Austin v Scotts Head Lifestyle Homes Limited
[2002] NSWLEC 241
•12/20/2002
Land and Environment Court
of New South Wales
CITATION: Austin & Anor v Scotts Head Lifestyle Homes Limited [2002] NSWLEC 241 PARTIES: APPLICANTS
RESPONDENT
Noel John Austin and Judith May Austin
Scotts Head Lifestyle Homes Limited
(ABN 41 079 362 146)FILE NUMBER(S): (3)0019 of 2002 CORAM: Pain J KEY ISSUES: Encroachment :- application for transfer of land and payment of compensation by encroaching owner - circumstances in which encroachment was made - intentional encroachment - exercise of discretion - whether encroachment should be removed
Estoppel - whether arises in circumstancesLEGISLATION CITED: Encroachment of Buildings Act 1922 s 2, s 3, s 4 CASES CITED: Byron Shire Council v Vaughan (No 2) (2000) 110 LGERA 424;
Haddans Pty Ltd v Nesbitt (1963) 57 QJPR 21;
Morris v Thomas (1991) 73 LGRA 164 ;
The Commonwealth v Verwayen (1990) 170 CLR 394;
Walton Stores (Interstate) Limited v Maher (1988) 164 CLR387DATES OF HEARING: 30/09/2002, 15/11/2002, 22/11/2002 (written submissions), 25/11/2002 (written submissions) DATE OF JUDGMENT:
12/20/2002LEGAL REPRESENTATIVES: RESPONDENT
APPLICANTS
Mr JR Connors (barrister)
SOLICITORS
Harris Wheeler
Mr TS Hale SC
with Mr T Bland (barrister)
SOLICITORS
Perry & Smith
JUDGMENT:
IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES
(3) 0019 of 2002
20 December 2002Pain J
NOEL JOHN AUSTIN and
JUDITH MAY AUSTIN
- Applicants
SCOTTS HEAD LIFESTYLE HOMES LIMITED
(ABN 41 079 362 146)
- Respondent
- Introduction
1 This is a Class 3 application made pursuant to ss 3 and 4 of the Encroachment of Buildings Act 1922 (the Act) whereby the Applicants, the encroaching owners, seek an order that 21m2 of the Respondent’s land (Lot 191), which adjoins the Applicants’ land (Lot 179), be transferred to the Applicants pursuant to section 3(2)(b) of the Act, with payment by the Applicants to the Respondent of the reasonable market value of that land. The Act refers to the payment of land value in such circumstances (s 4). Land value is not defined in the Act. The adjacent owner, the Respondent, opposes these orders and is seeking an order that the major encroachment be removed.
Relevant statutory provisions
2 Adjacent owner is defined in s 2 of the Act as "the owner of land over which an encroachment extends" (the Respondent). Encroaching owner is defined in s 2 of the Act as "the owner of land contiguous to the boundary beyond which an encroachment extends" (the Applicants).
3 Encroachment is defined in s 2 of the Act in the following terms:
- "Encroachment" means encroachment by a building, and includes encroachment by overhang of any part as well as encroachment by intrusion of any part in or upon the soil.
4 The definition of "building" in s 2 is "a substantial building of a permanent character and includes a wall".
5 Section 3 of the Act provides:
(1) Either an adjacent owner or an encroaching owner may apply to the Court for relief under this Act in respect of any encroachment.
(2) On the application the Court may make such orders as it may deem just with respect to:
(a) the payment of compensation to the adjacent owner,
(b) 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 therein or any easement right or privilege in relation thereto,
(c) the removal of the encroachment.
(3) The Court may grant or refuse the relief or any part thereof as it deems proper in the circumstances of the case, and in the exercise of this discretion may consider amongst other matters:
(a) the fact that the application is made by the adjacent owner or by the encroaching owner, as the case may be,
(b) the situation and value of the subject land, and the nature and extent of the encroachment,
(c) the character of the encroaching building, and the purposes for which it may be used,
(d) the loss and damage which has been or will be incurred by the adjacent owner,
(e) the loss and damage which would be incurred by the encroaching owner if the encroaching owner were required to remove the encroachment,
(f) the circumstances in which the encroachment was made.
6 Section 4(1) of the Act states:
- 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.
7 The encroachments referred to in this matter which encroach onto the Respondent's land are as follows:
(a) Steps adjoining the Applicants' timber deck (0.1m) (eastern boundary)
(b) Concrete carport wall (0.24m to 0.26m) and overhang roof of carport (0.95m to 0.98m) (eastern boundary)
(c) Retaining wall (1.6m) (north eastern corner boundary)
8 These are all encroachments within the meaning of encroachment under the Act. I note that in closing submissions counsel for the Respondent stated that the Respondent was concerned only with the encroachment of the concrete carport wall and carport roof overhang (b) (the carport encroachments), not the retaining wall (c) or the steps (a). There was little evidence in relation to the encroaching steps in any event. Further, I note that the area of land of 21m2 sought by the Applicants does not include the area occupied by the retaining wall. No orders in relation to the retaining wall are sought by the parties. The focus of this matter is therefore the carport encroachment (b).
