鄧偉良 v. 張本楠 AND ANOTHER

HCSA 41/2023

[2024] HKCFI 762

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 41 OF 2023

(On appeal from Small Claims Tribunal Claim No 27035 of 2022)

BETWEEN

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DECISION

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Introduction

1.  This is the defendants’ application for leave to appeal against the decision of Deputy Adjudicator Chan (the “Deputy Adjudicator”) made on 21 November 2023 (the “Decision”) and the review order dated 27 December 2023 (the “Review Decision”) in the Small Claims Tribunal proceedings in SCTC 27035/2022. Although the defendants made their oral submissions in Cantonese, as their written submissions were in English, this Decision is rendered in English.

The claim and the counterclaim

2.  By a Form of Claim (Form 2) dated 6 September 2022, the claimant originally claimed against the defendants for damages resulting from alleged water seepage from the defendants’ flat (“Flat 26D”) into the claimant’s flat at (“Flat 25D”). The HK$40,000 damages included the costs of replacing all the electrical wiring of Flat 25D, repair of ceiling and false ceiling in the washroom of Flat 25D.

3.  The defendants filed a counterclaim on 10 October 2022. The defendants claimed that the claimant had known from October 2019 onwards that he had no basis for seeking damages including repair costs. They counterclaim HK$75,000 as damages based on the tort of deceit.

4.  The claimant discontinued his claim on 25 October 2022.

5.  Thus the trial before the Deputy Adjudicator only concerned the defendants’ counterclaim.

The Written Reasons for the Decision and the Review Decision dated 6 February 2024

6.  The Deputy Adjudicator dismissed the defendants’ counterclaim by the Decision. The defendants’ application for review was dismissed by way of the Review Decision. The written reasons are set out in the Written Decision for the Decision and the Review Decision dated 6 February 2024 (the “Written Decision”).

Proposed grounds of the present appeal

7.  In the attachment to Form 9, the defendants set out the grounds of appeal on point of law, which can be summarised as follows:

(1) The defendants’ case was based on the tort of deceit. During the trial on 7 November 2023 and in the Decision, there was no mention of any element of the tort of deceit. The Deputy Adjudicator fundamentally misunderstood the defendants’ case and misapplied the applicable law.

(2) The Deputy Adjudicator applied the wrong standard of law.

(3) The Deputy Adjudicator was biased.

(4) The Deputy Adjudicator decided the issue of the source of the water leakage when that was not the issue in dispute.

The Legal Principles

8.  Section 28(1) of the Small Claims Tribunal Ordinance, Cap 338 (the “Ordinance”), provides as follows:

“Any party who is aggrieved by a decision of the tribunal—

(a) on any ground involving a question of law alone; or

(b) on the ground that the claim was outside the jurisdiction of the tribunal,

may apply to the Court of First Instance for leave to appeal and the Court of First Instance may grant such leave if it thinks fit.”

9.  Section 29(2) of the Ordinance further provides that on an appeal for which it has granted leave under s.28, the Court of First Instance (“CFI”) may draw any inference of fact and make such order as to costs and expenses as it thinks fit, but may not reverse or vary any determination made by the Tribunal on questions of fact or receive further evidence.

10.  If the defendants wish to challenge a finding of fact by the Deputy Adjudicator, they must convince a judge of the CFI that the Deputy Adjudicator had erred in law in making such finding of fact. Otherwise, the weight and assessment of the parties' evidence and submission by the Deputy Adjudicator would not involve any error of law, for which the CFI can grant leave to appeal.

11.  The defendants rely on the “question of law” limb. They will need to show that the question of law raised by them is reasonably arguable before leave will be granted.

Discussion

12.  The defendants’ arguments run along the following lines:

(1) In 2019, the claimant told the Food and Environmental Hygiene Department (the “FEHD”) about a leak. The FEHD did a leak test.

(2) The claimant told the defendants that the FEHD test report said Flat 26D was the source of water leak to Flat 25D.

(3) On this basis, the defendants spent money trying to remedy the leak and suffered a loss of one months’ rental during the period of repair. A loss of about HK$140,000 was sustained arising from the repair.

