SUN CHEONG CONSTRUCTION CO LTD v. THE INCORPORATED OWNERS OF KING FU, HO FU, KI FU & KA FU BUILDINGS

HCCT 27/2010

[2019] HKCFI 236

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 27 OF 2010

______________

______________

_____________

D E C I S I O N

_____________

Background

1.  These proceedings relate to the claims made by the plaintiff (“Contractor”) for outstanding costs of works carried out at various buildings in Whampoa Estate in Hunghom (“Buildings”), and the counterclaim made by the Incorporated Owners of the Buildings (“Owners”) for damages in respect of the Contractor’s allegedly defective works carried out.  The works for which the Contractor was engaged to execute included repair of the external walls and internal common parts of the Buildings, and the upgrading of the drainage and water supply systems (“Works”).  The Owners claim that the Contractor had failed to complete the Works, including failing to remove various foreign objects on the external walls of the Buildings, and further, that part of the Works were defective.  The allegedly outstanding Works and alleged defects included: the Contractor’s failure to carry out hammer tapping tests with skill and care; failing to identify and completely remove all defective concrete on the wall surface; failure to remove the concrete cover at various locations required for repair and replacement of rusted reinforcing bars; failing to carry out waterproofing work properly; and executing defective sealing up work for the replacement of the drainage system.

2.  The trial has been fixed to commence on 13 February 2019.

The court’s leave on expert evidence

3.  On 26 November 2015, this Court granted leave under Order 38 rule 36 (“2015 Order”) for each of the Contractor and the Owners to adduce expert evidence on quantum and, in respect of the Owners’ complaint of defects, on (i) structural engineering, and (ii) infrared thermography.  On defects, the experts were to answer the following questions:

(1) Has the Contractor performed the work set out in items 1 and 2 of Appendix B to the Amended Defence and Counterclaim (“DCC”)? If so, what are the extents of outstanding works (if any)?

(2) For each of the items of work referred to in items 3 - 7 of Appendix B to DCC, is the work defective? If so, what is the extent of the defective work?

(3) If the work referred to in (2) above is defective, what is the appropriate and reasonable method of rectification and the extent of such rectification?

4.  On quantum, the experts were to opine on the reasonable costs of execution of the outstanding works to be incurred by the Owners, and the reasonable costs of rectification of the defects identified.

The Owners’ expert evidence

5.  Pursuant to the 2015 Order, expert reports on infrared thermography have been served by Mr Shum for the Contractor and Mr Mong for the Owners.  They are not the subject of any dispute at this stage.

6.  Also pursuant to the 2015 Order,  Dr Sammy Yin Nin Chan (“Chan”) served an expert report dated February 2017 (“Chan’s Report”) on behalf of the Owners.  At paragraph 1.7 of Chan’s Report, he confirmed that he was commissioned by the solicitors acting for the Owners to be the structural engineering expert witness to answer the specific questions posed by the parties and directed by the Court in the 2015 Order.  In Chan’s Report, he appended 9 “assessment” and “condition survey” reports (“Assessment/Survey Reports”) prepared by Wong & Cheng Consulting Engineers Limited (“WC”) on the condition of the pipe and drainage system, the external walls, the concrete structure at various locations, the structural condition of the external walls, and water leakage at various locations, of the Buildings.  These Assessment/Survey Reports were made on different dates, from August 2009 to October 2013, all prior to the 2015 Order. 

7.  By reference to and on the basis of the Assessment/Survey Reports, Chan expressed his opinion and conclusions in Chan’s Report, including the following:

(1) There were 118 abandoned nails, bolts and foreign objects on 5% of the total area of the external walls of the Buildings, that they were likely used for the installation of scaffolding or had been left from external work carried out by other contractors which should have been removed by the Contractor, that as a result, water with rusty stain dripped from these objects, causing damage to the structure of the Buildings.

(2) There were severe defects such as cracks, concrete spalling, spalling with exposed reinforcing bars, and defective concrete surface or rendering observed at different locations. 

(3) Hollow ceramic tiles and hollow concrete rendering or finishing were identified by hammer tapping tests at different locations.

