WELL RISE (HONG KONG) LTD v. THE INCORPORATED OWNERS OF WESTLANDS CENTRE

DCCJ 253/2019

[2024] HKDC 1469

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 253 OF 2019

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BETWEEN

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JUDGMENT

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Overview

1.  P is the owner of Unit 2, 2/F, Westlands Centre, No. 20 Westlands Road, Quarry Bay, HK (“Unit 202”). Unit 202 at all material times has been let to successive commercial tenants.

2.  D is the incorporated owners (“IO”) of Westlands Centre.

3.  The present claim arises from water leakage at Unit 202, on P’s case since 2012. Specifically, such leakage affected the area near and around the 2 windows facing Westlands Road.

4.  Directly above Unit 202 there are 2 units, i.e. Unit 303 and Unit 304. Both Units 303 and 304 have a flat roof and these flat roofs are located directly above the abovesaid 2 windows at Unit 202. These flat roofs are themselves properties of the owners of Units 303 and 304 respectively.

5.  The above said, it was eventually not disputed between parties that the waterproofing layer embedded in the concrete floor slab of the flat roofs is a “common part” under the Building Management Ordinance (Cap 344) (the “BMO”) in the circumstances of the present case, applying IO of Hong Leong Industrial Complex v HL Resources Ltd [2009] 4 HKLRD 692 (affirmed on appeal in CACV 189/2009, 24 February 2010).

6.  There is further no dispute between parties that D, as the IO and per s.18 of the BMO and the DMC, is responsible for the management, maintenance and repair etc. of the common parts of Westlands Centre.

7.  Parties also do not dispute that the above duty is not an absolute one; an IO (or the building manager for that matter) is required to do all that is reasonably required in discharge of the above duty. In other words, to render D liable, P has to establish that D “failed to take appropriate steps after it had been made aware of the water leakage problem” (see §16 Lee Ming Yuen v Broadway-Nassau Investments Ltd & Anr (LDBM 452/2007, 15 August 2008); appeal in [2012] 5 HKLRD 208 only allowed in respect of costs).

Sequence of Factual Events and Corresponding Findings

2012-2013

8.  According to P’s factual witness Ms Ho, Unit 202 started suffering from water leakage problem in as early as April 2012, which was orally reported to the management office of Westlands Centre.

9.  Then in November 2012, Ms Ho stated that P’s then tenant complained orally again about water leakage, which she also orally relayed to the management office. On that occasion, P caused a window at Unit 202 to be replaced, thinking that it was defective, and also wallpaper to be replaced.

10.  However, there is no evidence that the above water leakages, if indeed any, originated from or were caused by Unit 303 and 304 flat roofs. There being no presumption that water leakage necessarily comes from or caused by the unit immediately above (Hui Ling Ling v Sky Field Development Limited (unrep. CACV 122/2012, 22 March 2013)), much less any defect in the waterproofing layers which constitute common parts, I am therefore unable to find D liable for these leakage instances in any event.

11.  It follows therefore P has failed to establish any breach of duty on D’s part, not to mention any causal link between that and its expenses in replacing the windows and the wallpaper in November 2013.

2014

12.  Subsequently, another instance of water leakage complaint was made by P’s then tenant in early 2014.

13.  On D’s own documentary evidence, i.e. photographs, the management office conducted colour water test on 12 May 2014 after receiving water leakage complaint from the then tenant of Unit 202. The handwritten notes thereon stated that it was shown that water leaked from the flat roof of Unit 303.

14.  This time around P also reported the issue to the Buildings Department/Food and Environmental Hygiene Department Joint Office (the “Joint Office”) and the Joint Office carried out tests at Unit 303 and Unit 202 in late July 2014.

15.  In gist, it was found that the leakage was caused by water infiltrating from the floor slab of the flat roof of Unit 303.

16.  As a result of the Joint Office test results, P in early August took the matter up with the owner of Unit 303 and demanded that remedial and repair works be done. In reply, the owner of Unit 303 stated that it had caused such works to be done and it would soon be completed.

17.  From the above objective evidence, I find that for this instance the cause of the water leakage was, on balance, defective waterproofing layer inside the Unit 303 flat roof.

18.  Further, D, through the management office, had knowledge of not only the water leakage problem (like in 2012) but also the cause of it.

19.  On documentary evidence, there are records of Unit 303 undergoing certain repair works at the flat roof in late August/early September 2014. Such works cost HK$16,000.

20.  Documents then show that the Joint Office found that the leakage had ceased during its review inspection with colour water testing in October 2014.

