THE INCORPORATED OWNERS OF RISE PARK VILLAS v. RAZOR HILL COMPANY LIMITED AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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DECISION

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1. This is an application made en behalf of the 3rd, 4th and 5th defendants for an order that the Statement of Claim be struck out as disclosing no reasonable cause of action against them or alternatively the action is frivolous, vexatious or otherwise an abuse of the process of the Court and consequently, as against them, be dismissed.

2. After hearing submissions on the 4th and 7th October 1985 I dismissed the application with costs and undertook to give my reasons for so doing in writing.

3. The plaintiff is a Body Corporate with perpetual succession and came into being under the provisions of the Multi-Storey Buildings (Owners Incorporation) Ordinance, Cap. 344.   By virtue of section 16 of that Ordinance it has the rights, powers, privilege and duties of the owners in relation to the common parts of the building. Both the word 'owners' and the words 'common parts' are defined in that Ordinance.

4. The Writ in this matter was issued in July last year and, as against these defendants, claims damages for negligence in connection with the design and construction of flats at Rise Park Villas, Clear Water Bay Road, New Territories.  The 3rd defendant is the firm of architects. The negligence is alleged in the design and/or subsequent supervision of the construction of the flats. The 4th defendant is alleged to have been negligent and/or in breach of his Statutory duty in and about the design and/or supervision of the construction of the flats, as is the 5th defendant. The 4th and 5th defendants are said to be partners in the 3rd defendant. The 4th defendant being an architect and the 5th defendant the structural engineer.

5. The Writ was not served at that time, and in December 1984 the solicitors for the plaintiff sent to the defendants what is described as a letter before action. Two months later the defendants' solicitors replied denying any allegation of negligence and pointing out that the occupation permit for the flats had been issued in May 1979. The Writ was then served and was followed by a Statement of Claim comprising 61 paragraphs and 3 Schedules.

6. This Pleading is attacked by Mr. Chang, for these defendants, on a number of grounds.

7. The 1st ground is that it is fundamentally defective in that it nowhere distinguishes the parts of the property about which complaints are made as being common parts. It is true that nowhere in the Pleading is that expression to be found and it is equally true that where the alleged defects are listed; in the 2nd Schedule; no indication is given whether any of those parts is or is not in the exclusive ownership or occupation on any individual owner.  Mr. Chang points to some of those defects relate to car parks or walls and suggests it is likely that such are not common parts.

8. Common parts are defined in section 2 of Cap. 344 as follows :-

9. It is also important to note that the definition of owner in the same section confines the meaning, apart from a registered mortgagee in possession, to a person who for the time being appears from the records of the Land Office to be the owner of an undivided share.

10. The importance of these to the defendants is that if this claim is restricted to common parts of the building and if it is limited to any damages suffered by the Corporation then they have only to consider, for instance, the question of limitation and damages in these circumstances. If, however, claims are being included which really relate to parts which are not properly common parts different questions of limitation may apply as different owners will have become registered at different times, possibly even after the alleged cause of action arose.

11. This partly arises from the wording of paragraph 8 of the Statement of Claim :-

"8. The plaintiff claims under section 16 of the Multi-Storey Buildings (Owners Incorporation) Ordinance against the defendants on its own behalf in respect of the causes of action herein which accrued to the original purchasers of the flats from Razor Hill (the 'original purchasers') and all subsequent assignees of the flats, (the 'assignees', referred to collectively with the original purchasers as 'owners') as listed in Schedule 1 attached hereto."

12. The matter having been pleaded in this way the defendants say, first of all, that as the claim does not say it is restricted to common parts there is no claim for them to answer at all and if that is not so then the claim in its present form is so general as to make it impossible for them reasonably to plead to it.

13. It is also said that as the claim appears to include common parts of the building and parts that are not common, or may not be common, it becomes a hybrid claim which is not permissible under section 16 of the Ordinance.

14. Mr. Dicks replies by making two points. The first is that as the Corporation is bringing the action ipso facto the claim must be limited to common parts of the building. The parts concerned are fully set out in the Schedule to the Statement of Claim and if the defendants contend that any of those parts are not common parts then it is open for them to say so. The second point is that even if the defendants are right in that the pleading should contain an averment that all parts referred to are common parts then it is a very simple amendment to make and the draconian remedy of striking out is not called for.

15. I do not know who drew the Statement of Claim, it is not signed by Counsel, but I think it regrettable this matter was not made clear. It would have been very easy to do. However I do not think it puts the defendants quite in the difficulty they would have me believe. The plaintiff is able only to sue in relation to the common parts and if the defendants believe that any of those parts listed in the Schedule are not common parts then they can quite easily say so in their defence or they can seek further and better particulars. At the end of the day it is a matter of evidence rather than of Pleading. I think Mr. Dicks is right when he says it is implicit in the Pleading that all the parts in respect of which claims are made against these defendants are claimed also to be common parts by the plaintiff.

16. It is accepted that the applicable test in this respect is whether it is plain and obvious that the claim as pleaded could not succeed. Inspite of my view of the Pleading I cannot say that on this point it is so plain and obvious.

17. The next matter on the Pleading is it fails to specify that the owners listed were in fact registered owners at the time the alleged damage occurred. The importance of this arises under the definition of owner in the Ordinance which I have set out above. I say no more than that I agree with Mr. Dicks that this is a matter very simply dealt with by way of amendment and does not go to the root of Pleading.

