SO KAI HAU v. YSK2 ENGINEERING CO LTD

CACV 417/2018

[2019] HKCA 617

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 417 OF 2018

(ON APPEAL FROM HCPI NO 1077 OF 2006)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This appeal is brought by Wellgo Archdecor Consultancy Limited (“Wellgo”) against the judgment of Bharwaney J on 31 July 2018, given after a five-day trial of the fourth party proceedings brought by JMK Consulting Engineers Limited (“JMK”) against Wellgo to seek contribution in respect of JMK’s liability towards So Kai Hau, the plaintiff in the action (“the plaintiff”).

2.  The plaintiff was a site foreman employed by YSK2 Engineering Company Limited (“YSK2”) and was injured on 28 June 2004 in an explosion at a demolition site, which was the Garley Building where a horrific fire disaster claimed the loss of many lives in November 1996.  He was injured when a bromotrifluoromethane cylinder (“BTM Cylinder”) shot up like a rocket from under a heap of building debris from the 3^rd floor (“3/F”) of the partially demolished building upon the sudden release of gas from within the cylinder, hit the external wall of the adjacent building, and ricocheted downwards back to 3/F.  In the course of the explosion, the valve of the BTM Cylinder and building debris blown away by the escaping gases struck and amputated the plaintiff’s left arm at above the elbow level.

3.  The judge found that JMK’s liability towards the plaintiff should be no more than 25% of the plaintiff’s claim, which amounts to $2,500,000, being 25% of the settlement of the plaintiff’s claim for damages and interest in the sum of $10,000,000.  He found that Wellgo is responsible for 30% of JMK’s liability towards the plaintiff.  So judgment was given in favour of JMK against Wellgo in the sum of $750,000 with interest.  In terms of the overall apportionment as regards as the plaintiff’s claim, Wellgo’s share is 7.5%.  A costs order nisi was made that Wellgo is to pay JMK’s costs of the fourth party proceedings on the District Court Scale.

4.  This appeal of Wellgo is in respect of liability only.  Wellgo seeks to challenge the holdings that it owed a duty of care to the plaintiff, that it had breached such duty, that its alleged negligence was causative of the accident to the plaintiff, and that it was fair and reasonable to hold it responsible for the accident.

Factual background

5.  Bharwaney J’s judgment ran to over 90 pages.  It pays to read his judgment with care.  I am grateful for his detailed account and thorough analysis of the evidence.  The factual background I am about to give is taken from his judgment, supplemented by some of the source materials where references are mentioned in the judgment.

(a) The BTM installation

6.  Garley Building was a 16-storey commercial building of 20 years. The registered owner of 3/F, Chinese Arts & Crafts (H.K.) Ltd (“Chinese Arts & Crafts”), had let the premises to a paging company Pacific Link Communications Ltd (“Pacific Link”), which occupied the premises as a paging centre.  Pacific Link installed an automatic BTM system on 3/F to protect its computer servers at the paging centre.  BTM gas inside the BTM Cylinder would be released when triggered by smoke detectors.  When BTM comes into contact with burning substances, it absorbs heat and vaporizes.  This vapour blankets and suppresses the fire by excluding oxygen.

7.  BTM is widely known to be a toxic substance and warning signs are normally shown in rooms storing BTM cylinders.  Upon release of such gas, people must be evacuated immediately.  Hong Kong stopped the import of BTM installations for fire suppression since January 1994.  A new type of waterless fire suppression system that is non-toxic and environmentally safe is used in Hong Kong.  But old BTM installations can still be found.  This type of BTM cylinders was not common in 2004 and seldom seen.  There are strict rules about the use and disposal of BTM as a controlled substance.  Old and unused BTM bottles are collected by specialist companies who recycle the BTM using special equipment.

8.  The design and installation of a BTM system must be submitted by an Authorized Person (“AP”) and approved by the Fire Services Department (“FSD”), which has strict guidelines for the use of fixed BTM installations contained in the circular letters about BTM installations issued by FSD to APs, building services consultants and fire service installation contractors.

9.  BTM is stored inside BTM cylinders under high pressure.  High pressure cylinders should not be allowed to remain in a building without proper maintenance.  Corrosion of the valves could cause leakages of the highly pressurised contents and lead to explosion of the high pressured cylinders.

10.  The BTM Cylinder, orange in colour and of 1 metre in height and 0.4 metre in diameter and weighing 86.5 kg when empty, was located in an enclosed BTM Bottle Room on 3/F.  The valve fitted to the mouth of the cylinder measured 0.309 metre in length, so the total height of the cylinder with the valve was 1.309 metres.  The identification plate of the cylinder showed that it used to contain a substance known as “Thorn Halon 301 Fire Fighting”^[1], a highly compressed gas which weighed 97 kg in addition to the weight of the cylinder.  There was no indicator on the cylinder showing how much gas was in it.

11.  A notice was posted next to the door of the room and this stated “B.T.M. GAS BOTTLES ROOM”.  Plans for the BTM installation had never been submitted to FSD for its approval and record.  The BTM installation on 3/F was not approved by FSD and was not part of the original fire services installation in Garley Building.  The installation did not conform to the requirements of BTM installations stated in FSD’s circular letters.  The required signage was not placed on the entrance of the BTM room to warn people of the toxicity of BTM.

12.  The BTM Cylinder would be classified as dangerous goods under the Dangerous Goods Ordinance, Cap 295, requiring a licence for its storage in any premises.  No licence or approval had been granted for the storage of the BTM Cylinder at 3/F.  After the Garley Building fire, the BTM Cylinder was left unattended.  It had not been serviced and no maintenance work was done on it since the fire on 20 November 1996.  Significant corrosion developed on the threads of the valve.  The strength of the corroded threads was reduced and corrosive materials developed and filled the space between the threaded joint.  The valve was disturbed which caused cracks to be formed on the corrosive materials, resulting in gas leakage from the cylinder.  The leakage caused more corrosive materials to be stripped away and the rate of leakage increased as the corrosive materials stripped away.  Eventually, the high pressure inside the cylinder forced and pushed the entire valve out from the cylinder and carried away the detached valve assembly and building debris in the vicinity at a very high speed, causing very substantial injury when they struck the plaintiff.  He could easily have been killed by the exploding BTM Cylinder and is very lucky to be alive.

(b) The aftermath of the fire in 1996

13.  The disastrous fire in Garley Building on 20 November 1996 started in the lift shaft at 2/F and spread to the upper floors through the lift shaft.  The fire damaged debris were found on 13/F, 14/F and 15/F levels.  After the fire, Garley Building was closed and unoccupied until the building was purchased by Worldfaith Properties Ltd (“Worldfaith”) in the latter part of 2003.  It was inspected by various government departments, including FSD and the Buildings Department (“BD”).

14.  FSD issued a number of Fire Hazard Abatement Notices to the Incorporated Owners of Garley Building (“IOGB”) in January 1997. The Abatement Notices concerned fire service installations, such as exit signs, portable fire extinguishers, firemen’s lift, automatic fire detection system, fire hydrant and hose reel system, manual fire alarm system, requiring the IOGB to modify, repair or reinstate them within a stated period.  The BTM installation on 3/F was known to FSD after the fire.  In the Fire Investigation Report of FSD dated 26 November 1996, it was stated under “Others” that “A BTM system, not F.S. mandatory requirement, was found at 3/F computer room but no FS314A was submitted to this office”.  No mention however was made of the BTM installation or the BTM Cylinder in the subsequent Abatement Notices.

15.  BD issued closure orders on 25 and 28 November 1996 directing that Office 1306, 14/F, 15/F and roof, portions of G/F, 1/F, 2/F and cockloft be closed.  Further, BD issued a number of building orders to the registered owners of various floors and the IOGB dated 5 December 1996, requiring various works to be done within specified periods under the supervision of an AP or a Registered Structural Engineer (“RSE”), such as investigation works on the extent of dilapidation or defects and the extent and severity of fire damage; proposal for remedial works; demolition and removal of unauthorized building works; reinstatement of that part of the building affected; temporary support to damaged columns, beams and slabs; repairing, securing or replacement of loose and defective window frames and glazing.  In addition to the building orders, BD issued a letter dated 4 February 1997 to Chinese Arts & Crafts, the registered owner of the relevant floors, regarding unauthorized building works at the basement to 5/F and 7/F and requiring Chinese Arts & Crafts to rectify a list of infractions as identified within a stated period.  The BTM Cylinder located on 3/F was not on the list of infractions.

16.  BD was informed by letters dated 29 January 1997 and 3 February 1997 that the IOGB and the owners of the relevant floors had appointed Joseph Chow Ming Kuen (“Joseph Chow”) as the AP and RSE for the repair and investigation work of various building orders.

