CHIM KWAN WO v. THE INCORPORATED OWNERS OF PEONY HOUSE EAST BLOCK

DCCJ 5125/2016

[2020] HKDC 111

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5125 OF 2016

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JUDGMENT

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Background

1.  The plaintiff is the registered owner of Flat 12, Ground Floor (“Flat 12”) & Cockloft (the “Cockloft”), Peony House East Block, Nos 1-7 Pok Man Street, Nos 27-37 Tai Kok Tsui Road & Nos 2-6 Foo Kwai Street, Kowloon (together, the “Premises”).  There is no dispute that:-

(1)  The plaintiff acquired the Premises on 5 March 2013.

(2)  The defendant was incorporated and registered under the Multi-Storey Buildings (Owners Incorporation) Ordinance (the predecessor of the Building Management Ordinance Cap 344 (the “BMO”)) for the management of the common parts of Peony House East Block.

(3)  Between 5 March 2013 to 9 April 2016, the plaintiff was the occupier of the Premises.

(4)  The Premises were let to Tom Soup Limited pursuant to a tenancy agreement dated 31March 2016 from 10 April 2016.

(5)  Immediately above the Cockloft is the flat roof which belongs to the common parts of Peony House East Block (the “Flat Roof”).

(6)  A Deed of Mutual Covenant dated 23 May 1974 in relation to Peony House East Block was registered in the Land Registry by Memorial No UB 1086094 (the “DMC”).

The plaintiff’s case

2.  The plaintiff’s case is that he discovered a water leakage problem in the Premises since April 2015.  The plaintiff says that water escaped from the Flat Roof to the floor slab and subsequently leaked and/or seeped into the ceiling of the Cockloft.  The Premises were thus damaged by such water leakage. The plaintiff said that the defendant had breached its duty under the DMC to maintain the Flat Roof, which was part of the common area. 

3.  The plaintiff engaged an expert to do an expert report on whether there was water leakage, and if so, the cause of the water leakage.  The plaintiff also gave oral evidence himself to the following effect:-

(1)  He first made oral complaints to the caretaker on duty in the management office in April 2015.  He then followed up with a letter to the management. During cross-examination, he agreed that he did not have a copy of the letter and he had not mentioned about this letter in his witness statement or pleadings.  His explanation was that he did not think it was useful as management said they had not received it.  He did not follow up after that until April 2016.  The plaintiff’s explanation was that he had put up with the leakage problem as it only affected the Premises when there was rain, and did not affect the Premises when there was no rain.

(2)  On 22 April 2016, the plaintiff received complaints from the tenant about water leakage.  He immediately arranged his manager to inspect and complain to the management office.  Soon after that, a staff from the Buildings Department (the “BD”) had inspected the Premises and issued a letter dated 29 April 2016 informing the registered owner of Flat 12 that there were cracks and loose plaster on the ceiling of Flat 12 and the Cockloft.

(3)  On 4 May 2016, there was a joint inspection between the plaintiff, a representative from the Food and Environmental Hygiene Department (the “FEHD”) and Ms Tam, the chairman of the defendant.  The plaintiff agreed that there was no prior arrangement with Ms Tam to be present, but it just so happened that she was there.

(4)  A letter dated 10 May 2016 from the Joint Office of the BD and the FEHD recorded the inspection on 4 May 2016 and it was their conclusion that the water leakage was caused by rain leakage from the Flat Roof.

(5)  No reply or action was forthcoming from the defendant.  Meanwhile, the leakage problem continued to worsen.  The plaintiff then instructed his solicitors to issue a letter dated 13 September 2016 to the defendant requesting the remedy of the leakage problem, failing which they would commence legal proceedings.

(6)  The present proceedings were commenced by the plaintiff on 25 October 2016 to claim for damages suffered by reason of the water leakage in the Premises.

The defendant’s case

4.  The defendant puts the plaintiff on strict proof.  Further, the defendant says the plaintiff never complained and the defendant did not have notice of the complaint until 4 May 2016.  This argument was run in order to defeat the plaintiff’s claim to general damages, as the plaintiff was no longer the occupier after the Premises were rented out to Tom Soup Limited in April 2016 and is not entitled to general damages thereafter. 

