SIN CHAN KAM v. THE INCORPORATED OWNERS OF WAI SUN BUILDING

LDBM 43/2016

[2019] HKLdT 32

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 43 OF 2016

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JUDGMENT

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A. Introduction

1.  The applicant (“A”) is the registered owner of shop D on the ground floor of Wai Sun Building, No.392-402 Jaffe Road, Wan Chai, Hong Kong (“Premises”).  According to the Ground Floor Plan[1], the Premises consist of the main area of the shop, a light well (“Light Well”) and 2 toilets (“Toilet A” and “Toilet B”) with back door. 

2.  The respondent (“R”) is the incorporated owners of Wai Sun Building (“Building”).

3.  The deed of mutual covenant of the Building was dated 13 March 1978 and registered with the Land Office on 1 May 1978 (“DMC”).  The Building is now about 41 years old.

4.  It is undisputed that the drainage plan of the Building was approved by the relevant government authority on 17 August 1977 (“Approved Drainage Plan”) before the Building was constructed in around 1978.   

5.  On about 27 August 2003, the Building Authority issued to R a building order[2] (“Building Order”) requiring R to repair or renew the defective rainwater, waste, soil and vent pipes of the Building to such standard acceptable to the Building Authority and in compliance with the regulations.

6.  On 26 March 2004, a Win Yat Construction and Engineering Co which was the contractor engaged by R for carrying out works under the Building Order (“R’s contractor”) sent a Notification of Commencement of Works to the Building Authority.

7.  Among other works, R’s contractor carried out the following alterations and additions to the pipes[3] inside the Premises (“Pipe Alterations[4]”):

(i)   removing Old Pipe 1 and Old Pipe 2;

(ii)   erecting New Pipe 1, New Pipe 2, New Pipe 2 U-trap and New Pipe 3 U-trap;

(iii)   drilling New Hole 1, New Hole 2 and New Hole 3;

(iv)   altering the Vent Pipe (“Altered Vent Pipe”);

(v)   erecting additional waste pipe connected to manhole No. 5 inside the Premises; and

(vi)   relocating 2 waste pipes to the external wall of the Building.

8.  According to a completion certificate issued by R’s contractor, repair works were completed on 15 June 2004.  On 9 July 2004, Form BA14 was submitted by R’s contractor to the Building Authority.

9.  On 26 August 2004, a certificate for compliance was issued by the Building Authority.

B.   A’s case

10.  Starting from about December 1992 and at the material times, A had delegated to Hang Seng Real Estate Management Ltd (“Hang Seng”) to handle matters relating to tenancies of the Premises.  From 24 March 1998 to 12 April 2014, the Premises was rented to a tenant for the business of selling aluminum and glass products.  In early 2014, the said tenant moved out and delivered possession to A.  Then, A discovered and made the complaints as follows:

(i)   The Pipe Alterations were carried out by R inside the Premises without the consent or approval of A (“Complaint 1”);

(ii)   There was water seepage at the areas surrounding the ceiling openings for New Pipes 2, 3 and 4, New Pipes 2 and 3 U-trap, and 2 toilets of the Premises (“Complaint 2”);

(iii)   In July 2014, one of the prescribed works for the survey and repair work for the underground sewer system of the Building had not been done (“Complaint 3”);

(iv)   A number of common part pipes under the Premises have become severely deteriorated and even collapsed because of R’s failure to repair them (“Complaint 4”);

(v)   R had allowed dirty water to flood the Light Well in multiple instances due to overflow of sewage from choked underground common part pipes and due to diversion of excess sewage to the common part rain water pipe in the Light Well (“Complaint 5”);

(vi)   R has failed to replace the defective manhole covers inside the Premises (“Complaint 6”).

11.  It is A’s case that R has been in breach of the following clauses under the DMC (details of which will be set out below):

(i)   Clause 1:  Breach of A’s exclusive use, occupation and enjoyment of the Premises;

(ii)   Clause 11(a):  Not to make structural alteration;  

(iii)   Clause 11(d):  Not to use the common part in a way that would cause nuisance to A;

(iv)   Clause 11(g):  Not to make dirty of the common part of the Building;

(v)   Clause 11(h):  Not to do anything whereby the flush system may be clogged;

(vi)   Clause 29:  Not to make structural alteration to the exterior of the unit.

12.  Further or alternatively, A alleged that R has been in breach of the following sections of the Building Management Ordinance (“BMO”):

(i)   Section 18(1)(a):  failure to maintain common part in good repair and clean condition;

(ii)   Section 18(1)(c):  failing to do all things reasonably necessary for the enforcement of the obligations in the DMC;

(iii)   Section 34I(1)(b):  using the commons parts in a way that would cause nuisance to A.

13.  As a result of R’s breaches, A claims against R:-

(i)   a mandatory injunction to:

(a)   reinstate the pipes in the Premises to its original state and condition;

(b)   repair/replace the manhole covers, the common part pipes, the staircase landing and water tank immediately above the 2 toilets and remove all unauthorized common facilities;

(c)   repair and reinstate the areas of the Premises affected by water seepage from the common parts;

(ii)   a prohibitory injunction to:

(a)   restrain R from continuing to allow water seepage from the common parts to the Premises;

(b)   restrain R from further discharging sewage into the areas of the Premises;

(c)   restrain R from further installing or causing to be installed any pipes not in conformity with the Approved Drainage Plan or not approved by the relevant competent Government authorities;

(iii)   Damages for loss of rental.

