Land and Environment Court of New South Wales CITATION : Gunther v Taylor [2008] NSWLEC 127 APPLICANTS Bruno Gunther and Irmgard Gunther PARTIES : RESPONDENTS Ian Taylor and Elizabeth Taylor FILE NUMBER(S) : 40701 of 2006 CORAM: Preston CJ KEY ISSUES: Costs :- proceedings settled - court orders substantially in terms and to effect claimed by applicants in originating process - costs ordered - adjustment of amount ordered Encroachment of Buildings Act 1922 LEGISLATION CITED: Land and Environment Court Act 1979 s 19 Surveying Act 2002 s 18 CASES CITED: Kiama Council v Grant (2006) 143 LGERA 441 DATES OF HEARING: 18 March 2008 EX TEMPORE JUDGMENT DATE : 18 March 2008 APPLICANTS Mr W Purdon (solicitor) SOLICITORS LEGAL REPRESENTATIVES: William Purdon RESPONDENTS In person JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES PRESTON CJ 18 MARCH 2008 40701 OF 2006 GUNTHER V TAYLOR JUDGMENT 1 HIS HONOUR: At the end of the first day of hearing of these proceedings I made orders by consent that effectively concluded the proceedings other than as to costs, which were reserved. 2 The applicants now seek an order that the respondents pay the applicants' costs of the proceedings. The respondents oppose that order and submit that each party should pay their own costs. 3 The applicants and respondents are neighbours in Heathcote. The respondents, who reside at 27A Lunar Avenue, built a swimming pool which had surrounding paving supported by a concrete block retaining wall along the common boundary with the applicants' property at 62 Boundary Road, Heathcote. 4 The construction of a swimming pool, paving and retaining wall was ultimately authorised by various building approvals issued by Sutherland Shire Council. Although contractors installed the swimming pool, the respondents constructed the concrete block retaining wall and paving themselves. This wall is the source of the problem between the neighbours. 5 The wall was allegedly poorly constructed, structurally inadequate and without proper drainage measures. The applicants allege that the wall allowed movement of soil and water onto the applicants' property in excess of what should have occurred if the wall had been properly constructed. Furthermore, the applicants allege that the wall encroached onto the applicants' property. 6 The applicants raised concerns about the wall with the respondents and with Sutherland Shire Council. The applicants allege that the respondents had not complied with the building approvals in constructing the wall, that the wall was defective in the respects specified and that the wall encroached onto the applicants' land. 7 The respondents did not take action that was effective to complete the wall in accordance with the building approvals, to remedy the alleged defects in the wall or to remove the encroachments. Instead, the respondents engaged in communications and dialogue with the applicants as to the precise nature of the concerns but no effective action was taken to address those concerns. 8 Ultimately, the applicants commenced proceedings in this Court seeking orders that the respondents remove the encroachments and comply with the building approvals. The applicants commenced proceedings by application in Class 4 of the Court's jurisdiction on 10 August 2006. 9 The claim for relief in relation to the encroachments may not properly have been a matter to be brought within Class 4 of the Court's jurisdiction. Proceedings under the Encroachment of Buildings Act 1922 are assigned by s 19 of the Land and Environment Court Act 1979 to Class 3 of the Court's jurisdiction. However, a claim is not improperly brought if it is commenced in an incorrect class of the Court's jurisdiction and the Court can reassign the claim to the correct class of the Court's jurisdiction. 10 On the first return of the application, the list judge made directions for the applicants to file and serve points of claim and affidavits and re-list the matter on 6 October 2006. On 6 October 2006, the list judge made further directions including in relation to the request for and response of further and better particulars to the points of claim, the filing and service by the respondents of points of defence and affidavits, the filing and service by the applicants of a reply to the points of defence and affidavits in reply, and the obtaining of a hearing date. The hearing was fixed later that day for two days on 29 and 30 November 2006. The parties prepared documents in the nature of pleadings and affidavits in terms of the list judge's directions. 11 The hearing of the proceedings commenced before me on 29 November 2006. During the course of the hearing it became evident that the retaining wall did encroach onto the applicants' property and that there were issues as to the nature of construction of the wall and whether it had been completed in accordance with the relevant building approvals in at least some respects. 12 After discussion between the parties and with some assistance from me as to the matters that the parties might consider to include in any settlement agreement, the parties settled the matter except as to costs. 13 The settlement involved, in essence, the respondents making a development application to Sutherland Shire Council to demolish the existing wall and replace it with a proper wall; upon obtaining consent, arranging construction of the wall in accordance with the consent and by a licensed professional builder; and arranging for a registered surveyor to certify that the new wall is wholly within the respondents' property. 14 By pursuing this course of action, the applicants' concerns about the existing wall's encroachment, defects in construction and non-compliance with previous building approvals would be remedied. The existing wall would be replaced by a new, properly constructed wall, wholly on the respondents' land and in accordance with a fresh development consent. 