XR Property Developments Pty Limited v Denning Real Estate Pty Limited [2015] NSWSC 1937

Supreme Court New South Wales

Medium Neutral Citation: XR Property Developments Pty Limited v Denning Real Estate Pty Limited [2015] NSWSC 1937 Hearing dates: 20 and 23 November 2015 Date of orders: 18 December 2015 Decision date: 18 December 2015 Jurisdiction: Equity Before: Young AJA Decision: Stands the matter over to a date in 2016 to deal with outstanding matters. Catchwords: ENCROACHMENT OF BUILDING – Whether encroachment constitutes trespass or nuisance – Issue as to when the encroachment should be removed Legislation Cited: Encroachment of Buildings Act 1922 (NSW) Cases Cited: Billiet v The Commercial Bank of Australasia Limited [1906] SALR 193 Boed Pty Ltd v Seymour (1989) 15 NSWLR 715 Droga v Proprietor of Strata Plan 51722 [1996] NSWLEC 247 Haddans Pty Ltd v Nesbitt (1962) 57 QJPR 21 Kostis v Devitt (1979) 1 BPR 9231 McCorquodale v The Shell Oil Co of Australia Ltd (1932) 33 SR (NSW) 151 Category: Principal judgment Parties: XR Property Developments Pty Limited (Plaintiff/first Cross-Defendant) Denning Real Estate Pty Limited (Defendant/Cross-Claimant) Representation: Counsel: Mr J Doyle; Ms I J King (Plaintiff/Cross-Defendant) Mr M Ashhurst SC (Defendant/Cross-Claimant)

Solicitors: Connor Stevens (Plaintiff/first Cross-Defendant) HWL Ebsworth Lawyers (Defendant/Cross-Claimant) File Number(s): 2015/259773