C.   R’s Case

14.  In summary, R’s case is that:-

(i)   All necessary works including the Pipe Alterations were carried out for the compliance of the Building Order and a certificate of compliance has been issued;

(ii)   A has refused to allow entry to the Premises by R to carry out inspection of the water seepage;

(iii)   A has, by his conduct in not raising any objection to the Pipe Alterations for almost 10 years, committed laches making it inequitable to proceed with the claim and has acquiesced or waived his rights to the Pipe Alterations;

(iv)   A has failed to mitigate his damages for rental loss.

15.  In the 2 letters from R’s solicitors both dated 9 January 2019 as well as the respective opening and closing submissions of R, it was agreed and conceded, inter alia, as follows:

(i)   R will carry out remedial repairs to rectify the problem in respect of the water seepage;

(ii)   R will remove the Altered Vent Pipe (as per para. 11(a) in Re-amended Grounds of Application) and the New Pipe 3 U-trap (as per para. 10(g) in Re-amended Grounds of Application);

(iii)   R will replace the cover to manhole marked A between manhole F3 and F4[5].

16.  Originally, R raised the argument of easement of necessity in the Notice of Opposition.  In the closing submission, Mr Wong for R conceded that it is untenable in view of the evidence presented.  Mr Wong further submitted that some outstanding issues are no longer live issues in view of the agreement of R to carry out repairs and that whether the making of any order or not is the Tribunal’s discretion that, he argued, should not be exercised when there is no nuisance or inconvenience to A.

D.   Relevant provisions in the BMO and in the DMC

17.  The duties of an incorporated owners to manage the building are provided under section 18(1)(a) and (c) of the BMO which states:-

“(1) The corporation shall-

(i) maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition;

…

(c)   do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building. ”

18.  The relevant provisions in the DMC are set out below:

“Clause 1:  Each of the parties hereto for himself or his executors administrators and assigns hereby grant unto each of the other parties hereto their or his respective executors administrators and assigns full right and privilege to the exclusive use occupation and enjoyment and the rents and profits during the residue of the said term of years and the period of renewal as set out in the Second Schedule hereto the part of the said building (hereinafter referred to as “his unit”) which is more particularly described and set out in the Second Column of the First Schedule hereto opposite to the respective names of the grantees as set out in the First Column of the First Schedule hereto with the appurtenances thereto TO THE INTENT that each of the parties hereto shall be entitled to the exclusive use occupation and enjoyment and the rents and profit of his unit so set out opposite to his name as set out in the First Column of the First Schedule hereto.

Clause 2:  Each of the parties ……..shall be entitled to the like right of passage and running of gas electricity and water to and from his unit or the roof through the sewers drains pipes wires ducts and conduits forming part of the said building.

Clause 11:   Each party hereto covenants with the other of them as follows:-

(a)   Not to make any structural alteration to his unit or any alteration of the water, gas or electrical conduits or plumbing nor to cut or injure any of the walls beams or columns thereof.

…

(d)   Not to do anything in any part or parts of the said building in common use which may be a nuisanceor annoyance to the other parties or the other occupier or occupiers of the said building.

…

(g)   Not to make dirty or damage the lifts or passages or landings or any part of the said building for common use.

(h)   Not to do anything whereby the flush system of the said building may be clogged or the efficient working thereof may be impaired.

Clause 29:  The owner of an unit in the said building shall not make any structural alterations to or additions to the exterior of his unit and shall not make any window or other aperture in any part of the wall dividing his unit from the parts of the said building in common use.”

E.   Factual Evidence

19.  A has only one factual witness namely, himself to give oral evidence at trial, who has also filed his following witness statements:

(i)   Witness Statement in Chinese filed on 31 October 2016;

(ii)   Further Witness Statement filed on 17 July 2017; and

(iii)   2^nd Supplemental Witness Statement filed on 7 November 2018.

20.  R has called Ms Tse Lok Yee Ann to give oral evidence, who has filed her following witness statements:

(i)   Witness Statement filed on 31 October 2016; and

(ii)   Supplemental Witness Statement filed on 17 July 2017.

F.   Expert Evidence

21.  A’s expert is Dr Lam Siu Shu Eddie (“Dr Lam”), a registered structural engineer.  R’s expert is Mr Cheung Yue Pong Joshua (“Mr Cheung”), an authorised person. The parties have called their respective experts to give evidence and also relied on the following expert reports at trial:

(i)   Expert Report of Dr Lam filed on 31 October 2016;

(ii)   Joint Expert Report prepared by Mr Cheung and Dr Lam filed on 16 August 2017;

(iii)   Supplementary Report on Questions Requiring Clarifications prepared by Dr Lam and Mr Cheung filed on 19 April 2018;

(iv)   Joint Expert Report prepared by Dr Lam and Mr Cheung filed on 10 August 2018;

(v)   Joint Comment prepared by Dr Lam and Mr Cheung filed on 19 December 2018.

22.  Both experts have no disagreement over the source of water seepage at the locations of (a) Toilet A; (b) Toilet B; and (c) soffit of the Premises under the flat roof. Their opinions are set out briefly below:

Toilet A

23.  Both experts agree that:

(i)   The cause of water seepage into Toilet A is likely due to defective external wall allowing water to penetrate and seep into the soffit of Toilet A;

(ii)   It is necessary to make good the external wall;

(iii)   There is a likelihood that seawater escapes from the flush water tank and enters the soffit of Toilet A;

(iv)   It is necessary to redo the waterproofing of the flush water tank. Repair work will need to be carried out to the whole soffit of Toilet A.

Toilet B

24.  Both experts agree that:

(i)   Water seepage into Toilet B is caused by the staircase landing being used as a storage area for cleaning tools;

(ii)   It is necessary to stop using the staircase landing for storage of cleaning tools;

(iii)   Repair work will need to be carried out to the whole soffit of Toilet B.

