SILVER KING CHINA LTD v. KONG SHUM UNION PROPERTY MANAGEMENT COMPANY LTD

DCCJ 1927/2023

[2025] HKDC 1650

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1927 OF 2023

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BETWEEN

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JUDGMENT

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1.  The Plaintiff owns G/F, 1/F and 2/F of 67A Waterloo Road in Ho Man Tin. As its sole shareholder and director, Mr Koo Ming Kown (“Mr Koo”) obviously decides how the plaintiff should act.

2.  The evidence suggests that 67A and 67B Waterloo Road is, in fact, one composite building known as Tung Nam Mansion. However, separate incorporated owners respectively exist for 67A Waterloo Road and 67B Waterloo Road. I shall refer to the Incorporated Owners of 67A Waterloo Road as “the 67A IO”; to the Incorporated Owners of 67B Waterloo Road as “the 67B IO”; and to them collectively as “the IOs”.

3.  The defendant was engaged by the IOs to be the manager of Tung Nam Mansion between 30 January 2019 and 5 January 2022.

4.  The plaintiff claims (i) a declaration that the defendant fraudulently misrepresented it in what will be known in this Judgment as “the 16/04/21 Letter” and in making what will be known as “the Request”; (ii) a declaration that the defendant was negligent in handling the renewal of the public liability insurance of Tung Nam Mansion; and (iii) HK$90,000.00 in damages.

The facts

5.  The defendant was appointed as the manager of Tung Nam Mansion by a management agreement in Chinese dated 30 January 2019 (“the Management Agreement”). Mr Simon Westbrook, SC, counsel for the defendant, summarized the relevant provisions of the Management Agreement in English in §15 of his closing submissions as follows:-

“1. The powers duties and responsibilities of the defendant shall be those assigned to the building manager under the DMC and the Building Management Ordinance (Cap.344) (“the BMO”).

7. The defendant shall enter into contracts for building management matters.

12. After obtaining written approval from the IOs, the defendant shall enter into the necessary insurance policies with insurance companies, including public liability insurance and all other insurance required by law to protect the IOs’ liabilities and ensuring these policies remain valid.

16. The defendant must assist and represent the IOs in supervising, managing and executing contracts signed between the IOs and third parties. The defendant must diligently supervise, manage and execute these contracts to protect the IOs’ interests. Contracts include … insurance.”

6.  Mr Westbrook, SC also refers me to section 28(1) of the BMO, under which an incorporated owners is clothed a duty to procure and keep in force a policy of insurance for the common parts of the building in respect of third-party risks. And in section 28(3), an incorporated owners have a discretion to insure the common parts of the building against fire and other risks.

7.  Mr Huy Yun Shiu (“Mr Huy”) was the owner of 3/F and the flat roof of 67A Waterloo Road. He was also the chairman of the 67A IO.

8.  It is common ground that, since 2019, damage by water seepage occurred within the plaintiff’s premises on 2/F of 67A Waterloo Road. There was a dispute as to whether water leaked from Mr Huy’s premises on 3/F to the plaintiff’s premises below. The plaintiff engaged surveyors, whose investigation report dated 20 October 2020 suggested that the leakage was caused by rainwater penetrating through the roof slab of the flat roof of the 3/F premises, and/or penetrating through the surface channel on the flat roof.

9.  Correspondence ensued between Messrs V Hau & Chow (“VHC”), solicitors for the plaintiff, and Mr Huy’s solicitors. In the letter sent by Mr Huy’s solicitors on 26 January 2021, it was alleged that the water leakage was caused by defective waterproofing system of the flat roof, which should be considered as the common parts of Tung Nam Mansion. It was further suggested that the Incorporated Owners of Tung Nam Mansion [sic] should be responsible for the damage caused to the plaintiff’s premises.

10.  VHC then sent a letter to “the Incorporated Owners of Tung Nam Mansion” on 2 February 2021, enclosing the letter from Mr Huy’s solicitors. The letter demanded a reply within 14 days; otherwise legal proceedings would be instituted.