9 In this case the circumstances in which the carport encroachments were made (s 3(f) of the Act) are of particular importance and these will be dealt with first.
Circumstances in which the encroachment was made - s 3(f)
10 The parties relied on affidavit and oral evidence, from which the following facts are set out. The parties disagree about some of the relevant events.
11 The Applicants acquired Lot 179 in DP 259408 (Lot 179) at Panorama Parade, Scotts Head on 15 July 1996. At the time of purchase the land contained a dwelling. It is an existing residential lot. Lot 179 adjoins Lot 191 in DP 259408 (Lot 191), which is undeveloped land, on the eastern and northern sides of Lot 179. Lot 191 is owned by the Respondent, who purchased the land on 23 May 1997. Lot 191 has an area of approximately three hectares.
12 The Respondent is a property developer with significant land holdings in the Scotts Head area. The Respondent, through its director, Mr Mahon, is developing that land, including Lot 191, for residential subdivision.
13 Renovations and alterations to the Applicants' house on Lot 179 were commenced in about February 1999. These renovations and alterations were done in stages over a period of about two and a half years.
14 In or about June 1999 the Applicants received a pamphlet in relation to the proposed development of Lot 191 by the Respondent. As a result of this, Mr Austin, one of the Applicants, made arrangements to meet with Mr Bowers, the architect of the Respondent named on the pamphlet.
15 There were discussions from July to December 1999 between Mr Austin, Mr Mahon, and Mr Bowers about a development the Respondent was proposing on Lot 191. Part of those discussions included the possible realignment of the boundaries between Lot 191 and Lot 179 as part of the Respondent’s proposal for a large subdivision on Lot 191. The Applicants were interested in acquiring an area of 153.1m2 of Lot 191 to add to the existing Lot 179. Also discussed was the transfer of a small triangular section of the north eastern corner of Lot 179 to Lot 191. Part of the reason for the land swap at that stage was because the small triangle of land on Lot 179 would ease a road entrance within Lot 191, according to Mr Bowers. Height details for buildings on the proposed subdivision of Lot 191 were also discussed between Mr Austin and Mr Bowers.
16 Mr Austin said that during the course of discussions he was also shown plans indicating changes to the boundary on Lot 179 on the basis that 153.1m2 of Lot 191 was to be transferred. Mr Austin stated that Mr Bowers had told him this was correcting an old mistake in relation to irregular land boundaries and that Mr Mahon would contact him.
17 In about October or November 1999 Mr Austin constructed the retaining wall at the north eastern boundary of his property, part of which encroaches onto Lot 191 by 1.6m. He states at par 13 of his affidavit that this was to allow for the boundary realignment and that he contacted Mr Bowers around that time to confirm the boundary realignment was still proceeding. In oral evidence Mr Austin stated that Mr Bowers had said he would contact Mr Mahon to arrange the land swap.
18 The precise terms of some of the discussions between Mr Austin and Mr Bowers are disputed. Mr Bowers could not recall having discussions at some times and in some of the terms alleged by Mr Austin. Mr Bowers states he never said to Mr Austin that a land swap was finally agreed.
19 In early March 2000 a draft boundary agreement prepared by the Respondent’s solicitor, presumably reflecting the land swap discussions, was received by Mr Austin from his solicitors. Clause 1 of the agreement provided that the Respondent would make a development application to Nambucca Shire Council for subdivision and, subject to development consent being granted on terms acceptable to the Respondent, the Respondent was to transfer 153.1m2 to Mr Austin in exchange for the triangular portion of 4.3m2 of the Applicants' land. The Respondent was also to place a covenant on the subdivided lots on Lot 191 restricting the heights of any buildings on those lots. One of the terms of the agreement was that Mr Austin agree "not to object to the proposed subdivision of Lot 191 or any other proposed development of Scotts Head Lifestyle Homes Limited on land owned by it in the Scotts Head area" (cl 1(e)). Clause 2 provided that in the event the Council failed to grant development consent on terms agreeable to the Respondent, the Respondent would transfer the 153.1m2 to Mr Austin in exchange for a sum of money agreed by the parties, or, if no agreement was reached, as determined by a registered valuer. Negotiations between the parties' respective solicitors commenced but then apparently ceased sometime afterwards.