(4) 3 years later in 2022, the claimant sued the defendants for HK$40,000 in the Small Claims Tribunal under SCTC 27035/2022.

(5) When the defendants asked to see the FEHD testing report, the claimant withdrew the claim. When the letter from FEHD dated 17 January 2020 (the “FEHD Letter”) was finally disclosed, it was found that the FEHD did not make any finding on the cause of the water leak; the content of the FEHD Letter is as follows:

“本處人員2019年10月9日到上址 (i.e. Flat 25D) 調查，濕度測試顯示浴室天花度數高於35%，並已在上層相關單位 (i.e. Flat 26D) 排水渠進行色水測試。本處人員再於今年1月13日到上址 (i.e. Flat 25D)跟進，惟濕度測試顯示浴室天花度數低於35%，因此，本處現階段不擬就此個案作進一步跟進……”

(6) The defendants submitted that based on the FEHD Letter the claimant ought to have stopped them from carrying out the repairs in June 2020.

(7) The defendants thus filed a counterclaim based on the tort of deceit, limiting their loss to HK$75,000, the jurisdictional limit of the Small Claims Tribunal.

13.  Based on the following, I find that the Deputy Adjudicator had not misunderstood the defendants’ counterclaim nor misapplied the applicable law:

(1) The Deputy Adjudicator had set out the nature of the defendants’ counterclaim in paragraph 20 of the Written Decision: “第一被告及第二被告指申索人自2019年10月開始，明知並無根據，迫使第一被告及第二被告支付了不必要的維修費及租金損失總共$136,995。因此，向申索人反申索$75,000放棄餘額。”

(2) In paragraph 60 of the Written Decision, the Deputy Adjudicator set out again the basis of the defendants’ counterclaim: “第一被告及第二被告指基於申索人指食環署的報告指25D 滲漏水是由26D引起，導致他們產生不必要的維修費用。申索人就食環署的報告作出欺詐/欺騙性失實陳述，因此向申索人提出反申索。”

(3) The elements of the relevant cause of action were set out in paragraph 61 of the Written Decision: “欺詐或欺騙的要素之一是該陳述必須在明知其是或可能是虛假的情況下作出，必須是故意虛假的，或至少是在沒有任何真正相信它是真實的情況下做出的。該陳述至少在很大程度上是不真實的。”

(4) In paragraph 63 of the Written Decision, the Deputy Adjudicator quoted [275.091] of Halsbury’s Laws of Hong Kong on the quality of evidence required in support of an action based on deceit: “In an action of deceit, the concurrence of fraud and damage is essential if damages are to be recovered, and neither is sufficient without the other. Fraudulent misrepresentation is a ‘very serious’ allegation and in this context the principle has been applied that the more serious the allegation, the more cogent the evidence required to overcome the unlikelihood of what is alleged.”

Did the claimant rely on a FEHD water test report?

14.  A fundamental allegation that the defendants need to prove is that the claimant had cited a FEHD test report in alleging that there was a water leak from Flat 26D to Flat 25D. Despite the defendant’s allegation, the claimant had denied that he had ever represented to the defendants that the FEHD had confirmed that the water leak was from Flat 26D to Flat 25D.

15.  This was therefore a dispute of fact that the Deputy Adjudicator needed to resolve. After considering the oral evidence of the claimant and the defendants, the Deputy Adjudicator found in paragraphs 28 – 30, 34, 36 of the Written Decision that the defendants had failed to prove on a balance of probabilities that the claimant had relied on any report from the FEHD when he alleged that the water leak originated from Flat 26D. In gist, the reasons given by the Deputy Adjudicator were:

(1) On credibility, she found the claimant to be credible and reliable and found the 1^st defendant to be unreliable as not having told the entire truth. Where the evidence conflict between the claimant’s version and the defendants’ version, the Deputy Adjudicator preferred the claimant’s version[1].

(2) She believed the claimant’s case that he had not received the letter from the FEHD dated 17 January 2020 until after he requested the FEHD to provide a copy of it on 1 November 2022. As such, it would not have been possible for the claimant to have relied on the FEHD Letter to deceive the defendants[2]. The FEHD Letter therefore cannot be proof that the claimant had made a false statement.

(3) The defendants alleged that the management office had said that the FEHD had found Flat 26D to be the source of the leak, yet the defendants had not called any of the management office staff as witnesses in support of such allegation[3].

16.  At the hearing before me, the 2^nd defendant was adamant that the claimant had based his claim in SCTC 27035/2022 on an allegation that the FEHD had found Flat 26D to have been the source of the water leak. However, this was not borne out by the evidence. There was no reliance on any report by the FEHD in the Form of Claim filed by the claimant dated 6 September 2022. The claimant had denied in his witness statement that he had relied on any report by the FEHD.

17.  I do not find that there was any misapplication of law when the Deputy Adjudicator made the factual finding that the claimant had not relied on any report of the FEHD in alleging that Flat 26D was the source of the leak.

Other false statements?

18.  Other than the FEHD Letter, the Deputy Adjudicator further considered if the claimant had made any false statement that could amount to a tort of deceit. The Deputy Adjudicator found that the claimant merely pointed out that the leak originated from Flat 26D and that had caused him loss and damage in Flat 25D.

19.  The fact that the claimant had alleged Flat 26D was the source of the leak into Flat 25D on its own did not amount to a false statement as the Deputy Adjudicator found that there was sufficient basis for the claimant to have drawn such a conclusion:

(1) There was evidence that the FEHD had investigated inside Flat 25D on 9 October 2019 and had tested a humidity level of 89%.

(2) It was recorded in 2 letters from the management office sent to the defendants dated 16 October 2019 and 31 October 2019 respectively, that when the management tried to carry out a water test on 9 October 2019 in Flat 26D, the water could not be effectively drained from the shower and therefore the test was aborted to prevent flooding.

(3) There was also evidence that the defendants had carried out simple repairs in Flat 26D in early October 2019.

(4) After that the water leak had alleviated but another major leak occurred in June 2020. The water leak problem was only completely resolved after the repair work by the defendants in Flat 26D were completed in June 2020.

20.  I do not find that there was any misapplication of law when the Deputy Adjudicator reached the conclusion that the claimant had other sufficient basis to allege that the water leak in Flat 25D was caused by Flat 26D.

Wrongful Conclusion on the Source of Leak

21.  The defendants further objected to the Deputy Adjudicator making a finding that the source of leak was Flat 26D, when that was not the issue in dispute. It was submitted that there was no sufficient evidence for the Deputy Adjudicator to have reached that factual finding.

22.  Whilst I agree that the main issue in dispute between the parties was not whether the source of the water leak was Flat 26D, the Deputy Adjudicator had to come to a view on whether the claimant had sufficient basis to allege that Flat 26D caused the water leak and asked for repairs to be made. It was in that context that the Deputy Adjudicator expressed her view on the source of leak. The Deputy Adjudicator had clarified this in the Written Decision[4].

23.  I do not find that this was a misapplication of law on the part of the Deputy Adjudicator.

Failure to Award Costs to the Defendants

24.  At the oral hearing, the defendants challenged the fact that the Deputy Adjudicator did not award costs to them for the hearing on 24 October 2022 (the “Call-Over Hearing”). I do not see any basis for the defendants to seek costs for that hearing:

(1) the Call-Over Hearing was for both the claimant’s claim and the defendants’ counterclaim.

(2) The defendants’ counterclaim had been dismissed, they naturally will not get costs for the trial, or the previous call-over hearings.

(3) The Deputy Adjudicator had disallowed the claimant’s costs for the Call-Over Hearing as he had subsequently discontinued his claim.

25.  I do not find that the Deputy Adjudicator had misapplied the award of costs.

Conclusion

26.  By reasons of the aforesaid, the defendants’ application for leave to appeal against the learned Deputy Adjudicator's Written Decision is dismissed.

Costs

27.  There be no order as to costs.