CENTURY WAY INVESTMENT LTD v. WILLBERT LTD AND ANOTHER

CACV 239/2017

[2019] HKCA 739

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 239 OF 2017

(ON APPEAL FROM DCCJ NO. 3710 OF 2013)

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J U D G M E N T

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Hon Cheung JA (giving the Judgment of the Court) :

I. Introduction

1.   A measure of ‘give and take, live and let live’ is the approach the Court often adopts in deciding whether the activity of a landowner has caused nuisance to his neighbours.  In this case Deputy District Judge Winnie Tsui held that the defendants were liable for nuisance in causing dampness to the floor of the property of their neighbour, the plaintiff.  Pursuant to leave granted by this Court (Cheung CJHC and Lam VP) the defendants now appeal.

II.   Facts

2.1   The plaintiff is the owner of a unit on the 17^th floor of an industrial building.  The plaintiff subdivided this unit into two parts, namely, Unit A and Unit B.  Unit A is an enclosed unit with no windows but has a door opening to the common corridor on the 17^th floor.

2.2   The 1^st defendant is the owner and the 2^nd defendant its tenant of the entire 16^th floor in the same building.  This is the floor immediately below the 17^th floor.  The two defendants are related.  The 2^nd defendant was already in occupation on the 16^th floor when the plaintiff moved in.

2.3   Immediately below the plaintiff’s Unit A is a computer server room (‘the server room’) set up by the 2^nd defendant.  It is located approximately at the top right‑hand corner below Unit A.  In order to cool down the heat generated by the computers in the server room, the 2^nd defendant turned on the air‑conditioning units in the server room at low temperature around the clock.  In addition to the central air‑conditioningunit, there were two other air‑conditioners installed in the server room.

2.4   In May 2013, the plaintiff carried out the renovation work in his unit which included the partitioning of the unit into Unit A and Unit B.  It was then discovered that the floor area at the centre of Unit A was consistently damp and water stain marks and droplets appeared.  The affected area was roughly square in shape, measuring about 2.4 metres x 2.4 metres. Mr Liu of the plaintiff immediately reported the matter to the management office.  The dampness persisted until September/October 2013.  The plaintiff’s evidence is that work on Unit B continued until September 2013. 

2.5   During the renovation of the plaintiff’s unit, there was also building work on the 17^th floor involving the subdivision of the whole of the 17^th floor into smaller units.  This started from February 2013.  During the work, the central air‑conditioning system on the 17^th floor was turned off and the floor was ventilated by the open windows.

2.6   No more dampness was found in Unit A after October 2013.  The plaintiff said dampness in Unit A occurred again for one day in June 2016 when there was building work carried out in another unit on the 17^th floor. Unit A was left unoccupied from September 2013 to end of August 2016.

III.   The Judge’s decision

1)   Cause of dampness

3.1   The Judge found that the dampness in Unit A was caused by condensation arising from the difference in temperature between Unit A and the server room.  The temperature in the server room was much lower and she gave the example that on 10 June 2013, the ceiling temperature of the server room was as low as 14.8 ºC. 

3.2   The Judge held :

‘ Equally importantly, when one considers the timing of the occurrence of the water dampness, it clearly coincides with the two periods when some renovation was in progress on the 17^th floor. In this regard, I accept the defendants’ evidence that on the two occasions of renovation, the 17^th floor, including Unit A, was in a hotter and more humid environment than at other times.’ (emphasis added)

2)   Reasonable and legitimate use of properties

3.3   The Judge went on to find that there is nothing unusual, illegitimate or unreasonable in each of the parties’ use of their own unit.  She first held that the 2^nd defendant’s use of the server room which is a common facility in office and which has to be maintained at low temperature round the clock is legitimate.  She also found that it is a common occurrence for office units or industrial workshops to undergo renovation and there is nothing unusual or unforeseeable for windows to be opened on the 17^th floor when renovation was in progress in both 2013 and 2016.  She found that although the plaintiff had not been maintaining Unit A in an air-conditioned environment, initially because of the renovation and subsequently because of it being left idle, such usage of Unit A cannot be said to be unreasonable.  After all, the plaintiff as owner has a right to decide whether to switch on the air‑conditioning or not, in light of its own business needs.