20 According to Mr Austin's affidavit, he did not agree with condition 1(e). Mr Austin states in his affidavit sworn 20 March 2002 at par 19 - 21 and 23:
[19] I instructed Harris Wheeler to negotiate with the Respondent to finalise a mutually suitable agreement for the boundary realignment. The negotiations broke down after communication ceased on the part of the Respondent's solicitors.
[20] In December 2000, I received a letter from Nambucca Shire Council advising that another development by the Respondent was proposed for Lot 191, of a different style to the August 1999 proposal referred to above.
[23] In response to the Development Application number 2001/148 and Council's letter dated 13 February 2001, I forwarded a letter to Council requesting further information. A copy of that letter is at Exhibit NJA 32 and 33. My letter to Council was not intended by me to be an objection to the proposed development.[21] In February 2001, I received a letter from the Nambucca Shire Council advising of and calling for objections to Development Application number 2001/148 for a proposed three lot residential subdivision on Lot 191. A copy of Council's letter dated 13 February 2001 is at Exhibit NJA 22. A copy of the Development application Plans 2001/148 is at Exhibit NJA 23. I noted the plan at Exhibit NJA 23 depicted the adjusted boundary between Lots 179 and 191 which had been the subject of my previous negotiations with the Respondent's architect Mr Bowers and solicitor Mr Perry.
…
21 The letter NJA 32/33 dated 26 February 2001 in my view would clearly be read by the Council and the Respondent as an objection to the proposed development. Mr Bowers disputes at par 11 of his affidavit sworn 13 August 2002 the statements made by Mr Austin in par 21 of his affidavit in relation to the plans submitted with DA 2001/148 including the adjusted boundary between Lots 179 and 191. Mr Bowers stated in his affidavit that the plan could not include the proposed realignment because he had no written consent from Mr Austin.
22 Nevertheless, it does appear that the plans lodged with DA 2001/148 at the Nambucca Shire Council did show the realignment of this boundary. The plans for DA 2001/148 showed the boundary line of the Applicants' land on the eastern boundary as if the agreement to transfer 153.1m2 had been proceeded with. DA 2001/148 was to cut Lot 191 into three separate parcels of land. Separate development applications (DA 2001/149, 150 and 151) were lodged in relation to further development of the three lots created from Lot 191. The plans for DA 2001/149, 150 and 151 also showed the "new" boundary between Lot 179 and Lot 191.
23 In early 2001 the Applicants were in the final stage of their renovations to the house on Lot 179 which included the carport on the eastern boundary of Lot 179, next to Lot 191. Approval had been obtained from the Nambucca Shire Council for the carport to be built to the boundary of Lot 179. Mr Austin stated that during construction he discovered that his house was not built on Lot 179 in accordance with the original plans as he had thought. The plans for the renovations had been based on the original plans. The result was that if Mr Austin proceeded with his existing plan for the renovations by reference to the position of the house on the land, a small encroachment onto Lot 191 would result from the carport. (I note the Respondent disputes that Mr Austin first discovered his house was incorrectly placed on Lot 179 when he was completing the Applicants' renovations. The Respondent submitted that Mr Austin knew about the incorrect positioning of the house on Lot 179 when he purchased the property because of the survey report obtained on purchase. Mr Austin stated in oral evidence that although the survey report may have been sent to his solicitor involved in the purchase of the property, he had not seen it.)
24 The Applicants wrote a letter, dated 23 April 2001, to the Respondent suggesting, inter alia, the problem could be overcome by a moderate boundary adjustment and asking for an urgent response. The letter stated in part:
- A number of ideas are being investigated to provide a practical solution to this problem.
We understand the above solution will be rendered redundant when the boundary re-alignment proposed in development application 2001/148 is finalised but we hope that you appreciate our circumstance which requires a resolution as soon as practicable.One solution is a modest boundary re-alignment, which will give sufficient space to extend the eaves/box gutter (making it symmetrical to the western side eaves/box gutter). The amount of land required for this, at the south/eastern boundary section is 110mm.
No reply was received from the Respondent but Mr Austin proceeded to have the builder pour the carport footings in May 2001 so that these encroached onto the Respondent’s land. It was the evidence of Mr Mahon that he received Mr Austin's letter in April 2001, he did not respond, but consulted a lawyer in April 2001. The evidence is clear that Mr Austin caused his builder to build beyond his boundary line when finalising the extensions to his carport in May 2001 knowing that it would encroach onto the Respondent's land. The carport cost about $30,000.
