Liability for Deteriorating Retaining Walls

20 August 2023 in Property Dispute Lawyers | 5 min read | skip to FAQs

This article explores the question of who has liability for deteriorating retaining walls. We examine the role of the Dividing Fences Act and when this does and doesn’t apply to retaining walls. We also discuss the concept of shared liability, considering the case of Yared vs Glenhurst Gardens, which sets out the principles governing liability for retaining walls providing benefit to both parties.

Retaining walls are often built between adjoining properties situated at different levels. Some of these walls are old and no longer conform to modern building codes. This situation leads to an important question: who bears the onus when these retaining walls deteriorate?

The Role of the Dividing Fences Act 1991

The Dividing Fences Act 1991 (NSW) assists in resolving neighbour disputes regarding liability for retaining wall.

Definition and Scope of “Dividing Fence” (s 3)

1. The Act applies to ‘adjoining owners’, that is, those whose lands share a common boundary.
2. Critically, Section 3 defines a “dividing fence” as a fence separating the land of adjoining owners, whether on the common boundary or not. It includes structures such as gates, cattle grids, and, in some cases, hedges.

When are Retaining Walls Part of a Dividing Fence?

1. The definition of a dividing fence does not automatically include a retaining wall. A retaining wall is considered part of a dividing fence only if it is necessary to support and maintain that fence. This distinction directly affects cost-sharing responsibilities for fencing work.
2. The legislative intent, as clarified in the Second Reading Speech of the Dividing Fences and Other Legislation Amendment Bill 2008, was to limit cost-sharing to fencing work, not for general land stabilisation. Under the Dividing Fences Act, contributions from neighbours can only be sought for fencing work necessary for the immediate support of a fence. The cost of constructing or maintaining the entire retaining wall, where not essential for the fence’s support, does not fall within this scheme.
3. For example, the cost of constructing footings on top of a retaining wall fall within the legislative framework, but the cost of building the retaining wall itself generally is not, unless it is integral to the fence’s support.
4. The recent case of Battiato v Clifton [2025] NSWLEC 1391 illustrates this point, where the wire fence located at the top of the retaining wall relied on the retaining wall for support, bringing the wall within the scope of the Dividing Fences Act. That is, in this case the retaining wall is considered a dividing fence and therefore principles in the Dividing Fences Act are applicable.
5. However, if a retaining wall is primarily for preventing land slippage, it may fall outside the scope of the Dividing Fences Act.

In summary, the sharing of costs for a dividing fence between adjacent landowners is governed by the Dividing Fences Act 1991 (NSW). However, section 3 of the Act states that a retaining wall is only covered by the Dividing Fences Act  when that wall serves as a needed foundation or support for maintaining the dividing fence’s stability and upkeep.

The Concept of Shared Liability

We can gain a valuable understanding of how courts address this matter from a prominent legal ruling in the case of Yared v Glenhurst Gardens [2002] NSWSC 11.

Yared v Glenhurst Gardens [2002] NSWSC 11

In this case, the defendant owned a property adjacent to the plaintiff’s land with a common boundary. The defendant’s property stood four to seven metres higher than the plaintiff’s property. The retaining wall supported a steep embankment along the common boundary. The wall, constructed in accordance with 1927 standards, intersected with the boundary. Heavy rainfall precipitated a partial collapse of the retaining wall, leading to a large amount of debris falling onto the plaintiff’s land.

The plaintiff initiated legal action, seeking damages. The claims contended that the fill material amassed by the defendant above and behind the retaining wall amounted to a legal nuisance. Furthermore, the plaintiff alleged that the defendant’s negligence in not maintaining the trees and vegetation on their property contributed to the collapse. The defendant countered with a cross-claim, asserting that the plaintiff’s negligence in preserving the structural stability of the wall posed a hazard to her property and that the plaintiff had failed to address this hazard.

The plaintiff drew from the English Court of Appeal’s precedent in Leakey v National Trust [1980] 1 QB 485. This precedent establishes that a landowner, when they are or should be aware of a hazardous condition on their land jeopardising neighbouring properties, is obliged to take reasonable measures to prevent or minimise risks.

Justice Austin expressed that while they were not directly binding, the principles from Leakey’s Case were applicable in this jurisdiction. He noted that the retaining wall yielded benefits to both parties: it retained the defendant’s soil and facilitated the plaintiff’s land use while protecting against landslips.

Justice Austin said that it is the duty of the defendant to take reasonable actions in the given circumstances. He deemed it fitting for the defendant to contribute a proportionate share (in this case half) of the remedial expenses and grant access to contractors for the repair work.

When does the Concept of Shared Liability not Apply?

Where only one land owner benefits from the retaining wall, for instance where one land owner requires a retaining wall to retain land the principle of sharing liability may not apply. A land owner has a duty pursuant to section 177 of the Conveyancing Act 1919 (NSW) to not do anything that removes the support for neighbouring land. For example if a land owner removes land on a slope to level their own land and causes the need for a retaining wall on the boundary, the land owner that removed that land will be liable for the cost of the retaining wall.

Key Takeaways

In situations where neighbouring property owners are entangled in disputes over the liability for a deteriorating retaining wall, property owners should seek legal advice. The liability for a retaining wall involves consideration of the Dividing Fences Act and relevant case law which considers the concept of shared liability. Parties share an interest in preserving the stability of the land along their common boundary and implementing corrective measures to ensure the integrity of both properties.

The case of Yared v Glenhurst Gardens 2002 NSWSC found that a retaining wall does not fall within the definition of a dividing fence.  However, the decision is consistent with the Dividing Fences Act 1991 (NSW) in that both parties gain an equal benefit from the retaining wall and share an equal liability for the maintenance of a retaining wall on a common boundary.

How can BSM Sydney Lawyers assist you?

The highly experienced property dispute lawyers  at BSM Sydney Lawyers frequently deal with neighbour disputes. We work hard to provide effective alternative dispute resolution solutions to save our client’s financial, emotional and time costs. BSM property dispute lawyers Sydney always attempt negotiation, mediation and other alternative dispute resolution techniques in the first instance. We pride ourselves on our ability to settle the majority of disputes with skilful negotiation and mediation. The Dividing Fences Act 1991 (NSW) and the case of Yared v Glenhurst Gardens 2002 highlights the considerable gains that can be made via processes such as negotiation and mediation with the avoidance of expensive civil litigation. BSM property dispute lawyers offer a free 20-minute consultation.

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