15 The Court made orders in terms of the detailed settlement agreed between the parties. The proceedings were adjourned to 28 September 2007 to allow time, some 10 months, for this process to occur. Unfortunately, although development consent was obtained, the applicants had not carried out work in relation to demolition of the existing wall and replacement with a new wall by 28 September 2007. 16 The respondents had removed a large tree adjacent to the pool in May 2007. However, the respondents allege that the applicants had not allowed access to their property for the respondents' contractor to carry out the work, contrary to one of the Court orders, order 7. This delayed the work being completed. 17 On 28 September 2007, the list judge extended the time for compliance to 15 October 2008 and noted the parties' agreement that the applicant would authorise access for a small excavator to dig out the foundations. The proceedings were adjourned to 15 February 2008. By 15 February 2008, the work had been completed and a surveyor had certificated that the wall did not encroach onto the applicants' property. 18 The applicants indicated their desire to apply for costs. The list judge made directions for each party to file affidavits in relation to costs and the matter was listed for hearing today, 18 March 2008. 19 At the hearing today, the applicants and respondents each read their own affidavits chronicling events leading up to and in the course of the proceedings. Extensive correspondence between the parties and their representatives was annexed. 20 The applicants' argument is essentially that they were forced by the respondents' conduct to come to court; by the orders agreed between the parties at the hearing of the substantive proceedings, the respondents effectively surrendered to the applicants; and the applicants were successful in obtaining the relief that they had sought in their application to the Court. 21 The respondents conceded that the existing wall had encroached onto the applicants' property and needed to be pulled down and rebuilt wholly on the respondents' land. However, the respondents submitted that they would have been prepared to do this without the necessity for court action and orders. 22 The respondents submitted that had the applicants allowed their surveyor to access their property to survey the wall, the respondents would have been able to verify the applicants' claim that the wall encroached and the respondents would have been able to negotiate with the applicants about demolishing and rebuilding the wall. 23 The respondents submitted that the applicants imposed a condition on the applicants' surveyor accessing their land that the applicants provide a copy of any survey so produced free of charge. The respondents refused to accept this condition for reasons relating to the past history of dealings between the neighbours, including that the applicants had refused to provide free of charge other documents in the past to the respondents. So the respondents did nothing in relation to the survey. 24 The respondents conceded that earlier they had received a letter from the applicants' surveyor, Mr Cochrane, that stated that the "concrete block wall appears to encroach by up to 0.13m between points A and B" (para 20 of Mr Taylor's affidavit of 8 March 2008). However, the respondents submitted they were entitled to reject the surveyor's opinion because there was no indication of where points A and B were and because the surveyor had used the word "appears". 25 The respondents submitted that it was not until they were able to arrange for their own survey, which confirmed that the wall encroached onto the applicants' property, that they were prepared to accept that fact and that it would need to be demolished and rebuilt. 26 The respondents' submissions misquotes the applicants' surveyor's letter. The letter of Mr Cochrane is dated 7 May 2003 and is annexed to Mr Taylor's affidavit. The relevant part of the letter referring to the encroachment between points A and B does not use the word "appears" at all. It states: "The concrete block wall encroaches onto the property by up to 0.13 metres between points A and B with the irregular foundations appearing to encroach by up to 0.25m in the vicinity of point B". 27 It can be seen that the reference to "appear" is in relation to the irregular foundations and not in relation to the concrete block wall encroaching by up to 0.13 metres. There is a subsequent reference to "apparent" in the last sentence of the letter where the surveyor states "Other than as indicated we find no other apparent encroachments between points A-C". 28 It is also the fact that a registered surveyor has power under the Surveying Act 2002 (s 18) to access a property for the purpose of identifying boundaries and encroachments even without consent of each of the property owners. 29 The respondents also conceded that the retaining wall they built was defective in some respects. The respondents noted that the wall was insufficiently reinforced and collapsed when the pool fence was erected upon it. It was rebuilt and, inappropriately, weep holes were left in the construction: para 16 of Mr Taylor's affidavit of 8 March 2008. 30 The respondents submitted, however, that they did not remedy the defects because the applicants would not allow the respondents onto their property to view the inappropriate weep holes or to block them. 31 I note, however, that Mr Taylor had said in a letter to Mr Gunther of 14 November 2003 that although he was happy to block the weep holes, "I would be silly to waste my time doing this when your claim is for the whole wall to be pulled down". As I have noted, Mr Taylor was not prepared to pull the wall down unless he verified, by his own surveyor, the applicants' claim that the wall encroached onto the applicants' property. 