SKY CENTURY INDUSTRIAL LTD v. CHOW MAN TO AND OTHERS

DCCJ 1869/2021

[2023] HKDC 834

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1869 OF 2021

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BETWEEN

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DECISION

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1.  This is a water leakage case. The Plaintiff is the registered owner of Factory No. 3 on the third floor (the “P’s Unit”) of Yam Hop Hing Industrial Building (the “Building”) whereas the 1^st Defendant (“D1”) are the registered owners of Factory No. 3 on the fourth floor and the flat roof on the fourth floor of the Building (“D’s Unit”). D’s Unit is located directly above P’s Unit.

2.  From December 2015 to December 2021, the 2^nd Defendant (“D2”) was a tenant and occupier of D’s Unit operating a food processing and restaurant business.

3.  It was alleged by the Plaintiff that there was water leakage from D’s Unit from around mid-2020 to at least around 24 June 2022, and a Writ of Summons was filed by the Plaintiff on 26 April 2021. By Summons dated 30 June 2022 pursuant to Order 14 rule 1 of the Rules of the District Court (the “Summons”), the Plaintiff applied for summary judgment against both the 1^st and 2^nd Defendants and sought declaratory reliefs that both D1 and D2 were in breach of Clauses 4, 5, 7 and 13 under the Second Schedule of the Deeds of Mutual Covenants of the Building, and an order that D1 and/or D2 to carry out all necessary works to rectify and prevent the water seepage at the P’s Unit, and damages to be assessed.

4.  At the end of the hearing for the Summons, the Plaintiff confirmed that there have been no complaints from the Plaintiff’s tenant in relation to water seepage at the P’s Unit from around July 2022. The Plaintiff submitted to the Court that the Plaintiff would therefore not pursue D1 and D2 to carry out remedial works to stop water seepage.

5.  In support of the Summons, the Plaintiff relied on the affirmation of its manager Wong Kin Kwok and three different expert reports, which included:

(1) Report of Chartered Building Surveyor and Authorized Person Sr. Yip Ho Yin John (“Sr. Yip”) dated 24 December 2020, in respect of inspections and tests carried out on 11 May 2020, 30 May 2020, 5 June 2020, 8 June 2020, and 14 July 2020 (the “2020 Report”);

(2) Supplementary report of Sr. Yip dated 13 April 2021, in respect of an inspection carried out on 6 April 2021 (the “2021 Report”); and

(3) Report of a Registered Structural and Geotechnical Engineer, Registered Inspector and Authorized Person Mr. Lo Kwok Kay (“Mr Lo”) dated April 2022 in respect of inspections and tests carried out on 11 November 2021 and 10 January 2022 (the “2022 Report”).

6.  As suggested by both D1 and D2’s counsels, the Court agreed that only the 2020 Report and 2022 Report were purported to identify the possible sources of water leakage of P’s Unit, as the 2021 Report was mainly about the damages of the P’s Unit suffered due to the water leakage observed by Sr. Yip.

7.  It is the Plaintiff’s case that the source of water leakage was from the D’s Unit. The following facts are not disputed by parties:

i. P’s Unit suffered from water leakage at the material times and the Plaintiff informed D1 through its solicitors shortly after signs of leakage;

ii. Upon D1 and D2’s consents, Sr. Yip and Mr. Lo were also allowed to carry out some visual inspection of D’s Unit in July 2020 and November 2021 respectively;

iii. The tests conducted by Sr. Yip and Mr. Lo at the P’s Unit were infrared thermographic Survey (the “Infrared Test”) and surface moisture content measurement (the “Moisture Content Test”);

iv. A contractor engaged by D1 and/or D2 attended P’s Unit in late May 2021 for inspection and repair works for the water seepage finished in June 2021. D1 also provided the Plaintiff a rectification plan prepared by its contractor Global Link Creation Limited; and

v. A contractor engaged by D1 and/or D2 attended P’s Unit to perform grouting works on the areas that were damaged by water leakage in late January 2022.

