MA CHUNG LAM AND OTHERS v. CITYBASE PROPERTY MANAGEMENT LTD

CACV 248/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 248 OF 2005

(On appeal from Lands Tribunal Application No. LDBM 334 of 2004)

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J U D G M E N T

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Hon Tang JA (giving the judgment of the Court):

1.  The applicants are the owners of Flat A, 5/F, Block 7 Monte Vista, No. 9 Sha On Street, Shatin, New Territories (“Flat 5A”).

2.  The respondent is the manager of Monte Vista (“the Manager”).

3.  By application dated 20^th October 2004, the applicants claimed against the respondent in the Lands Tribunal for damages for breach of the respondent’s duties as manager under the Deed of Mutual Covenant and Management Agreement (“the DMC”) dated 22 June 2000.

4.  The claim arose out of the flooding of Flat 5A.  The flooding was caused by the overflowing of water from the common drain pipes which were connected to the two split type air-conditioning units installed inside Bedrooms Nos. 1 and 2 in Flat 5A.

5.  The applicants were out of Hong Kong from 29 April 2004 to 24 July 2004.

6.  The flooding probably started on or before 16 June 2004 when the occupier of Flat 3A, which was directly below Flat 5A (there was no 4/F), noticed that water was dripping from the ceiling above the dining room which was near the kitchen and the main entrance.

7.  The flooding was not stopped until 23 July 2004.

8.  Mr K M Chong, who appeared for the applicants, submitted that the respondent’s liability could be put on two different bases:

(1) First, that but for the respondent’s breaches of duty, the flooding would not have occurred.

(2) Secondly, that had proper remedial action been taken, no or less damage would have resulted from the flooding.

9.  The provisions of the DMC relied on in the Statement of Claim are the following:

“(1) Section VI, (A), 2. The Manager shall be bound by and shall observe and perform all of the conditions, duties and obligations on its part to be observed and performed as herein or in any Sub-Deed provided.

(2) Section VI, (B), 1(1). The Manager shall be responsible and have full power and authority to inspect and examine the entire Estate including the interior of all units (on reasonable notice) at reasonable intervals.

(3) Section VI, (B), 1(3). The Manager shall be responsible and have full power and authority to carry out all works necessary to maintain the Estate and the Common Area and every part thereof in a good, clean, satisfactory and safe condition.

(4) Section VI, (B), 1(10). The Manager shall be responsible and have full power and authority to keep clear and in good working condition all the common sewers, drains, watercourses and pipes in the Estate.”

10.  The Manager’s duties are not absolute duties.  In Lo Yuk Chu v Hang Yick Properties Management Ltd [1996] 4 HKC 278 where a registered owner sued the manager for negligent breach of DMC for consequential loss caused by flooding as a result of a blocked sewage pipe, Power Ag CJ (as he then was) giving the judgment of Court of Appeal, said at page 282:

“Given the way in which this appeal was argued we are not required to enter into an examination of the nature and extent of duty of care as it applied to the sewage pipes.  We think it proper, however, to indicate that, upon the evidence before the court, there was, in our view, no failure by the respondent in that regard.  To satisfy such a duty the managers would be required to:

(i) take all reasonable steps, by way of notices and letters, to warn the tenants of the danger of blockage if foreign articles were placed in the toilet;

(ii) undertake regular inspection, if it were shown that such inspection was feasible and was in accord with proper plumbing practice;

(iii) take proper action if there was any indication of malfunction;

(iv) act expeditiously to remove obstructions which do occur.”

11.  Mr Chong submitted that under section VI, (B)1(1) of the DMC, the Manager should have undertaken regular inspection.

12.  The evidence is not clear but it seems that we are concerned with a closed system of drainage for condensation from split type air-conditioners.  There was no evidence that it was in accord with proper maintenance practice for inspections to be carried out regularly or periodically.  Indeed the fact that the blockage in this case was not discovered until after scaffoldings were erected outside Flat 5A and the pipe exposed makes it unlikely that the pipes were designed to require regular inspection.

13.  That view is supported by the evidence of Mr Peter W T Wong, Managing Director of Toplis and Harding Risk Management Ltd, who was relied upon as an expert by the applicants.