2015

21.  On 23 January 2015, P renewed the lease for Unit 202 with its then tenant, Leonhard Kurz (Far East) Ltd (“Kurz”), at a monthly rent of HK$167,860 for a term of 2 years from 18 February 2015 to 17 February 2017 (the “2015-2017 Kurz Lease”). This marked an increase of monthly rent from HK$117,502 under the previous 3-year lease, which was signed in November 2011 (the “2012-2015 Kurz Lease”).

22.  The 2012-2015 Kurz Lease rent level has a significance: the single joint valuation expert assessed market rentals without water leakage for 1 April 2012 to 31 March 2013 (the earliest period assessed) to be HK$115,000; 1 April 2013 to 31 March 2014 to be HK$127,000; 1 April 2014 to 31 March 2015 to be HK$138,400 (translating into an average of HK$126,469 per month for the similar period of April 2012 to February 2015), which shows that P had not been able to command a monthly rent for Unit 202 above (vis-à-vis the averaged-out figure of HK$126,469) or in any event much above (vis-à-vis the 1 April 2012 to 31 March 2013 figure of HK$115,000) the expert-assessed market rental level even prior to any water leakage issue.

23.  Ms Ho in her witness statement stated that this new rent of HK$167,860 represented a discount from HK$22.05 to HK$20 per square foot, i.e. about a 10% discount, due to sustained water leakage problem at Unit 202. I am unable to so find:-

23.1. According to the single joint valuation expert, the market rentals for Unit 202 for the periods from 1 April 2014 to 31 March 2015 to be HK$138,400; from 1 April 2015 to 31 March 2016 to be HK$152,300; and from 1 April 2016 to 31 March 2017 to be HK$159,500 even without any water leakage problem (translating into an average of HK$154,142 per month from February 2015 to February 2017), i.e. the actual rent of HK$167,860 P was able to obtain notwithstanding the water leakage problem was actually already 8.9% higher than the averaged-out expert-assessed market rental for the corresponding period, and indeed higher than even the end point of that period when market rental was trending upwards;

23.2. There is no documentary evidence showing the negotiation between P and Kurz before entering into this lease in 2015, i.e. there is no evidence apart from Ms Ho’s say-so that P wanted to charge 10% more (or indeed close to 20% more vis-à-vis the averaged out expert-assessed market rental) but for the water leakage problem, much less why and how P was entitled to command above-market rent to such an extent starting with the 2015-2017 Kurz Lease.

24.  I note further that although Ms Ho gave an account of the back-and-forth for each lease renewal, i.e. P making an offer to the then tenant based on “market price” (in turn based on Ms Ho’s own research/enquiry), the then tenant coming back with a counteroffer and the “boss” of P accepting the same, this account is incapable of remedying the evidential defect in this regard:-

24.1. The “boss” is not called to give evidence for P, despite being the decision maker and thus the only person who can speak with direct knowledge of what consideration had gone into agreeing to any counteroffer;

24.2. Ms Ho did not say (and in instances where there were contemporaneous records of communication, such records do not indicate) what the then tenant’s counteroffer was based on;

24.3. Ms Ho admitted in the box that the “boss” did not explain to her in detail why the counteroffer was accepted and she did not ask him whether it was due to water leakage, which highlights further the problem at §24.1 above.

25.  Hence, irrespective of finding on breach of duty, I am unable to find that P had suffered any loss in rental under the 2015-2017 Kurz Lease.

26.  On evidence there was no complaint of water leakage at Unit 202 until 21 May 2015, when an entry in the management office occurrence logbook was made stating that the then tenant of Unit 202 made such a complaint. It was further recorded that the affected area was the same as that of “last year” (i.e. 2014), hence it was suspected that the remedial works done at Unit 303 were incomplete.

27.  According to the occurrence logbook, the management office apparently could not contact the owner of Unit 303 and thus the matter was put as “to be followed up”. There is no evidence, either documentary or from witness, that there was any “follow up” action on that occasion.

28.  The next relevant event recorded on the occurrence logbook was that of testing at Unit 304 in September 2015 by the Joint Office.

29.  In gist, the testing results show that infiltration from the Unit 304 flat roof slab was “unlikely” but it was “likely” that infiltration came from the building envelope, based on moisture readings on rainy and sunny days. However, it was ultimately concluded that leakage “ceased during investigation, source uncertain”.

30.  As such, I do not find it established on balance that the leakage was caused by any defect(s) in the building envelope. What is certain from objective evidence is that the source of leakage (when only the flat roof of Unit 304 was tested) was “uncertain”.

31.  From the above, I find that on balance the leakage occurred in 2015 originated from the flat roof of Unit 303. D was also aware of both the occurrence and the source of leakage.

