WEALTH SUMMIT DEVELOPMENT (NOMINEE) LTD v. NG SHUN OI AND OTHERS

HCA1592/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1592 OF 2003

----------------------

---------------------------------------

--------------------------

JUDGMENT

--------------------------

1. The plaintiff sought a mandatory injunction, damages of loss of rental income, and repair costs for water leakages against its two upstairs neighbours, the 1^st and 2^nd defendants of one flat, and the 3^rd defendant of the other.  The trial was on liability.  By consent, the issue on quantum was severed.

2. The 1^st defendant passed away during the proceedings.   By consent, the 2^nd defendant was ordered to carry on the action for the 1^st defendant under Order 15, rule 7(2) of the Rules of High Court (Cap. 4A).

3. By consent, the parties appointed a joint expert to find out the cause(s) of the water leakage, and to recommend the remedial work.  The findings of the joint expert are binding on the parties.  Hence, the issue of mandatory injunction is overtaken by the recommended remedial work under the Consent Order.

Background

4. The building in question is Elegance Court in Happy Valley.  The building is 23 storey high.  It was first occupied in 1986.  There is a low block of non-residential premises on G/F, 1/F and 2/F.  There is a block of residential flats from 3/F upwards.  On the 2/F roof top, there are podium in front and at the rear of the residential block.  The residential block has 2 flats on each floor.  Viewing the building from the front, Flat A is on the right, and Flat B is on the left. 

5. The plaintiff is the owner of the of the G/F, 1/F and 2/F since October 2001.  The 1^st and 2^nd defendants are the owner of Flat 3A with the adjoining front and rear podium since 1986, and the 3^rd defendant is the owner of Flat 3B with the adjoining front and rear podium also since 1986.  The front podium is divided by a parapet in the middle. 

6. In Flat 3A, a glass house was constructed in front of the flat premises in the front podium.  Also, a storage shed was constructed on the front podium of Flat 3A along the diving parapet.  The rear podium of Flat 3A was converted into a laundry area. 

7. Flat 3B was also subject to alterations.  The flat premises were extended towards the front podium.  The rear podium was also converted into an indoor area.   

8. The 2/F is partitioned into 3 rooms.  The centre part of the 2/F is the lift shafts.  For ease of reference, the area underneath the rear podium of Flat 3B and is called Room 1, the area underneath the front podium and the premises of Flat 3A and Flat 3B is Room 2, and the area underneath the rear podium of Flat 3A is Room 3.  There are several toilets at the back of Room 3.

Issues

9. The issues are:

(1)	cause(s) of the water leakage;
(2)	whether the water leakage affected the rentability of the 2/F;
(3)	liability of the 1st and 2nd defendants and/or 3rd defendant;
(4)	apportionment of liability, if any.

Water leakage

10. In March 2002, water leakage started to occur at the 2/F ceiling during decoration work.  The plaintiff complained to the management office, and the management office wrote to the owners of Flat 3A and 3B in May 2002.

11. On 14 June 2002, a joint inspection was conducted by Ms. Emilie Hui, Registered Architect engaged by the 1^st and 2^nd defendants, in the presence of the representatives from the plaintiff and Flat 3B.  The visual observations were:

(1)	damage to 2/F ceiling near the lift shafts below the front podium of Flat 3A and 3B;
(2)	concrete spalling at 2/F ceiling near the lift shafts, mostly under Flat 3 B;
(3)	damage to paint of 2/F ceiling beams soffit below podium of Flat 3A near glass house and storage shed;
(4)	water dripping from fire services pipes passing through the beam.

12. Miss Hui concluded that the possible cause of water leakage might be: (i) defective water proofing to the flat roof; or (ii) leakage from fire services pipes passing through the beam.  She recommended that waterproofing material of Flat 3A be tested with pigmented water.

