Epl Corporation Pty Ltd v Diamond 6 Pty Ltd
[2024] VCC 168
•28 February 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. Cl-22-05084
| EPL CORPORATION PTY LTD (ACN 150 453 044) | Plaintiff |
| v | |
| DIAMOND 6 PTY LTD (ACN 119 391 338) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14-15, 19 February 2024 | |
DATE OF JUDGMENT: | 28 February 2024 | |
CASE MAY BE CITED AS: | EPL Corporation Pty Ltd v Diamond 6 Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 168 | |
REASONS FOR JUDGMENT
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Subject:TRESPASS BY BUILDING ENCROACHMENT
Catchwords: Adjacent allotments of land – Encroachment by way of concrete lip protruding from boundary wall on one allotment into other adjacent allotment – Wall and building constructed by predecessor in title of defendant – Encroachment constitutes a trespass to plaintiff’s land continued or adopted by defendant by reason of its refusal to remove encroachment when requested to do so – Damages for delay to completion of warehouse development on plaintiff’s land
Legislation Cited: Limitation of Actions Act 1958 (Vic); Encroachment of Buildings Act 1922 (NSW)
Cases Cited:Bottos v CityLink Melbourne Ltd [2021] VSC 585; Bottos v CityLink Melbourne Ltd [2022] VSCA 266; TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333; TEC Desert Pty Ltd & Anor v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576; Hampton v BHP Billiton Minerals Pty Ltd [No 2] [2012] WASC 285; Public Transport Commission (NSW) v Perry (1977) 137 CLR 107; Nickells v Melbourne Corporation (1938) 59 CLR 219; Sedleigh-Denfield v O’Callaghan [1940] AC 880; Billiet v The Commercial Bank of Australasia Limited [1906] SALR 193; Luben Petkovski v Kai Yin Huang [2018] NSWSC 1667; Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR 311; [2007] VSCA 311; XR Property Developments Pty Ltd v Denning Real Estate Pty Ltd [2015] NSWSC 1937; Boed Pty Ltd v Seymour (1989) 15 NSWLR 715; McIntosh v Morris [2021] NSWCA 225; Lakes Edge Developments Ltd v Kawarau Village Holdings Ltd [2017] 3 NZLR 336; Lord v McMahon [2015] NSWSC 1619
Judgment: 1. Within 14 days the parties must bring in short minutes to give effect to these reasons.
2. Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr K Mihaly | Moray & Agnew Lawyers |
| For the Defendant | Mr K Kappadath | BTT Lawyers Pty Ltd |
HIS HONOUR:
Background
1The plaintiff, EPL Corporation Pty Ltd (“EPL”), a company based in New South Wales, became registered proprietor of land known as No 14-22 Venture Drive, Sunshine West, on 3 May 2012. At that time, and for a further decade, this land was vacant and under grass (Court Book (“CB”) 45, paragraph 6.1). Immediately to the north of No 22 is a parcel of land known as No 30 Venture Drive. The defendant, Diamond 6 Pty Ltd (“Diamond 6”), became the registered proprietor of No 30 as from 21 November 2012 (CB 343). At the time of Diamond 6’s acquisition of No 30, a warehouse building stood on this allotment, constructed at some time prior to 30 March 2008 (Statement of Agreed Facts, [7]). This warehouse, constructed with concrete panels, it may be inferred was built by one of Diamond 6’s predecessors in title or perhaps an independent contractor to that predecessor in title. The southern wall of the warehouse at No 30 was built to the title boundary. The footings of that wall had been overpoured with concrete at the time of construction. The effect was that a “lip” of concrete protruded from the base of the wall at No 30 into No 22. This phenomenon is depicted in photographs at CB 337-338. A plan prepared by surveyors Hellier McFarland as at February 2022 depicts the “lip” or encroachment.
2By a contract dated 29 April 2021, Caatom Pty Ltd (“Caatom”) agreed with builder Ark Industrial Pty Ltd (“Ark”) for the construction of four warehouses on the property at 14-22 Venture Drive (CB 120). By an instrument dated 9 December 2021, the plaintiff EPL appointed Caatom Pty Ltd “to act on its behalf to arrange the construction of approved buildings on the land EPL owns at Venture Drive, Sunshine West, Victoria” (CB 154). It may be inferred that this instrument was an ex post facto ratification of an agreement previously entered into without written evidence. The effect seems to be that Caatom entered into the building contract as trustee for the plaintiff EPL. A subcontractor to Ark, Matrix Engineering Group, which was providing structural engineering services relative to the construction at 14-22, sent an email to project manager at Ark Mr Brett Worsfold, on 5 April 2022, stating:
“A site inspection was conducted to view the encroachment of the neighbouring footing from the north into the property of 14-22 Venture Dr. The encroachment varies between 200 to 600mm along the full length of the wall on boundary. This will affect the proposed new footings along this area. Due to the sufficient over-pour of concrete these footing will require to be trim back to property line. This should be the responsibility of the neighbour to conduct these works. Attached are photos taken at the time of inspection.” (CB 161)
3Mr Sam McCann, another Ark executive, sent an email to EPL’s general manager, Mr Jason Taylforth, dated 12 April 2022, copying an email to the neighbour, viz Diamond 6, and seeking instructions as to “how to proceed with this warehouse” (CB 162).