Soffit of the Premises under the flat roof

25.  Both experts agree that: 

(i)   Soffit of the Premises under the flat roof was and is subject to ingress of water from above;

(ii)   The cause of water seepage is likely due to aging of the waterproofing membrane under the flat roof and the poor arrangement of pipes;

(iii)   It is necessary to arrange the pipes in accordance with the approved plan and to connect the pipe by effective plumbing to the floor drain;

(iv)   It is necessary to redo the waterproofing membrane of the Flat Roof;

(v)   Repair work to the soffit of the Premises can only be carried out after alleviating the ingress of water from above;

(vi)   Repair work will need to be carried out to the whole soffit of the Premises under the flat roof.

G.   Site Visit

26.  By consent of the parties, I had conducted a site visit of the Premises accompanied by the parties’ legal representatives and experts in the afternoon of the first day trial.

27.  The purpose of the site visit is to assist the Tribunal in:-

(i)   Getting a better understanding of the physical layout and features of the Premises rather than only relying on photographs;

(ii)   Comparing the current and existing conditions of the Premises with that in the witnesses’ evidence.

H.   Complaint 1: Pipe Alterations

H.1  Whether R is in breach of Clause 1 of the DMC by carrying out the Pipe Alterations

28.  It is A’s case that the Pipe Alterations were not carried out in accordance with the Approved Drainage Plan.  Mr Mak for A submitted that R has failed to discharge its burden to prove its case that the Pipe Alterations were carried out in accordance with any approved drainage plan or were approved by the relevant authority back in 2004.  In my view, this submission is wrong as to the burden of proof.  Obviously, it is A who alleges that the Pipe Alterations were not carried out in accordance with the Approved Drainage Plan, shall bear the burden of proof but not R.

29.  Further, there is no provision in the DMC stating that the pipes must be installed according to the Approved Drainage Plan.  Mr Mak relied on Clause 2 of the DMC but I disagree as there is no mention of the Approved Drainage Plan in this clause.  By proper construction of Clause 2, it simply provides the owners with the right of passage and running of water etc to and from his unit through the sewers drains pipes of the Building.  It has nothing to do with the alteration of pipes by R.

30.  Besides, a certificate for compliance has been issued by the Building Authority on 26 August 2004 concerning the works done by R in respect of the Building Order.  Further in the subsequent letter dated 20 June 2014 issued by the Building Department, it was confirmed that upon inspection by the staff of the department, the Building Order was complied with and a certificate for compliance has been issued on 26 August 2004[6]. In other words, the Approved Drainage Plan has been impliedly varied by the Building Department.  I conclude that it is A who fails to prove his case that the Pipe Alterations were not carried out in accordance with the Approved Drainage Plan.

31.  Even if it is necessary for the Pipe Alterations to be carried out in accordance with the Approved Drainage Plan, the proper party to enforce is the Building Department or the relevant government authority but not A.  In fact, there is no evidence that the Building Department or the relevant government authority has taken or will take any action against R for the wrongful construction of the Pipes Alterations up to this date despite of the complaints made by A. 

32.  Mr Mak further submitted that pursuant to Clause 1 of the DMC, A as the registered owner of the Premises is entitled to the exclusive use, occupation and enjoyment of the Premises, and hence, R has been in breach of Clause 1 by carrying out the Pipe Alterations in the Premises without the permission and informed consent of A. The Pipe Alterations thus constitute trespass into the Premises and infringe A’s right in the exclusive use, possession and enjoyment of the Premises.

33.  As R never challenges A’s right as the owner in exclusive use, possession and enjoyment of the Premises, I consider that the issue should be whether the Pipe Alterations were carried out by R or R’s contractor in the Premises with or without the permission and consent, either express or implied, of A or his agent Hang Seng.  If yes, there is no trespass or breach of Clause 1 on the part of R.

H.2  Whether A or Hang Seng had knowledge about, or had consented to the Pipe Alterations

34.  If the answer to this question is positive, I consider that there will be no basis for A to seek the mandatory injunction from this Tribunal against R to reinstate the pipes in the Premises to its original state.

35.  It was R’s case that the removal of Old Pipe 2 and erection of New Pipe 2 was a result of the letter dated 30 April 2004[7] (“2004 Letter”) written by Hang Seng to R stating in Chinese as follows:

“敬啟者：

關於：香港灣仔謝斐道392-402號維新大廈地下D鋪修葺或更換水管事

本公司謹代表上述物業之業主。

查接獲貴法團通知 法團決議各戶須科款繳付修葺排水渠事已知照業主。鑑於現存部份渠管經D鋪而出，影響日常業務，故詢問貴法團可否在修整水管時考慮，將途經D鋪的渠位改道。

如有任何疑問，請即賜電2198 3997與本人聯絡。

石智成

客戶服務經理”

36.  According to the 2004 Letter, it said that Hang Seng was the agent of A at that time and made a specific enquiry addressed to R to consider re-routing the drainage pipes out of the Premises.  Due to the long lapse of time for almost 15 years, both Hang Seng and R cannot trace any record on correspondence between them consequent to such enquiry.  A did ask Hang Seng for records in respect of the Pipe Alterations but Hang Seng replied that it only kept records for 7 years, so no documents can be given to A.  石智成 who signed the 2004 Letter was no longer working for Hang Seng anymore. 

37.  Mr Wong for R submitted that logic would indicate that there must have been subsequent communications since R’s contractor needed to enter into the Premises to carry out the Pipe Alterations that would take a few days requiring the co-operation of Hang Seng in asking the then tenant, who would usually be reluctant to suffer any disruption of its daily business, to allow entry. The location of New Pipe 2 makes it less obvious to any person entering the Premises as it runs along a beam as opposed to Old Pipe 2 that runs in the middle of the ceiling in the centre of the Premises. Since removal of Old Pipe 2 and erection of New Pipe 2 were carried out at the approval of the agent of A, ie Hang Seng, Mr Wong contended that R has not breached Clauses 1, 11(a), (d) and (h) of the DMC.