14.  Mr Wong said in chief:

“問：   咁究竟需唔需要個定時嘅檢查，定時嘅通渠呢？

答： 呢個要好視乎嘞，譬如話，如果譬如話呢一個estate，或者呢個屋邨，經常有咁嘅事件嘅話，而管理處知道有咁嘅問題嘅話，亦都知道嗰個問題產生係咩嘢原因嘅話，理應管理處應該可以做一啲嘢。

問： 係啲乜嘢例如？

答： 包括譬如話，真係視乎佢哋嗰個情況有幾壞、有幾多住戶，譬如話喺每一個月有幾多投訴係真係有淤塞現象，嗰個問題係咩嘢，係咪同一個問題。如果都係同一個問題，好似 - - 譬如話好似話係因為呢啲咁嘅所謂塵埃嘅話，我相信即係管理處應該可以做一啲叫定期嘅清洗嘅工作。”

15.  Mr Chong also submitted that proper action should be taken if there was any indication of malfunction.  Mr Chong said that according to the evidence of Ms Ko Mee Ling Annie, who is an Assistant Property Officer in the employ of the respondent, there were past episodes of water dripping from air-conditioners.

16.  This is what she said under cross-examination at page 56 of the transcript:

“問：咁你哋嗰個估計都相當之正確喇，你亦都係之後發覺係冷氣機喉嘅問題喇，係咪？

答：到最後都未證實到。

問：一路屋苑幾年嚟，即係03年到04年6月，冇住客投訴過話冷氣機滴水？

答：有。

問：一路都有投訴冷氣機滴水？

答：係。

問：你哋就冇一個定期嘅檢查嘅，冷氣機喉，冇定期檢查？

答：冇。”

17.  But as Ms Audrey Eu SC, counsel for the Manager, pointed out, the matter was not explored in cross-examination and it is not known what was the cause of the water dripping mentioned by Ms Ko in her evidence.

18.  The fact that the matter was not explored came as no surprise.  It was never pleaded on behalf of the applicants that the duty of the Manager to inspect arose out of indications of malfunction or complaints in the past.

19.  It follows from the above that we are of the view that the claim by the applicants that the Manager was under a duty to inspect the drainage pipes regularly or as a result of indication of malfunction has not been established.

20.  As for the cause of the overflowing of water, according to the report of Mr Peter W T Wong, dated 25 August 2004:

“As regards the cause of overflowing, it would appear highly likely that there has been a blockage of the section of the drainpipe immediately underneath the Applicant’s unit, or it could equally be possible that the size of the drain pipe was of such a dimension that it was unable to drain the condensing water during such periods of high usage, leading to a backup situation.”

21.  In his oral evidence, Mr Wong confirmed his report.  In his evidence, he elaborated on the first cause, namely, the blockage was caused by dust or dirt accumulated over time.  This is what he said at page 27 of the transcript:

“問：   咁點解你會帶出呢個結論嘅？

答： 憑我哋經驗，即係話如果純粹係一個冷氣機嘅去水系統嘅話，亦都根據番嗰個 - - 嗰個我哋叫damage，嗰個損毀嘅情況，嗰個水係倒流，而嗰個喉唯一可以引致到倒流嘅話，就係一個叫做淤塞。淤塞嘅情況，可以係因為譬如話啲水裡面有嗰啲沉著物，我哋叫嗰啲塵埃，或者係一啲叫做污垢。經過時間長累積，去到一個點嘅話，嗰條喉喺某一個地方塞咗，咁嗰啲水去唔到嘅時候，就會喺一個叫做最低嘅位回湧，咁唔好彩就喺番我哋呢個客嗰個單位，嗰個分體機，本來係去水嘅地方就湧番出嚟。

問： 你頭先有提及過話水嗰度有啲沉著物，咁點解嗰啲水會有啲沉著物，呢啲係喺呢啲喉管嘅情況？

答： 冷氣機嗰個process，我哋叫嗰個抽濕嗰個功能裡面，係將室裡面個空氣抽番，期間有一個我哋叫condensation process，就係話水嘅凝結。咁喺空氣中嗰啲塵埃同一時間就會帶咗喺個水，而呢啲水嚟講，經常會係有一個叫做好高情況嘅dust particles喺裡面嘅。咁變咗嚟講，即係話經過一個長時間，呢啲dust如果喺一個點地方累積嘅話，佢會引致一個淤塞嘅情況。”

22.  The Deputy Judge held that on the evidence before him he was not satisfied that the flooding was caused by the blockage of the pipes.  Mr Chong submitted that the Deputy Judge was wrong.  We do not believe it is necessary to decide this point, having regard to our view that, no case of breach of duty has been made out against the Manager.

