KIMBERLEY ASSETS MANAGEMENT LTD v. GOLDEN STAR OVERSEAS LTD AND OTHERS

LDBM 291/2004

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. 291 of 2004

_________________

BETWEEN

___________________

___________________

J U D G M E N T

___________________

Introduction

1.  This is a dispute of water leakage problem among the flat owner, the roof owner, and the Incorporated Owners (the “IO”) of the subject building.

Background

2.  Wing Lee Building (永利大廈) (‘the Building”), 27-33 Kimberly Road, Kowloon was built by the 2^nd Defendant (“the Developer”) in about 1963. There were and are 10 flats on each of the 2^nd to 9^th floor. Each of the top flats had and has a corresponding roof. 6 roofs were sold to the owners at the flats below. However, the Developer kept for itself the 4 remaining roofs, namely, C, F, H and I.  Water seepage problem happened at the Roof I and Flat I on the 9^th Floor (“Flat I”).

3.  On 2 February 2001, all the said 4 remaining roofs were conveyed to the 1^st Respondent (“the Roof Owner”) who was and is a substantial shareholder of the Developer.

4.  Mr Suen Fung Cheung Jack (孫鳳翔) (“Mr Suen”) purchased Flat I in 1978 for his family and members, including one of her daughters, Ms Suen ka Lee Terrie (孫嘉莉) (‘Ms Suen”).  The Flat was assigned to the Applicant (“the Flat Owner”) in 2002.  Ms Suen and one of her sisters were and are shareholders and directors of the Flat Owner.

5.  Mr Suen was the chairman of the IO for some years until about 2000.  The post was then taken up by one Mr Chan for a short period of time, then Ms. Ko Yuk Man Gertrude (高玉文) (‘Ms. Ko”) from June 2003 until now.  She purchased Flat B on the 9^th floor and the corresponding roof in 1997.

6.  Water leakage has happened at Flat I since about 1990s’ and early 2000.  On 1 September 2001, Mr Suen wrote to the then Chairman, Mr Chan, of the IO:

“I would like to request the Corporation to repair the roof, my ceiling and wall due to the deterioration of the roof, which has caused water leakage into my flat and caused the damages thereof. I enclose pictures of certain damaged portions of my flat for your reference. Kindly advise the date when the repair work can be commenced…”

IO replied him in the followings:

“(2) 有關2001年9月1日來函，法團副主席高小姐和維修則師樓代表，則師於2001年11月29日晚上曾到訪府上瞭解情況，當時則師清楚解釋天台業權是屬於大業主通利行所有，法團無權在天台作任何工程，解決閣下之天花水問題。另於2001年12月15日法團副主席亦再與閣下解釋以上情形。並另建議大維修開工前聯絡法團，請則師再檢查貴戶外牆漏水情形以便大維修一併解決。

…”

7.  The water leakage was not cured.  On 1 March 2003, Ms Suen further took up the matter.

“….

I appreciate that Mr Poon took immediately action and arranged the representatives of the owner of the roof to inspect both my flat and the roof on 12 February 2003.

However, I have not received any responses for two weeks. Mr Poon contacted the owner of the roof to follow up and they replied that legal letter would be issued. Mr Poon suggested me to wait for the legal letter.

Since the committee will held a meeting on 14 March 2003, I request the committee to discuss the problems caused by the roof deterioration and take the following actions:

(1) Issue a legal letter to the owner of roof requesting them to repair the roof plus the damages caused to my flat; and

(2) File a complain to the Food and Environmental Hygiene Department.

...”

8.  The IO followed up the matter and caused a demand letter issued by its solicitors to the Roof Owner on 24 March 2003.

“….

We are instructed that you are the owner of that portion of the roof and our client requests you to contact the Manager of the building, Double Dragon Services Ltd. By 2311 2059 to resolve the water leakage problem as soon possible.

….”

9.  Parties attended both Flat I and Roof I.  The Roof Owner however declined liability. It argued, inter alia, that liability should fall on the Applicant and/or the IO.  The IO should not have constructed and/or allowed the construction of an iron cage (the “Unauthorized Structure”) on Roof I.  The Roof Owner also argued that it did not use Roof I at all.

10.  Facing with such reply, the Flat Owner referred to the matter to various Government Departments, including the Building Department, the Food and Environmental Hygiene Department, the Water Supplies Department, trying to seek for assistance.  However, it did not resolve the water seepage problem.  Briefly, the Government Departments confirmed that there was water seepage problem. Although it did not affect the structure of the Building, troubles would be caused.  Parties should therefore investigate into the cause(s) and take remedial works.

11.  In the meantime, the Roof Owner also asked its solicitors to write to the Building Department asking it to demolish the Illegal Structure.

“….

We refer to your letter dated 26^th June 2001 addressed to the owners/occupiers of the Building (copy whereof is enclosed for your easy reference). We are instructed that subsequent to the receipt of your said letter, our client had, no 10^th September 2001; enquired with your Mr Chan on your action in relation to the illegal structures on the roof of the Building. Our client was advised that the priority of your Department then was the illegal structures on the external walls. As to the illegal structures on the roof, your officers would conduct inspection at the beginning of the following year and would issue the relevant order for t heir removal and failing compliance, you would carry out the works on behalf of the owners. If is now already three years from the said telephone conversation between our client and your Department. No order for the removal of the illegal structures on the roof was ever served. Nor any action in relation thereto has ever been taken by your Department. So far as our client is concerned, our client has never erected nor has it permitted any illegal structure erected on its property. Our client is however concerned with the Government Authority allowing and/or condoning the illegal structures which pose danger to the Building to continue to exist.

We are instructed to urge you to take immediate enforcement action in respect of the illegal structures on the roof of the Building.”

(Letter of 26 October 2004)

There was however no demolishment of the Illegal Structure by anyone.

12.  In the meantime, indeed, the patience of the Flat Owner had lapsed, it therefore commenced on its own the present proceedings on 27 August 2004.  It decided to go against both the Flat Owner and the Developer, but not the IO.

13.  The Roof Owner and the Developer denied the claim and argued, inter alia, the Flat Owner had failed to take any or adequate step to mitigate its loss.  They further issued a 3^rd Party Notice against the IO.  On 6 January 2005, this Tribunal gave detailed directions regarding conduct of the proceedings among parties, involving particulars of claim, pleadings, discovery, exchange of witness statements and expert evidence.

