JOYBASE CORPORATION LTD v. LI KAI FAI

CACV 186/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 186 OF 2013

(ON APPEAL FROM DCCJ NO. 3016 OF 2011)

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REASONS FOR JUDGMENT

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Hon Kwan JA (giving the Reasons for Judgment of the Court):

1.  This is the defendant’s appeal against the judgment of HH Judge Chow on 6 May 2013 after a three-day trial. Leave to appeal was given by the Chief Judge of the High Court on 4 September 2013. The plaintiff’s claim arose out of loss and damage caused to its property, Unit 6 on the 11^th floor of Raton Industrial Building, No 4 Kin Wong Street, Tuen Mun, New Territories (“the Lower Flat”), after a very serious water leakage and flooding on 13 January 2010. The defendant was the registered owner and occupier of the property immediately above (“the Upper Flat”). Among other things, the plaintiff claimed against the defendant for breach of covenants in the deed of mutual covenants (not to do or permit anything which may be or become a nuisance) and section 34H of the Building Management Ordinance, Cap 344 (to maintain that part of the building to which he has exclusive possession in good repair and condition). The judge found in favour of the plaintiff and awarded damages to the plaintiff in the sum agreed between the parties at $316,980.

2.  The defendant issued a summons on 8 October 2014 for leave to adduce two sets of photographs as new evidence on appeal.  This was dismissed by Yuen JA on 28 October 2014, as the defendant failed to satisfy the court that such evidence could not have been obtained with reasonable diligence for use at the trial.

3.  We dismissed the appeal at the conclusion of the hearing with costs and these are the reasons for our judgment.

Background

4.  The relevant background matters may first be stated as follows.

5.  Raton Industrial Building was constructed in 1979.  The plaintiff became the registered owner and occupier of the Lower Flat in 2005.  The male and female lavatories in the property were removed and the lavatories were changed to a store room.  In fact, the whole of the Lower Flat was used by a solicitors’ firm, Messrs C K Mok & Co, to store old files.

6.  The defendant became the registered owner and occupier of the Upper Flat in 2007.  At the time the Upper Flat was inspected by the plaintiff’s expert, Andrew Kung Sui Lun (“Mr Kung”; a director of K C Surveyors Limited, later a director of Bright Solution Consulting Limited) within a week of the flooding incident in January 2010, it was found that alterations had been made to the male and female lavatories in the Upper Flat.  The female lavatory was demolished and the area was used for the storage of large piles of clothes.  The original door opening of the male lavatory was blocked and a new door opening was formed.  The layout of sanitary fitments in the male lavatory was altered in that only one hand basin and one water closet were provided.  There was a water supply control valve at the wall of the male lavatory located near the ground level and the floor level of the male lavatory was raised.

7.  On 13 January 2010, the management office of the building informed a partner of Messrs C K Mok & Co that the Lower Flat was flooded.  A clerk of the firm, Lam Wing Keung (“Mr Lam”), was sent to the premises that day and discovered that the false ceiling above the store room had partially collapsed and the room was flooded with water coming from a broken pipe which he believed was damaged by the collapsed false ceiling.  He saw water dripping from the ceiling of the store room.  The leakage occurred near the middle concrete beam of the store room and was not close to the external wall.  He had to place a carton box cover under the ceiling to collect water.

8.  On 20 January 2010, Mr Kung made his first inspection of the Lower Flat and the Upper Flat.  There was no record of rain between 15 and 20 January 2010.  His observations of water dripping from the ceiling and the location where the leakage occurred were the same as Mr Lam’s.  He inspected the partition wall outside the store room and found dampness at the upper part of the wall, with a high moisture content of 70%.  A spot of concrete spalling was noted at the ceiling of the store room adjacent to the middle concrete beam.  He found no sign of seepage along the external wall inside the Lower Flat.

9.  Mr Kung inspected the Upper Flat and found the alterations to the female and male lavatories as mentioned earlier.  The raised floor level of the male lavatory was immediately above the location of the collapsed false ceiling of the store room of the Lower Flat.  He explained in evidence that to alter the male lavatory and to remove the female lavatory, the original water pipes and drainage pipes must have been re-routed and they are likely to be buried in the raised floor level of the existing lavatory.

10.  On 11 February 2010, K C Surveyors collected three samples of hardened concrete at the ceiling of the Lower Flat for chemical analysis of chloride content.  The test results showed a progressive decrease of chloride content from the sample collected at the store room to the sample collected adjacent to the entrance of the premises, indicating that the store room had been affected by flush water flooding previously.