11.  The defendant sent a letter to VHC on 24 February 2021. It was alleged that modification works were carried out in Mr Huy’s premises without prior approval of the 67A IO, which damaged the waterproofing of the flat roof. Thus, the defendant advised VHC to pursue the plaintiff’s claim against Mr Huy. A further letter by the defendant dated 25 February 2021 essentially repeated the same stance[1]. It enclosed, for the plaintiff’s information, the defendant’s earlier letter to Mr Huy on 21 February 2021, claiming that unauthorized works were carried out to the 3/F premises, such that the waterproofing layer of the parapet wall of the 3/F flat roof was damaged.

12.  In the meantime, the public liability insurance for Tung Nam Mansion was about to expire in April 2021. It is common ground that the insurers the defendant approached were unwilling to provide coverage for Tung Nam Mansion, because of the ongoing water leakage dispute between the plaintiff, Mr Huy, and the 67A IO. Obviously, the insurers feared that they would face significant payout if there were to be legal proceedings, and if the 67A IO were to be liable for the water leakage.

13.  It is against the above background that the defendant issued the plaintiff the 16/04/21 Letter on 16 April 2021, with the heading ‘Water Seepage at No 67A, 2^nd Floor, Tung Nam Mansion, Nos 67A & 67B Waterloo Road, Kowloon “the Premises”.’. I think it is best for me to set the content out in full:-

“We, Kong Shum Union Property Management Co, Ltd, act upon the Instruction by both The Incorporated Owners of 67-A Waterloo Road and The Incorporated Owners of 67-B Waterloo Road, Tung Nam Mansion.

Regarding the captioned issue, we have encountered great problem for the insurance renewal in 2021. The existing insurance coverage is expired on 12 April 2021, and we have hold cover or [sic] 7 days till 19 Apr 2021. We do not have much time left.

Till this moment, we have received two declined notices … further make our renewal of insurance more difficult and implied insurance expenses will be in an increasing trend.

In the above aspects, we have approached Mr Huy, owner of Unit-3A and explaining the financial position of The Incorporated Owners and the risk of no Insurance Coverage. Then, Mr Huy have issued:

1. A letter to the Insurance Company … stating he is handling directly with the landlord of 2^nd Floor of No.67A for the captioned issue (see attachment 2);

2. Stating that he have issued a letter to your lawyer dated 10 Mar 2021. In this letter, Mr Huy said he had arranged repair the waterproofing of Unit-3A and the condition should be much better afterwards. In short, Mr Huy is willing to cooperate and improve the condition.

Finally, in above sense, we would suggest your company could issue a similar letter to [the insurers], cc us and I/O, stating Silver King China Limited will handle the captioned case with Unit-3A directly and this case did not involve The Incorporated Owners of 67-A Waterloo Road.

Here, we have prepared a draft letter for your kind consideration (see attachment 4).

Hoping to have your kind support and maintain the harmony of the building. Again, we have to state we do not have much time left for the cover will be expired by 19 Apr 2021. There might be no insurance coverage of which all of us, including your company will be suffered. The most important of all, your company is responsible ¼ of the related cost.

After receiving the letter from you stating the captioned case not related to The Incorporated Owners of 67-A Waterloo Road. We, as the property management company is pleased to act as the mediator with your company. These will benefit to all parties.

Thank you.”

14.  Attachment 2 to the 16/04/2021 was an undated letter signed by Mr Huy:-

“本人許潤兆為九龍窩打老道67A, 東南大樓3樓業主. 最近得悉貴法團正安排公共責任保險及第三者風險責任保險之續約事宜。

關於2樓商舖天花滲水事件，本人將與2樓商舖自行礎商解決。

為免影響貴保險公司對法團的風險責任構成錯誤評估及影響法團購買上述保險之墊底費和保險金額，本人特此澄清。”

15.  In crux, Mr Huy stated in Attachment 2 that he would negotiate and resolve the water leakage problem with the plaintiff as the owner of the 2/F premises. He clarified this in order to not affect the insurers’ assessment of the liability exposure of the 67A IO, which might in turn have a bearing on the premium to be demanded by the insurers.