32 The respondents submitted that many of the items of cost claimed by the applicants should be disallowed. In particular, the respondents claimed that: (a) There is no evidence that the four items of legal expenses in the period between 2002 to April 2005, prior to the commencement of proceedings, related to the costs of these proceedings, (b) Correspondence of the applicants' solicitors showed that the majority of their efforts related to attempts to convince Sutherland Shire Council that they should take action, (c) Advice from experts, Capaldi King and Soliman Hanna, were unnecessary and were not used in evidence, (d) The survey report from Mr Cochrane was relevant but because the diagram was not provided with the letter, the costs should be disallowed, (e) Other items said to be for "documentation copying, stamps, et cetera" are not itemised and may be arbitrary, (f) Work had not been completed by the court appearance on 28 September 2007 because of the failure of the applicants to allow access to their land in accordance with order 7 of the Court's orders and therefore the costs of that appearance should not be allowed, and (g) The respondents had completed the work and had a survey completed within one month of doing so in accordance with order 9 of the Court's orders and that the provision of the survey to the applicants at the mention on 15 February 2008 was still in accordance with order 9. 33 Where proceedings are compromised without completion of the hearing and a judgment, the court is deprived of the usual criterion that is used to determine how the discretion as to costs will be exercised. Nevertheless, the cases show that certain rules of thumb are used to determine the appropriate manner of exercise of the discretion. These principles were summarised in Kiama Council v Grant (2006) 143 LGERA 441 at 457 [80]. Of relevance is the following principle: "Where one party effectively surrenders to the other party by…submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party, the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party." The usual order as to costs is that the party in whose favour the court makes orders is entitled to have its costs paid by the other party against whom the order is made. 34 In this case, the orders of the Court were in terms and to the effect that was claimed by the applicants. The Class 4 application sought orders that the encroaching wall be removed. An order to that effect was made. 35 The application also sought orders in relation to the compliance with the building approvals that had been issued. An order was not made in these terms. The order that the wall be removed, that a new development consent be obtained and a new wall be built in accordance with that new development consent removed the need for any such determination in relation to the prior building approvals. 36 I consider that the orders made by the Court answer the description of a party effectively surrendering to the other party by submitting to the court making orders against that party substantially in the terms or to the effect claimed by the other party. 37 However, as I have noted, there is an exception to this ordinary rule and that is where there is disentitling conduct on the part of the other party. As I have noted, the respondents have pointed to two aspects of allegedly disentitling conduct. 38 The first was in relation to the applicants not agreeing to the respondents' surveyor entering upon their land to conduct a survey to verify that the retaining wall encroached onto the applicants' property. Although it would clearly have been preferable that unconditional access had been provided by the applicants to the respondents' surveyor, I do not consider that their conduct in allowing conditional access amounts to disentitling conduct. 39 First, as I have said, any registered surveyor under the s 18 of the Surveying Act 2002 has the right to enter upon land for the purpose of surveying boundaries and encroachments regardless of whether there is consent of the property owners concerned. That is a statutory right. 40 Secondly, the condition upon which access was allowed was not onerous. The condition was that any survey that resulted from the respondents' surveyor surveying the boundary and the encroachment be provided free of charge to the applicants. Whilst I can understand that where there has been a history of disagreement between neighbours it is sometimes unpalatable to allow a neighbour anything for free, there was no additional cost to the respondents by agreeing to this condition. The respondents would have to pay for the surveyor in any event. Photocopying the survey and providing it to the applicants was a small price to pay. Of course, if that had been done, it would have shown that the retaining wall did in fact encroach and the litigation may have been avoided. 