J and T Lonsdale v P Gilbert

[2006] NSWLEC 30

Land and Environment Court

of New South Wales

CITATION:

J and T Lonsdale v P Gilbert & Ors [2006] NSWLEC 30

PARTIES:

APPLICANTS:
J and T Lonsdale

RESPONDENTS:
P Gilbert and Ors

FILE NUMBER(S):

30860 of 2004

CORAM:

Bignold J

KEY ISSUES:

Encroachment :- retaining wall and attached fence—Encroachments constituting continuing trespass—Conduct of Parties—discretionary factors.

LEGISLATION CITED:

Encroachment of Buildings Act 1922, s 3(2)

CASES CITED:

Amatek Limited v Googoorewon Pty Ltd (1993) 176 CLR 471;
Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464;
Giniotis v Farrugia (unreported 19 August 1985);
Kontikis v Schreiner (1989) 16 NSWLR 706;
Mitchell v Waugh (1993) 82 LGERA 44

DATES OF HEARING:

30/08/2005, 02/09/2005

 
DATE OF JUDGMENT: 

01/30/2006

LEGAL REPRESENTATIVES:

APPLICANTS:
Mr A Crossland, Barrister

SOLICITORS
Turnbull Hill

FIRST RESPONDENT:
Mr M Fraser, Barrister
SECOND RESPONDENTS:
Mr M Lawson, Barrister

SOLICITORS:
FIRST RESPONDENT
Sparke Helmore
SECOND RESPONDENT
Thomas Mitchell

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BIGNOLD J

30 January 2006

30860 of 2004 J AND T LONSDALE v P GILBERT; B AND J ELLSTON

JUDGMENT

HIS HONOUR:

A. INTRODUCTION

1 This is an application for relief under the Encroachment of Buildings Act 1922, s 3(2) (the Act) brought by the “adjacent owners” against the “encroaching owners” as those two terms are respectively defined by the Act. The properties of the respective owners are adjacent residential properties situate at Belmont in a recently developed estate.

2 The original proceedings (which were filed on 21 July 2004) only claimed relief against the first Respondent who was the “encroaching owner” when the encroachments (comprising a timber retaining wall with a colorbond fence attached thereto) first came into existence but who sold to the second Respondents in December 2003 one of the two lots upon which the encroachment was erected and extended to the Applicants’ land (each of which lots he had developed with dual occupancy residential development).

3 The second Respondents were joined as a party to the proceedings by the Applicant by order made by the Court on 20 June 2005, they having neither consented to nor opposed their joinder. Although they were joined at a time when settlement negotiations between the original parties had failed, apparently on account of the second Respondents’ refusal upon legal advice, to agree to the terms of settlement no relief was claimed against them. (The terms of settlement had contemplated consent orders being made in the proceedings whereby the Applicants would transfer so much of their land as was encroached upon by the timber retaining wall and colourbond fence to each of the Respondents respectively in return for the payment by the first Respondent only of (i) $5,000 being the agreed value of the land subject to the encroachments; and (ii) $10,000 legal costs; and (iii) the costs of the registration of the necessary documents to adjust the respective common boundaries of the properties owned by the respective parties. The sole point at which the settlement negotiations failed was the refusal by the second Respondents to grant to the first Respondent a power of attorney authorising the first Respondent to claim compensation against the builder (or his insurer) who had constructed the retaining wall on behalf of the first Respondent, and to prosecute that claim).

4 Notwithstanding the joinder of the second Respondents and the fact that no relief was claimed against them directly, the second Respondents were legally represented and appeared by counsel at the hearing. This is not to suggest that they were unnecessarily joined, since obviously the Applicants’ claim that the first Respondent remove the encroachment included so much the encroachment that emanates from the second Respondents’ property. But it raises the question of their active participation and the question of costs, which regrettably are likely overall to far exceed the value of what was at stake in the proceedings, being a matter that reflects poorly on both the parties to this litigation and their lawyers.

5 The second Respondents’ position at the hearing was to support the Applicants’ claims against the first Respondent who had been the encroaching owner when the encroachment was created and who was solely responsible for that state of affairs and who had sold to the second Respondents their property without disclosing the existence of the encroachment upon the Applicants’ land. The second Respondents were clearly an entirely innocent party being ignorant of the existence of the encroachment when they purchased their property from the first Respondent and who acted reasonably in refusing to provide the power of attorney to the first Respondent as required by the draft Deed of Settlement because such a legal device was both inappropriate and ineffective for the ostensible purpose for which it was devised.