14.  However, all parties did not prosecute their cases for quite some years.  Apart from the default judgment herein against the IO being set aside on 22 April 2005, there was no step taken until this Court called upon the parties at about the end of 2008.  Mediation was directed.  Unfortunately, it took almost one year but did not achieve anything.  This Court then monitored closely the proceedings and held a number of further call-over hearings.  On 5 November 2009, it was directed, inter alia, that the IO was joined as the 3^rd Respondent herein.  Besides, other than the 3 solo expert reports done by the parties in 2004 and 2005, the Flat Owner and the IO should further submit a joint report prepared by a structural engineer.  The Flat Owner also discontinued its claim against the Developer on 19 November 2009.

15.  Later, on 16 March 2010, an unless order was imposed upon the IO.

“….

Unless the 3^rd Respondent do file and serve the Notice of Opposition on or before 30 March 2010, judgment will be entered for the Applicant against the 3^rd Respondent as follows: -

(1) A mandatory injunction that the 3^rd Respondent do within 3 months carry out remedial work to rectify the water leakage problem, including but not limited to repairing the edge beams and the external wall of the Building in question and repairing or replacing the waterproofing layer, failing which the Applicant be at liberty and at the costs of the 3^rd Respondent to carry out the work itself;

(2) The 3^rd Respondent to pay the Applicant damages to be assessed;

(3) The 3^rd Respondent do pay the Applicant its costs of the proceedings to be taxed if not agreed, but the scale of costs be reserved until after the …”

16.  The IO did comply with the order and, finally, the proceedings were fixed before me for a trial of 4 days in December 2010.  A few days before the trial, the IO discontinued its counterclaim against the Roof Owner and the Developer.  The Developer also discontinued its 3^rd Party Notice against the IO.

17.  To sum up the proceedings left before me at trial:

(a)   The Flat Owner sued the Roof Owner and the IO for damages caused by water leakage to Flat I;

(b)   The Roof Owner by the 3^rd Party Notice claimed indemnification from the IO.

Preliminary Matters

18.  All parties were represented by Counsel at the hearing. Mr. Herbert Au-Yeung acted for the Flat Owner, Mr. Wallace Cheung represented the Roof Owner, and Ms. Flora Cheng, the IO.

19.  One day before the trial, the Roof Owner and the Developer took out a summons asking for costs as a result of the IO’s dropping of its counterclaim.  Upon hearing from the parties, I ordered that:

(a)   The 3^rd Respondent and 3^rd Party shall pay costs of the 1^st and 2^nd Respondents in defending the counterclaim against them made by the 3^rd Respondent and 3^rd Party, on District Court Scale, to be taxed if not agreed;

(b)   The time of the summons is abridged; and

(c)   Costs of the application are agreed at $3,000, payable by the 3^rd Respondent and 3^rd party to the 1^st and 2^nd Respondents.

20.  Ms Cheng also informed, inter alia, this Court:

(a)   The IO had demolished the Illegal Structure on Roof I and started to reconstruct the waterproof membrane;

(b)   The IO would not dispute that the waterproof membrane was the common part of the Building; and

(c)   Obligation to maintain the waterproof membrane fell on the IO.

Issues

21.  Mr Au-yeung identified the following issues of this action to be decided by me:

“(1) Whether the water leakage problem of the Flat was caused by the defective waterproofing layer beneath the roof of the Building?

(2) If so, whether the said waterproofing layer is a common part of the Building?

(3) Whether the said waterproofing layer was damaged by the Unauthorized Structure?

(4) If so, whether the 1^st and/or 3^rd Respondent(s) should be responsible for such damage?

(5) Whether the water leakage problem of the Flat was also caused by the pores and cracks within the concrete members along the periphery areas, including the edge beams and external wall of the Building?

(6) In the event that liability is established against the 1^st and/or 3^rd Respondent(s), what should be the relief?”

      Both Mr Cheung and Ms Cheng did not raise any objection.  I also agree to the issues and will adopt them accordingly.

Evaluation of the evidence

22.  To answer the issues, one has to decide on the factual disputes among the parties.

23.  There were 4 factual witnesses appearing before me:

(a)   Ms Suen for the Flat Owner;

(b)   Ms Yu Chak Wan (“Ms Yu”) and Ms Chun Wai Jon (“Ms Chun”) for the Roof Owner; and

(c)   Ms Ko for the IO.

My overall impression over them is that they are all truthful witnesses.  There are of course differences among them, but I take it that they were only telling or reiterating their stances towards the matter.  Nonetheless, in case that one has to resolve their differences, especially when the Court is going to assess the damages to be paid, if necessary, I will accept those of Ms Suen as she has the direct and personal knowledge of the events happened, from the leakage, complaints, inspections, proceedings and extent of damage to Flat I. I also find her generally an honest and reliable witness.

24.  To decide on the most important dispute in the proceedings, namely, what caused the leakage, one has to go to the expert evidence.

25.  There were 4 expert reports available at the trial, prepared by:

(a)   Dr C M Tam of the City U Professional Services Ltd. dated 15 October 2004 for the Flat Owner;

(b)   Dr James Chan, Registered Professional Surveyor (BS), Registered Structural Engineer, Authorized Person, dated 26 November 2004, for the Roof Owner;

(c)   Mr Benjamin Yip, Authorized Person (List 1) and Registered Architect, HKIA, dated 18 April 2005, for the IO; and

(d)   Dr Eddie Lam, Associate Professor of the Department of Civil & Structural Engineer, Hong Kong Polytechnic University, dated 3 February 2010, jointly for both the Flat Owner and the IO.

26.  Each of the experts employed their own method to find out the cause(s) of leakage:

(a)   Dr Tam said:

“3. Summary

3.1 According to the visual inspection and the infrared thermographic survey, it is evidenced that the water leakage was originated from the failed roofing system on the roof floor.

3.2 The water seepage does not only annoy the occupant within the Unit, but also affects the concrete structure by rusting the reinforcing steel bars buried inside the reinforced concrete that may result in failure of the structural roof slab in the forms of concrete spelling (minor failure) and complete collapse of the roof (severe failure).

3.3 The owner(s) of the roof floor should take immediate action to replace the roofing system which must have reached the end of its physical life.”