5.  The defendant also alleges that questionnaires were delivered to the Premises to ask if any defect needed to be fixed, but the plaintiff never reported any defect.  Leaving aside the fact that the plaintiff said he never received these questionnaires, I consider these to be red-herrings and irrelevant to the resolution of the present disputes.  First of all, in the present case, the defect is alleged to be in the common area.  However, the first questionnaire dated December 2015 was in relation to private works and is thus irrelevant.    The second questionnaire was dated October 2016; this was months after the plaintiff had complained to the defendant about the water leakage and is thus also irrelevant.

6.  More controversial is the disclosure of what I consider a new line of defence put forward by the defendant a week before the beginning of the trial. Mr Ho, counsel for the defendant, disclosed in his opening written submissions on 6 January 2020, (a week before the trial) that the defendant would rely on a 1990 Building Order, a photo bearing serial no. 10620 (which showed the destruction of the slab of the Flat Roof) and a 1991 Letter of Withdrawal.  The defendant’s case is that it could not have been at fault and it had not acted unreasonably as the Flat Roof was previously damaged in 1990 to 1991 by other parties to the DMC.

7.  Ms Cheng, Counsel for the plaintiff objected to this line of argument being run on the basis that it was not pleaded in the Amended Defence.

8.  The legal principles on unpleaded issues are trite.  In the recent case of Lam Chin Pang & Anor v Wan Sui Ying[1], District Judge MK Liu summarized the principles in §20-21:-

“20. It is well established that the issues in a trial are defined by pleadings, not by evidence. One cannot slip in an unpleaded issue by saying that there is evidence on the issue. As said by Ma CJ in Kwok Chin Wing v 21 Holdings Ltd[2]:-

“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues:- Wing Hang Bank Limited v Crystal Jet International Limited [2005] 2 HKLRD 795, 799 [6(1)]. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Limited v Crystal Jet International Limited:-

“(2)  In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues.  Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained.  It will simply not do for unpleaded issues to be ‘slipped in’ when evidence is being given in the hope that the other side is not sufficiently alert to object.”

22. …… one does not sift through the evidence adduced in a trial in the hope that something was said that can conceivably found a cause of action. Issues, I would reiterate, must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings.” (Emphasis added)

21. The purpose of pleadings is to define the real issues in dispute and to ensure that the litigation is conducted in a fair way. It is pertinent to note what has been said by Yuen JA in Chan Kong v Chan Li Chai Medical Factory (Hong Kong) Ltd[3] [2009] 2 HKLRD 455:-

“15. …… It is well established that pleadings need to be clear - because pleadings are the foundations on which the rest of the action stand. The reason why parties to litigation must ensure that the real issues in dispute are defined in advance in the pleadings is so that there is an unambiguous framework for the many interlocutory steps that follow in an action, such as discovery of documents, interrogatories and witness statements, as well as for the conduct of the trial itself. A statement of claim should make it clear to the reader what the plaintiff's cause of action is, and it should set out the material facts which provide the basis for him to pursue that cause of action. It is not adequate for a plaintiff just to set out his story extensively and then to allege a number of breaches of rights for which he claims relief. Put another way, it should not be left to the reader to guess how the dots should be connected.

16. The more complex the facts and the more complicated the claim, the more important it is for the pleader to get it right. That is because the more obtuse the pleading, the more capacity there is for genuine misunderstanding or specious opportunism. And the more blind alleys are left in a pleading, the more expensive and time-consuming the litigation will be.” (Emphasis added)”

9.  Mr Ho agreed with the principles, yet he submitted that the defence had been pleaded in paragraph 6 and paragraph 8 of the Amended Defence.

10.  Paragraph 6 and 8 of the Amended Defence read:

“6. …Paragraph 4 is admitted. The Defendant avers that the Flat Roof has been occupied by parties to the Deed of Mutual Covenant … from time to time and carried out unauthorized building works thereon.

…

8.  Save and except destruction or damage caused by or resulting from any act or default or negligence by or on the part of any of the parties to the DMC as stated in clause 8(h) therein paragraph 6(a) of the Statement of Claim is admitted as well as Paragraph 6(b) and Paragraph 6(c).”