38.  It is not disputed by A that since 1992, A has entrusted Hang Seng, an established and experienced estate manager, to be responsible for handling rental matters relating to the Premises. However, A alleged that he had no knowledge about the existence of the 2004 Letter and the Pipe Alterations until 2014. From 1992 to 2014, since the then tenants had exclusive possession of the Premises, A had not paid any visit to the Premises. From the notice dated 24 March 2004 (“Notice”), Wong & Tang Solicitors (the then solicitors instructed by R) requested A and other owners of the Building to contribute to the cost of the repair works of the Building so as to comply with the Building Order.  In the Notice, it only stated that, according to the resolution of R, the owners of the Building had to pay certain contribution for the repair of the Building according to their shares in the Building, without explicit reference to the precise nature of the work that would be carried out.  Back in 2004, Hang Seng gave A the Notice and informed him that he was required to pay contribution for some repair works in the Building and he did make his contribution.

39.  Although A subsequently knew that the work involved some pipe works in the Building, A had no idea that some pipes would be removed or installed into the Premises until 2014 the then tenant delivered possession of the Premises did A discover the Pipe Alterations in the Premises.  He was under the impression that it was only a general repair work only.

40.  As R did not challenge the evidence of A in this regard, I accept that A himself had no actual knowledge about the existence of the 2004 Letter and the Pipe Alterations until 2014.

41.  It is also A’s case that Hang Seng did not have knowledge of the actual work involved in the Pipe Alterations.  Mr Mak for A rightly conceded that Hang Seng at most knew in 2004 that there were some pipes installed or removed in the Premises but submitted that not being a professional, Hang Seng would not have checked the Pipe Alterations against the Approved Drainage Plan. Nonetheless, for the reasons given in paras 28 to 31 above, I do not consider that it is relevant if the Pipe Alterations were carried out in accordance with the Approved Drainage Plan or not. 

42.  In my view, Hang Seng must have knowledge that some drainage pipe works had to be carried out inside the Premises in 2004; otherwise, Hang Seng would not make a specific enquiry requesting R to re-route the drainage pipes out of the Premises in the 2004 Letter.  I disagree with the submission of Mr Mak that by requesting R to re-route the pipes out of the Premises, Hang Seng in the 2004 Letter clearly protested against the Pipe Alterations in the Premises.  If that was the case, either Hang Seng or the then tenant could simply refuse to co-operate or to allow entry and the Pipe Alterations could not be done in the Premises at all.  To the contrary, I accept the submission of Mr Wong for R that on a balance of probabilities, there should have been some subsequent communications since R’s contractor needed to enter into the Premises in order to carry out the Pipe Alterations which would normally take a few days. Needless to say, the works would affect the daily business of the then tenant in the Premises.  In the circumstances, on a balance of probabilities, I find that Hang Seng had not just got the necessary knowledge but also given the consent to R or R’s contractors to enter into the Premises to carry out certain drainage pipe works which turned out to be the Pipe Alterations.  Hang Seng as the agent of A could always inspect the Premises during the works of or after the completion of the Pipe Alterations.  It is noteworthy that there is a term in the relevant tenancy agreement[8] that:

“…..the Tenant hereby expressly agrees that the Landlord shall have the right… at any time during the term of the tenancy by notice to the Tenant to enter the said premises….and to carry out at the Landlord’s cost and expense inspection….for the purpose of complying with the Buildings Ordinance (Cap123)…”

43.  If Hang Seng subsequently found that the Pipe Alterations did not complied with the Buildings Ordinance or some other regulations, it has to raise objection to R as soon as possible rather than being inaction for at least 10 years until 2014. 

44.  Even if A himself has no actual knowledge about the existence of the Pipe Alterations until 2014, I consider that the knowledge and consent of Hang Seng can be imputed to and binding on A as it is the agent of A[9] based on the various tenancy agreements signed by Hang Seng as its lawful attorney[10].  If Hang Seng failed to seek the instruction from A before giving the consent to R, it is the matter between A as the principal and Hang Seng as his agent which has nothing to do with R as the third party.

45.  As to the scope of the authority of Hang Seng in respect of allowing the Pipe Alterations to be carried out by R’s contractor, Mr Mak for A never challenged in his submission that Hang Seng has no authority whatsoever on behalf of A to deal with the matters concerning the Pipe Alterations.  In my view, if A did raise such an issue of authority, it is necessary for A to produce all the power of attorney or authorisation document signed by A in favour of Hang Seng for examination.  But A does not do so.   Further in para 6 of the Witness Statement of A in Chinese filed on 31 October 2016[11], A confirmed that Hang Seng was responsible for the matters concerning the Premises, but not just the rental matters. Based on the evidence before the Tribunal, I am of the view that Hang Seng has the necessary authority.

46.  As the Pipe Alterations were carried out by R’s contractor in the Premises with the knowledge and consent of Hang Seng, I conclude that there is no trespass or breach of Clause 1 of the DMC on the part of R or R’s contractor.

H.3  Whether R can establish valid defences of acquiescence, waiver and/or laches

47.  Assuming that R is in breach of the DMC for construction of the Pipe Alterations, I have to consider the defences of acquiescence, waiver and/or laches raised by R.  Parties have no dispute on the legal principles.

