Landorf v Wyndham[2017] QSC 198

SUPREME COURT OF QUEENSLAND

1. BROWN J: This is an application by Christine Myfanwy Landorf (“the applicant”) seeking relief under s 184 of the Property Law Act 1974 (“the Act”).  The alleged encroachment is a block retaining wall and subterranean drainage system that encroach upon the applicant’s land from the neighbouring property which is owned by David Bruce Wyndham and Guat Cheng Wyndham (“the respondents”).  The applicant seeks orders that the encroaching block retaining wall and drainage system be repositioned onto the respondents’ land such that it no longer encroaches onto her land. 

2. As with all neighbourhood disputes, it is unfortunate that this matter has resulted in an application to this Court. That is even more so given the time and cost involved and the relatively small value of the subject matter of the application.

Background

3. The respondents live at 34 Merthyr Road, New Farm (“no 34”). The applicant lives at 32 Merthyr Road, New Farm (“no 32”). The respondents have owned no 34 for a considerable length of time, having purchased the property in 1990.^[1] In 2006, they carried out works to their property which resulted in the construction of the encroaching block retaining wall.  That work was certified by a building certifier on 20 April 2007.^[2]  Plans for that work prepared by architects were stamped “boundary to be identified to ensure there is no encroachment over the real property alignment”.^[3]

4. According to the affidavit of Mr Wyndham, (“the first respondent”) a concrete block retaining wall was required to be constructed inside the existing boundary by Council. Permission was given by the respondents’ next door neighbour at the time for the existing chain wire fence to be removed and reinstated.^[4] According to the Final Building Inspection form the respondents were required to have a survey, build a retaining wall and provide for stormwater drainage including protection for adjoining properties.^[5]  The work was certified.

5. The respondents’ affidavit material indicates that a surveyor was engaged by the respondents’ architect however the work carried out by the surveyor is not in evidence.^[6]  The survey work included a calculation of the boundary definition as is evidenced by the surveyor’s fee proposal,^[7] and an invoice was rendered for works^[8] but no report or survey plans have been produced. 

6. The applicant purchased no 32 in May 2009, well after the work carried out by the respondents at no 34 which resulted in the encroachment.

7. In 2011 the respondents made an application to the Council for a development approval to use their property as multi-unit dwelling accommodation with permanent resident rooms at the rear of the dwelling and five student rooms at the front of the dwelling. That was opposed by the applicant. According to the applicant a number of complaints were made between 2010 and 2015 by her and her partner, Peter van Herk to the respondents, regarding lack of privacy and what they consider to be an unreasonable level of noise emanating from the multi-unit student development.^[9] 

8. In 2015, the applicant and her partner proposed to the respondents that the existing chain wire fence be replaced with a fence made out of timber palings which she considered would address the amenity problems caused by the multi-unit student development.^[10] 

9. On 2 April 2016, surveyors engaged by the applicant, Ian Davis Surveys Pty Ltd (“IDS”), in anticipation of a fence being constructed identified that there was an encroachment over no 32 from part of the block retaining wall and the fence on no 34.^[11]  IDS notified the first respondent of the encroachment on 2 April 2016.^[12]

10. A notice to fence provided to the respondents by the applicant on 22 April 2016^[13] indicated that the applicant wished to construct a fence on the boundary, and gave two options:

1. that the respondents relocate the retaining wall so that it no longer encroached on the applicant’s property and the fence be constructed on the boundary; or

2. that the retaining wall be left in situ and the fence be attached to the top according to an assessment by engineers or fencing contractors.

The applicant indicated that she was happy with the second option which she considered was the cheaper option for the respondents.

11. The respondents replied to the notice to fence on 21 May 2016,^[14] indicating that they were happy to relocate the existing chain wire fence to its correct location as per the survey issued by the IDS survey.  They indicated they would do the work themselves and that the fence would be a chain wire fence.  They also indicated that they were not prepared to pay a portion of the surveyor’s invoice.