32.  The cause of the leakage, on balance and on common sense, was the same defect(s) that caused the leakage in 2014, which was/were not satisfactorily but only temporarily addressed by the remedial works carried out by the owner of Unit 303 in late August/early September 2014.

33.  There is no evidence showing that there had been any remedial work(s) done at the flat roofs at Unit 303 or 304 in 2015, or that D had taken any steps in response apart from recording the complaints.

2016

34.  On P’s evidence, the next leakage complaint from the then tenant of Unit 202 came in July 2016. There is corresponding entry reflecting this complaint in the occurrence logbook as well.

35.  From the WhatsApp communication between the then tenant and Ms Ho, I gather that the affected area was still the same as before, i.e. near and around the 2 windows facing Westlands Road.

36.  On this occasion P informed the management office in writing and also instructed Mr Hau Tung Chow of Hong Kong Building Inspection and Structure Diagnostic Ltd. to carry out inspection, which took place in late October and early November 2016, and to prepare a report. Mr Hau in due course became P’s expert and testified at trial for P.

37.  Mr Hau’s findings as stated in his initial report of 18 January 2017 were such that, given the positive colour water test results, the water leaked down to Unit 202 mainly from cracks on the Unit 303 and 304 flat roofs slabs and through defective waterproofing layers. Mr Hau identified another source/cause of water leakage, i.e. around an a/c vent installed above one of the 2 windows in question at Unit 202 with defective waterproofing measures.

38.  D has not seriously challenged the above findings by Mr Hau and indeed its expert, Dr Francis Lung, very fairly agreed that the testing method used by Mr Hau on the above occasion and the results observed were acceptable. In any event I find the colour water test results sufficient to establish qualitatively that water did leak from the flat roofs of Unit 303 and 304.

39.  For completeness, the fact that water spraying test was also conducted on the external wall does not have the effect of watering down the conclusiveness of the colour water test results – as long as colour water was seen at Unit 202, logic dictates that the waterproofing measures in the flat roofs tested above must have been defective.

40.  What D argues is however the extent of the impact brought about by the leakage through the defective a/c vent frame. I might add that the vent was admittedly equipped with wind and waterproof louvres, i.e. supposedly used on external walls. The issue lies with proper sealing of its frame against the concrete wall around it, not the efficacy of its design.

41.  Mr Hau in his expert report of 20 April 2020 assessed such impact to be 1% on the basis of his observations recorded in his initial report: there was only a small spot of leakage in the right lower corner that showed moisture after the 2-hour long external wall water spraying test; the areas around that corner showed little moisture level change after the water spraying.

42.  Dr Lung had at the time of Mr Hau’s first inspections (i.e. late October/early November 2016) not been engaged by D and therefore he was unable to offer any comments in this regard.

43.  Doing the best I can based on the initial report by Mr Hau and in particular the photographs contained therein, I take the view that the leakage caused by the a/c vent lower right corner was indeed relatively minimal. So much so that I find damage caused by it (if at all separately detectable) to be de minimis. Mr Hau’s assessment of 1% would be consistent with my view as well, although somehow he felt compelled to quantify the same.

44.  There is no evidence showing that there had been any remedial work(s) done at the flat roofs at Unit 303 or 304 in 2016 in response to P’s complaint.

45.  In October 2016 P renewed its lease with Kurz for another 2 years, at a monthly rent of HK$163,663, from 18 February 2017 to 17 February 2019 (the “2017-2019 Kurz Lease”).

46.  Ms Ho in her witness statement similarly stated that this renewed rent was reduced from HK$22.90 to HK$19.50 per square foot, i.e. about a 15% discount, due again to water leakage problem at Unit 202.

47.  As I approached the similar issue for the 2015-2017 Kurz Lease above, I am not going to simply accept Ms Ho’s say-so but instead rely on the opinion of the single joint valuation expert, who assessed the market rentals for 1 April 2016 to 31 March 2017 to be HK$159,500; 1 April 2017 to 31 March 2018 to be HK$165,500; and 1 April 2018 to 31 March 2019 to be HK$177,600 (translating into an average of HK$170,344 per month for the corresponding period from February 2017 to February 2019) without any water leakage problem. On the other hand, with water leakage problem, the assessed figures were HK$149,600, HK$154,900 and HK$166,300 respectively (translating into an average of HK$159,492 per month from February 2017 to February 2019), or about a 6.4% reduction.