23.  Mr Chong submitted that the applicants have an alternative claim based on common law negligence.

24.  Even if that cause of action could be said to have been pleaded, it was expressly abandoned when the Deputy Judge raised the question of lack of jurisdiction of the Tribunal over such a claim.  No argument was addressed to us on the jurisdiction of the Tribunal over such a claim.  In any event, the duties of the manager at common law could not be wider than as stated in Lo Yuk Chu.

25.  We turn to consider whether the loss and damage suffered by the applicants could wholly or in part be attributed to the failure of the Manager to take proper remedial action after the commencement of the overflowing.

26.  As noted above the flooding probably started on or before 16 June 2004.  On 16 June 2004, the occupier of Flat 3A, which was directly below Flat 5A, noticed that water was dripping from the ceiling above the dining room, which was near the kitchen and the main entrance.  That matter was reported to the security office of the Manager.  The Manager tried to gain access to Flat 5A.  But as Flat 5A was unoccupied, they were unable to gain access.  They tried the emergency numbers given by the applicants to the Manager, but there was no answer.  The same day, they turned off the fresh water supply to Flat 5A.

27.  On 17 June, the Manager tried again to contact the applicants through their emergency numbers without success; they issued two “awaiting your return” notices to the applicants.  They also inserted newspapers into the applicants’ flat and could detect no water on the floor.

28.  On 19 June, they invited contractors to put in tender for the following work:

(1)     Cutting off flush water supply to Flat 5A

(2)     Inspecting the common drain pipe which served the air-conditioners in the dining room.  At that time because of the location of the dripping water at Flat 3A, it was believed that the water might have come from the air-conditioners in the dining room.

29.  The contractors were required to put in tender on the same day.

30.  On 21 June 2004, flush water supply at Block 7 was cut off from 4 pm to 9:30 am, flush water supply to Flat 5A could not be cut off individually before the contractor Vicki Engineering Ltd completed its work.

31.  We would add that in order to find out the source of the leakage, the Manager also tried to gain access into 6A.  However, the owner of 6A was unwilling to allow the Manager to have access.  Also, in an effort to contact the applicants, the Manager contacted the bank through whom management fees for Flat 5A were paid to see if there were ways of contacting the applicants.  However, the Manager was told by the bank in question that there was no way in which the applicants could be contacted.

32.  Mr Chong submitted that 21 June 2004 was the watershed and that the manager should have realised after that date that the water was coming from the air-conditioners in the bedroom.

33.  Ms Eu has supplied us with a helpful summary of actions taken by the Manager:

34.  It is on the basis of the evidence narrated above that one should consider whether it could be said that the Manager had failed to take proper remedial action.  We do not believe that could be said at all.  Nor do we believe it has been established that the manager should have realised by 21 June 2004 that the water was coming from the air-conditioners in the bedrooms.

35.  Mr Chong argued that in the circumstances what the Manager should have done was to have broken into Flat 5A.  He said there was power to do so under section 40 of the Building Management Ordinance, Cap. 344.

36.  The Deputy Judge was of the view that the Manager should have broken into the unit to inspect and to carry out the repair work and that the Manager was guilty of wilful default in failing to do so.  He said at para. 26:

“26. 不過，本席認為答辯人在這次事件上，是有蓄意疏忽，因為答辯人是應該知道他們是有權並有需要進入該單位內檢查及維修。因此，公契第VI B部份，第4條並不能幫助答辯人免去責任。”

37.  The Deputy Judge referred to the fact that the Manager could have invoked section 40 of the Building Management Ordinance.

