EASTERN FORTUNE ENTERPRISES LTD. v. BEST REGAL DEVELOPMENT LTD.

HCA10706/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. A10706 OF 1997

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J U D G M E N T

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1. This is an appeal by the Defendant herein, Best Regal Development Limited, against the judgment of Master Kwan of 16th March 1998. On that date Master Kwan, who was then seized with the Plaintiff's Order 14 application, ordered that judgment be entered for the Plaintiff against the Defendant for damages to be assessed, together with interest and costs with a Certificate for Counsel.

2. Pursuant to a Notice of Appeal dated 19th March 1998, the Defendant appeals against that Order, and asks that the judgment of Master Kwan be set aside, that the Defendant be given unconditional leave to defend the action, and that the costs of the appeal and of the hearing before Master Kwan be to the Defendant in any event.

3. This, then, is the judgment upon the hearing of this appeal.

4. The facts of this case are in short compass. The Plaintiff is the owner of a flat on the 1st Floor of Block One, Pacific View, Tai Tam. The Defendant, for its part, was the registered owner of a flat on the 2nd Floor of the same building; the Defendant's property was immediately above the Plaintiff's property. The evidence indicates that on 17th June 1997, water was seeping and/or dripping from the Defendant's property through the ceiling of the living room and kitchen of the Plaintiff's property. Moreover, it appears that Mr Ng, a director of the Plaintiff, found his flat flooded with water on that day after being contacted by management staff of the building, and during such inspection, Mr Ng is said to have seen water dripping down from the ceiling of his living room and the kitchen. A subsequent letter from the management services company, one Kai Shing Management Services Limited, dated 23rd July 1997 and addressed to Mr Ng, recounts the situation on visiting the Defendant's flat as follows :

"Water dripping at the ceiling
Flat B, 1/F, Block 1, Pacific View

We would like to furnish you with the depiction about what we saw at Flat 2B, Block 1, the flat above yours, on 22nd June 1997 regarding the captioned as follows :

When entering the premises being in company with the agent of the owner concerned, we found that the balcony door was not properly closed and some windows were opened in the premises. Also, there was a large amount of water being accumulated on the floor of the living room, the kitchen and the working area. The water might come through the unlocked balcony door, the living room's windows and the kitchen working area's which had been left opened during the rainy days as there was not any other apparent source of water which had caused the problem."

5. Thereafter, the Plaintiff caused a loss adjuster to visit his premises on 15th August 1997 and this loss adjuster, Messrs Cunningham International (Hong Kong) Limited, produced a report as to the loss. This report is exhibited in evidence and, I think, speaks for itself, in particular in describing the circumstances as they were perceived to exist, the causes of the source of the water, and the nature and extent of the damage.

6. It seems likely that the evidence of Mr Ng, the evidence of the management company, and the evidence of Messrs Cunningham International will be the totality of the evidence as to this incident since I am told by Miss Winnie Chan, who appears on behalf of the Defendant on this appeal, that in fact both flats now have changed hands and have been redecorated. I further understand that, at the relevant time, the Defendant's flat on the 2nd Floor, Pacific View was unoccupied, as indeed was the Plaintiff's flat on the floor beneath.

7. Unsurprisingly, perhaps, this chain of events led to proceedings being issued by the Plaintiff on 9th October 1997, the Statement of Claim alleging, inter alia, breach of the Deed of Mutual Covenant, negligence and nuisance, and particularising the loss and damage. In response, the Defence filed by the Defendant on 4th November 1997 does little more, so far as I am able to see, than simply to deny and to put to proof; indeed, as Miss Winnie Chan, on behalf of her client accepted, this was simply a general denial Defence. In addition, the affirmation of Mr Chan Yum Kit, a director of the Defendant, which is the only affirmation filed in opposition to the affirmation of Mr Ng, suggests that the water seeping and/or dripping :

" .... could be from sources other than the Defendant's property like, for example, common concealed pipes in the floor slab not exclusively serving the Defendant's property." (at para.4)

And further (at para.8), he observes :

" Even if, which is hereby denied, the Plaintiff has established a prima facie case herein, there is reasonable prospect that the Defendant is capable of raising a real defence or triable issue that the cause of the water leakage was not from the Defendant's premises. The Defendant will seek to do so by adducing similar expert evidence in support soon."

