be ordered if fair and reasonable in the circumstances, reflecting the presumptive rule based on the no discouragement principle that a person should not be discouraged from making or defending an application because of the risk of an adverse costs order, Arden Anglican School v Hornsby Shire Council(2008) 158 LGERA 224; [2008] NSWLEC 103 at [10] cited in Popovac v Kennedy[2022] NSWLEC 9 (Popovac) at [31]. The Court has discretion to decide if costs ought be payable. Circumstances where a costs order may be made are identified in subcl (3) of r 3.7. The circumstances identified in subcl (3) are not exhaustive. The usual rule that each party pays their own costs is informed by the nature of these proceedings, Smith v Kaddour(No 2)[2018] NSWLEC 21 at [25].
In Marks v Perham (No 2)[2020] NSWLEC 84 at [29]- [30] cited in Popovac at [32] Robson J helpfully stated:
[4]
29 The no discouragement principle is particularly important in the context of applications made pursuant to the Trees Act, as such applications are subject to the Court's Practice Note Class 2 - Tree Applications which is designed to facilitate the just, quick and cheap resolution of tree disputes through an appropriate and easily accessible procedure.
30 In approaching the task before me, I consider that it is appropriate, first, to identify whether there is anything within the judgment of the Commissioner which indicates that an order for costs may be fair and reasonable; and second, to look to the conduct of the parties both before and during the hearing for any indication that such an order may be appropriate.
[5]
The Applicant commenced the Class 2 proceeding represented by senior and junior counsel, and called two engineers and an arborist to give evidence. The amount claimed directly or indirectly in the application in requiring work to be done by the Respondents (see the AC's judgment at [2]) was very large being the unspecified cost of removing two trees and a hedge on the Respondents' property within 30 days (prayer 1), the dismantling of what was described as a boundary fence and the installation of a structural retaining wall and footing between the properties (prayer 2), and compensation of $444,268.03 as specified in numerous invoices commencing from 2017 in Form H attached to the Class 2 application.
Considering the matter raised by the Respondents of inadequate notice by the Applicant, the AC at [12] accepted that notice as required by s 8(1) of the Trees Act had been given by the Applicant. It is difficult to weigh up the Respondents' submission that the Applicant commenced proceedings without providing any notice to the Respondents that the claim in the order of approximately $440,000 was to be made having first asked them to pay $112,650 in 2016. The Respondents also submitted that proceedings were unreasonably commenced in light of negotiations occurring between the parties under the Dividing Fences Act and much of their affidavit evidence summarised above in [9], [14] was directed to such processes. While that was a matter linked practically in the minds of the Respondents in dealing with the fence between the respective properties, the two processes are legally separate. As the AC was satisfied that notice had been given as required by the Trees Act no basis arises from this circumstance to find that the Applicant acted unreasonably in commencing proceedings.
Turning to the AC's judgment and contrary to the Applicant's submissions that there are no relevant findings relevant to costs, I consider his findings to be highly relevant to this costs application as his findings suggest there was no basis at all for the Applicant's application and it lacked reasonable prospects of success. For a commissioner's judgment to be relevant to costs does not require that there be express observations about whether parties acted unreasonably, for example, which seemed to be what the Applicant was submitting. The existing very poor state of the block wall on the Applicant's land was agreed before the AC by all experts as identified at [18]. Mr Ell identified that it lacked any reinforcement and its blocks were not filled with concrete.
The findings of the AC are extracted above in relation to Mr Allouche arborist, Mr Ell and Mr Topolinsky engineers, the Applicant's experts. The findings are critical or highly critical of their reasoning processes in arriving at their respective conclusions including failing to identify that there was a wall on the Respondents' land next to the trees in issue which was not affected by the movement affecting the Applicant's block wall on the Applicant's land. The AC identified his observations of the wall on the Respondents' land at [21].
Mr Allouche's evidence is considered at [20], [21] of the judgment, the AC describing his reasoning as 'flimsy at best'. The AC's on-site observations as recorded at [21] enabled him to form the conclusion that Mr Allouche had assumed certain matters without any factual basis for doing so. These observations were unrelated to tree root mapping, which he also criticised Mr Allouche for not undertaking at [20] as being an appropriate underpinning for the opinion he gave.
Mr Ell's evidence is considered at [23], the AC identifying that necessary investigations had not been undertaken by him.
Mr Topolinsky's evidence was referred to at [24]-[27] and his conclusion that the trees contributed to the current condition of the block wall was substantially criticised as he lacked information to support that statement. Significantly at [25] the AC identifies that Mr Topolinsky's brief asked him to review documents provided to him and give his opinion on whether the trees had contributed to the block wall's damage and included assertions that excavation works did not in any way contribute to the collapse of the wall inter alia which he was asked to assume. I observe that such assumptions were significant limitations on Mr Topolinsky's ability to undertake an assessment of the reasons for the failure of the Applicant's block wall. The AC disagreed with Mr Topolinsky's opinion that there was a correlation between cracks in the Applicant's block wall and the Respondents' trees based on his on-site observations as detailed at [26]. The AC was critical of Mr Topolinsky's opinion because this was based on lack of information, at [27].