13. On 15 June 2002, a joint inspection was conducted by Miller International Loss Adjusters (HK) Ltd (“Miller International”) engaged by the plaintiff in the presence of representatives from Flat 3A and 3B.  The visual observations were:

(1)	damage of 2/F ceiling paint and plaster (4 ft x 2 ft) below Flat 3B next to a 3 inch diameter drain pipe apparently serving Flat 3B only;
(2)	damage of 2/F ceiling paint and plaster with concrete spalling and exposure of reinforcement bars (10 ft x 10 ft) below the dividing parapet of the podium of Flat 3A and 3B;
(3)	damage of 2/F ceiling paint and plaster(6ft x 4 ft) below podium of Flat 3A;
(4)	soaking of parquet flooring of Flat 3A.

14. Miller International believed that the cause of water leakage on ceiling under the podium was due to defective water proofing of the podium.

15. Miss Kitty Wong, daughter of the 2^nd defendant purportedly carried out the water test recommended by Ms. Emilie Hui.  She flooded the glass house area of the front podium of Flat 3A with 2 to 3 inches of blue dyed water for 5 days from 22 June 2002, and another 5 days from 10 July 2002.  Unfortunately, she did not flood the entire front and rear podium of Flat 3A. 

16. On 28 August 2002, Messrs. Winnie Lo & Wong, solicitors for the 1^st and 2^nd defendants wrote to the solicitors for the plaintiff, stating that their client had conducted water tests as recommended by the report of Ms. Emilie Hui, enclosing a copy of the report.  The letter stated that despite a lapse of more than two months, no sign of leakage of pigmented water had ever appeared in the plaintiff’s premises, and that was ample evidence the leakage was not caused by the 1^st and 2^nd defendants.

17. On 9 December 2002, the Food and Environmental Hygience Department (“F&EHD”) carried out colour water test to the drainage system of Flat 3A.  In February 2003, F&EHD wrote to the solicitors for the plaintiff and solicitors for the 1^st and 2^nd defendants stating that the test result showed that the leakage was not caused by any drainage pipes, and the cause of the water seepage could not be ascertained within the means of the Department. 

18. On 14 March 2003, solicitors for the 1^st and 2^nd defendants wrote to the solicitors for the plaintiff referring to the result of the colour water test by the F&EHD, and stated that since there was no evidence which proved that causation of the water seepage was accountable to their client, they suggested the plaintiff to resolve the seepage problem with recourse to the Incorporated Owners and/or the Management Company of the building. 

19. On 6 May 2003, the plaintiff commenced the present proceedings.

Appointment of joint expert

20. The matter first came on to trial on 20 December 2004.  A site visit was conducted on 21 December 2002.  By a Consent Order dated 22 December 2002, the trial was adjourned and the plaintiff, 1^st and 2^nd defendants and 3^rd defendant agreed, inter alia, that:

(1)	the parties do jointly appoint an expert –
	(a)	to find out the cause(s) of water leakage, water seepage and water marks at the ceiling of 2/F;
	(b)	to find out the water path between the concrete slab between 2/F and 3/F and the cause of damage to the water proof membrane, external wall and otherwise leading to the leakage, water seepage and water marks;
	(c)	to commission specialists to carry out recommended tests;
	(d)	to report in writing within 10 days and advising the remedial work required, unless the expert requested further time;
	(e)	to approve contractor to be appointed by all the parties, failing which to appoint contractors to carry out and complete remedial work within 30 days of the appointment or any reasonable time as advised by the expert (“Completion Date”);
	(f)	attending court to explain the report;
	(g)	to supervise the contractors in carrying out the remedial work until completion and certifying its completion to his satisfaction.
(2)	the parties do share the costs of the expert and the remedial works equally, pending the determination of liability (or its apportionment) in this Action.
(3)	the parties agree and acknowledge the findings of the expert is binding on them, without prejudice to the parties’ contention and submissions on liability.
(4)	Damages on loss of rental (if any) claimed by the plaintiff shall be limited to 6 weeks beyond the Completion Date, without prejudice to the contention of the defendants on any of the plaintiff’s claims;
(5)	Without prejudice to paragraph (4), if completion is delayed beyond 6 weeks shafts the Completion date, the party who is responsible for the delay will be liable to pay the other parties by way of liquidated damages of $1,600 per day of such delay.

