TAI CHENG INTERNATIONAL (HOLDINGS) LTD v. CHAN LAI MAN AND OTHERS

HCA 1154/2018

[2023] HKCFI 2430

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1154 OF 2018

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J U D G M E N T

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A.  INTRODUCTION

1.  In this action, the Plaintiff seeks damages and an injunction against the Defendants in relation to alleged water seepage from the Defendants’ apartments to the Plaintiff’s apartments.

B.  THE FACTUAL BACKGROUND

2.  The following are either agreed by the parties, taken largely from their helpful agreed chronology and agreed statement of facts, or otherwise indisputable, and I find them as facts.

3.  Greenville Gardens is a residential estate at 14-17 Shiu Fai Terrace, Stubbs Road, Hong Kong, consisting of four free-standing apartment blocks.

4.  At all material times, the Plaintiff was the registered owner of Units A1101 and A1102 on the eleventh floor of Block A, Greenville Gardens (“P’s Units”; “Block A”).

5.  From 28^th August 2009, the Defendants have been the registered owners of Units A1201 and A1202 on the 12^th floor of Block A, Greenville Gardens (“Ds’ Units”) and the roof portion above (“the Roof Portion”).

6.  The Plaintiff took the assignment of P’s Units, and the Defendants the assignment of Ds’ Units with the Roof Portion, subject to and with the benefit of the Deed of Mutual Covenant dated 24 February 1975.

7.  In about 2013 to 2014, the Defendants carried out renovation work in Ds’ Units and on the Roof Portion, which included:

7.1  the transforming of Ds’ Units into a single connected unit;

7.2  the building of an internal staircase from Ds’ Units to the Roof Portion;

7.3  the combining of the master bathroom and guest bathroom at Unit A1201 into a single large bathroom with a shower, bathtub, water closet and two wash basins;

7.4  the partitioning of the guest bathroom at Unit A1202 into two smaller bathrooms; and

7.5  alterations to the drainage systems of the bathrooms of Ds’ Units.

Renovation work to external walls of Greenville Gardens

8.  In September 2011, renovation work to all four blocks of Greenville Gardens commenced, including to the external wall and common roofs. The building contractor appointed was Sun Fook Kong Construction Limited (“SFK”).

9.  Following on from the renovation work, numerous complaints were made by the residents of Greenville Gardens regarding wet and damp areas on the internal areas of various units.

10.  In 2012 or early 2013, complaints were made about water leakage in Unit A1102, by the mother of Ms Tina Hsu (“Ms Hsu”), a director of the Plaintiff.

11.  In 2016 and 2019, arbitration proceedings were commenced, with the parties being the Incorporated Owners of Greenville Gardens (“the IO”) and SFK. The IO’s claim against SFK was in respect of, inter alia, defects in the external walls.

12.  On 25^th November 2020, the Buildings Department issued a letter to the IO, stating that it had recently conducted an inspection of Greenville Gardens and had found concrete spalling, loosened finishes and loosened tiles at the external walls of some of the building structures, and reminding the IO that it was the owners’ responsibility to maintain their buildings properly in order to protect the safety of occupants and the public.

Units A1101 and A1201

13.  The guest bathroom and master bathroom of Unit A1101 are located directly under the renovated and enlarged single master bathroom of Unit A1201.

14.  On 24^th July 2017, the Plaintiff lodged a complaint with the Food and Environmental Hygiene Department (“FEHD”) regarding water seepage at Unit A1101.

15.  On 2^nd August 2017 and 11^th September 2017, the Joint Office of the Buildings Department and the FEHD (“the Joint Office”) carried out inspections at Unit A1101. A coloured water test was conducted at the drainage outlet of the master bathroom of Unit A1201 on 2^nd August 2017, but at the inspection of 11^th September 2017, no colour dye was observed at the ceilings of the guest bathroom and master bathroom of Unit A1101. On both occasions, the Joint Office found that the moisture content readings of the ceilings of the master bathroom and guest bathroom of Unit A1101 were above 35%.

16.  By letter dated 21^st September 2017, the Joint Office informed the Defendants that it could not identify the source of the water seepage at Unit A1101.

17.  On 14^th December 2017, David S.K. Au & Associates Ltd (“David SK Au”) (appointed by the Joint Office) conducted an investigation at Unit A1101 and concluded that the source of seepage was uncertain.

18.  On 31 May 2018, ETS-Testconsult Ltd (“ETS”) (appointed by the Joint Office) carried out infrared thermographic and microwave tomography tests at Unit A1101 and detected signs of water seepage on the ceiling soffit of the guest bathroom and master bathroom of Unit A1101.

19.  On 28^th September 2018, the FEHD issued a Nuisance Notice to the Defendants under s.127(1) of the Public Health and Municipal Services Ordinance (Cap.132), stating that the Director of Food and Environmental Hygiene was satisfied of the existence of a nuisance at Unit A1201, being water seepage through the master bathroom to Unit A1101, and requiring various items of repair work to the master bathroom to abate the nuisance.

20.  On 28^th March 2019, the Plaintiff lodged a further complaint with FEHD in respect of both Units A1201 and A1202.

21.  On 9^th April 2019, IPS Consultants Limited (“IPS”) (appointed by the Joint Office) carried out an investigation at Unit A1101. IPS found that the moisture content readings at the master bathroom ceiling were below 35%, the source of seepage was uncertain, and the water seepage had ceased during investigation.

22.  On 11^th April 2019, the Joint Office carried out an inspection at Unit A1201 and conducted a coloured water test at the drainage outlets.

23.  By separate letters each dated 10^th May 2019 to the Plaintiff and the Defendants, the Joint Office stated that the source of water seepage at Unit A1101 could not be identified. However, as the seepage was still persisting, the Joint Office would consider proceeding to professional investigation.

24.  On 26^th July 2019, IPS carried out another investigation at Unit A1101, conducting infrared themographic test and microwave tomography tests, and concluded that the source of seepage was “[i]nfiltration from the floor slab of Master bathroom including the shower area at the bathroom and Maid’s bathroom in [Unit A1201]”. On this occasion, IPS did not carry out any inspection at Unit A1201.

25.  On 24^th April 2020, FEHD issued a second Nuisance Notice to the Defendants, stating that the Director of Food and Environmental Hygiene was satisfied of the existence of a nuisance at Unit A1201, being water seepage through the master bathroom and maid bathroom to Unit A1101, and requiring various items of repair work to abate the nuisance.

26.  On 16^th October 2020, Easy Living Consultant Ltd (“Easy Living”) (appointed by the Joint Office) carried out an inspection at Unit A1101 and found that the moisture content readings at the guest bathroom ceiling, master bathroom ceiling and maid bathroom ceiling were below 35%. Easy Living concluded that that source of seepage was uncertain and that seepage had ceased during investigation.

Unit A1102 & Unit A1202

27.  The master bathroom of Unit A1102 is located directly under what has been called “Bathroom 1” of Unit A1202. The guest bathroom of Unit A1102 is located directly under the what has been called “Bathroom 2” and the guest toilet of Unit A1202.

28.  On 18^th April 2017, the Plaintiff lodged a complaint with the FEHD regarding water seepage at Unit A1102.

29.  On 20^th April 2017, the Joint Office carried out inspections at Unit A1102. The Joint Office found that the moisture content readings at the ceiling of the master bathroom were above 35%. The Joint Office carried out inspections at Unit A1202 and performed a coloured water test at the drainage outlet of the master bathroom of Unit A1202. Upon re-inspection of Unit A1102, the ceiling of the master bathroom did not show the colour dye used in the test.

30.  On 11^th May 2017, the Joint Office carried out a further re-inspection at Unit A1102 but again did not see the colour dye used in the earlier test in the master bathroom at Unit A1102. The Joint Office found that the moisture content readings at the ceiling of the master bathroom were above 35%.

31.  On 22^nd May 2017, the Joint Office carried out a further investigation at Unit A1102. According to the investigation report, the source of the water seepage was still not identified and the water seepage problem had subsequently stopped.

32.  On 17^th June 2017, David SK Au (appointed by the Joint Office) conducted investigations at Unit A1102 and found that the moisture content readings at the ceiling of the guest bathroom were above 35%. No colour dye nor fluorescent effect under UV light was observed at Unit A1102.

33.  On 18^th July 2017, David SK Au carried out inspections at Unit A1102 and found that the moisture content readings at the ceiling of the guest bathroom was above 35%, whereas the moisture content readings at the ceiling of the master bathroom were below 35%.

34.  On 21^st July 2017, David SK Au carried out a ponding test at Unit A1202. David SK Au also inspected Unit A1102 and found that the moisture content readings at the ceiling of the guest bathroom were above 35%, whereas the moisture content readings at the ceiling of the master bathroom were below 35%. No colour dye nor fluorescent effect was observed at Unit A1102.

35.  On 11^th August 2017, David SK Au carried out inspections at Unit A1102 and concluded that the source of water seepage was uncertain and that the seepage had ceased.

36.  On 1^st June 2018, the Plaintiff lodged a further complaint with the FEHD regarding water seepage at Unit A1102.

37.  On 13^th June 2018, the Joint Office carried out inspections at Unit A1102 and found that the moisture contents at the ceiling of the guest bathroom were above 35%.

38.  On 26^th June 2018, the Joint Office performed a coloured water test at the drainage outlets of the guest bathroom and the guest toilet of Unit A1202.

39.  On 27^th July 2018, the Joint Office carried out an inspection at Unit A1102. The Joint Office did not find colour dye on the guest bathroom ceiling of Unit A1102, and found that the moisture content readings at the master bathroom and guest bathroom were below 35%. The Joint Office further took samples of the guest bathroom ceiling of Unit A1102 and sent them for examination by the Government Laboratory.

40.  By separate letters each dated 31^st August 2018 to the Plaintiff and the Defendants, the Joint Office stated that there was no seepage at Unit A1102 for the time being, and that no colour dye had been discovered in the sample taken from the guest bathroom ceiling of Unit A1102.

41.  As referred to above, on 28^th March 2019, the Plaintiff lodged a further complaint with FEHD in respect of both Units A1201 and A1202.

42.  On 2^nd and 11^th April 2019 and 3^rd May 2019, the Joint Office carried out inspections at Unit A1102. On 11^th April 2019, the Joint Office performed a colour water test at the drainage outlets of Unit A1202.