11.  The plaintiff reported the flooding incident to the Buildings Department in April 2010, drawing the latter’s attention to the risk of further collapse of the concrete slab of the ceiling of the store room in the Lower Flat.  On 15 July 2010, the Buildings Department inspected the Lower Flat and found spalled concrete with exposed reinforcement and sign of water seeping at the ceiling of the store room.

12.  On 6 September 2010, an Environmental Nuisance Investigator of the Food and Environmental and Hygiene Department (“FEHD”) inspected the Lower Flat and detected water dripping from the ceiling of the store room.  The investigator conducted colour water tests to the water closet and wash hand basin in the lavatory of the Upper Flat to trace the source of seepage.  He checked the result on 11 October 2010.  Water dripping was still detected from the ceiling of the store room but no colour dye could be detected in the dripping water.

13.  On 28 October 2010, the consultant appointed by the joint office of the Buildings Department and FEHD conducted initial inspection to the ceiling and wall of the store room in the Lower Flat and found that the moisture content was higher than 35% but no water dripping was noted.

14.  On 9 August 2011, the plaintiff issued the writ in this action with the statement of claim.

15.  On 15 August 2011, the consultant of the joint office conducted colour dye ponding test to the floor slab of the Upper Flat.  He conducted result monitoring on 19 October 2011 and 10 November 2011.  No colour dye used in the ponding test was observed at the Lower Flat on both dates and no water dripping was noted.  The moisture content was higher than 35% on 19 October (a sunny day) and lower than 35% on 10 November (a rainy day).  The joint office stopped the investigation works as water seepage had ceased during the inspection on 10 November 2011.

16.  On 10 October 2011, the defendant inspected the Lower Flat with his contractor.  Mr Lam was present on that occasion as well as in the subsequent inspections on 19 October and 10 November by the consultant of the joint office.  Mr Lam noted that water was still dripping from the ceiling of the store room on 10 October but was no longer dripping on the two later inspections.

17.  On 21 October 2011, the defendant entered into a provisional agreement for sale and purchase to sell the Upper Flat and the agreement contained a provision that the vendor should be responsible to rectify the water seepage in the lavatory.

18.  On 14 November 2011, the defendant filed its defence in which he alleged that the water seepage to the Lower Flat was caused by the structural defects of the external wall of the building and that such defects should be remedied by the incorporated owners.  This allegation was repeated in his witness statement dated 19 April 2012.

19.  On 29 March 2012, Mr Kung visited the Lower Flat again.  His findings on this occasion were similar to what he found in January 2010, save that there was no water dripping from the ceiling.  His last visit was on 29 May 2012.  It was raining between 26 and 28 May with 44.7 mm of rainfall recorded.  He did not detect any sign of water seepage from the external wall.  No works had been carried out at the external wall since January 2010.  The inspection on 29 May showed normal reading of moisture measure of the store room.

20.  The expert witness who gave evidence for the defendant, Dickie Lau Kam Sing (“Mr Lau”; a director of Wealthy Gate Architects & Associates Limited) did not visit or inspect the Lower Flat or the Upper Flat.  He only went to see the exterior condition of the building a few days before the trial.

The judgment below

21.  The key issues at the trial were the cause of the water leakage and the defendant’s liability under the deed of mutual covenants and section 34H of the Building Management Ordinance.

22.  The judge accepted the expert evidence of Mr Kung and rejected the expert evidence of Mr Lau.  He found that Mr Kung’s evidence that the water leakage came from the Upper Flat, by a process of deduction, was supported by ample evidence.  The conclusion reached by Mr Lau that the water leakage came from the external wall was not supported by evidence and the judge could not attach any weight to his evidence[1].  The judge held that in allowing water to escape from the Upper Flat to the Lower Flat, the defendant was in breach of paragraph (d) of the 4^th Schedule of the deed of mutual covenants and section 34H of the Ordinance[2].

23.  The observations and findings made within a week of the flooding incident and the results of the chemical analysis of the samples of hardened concrete collected at the ceiling of the Lower Flat indicated to Mr Kung that water leakage of flush water pipes from the Upper Flat should be one of the causes of the water leakage into the Lower Flat[3].  No drainage pipe works should pass through the concrete floor slab between the Lower Flat and the Upper Flat but the observations and findings indicated there must be pipes buried in the raised floor of the lavatory of the Upper Flat when the water and drainage pipes were re-routed.  No contrary evidence was adduced by the defendant in this respect.  The defendant merely asserted that he had not carried out any works affecting the building structures since his occupation of the Upper Flat such as raising the height of the floor slab[4].  With respect to the serious extent of concrete spalling at the ceiling of the store room, Mr Kung was of the opinion that the problem of water seepage might have been present for a few years[5].