6 The first Respondent had declined to accept the second Respondents’ suggestion that they assign to the first Respondent pursuant to the Conveyancing Act 1919, s 12 their rights against the builder (against whom the first Respondent had foreshadowed claims under his contract with the builder).

7 The second Respondents asserted that no costs order should be made against them but that their costs should be paid by either or both the other parties since they had been brought into the litigation without desiring to participate in it, and without any claims being made against them. Having been joined, they were entitled to be legally represented so that their interests be adequately protected. They submitted that the first Respondent should be held to be entirely responsible for the encroachment coming into existence and for the remedy to which the Applicants were entitled and for the second Respondents costs.

8 According to Points of Claim filed in Court on 30 August 2005 the following relief was claimed against the first Respondent only:

1. Declaration that the log retaining wall and colorbond fence attached thereto (the Encroachment ) located near that boundary of Lot 39 of DP 879395 ( the Applicants’ Property ) contiguous with Lots 102 and 103 of 1062309 ( the Respondents’ Property ), encroaches from the Respondents’ Property onto the Applicants’ Property.

2. Pursuant to section 3(2) of the Encroaching Buildings Act 1922 (NSW) (The Act), that the Encroachment be removed from the Applicants’ Property by the First Respondent at his sole expense.

3. That any survey or other work required to be carried out in order to meet Order 2 be completed at the First Respondent’s expense.

4. In the alternative:

a. That pursuant to section 3(2) of the Act, that portion of the Applicants’ Property which is encroached on and which is adjacent to the First Respondent’s Property be conveyed to the First Respondent.

b. That pursuant to section 3(2) of the Act, that portion of the Applicants’ Property which is encroached on and which is adjacent to the Second Respondents’ Property be conveyed to the Second Respondent.

c. That, pursuant to section 3(2) of the Act, the First Respondent compensate the Applicant for the land conveyed pursuant to Order 4(a) and (b).

d. That the First Respondent pay the Applicants’ conveyancing and legal expenses arising from Orders 4(a) and (b).


5. That the First Respondent pay the Applicants’ costs.

9 The first Respondent opposes the relief claimed against him upon the following discretionary grounds:

(i) the encroachment is minor and trifling in nature and extent and in value;

(ii) the Applicants’ initial acceptance of the encroachment caused by the existence of the timber retaining wall only changed to complaint and opposition following the construction of the colorbond fence some 19 months later on top of the retaining wall (but increasing the encroachment); and;

(iii) the Applicants received some material benefit to their land by agreeing to the first Respondent carrying out earthworks to reduce the difference in levels between the adjoining properties, which works were carried out entirely at the first Respondent’s expense.

C. THE RELIEF THAT IS AVAILABLE UNDER THE ACT

10 As the judgment of the High Court of Australia in Amatek Limited v Googoorewon Pty Ltd (1993) 176 CLR 471 states at 474, the scope of the relief available under the Act and of this Court’s jurisdiction to grant it are provided for in s 3 of the Act, with the meaning of the key terms used in that section being defined by s 2.

11 Those sections are in the following terms:

2 Definitions
In this Act, unless the context or subject-matter otherwise indicates or requires:

Adjacent owner means the owner of land over which an encroachment extends.
Boundary means the boundary line between contiguous parcels of land.
Building means a substantial building of a permanent character and includes a wall.
Court means the Land and Environment Court.
Encroaching owner means the owner of land contiguous to the boundary beyond which an encroachment extends.
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.
Owner means any person entitled to an estate of freehold in possession:

(a) whether in fee simple or for life or otherwise,
(b) whether at law or in equity,
(c) whether absolutely or by way of mortgage,

and includes a mortgagee under a registered mortgage of a freehold estate in possession in land under the Real Property Act 1900.

Subject land means that part of the land over which an encroachment extends.

3 Encroachments

(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.
(4) The Court may refer to any registered land surveyor (within the meaning of the Surveying Act 2002 ), or to any registered real estate valuer (within the meaning of the Valuers Registration Act 1975 ), any question involved in proceedings on the application.
(5) This section applies to encroachments made either before or after the commencement of this Act.