Mr Grieve's evidence on behalf of the Respondents is referred to at [29]-[30] including his opinion that the need for a specific retaining wall resulted from the excavations within the Applicant's property an opinion the AC subsequently agreed with at [35].
Importantly the AC identified at [31] that the Applicant's submission that the lateral loading was a result of build-up on the Respondents' side of the block wall lacked any factual foundation. Paragraph 35 is critical, the AC identifying that there was a lack of evidence to support the Applicant's claims that trees had damaged the block wall, that on-site observation suggested the damage to the block wall corresponded with the area of excavation on the Applicant's property, and that some of the most significant areas of rotation were demonstrably unrelated to the trees. Further in [35] the Respondents' wall appeared to provide a barrier between the trees and the Applicant's wall, and where some sections of the Applicant's wall had rotated above ground level its footing had not been displaced so that the wall's rotation had not resulted from loads on the Respondents' side. The Applicant's wall was clearly not designed or constructed for the current site conditions. At [36] the AC stated that the major contributing factor appeared to be the inadequacy of the block wall's structure in light of the current site conditions, and that any impact of the trees if any were found in future would not justify any costs to remedy that impact.
The AC's inspection during the view whereby he identified the presence of the wall on the Respondents' property which appeared in good order would have been readily apparent to the expert engineers and the arborist called by the Applicant given his observations at [28]. I note that according to the Respondents' submission, which was not disputed on this point, Mr Ell did go onto the Respondents' property for an inspection and therefore had the opportunity to see the Respondents' wall on their property and the survey pegs identifying the boundary. Mr Grieve in his report identified that Mr Kladis, his solicitor and Mr Grieve visited the Respondents' land on 8 June 2023, another opportunity for a site inspection.
Numerous cases identify that an unsuccessful party in a tree dispute is entitled to rely on the opinion of expert evidence and legal advice in resisting a costs application as identified in the Applicant's submissions above in [34]. Each case must be assessed on its own facts. What must be weighed up in this matter is that the expert evidence was found by the AC to be materially deficient due to the fundamental absence of investigation of matters that were readily apparent from a site inspection. The circumstances in the judgment are not akin to a commissioner preferring the evidence of one expert over another on a matter of professional judgment, which the no discouragement principle would protect from a costs order and is essentially the circumstance considered in the cases referred to by the Applicant. The observations in the judgment make clear that the Applicant's case lacked reasonable prospects of success, which r 3.7(3)(f)(i) refers to. Given what was seen on the view namely the presence of the wall on the Respondents' land arguably subcl (3)(f)(ii) also applies, as the Respondents submitted, as the Applicant could have accepted their claim lacked a proper expert basis in the course of the hearing but did not do so.
In terms of access to the Respondents' property by the Applicant's experts leading up to the hearing, the uncontested evidence of Mr Jarvis is that access to the Respondents' land would have been given to the Applicant's experts had that been sought and it was not. The submission of the Applicant that tree root mapping by Mr Allouche was not possible is not accepted in light of that evidence.
Returning to the application filed by the Applicant, some unsatisfactory aspects are to be noted. Firstly, while the large amount of compensation sought in prayer 3 was reduced during the hearing by $141,892.03 because the Applicant accepted that a claim for rental reduction could not be claimed under the Trees Act, a compensation claim of about $300,000 remained. This included the cost of about $225,000 to remove the existing wall and replace the block wall on the Applicant's land according to one of the invoices referred to in Form H. A separate order was also sought that the Respondents undertake this work (prayer 2), essentially a duplicate of the claim for compensation.
Secondly as raised by the Respondents the quotes for scaffolding and other building costs sought were provided by a building company Andrew Building Constructions Pty Ltd, a company it is agreed was owned by Mr Kladis, owner of the Applicant. In other words, these quotes were not 'arm's length' from the Applicant, an observation made by Mr Grieve in his report and given as the reason that he did not provide an opinion about the amounts claimed in the invoices. The Respondents obtained a quote on 15 March 2022 that removal of the block wall on the Applicant's land would cost in the amount of about $10,912. While there is no explicit amount for demolition in the invoices in Form H, $225,750 is claimed for removal and rebuilding of a wall on the Applicant's property. The state of the scaffolding for which compensation was sought appears to be in poor repair in the photograph attached to the affidavit of Mrs Jarvis taken on or around 27 March 2024. All these matters suggest the amount of compensation should have been independently verified.