4On 28 April 2022, Mr McCann sent a further email to Mr Taylforth, headed “RE: 30 Venture Drive Sunshine West”, stating, inter alia:
“I had a phone conversation with a gentleman today who is a representative of the neighbour. His attitude to start with was horrible – his suggestion was that if the neighbour had to pay anything then to stop the conversation and go legal. He believes because they did not build the building it is not his responsibility – in his words “it’s costing you guys money with this issue holding you up so why don’t you pay the costs of the rectification”.” (CB 171)
5On 10 May 2022, in a further email, Mr Worsfold sent Mr Taylforth of EPL a “Notice of Delay” under the terms of the building contract. The notice described a period of delay commencing 6 May 2022. In his email, Mr Worsfold said:
“While this matter is still being dealt with, we will continue with building warehouse & offices (2-4).”
6The warehouse abutting No 30 was designated as “Warehouse 1”.
7The person in effective control of Diamond 6 was and is Mr Ijaz Ahmad Rana, who describes his position at Diamond 6 as “general manager” in control of operations, and said he was formerly a director of Diamond 6, the current director being his wife (Transcript (“T”) 119, Line/s (“L”) 1−15). According to Mr Rana, his wife “doesn’t do any work or any operations” (Ibid, L13−15). Mr Rana gave evidence by electronic link from Pakistan. He was in poor health, and has been suffering from a brain tumour (T118, L3-7).
8Mr Rana had sent an email to Mr McCann of Ark on 13 February 2022 as follows:
“Hi Sam,
As per your email what I have understood that your construction work may damage our property due to the footing done by the builders and the old owners who built it. Given the scenarios, I will not be liable to accept any damages caused by the constructions you sought to and would assume the liable party would be who are doing the constructions now. I am happy to help in any way other than incurring expenses and compromising the safety of my property. I request you to contact council and relevant authorities to come about a solution and inform me as necessary. I am also willing to assist if a certified engineer provide assurance that your cutting work will not be affecting the building ’s safety and structure I may be able to agree to that. As I am looking forward to move further with you, please communicate with me or my accountant emailed here in my absence on this matter as I will be on overseas trip soon.
Regards,
Ijaz Rana” (CB 160)
9Following the service of the “notice of delay”, Mr Taylforth, who was and is the general manager of both the plaintiff EPL and Caatom (T33, L3-5), sent an email dated 11 May 2022 to Mr Worsfold of Ark, stating inter alia:
“This delay is unfortunate and completely out of our hands (not of our doing).
...
We would be grateful if other works can be progressed as much as possible in the meantime and related costs of this delay kept to a minimum.” (CB 176)
10Mr Worsfold responded in an email later the same day, stating inter alia:
“We are fully focused on continuing with the other three warehouses until the matter is resolved.
We started lifting panels to warehouse 2 yesterday and continued today currently we have 60 panels erected already.” (CB 178)
11Mr Taylforth sent a lengthy email dated 12 May 2022 to a Mr Shah, EPL’s accountant. The email was copied to Mr Rana (CB 180; T93, L12-13). It seems at this point that Mr Taylforth had reason to believe that Diamond 6 would deal with the encroachment issue itself. In the email he said:
“There are fundamentally two tasks required to be completed to resolve the outstanding issue:
1. Certified Engineer to complete a report regarding work to be done and impact (if any) of such work on the structure of 30 Venture Drive; and
2. Concrete cutter to do the work, i.e. cut back the footings and remove same from site.
You expressed a desire to have these tasks completed and asked that we assist with recommending you a suitable engineer, and quote, for the work required to ensure the concrete cutting is carried out without any damage to the structure of 30 Venture Drive.
...
This needs to be done as early as possible next week (week starting 16 May).
We are hopeful that from today the situation can be resolved quickly as it is now a matter of urgency.” (CB 180-181)
12Mr Taylforth said that he came to be corresponding and speaking with accountant Mr Shah because “when we attempted to communicate, we didn’t get an answer from the other party [Mr Rana] or we were given names...of other people to contact” (T95, L12-15). Mr McCann of Ark told Mr Taylforth that he recommended obtaining advice from Mr Ray Buttigieg of Matrix Engineering. He copied this email to Mr Shah and Mr Rana (CB 184). Mr Taylforth sent an email to Mr McCann and to Diamond 6’s accountant, stating inter alia:
“Shah – over to you now. If you can please contact Ray (if you haven’t already) and progress to the next stage, i.e. obtain a quote from Ray for the work he will be required to do with a view to engaging the chosen Engineer immediately so that the required assessment/work can be completed by tomorrow (Friday 13 May) at the latest.” (CB 185)
13Mr Taylforth followed this matter up with two emails: the first on the morning of 13 May 2022, and the second on the afternoon (CB 186-7). The accountant, correctly titled Mr Shah Rahman, responded at 5.06pm on 13 May, stating:
“I have spoken to Ijaz earlier today for his instructions on this, he informed his representative from another construction firm Mr. Jag will be calling or communicating with you for further. You may call him on...” (CB 188)
14Mr Taylforth had a telephone conversation with a building contractor apparently acting for Diamond 6 who was presumably “Mr Jag”. His email address was [email protected]. Mr Taylforth followed this up with an email at 2.54pm on that day. Mr Taylforth sought to review matters, noting that the builder had pointed out to him that Diamond 6 had purchased No 30 “as an existing building and wasn’t aware of the encroachment”. He continued:
“You also mentioned that whilst the owner [Diamond 6] is willing to cooperate by signing off on anything that may be required in order for the footings to be removed from our property he is not willing to pay a cent for this to be done.” (CB 190)
15By email dated 23 May 2022, Ark issued a further notice of delay (CB 192-193).