(b)   Dr Chan concluded that:

“4. CONCLUSION

The water leakage problem from roof slab at Flat I, Floor 9 of Wing Lee Building is mainly caused by the deterioration of the existing water proofing system applied on flat roof and the water seepage occurred along the periphery areas including edge beams and external wall of the unit.

The building was constructed in 60’s. The original water proofing system may have been damaged due to normal aging caused by temperature change, chemical attack, and sunlight etc. and also due to the misuse of the flat roof areas. The installation of the unauthorized building structure surely causes permanent damage to the water proofing system by drilling holes through the water proofing layer for fixing hold down bolts. The usage for storage at the roof, which is not designed for storage, may alter the loading condition to exceed the roof’s original design capacity. This overloading causes roof slabs and beams to deform and induce cracks. And at the same time, the water proofing system will be damaged.

The water leakage problem at Flat I unit is also caused by the water seepage occurred along the periphery areas. Due to the existence of pores and cracks within the concrete members along the periphery areas including edge beams and external wall, water can seep through these pores and cracks, and subsequently meets the internal surface of wall.

No evidence shows that leakage problem at Flat I unit is caused only by the defective waterproofing system directly located above the leakage points.  As water ingress occurs due to either defective waterproofing system on porous/cracked concrete, water content can penetrate to other surrounding concrete members and form water stains. Therefore, the leakage water found at Flat I unit might be coming from the roof of adjacent flat units.”

(c)   Mr Yip assessed and concluded that:

“4. Assessment on the Structural Integrity

(i) Parapet Wall

This structure seems to be sound without hollow cavity sound. The structural integrity is of satisfactory condition.

(ii) Surface Channel

Water Infiltration through roof membrane is possible source and the ageing asphalt had been in support to our claim.

(iii) Main Roof

Same comment as above.

(iv) Unauthorised Building Works

This is the only items which demonstrate a definite rupture on the water proofing surface. Although flood test may have to be carried out to ascertain whether point of puncture has any direct relationship with the alleged water leakage. However, we can say for certain that this damage had done permanent damage to the waterproofing layer, and have posed long term maintenance problem to the roof structure as a whole.

5. CONCLUSION

As revealed from the assessment in section 4, it could be concluded that the cracks on the roof asphalt would eventually cause damage to the properties below.  It is suggested that the roof layer should be repaired at once.”

(d)   (i)  Finally, Dr Lam analyzed the problem in a detailed way :

“5.0 CAUSE OF THE WATER SEEPAGE

5.1 In respect of the water seepage in Bedroom 1, opinion is as follows: -

(a) There was continuous water seepage from the Roof at the material times.

(b) Source of the water seepage comes from the Roof, e.g. rainwater or by other means like clothing…

(c) Cause of the water seepage is due to the defective bituminous layer at the top and wearing out of the roofing felt…

(d) The Single Pipe and the Group of Pipes also assisted the water seepage by tapping the water from discharging to the surface channels.

(e) As a result, water could easily penetrate the bituminous layer and “stored” inside the cement screed. By gravitational force, water moved vertically and passed through the roofing felt into the Flat.

(f) By reason of the slow rate of water seepage observed in the Flat, I am of the opinion that the reinforced concrete slab was in reasonable condition…

(g) The Steel Structure is not related to the water seepage because it is highly unlikely that water would enter from the footings of the Steel Structure into Bedroom I without first causing dampness to the soffit of ceiling in Bedroom 2 or in Living Room. Firstly, the said soffit was in dry condition and I refer to my observation reported in paragraphs 3.10 and 3.13 Secondly, the reinforced concrete slab is relatively thin making it easy for discharge of water vertically downwards by gravity.

(h) The water seepage is not caused by the external walls. It is because the external walls were repaired in early 2000s and recently but the water seepage persists.

5.2 In respect of the water seepage in Corridor, my opinion is as follows:-

(a) Cause of the water seepage is due to the defective bituminous layer at the top and wearing out of the roofing felt…

(b) On the Roof, the fall was leading the water to discharge in a direction away from Corridor. The flow of water would be blocked if there were objects sitting on the Roof in the vicinity immediate above Corridor.

(c) The Group of Pipes also assisted the water seepage by preventing effective discharge of water away from Corridor.

5.3 In respect of the water seepage in Living Room, my opinion is as follows: -

(a) Firstly, no obvious water path was found on the soffit of ceiling. Secondly, at the time of the water seepage there was a false ceiling (made of wood) that could absorb water. Thirdly, the water seepage was dripping from the chandelier.

(b) Considering the above, the water seepage was most likely caused by water entering the cable that was at one time connected to the chandelier.

(c) The cable was connected to a switch on the partition…

(d) Although a Steel Structure was erected on the Roof, footings of the Steel Structure are far away from the cable…. and are unlikely tobe related to the water seepage.

(e) Cause of the eater seepage is most likely due to the defective bituminous layer at the top and wearing out of the roofing felt.

(f) For example, objects sitting on the Roof in areas immediate above the cable the discharge of water leading to the water seepage.

5.4 In respect of the poor condition in Bedroom 2, Bedroom 3, Store Room and floorboards: -

(a) Peering off of wall paper occurred mostly on the upper part of the walls instead of uniformly throughout the height of the walls. This suggests that the cause of peering off of wallpaper is related to moisture condition on the upper part of the walls and the Roof.

(b) Poor condition of the ceiling is related to moisture condition of the Roof.

(c) The above is caused by aging of the waterproofing system on the Roof that (though providing a water-proof environment) does not provide a vapor-proof condition. For the avoidance of doubt, effective waterproofing should provide vapor-proof (and hence water-proof) environment.

(d) Poor condition of the floorboards is related to dampness insider the Flat.  The continuous water seepage in Bedroom 1 is the main source of dampness.”

(ii)  Dr Lam also commented on the 3 expert reports having done:

(1) Dr Tam’s report

“6.4 ……

6.5 There sets of thermographic images were reported thereof in Appendix IV indict signs of water seepage. The said images were all taken from the soffit of ceiling Bedroom 1. Therefore, area affected by the water seepage was at the soffit of ceiling in Bedroom 1. This is in agreement with my expert opinion expressed hereof.