25 Mr Mahon visited Mr Austin’s home on 23 November 2001. There is disagreement between Mr Austin and Mr Mahon about what was said on that occasion. At par 27 of his affidavit Mr Austin sets out the following conversation as having taken place:
On 23 November 2001 Stewart Mahon visited me at my home on Lot 179. I was not expecting him. It was my understanding that he was visiting a number of residents in the Scotts Head area to discuss outstanding issues resulting from the most recent Development Application. In my discussion with him we said words to the following effect:
I said: "What is happening with the boundary realignment? You know I have built on that land now."
I said: "I need to know where the boundary and building lots will be so that I can finish my landscaping."Stewart said: "I know. I will get onto Steve Bowers to organise the land swap."
- Stewart said: "I will arrange for a re-survey of the Lot to show the new boundary."
26 At par 27 of his affidavit sworn 21 June 2002, Mr Mahon sets out the conversation as having taken place as follows:
- As to paragraph 27 I say the conversation that I had with the applicant was as follows. I said "Hi, how are you, how is it going". He said "by the way, did you get my letter in regard to boundary realignment" (NJA 38) I said "yes I got your letter but since you objected to our development application we have a problem". I continued "You pull your objection out of Council and we will consider talking again to you". He replied "We didn't object to your development application I don't know what your problem is." I said "Well, that's not how the Council sees it. I have been into council and collected a copy of all the objections and your letter of objection is in there (NJA 32). You have got a few problems haven't you."
27 At par 29 of his affidavit Mr Austin states:
I did not give any agreement in writing.On Wednesday 28 November 2001 I telephoned Mr Bowers. He was busy but said he would phone me back. He phoned me back later on my mobile phone. We discussed my letter to the Nambucca Shire Council dated 26 February 2001 (Exhibit NJA 32). I told him I had no objections to the DA referred to in that letter. He said: "If you put into a written agreement that you are not objecting, it will go ahead straight away".
28 Mr Bowers disputes this conversation and sets out the conversation as follows in par 12 of his affidavit:
- I said "I am surprised at your objection when the land swap agreement with Stewart Mahon was a condition that you don't object!" He said "I have not objected, it is not a letter of objection". I said "To me it is clearly a letter of objection. I have contacted Council and they tell me they have a letter of objection from you". I continued "For the agreement to be reached he needs you to withdraw your objections. You should attend to this quickly as I will have to modify my plan if an agreement can't be reached."
29 The Respondent's counsel submitted that although the Applicants had made an objection on 26 February 2001 Mr Mahon did not find out that the Applicants had objected to the development application until some time later in late 2001. When Mr Mahon found out about the objection, he had his solicitor write to Mr Austin seeking the removal of the encroachment.
30 On 5 December 2001 the Respondent’s solicitor sent a letter to the Applicants requiring them to remove the carport encroachment and timber deck encroachment. On 12 December 2001 the Respondent erected a 1.8m fence on Lot 191 just inside the boundary of Lot 191 next to the eastern boundary of Lot 179. In response Mr Austin sent a letter to the Respondent essentially stating that any support for the development by the Applicants was now very unlikely. Mr Bowers apparently contacted Mr Mahon to let him know that resolution was still possible because in par 33 of his affidavit Mr Mahon states:
- … I say I was instructed by my architect Stephen Bowers that the applicant had contacted him and agreed to withdraw his objections and he was keen to use the land and access over the Christmas period
31 The draft agreement was essentially in the same terms as the first draft agreement, (see par 19) except for cl 1(e) and cl 2. Clause 1(e) provided that Mr Austin "agrees not to object to the proposed development of Lot 191 or any other proposed development as described in DA 148, 149, 150, 151 and the proposed environmental facility on Lot 3 in DP 710419 at Scotts Head." Clause 2 provided that if Council failed to grant development consent on terms agreeable to the Respondent, then either party could terminate the agreement by written notice; in other words, there was now no specific provision for the transfer of 153.1m2 of the Respondent's land to Mr Austin to go ahead in the event the Council failed to grant development consent on terms agreeable to the Respondent (cf cl 2 of the original draft agreement: see par 19 above). Once again, the draft agreement was not signed by the parties so that no final agreement was reached.
32 It was the oral evidence of Mr Mahon that he was only interested in a land swap with the Applicants on the basis that they did not object to the development. He stated he did not need the triangular part of Lot 179 for a road, as discussed earlier in 1999 between Mr Bowers and Mr Austin as part of a land swap at that stage. He stated that although DA 2001/148 showed the adjusted boundary, this was based on the Applicants not objecting to that DA and he did not find out that there was a letter of objection (as he saw it) until after the DA and plans had been lodged. He considered he could amend the plan to reflect the true boundary any time until the Council made its decision.
