EXPERT WINNER LTD v. THE INCORPORATED OWNERS OF CAMERON HOUSE

LDBM 169 OF 2004

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 169 OF 2004

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J U D G M E N T

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Background

1.  The Applicant purchased the subject flat, 6B, on the 6^th floor of the building for about 50 millions in July 1997 and spent about 5 million on renovation/decoration including replacing windows. The work took some months, commencing in May 1998 and finishing in early 1999.  Shortly after its completion in 1999 Ms Chan, one of its directors, took up residence there. In the third quarter of 1999, Ms Chan discovered signs of water leakages into the flat at various places and she made a complaint to the manager of the building.

2.  On 8 October 1999 the manager conducted a site inspection in the flat. It was a merely a visual one.  After this the manager reported in a letter to the Applicant registering its suspicion that the leakage problem was due to the window sills, and hinting that the leakage was not due to defects in the external walls making references to the earlier repairs and tests on the walls. The suspicion of the manager was not accepted by the Applicant. In its letter of 11 November 1999, Ms Chan of the Applicant clearly expressed her disbelief.  Among other complaints, she indicated that she would ‘appoint a contractor to investigate the water leakage on the wall and threatened to complain to the holding company of the Respondent if the report ‘ had been incorrect or irresponsible.’

3.      The manager had not done anything significant when in December 2000 a site inspection was conducted in the flat. This was prompted by the complaint of leakage by the flat directly below. Subsequently in January 2001, the Applicant agreed to a hose test proposed by the manager to identify the cause of leakage to the Applicant’s flat.    

4.  On 23 April 2001 a contractor employed by the manger conducted a hose test.  The results of the test did not appear to show leakage through the external walls. The validity of this test is challenged by Dr. Chan, the expert called by the Applicant at the trial. The Applicant has its own complaint about the test. It was recorded in its letter of 24 April 2001 and was repeated by Ms Chan in her evidence at the trial.  She complained that the test was ‘ obviously unfair and unjustified’ because it was conducted ‘immediately after one whole week’s continuing rainy weather.’

5.  In the letter of 5 June 2001 Ms Chan made two complaints. The second one did not concern the leakage. The first complaint was in effect about inadequate response in those two years since the leakage problem was reported. In response, the manager wrote to the Applicant suggesting another hose test. Somehow no subsequent hose test was arranged or conducted. Each party blamed the other for the failure to conduct a second hose test.

6.  In February 2003 when a contractor ‘CNK’ was doing remedial work to the flat below, flat 5B, Ms Chan of the Applicant noticed the scaffolding set up for the work. The scaffolding, and perhaps together with information furnished to him by ‘CNK’ led her to believe that the manager was doing remedial work to the external wall outside flat 5B.  She maintained this belief at trial. According to Mr. D Chan of the manager, she asked if similar work could be done for her flat. This resulted in a site inspection in her flat on 18 March 2003 by Mr. D Chan and one Mr. Leung, both employees of the manager.

7.   In the course of this site inspection Mr. Leung took a set of photographs of areas affected by water damage.  As a result of the inspection, the manager by way of goodwill gesture, proposed to do window grouting work for the Applicant. This proposal was accepted and the work done in May 2003.

8.  Prior to the proposal of grouting work to her, Ms Chan had obtained quotation of remedial waterproofing work from ‘CNK’.  Ms Chan did not employ ‘CNK’ to do waterproofing work even though she said that the water leakage deteriorated after grouting work by the manager.  To address the leakage problems, she took two steps.  In June 2003 she instructed an expert ‘B Choy’ to investigate into the causes of leakage and obtained a report dated 3 September 2003. In about August 2003, she engaged a contractor, ‘Teamwork’, to do the waterproofing work. The items of waterproofing work forms only part of a project totally costing more than $700,000.  The project was completed in about October 2003.

9.  The conclusion ‘B Choy’ reached was in no uncertain terms, namely, ‘the cause of water leakage can only be and must be the design fault for failing to provide a water cut off device in the original design of wall opening in the external wall’. Whether there had been a dripping device in the external wall was hotly disputed. However there cannot be any dispute that as part of waterproofing work ‘Teamwork’ installed a dripping device and that this dripping device was better than the original device, if there had been any.   

10.  It is the case of the Applicant that water leakage problem went away after ‘Teamwork’ completed the project in October 2003.   By these proceedings the Applicant is claiming about $270,000, being the cost incurred in rectifying the leakage problem and making good the damaged areas in the flat, and, loss and damages for the inconvenience caused. 