11.  Clause 8(h) of the DMC was not set out in full in the Amended Defence itself.  It provides:-

“Each of the parties hereto shall pay the due proportion hereinafter mentioned of all costs charges and expenses which may be or become payable for or in connection with the management operation servicing maintenance repair and insurance of the said building as determined by the Management Committee but not limited to: -

…

(h)  The costs of rebuilding or re-instatement of the said building or any part thereof so far as the same may be destroyed or damaged (except as regards destruction or damage caused by or resulting from any act of default or negligence by or on the part of any of the parties hereto rendering such party in fault solely liable therefor)...”

12.  Mr Ho submitted that the defendant should be allowed to run the argument as the plaintiff ought to have known what case he had to meet with the pleading in the Amended Defence and the mere fact that the 1990 Building Order and the 1991 Withdrawal Letter were disclosed in their List of Documents.  I disagree with Mr Ho’s submission for the following reasons:-

(1)  No particulars of any unauthorized building works, act or default or negligence were given in the Amended Defence.

(2)  The unauthorized building works were carried out on the Flat Roof, a common area.

(3)  There were no particulars of who carried out the unauthorized building works.

(4)  There was no mention of the 1990 Building Order or the 1991 Withdrawal Letter in the Amended Defence.

(5)  In the Joint Statement of Issues in Dispute, there was no mention that the defendant will rely on the 1990 Building Order or 1991 Withdrawal Letter. Whether any unauthorised building works caused the water leakage problem was not listed as an issue.

(6)  Neither of the two defence witnesses mentioned anything about the 1990 Building Order or 1991 Withdrawal Letter.

(7)  There was no evidence on who built, who owned and who used the unauthorized building works.

(8)  No causal link between any unauthorized building works and the damage of the Premises had been pleaded, and no evidence on this issue had been tendered.

(9)  The 1990 Building Order and the 1991 Withdrawal Letter were also registered against the property next to Flat 12, indicating that they were not aimed solely at the plaintiff, Flat 12, or its predecessors.

(10)  There is no expert evidence sought on whether the unauthorized building works caused the damage.

13.  In these circumstances, it is unfair to ask the plaintiff, and indeed the court, to connect all the dots and guess on their own how the defendant would run its defence. I would go further to say that just by looking at all the documents, it would have been impossible to draw the conclusion that the defendant intended to run such a case.     If indeed the defendant had wanted to run such a case they ought to have sought proper expert evidence and asked the relevant witnesses to put forward their version of events, and let the plaintiff respond.  None of that was done.  Accordingly, I held that the defendant should not be allowed to run a defence case at trial based on the 1990 Building Order or 1991 Withdrawal Letter.

Whether there was water leakage

14.  I bear in mind the guidelines on assessing the credibility of witnesses[4] when assessing the oral testimony of the witnesses.

15.  The plaintiff and Mr Yeung Kong (a staff of the plaintiff) gave oral evidence for the plaintiff. 

16.  The defendant’s witnesses Ms Tam Fung Kuen (the chairman of the defendant) and Mr Lee Sin Lok gave only very limited non-controversial evidence.  Ms Tam gave evidence on the general information of Peony House East Block and the Flat Roof.  Mr Lee, the owner of the property next to the Premises gave evidence as to who was the predecessor of Flat 12 and the fact that he was never asked by the plaintiff to fix water leakage problems.  The evidence of Ms Tam and Mr Lee did not seek to challenge the version of events put forward by the plaintiff.  I accept their evidence.

17.  I find both the plaintiff and Mr Yeung to be overall honest and reliable witnesses.  I accept and find that the events as described in their respective witness statements happened in the way described by them.  In particular, I find that:-

(1)  The plaintiff first noticed water leakage problems in April 2015 and had orally complained to the caretaker on duty in April 2015.  After that he had issued a letter of complaint to the management office.  Despite the fact that there was no documentary evidence of the same, I accept the plaintiff’s oral evidence in this regard. In particular, I take into account the fact that if the plaintiff had wanted to make up his case to claim general damages for nuisance, he would and could have said that the water leakage had been in existence ever since he acquired the Premises in March 2013.  The plaintiff was also honest when he said that he did not follow-up with the complaint as the leakage only affected him when there was rain. 

(2)  The reason why he actively pursued the complaint from April 2016 onwards was because he had received repeated complaints from the tenant. 

(3)  The fact that the solicitors letter issued on 13 September 2016 only mentioned water leakage since “a few months ago” was consistent with the plaintiff’s explanation that prior to that he had put up with the problem before then as it only affected him when there was rain.