(4) Water ponding, wet surfaces, and water leakage were observed, and water leakage was caused by poor concrete patch repair work carried out during the pipe replacement work.

(5) Due to the seriousness of the defects and the degree of deterioration of the concrete, such concrete defects ought to have been in existence at the time of the contract but were not detected or identified by the Contractor.

(6)  There were outstanding Works not completed by the Contractor.

(7)  The Contractor had failed to carry out the Works with proper skill and care, and the workmanship of the repair works did not comply with contract requirements.

The dispute

8.  By summons issued on 24 December 2018 (“Summons”), the Contractor applied to have the 9 Assessment/Survey Reports, and another condition survey report dated August 2010 (“August 2010 Report”) excluded as inadmissible evidence, on the basis that leave was never obtained for the Owners to adduce and rely on these Assessment/Survey Reports as expert evidence.

9.  The position is clear.  Order 38 rule 36 states that except with the leave of the Court or where all parties agree, “no expert evidence may be adduced at the trial”, unless the party seeking to adduce the evidence has applied for directions under rule 37 or 41 (whichever is appropriate) and has complied with any direction.  The courts have made it abundantly clear in the past the importance of expert directions being sought from the Court as an integral part of the case management process, in order to ensure the attainment of the objectives set out in Order 1A rule 1 RHC, and that parties and their legal representatives have the duty to assist the Court in formulating the appropriate expert directions and to ensure that, once given, the directions are strictly adhered to (see, for example, Chinachem Charitable Foundation Limited v Chan Chun Chuen HCAP 8/2007, 2 February 2010 and Chok Ying Interior Design & Engineering Co Ltd v Lau Chi Lun, 5 May 2010 at paras 7 -14).

10.  Principles of mutuality and fairness play an important role when directions are formulated for the mutual exchange and disclosure of expert reports to be prepared and relied upon at trial.  Save for compliance with the relevant provisions of Order 38 and with the directions of the Court when leave is granted, any expert opinion evidence is inadmissible.

11.  In addition, experts also have duties to the Court, as highlighted in Order 38 rules 35 and 37C.

12.  It is further pertinent to highlight, at this stage, that when an expert compiles his report pursuant to leave granted by the Court, the Court would expect him to set out, comprehensively and without reservation, in his report the facts on which his opinion is based, the documents reviewed, his opinion on the matters which are within his expertise and for which leave is granted for him to proffer his opinion evidence, any inferences drawn on the basis of his specialist skills and experience from facts assumed, proved or not disputed, and an explanation or analysis of his conclusions, opinion and inferences by reference to the data he relied upon.  The Court would not expect the expert to reserve such opinion, analysis and explanation to be given only at trial.  It may be that he will not even be called to be cross-examined by the parties, if his opinion and analyses are clear, and accepted.  The purpose of seeking leave for expert evidence and directions at an early stage is to facilitate useful discussions between the parties on the basis of the expert evidence, so that disputes can be narrowed down and only the core issues need to be resolved at trial, thus minimizing costs and time.

13.  In this case, I have been surprised and somewhat dismayed by the fact that the Owners and their legal advisers have chosen to withhold from the Contractor and from the Court, at the time when directions for expert evidence was sought in November 2015, that the Assessment/Survey Reports had been compiled and had been intended to be used by the Owners as expert evidence at trial. 

14.  For the purposes of the Summons, the Owners have sought to argue that the Assessment/Survey Reports (including the August 2010 Report) were not expert reports as such, but merely “contemporaneous records” of facts and observations made as to the conditions of parts of the Buildings.  They also argue that even if the Assessment/Survey Reports were indeed expert reports, they form part of Chan’s Report which was prepared pursuant to leave granted by the Court under the 2015 Order, and should therefore be admissible as expert evidence. 

15.  If the Assessment/Survey Reports, or any parts thereof, do form factual evidence and nothing more, they should have been disclosed by the Owners by lists of documents and dealt with by factual witnesses in their statements: who had made the observations, carried out the tests and inspections, or taken the photographs.  This was not done, save for the witness statement of one Mr Kenneth Chang of the Owners (“Chang”), who deposed to the fact in his statement made in February 2016 that WC had been engaged by the Owners to conduct inspections, and that WC had prepared the Assessment/Survey Reports. 