Duty of An Owners Incorporation

11.  The Applicant might have misunderstood and misconceived the scope of duty of the manager of a building or that of an owners incorporation. This might be in part due to the high expectation of the manager in question that Ms Chan of the Applicant at one time harboured. The case of the Applicant as presented is convoluted.  In so far as the Applicant insisted on relying on the failure on the part of the manager or the Respondent to identify the cause of the leakage, it would be futile.   

12.  Under the Building Management Ordinance neither the manager nor the owners incorporation is under a general duty to identify the cause of the leakage problem of individual flats, or to tackle a leakage problem in individual flats. There is no evidence that the DMC in the instant case imposes such duty on them.  In the context of current dispute, under the Building Management Ordinance the duty of the Respondent as an owners incorporation is only to keep in good repairs the common parts, namely, the external walls.

13.  Furthermore in the particular circumstances the case, neither the manager, nor the Respondent by itself or through the manager, took it upon themselves to identify the source or the sources of the leakage. The part taken by the manager in the investigation was clearly for one purpose, namely to see if the leakage was caused by the defects in the external walls. If the Applicant had a different understanding, it was not caused or contributed to by the Respondent. If the leakage was not caused by the defects in the external walls, the mere fact that the Respondent failed to correctly diagnose the source did not afford the Applicant a valid legal basis for a claim. Of course, if it turns out that the leakage was in fact caused by the defects in the external walls, the Respondent might be held liable. 

Burden of Proof---Liability

14.   That there are defects in the external walls of a building does not necessarily mean that the owners incorporation must have failed in its duty to keep and maintain the walls in good repairs, or that it should be invariably liable to an individual flat owner for damages caused by the defects.  Defences of this kind have not been raised or argued on behalf of the Respondent.  The only defence to liability relied on is simply that it has not been shown that the damage to the flat was caused by any defects in the external walls. 

15.  Because of the narrow stance the Respondent takes, the task of the Applicant to prove its case is much simplified. To establish the liability of the Respondent, the Applicant has only to prove on the balance of probabilities two things, namely there were defects in the external walls and that these defects caused the alleged damages allowing water to leak through it into the flat. 

Specific Defects---rainwater cut-off device

16.   Of the alleged defects of the external walls, the pleadings of the Applicant only mentioned one in some specific details. In paragraph 8 of the Notice of Application, this specific defect is referred to as ‘lack of a rainwater cut-off device’. The Applicant hinted at other defects by necessary inference from the leakage of water into its flat.   The other defects though not pleaded expressly came out from the evidence adduced by the Applicant at trial. They were basically cracked wall tiles and holes/voids in the wall beneath the wall tiles. 

17.  It is the contention of the Respondent that there was such rainwater cut-off device in the form of a dripping groove.  It was the groove near the edge between two adjacent lines of tiles. The Applicant maintained that the groove was nothing more than an ordinary gap between two lines of tiles.

18.  It cannot be disputed that a dripping groove is a form of rainwater cut-off device. A groove can cause the flow of water along the horizontal part of the wall to break and drop off.  In this way water is prevented from flowing along the horizontal part of the wall from one vertical part to another vertical part where the windows are. How effective it can be depends on its width and depth.  The Respondent does not seriously dispute that the width and depth of the groove might be less than what is specified for today’s standard. Whether the groove in question could be properly called a ‘dripping groove’ is really a dispute over its dimensions.

19.  There was no evidence or suggestion on the part of the Applicant that the dimensions of the groove were not the same as it always had been since the completion of the building.  Indeed it is never the contention of the Applicant that the width or depth falling below the standard of today’s was due to the Respondent’s failure to repair or maintain this groove.  That being the case, it has not been proved that the Respondent has failed in its duty to maintain or repair this groove, be it a dripping groove or otherwise.

20.   So far as the defect of dripping groove is concerned, it is always the argument of the Applicant that a new cut-off device should be added. Installing such a new device amounts to improvement. While an owners incorporation is so empowered to do, it is under no duty to do it. The mere omission or refusal to add a better, more effective or proper cut-off device cannot constitute a breach of duty on the part of the Respondent owners incorporation.

Specific Defects---cracked tiles

21.   The evidence of cracked tiles is vague. The allegations of cracked tiles arose from the work that the manager did for flat 5B in February 2003. Contrary to the belief of Ms Chan of the Applicant, the work only involved the replacement of window sealant and the replacement of wall tiles on only a small part of the external wall outside flat 5B.  The scope of replacement extended to an even smaller part of the wall outside flat 6B below the bay window.