16Mr Taylforth said that by June he concluded that in the circumstances EPL would have to take matters into its own hands and itself attend to the removal of the encroachment (T43, L14-17). He said it was necessary at this time to obtain legal advice from EPL’s solicitors (who represent EPL in this proceeding), Moray & Agnew (T43, L23 – T44, L22). EPL also engaged the structural engineer Mr Ray Buttigieg of the firm Matrix, of which Mr Buttigieg is general manager (T44, L23-25). Matrix had been retained as a subcontractor to Ark for the structural engineering elements of the construction project being carried out for EPL (T103, L28-30).
17Matrix furnished a report to EPL styled “Structural Engineering Report – Encroach neighbouring footing 14-22 Venture Dr, Sunshine West” (CB 207-213). The report contained a number of photographs of what I have earlier described as a “lip” projecting from the footings below the southern boundary wall of Diamond 6’s warehouse at No 30. The report stated:
“The encroachment of the footing from 40 Venture drive [sic, scil No 30], is believed to be an over-pour into the neigbouring property at time of construction. The excess concrete is therefore non-structural for the design performance of the building and redundant to the building structural performance. The encroachment to this area of the neigbouring footing interferes with the proposed new buildings at 14-22 Venture Dr, Sunshine West. The adjacent neighbouring footing will require to be trim back to the line of the site boundary...Notification of works must be brought to the attention of the affecting [sic] neighbour before works commence.” (CB 212)
18According to the report, the encroachment should be exposed and clearly marked: “These works should be conducted by a licensed surveyor”. According to Matrix:
“If any reinforcement from the neighbouring footing is exposed, this section will require to be treated with an appropriate protective membrane”. (CB 212)
19Moray & Agnew wrote a letter dated 4 July 2022 delivered by email to “Zarqa Rana and Ijaz Rana” (presumably Mr Rana’s wife, then the director of Diamond 6, and Mr Rana), stating inter alia:
“It appears that you are not interested in taking responsibility for the Encroachment or engaging with our client about it. Accordingly, in view of the mounting delay costs (as discussed in Our [earlier] Letter ...), our client has been left with no option other than to undertake the rectification work to remove the Encroachment itself.
...
Ark, our client’s builder, recently advised that the delay costs are now $85,472 plus GST. In addition to this, our client will need to pay Matrix for its services, estimated at $3,200 plus GST. Additional cost will be incurred with the concrete contractor, surveyor as well as Ark. On top of this are legal costs, additional rental associated with the construction and lost revenue caused by delays in finishing the development.” (CB 214)
20The letter said that EPL’s:
“best estimate of the losses that it will incur as a result of the Encroachment is around $150,000 plus GST. This figure continues to increase.” (CB 215)
21The letter concluded by stating:
“Our client’s rights are expressly reserved.” (Ibid)
22Matrix rendered an account for its investigations and report in the sum of $3,520 inclusive of Goods and Services Tax (CB 216). All Round Concrete Cutting Pty Ltd were retained to cut and remove the encroachments or “lip”. It rendered an invoice to Caatom Pty Ltd in the sum of $24,807.20 for its services (CB 217; T45 L1‑3). The work itself took place in the period 20-25 July 2022 (T47, L21-22). In accordance with the advice from Matrix a licensed surveyor was also retained, namely Hellier McFarland, which rendered a bill for its services to Caatom in the sum of $715 inclusive of GST (CB 220).
23With the encroachments removed, Ark issued a head contract variation dated 27 July 2022. Under “Scope of Work” the variation stated:
“Warehouse 1 construction delay due to encroachment of footing of neighbouring building at 30 Venture Drive.
Total delay days - 57 working days
Delay start date: 06/05/2022
Delay end date: 26/07/2022
Construction programme delay – 29 Days” (CB 222)
24Under the heading “Cost Break-Up” there appeared an additional charge of $77,930.50 exclusive of Goods and Services Tax. This consisted of the following items:
“Preliminaries $37,700.00
Overheads $8,491.20
Cost of WH1 panels storage $22,230.00
Additional cost for crane hire to lift steel for WH1 $1,200.00
Separate delivery of WH1 roof sheets $990.00
Additional cost of crane hire to lift roof sheets $1,000.00
Safety hand rail hire for WH1 roofing $770.00
Access tower hire for WH1 roofing $2,200.00
Roofing material cost increase due to delay $1,349.30
Hire 5t excavator & operator to assist concrete cutters
to excavate near footing for 2 days $2,000.00” (CB 218)
25According to Mr Worsfold of Ark, construction of Warehouse 1 “didn’t finish until late October. So there was a 29-day difference.” (T109, L19-20) He said as to preliminaries that the head contract gave a figure of $1,300 a day for preliminaries (T110, L5-6). The amount charged was calculated on a 29-day delay (Ibid, L9-11). He said overheads were also calculated by reference to a 29-day delay (Ibid, L17-18). As to the other items, he said they were necessitated by the need to recall to site contractors and machinery which could have dealt with Warehouse 1 at the same time as they dealt with the development as a whole, and therefore attracted additional charges for additional visits to site (T110-113). Additional charges for roofing materials were incurred because of a price increase during the period of delay (T113, L21-27). He said there was also a charge for a 5‑tonne excavator which was engaged to assist in the concrete-cutting process (T113, L31 — T114, L18).
26Caatom, as the party managing the construction project, rendered a tax invoice for these various amounts in the sum of $114,765.75 inclusive of GST (CB 240). I was taken to various “payment submissions” apparently forming part of the books of account of the EPL group of companies, indicating payment to the external parties of the various amounts rendered.