12. The parties met to discuss the issue further and apparently came close to resolving the matter by an interim arrangement whereby the applicant would build a fence on the top centreline of the retaining wall.^[15]  A point of disagreement arose when the respondents indicated by a letter dated 13 June 2016 that any damage done to the block retaining wall should be the responsibility of the party who did the damage to rectify.^[16]  

13. On 24 June 2016, Mr van Herk wrote to the respondents stating that he and the applicant could not agree the respondents’ position and that he and the applicant would place the matter in the hands of a third party to resolve. His letter states “due to the encroachment of the retaining wall and subsoil drainage the matter is far more complex than a boundary fence so we have appointed Purcell Fox Lawyers to handle the matter…”.^[17]  The respondents replied that they were surprised at this position but thought that QCAT was the appropriate body to resolve the matter, although they were still of the opinion that it could be settled amicably with further talks.^[18]

14. On 7 July 2016, lawyers for the applicant wrote to the respondents stating, inter alia, that the applicant required the removal of the encroachment from no 32 within 14 days of that date, after which time the lawyers were instructed to commence court proceedings to seek orders that the respondents remove the encroachment.^[19] 

15. It appears some construction work was carried out by the applicant on or about July 2016 which involved removing part of the original fence, and a portion of the subterranean drainage, apparently without notice to the respondents. Letters were written by the first respondent to the applicant in that regard on 14 July 2016.^[20]

16. On 28 September 2016, a further letter was written by Purcell Fox Lawyers to the respondents stating that they had not heard from them in relation to the correspondence of 7 July 2016. The letter indicated that the applicant was prepared to grant the respondents until 7 October 2016 to contact them with a view to entering into an agreement so that the matter might be resolved without going to court.^[21]

17. On 1 October 2016 the respondents indicated in a letter to Purcell Fox Lawyers that they were prepared to go to mediation and prepared to go to QCAT.^[22] Purcell Fox Lawyers proposed a “without prejudice” conference.  That occurred but no resolution was reached.^[23]

18. The present application was filed on 1 June 2017. No explanation for the delay between the “without prejudice” conference and the filing of the application has been provided.

19. According to the applicant, the encroachment of the block retaining wall interferes with her rights as the owner of no 32 and diminishes the value of the property and her ability to develop it. She states that relocating the wall back within the true boundary of no 34 would restore the full use and enjoyment and development potential of no 32, while retaining the benefit the wall provides to no 34.^[24]

20. An affidavit was also provided by Mr van Herk.  He has undertaken building and renovation works on no 32. According to his affidavit he and the applicant intend to develop no 32 by extending the size of the dwelling.  There is no evidence that Mr van Herk has any building qualifications, although he seems to have undertaken or overseen some building works at no 32.^[25] He deposes that in June 2016, whilst undertaking works adjacent to the relevant common boundary, he exposed a subterranean drainage system alongside the block retaining wall to drain storm water from the wall and no 34. He estimates that the width of the drainage system constructed on the affected property is 200mm and he “expects” that it runs the full length of the block retaining wall.  He also states that the porous pipe at the bottom of the block wall did not discharge to storm water infrastructure in the street but discharged storm water and run off to no 32 and would interfere with development of no 32.  As such he shortened the pipe and redirected the storm water discharge.^[26]

21. According to Mr van Herk, the location of the drainage system is such that the fence is unable to be constructed without a significant deviation from the true boundary of no 32 as the gravel above the drainage system would not provide a suitable foundation for the construction of a fence and this would result in the usable area of no 32 being diminished.^[27]

22. An affidavit has been provided by Mr Davis of IDS, who carried out a survey and provided a report. According to his affidavit, the block retaining wall is not located on the true boundary but rather encroaches upon the applicant’s property by distances varying between 0.07m and 0.16m. He indicated that the total area encroached is 1.5m².^[28]

23. A valuation report has been provided by Mr Iveson,^[29] a certified practising valuer, who was instructed to determine the compensatory value of that part of the land which is the area of encroachment.  His valuation addresses the value of no 32 (Lot 10), on the basis that the encroachment remains or is transferred to no 34 (Lot 9). 

24. In his view, the value of no 32 (Lot 10) is diminished by:

1. $20,000 if the encroachment were to remain; and

2. $10,000 if the encroachment were to be transferred to no 34 (Lot 9).