I pause to note that no further evidence, whether expert or otherwise, has been filed for the purposes of this appeal.

8. Faced with this somewhat inauspicious set of circumstances, Miss Chan, on behalf of the Defendant, basically argues that the incident and the consequent damage require greater investigation at trial. In particular, she is concerned that causation be more clearly established, and she mounts a circumstantial critique of the alleged incident; in particular she is concerned that on the day of the management's inspection, more water was apparently found accumulated in the Plaintiff's flat than the Defendant's flat, and she seeks to draw adverse inferences from this; in this connection I think it fair to say that she draws sustenance from a paragraph in the surveyor's report to the effect that management staff found water coming out from the bottom flat on the 1st Floor to the common areas, and that there is no mention of a similar effusion of water from the flat above. From this, she constructs her critique, and suggests that trial would reveal more accurately the true situation as to the source of the water.

9. I am bound to say that I find it difficult to agree given the evidence before this Court. Whilst Miss Chan has said everything that properly could be said in favour of her client on this appeal, in my judgment the combination of the inspection by Mr Ng on the day in question, namely, 17th June 1997, the report of the management as to their inspection of the flat above a week later on 22nd June 1997 (as contained in their letter of 23rd July 1997) and thirdly, the report of the surveyor of August 1997 point unassailably to the probabilities that the water that was ingressing into the Plaintiff's flat on the 1st Floor was coming from the Defendant's flat above. To put it another way, there is nothing on these papers remotely to justify the assertion that it could have come from, for example, a deficient pipe or floor slab, and it will not do for Order 14 purposes simply to opine, as the Defendant's director himself opines, to the effect that, if given long enough, the Defendant might be able to come up with an alternative source of the water leakage. The Court must proceed on the basis of the probabilities, and on the papers the probabilities are all one way. Nor do I find anything in these papers to justify a Miles v. Bull approach to this case, namely, that there is some other reason for trial; the evidence seems to me to go in one clear direction. Moreover, it is difficult to see, given the change of hands of both flats in question, and their subsequent redecoration, how any further site investigation now can assist the Court at any trial, nor do I attach any significance to the fact that an internal management report, which I understand has been released neither to the Plaintiff nor the Defendant, is and should be thought to be of any adverse significance to the Plaintiff's case.

10. In all the circumstances, therefore, I agree with the broad approach of Mr Gary Soo, Counsel for the Plaintiff, both on this appeal and below. In his address he presents this as a straightforward case, he recites the ambit of the evidence, and he lays very significant stress upon the fact that the Defendant's case is no more than a mere general denial and a putting to proof. He particularizes these matters in his excellent skeleton submission, with the content of which I agree, and he observes that there are no special circumstances in this case requiring further investigation. He also submits, correctly in my view, that a mere desire to investigate alleged obscurities in the hope that something will turn up on such investigation cannot, separately or together, amount to sufficient reason for refusing to enter judgment for the Plaintiff. Looked at overall, Mr Soo submits that the Defendant clearly has failed to show, or otherwise indicate, a triable issue, and he asks that the appeal be dismissed with costs.

11. I am in agreement with Mr Soo. In my judgment, this appeal must fail and accordingly must be dismissed. In my view, the judgment of the learned Master was correct. The only mild surprise I register is that a case of such apparently small dimension should have been filed in the High Court as opposed to the District Court, although possibly that can be justified with reference to the injunctive relief which I see at prayer 2 of the Statement of Claim. Be that as it may. The appeal is dismissed, and the judgment of the learned Master stands; presumably in the fullness of time damages will be assessed by a Master. Since I have dismissed the appeal and upheld the judgment of the learned Master, the costs order below remains, and, subject to anything that Counsel may say, it seems to me clear that the dismissal of this appeal must be accompanied by an order that the Plaintiff herein, the Respondent to the appeal, should have the costs of and occasioned by this appeal.

12. Lastly, it remains only to thank both Counsel for their efforts. In this case the skeleton arguments were of considerable assistance, and in this regard both junior Counsel, if I may respectfully say so, have acquitted themselves admirably.