41 Thirdly, the applicants did provide some evidence from a registered surveyor that the retaining wall encroached onto the applicants' land. This was provided by way of the letter of Mr Cochrane of 7 May 2003. That letter stated unequivocally that the concrete block wall encroached onto the property by up to 0.13 metres. It is true that it also stated that irregular foundations appeared to encroach by up to 0.25 metres at a particular point. However, this did not detract from the unqualified proposition that the concrete block wall encroached between points A and B. 42 There was no valid reason on the face of the surveyor's letter to doubt that there was an encroachment. It is true that it would have been more helpful if the survey which showed where the points A and B were located had also been provided to the respondents. Nevertheless, it later became clear to the respondents as to where the points A and B were. 43 In or around November 2003, the applicants' solicitors sent a letter to the respondents which included a plan which had highlighted on it the section of the retaining wall which it was alleged encroached upon the applicants' property. That showed the section of the wall to be adjacent to the swimming pool. The respondents certainly interpreted the section of the retaining wall that encroached to be that section which was adjacent to the swimming pool because in their letter of 14 November 2003 to the applicants, Mr Taylor said: "Your solicitor in his most recent letter has included a plan indicating that it is the wall and foundations adjacent to the swimming pool, which is alleged to encroach on your property. Presumably the end points of a highlighted area are points A and B mentioned in your surveyor's letter and you have no concern in relation to the remaining work that I have carried out." 44 It can be seen, therefore, that there was evidence provided to the respondents which showed that the retaining wall did encroach at this section. This was born out by subsequent survey work undertaken on behalf of the respondents. Although the respondents may have wished to independently verify the encroachment, there was evidence which was made plain to the respondents that the wall, at least for part of its length, encroached onto the applicants' land. 45 The failure of the applicants to allow the surveyor to come on to their land except on the condition that any survey be provided free of charge was not in these circumstances unreasonable. Accordingly, I do not consider that this conduct amounts to disentitling conduct. 46 The other conduct which was referred to by the respondents was the failure of the applicants to allow the respondents onto their property to view the retaining walls and the inappropriate weep holes that were left in the construction when the wall was rebuilt, or to allow the respondents to block the holes. 47 As the respondents rightly acknowledged in the letter of 14 November 2003, if the wall did in fact encroach and it would need to be removed and rebuilt, then any problem in relation to the weep holes would be corrected by the rebuilding. Furthermore, the applicants' concerns in relation to the wall were not limited to inappropriate weep holes; there were more general issues as to the construction of the wall, obviously including its location, encroaching onto the applicants' property, as well as whether it complied with the various conditions of the Council's building approvals. 48 Accordingly, the applicants' conduct in not allowing the respondents onto their property to enable the respondents to view the wall, let alone block the weep holes, does not amount to disentitling conduct. 49 That brings us to the specific items that the respondents took issue with in relation to certain cost items. 50 Upon my indication to the parties that, first, I was minded to make an order for costs, however, I was concerned that there may be some items which are not properly allowable as being referable to these proceedings or may be excessive, the parties had discussions and came to an agreement that costs should be in the amount of $11,936.00. 51 This amount was a reduction from the amount claimed in the affidavit of Mr Gunther of $17,078.25, to which would need to be added the legal costs for the hearing today which Mr Purdon, the solicitor for the applicants, estimated would be $1,000. 52 Mr Taylor, though agreeing with the amount of $11,936, did submit that that amount still included the full costs of one expert engaged by the applicants, Mr Capaldi. Mr Capaldi is a building consultant and prepared a report which dealt with a variety of different matters relating to the retaining wall. That report was annexed to an affidavit which was read in the proceedings. 53 The report covers a variety of matters including the finished landscape levels, the condition of the boundary fence, construction of the retaining wall, missing sections of the retaining wall, drainage, location of the existing fence and retaining wall and costs to rectifying and making good the boundaries. 54 Although the report does use the expertise of Mr Capaldi as a building consultant, it also is derivative of other experts' reports and repeats their evidence, in particular repeats the evidence of the structural engineer, Soliman Hanna and Associates, and the surveyor, Mr Cochrane. There is also a consideration of questions such as the location of the boundary fence and its condition, which questions were not the subject of the proceedings. 55 I consider that it is fair that the costs of Mr Capaldi should be included in the costs to be recovered by the applicant, however, there are certain items based upon the derivative work and extraneous matters for which allowance should be made. 56 The item of cost claimed for Mr Capaldi is in the sum of $2,783. I consider that approximately two thirds of this amount should be allowed. This would mean that the figure of $11,936 should be adjusted by some $900, resulting in a rounded total amount of $11,000. 57 This adjustment together with the earlier adjustments agreed between the parties is, I consider, an appropriate adjustment and deals with the submissions challenging certain of the cost items made by the respondents and that I have earlier set out. I consider that the amount of $11,000 is a fair and reasonable amount for costs. 58 For these reasons, I order, that the respondents pay the applicants' costs of the proceedings and of this application for costs, fixed in the amount of $11,000. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.