6.6 It was concluded thereof that the “waterproofing membrane (termed as “exposed asphalt roofing” thereof) has failed” and this is in agreement with my expert opinion expressed hereof ….”

(2) Dr Chan’s report

“6.7 ….

6.8 It was concluded thereof that the Steel Structure (termed as “unauthorized building structure” thereof) “surely cause permanent damage to the waterproofing system by drilling holes through the waterproofing layer for fixing holding-down bolts”. This contradicts with my expert opinion expressed herein in that :-

(a) The original water proofing system comprises a thick layer of cement screed and tiles of 63mm (paragraph 4.2). Hence, it is possible that the hold-down bolts so installed would not damage the waterproofing system.

(b) I repeat paragraph 5.1(g) hereof.

6.9 Further, it was concluded thereof that “The usage for storage (in the Steel Structure) at the roof, which is not designed for storage, may alter the loading condition to exceed the roof’s original design capacity. This overloading causes roof slabs and beams to deform and induce cracks”. My expert opinion on this matter is as follows:-

(a) I did not observe excessive deformation of structural members in the Flat and did not observe any flexural/shear crack caused by overloading. For the avoidance of doubt, flexural/shear crack is distinguished from those caused by corrosion of reinforcement. Examples of the latter are given in Photos 9 and 47.

(b) Objects stored inside the Steel Structure are not heave items. With due consideration of the waterproofing membrane, the additional loading can be accommodated by the minimum imposed load as per specified in the design. According the Building (Construction) Regulations 1975, 1985 and 2007, the minimum imposed load should not be less than 30psi or 1.44kPa where access is provided to the roof (Annex D). This is equivalent to 150kg loading per square meter.

6.10….”

(3) Mr Yip’s Report

“6.11 It was concluded thereof that for surface channels and the Roof “water infiltration through roof membrane is possible source and the aging asphalt had been in support to our claim.”  These are in agreement with my expert opinion expressed hereof.

6.12 Further, it was included that the Steel Structure “is the only item which demonstrates a definite rupture on the water proofing surface … we can say for certain that this damage had done permanent damage to the waterproofing layer ….” My expert opinion to this matter is referred to paragraphs 6.8(a)–(b).”

(iii)   Solicitors sought to clarify in writing certain points from Dr Lam who replied that:

“2. In respect of paragraph 5(1)(h), my opinion that “the water seepage (in Bedroom 1) is not caused by the external walls (because) the external walls were repaired in early 2000s and recently but the water seepage persists” is also based upon paragraphs 5(1)(a)-(g).

3. Further, I agree that it is possible to have water seepage from the external walls at the material times before the repairs.”

(Letter of 22 March 2010)

“The balcony fronting Kimberley Road”

3.   …

6.   Comparing condition of the said ceiling in 2004 (e.g. see documents B1 and B2) with that observed in the First Inspection, I am of the opinion that the degree of deterioration of the said ceiling at the material time is most likely not caused by water seepage directly from above.

7.   Based on the above, the First Inspection and with reference to Photos 14-16 and 20, I am of the opinion that condition of he ceiling in the vicinity of the balcony fronting Kimberley Road is likely to be caused by dampness inside the Flat. The continuous water seepage in Bedroom 1 is the main source of dampness.

“The balcony at the back”

8.   …

9.   …

10.   It is my opinion that enclosing the balcony at the back is not a cause leading to water seepage into the periphery areas and the edge beams areas of the Flat.

(Letter of 7 June 2010)

(iv)   Finally, as agreed by the parties, Dr Lam did also come to this Court to testify and justify his opinion.  Counsel also kindly agreed the following topics for his examination.

“Whether the existence of the Unauthorized Structure was an effective cause of the water leakage problem

- Whether the density of different parts of the roof slab is different and if so whether that would have any bearing on the exact location of water seepage;

- Whether the “rusted connections” [II/677, §3(iv)] at the “connection points” had contributed to the water leakage problem;

- Given the extent of the dampness of the Living Room, why did the joint expert not agree with the other experts in their opinion that the Unauthorized Structure was a causes of the water leakage problem;

- Why was part of the flat (e.g. Bedrooms 2 and 3, Living Room and the Corridor) was in dry condition at the time of the inspection in January 2010.

Whether the condition of the external wall was an effective cause of the water leakage problem

- Clarifying the joint expert’s opinion as expressed in the letter dated 22^nd March 2010 [II/759, §§2-3]

Normal life-span of original waterproofing layer and additional waterproofing layer.”

      To cut short the matter, upon examination, Dr Lam maintained his written opinion and explained in some details why he said so.

26.  Upon consideration, I have decided to prefer the opinion of Dr Lam than those of others.  My reasons appear in below.

(a)   Dr Lam employed a more scientific approach.  Apart from visual inspection, he also dissected a portion of the ceiling so that all could see and understand the different layers and condition of the roof.

“By examining an open-up area on the Roof above Bedroom 1, I conclude that structure between the ceiling of the Flat and the Roof comprises (from top to bottom)

Layer	Present condition	Approved Plans (paragraph 2.6)
6	Up to 5mm thick bituminous	N/A
5	67mm cement screed and/or tiles	N/A
4	63mm cement screed and tiles	Canton tiles
3	Thin layer of roofing felt	10mm roofing felt
2	35mm cement screed	25mm cement screed
1	Thin layer of roofing felt	N/A             ”

(Para. 4.2 of Dr Lam’s Report)

(b)   His report is more meticulous.  Instead of commenting of Flat I as a whole, he divided it into the living room, the corridor, and 3 bedrooms. He went on to describe their condition individually and gave his opinion to the different causes of leakage according to such division.

(c)   Dr Lam not only rendered his opinion but also explained in a more detailed way how he came to such opinion.

(d)   He was in a better position to assess the cause(s) of leakage because all the previous expert reports had been provided to him.

(e)   Dr Lam was the only expert witness who came to court to testify.  His evidence was able to stand firm upon cross-examination by Counsel and clarification sought from this Court.  At one stage during the hearing, as a layman, I have to admit that I did believe that the Illegal Structure, whose angle members (角鐵) having punctured through the roof to make it stand, should be one of the causes of leakage, if not the main one. Nonetheless without losing his temper or patience, Dr Lam led us though his reasons for not supporting such proposition, including that it did not go along with the leaking condition at the ceiling of Flat I.  Finally, when I asked if he would not propose to demolish the Illegal Structure in order to reconstruct the water proofing layer, he replied that it should be done, but only for practical purpose.  He never conceded that it was the cause of leakage.  I was convinced by his expertise.

