THE INCORPORATED OWNERS OF CHUNG WUI APARTMENTS v. WUI FU COMPANY LTD

LDBM 360/2014 & LDBM 361/2014
(Heard Together)

[2023] HKLdT 63

LDBM 360/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 360 OF 2014

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BETWEEN

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AND

LDBM 361/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 361 OF 2014

____________

BETWEEN

____________

(Heard Together)

_____________________

J U D G M E N T

_____________________

A. Parties & Respondents’ G/F Shops

1.  In 1970, the Incorporated Owners of Chung Wui Apartments (the Building) i.e. the same applicant in LDBM 360/2014 and in LDBM 361/2014 (IO) was incorporated pursuant to the predecessor of Buildings Management Ordinance[1] (the Ordinance).

2.  The Building is a 16-storey composite building, with a total of 8 shops at its G/F[2], offices at 1/F to 4/F, and 3 tenements on each floor for domestic use from 5/F to 15/F. It is situated on a site bounded by Johnston Road to its Northwest, Wanchai Road to its South, and is located next to the junction of the said 2 roads.

3.  The Building, and the land over which it was built, is subject to a Deed of Mutual Covenant dated 3 February 1964 registered at the Land Registry (the DMC).

4.  In January 1994, Wui Fu Company Limited (WF), the respondent in LDBM 360/2014, became the registered owner of shop D1 at G/F of the Building (Shop D1). Shop D1 is at the corner of the subject site where Johnston Road meets Wanchai Road.

5.  In March 1994, Sarwin Industries Limited (Sarwin), the respondent in LDBM 361/2014, became the registered owner of shops B at G/F of the Building (Shop B). In December 2003, Sarwin also became registered owner of Shop C at G/F of the Building (Shop C). Shops B and C are contiguous and both have their frontage at Johnston Road. At all material times since around 2003/2004, Sarwin had combined them into, and let them out as, one single shop (Shop BC).

6.  On one day in June 2007, Sarwin further acquired, and became registered owner of, both Shops F and G at G/F of the Building (Shop F and Shop G). Shops F and G are also contiguous. They have their common frontage at Wanchai Road.

B. Former & Current Toilets of Respondents’ Shops

7.  According to their respective assignment plans, Shop D1 (153 sq. ft.), Shop B (208 sq. ft.), Shop C (153 sq. ft.), Shop F (186 sq. ft.) and Shop G (143 sq. ft.) all originally have one toilet assigned to each of them.

8.  The toilet (8 sq. ft.) of Shop C (Toilet C) and the toilet (9 sq. ft.) of Shop D1 (Toilet D1)[3] are both located at a lift lobby away from the 2 shops. They are side by side to the north of, and they are adjacent to, Shop F.

9.  Like that of Toilets C and D1, the toilet (14 sq. ft.) of Shop B is also found at a yard away from Shop B to the north of Shop G. However, the toilet (16 sq. ft.) of Shop G and the toilet (15 sq. ft.) of Shop F are both internal toilets. These 3 toilets of Shops B, F and G form one group of three contiguous rectangles to/at the north of Shop G. At all material times, they had all been demolished (the 3 Former Toilets collectively) and annexed into, or become usable area of, Shop G. By reason of that, the depth of Shop G was increased to match that of Shop F next to it.

C. Only Counterclaims decided by Trial

10.  In December 2014, IO began these proceedings against WF and Sarwin in LDBM 360/2014 and LDBM 361/2014 respectively for outstanding management fee and outstanding contribution to renovation fund due from both to it.

11.  On 23 January 2015, WF complained in LDBM 360/2014 of defective common drainage pipes (underground drains and sewers) at the Building causing Toilet D1 to go out of function and counterclaimed IO for damages and injunctions.

12.  On the same date, Sarwin complained in LDBM 361/2014 of defective common drainage pipes (underground drains and sewers, and vertical pipes running down from 1 /F) at the Building causing

(1) foul water leakage at both ceiling and floor of Shop BC;

(2) Toilet C to go out of function; and

(3) the 3 Former Toilets unable to be reinstated

and counterclaimed IO for damages and injunctions.

13.  On the first day of trial on 1 February 2023, IO, WF and Sarwin settled IO’s claims in both LDBM 360/2014 and LDBM 361/2014. Judgment was thus entered by consent against WF in LDBM 360/2014 (and against Sarwin in LDBM 361/2014) for outstanding management fee and contribution to renovation fund together with interest, and for costs of IO’s claim with certificate for counsel.