17.  On 10 April 1997, Joseph Chow replied to the letter of BD of 4 February 1997 stating that the owners intended to demolish the existing building and redevelop the site and they wished “to carry out only the essential work to ensure structural stability and to seal off the building from access without permission”.

18.  On 9 May 1997, Joseph Chow wrote to BD giving notice of his resignation as AP to deal with certain building orders but would continue to act as RSE.  He informed BD that the new AP to be appointed was David Chan Wah Wai (“David Chan”).  Joseph Chow remained as RSE until his role was taken over in December 2003.  David Chan is a building surveyor and a director of Wellgo.  As evidenced by a letter dated 30 March 1998, the IOGB confirmed and authorized the appointment of Wellgo and Joseph Chow’s company, Joseph Chow & Partners Ltd (“JCPL”), to be the representative of the IOGB for “Monitoring, Inspection and Reporting to Buildings Department for the extension of the various Buildings Department Orders of which the expiration date have long transpired [sic]”.

19.  The presence of the BTM Cylinder was known to David Chan. Prior to Wellgo’s appointment on 30 March 1998, David Chan had a site inspection of Garley Building with a building surveyor of BD, Michael Pang, on 3 September 1997. At that inspection, David Chan found the BTM installation, including the BTM Cylinder, inside an enclosed BTM Bottle Room.  He was given a set of identification plans of the building by Michael Pang during this inspection.  The plan for 3/F showed that there was a BTM Bottle Room on that floor, located behind the access door to Staircase C.

20.  A photograph taken by David Chan subsequently showed a smoke detector outside the BTM Bottle Room at the upper right hand corner.  Another subsequent photograph taken inside the BTM Bottle Room showed the BTM Cylinder connected to a valve and gas pipe leading to another location. The BTM Cylinder was kept beside a cabinet inside the BTM Bottle Room.  The cabinet door, being 1.5 metres, was slightly higher than the BTM Cylinder so if the cabinet door was swung open, it would obstruct the view of the cylinder.  But the door of the cabinet was usually closed.  Anyone entering or looking into the BTM Bottle Room ought to have seen the BTM Cylinder. 

21.  On 4 September 1997, JCPL wrote to the IOGB referring to the joint inspection with BD on 3 September.  David Chan followed up on the matter by a letter the following day explaining to the IOGB the infractions identified by BD and the main concerns of BD, including maintaining an unobstructed means of escape in case of fire and removal of thick piles of building debris left on the roof.  The BTM Cylinder and BTM installation were not listed as one of the infractions.

22.  On 4 November 1997, representatives of JCPL and David Chan attended a meeting with BD and FSD to discuss fire safety measures. A small fire had occurred at Room 1303 of Garley Building on 29 October 1997, believed to have been caused by molten droplets from cutting process on upper floors that had fallen accidentally onto combustibles near the window on 13/F through uncovered window opening.  There was a need to implement remedial measures.  Although the BTM Cylinder and BTM installation were not mentioned by BD and FSD, the chairman of the meeting from FSD did require Wellgo and Joseph Chow to “make sure no over storage of dangerous goods” and to “look into the possibility of removing all debris inside the premises”.

23.  On 24 September 1997, the owners of Garley Building resolved at a meeting to undertake the redevelopment of the building instead of repairing it.  Wellgo was instructed to seek extension of time to comply with the building orders.  BD asked for the purpose of seeking extension of time and on 16 April 1998, David Chan and Joseph Chow replied stating that the owners had opted to redevelop and, in order to secure BD’s consent to extension of time, they confirmed they would inspect Garley Building on a monthly, or more frequent basis, to ensure that the structural condition of the building was sound and that there was no cause of imminent danger to the public.

24.  On 8 May 1998, David Chan wrote to BD confirming that owners/occupants had agreed not to enter Garley Building and that potentially dangerous and/or loose elements of construction had all been removed and vulnerable structures shored up by steel props, so that no special arrangement and safety measures would need to be instituted save that persons with legitimate cause to enter the building, such as workers, would be warned that they were entering a fire damaged building that had remained vacant for many months.  Garley Building was sealed off, security guards were posted and anyone entering the building was required to sign an entry registration record maintained by Wellgo.

25.  From 29 May 1998 to 29 August 2003, a total of 40 Monitoring Inspection Reports (“MIRs”) were submitted jointly by Wellgo and Joseph Chow to BD as part of the regular inspection and reporting of Garley Building.  No mention was made of the BTM installation or the BTM Cylinder on 3/F in all these MIRs.  The first MIR, signed by Joseph Chow and David Chan, recorded for 3/F that “[a]ll tenancy fixtures & furnitures together with fire damaged debris were removed and carted away”.  All subsequent MIRs stated that 3/F was free from debris.

26.  David Chan wrote to the IOGB on 20 October 1999 referring to the fax of JCPL concerning the removal of fire debris on 13/F to 15/F and making the observation that removal of all fire debris would eventually be required prior to demolition works.  He gave a rough estimate of the costs required for removal of fire debris and tenant fixtures and fittings in the whole building at $1.5 million.  The estimate did not include 3/F because that work had already been done as recorded in the first MIR, according to David Chan.  However, the estimate included an item called “Preliminaries and Contingency” and that would cover the cost of removing the BTM Cylinder and other similar things that may exist throughout the building.

27.  Notwithstanding a reminder by letter dated 11 April 2000, David Chan’s proposal for removal of fire debris in the whole building was never discussed or acted on by the IOGB.

28.  Wellgo carried on to liaise with BD for further extension of time to comply with the building orders.  By a letter to BD dated 27 February 2001, Wellgo reiterated that Garley Building would be kept under periodic monitoring inspections by the AP/RSE, that MIRs would be submitted to BD, and that “remedial measures being instituted where required in order to ensure that no undesirable situation which could affect the safety of the general public would arise”.  Extension of time was granted by BD from time to time.

29.  On 10 July 2003, the owners of Garley Building obtained an order from the Lands Tribunal for sale of the land for the purpose of redevelopment.  The sale to Worldfaith took place on 11 September 2003.

30.  On 13 August 2003, David Chan wrote to the IOGB pointing out that considerable safety remedial works were required to be carried out and asking for advice on the status of the redevelopment proposal and demolition of the building in particular, so it could plan to avoid unnecessary cost and at the same time ensure the safety of the general public.  By 15 September 2003, David Chan became aware that Garley Building had to be demolished for redevelopment and sought instructions from the IOGB on the transitional arrangements for monitoring the building until the taking over of the site by the new AP/RSE.

31.  The new owner appointed a new team to oversee and carry out the demolition of Garley Building.  On 27 August 2003, JMK was appointed the Structural and Geotechnical Engineer Consultant for demolition, with Helen Kwan, a director of JMK, being engaged as RSE for demolition works.  Daniel Kwan Pok Man (“Daniel Kwan”) was appointed on 30 September 2003 as the AP for demolition. YSK2, a specialist demolition contractor, was appointed as the demolition contractor on 30 December 2003, its tender having been accepted on 22 December. The plaintiff was the site foreman employed by YSK2.

32.  On 29 December 2003, Site Progress Meeting No 1 by the demolition team was held, attended by representatives of Worldfaith, the new team and Wellgo.  It was recorded that the subject site was handed over to YSK2 on the same day.  David Chan gave general advice regarding safety in relation to Garley Building to JMK and Daniel Kwan.  He agreed that if there was anything in the building that posed an ‘obvious danger’, such matter would be brought to the attention of JMK and Daniel Kwan.  He was of the view it was important that JMK should know about the condition of Garley Building and it was “good practice” that JMK, as demolition RSE, should trace the previous condition of the building.

33.  David Chan wrote to BD on 31 December 2003 informing them that Garley Building had been taken over on 29 December by the team appointed by the new owner and that the letter “shall demarcate the cessation of David W W Chan as the monitoring AP and Joseph M K Chow as the monitoring AP/RSE for the captioned Building”, and expressing gratitude for BD’s “accommodating management of remedial actions over the past 7 years”.

34.  The BTM Cylinder remained in the BTM Bottle Room up to the time that the Garley Building was handed over by David Chan to the new team.

(c) The demolition stage

35.  Prior to the handing over of the site to YSK2 on 29 December 2003, site investigation and preparatory work were done by JMK and Daniel Kwan for the purpose of planning for demolition.  Before demolition work was carried out, the demolition team had to comply with various statutory requirements for the submission of building appraisal report and demolition plan to BD, and hazardous materials must be removed^[2].  JMK conducted structural appraisal and submitted an Appraisal Report dated September 2003 and an Engineer’s Supplemental Assessment Report dated November 2003.  Daniel Kwan submitted the site investigation, demolition hoarding plans to the Building Authority of BD on 30 September 2003.  Further forms and a Site Safety Supervision Plan were submitted by Daniel Kwan to BD on 20 February 2004.  There was no mention of the BTM installation or Cylinder on 3/F in any of these reports.