48.  This 2017-2019 Kurz Lease should be approached differently as compared to the 2015-2017 Kurz Leave for 2 reasons: (a) for this 2017-2019 Kurz Lease, the preceding lease (i.e. the 2015-2017 Kurz Lease) showed that P was able to command and had indeed charged above-market rent for Unit 202; (b) for this lease and on average, P did do worse than expert-assessed market rentals without water leakage, but did better than that with water leakage (which is consistent with (a)).

49.  As I have indicated to the parties during opening submissions, given that there could be multiple factors affecting the level of rent eventually agreed upon, especially in a renewal situation, the fairer way of loss quantification should be that of percentage reduction deduced from expert assessment. This will be the closest to isolating water leakage as a causative factor.

50.  Adopting the above approach, I find that the water leakage problem that existed prior to the 2017-2019 Kurz Lease had caused a 6.4% reduction in rental for Unit 202. That will translate into a loss of HK$11,191 (closest dollar) per month on P’s part during the subsistence of the 2017-2019 Kurz Lease.

2017

51.  P in January 2017 informed the owners of Units 303 and 304 of Mr Hau’s findings and demanded that remedial works be carried out to abate the leakage. This letter was copied to the management office of Westlands Centre.

52.  Presumably in response to the above demand, the owners of Units 303 and 304 carried out repair works at their respective flat roofs, in February and June 2017 respectively.

53.  Evidence in relation to the works done at the Unit 303 flat roof is limited to a single page invoice issued by the contractor. The only information stated therein was that the Unit 303 flat roof was cleaned with high pressure water jetwash and then 3 layers of “Swiss waterproofing paint” (瑞士防水油) were applied.

54.  Mr Hau opined that such works looked extremely rudimentary, and Dr Lung stated that he was unable to comment on the comprehensiveness of the works given the scanty information.

55.  I should mention that in between the works at the respective flat roofs, there is evidence of leakage complaint in May 2017. As there was no testing done for that instance, there is no telling whether the leakage originated from Unit 303 flat roof (hence the repairs done in February 2017 were ineffective/unsatisfactory) or from Unit 304 flat roof (which was at that point yet to have repair works carried out). However, these being the only 2 possibilities, the damage to the wallpaper at Unit 202 that caused it to be replaced in May 2017 must have been caused by water leakage from either or both of them.

56.  Turning to the works done at the Unit 304 flat roof, there is in comparison much more information available as the contractor did provide a much more detailed breakdown of the works carried out, spanning 3 pages.

57.  Yet, given that neither side’s expert had any first-hand knowledge of how the works were carried out, they were understandably rather unable to comment on the efficacy of these works or the materials used.

58.  From what I can gather, Mr Hau was not familiar with the “ECT Seal” stated as used and opined that efficacy of these works would also depend on workmanship; Dr Lung opined that apparently the works did not seem to go so far as to address any potential structural problem (which the later repair works in 2023 did, see below).

59.  Rather, the efficacy of the above works at both flat roofs is gauged by both sides in hindsight, i.e. (a) whether the repaired flat roofs held up as there was no leakage thereafter until August 2019, which means they held up even when Super Typhoon Manghut hit Hong Kong in September 2018 and (b) how they stack up against the latest repairs organised by D in February 2023 (completed in June 2023). These will be dealt with below, in hindsight as well.

60.  For the remainder of 2017 after completion of the above repair works, I am not satisfied that there had been any leakage complaint, hence I am not able to find that there was leakage suffered at Unit 202, for the following reasons:-

60.1. Ms Ho in her written statements never mentioned any such complaint by P’s tenant of Unit 202 – she only mentioned the complaint in May 2017 and the next instance of complaint was already that in August 2019;

60.2. When cross-examined on the absence of such evidence from June 2017 to August 2019, Ms Ho said that she had actually received oral complaints over the phone from the tenant and she did not state that in any of her 3 witness statements because “nobody had asked me” – this I do not accept: the central issue in the present claim being that of water leakage, any complaint(s) at any time would have been a critical matter to speak to without any prompting;

60.3. Ms Ho further said that she had also relayed the complaint(s) from the tenant to the management office but P has done nothing with regard to D’s incomplete occurrence logbook disclosure (after May 2017, D has only disclosed 1 page pertaining to 24 November 2017 and showing only record of approving correspondence with P’s solicitors) – one would have expected P, bearing the burden of proof on there being complaints relayed to D, to have asked for a complete set of the occurrence logbook.