(f)   Having said that, I also observe that Dr Lam is not stubborn and will listen to views of others. Indeed, after being informed by the solicitors that the external walls of the Building had been repaired, he said:

“… I agree that it is possible to have water seepage from the external walls at the material times before the repairs.”

(Para. 3 of letter of Dr
Lam on 22 March 2010)

27.  With such determination, issues (1), (3) (4) and (5) can now be answered.  However, what about (2)?

(a)   Ms Cheng in her written opening submission said that:

“5. The 3^rd Respondent would not contend that it is under a duty to repair and maintain the waterproofing membrane of Building.

6. The 3^rd Respondent has already engaged contractors to carry out waterproof work on the Roof of the Building.  The last certificate for payment dated 21^st October 2010 shows that 50% of the work has been completed.  The work is currently ongoing.”

(b)   I sought all Counsel’s confirmation that they agreed that the waterproofing layer was a common part of the Building.  They did so.

(c)   Whether a waterproofing system is a common part of the building is a question of fact.  If the waterproof membrane is to protect the interior of the whole building, the former is a common part of the building.  The protection will include preventing rainwater from seeping inside the building, the units on the floors below the roof and the lift shafts for all owners generally. (Incorporated Owners of Hong Leong Industrial Complex) v. HL Resources Ltd.[2009] 4 HKLRD 692 (Court of First Instance) and [2010] 4 HKC 463 (Court of Appeal))

(d)   Though parties have not spent too much effort on the factual situation of Roof I, on the evidence before me, including those in the experts reports, on balance, I find that the waterproofing layer of Roof I is a common part of the Building within the definition of ‘common parts’ in item 10 of Schedule 1 of the Building Management Ordinance (Cap. 344) (“BMO”).

28.  Indeed, for the purpose of avoiding any unnecessary argument, as a matter of fact findings, on balance, I also find that the concrete members along the periphery areas including the edge beams and external wall of the Building “common parts” with the said definition of common parts under BMO.

29.  I now set out my answers to issues (1) to (5).

(1)   Yes.  The water leakage problem of the Flat was caused by the defective waterproofing layer beneath the roof the Building.

(2)   Yes.  The said waterproof layer was and is a common part of the Building.

(3)   No.  The said waterproofing layer was not damaged by the Unauthorized Structure.

(4)   Only the 3^rd Respondent should be responsible for the damage, not the 1^st Respondent.

(5)   Yes.  The water leakage problem of the Flat was also caused by pores and cracks within the concrete members along the periphery areas including the edge beams and external wall of the Building.  However, it was cured after the repairs in 2000.

30.  Before moving to issue (6), it will be a good idea to let parties know my finding on the question of “who constructed the Unauthorized Structure” on Roof I although the same is not relevant because of the acceptance by me of Dr Lam’s opinion.

(a)   There was no direct evidence from any of the witnesses appearing before me.

(b)   There were however quite some hearsay or double-hearsay evidence on the same. However, only little weight is to be given because of the inherent nature of them.

(c)   No one suggested that it was constructed by the Flat owner. By large, there can be 3 possibilities:

(i)   Mr Suen, as owner of Flat I

(ii)   Mr Suen, as Chairman of the IO and for the IO.

(iii)   The IO.

(d)   After thought, on balance, I find that (c) (iii) is more likely to be the truth.

(i)   There is undisputed or indisputable photographic evidence that the IO, through the Management Company or otherwise, did either allow or did not object the contractors to make use of the Unauthorized Structure in 2000, 2004 and 2009.

(ii)   Shortly before the commencement of the trial, and finally, the IO decided to make good the waterproofing layers and attempted to ask the Roof Owner for permission. The Roof Owner replied harshly though its solicitors:

“2. “…是次維修的工程承辦商必須獲得貴公司准許才可進入  貴公司所擁的業權範圍內施工才能夠執行相關工程之工序。”

Our client accepts the request herein a recognition of your client misdeeds done on the Roof.  Your client is entrusted with the management of the Building.  Having regard to the limited permitted user, our client has left the Roof open and accessible to your client relying on your client’s authority to enforce the Deed of Mutual Covenant and compliance of the relevant regulations.  Your client is obliged to keep our client informed of the matters affecting the Roof as the owner thereof and matters relating to the Building generally as any owner.  Instead of exercising its power in the performance of its duties properly, your client has erected/caused to be erected/permitted the existence of unauthorized structures on the Roof committing acts of trespass on our client’s entitlement and rights thereof and withheld from our client information which our client is entitled as owner.

Prior to your client’s request herein, at no time your client had ever approached our client for any permission of access/activities of your client on the Roof yet alleged those activities of your client the activities of ours.  It is hoped that your client’s request herein is not calculated to lay ground for your client’s untrue assertions against our client as pleaded/or to be made in the captioned proceedings.

It should be mentioned that the water leakage was first raised with our client in 2003 when your client sought to shift its liability on our client.  Inter alia, it put up the same contention as herein. As early as on that occasion, our client had already told your client (Mr Koon of your client’s then Manager) that if your client/the Manager or the Applicant required access to the Roof for investigating the cause of the water leakage and/or to do the rectification works, our client was amenable.

On 16^th March 2010, your Mr Cheung had also enquired with our Miss Lun on whether our client would be agreeable to give access/permission to your client to do waterproofing works on the Roof whereupon our Miss Lun told your Mr Cheung that our client had already confirmed its agreement in 2003.  It was only your client who chose to put the blame on our client and did not do anything then.

Our client agrees to give access to and allow all works done to remove the unauthorized structures on the Roof and all works required for the remedial and maintenance of the water proofing system of the Building at your client’s sole costs against your client’s indemnity on a full indemnity basis for all liabilities arising from such works.  The requirement of the indemnity is necessary and reasonable.  Surely your client’s contractor should have already the necessary bond/policy covering third party risks and others in place.

…”

(Letter of 30 April 2010)

(iii)   The IO made no reply and went ahead with the works, including the removal of the Unauthorized Structure.

(iv)   One still remembers that the Developer, and now the Roof Owner, was /is the owner of Roofs C, F, H and I.  And indeed, the IO also built its office together some structures at Roofs C and H.  While there were arguments between the Roof Owner and the IO as to whether there was consent or estoppel for these “occupation”, it suffices for me to take such situation as one of the relevant factors to be considered.

(v)   Ms Ko deposed that she had heard from some senior occupants of the Building, suggesting that the Unauthorized Structure was built by Mr Suen.  Such evidence is hearsay and may even be double-hearsay.  Only little weight can be given.  Worse still, even if it was built by Mr Suen, the IO would still be liable for it if he only did so in the capacity of its then Chairman.

31.  Having decided issues (1) to (5) which conclude that liability of the leakage fall on the IO, I now come to issue (6) as to the relief.

32.  Mr Au-Yeung asked me to grant an injunction order despite the renovation work was being carried out.  In his Closing Submission, he said that:

“78. It is submitted that the Applicant is entitled to be protected by such an order so that it can rest assured that the renovation work would be satisfactorily done and the water leakage problem totally resolved. The Tribunal’s attention is drawn to the fact that while the waterproofing layer had been laid at Roof I, canton tiles had not be laid thereon because Ms Ko admitted that further testing is yet to be done to confirm that the new waterproofing membrane is really functioning.

79. Moreover, it should be noted that the very new waterproofing membrane is not laid across the entirety of the roof of the Building.  In particular, it has not been laid at Roof G which there is currently no structure built thereon.  The effectiveness of such a new membrane is therefore a big question mark.  This demonstrates that despite the recent work at the roof, the water leakage problem may not be completely rectified.”

I agreed with the submission and will grant the injunction sought as against the IO.

32.  Damages of course are part of the relief to be granted.  In these respect, all Counsel made a number of submissions on the relevant principles.  I sum up them in the followings.  The damages must be:

(a)   caused by the leakage;

(b)   foreseeable, and

(c)   reasonable.

33.  Apart from the above principles agreeable to everyone, Counsel also had some disagreements.  I set out my views in the followings:

(a)   Paragraph 24 of the Re-Amended Grounds and Particulars of Opposition of the Roof Owner said, inter alia, that the Flat Owner failed to mitigate its loss.  Mr Au-Yeung argued that such allegation had to be specifically pleaded with supporting particulars. (HKCP 2011, vol. 1 Para. 18/8/17AA)  I agree, but only if it were an interlocutory application for striking out or provision of further and better particulars. The issue of failure to mitigate had been there for years, and it will be too late to raise such argument at trial.

(b)   Having said that, it does not affect the position of the Flat Owner because the Notice of Opposition filed herein on 30 March 2010 only denied the Flat Owner’s claim without any reference of duty to mitigate.

(c)   Only the IO has been held by me to be liable, and hence, as between them, there is no issue of duty to mitigate.

(d)   It is trite law that the measure of damages should be:

“that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.” (Livingstone v Rawyards Coal Co.(1880) 5 App. Cas. 25 at 39, per Lord Blackburn, cited in McGregor on Damages, 18^th ed., 2009 para. 1-022, p.14)

(e)   Both Mr Cheung and Ms Cheng asked me to take into account the factors of “new for old” and “depreciation” in assessing the Flat Owner’s Claim. (see McGregor on Damages Para. 1-022, P.19 n. 108)

(f)   Mr Au-Yeung opposed to it and relied on Wong Ping Mui v Mak Hung On (DCCJ 2874/2001, unreported, 12 October 2001, District Judge A. Cheung (as he then was):

“4.   關於這3,648.10元所謂的 ”betterment”費用，本官認為根據法律可以作出索償。雖然從某一個角度而言，車輪維修後比較意外前的狀況有實際的改善，但根據 McGregor on Damages 第16版第1328段指出，關於侵權賠償方面，如果受害人對本身損壞的物件進行維修，而維修不可避免地令到該物件在維修後比未受損壞前更為有價值或有改進的話，由於他是在無可選擇之下進行維修，而維修的後果是無可避免地有一些新的部分加諸於被損壞的物件內，在這舍情況下，法庭不會將因維修帶來的增值，從損害賠償中扣除。”

(g)   I do not consider that the authorities submitted by all Counsel are contradictory.  Then indeed support the proportion that damages must be reasonable.  However, there is no fast and hard rule. Each case depends on its own facts, or perhaps, each item depends on its own circumstances. The general rule is that the innocent party should be restored to its original position, as far as possible.  However, if the repair or replacement will inevitably put him into a “better” position and he is still entitled to the same without any deduction.

(h)   Finally, there appeared to be a small argument over the quotation and estimation of damages by the Flat Owner.  My view is that there is no rule preventing the innocent party to claim on quotation or estimation, the only hurdle is that they must be accurate and without exaggeration.

34.  Mr Au-Yeung kindly prepared a table summarizing the claims of the Flat Owner.

“

	Items	Amount
(a)	Removal of false ceiling	$1,500
(b)	Estimated cost of repairing the ceiling	$75,000
(c)	Estimated replacement costs of aluminum windows and frame	$18,500
(d)	Estimated cost of bamboo frame for the purpose of restoration work for windows	$45,000
(e)	Estimated interior repair of the Flat	$248,120
(f)	Estimated additional interior repair of the Flat	$53,800
(g)	Replacing damaged furniture	$89,926
(h)	Removing and storing personal belongings and furniture	$34,450
(i)	Loss of rental income at the rate of $15,000 per month from July 2002 to November 2009	$1,335,000
		$1,901,296
	Items	Amount
(j)	Loss of rental income at the rate of $15,000 per month from December 2009 to 2 months after the water leakage problem is fixed (to allow renovation of the Flat)	$15,000 per month

“

35.  Here is my assessment on the claims, item by item.

36.  False ceiling was constructed to try to address the leakage problem.  It was not successful and even further fell down in about 2007.  Ms Suen asked 4 workers to remove them.  It cost her HK$1,500.  She did not ask for a receipt.  I find that such costs were caused by the leakage and reasonable.  I will allow it in full.

37.  There is no doubt that the ceiling of Flat I was seriously damaged by the leakage over years.  The quotation obtained by Ms Suen from Mayer Water & Waterproofing Limited dated 16 may 2009 asked for the $75,000.  I also find it foreseeable and reasonable.  It is to be allowed.