Thirdly the Applicant sought an order seeking the dismantling and replacement of the boundary fence and installation by the Respondents of a structural retaining wall and footing between the properties within 60 days of any orders. There is no retaining wall on the boundary between the properties. The Applicant's block wall is entirely on its land. That was a matter known to the Applicant not least because the Respondents had provided the survey they obtained to Mr Kladis in 2016 together with legal advice from the Respondents' solicitor that the responsibility for the block wall was the Applicant's given the location of the wall on the Applicant's land. The application was based on an inaccurate assumption about the location of the Applicant's wall.
The approach of the Applicant in initiating and continuing its case did not result in the just, quick and cheap disposal of the proceedings, per Class 2 Practice Note - Tree Applications par 4. The initial application sought orders for very large sums to be paid by the Respondents. Reliance on expert evidence which is found to be wholly lacking in merit by the Court should not immunise an applicant from a costs claim by a respondent put to substantial expense to refute that evidence, as has occurred in this matter. Given the large sums claimed and the scale of work sought to be required of the Respondents it was reasonable for the Respondents to engage legal representation and expert evidence from an engineer.
I will be making an order that the Applicant pay the Respondents' legal and expert costs that properly arise from the proceedings. Issues were briefly raised by the Applicant about the invoices relied on by the Respondents to the effect that not all of these should be payable given the time at which work charged for was incurred and the extent of experts' fees. The Respondents' claim will be discussed with the parties before orders are finalised. Costs of the costs motion being appropriate disbursements incurred by the Respondents will also be the subject of an order.
The Respondents Mr and Mrs Jarvis apply for costs in finalised Class 2 proceedings under the Trees (Disputes Between Neighbours) Act 2006 (Trees Act). The parties are neighbours on New South Head Road Rose Bay and share a common boundary of some 40m which was the focus of the proceedings. In Zante Investments Pty Ltd v Jarvis [2024] NSWLEC 1085 Acting Commissioner (AC) Galwey dismissed the application under s 7 of the Trees Act as he found that no damage to a block wall on the Applicant's land resulting from specified trees on the Respondents' land was proved by the Applicant.
The Respondents have filed a notice of motion dated 27 March 2024 seeking that their costs of the Class 2 proceedings be paid. The Respondents represented themselves at the hearing of their notice of motion. Costs of the notice of motion are also sought, noting that if an order is made these costs, effectively disbursements, will be minimal in that the Respondents are representing themselves.
All parties were legally represented before the AC, the Applicant by senior and junior counsel instructed by a solicitor. The Applicant called two engineers and an arborist. The Respondents were represented by counsel instructed by a solicitor and relied on an engineer. They seek an order that about $63,341.50 for legal and expert costs is payable to them by the Applicant as detailed in several invoices (Ex A).
Costs in Class 2 proceedings are to be considered under Pt 3 r 3.7 of the Land and Environment Court Rules 2007 (NSW) (LEC Rules) as provided for in s 98 of the Civil Procedure Act 2005 (NSW). Rule 3.7 of the LEC Rules provides:
(1) This rule applies to the following proceedings:
…
(b) all proceedings in Class 2 of the Court's jurisdiction,
…
(2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances.
(3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following:
…
(c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings,
(d) that a party has acted unreasonably in the conduct of the proceedings,
(e) that a party has commenced or defended the proceedings for an improper purpose,
(f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where:
(i) the claim or defence (as appropriate) did not have reasonable prospects of success, or
(ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable.
The Respondents rely on subcll 3(c), (d), (e), (f)(i) and (ii). An important part of assessing the Respondents' claim for costs is the findings of the AC.
AC Galwey judgment
Zante Investments Pty Ltd v Jarvis is relevantly extracted as follows:
1 A wall dividing two residential properties in Rose Bay shows signs of damage and potential failure. Land on the property to the south of the wall, owned by Zante Investments Pty Ltd (the applicant), is considerably lower than the land to the north, owned by Mary-Lou and Nicolas Jarvis (the respondents). Several trees grow on the respondents' property close to the boundary. The wall is supported by temporary props.
2 The applicant has applied to the Court pursuant to s 7 (Pt 2) of the Trees (Disputes Between Neighbours) Act 2006 (the Trees Act) seeking the following orders:
"1. An order that the Respondents are to engage a suitably qualified arborist to remove the trees, referred to as T1 and T2, and the hedge referred to as T3, in Diagram for Question 2 attached to Form H of this Application, and remove the stumps and roots, within 30 days of these orders.
2. An order that the Respondents are to engage a suitably qualified builder to dismantle and replace the boundary fence and install a structural retaining wall and footing between 897 and 899 New South Head Road, Rose Bay, NSW, 2029 within 60 days of these orders; alternatively,
3. An order that the Respondents pay to the Applicant compensation in the amount of $444,268.03, calculated in accordance with Question 14 of Form H attached hereto.
4. Such further or other orders the Court considers appropriate."
3 During the hearing, the applicant reduced the compensation claim, no longer seeking a sum of $141,892.03 for rental reduction. The order seeking the rebuilding of the entire boundary fence is made pursuant to s 13A of the Dividing Fences Act 1991.