43.  By separate letters dated 10^th May to the Plaintiff and the Defendants, the Joint Office stated that the water seepage at Unit A1102 persisted, but the source of seepage could not be identified.

44.  On 26^th July 2019, IPS (appointed by the Joint Office) carried out investigations at Unit A1102 and found that the moisture content readings at the ceiling of the master bathroom were above 35%, whereas the moisture content readings at the ceiling of the guest bathroom were below 35%. IPS concluded that the source of seepage was uncertain.

45.  On 27^th May 2020, IPS (appointed by the Joint Office) carried out investigations at Unit A1102 and found that the moisture content readings at the ceiling of guest bathroom were above 35%, whereas the moisture content readings at the ceiling of the master bathroom were below 35%.

46.  On 3^rd July 2020, IPS carried out a ponding test at the drainage outlets of Unit A1202. Upon inspection at Unit A1102, no colour dye or fluorescent effect was noted.

47.  On 12^th August 2020, IPS carried out inspections at Unit A1102 and found that the moisture content readings at the guest bathroom ceiling and master bathroom ceiling were below 35%. IPS concluded that the source of seepage was uncertain and that the seepage had ceased during investigation.

48.  On 16^th October 2020, IPS carried out inspections at Unit A1102 and found that water seepage had ceased.

C.  THE PARTIES’ CASES

49.  The Plaintiff says that since February 2017 (as regards Unit A1102) and July 2017 (as regards Unit A1101), there has been water seepage from the bathrooms of Ds’ Units to the ceilings of the bathrooms of P’s Units.[1] The Plaintiff’s case is that the source of the water seepage is the facilities in the bathrooms of Ds’ Units, and the cause of the water seepage is likely to be the defective waterproofing in these units.

50.  The Plaintiff claims against the Defendants for breach of the Deed of Mutual Covenant of Greenville Gardens (“the DMC”) and s.34H of the Building Management Ordinance, Cap.344 (“the BMO”) and in nuisance and/or negligence. The Plaintiff’s claim for damages is principally for loss of rental income and the cost of repair. The Plaintiff further seeks a mandatory injunction ordering the Defendants to rectify the water seepage.

51.  The Defendants say that the Plaintiff fails to show on a balance of probabilities that the source of the water seepage lies in Ds’ Units. There is therefore no need to even consider the issue of the cause of the seepage. The Defendants also say that the Plaintiff fails to show that water seepage is still continuing in P’s Units.

D.  THE APPLICABLE PRINCIPLES

52.  There is no dispute as to the applicable principles relating to cases of water seepage.

53.  Identifying the source of water is essential to establish liability in water seepage cases. There is no presumption that water seepage in one set of premises must have been caused by the premises above. It is not for a defendant to identify the source of leakage or to prove that it did not come from the defendant’s premises. The onus is on the plaintiff to establish that the leakage originated from the defendant’s premises. See Mohan Selvaraj v Grace Ka Man O’Brien [2020] HKCA 698 at [17] (Lam VP, as he then was); Hui Ling Ling v Sky Field Development Ltd, unreported, CACV 122/2012, 22^nd March 2013, at [42] (Kwan JA, as she then was).

E.  THE ISSUES

54.  The parties agreed that the issues for my determination are as follows.

54.1  Was/is there water seepage at the bathrooms of Units A1101 and A1102?

54.2  If yes, what is/are the source(s) and cause(s) of the seepage?

54.3  Are the Defendants liable to the Plaintiff for breach of the DMC, breach of the BMO, or in negligence and/or nuisance?

54.4  If the Defendants are liable to the Plaintiff:

54.4.1  what is the loss of rental income for P’s Units during the periods affected?

54.4.2  should an injunction requiring the Defendants to carry out all necessary works to rectify the water seepage be granted?

F.  WHETHER THERE WAS/IS SEEPAGE AT THE BATHROOMS AT UNITS A1101 AND A1102

55.  Under paragraph 11 of the Joint Office’s “Notes to Owners/Occupants – General Procedures for Investigating Water Seepage in Pilot Districts”, at Stage I of a water seepage investigation, the Joint Office will visit affected premises to record the condition of the seepage location and other relevant information. If the moisture content of the seepage area is found to be 35% or over, and the seepage problem is suspected to have been caused by other premises, the Joint Office will proceed to a “Stage II – Initial Investigation”.

56.  On this basis, whilst the Defendants said that it was unclear how the figure of 35% was arrived at, they were nevertheless prepared to proceed on the basis that a moisture content reading above 35% indicates a suspicion of water seepage.[2]

57.  It is not seriously disputed that there was some seepage in the bathrooms of Units A1101 and A1102 between 2017 and 2020, as follows. Some of these matters have been agreed; insofar as they are not, they were not seriously disputed and I find them as facts.

57.1  For Unit A1101, the moisture content readings of the ceilings of the master and guest bathrooms taken by the Joint Office on 2^nd August 2017 and 11^th September 2017 were above 35%. Moisture content readings were also taken by David SK Au at the inspection of 14^th December 2017 and were found to be above 35%. Photos taken on 9^th April 2019 show that water was dripping from a couple of small stalactites which had formed on the ceiling slab of the guest bathroom. The moisture content readings of the ceilings of the master and guest bathrooms taken by the Joint Office on 11^th April 2019 and 3^rd May 2019, by IPS on 26^th July 2019, and by the Joint Office on 8^th July 2020, were above 35%.

57.2  For Unit A1102, the moisture content readings of the ceiling of the guest bathroom taken by the Joint Office on 20^th April 2017 and 11^th May 2017 were above 35%. Moisture content readings of the ceiling of the guest bathroom were also taken by David SK Au on 17^th June, 18^th July and 21^st July 2017 and were found to be above 35%. Further readings taken by David SK Au on 11^th August 2017 were however below 35%. Moisture content readings of the ceiling of the guest bathroom were again taken by the Joint Office on 13^th June 2018 and found to be above 35%, but the readings on 27^th July 2018 were below 35%. They were above 35% at the Joint Office’s inspections on 7^th December 2018 and 2^nd April 2019. On 26^th July 2019, IPS found that the moisture content readings at the ceiling of the master bathroom were above 35%. On 31^st March 2020, IPS found that the moisture content readings at the ceiling of the guest bathroom were above 35%.

58.  However, I do not consider that the Plaintiff has shown, on the balance of probabilities, that the seepage of the bathroom ceilings continued beyond October 2020 in the case of Unit A1101, and August 2020 in the case of Unit A1102. (A consideration of whether or not seepage has continued beyond 2020 is relevant in the event that it becomes necessary to go on to consider whether or not injunctive relief as sought by the Plaintiff should be granted: Ng Yuen Han v Lam Fei Fui [2013] 3 HKLRD 608 at [24].)

58.1  On 16^th October 2020, Easy Living (a consultant appointed by the Joint Office) inspected Unit A1101, found that the moisture content readings of the bathroom ceilings were less than 35%, and concluded that the source of the reported water seepage was uncertain.

58.2  On 12^th August 2020, IPS (a consultant appointed by the Joint Office) inspected Unit A1102, found that the moisture content readings of the bathroom ceilings were less than 35%, and concluded that the source of the reported water seepage was uncertain.

58.3  The Defendants submit, and I agree, that there is no objective evidence to contradict these findings. The Plaintiff’s factual witness did not suggest that seepage in the bathroom ceilings has continued after these dates. The inspections of the expert witnesses for this case were conducted prior to these dates.[3]

G.  THE SOURCE OF THE WATER SEEPAGE

59.  The parties agree that the source of the water seepage and the cause of the water seepage are separate issues, and that it is necessary to identify the source of the seepage before its cause can be ascertained.

G1.  Whether rainwater can be eliminated at the outset

60.  The first question which should be considered is whether rainwater can be excluded as a source of the seepage. The Plaintiff sought to exclude rainwater as a possible source at the outset, so as to leave water leaking from Ds’ Units as the only possible source. In order to do this, the Plaintiff relied on the evidence of its expert witness, Dr Lam Siu Shu Eddie, a registered structural engineer (amongst other qualifications).

61.  Dr Lam was cross-examined at length. Having reviewed Dr Lam’s expert reports and considered his oral testimony, I do not feel able to rely on his opinion in excluding rainwater ingress from the external wall as a possible source of seepage from the outset. Dr Lam was too ready to exclude this as a possible cause of seepage so as to leave water leaking from Ds’ Units as the only possible source. This meant that his consideration of the possible sources of seepage was not complete or reliable. I arrive at this view based on the following matters.

62.  In his cross examination, Dr Lam said that he first inspected P’s Units in 2017, and expressed a view at the time to Ms Hsu that the seepage which he saw originated from Ds’ Units. He came to this view because the damp patches which he saw were not close to the exterior walls, and he considered that water from the external wall would not travel as far as 1m from the external wall, and he did not find signs of seepage near the external wall. However, he came to this view even though he had inspected neither P’s Units nor the external wall. When asked whether he knew of the condition of the external wall at the time, he said that as he had already formed his initial opinion that the seepage came from above, he did not carry out such an inspection. Indeed, he acknowledged that at that stage he had already excluded the possibility that there was any seepage emanating from the external wall, so he did not need to investigate it further, and his focus was on seepage from above. I return below to the question of how far water might be able to travel from the external wall. The point is that Dr Lam appeared ready to have come to a conclusion without having inspected either of the possible sources.

63.  In his expert report dated 28^th February 2020, Dr Lam maintained his view that it was unlikely that the water seepage in P’s Units originated from the ingress of rainwater from the external walls of Block A, because there was no correlation between the days on which rainfall was recorded by the Hong Kong Observatory and the days on which high moisture content readings were taken at P’s Units.[4] There were days on which high moisture content readings were noted, yet there was no rainfall on those days; and there were days on which low moisture content readings were noted, yet there was rainfall on those days.