21. Mr. Richard Cheung, Chartered Surveyor was appointed as the joint expert.  The joint expert prescribed the following tests to be done:

(1)	Flooding tests to the interior and front and rear podium of Flat 3A and 3B;
(2)	Spraying tests to the external walls of Flat 3A and 3B;
(3)	Concealed water pipes detection inside Flat 3A and 3B;
(4)	Fluorescent dye tests to the drainage systems of Flat 3A and 3B;
(5)	Water pipes leakage tests in Flat 3A and 3B.

22. In February 2005, the joint expert rendered the first report (“1^st Report”).  The solicitors for the 1^st and 2^nd defendants raised certain queries to the 1^st Report.  The joint expert found out that there the test results by the specialists were wrongly collated, and hence his conclusions had to be revised. 

Revised Report

23. In August 2005, the joint expert rendered the revised report.

(1) Flooding tests

24. The flooding test was to fill designated area on the 3/F to test the water proofing membrane of the 3/F.  The designated area would be filled with water for an hour.  Infra red thermo-scanning would be conducted at the ceiling of 2/F both before the flooding and 1 hour after the release of the water to note the different in temperature as indicating water leakage.  As separate tests would be conducted to different designated areas, the source and resulting water seepage could be identified.

25. On 18 January 2005, the first flooding test was conducted at the front and rear podium of Flat 3A.  Thermo-scanning at 3 p.m. detected seepages in the ceiling of Room 2, and also a small area in Room 3.  The most serious spot was in Room 2 underneath the front podium near the glasshouse.  There were 2 other spots in Room 2: near the lift shafts, and in the centre of Room 2, both underneath the front podium of Flat 3B.  There was also a small area in the toilet in Room 3.  (See Exhibit D3-1.) 

26. Later on 18 January 2005, the second flooding test was conducted at the bathroom of Flat 3B.  Scanning at 5 p.m. detected no seepage on the ceiling of 2/F.  (See Exhibit D3-2.)

27. On 20 January 2005, the first flooding test was conducted at the front and rear podium of Flat 3B.  Scanning at 2 p.m. detected seepage in the ceiling at the corner of Room 1 under the rear podium of Flat 3B.  (See Exhibit D3-3.)  The joint expert’s opinion was that this spot was more likely to be caused by water leakage from the rear as opposed to the front podium of Flat 3B.

28. Later on 20 January 2005, the second flooding test was conducted at the bathroom and kitchen of Flat 3A.  Scanning at 4:30 p.m. detected seepage on the ceiling of Room 2 underneath the front podium near the glasshouse and the lift shafts, similar to the result after the flooding test at the front and rear podium of Flat 3A on 18 January 2005.  (See Exhibit D3-4.)

(2) Spraying tests

29. The spraying test was to test seepage from external walls.  Water is sprayed onto the external walls outside Flat 3A and Flat 3B separately, and infra-red thermo-scanning to detect spots of seepage at the ceiling adjacent to the periphery of the external walls. 

30. On 24 January 2005, the first spraying test was conducted to the external walls of Flat 3B.  Thermo-scanning detected no sign of water seepage. 

31. Later on the same day, the second spraying test was conducted to the eternal walls of Flat 3A.  Sign of water seepage was detected in the toilet in Room 3, at the same spot after the flooding test conducted at the front and rear podium of Flat 3A on 18 January 2005.

(3) Concealed water pipes detection

32. One concealed water pipe was found in the living room of Flat 3B.  No leakage was detected.

(4) Fluorescent dye tests

33. Fluorescent dye was poured into the drainage systems of Flat 3A and Flat 3B.  No leakage was detected.

(5) Water pipes leakage tests

34. The internal plumbing systems of Flat 3A and Flat 3B were tested.  Sections of the pipes were isolated and pressure was exerted into the section.  A decrease in pressure would indicate leakage.  No leakage was detected in Flat 3B.  As to Flat 3A, leakage was detected in the hot water system, but not the cold water system.

35. The joint expert concluded that the main cause of water leakage was from the front and rear podium, kitchen and bath room of Flat 3A.  The defective hot water pipe work in Flat 3A was not the main cause of the water leakage, but only an aggravating factor, as demonstrated by the serious dampness behind the bathroom.  He explained that it was only an aggravating factor because the hot water system would only be used intermittently, and there would not be enough hot water emitted to cause the extensive leakage. 