16.  Attachment 3 to the 16/04/21 Letter was apparently an unsigned letter dated 10 March 2021 from Mr Huy to VHC. In it, Mr Huy claimed to have effected repairs upon receiving the surveyor’s report from VHC in October 2020. He also claimed to have instructed experts to suggest additional measures, if any, to resolve the issue.

17.  Attachment 4 was the draft supplied by the defendant to the plaintiff, the content of which was as follows:-

“有關：2樓商舖天花滲水事宜

本公司Silver King China Limited為九龍窩打老道67A，東南大樓2樓業主。最近得悉貴法團正安排公共責任保險及第三者風險責任保險之續約事宜。

本司得悉有關保險因上述天花滲水事件而影響續保之保費，大幅調昇。

關於2樓商舖天花滲水事件，本司決定與3A業主自行礎商解法。

為免影響貴保險公司對法團的風險責任構成錯誤評估及影響法團購買上述保險之墊底費和保險金額，本司特此澄清上述事件與法團無關。”

18.  “The Request”, as defined in the pleadings, is thus one the defendant made in the 16/04/21 Letter, requesting the plaintiff to issue a letter in the form of Attachment 4 to the insurers.

19.  Mr Hectar Pun, SC, counsel for the plaintiff[2], asks me to take note that the content of Attachment 2 was different to that of Attachment 4, in that Attachment 4 ended with the clarification that the water leakage incident did not concern the 67A IO, which was absent in Attachment 2. I also note that Attachment 4 expressly referred to the possible increase in premium as a result of the water leakage incident, which was also absent from in Attachment 2. According to the defendant’s witnesses, the difference resulted from amendments made by Mr Huy to the draft before he engrossed Attachment 2.

20.  VHC issued 4 letters consequent to the above correspondence:-

20.1. On 11 May 2021, a letter was sent to Messrs Tang, Wong & Chow, the solicitors for the 67A IO, stating that it was unreasonable and unsatisfactory for the 67A IO to tolerate Mr Huy to drag on the water leakage problem for months; this was allegedly a clear breach of duty by the 67A IO. The letter further referred to Mr Huy’s letters dated 10 March 2021 and 12 April 2021, and claimed that those letters were simply a delaying strategy devised by Mr Huy to resolve the insurance renewal problem. Finally, the 16/04/21 Letter was referred to, and it was claimed that the content of Attachment 4 was in fact not true.

20.2. Also on 11 May 2021, a letter was sent to Mr Huy, claiming that he had never provided any document or evidence to corroborate his assertion in his letters dated 10 March 2021 and 12 April 2021 that repair works had been carried out. Again, it was stated that Mr Huy’s letters were simply a delaying strategy to resolve the insurance renewal problem. It alleged that the draft letter supplied by the defendant had the suspicion of deceiving the insurers.

20.3. On 24 May 2021, a letter was sent to the defendant, claiming that the plaintiff had reason to believe that Attachment 4 to the 16/04/21 Letter was a deceptive strategy devised by the defendant to deceive and/or mislead the insurers to believe that (a) the plaintiff would resolve the water leakage problem with Mr Huy; and (b) the 67A IO was not involved in the matter, in order to resolve the insurance renewal problem. It was further alleged that the defendant exerted pressure on the plaintiff to cooperate by stating the plaintiff would be responsible for ¼ of the related cost of any unsuccessful insurance renewal or increased in premium due to the water leakage problem. The letter ended with a request for justification and explanation from the defendant for making the Request; or else the plaintiff would report the matter forthwith to the police.

20.4. Also on 24 May 2021, a letter was sent to Mr Huy, claiming that the plaintiff had reason to believe that he acted in concert with the defendant in putting forward the Request. This allegedly amounted to a conspiracy to defraud the insurers. The letter ended with a request to explain why the plaintiff was asked to sign on an allegedly unreasonable or illegal document; or else the plaintiff might need to make a report to the police.

21.  As confirmed by Mr Koo in his cross examination, the plaintiff never issued any letter to the insurers, in the form of Attachment 4 or otherwise.

