KEY LIGHT HOLDINGS LTD AND ANOTHER v. SHIH HUA MIN AND ANOTHER

DCCJ 1167/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION No. 1167 OF 2010

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DECISION

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1.  In the wake of my judgment handed down on 22 April 2013 (“the Judgment”), both the plaintiffs and the 1^st defendant made applications to this court by way of two summonses both dated 6 May 2013. By the Judgment, the 1^st defendant was ordered to pay the 1^st plaintiff damages in the sum of HK$134,721.50 and the 2^nd plaintiff HK$100 as nominal damages. I also made an order nisi that the 1^st defendant is to pay the plaintiffs costs of the action with certificate for counsel.

2.  The plaintiffs now apply for a variation of the costs order nisi and enhanced interest on their resepctive judgment sums on account of a sanctioned offer (“the Sanction Offer”) contained in a letter of the plaintiffs’ solicitors dated 13 December 2012.

3.  On the other hand, the 1^st defendant applies for leave to appeal against the Judgment. Mr Tsui, counsel for the 1^st defendant, indicates that the 1^st defendant challenges liability only and not the quantum of damages assessed by this court.

4.  Both parties agree that this court should first deal with the 1^st defendant’s application. In this Decision, I shall adopt the same abbreviations used in the Judgment and references to paragraph numbers, unless otherwise stated, are references to paragraph numbers of the Judgment.

The 1^st defendant’s intended appeal

5.  There is no debate about the general principles germane to the 1^st defendant’s application. Under section 63A(2) of the District Court Ordinance, Cap.336, the court shall not grant leave to appeal unless it is satisfied that the appeal has a reasonable prospect of success. A reasonable prospect of success means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be probable: SMSE v. KL [2009] 4 HKLRD 125 at §17 per Le Pichon JA.

6.  The background facts were narrated in the Judgment and full reasons were given there for my finding of liability on the part of the 1^st defendant. I shall not repeat those matters in this Decision. When considering the prospect of the 1^st defendant’s intended appeal, suffice it to say, I have regard to all those matters. Simply put, the plaintiffs’ causes of action were founded upon the same factual complaint – the 1^st defendant’s Property, to be exact, its flat roof, was the source of the water seepage problem in the plaintiff’s Property.

7.  In the Judgment, I found the complaint made out on the expert evidence adduced by the parties by way of the Expert Report. I was able to make such a factual finding that the 1^st defendant’s Property was the source in reliance on Dr Paul Wong’s factual conclusion in the Expert Report.

8.  In view of the challenge mounted by Mr Tsui in this application, the role played by Dr Paul Wong in these proceedings is noteworthy, which was actually explained in paragraphs 25 and 26.

9.  Dr Paul Wong compiled the Expert Report dated 3 September 2008 on behalf of Paul Wong Consulting Engineers Ltd (“Paul Wong Ltd”) as commissioned by the Building Department/Food and Environment Hygiene Department. The Expert Report was to explain the outcome of Paul Wong Ltd’s investigation into the water seepage problem suffered by the plaintiffs.   

10.  By an order dated 30 November 2011 made by Master T. Chan (“the Order”), leave to the parties to adduce the Expert Report was granted. It is remarkable that at the same time, the master also granted leave to the parties to obtain a joint and supplementary report from Paul Wong Ltd to clarify certain matters in the Export Report.

11.  Thus, by the time when the Order was made, all the ponding tests had been already administered and Dr Paul Wong had come to the factual conclusion that the source of water seepage is defective floor slab of balcony of Room D (not belonging to the 1^st defendant) and defective floor slab of balcony of Room J (part of the 1^st defendant’s Property).

12.  Pursuant to the Order, Dr Paul Wong compiled a supplemental report dated 22 March 2012. There, he came to the conclusion that water seepage in the plaintiffs’ Property was almost certainly caused by water seepage from the balcony of the 1^st defendant’s Property. Dr Paul Wong further concluded that there was no other contributing factors causing water dampness in the relevant part of the plaintiffs’ Property.