12 Although at the hearing the case was conducted upon the common basis that the Court had jurisdiction to order the first Respondent to remove the encroachment from the Applicants’ land that emanates from the property now owned by the second Respondent (having been formerly owned by the first Respondent when the encroachments came into existence), I am not persuaded that the Court has jurisdiction under the Act, so to order the first Respondent. This is because the defined terms “adjacent owner” and “encroaching owner” implicitly mean the owners respectively at the time that the Court’s jurisdiction is invoked, rather than the respective owners at some earlier point of time (including the time when the encroachment came into existence). The legal consequence of this fact is that the relief available to the Applicants under the Act in respect of the encroachment is relief against the respective encroaching owners (including the second Respondent).

13 It may be that the Applicants’ claim that the first Respondent be ordered to remove the entire encroachment (including that emanating from the second Respondents’ property) may be capable of being founded on a cause of action which exists independently of the Act. However, the Applicants’ have not so propounded their claim. (Had they done so it would have been necessary to demonstrate that the claim was within the Court’s jurisdiction.) Accordingly, if the Applicants’ principal claim to relief is upheld resulting in an order for the removal of the encroachment, it would be necessary for the Applicants to obtain leave to amend their claim so that relief is obtainable against each encroaching owner. If relief were granted against the second Respondents as encroaching owner, it would, in my judgment be only fair and reasonable to require the first Respondent to fully indemnify the second Respondents because the first Respondent (i) was relevantly the encroaching owner when the encroachment came into existence; (ii) was entirely responsible for that action (albeit it occurred by virtue of the agency of the building contractor); (iii) sold the property to the second Respondents without disclosing the existence of encroachment; and (iv) unreasonably required the second Respondents in the course of the settlement negotiations to grant him a power of attorney in respect of claims against the builder (and refused to accept their suggestion of an assignment of the chose in action).

14 I propose to take this course if I am satisfied in the exercise of discretion that relief should be granted requiring the removal of the encroachment and without further reference to the parties in this litigation which has been waged without any proper sense of perspective as to whether the means justify the end (ie whether the costs justify a remedy for what is at stake in the proceedings). To further escalate the legal costs would be indefensible.

15 I propose to record my relevant factual findings by reference to the relevant statutory considerations enunciated in s 3(3) of the Act. I should note that there is conflict in the affidavit evidence as to conversations and actions said to have taken place over the years between the Applicants and the first Respondent. My factual findings are based upon my evaluation of the evidence (including that which is in conflict) and the probabilities of what relevantly occurred between the parties.

(a) which owner seeks relief

16 The adjacent owners are the applicants for relief against the encroaching owners.

17 The first Respondent who has resisted their claim on discretionary grounds, while acknowledging the existence of the encroachment has somewhat unusually not made any cross-application. Whereas relief is available under the Act to either an application made by an adjacent owner or an encroaching owner, what is significant in the present case is that the first Respondent, as the encroaching owner is the person who created the encroachment (albeit by the agency of his builder against whom he has anticipated taking some legal action) and the Applicants as adjacent owner are the persons whose land has been trespassed upon, in respect of which trespass they would have a legal claim to redress against the trespasser (the first Respondent) independently of their claim under the Act.

18 These features distinguish the present case from other cases that are typically brought under the Act (involving respective property owners who were not involved or implicated in the creation of the encroachment). An allied distinguishing fact of the present case is that the encroachment has only recently come into existence (which compares with other cases brought under the Act where typically the encroachment has been in existence for a long period of time).

(b) the situation and value of the subject land and the nature and extent of the encroachment

19 The “subject land” in terms of the Act is that part of the Applicants’ land over which the encroachment extends.

20 The extent of the encroachment is not disputed and is shown in the sketch plan and report prepared by Mr David Walpole, Registered Surveyor, dated 16 January 2004. A copy of the sketch plan is annexed hereto and marked “A”. Lot 103 shown on that sketch plan is owned by the first Respondent and lot 102 shown on that plan is owned by the second Respondents. According to Mr Walpole’s report, the extent of the encroachment by the timber and log retaining wall ranges from 0.17 to 0.24 metres (width) extending for most of the lengths of the rear boundaries of those two lots as they adjoin the Applicants’ land with a further encroachment ranging from 0.2 to 0.32 metres (width) by the colorbond fence attached to the top of the retaining wall.