…
8 Correspondence filed with the Court demonstrates not only the applicant's effort to reach an agreement with the respondent from at least early 2017, but also the impasse reached and the improbability of finding agreement. I am satisfied that the applicant's effort was reasonable (s (10(1)(a) of the Trees Act).
…
16 The common boundary is almost 40 metres long. The applicant's wall is generally on the applicant's land close to the common boundary, as shown in the survey plan included in Exhibit C. For most of its length, it is a concrete block wall with an average height of approximately 3 metres. From its western end at the front of the property, most of the block wall is capped, the uncapped section beginning at approximately the point where the applicant's ground level returns to its original level, not far from T2. The remaining section of the wall near the eastern end of the boundary is brick.
17 The lower part of the block wall, and the ground exposed by excavation works below the wall, have been covered with shotcrete, which was sprayed on once excavation works were completed.
18 Michael Ell, an engineer engaged by the applicant, found the block wall lacked any reinforcing and its blocks were not filled with concrete. The parties generally agree on the nature of the block wall.
19 Sections of the block wall have rotated and lean into the applicant's property. The applicant alleges that this damage was caused by the respondents' trees, while the respondents assert that the damage was caused by factors other than their trees.
Cause of damage
20 The applicant relies upon arboricultural evidence provided by Mr Allouche. Mr Allouche's investigations were limited to a visual inspection undertaken from within the applicant's land. Mr Allouche calculated T2's structural root zone radius as 2.85 metres. Referring to T2 as a Norfolk Island pine (I find it is more likely a Cook pine), Mr Allouche described roots of that species as "…known to be both vigorous, where they have increased strength capabilities, and invasive, where they grow and spread rapidly with undesirable outcomes". Mr Allouche wrote on p 11 of his report: "The Arborist [referring to himself] assumed that the trees are growing within two (2) metres of the common wall, and therefore it is highly probable that the wall is constructed within the SRZ [structural root zone] of both trees, where there would be a presence of large structural roots responsible for anchoring the trees in the soil, but also large enough to exert enough force to impact structures." From this rationale only, Mr Allouche concluded that "… the trees are a major contributing factor to the damage and displacement of common wall…".
21 Schedule 7 to the Uniform Civil Procedure Rules 2005 requires inter alia that an expert must state, for opinions expressed in a report: "(e) the reasons for and any literature or other materials utilised in support of each such opinion". The reasons given by Mr Allouche to support his conclusion that the trees are a major contributing factor to the condition of the wall are flimsy, at best. Mr Allouche undertook no investigations to support his contention that large structural roots were growing against and impacting the wall. Mr Leggat submitted that the Court's on-site inspection would confirm Mr Allouche's conclusion. In fact, the on-site inspection only cast Mr Allouche's conclusion into greater doubt. At the on-site inspection, the respondents pointed out the footing and remaining section of a wall on their property were close to the common boundary. The respondents' wall, partly breezeblock, partly other construction, has been removed above ground level. The remainder of the wall, including its footing, is separated from the applicant's wall by a gap some 40-50 mm wide. It separates the earth on the respondents' property from the applicant's wall. It appears undamaged. I observed the remaining sections of the respondents' wall in the vicinity of trees T1, T2 and T3. The respondents' photographs show the breezeblock wall before it was removed, undamaged and in apparently vertical alignment, while the applicant's wall was already rotated. This situation does not fit the scenario described by Mr Allouche.
22 While the respondents provided no expert arboricultural evidence to refute Mr Allouche's evidence, I find Mr Allouche's lack of investigation and reasoning in support of his conclusions leaves his evidence with little weight. My own observations of the situation led me to a different conclusion.
23 Michael Ell, an engineer engaged by the applicant, gave oral evidence during the on-site view and in Court. A report he had prepared earlier was not in evidence. Mr Ell described the wall and the significant extent of its rotation. Mr Ell suggested that trees T1, T2 and T3 move in the wind, resulting in their roots moving, which in turn causes rotational forces on the applicant's wall. He identified this as the primary cause of damage to the wall. Mr Ell undertook no investigations to confirm if roots of any of the trees did indeed grow against the applicant's wall. He seemed unaware of the presence of the respondents' wall between the trees and the applicant's wall.
24 Vadim Topolinsky, an engineer engaged by the applicant, provided written and oral evidence. Mr Topolinsky provided a report to the applicant in July 2019, and a further report in 2023 in response to the respondents' evidence. After inspecting the wall on 21 November 2018, Mr Topolinsky concluded (in the Executive Summary of the 2019 report) that the wall "… does not meet any of the design criteria required for a soil retaining structure…", and "… appears to have been chosen to bound the land and was not intended or appropriate to perform a function of a soil retaining structure…". He found that the wall "… has structurally failed and poses an immediate risk to property and occupant safety".