3)   Uninsulated ceiling

3.4   The Judge then held that the question turns squarely on what is the right balance to maintain as between the competing rights of the parties.  She found the 2^nd defendant liable in that the 2^nd defendant had failed to insulate the server room.  She held :

‘ 82. Having taken into account all the relevant circumstances of the case and weighing the competing considerations for and against each side, in my view, it is clear that the operating of the Server Room by the 2^nd defendant without any adequate insulation amounts to a real interference with the plaintiff’s use and enjoyment of Unit A and as such it is an actionable nuisance.’

3.5   The Judge held that :

‘ (b) It is neither difficult nor costly to install insulation materials at the Server Room so as to prevent the cold temperature from “spreading” to any adjoining unit, such as Unit A. In this regard, I accept Mr Liu’s evidence (which is unchallenged) that it would only cost about $10,000 to mount a false ceiling at the Server Room so as to resolve the problem. Yet the 2^nd defendant did not take up this suggestion and proceeded to put on polyfoam layer to part of the ceiling of the Server Room, which was clearly inadequate to stop the condensation.’

3.6   The Judge gave judgment for the plaintiff and granted an injunction to restrain the defendants from causing or permitting any further water dampness at Unit A.  She further ordered the defendants do pay damages to the plaintiff in the sum of $311,084.

IV.   The law

4.1   Other than a matter concerning the balancing exercise which we shall later discuss, the law in this area which is well established is not disputed.

4.2   The nature of nuisance in this case is private nuisance, namely, the 2^nd defendant’s conduct unduly interfered with its neighbour, the plaintiff, in the comfortable and convenient enjoyment of its land, namely, Unit A.  This is the third category of private nuisance described by the authors of Clerk & Lindsell on Torts, 22^nd ed., at para 20‑08.  The authors observed that there is no absolute standard to be applied in this type of private nuisance.  As Lord Wright in Sedleigh‑Denfield v O’Callaghan [1940] AC 880 at 903 observed :

‘A balance has to be maintained between the right of the occupier to do what he likes with his own, and the right of his neighbour not to be interfered with. It is impossible to give any precise or universal formula, but it may broadly be said that a useful test is perhaps what is reasonable according to the ordinary usages of mankind living in society, or more correctly in a particular society. The forms which nuisance may take are protean. Certain classifications are possible, but many reported cases are no more than illustrations of particular matters of fact which have been held to be nuisances.

…

Negligence, moreover, is not a necessary condition of a claim for nuisance.  What is done may be done deliberately, and in good faith and in a genuine belief that it is justified. Negligence here is not an independent cause of action but is ancillary to the actual cause of action, which is nuisance.’

4.3   Oliver J in Stone v Bolton [1949] 1 All ER 237 at 238‑239 stated :

‘ Whether such an act does constitute a nuisance must be determined, not merely by an abstract consideration of the act itself, but by reference to all the circumstances of the particular case, including, for example, the time of the commission of the act complained of; the place of its commission; the manner of committing it, that is, whether it is done wantonly or in the reasonable exercise of rights; and the effect of its commission, that is, whether those effects are transitory or permanent, occasional or continuous; so that the question of nuisance or no nuisance is one of fact.’

4.4   In Vernon Knights Associates v Cornwall Council [2014] Env. L.R. 6 [2013] EWCA Civ 950, a case of natural nuisance (i.e. nuisance caused by the operation of nature rather than any act of the landowner) Jackson LJ summarized the principles in relation to the liability of landowners for nonfeasance in respect of natural nuisance.  Specifically he held at para 49 that :

‘ (ii) in determining the content of the measured duty, the court must consider what is fair, just and reasonable as between the two neighbouring landowners. It must have regard to all the circumstances, including the extent of the foreseeable risk, the available preventive measures, the costs of such measures and the resources of both parties.’

4.5   The ‘give and take, live and let live’ approach is discussed in cases such as Kennaway v Thompson & Another [1981] QB 88 at 94 and Cambridge Water Co. v Eastern Counties [1994] AC 264 at 299.

