JOHN SO AND ANOTHER v. LAU HON MAN AND OTHERS

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H E A D N O T E

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Deed of Mutual Covenant - Common parts of block of flats in multiple ownership - Water pipe for exclusive use of owner of upper flat - Leakage causing damage to lower flat - Breach of covenant - Entitlement of owner of lower flat to damages for (i) economic loss and (ii) discomfort and inconvenience.

IN THE COURT OF APPEAL

1993, No. 110
(Civil)

(ON APPEAL FROM HIGH COURT ACTION NO.A2792 OF 1992)

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J U D G M E N T

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Rhind, J.:

1. Broadview Terrace in Cloudview Road, Hong Kong is a twenty- one storey block of flats, built approximately eighteen years ago. Each floor, from the third floor upwards, has five flats in line abreast.

2. In 1987, the whole block was refurbished by a developer who, the following year, sold Flat E on the thirteenth floor to the Respondents, and the identically laid-out Flat E on the twelfth floor, immediately below, to the Appellants.

3. The Appellants, who are husband and wife, reside in their flat, and the same applies to the Respondents, a married couple plus the husband's mother.

4. In familiar Hong Kong fashion, the owners of each flat own a specified number of undivided shares in the whole block as tenants in common, subject to a Deed of Mutual Covenant, with the exclusive right to use and occupy their own particular flat and car-parking space.

5. As the flats "E" on the twelfth and thirteenth floors are identical in size and lay-out, it is unsurprising that the owners of each have the same number of undivided shares, namely, 1501 out of a total of 183,117 for the whole block.

6. The Deed of Mutual Covenant by which both sides acknowledge they are bound was made between the developer and the first owner of a flat in the block on 15th December 1987. In 1989, the owners of the undivided shares in the building got themselves incorporated under Part III of the Multi-storey Buildings (Owners Incorporation) Ordinance, Cap.344 ("The Ordinance") as "The Incorporated Owners of Broadview".

7. On the night of 7th/8th April 1992, a fresh water pipe laid in the concrete slab which served as ceiling for Flat E on the twelfth floor, and floor for E on the thirteenth floor, burst, causing considerable damage to parts of the ceiling and walls of the lower flat. The pipe which burst was used exclusively for the supply of fresh water to Flat E on the thirteenth floor. That pipe had in fact been leaking and causing some damage to the Appellants' flat since about the end of February 1992. Water from the burst pipe continued to drip into Flat E on the twelfth floor upto about the 17th April 1992, the date the Respondents put a plumber to work on the problem.

8. The Appellants brought proceedings against the Respondents, seeking, inter alia, damages for breach of Clause 10(c) of the Deed of Mutual Covenant, ("the D.M.C.") which is as follows :-

"10. Each party hereto hereby convenants with the other as follows:-

(c) Not to use his part of the said Building for any illegal or immoral purposes nor do or permit anything therein or thereupon which may create unnecessary noise or may be a nuisance or annoyance to or may cause damage or inconvenience to the other occupiers of the said Building."

9. After a three day trial, the judge, in a written judgment, awarded the Appellants special damages of $51,450 for various forms of economic loss, but nothing by way of general damages, observing,

"I do accept that whilst not impossible, as claimed, it certainly would have been at least unpleasant to use the toilets and the dining room with water dripping from the ceiling. Inconvenience and frustration however are not be financially measured in this action. I am concerned with compensation for damage sustained."

10. It is only against the part of the judgment denying them general damages that the Appellants complain. They contend that the judge was wrong in principle to hold that damages could not be awarded for frustration (more usually referred to as "discomfort") and inconvenience occasioned by breach of contract.

11. Mr Merry, for the Respondents, conceded, (in our view, correctly), that general damages for inconvenience and discomfort can be awarded in a breach of contract action. Authorities showing that this type of damage is recoverable are Rawlings v. Rentokil Laboratories [1972] E.G.D. 744; Calabar Properties v. Stitcher, [1984] 1 W.L.R. 287 (C.A.) andElmcroft Developments v. Tankersley - Sawyer [1984] 15 H.L.R. 63 (C.A.).

12. While not binding his clients to any upper limit, Mr Edward Chan, Q.C., for the appellants, nonetheless, indicated his view that a figure of the order of $10,000 would be fair for this type of damage. Mr Chan urged us not to remit the assessment of these damages to the court below, but to fix the amount ourselves to avoid further costs.

13. Mr Merry was content to let us assess such damages, but only so long as our award did not exceed $10,000. He thought the trial judge was in a better position than ourselves to assess such damages.

14. It so happens that we think $10,000 is a fair assessment for the inconvenience and discomfort suffered by the Appellants, but even if we had felt a higher award appropriate, we would still have made the assessment ourselves since there is abundant material in the trial documents for this purpose and we do not see how the further delay and expense of remitting such a matter could be justified.

