POWER COLOR SCANNING & LITHOGRAPHICS CO LTD v. KAM KONG FOOD FACTORY (A FIRM)

DCCJ 3902/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3902 OF 2007

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BETWEEN

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JUDGMENT

Background

1.  The Plaintiff ("Power Color") purchased a brand new digital printing machine ("Machine") and had it installed in its premises at Flat A on the 2nd floor of Sunrise Industrial Building ("Building") in Chai Wan ("Flat 2A"). On 1 December 2006, the Machine was undergoing a test run with engineers and representatives of Power Color present at Flat 2A, when water began to drip from the ceiling of Flat 2A into the Machine, the top cover of which had been left open in the course of the installation and test run. As a result, sensitive parts of the Machines were damaged by water. Power Color commenced these proceedings against the Defendant ("Kam Kong"), which was the occupier of the flat above Flat 2A ("Flat 3A"), to recover damages which Power Color claims it has sustained as a result of Kam Kong's nuisance or negligence in permitting water to escape from Flat 3A into the ceiling of Flat 2A.

2.  It is not disputed that Power Color operates a printing business in Flat 2A, where sophisticated printing machines were placed. A part of Flat 2A was used as an office. Flat 3A was used by Kam Kong for storage, but it is not disputed that workers carried out cleaning, washing and laundry activities within Flat 3A, where at least one washing machine and a washbasin were situated.

Issues

3.  The agreed issues for determination at trial are :

(1)        What was the cause of the water leakage in Flat 2A on 1 December 2006?

(2)        Is Kam Kong liable to Power Color?

(3)        Was Power Color contributorily negligent?

(4)        Did Power Color fail to mitigate its damage?

(5)        What is the quantum of damages for which Kam Kong is liable (if any)?

What was the cause of the water leakage in Flat 2A on 1 December 2006?

4.  According to the evidence of Mdm. Chan of Power Color, who was present at Flat 2A at the time of the incident, she was told of the water leakage by her staff some time around 12:45pm. She saw water dripping from the ceiling into the components of the Machine. Mdm. Chan immediately reported the incident to the management office of the Building, and went up to Flat 3A with Mr. Chan of the management office in order to investigate.

5.  According to Mdm. Chan, when they arrived at Flat 3A, she could see that Flat 3A was flooded with water. She saw goods piled up, a washing machine and a large bucket. There were many people removing the water in Flat 3A with shovels.

6.  Mr. Chan of the Building management took photographs of Flat 2A and of Flat 3A on 1 December 2006. Mr. Chan also prepared a report of the incident by a Memorandum issued to the Building management on 1 December 2006 ("Memorandum"). According to the Memorandum, Mr. Chan received a call from Flat 2A at about 12:30 regarding the dripping of water from the ceiling. Mr. Chan recorded that he had gone to Flat 3A immediately, where he saw workers busy removing water, and according to Mr. Chan, the water leakage was caused by a burst fresh water supply rubber hose in Flat 3A, and that the water affected the ceiling of Flat 2A, causing water to drip into the Machine.

7.  Mdm. Chan reported the incident to her insurers immediately after the incident, and a loss adjuster carried out an investigation on the same day of the incident. Mr. Choi, the loss adjuster, attended Flat 2A in the afternoon of 1 December 2006, at about 4 pm. He also went to Flat 3A, and took photographs there. According to Mr. Choi's evidence, he was informed by workers at Flat 3A that they had left the premises for lunch at approximately 12 pm, and when they returned about 20 minutes later, sections of Flat 3A were flooded with water. According to the workers at Flat 3A, their investigations had revealed that a metal nozzle of a rubber hose had detached from the hose, the hose was connected to a water tap which had been turned on, and this had caused water from the hose to flood Flat 3A.

8.  In November 2007, Power Color instructed Mr. Michael Mann to prepare an expert report on the cause of the water leakage. As this was nearly a year after the incident, Mr. Mann did not carry out an inspection of Flat 3A. Kam Kong challenged Mr. Mann's report and findings on the basis that he had failed to inspect the ceiling above the Machine, and in particular a patch on the ceiling (as can be seen in the photographs appearing on page 240 of the trial bundle) ("Patch"), which Kam Kong claims shows that the ceiling of Flat 2A may have been defective, and that the defective Patch may have been the cause of the leakage of water into the Machine. Further, Kam Kong challenges Mr. Mann's report on the basis that he had not conducted any tests at either Flat 3A or Flat 2A before concluding that the source of the water leakage into Flat 2A is the flooding within Flat 3A.

