McDONALD's RESTAURANTS (HONG KONG) LTD. and Another v. LEE MEE HUA

IN THE COURT OF APPEAL

1993, No. 183
(Civil)

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J U D G M E N T

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Bokhary, J.A.:

1. This case concerns events on February 1, 2 and 3, 1990, at a "fastfood" restaurant operated by the plaintiff ("McDonald's") in premises owned by it on the ground floor of Sing Shing Building at 102 Wo Yi Hop Road in Kwai Chung.

2. On each of those three days, foul-smelling water escaped into the restaurant, damaging its fittings.

3. McDonald's sued the incorporated owners of the building as the 1st defendant and the owner of Unit 4 on the 2nd floor, Madam Lee Mee Hua, as the 2nd defendant. The claim was for special damages in the sum of $222, 920.00 plus interest and costs. That sum is, as pleaded, made up of $219,060.00 for the repair and replacement of fittings and $3,860.00 for an additional drainpipe.

4. It is McDonald's case, as one sees from paragraph 14 of its Statement of Claim, that the escape of water into its restaurant had been "caused by a blockage and/or leakage in the galvanised iron pipes extending across the floor of the balcony of" Madam Lee's unit. That balcony is directly above the point at which water escaped into the restaurant.

5. Godfrey J, who tried the case and dismissed the claim, held: (i) that the water or at least most of the water which escaped into the restaurant had come from a toilet bowl in Madam Lee's unit which over-flowed because occupants of the building had flushed into its waste-water system objects for which it was not intended; and (ii) that neither defendant could be held responsible for those activities or their consequences.

6. It was on July 21, 1993, that the judge gave judgment dismissing the claim. And it was on November 18, 1994, that McDonald's appeal against that judgment was first called on. But on that day, McDonald's, not having prepared the necessary bundles of documents, sought an adjournment, which was granted with costs to the incorporated owners and Madam Lee.

7. The resumed hearing of the appeal took place this morning.

8. McDonald's attack upon the judge's judgment is directed mainly to his findings as to how water came to escape into its restaurant.

9. Those findings are contained in five paragraphs of the judge's judgment. It is appropriate to set out those paragraphs in full. They read:-

" In 1988, when [McDonald's] went into occupation of its premises, it did some work on the exterior of the building, including the pipework, the exact details of which were not in evidence. At about the same time the 1st defendant decided on some repairs to the pipework. The building had been built around 1973. The galvanized iron pipes were in places rusty and corroded. It was thought they were in need of replacement. The trend at the time was to replace such pipes with polyvinyl chloride (PVC) piping. A decision to do this was taken. It was possible without any great difficulty to replace the pipework from the top of the building down to the 3rd floor. But from the 2nd floor there was a difficulty, because the pipe then went at horizontal level for a stretch of its run across a balcony to another pipe leading to the lower level. Difficulties arose in persuading the occupants at the 2nd floor level to allow access to the balcony, on which all or most of them had erected various sorts of illegal structure. As a result, the new pipework was carried down to the 3rd floor but the galvanized iron piping was left in position at the horizontal level. The PVC piping was resumed again at the end of the run of the horizontal piping.

I cannot think this was at all a satisfactory way of carrying into effect the proposal for renewal of the pipework. It is obviously fraught with the risk that, at the joints, difficulties might arise which could have been avoided if there had been a continuous run of pipework in the same material. To leave in place as part of a pipework system, consisting mainly of PVC, stretches of horizontal galvanized iron piping some 15 to 20 years old cannot be desirable. But when I put these points to [McDonald's] witness, Mr Harris Choi, he did not, as I understood him, regard these defects as necessarily fatal to the proper operation of the system. And I am satisied that this is not what caused the problem.

What did go wrong was that on 1st February 1990 a blockage occurred, towards the end of the run of horizontal piping, which was caused by flushing into the waste water system objects for which it was not intended. It is all too common in a building like this to find people flushing down the lavatory articles which should really to be disposed of in another way. Abuse of this sort causes blockages to occur. That is what happened here.

The blockage manifested itself when the toilet bowl in [Madam Lee's] premises overflowed. The waste had been forced back from the blockage. It had backed up through the pipe and escaped through the toilet bowl. Water finds a way out at the weakest point. If the galvanized iron pipe had been so unsatisfactory as [McDonald's] suggested, the waste water would never have backed up as far as the toilet bowl. But it did. Accordingly, I am not satisfied that the state of the galvanized iron piping was the cause of the problem which arose here.