22.  On 28 May 2021, Mr Huy sent a reply letter in Chinese to VHC. As summarized by Mr Westbrook, SC in §22 of his closing submissions, this letter stated that:-

22.1. Although he served as the chairman of the 67A IO, he was not involved in the discussion concerning the water leakage incident within the committee. All matters were handled by the defendant and other committee members.

22.2. As the owner of the 3/F premises, he sent a letter to the insurers expressing that he was willing to resolve the dispute with the 2/F owner.

22.3. Regarding the defendant’s unilateral request or issue of any document to VHC, he had no knowledge and did not take any part.

22.4. Therefore, he was utterly perplexed by the accusations raised by VHC regarding conspiracy to defraud and collusion with the 67A IO to provide false information.

22.5. He always maintained a proactive attitude to resolve the water leakage issue, and arranged for an expert to inspect; he hoped the parties could cooperate with each other to solve the problems.

23.  The defendant sent a reply letter to the plaintiff (and its tenant) on 1 June 2021. It was stated in this letter that, inter alia:-

23.1. There had been similar water leakage complaints in the past which had impacted efforts to seek insurance renewal. In those occasions, the claimants sent letters to the insurers clarifying that the IOs were not involved, so that insurance could be renewed at the then existing premium.

23.2. The defendant claimed that there were discussions with Mr Huy, consequent upon which Mr Huy agreed to repair and handle the water leakage problem; he would also handle the negotiations with the plaintiff direct till settlement of the dispute.

23.3. After discussing with the insurance brokers and seeking legal advice, the defendant tried to request the plaintiff and Mr Huy to issue letters to the insurers clarifying that the 67A IO was not involved, such that the premium would not be increased. But at the end, it only received such letter from Mr Huy.

23.4. Since the clarifying letters were not forthcoming, the premium was raised from HK$10,008.50 to HK$18,218.20 upon renewal. The IOs could not balance their budget as a result.

23.5. The draft letter sent by the defendant to the plaintiff recounted the facts accurately.

24.  Apparently, the plaintiff remained dissatisfied despite the defendant’s reply. It commenced a claim against the defendant in the High Court (ie HCA 1503/2021) on 30 September 2021[3]. Pursuant to the parties’ consent, HCA 1503/2021 was ordered to be transferred to the District Court on 13 April 2023.

25.  In the Amended Statement of Claim dated 28 February 2022:-

25.1. The plaintiff defined the first paragraph of the 16/04/21 Letter, viz “We, Kong Shum Union Property Management Co, Ltd, act upon the Instruction by both The Incorporated Owners of 67-A Waterloo Road and The Incorporated Owners of 67-B Waterloo Road, Tung Nam Mansion.”, as “the Representation”: §5A;

25.2. It was averred that the Representation was false, in that the defendant was not authorized by, or was not acting on the instructions of the 67A IO to put forward the Request: §9A;

25.3. The Representation was made by the defendant fraudulently, in that it knew the Representation was false, or it did not have a genuine belief that the Representation was true, or it was reckless as to whether the Representation was true. Further, the defendant made the Representation with the intention that the plaintiff would act upon it in a manner which would result in damage to the plaintiff: §9B;

25.4. The plaintiff was induced by the Representation to believe that the defendant had the authority and instruction from the 67A IO, such that it sought legal advice from VHC to see how to deal with the 16/04/21 Letter: §9C;

25.5. In addition to fraudulent misrepresentation, the defendant (as the manager of Tung Nam Mansion) owed a duty of care to the plaintiff (as a co-owner of Tung Nam Mansion) in the execution of its duties as the manager of Tung Nam Mansion: §12;

25.6. The defendant was in breach of its duty to the plaintiff because:-

25.6.1. It made the Request with an intention to deceive, defraud or mislead the insurers for the renewal of the public liability insurance without any upward adjustment of premium: §13(a);

25.6.2. It requested the plaintiff to make a false representation to the insurers, which might attract civil and/or criminal liability for the plaintiff: §13(b);

25.6.3. It failed to properly assess the possibility that the public liability insurance for Tung Nam Mansion might be rendered void because it sought to obtain a renewal based on deceit, fraud, or misleading behaviour: §13(c);

25.6.4. It failed to provide any justification or explanation for making the Request despite the plaintiff’s demand: §13(d); and

25.6.5. It misrepresented its authority and/or instruction in the 16/04/21 Letter: §13(e)-(g).

26.  In relation to the claim on fraudulent misrepresentation, the defendant argues that the 16/04/21 Letter was issued with the knowledge and authority and upon instructions of the IOs. Further, and/or alternatively, it had the implied authority to issue it as an act necessary or incidental to its position as the manager of Tung Nam Mansion.