9.  The concrete ceiling of Flat 2A was covered by a false ceiling. The Machine was high and very large in size, such that its top part protruded into the false ceiling. Despite the fact that Mr. Mann had not carried out any inspection at Flat 3A, nor conducted any tests at Flat 2A and Flat 3A, nor performed any detailed inspection of the Patch in the ceiling of Flat 2A, Mr. Mann remained convinced that the water which escaped through the ceiling of Flat 2A was caused by the flooding of Flat 3A on 1 December 2006. The timing of the leakage from the ceiling was roughly the same time as the floor of Flat 3A becoming flooded with water which escaped from the hose. Mr. Mann's evidence is that having considered the photographs produced by Mr. Chan and the photographs attached to the loss adjuster's report, he was of the opinion that there is no possibility that water had seeped into Flat 2A from any other source. He referred to the evidence from the Hong Kong Observatory that there had been no rainfall for some days before the incident, that there were 8.8 hours of bright sunshine with no rainfall on 1 December 2006, and that the only record of rainfall was 7 mm on 27 November 2006. According to Mr. Mann, there was no evidence of water seepage on the internal finishes to the wall and ceiling of Flat 2A, which were in good condition, and this led him to eliminate rainwater as a source of leakage into either Flat 3A or Flat 2A.

10.  Mr. Mann accepted that he had not inspected the Patch, and could not say for certain how the Patch came by. On being cross-examined, Mr. Mann's evidence is that from the photographs and the compact disc recording produced for the trial, he considered that the Patch may have been the result of something having been removed from the ceiling and the ceiling being made good afterwards, thus producing a uniform patch, which did not suggest a "repair patch" to him. According to Mr. Mann, the rest of the ceiling which he had seen appeared to him to be in a good condition.

11.  Mr. Mann also referred in his evidence to a photograph taken by the loss adjuster at Flat 3A on 1 December 2006 (photograph 6 on page 230 of the trial bundle) which indicates a dark patch on the floor of Flat 3A, suggesting an area of dampness which remained in a part of the floor in Flat 3A when the rest of the floor had by that time dried out in the afternoon of 1 December 2006. The area corresponds to the part of the ceiling in Flat 2A where the leakage occurred. According to Mr. Mann, the remaining damp area indicates that the concrete in the floor slab in Flat 3A was defective.

12.  It is clearly established in Cheung Sau Ling v. Cheng Lai Chong CACV 268/1998 unreported, 9 April 1999 that the burden is on a plaintiff to show that water seepage into its premises originated from the defendant's premises. As in any other case, the Court has to be satisfied, on a balance of convenience, from the evidence adduced by a plaintiff that the source or cause of the water seepage in its premises is the defendant's premises or some negligence or fault of the defendant. The Court may be (and usually is) assisted by expert evidence, if necessary.

13.  From all the evidence available in this case, I am satisfied on a balance of probabilities that the seepage of water into the ceiling of Flat 2A was caused by the flooding which occurred within Flat 3A. I can find no evidence which casts doubt on this source.

14.  I accept, from the evidence of Mdm. Chan and Mr. Mann, Mr. Chan's Memorandum, Mr. Choi's report, and the evidence of Kam Kong's Mr. Wong himself, that the flooding within Flat 3A was caused as a result of the workers leaving the water tap on when they left for lunch, and the fact of the metal pipe fastener having become loosened from the metal nozzle, which led to water escaping from the rubber hose. Mr. Wong himself admitted in his evidence that his workers had left the water tap on, and that according to his workers' report to him, the metal pipe fastener had become loosened. It cannot be disputed that Flat 3A had been flooded as a result. The photographs taken on the day of the incident show the condition of the part of Flat 3A which was flooded, and the workers in the flat working to clean up and remove the water which had accumulated. From Mr. Mann 's evidence, it seems to me that, on a balance of probabilities, it is unlikely that rain water can be a source of the seepage into Flat 2A

Is Kam Kong liable to Power Color?