27Moray & Agnew wrote a letter to Mr and Mrs Rana of Diamond 6 demanding payment of $134,547.70, being the total of the various amounts said to have been charged by Matrix, Hellier McFarland, All Round Concrete Cutting and Ark Industrial relative to the removal of the encroachments, and including charges of $13,431 said to be “[a]dditional rent over delay period”, and $14,144 said to be “[l]ost revenue over delay period” (CB 233). Moray & Agnew rendered a bill to EPL for professional costs and disbursements for $5,063.85 exclusive of GST relative to the various advices, correspondence, and research (CB 200-201).
28Mr Taylforth described how Warehouse 1 (that is, the warehouse immediately abutting No 30 – the defendant’s warehouse) was offered for lease and let to a tenant, Pro Sports Group Pty Ltd, by Caatom Pty Ltd for a period of three years commencing 14 July 2023 (CB 315-336).
This proceeding
29Solicitors acting for EPL (Moray & Agnew) commenced this proceeding by writ dated 30 November 2022.
Statement of claim
30By its further amended statement of claim dated 3 October 2023, EPL alleged the various matters as to title referred to in the foregoing narrative. It said that:
“Since at least about 2012 and up until their removal by or on behalf of the plaintiff in or about July 2022, the concrete poured with the footings from the defendant’s building [No 30 Venture Drive] had wrongfully encroached onto the plaintiff’s property [No 22].” (FASOC [5])
31It said that the encroachments were owned by Diamond 6 by virtue of its ownership of the warehouse at No 30. It said that Diamond 6 had (a) used the encroachments, (b) exerted force upon the encroachments, (c) exerted force on EPL’s property, and (d) used part of EPL’s property by reason of Diamond 6’s use of its warehouse at No 30. These matters were said to constitute a continuing trespass on EPL’s property or alternatively a nuisance.
32The further amended statement of claim then narrated the dealings between plaintiff and defendant described above, including the demands on behalf of EPL that the encroachments be removed by Diamond 6.
33EPL sought damages particularised at $139,705.05 following generally the scheme and calculations in Moray & Agnew’s letter of demand. EPL sought damages, statutory interest, costs, and further or other relief.
Defence
34In its defence to the plaintiff’s further amended statement of claim, Diamond 6 admitted the various title allegations to be found in the statement of claim, including the allegation that EPL “is and at all material times was the registered proprietor entitled to and in legal possession of [No 22]”.
35Diamond 6 denied the allegation that since 2012 footings from its building “had wrongfully encroached onto” EPL’s property. It denied that it owned the encroachments as alleged in the statement of claim, or that it had used those encroachments as alleged by EPL. It also denied any trespass or continuing trespass, alleging that Diamond 6 became the registered proprietor or No 30 on or about 3 May 2012 after the warehouse erected on that property had been erected and completed, and after any of the relevant concrete had been poured. Accordingly, it was said, Diamond 6 “has neither intentionally nor carelessly done or caused to be done anything to cause the encroachment.” It generally denied the narrative of the dealings between the parties alleged in the statement of claim.
Conclusions
Bottos’s case
36In final submissions, both counsel – Mr Mihaly for the plaintiff, and Mr Kappadath for the defendant Diamond 6 – referred to a decision of Gorton J, Bottos v CityLink Melbourne Ltd [2021] VSC 585 (Bottos’s case), and on appeal the Court of Appeal, Beach, Sifris JJA and J Forrest AJA, [2022] VSCA 266. This case concerned rights and liabilities arising out of an overpour or “spill” of concrete in the course of construction of a sound barrier along the boundary of the land of the Bottos brothers, who were plaintiffs and appellants before Gorton J and the Court of Appeal. The resemblance to the present case is clear enough. Having a decision of the trial division and the Court of Appeal on these facts provides invaluable guidance to me in determining the present dispute. As Mr Kappadath was at pains to point out, and Mr Mihaly conceded, Bottos’s case is crucially different from the present. It was accepted for the purposes of the determination at first instance and on appeal that the “spillage” of concrete which created the encroachment could be attributed to CityLink. CityLink was unable to say that the spillage was made by a predecessor in title or an independent contractor of a predecessor in title, as would appear to be the case in this instance.
37At first instance, the “catchwords” on the face page of the decision of Gorton J refer to the spillage as being a “[s]ubterranean incursion”. This might be regarded as a further distinction from the present case, where in my understanding the encroachment was at least partly visible above ground. His Honour awarded damages to the Bottos brothers. He said:
“The presence of the underground spillage on the Bottos brothers’ land was a trespass. The Bottos brothers are entitled to compensation for the ‘natural and probable consequences’ of that trespass.” ([2021] VSC 585 [120])
38His Honour referred to a decision of the New South Wales Court of Appeal, TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333, 353 [103] per Spigelman CJ. The damages which his Honour awarded pertained, as the damages claim in this case do, to additional charges said to have been generated by disruption to a planned development on the Bottos brothers’ land. His Honour continued:
“...once it is accepted that it is natural and probable that a trespass consisting of an encroachment of a physical nature into an area of land that another person is intending to develop will interfere with that development, including by requiring design responses and causing delays ...it is natural and probable that once a development is affected by the need to prepare design responses and delays, associated problems with having to engage different contractors and the like may develop.” ([2021] VSC 585 [121])
39His Honour, following an analysis of the evidence, determined to award the brothers damages in the sum of $69,035. The contention that the overpouring constituted a trespass by CityLink as against the brothers does not seriously seem to have been in dispute. The main area of contention related to the issue of adverse possession. CityLink contended, by reference to the Limitation of Actions Act 1958, that it had become entitled to ownership of the area occupied by the spillage, which therefore ceased to be land in the ownership of the brothers, and their application for an order requiring CityLink to remove the spillage was dismissed. The brothers appealed to the Court of Appeal. The noise wall, and hence the spillage, dated from 1999. The relevant proceeding was commenced in 2022. The appeal was dismissed. No reliance has been placed by the defendant here on the Limitation of Actions Act. It follows that the Bottos case is of far less significance to the outcome of this proceeding than on the face of it it would appear to be.