21 In his further report dated 14 September 2004, Mr Walpole measures the area of encroachment emanating from lot 103 at 3.8 square metres. No measured area of the encroachment emanating from lot 102 was provided in the evidence but it would appear to be a little greater than the area of the encroachment emanating from lot 103. The total area of the encroachments would be approximately 9 square metres out of a total area of 926 square metres comprising the area of the Applicants’ property. (The two valuers who provided valuations of the area of encroachment could not agree upon the total area of the encroachment. This lack of agreement may explain the disparity in their valuations of the subject land of $2,000 and $5,000 respectively in view of their very proximate valuations of the land value of the Applicants’ property at $320,000 and $325,000 respectively.)

22 The builder of the retaining wall Mr Peter Moroney swore an affidavit which was read in the first Respondent’s case. He was contracted by the first Respondent to build a retaining wall around the two lots (lots 102 and 103), then owned by the first Respondent, preparatory to the first Respondent developing each lot with an approved dual-occupancy residential development.

23 The retaining wall was constructed by the builder in February and March 2002.

24 Paragraph 15 of his affidavit contains the following description of the manner in which the retaining wall was constructed:

The method of construction of the retaining wall is similar to the section post and log retaining wall sketch on the Holmes Henderson Savage Pty Limited Consulting Engineers plan of stormwater details. The retaining wall was built as directed by Paul Gilbert and Graham Holmes so that a post hole was dug every 1200mm along the boundary and a post of 200mm was inserted in the hole which was then filled with concrete. Sleepers of 75mm width and drainage were placed behind the posts. The retaining wall had a slope of 1 in 10 such that the post was leaning from the property on which I was working along the full length of the boundary between lot 39 in Deposited Plan 879395 being 7 Matelot Place owned by the Applicants and Lot 102 in Deposited Plan 1062309 being 6 Sabot Close and Lot 103 in Deposited Plan 1062309 being 8 Sabot Close owned by the Respondents.

25 Some 18 months later (by which time the first Respondent had nearly completed the approved dual-occupancy developments) a colorbond fence was erected on top of the retaining wall (except for the last 3 metres measured from the rear boundary of the Applicants’ property). This feature of the colorbond fence construction created conflict between the Applicants and the first Respondent, which may explain the origins of the present litigation.

26 According to paragraph 16 of the first Respondent’s affidavit, the following conversation took place between himself and Mr Londsdale (one of the Applicants):

Not long after the fence was erected, Jamie Lonsdale approached me whilst cleaning one of the units and we had a discussion to the following effect:
He said: Why haven’t you finished the fence to the rear wall?
I said: The rock wall is obstructing it and it can’t physically continue to the existing rear fence.
He said: My kids will fall over the wall there so you had better finish it off
I said: I will do it at the first opportunity I have

27 Paragraph 10 of Mr Lonsdale’s affidavit in reply provides the following version of that conversation:

I refer to paragraph 16 of Mr Gilbert’s Affidavit. I say that the conversation there recorded is inaccurate and incomplete. The conversation went as follows. I said: Why haven’t you finished the fence to the rear wall? He said: The rock wall is obstructing it and it cannot physically continue to the rear fence. I will put some lattice work there. It would look better anyway than just having a fence the whole way along the boundary. Besides, the cost of completing that bit of fence would be as much as the whole rest of the fence. I Said : A bit of lattice work will not do. It is dangerous for my children who would be at risk of falling over the retaining wall. You had better finish it off. He said: No, I will not . I then said: If you look along the line here (indicating along the boundary line of the property) you can see the surveyor’s peg up there. Everything on this side of that line is on our property .

28 Whichever version of the conversation represents the more accurate recollection the immediate follow-up facts indicate that the matter in dispute was not resolved (when it could have been very readily and satisfactorily resolved by the first Respondent doing what he said he would do):

(a) the gap in the fence was not filled by the completion of the fence; and
(b) the Applicants instructed their Solicitors to seek redress against the first Respondent.

(c) the character of the encroachment

29 This has already been explained. The retaining wall retains the Applicants’ land which is some two metres higher than the level of the adjacent lands respectively owned by the Respondents and the colorbond fence generally divides the respective properties. In themselves, the encroachments do not adversely affect the amenity of the Applicants’ property.