15.  Counsel for Power Color emphasizes that Power Color's claim in nuisance is based upon Kam Kong's unreasonable user of Flat 3A in permitting water to run unabated from the tap and causing the accumulation of water on its floor slab. I agree with Counsel that an isolated incident of flooding is sufficient to constitute an actionable nuisance (Clerk & Lindsell para 20-16). As such, it has been stressed by Counsel for Power Color that it is not necessary for there to be any "fault" on the part of Kam Kong before its liability in nuisance is established.

16.  To the extent that negligence is required, I am perfectly satisfied from the evidence that Kam Kong's workers were negligent in leaving the water tap in Flat 3A on and running during the time when their workers had left Flat 3A for lunch, such that water was permitted to overflow onto the floor and accumulate to cause flooding to occur within Flat 3A. Whether this was due to the metal pipe fastener having become loosened by wear and tear or by improper use, the fact remains that Kam Kong's workers were negligent in permitting the water tap to be left on and unsupervised. The fact that the pipe fastener had been permitted to become loosened increased the risk of water escaping and overflowing, and is further evidence of Kam Kong's negligence.

17.  It is not in dispute between the parties that in 2005, there was an earlier incident of a burst of a rubber hose leading to the washing machine in Flat 3A, which caused a flooding of Flat 3A during the lunch hour, and that as a result, Power Color had complained to Kam Kong that water had dripped from the ceiling of Flat 2A. It is hence reasonably foreseeable to Power Color that flooding of the floor of Flat 3A would lead to water seepage from the ceiling of Flat 2A.

18.  I am satisfied that due to Kam Kong's negligence, water had been permitted to accumulate within Flat 3A, leading to its escape from Flat 3A through the floor slab into the ceiling of Flat 2A. On this basis, Kam Kong is clearly liable to Power Color in nuisance, or negligence.

Was Power Color contributorily negligent?

19.  Counsel for Kam Kong argued that Power Color's damage was partly caused by its own fault or negligence. First, it is claimed that Power Color was wrongfully using Flat 2A, when the Building is specified under its Deed of Mutual Covenant to be limited to industrial and godown use. Further, it is claimed that Power Color was negligent in placing the Machine under the Patch which was defective, or negligently maintained, and that Power Color should have known or foreseen that water may leak from the Patch, since there was an earlier incident of water seepage from the ceiling of Flat 2A in 2005. Finally, it is claimed that Power Color was negligent in failing to take adequate measures to guard the Machine against water damage.

20.  I accept Mdm. Chan's evidence that Flat 2A was used for the business of industrial printing, and fail to see how this constitutes wrongful user of the premises under the Deed of Mutual Covenant. I also agree with Counsel for Power Color that it is no defence for Kam Kong to say that it was not known, or could not be foreseen that an expensive and sensitive printing machine such as the Machine would be placed within Flat 2A by virtue of Power Color's type of use of its premises.

21.  With regard to the Patch, I cannot be satisfied on the available evidence that it is evidence of defect in the ceiling of Flat 2A. Mr. Mann does not agree that it is. According to Mr. Mann, even if the Patch was evidence of any defect in the ceiling of Flat 2A, water would not have leaked into Flat 2A and into the Machine but for the wrongful accumulation of water in Flat 3A and its escape through the defective floor slab, as evidenced by the dark and damp patch on the floor in Flat 3A directly above. Mr. Mann also considered that if water accumulated on the floor slab in Flat 3A, the water will eventually find its way and leak into the ceiling of Flat 2A even if the ceiling is not defective.

22.  Mdm. Chan claims that there had not been any incident of repair being required or undertaken for the ceiling or the area of the Patch. Her evidence is that she was only made aware of the Patch in these proceedings.

23.  Mdm. Chan's evidence is that the location of the water seepage in 2005 was very near to the location of the seepage in 2006 at the Patch. She claims that the 2 areas were in the vicinity of and very close to each other, but involved 2 different spots in the ceiling. However she was adamant that the water seepage incident in 2005 was very minor, and did not cause any damage to Power Color. She and her husband had therefore both forgotten about the earlier incident of leakage in 2005, which was why the earlier leakage was not mentioned to the engineers when the location of the Machine was decided upon for installation.

24.  According to Mdm. Chan, the Machine was very big and leveling work was required for the area where the Machine was to be placed. Due to the size of the Machine and the limited available space within Flat 2A, Power Color had no other option but to place the Machine in the location where it was, and an office had to be removed for the purpose.