25 Mr Topolinsky's instructions, according to his 'Brief', were to review documents provided to him and to offer an opinion as to whether the "… wall in question falls within the definition of the Dividing Fences Act 1991" and whether the trees have contributed to the wall's damage. He was asked to consider certain factors as being relevant to his review, including that the excavation works on the applicant's property "… did not in any way contribute to the imminent collapse of the wall" and that "… the 'sprayed concrete' which was applied by Zante to the base of the wall at the time of construction served to provide the wall with much need stability". On my reading of his Brief, Mr Topolinsky was asked to assume these statements as facts. He was also asked to consider that the wall's footings "… do not appear to have a toe".
26 Mr Topolinsky found that "… there appears to be a close correlation between some of cracking locations [sic] (and associated lateral wall displacement) and larger trees located directly behind…" the wall. The Court's on-site observations contradict this:
the wall is not significantly displaced near the largest tree, T2;
the areas of greatest rotation are not in line with any of trees T1, T2 or T3; and
the area of rotation along the wall corresponds more closely with the area excavated on the applicant's land than it does with the respondents' trees.
27 Mr Topolinsky then stated: "I do not have sufficient information to determine the effects of existing trees or their root systems upon the Boundary Wall". Despite this, he said that "… I believe that the trees… have contributed to the current condition of the Boundary Wall". I agree with his statement regarding a lack of information. Mr Topolinsky undertook no investigation to determine if any tree roots grew to the wall or pushed against it. In oral evidence, he stated that he was unaware of the presence of the respondents' wall behind the applicant's wall. Mr Topolinsky might believe that the trees have contributed to the damage, but has provided no evidence to support his belief.
28 During the on-site view, while on the front part of the respondents' property near the lilly pilly hedge (T3), the Court observed that the applicant's wall's footing was visible behind the respondents' wall. The applicant's footing was vertical and not tilted; only the wall above it was tilted. There was no lateral load from the respondents' property on that part of the wall. Mr Topolinsky suggested the wall here had rotated due to the adjacent section's rotation, caused by trees. However, the tilted section of wall was not attached to the adjacent part of the wall to the east, but was separated by a construction joint or gap. It had moved independently of the adjacent section. Its movement was clearly not caused by trees.
29 Anthony Grieve, a building consultant and engineer engaged by the respondents, inspected the site on 8 June 2023 and reviewed documents provided to him. Relying on documents and photographs, Mr Grieve found that the applicant's wall was in a serviceable condition in 2003, prior to development of the applicant's land. He estimated that in 2003 the wall had rotated some 30 mm at its top, whereas in 2023 it was in danger of collapse.
30 Mr Grieve identified that the applicant's development included no changes to the wall, but stated that it was essential that a retaining wall be specified for the boundary because of the difference between ground level on the applicant's and respondents' respective properties. Mr Grieve suggested the applicant had not complied with development requirements, in particular a clause requiring structural details of retaining walls. Mr Grieve found the difference in ground levels between the properties, and the need for a specified retaining wall, resulted from the excavation works within the applicant's property.
31 Of interest here, I note that the applicant submits that lateral loading on its wall is a result of the respondents building up the ground level on their side of the wall. The engineers engaged by the applicant repeat this proposition. However, the respondents submitted that they have not raised soil levels against the wall on their property. The Court's on-site observations support the respondents' submission: their soil level has not been raised such that it provides any loading against the applicant's wall. The top of the remainder of the respondent's wall is visible for most of the length of the boundary, or can be seen by scraping away a small amount of soil.
32 Returning to Mr Grieve's [sic] report, he expressed an opinion that the pine (T2) would have an effect of applying pressure to the applicant's wall. He undertook no investigation to support this opinion.
33 The engineers and the arborist have all expressed opinions on causation of the damage. What is striking in this matter is that none of them undertook any site investigations to support their conclusions, which are based on possibilities and theories. Neither of the engineers engaged by the applicant even seemed aware of the wall on the respondents' property between the trees and the applicant's wall, yet were able to attribute the wall's rotation to either soil loads against the wall on the respondents' side or movement of roots against the wall. On-site observations make either scenario so unlikely that the Court cannot be satisfied, to the extent required at s 10(1)(a) of the Trees Act, that the trees have caused any damage. The applicant's evidence does not demonstrate any causal nexus between the trees and the damage: see Smith & Hannaford v Zhang & Zhou [2011] NSWLEC 29, at [38]. The Court listed investigations that might be undertaken to demonstrate such a nexus, should one exist, in the principle at [59] in Fang v Li & anor [2017] NSWLEC 1503. No such investigations have been undertaken.
…
35 Not only is there a lack of evidence to support the applicant's claim that trees have damaged the wall, the Court's on-site observations suggest otherwise:
damage to the applicant's wall corresponds more closely with the area of excavation works on the applicant's property than it does with trees on the respondents' property;
some of the most significant areas of rotation of the wall are demonstrably unrelated to trees;
the respondents' wall appears to provide a barrier between the trees and the applicant's wall;
where some sections of the applicant's wall have rotated above ground level, its footing has not been displaced, so the wall's rotation has not resulted from loads on the respondents' side; and
the applicant's wall was clearly not designed or constructed for the current site conditions.