(4)  Mr Yeung had made a complaint to the management office on 22 April 2016 after he received instructions from the plaintiff to follow up the tenant’s complaint.

18.  As to the expert evidence, I bear in mind the principles set out by the Hon. Lam J. (as he then was) in Chinachem Charitable Foundation Ltd v Chan Chun Chuen & Ors[5] in assessing the reliability of the evidence of an expert.  I say at the outset that Mr Hau, the plaintiff’s expert is an honest and reliable witness.  I accept Mr Hau’s evidence that by adopting the 5 tests (Visual Inspection, Electrical Conductivity Sensing, Infra-red Scanning, Microwave Scanning and Flourescent Dye Ponding), he reached the conclusion that the 5 tests yielded similar results which pointed to water seepage from the Flat Roof into the ceiling of the Cockloft.  Mr Hau’s analysis was that the source of the water leakage was from the Flat Roof. 

19.  This result was consistent with the conclusion reached by the Joint Office of the BD and the FEHD as recorded in the letter dated 10 May 2016.  The letter recorded the inspection on 4 May 2016 and concluded that the water leakage was caused by rain leakage from the Flat Roof.

20.  Mr Ho attempted to cast doubt or discredit Mr Hau’s findings or methodologies used.  Suffice it to say that I do not accept Mr Ho’s submissions that Mr Hau was evasive.  I also accept Mr Hau’s explanations on the various readings and the reasons behind the readings.  I find Mr Hau’s oral evidence to be direct and reliable.  I also find that the results of the 5 tests employed by Mr Hau to be overwhelming in showing there was water leakage and the source of the leakage.  I accept the methodologies employed in the 5 tests and Mr Hau’s expert evidence that there is water leakage in the Premises, mostly in the Cockloft, and that the source of the water leakage is the Flat Roof.

Whether there was breach of duty by the defendant

21.  There is no dispute between the parties that the defendant is not the owner of the Flat Roof.  The overall duty imposed on the defendant by the DMC is one of proper management[6]. Such management entails doing all that is reasonably required of a manager in the circumstances.  Liability only arises when there is fault, e.g. if, having been made aware of a defect which requires remedy, the Incorporated Owners fail to take appropriate steps[7].

22.  The defendant accepted that the Flat Roof was a common area and it is responsible for its maintenance.  However, the defendant submitted that it did not act unreasonably and that there was no breach of duty on its part.  Mr Ho submitted that the relevant time to consider whether the defendant acted reasonably could only begin when the defendant first had notice of the water leakage problem in the Premises. 

23.  As analyzed above, I accept the plaintiff’s case that the plaintiff first noticed water leakage problems in April 2015 and had orally complained to the caretaker on duty in April 2015.  Thus, the defendant had failed to respond or act accordingly for over a year after having had knowledge of the water leakage problem in the Premises.  This would clearly be classified as unreasonable behavior on the part of the Incorporated Owners. 

24.  Taking the defendant’s case to the highest, even if I agree with the defendant that it had only acquired knowledge of the water leakage in the Premises on 4 May 2016 (when Ms Tam inspected the Premises together with the plaintiff and the FEHD), a period of 5 months of inactivity (May 2016 to October 2016) on the part of the defendant would in any event still be considered as unreasonable.

Disposition – liability

25.  I thus find that the defendant had failed to perform its duties and had breached its covenant under the DMC and is thus liable for the damages suffered by the plaintiff by reason of the water leakage.

General damages and specific damages

26.  Parties agree on the principles on whether water leakage can constitute private nuisance[8], and the defendant’ corresponding duty within a reasonable time to take reasonable steps to prevent water leakage within its control[9].

27.  Damages for discomfort and inconvenience is recoverable under a nuisance claim as general damages.  Specific damages in relation to the replacement or reinstatement of physical damage caused by the nuisance (water leakage in the present case)[10] is also recoverable.

28.  The plaintiff accepts that he is only entitled to general damages for discomfort and inconvenience arising out of nuisance during the time that he was an occupier of the Premises.  I have found that the plaintiff did complain about the water leakage problem since April 2015 to the defendant.  The plaintiff is thus entitled to general damages from April 2015 to 9 April 2016, when he was an occupier of the Premises. 