16.  Chan himself also signed and served a witness statement in February 2016, deposing briefly to the fact that the Owners had engaged WC to carry out investigations of the condition of the Buildings, and that unnamed “employees of WC” and contractors had carried out the inspections, the results of which were set out in the Assessment/Survey Reports which were “monitored” by him, as a registered structural engineer of WC. 

17.  The Assessment/Survey Reports were not exhibited to the witness statements, although they were later provided to the Contractor’s solicitors in February 2016.

What constitutes expert evidence

18.  The nature of expert evidence, and its distinction from evidence of fact, was analyzed and highlighted in The Torenia [1983] 2 Lloyd’s Rep 210, a case on the cause of the sinking of “The Torenia”, in which the defendants sought to adduce the evidence of a captain of a merchant ship as to observations he had made over a number of years of “damage to deep tanks or deep tank structures and bulkheads in cargo service,” and of his “experience of not using deep tanks while sailing in ballast conditions”.  The captain had not sailed on the vessel and had not seen her when she was afloat.  Hobhouse J (as he then was) held in the case that this was properly described as expert evidence, and identified 3 evidential categories (at p 233 of the report):

“In a case of this kind one can analyze the matter in this way: First, evidence is adduced which can be described as direct factual evidence, which bears directly on the facts of the case. Second, there is opinion evidence which is given with regard to those facts as they have been proved; and then, thirdly, there is evidence which might be described as factual, which is used to support or contradict the opinion evidence. This is evidence which is commonly given by experts, because in giving that expert evidence they rely upon their expertise and their experience, and they do refer to that experience in the evidence. So any expert may say what he has observed in other cases and what they have taught him for the evaluation of the facts of the particular case. So also experts give evidence about experiments which they had carried out in the past or which they had carried out for the purposes of their evidence in the particular case in question.

… I have come to the conclusion that expert evidence must include both the second and third categories of evidence which I have referred to, that is, both the opinion evidence and the experience or factual evidence which goes to support that opinion evidence. I consider that no dichotomy is to be made between the second and third categories.”

19.  In The Torenia, the learned judge reasoned in his ruling on the admissibility of the evidence that although expert evidence can include evidence of fact, a distinction between factual and opinion evidence is unrealistic when the expert employs both fact and opinion in order to describe observations he had made. The conclusion of the court (at p 234) was that expert evidence is not only evidence of opinion, but also factual evidence which goes to an expert issue.

20.  Where the expert is drawing an inference from facts, on the basis of his expertise, specialist knowledge and experience, that is part of his expert evidence, for which leave of the court and directions given by the court under Order 38 are required.  As the learned author of Expert Evidence: Law and Practice (4^th Edition) pointed out at para 2-001, evidence of fact, given by an expert, the observation, comprehension or description of which require expertise, should rightly be included in expert evidence.  I agree and have nothing further to usefully add to the reasoning of Hobhouse J set out above.

The disputed evidence

21.  Under the 2015 Order when leave was granted for expert evidence to be called by the parties, and as the reports served by the parties pursuant to the 2015 Order clearly demonstrate, the leave of the Court was granted for Chan to be appointed as the Owners’ expert, on structural engineering.  There has never been any leave granted to the Owners to adduce any other expert evidence of WC, or any other engineer of WC, on structural engineering, or on infrared thermography.  WC as a limited company cannot have any “expertise” or specialist knowledge to proffer as expert witness.

22.  The Assessment Report dated August 2009 stated that “WC” were engaged by the Owners to submit an assessment report on the concrete and reinforced concrete in the external walls and internal common areas of the Buildings, and that unnamed engineers of WC carried out hammer tapping tests and made arrangements for infrared testing to be carried out by a third party, Forwin.  It then set out the results of the hammer tapping tests which had revealed defective concrete at various locations, stating that there were hollow areas of various dimensions in various locations.  The infrared test results were also set out, with the conclusion that there were 4 areas of “suspected” defects in the concrete.  The report contained the conclusion that there were 12 areas of suspected damage in the external walls, a total of 405 areas where the concrete structure was defective as revealed by the hammer tapping tests, and that the defective concrete was at risk of falling, and required repairs.  Further, the report stated that the maintenance works were not up to standard.