On the contrary, I am satisfied that the problem which arose was due to the blockage to which I have referred and the consequent backing up of water coming eventually out of the toilet bowl. The flooding which resulted included no doubt, some additional escape due to leakage when the galvanized iron piping was subjected to this unusual treatment because of the blockage."

10. Unfortunately, the judge did not indicate the evidence on which he found those facts.

11. Mr Chan Tsang, the chairman of the incorporated owners whom the judge permitted to represent its interests, went into the witness-box at the trial. He spoke about the observations and activities of a caretaker. But what he said thereon is mere hearsay. He said, to quote the judge's notes, that the "blockages were caused by people throwing things down the toilets". But that appears to be mere surmise on his part.

12. Madam Lee also went into the witness-box at the trial. She said that her tenant had telephoned her complaining of the backing up of foul water. That too is mere hearsay.

13. What evidence (as opposed to hearsay) there was came from an expert called by McDonald's, namely Mr Harris Choi of Brocklehursts (Far East) Ltd who are loss adjusters.

14. Mr Choi went to Madam Lee's unit on February 6, 1990, to conduct an inspection. He described what he saw: the pipes running along the balcony were badly corroded; the drainage hole was blocked by waste material; water was leaking from the pipes at various spots; and the floor of the balcony was wet. He gave it as his expert opinion that the water which escaped into the restaurant had come from the balcony after escaping from the corroded pipes on to the balcony.

15. It was open to the judge to treat the expert as unreliable in what he said. But the judge did not do that. Rather, he took the expert as being of the opinion that the defect of having corroded pipes was not necessarily fatal to the proper operation of the system. The record does not support the notion that the expert held or expressed as any such opinion.

16. At the same time, however, we have to face the fact that the record is in a far from satisfactory state.

17. The trial took place at a time when the system for recording the evidence given in a civil trial in the High Court was not what it is today.

18. Plainly, the judge's notes are extremely sketchy. The notes kept by McDonald's counsel and those kept by her instructing solicitors are better but still far from full. And the judge has not adopted them, leaving us to make what we would of them.

19. We are unable to uphold the judge's finding as to cause of the escape of water into the restaurant. But can we go on to find that such escape was caused in the way McDonald's contends?

20. If it was, then there would seem to be a proper basis ( we say no more than "seem to be" ( for holding both defendants liable to McDonald's and, as between themselves, equally to blame.

21. We are naturally reluctant in the extreme to order a new trial. But have we any other choice?

22. Certainly, we are unable, on any view as to liability, to enter judgment for McDonald's for damages as claimed.

23. That is so for this reason. The judge said that McDonald's had "suffered considerable loss". But he made no assessment of damages in case he was wrong on liability. And, in truth, he could not have made any such assessment. There was no admissible evidence on which he could have done so. That assessment was, as we understand McDonald's counsel, due to the fact that McDonald's legal advisers thought that there was "no real dispute as to damages". But the fact remains that the amount of damages was neither admitted nor proved.

24. So even if, in the interest of finality, we were to take so robust a view as to decide liability in favour of McDonald's on the present unsatisfactory state of the evidence and of the record, still the matter would have to go back for an assessment of damages before a Master. It would have to unless we were simply to enter judgment for McDonald's for nominal damages only. But that would be too rough a form of justice: too rough to McDonald's.

25. Now, when one sees that the matter cannot in any event end today, our reluctance to order a new trial must necessarily diminish.

26. If a new trial were ordered, the incorporated owners and Madam Lee would be in a position to call first-hand evidence as opposed to give mere hearsay. Where necessary, they could subpoena the desired witness or witnesses. We are sure that if the judge had not thought that they could succeed without such evidence, he would have assisted these litigants in person by pointing out the need for first-hand evidence and by explaining the process by which the same could be secured.

27. Having to order a new trial is most unfortunate. But in the extraordinary circumstances of the present case, it is the least of a number of evils. The judge misdirected himself as to the proper approach to this matter; and justice requires a new trial so that the matter may be approached afresh and correctly.

Accordingly, we allow the appeal, set aside the judge's order, and order a new trial.