48.  In Freder Centre (IO) v Gringo Ltd [2016] 2 HKLRD 190, Chu JA summarized the defence of acquiescencethat:-

“26. Hence, to succeed in a defence of acquiescence, it must be shown firstly, there was on the part of the plaintiff, an assent or lying by in relation to the acts of another person; and secondly, in view of the assent or lying by and consequent acts it is unjust in all the circumstances to grant the relief in question: see Spry, Equitable Remedies, (9^th ed.), p. 56.”

49.  In Yick Fung Holdings Ltd v Sandwood Ltd [2009] 4 HKC 43, Le Pichon JA dealt with the issue of knowledge for the purpose of establishing acquiescence and held that:-

“(1) It is sufficient that at the relevant time the party concerned knew of the facts or matters that gave rise to his right to equitable relief, even although he may not have fully understood, as a question of law, the rights that he possessed. The paramount question relates to the justice or injustice of granting the particular relief that is sought and the degree of knowledge required in any situation must depend on all other circumstances. See Spry on Equitable Remedies, 6^th Ed, pp 440-442.

(2) It is thus sufficient that the party knew the facts ‘constituting the title to relief’. See Spry, p 431; Lindsay Petroleum Co v. Hurd (1874) LR 5 PC 221 at 241.

(3) It is ordinarily sufficient that the plaintiff has been put on suspicion, that is, that he is aware of sufficient matters to raise in his mind a doubt whether an infringement of his rights has taken place.  See Spry, p 431; Marquis of Clanricarde v. Henning (1861) 30 Beav. 175, 54 ER 855.”

50.  As explained in paras 42 to 44 above, I found that A has the imputed knowledge from Hang Seng as to the Pipe Alterations which is sufficient to raise in his mind a doubt of the infringement of the DMC on the part of R.  It cannot be argued that Hang Seng which is a professional agent to handle tenancy matters for the landlord ought to understand A’s rights under the DMC.  The fact that Hang Seng as agent of A at the material times has taken no action until 2014 amounts to an assent or lying by in relation to the acts of R concerning the Pipe Alterations, I am of the view that it is unjust in all the circumstances to grant the injunction sought.  R has successfully established the defence of acquiescence.  Accordingly, the Complaint 1 is not sustainable and the application for mandatory injunction in respect of demolition and/or reinstatement of the relevant drainage pipes must be dismissed apart from the Altered Vent Pipe and the New Pipe 3 U-trap which have been agreed to be removed by R.  As the legal consequence for the other defences of waiver and laches is the same as that for acquiescence, it is not necessary for me to discuss these defences.

I.   Complaint 2: water seepage

51.  Mr Wong for R accepted that the water seepage is caused by the disrepair of the water proof membrane in the soffit between the flat roof of the Building and the Premises, which R has agreed to repair. Hence, R would not argue that there was no nuisance.  For water seepage into Toilet A and Toilet B, the parties’ experts agree that the cause is due to defective external wall and staircase landing.  In the circumstances, I find that as R is responsible for repairing the water proof membrane, external wall and staircase landing under the DMC, R is in breach of the DMC and section 18 of BMO[12], so liable for damage suffered by A, if any, due to the water seepage.  The outstanding questions are quantum and whether injunction for repairing these common parts shall be granted, which will be dealt with in the latter part of this judgment.

J.   Complaints 3 to 5

52.  In 2012, R has raised funds of around $7.5 million from the owners for renovation and repair works of the Building (“2012 Renovation”). It is A’s case for Complaint 3 that R has failed to carry out survey and repair work for underground sewer system, which is one of the prescribed works for 2012 Renovation.  For Complaint 4, A alleged that R has failed to repair the defective underground common part pipes causing the Light Well to be flooded. For Complaint 5, R has been allowing the discharge of sewage into the Light Well and flooding occurred repeatedly. For Complaint 6, R has failed to repair the manhole cover inside the Premises.  According to the CCTV report prepared by Tai Hung Engineering Co Ltd dated 6 February 2013[13] (“CCTV Report”), some of the underground common part pipes are found broken and even collapsed.  Flooding at the Light Well happened on various occasions starting from about April 2014 up to May 2017.  By failing to repair the underground common part pipes, A alleged that R had failed to maintain the common parts of the Building in good and clean condition, thereby failing to take reasonably necessary action to perform its duty under clauses 11(d), 11(g) of the DMC and sections 18(1)(a), 18(1)(c) and 34I(1)(b) of the BMO.  Thus, A submitted that R is in breach of the DMC and the BMO.

53.  In reply to Complaints 3 to 5, R argued that it has discharged its duty and has responded to A’s report of want of repair upon receipt of the complaints.  A qualified contractor called Hing Yip Pipeline Services Ltd was engaged to carry out the repair works for the underground sewer system in November 2015[14]. The manager of the Building, Vigers Property Management Services (HK) Ltd, has engaged another contractor called Family of the Treasure Ltd to handle the flooding caused by clogging of the underground pipe after receiving the complaint from A.  Nonetheless, R said that A was always not co-operative in allowing R’s staff or contractors to enter into the Premises for inspection and repair. 

54.  It is not disputed that R engaged 生興建築工程有限公司to be responsible for 2012 Renovation.  Regarding the CCTV Report, I accept the comments made therein, namely certain repair works needed to be done in respect of the underground sewer system since this contractor was engaged by R.  However, A has not challenged that a qualified contractor Hing Yip Pipeline Services Ltd has been engaged by R to carry out such repair works.  There is no evidence from A that Hing Yip Pipeline Services Ltd is not qualified to carry out such works.  Similarly, no evidence to show Family of the Treasure Ltd is unqualified to handle the flooding.  In Lee Ming Yueh v Broadway-Nassau Investments Ltd and another[15], the Court of Appeal said:

“33. There was no evidence that Kin Ching was improperly appointed as the contractor to repair the water proofing system on the roof tops. As Kin Ching had provided a 10-year guarantee for its work, the respondents could not be criticised for asking Kin Ching to look into the water leakage problem that persisted despite the repair work carried out by Luen Sing on the external wall of the applicant’s flat. While it took two attempts by Kin Ching before it succeeded in resolving the leakage problem in 2005, I agree with the Presiding Officer that the respondents could not be said to be at fault in relying on Kin Ching to remedy the problem leakage. This is a finding that the Presiding Officer was entitled to reach.