13.  As set out in paragraph 34, the 1^st defendant managed to obtain leave to ask Dr Paul Wong to make a further supplementary report to answer his five specified questions on 3 April 2012. As a result, Dr Paul Wong compiled a further supplementary report dated 27 August 2012. There, Dr Paul Wong did not deviate from his previous conclusions.

14.  In the course of his closing submission at the trial, Mr Tsui sought to dispute the conclusiveness of the conclusions of Dr Paul Wong in his reports. In particular, he argued that since the same dye (FS) was detected in the plaintiffs’ Property on 21 April 2008 after it was used in the ponding test conducted in Apartment D on 16 March 2008, another property above the plaintiffs’ Property, there was a possibility that the FS observed in the plaintiffs’ Property on 7 August 2008 actually came from Apartment D and not the 1^st defendant’s Property. Without such a possibility being excluded, Mr Tsui argued that Dr Paul Wong’s finding could not be conclusive.

15.  In the Judgment, I rejected Mr Tsui’s argument. I found his criticisms to be unfair without calling Dr Paul Wong to testify and be cross-examined or to make clarification in his supplementary reports. I further held that in the absence of contrary evidence and inherent probability, there is no reason for this court to reject the findings and conclusions of Dr Paul Wong.

16.  Mr Tsui now repeats his challenge and submits that I erred in rejecting his argument on that basis. He complains that when I mentioned the absence of contrary evidence in the Judgment, it appears or suggests however slightly that I have mistakenly shifted the onus of proof to the 1^st defendant in regard to the source of water seepage to the plaintiffs’ Property. Moreover, in rejecting his criticisms of the evidence of Dr Paul Wong, I erred in adopting his evidence without proper evaluation of the same.

17.  I am not convinced that there is any reasonable prospect of success of proving the mistakes so contended by Mr Tsui.

18.  Dr Paul Wong in these proceedings was effectively a single joint expert. As noted in the commentary of Hong Kong Civil Procedure 2013, Vol.1, §38/4A/6, it is conceivable that one of the parties may be unhappy with the evidence of the single joint expert. The usual course to take on the part of the unhappy party is to adduce other expert evidence to challenge the single joint expert’s evidence. Of course, leave is required and Lord Woolf in Daniels v. Walker [2001] 1 W.L.R. 1382 set out the considerations which the court should take into account when asked to decide whether to allow additional expert evidence to be adduced to challenge those of the single joint expert.

19.  Thus, there is no issue of shifting the burden of proof when this court pointed out that there is no contrary evidence to challenge those of Dr Paul Wong. I cannot accept the validity of this complaint.

20.  I also do not accept that I failed to evaluate the evidence of Dr Paul Wong. Mr Tsui did not specify which piece of evidence I fail to have neglected to consider. Dr Paul Wong was aware that, some four months before FS used in the 1^st defendant’s Property was detected in the plaintiffs’ Property, the same dye was detected in the same location albeit originating from Apartment D. He said so in the Expert Report and I recounted this in the Judgment. Nevertheless, he made the factual finding that the dye found on 28 August 2008 in the plaintiffs’ Property originated from the 1^st defendant Property applied in the ponding test conducted on 7 August 2008. I fail to see how his factual finding can be challenged in the absence of contrary evidence. The possibility suggested by Mr Tsui is a mere conjecture without evidential basis.

21.  In Coopers Payen Ltd v. Southampton Container Terminal Ltd [2003] EWCA Civ 1223, the English Court of Appeal considered the principles relating to assessment of the evidence of a single joint expert. Of course, as pointed out by Clarke L.J., the court is not bound to accept the evidence of such an expert and his evidence must be considered in the light of all other evidence. The English Court of Appeal observed that the evidence of the expert should only properly be disregarded in very rare cases and there must be good reasons for so doing.

22.  On the other hand, I am aware of the Court of Final Appeal decision in Traffic Stream Infrastructure Co Ltd v Full Wisdom Holding Ltd [2005] 1 HKLRD 740 and bear in mind that where the circumstances so warrant, the court is entitled to reject uncontradicted expert evidence. In the present case, there is however nothing which causes me any concern about the veracity and validity of the factual findings of Dr Paul Wong. The 1^st defendant himself did not ask Dr Paul Wong to exclude the possibility in his supplementary reports too.

23.  Mr Tsui refers me to the Court of Final Appeal’s decision in Nina Kung v Wong Din Shin (2005) 8 HKCFAR where the appellate court dealt with the conflicting evidence of handwriting experts. Nevertheless, the dictum of Ribeiro PJ now relied upon by Mr Tsui, making specific to handwriting eidence, is not really relevant and in any event, this court is not concerned with conflicting expert evidence at all.           

24.  Mr Tsui contends that even in the absence of contrary expert evidence, a little “scientific common sense” can tell that the findings of Dr Paul Wong are flawed. I find no merit in this submission.

25.  Essentially the 1^st defendant seeks to challenge my factual findings. The 1^st defendant has to show that this court was plainly wrong and has made the kinds of errors discussed by Bokhary PJ in Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§43 to 46, rightly referred to me by Mr Lo, counsel for the plaintiffs. I am not convinced that the there is any reasonable prospect of 1^st defendant satisfying the threshold.

26.  Mr Tsui also makes several subsidiary points which can be disposed of briefly. First, Mr Tsui submits that I erred in my erroneous application of the standard of care in a strict liability case in this matter. He relies again on John So and Anor. v Lau Hon Man and Ors. CACV 110/1993, 5.10.1993 where it was held that the waterproofing floor slab below the top layer of the floor was a common part and all the owners of the building were responsible for its repair and maintenance. He argues that if the floor slab being the common part is waterproof, the 1^st defendant should not have the duty to make his top layer 100% waterproof.

27.  For two reasons his argument is flawed. Firstly, as stated in the Judgment (§49), Mr Tsui accepted in the trial that there is no evidence that there was any waterproofing layer in the floor slab of the flat roof of the 1^st defendant. Thus, his rhetorical question has no evidential basis at all. Secondly, there is no issue of contribution and/or indemnity in the present case.

28.  The 1^st defendant had the exclusive possession and enjoyment of the floor slab of his flat roof, the defects of which were found to be the source of water seepage. I do not find it arguable that the 1^st defendant had an unreasonable standard of care to meet in carrying out proper repair works for his floor slab.

29.  Mr Tsui further contends that this is the first time in which an individual owner of a flat roof is held liable in the tort of negligence for damages caused by rain water seeping through the top floor slabs to the premises below. Hence he argues that it is appropriate to be heard by the Court of Appeal under the ‘interests of justice’ limb.

30.  I cannot agree to this submission. I do not know whether this is the first case. Be that as it may, the tort of negligence covers countless different factual scenarios. I do not think it is a valid ground to invoke the jurisdiction of the Court of Appeal.

31.  Mr Tsui complains that I did not elaborate on the basis of my finding of nuisance. He in particular points out that even if this court finds that the 1^st defendant failed to effect proper repair and maintenance of the flat roof, this court did not consider the issue of foreseeability, which is a prerequisite of liability in damages for nuisance.

32.  The issue of foreseeability has never been raised in the pleadings, witness statements and the Statement of Issues in Dispute filed by the parties. I accepted the plaintiffs’ evidence to the effect that the 1^st defendant refused to engage Wing Lok together with all other owners of the 4^th floor to carry out the repair works of the flat roof to remedy the water seepage problem despite the written request of the 2^nd plaintiff. Even if the 1^st defendant is allowed to argue foreseeability now, I do not find it arguable that the 1^st defendant could not have foreseen that the water seepage caused by the defects of the floor slab of his flat roof could cause damage to the premises below.

33.  Lastly, though not included in his draft grounds of appeal, Mr Tsui argues that the plaintiffs failed to prove their pleaded allegations relating to the causes of the defects of the floor slab of the flat roof of the 1^st defendant.

