REALTY HARVEST LTD. AND OTHERS v. GOLD MARGIN DEVELOPMENT LTD. AND ANOTHER

CACV000212/2000

CACV212/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 212 OF 2000

(ON APPEAL FROM HCA 11197 OF 1998)

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Coram: Hon Leong CJHC, Wong & Woo JJA in Court

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J U D G M E N T

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Hon Leong CJHC (giving the judgment of the court) :

1. The 2nd defendant (the appellant) is the owner and the 1st defendant is the tenant of Unit 12 on the 3/F of the Yue Fung Industrial Building in Tsuen Wan, New Territories. The tenancy agreement between the 2nd defendant and 1st defendant provides for an option which the 1st defendant may exercise at the end of the current term to renew the tenancy on the same terms and conditions.

2. The 1st plaintiff is the owner of Unit 12 on the floor directly below. The 2nd and 3rd plaintiffs are the tenant and sub-tenant of the 1st plaintiff of this unit. All of the plaintiffs are respondents in this appeal.

3. The 1st defendant installed two weaving machines on its rented premises to manufacture labels and these weaving machines generated noise and vibrations when they were in operation. It is not disputed that since March 1998 the employees of the 2nd and 3rd plaintiffs working on the floor below found the level of noise and vibrations intolerable and they had to relocate their working places.

4. Complaints about the level of noise and vibrations were made by the plaintiffs to the management of the building, the Environmental Protection Department as well as to the Labour Department but of no avail. The plaintiffs themselves attempted to reduce the noise and vibrations by installing insulating materials on the ceiling of their premises but this was not effective. The defendants were made aware of the problem and it is not in dispute that in April and in July 1998, after they consulted the supplier of the weaving machines for a solution, the defendants installed paddings beneath the machines in an attempt to reduce the noise and vibration level.

5. In July 1998, the 1st defendant's technicians went into the plaintiffs' premises to assess the situation and the readings obtained showed a maximum of 77 db(A) when both weaving machines were in operation. By this time, the plaintiffs had already issued a writ against the 1st defendant claiming an injunction and damages for nuisance.

6. The Labour Department considered that in an industrial building, a noise level of not more than 85 db(A) was acceptable to a person working on the premises but beyond that, workers on the premises should be provided with ear mufflers for protection. In August 1998, the 2nd defendant informed the plaintiffs that better vibration insulators had been installed to the machines. However, the plaintiffs did not accept that the defendants had made sufficient amends to reduce the level of noise and vibrations. They proceeded with their legal claim against the defendants. While these proceedings were going on, the 1st defendant exercised his option to renew the tenancy and the 2nd defendant renewed the tenancy on the same terms.

7. The case against the 2nd defendant is that he was in breach of Clauses 9 and 33 of the Deed of Mutual Covenants (DMC) and was responsible for the nuisance of excessive noise and vibrations emitted from the 1st defendant's machines on his premises.

8. The relevant clauses are as follows:

9. The main question at the trial was whether the plaintiffs had proved the 2nd defendant committed a breach of these two clauses. To prove there was a breach of Clause 9, the plaintiffs must prove the 2nd defendant had suffered or permitted the 1st defendant to generate noise and vibrations to the unacceptable level and the 2nd defendant had failed to take all possible steps to abate the noise and vibrations and that the 1st plaintiff had suffered damage as a result.

10. In the proceedings below, both the plaintiffs and the defendants had engaged their own experts to assess the noise and vibration level in the plaintiffs' premises and their reports were put before the trial judge. These reports contained the experts' individual assessments of the noise and vibration level at various parts of the plaintiffs' premises when the 1st defendant's weaving machines on the floor above were in operation.

11. After reviewing the evidence and the reports of these experts, the trial judge accepted the assessments made by the plaintiffs' expert as "the basis for determining the gravity of the level of noise and vibrations". On that basis, the judge concluded that the noise and vibration level at the plaintiffs' premises was such that a reasonable man would be annoyed or dissatisfied. She found the plaintiffs had a cause of action, even though the plaintiffs' premises were in an industrial surrounding which was bound to be noisy. The trial judge found that even though the 2nd defendant had taken some steps to abate the nuisance, he had not taken all possible steps in that he had not imposed a new term in the new tenancy granted to the 1st defendant requiring him to ensure that the noise and vibrations emitting from the 1st defendant's machines would not exceed the acceptable level.

