If the wall was built on the boundary of the house (i.e. shared wall) then the neighbour has the right to complain. If the wall was built within your friends house grounds then your friend has the right to tear down the wall (i.e. the initial wall was built next to the old fence/original wall).

If the neighbour has torn down the original fence/wall that separated their house from your friends then what i would recommend your friend to do is submit their plans 1st to the local council for demolition and highlight that the neighbour had removed the original boundary fence/wall and tiled the wall that your friend had built within his/her boundary.

See what the council says first. It's unreasonable for the neighbour to request for a new wall when they are using the wall within your friends boundary. But this type of situation very susah... and they have to see the neighbour for many years more... confirm headache....