Fixture or chattel
40One issue upon which reliance was placed by EPL was in support of its contention that the encroachments were to be regarded as a chattel. In his closing submissions, at paragraphs 38 and 39, Mr Mihaly referred to the well-known authorities and principles to the effect that consideration of whether an object in some way affixed to land is to be regarded as a fixture or a chattel requires a consideration of the degree of annexation and the object of annexation, referring to TEC Desert Pty Ltd & Anor v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576, [24]. As to the question of the ownership of the encroachment, Mr Mihaly contended:
“The Encroachment was overpoured concrete. It was not needed for the structural integrity of the No. 30 Building. In such circumstances, it was to be inferred that its presence was accidental. The effect of such an accident is that it was not poured with the intent for it to remain for the benefit of the pourer and would be removed if required. As a result, Encroachment lacked all object of annexation, such that at no time did the Encroachment become a fixture of No. 22.” (Plaintiff’s Closing Submissions, [45])
41Mr Mihaly relied on paragraphs [47] and [48] of the judgment of Gorton J in the Bottos case in support of this proposition. These paragraphs state as follows:
“The situation with the spillage is different. This was a large extrusion of concrete that spilled out some further distance into the Bottos brothers’ land, again underground, when the concrete foundations were being laid. This seems to have happened at only one of the 11 posts supporting that part of the noise wall that ran along the boundary. It was not an encroachment that was needed to support the noise wall. I infer that it was an accidental extrusion.
In these circumstances, I do not consider that CityLink took possession of the space occupied by the spillage insofar as the concept of possession is understood for the purposes of the Limitations Act. This accidental extrusion, unlike the intended permanent underground foundations necessary to support the fence, did not unequivocally carry with it the necessary intention to exclude others from the space it occupied. It was not an act claiming or assuming ownership of the land occupied. It was not laid with the intention that it remain there for the benefit of CityLink. Rather, the extrusion of the spillage was consistent with an intention to occupy that part of the land until it was needed by the true owner (at which time it would be removed), rather than an intention to possess that part of the land and thereafter to exclude all others. It was laid by mistake, and I am not prepared to conclude that there was any intention attributable to CityLink other than to remove it, if asked, as in fact (and quite properly) occurred. The extrusion was at best equivocal, and where the entry is equivocal in the sense that it does not by itself betoken an intention to claim the land, there must be some other evidence to establish the necessary intent.” ([2021] VSC 585 [47]-[48])
42Mr Kappadath, in submissions in reply, accurately pointed out that in the quoted passages, his Honour was dealing with the question of intention to possess or intention to exclude relative to the issue of adverse possession. He was not dealing with the question as to whether the “spillage” in Bottos’s case was a fixture or a chattel.
43The obvious interpretation, perhaps placing more emphasis upon degree of annexation rather than object, is that the encroachment was a fixture to the structure at No 30 as was contended by Mr Kappadath.
44An analogy which occurred to me is the not-untypical instance of encroachment where a building on a defendant’s allotment has eaves which protrude over the boundary into the airspace of the plaintiff’s allotment. Plainly the eaves are fixtures of the defendant’s land because they form part of the structure principally or almost solely located on the defendant’s land. This would not be altered by the fact that the intrusion was accidental or that the eaves could be “trimmed back” without affecting their efficient operation as such for the defendant’s structure.
45One of the ways in which Mr Mihaly put EPL’s case is that the encroachments constitute chattel on or under EPL’s land, title to which chattels is vested in Diamond 6. He accepted that this was analogous analytically to a situation where a defendant owned a derelict motor vehicle which it had left on the plaintiff’s property.
46In so far as this contention treats the encroachment or encroachments as chattel, I reject it.
47Mr Mihaly said, as a “fallback”, that if his contention that the encroachment or encroachments should be regarded as a chattel or chattels failed, and it would be regarded as a fixture, it was nevertheless “used” by Diamond 6 on No 22, the property of EPL, and without EPL’s permission. This, he said, would constitute trespass (Plaintiff’s Closing Submissions, [58]).
Trespass
48As to the elements of the tort of trespass, Mr Mihaly referred to and relied on passages from the judgment of Edelman J sitting as a judge of the Supreme Court of Western Australia in Hampton v BHP Billiton Minerals Pty Ltd [No 2] [2012] WASC 285. In a relatively elaborate proceeding, his Honour had to deal inter alia with a counterclaim seeking mesne profits for trespass to land. At [272] his Honour said:
“Pollock and Wright explained that the common law founded an action of trespass ‘for a wrong done to existing legal possession [ie occupation]’. In contrast, those wrongs merely ‘affecting the right to possess are remediable by other forms of action, mainly Ejectment ... as to land, and Trover ... as to personal chattels’.” ([2012] WASC 285, [272])
49In the previous paragraph, his Honour said:
“A claim for trespass, based upon a physical interference with land or goods, has always required a claimant to show occupation of the land or goods prior to the trespass. It is not sufficient that the claimant has merely a right to possess and complains of the interference with that right. The tort of trespass requires something else, variously described as ‘actual possession’, ‘legal possession’ or ‘factual possession’ or occupation.” (Ibid, [271])
50In a general sense, the finding of trespass by Gorton J at trial in Bottos’s case supports the view that the existence of the encroachment here in analogous circumstances – that is, created by accidental overpouring which it is reasonable to infer was the cause of the “lip” in question – was trespassory. The question is, by whom? As at the time prior to Diamond 6’s acquisition of No 30, the trespass could be regarded as having been committed by the predecessor in title perhaps, or certainly its contractor who created the overpour. Mr Kappadath said:
“As with all torts, there is no liability if there is no voluntary act on the part of the defendant, such that a person thrown onto the land by a third party is not liable in trespass. This view was endorsed by Gibbs J as a principle which has been ‘established for centuries’ in Public Transport Commission of NSW v Perry [(1977) 137 CLR 107, 132].” (Defendant’s Closing Submission, Page 3)
51However, as Mr Mihaly correctly observed, negligence may form the basis for liability in trespass where the alleged trespasser does not directly intend to commit a trespass: Nickells v Melbourne Corporation (1938) 59 CLR 219, 225, where his Honour said:
“Just as in trespass to the person and in trespass to goods it has come to be the law that an unintentional injury to or interference with another’s person or property on the part of the user of a highway is not actionable in the absence of negligence...”.