64.  Yet Dr Lam had been made aware that there were extensive defects in the external wall of Block A. By the time he was engaged by the Plaintiff, the IO had already been complaining about SFK’s work. Dr Lam acknowledged that he reviewed[5] a report from a registered structural engineer Rodney Buckell, engaged by the IO, dated 15^th February 2016 (“the Buckell Report”). The Buckell Report referred to the “complete re-rendering of external walls” which SFK had been engaged to do, the complaints by residents of water ingress through the external walls, and expressed the view that “For significant water ingress through the body of the wall it may be reasonably concluded that, for leakage through the external wall, a failure must have occurred in … either the preparation of the wall and openings prior to the application of the waterproof rendering or the actual application or materials used in the waterproof rendering”. The report also recorded that investigations had been carried out by removal of the wall tiles at selected residential units and hacking back of the waterproof render. The findings were that in no cases had the contractual specification of 25mm of primer and waterproof render been attained. It was estimated that the cost of rectification would be in the order of $60m. The conclusion of the Buckell Report stated, inter alia, that:

“The external walls of Blocks A to D have multiple cases of water ingress into the residential units some of which have prevented occupancy of the property. Such is the frequency of water ingress, and the apparent inability of the contractor to effect a repair, would suggest a major defect in the application and/or materials of the waterproof plaster.”

65.  The Buckell Report actually referred to an investigation of the external wall at Unit A1101,[6] water ingress at the internal wall surfaces of Unit A1102, and a history of complaints of various types of water leakage in Unit A1102.[7]

66.  The unusual feature of this case is that prior to the preparation of Dr Lam’s report of February 2020, he was engaged by the IO in 2019, until about 2021, as its expert in its dispute against SFK. He acknowledged that he carried out substantial work as such an expert. In this capacity, he learnt of numerous complaints from residents of Greenville Gardens of water seepage from the external wall, and Dr Lam himself expressed the view that the tiling of the external wall was defective.

66.1  The IO’s claim against SFK was for some $99.9m, of which about $72.6m related to the defects in the external walls of Greenville Gardens.

66.2  Dr Lam’s view, as summarised by the IO’s solicitors Mayer Brown on 23^rd November 2020 as part of its review of the IO’s pleadings for the arbitration against SFK and circulated to the owners of Greenville Gardens by a letter of 25^th November 2020, was that there was “alarming evidence of SFK’s serious workmanship issues and failure to comply with the specifications [for the external wall work]. The external wall tiles were unsafe and unsound due to insufficient bonding between the re-rendering and the parent substrate, and were suggestive of poor surface preparation by SFK at the time”.

66.3  As Mayer Brown summarised, the IO’s pleaded case against SFK (which Dr Lam reviewed) was that throughout the course of the renovation project, and up to the date of Mayer Brown’s summary in November 2000, there were various defects in SFK’s work. Although SFK carried out rectification for some of the defects between 2013 and 2019, they were ineffective as the defects, including water seepage, had either continued or re-occurred.

66.4  Mayer Brown went on to say that “[the IO’s] External Wall Claims can be summarised as follows:- (i) The waterproof rendering works carried out by SFK at the external walls of the residential blocks and carparking levels are defective in that the external walls are not watertight and water seepage appears at various locations. The works carried out by SFK failed to conform to the requirements of the Contract, in that SFK failed to repair cracks and spalled concrete, to properly prepare the surface and/or to provide the specified 25mm thickness of waterproof rendering on external walls at the residential blocks…” (SFK denied that the water leakage at the external walls was caused by their work, and suggested various other reasons.)

66.5  After lengthy questioning, Dr Lam eventually accepted that between 2019 to 2021, when he acted as the IO’s expert in the case against SFK, the water seepage problem of the external walls of Greenville Gardens continued to occur.

67.  Dr Lam did not disclose his earlier views regarding the external walls of Greenville Gardens in his report. His explanation was that he thought that the information was privileged.

68.  In cross-examination, when Dr Lam was asked about the IO’s disputes with SFK, he sought to minimise the severity of the defects in the external wall, to downplay the issue of water seepage (when compared with the picture presented by Mayer Brown (who were advised by Dr Lam as an expert) to the owners) and even to be defensive for SFK. The distinct impression given by his evidence is that he was not doing so impartially. Furthermore, when contemporaneous evidence of the complaints made by the owners and of his own view (held as the IO’s expert) was put to him, his defensiveness as to possible defects in the external wall, and the contradictions in his evidence, became apparent. I give some examples.

68.1  There were some eight hundred questionnaires submitted by the owners and residents of Greenville Gardens, setting out their complaints about the external wall renovation (not all related to water seepage), in three rounds of survey.[8] When it was put to him that there were quite a lot of complaints by the residents, he said that he did not take them as complaints – whilst the residents said that there were defects, “SFK had a different story”.

68.2  Dr Lam sought to characterise the problem of SFK’s work as one of failing to conform to contractual specifications, rather than one of defective work leading to, inter alia, water seepage, despite the evidence that there were numerous complaints by the owners of water seepage and the characterisation by Mayer Brown of the IO’s complaint against SFK as being not only one of non-conformity but also one of defective waterproofing work at the external wall, leading to water seepage.

68.3  At one point, Dr Lam’s evidence was that the water seepage problem caused by SFK’s defective work had been rectified satisfactorily and that this was the state of affairs between 2019 and 2021. He said that by 2019, when he was engaged by the IO, all of the water seepage problems caused by SFK had been rectified by SFK. Initially he said that the rectification was satisfactory, based on his review of the questionnaires submitted by the owners and residents. He went on to say that this remained the case up to 2021 when he ceased to act for the IO. When he was questioned further, he shifted his position somewhat and said that in fact, even after 2019, there were still complaints of seepage in the questionnaires. When it was then put to him that Mayer Brown’s 23^rd November 2020 letter referred to the IO’s case that SFK’s defective work had led to (inter alia) water seepage and that this was continuing, contrary to Dr Lam’s evidence that it had all been satisfactorily rectified, Dr Lam denied that there was any contradiction, but was unable to explain why this was so.

68.4  The IO’s letter of 12^th November 2020 to all owners referred to the arbitration against SFK, saying “…As many owners will be aware and may well experience as the sufferers, a major item of dispute concerns the sub-standard and defective external walls tiling works and waterproof rendering works carried out by SFK, which resulted in the serious and widespread water seepage across the entire estate, causing damage and inconvenience for many owners to say the least. … All of these are clearly the direct results of the defective external wall rendering works carried out by SFK, which cannot be further tolerated and must be addressed now, otherwise it is quite certain that additional problems caused by the defective works would continue to appear and would also be aggravated… Unfortunately, till this day, SFK continues to deny its liability…We now have clear evidence that the previous “remedial” measures taken by SFL to resolve the water seepage did not rectify the defects at the external wall rendering and the water seepage subsisted and/or reoccurred”. When it was put to Dr Lam that this was further evidence that contrary to his suggestion, the water seepage problem from the external walls had not been rectified by 2020, he initially sought to downplay the extent of the water seepage problem, but when pressed, he was unable to say that the owners who complained about water seepage were wrong – Dr Lam had not himself carried out a physical inspection at the time.

68.5  Subsequently, Dr Lam said that the IO’s complaint that “We now have clear evidence that the previous “remedial” measures taken by SFL to resolve the water seepage did not rectify the defects at the external wall rendering and the water seepage subsisted and/or reoccurred” was in fact a correct statement, because of the guarantee provided by SFK; he could not satisfactorily explain this answer.

68.6  The IO’s letter of 12^th November 2020 went on to complain that SFK’s remedial work had been “ineffective” and were just “short-term and shortcut solutions” which did not address the defective works. One example given was SFK’s attempt at fixing the water seepage problems; it was said that these measures would not be long-lasting and “could at most conceal water seepage for 3 years or so” and that “many owners reported the resurface of the water seepage at their units”. When this was put to Dr Lam, he accepted that he had no reason to doubt this, and indeed went on to say that it was his opinion. When it was put to him that this contradicted his earlier evidence that the rectification work was satisfactory, he said that what he had meant was that the repair work was completed, but was not what he (the IO’s side) had been looking for, as it did not comply with the contractual specifications and was not permanent.

68.7  When he was then asked what he had meant when he earlier said that SFK had remedied the water seepage satisfactorily, Dr Lam said that he meant that the rectification had been accepted by the management office. However, he then accepted that the management office had not said that the work had been satisfactorily carried out, but only that the work had been done. When it was put to him how he could have known whether the work was satisfactory as claimed, he said that he knew because the complaints about water seepage ceased. But as had been put to him, the complaints had not, in fact, ceased.

68.8  At the time of the IO’s letter, Dr Lam was preparing a “Summary of Findings on the Retiling Works Completed by Sun Fook Kong” for the IO, eventually dated 15^th November 2020. At paragraph 3 of the document, Dr Lam said that he had opened up areas of the external walls which were accessible for inspection and testing, and had found that there was no preparation of the substrate, so that the original paintwork of the external wall was still in place; that there was no application of primer or tile adhesive; that the material used was not that specified under the contract; and that apart from one location, the thickness of the retiling works was less than 25mm. Dr Lam accepted that he had then inferred that these problems were likely to be found throughout the whole area of the external walls. However, when it was put to him that they should also have been found at the external wall of Units A1101 and A1102, Dr Lam disagreed, because he said that there had been an agreement between SFK and the architect that the thickness of the retiling works could be reduced at the ground floor, and maybe the upper flowers might be different. However, Dr Lam had not suggested in his “Summary of Findings” that there might be any such distinction between the lower and upper floors of the four blocks, or that the document only considered lower floors.

68.9  In any event, the Buckell Report had already shown that the problem was present at the upper floors. When this was put to Dr Lam, he sought to express doubts about the Buckell Report, which he had not hitertho done.

69.  More importantly, in his February 2020 report, Dr Lam did not revisit his views about whether to investigate the external wall as a possible source of the seepage complained of in P’s Units, despite his having learnt that there were extensive defects in the external walls of all four Blocks of Greenville Gardens which had given rise to complaints of water seepage and a claim by the IO against SFK in respect of such defects which was being taken to arbitration. Furthermore, the Buckell Report had identified faulty waterproofing work at the external walls of the buildings, and had referred to Units A1101 and A1102 as suffering from external wall defects and/or water seepage problems.