(d) loss/damage incurred by the adjacent owner

30 As earlier found, the encroachment has not significantly devalued the Applicants’ property. Even accepting the Applicants’ valuer’s estimate of the value of the subject land in the sum of $5,000 this represents little more than 1.5 percent of his estimated value of the Applicants’ land.

31 However, if no remedy is provided in respect of the encroachment, the Applicants are likely to be disadvantaged by the existence of the encroachment should they seek to sell their property in the future.

32 Moreover, to the extent that the encroachment represents a continuing trespass to their property (which is doubtless the case as to which see below), the Applicants have cogent rights firmly recognised by the law of torts as landowners to seek injunctive relief to prevent the continuance of the trespass: see the discussion of relevant case law in Australia and England by Bryson J in Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464 at 468 et seq.

(e) loss/damage likely to be incurred by encroaching owner if required to remove the encroachment

33 There was no particular evidence on this issue as to the amount of expenditure likely to be incurred if the encroachment were ordered to be removed, but obviously compliance with such an order would involve some expense.

34 Additionally, the following facts are relevant to the present consideration—

(i) the first Respondent has anticipated claiming compensation against the builder of the retaining wall in the event that the first Respondent incurs liability in these proceedings;
(ii) Mr Ellston (one of the second Respondents) was told by the builder, Mr Moroney, that he (the latter) would be able to relocate the retaining wall and the dividing fence, thereby effectively removing the encroachment from the Applicants’ land. The builder also informed Mr Ellston that the builder was responsible, in terms of the relevant building contract with the first Respondent and the relevant insurance policy, for correcting any defects in the contract works, including the encroachment; and

(iii) additionally, having regard to the nature of the building materials and manner of construction of the encroachments it may reasonably be inferred that the materials could be readily salvaged and redeployed in the proper relocation of the retaining wall and fence to the Respondents’ respective properties.

(f) the circumstances in which the encroachment was made

35 I have already noted when the encroachments came into existence. That occurred as part of the process of the first Respondent developing lots 102 and 103 (while he owned them both) with dual-occupancy residential developments. (It was following the completion of those dual-occupancy developments that the first Respondent sold lot 102 to the second Respondents in December 2003).

36 If the retaining wall had been properly constructed, it would have been located on lots 102 and 103 and would not have encroached upon the Applicants’ adjacent property. The fact that the construction created the encroachment can only be the result of either intentional or negligent conduct upon the part of the first Respondent and/or his builder.

37 The first Respondent sought to make out a case that the Applicants had acquiesced in the creation of the encroachment in consideration of the first Respondent carrying out earthworks on the Applicants’ property by levelling the rear yard area to render it more useable, and thereby reducing the level of that land so that it was approximately two metres higher than the first Respondent’s properties (lots 102 and 103). However, the first Respondent has entirely failed to establish any such agreement by the Applicants to the creation of an encroachment on their property. Rather, I entirely accept the evidence of the Applicants that the earthworks executed on their property by the first Respondent, though no doubt creating some benefit for their residential amenity, likewise conferred a benefit upon the Applicant, namely by reducing the difference in the land levels so that the required retaining walls need not be at an excessive height (which otherwise would have been the result of the different levels of the adjacent lands but for the carrying out of the levelling earthworks which reduced the difference in the relative land levels).

38 The obvious object of such earthworks was to lower the height of the retaining walls required to be erected on the first Respondent’s land (lots 102 and 103) rather than to allow the retaining wall to encroach upon the Applicants’ property. The notion of creating a building encroachment was entirely foreign to the agreement.

39 That being the true nature and basis of the agreement struck between the Applicants and the first Respondent, there is simply no basis in law or in fact for the first Respondent to claim that the Applicants received material benefits in exchange for the creation of the encroachment.

40 Moreover, on the basis of the evidence, I find that the Applicants did not acquiesce or agree to the creation of the encroachments or to their continuance, such as to effectively raise any basis for a discretionary defence to their claim in these proceedings.

E. CONLCUSIONS AND ORDERS

41 Having considered each of the factors enumerated in s 3(3) of the Act, I am of the opinion that this is an appropriate case where it is just and proper that relief be granted under the Act.

42 In so concluding, I do not consider the first Respondent to have made out a discretionary defence based upon any element of delay or acquiescence by the Applicants in the creation or continuance of the encroachments.