61.  For completeness I should point out that although P has issued demand letters through its solicitors to D in late July and early November 2017, these letters do not establish that there was leakage complaint or leakage post the above repair works:-

61.1. As Ms Ho put it in her witness statement, these letters were issue “based on the findings by [Mr Hau]”, i.e. pertaining to complaints in 2016, not that there had been fresh leakage incidents after the above repair works;

61.2. The said letter in late July 2017 reflected the above as well: reference was made only to Mr Hau’s initial report of 18 January 2017 (and a “confirmation letter of 18 July 2017”, which apparently served only to confirm the findings in the initial report) and the findings therein; there was no reference to any leakage incident near the time of its dispatch;

61.3. The said letter in early November 2017 was simply a chaser of the earlier letter, hence contained no fresh complaint near the time of its dispatch.

2018

62.  Stemming from the above factual finding in relation to lack of complaint, I at the outset find that there had been no leakage complaint for the entire year of 2018. Hence, I am similarly unable to find that there was leakage suffered at Unit 202 in 2018.

63.  This finding is not inconsistent with the following key events that took place in year 2018.

64.  The first in sequence was that Kurz terminated its lease with P by a letter from Kurz (Hong Kong) Ltd dated 1 August 2018. Its lease with P was supposed to expire on 17 February 2019 but it chose to exercise its right of early termination. The effective date of termination fell on 17 October 2018.

65.  This early termination has not been shown to be due to water leakage (either before or around the time of termination). The termination letter simply stated that it was “according to our executive office’s decision” and Ms Ho in her witness statements did not speak to the reason for this termination.

66.  Unit 202 was soon after let to another tenant, Wong & Quyang (HK) Ltd (“W&Q”), which entered into a 2-year lease with P from 1 November 2018 to 31 October 2020 at a monthly rent of HK$172,057 (the “2018-2020 W&Q Lease”).

67.  There is no evidence at all, either from Ms Ho or on document, in relation to how this monthly rent was agreed upon or whether it was in any way affected by the water leakage problem (if any), or even what P initially wanted to charge. To state the obvious, this lease being to a new tenant and therefore negotiated afresh, there can be no presumption or inference that whatever factors affecting the rent levels for the previous tenant (i.e. Kurz) would have had the same impact, quantitatively or even qualitatively, for this lease.

68.  For completeness, I do note that the monthly rent of HK$172,057 under the 2018-2020 W&Q Lease was lower than the averaged-out expert-assessed market rental for the corresponding period without water leakage problem, which is HK$181,575. However, as explained above, there could be multiple reasons why a rent was agreed on a particular level and in the complete absence of any evidence on causation, I am unable to find that the level of rent under the 2018-2020 W&Q Lease was at a reduced level as a result of water leakage and certainly not where there is a complete absence of evidence from P on the subject.

69.  The second event in sequence to Kurz’s early termination was an inspection carried out by Dr Lung on various days in September 2018.

70.  Coincidentally, the third event also took place during Dr Lung’s various inspections: Super Typhoon Manghut hit Hong Kong on 16 and 17 September 2018.

71.  As a result, Dr Lung was able to not only carry out various tests in early September 2018 but was also able to inspect the impact of Super Typhoon Manghut after signal number 8 was lowered to number 3 on 17 September 2018.

72.  In gist, Dr Lung found no sign of water leakage from the flat roofs of Units 303 and 304 on his florescent water test and water spraying test, as well as moisture measurements on the ceiling and walls of Unit 202 before and after Super Typhoon Manghut.

73.  Apart from Dr Lung’s examination, there is also a complete absence of evidence on there being any complaint from Kurz (the tenant that was still using Unit 202 as at September 2018) during and after Super Typhoon Manghut hit.

74.  I reckon it necessary to recite Ms Ho’s written evidence to illustrate the point, although I have touched upon it in §59 above. In her 1^st statement, when addressing Dr Lung’s report stating that there was no leakage during Super Typhoon Manghut, Ms Ho stated “[P] does not admit such allegations. In fact, I received complaints from [Kurz] that the Lekage Problem still subsisted since on or about 25 August 2019.” This statement is rather curious: if there were indeed complaints of water leakage, why the non-admission as opposed to stating the positive? And just when the next sentence seems to begin to say that there were actually complaints, it qualified the context to “since on or about 25 August 2019” (emphasis added), hence in fact taking the reference to complaints completely out of the proper temporal context.

75.  Ms Ho was asked about this during cross-examination and she said that there were oral complaints by Kurz through telephone. However there is no evidence of any record of such complaint, not even in her own witness statements, not to mention the records of the management office of Westlands Centre (the incompleteness of which P has done nothing about, as mentioned in §60.3 above).

76.  To the above conspicuous absence, as also touched upon in §60 above in the context of 2017, Ms Ho’s explanation came down to that she was not asked when preparing her witness statements so she did not mention such complaints. This, with respect, is hardly acceptable – as I explained above, the central issue in P’s claim being that of water leakage, there is no reason why any complaint of it should be omitted in evidence, much worse for complaints with a clear and specific reference event, i.e. Super Typhoon Manghut, in 2018.