The Plaintiff’s Case

8.  The Plaintiff relied on the 2020, 2021 and 2022 Reports to demonstrate that the source of water leakage was from the D’s Unit. In the 2020 Report, Sr. Yip identified four possible causes of water leakage from D’s Unit to P’s Unit, which included first, possible cracked/broken drainage pipes concealed under the floor finishes (the “Cracked Pipes Theory”) at D’s Unit or secondly, the water ponding observed in P’s Unit that was caused by frequent usage of water in food preparation (the “Water Ponding Theory”). In either cases, he contributed to inadequate waterproofing ability at the floor slabs which would allow water penetrated into the concrete floor slab underneath D’s Unit leading to water seepage at the ceiling slab of the P’s Unit. Alternatively, the third potential reason could be caused by the usage of large freezers in D’s Unit that created a low temperature environment that led to condensation at the ceiling of the P’s Unit due to large temperature difference (the “Condensation Theory”). This theory was supported by his observation that the areas where water dripped in P’s Unit correlated to where the freezers were installed in D’s Unit. Lastly, he also considered that rainwater on the flat roof of the D’s Unit could seep into the floor slab underneath, and thus causing water leakage into the P’s Unit (the “Flat Roof Theory”). Such belief was based on his visit to the Flat Roof where he found floor tiles protecting the waterproofing membrane below were broken.

9.  While Mr. Lo did not elaborate his findings in the 2022 Report as detailed as Sr. Yip, he observed water ponding in D’s Unit and water dripping on the ceiling of P’s Unit at locations pointed out by Sr. Yip. Mr. Lo concluded the most likely causes of leakage were the defective water-proofing or leakage of water surface channels in D’s Unit.

10.  In view of the locations of leakage in P’s Unit, both Sr. Yip and Mr. Lo considered that the cause of water leakage from external walls was unlikely as the areas that suffered damage were concentrated towards the middle of P’s Unit as opposed to the external wall. Further, such findings also cohered to the results of the Infrared Test and Moisture Content Test, where the middle of P’s Unit indicated low temperature and high moisture content readings.

11.  The Plaintiff therefore averred that water leakage from D’s Unit is the effective cause of the resultant damage in P’s Unit.

The 1^st and 2^nd Defendants’ Case

12.  Both Defendants argued that none of the Expert Reports could prove that the leakage was originated from D’s Unit. Counsels for D1 and D2 further commented that the findings of the 2020 Report and 2022 Report were unreliable and inconsistent. And even if the Court is to accept the Cracked Pipes Theory suggested by Sr. Yip, the Plaintiff has failed to identify such damaged pipes, and thus it is left for further investigation to determine if such pipe (if any) is ‘common parts’ under the Building Management Ordinance, Cap. 344, which both D1 and D2 cannot be held liable for. Further, the remedial actions taken by the Defendants upon learning the water leakage provide them a bona fide defence in the alleged nuisance.

APPLICABLE PRINCIPLES

Summary Judgment

13.  As for an application for summary judgment, it is a process by which a plaintiff may apply for judgment expeditiously in a case where there is no defence, in order to avoid unnecessary delay. Where a plaintiff has established a prima facie sustainable case, it is for the defendant to show cause why summary judgment should not be granted by reason of the existence of a triable issue or an arguable defence or that there ought to be a trial for some other reasons – see Hong Kong Civil Procedure 2023, Vol 1 at paragraphs 14/4/1 and 14/4/3.

14.  The primary duty, however, rests on the plaintiff to demonstrate that the defendant has no defence. In this regard, the Court will examine not only the defence raised, but also the basic premise of the plaintiff’s claim and its inherent strengths and weaknesses. As Cheung JA said in Ju Yan Di Emperory Genesisy v Yau Wai Han [2015] 1 HKLRD 822 at paragraph 14:-

“It is well established that the burden on the defendant in a summary judgment application is to show that he has a credible defence and he must condescend to give particulars of his defence… the starting point in a summary judgment application is that it should only be invoked when there is no defence to a claim. This means that the plaintiff must in the first place demonstrate that the defendant has indeed no defence…”

15.  Thus once the plaintiff is capable of arguing that there is no defence to a claim, the onus shifts on the defendant to show that there are triable issues or that he has a “real or bona fide defence” on the balance of probabilities. Bare allegations are not sufficient. In considering whether there are triable issues, the Court will not take the alleged defence on its face value but will test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents and inherent probability of the defence.