12. The judge found it proved against the 2nd defendant that he was in breach of the DMC. She made the following orders against the 2nd defendant:

13. The 2nd defendant appeals.

14. In the grounds of appeal, the 2nd defendant claims that the judge was wrong to find there was a claim made by the 2nd and 3rd plaintiffs against him. He also complains that the trial judge failed to appreciate the true meaning and effect of Clause 9 and Clause 33 of the DMC and the 2nd defendant's responsibilities thereunder. He says that the judge's finding that the 2nd defendant had failed to take all possible steps to comply with DMC was wrong. These grounds also complain that the judge erred in holding that the plaintiffs had suffered loss as a result of the nuisance caused by the 1st defendant.

15. Mr Chau, Counsel for the plaintiffs, concedes that the order to pay damages should only apply to the 1st defendant and not the 2nd defendant. He further indicates that the 1st plaintiff will not rely on Clause 33 in this appeal. That being so, the 2nd defendant must succeed in his appeal against the order on damages.

16. On the rest of the appeal, the question for our determination is really the meaning of Clause 9 of the DMC and whether the 1st plaintiff has proved that the 2nd defendant was in breach.

17. Mr Siu for the 2nd defendant, relying on Berton v Alliance Economic Investment Co [1922] 1 KB 742 which was applied in Kwan Shung King v Housing Appeal Tribunal [2000] 2 HKLRD 764, submits that to prove that the 2nd defendant had suffered or permitted excessive noise and vibrations to emit from the 1st defendant's machines and had failed to take all possible steps to prevent it, the plaintiffs must prove the 2nd defendant had allowed the 1st defendant to do the act or to have abstained from taking reasonable steps to prevent the act and such steps must be within the 2nd defendant's power to take. He further submits that the 2nd defendant's responsibilities under the clause do not include an obligation at all costs to take an action to prevent the nuisance. He also submits that the duty is not an absolute one and where there was no evidence that when the tenancy was renewed the 2nd defendant had power to impose new terms requiring the 1st defendant to ensure that the level of noise and vibrations generated from the machines is acceptable, the 1st plaintiff had not proved that the 2nd defendant had failed to take all possible steps to prevent the nuisance.

18. In Berton v Alliance Economic Investment Co, one of the questions for the consideration of the Court was the meaning of "permit" in a covenant by a sub-lessee "not to do or permit to be done any act or thing upon the premises which might be or grow to the annoyance, damage or disturbance of the assignee and not to sublet without the consent of the assignee." Mr Siu relies on the following passage in the judgment of Atkin LJ (at p. 759):

19. InYu Yuk Sun v Wing Shing Firm [1951] HKLR 136, a case also relied on by Mr Siu, Scholes J in referring to what Bankes LJ said in Berton, quoted from the judgment of Bayley J in Hobson v Middleton:

20. On these authorities, Mr Siu submits that the 2nd defendant had no power to impose a term restricting emission of noise and vibrations from his premises on renewal of the 1st defendant's tenancy, because the parties were not negotiating a new tenancy. The 2nd defendant was obliged to grant the new tenancy on the same terms on the 1st defendant exercising his option to renew. It could not be said that he had failed to take all possible steps. The 2nd defendant had no obligation to prevent the nuisance at all costs.

21. On the question of whether the nuisance interfered with the enjoyment of the premises by the 1st plaintiff, Mr Siu submits there is no evidence showing that the lst plaintiff had been affected by the noise and vibrations.

22. Mr Chau, on the other hand, submits that Clause 9 requires the 2nd defendant to take all possible steps and not only reasonable steps and the duty is a continuing one. He submits that the judge concluded that the 2nd defendant had failed to take all possible steps and that conclusion is supported by the evidence before the judge.

23. The trial judge in her judgment clearly accepted that apart from the 2nd defendant's failure to impose a term in the renewed tenancy restricting the emission of excessive noise and vibrations, the 2nd defendant had taken all steps within his power to abate the nuisance. Because the 2nd defendant's said failure, the trial judge found the 2nd defendant liable. In our opinion, the 2nd defendant was not in a position to refuse a renewal upon the 1st defendant exercising his option. Neither was it within his power to vary the terms of the renewed tenancy. There is no evidence to show the contrary nor that the 1st plaintiff had suffered damage as a result of the excessive noise and vibrations.

24. We are unable to accept that the 1st plaintiff had proved that the 2nd defendant had been in breach of Clause 9. The judge's order restraining the 2nd defendant from committing a breach of that clause cannot stand. We allow the 2nd defendant's appeal and set aside the order accordingly.

25. We make a costs order nisi that the 2nd defendant's costs of this appeal and his costs below shall be borne by the 1st plaintiff.

Representation: