Valherie v Strata Corporation No. 1841 Inc and Ors No. Scciv-03-593

VALHERIE v STRATA CORPORATION NO. 1841 INC & ORS
[2003] SASC 291
Magistrates Appeal

Doyle CJ This appeal illustrates the problems that can arise when a substantial tree grows close to a house built on highly reactive clay of the kind found in a number of Adelaide suburbs.
I feel sorry for the parties. They have become involved in court proceedings that involve considerable expense, and, no doubt, considerable anxiety for them. However, I must apply the law as it stands.
Facts
What follows is drawn almost entirely from the Magistrate’s findings. On a few occasions I have added some additional facts which I am satisfied are consistent with his findings.
In April 1995 Ms Valherie purchased a house (“the defendant’s house”) at Windsor Gardens.
She bought it from Ms Mitchell and Ms Arnott (“the third parties”) who had owned it since about 1980.
When Ms Valherie bought the defendants’ house, a substantial lemon scented gum tree was growing in the backyard. The gum tree was very close to the boundary of the adjoining property. The gum tree was growing there when the third parties bought the house in 1980.
The plaintiff, Strata Corporation No. 1841 Inc (“the Corporation”) owned the adjoining property. Ten strata title units stood on it. They were built in two blocks of five. The gum tree was only about 3 metres from the nearest unit in one of the blocks of five (“the Corporation units”).
The soil in this area is a highly reactive clay soil. Such soil swells when wet and shrinks and settles when dry. Because of its size, the gum tree would have absorbed considerable moisture from the soil in summer, increasing the soil shrinkage in the dry season.
Prior to the year 2000, there was minor cracking in the Corporation’s units. However, this was regarded as minor, and of a kind often encountered in Adelaide. It was repaired from time to time. The work was regarded as routine maintenance. No complaint was made by the Corporation to the third parties or to Ms Valherie.
Although the evidence is not completely clear, the cracking and other problems attributable to soil movement must have worsened during 2000. This led to the Corporation obtaining expert advice about the cause.
There is no doubt that the cracking was contributed to by the roots of the gum tree, which had penetrated below the Corporation units before 1999.
The third parties were keen gardeners, and took considerable care with their garden. They watered it regularly. This probably contained soil shrinkage during the summers when they were in occupation.
Not long after Ms Valherie purchased the defendant’s house in April 1999 she was advised, in a report that she commissioned, that it was important to maintain “consistent soil moisture balance all year round”. The reason for this was explained to her. In November 1999 Ms Valherie was given similar advice in another report that she commissioned. She obtained these reports because she was concerned about cracking and other signs of soil movement affecting the defendant’s house.
Ms Valherie became concerned about signs of increasing problems with the structure of the defendant’s house. In early 2000 she tried unsuccessfully to sell the house. Then she tried to rescind the purchase of the house. In October 2000 she moved out of the house and abandoned it. In November 2000 she left Australia. She did not return until November 2001.
From at least October 2000, when she abandoned the house, she did not maintain the garden at all. It may be that prior to that she was not maintaining it adequately.
Meantime, in about October 2000 the Corporation had become concerned about increased cracking in the Corporation units. Mr Liney, an engineer, inspected one of the units on 16 October 2000. In a report of that date he refers to significant cracking and other signs of soil movement. He states that the gum tree was making a “significant contribution” to this. He “strongly recommended” that the tree be removed. He suggested “cosmetic repairs” straight away, and a more substantial repair program about three years later, when soil movement should have become normal.
By letter dated 1 November 2000 the Corporation wrote to Ms Valherie. It referred to structural damage to the Corporation units being caused by the gum tree. The Corporation invited Ms Valherie to contact it, and offered to show her Mr Liney’s report and to discuss the matter.
Ms Valherie replied at length by letter dated 13 November 2000. She said that she had rescinded the purchase of the defendant’s property, and was no longer the owner. She also referred to court proceedings to obtain rescission. She said that there was no “rightful owner” able to make a decision on the matter of the damage to the Corporation’s units. She added:
“I am well aware of the structural damage to the [Corporation units], damage which has most likely been caused, apart from the extreme soil reactivity of this particular area of Windsor Gardens, of which I am also well aware now, by the gum tree situated at the northern end of [the defendant’s house], extremely close to the group of buildings.
The apportionment of the various likely causes of the structural damage will be no doubt a good subject for debate between agents.”
She suggested that the builder of the Corporation units might be at fault for having built so close to the gum tree. She suggested that the third parties were to blame for any problems. She asked to be kept advised of developments, and gave a postal address in Paris. The letter was courteously expressed, but contained no offer to resolve the problem.
Ms Valherie’s claim to rescind the purchase was ultimately unsuccessful. She did not do anything about the tree.
On 22 February 2001 the Corporation issued court proceedings seeking a court order for removal of the gum tree and claiming the cost of repairs, an amount slightly less than $5,000.
At some stage a court order for the removal of the tree was made, and the tree was taken out.
Ms Valherie filed a defence to the claim in March 2002.
In May 2001 the Corporation amended its pleadings to particularise the claim in more detail. It now claimed damages of almost $20,000.
In January 2003 Ms Valherie joined the third parties as third parties, claiming indemnity from them.
The case was heard by a Magistrate in April 2003. The Corporation was represented by a practitioner. Ms Valherie and the third parties appeared for themselves.
The Magistrate’s reasons
The Magistrate made findings along the lines outlined above.
The Magistrate accepted expert evidence from Mr Liney, the engineer who had provided reports to the Corporation. He found that extensive damage to the Corporation units, described by Mr Liney, was attributable to excessive soil movement caused by the withdrawal of moisture from the soil by the gum tree. Obviously enough, the nature of the soil was a contributing factor, but his finding was that the substantial cause of the damage was the gum tree.
The Magistrate found that Ms Valherie did not maintain adequate watering from at least late 2000. He found, on the basis of advice given to her (the reports referred to above) and her own letter, that she knew of the need to maintain moisture levels, but had not done so. By inference he found that this failure was the cause of the increasing soil movement in late 2000.
The Magistrate did not make a finding that Ms Valherie knew that there was a risk of damage to the Corporation units, as distinct from a risk of damage to the defendant’s house, if she failed to maintain adequate watering. But she must have realised this once she received the Corporation’s letter of 1 November 2000, as her own letter indicates.
I interpolate here that I am satisfied that she did not direct her mind to the risk of damage to the Corporation’s units before then.
The Magistrate found that Ms Valherie was liable for the cost of repairs because, knowing of the risk of damage to the Corporation’s units, she failed to remove the gum tree or to take other remedial action.
The Magistrate awarded the Corporation damages of $23,962.00. These comprised fees paid to the engineer ($572.00), the cost of removing the tree ($1,870.00), loss suffered by the Corporation because it could not charge the full rental for one of the units while it was in a damaged state ($4,020.00), the estimated cost of repairs past and future ($14,287.00) and an additional allowance on this amount to reflect likely cost increases in the cost of repairs ($2,400.00) and an allowance of $813.00 for contingencies.
I note here that the Magistrate did not address his mind to the fact that, when the problem was drawn to Ms Valherie’s attention in November 2000, damage over and above the usual cracking had already occurred. Accordingly, he appears to have awarded the Corporation damages which include the cost of repairing damage to the Corporation units which had occurred before the problem was drawn to Ms Valherie’s attention.
The Magistrate found that when the third parties sold the defendant’s house to Ms Valherie, damage to the Corporation’s units was foreseeable. The basis for this finding is not clear. He also seems to have found that the minor cracking that occurred prior to 2000 was attributable to the gum tree. He found that the third parties would have removed the gum tree promptly if they were still the owners at the time in question, and had been asked to do so. Accordingly, apparently regarding them as liable for the damage to the Corporation units, he nevertheless limited the liability to the loss attributable to the failure to remove the tree promptly. He assessed that loss at $2,500.00. He did not give any explanation for how he arrived at that figure.
It should be noted that when the third parties sold the property to Ms Valherie, no damage to the Corporation units had occurred which the Corporation regarded as in any way out of the ordinary.
The Appeal
On appeal, the Corporation was legally represented. Ms Valherie and the third parties again appeared for themselves.
Ms Valherie argued that the damage to the Corporation units was caused by its own failure to maintain in good condition concrete paving around the units. There is nothing in the evidence to support the submission. I do not accept it.
I agree that the highly reactive soil was a contributing factor to the damage. However, on the evidence before the Magistrate the substantial cause of the damage was the drying effect of the roots of the gum tree.
Ms Valherie complained of the Corporation’s failure to ask specifically that the gum tree be removed. She said that she would have removed the tree if asked to do so. She also complained of the Corporation’s failure to contact her during 2001 at the Paris address she had given. She complained that during that time the damage got worse, and had she been told of this she would have done something about it.
I consider that the Corporation’s letter of 1 November 2000 fairly put Ms Valherie on notice about the problem. Her response, while courteous, was defensive. It gave no indication that she was prepared to remedy the problem. She took no action, and made no enquiry herself. The ideal solution, prompt removal of the tree, should have been obvious to Ms Valherie. In my view the Corporation did not act unreasonably. No criticism can be made of the Magistrate’s findings on this basis.
The Corporation was not obliged to contact Ms Valherie in Paris, to keep her apprised of developments. As I have said, her reply did not indicate that she was willing to remove the tree. In any event, this matter was not raised as a defence at the hearing, as far as I can tell from the transcript. Mr Hegarty, counsel for the Corporation, made the point that had it been raised at the hearing, the Corporation would have led evidence in relation to the matter. There may be reasons unknown to me why the Corporation’s solicitors did not contact Ms Valherie during 2001. It is now too late to open up a new aspect of the case. Ms Valherie should not be permitted to put forward fresh argument at this stage, but in any event it appears to me to have no substance.
Ms Valherie also challenged the Magistrate’s finding that the encroaching roots of the gum tree were the cause of the damage. That finding was firmly supported by the evidence.
Not surprisingly, Ms Valherie argued that it was unfair that, after being owner for about 18 months, she should be found liable for damage caused by a tree that had grown on the defendant’s property for at least 20 years.
The law in this respect is clear. 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 Sedleigh-Denfield v O’Callaghan and Others [1940] AC 880 Viscount Maugham said at 894:
“…an 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 and end though with ample time to do so. He “adopts” it if he makes any use of the erection, building, bank or artificial contrivance which constitutes the nuisance.”
This is a statement of principle which has been accepted and applied in many subsequent cases. The relevant principle was stated by members of the High Court in similar terms in Torette House Pty Ltd v Berkman (1939) 62 CLR 637. The statement of principle just cited was referred to with approval by members of the High Court in Hargrave and Others v Goldman (1963) 110 CLR 40. The principle has been applied in a number of decisions made by single judges: see, for example, City ofRichmond v Scantelbury and Another [1991] 2 VR 38 and Proprietors of Strata Plan No 14198 v Cowell (1991 - 1992) 24 NSWLR 478.
On the basis of these principles, the Magistrate’s decision was correct.
Ms Valherie was aware of the need to maintain adequate watering of the soil. She was made aware of this, by reports that she obtained, in 1999 and 2000. She was aware of the risk of damage to the defendant’s house if she did not do so. She must have understood that the highly reactive nature of the soil meant that damage was likely to occur to the defendant’s house if she did not maintain a watering program during summer. However, there is no evidence that she was, or should have been, aware that failure to maintain adequate watering might cause damage to the Corporation units, because of the drying effect of the encroaching roots of the gum tree. On the evidence, it appears to me that she first became aware of this in November 2000 when she received the letter from the Corporation to which I have referred.
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.
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.
That conclusion gives rise to a problem with the damages. This issue was not addressed by Ms Valherie, but in fairness it should be. I raised it with Mr Hegarty during the course of argument.
The Magistrate appears to have awarded damages for repairing damage to the Corporation units that included damage found when the engineer inspected the Corporation units in October 2000. This was before the Corporation drew to Ms Valherie’s attention the damage being done by the tree roots. My understanding of the evidence is that the damage to the Corporation units increased significantly during 2001. Most of the damage occurred after the Corporation wrote to Ms Valherie, but some of the damage occurred before then.
In the nature of things, it would be very difficult to isolate the cost of repairing damage caused before the end of 2000 from the cost of repairing damage caused from the beginning of 2001. The nature of the damage, cracking in the building structure, is the source of the difficulty. No doubt in some cases cracks became worse during 2001, and in some cases there would have been new cracks. The process of filling cracks, plastering and painting, is one that is only partly dependent on the extent of cracking at a given site or in a particular wall at a particular time. Nevertheless, I consider that some deduction should be made from the damages on account of repair work that was necessary before Ms Valherie became liable.