18. A matter, however, which has caused me more concern is the absence of averments of fact to establish a duty of care by these defendants to the plaintiff. The form used in respect of each is very much the same.  I will take the particulars against the 3rd defendant as an example. In paragraph 29 of the Statement of Claim it is recited that the 3rd defendant was at all material times employed by the 1st and/or 2nd defendant to design and/or supervise the construction of the premises. The next paragraph avers that in the premises the 3rd defendant owed the owners of the premises a duty of care in and about the design and/or supervision of the construction of the premises. Between these two paragraphs, says Mr. Chang, there is a quantum leap from the recital of a contractual arrangement with co-defendants to a duty of care to the present plaintiff. The nexus between the two is not pleaded.

19. As explained in Anns and Others v. Morton London Borough Council (1978) AC 728 such rights as are here claimed are conferred on a person who is an owner when the damage occurred. That, it is complained, is not clear in this pleading. Again it is extremely relevant in deciding when any period of limitation starts to run. There is a mere assertion of employment immediately followed by a plea of duty of care unsupported by any factual basis.

20. Mr. Dicks says that the nature of the duty of care is raised in the Pleading by the status of the defendants. The Pleadings as a whole show three different, but overlapping, causes of action. The first is the Common Law duty of care which extends to subsequent purchasers of property in the case of claims against architects and the like. This fellows the decision in the Hedley Byrne case and a number which followed it. The status of the defendants in connection with the development raises that Common Law duty which is a matter of law and not a matter of fact to be pleaded.

21. The defendants also had a Statutory duty of care as authorised persons under the Buildings Ordinance, Cap. 123; which duty enures for the benefit of the plaintiff; the defendant being very much in the position of the local authority in Dutton v. Bognor Regis Council.

22. The third duty of care Mr. Dicks put forward is a Common Law duty of care to ensure the Statutory duties were properly carried out or that all reasonable efforts were made to do so.

23. I am not familiar, and hope it will not be necessary to become familiar, with Pleadings where the duties of care alleged are not clearly stated but are to be gleaned from a close study of Statute and constantly changing case law. To that extent I consider this pleading to be inadequate. It cannot be said too often that the object of Pleading is to state clearly and succinctly what the case is. However urgent my desire to strike it out, however, I have been reminded of the words of Lord Wilberforce in Anns v. Merton London Borough Council at p. 751 where he says :-

"One has to ask whether as between the alleged wrong doer and the person who has suffered damage, there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former carelessness on his part may be likely to cause damage to the latter in which case a prima facie duty of care arises."

24. In this case the defendants are a firm, the architect, and the engineer, concerned in the design and construction of a development of flats. The plaintiff is the embodyment of the subsequent owners of those flats. Even on this Pleading I cannot say it is plain and obvious there is not between them such connection as will be embraced by the words of Lord Wilberforce. The whole trend of the modern cases points to the proposition that any architect, or indeed anyone else, concerned in the building of any property may have a duty of care to subsequent owners.

25. In the same passage Lord Wilberforce continue to say that if the question is answered in the affirmative it is necessary to consider whether there are any considerations which ought to negative or to reduce or limit the scope of the duty. I see nothing in the circumstances of this case which would so negative, reduce or limit the scope of any such duty as to make this claim unarguable.

26. For these reasons the first part of the defendants' summons failed.

27. The second limb of the application is that the action be dismissed as frivolous, vexatious or otherwise an abuse of the process of the Court.  The defendants' complaint here appears to be based really on two different matters. The first is the history of this action. In an affidavit filed and supported of this application the 4th defendant points out the somewhat bizarre way in which the Writ was issued long before any complaint was made to these defendants.

28. I really do not think any point can be made about this. It not infrequently happens that for limitation or other reason a Writ may be issued and retained by the plaintiff until an appropriate time comes for the proceedings really to get under way.

29. A more serious matter is that they had no reason to believe complaints were being made until the first letter in the action. A great deal had happened before then. I have already recorded that the occupation permit was issued in May 1979. In May 1982 it is alleged that a slope near one of the blocks gave way and much of the subsequent damage was a result of it. The defendants say they were not informed about that by the owners, the plaintiff, the 1st and 2nd defendants or the Building Ordinance Office. This does, of course, put these defendants at a considerable disadvantage as no doubt the slope has by now been put right and they are simply not going to be able to make their own investigations as they would have been able to had they been notified at the time.  However that may be it is, in my view, clearly not a frivolous or vexatious claim (however hard it may be on the defendants) and it is not necessary to look further than note. 18/19/15 in the Supreme Court Practice for 1985 to see how different this is from the examples there given of what has been held to be frivolous and vexatious. Similarly the note 18/19/17 gives excellent guidance to the kind of things which have been held to be in abuse of the process of the Court. I will not set out either footnotes in extenso but I must say I do not find any grounds at all enabling these proceedings to be so classified.

30. The final matter raised by the defendants really touches on all their objections and is this. You cannot tell, they say, from this Pleading whether all the owners are bringing all their claims through the incorporated owners or whether we may yet be faced by a multiplicity of proceedings by individual owners. Such a situation would be intolerable and these proceedings are an abuse unless all such owners join.

31. I appreciate the difficulty these defendants face. The plaintiff's claims is limited to the common parts of the building and it is apparent from the Schedule to the Statement of Claim that no complaints are being made in this action about the interior of any particular flat. If the allegations in the Statement of Claim are brought home it seems highly possible that individual owners will then be encouraged to bring individual claims in relation to defects within their own flats.  In the Schedule some 40 flats are listed. I do not know whether that is the total number there are, how many of them might allege defects or how many of those would not be statue-barred. The prospect for the defendants is a nightmare.

32. I do not see how that nightmare can be avoided by the present application. The plaintiff represents only itself and cannot oblige individual owners to join in these proceedings and bring their own actions at the same time. Those individual owners are entitled to sit back and see what happens in these proceedings. The fact they may choose to do so cannot be a ground for refusing the plaintiff the right to continue with its own action. It certainly does not make that action an abuse of the process of the Court.

33. In my judgment this limb of the defendants' application fails also.