38.  The Flat Owner said that all the aluminum windows and frame had to be replaced.  It would cost $18,500.  The necessity of this item was challenged during cross-examination of Ms Suen.  She provided her explanation.  The replacement, instead of repairs, was indeed suggested by the contractor because it would be cheaper to do so.  I accept her evidence.  Judging from the condition of the windows and walls around them as shown in the pictures produced, they had to be replaced.  Some windows could no longer be opened.  The cement surrounding the windows was very “loose” due to its being “soaked in water” for a long time. There was no challenge the reasonableness of the replacement cost.  I make no deduction to such claim.

39.  The Flat Owner further said that bamboo frame had to be constructed to replace the windows.  Ms Suen asked for $45,000.  She premised on the first item of the following quotation from Merger Waterproofing Limited dated 16 May 2009.

“

施工性質	：	外牆搭棚工程
	：	外牆牆身維修工程1600平方呎
項目		施工程序	數量	單位售價	金額
				(HKD)	(HKD)
1		搭建棚架：80呎長 x 30呎高	1 Job	45,000.00	45,000.00
2		外牆牆身維修工程	1 Job	72,000.00	72,000.00
		- 先鑿去已鬆浮之外牆批盪。
		- 在外牆塗上Plaincrete SBR作底油。
		- 然後再塗上二層MY-WS2防水泥膠膜。
		- 用Opitmix RM725 light-weight repair mortar修補至平順。
		- 塗上SKK外牆水油。
			總淨金額：	HKD	117,000.00 =========
					”

Upon examining carefully the quotation, I notice that the bamboo frame there was provided to repair the exterior walls as well as the windows.  Further, if one re-examines the quotation of windows which asked for the said sum $18,500.

“

施工性質	：	更換鋁窗工程 位置A. 正面外牆位 (窗口面積約20ft. x 4ft共1幅) 位置B. 天井外牆位 (窗口面積約3ft. x 4ft共1幅、5ft. x 4ft共2幅、1.5ft. x 4ft共2幅及2ft. x 4ft共1幅)
		工程總額：HK$18,500.- (Lumpsum)

附註：

1. 此維修工程為壹單計算(Lumpsum)完成：其他地方之維修工作、須另外報價維修。

2 …

3 …

4.  a. 本公司負責購買勞工保險。

b. 本公司提供HK$10,000.000.-第三者保險

5. 付款細則：

a. 工程金額之五成作為訂金於開工前先付

b. 工程金額之四成於工程完成後清拆棚架前清付

c. 其餘工程款項於完工日計十四天內清付

…”

(Quotation of Grandtime Engineering
(Builders) Ltd. dated 12 May 2009)

It appears that the fee of $18,500 is inclusive of the construction and removal of bamboo frame.  Hence, the claim for $45,000 will be disallowed.

40.  The interior of Flat I was so badly damaged that it had to be repaired substantively.  The quotation of Design Box Company dated 16 May 2009 proposed $248,120.  It covered demolish work, all fitting out work and insurance, including reconstruction of a partition wall and all wooden door, door flame and flooring of Flat I.  It was challenged in 2 major aspects.  The quotation obtained by Ms Suen in 2004 was much cheaper.  Further, the IO’s constructor only asked $83,300.  After thought, I agree to accept Mr Au-Yeung’s submissions. All the interior of Flat I have been soaking wet and seriously damaged, after so many years.  The quotation in 2004 is no longer applicable.  As to the undated IO’s quotation, Mr Au-Yeung correctly pointed out that:

“160.   It is submitted that the circumstances under which this quotation was prepared is in serious doubt and as a result no weight should be attached to this newly discovered document.

First of all, according to Ms Ko, she asked the 3^rd Respondent’s contractor to prepare this quotation back in January 2010.  However, such a contractor had failed to produce this quotation “for a very long time” after the contractor’s alleged inspection of the Flat in January 2010.  Given the long time lapse, it is questionable as to whether the 3^rd Respondent’s contractor could still recall what items of work should be undertaken at the Flat.  It should be specifically pointed out that no unit of work had been stated in the said quotation.  The accuracy of such estimation of cost is simply questionable.

162. At one stage, counsel for the 3^rd Respondent suggested to the Tribunal that this quotation was only done very recently.  This contradicts what we have been told by Ms Ko.

163 …

164. Ms Ko suggested that she had thought about asking the Applicant to engage this contractor to carry out the repair work.  However, in the end, she did not put forward such a proposal to Ms Suen for her consideration.  Ms Suen indicated that she is unwilling to use the 3^rd Respondent’s contractor because she does not want to deal with the 3^rd Respondent’s anymore by reason that, as confirmed by Ms Ko, Ms Suen had been subject to verbal abuse in the 3^rd Respondent’s recent meetings.  It is thus reasonable for Ms Suen to take such a stance.”

(Closing Submission of Mr Au-Yeung)

I will not make any deduction under this claim. 

41.  On top of the interior repairs as aforesaid, the Flat Owner further claimed an additional sum of $53,800, based on Ms Suen’s estimation:

		Estimate
1)	Referring to 2.1 -   Demolish brick wall and build in cabinets between room 2 and dining room	HK$8,000
	-   Demolish brick wall and build in cabinets between room 3 and living room	HK$8,000
2)	Referring to 3.8 -   Brick wall between room 2 and dining room -   Brick wall between room 3 and living room	HK$8,000 HK$8,000
3)	Referring to 4 - 13 A power outlet with conduit & wiring (Item I ) @$500/Nos. 30	HK$15,000
	- Telephone/Data outlet with conduit only (Item II) @$400/Nos. 4	HK$1,600
	- Lighting point with conduit & wiring (Item III) @$400/Nos. 13	HK$5,200
	Total :	HK$53,800 =========

While noting that items 1 and 2 were not quoted by the contractor, I accept Ms Suen’s evidence that these further walls had to be demolished and reconstructed. The same also applies to the built–in cabinets.  Her estimates are fair and reasonable. As to the item 3 regarding the electricity wiring, I am satisfied that Ms Suen had been advised that all electrical outlets had to be replaced.  She was given a unit price only because it was simply impossible for the contractor to count the exact numbers in light of the condition of Flat I.  The sum of $53,800 is allowed.