38.  Section 40 provides as follows:

“40. Powers of entry and inspection

(1) A member of a management committee and any other person authorized in that behalf by the management committee may, on reasonable notice to the owner or occupier thereof, enter a flat at any reasonable time for the purpose of-  (Amended 27 of 1993 s. 33)

(a) inspecting, repairing, maintaining or renewing-

(i) any common parts in the flat; or

(ii) any other property in the flat the condition of which does or may affect adversely the common parts or other owners;

(b) abating any hazard or nuisance which does or may adversely affect the common parts or other owners.

(2) A magistrate may, if satisfied by information on oath that it is necessary for any person to break into any flat which he is empowered to enter under subsection (1), by warrant authorize such person to break into the flat in the presence of a police officer.

(3) Notwithstanding section 19(2), any costs incurred by the management committee in connection with the exercise by it of the powers conferred by subsection (1)(a)(ii) or (b) shall be recoverable by the corporation as a civil debt from the owner of the flat in respect of which such costs were incurred.  (Amended 27 of 1993 ss. 33 & 42)”

39.  There was no management committee; so section 40 could not have been invoked.  Nor do we believe that in the circumstances of this case, a magistrate would have authorized breaking into Flat 5A.

40.  Mr Chong also referred to Section III B of the DMC which provides as follows:

“The Manager, its respective contractors, agents, servants, workmen and other persons authorised by it shall have the exclusive and unrestricted rights and privilege to enter into and upon any part of the Estate and where necessary, the interior of any Unit, upon prior reasonable notice (except in case of emergency) for the purpose of inspecting and maintaining the structure or any part or parts thereof including the Common Areas and the Common Service Facilities or any apparatus or equipment used or installed for the benefit of the Estate or otherwise carrying out the management and maintenance of the Estate or performing the Manager’s obligations hereunder or under any relevant Sub-Deed as the case may be Provided always that the Manager shall be responsible for any negligent or wilful acts of his own or of its respective contractors, agents, servants, workmen and other person authorised by it and shall compensate the Owners for the damage sustained or suffered;”

41.  This was not relied on below.  In any event, we do not believe that a case of emergency has been made out.  In this respect, it is useful to look at the contemporaneous record kept by the Manager.  It is clear from the entry made on 25 June 2004, that the quantity of water leaked was half a bucket every 12 hours before 25 June 2004, which was reduced to a quarter of a bucket every 12 hours.

25/6/04	業戶來電表示 是日水量減少。由早期
/   /	半桶水(12小時)，減至¼桶(12小1.5時)。
/   /	6A測試一切正常。

42.  We do not believe that this would qualify as an emergency justifying breaking into Flat 5A.  The power given under DMC has to be read together with section 40 of the Building Management Ordinance, which required a court order before any premises could be broken into.  We believe that “emergency” in the context must refer to an event or incident involving serious danger to persons or property which would brook no delay.  As Ms Eu has pointed out, in the New Shorter Oxford English Dictionary, under “emergency” these entries appear:

“A n. 1 A situation, esp. of danger or conflict, that arises unexpectedly and requires urgent actions; (a person with) a condition requiring immediate treatment. MI7.

b Pressing need.”

43.  We believe that there was no emergency.  For the same reason we believe no magistrate would have made an order under section 40.

44.  Furthermore, we do not believe that even if the circumstances were such that the Manager could have invoked the emergency power, a case of wilful default has been made out.

45.  In Hoi Kong Container Services Co Ltd v Bewise Motors Co Ltd [1997] 2 HKC 615 it was held that one is not guilty of wilful negligence “unless he knows that he is committing, and intends to commit, a breach of his duty, or is recklessly careless in the sense of not caring whether his act or omission is or is not a breach of duty”. (at 626 - 627)

46.  The Deputy Judge has not explained why he thought the failure to use such emergency power amounted to wilful default.  We see no evidence of wilful default.  Indeed we find that the manager has throughout acted with commendable professionalism.

47.  For the above reasons, the appeal is dismissed.

48.  We also make an order nisi that the respondent is to have the costs of the appeal, to be taxed if not agreed.