"COMPANY W" v. THE BUILDING AUTHORITY

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JUDGMENT

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Liu, J.

1. Nos. 12 and 14, Marigold Road is a small site which was to accommodate a three-storeyed building comprising in all 12 units of approximately 1,000 sq.ft. each. The appellant company faced two charges before a disciplinary board appointed under section 11 of the Buildings Ordinance. I shall call it "the Board". The hearing lasted two days, on the 20th and the 22nd September last year, in the course of which the second charge was abandoned. At the conclusion of the proceedings, the Board found the appellant guilty of negligence under section 13 (1) of the Buildings Ordinance.

2. The appellant felt aggrieved, hence the instant appeal. The appeal was directed by the Chief Justice to be entertained by two judges, and these proceedings commenced before Mr Justice Mayo and myself.

3. The appellant is a registered contractor. It is a limited company which was appointed the piling contractor in the site preparation for the proposed building in Marigold Road. The Building Authority was notified of the appellant's appointment by Form 16 on the 25th June 1987.

4. Of the two charges before the Board, the one not abandoned reads as follows :-

"CHARGE : Negligence, contrary to Section 13(1) of the Buildings Ordinance, Cap. 123, Laws of Hong Kong.

 

PARTICULARS : You, (the appellant), being a registered contractor appointed during the period between 25th June 1987 and 13th August 1987 in respect of the building works at 12-14 Marigold Road, Kowloon on Kowloon Inland Lots No. 4685 and 4686, did, during the carrying out thereof, deviate in a material way from the building work shown in the amended piling plan approved by the Building Authority on 20th May 1987 under the Buildings Ordinance, Cap. 123 in that the pile No. H10 was not driven through the boulder encountered, and by reason of the facts alleged have been guilty of negligence."

5. The Charge was an amended Charge.

6. The facts before the Board were virtually undisputed. Two piling plans initially approved in February were amended on the 20th May 1987. We are not concerned with a later amendment. Consent to commence piling works was granted by Form 14 on the 3rd June 1987. Notice was given for piling works to commence on the 25th June of the same year. Piling involved the driving of 96 piles. Completion was reported on the 13th August 1987 by Form 21.

7. Pile No. 10, designated as H10 on the approved plans, was the one in question. After completion, when pile caps were being constructed, it came to light that the pile was considerably shorter and it had fallen out of position lying over the boulder beneath. H10 was supposed to reach down to a depth of 16.8 metres, but the actual length of the H10 pile as sunk was found to be only 1.37 metres. The boulder discovered a little beyond the end of H10 was said to be about l metre in diameter. Its precise size and shape was undetermined. But as I have said, the shortfall in length of H10 was unearthed, so to speak, during excavation down and around the top of the pile. It was in mid-October. Piling was obviously not of the approved specifications. H10 was out of position. It was not as designed for in the approved piling plans; hence on all hands it was agreed to be a material deviation.

8. On behalf of the appellant, three points were advanced for the Board's consideration. By a majority, the Board found the appellant guilty as charged but it gave no reasons for its decision. Before us, the Notice of Motion lodged contains five Grounds of Appeal, mildly different in formulation from the three submissions made to the Board. It is warned that negligence under s. 13(1) of the Buildings Ordinance must not be confused with negligence in the law of tort. Counsel further submits that negligence with the attributes assigned to it by s. 13(1) stands on its own.

9. Insofar as it is relevant, s. 13(1) of the Buildings Ordinance reads :

10. Ground (1) of the appeal complains that the Board was wrong in law in its failure to capture the true nature of the s. 13 (1) negligence which must be such as would render the registered contractor unfit to be on the register or make the further inclusion of him in the register prejudical to the due administration of the Ordinance or render him deserving of censure. Ground (2) is an contention that there was no or no sufficient evidence before the Board for establishing s. 13(i) negligence. Ground (3) is a plea that the amended charge was a bad one. Ground (4) is a submission that the Board failed to have proper regard or to give proper weight to three separate areas : (i) the reasonable and acceptable system of work maintained by the appellant on the site; (ii) the lack of knowledge of the deviation on the part of the appellant; and (iii) the fraudulent representations made in the daily return and piling records for the unsuspecting appellant and its then site forman, Mr Chan. Ground (5) is a further submission that in so accepting and relying on such piling records as submitted, the appellant could not be said to be and was not negligent within the meaning of s. 13(1). Lastly, Ground (6) is a general criticism that the Board's decision was unsafe and unsatisfactory.