4.6   In Bulmer Limited, K. & Fung Industry Company Limited v ACL Electronics (H.K.) Limited (unreported, HCA 7042 of 1990, 9^th November 1991), water damage was caused to the ceiling of the fourth floor unit in an industrial building.  The occupier of the floor above on the fifth floor had maintained a round the clock air‑conditioned room with temperature preset at 20 ºC.  This lowered the temperature of the floor slab inside the air‑conditioned room between the fourth floor and the fifth floor.  This caused condensation to occur on the ceiling.  Liu J found that there was no direct evidence that the ‘environment’ on the fourth floor was otherwise than normal.  He held that the activity amounted to actionable nuisance.

V.   Discussion

1)   False ceiling

(1)   The defendants’ challenge

5.1   As pointed out earlier, the decision whether there is a nuisance or not is a question of fact.  The Judge found nuisance was established.  The threshold for challenging such a finding of fact is extremely high and the Court of Appeal will not overturn the finding unless the decision is plainly wrong.

5.2   Mr Li SC (together with Mr Yuen) for the defendants argued that this threshold requirement is satisfied in that the Judge was plainly wrong because she had misdirected herself on the effect of the false ceiling.  It is apparent from the judgment below that the Judge considered the problem would be prevented by putting up a false ceiling which was said to cost only about $10,000. 

5.3   On a pleading point Mr Li also submitted that the plaintiff had not pleaded that there is any duty on the defendants to install false ceilings at the server room.  It is clear that the plaintiff had indeed pleaded that the 2^nd defendant had failed to maintain an uninsulated air‑conditioned room and to take measures to prevent condensation caused by the difference in temperature of the two premises.  But the real dispute in this case is whether the evidence on this topic justified the finding by the Judge. It is Mr Li’s case that this specific preventive measure was not even put to the defendants’ witnesses or argued in the plaintiff’s closing submission. 

(2)   The plaintiff’s response

5.4   Mr Shum (together with Ms Ng) for the plaintiff first argued that the balancing exercise referred to in the cases relates to the respective rights of the parties to use and enjoy their respective properties.  By referring to the rights of the parties, it must mean their rights to use the property reasonably and appropriately in all the circumstances.  If a defendant uses the premises unreasonably (having regard to his right of use and the nature of his land) and hence affects the plaintiff’s right of reasonable enjoyment of the plaintiff’s land, the defendant’s unreasonable usage would constitute actionable nuisance.  Once it is established that a defendant has acted unreasonably and violated the plaintiff’s rights, the defendant is liable in private nuisance.  The available remedy, other than damages, would include injunctive relief (which is discretionary in nature) such as ceasing the nuisance and requiring the plaintiff to reinstate insulation in his premises.  One should not mix up the test on liability and the more flexible considerations in the context of granting of relief.  The balancing exercise of ‘rights’ of the parties in the proportion does not involve any balancing exercise of the cost and/or difficulties of preventing further nuisance.  It is absurd and does not accord with common sense that if the nuisance creator need to expend a lot of money to stop his nuisance then he is not liable; if the innocent party need to expend a smaller amount of money to cope with the nuisance created by the wrongdoer then he should renovate his premises to prevent the nuisance.

5.5   Mr Shum then argued that Vernon Knights Associates is only concerned with natural nuisance. 

5.6   Mr Shum further submitted that based on the decision of Liu J in Bulmer Limited, under the proper interpretation of the ‘balancing exercise’, the alleged difficulty or impracticality in installing a false ceiling is irrelevant on the issue of liability of the defendant.  The Court should not be required to consider what the possible ramifications would be or the practicality of such ramifications when deciding if the defendants were at fault.

5.7   Mr Shum then submitted that the Judge was entitled to consider and accept the evidence of Mr Wong, the plaintiff’s expert, who at paragraph 106 of the Joint Expert Report recommended that ‘additional thermal insulation layer should be installed at the ceiling of the server room’.

