Valherie v Strata Corporation No 1841
[2004] SASC 170
•9 June 2004
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
VALHERIE v STRATA CORPORATION NO 1841 AND ORS
Judgment of The Full Court
(The Honourable Justice Perry, The Honourable Justice Bleby and The Honourable Justice Gray)
9 June 2004
APPEAL AND NEW TRIAL
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT - WHERE INFERENCES OF FACT INVOLVED
TORTS - NUISANCE - WHAT CONSTITUTES - PRIVATE NUISANCE
Appeal against judgment of single judge of this court - appeal against decision of the Magistrates Court allowed by single judge - whether magistrate erred in findings of fact - whether magistrate erred in assessment of the date from which the appellant continued a nuisance - whether the cause of the nuisance can be attributed to the second and third respondents - roots from a tree in the appellant's backyard caused cracking to the neighbouring first respondent's units - the first respondent informed the appellant that damage was being caused to the units by the tree - the appellant informed the first respondents that she would not be residing at the premises - principles of nuisance discussed - burden of proof discussed - assessment of damages discussed - appeal allowed to reduce award of damages only - appeal dismissed in all other respects.
Proprietors of Strata Plan No 14198 v Cowell (1989) 24 NSWLR 478; Hargrave and Ors v Goldman (1963) 110 CLR 40; Richard City Council v Scantelbury [1991] 2 VR 38; Valherie v Strata Corporation 1841 [2002] SASC 398; Morgan v Khyatt (1964) 1 WLR 475; Sedleigh-Denfield v O'Callaghan [1940] AC 880; Torette House Pty Ltd v Berkman (1940) 62 CLR 637, considered.
VALHERIE v STRATA CORPORATION NO 1841 AND ORS
[2004] SASC 170Full Court: Perry, Bleby and Gray JJ
PERRY J. I agree that the appeal should be allowed and that an order be made in the terms suggested by Gray J. I agree with his reasons and have nothing to add.
BLEBY J. I agree that the appeal should be allowed. I agree with the orders proposed by Gray J and with his reasons.
GRAY J.
Introduction
This appeal concerns a claim in nuisance.
Following a trial a magistrate concluded that a property owner was liable for damages flowing from the continuation or adoption of a nuisance. The nuisance was said to arise from an encroachment by tree roots onto a neighbouring property. It was alleged that damage was caused to buildings. The defendant Daniele Valherie, the owner of the property on which the tree was situated, denied liability, disputed the alleged loss and damage and claimed an indemnity from third parties, Ms Mitchell and Ms Arnott, the previous owners of the property. The magistrate found in favour of the plaintiff, Strata Corporation No. 1841 and assessed damages at $23,962.00. He concluded that Ms Mitchell and Ms Arnott were also liable and assessed their liability at $2,500.00.
Ms Valherie appealed to a judge of this court. Ms Mitchell and Ms Arnott cross-appealed. The learned judge confirmed the primary finding of nuisance against Ms Valherie but reduced the damages to $21,875.00. The judge allowed the appeal by Ms Mitchell and Ms Arnott and entered judgment in their favour. There has been no appeal from this order. Ms Valherie has appealed to this court pursuant to leave against the judgment entered in favour of Strata Corporation 1841.
Facts
In April 1999 Ms Valherie purchased a property at 4 Lothian Avenue, Windsor Gardens (‘the property’) from Ms Mitchell and Ms Arnott who had owned the property for approximately 20 years. During their ownership, the garden was well maintained and watered.
A lemon scented gum tree was situated on the property close to the boundary of a neighbouring property owned by Strata Corporation 1841. This tree was well established when Ms Mitchell and Ms Arnott purchased the house. The tree was approximately ten metres tall by the late 1990s.
Ten strata title units stood on the neighbouring property, built in two blocks of five. Concrete surrounded the units. One, unit 8, was situated about three metres from the lemon scented gum.
Shortly after purchase, Ms Valherie became concerned about the structural soundness of the house on her property. She sought professional advice about cracks in her walls and others signs of structural damage. She commissioned a report from Archicentre. In a report dated 17 April 1999 the highly reactive soil and trees growing in close proximity to the house on her property were identified as contributing to structural damage. The report advised Ms Valherie to maintain constant soil moisture balance all year round and to consider removing a number of trees, including the lemon scented gum. She was advised to maintain a consistent garden watering regime:
On reactive soils adequate watering during dry-spells is important to prevent excessive drying out which could lead to excessive soil movement. A good soaking once a week would be required rather than a little watering each day. Observe that there is a reasonable water penetration into the soil. Some soils may need treatment, such as coring, in order to assist with this. Consult with a gardening or landscaping centre.
With large trees and shrubs in the vicinity, try to install post-holes around the perimeter of the plant’s drip-line. Fill these holes with coarse sand or gravel and use these holes for direct watering in order to keep water of general watering to a minimum.
By November 1999, Ms Valherie became increasingly distressed about the condition of the house and sought to rescind the contract for the purchase of the property. In July 2000 she commenced proceedings in the District Court against Ms Mitchell and Ms Arnott. During this time Ms Valherie suffered from a depressive mental condition. In October 2000 Ms Valherie abandoned the property, claiming that it was no longer fit for occupation. She continued to pursue legal action to rescind the contract.
In November 2000 Ms Valherie suffered a nervous breakdown. She decided to leave Australia and return to the support of friends and family in France. When she returned to Australia in November 2001, she found that the property had been auctioned as a consequence of the District Court proceeding. It was at this time that she learnt of the status of the present proceedings.
During the period between April 1999 and Ms Valherie’s return to Australia in November 2001, structural damage was being suffered by units 7, 8, 9 and 10 on the neighbouring property. On 27 July 2000 the Housing Trust issued a substandard order with respect to unit 8. The order outlined the defects as follows.
EXTERNALLY
Roof gutters contain vegetation and debris
Gutters leaking and downpipes defectivePaving by gulley holding water
INTERNALLY
BATHROOM
Tiles to shower recess loose and drummy
FRONT LIVING & DINING AREA
Walls fractured and cracked by archway
Wall damp affected adjacent bathroomKITCHEN
Tapware not maintained in a good state of repair
Poor seal between sink and wall
Wall tiles drummy in part to some areas
FRONT MAIN BEDROOM
Walls fractured and cracked
PASSAGE
Walls fractured and cracked
In October 2000 Strata Corporation 1841 commissioned a reported from Kourkourou Engineers about the structural soundness of the units. On 16 October 2000 Kourkourou Engineers reported on the damage evident in unit 8 and concluded:
There are numerous cracks within the building in the solid brick walls and the cornices and there are signs that tiles are drummy behind the shower and over the kitchen sink. An inspection of the rear of the property shows that there is a Lemon Scented Gum approximately 10 metres high within 3 metres of the building on an adjoined property. As a result, the roof is covered in leaf litter and the gutters and downpipes are in poor condition.
…
It is the author’s opinion that in this particular case the Lemon Scented Gum is making a significant contribution to the cracking in the building due to its close location and the highly reactive nature of the soil. It is therefore strongly recommended that your client (and other owners of units within the group for that matter) respectfully request the owner of the tree to completely remove the tree and hence abort the continuing effect in the clay soil, not to mention the leaf litter in the roof and downpipes. It is imperative that once the tree is removed the ground in the immediate vicinity be watered over a nominated period of time to restore some of the moisture into the clay soil.
On 1 November 2000 Strata Corporation 1841 wrote to Ms Valherie notifying her of the structural damage. The lemon scented gum was identified as the cause:
We are in receipt of a report from Koukourou Engineers regarding structural damage to our group of buildings which is being caused by a lemon scented gum tree situated on your property and with in three metres of our buildings.
…
However in this instance we shall be pleased if you would contact us within seven days of the above date, so that we are able to show you the report in detail and discuss the matter. If we do not hear from you, we shall have no choice but to seek further advice.
The Koukourou report was not forwarded with the letter. No reference was made to the engineer’s strong recommendation that the lemon scented gum be removed. The alleged damage was not described. The removal of the tree was not requested.
On 13 November 2000 Ms Valherie wrote in reply. She informed Strata Corporation 1841 that she was no longer the owner of the property and was engaged in legal proceedings with the previous owners. Ms Valherie explained that she could not assist Strata Corporation 1841 as she no longer saw herself as the owner of the property. She suggested that the corporation pursue other parties, such as the previous owners and the property developers, to recover the damage caused by the tree. She requested to be kept informed of any further developments and included her Paris address. She wrote:
I am well aware of the structural damage to the units of 14 Pibroch Avenue, damage which has most likely been caused, apart from the extreme soil reactivity of this particular area of Winsdor Gardens, of which I am also well aware now, by the gum tree situated at the northern end of the 4 Lothian Avenue property, extremely close to the group of buildings.
…
You mention that you will seek further advice, and no doubt consider some action, I can understand that – I would be very much obliged if you could keep me informed of any future actions concerning this matter at the following address … .
…
Please, do keep me informed of any further development, as this is extremely important for my Court action - All the more so, if, in the unlikely event that the Court awards me damages instead of the rescission, I have to assess the full extent of the costs and consequential loss from your action in order to add them to my claim.
It was evident that the Strata Corporation did not intend to correspond with Ms Valherie in Paris or to keep her informed of developments regarding the damage to the units. On 29 January 2002 Sylvia Bolton of Strata Corporation 1841 wrote to the corporation’s solicitor providing details of the background of the present dispute. The letter included the following information:
As for her request that I keep her informed in Paris as to further developments, I deny that this was my responsibility. I am responsible only to the Corporation, the plaintiff in this action, and had no intention to correspond with the defendant who had decided to leave for Paris.
Ms Bolton gave evidence that she did not personally contact Ms Valherie in Paris. Ms Valherie said that she had not received notification of any proceedings whilst in Paris.
The Legal Proceedings
Rather than make immediate contact with Ms Valherie in Paris enclosing the report and seeking agreement in respect of the removal of the lemon scented gum, Strata Corporation 1841 followed a different course. On 28 February 2001 the corporation without notice to Ms Valherie issued court proceedings seeking an order for the removal of the lemon scented gum and claiming the cost of repairs to the damaged units.
Strata Corporation 1841 falsely claimed that all diligent and reasonable enquiries to locate and serve Ms Valherie with notice of the proceedings were made. It claimed that service by post was attempted to both 4 Lothian Avenue Windsor Gardens 5087 and an alternative address at Camden Park. The court was not informed that Strata Corporation 1841 was aware that Ms Valherie was resident in Paris and had asked to be kept informed. Nor was the court informed that the corporation had no intention of keeping Ms Valherie informed.
Strata Corporation 1841 made an application on 7 September 2001 to dispense with service and to obtain summary judgement. An order was made that service be dispensed with and that the lemon scented gum be removed by Ms Valherie within seven days. Strata Corporation 1841 was authorised to enter and take possession of the property to remove the tree if it was not removed by Ms Valherie. The cost of the tree removal was to be borne by Ms Valherie.
Ms Valherie applied to have these orders set aside. On 2 August 2002 Ms Valherie’s application was dismissed on the ground that she had failed to prosecute her defence expeditiously. This decision was reversed on appeal by a judge of this court.[1] The action was remitted for hearing.
[1] Valherie v Strata Corporation 1841 [2002] SASC 398
In seeking to proceed ex parte, the court was misled by Strata Corporation 1841. The corporation was aware of Ms Valherie’s whereabouts and, if properly instructed, its solicitors were also aware. Through deliberate misconduct or neglect, the court was misinformed. As a consequence the proceedings were delayed as was the ultimate order for the removal of the lemon scented gum. The tree was not removed until the following September.
Strata Corporation 1841’s conduct not only misled the court, but it also misled Ms Valherie. She reasonably expected to be kept informed of any developments but was left “in the dark”. She did not receive the Kourkourou report. The conduct of the corporation was unreasonable and represented a failure on the part of the corporation to take reasonable steps to mitigate its loss. Ms Valherie lost the opportunity to agree to the removal of the tree and to avoid the subsequent delay and costs of the court proceedings.
In January 2003 Ms Valherie joined Ms Mitchell and Ms Arnott as third parties claiming an indemnity. The trial was conducted by a magistrate in April 2003.
The Decision of the Magistrate
On 6 May 2003 the magistrate delivered judgment. The magistrate accepted the expert evidence from Mr Liney, the engineer who provided the Kourkourou report to the corporation. He found that the damage to the units was brought about by excessive soil movement caused by the withdrawal of moisture from the soil by the lemon scented gum. He concluded that Ms Valherie was liable for the cost of repairs because, knowing of the risk of damage to the units, she failed to remove the tree or take alternative remedial action. He found Ms Valherie liable in nuisance and assessed damages at $23,962.00. He found that Ms Mitchell and Ms Arnott were liable to indemnify Ms Valherie in the amount of $2,500.00.
Issues on Appeal
Liability for Damage
The central issue relating to liability for damage was whether Ms Valherie ‘adopted the nuisance’ caused by the lemon scented gum when she purchased the property.
Nuisance can be public or private. Private nuisance is the infringement of rights related the ownership or occupation of land. Private nuisance can occur by unreasonable interference with use and enjoyment of property rights or by material damage to land. Material damage caused to property by encroaching roots of a tree located in a neighbouring property can constitute private nuisance and can amount to actionable nuisance. In Morgan v Khyatt the court observed that[2]:
… [I]t has … long been established as a general proposition that an owner of land may make any natural use of it; but also (and by way of qualification of the general rule) that if an owner of land grows or permits the growth on his land in the natural way of trees whose roots penetrate into adjoining property and thereby cause and continue to cause damage to buildings upon that property, he is liable for the tort of nuisance to the owner of that adjoining property.
[2] Morgan v Khyatt (1964) 1 WLR 475 at 477
The occupier of premises from which a nuisance emanates may be liable for nuisance, even if the occupier did not create the nuisance.[3] This liability arises if the occupier adopts or continues the nuisance. The remarks of Viscount Maughan in Sedleigh Denfield v O’Calloghan are apposite:[4]
…[A]n occupier of land ‘continues’ a nuisance if with knowledge or presumed knowledge of its existence he fails to take any reasonable means to bring it to an end though with ample time to do so.
[3] Sedleigh-Denfield v O’Callaghan [1940] AC 880
[4] Sedleigh Denfield v O’Calloghan [1940] AC 880 at 894
Although negligence is not an essential element in nuisance, fault is a necessary element in ‘continuing’ or ‘adopting’ a nuisance.[5] This element requires that an occupier of the premises from which a nuisance emanates was aware, or ought to have been aware, of the existence of the nuisance and fails to take any reasonable means to bring it to an end.[6] It follows that an occupier who did not create a nuisance and neither knew or ought to have known of it, cannot be liable for that nuisance.[7]
[5] Sedleigh-Denfield v O’Callaghan [1940] AC 880
[6] Sedleigh Denfield v O’Calloghan [1940] AC 880 at 894
[7]Torette House Pty Ltd v Berkman (1940) 62 CLR 637; Richard City Council v Scantelbury [1991] 2 VR 38 and Hargrave and Others v Goldman (1963) 110 CLR 40
In order for Ms Valherie to be found liable for damage caused by the lemon scented gum, Strata Corporation 1841 had to establish that Ms Valherie adopted or continued the nuisance with knowledge of its effect. It also had to be shown that the risk of damage was reasonably foreseeable if the nuisance continued. At trial the magistrate found that Ms Valherie adopted or continued the nuisance causing damage to units owned by Strata Corporation 1841.
On appeal to this court, the judge reasoned:
… The encroachment of tree roots from one property to another, if the encroachment causes damage to buildings on the other property, is an interference with the owner’s use and enjoyment of that other property of a kind that amounts to actionable nuisance.
A person who acquires a property that has on it a cause or potential cause of damage (amounting to nuisance) to another property, can be liable for that damage, even though the new owner did not create or bring into existence the cause of the damage. The new owner becomes liable if, in language used in the cases, the new owner continues or adopts the nuisance.