22.  Ms Chan might have a genuine belief that the problem of cracked tiles in that part of the wall outside flat 6B was serious. She might also believe that this problem caused or contributed to the leakage problem. However her belief is not supported by admissible evidence. Her belief is probably prompted by two factors.

23.   Firstly, she took it for granted that the number of tiles replaced should be equal to the number of cracked tiles. This is not a valid assumption. In the replacement exercise, together with the cracked tiles the good tiles in the immediate vicinity would also have to be replaced. Then the resulting patch up work would achieve a better outlook. This is common experience. This practice is also accepted by the Dr. Chan, the Applicant’s expert.  In this respect Mr. Shieh, counsel for the Respondent, rightly pointed out that there was no evidence that the tiles covering that small part were cracked before replacement.

24.  Secondly, she was led to believe by Mr. Chan of ‘CNK’ that the manager was engaging them to do remedial work for the external wall outside flat 5B. Mr. Chan allegedly also said to her that the two flats had similar leakage problem.  If this is in fact what Mr. Chan said to her, she was misled. 

25.  In any event, even if some or all of those replaced tiles below the bay window of flat 6B were cracked, this defect could not be the cause of leakage. This is simple logic as submitted by Mr. Shieh. After the replacement of these tiles, the leakage problem not only continued but deteriorated. I am not surprised that this specific defect has not been pleaded. I agree with Mr. Shieh that the work done to flat 5B in 2003 has no evidential value in the present case.

Specific Defects---voids and holes

26.  In December 2003 the manager carried out repair work to the external wall around the planter for a number of units. In a letter to the Applicant’ s contractor the manger mentioned an incident of water coming out of the external wall of the planter of flat 3B when a worker drilled a hole in it.  This letter was relied on by Ms Chan of the Applicant for corroborating her opinion that water accumulated in the void of her flat 6B was one of the causes or contributing factors to the leakage problem.

27.  Ms Chan gave evidence that water came out similarly from the external wall outside her flat when a hole was drilled. Her evidence that she herself saw it happen did not stand up to cross-examination. At the end of the day, her evidence of water coming out amounted to hearsay evidence.

28.   I also accept Mr. Shieh’s analysis of evidence concerning Ms Chan’s opinion in respect of causation. Even if there was in fact water accumulated in the planter, this fact could not have been the cause of leakage to the flat.

29.  Mr. Shieh correctly pointed out that the quotation of ‘Teamwork’ indicated that the waterproofing work done to the external walls was all around perimeter of the windows. In the course of such work, cracks and holes would be filled up. The Applicant did not call evidence to show the precise nature and extent of defects that were actually found and rectified. Mr. Shieh did not take any point on that. He was content to argue the Respondent’s case on the basis that the leakage had not been shown to be caused by any of these defects.

Causation

30.  To succeed, the Applicant has to prove two things, the defects and the causation.  In the particular circumstances of this case, these two issues are interwoven, and the Applicant does not have to prove them separately and independently.

31.  The approach urged upon me by Mr. Shieh is correct. The only issue in this case is whether the Applicant has proved on the balance of probabilities that the water damage in the flat was caused by defects in the wall. 

32.  As has been said, the lack of rainwater cut-off device or the ineffectiveness of the original device did not constitute the relevant defects.  The other defects alleged by the Applicant were some sort of holes or voids beneath the surface of the external walls. In the instant case whether such holes or voids existed causing the leakage is a matter of inference drawn from the established facts with the assistance of the opinion of the expert.

33.   Ms Chan of the Applicant made no secret of her dissatisfaction with the standard of service of the manager.  Ms Myint, counsel for the Applicant, made quite an effort to discredit the competence or the efficiency of the manager generally, and in particular in its investigation into the true cause or causes of the leakage problem in the Applicant’s flat. A few incidents were gone into in support, peeling off of wall tiles in 2005 long after the leakage problem had been solved, repairs of external wall about the planters, the work done to flat 5B.  These incidents cannot be relied upon to draw the inference that bad rating should be given to the manager in so far as the general standard of maintenance is concerned. In any event bad rating is irrelevant in the instant case. It is because it is not the defence of the Respondent that it could not have reasonably discovered the defects or had them rectified in good time. The Respondent simply requires the Applicant to prove that there were in the external walls defects causing the alleged leakage. In the particular circumstances of this case, I can derive no assistance from these incidents in drawing the inference, if I should so draw, that the leakage of flat 6B was caused by some defects in the external wall.