27.  In relation to the claim on negligence, the defendant argues that it did not owe the duties averred by the plaintiff; in any event, it committed no breach as it acted reasonably in managing the affairs of Tung Nam Mansion properly.

The issues

28.  The parties put in a Joint Statement of Issues in Dispute, and I quote below the issues framed therein:-

Issue (1): Whether the statement contained in the 16/04/21 Letter, namely “We, Kong Shum Union Property Management Co, Ltd, act upon instruction by both the Incorporated Owners of 67-A Waterloo Road and the Incorporated Owners of 67-B Waterloo Road, Tung Nam Mansion” (“the Representation”), was false?

Issue (2): If the answer to (1) above is affirmative, whether the defendant, in making the Representation, is liable to the plaintiff for fraudulent misrepresentation?

Issue (3): Being the manager of the building situate at No 67A Waterloo Road, Kowloon, also known as Tung Nam Mansion:-

(1) Whether the defendant owed any duties of care to the plaintiff as alleged;

(2) If so, whether the defendant was in breach of its duties of care as alleged by the plaintiff; and

(3) If so, whether the defendant is liable to the plaintiff in negligence.

Issue (4): If the defendant is held liable to the plaintiff for fraudulent misrepresentation and/or negligence:-

(1) Whether the plaintiff has suffered any loss and damage as a result of the alleged fraudulent misrepresentation and/or negligence;

(2) Whether the defendant is liable to pay damages to the plaintiff; and if so, the quantum; and

(3) Whether the plaintiff is entitled to the declarations sought in prayers (a) and (b) of the Amended Statement of Claim?

The plaintiff’s claim on fraudulent misrepresentation

29.  There is no dispute that the plaintiff has to prove the following in order to establish its claim on fraudulent misrepresentation[4]:-

29.1. There must be a representation of fact made by words or conduct;

29.2. The representation must be made with knowledge that it is or may be false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true;

29.3. The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which includes the claimant, in the manner which resulted in damage to him;

29.4. It must be proved that the claimant has acted upon the false statement; and

29.5. It must be proved that the claimant suffered damage by so doing.

30.  As a starting point, it is important to recognize that the alleged fraudulent misrepresentation centers on the first substantive paragraph of the 16/04/21 Letter. There is no plea, with respect to this cause of action, touching on the defendant making the Request.

31.  In my judgment, the correct approach is to first consider whether the defendant was entitled to rely on any implied authority from the 67A IO to issue the 16/04/21 Letter; and if so, whether the implied authority covered the 16/04/21 Letter in the way it was worded. If both of these questions are answered in the affirmative, whether the defendant received any express authority and/or instruction to issue the 16/04/21 Letter is quite beside the point.

32.  I agree with the defendant that it was entitled to rely on its implied authority as the manager of Tung Nam Mansion to issue the 16/04/21 Letter, and it did not exceed such implied authority in issuing the same. My reasons are as follows:-

32.1. I have not been shown any legal authority or proposition to the effect that the defendant must receive the express authority from the IOs to issue the 16/04/21 Letter.

32.2. Clauses 7, 12 and 16 of the Management Agreement expressly required the defendant to take out public liability insurance for the benefit of the IOs. As a matter of business efficacy, the Management Agreement must have also given the defendant to implied authority to do all ancillary acts to enable it to take out such insurance.

32.3. In my judgment, negotiating with insurers and the co-owners of Tung Nam Mansion to enable such insurance to be taken out must be an act ancillary to the defendant’s express responsibilities imposed by the Management Agreement. I find that this serves as a complete answer to the plaintiff’s claim that the Representation was false.