36 The Court cannot be satisfied that the respondents' trees have caused, are causing, or are likely in the near future to cause damage to the applicant's property. Notwithstanding this finding, even if the trees have contributed in some as-yet undemonstrated way to the applicant's wall's damage, the major contributing factor appears to be the inadequacy of the wall's structure of the current site conditions. Any contribution by the trees to damage would be so relatively minor as to not warrant apportioning to the respondents any costs of remedy.
…
Applicant's submissions
The no discouragement principle applies and is the basis for the costs regime in Class 2 matters. It would not be fair and reasonable for costs to be paid by the Applicant to the Respondents. There is no indication in the judgment of the AC that a costs order would be fair and reasonable, or that the application should never have been contemplated, or that in commencing or conducting proceedings the Applicant acted so unreasonably that an order for costs would be fair and reasonable. The AC's finding at [8] that the Applicant had made reasonable efforts to resolve the proceedings goes some way to concluding that the Applicant did not commence the proceedings unreasonably.
The Applicant gave evidence that it relied on expert evidence in bringing its claim and that was reasonable behaviour on its part as has been accepted in several cases. For the Applicant to rely and act upon the advice of its structural engineers and arborist, does not, without more, constitute unreasonable behaviour in the maintenance of its claim, Carey v Pattinson (No 2) [2020] NSWLEC 177 at [45], McLaren v Lewis (No 2) (2011) 183 LGERA 344; [2011] NSWLEC 176 at [23]-[24].
The AC identified weaknesses in the Applicant's expert opinions. These weaknesses were attributed to how the experts' investigations did not include uncovering whether the tree roots themselves grew against the common wall. To cure this inadequacy, the Applicant would have required the Respondents to consent to the root mapping on their land, however, that luxury was not open to the Applicant. The experts thus did 'the best they could' in the circumstances.
Further, there is no formal requirement for root mapping to have been carried out in order for the Applicant to have had 'reasonable prospects of success'. There are, for example, numerous cases where the Court has been satisfied that a tree's roots have caused damage to a building despite there being no evidence of root mapping having been undertaken, see for example Owners Strata Plan 31839 v Alafaci [2016] NSWLEC 1083. Whilst root mapping may have provided further certainty as to the cause of the damage to the wall, the Applicant submits that was not, of itself, a necessary precondition to the Court's jurisdiction to make orders in relation to the trees.
In the present case, each of the experts explained their reasoning as to why they considered the trees were responsible for the damage to the wall. Mr Allouche's reasoning is summarised at [20] of the judgment, while Mr Ell's and Mr Topolinsky's views are summarised at [22]-[23] and [24]-[27], respectively. Whilst their opinion was not accepted by the Court, that does not mean there were no reasonable prospects of success.
Finding
Rule 3.7(2) of the LEC Rules states that costs should only be ordered if fair and reasonable in the circumstances, reflecting the presumptive rule based on the no discouragement principle that a person should not be discouraged from making or defending an application because of the risk of an adverse costs order, Arden Anglican School v Hornsby Shire Council (2008) 158 LGERA 224; [2008] NSWLEC 103 at [10] cited in Popovac v Kennedy [2022] NSWLEC 9 (Popovac) at [31]. The Court has discretion to decide if costs ought be payable. Circumstances where a costs order may be made are identified in subcl (3) of r 3.7. The circumstances identified in subcl (3) are not exhaustive. The usual rule that each party pays their own costs is informed by the nature of these proceedings, Smith v Kaddour (No 2) [2018] NSWLEC 21 at [25].
In Marks v Perham (No 2) [2020] NSWLEC 84 at [29]-[30] cited in Popovac at [32] Robson J helpfully stated:
29 The no discouragement principle is particularly important in the context of applications made pursuant to the Trees Act, as such applications are subject to the Court's Practice Note Class 2 - Tree Applications which is designed to facilitate the just, quick and cheap resolution of tree disputes through an appropriate and easily accessible procedure.
30 In approaching the task before me, I consider that it is appropriate, first, to identify whether there is anything within the judgment of the Commissioner which indicates that an order for costs may be fair and reasonable; and second, to look to the conduct of the parties both before and during the hearing for any indication that such an order may be appropriate.
The Applicant commenced the Class 2 proceeding represented by senior and junior counsel, and called two engineers and an arborist to give evidence. The amount claimed directly or indirectly in the application in requiring work to be done by the Respondents (see the AC's judgment at [2]) was very large being the unspecified cost of removing two trees and a hedge on the Respondents' property within 30 days (prayer 1), the dismantling of what was described as a boundary fence and the installation of a structural retaining wall and footing between the properties (prayer 2), and compensation of $444,268.03 as specified in numerous invoices commencing from 2017 in Form H attached to the Class 2 application.