23.  The Assessment Report dated August 2009 includes an infrared report which was compiled by Forwin.  It sets out the tests conducted by Forwin, and the conclusions made by Forwin on damaged or defective concrete located at various areas of the Buildings on the basis of the analyses made by Forwin.

24.  The conduct of hammer tapping and infrared tests requires experience and the employment of skills and specialist knowledge.  The conclusion made, that damage exists or has been noted from the tonal or other relevant changes detected in the course of the tapping is a process of inference made by the operator or examiner, drawn from and independent on the skill and experience of the operator.  Likewise, the reliability of infrared thermography tests depends on (inter alia) how the thermal images are read or interpreted and whether the measurement devices were correctly applied with the relevant expertise.  Applying the tests set out in paragraphs 18 to 20 above, the Assessment Report dated August 2009 clearly contains and purports to set out expert evidence, for which leave is required. 

25.  Chan adopted the August 2009 Assessment Report and the 8 other Assessment/Survey Reports in his expert report of February 2017. He further stated in his witness statement that employees of WC and contractors of Forwin had carried out the inspections referred to in the Assessment/Survey Reports, that he had monitored the inspections to the best of his ability, and that he confirmed the accuracy thereof to the best of his knowledge and belief. Yet, neither his witness statement, his report of February 2017, nor the August 2009 Assessment Report specified the individual or individuals who had carried out these tests, what their relevant experience was, the detailed methodology they employed, or their manner of analysis of the test results.  Although Chan stated in his witness statement that he had prepared and signed the 10 Assessment/Survey Reports, not all of them bore his signature (in the copies produced in evidence), and only 4 of the 10 Assessment/Survey Reports (those dated June 2012, July 2012 and October 2013) show Chan’s signature on the front page.

26.  The infrared report compiled by Forwin, and relied upon in Chan’s Report, is expert evidence the production of which does not have the leave of the Court.  Mr Shum and Mr Mong were granted leave under the 2015 Order to give expert evidence on infrared thermography.  The Forwin report is clearly inadmissible.  Reference thereto in Chan’s Report does not render it admissible as expert evidence.  Leave was never granted for Chan to be called as expert on infrared technology or thermography.  His opinions, conclusions and inferences based on and made from Forwin’s tests and reports are outside Chan’s own field of accepted expertise.

27.  On the face of the August 2009 Assessment Report, it is not known who had assimilated the facts and data regarding the hammer tapping test, how the data was analyzed, and who had made the conclusions and compiled the report.  Nor did Chan in Chan’s Report make any analysis of the data, information and facts assimilated and referred to in the August 2009 Assessment Report issued in the name of WC (and not Chan, the expert for which the Owners obtained leave to adduce expert evidence).  Chan only stated (in paragraph 5.1.3 and 5.1.4 of Chan’s Report) that there was defective concrete surface/rendering detected at 12 locations, and a total of 405 defects in the form of hollowed concrete, as identified in the August 2009 Assessment Report - namely, a complete acceptance of and reliance on the findings and conclusions made in the earlier report.

28.  Even if Chan was to be permitted to refer to the data, information and facts contained in the August 2009 Assessment Report, without any or any sufficient information as to the validity of the methods by which the data was obtained, the quality of the data obtained, the degree of precision or accuracy of the results of the tests, Chan’s expert conclusions, and any inferences he made from the data and test results on the basis of his own specialist skills, are neither reliable nor helpful to the Court at trial. This is precisely why directions should be obtained before expert reports are compiled for use in legal proceedings.  The parties should, at the stage when leave and consequential directions are sought from the Court, consult with each other and their intended expert(s) as to the inspections and testing that may be required, so that directions can be agreed and obtained from the Court for meetings of the experts to agree on the appropriate inspections and testing to be conducted, and the methodology for analyses, assessments and calculations as may be required on the facts of the case and the nature of the dispute.