34.  The water damages inside flat 6B should have been the facts for the experts to work on. Unfortunately the two experts giving evidence did not have the first hand opportunity to inspect them. Of course ‘B Choy’ must have such opportunity before he made his report and drew his conclusion, but he was not called to give evidence. His conclusion must be inadmissible and irrelevant. The evidence of these damages came from photographs and witnesses.

35.   There were photographs depicting the affected areas, some from the Applicant and some from the Respondent. There were other affected areas not shown in the photographs.   The short-circuit problems were not shown and came from oral evidence.  The Applicant stated the frequencies of short-circuit the Answers to Request for Further and Better Particulars. The Respondent did not challenge that the short-circuit incidents happened at the frequency as recounted.

36.  The most important areas of alleged damage or water marks on the walls are those allegedly found 2 to 3 feet above window level. One of such area was purportedly shown in a photograph produced by the Applicant during the trial.  Yet nothing resembling water marks can be discerned from it.  To prove the existence of these water marks the Applicant has to rely on the evidence of its two witnesses, Ms Chan and Mr. H Chan.

37.   The unreliability of these witnesses has been correctly demonstrated by Mr. Shieh. Suffice to say, I accept his submission in this respect. It is not an overstatement when Mr. Shieh submitted at one point that Ms Chan was desperate in searching for evidence of water leakage from the external walls. It is understandable that witnesses when preparing witness statement may leave some important points out. This may happen for all kind of innocent reasons. Sometime the omissions cannot be explained by the witnesses. One cannot be too critical of witnesses.  However these two witnesses were always ready to offer explanations which turned out to be nonsensical. They did not hesitate to blame unjustifiably on others for their own failure, more specifically ‘B Choy and the manager’. In doing so they damaged their credibility even further. It is only proper to scrutinise their evidence in the light of contemporaneous documents, photographs and the pleadings.  As a result I reject their evidence that there were water marks 2 to 3 feet above window level in all the rooms or in any of the rooms.

38.  A further reason for rejecting their evidence was submitted by Mr. Shieh.  Their evidence were inconsistent with the scope of remedial work by ‘Teamwork’ which happened to rectify all these alleged defects 2 to 3 feet above the window level. Mr. Shieh made an analysis of the remedial work done to the wall. ‘Teamwork’ worked on the external walls one foot above and below the windows injecting epoxy. This would fill up the holes in the wall within one foot. As epoxy would be applied with pressure it may go up to a level up to 2 or even 3 feet to fill up the holes there. However there was no evidence of how the epoxy was applied. In any event, as Mr. Shieh submitted, it would not fill up all the holes more than one foot above unless all the holes higher up were inter-connected with one or more holes within the one foot area. I cannot see any reason, and none was advanced, for all these higher up holes would be inter-connected with those within the one foot area. I find it too much a coincidence that it should happen. 

39.    Of course there was one photograph showing some marks above a window. This mark could be as consistent with leakage from the external walls as with other sources or causes. Nonetheless this should be taken into account when determining the causes of leakage.

40.  Looking at the distribution of affected areas, the leakage, if all came from the external walls, would be quite serious. Or else it would be difficult to imagine how water or dampness could travel such a long way into the flat.  In the case of water marks on the internal wall in the game room, Dr. Chan advanced a theory.  He made an error of a basic fact. When Mr. Shieh pointed out the error to him, he made an excuse that the sketch he used was not drawn to scale. Be that as it may, his explanation is not valid. The scale of the sketch has nothing to with his theory.  The foundation of his theory lies in the relative position of the ceiling to the pond of water accumulated outside the wall on the horizontal part of the external wall. He made the mistake of the relative position of the false ceiling. The relative position has nothing to do with the scale of the sketch. When this was pointed out to him, he immediately advanced another theory altogether different. This time he laid the blame on the cracked tiles and which theory was not supported by evidence. I do not accept his theory given impromptu at the trial about the dirty water marks on the internal wall of the game room. Nonetheless these water marks should be taken into consideration in determining the cause of leakage in the flat.

41.  The hose test was conducted by a contractor engaged by the manager. The Applicant engaged its own contractor, Mr. Hung, to be present at the test.  He together with the manager’s employees present oversaw the hose test and observed the result. The hose was connected to a tap and the nozzle speed of water was increased by squeezing the tip of the hose without the use of a pump. A pump with a pressure gauge should be used to obtain a correct force according to the relevant guidelines.

42.  There is no dispute that no water leakage through the wall was detected but water leaked through a window.  The quantity of water leaked though the window is in dispute. Mr. Hung said a very small quantity of water leaked through and the representatives of the manager said otherwise.