25. Mr Iveson’s valuation was made by direct comparison with recent property sales in the area. His report indicates that there is no direct comparison evidence specific to a small reduction in area of 1.5 m² however the principle of proportionate value is still anticipated to apply.^[30] He considers the value of the land subject to the encroachment to be $5,000 on a direct rate per metre basis.^[31]  He values no 32 without any encroachment to be $1,100,000. He calculates the decrease in value of the applicant’s property if the encroachment remains on the basis of the risk relief may be sought under s 184 of the Property Law Act and the price of litigation.  He opines that in that case the value of no 32 would be $1,080,000 to account for such a risk.^[32]  Such an assessment does not involve the application of valuation principles and is not an opinion which could be reasonably be given within the expertise of a valuer. If the encroachment was to be transferred to the respondents he calculates the decrease in value of no 32 is $10,000. This is on the basis a prudent purchaser would make a deduction of $5,000 on account of the proportionately reduced land size and a further $5,000 on account of the irregular boundary alignment such that the value of the applicant’s land would be $1,090,000.^[33]

Application of the Act

26. Section 184 of the Act provides that:

“(1)  Either an adjacent owner or an encroaching owner may apply to the court for relief under this division in respect of any encroachment.

(2)  This section applies to encroachments made either before or after the commencement of this Act.”

27. In the present case the applicant is the adjacent owner and the respondents are the encroaching owners.

28. “Encroachment” is defined in s 182 of the Act to mean “encroachment by a building, including encroachment by overhang of any part as well as encroachment by intrusion of any part in or upon the soil.” The definition of “building” in s 182 of the Act includes “a wall”. I accept that the block retaining wall falls within the definition given it is a substantial structure of a lasting character made for domestic purposes.^[34] It is however questionable whether a porous pipe and a covering of gravel installed along the block wall which apparently constitute the stormwater drainage system fall within the definition of “encroachment”.  However the drainage does appear to be associated with the retaining wall and on that basis I accept it forms part of the encroachment intruding in or upon the soil.^[35]

29. The originating application^[36] only seeks relief in respect of the block retaining wall although the draft order provides for relief for the associated drainage system. It was addressed by the affidavit of Mr van Herk and to a limited extent by the affidavit of the first respondent. The respondents did not challenge the accuracy of the survey report which showed the encroachment.^[37] The first respondent did not challenge the evidence of the position of the drainage stormwater drainage system.

30. The fact that the encroachment was apparently in existence before the adjacent owner bought the property does not preclude her from making an application given the terms of s 184(2) of the Act.

31. Section 185 of the Act provides for the powers of the court on application for relief under s 184. Section 185(1) provides that the court may make such order as it may deem just with respect to the matters outlined. Section 185(2) provides a number of circumstances which the court may consider in determining whether or not to grant or refuse relief, and in the exercise of its discretion may consider, amongst other matters:

1. the fact that the application is made by the adjacent owner or by the encroaching owner, as the case may be; and

2. the situation and value of the subject land, and the nature and extent of the encroachment; and

3. the character of the encroaching building, and the purposes for which it may be used; and

4. the loss and damage which has been or will be incurred by the adjacent owner; and

5. the loss and damage which would be incurred by the encroaching owner if the encroaching owner were required to remove the encroachment; and

6. the circumstances in which the encroachment was made.

32. In terms of the matters in s 185(2) of the Act:^[38]

1. the adjacent owner has brought the application;

2. the land is a relatively small block of 445m² which has an estimated value of $2472 per m² in New Farm;

3. the encroachment is a concrete block retaining wall which encroaches at various distances between 0.07m and 0.16m and the total area encroached upon is 1.5m². The first respondent measured a smaller area of .309225 m² as the encroaching area but did not challenge the IDS report.^[39]  Given the expertise of IDS as surveyors I accept the area encroached upon is 1.5m²;

4. the encroachment is a block retaining wall which was apparently required by the Council to be built and was the subject of the matters reviewed before the issuing of the final building certification. The drainage system appears to be for the benefit of both the respondents and the applicant to prevent flooding from stormwater.^[40] The applicant contends that the block retaining wall and drainage works serve only to benefit no 34 by allowing greater development capacity. Other than the evidence of the additional area of the encroachment, that assertion is not borne out by the evidence. The applicant states that the encroachment does not benefit no 32 which appears to be the case save as identified;