Considering the matter raised by the Respondents of inadequate notice by the Applicant, the AC at [12] accepted that notice as required by s 8(1) of the Trees Act had been given by the Applicant. It is difficult to weigh up the Respondents' submission that the Applicant commenced proceedings without providing any notice to the Respondents that the claim in the order of approximately $440,000 was to be made having first asked them to pay $112,650 in 2016. The Respondents also submitted that proceedings were unreasonably commenced in light of negotiations occurring between the parties under the Dividing Fences Act and much of their affidavit evidence summarised above in [9], [14] was directed to such processes. While that was a matter linked practically in the minds of the Respondents in dealing with the fence between the respective properties, the two processes are legally separate. As the AC was satisfied that notice had been given as required by the Trees Act no basis arises from this circumstance to find that the Applicant acted unreasonably in commencing proceedings.
The parties agreed Mr Kladis is the owner of the Applicant and managing director of Andrew Building Constructions Pty Ltd.
The existence of conflicting views as to the cause of the wall merely gave rise to an evidential contest to be determined by the Court. The simple fact that the Applicant's application was dismissed, that the arborist's and engineers' expert evidence was not accepted by the Court, and that the Respondents' expert evidence was preferred, does not make it fair and reasonable that the presumptive rule that each party bear their own costs be displaced, Carey v Pattinson (No 2) at [49].
Turning to the AC's judgment and contrary to the Applicant's submissions that there are no relevant findings relevant to costs, I consider his findings to be highly relevant to this costs application as his findings suggest there was no basis at all for the Applicant's application and it lacked reasonable prospects of success. For a commissioner's judgment to be relevant to costs does not require that there be express observations about whether parties acted unreasonably, for example, which seemed to be what the Applicant was submitting. The existing very poor state of the block wall on the Applicant's land was agreed before the AC by all experts as identified at [18]. Mr Ell identified that it lacked any reinforcement and its blocks were not filled with concrete.
The findings of the AC are extracted above in relation to Mr Allouche arborist, Mr Ell and Mr Topolinsky engineers, the Applicant's experts. The findings are critical or highly critical of their reasoning processes in arriving at their respective conclusions including failing to identify that there was a wall on the Respondents' land next to the trees in issue which was not affected by the movement affecting the Applicant's block wall on the Applicant's land. The AC identified his observations of the wall on the Respondents' land at [21].
Mr Allouche's evidence is considered at [20], [21] of the judgment, the AC describing his reasoning as 'flimsy at best'. The AC's on-site observations as recorded at [21] enabled him to form the conclusion that Mr Allouche had assumed certain matters without any factual basis for doing so. These observations were unrelated to tree root mapping, which he also criticised Mr Allouche for not undertaking at [20] as being an appropriate underpinning for the opinion he gave.
Mr Ell's evidence is considered at [23], the AC identifying that necessary investigations had not been undertaken by him.
Mr Topolinsky's evidence was referred to at [24]-[27] and his conclusion that the trees contributed to the current condition of the block wall was substantially criticised as he lacked information to support that statement. Significantly at [25] the AC identifies that Mr Topolinsky's brief asked him to review documents provided to him and give his opinion on whether the trees had contributed to the block wall's damage and included assertions that excavation works did not in any way contribute to the collapse of the wall inter alia which he was asked to assume. I observe that such assumptions were significant limitations on Mr Topolinsky's ability to undertake an assessment of the reasons for the failure of the Applicant's block wall. The AC disagreed with Mr Topolinsky's opinion that there was a correlation between cracks in the Applicant's block wall and the Respondents' trees based on his on-site observations as detailed at [26]. The AC was critical of Mr Topolinsky's opinion because this was based on lack of information, at [27].
Mr Grieve's evidence on behalf of the Respondents is referred to at [29]-[30] including his opinion that the need for a specific retaining wall resulted from the excavations within the Applicant's property an opinion the AC subsequently agreed with at [35].
Importantly the AC identified at [31] that the Applicant's submission that the lateral loading was a result of build-up on the Respondents' side of the block wall lacked any factual foundation. Paragraph 35 is critical, the AC identifying that there was a lack of evidence to support the Applicant's claims that trees had damaged the block wall, that on-site observation suggested the damage to the block wall corresponded with the area of excavation on the Applicant's property, and that some of the most significant areas of rotation were demonstrably unrelated to the trees. Further in [35] the Respondents' wall appeared to provide a barrier between the trees and the Applicant's wall, and where some sections of the Applicant's wall had rotated above ground level its footing had not been displaced so that the wall's rotation had not resulted from loads on the Respondents' side. The Applicant's wall was clearly not designed or constructed for the current site conditions. At [36] the AC stated that the major contributing factor appeared to be the inadequacy of the block wall's structure in light of the current site conditions, and that any impact of the trees if any were found in future would not justify any costs to remedy that impact.