24.  Mr Kung opined that the only possible sources of water were rain water from the external wall or the water leakage from the Upper Flat, and there was no other source of water leading to the collapse of the false ceiling of the store room.  He ruled out the possibility of water seepage from the external wall for a number of reasons.  There were no signs of water seepage, crack, concrete spalling, damp patches or peeling paint noted along or near the external wall at the Lower Flat or the Upper Flat[6].  No evidence to the contrary was adduced by the defendant.  Water dripping occurred when the weather was fine but after a heavy rainfall in late May 2012, there was no sign of water seepage from the external wall and the reading of moisture content on the day of inspection on 29 May 2012 was normal.  If water leakage had come from the external wall, it would not stop by itself as no works had been carried out at the external wall since January 2010.  Part of the collapsed false ceiling in the Lower Flat was located across the middle beam, which is far away from the external wall[7].  The lavatories of the Upper Flat had been altered and the water and drainage pipes were likely to be buried in the raised floor of the lavatory of the Upper Flat which was immediately above the location of the collapsed ceiling of the store room[8].  The relatively high percentage of chloride content of the test sample collected from the ceiling of the store room showed that it was due to previous leakage of flush water pipe from the Upper Flat[9].

25.  Mr Kung was of the view it is highly probable that the collapse of the concrete ceiling was caused by water leakage over a long period of time, causing the reinforced steel to rust and the concrete to spall.  He deduced from the above that the water leakage was very probably due to flush water from the pipes buried in the raised floor of the lavatory of the Upper Flat.  Even though the main flush water supply was turned off, it might not be able to lock it and prevent the water flow completely and there might still be water leakage through small cracks on the pipes[10].

26.  The judge found Mr Kung’s reasoning cogent and supported by “ample evidence”.

27.  The judge also rejected the defendant’s evidence that he had not carried out any renovation work after he and his contractor inspected the Lower Flat on 10 October 2011.  There was water dripping that day, which was a sunny day, but the dripping came to a sudden halt when the Lower Flat was inspected by the consultant of the joint office on 19 October and 10 November 2011.  The judge accepted the expert evidence of Mr Kung[11] and found that the defendant must have carried out certain rectification work[12].

28.  Other than claiming that the leakage came from the external wall and not from the pipes in the raised floor of the lavatory of the Upper Flat, Mr Lau failed to provide any factual basis to justify his conclusion, except for the photographs seen by him.  The judge was wholly unimpressed with his evidence and attached no weight to it[13].

This appeal

29.  This appeal is a challenge against the finding of primary fact by the judge that the water leakage came from the Upper Flat.  The correct approach has been stated in Hui Ling Ling v Sky Field Development Limited, CACV 122/2012, 22 March 2013 at §43:

“Secondly, findings which are based on expert evidence are to be treated on appeal as findings of fact. To overturn such findings, it has to be shown that the trial judge went seriously wrong, for example, by overlooking critical evidence, misunderstanding the evidence, or making a finding that was wholly unsupported by any evidence (Au Yeung Miu Sim v Tsang Kwong Wai & Anr [2004] 2 HKLRD 187 at §16). The high threshold to succeed on challenges to findings of fact as stated by the Court of Final Appeal in Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 applies to this situation (Ansar Mohammad v Global Legend Transportation Ltd [2011] 2 HKLRD 985 at §22(1)). When dealing with an expert witness, a trial judge still has a significant advantage over an appeal court in assessing the value, the reliability and the impressiveness of the evidence given by the expert, although the advantage of the trial judge is not so great as in the case where the witness is a witness of fact (Joyce v Yeomans [1981] 1 WLR 549 at 556E to H).”

30.  Mr Coleman, SC, who appeared for the defendant on appeal with the trial counsel, Mr Liu Chin Yu, contended that the judge had not addressed the question where the burden of proof lay, did not require the plaintiff to meet its burden of showing on the balance of probabilities that the water nuisance had emanated from the Upper Flat, and misplaced the burden of proof on the defendant in accepting the plaintiff’s case purely based on his rejection of the defendant’s case.

31.  Mr Coleman complained that the judge had failed to frame his approach with reference to the principles stated in the first instance decision of Hui Ling Ling v Sky Field Development Limited, HCA 35/2007, 8 May 2012, Recorder Yuen, SC), namely, to ascertain the source of water leakage, that can be done by considering the possible sources of water and the plaintiff bears the burden of establishing on the balance of probabilities that the source of water was the defendant’s premises.  Thus, there is no presumption that the source of leakage must be from the flat above and it is not for the defendant to identify the correct source of leakage or that the water did not come from his premises.

32.  We do not think any of the above criticisms are valid.

33.  It is unnecessary for the trial judge to mention the burden of proof in every case.  As Lord Hoffmann has stated in Piglowska v Piglowski [1999] 1 WLR 1360 at 1372G, the exigencies of daily courtroom life are such that reasons for judgment will always be capable of having been better expressed and reasons for judgment should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account.