32.4. In any event, I find that, standing from the defendant’s point of view and looking at the correspondence preceding the 16/04/21 Letter, one could reasonably conclude that Mr Huy caved in and accepted that he ought to be responsible for the damage caused by water leaking from his premises to the plaintiff’s premises.

32.5. Hence, I find that the Request was one that a reasonable manager standing in the defendant’s shoes could have made in order to facilitate the renewal of the public liability insurance of Tung Nam Mansion.

32.6. The correspondence shows that the plaintiff did not (and still does not) accept the genuineness of Mr Huy’s acceptance of liability. The plaintiff might well have reasons it knows best to remain skeptical about Mr Huy’s admission. But I have heard no evidence which purports to show that Mr Huy could not be believed. Even if, by the 16/04/21 Letter, the repairs allegedly carried out by Mr Huy did not stem the flow of water seepage down to the plaintiff’s premises, I cannot see why the defendant could not conclude that it could hold Mr Huy to his admission to exonerate the 67A IO, and the insurers ought to be informed of this.

32.7. Therefore, the defendant properly exercised the implied authority it received from the IOs based on the Management Agreement in putting forward the Request to the plaintiff.

33.  As a matter of completeness, I find that Clause 12 of the Management Agreement only required the defendant to obtain the written approval from the IOs for the purpose of entering into a contract of insurance. In my judgment, it did not require any express approval to be obtained prior to doing any ancillary act in aid of taking out any insurance.

34.  With the above analysis, I find it is unnecessary to consider whether the Representation was made with the express authority and/or instruction by the IOs. Should it become necessary, I would have found that the defendant has not put forward sufficient evidence to show that express authority and/or instruction was given:-

34.1. The defendant claims that express authority and/or instruction was given by a Mr Leung, who was the son of the then chairman of the 67B IO.

34.2. It puts forward the chat history of a WhatsApp chatgroup named “Tung Nam Working Group” to corroborate its claim that Mr Leung gave such authority and/or instruction. However, the defendant’s witnesses did not explain in detail in their witness statements the usual way(s) in which the IOs gave instructions to the defendant. I also refused to allow Mr Westbrook, SC to explore this with the defendant’s witnesses by way of his examination-in-chief. Evidence on this topic could have been set out in the witness statements; there seems to be no good reason for such evidence to be made known to the plaintiff only at trial. I find that it would be unfair to allow the defendant to lead such evidence orally at trial without prior notice to the plaintiff.

34.3. In response to my question at the end of cross examination, Mr Daniel Chan, the defendant’s assistant manager assigned to oversee the management of Tung Nam Mansion, accepts that Mr Leung was the only person in the WhatsApp chatgroup representing the IOs; all other participants in the chatgroup were the defendant’s staff members.

34.4. Without more, I do not accept that the defendant could have accepted that Mr Leung gave express authority and/or instruction on behalf of the 67A IO.

34.5. In addition, I agree with Mr Pun, SC that Clause 17 of the Management Agreement required any instruction from the management committee of the IOs to be given by the chairmen of the IOs. Given Mr Huy’s letter dated 28 May 2021, the procedural requirement stated in the Management Agreement was clearly not satisfied.

35.  It is my judgment that the plaintiff’s claim on fraudulent misrepresentation fails.

The plaintiff’s claim on negligence

36.  The defendant made 2 arguments in defending the plaintiff’s claim on negligence:-

36.1. The damage suffered by the plaintiff was purely monetary. There was no general liability in negligence for pure economic loss. In addition, the plaintiff has not established that it had a special relationship with the defendant as described in Hedley Byrne v Heller [1964] AC 465, so that the defendant could not be said to have assumed responsibility for any economic loss flowing from any negligent advice or information.

36.2. In any event, the plaintiff has not pleaded in the Amended Statement of Claim the relevant facts supporting the existence of a special relationship it had with the defendant, so that the plaintiff’s claim is defective from the start.