15. In reaching our assessment of $10,000, we have taken into account that the Appellants suffered the inconvenience of relatively minor penetration of dampness into their flat from about the end of February to about the 7th April, and from then upto about 17th April, there was continuously dripping water. The Appellants' dining area, bedrooms and bathrooms were affected.

16. As the result of the leakage, the Appellants' dining room and lounge had to be completely re-papered. Re-plastering had to be done to some walls, some re-wiring was necessary, and, some tiles had to be replaced. Some doors and door frames required attention. Repainting of various parts and re-varnishing of floors was required.

17. Cleaning up and carrying out all that work in the Appellants' flat, once the leak was repaired, occupied twenty-four days. This means the Appellants were discommoded one way or another from about the end of February upto about 17th April, on top of which was a period of twenty-four days for clearing up and repairing - in all, a period of about two and a half months.

18. As Mr Merry rightly pointed out, there is no scientific way of translating inconvenience and discomfort into a sum of money : it has to be a conventional sum.

19. By their cross-appeal, the Respondents deny that they were in breach of Clause 10(c) of the D.M.C., since, so they allege, the burst pipe did not occur in or on their "......part of the said Buildings", but on the common parts. If the pipe was in the common parts, any damage caused by a defect would be the responsibility of the Incorporated Owners.

"Common parts" are defined in Clause 5(1) of the D.M.C. as follows:-

"(t) the common part services and facilities referred to in this Deed shall include the following :-

(i) the outer walls private roads gardens (if any), children's play ground, staircases, landings, passages, entrance hall, lobby lifts and recreational facilities and any other space or area which are not included in any part of the said premises and the said Buildings exclusively owned by any owner or expressly reserved by the First Owner under this Deed.

(ii) the sewers gutters, drains, water-courses, cables, pump, tanks, wires, sanitary fittings, fire fighting and refuse disposal equipment and fire-prevention apparatuses and security system used or installed for the benefit of the said Buildings as part of the amenities thereof and not by any individual owner for his own use or purposes."

20. There is also a definition of "common parts", subject to the context otherwise requiring, in s.2 of the Ordinance, as follows :-

"'common parts' means -

(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Office as being for the exclusive use, occupation or enjoyment of an owner; and

(b) unless so specified or designated, those parts specified in the First Schedule;"

The First Schedule to the Ordinance is as follows :-

"	FIRST SCHEDULE.
	COMMON PARTS.

1. External walls and load bearing walls, foundation, columns, beams and other structural supports.

2. Walls enclosing passageways, corridors and staircases.

3. The roofs, chimneys, gables, gutters, lightning conductors, aerials and aerial cables.

4. Parapet walls, fences and boundary walls.

5. Vents serving two or more flats.

6. Water tanks, pumps, wells, sewers, drains, soil pipes, waste pipes, channels, water-courses, gutters, ducts, downpipes, cables, conduits, refuse chutes, hoppers and refuse container chambers.

7. Cellars, toilets, water closet, wash houses, bathhouses, kitchens and caretakers' flats.

8. Passageways, corridors, staircases, landings, light wells, staircase window frames and glazing, hatchways, roofways and outlets to the roofs and doors and gates giving access thereto.

9. Lifts, escalators, lift shafts and machinery and apparatus used in connection therewith and the housing thereof.

10. Lighting apparatus, air conditioning apparatus, central heating apparatus, fire fighting equipment and installations intended for the use and benefit of all of the owners generally and any room or chamber in which such apparatus, equipment or installation is fitted or installed.

11. Fixtures situated in a flat which are used in connection with the enjoyment of any other flat or other portion of the building."

21. There is also the following definition of "flat" in s.2 of the Ordinance :-

"'flat' means any premises in a building which are referred to in a deed of mutual covenant whether described therein as a flat or by any other name and whether used as a dwelling, shop, factory, office or for any other purpose, of which the owner, as between himself and owners or occupiers of other parts of the same building, is entitled to the exclusive possession;"

22. Each flat in the parties' block has its own separately metered and piped fresh water supply from the roof. After clearing its meter on the roof, the pipe dedicated to a particular flat runs down the outside wall of the block on its hill side until it reaches that flat. Hence, there is a multiplicity of pipes running vertically down that wall, one for each flat.

23. When the pipe reaches the appropriate flat, it forks, with one branch going through the external wall to that flat's kitchen, and the other to its bathroom immediately on the other side of that external wall. It then travels through the floor slab to a bathroom directly opposite on the harbour side of the flat where it terminates.

24. It was such a pipe, running from one of the Respondents' bathrooms to the other, through the floor slab between the Respondents' and the Appellants' flats, which, on breaking, gave rise to the present proceedings.

25. When the Appellants first noticed water permeating their ceiling towards the end of February 1992, they made a complaint to the management company which looks after Broadview Terrace for the Incorporated Owners of the block.

26. No doubt at the prompting of the management company, the 1st Respondent visited the Appellants' flat on 3rd March 1992 where he could see for himself the water coming through the Appellants' ceiling.