34.  On a fair reading of the judgment, it is apparent that the judge had firmly grasped what it was that the plaintiff was required to prove for its claim to succeed when he set out to review carefully the expert evidence on both sides as well as other relevant evidence.  The first instance decision of Hui Ling Ling did not lay down any new principles.  The judge was aware of this decision, which was cited to him by Mr Liu, who also appeared for one of the parties in that case.  The fact that the judge did not mention it in the judgment does not mean he was not aware of the established principles.  We are unable to see any indication in the judgment that the judge failed to direct himself on the burden of proof or the standard of proof or that he had made any presumptions of fact.  As stated in Wong Man Tat v Chan Yuen Man & Anr, CACV 347/2007, 24 April 2008, at §22, basically the defendant was asking this court to infer from the result, with which he was dissatisfied, that the judge failed to realise or apply such basic principles and there is no justification for such an approach.

35.  Mr Coleman placed heavy reliance on the negative test results of the colour dye test carried out by the FEHD to the water closet and wash hand basin in the lavatory of the Upper Flat in September 2010 and the colour dye ponding test carried out by the joint office to the floor slab of the Upper Flat in August 2011.  He relied also on a survey report issued on 25 October 2011 by Global Generation Consulting Engineers Limited (“Global Generation”), which was engaged by the incorporated owners to survey the condition of the external wall of the building for building maintenance and an order issued by the Buildings Department to the incorporated owners dated 15 September 2011 to carry out works to the building.  He submitted that the negative test results had practically ruled out the Upper Flat as the source of water leakage and the photographs in the report of Global Generation showed external cracking in the walls and it was impossible to exclude rain water from the external wall as a likely source of leakage.

36.  The negative test results were set out in the letters of the joint office to the defendant dated 15 May 2012 and to the plaintiff’s solicitors dated 28 May 2012.  The judge referred to the earlier letter in the judgment but not the subsequent letter.  He also mentioned another letter of the joint office to the defendant dated 9 January 2012.  It is pertinent to note that the joint office stated in the January 2012 letter they have tried various “non-destructive” methods of investigation and test, but have yet been able to confirm effectively the source of water seepage.  It was also mentioned that since causes of water seepage are complicated, and they could only conduct “non-destructive” tests, the effect may sometimes be limited.  The judge did not regard the negative test results to be of assistance to the case[14].  We do not think he could be justly criticised for that.

37.  We understand these letters of the joint office featured in the cross-examination of Mr Kung and Mr Lau.  But as this court was not provided with the relevant part of the transcript, we do not think we could attach any significance as to what either expert witness had said regarding the inspections and test results of the joint office.  We decline to read more into these letters as Mr Coleman had asked us to do.  If the effect of the test results was that they practically ruled out the Upper Flat as the source of leakage as contended by him, it is puzzling, to say the least, that Mr Lau had not said so in his expert report, joint statement of experts[15] or his oral evidence.  Nor would the joint office have simply stated in the letter dated 9 January 2012 that they “have yet been able to confirm effectively the source of water seepage”.

38.  The judge had noted the extent of the renovation work to be carried out to the building although he did not specifically mention the cracks in the external walls stated in the survey report of Global Generation.  He did not find that report helpful to show the cause of water seepage in this case[16].  Earlier, he had mentioned the photographs in the report of Wealthy Gate Architects showing the presence of some cracks in the external walls.  Mr Lau was unable to tell the court how deep any of the cracks were or the exact locations of the cracks and there was no evidence to show that such cracks existed in January 2010.  The judge decided to attach no weight to this evidence[17].  He is clearly entitled to do so.  Nor do we think he is wrong, let alone clearly wrong, to find that the possibility that water leakage came from the external wall was not supported by evidence on the totality of the evidence before him.

39.  The letter from the Water Supplies Department dated 15 January 2013 showing little or virtually no consumption of water by the defendant in the Upper Flat was rightly rejected by the judge as incapable of having any relevance to the issues in this case[18].

40.  As for the judge’s rejection of the defendant’s evidence that he had not carried out any repairs to the Upper Flat since the flooding incident[19], we do not think there is any basis to interfere with the finding that the defendant was notified of the leakage and flooding in January 2010[20] but took no rectification action until some time between 10 October and 19 October 2011.

41.  None of the arguments advanced by Mr Coleman are of merit.  The defendant failed to meet the high threshold for a challenge to findings of fact to succeed. Liability for breach of the deed of mutual covenants and section 34H of the Building Management Ordinance was clearly established.  We have therefore dismissed the appeal with costs to the plaintiff.