77.  As stated in the outset above, I am unable to find that there was water leakage suffered at Unit 202 for 2018 on evidence for the above reasons.

78.  The above said, on documentary evidence there had been works done at Unit 202 by W&Q in December 2018. The relevant invoice shows installation of waterproofing system, re-sealing of walls and window frames and fixing of concrete defects.

79.  These in my view were reasonably attributable to the water leakage problem that had occurred prior to that point (as indeed since 2014 even if one takes the earliest point of identifiable leakage source), not negated or rendered unreasonable by virtue of having no new instances of leakage since the second half of 2017. I therefore find a sufficient causal link between these works and the identifiable Units 303 and/or 304 water leakage problem.

2019 up to June 2023

80.  As the recital of Ms Ho’s written evidence above shows, her evidence is that there was no complaint of water leakage until “since on or about” 25 August 2019. It firstly therefore follows that I do find that there had been no such complaint for the first 7 months of the 2019.

81.  There is no dispute that W&Q did complain about water leakage at Unit 202 in August 2019; in May, June and August 2020; and in June 2021 and July 2022. In any event, there are contemporaneous documentary records of the complaint by way of email and also photographs.

82.  Further, D does not quarrel with the fact that the resurfaced water leakage in August 2019 did not finally subside until D arranged repairs of the flat roofs of Unit 303 and 304, which were completed on 30 June 2023. In any event, there is also corroborating expert opinion to this effect by Mr Hau, who inspected Unit 202 again in August 2020, and by Mr Hau and Dr Lung jointly, through their joint inspection in August 2021.

83.  The upshot of the above is that, in effect and in hindsight, the repair works carried out by owners of Units 303 and 304 in 2017 had held up from June 2017 to August 2019.

84.  There is an issue arising as to what caused the water leakage to surface again in August 2019, of which there are 2 possibilities offered on evidence:-

84.1. The quality of the flat roof repair works carried out by the owners of Units 303 and 304 in 2017 being sub-standard and thereby lasting only just over 2 years;

84.2. Dr Lung’s opinion that the vibration brought about by piling works at a construction site across the street from Westlands Centre causing the cement surface of the flat roofs, and in turn the waterproofing layer underneath, to crack.

85.  Dealing first with the quality of the 2017 repair works, the following evidence is relevant:-

85.1. On document, with regard to the flat roof of Unit 303, there is only a single page quotation/invoice from the contractor stating only that the flat roof was cleaned and 3 layers of “Swiss” waterproofing paint applied; the total cost was just HK$27,800;

85.2. As for the flat roof of Unit 304, the contractor’s quotation does provide more details, e.g. specific reference to creating a “chamfered edge” between the horizontal roof surface and the vertical walls, which I understood from both the experts to be an essential feature in building an effective waterproofing layer and using “ECT seal”; the total cost came to HK$62,000;

85.3. Mr Hau described the works at the Unit 303 flat roof to be extremely rudimentary and said in respect of Unit 304 flat roof works that he was not sure what “ECT seal” was;

85.4. Dr Lung fairly agreed that from the single page quotation/invoice in relation to Unit 303 flat roof one would not know what work and how such work had been carried out; he opined that the works carried out at the Unit 304 flat roof were more comprehensive and of a larger scale but that there is no indication on paper whether the repairs went into dealing with any structural defects (which may cause tearing of the waterproofing layer);

85.5. Both experts were asked to comment on the repair works arranged by D in 2023, for which a detailed quotation containing the method statement had been prepared by the contractor – while Mr Hau said that it still could be better, Dr Lung accepted that these works were more comprehensive compared even to the previous repair works at Unit 304 flat roof as these works did go into structural level to make sure there was no latent defect;

85.6. Lastly, the contractor for the 2023 repair works offered a 10-year warranty period on the works.

86.  On the above evidence, it does seem to me that the quality or comprehensiveness of the repair works carried out in 2017 may be questionable, and in any event the relevant contractors did not offer any warranty period (at least not on evidence).

