HELIGEAR ENGINEERING (HK) CO LTD v. CHU CHUNG KAI AND KUNCORO LINGKOREN AND ANOTHER

LDBM 318 OF 2003

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT Application No. 318 of 2003

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J U D G M E N T

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Background

1.  The Applicant has settled its claim with the 1^st Respondent for $10,000. The 2^nd Respondent was at one time the tenant of the 1^st Respondent in an industrial building operating a printing workshop in the flat so rented. The Applicant is the owner of the flat directly below the 2^nd Respondent’s workshop. From about March 2002, a dark brownish oil was found seeping through the ceiling of the Applicant’s unit at various spots.  On some occasions the oil even dripped on to the floor as well. The Applicant contends that the 2^nd Respondent caused this oil seepage. It is alleged that the 2^nd Respondent allowed lubricating oil to flow from  its printing machines or equipment to get to the floor of the workshop and that the 2^nd Respondent should be liable to compensate the Applicant for its loss and damage. 

Causes of Action, Jurisdiction, Application for determination of Preliminary Points

2.  At the commencement of the trial, the 2^nd Respondent applied to have preliminary points determined and which application I refused. Not only that it is a very late application but that there has been ample opportunity for such application to be made. There have been a number of call-over hearings in which directions along the line of High Court Practice were made for the preparation of the trial. If preliminary points should be determined, application should have been made in one of these call-over hearings and as soon as possible.  No explanation has been given why the application should be made when both parties are ready to commence trial, a short trial. The case could not have been disposed of expeditiously, or costs could have been saved, by entertaining the application. On the contrary, the case could have been dragged on for a long time and greater costs are likely to be incurred.  The application is therefore refused.  The preliminary points of law raised are now being pursued by the 2^nd Respondent in its final submission.

3.  The 2^nd Respondent contends that this Tribunal has no jurisdiction in this claim. Two points of objection are raised. Firstly, this Tribunal has no jurisdiction to determine claims based on tort. Secondly the 2^nd Respondent is not bound by the deed of mutual covenant of the building generally and particularly, the tenancy has terminated and the 2^nd Respondent has vacated the flat.  Ms Yeung, counsel for the 2^nd Respondent, argues that in either case the Tribunal has no jurisdiction to determine the claim.

4.  The Applicant has clarified its position with regard to the cause of action.  The Applicant based its claim on one ground only, namely, breach of a covenant contained in the deed of mutual covenant.  In particular, its counsel, Ms Saing, unequivocally states that the present claim is for damages only and is not based on tort for nuisance.  That being the position of the Applicant, the first point of objection becomes irrelevant. 

5.  An owner of a building is certainly by bound by the deed of mutual covenant. Section 41(3) ofthe Conveyance and Property Ordinance, Cap219, extends its binding effect so that a covenant therein, other than a positive covenant, can be enforced against a tenant occupier.  The Applicant alleged that 2^nd Respondent was in breach of the covenant in clause 10(c) of the deed of mutual covenant. This covenant is not of positive nature.  The 2^nd Respondent was therefore bound by the covenant during the currency of tenancy or before he has vacated the premises.  Termination of its tenancy and vacating his premises neither alone or together operate by any known legal principle to absolve its liability under the deed of mutual covenant for breach committed while it was the tenant occupier.  The Applicant is not suing for an injunction order or damages in lieu.  The Applicant is suing for damages and loss as caused by the 2^nd Respondent’s breach committed during its term of tenancy.  This Tribunal has jurisdiction to deal with breaches of the deed of mutual covenants. The Applicant as an owner is entitled to initiate proceedings in this Tribunal.

6.  Ms Yeung has other points of argument which, without disrespect, I do not think I need to address.  In my judgment the 2^nd Respondent is bound by the covenant stipulated in clause 10(c) of the deed of mutual covenant and it is within the jurisdiction of this Tribunal to determine the claim so framed by the Applicant.