11. In Ground (3), the validity of the remaining charge is attacked. It can readily be appreciated that the facts alleged in that charge cannot raise a presumption of negligence, let alone s.13(1) negligence. That must be self evident as possible causes for the deviation were many. The doctrine of res ipsa loquitur has no application. It would follow that the alleged facts in the remaining Charge cannot sustain a claim in s. 13(l) negligence. However, the instant appeal may, in my opinion, be wholly disposed of by a determination on Ground (2) and Ground (5); hence I need express no concluded view on Ground (3), and likewise it would seem quite unnecessary to deal with the other Grounds of Appeal.

12. Ground (2) is a complaint that there was no or no sufficient evidence to support a finding of s. 13(1) negligence. In addition, Ground (5) maintains that the appellant was in fact not so negligent within the meaning of that subsection by accepting and relying on reports and the graph which are not suspect.

13. The law is well settled. It is not questioned before us today that for the purposes of s. 13(l), the duty of care to be exercised by the appellant is that of a reasonable and competent registered contractor. That the continued viability of the appellant and the livelihood of those in its management will be affected by the Board's decision cannot be doubted. It is also established that the weight of burden is to be commensurate with the seriousness of the charge and its consequences.

14. Counsel for the respondent seeks to persuade us that some guidance may be derived from the usual principles in agency law. I find myself at variance with that submission. The amended Charge under s. 13(1) is not one concerned with agency in contract or vicarious liability in tort. I cannot emphasize more strongly that we are dealing with a different category of negligence - the s. 13(1) negligence.

15. Mr Chan Cheung Hon, witness No. 3 for the Building Authority before the Board was the then site foreman. He has been in the construction trade for 18/19 years. Prior to his joining the appellant, he had worked for two sizeable and not at all unknown construction companies in Hong Kong. At the material time, he was the appellant's only site foreman in Marigold Road. He was immediately accountable to two engineers, Mr Tam and Mr Chan. He was somewhat - in order to be kind - inexact in specifying his period of supervision at the construction site in Marigold Road. He gave, I believe, not less than 4/5 versions before the Board. But as corroborated by the documents, it can fairly be accepted that he was not transferred to the Marigold construction site when the first of the 96 piles was being driven. He came on the scene commencing from the second pile to the last. After he had taken charge of the Marigold construction site, by the 3rd Jury boulders were encountered, including the one under pile H10. He sent for the crushing and drilling machines. They came. On the 18th July, he observed that the drilling machine was being moved from pile No. 9 to pile H10. He remained on site that day but he did not personally supervise or witness the drilling operation for H10. He merely left instructions for four bore holes to be drilled after the withdrawal of H10 and thereafter for piling to be again attempted. He witnessed none of these operations. As a matter of fact when H10 was about to be re-driven in the same position on either the 26th July or 27th July, he found it necessary to take leave for visiting the "Industrial Estate" site at Tai Po. He was absent from the Marigold site from 8/9 a.m. in the morning until about 2/3 p.m. in the afternoon. He had expected, so he claimed, to be able to return to Marigold Road for supervising the final set of H10, but by the time he managed to reappear at the construction site, piling of H10 had allegedly been completed. The top of the pile was then covered up with earth. There was no visible sign that could have aroused any suspicion. He was shown and given data, including a graph. The piling record plan, piling record report and pile compression records were subsequently compiled for him and the management of the appellant for submission to the authority .But as I have said earlier, in mid-November 1987, during excavation down and around the top of H10 by another contractor, the material deviation was discovered.

