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surfbroker – it appears that you are in NSW, where as you state that the retaining wall was necessary due to the original building works on the adjoining property, in the absence of any formal agreement to the contrary, the owner who altered the natural state of that land and subsequent owners of it are entirely responsible for on-going repairs and maintenance of the retaining wall that Council would have likely required under the terms of their Development Consent, unless it acts as the foundation for a dividing fence when as Peter C stated (post #2), costs are then shared under the provisions of the NSW Dividing Fences Act (DFA).
Ref: Sect 3 of the DFA and in particular the definition of a “fence”.
That’s the legal position as I understand it (I’m not a lawyer), but as your Owners Corporation and its neighbour have a mutual interest in ensuring that the land on and around the common boundary is stable, it would be advisable in my opinion to attempt an amicable solution.