HUI TUNG v. WORLD WIN CONSULTANTS LTD

CACV 136/2022

[2023] HKCA 442

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 136 OF 2022

(ON APPEAL FROM DCCJ 428 OF 2021)

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REASONS FOR JUDGMENT

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Hon Cheung JA (giving the Reasons for Judgment of the Court) :

I.  Introduction

1.  Deputy District Court Judge Tracy Chan dismissed the plaintiff’s application for summary judgment under Order 14 of the Rules of the District Court (‘RDC’) against the defendant and ordered the costs of the application to be in the cause of the action. The defendant was dissatisfied with the costs order and sought leave to appeal. Pursuant to leave granted by the Judge, we heard the appeal and allowed the appeal. We ordered the costs of the application below and the appeal to be taxed and paid to the defendant by the plaintiff forthwith together with a certificate for counsel. We now give reasons for our judgment. There are undertakings given by the plaintiff’s solicitors on costs which will be elaborated below.

II.  The Order 14 application

2.  The plaintiff and the defendant are the owners of two adjacent flats in a multi‑ storey building in Hanoi Road, Tsim Sha Tsui known as the Masterpiece, K11 (‘the Building’). The plaintiff complained that water from the washroom of the defendant’s flat (‘Unit H’) had seeped through a hollow wall and floor tiles to the plaintiff’s flat (‘Unit J’) at the area of the corridor near the main entrance of Unit J. The seepage caused, inter alia, the skirting of a wall at Unit J to be moist and wet.

3.  The Plaintiff pleaded that :

‘ 14. The defendant was negligent and/or in breach of its duties by :

Particulars of negligence and/or in breach

(a)  Failing to make good, repair the hollow wall and floor tiles on the washroom of Unit H in question;

(b)  Failing to competently and properly maintain the Wall;

(c)  Failing to prevent water seeping through the Wall to Unit J;

(d)  Continuing allow water to seep through the Wall to Unit J; and

(e)  Failing to comply with the obligations between owners under the DMC.

15.  By reasons of the aforesaid negligence and/or breach of the Defendant, the Plaintiff suffered losses and damage.’

4.  The plaintiff pleaded that he had instructed a building surveyor to ascertain the cause and the source of the water seepage problem. A report was obtained and the plaintiff pleaded that in the report ‘it is analysed that the water seepage problem in question is highly likely caused by hollow wall and floor tiles on the washroom of Unit H. Hence, it is necessary for the defendant to carry out necessary remedial and repair works to the said hollow wall and floor tiles on the washroom of Unit H as per the suggestions made in the report in order to tackle and address the said water seepage problem.’

5.  He claimed against the defendant for, inter alia,

1)  An order ‘to carry out necessary remedial works as per the suggestions set out in the report to stop the water leakage problem’; and

2)  Damages.

6.  The defendant filed its defence. It made no admission to the cause of the alleged water seepage or that the water seepage caused the skirting of the wall to be moist and wet. It further pleaded reasonable steps had been taken by it to address the complaint of the plaintiff including engaging a contractor to carry out ‘a colour water ponding test’ of the two units. The result was that no seepage of the coloured water was found.

7.  After the defence was filed on 27 May 2021 the plaintiff issued his summons for summary judgment on 22 June 2021. He asked for

1)  final judgment against the defendant by ‘ordering the defendant to forthwith carry out all the remedial works recommended to the defendant and particularized in the report for stopping the seepage in Unit J caused by water from Unit H’; and

2)  interlocutory judgment on liability to be entered against the defendant ‘with damages caused to Unit J by the water escaped from Unit H to be assessed’.

8.  After the service of the summons, the defendant amended its defence on 15 September 2021. It further pleaded that the area between the Unit H washroom and the Unit J entrance is the residential common area of the Building. That area housed a duct containing fresh water supply pipes that run vertically and adjacent to the Unit H washroom. The water pipes are part of the residential common facilities of the Building. The duty to maintain these common area and common facilities lies with the manager of the Building under the Building’s Deed of Mutual Covenant. The defendant pleaded that the plaintiff’s surveyor report ‘does not properly or adequately address the possibility that the cause of the water seepage was from the water pipes and from the common area.’ It further pleaded, inter alia, that the plaintiff’s claim discloses no reasonable cause of action. The plaintiff joined issue by filing an Amended Reply to the Amended Defence on 4 October 2021.