36. Between the 1^st Report and the Revised Report, further tests were conducted to the water pipes supplying the other units passing through the ceiling of 2/F at the suggestion of the expert for the 1^st and 2^nd defendants.  The only problem was condensation on the surface of the portable water supply pipes.  The joint expert concluded that was an intermittent phenomenon and the amount of moisture generated was unlikely to be an attribute to the water leakage.

Causes of the water leakage

37. The Consent Order stipulated that the findings of the expert is binding on the parties, without prejudice to their contention and submissions on liability.  It is common ground between the parties that the expert’s opinions are the only expert evidence in the case, and are prima facie binding, subject to the rejection by the court insofar as they are not supported by facts or reason.

38. In the 1^st Report, the seepage in Room 1 after the flooding of the front and rear podium of Flat 3B were omitted due to mixing up of the thermo-scans by the contractor.  The Revised Report has rectified that upon suggestion of the solicitors for the 1^st and 2^nd defendants. 

39. Mr. Cheung for the 1^st and 2^nd defendants cross-examined the joint expert on the time gap between the two flooding tests on the same day.  Mr. Cheung queried whether the result of the first flooding would only be detected after the second scanning.

40. Mr. Cheung submitted that the test result of 20 January 2005 at 4:30 pm was contaminated by the earlier test at 2 pm.  Earlier that day, the front and rear podium of Flat 3B were flooded and scanning at 2 pm was negative.  Then the kitchen and bathroom of Flat 3A were flooded and scanning at 4:30 pm showed marks in Room 2 underneath the glass house and near the lift shafts.  Mr. Cheung said that water needs time to travel.  Judging from the distance between the Flat 3A kitchen and bathroom and the water marks, it would suggest the water marks might be left behind from the flooding test of the Flat 3B front and rear podium.

41. The joint expert said that the time gap between the first and second flooding test on the same day was sufficient, and it is the same duration adopted by the government departments in such tests.  There is no need to wait for full penetration of water through the concrete slab.  The thermo-scan would detect areas of drop in temperature as indicating sites of water seepage.  Further, as the ceiling was thermo-scanned as control before each flooding, the result was obtained by comparison of the subsequent thermographs with the control.  That would exclude the mixing of the result of a previous flooding test with the later.

42. Mr. Cheung also cross-examined the joint expert on why only the ceiling adjacent to the periphery of the external walls was scanned to detect spots of seepages at the spraying tests.  The joint expert explained that from experience, seepages from external walls would only affect the areas adjacent to the periphery of the external walls, because water came into contact with the external wall vertically or at a slight angle, and most of the water would travel on the surface of the external wall due to the force of gravity.  Hence, the impact of water entering horizontally into the ceiling slap would be smaller.

43. Mr. Cheung also cross-examined as to whether some thermo-scans taken on 25 January 2005 related to the result of spraying tests on 24 January 2005.  The joint expert said no and in fact the water marks in the thermo-scans on 25 January 2005 were results of the flooding test few days ago.

44. The joint expert has answered every query by the 1^st and 2^nd defendants.  I see no difficulty in accepting his opinion.

45. The joint expert said that the normal useful life of the water proofing membrane is 10 to 15 years.  The water proofing membrane on the 3/F has never been renewed.  I note that as at early 2002, the building has been in occupation for about 15 years.  In the normal course of event, failure of the water proofing membrane is not unexpected.

46. I accept the causes of the water leakages from Flat 3A, and to a limited extent from Flat 3B as stated in the Revised Report.

Rentability of 2/F

47. There are two sub-issues as to the rentability of 2/F:

(1)	whether the water leakage affected the rentability of 2/F;
(2)	whether in any event, the 2/F could not be rented out due to poor market condition.

48. The plaintiff’s case is that the water leakage at the centre part of the ceiling of Room 2 affected the rentability of 2/F.

49. Mr. Cheng Ying Yim of the plaintiff said that in May 2002, there was serious water leakage affecting the decoration work and rentability of 2/F.  Both the reports of Miller International for the plaintiff and Ms. Emilie Hui for the 1^st and 2^nd defendants in June 2002 supported the claim of leakage in the ceiling of Room 2.  The problem was continuing as at the date of the site visit. 