Burden of proof in water leakage cases

16.  It is trite that the plaintiff has to prove where the water came from. In Leung Yung Chun & Another v Chan Wing Sang & Others [2000] 1 HKLRD 456, it was held by Cheung J (as his Lordship then was) that:

“The burden of proof is clearly on the plaintiffs to show that the source of water came from Mr Chan’s flat. As rightly pointed out by Leong JA in 張秀玲及吳炳漢 對 鄭禮莊 (CACV268/98), there is no presumption that the source of leakage would necessarily come from the flat above…” (at 461 I – J)

17.  Further, it is not for the defendants to find out or identify the real source of the water seepage or to prove that its origin did not come from their property[1]. Neither is it necessary for the Court to find the real source of the water seepage problem. [2]

Discussion

18.  The nub of this case boils down to the following two issues:

i. Whether D’s Unit is the source of the water leakage in P’s Unit; and

ii. Whether the Defendants took reasonable and effective steps to remedy the water leakage problem.

Source of Leakage

19.  D1 and D2 suggested there were inconsistencies between the 2020 Report and 2022 Report as Mr. Lo simply suggested there could be ‘detective water-proofing’ and ‘leakage of water surface channels’ from D’s Unit to P’s Unit, Sr. Yip offered the Cracked Pipes Theory and Water Ponding Theory. With respect, I consider the alleged inconsistencies can be reconciled as both experts’ conclusions were premised on two same principles. First, it is agreed the water-proofing layer under the D’s Unit could be inadequate or defective as such water accumulating on the flooring of D’s Unit could penetrate through the floor slab and seep through the ceiling of P’s Unit. In fact, Mr. Lo did not rule out the possibility of the Flat Roof Theory as such theory was premised on the conjecture of inadequate waterproofing layer under the tiles on the roof top of D’s Unit. The only difference between the 2020 Report and 2022 Report is that the latter did not specify the possible areas that lack adequate waterproofing membrane.

20.  Secondly, the ‘surface channels’ which suggested by Mr. Lo was nothing new but is taken as some pipes installed in D’s Unit[3], and thus the suggested cause of ‘leakage of water surface channels’ was essentially referring to defective pipes that were installed under the D1’s flooring which caused water leakage to the floor below. This is a theory akin to Sr. Yip’s Cracked Pipes Theory. As such, I see no inconsistencies between the two experts besides the fact that Mr. Lo did not in his 2022 Report consider the possibilities of the Condensation Theory.

21.  The Defendants argued that the findings of Sr. Yip and Mr. Lo were speculative and inconclusive, such that they could only show water leakage at the ceiling of P’s Unit but failed to identify the source was originated from the D’s Unit. In this regard, the Court has the opportunity to understand the extent of damages suffered by P’s Unit from the exhibits and is satisfied that not only the problem of water leakage was serious, but also the affected areas were mostly in the middle of P’s Unit. As such, I agree the cause of water leakage from external wall is inherently improbable, and thus the causes of the leakage were left with the Cracked Pipes, Water Ponding and Flat Roof Theories (the latter two theories are both premised on inadequate waterproofing layer) or other sources that were not suggested by the experts.

22.  Both experts conducted the Infrared Test and the Moisture Content Test, which are two types of tests that are frequently used in detecting sources of water leakage. I would not disregard the results from these tests, and am satisfied that water was trapped in between the floor slabs thus seeping to the P’s Unit. The Court however agreed with the Defendants that these results could not conclude the source of the leakage since no presumption should be made that water leakage was necessarily cause by the flat above. Given that there are other units adjacent to and above the D’s Unit on the 4^th Floor, and neither expert gave evidence in their respective expert reports why leakage from places other than the D’s Unit should be excluded, henceforth it gave rise to a possibility that the source of leakage was originated somewhere else than the D’s Unit. In light of this, I consider the Plaintiff has failed to demonstrate that D1 and D2 have indeed no defence to the claim.