Estoppel
33 Counsel for the Applicants argued that in the circumstances outlined above, where the Applicants were at the time of the intentional encroachment firmly of the belief that the Respondent was intending to transfer to them 153.1m2 of its land, which would have removed any issue concerning possible encroachment, that the Respondent was estopped by its conduct from denying that the proposed boundary adjustment was going to take place. The decision of Lloyd J in Byron Shire Council v Vaughan (No 2) (2000) 110 LGERA 424 was relied on, particularly at 431 - 433, where Lloyd J set out the principles of estoppel as follows:
(1) The fundamental principle upon which the estoppel is based is that equity is concerned to prevent unconscionable conduct…
(2) The statement upon which the estoppel is founded must be clear and unambiguous; and it must not arise from inference…
(3) The representation upon which the estoppel is founded must have been reasonably capable of influencing the representee to act as he did…
(4) The representation upon which the estoppel is founded must be such as will be reasonably understood in a particular sense by the representee…
(5) The question of unconscionability includes consideration of the reasonableness of the representee in acting on the assumed state of affairs…
Applying these principles the Applicants' counsel argued that:
(1) The Respondent's actions amounted to unconscionable conduct because that conduct caused the Applicants to consider at all relevant times that the boundary between Lot 179 and Lot 191 would be adjusted as detailed in the plans lodged with the Nambucca Shire Council. Further, the retaining wall to the north-eastern corner of Lot 179 was built by the Applicants after discussion with the Respondent's architects to accord with his wishes and in anticipation of the boundary adjustment being made. There was no suggestion by the Respondent or anyone on the Respondent's behalf that the boundary adjustment would not proceed until after the encroachment had been effected.
(2) The evidence establishes that the Applicants were induced to adopt the assumption that the boundary would be adjusted as detailed in the plans.
(3) Mr Austin acted to continue the construction of the encroaching building on the understanding that the boundary adjustment would rectify the situation.
(4) The Respondent intended Mr Austin to rely upon the representation because Mr Bowers authorised the construction of the retaining wall on the north-eastern corner of Lot 179 which reflected part of the proposed new boundary. Further, conversations as late as November 2001, after the encroachment had been made, confirmed that it was a matter of awaiting the surveyors to effect the proposed boundary realignment.
(5) Mr Austin will suffer detriment if the estoppel is not established in that he will have to demolish the encroaching element of his house or will be required to pay three times the value of the land the subject of the encroachment (s 4 of the Act).
(6) The encroachment was made at the time when the Applicants clearly believed that the boundary between Lot 179 and Lot 191 was to be adjusted and the Respondent is therefore estopped from denying the existence of those circumstances at that time.
34 I note that (2) through (6) in the Applicants' counsel's submissions do not correspond to principles (2) through (6) set out by Lloyd J in Vaughan (No 2) but rather seem to correspond with principles (2) through (6) expounded by Brennan J in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 337 at 428-9. I deal with these below at par 40.
35 The Respondent's representatives denied that there was any conduct on its part which amounted to estoppel. The Respondent submitted that to establish estoppel the Applicants must show that they relied on a representation or conduct amounting to a representation that an agreement was entered into or binding. There was no evidence of this. Furthermore, the draft agreements sent by the Respondent to the Applicants were for a larger area of land than the Applicants are claiming in these proceedings, in other words, the negotiations the Applicants rely on are irrelevant to the different circumstances now before the Court.
36 The Respondent submitted that the negotiations between the parties had commercial value to the Respondent in the Applicants not objecting to its development proposals on Lot 191. The draft agreement contained a clause to the effect that the Applicants would not object to the development. The Applicants refused to enter into an agreement on those terms, the negotiations broke down and communications ceased during 2000. At the time of the major encroachment by the carport Mr Austin knew that negotiations had broken down and that there was no final agreement. He also knew, by his own admission, that what was proposed was an encroachment, but he went ahead and built the carport anyway.
37 The Respondent submitted that at no point have the Applicants said they relied on any conduct of the Respondent in any way which led to the decision to encroach. Mr Austin instructed the builder to proceed knowing that negotiations had broken down over one year before. He did not assert in his evidence the existence of an agreement and there was no reliance on the draft agreement. Furthermore, there was no evidence that the Respondent knew that Mr Austin had taken it upon himself to encroach onto the land at the time the carport was constructed.
Conclusion on estoppel
38 I do not accept the Applicants' submissions in relation to estoppel, namely that the Respondent's behaviour amounts to an estoppel by conduct at the time the intentional encroachment was carried out by Mr Austin.