43 Even if it be the case that the Applicants’ complaint against the encroachment created by the retaining wall only surfaced and hardened when the dispute broke out between them and the first Respondent over the creation of the additional encroachment by the colorbond fence coming into existence some 19 months after the encroachment created by the retaining wall had come into existence, that fact is not relevantly disqualifying in the sense that it demonstrates delay or waiver by the Applicants in asserting their rights or some kind of assent or acquiescence by the Applicants in the existence and construction of the encroachments.

44 In concluding that this is an appropriate case to grant relief under the Act in respect of the encroachment, I include within the reference to “encroachment” the colorbond fence erected on top of the retaining wall. In this respect, I do not accept the argument advanced by the first Respondent that it is necessary to exclude from the ambit of “encroachment” under the Act a building in the nature of a dividing fence. The evidence adduced in the present case does not support a finding that the colorbond fence was erected as a “dividing fence” within the meaning of the Dividing Fences Act 1991 and in pursuance of that Act. But in any event, the first Respondent’s argument that the Dividing Fences Act 1991 and the Encroachment of Buildings Act 1922 are mutually exclusive statutes is inconsistent with the express provisions contained in s 26 of the former Act which provides as follows:

Act not to affect agreements etc, retaining walls or other Acts

Nothing in this Act affects:
(a) any covenant or any contract or agreement (other than an agreement arising under this Act) made between adjoining owners in respect of a dividing fence before or after the commencement of this Act, or
(b) any law relating to retaining walls, easements of support or other rights of support in relation to land, or
(c) provisions relating to fences made by or under any other Act.

45 The facts of the present case are different from the facts in Mitchell v Waugh (1993) 82 LGERA 44 where Bannon J in proceedings brought under the Act entertained a claim under the Dividing Fences Act which he held (despite some doubt) fell within the Court’s ancillary jurisdiction conferred by the Land and Environment Court Act 1979, s 16(1A). In that case, Bannon J held that the retaining wall not only confined the higher land but provided the foundation for the supports of the dividing fence and noted the observation of Mahoney JA in Kontikis v Schreiner (1989) 16 NSWLR 706 at 711 “the function of a wall may serve both to retain the soil and to mark the boundary”. In the present case, the evidence suggests that the colorbond fence has been attached to the top of the retaining wall.

46 The question now to be resolved is what form of relief under the Act should be granted. The Applicants’ principal claim to relief is for an order requiring the removal from their land of the encroachments.

47 The form of relief that had been the subject of the settlement negotiations (which almost succeeded) was for a boundary readjustment with the payment of compensation to the Applicants in exchange for the transfer by them to each of the encroaching owners of those parts of the Applicants’ land that were relevantly encroached upon.

48 This latter form of remedy was the Applicants’ second preference. It was the preferred outcome on the first Respondent’s case if the Court rejected his principal case that in the exercise of its discretion the Court would refuse relief altogether.

49 However, whereas the parties in their settlement negotiations had adopted an amount of compensation in the sum of $5,000 (corresponding to the estimate of value proffered by the Applicants’ valuer), on the hearing of the case, the Applicants submitted that they were entitled to “minimum compensation” as provided in s 4(1) of the Act, being three times the land value because the encroaching owner had not satisfied the Court that the encroachment was not intentional and did not arise from negligence. (I have already found that the encroachment was created either intentionally or negligently by the first Respondent and by his builder Mr Moroney.)

50 In my judgment, the just and proper form of relief to be granted in the present case is an order for the removal of the encroachment. In this respect, the most influential matters that I have considered conformably to the Act s 3(3) are the recent origins of the encroachments, the plain fact that they constitute trespass to the Applicants’ land, the legal capacity of the first Respondent to require the builder to rectify “defects” in the contract works that he undertook on behalf of the first Respondent in building the retaining walls and the propensity for the building materials to be salvaged in any such rectification works.

51 As I have earlier pointed out, the order for removal should be directed to each “encroaching owner” under the Act in respect of the encroachments emanating from their respective lands.

52 However, for the reasons already given, the first Respondent should be made to indemnify the second Respondents who were entirely innocent of the creation of the encroachment and entirely ignorant of its existence when they purchased their property from the first Respondent who had not disclosed the existence of the encroachment. Their refusal to grant the power of attorney to the first Respondent which led to the failure of the settlement negotiations was entirely reasonable and was consistent with the reasoning of the decision of the Court of Appeal in Giniotis v Farrugia (unreported 19 August 1985), and the refusal of the first Respondent to accept the second Respondents’ counter-offer to assign to the first Respondent their chose in action was itself legally unreasonable.