I consider that, in all the circumstances, it would be fair to reduce the allowance for the cost of repairs from $14,287.00 to $13,000.00, a reduction of about 10%. To send the matter back to the Magistrates’ court for a further hearing on this point would cost the parties further expense and, I am satisfied, would involve an enquiry which is likely to be unanswerable.
The Magistrate also allowed $2,400.00 to allow for anticipated cost increases incurring before all of the repair work was carried out. It is not clear why he did this. The estimate for the cost of repairs relates to work which, according to Mr Liney, should be carried out more or less straight away. In his report, Exhibit P6, Mr Liney refers to further work that might be necessary in several years time, once the soil movement has returned to normal. But the estimate before the Magistrate does not relate to that deferred work, but to the work which should be carried out straight away. As the Appellant has the benefit of the award of damages from the date of judgment, that award carrying interest from the date of judgment, it seems to me wrong to allow for anything more than the increase in cost from the date of the estimate (30 November 2001) to the date of trial. The Magistrate appears to have allowed for a 3-year delay in carrying out the work. In my view that was wrong. I consider that an appropriate allowance for the cost of repairs is $15,000.00, inclusive of an allowance for cost increases.
Finally, the Magistrate also allowed for loss of rental income from the Corporation units from 21 September 2000 for 134 weeks at a rate of $30.00 per week. Having regard to my view on the question of liability, that allowance should be reduced by $400.00 to reflect the fact that Ms Valherie’s liability runs from the beginning of the year 2001.
To summarise, the allowance for the cost of repairs should be reduced to $15,000.00, inclusive of interest on account of cost increases. The allowance for the loss of rental should be reduced to $3,620.00. The amount awarded by the Magistrate should be set aside, and the amount of $21,875.00 should be substituted.

I turn now to the appeal by the third parties. I consider that appeal should be allowed.
When the third parties sold the property to Ms Valherie, the gum tree was not causing any significant damage to the Corporation units. The minor cracking that occurred was regarded by the Corporation as normal for the area. Accordingly, when the third parties sold the property, the gum tree on the property was not causing actionable damage to the Corporation units.
There is no basis for a finding that the gum tree was inevitably going to cause actionable damage to the Corporation units. The fact that the tree roots had encroached onto the Corporation’s land, and under the Corporation units, at the time when the third parties sold the property, is not enough to make the third parties liable. On the evidence before the Magistrate there would have been no damage to the Corporation units if Ms Valherie had continued an adequate watering program. This is not a case in which it can be said that the third parties sold the property leaving on it something that was likely to cause damage to the Corporation units. On the evidence, that damage would never have occurred had Ms Valherie maintained an appropriate watering program. There was no reason for the third parties to anticipate that Ms Valherie would not do that.
The third parties are liable to indemnify Ms Valherie only if they are persons who would be liable to the Corporation for the damage that occurred, if they were sued by the Corporation. I consider that an action against the third parties by the Corporation would have failed. The cause of the damage can be attributed to Ms Valherie’s conduct, including her failure promptly to remove the tree. In those circumstances, the damage cannot be regarded as attributable to the conduct of the third parties. As the third parties would not have been liable if sued by the Corporation, they cannot be liable to indemnify Ms Valherie. They are not liable merely because they knew that the gum tree might cause damage to the Corporation units if an adequate watering program was not maintained.
Accordingly, the appeal by the third parties should be allowed. The order that they indemnify Ms Valherie to the extent of $2,500.00 should be set aside. The claim for indemnity should be dismissed.
Conclusions
I would allow the appeal by Ms Valherie. I would set aside the award of damages and order that there be substituted a judgment for the Corporation against Ms Valherie in the sum of $21,875.00 with costs. I allow the appeal by the third parties, and order that the judgment against them be set aside and for that judgment there be substituted an order dismissing the claim against the third parties, with an order for costs in favour of the third parties. The Magistrates’ order that Ms Valherie pay the Corporation’s costs of the trial in the Magistrates’ Court should stand. I would hear the parties as to the costs of the appeal.

[2003] SASC 291

28 August 2003