25.  Mr. Wong himself accepts that the incident of water leaking from the floor of Flat 3A into the ceiling of Flat 2A in 2005 was very minor, and that on that occasion, Mdm. Chan had asked him to pay more attention and not to let the incident happen again. Besides the minor leakage incident in 2005, there is no other evidence of the ceiling of Flat 2A being defective or in need of repair before December 2006. The minor incident in 2005 did not reasonably cause Mdm. Chan to be concerned about the state of the ceiling, as the 2005 incident would only suggest that the leakage into Flat 2A was the result of an unusual and unnatural flooding of Flat 3A, and that in reasonable circumstances, such flooding would not occur or repeat itself.

26.  Overall, it does not appear to me from the available evidence that the Patch itself would be sufficient to suggest to a reasonable man that the area of the ceiling in its vicinity was defective. I therefore do not regard Power Color to be negligent in placing the Machine under the Patch, or in failing to carry out additional work to the ceiling or to take preventive steps to avoid seepage of water from the ceiling into the Machine. I agree with Mr. Mann and Mdm. Chan that in normal circumstances, an occupier would not expect water to leak from the ceiling of a flat not exposed to the elements.

27.  On the evidence, the top cover of the Machine was not put in place at the material time because the engineers and Power Color were undergoing a trial run of the Machine. I am satisfied that it is not reasonably foreseeable that in the course of the trial run, water would leak from the ceiling above into the Machine and come into contact with the sensitive parts and components.

28.  Again, I accept that it is no defence for Kam Kong to say that Power Color "came to the nuisance" by choosing to install the expensive and sensitive Machine immediately below the Patch or Kam Kong's floor slab (Clerk & Lindsell, para 20-89; Miller v. Jackson [1977] QB 966; Watson v. Croft [2008] 3 All ER 1171).

29.  Overall, even if contributory negligence should be relevant to the claim of nuisance, I am not satisfied that any contributory negligence on Power Color's part has been established by Kam Kong.

Did Power Color fail to mitigate its damage?

30.  Immediately after discovery of the water leakage, Power Color had reported the matter to the Building management. Mdm. Chan had also immediately gone to Flat 3A to identify the source of the leakage and to bring the matter to the attention of Kam Kong.

31.  According to the evidence, Power Color's staff had placed large pieces of paper, plastic bags or sheets and a bin on the Machine to protect the top part of the Machine as soon as they found water leaking from the ceiling.

32.  The Machine could not be moved because of its large size, and because there was no available space within Flat 2A.

33.  In the circumstances of the case, I consider that Power Color had already taken adequate and reasonable steps to minimise its damage.

What is the quantum of damages for which Kam Kong is liable?

34.  Power Color's claim for damages is the sum of $625,884, as supported by the invoices, quotations and receipts produced at trial. This sum represents the cost of replacing the parts of the Machine which were damaged by water, and the labour charges incurred for repairs, with adjustments made by the loss adjusters. I find no evidence to show that any of the repair work and any item of replacement is unnecessary, unreasonable or excessive.

35.  On the evidence adduced, Power Color's loss adjusters had notified Kam Kong of Power Color's claim for damages as early as 2 December 2006, when they wrote to Kam Kong in relation to the leakage incident and advised Kam Kong to notify their insurers in order to carry out their investigations. The amount of the claim was also notified to Kam Kong by the loss adjusters' letter of 4 January 2007. Power Color finally informed Kam Kong on 15 January 2007 that repair works to the Machine would be conducted on 15 and 16 January 2007, and invited Kam Kong to arrange for inspection of the Machine and the spare parts. The damaged parts were retained for Kam Kong's inspection, but despite such notification, Kam Kong failed to carry out any inspection.

36.  In all these circumstances, it is not open to Kam Kong in my judgment to complain that it had not been given adequate opportunity to investigate and challenge Power Color's claim for damages, and I allow the claim in full.

Award

37.  I allow Power Color's claim of $625,884, with interest at judgment rate from the date of service of the Writ until payment.

38.  Kam Kong is to pay to Power Color the costs of the action, to be taxed if not agreed, with certificate for counsel. I will make such a costs order nisi, to be made absolute within 14 days.