36.  Sometime after 29 December 2003, the workers of YSK2 removed the BTM Cylinder from its original position and location in the BTM Bottle Room and allowed demolition debris to be stacked on top of it.  The removal of the BTM Cylinder probably disturbed the valve assembly and contributed to the subsequent explosion.

37.  The consent for the commencement of the demolition works was given by BD on 2 April 2004 and the demolition works commenced thereafter.  The conventional top-down demolition method was adopted, with props erected on floors below the floor being demolished.  The grid distance between props was 1.2 metres throughout the entire floor.  By June, the demolition work had progressed down to 3/F and the ceiling of 3/F had been removed.

38.  The plaintiff’s main duties were to oversee the collection and removal of scrap metal and miscellaneous waste at the demolition site.  On 28 June 2004, a worker reported to him an unusual sound was coming from a stack of debris on 3/F.  He used a wooden rod to move away the debris, the BTM Cylinder was exposed and a large amount of gas leaked out from it.  The cylinder was propelled skywards, hitting the external wall of the adjacent building and fell about six seconds later.  The plaintiff was found injured on the floor.

39.  This accident happened after Wellgo’s contractual engagement had come to an end and had already left the site for six months.

(d) The legal proceedings

40.  On 5 December 2006, the plaintiff brought this action against YSK2 claiming damages for personal injuries caused by the negligence and breach of statutory duties of YSK2, its servants and agents, in failing to discover, properly handle and/or remove the BTM Cylinder prior to the commencement of the demolition works.

41.  On 24 November 2009, YSK2 brought third party proceedings against Wellgo and JMK.  The third party notice was amended on 24 November 2010 to include Joseph Chow and Daniel Kwan.  YSK2 discontinued the third party proceedings against Wellgo on 25 July 2011.

42.  On 17 February 2012, JMK issued a fourth party notice against Wellgo claiming that Wellgo is liable for David Chan’s acts and omissions.  David Chan has not been sued. Wellgo has not raised any defence that it is not liable for his acts and omissions.

43.  On 31 October 2014, YSK2 discontinued the third party proceedings against Joseph Chow.

44.  YSK2 settled its third party claim against JMK on 15 May 2015 on terms that JMK would be liable to indemnify YSK2 to the extent of 35% of the damages and interest that YSK2 may be liable to pay to the plaintiff, and to pay YSK2’s costs against JMK in the third party proceedings.

45.  The plaintiff settled his claim against YSK2 on 14 July 2015 on terms that YSK2 agreed to be liable for 95% of the loss and damage suffered by the plaintiff to be assessed, and costs.  Damages were agreed on 19 August 2015 in the gross sum of $10,000,000 inclusive of interest and employees’ compensation already received by the plaintiff.

46.  YSK2 settled its third party claim against Daniel Kwan on 30 July 2015 on terms that Daniel Kwan would pay to YSK2 an agreed all-inclusive sum of $2,200,000, with no order as to costs between them.

47.  As a result of the above settlements, the only proceedings left unresolved were the fourth party proceedings brought by JMK against Wellgo, the trial of which took place before Bharwaney J in August 2015.

48.  In determining the question of the liability of Wellgo to make contribution to JMK’s liability towards the plaintiff, the judge considered that the only duty of care which is properly pleaded in JMK’s Fourth Party Notice is Wellgo’s duty of care to the plaintiff, as the provisions of the Civil Liability (Contribution) Ordinance, Cap 377 come into play only when the claimant and the respondent are both liable to the person who suffered the damage, in this case the plaintiff.  He disregarded the plea that purported to raise a duty of care on Wellgo’s part to safeguard YSK2 or JMK from economic loss caused by Wellgo’s negligence as there is no proper averment in the Fourth Party Notice of any such duty of care or of any assumption of responsibility by Wellgo towards YSK2 or JMK.  So the primary issues before the judge were just two: whether David Chan owed a duty of care to the plaintiff, and whether he was in breach of any such duty.

The judge’s findings of fact

49.  I now wish to mention some material findings of fact made by the judge, as they are crucial to the understanding of his reasoning and the arguments raised by the parties on appeal.

(a) Wellgo’s terms of engagement and David Chan’s role and responsibilities as AP of Garley Building

50.  David Chan’s area of expertise was in building maintenance and he had never been involved in demolition work, nor did Wellgo’s engagement involve the demolition of the entire building, as the IOGB never intended to undertake the demolition of Garley Building themselves.  All along, the intention of the IOGB was to obtain extensions of time from BD to comply with the building orders until such time Garley Building could be sold to a new owner.  This was achieved by appointing David Chan and Joseph Chow to monitor the building and perform remedial works to the satisfaction of BD.  The works undertaken by Wellgo, to be the IOGB’s representative for monitoring, inspecting and reporting to BD, and for requesting extension of time to delay carrying out the building orders pending the demolition of the entire building, were unusual.  There was no common practice for this exceptional type of work^[3].

51.  Although David Chan was only the AP in charge of two of the building orders, he admitted that he was effectively and for all practical purposes the AP for the entire building as all AP works in relation to all the building orders were done by him^[4]. The reinstatement of the fire services installations and the maintenance of fire safety in the building was within the scope of David Chan’s duty as AP^[5]. He was responsible for fire-services related matters in Garley Building and if he found fire hazards, such matter would be raised with FSD^[6].  The safety of workers working in Garley Building was also within the scope of his duty as AP^[7].

52.  David Chan admitted to being in charge of environmental hygiene even though this was not part of the works under the building orders^[8]. And advising on removal of debris was one of his responsibilities as AP, to cater for the possibility that the building would eventually be demolished, although that was not the only option to the owner who would acquire the whole building.  He agreed that the term “debris” included “all fixture and fittings which became useless and did not serve any function”^[9].

53.  Wellgo also undertook other works to address concerns raised by BD such as the removal of dilapidated signboards, defects in timber boarding, deterioration of safety nets, broken window glazing and loose plastering.  BD’s concern was not only confined to structural-related matters but also included concerns over dilapidated and unhygienic conditions^[10]. Wellgo wrote letters to the IOGB on a wide range of matters including safety and precautionary measures, removal of debris, hygienic issues, entrance/security concerns, remedial works, redevelopment/compulsory sale progress and transitional arrangements^[11].

(b) David Chan’s responsibilities, as AP for Garley Building, towards the BTM Cylinder

54.  By 15 September 2003, David Chan was aware that Garley Building had to be demolished for redevelopment.  He acknowledged that the BTM Cylinder would need to be removed before the commencement of demolition.  He recognised that even if the BTM Cylinder was empty, a specialist contractor had to be engaged to handle and dispose of it.  He estimated the cost of removal to be about $5,000 to $6,000^[12].

55.  David Chan knew, or ought to have known as an AP, that BTM is a toxic substance, that people must be evacuated immediately upon release of the gas, that BTM is stored inside cylinders under high pressure and such cylinders should not be allowed to remain in a building without proper maintenance, that BTM cylinders would be classified as dangerous goods under the Dangerous Goods Ordinance, that there are strict rules about the use and disposal of BTM as a controlled substance and old and unused cylinders are collected by specialist companies^[13].

56.  David Chan had formed the view that all the BTM gas inside the cylinder should have been fully discharged when the big fire occurred in November 1996 and that even if some of the gas had not been discharged during the fire, its presence inside the BTM Cylinder should not be considered as an “over storage” of dangerous goods.  His assessment was based on three things.  First, his site observations.  He stated that the condition within the BTM protected area was far better in that only smoke damage and not fire damage was sustained, compared to the rest of the area on 3/F which was not so protected.  Second, BD had given him a 3/F plan showing a BTM Bottle Room and should be aware of the presence of the BTM Cylinder.  If the building surveyor of BD (Michael Pang) had thought the presence of the BTM Cylinder hazardous or would pose a risk to building safety, he would have put this down as one of the infractions in the list of infractions provided after the joint inspection on 3 September 1997. Third, FSD in the special meeting on 4 November 1997 did not demand the BTM Cylinder be removed when it made various requests to him and JMK for fire safety measures.  If the presence of the BTM Cylinder had posed an imminent hazard, FSD would no doubt have made that demand.

57.  The judge rejected each of the three reasons.

58.  There was no evidence of how the fire spread on 3/F and whether the fire actually spread from Staircase A to the other areas and had stopped spreading at the boundary of the BTM protected area.  There was no clear evidence of the boundaries of the fire damage caused on 3/F^[14].

59.  The judge doubted the accuracy of the demarcation made by David Chan of the BTM protected area on an enlarged plan produced at the trial.  The gas pipes which were linked to the BTM Cylinder above the false ceiling and were there initially, had been entirely removed during the period when David Chan was AP and the judge was not satisfied that David Chan had a good recollection of the extent of the gas pipes that would be fed by the BTM gas upon the occurrence of a fire.  While a photograph subsequently taken by David Chan showed a smoke detector outside the BTM Bottle Room, the other smoke detectors had also been removed and David Chan was also not in a position to say how many smoke detectors had been installed by Pacific Link^[15].