39 I further note that in Vaughan (No 2) Lloyd J considered the application of the doctrine of estoppel by applying the decision of Brennan J in Waltons Stores (Interstate) Limited v Maher at 428-9, where his Honour had set out those criteria necessary to establish equitable estoppel (which was adopted by McHugh in The Commonwealth v Verwayen (1990) 170 CLR 394 at 502). These criteria require that to rely on estoppel it is necessary for a plaintiff to prove that:
- (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
40 Applying the above factors, to the circumstances of this case:
(1) There was no legal relationship between the parties at the time of the carport's construction in May 2001, and while there may have been an expectation on the Applicants' part that a legal relationship would come into existence, both parties were free to withdraw from that expected legal relationship. Even if it could be said that the Applicants adopted an assumption that the boundary realignment would take place (which on the facts I do not think is reasonable), as will be seen under (2) there was no necessary inducement by the Respondent.
(2) There was no inducement by the Respondent to cause the Applicants to adopt any assumption or expectation. The Respondent did not actively induce the Applicants to adopt an assumption or fail to deny to the Applicants the correctness of an assumption or expectation on which the Applicants were conducting their affairs. There is no basis for the Applicants' argument that they were induced to adopt the assumption that the boundary would be adjusted as detailed in the plans. The land swap was the subject of a draft agreement between the parties as to the terms on which it would occur and on Mr Austin's own admission, negotiations had broken down between the parties over a year before the encroachment took place. The Applicants had also lodged a letter of objection with the Council, a matter which was the main basis for the Respondent, according to its evidence, being willing to reach any agreement.
(3) The Applicants have not proved that they relied on any assumption or expectation when they undertook the carport encroachment. The Applicants' letter of 23 April 2001 clearly showed that once they discovered the problem with the plans they wrote to the Respondent before encroaching in order to determine what could be done about the problem. The paragraphs of the Applicants' letter of 23 April 2002 set out at par 24 clearly demonstrate the Applicants were not relying on any assumption or expectation when they undertook the encroachment. That is, they clearly envisaged an interim solution was required before any possible agreement was finalised.
(4) The Respondent did not know at the time the carport encroachment would occur and could not be said to have intended the Applicants so to act. The Applicants sent the letter dated 23 April 2001 and proceeded after there was no reply in May 2001. The letter does not suggest to the Respondent that the Applicants were intending to build the encroachment within a certain time period if they did not hear from the Respondent, in other words, that the Applicants were intending to proceed regardless of whether a response was received.
(5) While Mr Austin's action will result in detriment to the Applicants if I order removal of the carport encroachment, because no final agreement has been able to be reached with the Respondent, that is due to his own actions. As I have found in (2) and (3) above, there was no assumption or expectation on which the Applicants could rely. Indeed in the present action the Applicants potentially benefit from their deliberate encroachment if I do not make such orders.
(6) I do not think there has been failure to act on the Respondent's part so that the Applicants' detriment, if any, is not due to the Respondent's failure to act.
41 I do not think the Applicants can rely on estoppel in these circumstances.
42 Further considerations under s 3(3) are as follows:
(a) the fact that the application is made by the adjacent owner or by the encroaching owner
43 The encroaching owners are making this application seeking to rectify the situation which has arisen as a result of their encroachment. It was submitted by the Applicants' counsel that this demonstrated their bona fides in coming to the Court.
(b) the situation and value of the subject land, and the nature and extent of the encroachment
44 To rectify the encroachments the Applicants are seeking an area of 21m2 of land to be transferred from Lot 191 to Lot 179. The encroachment is small in the circumstances given that Lot 191 is approximately 3 hectares in area. The land to be transferred from Lot 191 is land between a proposed road and the existing eastern boundary of Lot 179. On the basis of the current development applications lodged with the Council, the Applicants argue it is land that has no economic use for the Respondent and is essentially to be a reserve adjacent to the proposed road on Lot 191.
45 Both parties presented expert evidence in relation to the value of the 21m2 portion of Lot 191. Mr Cubis, the Applicants' valuer, valued the land by determining the current market value of the 21m2 portion. He compared other vacant residential land sales in the Scotts Head area to determine the current market value of the 21m2 portion. Mr Cubis determined that, on the basis of what he considered to be comparable sales, a rate of $235 per m2 should be adopted, resulting in a value of $4,935.
46 Mr Jeffrey, the Respondent’s valuer, also valued the land by determining the market value of the 21m2 portion, using comparable sales but arrived at a substantially larger figure of $557 per m2. He also included an element of special value in his valuation. Mr Jeffrey determined that a rate of $1,120 per m2 should be adopted ($557 per m2 plus a special value rate) resulting in a value of $23,500.
(c) the character of the encroaching building and the purposes for which it may be used
47 The main encroachment is the carport encroachment, the carport is part of the dwelling house on Lot 179 owned and used by the Applicants as occupants.