43.  Despite the dispute over the quantity of water leaking through the window and despite the question of whether proper pressure was applied, the result suggests that the window was more likely to leak than the wall. This proposition must be true unless higher force was applied to window than to the wall. This allegation was made. If it was true, the contractor was not only cheating the Applicant, the contractor was also cheating the manager unless the latter colluded with the former. I do not see any reason why the manager would have colluded in this way with the contractor. Mr. Hung was also present overseeing the test, he raised no complaint there and then. He should have at least raised the complaint to his employer later. The evidence shows he did not.  If he did, Ms Chan would certainly have raised it in her letter of 24 April. In this letter she alleged that the test was unfair and unjustified. She did not incorporate Mr. Hung’s complaint into hers. In the letter the only complaint she gave was that the test was conducted after a week’s continued rainy weather. She was given ample opportunity to explain the rationale behind this complaint about the timing of the test. She could not offer any satisfactory answer and did not refer to Mr. Hung’s complaint. In view of all these, I find that the test was conducted to the satisfaction of all parties. As to the quantity of water seeping through the window and the conduct of the test, I prefer the version given by the Applicant’s witnesses.

44.  The result of the hose test tends to suggest that water leaked more readily through the window than the wall.  Dr. Chan in the ‘Supplemental Report’ gave his opinion discrediting the use of hose test for eliminating wall leakage.  His report is in fact his first and only report and is not ‘supplemental’ in the strict sense of the word to the first report filed by the Applicant, the report by ‘B Choy’.  When giving evidence in chief, he really supplemented his own report orally by giving his opinion on the validity of the hose test on windows.   He did not accept the validity of the hose test solely because the test was not done according to the guidelines. He failed to give any margins of error. In a rigorous scientific experiment, it is of utmost importance to observe guidelines or the results would not be accurate. This must be true. However in the case of test ing the water-tightness of windows, if guidelines were not strictly observed, we could still make use of the results, if we knew actually what has been done.  Here we knew that water was sprayed on the windows for a certain time. It is question of assessing whether this would be close to rainy weather condition. This is a pragmatic test for leakage. Dr. Chan gave an outright rejection of the test. He did not expressly say whether the pressure was too high or too low or what, or whether the window was sprayed on for too long. He could not deny the fact that water seeping through indicated that the window leaked. To win the argument he used an obviously inappropriate scenario. He said in effect that a building was not a submarine and therefore when immersed in water the building would begin to leak. However, he had to admit that the conduct of the test in no way resembled immersing the building in water and in fact the test did not simulate a condition as bad as heavy rain and wind conditions. Having said that, the hose test may not be conclusive in eliminating the external walls as a source of leakage but it is factor to be taken into account in favour of the Respondent.

45.  Common experience tells us that short-circuits sometimes occur without a layman knowing exactly the cause. Very often we put the fuse switch back to ‘on’ position and all is well. Momentary overloading, or faulty wiring, electrical fault of connection or of appliances in use could be the problem. One other possible cause was the one suggested by the Applicant, water leaking to the wiring.  The frequency of short-circuits should be taken into account as well as the location of their occurrence.

46.  The Respondent raised the certain possible causes of water damage or water marks. The building is in the area of high humidity. In fact there is evidence, which I accept, that ten dehumidifiers were used in a flat. The Applicant had a boiler installed in the flat. There were air-conditioning ducts going around the flat. These are not improbable causes of water leakage and condensation.

47.  The replacement of windows by the Applicant in 1998. Proximity to the time of appearance of water damage should be taken into account. In this regard, Dr. Chan repeatedly stressed that the grouting work done to the windows would have rectified any problem. He was not in a position to comment on the quality of the grouting work or its effectiveness in rectifying the defects. Ms Chan claimed the problem deteriorated without giving details. I do not find her a reliable witness. If what she claimed was correct, she would notice the deterioration after a rain and only after a rain, and would have registered her complaint to the manager. Yet not very long after the grouting work, she engage ‘Teamwork’ to undertake renovation work. The project according to ‘Teamwork’ could rectify all leakage problems. The work relating to external wall was only along the window area and not on every spot where leakage was said to occur..

48.  I have considered all the above relevant factors individually and in totality, I am driven into the conclusion that the Applicant has not proved on the balance of probabilities that there was in the external walls any defect which caused the leakage problems in the flat of the Applicant.  

49.  The claim of the Applicant is dismissed and there be an order nisi for costs in favour of the Respondent on High Court Scale with Certificate for Counsel to be taxed if not agreed. The costs order nisi be made absolute in 6 weeks.