60.  David Chan had no discussion about the BTM Cylinder with the officers of BD or FSD.  Between July 2002 and December 2003, BD only visited the building once on 27 October 2003.  David Chan did not accompany the FSD officers during their visits.  He did not know what had or had not been inspected by BD and FSD.  He was not in a position to say whether BD or FSD had actually considered the hazards, if any, posed by the BTM Cylinder^[16].

61.  David Chan accepted that his assessment that the BTM Cylinder was empty or nearly empty was proved to be wrong by the occurrence of the accident that injured the plaintiff^[17].  He admitted he had a duty, as AP for Garley Building, to report “obvious danger”^[18]. He also admitted that if the BTM Cylinder still consisted of compressed gas, he would classify it as “dangerous goods” that needed to be handled by specialist contractors.  Indeed, even an empty cylinder had to be handled by specialist contractors.  Had he assessed the BTM Cylinder not to be empty, he would not have left it unattended for five years^[19].  He admitted that he was not a fire services specialist and did not have specialist knowledge of BTM cylinders and BTM installations^[20].  A specialist contractor would have been able to discover that the BMT Cylinder was full or nearly full and conclude that it posed a danger to workers working in its vicinity in Garley Building^[21].

62.  The judge found that David Chan was under a duty to take reasonable care to protect persons entering Garley Building from obvious danger during the time he was AP for the building^[22].  The duty to take reasonable care to protect persons entering Garley Building from obvious danger included a duty to take reasonable steps to ascertain whether or not potentially dangerous structures or objects were dangerous^[23].

63.  If a visitor to 3/F had been injured by an explosion of the BTM Cylinder during the period when David Chan was AP for the building, his liability to the injured visitor would turn on whether or not he was in breach of his duty of care by assessing the BTM Cylinder to be empty or nearly empty without assistance from specialist contractor, as there can be no dispute that David Chan was under a duty to take reasonable care for the safety of that injured visitor^[24]. As mentioned earlier, the cost of engaging a specialist contractor to handle and dispose of the BTM Cylinder was about $5,000 to $6,000. 

(c) The negligence of the demolition team

64.  The demolition team comprised Daniel Kwan (AP for demolition), JMK (RSE for demolition) and YSK2 (specialist demolition contractor).  They were appointed to demolish Garley Building, which must include removing everything left in the building so that the concrete structure of the building could be taken down floor by floor.  It cannot be disputed that the demolition team, as supervised by experienced professionals, was under a duty to remove the BTM Cylinder, and they were under a duty to protect from harm the workers who were performing the demolition work[25].

65.  In discharging their duties, Daniel Kwan, JMK and YSK2 were each required to carry out their own independent inspection of Garley Building, and they did inspect the building[26].  Helen Kwan, Sze Ka Tat and Thomas Choy gave evidence of the inspections they carried out on behalf of JMK.  Helen Kwan visited twice a month.  Sze Ka Tat visited once a week during stage 1 of the demolition works and twice a week during stage 2, and he had inspected the building over ten times.  Thomas Choy had been there about ten times and visited 3/F each time.  There was a conspicuous yellow sign in front of the BTM room which read “BTM GAS BOTTLES ROOM”, and yet each of them missed spotting the BTM Cylinder.  The judge accepted their evidence that had any one of them spotted the BTM Cylinder, it would definitely have been removed prior to the commencement of demolition works, as they had as much if not more knowledge as David Chan about BTM gas and would have known that it was hazardous and posed an obvious danger^[27].

66.  The judge further found that each of the building professionals (Daniel Kwan, JMK and YSK2) negligently failed to appreciate the presence of the BTM Cylinder, with the result that no steps were taken to safely remove it from 3/F before the commencement of demolition works. The judge noted that if the cabinet door inside the BTM Bottle Room was swung open, and remained open, it would obstruct the view of the BTM Cylinder^[28]. The settlements YSK2, JMK and Daniel Kwan reached with the plaintiff are proof enough of their breaches of the duties they owed to the plaintiff^[29].

The finding of Wellgo’s liability to the plaintiff

67.  The judge posed these critical questions at §88:

“The critical question in this case is whether or not the duty of care of on the part of David Chan, as AP for the Garley Building, to take reasonable care to protect persons entering the Garley Building from obvious danger, extended to cover the plaintiff. Was it foreseeable that harm would be caused to the plaintiff by David Chan’s acts or omissions? Was there a proximity of relationship between the plaintiff and David Chan? Was it fair, just and reasonable to hold that a duty of care was owed by David Chan to the plaintiff?”

68.  He went on to answer each of the above questions in the affirmative, for reasons that will be discussed in the analysis of the grounds of appeal.  Suffice it to say at present that in determining a duty of care existed in this instance, the judge had followed the guidance in Luen Hing Fat Coating & Finishing Factory Ltd v Waan Chuen Ming (2011) 11 HKCFAR 14, in adopting a holistic view of the overlapping concepts of foreseeability, proximity and the need to be satisfied it would be fair, just and reasonable to impose a duty of care, taking into consideration all relevant circumstances, and weighing up and balancing competing factual and legal factors before arriving at his conclusion.  As noted by Bokhary PJ at §34 in Luen Hing Fat, it is well to remember what Sir Robin Cooke P said in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282 at 294: “There is no escape from the truth that, whatever formula be used, the outcome in a grey area case has to be determined by judicial judgment” and that “[f]ormulae can help to organise thinking but they cannot provide answers”.  

This appeal

69.  Mr C Y Li SC, who appeared for Wellgo on appeal^[30] and at trial, attacked the judge’s holdings on each of the questions mentioned above and some of the findings of fact.  Particular emphasis was placed on these points in his arguments before us:

(1)   The BTM Cylinder was not brought to the building by Wellgo and not a danger created by Wellgo.

(2)   Wellgo had no relationship with the plaintiff and the accident happened when Wellgo had left the site which was then under the control of the demolition team.

(3)   Wellgo was only involved in the monitoring stage and its engagement did not involve the demolition of the building.  It was the demolition team that had to comply with statutory requirements on demolition and was responsible for identifying and removing hazardous materials like the BTM Cylinder prior to demolition works.

70.  Five broad grounds of appeal were advanced on behalf of Wellgo:

(1)   Wellgo was not under a duty to take reasonable care to protect the plaintiff from the BTM Cylinder as David Chan did not know and ought not to have known that the BTM Cylinder was an obvious danger and Wellgo had already left the site.

(2)   It was not reasonably foreseeable to Wellgo that demolition workers would be endangered by the BTM Cylinder as the improper handling of the cylinder (by moving it from its original upright position in the BTM Bottle Room and leaving it lying on the floor with demolition debris stacked on top) and the negligent failure of the demolition team to spot the BTM Cylinder were not reasonably foreseeable.

(3)   It was not just, fair and reasonable to impose a duty of care on Wellgo.  In particular, there is a distinction between a positive act creating danger and a mere omission to prevent an act leading to danger, and the latter will not attract any duty of care.

(4)   The improper handling of the BTM Cylinder and the negligent failure of the demolition team to appreciate its presence constituted clear intervening acts sufficient to break the chain of causation of any liability of Wellgo to the plaintiff.

(5)   There was insufficient proximity for a duty of care to arise on the part of Wellgo towards the plaintiff, as Wellgo had no control and responsibility over the site after it was handed over to the demolition team.

71.  I would agree with Mr Yeung Ming Tai, who appeared for JMK throughout^[31], that basically what is challenged on appeal is whether the judge had correctly applied the law to the facts in finding that a duty of care existed between Wellgo and the plaintiff and that there was no break in the chain of causation. The court is essentially concerned with the correctness of an exercise of evaluation or judgment, whether, weighing up all relevant factors, Wellgo owed a duty to take reasonable care towards the plaintiff and was liable to the plaintiff.

The proper appellate approach

72.  Before dealing with the grounds of appeal, it is pertinent to bear in mind the appropriate approach in an appeal of this nature. I can do no better than quote from the judgment of Neuberger J (as he then was) in Todd v Adams [2002] CLC 1050 at 1064H to 1065H:

“60. Having determined the factual incidents of the relationship, the first instance tribunal has to proceed to the second stage, which involves deciding whether all those facts, taken together, lead to the conclusion that there was a contract of service. Whether one characterises that conclusion as an inference, as a conclusion of law, or (which I doubt) as a finding of secondary fact, it seems to me that the essential point is that it would be a conclusion arrived at by a proper evaluation of the effect of the various factual incidents of the relationship. In principle, it is plainly easier for an appellate court to be persuaded to interfere with a conclusion reached by the tribunal at this second stage, than it is in relation to its decision at the first stage. That is because, in relation to the second stage, an appellate court is not being asked to interfere with a tribunal’s primary findings of fact.