Evidence& Finding on facts & Liability

7.  There are two expert witnesses, one from each party. The other witness is Mr. Kong, giving evidence on behalf of  his employer, the Applicant.

8.  Early in the year of 2002, Mr. Kong discovered oil seepage in the ceiling of the Applicant’s flat. Apparently he took no heed of it until May 2002, when the problem had shown no sign of improvement and was getting worse instead, and he made a complaint to the management office of the building. There upon he visited the Respondent’s workshop, accompanied by the staff of the management office. He was received by a person, apparent in charge of the operation and maintenance of a large printing machine.  That machine was right in the position above the spot on the ceiling where oil seepage occurred. On the floor there was black machine oil all over. The man explained to Mr. Kong that the oil flowed from the machine when printing was in operation. The man promised him that he would clean up the oil flowing out during the printing process and guaranteed that the seepage problem would be stopped. Despite the promise and guarantee given by the man, the problem did not go away and was getting worse during the following months.  On 20 May 2003, Mr. Kong made a second visit to the workshop, about 12 months after the first, again accompanied by the staff of the management office. This time he could not get in touch with any person who would speak for the 2^nd Respondent. He then left leaving a message for the 2^nd Respondent to contact the Applicant. However no one from the 2^nd Respondent responded to the message to contact him or the Applicant until about 9 July 2003, three days after the Applicant’s solicitors wrote a complaint and warning letter to the 2^nd Respondent, when one Ms Tang rang to say she understood the problem and that the 2^nd Respondent would vacate the flat soon.  The problem persisted and the solicitors wrote another letter in the latter half of August.  Eventually in October, Mr. Kong made another visit, the third one, to the flat and discovered that it was vacant. Through the door he saw its floor blackened in a large area.

9.  The above account of evidence is not a just a summary of what Mr. Kong said in evidence, but practically a recounting of every details of his evidence.  Although his evidence lacks particularity, it is supplemented by photographs and the visual observation of the two expert witnesses of the condition of the Applicant’s flat. One may also be so amazed by the exceptional tolerance on the part of the Applicant that it may lead to doubts whether part of condition of the Applicant’s flat had been pre-existing for quite some time before Mr. Kong first discovered the oil seepage in 2002.  However some people do have exceptional level of tolerance in order to maintain a good neighbour relationship. Further Mr. Kong is only an employee and he might not have had the same motivation as his employer to have the problem rectified promptly.  Ms Yeung is also very fair in not challenging his veracity.  Looking at the totality of evidence I accept his evidence and find him a truthful witness.  Furthermore I find that oil seepages as seen and described by Mr. Kong originated from the lubricating oil spilling to the floor of the 2^nd Respondent’s workshop from its printing machine while in operation.

10.  The building is over 20 years old. There is no evidence as to the state and condition of the waterproofing work in the slab forming the ceiling/floor between the flats of the Applicant and the 1^st Respondent.  The building is an industrial building. Operating a printing workshop in the 1^st Respondent’s flat is within its normal use.   Oil spilling from the printing machine is nothing unusual.   The activities the 2^nd Respondent was carrying on were lawful, activities the 2^nd Respondent was entitled to carry on. The 2^nd Respondent is therefore not liable for the damage that occurred before Mr. Kong’s first visit.  As from then on the 2^nd Respondent cannot be so excused as it has been made aware of the problem and is liable to compensate the loss of the Applicant caused by continuing to allow oil to get to floor of the workshop.

Evidence-expert-quantum

11.  No argument has been raised as to what proprietary right, or as to its extent, that the Applicant has in relation to the ceiling/floor concrete slab between the two flats, one above the other. This concrete slab should be part of the structure of the building. The claim of the Applicant could have been framed in different ways.  The 2^nd Respondent apparently has also injured the structure of the building and has thereby been in breach of clause 10(a). To base the claim on clause 10(a) is not without difficulty. It is the right of the Applicant to choose how to frame its claim in its best interest or to its greatest advantage, with a view to save costs or for some other reasons.