70.  Furthermore, he did not revisit his views about whether to investigate the external wall, at least at Unit A1101, despite the fact that at the site visit of 13^th February 2020, he was told by the owner of Unit A1201 that the bathroom had not been used since September 2018, and the fact that he could see, at that visit, that the bathtub had been disconnected and moved away from the drain so that it could not be used. He said (in re-examination) that he had reservations about the veracity of the claim of non-usage as he saw that the sinks had been used and that there was a toothbrush at the sink. However, in cross-examination he had acknowledged that he did not find any sign of leaking from the sink drainage. He had also acknowledged that the drainage for the water closet was not embedded in the floor slab and went directly out through the external wall, connecting to the drainage pipe outside, and that there was no sign of leakage from the water closet drainage. Even if it could be said that Dr Lam might reasonably have entertained doubts about whether the bathroom in Unit A1201 had been used, it seems that he was not willing to similarly entertain any uncertainties about whether the external wall could have been the source of the seepage into Unit A1101 if it was indeed the case that the bathroom in Unit A1201 had not been used save for the sinks and the water closet, and despite the fact that the sinks and water closet did not appear to be the source of any leak. On the contrary, he sought to argue that even if there was no usage of the bathroom facilities in Unit A1201, there could have been other sources of water in the bathroom in Unit A1201 leading to seepage into the ceiling of the bathrooms in Unit A1101, such as mopping of the (marble) floor, wiping of the floor with a damp cloth, or spillage of water onto the floor during tooth-brushing. It was apparent that Dr Lam was willing to consider any theories that supported his view that the source of the seepage in Unit A1101 was from Unit A1201, even if they were far-fetched, but dismissive of evidence which contradicted it.

71.  Dr Lam also knew that it was the Defendants’ case that the external wall was the source of leakage into P’s Units. Yet he did not investigate the external walls of P’s Units. When asked why he did not do so, his answer was that the complaint was about seepage on the ceilings of P’s Units. When pressed, he said that he had already excluded the possibility of rainfall from the external walls as a source, because of the lack of correlation between rainfall records and moisture content readings. Again, this piece of evidence shows that he had effectively closed his mind to other possibilities as to the source of the seepage.

72.  Dr Lam was also asked why he did not ask for particulars of the external wall defects at P’s Units when he was engaged by the Plaintiff to act as an expert in the present case (since he would have learnt of such defects on (inter alia) being provided with the Buckell Report). His answer was that it was not necessary to do so, because defects in the wall of Unit A1101 could not have caused leakage in the ceiling of Unit A1101. Again, this answer shows that he had effectively closed his mind to other possibilities as to the source of the seepage before he had even given them proper consideration.

73.  Paragraph 5.16(c) of the experts’ Amended Joint Expert Report gave a rather telling insight into Dr Lam’s reasons for not investigating the external walls of P’s Units. In commenting on the suggestion of Mr Cheung Wai Sum, the expert witness for the Defendants, that a spray test be conducted on the external walls of P’s Units, Dr Lam said that the proposed test would not be meaningful, because it could not distinguish the cause of any water travelling through the external walls, that is, whether it was due to damage caused by the Defendants or damage due to SFK in 2012-13. When asked about this, Dr Lam explained that seepage through the external wall might have been caused by holes made by the Defendants’ contractor in the course of carrying out renovations for the Defendants, or it might have been caused by holes made by SFK during the earlier external wall renovation. He would therefore not be able to assist on the issue of whether the Defendants’ contractor, or SFK, was the cause of the water seepage. On this logic, the external wall remains a possible source of seepage; it is just that if water came through the external wall, then Dr Lam would not be able to say whether the Defendants or SFK caused it. However, as counsel for the Defendants, Mr Kenny Lin (appearing with Mr Jason Kung) submitted, this puts the cart before the horse. The first question (as Dr Lam himself agreed) was to identify the source of the seepage. It seems that Dr Lam did not wish to test the external wall not because it was not a possible source of seepage, but because if it were found to be a possible source, it would not then be possible to say whether or not the cause was attributable to the Defendants.

74.  When questioned further about the possibility of carrying out a spray test, Dr Lam said that it was already “clear” in his mind that he had eliminated the external wall as a source of seepage, so that it was not necessary to carry out the test. Again, this illustrates that he closed his mind to the possibility of the external wall being a source of seepage before any investigations were carried out.

75.  I now turn to the reasons given by Dr Lam for excluding, from the outset, the external wall of Block A as a source of seepage into P’s Units, namely (1) that the damp patches on the ceiling of the bathrooms of P’s Units were not close to the external wall whereas there were no signs of seepage near the external wall, and (2) that there was no correlation between the days on which rainfall was recorded and the days on which high moisture content readings were taken at P’s Units. I do not agree that these reasons provide a sufficient basis to exclude the external wall of Block A as a possible source of water seepage from the outset.

76.  As regards the location of the damp patches:

76.1  according to the moisture content readings of various locations of the ceilings of the bathrooms of P’s Units taken by Dr Lam’s protimeter during the testing conducted in February 2020, which were plotted onto a grid to show the locations of the areas said to be relatively moist, it was not the case that the moist areas were only found at locations far from the external wall;

76.2  Dr Lam initially said that water could not travel horizontally for more than 0.5m from the external wall to the interior of the bathrooms before it had to stop. He then changed his evidence to say that it could at most travel 0.6 to 0.65m, inside the sunken slab at the ceiling of the bathrooms (0.6 to 0.65m being the width of the sunken slab measured from the external wall),[9] but would stop at the edge of the sunken slab (as this was lower than the ceiling) and go no further. When challenged as to how he came up with such a precise figure as 0.6m, Dr Lam then said that it was only an arbitrary figure and accepted that there was no authority to say that water could not travel beyond such a distance;

76.3  as noted in the Hong Kong Institute of Surveyors’ “Professional Guide to Water Seepage” (“the Professional Guide”) and not disputed by Dr Lam, the source and movement of water causing seepage “are often mysterious”; the movement of water “can be horizontal, vertically downwards, or even upwards, as it is aided by gravity or capillary action”;

76.4  Mr Cheung’s evidence, which I prefer as it accords with the Professional Guide and common sense, is that the distance which water could generally travel was not fixed; the distance which water might travel within the sunken slabs in the present case would depend on the density of the concrete, whether there were cracks inside the concrete, whether there was a continuing supply of water (and if so how much and for how long), and the thickness of the slab.

77.  As regards the lack of correlation between rainfall records and days on which high moisture content readings were taken at P’s Units:

77.1  Dr Lam himself said in cross examination (when challenged as to how wiping the floor of the bathroom Unit A1201 with a damp cloth or spilling water during tooth-brushing could lead to water seepage on the ceiling of the bathrooms of Unit A1101) that water can gradually accumulate and eventually cause seepage. In other words, it may take time before any particular source of water results in seepage;

77.2  Mr Cheung opined that rainwater seeping in through external walls might not necessarily reach the inner parts of P’s Units instantly, and that it might take time for the rainwater to reach the places where seepage was observed. Thus, for example, in respect of the observation of water dripping from the stalactites in the guest bathroom of Unit A1101 on 9^th April 2019, whilst it had not been raining from 1^st to 9^th April 2019, there had been eighteen days of rain in March 2019, including two days on which an amber rainstorm warning was given and one day on which a red rainstorm warning was given by the Hong Kong Observatory. Mr Cheung considered that this quite a lot of rainfall and could explain the dripping observed on 9^th April 2019;[10]

77.3  it was put to Mr Cheung that the fact that the moisture content readings in July 2017 after rain were above 35% in the guest bathroom of Unit A1102 but much lower in the adjacent master bathroom showed that there was no correlation between rain and seepage, but Mr Cheung pointed out that the condition of the external wall in each location might be different. It was then put to Mr Cheung that in the same bathroom, the ceiling was dry in July 2017 after rain, but moist in April 2017 after rain, demonstrated the lack of correlation, but Mr Cheung pointed out that the points checked on the two occasions might not have been the same;

77.4  as Mr Lin pointed out, whilst there was no perfect correlation between rainfall records and days on which high moisture content readings were taken, there were in fact a number of occasions on which high moisture content readings were observed after it had been raining for a few days;[11]

77.5  moisture content readings were taken at the guest bathroom ceiling of Unit A1102 on 17^th June, 18^th July, 21^st July and 11^th August 2017, which were on rainy days or days immediately following rainy days. It so happened that the readings were taken in a straight line perpendicular to the external wall. It could be seen that the further away from the external wall that the reading was taken, the lower was the moisture content recorded;

77.6  I therefore do not agree that there is such a lack of correlation between the incidence of rain and the moisture content readings in P’s Units such that rainwater ingress from the external wall of Block A can be excluded as a source of seepage from the outset.

78.  At this stage of the analysis, then, both rainwater ingress from the external wall and leakage from Ds’ Units remain as possible sources of the seepage into P’s Units.

G2.  Whether Plaintiff establishes that Ds’ Units were the source of seepage

79.  On a balance of probabilities, I do not accept that the Plaintiff has established on the evidence that Ds’ Units were the source of seepage into P’s Units. I have come to this conclusion having had regard to the following:

79.1  the tests carried out by the experts in February 2020;

79.2  Mr Cheung’s opinion that the external wall of Block A could have been a possible source of seepage;

79.3  the observations and tests carried out by the Joint Office on various occasions;

79.4  the cessation of use of the bathroom in Unit A1201;

79.5  the lack of testing of the external wall of P’s Units.

80.  Furthermore, I do not consider that the Plaintiff’s reliance on the following points[12] tips the balance:

80.1  the lack of correlation between rainfall records and moisture content readings;

80.2  the unlikelihood of a water path for rainwater to cause seepage at the inner part of the bathroom ceilings of P’s Units;

80.3  the lack of correlation between reported seepage from external walls seepage at the bathroom ceilings of P’s Units;

80.4  the inadequacy of the remedial work carried out in the bathrooms of Ds’ Units;

80.5  the credibility of Dr Lam’s evidence;

80.6  the credibility of the evidence relating to cessation of usage of the shower and bathtub in the master bathroom of Unit A1201;

80.7  the coloured dye water testing.

81.  I now turn to address each of these matters.[13]

G2.1  The tests carried out by the experts in February 2020

82.  On 13^th, 14^th and 21^st February 2020, the parties’ experts jointly conducted flooding tests, drain flow tests and spraying tests at Ds’ Units and P’s Units. The experts inspected the various bathrooms. They carried out the following tests:

82.1  flooding test: the floors of the bathrooms at Ds’ Units were flooded with water containing coloured dye, to a depth of approximately 10mm,[14] for one hour;

82.2  drain flow tests: dyed water was discharged at every floor drain, flushed in every water closet, and drained at every basin, five times each;

82.3  spraying tests: dyed water was sprayed on the walls of every shower unit to a height of about 1.6 to 1.8m, for ten minutes, at a pressure compatible to that of the showers.