61. Nonetheless, where there is a challenge to a first instance tribunal’s conclusion at the second stage, namely, whether or not there is a contract of service, I do not consider that an appellate court faces a black or white choice, as it would on a point of law such as an issue of contractual or Statutory interpretation, between holding that the tribunal was right or wrong. The first instance decision may fall within a grey area, a sort of margin of appreciation, where an appellate court may, indeed should, conclude that the tribunal reached a conclusion which it was entitled to reach and with which the appellate court should not interfere. After all, the exercise on which the tribunal is engaged in a case such as this is weighing up various factors, some of which point one way and some of which point the other, and reaching a conclusion as to the side on which the balance ultimately comes down. In my judgment, in such a case, an appellate court should not interfere unless the first instance tribunal has misdirected itself on the law (either expressly or impliedly), has taken into account a factor which it ought not to have taken into account, has failed to take into account a factor which it ought to have taken into account, or has reached a conclusion which, in light of the primary facts, it could not properly have reached.

62. I derive support for this view from the approval by Lord Hoffmann in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] FSR 113 at p 122, of what Buxton LJ said in Norowzian v Arks Ltd (No 2) [2000] FSR 363 at p 370:

‘[W]here it is not suggested that the judge has made an error of principle, a party should not come to the Court of Appeal simply in the hope that the impression formed by the judges in this court … will be different from that of the trial judge.…’

63. In that passage, Buxton LJ was referring to what Robert Walker LJ said in Pro Sieben Media AG v Carlton UK Television Ltd [l999] l WLR 605 at pp. 612-613, namely:

‘There is another general point which should be mentioned, that is the approach which this court should take on appeal against a judge’s ruling, after a full trial, on an issue of fair dealing. It is an issue on which the judge had come to a judgmental conclusion after taking into account a number of factors. In such a case the correct approach for an appellate tribunal was described as follows by Hoffmann LJ in Re Grayan Building Services Ltd [1995] Ch 241, 254 …

‘The judge is deciding a question of mixed fact and law in that he is applying the standard laid down by the courts [in that case - conduct appropriate to a person fit to be a director] to the facts of the case. It is in principle no different from the decision as to whether someone has been negligent or whether a patented invention was obvious: see BenmaxvAustin Motor Co Ltd [l955] AC 370. On the other hand, the standards applied by the law in different contexts vary a great deal in precision and generally speaking, the vaguer the standard and the greater the number of factors which the court has to weigh up in deciding whether or not the standards have been met, the more reluctant an appellate court will be to interfere with the trial judge's decision.’

…That is the right approach on this appeal. The judge’s conclusions, especially on fair dealing, should not be disturbed unless they proceeded from some error of principle or are clearly unsustainable.’

64.prisingly) not challenged, a ‘number of factors’ had to be ‘weigh[ed] up’ by the judge, in order to decide whether or not a particular arrangement constituted a contract of service.…”

73.  The above approach was applied in Yeung Pan Nam v Personal Representative of Tong Yu Tat Anthony & Ors, CACV 95/2015, 10 May 2016, at §§26 to 29, in which findings of negligence and apportionment of liability were challenged.  In reviewing the judge’s decision on liability, I should treat his decision with the utmost respect and refrain from interference with it unless I am satisfied that it proceeded upon some erroneous principle or was plainly and obviously wrong (George Mitchell Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803 at 815H to 816B).  

74.  The five broad grounds of appeal will be considered under these four headings: obvious danger; reasonable foresight and proximity; fairness, justice and reasonableness; and break in the chain of causation.  

Obvious danger

75.  Mr Li contended there is no evidential basis to say that David Chan knew or ought to have known that the BTM Cylinder was an obvious danger and had to be dealt with before the site was handed over to the demolition team.  Had the BTM Cylinder been correctly found not to be an obvious danger, the duty for Wellgo to have it removed during the six-year period when David Chan was AP for Garley Building could not have arisen. 

76.  Mr Li complained that there is no finding or analysis in the judgment as to why David Chan knew or should have known that the BTM Cylinder was an obvious danger.  He criticised the judge for so finding simply because BTM was dangerous and that was acknowledged by David Chan. It is always easy to be wise after the event.  The fact that subsequent experience or hindsight may show the BTM Cylinder an obvious danger does not by itself prove that it is an obvious danger David Chan knew or should have known.  The fact that the BTM Cylinder was full or nearly full of gas could only have been known with the benefit of hindsight.

77.  His argument that the BTM Cylinder was not objectively an obvious danger ran along these lines:

(1)   The BTM Cylinder was not brought to the building by Wellgo.  Wellgo did not have the knowledge that the cylinder still had gas inside.

(2)   It was reasonable for David Chan to believe that the BTM gas had been emitted during the fire in November 1996.  Mr Li referred to the evidence of Helen Kwan in which she said that if the area protected by the BTM installation was on fire and if the BTM system was in good functional condition, she would expect the gas to be discharged^[32].

(3)   Even though FSD was aware of the BTM system on 3/F, this was never included in any of the Fire Hazard Abatement Notices, nor was Wellgo ever asked by FSD to deal with the BTM Cylinder.

(4)   Likewise, BD was aware of the BTM system and had never included it in any of the lists of infractions issued to the owners and the IOGB requiring rectification within a stated period.

(5)   The assessment that David Chan knew or should have known that the BTM Cylinder was an obvious danger must take into account that he was not a specialist in fire services installation.  He would not have entered the building regularly over a period of five to six years if he regarded the cylinder as an obvious danger and had not removed it.

(6)   Maunsell Environmental Management Consultants Ltd (“Maunsell”), appointed by the new owner to undertake an asbestos survey for Garley Building in October 2003 and to identify asbestos contained materials for removal prior to the demolition works, did not find the BTM Cylinder an obvious danger required to be dealt with.

78.  Mr Li further argued that even if David Chan was aware the BTM Cylinder was an obvious danger and ought to be dealt with, there is no evidence that the IOGB was willing to do anything.  The IOGB did not instruct Wellgo to remove any of the fire debris in the building prior to demolition works on receiving the estimate of costs of $1.5 million from David Chan in October 1999.  If the IOGB would not act differently even if properly informed or advised by Wellgo, causation would not be established and Wellgo is not liable to compensate the plaintiff for damage not caused by the negligence complained of.

79.  I do not accept that there is no finding or analysis in the judgment as to why David Chan knew or should have known that the BTM Cylinder was an obvious danger.  Nor do I agree with the submission it was only with hindsight that it could have been known that the BTM Cylinder was full or nearly full of gas.  The fact that David Chan was not a specialist in fire services installation is immaterial.  The knowledge he had or should have as an AP concerning BTM, as found by the judge, is all that matters (in particular that BTM is a toxic substance, that BTM cylinders would be classified as dangerous goods under the Dangerous Goods Ordinance, that such cylinders should not be allowed to remain in a building without proper maintenance, that there are strict rules about the use and disposal of BTM as a controlled substance and old and unused cylinders are collected by specialist companies).  Given that kind of knowledge, and as there was no indicator on the BTM Cylinder showing how much gas was in it, it is obvious that a specialist contractor should have been engaged to find out, instead of leaving it unattended for five years.  This is not hindsight but plain common sense and prudence.

80.  The contentions made regarding David Chan’s belief that the gas had been emitted during the fire and that neither FSD nor BD had required the BTM Cylinder to be dealt with have been considered by the judge and rejected for cogent reasons.  What Maunsell did or did not do cannot add anything of value to this argument.  There is no clear evidence that Maunsell was aware of the BTM Cylinder.  There was only attached to its report in November 2003 an Abatement Plan of 3/F showing a room marked “BTM Gas Bottle Room”^[33].

81.  The fact that David Chan had entered the building regularly when he was AP of it whilst leaving the BTM Cylinder unattended all the time cannot provide support for the argument that the cylinder was not an obvious danger that ought to be known to him.

82.  I reject the contention that the BTM Cylinder was not objectively an obvious danger.

83.  As for the argument that the IOGB would not be willing to do anything to remove the obvious danger posed by the BTM Cylinder, the letter of David Chan dated 20 October 1999 did not mention the cylinder or the separate estimate of engaging a specialist contractor to handle and dispose of it at $5,000 to $6,000.  There is no evidential support for this argument.

84.  There is no basis to interfere with the holding that David Chan, as AP for Garley Building, was under a duty to take reasonable care to protect persons entering the building from obvious danger and to take the reasonable step of engaging a specialist contractor to assess whether the potentially hazardous BTM Cylinder was indeed hazardous.  Whether this duty of care should extend to cover the workers after Wellgo had left the site is to be discussed in the next part of this judgment.