…
In my view, on the evidence before the Magistrate, Ms Valherie became aware of the cause of likely damage to the Corporation units, the drying effect of the encroaching tree roots, in November 2000 and not before. Until that time her attention, not unreasonably, had been directed to the possibility of damage to the defendant’s home. Her liability rests on the fact that after November 2000 she failed to take reasonable means, the removal of the tree, to bring the source of damage to an end. The tree could have been removed quite quickly. I consider that Ms Valherie should be regarded as liable for damage caused to the Corporation units as from the end of 2000.
This conclusion was fully supported by the evidence at trial. Upon the purchase of the property, Ms Valherie adopted the nuisance caused by the lemon scented gum. She obtained advice that warned her of damage caused to her own property by the tree. In her response to the corporation’s letter of 1 November 2000 Ms Valherie accepted that damage had been incurred to the units and that the gum tree was a substantial cause of that damage. She had knowledge of the nuisance. She herself took no steps to remove the tree or otherwise address the problem.
The judge on appeal was correct to uphold the magistrate’s finding that the lemon scented gum, and in particular that its roots were a substantial cause of at least some of the damage to neighbouring units. The judge was also correct to conclude that Ms Valherie was liable for continuing or adopting the nuisance. However the extent of the compensable losses is more problematic. An occupier who adopts or continues a nuisance is only liable for so much of the damage caused by the nuisance as occurred after he or she began to continue or adopt it.[8] Difficult questions arise for resolution.
Compensable Loss
[8] Proprietors of Strata Plan No 14198 v Cowell (1989) 24 NSWLR 478
The Continuation or Adoption of the Nuisance
Ms Valherie was not aware of the damage to the neighbouring units until she received the letter of 1 November 2000. As the judge observed:
…I am satisfied that [Ms Valherie] did not direct her mind to the risk of damage to the Corporation’s units before mid November 2000.
Relevantly the judge then concluded:
If the Magistrate intended to find Ms Valherie liable for damage occurring before that date, to that extent only he was in error. My impression from his reasons is that he did so intend, but his reasons are not clear on the point.
It follows from this that Ms Valherie should not be liable for the cost of repairing damage done to the Corporation units before the end of the year 2000. She is liable to pay damages only for the consequences of her wrongful conduct, and in my view, her liability is for the loss caused by her continuance of the nuisance. That loss as a matter of law, begins from the year 2001, because that is when she is treated as continuing the nuisance. I note that the same approach was taken by Hodgson J in Proprietors of Strata Plan No 14198 v Cowell (1991-1992) 24 NSWLR 478.
The Conduct of Strata Corporation 1841
The question of compensable loss was complicated by the conduct of Strata Corporation 1841. As earlier observed Strata Corporation 1841 did not provide a copy of the Kourkourou report to Ms Valherie and failed to disclose the ‘strong recommendation’ of Kourkourou that the lemon scented gum be removed immediately. Strata Corporation 1841 deliberately ignored Ms Valherie’s request that it communicate with her at her Paris address. Strata Corporation 1841 misled the court when obtaining an order for substituted service. This conduct led to a delay in the removal of the lemon scented gum and also denied Ms Valherie the opportunity to consider the immediate removal of the gum.
The Burden of Proof
There is a further difficulty. As the judge correctly concluded, the magistrate failed to consider that the units were already damaged before Ms Valherie adopted or continued the nuisance and became liable for ongoing damage. The burden of proving the extent of loss was on Strata Corporation 1841. The measure of compensable loss necessarily involved a comparison of the extent of the damage to the units as at the end of the year 2000 with the extent of the damage at the time of the removal of the tree. What was the further damage? Did the further damage lead to a greater repair expense? What was the extra expense? Strata Corporation was in a position to lead evidence addressing these issues. An estimate of the cost of repairs at the two dates could have been made. The difference between the two would represent the primary loss of the Corporation. However this evidence was not placed before the magistrate. As a result the court has been left to make the best assessment it could on inadequate evidence.