37.  There appears to be no dispute from the plaintiff that its claim under negligence was one for pure economic loss. Mr Pun, SC submits that the duty to prevent pure economic loss has been pleaded in §12(g) of the Amended Statement of Claim, which states that the defendant had a duty “to prevent or avoid individual co-owner(s) from incurring unnecessary liability or expenses when inviting individual co-owner(s) to assist in procuring the renewal of the public liability insurance” of Tung Nam Mansion.

38.  With respect, I do not agree that the plaintiff has properly raised a claim for pure economic loss by negligent misstatement in the Amended Statement of Claim. The plaintiff does not spell out the facts supporting the existence of a special relationship in its pleadings. In my judgment, §12(g) only makes an assertion that the defendant had a duty to prevent pure economic loss on the plaintiff’s part but nothing more. Indeed, in his closing submissions Mr Pun, SC referred to[5] (i) the defendant was a professional property management service company, the parent company of which was listed on the Hong Kong Stock Exchange; (ii) the defendant was providing professional building management service to the IOs; (iii) the IOs paid HK$18,350.00 per month for the management services provided by the defendant as part of the reasons why the defendant owed the plaintiff a duty to avoid causing pure economic loss. These facts, whilst one may think obvious, are simply not pleaded to support the existence of a special relationship between the plaintiff and the defendant. With respect, this rather shows that the Amended Statement of Claim was indeed defective as the defendant claims.

39.  I do not think the plaintiff should be allowed to run its case on pure economic loss by negligent misstatement.

40.  In any event, without going into detailed discussion as to whether a special relationship existed between the plaintiff and the defendant to allow the plaintiff to claim for pure economic loss[6], I find that the defendant was not negligent in making the Representation and putting forward the Request. Based on the findings I made above, the Representation was correctly made. It was also reasonable for the defendant to put forward the Request, on the reasonable belief that Mr Huy indeed accepted liability for the water seepage. In my judgment, the plaintiff’s assertion that the Request was a scheme devised by Mr Huy and the defendant to deceive the insurers was only a matter of pure conjecture. Mr Koo might well have believed in the propensity of such conjecture, but his strong conviction on there being something sinister cannot be blindly elevated to a piece of fact supporting the plaintiff’s claim on negligence. As a consequence, there could not be any breach on the defendant’s part for not providing an explanation to the plaintiff’s satisfaction.

41.  References were also made in the course of evidence to the defendant’s statement that the plaintiff had to be responsible for ¼ of the additional expenses to be incurred by the 67A IO should the plaintiff decide not to acceded to the Request. It is the plaintiff’s case that this put pressure on it to succumb to the Request. In my judgment, this does not assist the plaintiff on its claim on negligence. Apart from the fact that the plaintiff never challenged the truthfulness of the defendant’s statement, there was also no plea in the Amended Statement of Claim that the defendant was negligent in putting forward the statement alongside the Request. There is also no evidence adduced to show the defendant’s statement would have put pressure on the plaintiff to accede to the Request – were it the case that the plaintiff would have been adversely affected by the additional expenses? In a vacuum, I do not think it is possible to make any factual finding on that one way or another.

42.  I conclude that the plaintiff fails on its claim on negligence.

The plaintiff’s relief

43.  I shall briefly state my views on the relief sought by the plaintiff should this become necessary.

44.  First, the issue is whether the plaintiff should be granted the declarations sought, the content of which I set out in §4 above.

45.  It is trite that a declaration is a discretionary relief. There is no dispute that the court ought to consider whether any practical purpose would be served by the grant of a declaration: Koo Ming Kown v Rev Mr Mok Kong Ting (President of the Baptist Convention of Hong Kong) [2022] HKCFI 642 at §15 (Cheng J; 21 March 2022). The idea of “useful purpose” or “practical purpose” should receive broad and flexible interpretation.