42.  The leakage over years also damaged furniture and fittings in Flat I.  I am satisfied that it would not be feasible to move them from Flat I to other places.  Further, Ms Suen did try her best to protect them by bed sheets or covers.  However, they were still rendered useless by the water damage and had to be replaced.  The quotations obtained are reasonable and there was indeed no evidence adduced by either the IO or the Roof Owner as to any alternative option open to Ms Suen.  This claim is allowed without deduction.

“1)	Room 1 -   Build-in Closet (6 feet wide, 8 feet high and 2 feet deep)	HK$11,880
	-   Simmons Queen Size Mattress	HK$24,000
	-   Queen size bed	HK$9,180
	-   Night stand (two)	HK$3,960
	-   Vanity with chair	HK$3,950
2)	Room 2 -   Sea Horse Twin Size Mattress	HK$1,000
	-   Twin size bed	HK$4,780
	-   Closet (3 feet wide, 8 feet high and 2 feet deep)	HK$5,940
3)	Room 3 -   Sea Horse Twin Size Mattress	HK$1,000
	-   Twin size bed	HK$4,780
	-   6 Drawer Chest (30 inches wide)	HK$3,950
	-   6 Drawer Chest (18 inches wide)	HK$2,370
4)	Lighting -   Crystal Chandelier at Living and Dining room	HK$10,000
	-   Bedroom Lights three @HK$780/each	HK$2,340
	-   Hallway Lights two @HK$398/each	HK$796
	Total :	HK$89,926 =========

“	Unit price	Sub-total
Storage	$3,300 x 3 months	$9,900
Moving from and to the Flat	$11,700 x 2 times	$23,400
Boxes, etc.	$1,150	$1,150
	Total :	$34,450”

I heard no evidence to contradict these items.  They are allowed in full.

44.  Finally, I will deal with the biggest item of the claim, namely, loss of rental over the years.  I should reiterate at this juncture that I find Ms Suen a credible witness.  She and her sister, by the Applicant Company, took up Flat I from their father.  She also took up the leakage problem with the IO, the Roof Owner and all authorities concerned.  Both IO and the Roof Owner were pointing their fingers to each other.  All authorities could not provide a solution.  She was fed up and commended the present proceedings on her own against the Developer and Roof Owner only. It was because the IO had sought legal advice, suggesting that the Developer and Roof Owner should be responsible.  Ms Suen wanted nothing but to make good the leakage problem.

45.  The Roof Owner in turn instituted the 3^rd Party proceedings.  Ms Suen was at a loss and did not know how to handle such development.  Her requests for documents towards the Roof Owner and the Third Party were ignored.

46.  As a housewife and mother, she had a lot of matters to attend to.  She could not repair Flat I unless the leakage had been cured.  She could not repair Roof I because it belonged to the Roof Owner.  The IO was denying liability.  But for the leakage, she could have let Flat I to her parents-in-law commencing from about July 2002 so that her husband would pay $9,000 per month to the Flat Owner.

47.  She had done the best she could to take care of Flat I, including moving valuables to the store room which was relatively dry. She also protected the beds and mattresses with covers.  She could not move all other furniture and so forth to other places as storage costs would be substantial.

48.  Ms Suen only failed this Court on one matter, namely, she sat on the case from about mid 2005 till end of 2008 until this Tribunal called upon all the parties.  There is a “delay” of about 3.5 years in these proceedings, as admitted by her.  Hence, loss of rental will be calculated at $9,000 per month from July 2002 until December 2010 (excluding 3.5 years) and thereafter from January 2011 until 2 months after the leakage problem will have been fixed.

Conclusion

49.  To conclude, I will make the following order for the Applicant against the 3^rd Respondent:

(a) A mandatory injunction that it shall within 3 months carry out removal work to rectify the water leakage problem, including repairing or replacing the waterproofing layer, failing which the Applicant is at liberty and at the costs of the 3^rd Respondent to carry out the work itself.

(b) (1) Payment of damages of $1,061,296.

	Items	Amount $
(a)	Removal of false ceiling	1,500
(b)	Estimated cost of repairing the ceiling	75,000
(c)	Estimated replacement costs of aluminum windows and frame	18,500
(d)	Estimated cost of bamboo frame for the purpose of restoration work for windows	__
(e)	Estimated interior repair of the Flat	248,120
(f)	Estimated additional interior repair of the Flat	53,800
(g)	Replacing damaged furniture	89,926
(h)	Removing and storing personal belongings and furniture	34,450
(i)	Loss of rental income at the rate of $9,000 per month from July 2002 to December 2010 (excluding 3.5 years)	540,000
		1,061,296 =======

(2) Payment of further damages at the rate of $9,000 per month from January 2011 until 2 months after the leakage problem will have been fixed.

(c) There is an order nisi that the 3^rd Respondent do bear half of the costs of the proceedings from 19 November 2009 to the date hereof including Certificate for Counsel for hearings from 7 to 10 December 2010 at District Court Scale, to be taxed if not agreed.

50.  As between the Applicant and the 1^st Respondent, I will order that:

(a) The claim is dismissed.

(b) There is an order nisi of no order as to costs.

51.  Finally, in relation to the 3^rd Party Proceedings between the 1^st Respondent and the 3^rd Respondent, I will only make an order nisi of no order as to costs.

52.  This has come to almost the end of this Judgment, I will conclude it by explaining why I have awarded no costs to the 1^st Respondent when it has been held that it is not liable to the Flat Owner.

(a) The Roof Owner only “escapes” the liability because I have accepted the expert evidence of Dr Lam, the joint expert of the Flat Owner and the IO, that the Unauthorized Structure was not the cause of the leakage.  Indeed, before the engagement of Dr Lam in 2010, there had been quite some expert evidence, including those of the expert of the Roof Owner itself, that the Unauthorized Structure was one the causes of the leakage.

(b) But for the evidence of Dr Lam, the Roof Owner would be held jointly and severally liable with the IO to the damages suffered by the Flat Owner, because of the breach of Clause 10 of the relevant DMC. It “permitted” the Unauthorized Structure to be constructed and remained at its property, Roof I, which created annoyance, i.e. the leakage, to the Flat I.

(c) The attitude of the Roof Owner in taking care of its “property” should not be endorsed.