16. Mr Chan admitted that he was negligent. There was every temptation to shift responsibility. He was a witness who might even have some purpose of his own to serve, but the Building Authority tendered him as a credible witness on whose the evidence the appellant was sought to be sanctioned. What transpired could not have reflected well on the appellant, but the Board could only act on evidence. He gave evidence before the Board that he was under specific instructions to supervise on the construction site particularly at the stage of the final set of each pile. He told the Board that the rest of the piles were in place and in order. H10 was the only lapse. He conceded that had he properly supervised the last stage of piling for H10, fraud could have been prevented. He told the Board that all the documents, records and the graph appeared to be normal and accurate. He accepted all without hesitation. The same were thereupon passed on to the management of the appellant which in turn accepted them. He also told the Board that pile H10, the top of which was not visible, did not appear to suffer from any imperfection. All, so he concluded, seemed to be prime and proper on his return. He was misled, and consequently the appellant was misled. In fact, no point was then taken by anyone on these records. The appellant, according to Mr Chan, was unaware of any deviation until its detection in mid-November 1987. The appellant could not reasonably have been expected to take more measures as the registered piling contractor. The experts and professional men called before the Board were all of one voice, that the appointment of a competent site forman was all that it would need for piling works in a small construction site.

17. Material deviations could obviously lead to dreadful consequences, but it would seem that the gravity of material deviation alone could not give rise to s. 13(1) negligence. S. 13(1) negligence must, in my view, be negligence of such a nature as would warrant the discipline prescribed by that subsection. In my judgment, the subsection clearly envisages some personal blame, some reprehensible conduct on the part of a registered contractor in the causation of the material deviation. In this case, that would need to be at least censurable conduct on the part of the management of the appellant. Mr Chan, the site foreman was no management. Unfitness and censure of a registered contractor and his desirable exclusion from the register are matters to be judged exclusively on his personal culpability. In my view, however serious the material deviation, unless it was personally caused or contributed or in some other way instigated, knowingly permitted or condoned by the registered contractor, it would not by itself fix him with s. 13(1) negligence. Vicarious liability for a servant or agent without more is not enough. But it does not follow that the appellant cannot be made vicariously liable in a civil suit for the negligence of his site foreman. The two concepts are decidedly different. In fact, such vicarious liability in tort has been conceded by counsel for the appellant.

18. The appellant engaged an apparently experienced and competent site foreman in the person of Mr Chan. On the evidence led by the Building Authority, sufficient instructions were admittedly given. There was also evidence at the hearing that the appellant was similarly misled by the submitted documents and the graph. On that evidence, it was open to the appellant to accept and rely on them as its professional staff did. The appellant is said to have had no prior knowledge of the deviation. I am constrained to hold that there was no evidence of s.13(1) negligence for the Board to return a guilty decision. Further the evidence adduced before the Board, when properly evaluated, must inevitably lead to the conclusion that the appellant could not have been found and was not guilty of s. 13(1) negligence. On Grounds (2) and (5), the appellant succeeds.

19. I would allow the appeal and set aside the decision of the Board. In the light of the conclusion I have reached, it is quite unnecessary to pass on to the other Grounds of Appeal.

Mayo, J:

20. This is an appeal against a Decision of the Registered contractors' Disciplinary Board. The Appellant was found guilty of an offence under Section 13(1) of the Building ordinance, Chapter 123.

21. This appeal was not an entirely simple one. Although we had available to us a transcript of the proceedings before the Board the Board did not see fit to give reasons for its decision.

22. This left us in a rather difficult position. We fully appreciate that members of the Board have extensive experience in the construction industry but they do not necessarily have legal experience. While it is true that one of the members of the Board was a qualified lawyer we have no means of knowing whether the Board followed any advice which may have been tendered to it. Indeed as the Decision was only a majority Decision we can only speculate whether the lawyer member cast her vote for or against the Board's determination.

23. The grounds of appeal which have been lodged by the Appellant read as follows :-

24. It will be noted that the main complaint which is made is that the Board have failed to adopt the correct test to determine whether the applicant has been guilty of negligence.

25. The important point to observe is that mere negligence in itself is insufficient to support a disciplinary charge under this section. What is required is such negligence or misconduct .... as to render the contractor deserving of censure.

26. Mr. Lee who was representing the Appellant conceded that its site foreman Mr. Chan Cheung-hong (PW3 in the proceedings) had undoubtedly been guilty of negligence. The main complaint made against him was that he was not present on the 26th July 1987 at the site at Marigold Road, Kowloon when piling work was completed on pile H10 to supervise the work. It subsequently transpired that the work had been grossly deficient thus leading to a deviation from the approved plan.

27. It is evident from the transcript of the proceedings that Mr. Chan was unable to furnish any satisfactory explanation for his non attendance.