(3)   Our view

5.8   In our view, this is an area where the Judge has fallen into error.  The adequacy of this preventive measure was not fully explored below.  First, it is the unchallenged expert evidence of the defendants that outlets of air‑conditioning units being fixed on the ceiling without insulation is a common trade practice in Hong Kong.  Second, there was no discussion below as to the type of material to be used for the false ceiling.  Third, there is also no expert evidence that installing the false ceiling would solve the problem of condensation.  Mr Li submitted that all three air-conditioning units in the server room are installed close to the ceiling, if a false ceiling is to be installed, it could only be installed below the outlets of the said air‑conditioning units rendering the false ceiling to have no effect.  If the air-conditioning units are to be relocated for the purpose of installing the false ceiling, there is no evidence as to the cost involved.  In our view these are matters that ought to be canvassed before the Judge before she could properly rule on the preventive nature of the false ceiling.

5.9   We now deal with the matter on the balancing exercise which is in dispute. 

5.10   We disagree with the first argument of Mr Shum.  In the balancing exercise the Court has to decide whether the landowner has reasonably and legitimately used its property.  The Court must regard all the circumstances, including the extent of the foreseeable risk, the available preventive measures and the cost of such measures and the resources of both parties (Vernon Knights Associates).  The cost that has to be incurred in carrying out preventive measures is clearly a relevant factor to be considered.  In our view, notwithstanding Vernon Knights Associates is a case on natural nuisance, the discussion there is about what is fair, just and reasonable as between the two neighbouring landowners.  The discussion is based on principle and not on the classification of the nature of the claim.  It is overly restrictive to say that the decision is not applicable just because the nature of the nuisance is different.  The Judge in her balancing exercise clearly had considered cost of the preventive measure to be a relevant factor.

5.11   As to Bulmer Limited, although Liu J did not expressly say so, he had in effect carried out a balancing exercise in that he had considered the preventive measures which had been tried out, such as the use of the fan and dehumidifiers which had been proved to be ineffective.  This is far from saying that a balancing exercise is not required to be carried out.  The amount of the cost and the difficulties involved are clearly relevant factors in such an exercise.

5.12   As to Mr Wong’s evidence, the Judge had simply referred to it in her summary of the evidence without making a specific finding on it. The real point is that there was a lack of evidence on how the insulation was to be carried out and the nature of the material to be used.

5.13   We are of the view that the Judge was wrong to find liability solely based on the lack of provision of an insulated ceiling.  Without this breach, there is no basis to establish liability.

2)   Lack of ventilation

5.14   In any event, what is significant in this case is that the dampness on Unit A occurred only during the renovation work on the 17^th floor when the central air‑conditioning unit was turned off and windows were opened resulting in the difference in temperature and humidity and the occurrence of condensation.  At other times when the central air‑conditioner was not turned off there was no occurrence of dampness.  Hence the period of renovation is exceptional.  As discussed earlier, the extent of the foreseeable risk is a relevant consideration.  We agreed with Mr Li that it is not foreseeable to the defendants that somehow the air‑conditioning on the entire 17^th floor would be turned off and no adequate ventilation was provided according to the Code of Practice for the Control of Condensation in Buildings which recommenced proper ventilation of premises to prevent the occurrence of condensation.  This case is quite different from the situation in Bulmer Limited where condensation occurred continuously.  Further, unlike the building in Bulmer Limited, we are concerned with a building with central air‑conditioning facility and the evidence is that such air‑conditioning would have been turned on but for the renovation works.  To put it in another way, it is not foreseeable that additional measures like insulation is required to be installed during the renovation period when none was necessary before.  The plaintiff’s case is that foreseeability of risk is not a relevant factor at all and it made no submission as to how foreseeability will apply after the plaintiff became aware of the problem.  In any event, as said earlier the issue of insulation was not fully explored below.

5.15   On the premise that the defendants’ use of the low temperature server room is a reasonable use of its property, it is wrong to say that they had nonetheless crossed the line when condensation occurred in Unit A due to the problem with temperature ventilation during the renovation period.  The balancing exercise should not be tilted in such a way.

5.16   In our view, liability for nuisance has not been established against the defendants.  There are other points raised by the parties which we do not consider necessary to deal with in the light of the basis in which we come to our view.

VI.   Conclusion

6.1   Accordingly, the appeal is allowed, the judgment below is set aside.

6.2   There will be an order nisi that the defendants are to have the costs of the appeal and below with certificate for two counsel.