34. The Court raised the point with the parties at the hearing whether the respondents’ duty was discharged when the applicant experienced further water leakage problems in June 2006 despite the earlier repair in 2005. The concern of this Court was whether the respondents should continue to engage Kin Ching when there was a further complaint of water leakage problem.

35.  Despite this earlier concern, I am satisfied that the Presiding Officer was correct when he held that the respondents could not be faulted.  The applicant submitted that the respondents had failed to supervise Kin Ching, particularly when they had their own works department which could undertake this supervisory work, and that the failure amounted to breach of duty under the DMC and BMO. However, the point is that there was no fresh complaint about water leakage until June 2006.  There was really no basis for the respondents to doubt the competence of Kin Ching when it was alerted again of the leakage problem and instructed Kin Ching to address the problem.  After all Kin Ching had provided a 10-year guarantee for its work and the practical difficulties of engaging a new contractor when faced with a complaint and an immediate need to repair were real.  Had there been complaints between 2005 and 2006, the respondents might have grounds to suspect the competence of Kin Ching and a stronger case may be advanced that they should not have engaged it again.  As it was, the respondents could not be said to have failed in their duty.” 

55.  In the circumstances, I fail to see how R can be said to have failed to carry out survey and repair work for underground sewer system since R has already engaged a qualified contractor.  I consider that R is not in breach of its duties to maintain and repair under the DMC or the BMO and that A fails to discharge his burden of proof for Complaint 3.  Even if R is in breach of the DMC or the BMO, I think that A fails to prove any damages suffered by A which is caused by such breach.

56.  In my view, the main complaints namely Complaints 4 and 5, are the repeated floodings occurred in the Light Well despite of such repair works.  It is not disputed that flooding at the Light Well did happen on various occasions starting from about April 2014 up to May 2017. Even though the underground common pipes are defective and R is in breach of its duty to repair, A still has the burden of proof that the flooding happened due to or was caused by the defective underground common pipes.  According to the report dated 4 May 2015 prepared by the contractor called Family of the Treasure Ltd[16] and even based on the evidence of A in his witness statement[17], the dirty stuffs or matters that clogged or blocked the underground pipes were towel, sanitary towel, its packing, toilet papers, stool, sand and rubbish etc.  The source of clogging or blocking is unknown as there was no evidence as to where these stuffs or matters came from.  They may come from the owners, users or occupiers of the shops on the ground floor next to the Premises or even from the people living in the upper floors who threw the dirty stuffs through the common sewage pipes to the underground sewage system.  The parties have not adduced any expert or factual evidence to prove the source of clogging or blocking or the causation of the flooding, in particular no evidence showing that R had done anything to clog the underground sewage system.   Thus, I find that A has failed to discharge the burden of proof that the flooding in the Light Well was caused by the defective underground common pipes.

57.     In my view, the duty of R as the incorporated owners to maintain common facilities is not intended to impose an absolute duty under section 18 of the BMO and Clause 11 of the DMC.  Overall duty imposed is “proper management”, i.e. doing all that is reasonably required and R will not be strictly liable once A as one of the owners of the Building proved flooding inside the Premises. The Court of Appeal in Lo Yuk Chu v Hang Yick Properties Management Ltd[18]said as follows:

“9.   The duty imposed upon the manager in the words of the opening paragraph of Part B is to "manage the Building and Land in a proper manner ..." The management is required not only to "keep all common sewers ... free and clear from obstruction" (Clause 10) but also to "keep all Common Areas well lighted" (Clause 5) and "in a clean sanitary and tidy condition" (Clause 7); to "prevent any person detrimentally altering or damaging any part of the building or any of the equipment, apparatus, services or facilities thereof" (Clause 24); to "prevent any person from occupying or using otherwise than in accordance with ... written permission ... any parts of the Common Areas" (Clause 21).

10.   These requirements, if they are absolute duties, could only be satisfied by employing a virtual army of maintenance and security staff. This could never have been the intention of the parties. Indeed Clause 12, upon which the appellant places some reliance, itself gives a clear indication of the extent of the duty. It requires the managers to "keep all Common Facilities in good condition and working order". This, we are satisfied, was plainly never intended to posit an absolute duty to ensure that no common facility ever breaks down. That would impose an impossible burden.

11.   The overall duty imposed on the respondent by the Deed of Mutual Covenant is one of "proper" management. Such management entails doing all that is reasonably required of a manager in the circumstances. Things like keeping drains clear are specific aspects of a building manager's overall duty. But the mere fact that such a thing is listed without being qualified by expressions such as "take reasonable steps to" does not turn a manager into an insurer against the consequences of a drain becoming obstructed through no failure on its part to act reasonably as a manager should.

12.   The judge was right to hold that Section V Part B did not impose an absolute duty.”

58.  It is also not disputed that R did engage separate contractor to clear up the underground common pipes after receiving the complaint of flooding from A.  Upon fair reading of the correspondence between A and R themselves[19], I am satisfied that R has been reacting reasonably and has not delayed in responding the complaint of flooding so as to discharge its duty to maintain and repair.