The AC's inspection during the view whereby he identified the presence of the wall on the Respondents' property which appeared in good order would have been readily apparent to the expert engineers and the arborist called by the Applicant given his observations at [28]. I note that according to the Respondents' submission, which was not disputed on this point, Mr Ell did go onto the Respondents' property for an inspection and therefore had the opportunity to see the Respondents' wall on their property and the survey pegs identifying the boundary. Mr Grieve in his report identified that Mr Kladis, his solicitor and Mr Grieve visited the Respondents' land on 8 June 2023, another opportunity for a site inspection.
Numerous cases identify that an unsuccessful party in a tree dispute is entitled to rely on the opinion of expert evidence and legal advice in resisting a costs application as identified in the Applicant's submissions above in [34]. Each case must be assessed on its own facts. What must be weighed up in this matter is that the expert evidence was found by the AC to be materially deficient due to the fundamental absence of investigation of matters that were readily apparent from a site inspection. The circumstances in the judgment are not akin to a commissioner preferring the evidence of one expert over another on a matter of professional judgment, which the no discouragement principle would protect from a costs order and is essentially the circumstance considered in the cases referred to by the Applicant. The observations in the judgment make clear that the Applicant's case lacked reasonable prospects of success, which r 3.7(3)(f)(i) refers to. Given what was seen on the view namely the presence of the wall on the Respondents' land arguably subcl (3)(f)(ii) also applies, as the Respondents submitted, as the Applicant could have accepted their claim lacked a proper expert basis in the course of the hearing but did not do so.
In terms of access to the Respondents' property by the Applicant's experts leading up to the hearing, the uncontested evidence of Mr Jarvis is that access to the Respondents' land would have been given to the Applicant's experts had that been sought and it was not. The submission of the Applicant that tree root mapping by Mr Allouche was not possible is not accepted in light of that evidence.
Returning to the application filed by the Applicant, some unsatisfactory aspects are to be noted. Firstly, while the large amount of compensation sought in prayer 3 was reduced during the hearing by $141,892.03 because the Applicant accepted that a claim for rental reduction could not be claimed under the Trees Act, a compensation claim of about $300,000 remained. This included the cost of about $225,000 to remove the existing wall and replace the block wall on the Applicant's land according to one of the invoices referred to in Form H. A separate order was also sought that the Respondents undertake this work (prayer 2), essentially a duplicate of the claim for compensation.
Secondly as raised by the Respondents the quotes for scaffolding and other building costs sought were provided by a building company Andrew Building Constructions Pty Ltd, a company it is agreed was owned by Mr Kladis, owner of the Applicant. In other words, these quotes were not 'arm's length' from the Applicant, an observation made by Mr Grieve in his report and given as the reason that he did not provide an opinion about the amounts claimed in the invoices. The Respondents obtained a quote on 15 March 2022 that removal of the block wall on the Applicant's land would cost in the amount of about $10,912. While there is no explicit amount for demolition in the invoices in Form H, $225,750 is claimed for removal and rebuilding of a wall on the Applicant's property. The state of the scaffolding for which compensation was sought appears to be in poor repair in the photograph attached to the affidavit of Mrs Jarvis taken on or around 27 March 2024. All these matters suggest the amount of compensation should have been independently verified.
Thirdly the Applicant sought an order seeking the dismantling and replacement of the boundary fence and installation by the Respondents of a structural retaining wall and footing between the properties within 60 days of any orders. There is no retaining wall on the boundary between the properties. The Applicant's block wall is entirely on its land. That was a matter known to the Applicant not least because the Respondents had provided the survey they obtained to Mr Kladis in 2016 together with legal advice from the Respondents' solicitor that the responsibility for the block wall was the Applicant's given the location of the wall on the Applicant's land. The application was based on an inaccurate assumption about the location of the Applicant's wall.
The approach of the Applicant in initiating and continuing its case did not result in the just, quick and cheap disposal of the proceedings, per Class 2 Practice Note - Tree Applications par 4. The initial application sought orders for very large sums to be paid by the Respondents. Reliance on expert evidence which is found to be wholly lacking in merit by the Court should not immunise an applicant from a costs claim by a respondent put to substantial expense to refute that evidence, as has occurred in this matter. Given the large sums claimed and the scale of work sought to be required of the Respondents it was reasonable for the Respondents to engage legal representation and expert evidence from an engineer.
I will be making an order that the Applicant pay the Respondents' legal and expert costs that properly arise from the proceedings. Issues were briefly raised by the Applicant about the invoices relied on by the Respondents to the effect that not all of these should be payable given the time at which work charged for was incurred and the extent of experts' fees. The Respondents' claim will be discussed with the parties before orders are finalised. Costs of the costs motion being appropriate disbursements incurred by the Respondents will also be the subject of an order.