83.  The moisture contents of the ceilings at P’s Units were measured using a protimeter at the following times:

83.1  before the flooding test was carried out (the “Initial” reading);

83.2  one hour after the flooding was carried out (the “First” reading);[15]

83.3  after the completion of the drain flow tests and spraying tests (the “Second” reading);

83.4  on the day after the tests (Day 2), that is, 14^th February 2020 (the “Third” reading),

83.5  one week after the Third reading (Day 8), that is, on 21^st February 2020 (the “Fourth” reading).

84.  Visual inspections were also carried out on the day of testing, Day 2 and Day 8.

G2.1.1  Coloured water observations

85.  It is common ground that no sign of dyed water could be seen on the ceilings of P’s Units on the day of testing, Day 2, or Day 8. In this regard, the tests do not support the Plaintiff’s case that Ds’ Units were the source of seepage.

86.  It was Mr Cheung’s opinion that that the results of the coloured water test in fact go further, to show that there was no seepage from Ds’ Units to P’s Units. He considered that this type of testing is a “powerful and reliable primary testing method” to identify any leakage including tiny or minor leakage. The Professional Guide says that the advantage of coloured water testing is that it has been “proven to find multiple, intermittent, and even small leaks that are undetectable by any other method”.

87.  Dr Lam also accepted that coloured water testing is the only direct testing method available, although he was of the opinion that it did not have a good reputation and that quite often, dye could not be detected despite there being seepage. The Plaintiff says that the mere fact that dye did not seep through did not mean that the bathrooms in Ds’ Units could be eliminated as a source of seepage, as negative results were not conclusive, as indeed has been recognised in previous cases.

88.  It is true that the Professional Guide says that a dye test is not always successful, and that a failure to record its presence in a damp zone cannot be taken as definite evidence against the suspected source. The Professional Guide also refers to the possibility of absorption or filtration of dye solutions along the cracks (in the concrete) resulting in the dye being unable to reach the damp zone. Mr Cheung acknowledged that it was possible that such absorption could be the reason why no coloured water reached Ds’ Units.

89.  In the present case, however, I consider it significant that the Plaintiff’s complaint was that the water seepage problem affected a wide area of the ceilings of the bathrooms of P’s Units. The coloured dye water test was used to flood the entirety of the bathroom floors of Ds’ Units, flushed through all the drainage outlets of the bathroom facilities of Ds’ Units, and sprayed on all the shower walls. Yet no trace of any coloured water was found at P’s Units, whether on the day of testing or up to Day 8. As a matter of simple probabilities, whilst there might have been absorption or filtration of the dye at certain points where, say, there were cracks in the concrete, it is relatively less likely that there would have been such absorption and filtration throughout the entirety of the ceilings of P’s Units.

90.  I also note that the Joint Office had previously conducted a number of coloured dye water tests. For Unit A1201, there were such tests carried out for the drainage facilities in August 2017 and April 2019. For Unit A1202, there were such tests carried out for the drainage facilities in April 2017 (master bathroom only), April 2019 and July 2020, and for the whole of the bathroom floors in July 2017. On none of these occasions was any coloured water detected in P’s Units.

91.  Whilst it may be the case that the lack of coloured water appearing on the ceilings of P’s Units does not necessarily amount to conclusive evidence that there was no seepage from Ds’ Units, it is at least evidence that points towards such a conclusion.

G2.1.2  Protimeter readings

92.  The Plaintiff therefore relies on the protimeter readings taken during the February 2020 tests in support of its case that the source of seepage was Ds’ Units.

93.  However, as is not disputed, what one makes of the readings is a matter of interpretation. The question therefore is whether I should accept Dr Lam’s view that the protimeter readings show seepage from Ds’ Units to P’s Units.

94.  The ceilings of the bathrooms in P’s Units were mapped and divided into grids, comprising horizontal and vertical lines at regular intervals. In other words, it was as if the ceilings were overlaid with a grid of small squares. Protimeter readings were taken at the junctions of the horizontal and vertical lines, at the times indicated earlier. Dr Lam then set out the readings for all of the ceilings in his report in the form of tables.

94.1  He took the view that readings above 25% to 30% indicated wet areas, whereas readings below 18% suggested dry areas. (It will be recalled that the Joint Office took readings of 35% or above as an indication that a complaint of water seepage should be investigated.) In his tables, Dr Lam highlighted in yellow protimeter readings equal to or above 30%.

94.2  Dr Lam devised an equation which, in his view, enabled the identification of water seepage arising from the coloured dye water tests (“Dr Lam’s Equation”). He said that water seepage should be “deemed to have taken place” when the increase in the surface moisture content of any particular spot increased by 10%.[16]

94.3  Dr Lam then highlighted in blue on his tables all of the grid locations for which there was an increase in surface moisture content equal to or above 10% (between the Initial reading and any of the subsequent (First, Second, Third or Fourth) readings).

94.4  Dr Lam then prepared maps of the bathroom ceilings in P’s Units, highlighting in red all of the grid locations for which there was such an increase in surface moisture content.

94.5  He concluded that these were signs of water ingress from Ds’ Units to P’s Units.

94.6  He further concluded that since the increase in surface moisture content took place after the testing on 13^th and 14^th February 2020, ingress of rainwater from the external walls of Block A could be excluded.

95.  I do not find Dr Lam’s evidence to be persuasive.

95.1  Dr Lam’s Equation was presented as if it were an objective scientific formula (with various mathematical symbols), pursuant to which water seepage could be “identified”. However, it emerged in the course of his giving evidence that there was no scientific literature to support the equation, and that it was simply his judgment (expressed in the form of an equation).

95.2  Apart from such “judgment” – which amounts to little more than a bare assertion – there is no real basis for the view that an increase of 10%, rather than say 5% or 50%, amounts to “identification”[17] of water seepage, or should stand as the benchmark by which water seepage should be “deemed”[18] to have taken place. The Plaintiff submitted that Mr Cheung did not challenge the adoption of 10% as a benchmark. However, it is not the case that Mr Cheung accepted 10% as being appropriate; his evidence was that he was unable to say whether it was appropriate or not, and he queried why the figure should be 10% rather than some other figure. In addition, Mr Cheung said that he was not a mathematician and did not know what the formula was supposed to reveal; it was the first time he had seen it in his work as an expert, including during his work as a consultant in the Joint Office investigating water seepage cases and in the course of his review of other experts’ reports; he had tried to look it up online to find authority for its usage but could not find any.

95.3  Furthermore, I do not consider that the protimeter readings taken by Dr Lam[19] are sufficiently reliable or precise indicators of the wetness of the ceilings of the bathrooms in P’s Units such that a difference of 10% between two readings could safely be said to identify seepage.

95.3.1  In cross-examination, Dr Lam was taken to four grid points in the master bathroom of A1101. First was grid point G9, where the protimeter readings were 55 (Initial), 27 (First I) 30 (First II), 30 (Second), 26 (Third), and 19 (Fourth). Dr Lam was unable to explain why the readings had fallen despite the ponding, drainage and spraying tests. He was then taken to grid point H9, where the protimeter readings were 40 (Initial), 23 (First I) 19 (First II), 45 (Second), 28 (Third), 28 (Fourth). He was unable to explain why the measurements went down after the testing, then went up, then went down again. He was then taken to grid point I1, where the readings were 50 (Initial), 22 (First I), 55 (First II), 58 (Second), 26 (Third), 52 (Fourth). Again, he was unable to account for what might have caused the fluctuation in the readings. He was then taken to grid point J13, where the readings were 35 (Initial), 50 (First I), 35 (First II), 45 (Second), 38 (Third), 20 (Fourth). Again, he was unable to explain the fluctuations.

95.3.2  It was only when a fifth grid point was put to Dr Lam that he then came up with an explanation for such fluctuations, namely, that the point on the ceiling might have been a “bad spot”, in that the ceiling material at the grid point might not have been homogenous, which meant that that the readings might differ (depending on how they were taken) and the data in such spots would not be reasonable. A number of other spots where readings fluctuated were then put to Dr Lam, and he explained all of them as being “bad spots”.

95.3.3  In the absence of any explanation for the fluctuations in the readings, it seems to me that it is dangerous to rely on the readings as precise indicators of wetness to the extent that one can “identify” seepage whenever there is an increase in the readings of 10%. For example, what is one to conclude from a set of readings that runs 35-50-35-45-38-20 (grid point J3)? It is not being suggested that the seepage started, then stopped and actually “reversed” in the short time between the First I and First II, then started again, then “reversed” yet again.

95.3.4  The explanation given by Dr Lam does not, in my view, make the readings any more reliable. If anything, it confirms the unreliability of the readings. If certain grid points on the ceiling were indeed “bad spots” because the material at those grid points was not homogenous in nature, it is simply not possible to say which of the grid points is “good” or “bad”, since no study was done to ascertain the homogeneity of the material at any of the grid points. The fact that a series of readings may appear “reasonable” (Dr Lam’s word) does not mean that the grid point at which they were taken was a “good” spot consisting of homogenous material. On the contrary, it may have been a “bad” spot consisting of non-homogenous material, but fluctuations in the wetness of that material may have obscured this. It is simply not possible to infer backwards from the readings whether a grid point consisted of homogenous material or not.

95.3.5  This does not even take into account the lack of credibility of Dr Lam’s explanation of “bad spots”, which explanation was not mentioned in Dr Lam’s report, or indeed even when Dr Lam was initially cross-examined about fluctuating readings. Furthermore, Dr Lam did not exclude such “bad spots” when he compiled his list of blue grid points which were then plotted as red points on his map of the ceilings of the bathrooms of P’s Units, said to indicate seepage. Had this explanation been in Dr Lam’s mind at the time of his report, it is inexplicable why he included them (that is, data admitted to be unreliable), as support for his theory of the source of water seepage.

95.3.6  Because of the limitations of time at trial, Mr Lin did not cross-examine Dr Lam as to every single grid point for which the readings fluctuated, and simply highlighted some examples. In closing submissions, Mr Lin submitted that on the strength of Dr Lam’s logic, quite a number of other grid points must have been “bad spots” as well. Mr Ma objected to this submission on the grounds that whether or not there was a “bad spot” depended on Dr Lam’s view of whether the data made sense.