52It is reasonable to infer that the “overpour” which occurred here in the construction of the southern boundary wall of No 30 would not have occurred had the party involved in the construction used reasonable care. Again, to the extent lack of care or “negligence” requires the existence of a duty of care, it would be reasonable to suppose that a person, whether he be owner or contractor, carrying out building operations on the boundary of his land or the land of his principal would owe a duty of care to the owner or occupier of the adjacent land to take reasonable care. The question here, however, is whether the carelessness or negligence which I have described can be carried over so as to impose liability on a successor in title coming on the scene only years later.
53It follows from what I have said that the original “overpour” constituted a trespass. That trespass was a continuing one, in the sense that until the encroachments were removed by EPL’s contractor they persisted as intrusions onto what had become its land. The crucial question is whether Diamond 6 as successor in title and owner of the structure of which the encroachments were part can be liable for “continuing” the trespass by mere inaction as distinct from the taking of some positive step. In the law of nuisance there is a well-established doctrine whereby an occupier of land may be held liable for a nuisance on his or her land created by a predecessor in title if the successor defendant can be said to have “adopted” the nuisance: Clerk & Lindsell on Torts (24th edition) [19-39] Sedleigh-Denfield v O’Callaghan [1940] AC 880, 897. Mr Mihaly contended that a similar doctrine operates relative to continuing trespasses. He conceded, however, that the law was less clear, and the doctrine less well established, relative to trespass.
54In Billiet v The Commercial Bank of Australasia Limited [1906] SALR 193 (Billiet’s case), a decision of Way CJ, the Court considered a claim alleging an encroachment on the plaintiff’s property by a building owned by the defendant bank. The allegation was that part of the structure of the bank’s building known as the Cyclorama intruded upon the title boundary of the defendant’s building known as the Coffee Palace. The title history of the area was somewhat complex. Ultimately, however, the entire site had been owned and controlled by Mr McLean, under whose stewardship and control the offending Cyclorama building was erected. The Chief Justice dismissed the plaintiff’s claim based on an alleged continuing trespass because the construction of the Cyclorama on behalf of Mr McLean could not be trespassory because he owned and occupied the Coffee Palace. The Chief Justice said:
“It is not sufficient to shew that if the defendant Bank itself made the encroachments it would have been liable. It must be shewn that when the encroachments were erected the erection was a wrong. ...In short, for a continuing trespass there must be an original trespass.” ([1906] SALR 193, 201)
55In Luben Petkovski v Kai Yin Huang [2018] NSWSC 1667 (Petkovski’s case) a complex proceeding raising, amongst other things, a claim for trespass to land relative to a sewer pipe installed in 2011, Slattery J said:
“The relevant principles may be shortly stated. An action for trespass to land will lie where there is an “unjustified entry directly by a person on land in the possession of another, which is carried out either intentionally or negligently”, even though there is no damage caused thereby: Halsbury’s Laws of Australia at [415-480]. Trespass to land includes the physical intrusion onto land by tangible objects: see Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR 311; [2007] VSCA 311. It is well-established that the tort of trespass is actionable per se, that is, without evidence of actual damage.
It is clear that there was no trespass at the time when the 2011 sewer pipe was constructed and installed. The 2011 sewer pipe was placed on Lot 2 (No. 55) before the Land was subdivided, when Pangani owned the entire property. If one owns both Redacre and Whiteacre and constructs work on Redacre which encroaches on the boundary of Whiteacre, there is no trespass: see XR Property Developments Pty Ltd v Denning Real Estate Pty Ltd [2015] NSWSC 1937 at [18]-[19] per Young AJA, referring there to Billiet v The Commercial Bank of Australasia Limited [1906] SALR 193 (see at 200-202 [11]-[13] per Way CJ) and Boed Pty Ltd v Seymour (1989) 15 NSWLR 715 (see at 718 per Bryson J).
It is not controversial that failure to remove a structure or object placed on another’s land constitutes an actionable wrong; that there is a “continuing trespass” as long as the object remains; and that on account of such a trespass, a subsequent transferee of the land may sue: Fleming’s The Law of Torts at 53 [3.40]. This analysis assumes that there was an initial trespass.
But the 2011 sewer pipe was placed upon Lot 2 (No. 55) with Pangani’s consent, as the owner of both Lots 1 (No. 57) and 2 (No. 55). And the Huangs purchased Lot 2 (No. 55) in that state, without taking any steps at that point to negate or revoke that prior consent. In those circumstances, there was an implied licence for the maintenance of the 2011 sewer pipe upon Lot 2 (No. 55).” ([2018] NSWSC 1667, [442]-[445])
56The present case differs from Billiet’s case and Petkovski’s case in that, for reasons I have explained, the original “overpour” was trespassory.