5. the loss and damage to the adjacent owner is said to be a diminished value of the land on no 32: if the encroachment remains the loss in value is said to be $20,000 and is $10,000 if it is transferred to no 34. The encroachment was already on the property at the time it was purchased. There is no evidence that the applicant paid a greater price than she otherwise should have when she has purchased the land with the encroachment affecting the land on no 32. The loss relates to loss on resale. The other loss is said to be to the full enjoyment of the property and its development potential;

6. the loss and damage which will be incurred by the encroaching owners, the respondents, if required to remove the encroachment has not been quantified. The concrete extension to the retaining wall originally cost $1250 in 2005.^[41]  No estimated cost has been provided by either party of the cost for removal and realignment of the block retaining wall or of the underlying drainage system. 

7. As is set out above, there is no real explanation as to how the encroachment occurred and whether it occurred at the time of the works being carried out by the respondents in about 2006 or due to some subsequent event or movement over time.  I consider the most likely explanation is that it occurred at the time the works were carried out at no 34. It was submitted on behalf of the applicant that the encroachment had been caused by the recklessness of the respondents.^[42]  That submission was, quite properly, not relied upon by the applicant’s Counsel at the end of the hearing.  I consider this matter further below.

33. The actual interference caused to the applicant by the encroachment in terms of the development potential of her property is questionable. Even after the applicant was aware that there was an encroachment over the boundary by the block retaining wall, she was prepared to negotiate with the respondents on the basis of building the fence on the existing block retaining wall. The respondents have indicated that they are still prepared to agree to that course. Mr van Herk has purported to give evidence about the interference of the drainage with the fence. Given his lack of qualifications that evidence can be given little weight.

34. The evidence of the respondents is that the encroachment on no 32 was unintentional and the respondents were not aware of it until given notice by IDS. I accept that was the case. It appears the respondents engaged proper professionals and that the building plans explicitly stated the boundary was to be identified and there was to be no encroachment over the boundary. There is no evidence that the encroachment was the result of negligence by the respondents.

35. The applicant wishes to have the encroachment removed. Its draft order^[43] proposes a number of conditions which are reasonably onerous include:

"4. The First Respondent and the Second Respondent must ensure that all works necessary to complete the Works are:

1. completed by appropriately qualified and licensed builders and   tradesmen;

2. carried out under the supervision of and in accordance with plans provided by a registered engineer, ensuring that there is no danger to the improvements on the Affected Property and the Encroaching Property;

3. carried out in compliance with all laws, including obtaining and complying with any approvals required to complete the Works. …

8. Entry and access to the Affected Property is on the basis that the First Respondent and the Second Respondent indemnifies the Applicant from and against any and all actions, claims, notices, proceedings, judgements, demands, losses, damages, costs, payments and expenses, however arising, whether present or future, unascertained, immediate or contingent whether at law, in contract, in equity or pursuant to statute (Claim) which the Applicant may incur, including to a third party, in respect of any Claim arising from loss, damage or injury to property or person occurring within the Affected Property save for any loss, damage, or injury to any property or person caused by the wilful or negligent act or omission of the Applicant. …

10. Upon completion of the Works, the First Respondent and the Second Respondent must provide to the Applicant:

1. copies of all relevant approvals and certificates with respect to the Works;

2. copies of “as built” plans and drawings regarding the Works; and

3. written confirmation from a registered surveyor that the Works are situated in the Encroaching Property.”

11. The costs of undertaking the Works are to be borne by the First Respondent and the Second Respondent, including, without limitation, costs associated with:

1. engaging engineers and surveyors; and

2.  complying with all laws.”

36. In the context of a block retaining wall the conditions appear to be unduly onerous particularly given the works that may be affected on lot 32 have been carried out since the Applicant was aware of the encroachment. In those circumstances the indemnity is too broad and the necessity for an engineer to be engaged is questionable. It may be an engineer would need to supervise the removal works given the fact that no 32 has also carried out work going to the boundary between the two properties but in that case there is an issue whether the costs should be borne by the respondents alone.