23.  But even if the Court is to accept that the broken pipes and poor waterproofing membrane are the most likely causes of the leakage, the Court borne in mind that no actual damaged pipes nor defective waterproofing layer had been identified by the Plaintiff’s experts. Although the Court would not go so far to say both these theories were sheer speculation but inferences drawn from scientific examinations, the commonly used hydrostatic pressure test (for broken pipes) or water dye test (for defective waterproofing layer) were never conducted in D’s Unit. In such circumstances, I do not see how this issue can be satisfactorily resolved without recourse to cross-examination of the factual and expert witnesses. I am of the view that these issues are best to be dealt with in a full trial so that the Defendants would have the opportunity to engage their own experts and/or to cross-examine the Plaintiff’s experts.

24.  Further, the Plaintiff’s failure in identifying the cracked pipes gave rise to an argument that such pipe (if any) could form part of the common parts of the Building under the Ordinance. I agree this is a triable issue of fact and law that cannot be resolved summarily. If made out, it seems that D1 and/or D2 would have an arguable case that it should not be held responsible for the water seepage.

25.  In light of the aforesaid, the liability of the water leakage is therefore not suitable for determination without a full trial of the action.

The Law on Nuisance

26.  It is well established that identifying the source of water is essential for attaching liability to a defendant for nuisance in water leakage cases. The onus is on the plaintiff to establish that the leakage originated from the defendant’s flat and the defendant must have knowledge that water seepage was originated from his/her own property before he/she can be liable[4]. Once the defendant knew that water seeped from his/her own property into another person’s property, he/she must remedy the water seepage problem without unreasonable delay.

27.  It must also be borne in mind that whether the defendant was liable for the water seepage problem does not premised on whether the remedial measures had cured the water seepage problem. There is no requirement that the remedial measures taken must effectively stop the water seepage problem, but the test should be whether the defendant, after realizing the water seepage problem, has taken reasonable steps to remedy the problem.

28.  The Court has already discussed in the foregoing paragraphs that the Plaintiff has failed to conclude, under the summary judgment application, that the water leakage problem originated from the D’s Unit. It is therefore still an open question whether the D1 and/or D2 has committed the act of nuisance. Further, given the ample evidence showing that the Defendants did engage contractor to improve the waterproofing condition in the D’s Unit after the Plaintiff’s complaint, the Court sees triable issue as to whether D1 and/or D2 had taken reasonable steps after the material time to remedy the water leakage problem (if the problem is originated from D’s Unit).

29.  In light of the aforesaid, I am satisfied that there is a fair or reasonable probability that the Defendants have a real or bona fide defence to this action and hence this case must go to trial.

30.  For the above reasons, I find that there are triable issues in the present case. I refuse to give summary judgment for the Plaintiff. I give D1 and D2 unconditional leave to defend. As a matter of completeness, I must express the current findings are made without considering any correlation between the latest remedial work performed by the Defendants which seemed to bring to an end of the alleged water leakage. Unfortunately, no evidence has been put forward by the Plaintiff in this respect and the Court is bound to make findings based on solely what came before me. As such, I gave directions as follows:

(1) The parties shall file and serve timetabling questionnaire within 21 days from the date hereof;

(2) The parties shall, by consent, reach agreement on case management directions within 21 days after receiving D1’s and D2’s timetabling questionnaire; and

(3) If the parties are unable to reach agreement on case management directions, the Plaintiff shall take out a Case Management Summons within 14 days thereafter.

Costs

31.  There is no reason why costs should not follow the event. I make an order nisi that the Plaintiff pays D1 and D2 costs of this Summons with certificate for both counsels. All parties have already submitted their Statement of Costs for summary assessment, the Plaintiff’s solicitors are invited to submit their opposition in relation to D1’s and D2’s costs within 14 days from the date hereof.

32.  I thank all counsels for their assistance to the Court.