(d) The loss and damage which has been or will be incurred by the adjacent owner
48 The area of land sought to be transferred by the Applicants is small and is valued by the Applicants' valuer Mr Cubis at $4,935. The Applicants submitted that as the total area of the undeveloped building block on Lot 191 from which the 21m2 would be excised is 800 or more square metres, the 21m2 sought to be transferred is minimal. Furthermore, the Applicants submitted that the Respondent had proceeded at all times on the basis that the boundary between Lot 179 and Lot 191 would be adjusted.
49 The Respondent's counsel argued that if I make the orders sought by the Applicants the Respondent had lost the ability to deal with the area of land in question as it chooses. While the Respondent would not be under any obligation to sell the land to the Applicants, through its own deliberate actions the Applicants put the Respondent in the position of having to potentially transfer the land to the Applicants when it might otherwise have chosen not to do so.
50 The evidence of the valuer for the Respondent, Mr Jeffrey, was that the 21m2 portion of Lot 191 should be valued in the amount of $23,500.
(e) the loss and damage which would be incurred by the encroaching owner if the encroaching owner were required to remove the encroachment
51 As no evidence of the cost of removing the encroaching carport was provided at the hearing, leave was given to the parties to file, within seven days of the hearing, an estimate provided by the builder of the carport of the cost of removing that part of the carport which encroaches over the boundary and reinstating the structure of the carport wholly within Lot 179. The qualified estimate provided by the builder is in the amount of $25,500.
Findings
52 In Morris v Thomas (1991) 73 LGRA 164 at 168 Bignold J observed that the conduct giving rise to the encroachment is a very important consideration in the exercise of the statutory discretion conferred by s 3. His Honour adopted a decision of Gibbs J in Haddans Pty Ltd v Nesbitt (1963) 57 QJPR 21. Gibbs J stated at 22:
- An initial question of considerable importance that arises in the present case is whether the applicant was aware that the fence that it caused to be built in 1960, in fact stood on the respondents' land, for it would be a rare and exceptional case in which the court would make an order under this Act in favour of a person who, with full knowledge, encroached on his neighbour's land. The court would indeed be reluctant to set the seal of its approval on a deliberate trespass.
- In the circumstances of this case it seems to me there is considerable force in that statement.
53 While there were discussions about a possible land swap between Lot 179 and Lot 191 and a draft agreement was prepared in March 2000 to give effect to those discussions, the fact is that no agreement was reached between the Applicants and the Respondent before the carport was built in May 2001. The Applicants' contention that they at all times believed that the boundary realignment of 153.1m2 to be transferred to Lot 179 would take place appears misconceived.
54 There are factors suggesting agreement was possible such as the encroachment of the retaining wall built by the Applicants in October/November 1999 onto Lot 191 was not objected to by the Respondent and was done when Mr Bowers was aware it was being done. Further, DA 2001/148 (lodged December 2000), and DA 2001/149, DA 2001/150 and DA 2001/151 included plans which showed the boundary realignment between Lots 179 and 191 when lodged with the Nambucca Shire Council. Nevertheless, at the time that the intentional encroachment of the carport took place in May 2001 there had been no communication from the Respondent or its solicitor for over a year and no final agreement signed by both parties. The last occasion there was contact between the parties' solicitors no agreement was reached. Although the Applicants wrote to the Respondent before proceeding with the encroachment of the carport, when they received no reply they still continued with that encroachment.
55 Mr Austin agreed in cross-examination that negotiations had broken down over a year (about April 2000) before he wrote to the Respondent in April 2001 about the need to encroach onto the Respondent's land when building the carport extension. Furthermore, the terms of the draft agreement are clear that part of the consideration the Respondent was seeking from the Applicants was an agreement not to object to development on Lot 191. As I have already found, the Applicants did make an objection to the Council in their letter dated 26 February 2001, well before the carport construction in April 2001, making an agreement even less likely. Although Mr Austin maintains that he did not object, that the Applicants' letter simply raised issues they thought the Council should consider, I think a prudent approach would have suggested that the Respondent was less likely to enter into an agreement in relation to the boundary once that letter had been sent.
56 It appears likely that Mr Austin was hopeful that an agreement could be reached with the Respondent in relation to boundary realignment when he proceeded with the encroachment. However, it appears somewhat reckless in the circumstances that he knowingly encroached on his neighbour’s land in the absence of a clear written agreement and in doing so was in breach of the development consent from the Council. It is difficult to see the Applicants' actions as anything other than a deliberate and intentional encroachment in circumstances where Mr Austin had no certainty that agreement would be reached with the Respondent.