29.  As to quantum, parties agree that there is no mathematical formula for such intangible loss[11]. I have considered the cases referred to by Ms Cheng and taken into account the following factors in assessing quantum of general damages:-

(1)  The plaintiff did not live in the Premises during the relevant time period.  He used it as storage for his bakery at Flat 12.

(2)  The plaintiff’s evidence was that he was only affected when it rained.

(3)  The plaintiff was able to put up with the nuisance during the relevant period as he had not actively pursued against the defendant for the water leakage.

30.  In the case of Lam Kit Yee (supra.), DDJ Lawrence Ng considered a few cases on general damages.  The cases referred to therein mostly involved people living in the affected premises and were thus affected to a much greater extent.  The damages awarded in those cases ranged from HK$30,000 to HK$60,000.  I find that in the present case, the degree of discomfort suffered by the plaintiff was minimal as he did not live there. Such minimal discomfort is also supported by the fact that he did not feel the need to actively pursue his complaint about the water leakage during this period.  I will thus award nominal damages of HK$3,000 for general damages.

31.  In relation to specific damages, the dispute between parties  lied in whether the plaintiff could claim for the cost of repair for the steel bars inside the structural ceiling of the Cockloft.  I agree with Mr Ho’s submission that there simply was no evidence which suggested that the steel bars inside the structural ceiling of the Cockloft needed repair.  There is also no evidence as to whether the steel bars formed part of the common area.  More importantly, the cost for repairing the steel bar was not pleaded in the Amended Statement of Claim.  I thus find that the plaintiff is not entitled to claim for the cost of repair for the steel bars.

32.  Ms Cheng accepted that if the court does not allow the cost of repair for the steel bars, the court should adopt the estimate of HK$43,000 given by Mr Hau, the expert, as the cost of repair.  Mr Ho agreed to HK$43,000 as the quantum of the special damages, if liability is established.

Injunction

33.  Parties agreed that if liability is established, a prohibitory injunction is inappropriate and a mandatory injunction in the following wording would be proportionate and would suffice:-

“The defendant do cause necessary repair works to remedy the water leakage problem of the flat roof located at 1/F, Peony House East Block, Nos. 1-7 Pok Man Street, Nos. 27-37 Tai Kok Tsui Road & Nos. 2-6 Foo Kwai Street, Kowloon to be commenced within 6 weeks from the date of this Order.”

Costs

34.  Parties agreed to the general proposition that costs follow the event, and thus the plaintiff ought to have costs of the action.  However, Mr Ho submitted that the defendant ought not be responsible for the costs of the plaintiff’s supplemental expert report dated 13 July 2019 as it was a pure attempt to claim for the repair cost of the steel bars, which the plaintiff failed to establish.

35.  Having decided that the plaintiff was not entitled to claim for such repair costs as they were not supported by evidence or pleading, I agree with Mr Ho that the plaintiff should not be able to claim the costs of the supplemental expert report against the defendant.  Ms Cheng argued that the supplemental expert report was carried out pursuant to a consent order and as the defendant agreed to it, they should also bear its costs.  I disagree.  The defendant might have agreed to the supplemental report  at the time for multiple reasons, including the wish to save costs.  Ultimately, the result proves that the supplemental expert report was not useful and the plaintiff should bear the wasted costs of its preparation himself.

Orders

36.  Accordingly, I make the following orders:-

(1)  The defendant do pay the plaintiff HK$3,000 with interest as general damages.  Interest on this head of damages to be calculated from the date of Judgment to payment, at judgment rate.

(2)  The defendant do pay the plaintiff HK$43,000 with interest as specific damages.  Interest on this head of damages to be calculated from the date of the Writ until the date of this judgment at 1% above the best lending rate of HSBC, and thereafter at judgment rate until full payment.

(3)  The defendant do cause necessary repair works to remedy the water leakage problem of the flat roof located at 1/F, Peony House East Block,  Nos 1-7 Pok Man Street, Nos 27-37 Tai Kok Tsui Road & Nos 2-6 Foo Kwai Street, Kowloon to be commenced within 6 weeks from the date of this Order.

(4)  Save and except the costs of and occasioned by the plaintiff’s supplemental expert report dated 13 July 2019, the plaintiff is to have the costs of the proceedings, with certificate for counsel, to be taxed if not agreed.

37.  I thank Ms Cheng and Mr Ho for their assistance provided to this court.