50. Mr. Cheung submitted that the extent of damage observed by Miller International on 15 June 2002 was not extensive.  Be that as it may, at the joint inspection on 14 June 2002, Ms. Emilie Hui found that water was dripping.  At that stage, she attributed it to the fire services pipes.  The joint expert did not find the pipes to be the cause of water leakage.  He said the condensation of the portable pipes was unlikely to be a cause of water leakage.  Hence, the water dripping must be attributable to the causes found by the joint expert.

51. I accept the evidence of Mr. Cheng that the water leakage has generally affected the rentability of 2/F as from June 2002.

52. The defendants submitted that in any event, the market was sluggish, and 2/F could not be rented out.  I think it is a far cry to say that in 2002, even without any water leakage, there was no market for 2/F at all.  I would have thought it is a matter of the asking rent.  As the issue of quantum was severed, the experts on valuation and market rent were not called.  Hence, sub-issue (2) will not be dealt with now but deferred to the assessment of damages.

Liability of the 1^st and 2^nd defendants

53. The duty is on the plaintiff to show that the defendants have been negligent in causing and/or suffering the water leakage problem.

54. The joint expert attributed the water leakage mainly to the centre part of Room 2 to the podium, kitchen and bathroom of Flat 3A.  The cause was failure of the water proofing membrane.

55. Mr. Cheung accepted that he could not really dispute that water leakage came from Flat 3A.  However, the 1^st and 2^nd defendants should not be blamed because there was neither misfeasance not nonfeasance.  They did not alter any structure nor damaged the water proofing membrane.  The did not fail to do anything that a reasonable man would have done.  The 1^st and 2^nd defendants thought that as the water proofing membrane was a single sheet, and fair wear and tear would occur equally to the entire membrane, remedial work required the concerted efforts of the 3^rd defendant.   The 1^st and 2^nd defendants blamed the 3^rd defendant for non-cooperation.

56. The tests prescribed by the joint expert have clearly separated sources of leakage from Flat 3A and 3B.  The fact that the water proofing membrane is one sheet or that the course of water seepage is erratic does not affect those results.  Miss Kitty Wong alleged that Mr. Tommy Fung, Chartered Building Surveyor originally retained by the 1^st and 2^nd defendants as expert witness, had told her that the water proofing membrane was one piece and remedial work had to be done with Flat 3B, but she accepted in cross-examination that Mr. Fung never advised her so.

57. Miss Kitty Wong also alleged that the 3^rd defendant could not be contacted to discuss the problem.  But it is contrary to the fact that the 3^rd defendant’s representatives were present at the joint inspections in June 2002, and soon thereafter, the 1^st and 2^nd defendants denied liability and told the plaintiff to have recourse to the Incorporated Owners.  There did not seem to be any initiative for concerted effort from the 1^st and 2^nd defendants.

58. It is only common sense that the water proofing membrane is subject to wear and tear and will not last forever.  It is the duty of the owner of the flat roof or podium to ensure that the water proofing membrane is reasonably and sufficiently maintained so that there is no leakage to the floor underneath.  Even if there were not any occasion for an inspection to see if renewal or reinforcement is required, complaint of water leakage from the downstairs neighbour certainly would be a signal to do so.  Here, the 1^st and 2^nd defendants had already been advised by their architect to conduct a flooding test to the flat roof, but only the glass house was flooded.  They then wrote to the plaintiff indicated that tests according to the report of the architect has been done for 10 days, and the cause of water leakage had nothing to do with Flat 3A.  They further relied on the drainage test by F&EHD to deny liability, notwithstanding F&EHD stated the cause could not be found out within their means.  I find that the 1^st and 2^nd defendants have delayed the process of detecting and remedying the water leakage problem.

59. The attitude of Miss Kitty Wong can be further demonstrated by these examples.

60. On 23 October 2002, solicitors for the plaintiff wrote back to the solicitors for the 1^st and 2^nd defendants stating that leakage of pigmented water was found at an inspection after the water tests by Miss Wong were conducted.  Under cross-examination, Miss Wong was asked how she responded to it.  Miss Wong said since the letter did not state what the pigment was, she could not be sure whether that related to the pigmented water test carried out by her.  It is noted that the colour water test by the F&EHD was only carried out in December 2002.  Miss Wong’s attitude can only be described as uncooperative.