87.  Turing to Dr Lung’s theory of damage to the 2017 works by piling works nearby, I note the following on evidence:-

87.1. This theory starts from the fact that piling equipment could be seen through the windows at Unit 202 when Dr Lung carried out his inspection in 2018 – this being shown on photos featured in Dr Lung’s first report is not in dispute (the only thing unclear is whether the photos were taken in July (as Dr Lung stated in the joint report with Mr Hau) or in September, but that is immaterial);

87.2. Dr Lung postulated in the joint report that the piling had just started (presumably meaning around the second half of 2018), but he accepted during cross-examination that he did not actually know when it started;

87.3. There is no indication or postulation from anyone as to when the piling had completed/stopped either.

88.  Given the above, I tend to think this theory speculative at best and next to impossible to assess with any degree of certainty the impact the piling work may have, much less timing of the same, on the flat roofs of Units 303 and 304. In any event, even if it did have some impact on those flat roofs, the reason for such impact to be sufficiently destructive despite the distance may well come down to lack of structural level repair works in 2017.

89.  I find therefore, on balance, that water leakage resurfaced in August 2019 primarily or ultimately due to the quality of repair works carried out by the owners of Units 303 and 304 in 2017.

90.  During these years, there had been 2 further lease renewals with W&Q:-

90.1. From 1 November 2020 to 31 October 2022 at HK$163,663.50 per month (“2020-2022 W&Q Lease”);

90.2. From 1 November 2022 to 31 October 2024 at HK$155,270.50 per month (“2022-2024 W&Q Lease”).

91.  For the 2020-2022 W&Q Lease, the monthly rent of HK$163,663.50 was lower than the averaged-out expert assessed market rental for the corresponding period without water leakage problem, which is HK$171,746, but slightly higher than the figure with water leakage problem, which is HK$160,979.

92.  The above said, once again, like the 2018-2020 W&Q Lease, there is a complete lack of evidence from Ms Ho or on document as to how this new monthly rent was agreed between P and W&Q. As already explained above, there could be multiple reasons why a rent was agreed at this level and for this 2020-2022 W&Q Lease one could not turn a blind eye to the then prevailing market/economic condition in Hong Kong (or indeed globally) under the COVID-19 pandemic.

93.  Once again, I find myself unable to find, on balance, the necessary causal link between the water leakage and the monthly rent level under the 2020-2022 W&Q Lease.

94.  As for the 2022-2024 W&Q Lease, Ms Ho did speak to it in her 3^rd witness statement. On this occasion she stated that due to water leakage problem, W&Q requested a lower rent and it was eventually reluctantly accepted by P, and also attached the relevant email correspondence.

95.  Although the email correspondence did not contain any indication as to the reason for the reduction, it does show that there was discussion prior to those emails, hence I am prepared to accept that during such prior discussion P and W&Q did refer to water leakage in considering rent level.

96.  For the period covered (and to be covered) under the 2022-2024 W&Q Lease, the single joint valuation expert assessed the market rental without water leakage problem to be HK$159,782 (on average from November 2022 to March 2024, the latest time point the assessment got up to) and HK$150,059 with water leakage problem, i.e. a reduction of about 6.1%. This translates into a loss of HK$10,087 (closest dollar) per month on P’s part during the subsistence of the 2022-2024 W&Q Lease.

97.  During this period, P had also incurred expenses in installing drip trays and aluminium plates in August 2022 to deal with the water leakage problem. These must be causally linked to the water leakage problem that had resurfaced in August 2019, as there had been no remedial work done since that point and until 2023.

Liability of D & Corresponding Quantum

98.  As a preliminary legal point to note, it is fairly and correctly accepted by D that subjective ignorance of duty on the part of D does not absolve D from such a duty – the fact that P initially took the water leakage problem up with the owners of Units 303 and 304 would not have altered D’s duty under the BMO and DMC to maintain/repair common parts of Westlands Centre as the IO thereof. Also, as long as the duty is not absolved, the reasonableness in the discharge of that duty is judged regardless of D’s subjective belief as to where the duty lies or to whom P demanded remedial action.

99.  As to the period from 2012-2013, given my findings above at §11, I find D not liable for the only items claimed, i.e. costs of replacing an aluminum window and wall paper in November 2013.

100.  On undisputed evidence referred to above at §13, D knew of the water leakage problem at Unit 202 and specifically that the water leaked from Unit 303 in May 2014. The only remedial works were carried out by the owner of Unit 303 hence D had basically done nothing apart from liaising. I do find D failed to discharge its maintenance/repair duty.

101.  That said, more importantly, P had not incurred any expenses in 2014 and does not claim any loss in rental during this time. There is thus nothing D is liable for in this period despite the breach.

102.  For 2015, I found above at §26 that water leakage complaints resurfaced in May 2015 and that D knew of them as well as the source (being from Unit 303), so I do find that D was in breach of its duty as there was no remedial works carried out by anyone in 2015 and indeed no follow-up by D. For completeness I should also mention that, as I found above at §32, the remedial works carried out at Unit 303 in 2014 were not reasonably satisfactory hence even if such works were arranged to be carried out by D they would not have sufficed for D to discharge its duty, not to mention that it actually took no part in the same.