27. In the Respondents' flat, there was nothing to see. The offending pipe was in no way visible, since it was encased by the floor slab.

28. Despite continuing complaints from the Appellants, the 1st Respondent did nothing further until 23rd March 1992 when he engaged a plumber to inspect the Appellants' flat.

29. The Respondents refrained from doing anything further until the pipe burst on the night of 7th/8th April, 1992.

30. Once the pipe burst, not only did the flow of water descending into the Appellants' flat greatly increase, but, also, the Respondents themselves started to be affected by wetness spreading in their flat.

31. On 13th April, the 1st Respondent brought in two plumbers to inspect his premises. One of them, a Mr Sung, commenced the necessary remedial work on 17th April 1992.

32. Instead of the more expensive operation of digging into the floor-slab to replace the pipe between the Respondents' two bathrooms, Mr Sung by-passed that pipe by blocking it off, and installing what the judge described as, "new, mostly above surface" copper piping. There are no details of how much of it was below surface and how far down it went into the floor slab. The work was completed on 21st April 1992, totally curing the problem of leakage.

33. Despite the parties' flats being visited by at least three plumbers, one loss-adjuster, and one chartered surveyor in relation to the defective pipe, no evidence was forthcoming at the trial about the method of construction of the floor slab, its precise composition and where within the floor slab the pipe would have been in relation to the floor surface of the Respondents' flat. The only evidence imparted to the court below appears to have been that the "pipe was within the concrete slab", the exact location being unknown. There was also evidence that the floor slab was about five inches deep.

34. In relation to the issue whether the Respondents were liable for breach of covenant because of the broken pipe, the trial judge initially went slightly off on the wrong track by asserting:

"The only question is : Is the slab between the vertically adjacent flats a 'common part'. If it is, the defendants cannot be held liable whether the pipes were there for their exclusive use or not, because their liability under clause 10(c) can only relate to nuisance, annoyance, damage or any inconvenience arising from 'anything therein or thereupon' his part of the said Building".

35. Clearly, for many purposes, the floor slab is a common part, but that by itself need not necessarily be fatal to the Appellants' claim.

36. Not liking the result to which his own logic appeared to be impelling him, the judge found himself attracted by an argument advanced on behalf of the Appellants to the effect that the part of the floor slab occupied by the water pipe for the exclusive use of the Respondents could be regarded as a part of the building, along with the rest of Flat E on the thirteenth floor, of which the Respondents had exclusive right of use.

37. The learned judge went on to state:-

"I am concerned with a space within that slab occupied by water pipes exclusively feeding outlets within Flat 13E. For howsoever long that pipe, serving that purpose, occupies that space, I am driven, in the absence of any authority to the contrary, to conclude that that exclusive space cannot be anything but 'his part of the said Buildings', whatever may be the position regarding the rest of the slab mass."

38. We agree entirely with the approach adopted by the learned judge in that paragraph. He was right, in our view, to treat the circumstance that the sole purpose of the pipe was to serve the Respondents' flat as the determining factor as to whether the pipe was in the Respondents' part of the building.

39. Although we are not aware of any direct authority on the rights and obligations between tenants in common of adjoining flats in relation to a pipe exclusively serving one of their flats in a block in multiple ownership held under a DMC, we think useful guidance can be found in the law on easements in relation to land generally where there can be the benefit of property rights to the three-dimensional space through which a water pipe runs, together with ownership of the pipe itself. See Taylor v. St. Helen's Corp. [1877] 6 Ch.D. 264, and Simmons v. Midford [1969] 2 Ch 415. In Wheeldon v. Burrows, (1879) 12 Ch.D. 31, James L.J. suggested that where water is brought to a house by a pipe laid under the land of another the pipe can be regarded as a corporeal part of the house if used exclusively to serve that house.

40. With that sort of analogy with land-use in mind, we see no conceptual difficulty in construing Clause 10(c) of the DMC and the definition of "common parts" in s.2 of the Ordinance in such a way as to hold that the water pipe in the floor slab came within the Respondents' "part" of the building.

41. As the Respondents are the ones to get the exclusive benefit from the use of their fresh water pipe, it is not unreasonable they should bear the exclusive burden of the cost of repairing it if it becomes defective. Such was the common intent of those entering into the DMC, in our view.

42. By allowing their pipe to fall into disrepair with the result that water escaped to the Appellants' flat, the Respondents were in clear breach of their obligation under s.10(c) of the DMC not to permit anything in their flat which might be a nuisance to other occupiers of the building, escape of water from one person's premises to another's being a classic instance of nuisance in the eyes of the law.

43. We therefore hold that the trial judge was right to hold the Respondents liable for breach of convenant, and dismiss the cross-appeal. As stated earlier, we find that the judge erred in not awarding damages for discomfort and inconvenience occasioned by the breach of covenant. The quantum we assessed under that head was $10,000. Thus, the Appellants won on that single issue on which they appealed.

44. Costs are to follow the event.