61. Another incident was that on 15 and 17 February 2005, the joint expert issued the invoices for his service.  By 21 March 2005, the other parties except the 1^st and 2^nd defendants have settled the fees.  On 11 April 2005, the 1^st and 2^nd defendants partially settled the fees and raised queries on the 1^st report.  On 18 April 2005, the joint expert requested payment of the balance and further fees for dealing with the queries.  Payment was only made on 8 July 2005.  An explanation was that the 1^st defendant has just passed away.  However, Miss Wong accepted that was not really an excuse.

62. I find that the 1^st and 2^nd defendants are liable to the plaintiff for water leakage from Flat 3A.  I also find that the uncooperative attitude of the 1^st and 2^nd defendants were the cause of the delay in remedying the water leakage.

63. The issue of liability can be divided into sub-heads:

(1)	Loss of rental income;
(2)	Repair costs of the ceiling of 2/F;
(3)	Repair costs of recommended remedial work.

64. As to loss of rental income, as I have mentioned, the plaintiff’s case is that the water leakage from the centre part of the ceiling of Room 2 affected the rentability of 2/F.  Mr. Au for the 3^rd defendant submitted that the water leakage in Room 1 did not affect rentability.  Likewise, Mr. Cheung submitted that water leakage in the corner of the toilet in Room 3 did not affect rentability.  Indeed, I do find that only the more serious water leakage in the centre of Room 2 affected the rentability of 2/F.  Hence, the 1^st and 2^nd defendants are solely responsible for the loss of rental income (to be assessed, if any).

65. As to damage to the ceiling of 2/F, it is neatly delineated into Room1, Room 2 and Room 3, with the damage in Room 3 being jointly contributed to by the leakage from Flat 3A and the external wall.

66. It is evident that the 1^st and 2^nd defendants should bear the repair costs of the ceiling of Room 2.

67. As to Room 3, both the external wall and Flat 3A have contributed to the same spot of damage on the ceiling.  Mr. Mak is not making any claim for the damage caused by seepage from the external wall.  I think it is fair that the plaintiff and the 1^st and 2^nd defendants should share the repair cost equally.

68. As to renewal of the water proofing membrane of Flat 3A as recommended by the joint expert, the 1^st and 2^nd defendants should bear the cost, as well as such costs of the recommended remedial work as touching and concerning Flat 3A.

Liability of the 3^rd defendant

69. I find that the 3^rd defendant is liable for water leakage to Room 1 by reason of his failure to sufficiently maintain the water proofing membrane of the podium of Flat 3B.

70. By reason of the matter stated above, I do not find the 3^rd defendant liable for any loss of rental income.

71. Mr. Au accepted that the 3^rd defendant should bear the cost of repair of the ceiling of Room 1.

72. As to the renewal of the water proofing membrane, although probably only the rear podium was leaking, the joint expert recommended the renewal of the entire flat roof, based on caution and conservatism.  I agree.  At any rate, based on fair wear and tear, it is likely that the time for the water proofing membrane for the entire Flat 3B is almost up.  The 3^rd defendant should also bear such costs of the recommended remedial work as touching and concerning Flat 3B.

Quantum

73. I shall adjourn the assessment of damages before a master of the High Court.

Costs

74. I shall make a separate order nisi that the 1^st and 2^nd defendants do pay 90% of the costs of the action up to the trial (excluding the costs of the joint expert) to the plaintiff, and the 3^rd defendant do pay 10% of such costs to the plaintiff.

75. As to the costs of the joint expert, I shall apportion them according to the recommended remedial work.  I shall make an order nisi that the plaintiff, 1^st and 2^nd defendants, and the 3^rd defendant shall bear the costs of the joint expert in the ratio of 1:5:4.

76. Lastly, I wish to express my gratitude for the abundant good sense of Mr. Mak, Mr. Cheung and Mr. Au in the conduct of the case.