59.  In any event, there is no evidence before the Tribunal that flooding continues to happen after May 2017.  Hence, I fail to see why the Tribunal has to grant the injunctions as sought by A to restrain R from further discharging sewage into the Premises.

K.   Quantum of damages due to water seepage and flooding

60.  In my view, subject to mitigation on the part of A, R should be liable to A for damages due to water seepage as R has conceded that such seepage is caused by the failure of repairing the water proof membrane in the soffit between the flat roof and the Premises as well as the common parts in Toilet A and Toilet B.  The only claim of A is for loss of rental which depends upon the question of fact if A is or is not able to let out the Premises because of such seepage. 

61.  The market rental of the Premises has been agreed between the parties:

(i)   As of 1 May 2014: $87,724;

(ii)   As of 1 May 2016[20]: $88,167.

62.  A is now claiming a loss of rent from 1 May 2014 until trial and has no other heads of claims.  The total loss of damage is set out as follows:

Period of loss of rental	Amount
From 1 May 2014 to 30 April 2016 (24 months)	$2,105,376
From 1 May 2016 to 31 January 2019 (32 months)	$2,821,344
Six months of rental loss for R to comply with the mandatory injunction if granted by the Tribunal	$529,002
Total:	$5,455,722

63.  The crux is whether A has failed to take reasonable steps to mitigate his damage.  Mr Mak for A submitted that the legal principles of mitigation of damages, which is not contested by Mr Wong, are conveniently summarized by Deputy District Judge Lawrence Ng in Lam Kit Yee v Lam Shuk Lam and Another (unreported, DCCJ 3115/2011, 10 March 2017) at §99:

“(1) The law requires a victim to take all reasonable steps to mitigate the loss consequent on the defendant's wrong: McGregor on Damages (2014) 19th Ed, §9-014;

(2) Whether a loss is avoidable by reasonable action on the part of the claimant is a question of fact not law: McGregor, §9-016;

(3) Although often called “a duty to mitigate”, the expression is somewhat loose because there is no actionable “duty” which is actionable or which is owed to anyone by the claimant: McGregor, §9-017;

(4) The onus of proof on the issue of mitigation is on the defendant. If he has failed to show that the claimant ought reasonably to have taken mitigating steps, then the normal measure will apply: McGregor, §9-019;

(5)   In assessing reasonableness, the victim must act with the wrongdoer's as well as his own interest in mind: McGregor, §9-076.”

64.  In 顏小明v 多福大廈業主立案法團 (unreported, LDBM 79/2007, 27 August 2012), Deputy Judge Kot (as she then was) accepted that the applicant had tried to engage contractors trying to renovate the subject property and had also tried to put the subject property on the market for rent. Yet, his attempt all proved to be futile given the water leakage inside the subject property. Judging from the photos showing the inside of the subject property, no one of sound mind would ever consider renting the place. The tribunal therefore found that the applicant had not failed in his duty to mitigate his loss.

65.  In Parlico Ltd v New Accord Holdings Ltd and Another (unreported, HCA 1665/2010, 10 March 2015), the court found that the plaintiff failed to mitigate and said:-

“27. … the plaintiff either had no real intention of letting the premises during the period claimed for loss of rental income, or had no real prospect of obtaining a tenant during that period. The rent being sought ($135,000 per month) was far in excess of the reasonable market rental at the time of approximately $71,000 per month.

28. … although the water leakage problems ended in mid-September 2009, the premises were not in fact still not rented out over one year later, in November 2010.

…

129. So far as loss of rental is concerned the evidence strongly suggests that the four Incidents were not causative of any such loss and I so find. The plaintiff was seeking what can be seen to be an extremely high rent at a time when the market for luxury property seems to have been poor. Renovation work to the whole of the flat was ongoing throughout the period of the 2nd to 4th Incidents and, it seems, for a long time afterwards. Renovation to the whole building was also carried out at a later date. The property was also listed for sale. I do not think the plaintiff had any reasonable prospect of renting the premises at the asking rent, nor any firm intention to let the premises at a market rate during 2009 or 2010.

130.  The suggestion that it was reasonable to wait until November 2010 to rent the premises in circumstances in which no further damage occurred after September 2009 is simply fanciful.  If the plaintiff truly wished to rent out its premises, and was losing at least $70,000 per month in not doing so, then quick action would or should have been taken to have the independent survey carried out to see if it was reasonable to proceed with renting the premises.  Instead, the plaintiff waited until November 2010.  This head of claim fails.”

66.  Despite of the existence of such seepage and the apparently unpleasant condition of the ceiling of the Premises as shown in the photographs produced[21], Mr Wong for R contended that there were offers made to take the Premises at a rental, some of which are even higher than the market rent as agreed by the two valuation experts of the parties, namely  $88,167 per month as of 1 May 2016. These offers show that the letting of the Premises has not been affected by such seepage and consequently R should not be liable to A for any damage arising from the water seepage.

67.  The offers are as follows:

(i)   An estate agent called Dragon Stand Consultant Limited offered by letter dated 24 March 2015[22] to A’s wife at $130,000 per month for use as “bar and restaurant” with no special terms on electricity but A refused to accept offer because Hang Seng advised him not to accept because there was no background information on the tenant provided;

(ii)   Another estate agent, 港置旺舖by letter dated 8 July 2016[23] offered a rent of $70,000 per month but could not reach agreement because the prospective tenant required to increase of electricity from 60A to 3 phases 150A (i.e. ampere). So A wrote to R who refused the request and the prospective tenant also required the ceiling to be repaired before commencement of tenancy;

(iii)   Centaline Commercial by letter dated 18 August 2017[24] offered a rent of $90,000 per month but required 3 phases 160A electricity at A’s costs and reinstatement of changes to sewage pipes inside the Premises because the prospective tenant was aware of  the present proceedings between A and R from the notice board of the Building;

(iv)   港置旺舖 by another letter dated 21 August 2017[25] offered a rent of $100,000.00 per month for use as “電器”, but A did not accept because it did not provide background information on the prospective tenant and A thought letting to this tenant was not safe.