Judgment 1. HIS HONOUR: This is a claim and cross-claim, each made under the Encroachment of Buildings Act 1922 (NSW) with respect to buildings in Alexandria. The Plaintiff's land fronts Wyndham Street, Alexandria and it joins at the rear the Defendant's land which fronts onto Botany Road. The factual situation has been much clarified since the proceedings were commenced and it is now common ground that there is an encroachment by the Defendant's building onto the Plaintiff's land in that purlins which support the roof of the Defendant's building project to some extent over the boundary line and rest upon a one skinned wall which is wholly upon the Plaintiff's land. 2. The Plaintiff seeks compensation and also damages for continuing trespass and nuisance and removal of the encroachment. The Defendant denies any damages in trespass or nuisance and says that it is quite content to remove the encroachment in about a year's time. This proposal would not inconvenience the Plaintiff who itself proposed an open offer whereby the encroachment could remain for some twelve to fourteen months because the Plaintiff is erecting a new building on its land and it will not be before that time expires that the encroachment will cause real inconvenience. 3. I took a view of the site with Counsel on 19 November and heard evidence and submissions on 20 and 23 November. Mr J Doyle and Ms I J King appeared for the Plaintiff, and Mr M Ashhurst SC appeared for the Defendant. 4. Both parcels of land are due for redevelopment. The buildings on the Plaintiff's land have already been demolished and construction work has commenced. The Plaintiff is erecting 24 units, 8 townhouses, 21 car parking spaces, and one retail space on its land. Its plans have been duly approved by the local authority. 5. The Defendant's land contains two buildings, the northern building and the southern building. The southern building has nothing to do with the present case and I will hereafter ignore it. The northern building is currently unoccupied and it appears to be unsafe to occupy the mezzanine floor of it. The ground floor is unoccupied at present. It would seem that the Defendant has some expectation of letting some or all of that building in the short term, and in the long term redeveloping its site. 6. I have been provided with a history of the ownership of the two parcels of land over the last century. Up until 22 June 1955, the parcels were in separate ownership. However, for between 22 June 1955 and 24 April 1959, N V Appleton Pty Ltd was the registered proprietor of both blocks. From 27 May 1959 until 2 May 1983, Zieman Parker & Graham Pty Limited was the proprietor of both blocks. They were then again in common ownership from 3 May 1983 to 10 July 1988. From 11 July 1988, they have been owned by different proprietors. 7. The Defendant purchased the Botany Road block on 10 April 1991 and the Plaintiff purchased the Wyndham Street block on 14 March 2014. 8. No one knows exactly when the building on the Defendant's land was first erected. It was probably about 100 years ago. That is of little significance. What is of significance is that on the balance of probabilities, building works were carried out to the Defendant's building in 1967 and then critically in 1974. On both dates Zieman Parker & Graham Pty Limited were the proprietors of both blocks. 9. Page 209 in volume 2 of the Defendant's bundle of documents is part of the building application that was made by the then owner of the Wyndham Street block to what was then the Municipality of South Sydney for building approval. The plan shows the words "existing building" to the east of the proposed work on the Wyndham Street property. That must be the Defendant's building. The plan shows the words "demolish this section of the existing wall". The plan is dated 31 July 1968 but it would seem that the works were carried out in 1974. 10. It would seem from the documents obtained from the local authority that at the same time as the development of Wyndham Street, the adjoining premises in Botany Road were to be used for the storage of tiles. The operating company, presumably a subsidiary of the owner, was Graham Tiles Pty Limited. 11. Mr Doyle says that it is significant that the council documents do not actually say that there is a permission to erect a mezzanine floor on the Botany Road property and he says that there is "no approval for that work to suggest that new roofing was attached at that time". However, he continues, and I believe appropriately in view of other evidence, "it is not a matter we necessarily contradict but we say the evidence as to what occurred simply is not there as to the timing". With respect, there is sufficient evidence, some of the experts agree with the timing and, on the balance of probabilities, when the problem occurred. 12. It would seem more likely than not that during the process of the building work, a mezzanine floor was added to the Botany Road property, the roof was adjusted, the rear wall of the Botany Road property was partially demolished and the purlins which supported the roof were supported by a single skin brick wall built wholly upon the Wyndham Street land. This wall then effectively became the rear wall of the Defendant's building. 13. The Plaintiff initially demanded the demolition of the single skin brick wall on the basis that it was encroaching. The Defendant says that that order cannot be made because the wall is wholly on the Plaintiff's land. Apart from having some time to re-adjust the purlins so that they are supported by something, it could not care less whether the single skin brick wall is demolished or not. 14. Now there is no doubt, and it is conceded by both parties, that the purlins do encroach on the Plaintiff's land. 15. The fact that the encroachment is well above ground level does not prevent the purlins constituting an encroachment within the meaning of the Encroachment of Buildings Act; see: Droga v Proprietor of Strata Plan 51722 [1996] NSWLEC 247. 16. The Plaintiff says that the presence of the single skin brick wall, and the purlins which are supported by it, is frustrating its development and that it is under contract with the builder to proceed with due speed. Two particular matters were put up of prejudice. The first is that the piers under the proposed driveway could not be installed while that brick wall was there. However, the expert reporter, Mr Hutchings, shows that this is not so. This evidence was not contradicted and Mr Hutchings was not required for cross-examination and I accept that evidence. 17. The second problem was with respect to the construction of the driveway. However, it became fairly clear on the evidence of all the experts that if the brick wall is removed early, there will have to be filling and it is as convenient for both parties as any other scheme for the brick wall to be removed in 12-14 weeks' time, and the driveway constructed then. This will not hold up the Plaintiff's development. I keep saying 12-14 weeks because at the hearing it was 13-14 weeks and about one month has elapsed since the hearing. 18. If one owns both Redacre and Whiteacre and constructs work on Redacre which encroaches on the boundary of Whiteacre, there is no trespass, see Billiet v The Commercial Bank of Australasia Limited [1906] SALR 193 and Boed Pty Ltd v Seymour (1989) 15 NSWLR 715. If there is no initial trespass or nuisance, there can be no continuing trespass or nuisance. In Kostis v Devitt (1979) 1 BPR 9211, Powell J seems to have found a trespass where the problem was caused by a previous proprietor of both parcels. I have consulted the full text of His Honour's judgment. The present defence to the case in trespass was not argued in the Kostis case. I accordingly prefer the other authorities. 19. In any event one would have to look at the significance, if any, of the Full Court's decision in McCorquodale v The Shell Oil Co of Australia Ltd (1932) 33 SR (NSW) 151, as to the requirement of a direct command by the owner of the building to the workman who did the work or the builder who was employed to do it before there could be any liability for trespass. In the light of the joint ownership point, this is unnecessary to consider. 20. It follows that the damages claims fail except in so far as they come under the Encroachment of Buildings Act. It was agreed that questions of the quantum of compensation could be postponed until next year. The orders that I make may also be postponed until next year because apart from questions of compensation, the only order that can be made is to remove the purlins because they are the only encroachment. It is satisfactory to both parties that things be left in place until the construction program is ready to put in the driveway in the area in question. At that stage it is clear that the Plaintiff can demolish the walls and by that stage, hopefully, the purlins will have been supported by something else and perhaps any overhang removed. Accordingly, all that needs to be done, and it can be done in February, is for an order similar to the order that was proposed by both parties in their respective open offers. That is, that there be a licence in the meantime and that offending overhangs, etc be removed in one year's time. 21. The only other thing that I would add at this stage is that in Droga's case, Stein J said that when one has the situation where the common owner of both pieces of land causes the problem, the encroachment commences as an encroachment when the titles are split and at that stage it should be classed as an unintentional encroachment because it is mainly due to the negligence of the surveyor. It would seem to me that by like reasoning, the present encroachment should be treated for compensation purposes as unintentional and which has taken place at the time when the title was split, which seems to be 5 April 1989. 22. Mr Doyle submitted that prima facie the order that the Court must make under the Encroachment of Buildings Act is removal of the encroachment. He cited as authority Haddans Pty Ltd v Nesbitt, a decision of Sir Harry Gibbs, then Gibbs J of the Supreme Court of Queensland, reported in (1962) 57 QJPR 21. That decision, to my mind, is not authority for that proposition at all. Mr Doyle could not put forward any other proposition. I cannot either and I do not consider the proposition to be correct. 23. I adjourn the proceedings to next year on the basis that the Plaintiff will not remove the wall on which the encroaching purlins rest, pending the final hearing of these proceedings. If there is a threat to do so, a Motion for injunction may be made returnable before the Duty Judge or a Vacation Judge. 24. Accordingly, all I do at this stage, is publish these reasons, stand the matter over to a date in 2016 to deal with outstanding matters. If a date cannot be found in the near future, there will have to be an earlier mention date to make orders following these reasons.