46.  I do not agree that a declaration would be necessary even if the plaintiff were able to establish its claim against the defendant on fraudulent misrepresentation and/or negligence. In my judgment, no useful purpose would be served by the declarations sought by the plaintiff. The defendant has ceased to be the manager of Tung Nam Mansion; no evidence suggests that it might be appointed as the manager again. Hence, a declaration would not be useful to inform the defendant as to how the affairs of Tung Nam Mansion should be managed. In Mok King Ting, there was evidence to suggest that the defendant school sponsoring body might consider the appointment as a manager a person Mr Koo had adverse views of in the future, so that it might be useful to grant a declaration (if the court was with the plaintiff) to guide the future conduct of the defendant. I find Cheng J’s judgment distinguishable on facts. In any event, the learned Judge was concerned with a striking out application; her opinion must be read to only mean that the declaration sought in that case was not plainly unarguable. It does not provide any authority for a proposition that a declaration must have practical purpose whenever a breach of duty occurs.

47.  For damages, I put on record that the plaintiff has not discovered the documents supporting Mr Koo’s evidence in his witness statement that VHC rendered legal advice on 30 different days for a total of at least 15 hours (at HK$6,000.00 per hour) until shortly before the trial. At the eve of the commencement of trial, the plaintiff sought to put in as evidence the 14^th, 15^th, 16^th and 17^th interim bills issued by VHC to the plaintiff, which covered work done in April to July 2021. On those interim bills, various dates were highlighted. The plaintiff says the highlighted dates were the ones on which legal advice was rendered with respect to the 16/04/21 Letter and its sequalae.

48.  Even if one overlooks the plaintiff’s delay in discovering the interim bills, I agree with the defendant, and I so find, that the plaintiff has not proved that legal advice of at least 15 hours was rendered by VHC. I reject Mr Koo’s evidence in this respect. Under cross examination, he accepts that he was not the person highlighting the interim bills; he could not speak of the extent of legal advice involved in each of those highlighted dates. On the interim bills, no narrative was provided to explain the extent of work involved[7]; worse still, the time spent by each fee earner in an interim bill was stated with reference to the particular type of work done across multiple dates, without any break-down as to the time spent for each specified date. I also accept the defendant’s argument that the plaintiff’s calculation is defective, in that some highlighted dates involved work done by a trainee solicitor with the charge-out rate of HK$1,800.00 per hour instead of HK$6,000.00 per hour.

49.  Had liability been established, I would have awarded HK$10,000.00 as nominal damages for the reasonable legal fees the plaintiff should have incurred in response to the 16/04/21 Letter.

Conclusion

50.  I answer the Joint Statement of Issues in Dispute as follows:-

Issue (1): No.

Issue (2): This issue does not arise for determination.

Issue (3)(1): Yes.

Issue (3)(2): No.

Issue (3)(3): This issue does not arise for determination.

Issue (4)(1): If liable, yes.

Issue (4)(2): If liable, HK$10,000.00.

Issue (4)(3): If liable, still no.

51.  I dismiss the plaintiff’s claim with costs to the defendant, with certificate for counsel[8]. This costs order shall include the costs before the transfer of the present case to this court are concerned (ie the costs in HCA 1503/2021). Whilst it should be a matter for taxation, I state my view (if useful at all) that the costs in HCA 1503/2021 ought to be taxed on the High Court scale.

52.  The defendant asks for costs to be taxed on an indemnity basis. Mr Westbrook, SC refers me to various decisions in which Mr Koo was said to be going on a personal vendetta or pursuing a campaign of personal vilification against his adversary; and was ordered to pay costs on an indemnity basis[9].

53.  Whilst I agree that Mr Koo was litigious, and the plaintiff’s choice to pursue this matter to a full-blown trial does not sit well with Order 1A rule 1(c) and (f) of the Rules of the District Court (Cap 336H), I have ultimately come to the conclusion that an order of indemnity costs is not called for. Most of the cases cited by Mr Westbrook, SC, in which indemnity costs were ordered, related to Mr Koo’s obsession of going after a Mr Hopkins Chan. At the moment, repeated vexatious claims over a personal obsession is absent. Although I am disappointed to see a property management squabble so bitterly fought using precious public resources, I am inclined to think that this only comes close, but does not amount to, an abuse of the process of the court.

54.  I order the defendant’s costs to be taxed on party-and-party basis.

55.  The above costs order is nisi; unless there is any application for variation within 14 days of this Judgment, it shall become absolute.

56.  It remains for me to thank leading counsel and their respective teams for their helpful assistance.