(a)  However, it was tolerably clear from Dr Lam’s evidence (he was asked about almost thirty grid points) when he would consider a spot to be “bad” (essentially, where the data fluctuated without any pattern), and it is plain that there are many other such spots in Dr Lam’s tables. An example is grid point J8 in the master bathroom of Unit A1101 (readings 35-40-22-38-24-16). Such spots included some which were marked as blue grid points (and hence taken as evidence in support of the theory that seepage originated from Ds’ Units). An example is grid point L7 in the same bathroom (readings 25-35-27-32-28-18).

(b)  In any event, for the reasons earlier given, I consider that (i) Dr Lam’s methodology (of taking a difference of 10% in readings as identification of seepage) is not a reliable way of identifying seepage, and (ii) the protimeter readings cannot reliably be used in the way Dr Lam has used them to “identify” seepage. It is not necessary for Dr Lam to have been asked about every single one of the bad spots to enable me to draw these conclusions.

95.4  Contrary to Dr Lam’s view that the protimeter readings ruled out ingress of rainwater from the external walls of Block A, the readings could in fact be consistent with the source of seepage being from the external wall of Block A.

95.4.1  The rainfall records show that it was raining on 13^th, 14^th and 16^th February 2020 (13^th February 2020 being the first day of the tests).

95.4.2  Insofar as any weight could be placed on the protimeter readings, they tended to show, according to the diagrams plotted by Mr Cheung, that the higher readings (whether before or after the tests had been carried out) were generally near the external wall, or in a set of grid points with some connection to the external wall.

95.4.3  Mr Cheung also pointed out that the protimeter readings tended to undermine Dr Lam’s theory that the “inner” areas of the bathrooms could not have been caused by seepage from the external walls (as they were too far away from the external walls). He gave grid points D15 to D18, which were in the “inner” area of the master bathroom of A1101, as an example. The Initial moisture content readings of these points (that is, before coloured dye water was flooded, flushed or sprayed) was in the range of 30 to 35%. Yet (apart from two readings) all of the subsequent readings, up to the Fourth reading on Day 8, showed a gradual decline in wetness. This was consistent with seepage of rainwater from the external wall, it having rained on 13^th, 14^th and 16^th February 2020.

95.4.4  I have already indicated that I do not accept Dr Lam’s evidence that water could not have travelled horizontally further than 0.5m (or 0.6m or 0.65m) from the external wall to the interior of the bathrooms before it had to stop. Mr Cheung’s evidence, which accords with common sense and which I accept, is that how far water can travel depends on a number of factors including the density of the concrete involved, the thickness of the concrete slab (which slab he considered to be a possible route taken by rainwater), the cracks inside the concrete, and whether there is a continuous supply of water.

G2.2  Mr Cheung’s opinion that the external wall could have been possible source

96.  Mr Cheung’s view was that the external wall of Block A had not been properly considered by Dr Lam as a possible source of seepage. He considered that ingress of rainwater from the external wall was more likely than not to be the source of seepage given that:

96.1  there was evidence that the external wall contained defects arising from SFK’s work. For example, there had been complaints about the defective work causing seepage, by various residents including the Defendants from 2013 to 2017; and in December 2013, the moisture contents recorded on the internal walls of Unit A1101 (not the bathrooms) were 82.7% and 77.8%, indicating that moisture or vapour had become trapped inside the external wall after SFK’s work;

96.2  usage of the bathroom facilities in Unit A1201 had stopped since August 2018;

96.3  improvement to the waterproofing of the bathrooms of P’s Units had already been carried out;

96.4  the moisture content readings in the master bathroom of Unit A1201 prior to starting the tests on 13^th February 2020 included readings of over 35%, whereas these had fallen by the time of the Fourth readings on Day 8 of the testing.

97.  It was Mr Cheung’s view that rainwater could have entered the external wall of Block A at the roof, 12^th floor or 11^th floor level, then travelled along the width of the sunken slab which ran along the external wall of the bathrooms of P’s Units, with some water travelling along the upper part of the slab, and some travelling along the lower part of the slab. For the upper part of the slab, this connected to and was at the same level as the rest of the ceiling in the bathrooms of P’s Units, and was basically just a continuation of the ceiling, so water travelling along the upper part of the slab would not have suddenly stopped after travelling to the edge of the upper part of the slab (ie. 0.65m from the external wall), but would have continued into the rest of the ceiling. For the lower part of the slab, this was at a lower level than the rest of the ceiling. Water reaching that point would have been unlikely to then travel upwards to the rest of the ceiling, and instead would have come out (as Mr Cheung says he observed in the form of drips from the stalactites), or caused stains.

98.  It was put to Mr Cheung that in the diagram he produced to illustrate this possible source of the seepage, he only showed water travelling to the lower part of the slab (which would then not have travelled beyond the edge, as the lower part of the slab was lower than the rest of the ceiling in the bathrooms). I do not however consider that this undermined the plausibility of Mr Cheung’s theory. As he explained, he drew the diagram to show how water could get into the ceiling of the master bathroom of Unit A1101, and not to show all possible paths that the water might have thereafter taken.

G2.3  The Joint Office tests

99.  The Joint Office and its appointed consultants carried out various tests at P’s Units on a number of separate occasions. I have already referred to the fact that the coloured dye water tests carried out in 2017, 2018, 2019, and 2020 did not show any positive results (in terms of confirming seepage).

100.  The Joint Office did issue a Nuisance Notice to the Defendants in respect of Unit A1201 in September 2018 and in April 2020. On both occasions, the notices were issued following the conduct of infrared thermographic and microwave tomography tests at Unit A1101.[20]

101.  Dr Lam was asked whether he relied on the infrared thermography tests carried out by the Joint Office to support his opinion regarding the source of seepage. He said he did not, as this method could only detect the moisture content of any particular surface; he agreed that it could not reveal the source of seepage. The Professional Guide says that rapid infrared thermography scan only indicates the presence of moisture but is unable to tell its source.

102.  As regards the microwave tomography tests, Dr Lam considered that they could show the source of seepage, but he agreed that they were not a direct test, and involved interpretation of results. He agreed that whether the tests could provide information as to the path taken by water depended on the quality of the test data, and he was of course not present during the taking of such data.

103.  The persons conducting the microwave tomography tests did not give evidence at trial.

104.  In such circumstances, I do not consider that the infrared thermography tests and microwave tomography tests carried out by the Joint Office assist the Plaintiff in showing that the source of the seepage was Ds’ Units.

G2.4  Cessation of use of the bathroom in Unit A1201

105.  The Defendants say that the bathroom in Unit A1201 has essentially not been used since around September 2018. The 1^st Defendant, Ms Chan Lai Man (“Ms Chan”), gave evidence about this, and was cross-examined at some length about it. Ms Chan was a credible witness who gave her evidence in a straightforward manner, and I accept her evidence on this point.

106.  Ms Chan gave evidence that from mid-October to December 2018 (after the first Nuisance Notice of 28^th September 2018), she engaged a contractor “Matthew” to redo all the waterproofing and replace all the tiles of the shower tray and below the bathtub in the bathroom of Unit A1201 (“the Re-waterproofing Work”).[21] After the work was completed, the bathroom was not reinstated in that the bathtub was not replaced in its intended position and instead was placed some distance away from the tap, leaving unfinished concrete and pipes on the floor visible, and the wooden floor panels originally covering the raised platform next to the bathtub and on the pathway to the shower area were lifted up and propped against the wall. The shower area was however in usable condition that the marble floor slab of the shower area had been replaced, although Ms Chan said that this was simply for convenience of storage, not for the purpose of usage; the wooden floor panels leading to the shower had been taken away and the area was dusty, hence not suitable for use. Ms Chan said that the bathroom has remained in this condition ever since.

107.  Ms Chan and her husband have, however, been using the washbasins and the water closet of the bathroom in Unit A1201.

108.  Ms Chan and members of her family were away from Hong Kong during various periods. In April 2019, one of her daughters went abroad to study, and Ms Chan went with her, not returning until March 2020. The whole family went to join them from August 2019 to March 2020, with Ms Chan’s husband returning to Hong Kong in mid-September 2019 and then leaving again in December 2019 for a period. Most of the time from August 2019 to June 2020, Ds’ Units were occupied by only one helper, who would have used the servant’s bathroom.

109.  It was put to Ms Chan that as she was away from Hong Kong from April 2019 to March 2020, she would not have known how her helpers cleaned the bathroom, so that it was possible that water or bleach could have been used for cleaning the bathroom. Ms Chan said that her helpers had worked for her for eight or nine years so she knew how they carried out cleaning, and she did not think that they would have adopted a different method during her absence. Furthermore, they knew about the claimed water seepage, so they would not have used water to mop the floor, and they did not do any cleaning in the bathtub and shower area beyond wiping with a wet cloth. Mr Ma submitted that the helpers would have turned on the shower to clean it and that there would have been regular and thorough cleaning because of the Covid-19 pandemic.

110.  I accept Ms Chan’s evidence. As I have mentioned, she was a straightforward and credible witness. Moreover, the photos of the bathroom in Unit A1201 support her evidence that the bathtub is not in a usable state, and that the wooden floor panels leading to the shower area have been lifted up. If the shower were not used, there would have been no reason to regularly clean it by turning on the shower taps.

111.  As further evidence of non-usage of the bathtub and shower of Unit A1201, the Defendants produced copies of the water bills for the unit. They did indeed show a very low level of usage of water, averaging 16 litres per day for the period from January 2019 to May 2019. However, the level of usage of water in the period from May 2018 to September 2018 was also not that high, averaging 25 litres per day. Mr Ma submitted that the bulk of the water consumption at Unit A1201 must have been reflected in the bills for Unit A1202 instead, which were many times higher. I do not need to make a finding about this. Suffice it to say that I agree that the water bills do not take the Defendants’ case regarding usage of Unit A1201 further.

112.  Mr Ma submitted that it could not have been a coincidence that the area where seepage was most serious, namely at the location of the two stalactites on the ceiling of the guest bathroom in Unit A1101, was directly under the water closet of the Unit A1201 bathroom, and that the water closet had not been covered in the works carried out by Matthew. However, this is a bootstraps argument.

G2.5  Lack of testing of external walls

113.  Dr Lam ruled out the external walls of Block A as a source of seepage from the start. Mr Cheung suggested that the external wall should be tested, but Dr Lam disagreed with the proposed methodology. In the end, no agreement was reached and the external wall was not tested.