9.  This was the state of the parties’ pleadings when the Order 14 summons was heard by the Judge on 15 November 2021. Not surprisingly the Judge dismissed the application for summary judgment.

III.  Our view

1)  Costs order on dismissal of an Order 14 summons

10.  How costs are to be awarded is a matter within the discretion of the Court. However, where an Order 14 summons is dismissed, in contrast with the Court granting unconditional leave to defend, the usual costs order is costs to the defendant and in appropriate cases, such costs to be paid forthwith. The Court may dismiss the summons either 1) where the case is not within the Order or 2) where the plaintiff knew, before the issue of the summons, that the defendant was relying on an arguable defence. This is expressly provided for by Order 14, rule 7 :

‘ 7.—(1) If the plaintiff makes an application under rule 1 where the case is not within this Order or if it appears to the Court that the plaintiff knew that the defendant relied on a contention which would entitle him to unconditional leave to defend, then, without prejudice to Order 62 and in particular to rule 4(1) thereof, the Court may dismiss the application with costs and may require the costs to be paid by him forthwith.’

11.  As Hong Kong Civil Practice 2023 [14/7/1] observed, the Court would have had this power, even without the express powers.

12.  Whether the plaintiff knew, before the issue of the Order 14 summons, that the defendant was relying on an arguable defence is to be determined by considering all the circumstances of the case, including, inter alia, the state of the pleadings. Water leakage or seepage in a multi‑storey building is a notoriously common problem in Hong Kong. In the absence of a clear and simple case, the cause of the water problem is to be proved by way of factual and expert evidence. In this case the defendant had made no admissions in its defence to the plaintiff’s claim and put the plaintiff to strict proof. It further pleaded the negative result of the colour water ponding test which is commonly used to ascertain the source of water leakage and seepage. The plaintiff’s own pleading merely pleaded that it is ‘highly likely’ that the water seepage was caused by the defendant. We are of the view that this being the position when the Order 14 was issued, the plaintiff knew that the case was not suitable for summary judgment. Whether the defendant was negligent in causing the water seepage was clearly a triable issue. What made the situation worse is the fact that the plaintiff still pursued the application after the Amended Defence was filed. The additional issue raised by the defendant that the source of seepage might have occurred at the common area from the common facilities further made the case plainly unsuitable for summary judgment. Instead the Order 14 summons was doggedly pursued by the plaintiff.

13.  Ms Leung for the plaintiff (who did not appear below) did not seek to defend the costs order of the Judge. She accepted that the discretion was wrongly exercised by the Judge which entitles this Court to exercise the discretion afresh. However, the appeal was not conceded and it was argued that the departure from the usual costs order was justified because the Judge had taken a dim view of the defence when she held that ‘I do not agree that the plaintiff has made out a claim which could stand on his own feet at this stage.’ The plaintiff also relied on an open offer that had been made by the plaintiff to vary the costs order below to that of ‘defendant’s costs in the cause’ which was rejected by the defendant. The plaintiff submitted that the defendant rejected the offer because it has no confidence in successfully defending the plaintiff’s claim at trial. We do not see how the Judge said would support a departure from the usual costs order in this case. We further do not see any justification for the suggested costs order. The only appropriate order is to order the plaintiff to be responsible for the costs as we have indicated above.

2)  Undertaking by the plaintiff’s solicitors

14.  We were originally minded to pursue a wasted costs order inquiry against the plaintiff’s lawyers for their role in pursuing the Order 14 summons and in resisting the appeal but it was not necessary for us to do so because of the following undertakings given by the plaintiff’s solicitors, namely that, 1) they will personally pay the defendant the costs that we have ordered against the plaintiff; 2) they will not charge the plaintiff for the costs incurred here and below and 3) they will inform the plaintiff of their undertakings by letter with a copy to the Court within seven days.