37. The respondents propose that the fence that the applicant wishes to build be built on the respondents’ block retaining wall and that the “unintentional insignificant encroachment” is cancelled out by the replacement value of the concrete extension which the first respondent has given evidence was removed without the permission of the respondents.^[44] The respondents seek to have the application dismissed.

38. The respondents’ proposal does not address the question of the encroachment but rather the question of the proposed fence. The fact that the concrete extension is said to have been removed without the respondents’ permission is not a consideration relevant to the Court’s determination of this matter. The respondents have acted under a misapprehension in this matter not appreciating that the issue had evolved from one involving a dividing fence to one of encroachment and the difference between them. Unfortunately they did not have the benefit of legal advice although they were encouraged to get legal advice.

39. The first respondent has contended that the retaining wall cannot be removed in its entirety because Mr van Herk has built a retaining wall and concrete steps on no 32 which he asserts are both attached to the block retaining wall. The applicant contends the wall and steps are not attached. The first respondent contends that the costs of removing the block retaining wall would be “prohibitive”.^[45] There is no evidence bearing that out.

40. The photos provided by the first respondent and the applicant however do support the fact that the applicant has built a concrete retaining wall and steps which at least abut the respondents’ block retaining wall.^[46] That work was carried out in early July 2016, according to the first respondent.^[47] That evidence is not refuted by the applicant. 

41. While the applicant’s Counsel indicated that there was no attachment of the works done on no 32 to the encroaching block retaining wall, there is no evidence that the retaining wall can be removed without damaging those concrete works done by the applicant.

42. The First Respondent also submitted that the respondents cannot build within one and a half metres of their house under Council regulations.^[48] However that does not sit with the fact that the previous plans for the 2006 works provided for a retaining wall to be built within the boundary of no 34, which indicates that there is no reason that the wall cannot be realigned. 

43. Given that the building of the retaining wall was a Council requirement when the respondents carried out the works in 2006, it would appear that they would have to remove and rebuild the wall in order to address the question of the misalignment.

44. Neither party provided any evidence as to what would be involved in removing the block retaining wall nor the cost that would be incurred. That is entirely unsatisfactory and makes the Court’s task a difficult one. While the applicant submitted that the evidence of the cost of removal should have been provided by the respondents, given it is one of the factors which the court is to consider pursuant to s 185(2) I consider the applicant should have provided some evidence in this regard and the onus was not only on the respondents to do so.

45. I accept that the respondents will incur costs if they are required to remove and rebuild the encroaching block retaining wall with the correct alignment together with repositioning the associated drainage system. There is no evidence of any other loss that would be suffered by the respondents should they be ordered to remove the encroachment. If the conditions sought to be imposed by the applicant were imposed that would add further costs.

Consideration

46. The Property Law Act provisions are remedial in character.^[49]  The approach which has been adopted by this court is one of weighing the various factors affecting each of the property owners.^[50]

47. Section 185(1) of the Act provides that the Court:

“May make such order as it may deem just with respect to —

1. the payment of compensation to the adjacent owner; and

2. the conveyance, transfer, or lease of the subject land to the encroaching owner, or the grant to the encroaching owner of any estate or interest in the land or of any easement, right, or privilege in relation to the land; and

3. the removal of the encroachment.”

48. In determining whether to grant or refuse the relief or any part of the relief the Court is to consider amongst other matters, the matters in s 185(2) of the Act as outlined above.

49. If the Court orders a conveyance or transfer of the subject land to the encroaching owner, it must order compensation pursuant to s 186 of the Act. The minimum compensation to be paid to the adjacent owner in respect of any conveyance or transfer shall, if the encroaching owner satisfies the Court that the encroachment was not intentional and did not arise from negligence be the unimproved capital value of the land.

50. Notwithstanding the respondents had the block retaining wall built when they carried out works in 2006, they have satisfied me that the encroachment was not intentional and did not arise from negligence. They engaged professionals to carry out those works and there is no evidence that the encroachment has resulted from negligence.

51. On the basis of the evidence and expert opinion of the valuer, the unimproved value of the land subject to encroachment appears to be $5000,^[51] although I note his evidence that the value of the land would be further reduced by $5000 due to an irregular boundary.