114.  I have earlier referred to Dr Lam’s view that conducting a test on the external walls would not be meaningful as, in the event that water seeped through the external wall, it would not be possible to say whether this was caused by the Defendants’ contractor making holes in the external wall in the course of renovation work, or SFK’s work. However, this does not mean that the test could not meaningfully tell whether the external wall was the source of seepage in the first place (leaving aside whether the cause was the Defendants’ contractor or SFK).

115.  It was known that the IO had a claim against SFK for defects in the external walls leading to (inter alia) water seepage. The extent and effectiveness of rectification is unclear. It is said by the Plaintiff that the complaints did not relate to the areas of seepage in issue in these proceedings. Indeed, even in respect of the multitude of complaints made by the Defendants about the external walls of Ds’ Units, Ms Chan accepted that these did not relate to the master bathroom of Unit 1201. The point however is that the numerous complaints of defects in the external walls of Greenville Gardens, including Block A, leading to (inter alia) water seepage, indicate that the external wall could not simply just be ruled out as a potential source of seepage. As the Professional Guide noted, the source and movement of water causing seepage “are often mysterious”. Mr Cheung posited that water could have entered the external wall at various places and then moved into the ceiling of P’s Units.

116.  In the circumstances, given the lack of testing of the external wall, it cannot be ruled out as a source of seepage.

G2.6  Correlation between reported seepage from external walls in other incidents and the seepage in the present case

117.  The Plaintiff says that there is a lack of correlation between reported seepage from external walls in other incidents referred to in the Buckell Report and the seepage which is in issue in the present proceedings. There was extensive cross-examination and re-examination of Ms Hsu as to the locations of the seepage referred to in the history of complaints of water leakage in Unit A1102 which was tabulated in the Buckell Report.

118.  As I have earlier explained, to my mind, the significance of these incidents is not so much whether any of them could be specifically linked to any item of seepage complained of in these proceedings. Rather, the point is that the Buckell Report is one of the pieces of evidence that there were defects in the external wall causing seepage, that Dr Lam was aware of this and indeed had expressed similar views when acting for the IO, yet ruled out the possibility of the external wall as a source without investigating it when acting for the Plaintiff. The Buckell Report does not assist the Plaintiff in showing that the source of seepage emanated from Ds’ Units.

119.  The Plaintiff also says that the complaints about seepage made by the Defendants about the external walls of Ds’ Units did not correspond to the seepage in issue in the present proceedings. The submission is that seepage at these locations in Ds’ Units would have caused seepage at the ceilings of Ds’ Units as well.[22] It seems to me that this is speculative. The fact that there was no complaint of seepage at the ceilings of Ds’ Units from the external walls does not mean that seepage at the ceilings of P’s Units could not have originated from the external walls.

G2.7  Quality of the remedial work carried out in the bathrooms of Ds’ Units

120.  After the first Nuisance Notice of 28^th September 2018 was issued, the Defendants engaged Matthew to carry out the Re-waterproofing Work for Unit A1201. The Plaintiff says that this was inadequate to prevent leakage. According to Ms Chan, initially, Matthew applied silicone sealant and waterproof paint at various locations. An officer from the FEHD inspected the work, expressed the view that this was insufficient, and asked Ms Chan to demolish and redo the waterproofing layer of the bathtub in Unit A1201. Ms Chan then engaged Matthew to redo all the waterproofing of the shower tray and below the bathtub in the bathroom of Unit A1201.

121.  The Plaintiff says that the Re-waterproofing work in Unit A1201 was inadequate because:

121.1  it did not cover the area where the washbasins and the water closet was located;

121.2  waterproofing was not carried out to the wall surface and upturn of the shower unit;

121.3  the bathtub was not reinstated after the Re-waterproofing Work, leaving the area under the intended location of the bathtub exposed.

122.  I do not agree that the matters relied on by the Plaintiff constitute evidence of seepage from Unit A1201[23] or evidence of the source of seepage.

123.  The Plaintiff says that the work required by the Nuisance Notice of 28^th September 2018 was not confined to the shower area and the bathtub area but the whole of the bathroom in Unit A1201. Ms Chan explained that she had understood from the Chinese version of the notice that it was the raised areas, or platforms, in the master bathroom (“地台”) which were required to be repaired, and that this comprised the shower, bathtub and the raised walkway area next to both, but not the floor level area where the washbasins and water closet were located. Furthermore, this is what the FEHD officer told her as well when he inspected. I accept her evidence as to why the Re-waterproofing Work was carried out in this way.

124.  Whatever the correct construction of the Nuisance Notice may be, I do not agree that the absence of re-waterproofing work at the washbasins and water closet areas constitutes evidence of seepage or the source of seepage. As a matter of common sense, there is a distinction between the raised platform where the bathtub and shower were located, which may be covered with water during usage (there was a channel within the platform next to the bathtub which carried water), and the washbasins and water closet, where the floor would not be subject to such flooding during normal usage. Dr Lam gave evidence that he did not see any leak from the sink drainage or water closet drainage. There is no real basis to suggest that splashing water from toothbrushing or handwashing, cleaning the floor with a wet cloth, or splashing water from flushing the toilet is the source of seepage into the bathrooms at Unit A1101.

125.  As to the lack of waterproofing for the wall and upturn of the shower unit, since I accept that the shower unit has not been used since around September 2018, the lack of waterproofing cannot constitute evidence of seepage or the source of such seepage.

126.  As to the fact that the bathtub was not reinstated, similarly, since the bathtub has not been used around September 2018, the fact that it has not been put back into place cannot constitute evidence of seepage or the source of such seepage. It is speculative to say that the moving the bathtub “may possibly cause damage” to the waterproof membrane.

127.  As regards Unit A1202, Matthew was engaged to redo the nano waterproofing membrane and to reapply the waterproof coating for the bathrooms and toilet in about June 2017 (“the Nano Waterproofing Work”). The work did not involve removal of floor tiles; two layers of coating were applied on the floor surface of the bathrooms and toilet.

128.  Dr Lam’s evidence was that the waterproofing layer might not be durable, as it was unprotected and would be subject to wear and tear. After a few years, there might be scratches which could cause leakage.

129.  It is said that water seepage persisted at Unit A1102 even after the Nano Waterproofing Work. However, this again is a bootstraps argument. The supposed inadequacy of the waterproofing work and the continued seepage is not probative of the source of seepage.

G2.8  The servants’ bathroom

130.  I did not understand the Plaintiff to be pursuing a case in respect of this location, Mr Ma having indicating in closing that it was not pleaded.[24]

131.  The servants’ bathroom was also the subject of the experts’ joint testing using coloured dye water. No coloured dye was observed to have seeped through from Unit A1201. As regards the protimeter readings, the observations I have made above would equally apply to this location.

132.  In any event, Mr Cheung’s evidence was that the source of the seepage was the fire service pump house (for which the Plaintiff would not be responsible). This was not challenged – the focus of the cross examination was directed to showing that the fire service pump house was not the source of seepage in the master and guest bathrooms. I accept Mr Cheung’s evidence.

G2.9  Plaintiff fails to establish source of seepage

133.  Having considered all the evidence, I find that the Plaintiff has failed to establish, on a balance of probabilities, that Ds’ Units were the source of seepage into P’s Units.

H.  LIABILITY

134.  I therefore do not need to go on to consider the issue of the cause of the seepage complained of by the Plaintiff.

135.  The Defendants are not liable to the Plaintiff for breach of the DMC, breach of the BMO, in negligence or in nuisance.

I.  QUANTUM

136.  In case I am wrong in relation to the issues of liability, I go on to set out my brief observations in relation to a number of issues in relation to quantum.

I1.  Cost of reinstatement

137.  The parties have agreed on the cost of reinstatement for P’s Units as being $25,500 for Unit A1101 and $21,500 for Unit A1102.

I2.  Rental income – factual issues

I2.1  Unit A1102

138.  The Plaintiff’s pleaded case for Unit A1102 is that the Plaintiff had sought to let it out since around April 2017 but was unable to do so because of the water seepage from Ds’ Units.

139.  The defendant submitted that unlike Unit A1101, this unit had never been let out, and that in any event, it could not be let out from the end of 2020 onwards because of external wall seepage caused by SFK. Furthermore, the asking price was unreasonable. The Plaintiff submitted that the unit should not be treated any differently from Unit A1101.

140.  The undisputed evidence is that Unit A1102 was occupied by Ms Hsu’s grandparents until 2008, but still not leased out thereafter. Later on, SFK’s external wall work affected this unit significantly, and the plaster of two walls in one of the bedrooms was hacked off in September and October 2015, and not fixed until February 2017, and could not have been let out in this state.

141.  It was put to Ms Hsu that the asking monthly rental of $68,000 set in around April 2017 showed that she had no genuine intention to rent out the unit, given that the Plaintiff’s own expert (Mr Pang Shiu Kee) valued the market rent of the unit at this time at $57,000 and the Defendants’ expert (Mr Wong Kam Wing) valued the market rent at $50,000 (or $48,000 if the water leakage was taken into account). Furthermore, despite the lack of interest from prospective tenants, the asking price was nevertheless increased to $70,000 in around September 2018. Ms Hsu said that the asking rental of $68,000 was suggested by her estate agent.

142.  The Defendants also say that the estate agent’s internal notes suggest that Ms Hsu had instructed that there was to be no viewing of the flat until the water leakage problem had been fixed.

143.  Ms Hsu denied that there had been no genuine attempt to rent out the flat, and said that she did not know what the agent’s abbreviations meant. She also said[25] that the asking rental was only a starting point for negotiation, but the problem was that nobody was interested as the agent was duty bound to inform potential tenants of the water seepage problem.

144.  I agree with Mr Ma that it is a serious allegation to say that there was no genuine intention to let the unit, as it involves the suggestion that the placing of the unit on the market for letting in 2017 was conceived to pave the way for the Plaintiff’s claim which was only commenced in May 2018. I am not prepared to make this finding on the basis of the evidence given.

145.  However, this is not the end of the matter. Mr Pang, the Plaintiff’s own expert, had initially taken the position that the fact that Unit A1102 had never been tenanted showed that it could not be leased out by reason of the water leakage. After cross-examination, he accepted that even with water seepage, the unit could in fact have been rented out, with the level of rental to be settled by negotiations between the landlord and tenant. He also accepted that placing Unit A1102 on the market with an asking rental of $68,000 in April 2017 was not realistic; whilst an estate agent might want to solicit business from landlords by suggesting an attractive level of rent, placing a unit on the market at an unrealistic rent would backfire as the unit would not be rented. Mr Pang agreed that when the Plaintiff placed Unit A1102 on the market at $68,000, he would not have expected it to be rented out, and he agreed that in asking for this level of rent, the landlord was acting “a bit unreasonably”.