12.  The Applicant has chosen to frame its claim in the present form and it is not without its advantage.  It is simple. The Applicant is entitled not to have its enjoyment of property interfered or inconvenienced. The loss it suffered is, as contended by Ms Saing, represented by the cost of repair. Whether or not compensation awarded would be spent on the repair is irrelevant.

13.  The respective repair projects prescribed by the two experts differ widely.  This is basically due to their difference in opinion as to the quality of the concrete.  Mr. Cheng for the 2^nd Respondent is of the view that the quality of the concrete is not affected. Despite the fact that the total blackened area of the ceiling was very large, oil only seeped through a few small areas.   He explains that when oil seeps through and reaches the surface of the ceiling it would spread sideways to other parts of the ceiling surface causing the blackening in time. He reached his conclusion using the infra-red scanning method to identify the seeping through areas. Tests on the concrete samples taken on trouble spots were performed. I accept that these are objective tests to ascertain the strength of concrete.  Most of the oil stained area in the ceiling only has its surface affected.  The remedial work he recommended is therefore of decorative nature.

14.  Mr. Lee, the Applicant’s expert, is of the view that the quality of concrete is affected. He recommended extensive structural repairs requiring to bore holes right up and through the floor of the 1^st Respondent’s flat above. He confirms that should his project go ahead, it would require the cooperation of the 1^st Respondent.  When he came to his view that the quality of the concrete is affected, he relies heavily on the presence of fatty acids.  In cross-examination, he conceded that process of attack is slow taking some 8 to 10 years. He did not know whether dry fatty acids would attack concrete.  His logic is simply that once oil is dripping from the part of the ceiling, the concrete of that part needs to be re-cast.  He did not have the concrete samples tested for pH value or chlorides. He discounts the reliability of the tests. As in his undated second report, he disagrees with every tests and every findings on the quality of concrete reached by the other expert Mr. Cheng.

15.  Of the two experts’ evidence, I preferred that of Mr. Cheng. He explains his findings coherently and has relied on objective tests as well as visual inspection. In discounting the pH value tests, Mr. Lee does not give a convincing reason. He agrees that pH value can measure the extent of attack of acid on the concrete. Yet he did not perform the test. As to the chlorides test, he thinks it is not useful because the original value is not known.  He entirely misses the point of Mr. Cheng who is giving opinion on the quality of the concrete as it is, not by what extent it has been affected. As to other tests and methods employed by Mr. Lee, he discounted them merely by citing their short- comings. Of course, every test, no matter how good it is, there must be short-comings or limits but these are not reasons for not using them. Mr. Lee does not suggest what better tests should be done, nor has he performed any such tests. When he took samples of concrete for tests. One sample does not produce the expected result.  He explained that the worker taking the sample must have contaminated it. However the sample must have been taken under his supervision and he offers no elaboration on how contamination could have happened.  He places emphasis on the presence of fatty acids in reaching his conclusion. In the course of his argument he cited a passage in a text book in Appendix 8 in support. On closer reading of the text book, the passage relates to the time of casting the concrete, and precautions that should be taken at the time, i.e. when the concrete is still wet. Bonding between steel and concrete only sets in when the concrete dries.  He admits this. It is a different situation that we are dealing with. The bonding has already set in and we are concerned about how a bonding already set in would be weakened. All these tend to show that Mr. Lee is too anxious to defend his  opinion and runs into the error of being too critical of his counter-part without any justification. For all these reasons, I prefer the opinion of Mr. Cheng.

Conclusion

16.  The Applicant has settled the claim with 1^st Respondent for $10,000.  The claim against 1^st Respondent is not exactly the same as that against the 2^nd Respondent. The amount claimed against the 2^nd Respondent is the repair costs which does not take into account other losses, say, inconvenience during the whole year and before the 2^nd Respondent is made aware of the problem.  Therefore it should only be fair that this $10,000 should not be set off from the award which I now make, namely, $50,000 as estimated by Mr. Cheng.  I will not make the usual order nisi for costs as parties have indicated they wish to be heard on costs.