Reasonable foresight and proximity

85.  Contrary to the finding it was reasonably foreseeable to David Chan that the demolition team would not have spotted the BTM Cylinder and handled it, Mr Li submitted the correct finding should be that it was within the reasonable contemplation of David Chan the demolition team would carry out its job properly and in particular comply with the statutory requirements on demolition work, including the removal of hazardous materials, so that any noxious substance in the building would be disposed of and not pose a threat to any one entering the building after Wellgo had handed over the site.  In support of the proposition that one would expect professionals to comply with the statutory prescriptions for carrying out their task, he cited Sze Che Sau & Ors v Dragages Et Travaux Publics (HK) Ltd [2007] 4 HKC 140 at §§120, 121; Goldswain v Beltec Ltd [2015] 159 Con LR 46 at §47(e); and Aurum Investments Ltd v Avonforce Ltd (in liq) (2000) 78 Con LR 114 at §§13 to 19.

86.  I do not consider the particular passages in these authorities to be of particular relevance to this discussion.  As the judge has stated, these authorities would be of relevance if it had been asserted that David Chan or Wellgo had a duty to advise the demolition team how the work ought to be done or a duty to ensure that the demolition team acted competently^[34]. But we are not concerned with whether David Chan or Wellgo owed a duty to warn the demolition team of risks in their work.  The judge had held earlier that the claims of JMK in the Fourth Party Notice based on a duty of care of Wellgo to safeguard YSK2 or JMK from economic loss were not properly pleaded^[35], and even if it were, he would still have held that there was no duty of Wellgo to advise the demolition team as to the condition of Garley Building or to warn them of risks, as there was an insufficient degree of proximity between Wellgo and these parties, nor did Wellgo assume any responsibility towards them^[36]. We are here concerned with whether a duty of care was owed by David Chan to protect from obvious danger persons, like the plaintiff, who were likely to enter the building to carry out the demolition work after Wellgo ceased to be engaged. 

87.  Mr Li attacked the finding of fact that the demolition team did not see the BTM Cylinder as “incredulous” and “perverse”, in light of the evidence that members of the team had inspected the building many times before the plaintiff’s accident, and that FSD, BD and David Chan had all seen the cylinder when they inspected the building.  The judge had earlier accepted David Chan’s evidence that anyone entering or looking into the BTM Room ought to have seen the BTM Cylinder.  He submitted that those who testified for JMK (Helen Kwan, Thomas Choy and Sze Ka Tat) could not give any credible explanation of not seeing the BTM Bottle Room and the cylinder.  And no one from Daniel Kwan or JSK2 had testified. 

88.  He further submitted that it was “impossible” for the demolition team not to have seen the BTM Cylinder lying on the floor of 3/F after the props were erected on 3/F when the floors above were demolished, as the grid distance between props was 1.2 metres and the cylinder with the valve lying flat on the floor was about 1.3 metres long and 0.4 metre in diameter.  Moreover, as the cylinder was moved from an upright position in the BTM Bottle Room and left lying on the floor with demolition debris stacked on top of it, some members of the demolition team must have seen it.

89.  As to foreseeability, Mr Li submitted that David Chan could not have foreseen that workers of the demolition team would have moved the BTM Cylinder to the floor and piled debris on top of it.  The judge was wrong to hold otherwise on the basis that the test of reasonable foreseeability, in the context of determining whether or not a duty of care exists, “does not require foresight of the precise sequence of events that results in damage”, having cited Hughes v Lord Advocate [1963] AC 837 at 853 and Pearson Education Limited v Charter Partnership Limited [2007] EWCA Civ 130 at §36^[37]. It was the removal of the cylinder that probably disturbed the valve assembly and contributed to the subsequent explosion.  The improper handling of the cylinder by the demolition workers was essential to the causation of the accident.

90.  Further, because of the statutory prescriptions for carrying out demolition work, Mr Li submitted it was a matter of certainty to David Chan that proper inspection of the building would be carried out by the demolition team.  It would also be a matter of certainty that the demolition team would have properly handled the BTM Cylinder if it contained hazardous materials, in the proper execution of their jobs.  He quoted Lowry LCJ in McIlveen v Charlesworth Developments [1982] NI 216 at 221 line 20: “If an inspection is certain and will reveal the defect and the person making the inspection will appreciate the danger, then no doubt a risk to the neighbour is not reasonably foreseeable.”^[38]  It could not have been reasonably contemplated by David Chan that all the professionals in the demolition team would act in breach of the statutory prescriptions.

91.  Mr Li contended it was impossible to suggest that people entering the building at the demolition stage would be proximate enough to be Wellgo’s neighbours, as Wellgo would have no control and responsibility over the site and the BTM Cylinder inside it after the site was handed over by Wellgo to the demolition team.  He relied on these statements of Lord Hoffmann in Sutradhar v Natural Environment Research Council [2006] PNLR 36 at §38: “But that principle is not that a duty of care is owed in all cases in which it is foreseeable that in the absence of care someone may suffer physical injury.  There must be proximity in the sense of a measure of control over and responsibility for the potentially dangerous situation.”

92.  Mr Li also made the point that the negligence alleged against Wellgo was a mere omission.  This will be addressed under the next heading of this judgment.

93.  I do not think there is any proper basis to disturb the finding of primary fact that those members of the demolition team who testified did not spot the BTM Cylinder and the finding of fact based on inference that the professionals in the demolition team failed to spot the cylinder notwithstanding that Daniel Kwan, JMK and YSK2 were each required to carry out independent inspection of Garley Building and had inspected the building.

94.  Helen Kwan, Thomas Choy and Sze Ka Tat adamantly maintained they did not see BTM Cylinder or notice the BTM Bottle Room, notwithstanding that they had to see whether there was any hazardous or potentially hazardous materials^[39], that they would check structural elements and there was a structural column close to the BTM Bottle Room^[40], that they had to see if there was any problems with the props being installed^[41]. The judge had made a general remark that he was “not impressed” by the evidence of these three individuals^[42]. He is fully aware that the quality of inspection of JMK left much to be desired and that the BTM Cylinder was “easily discoverable”^[43].  Nevertheless, he is entitled to accept a particular aspect of their evidence.  Each of them had testified that had any one of them spotted the BTM Cylinder, it would definitely have been removed prior to the commencement of demolition works.  The judge was satisfied that their evidence is true^[44].  The judge also had regard to his earlier finding that if the door of the cabinet inside the BTM Bottle  Room was swung open and remained open, it would obstruct the view of the BTM Cylinder^[45]. The findings of fact cannot be said to be incredible, perverse or plainly wrong.

95.  As for the holding that it was reasonably foreseeable that demolition workers would be endangered by the BTM Cylinder which was full or nearly full of gas, that it was reasonably foreseeable each of the building professionals would negligently fail to appreciate the presence of the BTM Cylinder, and that the plaintiff was sufficiently proximate to David Chan for a duty of care to arise, this is a judgmental conclusion arrived at by a proper evaluation of the effect of the facts found, after weighing up a number of factors, some pointing one way and some pointing the other.  The appeal court is not faced with a black or white choice between holding that the judge is right or wrong in his conclusion, as the standards applied by the law in different contexts vary a great deal in precision.  This kind of conclusion would fall within a margin of appreciation where an appeal court may properly conclude that the trial judge reached a conclusion he was entitled to reach and with which the appeal court should not interfere.  We should be guided by the approach mentioned earlier, that this court should not interfere unless the judge has misdirected himself on the law (either expressly or impliedly), has taken into account a factor which he ought not to have taken into account, has failed to take into account a factor which he ought to have taken into account, or has reached a conclusion which, in light of the primary facts, he could not properly have reached.

96.  I am not persuaded that the judge’s conclusion proceeded from some error of principle or is clearly unsustainable.

97.  The judge referred to his earlier findings of fact concerning Wellgo’s terms of engagement, David Chan’s role and responsibilities as AP for Garley Building, David Chan’s responsibilities as AP for the building towards the BTM Cylinder, and the negligence of the demolition team.  The findings of fact were considered with regard to his analysis of a number of authorities relating to the question of reasonable foresight in the context of ascertaining whether or not a duty of care exists, and in particular the significance of the possibility of intermediate examination of a dangerous chattel or building^[46]. The judge was mindful that the question whether it was reasonably foreseeable that Daniel Kwan, JMK and JSK2 would negligently fail to safely remove or to take steps to safely remove the BTM Cylinder from 3/F merges with the question whether it is fair, just and reasonable to impose a duty of care on the part of David Chan^[47].

98.  The judge had clearly taken into consideration that the BTM Cylinder was not brought into the building by Wellgo and it was not a danger created by it in the first place.  However, he did not regard this factor as material, praying in aid the dicta of Davies LJ in Clay v A J Crump & Sons Ltd at 571 that there is no distinction in principle between a case where an architect creates the dangerous structure or permits its continuance, as there is a duty not to expose to unnecessary danger anyone who it is reasonably foreseeable might be so exposed^[48].