52. The encroachment was discovered as a result of the applicant’s desire to put up a wooden paling fence in order to block out no 34 and the multi-unit student accommodation in no 34, which is clearly a source of irritation and frustration to her.

53. While the affidavit of Ms Wyndham (“the second respondent”) deposes as to some acrimony from the applicant and Mr van Herk, there is no evidence that acrimony is the motivating factor for the application. I find that the application has been made in good faith.

54. I accept that the applicant was not aware of the encroachment at the time she purchased no 32. The applicant bought the property after the retaining wall was built on no 34. The applicant did not carry out a survey of the property before buying the property. There is no evidence in this case that it is standard practice that such a survey be carried out in respect of a residential sale.^[52]

55. While the applicant asserts that the encroachment is interfering with her ability to develop the property, there is only limited evidence supporting that fact which is fairly non-specific.^[53] Mr van Herk’s evidence states that the location of the drainage system, which comprises gravel beneath the top soil, means that a fence is unable to be constructed without a significant deviation onto no 32 as the gravel will not provide a stable foundation for the construction of a fence.  However, I note that Mr van Herk is not a builder or an engineer but rather a business consultant and I find that his evidence is of limited weight in this regard.  He contends that the usable area of no 32 is diminished further in addition to the land lost by the encroachment of the block retaining wall due to a fence having to be constructed further inside the boundary of no 32 and that the subsequent loss of land for side boundary means further setbacks for extension works to the property.^[54] Other than the construction of the fence to provide privacy, there is no specific evidence of how the encroachment interferes with the development potential.

56. Although I have reservations about the opinion provided by the valuer on behalf of the applicant, as set out above, I accept that the value of the land subject to the encroachment of $5000. 

57. The area of encroachment is relatively small varying between 0.07m and 0.16m. That fact must be weighed against the fact that no 32 is a relatively small block. I considered whether the encroachment should be regarded as so insignificant that the application should be dismissed. While the matter is finely balanced, given the size of the block at no 32, the value placed upon the area the subject of the encroachment and that there is some evidence the encroachment may interfere with the development potential of no 32, I do not consider that the encroachment is insignificant and am satisfied that it is not appropriate to dismiss the application in the present case.

58. I do consider it is appropriate that relief under section 184 of the Property Law Act is granted in respect of the encroachment by a block wall and associated drainage works on to the land described as Lot 10 on RP8689 and situated at 32 Merthyr Road, New Farm in the State of Queensland, Title Reference 50253890.

59. While I am conscious of the effect of the encroachment on the applicant’s property, I consider the most just order in the circumstances would be to order the area the subject of the encroachment be transferred by the applicant to the respondents and that the respondents pay the applicant compensation. I would propose the compensation be $5000 based on Mr Iveson’s report, which is higher than the unimproved value based on comparative sales. Given the irregular boundary was likely to have been evident at the time the applicant bought the property and the unintentional nature of the encroachment, I am not presently satisfied that it would be just to order that the respondents pay compensation for the irregular boundary.

60. In the circumstances, I am not satisfied on the evidence that removal and repositioning of the block retaining wall is the easiest and cheapest option. While the proposed order does enlarge the respondents’ property, it is only by a relatively small area. I consider the order to be the most appropriate given the lack of fault by the respondents and that the removal and realignment of the block retaining wall and associated subterranean drainage will involve significant work and not insignificant cost and that there is the potential for property damage to both parties’ property upon its removal, all of which could possibly outweigh the loss and damage caused to the applicant by the encroachment.^[55] The proposed order ensures that the applicant is compensated for the area of land subject to the encroachment which is lost.

61. As neither party proposed that the area of land subject to the encroachment be transferred to the respondents and compensation be ordered, (although the prospect was canvassed by the applicant’s expert), I consider it appropriate to allow the parties to make further submissions to me about the proposed terms of the order including compensation before I reach a final view about the appropriate order to make and make any final orders.

62. I will also hear the parties further on the question of costs.

63. The parties may make further submissions in writing as to the proposed orders that should be made and as to costs by 27 September 2017, after consideration of which I will make final orders, unless the matter needs to be relisted. The submissions should be limited to four pages.