The Extent of Damage
All the neighbouring units suffered some structural damage prior to Ms Valherie becoming aware that the units were being damaged by the roots of the lemon scented gum. Strata Corporation 1841 was in a position at the time it commissioned the engineer’s report in late 2000 to obtain an estimate of the cost of repairs. Its advisers Kourkourou had examined the units in late 2000 as well as at the time of the removal of the tree. The extent of the damage could be assessed and an estimate of the cost of repairs undertaken. The existing damage to unit 8 was significant as evidenced by the Housing Trust order.
Strata Corporation 1841 made no attempt to quantify the extent of the damage as at the end of the year 2000. The extent of the damage to the units and the cost of repairs were only quantified following the removal of the tree in September 2001. As a result, it is not possible to accurately assess the extent of the deterioration since November 2000. As earlier observed Strata Corporation 1841 carried the onus of proof in this respect. It had the opportunity to lead relevant evidence but it did not do so.
By the end of the year 2000 substantial damage had been caused to unit 8 as well as damage to at least some of the other units. This was evidenced by the substandard order made by the Housing Trust in July 2000 with respect to unit 8. This order led to a loss of rent. The rent loss was due to the poor condition of unit 8 many months before the date from which Ms Valherie was found to have adopted or continued the nuisance. Counsel conceded that a causative link had not been shown between the continuation of the nuisance and the loss of rent. It was accepted that the loss of rent was not a compensable head of damage.
The evidence also disclosed that damage to other units was evident well before the end of the year 2000.
A discrete issue arose concerning unit 10. The evidence established that damage to unit 10 was primarily and substantially caused by the roots of a pepper tree situated on the property on which the units were built. On appeal counsel for Strata Corporation 1841 accepted that Ms Valherie was not responsible for the cost of repairs to unit 10.
The Approach of the Appeal Judge
On appeal the judge reduced the amount of damages for which Ms Valherie was liable by 10%. However, no basis for this reduction was identified or disclosed. The judge treated the damage to unit 10 as compensable damage and this may have influenced his considerations of an appropriate reduction. The loss of rent claim was allowed but reduced as to the amount. As earlier observed, it was accepted that the rent losses were not caused by the continuation of the nuisance and were not compensable.
The assessment of damages of the magistrate and the judge can be compared as follows:
Magistrate
Judge
Cost of repairs 14,287 13,000 Loss of Rent 4,020 3,620 Anticipated increase in costs 2,400 2,000 Removal of tree 1,870 1,870 Contingencies 813 813 Engineers costs 572 572 Total 23,962 21,875 Conclusion
Ms Valherie was liable for the loss occasioned by her continuance for adoption of the nuisance. This loss is represented by the further damage occasioned to units 7, 8 and 9 during the period from commencement of the year 2001 until the tree was removed in September 2001. That estimate should include an allowance for the fact the work could not commence until the soil had settled following the removal of the tree. Ms Valherie was also responsible for the cost of the removal of the tree and the cost of the engineering expenses associated with the investigation and assessment of the damage sustained.
As a result of the Housing Trust order of July 2000 relating to the substandard condition of unit 8, Strata Corporation sustained a loss of rent. As earlier observed counsel for the corporation conceded that this loss was not caused by the ongoing nuisance.
As earlier observed, the evidence relating to the state of unit 10 disclosed that the substantial cause of damage to that unit was a pepper tree situated on the property of Strata Corporation 1841. The cost estimate to repair unit 10 was $4,177.80. As a result, the damage to this unit does not form part of the compensable loss. This was accepted by counsel for the corporation.
It is difficult to assess the compensable losses having regard to the failure of the Corporation to establish the extent of the deterioration of units 7, 8 and 9 between January 2001 and September 2001. The evidence established that further deterioration had occurred. The court is left to assess the loss as best it can. In the circumstances only a nominal allowance can be made. Strata Corporation’s compensable loss should be assessed as follows:
-an allowance for the cost of repair of units 7, 8 and 9 including an allowance for increasing costs and all miscellaneous expense $3,000.00;
-engineering expenses $300.00;
-costs for removal of tree $1,870.00.
This appeal should be allowed. The award of damage to Strata Corporation 1841 should be reduced from $21,875.00 to $5,170.00. Otherwise the appeal should be dismissed.
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