53 As earlier noted, to give effect to this fair and just outcome as between the Respondents as “encroaching owners” under the Act, it is necessary that I give leave to the Applicants to amend their Points of Claim so that the relief claimed by way of order for the removal of the encroachment be claimed against each Respondent in their capacity as encroaching owner.

54 Such amendment is permitted pursuant to Part 10 rule 1(1) of the Rules of Court and I so order.

55 In the light of that outcome, it necessarily follows that the second Respondents’ claim for costs against the Applicant must be dismissed. However, the indemnity required of the first Respondent in favour of the second Respondent should be extended to require the first Respondent to pay the second Respondents’ costs.

56 Finally, on the question of costs, s 14 of the Act provides as follows:

Costs
In any application under this Act the Court may make such order as to payment of costs charges and expenses as it may deem just in the circumstances and may take into consideration any offer of settlement made by either party.

57 The fact that the Applicants have obtained the principal relief they have claimed in the proceedings means that prima facie they should obtain an order for their costs. The first Respondent should be held entirely responsible for such costs since he has unsuccessfully defended their claim. Additionally, the first Respondent should be held responsible for the second Respondents’ costs for the reasons I have already given.

58 Correspondence passing between the parties prior to the commencement of the proceedings and during the course of the proceedings was tendered on the question of costs (Exhibits A/1 and B/1).

59 Various offers of settlement were made by the Applicants and the first Respondent and I have earlier referred extensively to the settlement negotiations that almost succeeded but ultimately came to nought.

60 That the proceedings could and should have been settled is abundantly obvious. It does the parties’ legal representatives very little credit that this case was not settled. The small stakes involved hardly justified a disputed hearing and the incurring of additional legal costs by three parties. Ultimately, I have concluded that the first Respondent (acting through the agency of his builder) was solely responsible for the creation of the encroachments and that they were created intentionally or negligently. Clearly those encroachments involved a continuing trespass to the Applicants’ land and although the nature and extent of the trespass was not significantly adverse to the Applicants in terms of impact upon residential amenity or the reduced value of the Applicants’ residential property, it nonetheless involved an unlawful invasion and violation of the Applicants’ ownership and occupation of their property which justifies the relief that I propose to grant.

61 The first Respondent, having failed to resist the Applicants’ claims should pay the costs of the Applicants and additionally, for the reasons given, should pay the second Respondents’ costs.

62 For all of the foregoing reasons, I make the following orders:-

1. The Applicants’ Points of Claim be amended to include a claim to relief against the second Respondents as encroaching owner under the Encroachment of Buildings Act 1922 .
2. The first Respondent, as encroaching owner under the Encroachment of Buildings Act 1922 , remove from the Applicants’ land being lot 39 in Deposited Plan 879395 and known as 7 Matelot Place, Belmont the encroachments comprising a timber retaining wall and colorbond fence erected on top of that wall emanating from the first Respondent’s property, being lot 103 in Deposited Plan 1062309 and known as No 8 Sabot Close, Belmont.
3. The second Respondents, as encroaching owner under the Encroachment of Buildings Act 1922 , remove from the Applicants’ land being lot 39 in Deposited Plan 879395 and known as 7 Matelot Place, Belmont the encroachments comprising a timber retaining wall and colorbond fence erected on top of that wall emanating from the second Respondents’ property, being lot 102 in Deposited Plan 1062309 and known as No 6 Sabot Close, Belmont.
4. The works referred to in Orders 2 and 3 be carried out within 60 days (or such further period as the parties may agree in writing).
5. The first Respondent shall fully indemnify the second Respondents in respect of the liability imposed upon them by Order 3. (Such indemnification may take the form of the first Respondent undertaking the requisite work on behalf of the second Respondents, if so requested by them, and to their satisfaction).
6. The first Respondent to pay the Applicants’ costs and the second Respondents’ costs of the proceedings in the sum agreed or failing agreement, as assessed.
7. Liberty to apply on three days’ notice in respect of the outworking of the mandatory orders made for the removal of the encroachments.