28. What however is of even greater significance is that during the proceedings evidence was given by 2 expert witnesses to the effect that it was generally accepted practice in the Building Trade for a small building site such as the present one to be supervised by a Foreman who is not a qualified engineer. Such a Foreman is expected to supervise the completion of work on each pile as it is completed.

29. There is nothing which we could find in the transcript of the proceedings which indicated that the Appellant either had any knowledge of Mr. Chan's absence from the site or pointed to any deficiences or shortcomings in the system of work.

30. The experts also gave their expert opinion that from the graphs and other records supplied to them or their engineers by Mr. Chan there was nothing whatever to put them on notice that there had been any negligence or non compliance with statutory requirements by Mr. Chan.

31. We have been satisfied from the evidence which was before the Tribunal that there was insufficient evidence before the Tribunal to enable them to make the determination which they did.

32. The question which next arises is whether Mr. Chan's negligence or misconduct can be attributed to the Appellant.

33. Mr. Rosenberg for the Respondent cited to us passages from the speeches by Lord Reid, Lord Diplock and Lord Scarman in Tesco Supermarket v. Nattrass 1972 AC 153.

34. I have no doubt the respondents have failed to establish that Mr. Chan was himself the embodiment of the Appellant when he was either supervising or perhaps more accurately failing to supervise work on the site in question. One of my reasons for coming to this conclusion is that it was part of the facts which were agreed that Mr. Chan was answerable to two Engineers who were employees of the Respondent.

35. Mr. Lee conceded that Mr. Chan was an Agent for the Appellant. However such a concession would only be relevant to considerations as to whether the Appellants could be held to be vicariously liable for Mr. Chan's acts or omissions. This is an entirely different question to the matter which lay before the Tribunal namely whether the Appellant had been fount) to be guilty of negligence such as to render them liable to censure.

36. I am satisfied that for this to be established it must be shown that the company has itself been in breach of some duty of care.

37. All of the evidence available would tend to show the opposite to be the case. In the proceedings the complaints concerning the lack of a satisfactory system of work were withdrawn. More importantly the Expert witnesses were not critical of the Appellants practice of putting a Foreman in charge of the site. It has also to be borne in mind that Mr. Chan had 15 years relevant experience in the construction business and there was no evidence to show that the Appellants had any cause not to repose confidence in him.

38. Mr. Rosenberg argued that the Board which was comprised of experienced people in the trade ruby have formed an unfavourable impression of Mr. Chan and come to a conclusion that he was not a fit person to be in charge of such a site. I think that the answer to this is that the Board have not condescended to give any such reason for their decision. It would not be fair for us to assume that this teas the case.

39. One of the more disturbing aspects of this appeal was the reasons the Board gave for the sentence they imposed. They said :

"1.  Wing Tai Pilonner Co Ltd, the Board has found you Guilty of the charge brought by the Building Authority. Having fully considered the facts of the case and what your counsel has had to say in mitigation, the Board has assessed the seriousness of his offence and the extent of the penalty.

2.  You as a Registered Contractor with many years of experience at the time of the incident, should have appreciated the consequences or not complying with the Building Regulations. The Board therefore taxes a serious view of this offence.

3.  It is the Board's decision that you failed in your responsibilities in carrying out the piling work in accordance with the agreed working procedures for placing pile H10.

4.  The Board has therefore determined in this case that Wing Tai Pilonner Co Ltd be reprimanded in accordance with Cap 123 Section 13(2)(c) but that Section 13(2)(d) shall hot apply.

5.  Finally I have to point out that you have the right of appeal to a Judge of the High Court if you so wish."

40. It seems to me that the Board have proceeded upon the assumption, which was quite unwarranted, that the company itself had knowledge of the deviations from the approved plan when they occurred. It is difficult to imagine how they were able to come to this conclusion on the basis of the evidence before them.

41. One almost irresistably is drawn to a conclusion that the Board must have adopted the wrong criteria in that the Board must have adopted the wrong criteria in reaching the determination they did that negligence had been proved pursuant to the provisions contained in Section 13 of Chapter 123.

42. This being the case this appeal must be allowed.

                (Submissions on costs)

Liu, J:

43. We order that the decision of the disciplinary board be set aside and that costs of this appeal and before the disciplinary board be costs for the appellant.