57Mr Mihaly relied upon a recent decision of the New South Wales Court of Appeal in McIntosh v Morris [2021] NSWCA 225. This was another instance of encroachments in the form of stormwater pipes and an electrical conduit installed for the benefit of one parcel of land encroaching upon the adjoining land. The encroachment was constructed by predecessors in title of the defendant. The proceeding in the District Court was terminated by settlement. The appeal to the Court of Appeal dealt with a costs order made by the primary judge in the District Court. In considering the appropriateness of that order, the Court of Appeal, White and Brereton JJA and Emmett AJA, necessarily commented upon the underlying merits of the dispute which led to the District Court proceeding. They were at pains, however, to disclaim any intention to undertake a comprehensive analysis of the law on this subject. For the purposes of his analysis, Brereton JA stated a series of propositions relative to the law on encroachments and title succession:
“First, there is no doubt that it may be a trespass for a defendant, without lawful justification, to place chattels on, or in the subsoil of, a plaintiff’s land.
Secondly, for that purpose, consent is lawful justification, but if the consent is withdrawn and the chattel is not removed within a reasonable time, there is a trespass.
Thirdly, as White JA observes, there is authority that if the original placement of the encroachment by the defendants’ predecessor in title (in this case, the Steedmans) was trespassory, then the defendant would be liable for a continuing trespass if it continued or adopted it, for example by maintaining it after it was drawn to its attention.
Fourthly, however, if what is placed on or in the plaintiff’s land becomes affixed to it so as to become the property of the plaintiff, there is authority that there can be no continuing trespass. In this respect, the respondents lodged supplementary written submissions, after the hearing, which argued that there was no reason at law why the respondents would not have succeeded in their claim, as the applicants were responsible for the continuing trespass of “their chattels, being their pipes” on the land of the respondents. In those submissions, reference was made to Lakes Edge Developments Ltd v Kawarau Village Holdings Ltd (“Lakes Edge”), and to Lord v McMahon (“Lord”). The passages referred to in Lakes Edge supported the following propositions:
(1) If A inserts an object into the subsoil of land belonging to B without lawful justification, A has committed a trespass against B;
(2) So long as the object remains in B’s land without lawful justification, its presence constitutes a continuing trespass; and
(3) While the trespass is ongoing, A’s successor in title can be liable for continuing it, and B’s successor in title has standing to sue;
(4) If B has given consent to A’s installation of the object, that will be a lawful justification for the object’s presence and there will be no trespass;
(5) However, consent without the grant of an interest is only a bare licence, which does not bind third parties and expires upon transfer of B’s land to a third party;
(6) Once the licence has expired or been revoked, the object’s presence becomes a trespass, for which the then-owner of A’s land is liable.” ([2021] NSWCA 225, [99]-[102])
58The “Fourthly” proposition made by his Honour is plainly the important one here. The key to the proviso as to the non-actionability of encroachments which become affixed to the plaintiff’s land as stated by his Honour is that the affixation is such that the fixture becomes the property of the plaintiff. It was not suggested, so far as I can see, that the overpour in Bottos’s case was regarded as having become the property of the Bottos brothers. Rather, their case was that the area occupied by the encroachments was their property, and the encroachments should be removed to enable them to enjoy that part of their property. This was accepted by the court, subject only to the operation of the law of adverse possession. For the reasons already explained, these encroachments being part of the structure on No 30 did not become the property of EPL or its predecessor in title. According to the formulation of Brereton JA, a landowner or occupier can continue a trespass “by maintaining it after it was drawn to its attention”. This is precisely what Diamond 6 did, according to the foregoing narrative. If the written record were not clear enough, Mr Rana conceded as much in cross-examination (T128, L25-30). In accordance with the principles stated by Brereton JA, therefore, Diamond 6 adopted and continued the trespass constituted by the encroachments so as to render itself liable for trespass.
59What I have said is sufficient to determine this matter in favour of the plaintiff. Mr Kappadath referred to the existence of statutes governing disputes confirming encroachment in all Australian jurisdictions except Victoria and Tasmania, which leave such matters to the common law; likewise in New Zealand. He referred to the Encroachment of Buildings Act 1922 (NSW). Mr Mihaly contended, correctly so far as I can see, that decisions under those statutes cannot govern the outcome of a dispute in Victoria, which must be adjudicated in accordance with the common law.
60Mr Mihaly placed reliance upon the concept that Diamond 6 “used” the encroachment because joint engineering expert witness Mr Irwin’s report and his oral evidence accepted the proposition that the encroachment or overpour provided some support to Diamond 6’s warehouse, albeit that it was not essential support. The encroachments have been removed. The warehouse still stands. There is no imminent threat that I have heard of to the stability of Diamond 6’s warehouse. Mr Irwin described the “support” derived by the warehouse from the encroachment as “minimal” (T63, L6-9). Had the conclusion that the trespass was adopted or continued by Diamond 6 depended upon this consideration, I would have inclined to the view that the legal maxim de minimis non curat lex would apply.
61Mr Kappadath for Diamond 6 said “it is inconceivable and illogical to consider the encroachment as a chattel.” In his closing oral submission, he repeated this contention (T148, L21). He continued “it would be characterised as a fixture of the plaintiff’s land as well as the defendant’s land.” (Ibid, L22-23) For reasons given earlier, I consider the encroachment to have been a fixture affixed to Diamond 6’s land – No 30.