34.  In my view, my rejection of such allegations had little bearing on my findings of liability on the part of the 1^st defendant, which were mainly based on the factual findings of Dr Paul Wong that there were indeed defects in the floor slab. I do not think that the plaintiffs had to prove how such defects came into existence, which after all could be something beyond their ken.

35.  In the premises, for the reasons given above, I do not think that the 1^st defendant’s intended appeal satisfies the requirements in section 63A(2) of the District Court Ordinance. I therefore dismiss the 1^st defendant’s application for leave to appeal with costs to the plaintiffs with certificate for counsel.

The Plaintiffs’ Application

36.  There is no dispute that the plaintiffs made a “without prejudice” offer and the Sanctioned Offer on 13 December 2012, more than three weeks before the trial. In the former, full explanations were given for the computation of the amount of damages demanded. In those offers, the plaintiffs agreed to accept a sum of HK$100,000 inclusive of interest plus costs to be taxed if not agreed in settlement of the present action. In the Sanctioned Offer, the plaintiffs demanded a reply by close of business on 17 December 2012. The 1^st defendant did not respond to the Sanctioned Offer.

37.  It is not disputed that the proposed settlement terms there are more advantageous to the 1^st defendant. Thus, the plaintiffs make this application pursuant to Order 22 rule 24 of the Rules of the District Court. The plaintiffs ask this court to accept that the latest date that the 1^st defendant could have accepted the Sanctioned Offer to be 17 December 2012 and that the enhanced rate of interest should be 5%, being the median of the maximum rate of 10%.

38.  It is common ground that in this application, this court has to have regard to all the circumstances of the present case including those matters set out in Order 24 rules 5(a) to (d), Rules of the District Court.

39.  In his able submission to resist this application, Mr Tsui draws to my attention the fact that I was unimpressed by the documentary evidence adduced by the plaintiffs to prove the quantum of the damage suffered. He argues that the 1^st defendant was not given 

adequate information to verify the amount demanded by the plaintiffs in the Sanctioned Offer. He also complains about the lateness of the Sanctioned Offer.

40.  Lastly, Mr Tsui highlights the fact that the 1^st defendant had been operative and forthcoming in reaching a settlement prior to the Sanctioned Offer. He submits that in all the circumstances it would be unjust to make an order under Order 24 rules 2 and 3.

41.  I note that the 1^st defendant made a “without prejudice” offer by way of a letter dated 22 February 2012 whereby an offer of HK$100,000 (all inclusive) was made. The plaintiffs counter-offered HK$200,000 (all inclusive). Moreover, the 1^st defendant made a Sanctioned Offer in May 2012 in the sum of HK$80,000.00 to settle the present action and the plaintiffs counter-offered HK$135,000.

42.  The parties did make a genuine effort to settle the matter. They were actually not too far apart in their valuation of the settlement amount. With or without adequate proof of quantum, the 1^st defendant was once prepared to settle the present action by payment of HK$80,000. Unfortunately, the 1^st defendant did not continue the good effort after receipt of the Sanctioned Offer and took a wrong course to challenge the plaintiffs’ claim at trial.

43.  In my view, the 1^st defendant should have asked for further documents relating to quantum if he was in serious doubt about the validity of their claim and engaged them in further negotiation after the Sanctioned Offer. I agree that the 1^st defendant could have accepted the Sanctioned Offer on 17 December 2012 and avoided the trial. I do not think the Sanctioned Offer was made so late that the plaintiffs should be deprived of the legal protection it affords.

44.  Given the previous efforts made by the 1^st defendant to settle the matter, which was not very far from the Sanctioned Offer, I find 3% to be the appropriate enhanced rate.

45.  In the premises, I accede to the application of the plaintiffs and order that the 1^st defendant do pay the plaintiffs enhanced interest on their respective judgment sums at the rate of 3% above judgment rate, and costs to be taxed on an indemnity basis if not agreed with the same interest rate from 17 December 2012 until payment.

46.  Costs of this application should follow the event. I make an order nisi that the 1^st defendant do pay the plaintiffs such costs to be taxed if not agreed on an indemnity basis with certificate for counsel.