29.  Inspection and testing reports instructed by parties prior to commencement of legal proceedings, or for purposes other than for use in legal proceedings, may vary in nature, form and quality from reports for use in legal proceedings as expert evidence.  The latter has to satisfy the requirements of Order 38 RHC in form and substance to be admissible as evidence. Whilst the Owners may be happy and prepared to accept the conclusions and findings made in the Assessment/Survey Reports, without formalities, without testing or verification, and without particulars, these same reports would not be admissible if they constitute expert, as opposed to factual, evidence and if they do not satisfy the requirements of Order 38 RHC.

30.  The same problems and issues affect the other Assessment/Survey Reports made between August 2009 and October 2013.  The Assessment/Survey Report dated December 2009 was not signed by Chan.  It referred to unnamed engineers of WC conducting hammer tapping tests, water leakage tests and observations made on 30 October to 28 November 2009.  The December 2009 Assessment Report stated the detection of slight rust in some locations of the pipes, 30 locations of hollowness in the external walls, and rusty ornaments remaining on the external walls.  Measurements of the hollow areas were recorded, and the report stated that the engineer (s) had carried out an average of 15 hammering on an area of 1 metre of surface.  Neither the December 2009 Assessment/Survey Report nor Chan’s Report stated by whom the relevant tests were made, the experience and expertise of the person who had conducted the tests, and how the data was analyzed by Chan to reach the conclusions made in Chan’s Report.  Chan only stated that the survey carried out between October and November 2009 was under his supervision, and repeated the findings made by WC that there was defective concrete identified at 145 locations of the Buildings.  No other engineer of WC produced any other witness statement or report to set out details of the methodology of the tests carried out by him/her, and the analyses made.  No such witness will be called at trial for such evidence to be tested in cross-examination.

31.  The Assessment/Survey Report dated March 2010 included in its appendices photographs supplied by the Owners of water patches at 2 locations inside one of the Buildings, and referred to hammer tapping tests conducted by unnamed engineers of WC in January 2010, as well as CCTV surveys conducted by unnamed engineers and technicians of WC and Forwin.  The CCTV surveys included photographs taken within water tanks of the Buildings, to show signs of water leakage and water dripping.  The March 2010 Assessment/Survey Report further included plans to show the areas where the hammer tapping tests were conducted.  The hollow tiles identified by the hammer tapping tests, the water stains and ponding observed were referred to in Chan’s Report as the basis of his conclusion of defects and suspected water seepage.

32.  The Assessment/Survey Report dated May 2010 referred to visual surveys and water spraying tests conducted by unnamed engineer(s) of WC.  A limited number of photographs taken of the false ceiling, pipes and of some suspected leakage areas during and after the water spraying were included in the May 2010 Assessment/Survey Report.  Chan’s Report referred to the visual inspection and water spraying test, and concluded that the water leakage was caused by the poor concrete patch repair work carried out by the Contractor.

33.  The Assessment/Survey Report dated July 2010 referred to visual surveys and CCTV surveys conducted by unnamed engineers of WC and technicians from Forwin.  It recorded signs of leakage and water seepage at various locations, and included a CCTV survey report conducted at suspected water leakage locations, with photographs taken during the CCTV survey conducted by Forwin.  The conclusions made in the July 2010 Assessment/Survey Report were that on the basis of the visual surveys and the hammer tapping tests, there was damaged concrete at various locations, leading to water leakage, and that the waterproofing system at the locations might have been damaged.  Chan’s Report referred to the on-site examination and surveys recorded in the July 2010 report, and repeated that hollow concrete rendering or finishing had been identified by the hammer tapping test, and that water stains and wet surfaces had been observed.