103.  However, P’s only claim for this period is that of loss of rental under the 2015-2017 Kurz Lease and I have rejected it for reasons explained above at §22-25. Hence D is not liable for the loss claimed in this period.

104.  For 2016, as I found above at §36, it was known to D that there was water leakage at Unit 202, and from what D knew from 2015 it must also be reasonably clear to D that the leakage originated from (at least) Unit 303, yet D did not cause or arrange for any remedial works to be carried out, not even any inspection on its own to inform itself as to what had to be done. I find D in breach of its duty.

105.  During this period, as I also found above at §46-50, P did suffer loss in rental to the extent of HK$11,191 per month under the 2017-2019 Kurz Lease – totalling HK$268,584 for the 2-year term. I find D liable for this sum.

106.  For 2017, I found above at §51 that D knew of the water leakage problem as well as the source being Units 303 and 304. What D had done in response was again just liaising between P and the owners of Units 303 and 304. In simple terms, D just left it to the owners of Units 303 and 304 to deal with the problem. I do not find that sufficient to discharge its duty.

107.  In any event, as I have found that the repair works carried out by the owners of Units 303 and 304 were not of sufficient quality and lasted only about 2 years, even if these works were arranged by D they would not have sufficed to discharge the duty.

108.  P claims for cost in wallpaper replacement at Unit 202 in May 2017 at HK$6,000, as found on causation at §55 above and breach in the preceding paragraphs, I find D liable for this sum.

109.  For 2018, as explained and found above at §67-68, I find D not liable for the rental loss claimed under the 2018-2020 W&Q Lease. However, for reasons explained above at §78-79, I do find D liable for the HK$51,956 incurred by P in December 2018 for works carried out at Unit 202.

110.  For 2019 onwards, I found above at §84-89 that on balance the re-emergence of water leakage in August 2019 was caused by the quality of the repair works carried out at Units 303 and 304 flat roofs in 2017, hence D, either for having done nothing but liaising or in any event judging by the quality of the repair works in 2017 (even if they were arranged by D), was in breach of its duty.

111.  Given my findings above at §91-96, I find D liable for the loss of rental under the 2022-2024 W&Q Lease, totalling HK$242,088.

112.  Further, given my finding above at §97, I also find D liable for the cost of HK$43,000 incurred by P in August 2022 in dealing with the water leakage problem.

113.  Next, P claims for a total of HK$57,900 in future repair works for Unit 202 based on Mr Hau’s recommendation in the joint report. Dr Lung does not seem to dispute the need but only suggested that 2 alternative quotations be sought.

114.  From the list of items set out by Mr Hau in the joint report, I note that they are all related to affected areas in Unit 202, eg the carpet, the false ceiling, and non-duplication with other repairs at Unit 202 that had been carried out (eg wall paper and window frame), hence I do find them reasonably required to remedy the aftermath of identifiable water leakage problem suffered at Unit 202 since 2014 (for which I also found D to have been in breach of its duty).

115.  In terms of quantum of these repairs, comparing with the other repairs carried out at Unit 202, in particular the HK$51,956 spent in December 2018 and HK$21,200 spent in November 2013 (although D not found liable for it), and also given that Mr Hau was not challenged as to the amounts he suggested, I do not find the quantum to be unreasonable.

116.  As such, I will allow this sum of HK$57,900 as damages for future repairs.

117.  Lastly, P claims HK$42,600 incurred for Mr Hau’s initial report as special damages. D fairly and correctly accepted this as a matter of principle. I shall therefore award this sum as such.

Conclusion

118.  In conclusion, I find D liable to compensate P in the following amounts:-

118.1. Loss of rental: HK$268,584 + HK$242,088 = HK$510,672;

118.2. Cost of repair incurred: HK$6,000 + HK$51,956 + HK$43,000 = HK$100,956;

118.3. Cost of future repair: HK$57,900;

118.4. Costs of pre-action report: HK$42,600.

119.  Grand total of the above comes to HK$712,128.

120.  P does claim interest on past losses and damages. Since parties have not addressed me on this in their closing submissions, I direct that parties to lodge and exchange their submissions and calculations on interest, on the basis of my rulings above, within 7 days of the date herein. The matter will be dealt with on paper in due course.

121.  P is substantially successful in its claim against D, I therefore make a costs order nisi that D is to pay P costs of the action, with certificate for counsel, to be taxed if not agreed.

122.  Unless an application to vary the above costs order nisi is made within 14 days of the date of this judgment by Summons, it will become absolute after 14 days of the date of this judgment.