68.  After having carefully considered the evidence of A, both in his witness statements and in court, I find as a fact that he has no real intention to rent out the Premises. Judging from the photos showing the condition inside the Premises even if there are some water seepage markings on the floor and ceiling, I do not think that no potential tenant will accept it as the water seepage is not serious.  Besides, it is unreasonable for A to make the offer of $110,000 as the monthly rental of the Premises[26] whereas the market rental is only about $88,000. Mr Mak even submitted in para 57 of his closing that under the advice of Hang Seng, A offered to rent out the Premises at the monthly rent of around $130,000 to $140,000.  In my view, the reason why the Premises cannot be let out simply because A is asking for the unreasonably high rental.  Further, I reject A’s evidence that most of the potential tenants did not give feedback after inspection of the Premises as there are at least 4 written offers as mentioned above, 2 of which stated the delivery of the Premises on the basis of its present condition[27].   I also disagree that A was reasonable to refuse the offer being made in the letter dated 21 August 2017[28] for a rent of $100,000 per month for use as “電器”, which I understand is the business relating to electrical apparatus, simply because 港置旺舖 did not provide background information on the prospective tenant.  A never said when being cross-examined by Mr Wong for R that this particular potential tenant was unwilling to tolerate the situation at the Premises due to the water seepage.  Nor did A say in court that this particular potential tenant requested a much reduced rent or requested a short term lease for few months.  Even if the potential tenant offered a reduced rent below the market rent with a short term lease, I am of the view that A shall still let it out first in order to mitigate the loss and then claim R for the difference in rental rather than leaving the Premises vacant for almost 5 years since 2014.

69.  I also find that the flooding only occurred in the Light Well but not in the main area of the shop.  From the Ground Floor Plan[29], there is a long corridor between the main area of the shop and the Light Well and a few downstairs steps to separate the corridor and the Light Well.  Even if there is flooding in the Light Well, I consider that A is still able to let out the main area of the shop albeit at a reduced rent.  Nonetheless, A fails to adduce any evidence of the reduced rent and does not have any fallback claim based on the reduced rent.  In any event, I have already found above that R is not liable for damages due to flooding. 

70.  In the circumstances, I find that A has failed to mitigate his loss and is not entitled to damages consequent upon the water seepage and flooding.

L.   Whether injunction for repairing the water proof membrane shall be granted

71.  Mr Wong for R argued that the Tribunal should not exercise the discretion to grant the injunction for repairing the water proof membrane since there is no nuisance or inconvenience to A.  With respect, I disagree and fail to see how water seepage by itself is not a kind of nuisance or inconvenience even though no actual loss for rental is suffered by A.  It is not in dispute that the water proof membrane is a common part of the Building, which R is responsible to repair under both of the DMC or the BMO. 

72.  Besides, I accept the submission of Mr Mak for A that the water seepage at the Premises amounts to continuing breach as it is highly likely that it will be recurring.  Where there is a continuing breach of an obligation undertaken in a deed of mutual covenant, the discretion to grant a mandatory injunction will be exercised unless there are good reasons not to do so: see JLW Management Services Ltd and Another v Charter Dragon Development Ltd [1995] 2 HKC 501.

73.  Bearing in mind that the case has been dragged on for few years already, I do think necessary to grant an injunction to compel R to complete all the necessary repair works within a reasonable time.  I also understand that as the incorporated owners, R may need some time to engage a suitable contractor to undertake such works.   3 months shall be reasonable in the circumstances.

M.   Complaint 6: defective manhole covers

74.  A said in his witness statement that there are 6 defective manhole covers inside the Premises and that R had replaced 2 covers on 24 August 2015. And now, R further agreed to replace the cover to manhole marked A between manhole F3 and F4.

75.  In the draft order submitted by Mr Mak, A only seeks, inter alia, an order that manhole cover at F4A in the Premises be replaced but not the other covers.  Thus, I will not make any order for replacement of the remaining manhole covers except that agreed by R.

N.   Conclusion 

76.  Accordingly, I grant the injunction that R shall within 3 months from the date of this judgment carry out all necessary repair and remedial works to: 

(i)   Stop water seepage at the ceiling of the Premises and at the 2 toilets; and

(ii)   Reinstate the parts of the Premises and the 2 toilets affected by water seepage.

77.  Similarly, I shall grant the injunction to demolish the Altered Vent Pipe and the New Pipe 3 U-trap and to replace the cover to manhole marked A between manhole F3 and F4, which have been agreed by R, within 3 months from the date of this judgment.

O.   Costs

78.  Some of the reliefs sought by A are granted as R has made a lot of concessions just before or at the trial.  I consider that R shall be able to make these concessions much earlier especially there are not many disagreements between the parties’ experts, such as on the issue of water seepage.  On the other hard, some of A’s claims are dismissed in particular the claim for loss of rental for over $5 million.  I also found that R has successfully established the defence of acquiescence.  In short, some issues are determined in favor of A but some not.  After taking into account all the relevant circumstances, I exercise my discretion to make an order nisi that R do pay 30 % costs of these proceedings including all costs reserved, if any, with certificate for counsel,  on the District Court scale, to be taxed if not agreed, which shall become absolute unless any of the parties apply to vary by summons within 14 days.  For the avoidance of doubt, Certificate for only 1 instead of 2 Counsel is granted.

79.  Last but not least, I thank all counsel and solicitor for their assistance to the Tribunal.