Hi @Spravotchka,
It sounds like your lilly pilly is experiencing some stress, but the fact that there is healthy new growth at the top is an encouraging sign. Many evergreen plants, including lilly pillies, will naturally shed their older leaves from time to time, so some leaf loss is not always a sign of disease or pests. However, losing two-thirds of the foliage can indicate that the plant is struggling with its growing conditions.
One of the most common causes of leaf drop is water stress. If the soil remains too wet, the roots may suffocate and begin to rot, while if the soil dries out too much, the plant will shed leaves to reduce demand on the roots. Looking at the soil, I would say it is more likely to be underwatering as it looks like you have quite sandy soil, which struggles to retain moisture as well as nutrients. I would suggest mixing some compost in with the soil around the base of the tree and applying mulch to aid with water retention. Ensure the mulch is not directly up against the trunk of the tree, as this can cause issues. It is best to leave a gap of around 15cm between the mulch and the trunk.
Nutrient deficiencies can also contribute to leaf discolouration and drop. If you are not already doing so, I'd suggest an application of a slow-release fertiliser such as this Scotts Osmocote Native Controlled Release Fertiliser to ensure it has the nutrients it needs for healthy growth.
It would also be worth checking the pH balance of the soil and adjusting it if required. Check out How To Test And Adjust Your Soil Ph for some guidance.
Allow me to tag @Noelle and @robchin to see if they have any other advice they can offer.
Let me know what you think.
Jacob