34.  The Assessment/Survey Report dated August 2010 referred to visual surveys conducted by unnamed engineers of WC and a mechanical engineer from Wellhope Engineering Limited (“WE”), and included in its appendices a survey report prepared by representatives of WE (“WE Report”).  The WE Report stated observations made by the WE representatives on the condition of the drainage pipes of the Buildings, and in reliance on such observations, made conclusions that there were defects in the drainage system, with recommendations as to rectification.  The defects in the drainage system included the allegedly incorrect location of the pipe exhaust, method of connection of the pipes, loose screwing and lack of support, etc.  There is no information on the alleged expertise of the engineers from either WC or WE, and their competence to give expert opinion on the alleged defects in the drainage system.  No leave was ever obtained from the Court for such expert opinion evidence to be adduced, and it is clearly inadmissible.  No reference was made in Chan’s Report to the August 2010 Assessment/Survey Report.

35.  The Assessment/Survey Reports of June 2012 to October 2013 are along the same vein.  They referred to visual inspections and surveys conducted by unnamed representatives of WC, and their visual detection of defects such as cracks, spalling, signs of water seepage, etc.  Chan’s Report then referred to those observations and concluded that the water leakage was caused by poor concrete repair work, that the defects were severe or serious, and that the Contractor had not carried out the necessary survey, or had completely ignored the defects for repair.

36.  The photographs (including the CCTV photographs) of water seepage and the physical condition of the Buildings may constitute factual evidence, but the Assessment/Survey Reports on the whole constitute expert evidence in that they proffer opinion evidence on the existence of defects in the concrete, by reference to the factual evidence relied on in the reports, and inferences made with the employment of skill and experience.  Photographs and matters of visual observation can be separately relied upon by the Owners/Chan by having them properly adduced through hearsay notices and witness statements on facts.  At this stage, I would rule that all the Assessment/Survey Reports are inadmissible as expert opinion evidence.

37.  To the extent that references are made to the Assessment/Survey Reports in Chan’s Reports, and to the extent that Chan’s expert evidence is purely reliant on hearsay evidence, without his own detailed and expertise analysis and explanation, that will be a question that goes to the weight (if any) to be attached to Chan’s Report, and what value remains of his evidence.

38.  Chan’s ability to fully understand the duties which he owes to the Court as an independent expert will also have to be considered, in the light of his reliance on non-expert evidence or inadmissible evidence, and his lack of full disclosure of the individuals on whom he relied in the compilation of his expert report and his expert evidence.

Any agreement for the production of expert evidence

39.  On behalf of the Owners, it was argued that despite any absence of the requisite leave from the Court for the production of expert evidence, the Contractor had nevertheless agreed to the expert evidence contained in the Assessment/Survey Reports.  The 10 Assessment/Survey Reports had been disclosed to the Contractor and its solicitors in February 2016, after the 2015 Order, and after the witness statements of Chan and Chang were served. The experts exchanged their reports pursuant to the 2015 Order, and their joint statement was signed in August 2016, with no action taken by the Contractor in relation to the Assessment/Survey Reports disclosed, until the Summons issued shortly before trial.

40.  The Contractor’s solicitors had written in July 2016 to complain of the Assessment/Survey Reports, threatening an application to the Court to disallow same.  Whilst there has been admitted delay from February/July 2016 on the part of the Contractor in making the formal application to disallow the Assessment/Survey Reports, which delay should not be encouraged, the Contractor’s answer is that the burden is on the Owners to seek leave from the Court to adduce the expert evidence, and as long as such leave is not obtained, the Assessment/Survey Reports cannot be relied upon at trial.

41.  On the evidence, I cannot accept that there was agreement from the Contractor for the Owners to produce and rely upon the Assessment/Survey Reports as expert evidence at trial.

42.  It remains necessary to remind legal advisers not to permit the hostility of their lay clients to dictate the conduct of litigation in court.  Early preparation, thorough planning and full disclosure, instead of ambush, should always be the guidepost in civil proceedings post Civil Justice Reform.

Disposition

43.  For all the foregoing reasons, I grant the Contractor’s application and order that the 10 Assessment/Survey Reports referred to in the Summons are inadmissible as expert evidence.  The costs of the Summons are to be paid by the Owners to the Contractor, with certificate for counsel.