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And now time for an update.
As I write the tree is being cut down and mulched.
I contacted disputes.vic.gov.au and had an interesting talk with them.
They advised that:
I had to check with my council that it wasn’t a protected tree (it wasn’t) and if it was a native species also check with the Victorian government (it wasn’t).
The roots causing the damage belong to us and the tree owner isn’t liable for the damage caused.
and;
If the owner next door didn’t want to remove it then we would be off to VCAT. Turns out one significant problem they had was finding someone to actually do the job.
Fortunately the tree is now being removed and now we can focus on getting the damage repaired.
Finally, thanks to proudsceptic for their advice and guidance.
This forum is fantastic.