57 I have already found that estoppel does not arise in these circumstances and there is no other circumstance which renders this conduct reasonable in my view. The parties have ultimately failed to reach agreement on two occasions about a boundary realignment, before and after the carport construction. Despite the Applicants' evidence that as late as November 2001 (after the main encroachment took place) the Respondent was discussing the possibility of a boundary realignment and this was effected on the plans submitted with the DA, the fact is no agreement has been reached between the parties.
58 In my view it is appropriate that I order under s 3(2)(c) that the encroachment in relation to the carport be removed. While I note that this will be at a reasonably large cost to the Applicants I do not think the appropriateness of this course of action is outweighed by the circumstances of the intentional encroachment before me in this matter.
59 The other matters I may consider under s 3(a) - (e) of the Act, as set out above, do not convince me that I should take another approach. I note that the Applicants have approached the Court for orders and the building is one used, presumably on a regular basis, by the Applicants. There will be inconvenience and cost to the Applicants in removing the carport encroachment. While the area of land is small and the loss or damage to the Respondent is not large, nevertheless the Applicants deliberately encroached onto the Respondent's land in circumstances I have already set out above.
60 It is useful to consider what amount of compensation I would have been likely to award in relation to the 21m2 area in comparison to the costs of removing the encroachment. The parties filed valuers reports which differ in the amount of compensation payable, referred to at par 45 and 46.
61 The Respondent submitted that if the midpoint between Jeffrey’s value of $1,120 per m2 and Cubis’s value of $235 per m2 is taken a value of $660 per m2 is obtained, which results in a value of $13,860 for the 21m2 area. However, as the encroachment was intentional, the minimum compensation under s 4(1) is three times that amount, resulting in a figure of $41,580. This is significantly greater than the estimate of $25,500 for the removal of the encroachment. The Respondent argued that even if the value per m2 Mr Jeffrey applied without including the figure for special value is used (which the Respondent submits should be included), the minimum compensation would be $39,375 on the Respondent’s calculations. The Respondent therefore submits that it is cheaper to remove the encroachment than pay the compensation.
62 Applying s 4(1), given that the encroachment was intentional, compensation should be three times the land value, that is $14,805 on the Applicants' expert's figures (3 x $4,935) and $70,500 (3 x $23,500) on the Respondent's expert's figures. Had I awarded compensation in this matter I would have been likely to award the value of the 21m2 at $11,697 being the value of $557 per m2 calculated by valuer Jeffrey without the rate of special value. Applying s 4(1) this would have meant a compensation payment of $35,091 (3 x $11,697) as the encroachment was intentional. The cost of removing the carport encroachment is likely to be less than this sum on the evidence presented to the Court.
63 It is relevant to note that I have broad powers under s 3(2) of the Act to deal with encroachments. For example, it would be possible to order that there be a boundary adjustment which altered the boundary of Lots 179 and 191 so that only the area of actual encroachment was transferred from Lot 191 to Lot 179. This would lead to an irregularly shaped boundary between the two properties at this location and is no doubt why the Applicants are seeking the 21m2 as this encompasses the carport and step encroachments and leads to a "clean" boundary line between the two lots.
64 Neither party urged this approach on the Court, rather I raised this as an issue and the Applicants' counsel made the following written submission in relation to it. The Applicants submitted that the minimum area required to remove the carport encroachments is 6m x 0.96m (5.76m2). Taking the average of Mr Jeffrey’s land value per m2 without special value included ($557) and Mr Cubis’ value ($235) an average valuation of $396 per m2 results. The minimum compensation would therefore be $2,280.96 or $6,842.88 if three times the minimum compensation were awarded. However, the Applicants suggested that if Mr Cubis' value was applied to the 5.76m2 area the minimum compensation would be $1,353.60, or $4,060.80 if three times the compensation were awarded, in the event I ordered the transfer of only 5.76m2 of Lot 191 to Lot 179. I am inclined not to adopt this approach because neither party urged this course, it would lead to an irregular boundary line between the parties and in light of the circumstances outlined at par 10 - 32.
65 I had intended to make no order in relation to the steps (a) and the retaining wall (c) referred to in par 7, and no specific order was sought by the Respondent in relation to these in the event that I did not agree to the transfer of the 21m2 sought by the Applicants. Now that I am writing this judgment I am concerned that if I make no order in relation to these encroachments, unresolved issues remain for any future owners of these properties. I am not inclined to order demolition of these encroachments and will give the parties the opportunity to reconsider if no order in relation to these encroachments is appropriate given my views on the carport encroachment. I have also not heard submissions from the parties in relation to time for compliance with an order for the removal of the carport encroachment. I consider there should be opportunity for the parties to address me on the terms of any final orders. I will not therefore make final orders at this stage, but relist the matter to enable the parties to prepare short minutes of order, or short submissions if appropriate, for the Court's consideration.
0
4
1