99.  The BTM Cylinder which was full or nearly full of gas was clearly an obvious danger to any visitor of the building during David Chan’s watch.  It would be even more dangerous to demolition workers carrying out the work of demolishing the building if it continued to be left unattended on 3/F.  The judge is clearly right to find it reasonably foreseeable that demolition workers carrying out the work of demolishing the building would be endangered by the BTM Cylinder on 3/F if it was full or nearly full of gas.  I agree with him that this does not detract from his earlier finding the workers of YSK2 had moved the BTM Cylinder and allowed demolition debris to be stacked on top, which probably disturbed the valve assembly and contributed to the subsequent explosion^[49].  It must be within the reasonable contemplation of David Chan that the BTM Cylinder left unattended on 3/F would be moved from its original position by demolition workers in the course of their work.  It is unnecessary that David Chan could not have foreseen that the demolition workers would have moved the cylinder to the floor and piled debris on top.  The judge had rightly applied the law that the test of reasonable foreseeability, in the context of determining whether or not a duty of care exists, “does not require foresight of the precise sequence of events that results in damage”.

100.  The judge had obviously borne in mind that the plaintiff was injured some six months after David Chan handed over the building to the demolition team^[50]. He was mindful that the proximity of the plaintiff to JMK and to Daniel Kwan was similar to the proximity of the injured worker in the employ of the building contractor in Clay v A J Crump & Sons Ltd to the architect and the demolition contractor (both had completed their works and left the site two months ago), and the proximity of the plaintiff to David Chan was one step further removed.  Nevertheless, he took the view that the plaintiff was sufficiently proximate to David Chan for a duty of care to arise^[51].

101.  In arriving at this view, the judge had taken into account and weighed up a host of factors: that the BTM Cylinder was under the “watch” of David Chan for a considerably longer period of time than the time when Daniel Kwan, JMK and YSK2 had responsibilities in respect of Garley Building and hence had more time and opportunity to inspect and safely remove the cylinder^[52]; that the accident occurred almost six months after David Chan handed over the site and Daniel Kwan, JMK and YSK2 were each required to carry out their own independent inspection of the building prior to the commencement of demolition works^[53]; that the time JMK had responsibility in respect of the building was more than sufficient for JMK to discover and safely remove the cylinder, and if JMK had conducted its inspections properly, it would have become aware of the presence of the cylinder on 3/F and could easily have informed Daniel Kwan, who would have taken steps to safely remove it prior to the commencement of demolition works^[54]; that it was likely but not certain that the inspections of Daniel Kwan, JMK and YSK2 would reveal to them the presence of the BTM Cylinder prior to the commencement of demolition works, and it was reasonably foreseeable that Daniel Kwan, JMK and YSK2 would negligently fail to spot the cylinder, with the result that it would continue to remain a danger to demolition workers^[55].

102.  I would add that the negligence of Daniel Kwan, JMK and YSK2 in failing to appreciate the presence of the cylinder is not so different from the negligence of David Chan, who, although aware of the cylinder, did not engage a specialist contractor to check its contents and to handle it safely even if he had wrongly assumed it to be empty.

103.  The following statements are of particular relevance to the present discussion (they were cited in large part in the judgment of Lord Phillips CJ who gave the judgment of the court in Pearson Education Limited v Charter Partnership Limited):

“It was urged on the part of the builders that they were entitled to rely on the demolition contractors as having left the premises in a safe condition and that nothing other than a cursory examination was required of them. That may, of course, be so, but the evidence appears to have been that even a cursory examination would have disclosed the state of the wall and to an experienced eye the fact that it was dangerous. It may be that there was negligence in some degree on the part both of the demolition contractors and the builders. If there was such negligence, it may be that it was a contributory cause of the accident. It cannot, however, in my judgment, absolve the architect from a share in the blame. To hold otherwise would be to hold that an architect, or indeed anyone in a similar position, could behave negligently by delegating to other duties he was under an obligation to perform and escape liability by the plea that the injuries caused were caused by the negligence of that other person and not of himself. I do not accept that as being the true position in law and I am satisfied that it is not the law as laid down by Lord Atkin in Donoghue v Stevenson or by the judgments in any of the other cases to which we have been referred.” (Clay v A J Crump & Sons Ltd at 559 to 560, per Ormerod LJ)

“That duty does not cease to exist because there is a possibility or probability of inspection by an intermediary or by the neighbour himself before the article is taken into use.  If an inspection is certain and will reveal the defect and the person making the inspection will appreciate the danger, then no doubt a risk to the neighbour is not reasonably foreseeable, but such considerations raise questions of fact which will usually be questions for the jury.  An exception arises when there is only one reasonable answer – in favour of the potential defendant, and in such a case the neighbour’s claim will fail for want of evidence reasonable to laid before a jury.  Most of the defences based on the possibility of discovering a defect raise questions on causation – “Has the chain been broken?” – and, as such, are almost invariably a matter for the jury, or questions of contributory negligence, the existence and extent of which are again for the jury.” (McIlveen v Charlesworth Developments at 221 lines 17 to 32, per Lowry LCJ)

104.  The present situation is not a case that admits of only one reasonable answer in favour of Wellgo, namely, that it would not be reasonably foreseeable that Daniel Kwan, JMK and YSK2 would all fail to appreciate the presence of the cylinder and take steps to remove it safely.  There is no basis to interfere with the judge’s answer to this ‘jury question’.

105.  As for the argument that Wellgo did not have control and responsibility over the site and the cylinder at the time of the accident for Wellgo to owe a duty of care to the plaintiff, I do not think the judge had proceeded on the basis there was sufficient proximity merely because it is foreseeable that someone might suffer physical injury in the absence of care.

106.  The judge had made detailed findings on Wellgo’s terms of engagement, David Chan’s role and responsibilities as AP for Garley Building, and David Chan’s responsibilities as AP for the building towards the BTM Cylinder, which was an obvious danger and was left unattended for five years during David Chan’s watch, during which time significant corrosion developed on the threads of the valve and reduced the strength of the threads.

107.  The present situation is far removed from the fact situation in Sutradhar v Natural Environment Research Council.  The defendants there had conducted a hydrogeological survey in Bangladesh and made a report of a general nature, and were in an analogous position to the author of a textbook.  They were under no duty to the authorities in Bangladesh or people living there who suffered arsenical poisoning from drinking water contaminated by arsenic.  The claim was struck out because the defendants had no control over and responsibility for the potentially dangerous situation.

Fairness, justice and reasonableness

108.  Mr Li argued that in considering whether it was fair, just and reasonable to impose a duty of care on David Chan towards the plaintiff, the judge had failed to have regard to these factors:

(1)   The judge failed to distinguish between a positive act creating danger and a mere omission to prevent an act by other agencies leading to danger, in that the latter will not generally attract any duty of care (see Stovin v Wise [1996] AC 923 at 929H to 931D per Lord Nicholls, and 943E to 945E per Lord Hoffmann; and Robinson v Chief Constable of West Yorkshire Police [2018] AC 736 at §§69(4), (5) and 70 per Lord Reed).  Wellgo did not bring the BTM Cylinder into the building and so did not create the risk associated with it.  The negligence alleged against Wellgo, assuming that David Chan knew or ought to have known that the cylinder was an obvious danger, was at most only an omission in not advising the IOGB to remove it before Wellgo handed over the site.

(2)   The judge failed to weigh Wellgo’s alleged negligence against the fact that it was not engaged to do demolition works, that David Chan had no experience as AP for demolition works and a professional demolition team was charged with the responsibility of dealing with hazardous materials when Wellgo quitted the site.  It was contended that there was no assumption of responsibility on Wellgo’s part with respect to hazardous materials and it is unfair, unjust and unreasonable to impose a duty on Wellgo in relation to a job which was not supported to be undertaken by it.  In support of this, counsel cited Clayton v Woodman & son (Builders) Ltd [1962] 1 WLR 585 at 595; Oldschool & Anr v Gleeson (Construction) Ltd & Ors (1976) 4 BLR 103 at 130 to 131; Arrowhead Capital Finance Ltd (in liq) v KPMG LLP [2012] PNLR 30 at §§41 to 60; Jackson & Powell on Professional Liability (8^th ed) §9-013; Harrison v Technical Sign Co Ltd & Ors [2014] PNLR 326 at §§8, 11, 12, 13 to 22; Stagecoach South Western Trains Ltd v Hind & Anr [2014] EWHC 1891 (TCC) at §§93 to 103.