62Mr Mihaly contended that if the plaintiff did not succeed in its claim for trespass, a finding of nuisance should be made against the defendant. At closing submissions [41] he said:
“A private nuisance occurs where a person:
a. substantially interferes with another’s land; save for
b. if the interference was in the reasonable and convenient use of their own land.” (Plaintiff’s Closing Submissions, [41])
63In a broad sense, one would have to say that the intrusion of the “lip” onto No 22 and the impediment which it created for EPL’s plan to build a warehouse up to the southern boundary of No 30 would constitute an interference for the purposes of this formulation. Clerk & Lindsell on Torts (op cit), [19-02], distinguishes between the torts of nuisance and trespass as follows:
“The distinction between trespass and nuisance is the old distinction between trespass and case. Trespass is a direct entry on the land of another, and is actionable per se, without proof of special damage, but nuisance is the infringement of the claimant’s interest in property without direct entry by the defendant, and generally actionable only on proof of special damage. For example, to build a wall partly on someone else’s property is a trespass, but to build on one’s own land a wall which, through disrepair, falls on to another’s land is a nuisance...It is a nuisance and not a trespass if the branches of a tree, whether planted or self-sown, growing on the land of one man, overhang his neighbour’s land, or if the roots burrow into his land and damage his buildings.” [19-02]
64It will be seen that the distinction between the two torts goes back to the distinction between trespass and actions upon the case under the old causes of action. The rule as to trees would appear to constitute something of an exception to the general rule. In this instance no trees are involved, and the intrusion is a direct and physical one. The relevant tort would appear to be trespass rather than nuisance.
65In his opening statement, Mr Kappadath referred to a provision in the building contract with Ark whereby he said Ark was given possession. At the relevant time, on this contention, Ark was in possession of the land and EPL was not. Not being in actual or legal possession, EPL was not a proper plaintiff for the tort of trespass – or nuisance for that matter. Mr Mihaly pointed out that in its defence Diamond 6 admitted the assertion in EPL’s further amended statement of claim that it was in legal possession of the land at the material time. He said that if this argument were to be persisted with, Diamond 6 would have to seek to amend its defence. No such application was made, and the contention was not repeated in closing submissions. I regard it, therefore, as abandoned.
66I turn finally therefore of the issue of damages. The amounts claimed were as follows (CB 10):
Item Company Description Amount 1 Matrix Engineering Group Engineering Report re: encroachment $3,520.00 2 Hellier McFarland Survey work for concrete cutting $715.00 3 All Round Concrete Cutting Pty Ltd Removal of neighbour’s footings $24,807.20 4 Ark Industrial Warehouse 1 delay costs $77,930.50 5 EPL Additional rent over delay period $13,431.00 6 EPL Lost revenue over delay period (conservative) $14,144.00 7 Moray & Agnew Lawyers Legal fees $5,157.35 Total $139,705.05 67Mr Kappadath cross-examined the plaintiff’s witnesses Messrs Taylforth and Worsfold with a view to establishing that the encroachment could have been removed in minimal time with no, or only very limited, delay to the completion of the warehouse at No 22 referred to as Warehouse 1. Mr Mihaly contended that since Diamond 6’s response to the allegation of loss and damage incurred by EPL was a bare denial, a contention of failure to mitigate was not open. Mr Kappadath in his cross-examination drew attention to Diamond 6’s initial indication that it denied liability and refused to take action or incur expenses in February, and the delay until July for the final removal of the encroachment.
68Without seeking to determine the pleading point raised by Mr Mihaly, assuming that the contention of failure to mitigate or delay was open to Diamond 6 on the pleadings, it fails. As Mr Taylforth correctly observed, engagements of contractors and consultants takes time. They are not at liberty simply to “drop everything” and attend to a particular assignment.
69Moreover, upon the findings I have made, responsibility for the removal of this encroachment rested with Diamond 6. In those circumstances, it was no more than reasonable for EPL to take time trying to persuade Diamond 6 to attend to the matter. Again, since action to remove the encroachment entailed destructive processes touching on the structure of the warehouse located at No 30, it was only reasonable for EPL to take structural engineering advice and to concur and implement the advice given by the structural engineer that a surveyor be engaged to mark out for the concrete-cutting contractor the alignment on which the cut was to be made. Again, consequent upon the finding that there was no unreasonable delay on the part of EPL, the additional construction costs entailed in completing the entire warehouse complex in two stages, rather than a single stage as was the original plan, can properly be regarded as the direct consequence of Diamond 6’s trespass.
70Given the rather arcane legal and engineering issue which was thrown up by the overpouring, it was reasonable and proper and necessary for EPL to obtain legal advice before determining how to proceed. The fees rendered in this pre-proceeding stage by Moray & Agnew seem to me to be reasonable. Again, in so far as the delay necessarily delayed EPL’s ability to offer Warehouse 1 to the market for tenancy, the amounts sought for lost rental appear reasonable and appropriate.
71Of the four warehouses, EPL retained one warehouse for its own occupancy as part of its freight-forwarding business (T55, L5-10).
72As to the fifth item in the table, on my recollection of the evidence and my consideration of the transcript, I find no verification or explanation of this item, described as “Additional rent over delay period”. This descriptor would seem to refer to additional rent incurred by EPL, one would think for not being able to occupy Warehouse 1. Since EPL occupied another warehouse and offered Warehouse 1 to the market for lease, absent further verification, this item of damage is not made out.
Disposition
73I will direct the parties to bring in short minutes to give effect to these reasons.
Costs
74I have heard no submissions on costs, and so I will reserve them.
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