146.  Ms Hsu’s evidence was that estate agents were duty bound to disclose the existence of water seepage in the unit.

147.  In other words, Unit A1102 was placed on the market at an above-market asking rental, and any prospective tenants would have been told that the unit had water seepage problems.

148.  In the circumstances, the Plaintiff fails to prove that it was water seepage that caused Unit A1102 not to be let. It seems to me that it is at least equally possible that it was the high asking price, rather than the existence of water seepage, that put off potential tenants from pursuing a tenancy.

149.  Furthermore, from the end of 2020 onwards, I consider that there is an additional, independent reason why it cannot be said that it was water seepage from Ds’ Units that caused Unit A1102 not to be let out. Ms Hsu accepted that with the new water seepage discovered at the end of 2020 next to a window (which was caused by SFK), no potential tenants would have been interested in renting Unit A1102. From that time onwards, therefore, it could not be said that “but for” the water seepage in the bathrooms of Unit A1102, the unit would have been rented out.

150.  In case I am wrong about these points, I deal further below with the experts’ evidence regarding the market rental valuation of Unit A1102.

I2.2  Unit A1101

151.  The Plaintiff’s pleaded case for Unit A1101 is that the monthly rent for the unit for the tenancy which commenced on 15^th October 2017 had to be lowered to $55,000, which was below market rent, due to the continuing seepage, and that after the tenant moved out in December 2018, the Plaintiff was unable to let out the unit due to the continuing seepage.

152.  It was Ms Hsu’s evidence that from 15^th October 2017 to 14^th July 2018, the Plaintiff had to lease out Unit A1101 at the monthly rate of $55,000 and that this was lower than the market rent at the time. Ms Hsu did not produce any tenancy agreement in support of this claim. What she produced was a letter from the tenant dated 11^th June 2018 requesting an extension of the tenancy, and asking for the monthly rent to be reduced from 15^th July 2018 onwards from $60,000 to $55,000.

153.  I reject Ms Hsu’s evidence that the rent up to 14^th July 2018 was $55,000. The tenant’s letter clearly asked for a reduction in the monthly rent from $60,000. Ms Hsu’s claim that she had in fact rented the unit out at $55,000 and proposed to increase it to $60,000 but that the tenant bargained to keep the rent at the same level is inconsistent with the letter and was unconvincing. This was one of several examples of Ms Hsu’s evidence which struck me as being unreliable. In the premises, there was no loss for the period up to 14^th July 2018, given that even the Plaintiff’s expert assessed the market rent for the unit (on the assumption of no water seepage) at $60,000 as at 15^th October 2018.

154.  For the period from 15^th July 2018 to 14^th December 2018 (the end of the extension requested by the tenant), Ms Hsu’s evidence that Unit A1101 was rented out at $55,000 was not challenged. As to the market valuation of the rental value during this period, I deal with this below.

155.  From 15^th December 2018 onwards, Ms Hsu says that she was unable to rent out Unit A1101 due to the water seepage problem. She says the Plaintiff entered into an estate agency agreement with its estate agent for the period from 3^rd December 2018 to 2^nd December 2019 to seek to let out Unit A1101, but was unable to secure any tenant. The Defendants say that the unit could not be let out because it was put on the market with an asking rental of $65,000 which was 8.3% higher than the Plaintiff’s expert’s valuation of $60,000, and 20% and 25% higher than the Defendants’ expert’s valuations of $54,000 (assuming no leakage) and $52,000 (assuming leakage) (all as at 15^th October 2018), and unreasonable compared to the $53,000 which Ms Hsu says she could not persuade even her existing tenant to accept. The Defendants also say that someone from the Plaintiff must also have prevented the estate agent from letting anyone view the flat, as the agent’s notes stated “not available for vf”. They say that on the basis of these matters, as with Unit A1102, the Plaintiff simply had no intention to let out Unit A1101 at all.

156.  Again, I am not prepared to make any finding that the Plaintiff had no genuine intention to let the unit. However, I consider that the Plaintiff fails to prove that it was water seepage that caused Unit A1101 not to be let from 15^th December 2018 onwards, for similar reasons as those in relation to Unit A1102, it being at least equally possible that it was the high asking price, rather than the existence of water seepage, that put off potential tenants from pursuing a tenancy.

157.  This conclusion is reinforced by the fact that on or about 1^st December 2021, the Plaintiff entered into a tenancy agreement with a Mr Lee to lease Unit A1101 (and an additional parking space) for a term of two years starting from 15^th December 2021, at a rent of $48,000. The arrangement was made not through the estate agent, but through Mr Lee’s father-in-law directly approaching Ms Hsu. The rental agreement shows that water seepage did not render Unit A1101 incapable of being let out.

I3.  Rental income – the valuation evidence

158.  The parties’ respective experts valued each of P’s Units by reference to agreed comparables (termed “C1”, “C2”, “C3” and “C4”) which were located in Blocks B and D of Greenville Gardens. Unit A1101 was valued as at 15^th October, for each of the years from 2017 to 2022. Unit A1102 was valued as at 1^st April, for each of the years from 2017 to 2022. Both experts valued the units on the basis that they were not affected by water seepage. The Defendants’ expert also valued the units on the basis of being affected by water seepage, whereas the Plaintiff’s expert opined that the units would have nil rental value if they were affected by water seepage.

159.  The parties’ experts differed on five adjustment factors for the comparables.

I3.1  View

160.  I agree with the Plaintiff’s expert that P’s Units, being “front” facing units, enjoy a view of the racecourse (at least from the balcony, even if not from the interior) whereas the comparables, being “rear” facing units, do not. Between P’s Units, Unit A1102 has the more open and therefore better view, as can be seen from the photographs. Furthermore, comparables C2 and C4 face a retaining wall.

161.  I agree that some adjustment should be made accordingly. The Plaintiff’s expert Mr Pang made his adjustments based on the relative rateable values of the units, as there was no available evidence of actual rents for front facing units. It was put to him that the rateable value of Unit A1102 was higher than that of Unit A1101 from 2017/18 to 2019/20, whereas he himself had assessed Unit A1101 to possess the higher rental value over the same period. However, I accept that the reason for the difference is that different valuation dates were taken (Mr Pang using April to value Unit A1102, whereas rateable values would have been based on October values).

162.  Mr Pang acknowledged that rateable values might not necessarily accurately reflect actual transacted values. However, it seems to me that, in the absence of other means to account for the difference in view between P’s Units and the comparables (and Mr Wong did not suggest any such means), using rateable values as a proxy is acceptable.

163.  I therefore accept Mr Pang’s adjustments as regards view.

I3.2  Accessibility

164.  Block A is closer to the main entrance of Greenville Gardens and therefore has better accessibility than Blocks B and D. Access to taxis and minibuses along Shiu Fai Terrace is relatively easy. In comparison, the lift lobby of Block B is recessed from the road and has to be accessed via the carpark, and the lift lobby of Block D is ten steps up from the road and there is no cover in times of rain. Mr Pang therefore made upward adjustments to the Block B and Block D comparables.

165.  Mr Wong considered that the residents of Block A would be troubled by the sound of traffic passing by the building in order to reach the other blocks. He also considered that Blocks B, C and D were more prestigious as they were taller and stood on an elevated platform, in contrast to the lower Block A.

166.  In my view, Mr Wong’s considerations do not address the issue of accessibility.

167.  I therefore accept Mr Pang’s adjustments as regards accessibility.

I3.3  Availability

168.  Mr Pang made further upward adjustments to account for the fact, as he perceived it, that there were no higher floor units in Block A available on the market for leasing. In other words, he considered that P’s Units enjoyed the quality of rarity. He said that in Block A, many “veteran owners” occupied the front facing units, so that it was rare to find such units on the leasing market.

169.  However, when asked for the evidence to support his view that units held by veteran owners were not available for leasing, Mr Pang could only say that he had talked to some estate agents, owners and investors; he had not set out the relevant information in his report, and he could not give any particulars as to which units were or were not said to be available for rent, whether for Block A, or the other blocks. He acknowledged that it was not possible to tell from the Land Registry or other public records whether any of the units had been rented out. In the end, he accepted (“to a minor extent”) that he could not really tell whether P’s Units were really rare on the market.

170.  I therefore reject Mr Pang’s adjustments as regards availability, and agree with Mr Wong that no adjustment should be made for this factor.

I3.4  Furnishings

171.  Mr Wong made a downward adjustment of 1% for this factor, whereas Mr Pang made no adjustment. Mr Wong made this adjustment as the comparables were placed on the market on the basis of being fully furnished. Mr Pang considered that no adjustment was necessary as there were some items of furniture and appliances in P’s Units.

172.  In cross-examination, it emerged that Mr Wong was denied the opportunity of making detailed inspections of P’s Units. He said that in his experience, this kind of behaviour suggested that the units would have been inferior in condition, hence the downward adjustment.

173.  Even though the behaviour referred to by Mr Wong may be objectionable, I cannot accept it as sufficient evidential basis for a conclusion that the interior conditions of P’s Units were inferior to those of the comparables. Mr Wong fairly accepted that he was not in a position to verify the Plaintiff’s claim that certain furnishings and appliances were provided in P’s Units.

174.  I therefore reject Mr Wong’s adjustment as regard furnishings, and agree with Mr Pang that no adjustment should be made for this factor.

I3.5  Privacy

175.  Mr Wong made a downward adjustment of 1% for this factor, whereas Mr Pang made no adjustment. Mr Wong made this adjustment as the comparables face a green slope, whereas P’s Units are close to neighbouring buildings.

176.  In cross-examination, Mr Wong agreed that the bedrooms of the Block B comparables also suffered from a problem with privacy.

177.  I therefore reject Mr Wong’s adjustment as regards privacy, and agree with Mr Pang that no adjustment should be made for this factor.

J.  DISPOSITION

178.  I therefore dismiss the Plaintiff’s claim. I further make a costs order nisi that the costs of and occasioned by the action be paid by the Plaintiff to the Defendants, with certificate for two counsel, to be taxed if not agreed.