(3)   It would be alarming to hold Wellgo responsible for the plaintiff’s accident just because David Chan was aware of the existence of the BTM Cylinder and that it was an obvious danger.  Imposing a duty of care on Wellgo is to cast the net unnecessarily and inappropriately wide.  It would mean anyone who came to know of the cylinder and who failed to deal with it should similarly be liable, such as FSD, BD, Joseph Chow and Maunsell.  But these parties were not sued by JMK and they were not considered by the judge.

(4)   There is nothing to suggest that the plaintiff knew of Wellgo or had relied on Wellgo in carrying out his work.  In contrast, the plaintiff would have relied on the demolition team to have properly surveyed the site and rendered it safe for him to carry out demolition work.

109.  In determining that it is fair, just and reasonable to impose a duty of care on David Chan towards the plaintiff, the judge had considered a number of factors.  It was within the reasonable contemplation of David Chan that demolition workers would enter the building to carry out the demolition work and it was reasonably foreseeable that such workers would be endangered by the BTM Cylinder if it remained on the site during those works.  It is fair, just and reasonable to impose a duty of care on David Chan to take reasonable care to protect demolition workers from obvious danger, even though such workers would not enter the building to carry out the works until many months after David Chan ceased to be AP for the building, as the greater the potential for harm, the more likely it is that a duty of care would be imposed^[56].

110.  The danger posed by the unattended cylinder was extremely serious.  The judge characterised this danger as not too far removed from the category of dangerous objects such as an unexploded World War II mega bomb and remarked that the plaintiff could easily have been killed in the explosion and is very lucky to be alive^[57]. Hence, he felt compelled to give recognition that “the right to bodily integrity is the first and most important of the interests protected by the law of tort … [and includes] the right not to be subjected to bodily harm or injury” (Parkinson v St James and Seacroft University Hospital NHS Trust [2002] QB 266 at §56 per Hale LJ).  He further noted the statement of Buxton LJ in Perrett v Collins at 111E that “when one turns to the judgmental issues of justice, fairness and reasonableness the importance of fact that what is put at risk is the plaintiff’s body, and not just his goods, is … deeply embedded in the law of negligence”.

111.  To the above statements may be added these observations in the judgment of Bokhary PJ in Luen Hing Fat Coating & Finishing Factory Ltd v Waan Chuen Ming at §§42 and 43:

“42. Still on the question of fairness, justice and reasonableness, it has to be borne in mind that the danger involved was to life and limb. Without making light of purely economic loss, it is fair to say that the fact of personal safety being at stake is always significant. … This is an area in which legal policy is involved. And there can be no doubt that the policy considerations in favour of personal safety are naturally very powerful.

43. That is particularly so where the person is in a vulnerable position. The point is neatly put in Charlesworth & Percy on Negligence, p 34. There, under the subheading “Protecting the vulnerable”, it is said that “[t]here is a concern to protect those at a disadvantage, who have no reasonably available means of protecting themselves”.…”

112.  Turning to those other factors Mr Li submitted that the judge had failed to consider, I do not think the judge was in error in not attaching weight to them in arriving at his conclusion on the judgmental issues of justice, fairness and reasonableness.

113.  I do not consider the present case a ‘pure omission’ case.  Although the BTM Cylinder was not brought into the building by Wellgo, the judge had found on Wellgo’s terms of engagement that David Chan as AP for the building had responsibilities in respect of the BTM Cylinder, which he failed to discharge.  He had assumed a responsibility to protect persons entering the building from obvious danger during the time he was AP for the building.  His assessment that the cylinder was empty or nearly empty, based on his site inspection, was unreliable.  He failed to take the reasonable step of engaging a specialist contractor to assess whether the potentially hazardous BTM Cylinder was indeed hazardous even though the cost of the precaution was relatively low.  He acknowledged that the cylinder would need to be removed before the commencement of demolition works, which he knew by September 2003 would be carried out, but permitted the risk posed by the unattended cylinder to continue.  And even if the cylinder was empty, he knew that a specialist contractor had to be engaged to handle and dispose of it.  Wellgo was more than a bystander. There is justification to require Wellgo to act to remove the source of danger for the protection and benefit of those likely to enter the building even though it did not create this danger in the first place.

114.  I reject the contention there was no assumption of responsibility on Wellgo’s part with respect to the BTM Cylinder while it was under the watch of David Chan as AP for the building.  The fact that the demolition team were professionals charged with the responsibility of removing hazardous materials prior to the commencement of demolition work whereas David Chan had no experience and no responsibility for demolition works may account for a greater apportionment of liability to the demolition team, but is not in itself a reason why it would not be fair, just and reasonable to impose a duty of care on Wellgo in all the circumstances.  As rightly submitted by Mr Yeung, the proper handling of the BTM Cylinder must be outsourced to a specialist contractor in any event.  In terms of knowledge and responsibility assumed towards personal safety, the parties were in a similar position as building professionals.  I have considered the lengthy extracts in the various cases cited by Mr Li but do not think they really assist his argument, as the contexts for the discussion in those authorities are rather removed from the present situation.

115.  It is wholly speculative to say that FSD, BD, Joseph Chow and Maunsell should similarly be liable in the event Wellgo is held liable to the plaintiff.  The judge is entitled not to express any view on the position of these parties as other than FSD, it is not entirely clear if the others had knowledge of the existence of the BTM Cylinder and no or little evidence was adduced as to whether they had considered the hazards posed by the BTM Cylinder.  It cannot simply be assumed that the proximity of the plaintiff and these other parties must be considered the same as that between the plaintiff and Wellgo. 

116.  As for the contention that the plaintiff had not known about Wellgo or had relied on Wellgo to protect him from obvious danger in carrying out his work, this is not a material consideration in the present circumstances.  As Hobhouse LJ has stated in Perrett v Collins at 87A: “… it has never been a requirement of the law of the tort of negligence that there be a particular antecedent relationship between the defendant and the plaintiff other than one that the plaintiff belongs to a class which the defendant contemplates or should contemplate would be affected by his conduct.…”

117.  There is force in Mr Yeung’s submission that the law cannot allow a party to be exonerated from his wrongs merely because he has dropped out from the scene and attribute liability only to the subsequent party who came on to the scene when the risk left behind had materialised.  

118.  It is not necessary to address in detail Mr Li’s criticisms of the judge’s reliance on Clay v A J Crump & Sons Ltd and Pearson Education Limited v Charter Partnership Limited.  Suffice it to say the judge had set out the facts of Clay v A J Crump & Sons Ltd correctly and in great detail and he did not rely on the facts in that case as if they were the same or similar to the present situation, which seems to be Mr Li’s complaint.  Nor did the judge say that Baxall Securities Ltd & Anr v Sheard Walshaw Partnership & Ors was overruled by Pearson Education Limited v Charter Partnership Limited when he drew on various passages in the judgment of Lord Phillips CJ to assist him in his analysis of reasonable foresight and whether there was a break in the chain of causation. 

Break in the chain of causation

119.  Mr Li submitted that the judge was wrong in law and in fact in ruling that there was no break in the chain of causation by the improper handling of the BTM Cylinder by the employees of YSK2 and the negligent failure of Daniel Kwan, JMK and YSK2 to spot the cylinder. These acts and omissions of the demolition team were not under the control of Wellgo and being highly unreasonable could not be foreseen by Wellgo.  They were new causes disturbing the sequence of events leading from the alleged negligence of Wellgo and interrupting the effect of that alleged negligence and hence they broke the chain of causation.  The judge had given insufficient consideration to the improper handling of the BTM Cylinder by YSK2’s employees.

120.  I do not think there are sufficient grounds to interfere with the judge’s conclusion on this issue.  He has considered the cases dealing with the question whether there was a break in the chain of causation^[58]. He referred to his findings earlier, in particular that it was reasonably foreseeable that Daniel Kwan, JMK and YSK2 would each negligently fail to spot the cylinder, with the result that the cylinder would continue to remain a danger to demolition workers like the plaintiff.  He had regard to the fact that the cylinder was under the “watch” of David Chan for a considerably longer period than the time when Daniel Kwan, JMK and YSK2 had responsibilities in respect of the building^[59]. And although the removal of the cylinder by YSK2’s employees probably disturbed the valve assembly and contributed to the subsequent explosion, this act, which increased the causative potency of the negligence of YSK2, would be a relevant consideration in the apportionment of liability between the parties but was insufficient to break the chain of causation^[60].

121.  The judge had valid grounds for his conclusion that this is a case of multiple torts and multiple tortfeasors, whose responsibility for the ultimate damage that each of them caused ought to be apportioned between them.

Conclusion and costs

122.  For all the above reasons, I would dismiss Wellgo’s appeal.  As there is no dispute that costs should follow the event, I would order Wellgo to pay JMK’s costs of this appeal, with a certificate for two counsel.

Hon Barma JA:

123.  I agree with the Judgment of Kwan VP.

Hon Au JA:

124.  I respectfully agree.