14.  Hence, this Tribunal heard at trial only (and this judgment only deals with) WF’s counterclaim at [11] and Sarwin’s counterclaim at [12]. Mr Alex Lai of counsel (Mr Lai) appeared for WF and Sarwin whereas counsel Mr Bosco Cheng (Mr Cheng) was instructed to appear for IO in both applications.

15.  Mr Lai opened both counterclaims first. He called Madam Wong Pui Yuen (Mdm Wong), common director and de facto controller of WF and Sarwin, as his only factual witness.

16.  Mr Cheng later called the current chairman of IO, Mr Lam Koon Fung (Mr Lam), as his sole factual witness (Mr Lam has been chairman of IO since 1 March 2013). The father of Mr Lam, Mr Lam Hei Shing Joseph (Lam Senior) had previously prepared a witness statement as IO’s witness but, for his health reason, Lam Senior was not called as a witness at this trial.

17.  Directions had previously been given to allow parties to adduce expert evidence on liability and quantum by 2 single joint experts.

18.  Mr Anthony C. S. Wong (Mr Wong), a registered structural engineer and an authorized person, was appointed single joint liability expert.

19.  Mr Wong had inspected the site on 3 January 2020 and prepared a liability report on drainage system of the Building dated 6 November 2020 (Liability Report). Annexed to the Liability Report are, among others, site photos, CCTV survey report[4] and Mr Wong’s clarifications by way of 4 letters addressed to parties’ solicitors[5]. As Mr Wong for his personal reason cannot attend the tribunal to give evidence on trial day, the Liability Report was adduced as evidence at trial without calling Mr Wong.

20.  Ms Lam Wai I Pamela (Ms Lam), a registered professional surveyor (general practice) and director of Centaline Surveyors Limited, was appointed single joint quantum expert.

21.  Ms Lam had inspected Shop BC as well as Toilet C[6] on 27 October 2020 and Shops F & G on 14 December 2020, and prepared a valuation report dated 20 January 2021 on loss of rental income due to defective toilets of Shops B, C, F & G since January 2002 (and due to water seepage/leakage in Shop BC since December 2006) (1^st Valuation Report). Ms Lam had also gained access to, and inspected, Shop D1 on 27 May 2022 and prepared a supplementary valuation report dated 8 June 2022 on loss of rental income due to defective Toilet D1 since January 2002 (2^nd Valuation Report). Parties had elected to call Ms Lam to testify at trial.

D. Issues to be determined in LDBM 360/2014

22.  Modifying issues suggested at para 10 of Mr Cheng’s closing submission, IO mainly took issue with WF’s counterclaim on:

(1) whether Toilet D1 had gone out of function since 2001 as alleged;

(2) if so, whether alleged malfunctioning of Toilet D1 was caused by defective[7] underground drains and sewers at the Building;

(3) if so, whether IO should be held liable for breach of its duties under the Ordinance and/or provisions of the DMC; and

(4) if so, what relief, if any, should be granted to WF.

E. Issues to be determined in LDBM 361/2014

23.  Again, modifying issues suggested at para 10 of Mr Cheng’s closing submission, IO mainly took issue with Sarwin’s counterclaim on

(1) whether there had been foul water leakage at ceiling of Shop BC since around December 2006 as alleged;

(2) if so, whether such alleged foul water leakage at ceiling of Shop BC was caused by 3 pipes which run down vertically from 1 /F of the Building (the 3 Vertical Pipes);

(3) whether there had been foul water leakage at the floor of Shop BC since around 2001 as alleged;

(4) if so, whether alleged foul water leakage at the floor of Shop BC was caused by defective[8] underground drains and sewers at the Building;

(5) whether Toilet C had gone out of function since around 2001 as alleged;

(6) if so, whether alleged malfunctioning of Toilet C was caused by defective underground drains and sewers at the Building;

(7) whether the 3 Former Toilets were unable to be reinstated by reason of defective underground drains and sewers at the Building;

(8) if so to (2), (4), (6) and/or (7), whether IO should be held liable for breach of its duties under the Ordinance and/or provisions of the DMC; and

(9) if so, what relief, if any, should be granted to Sarwin.

F. IO’s Contentions on both Counterclaims

24.  In summary, Mr Cheng had submitted that that the quality and amount of the evidence adduced by WF and Sarwin, both expert and factual, to prove their counterclaims is poor and inadequate. WF and Sarwin have therefore, he submitted, failed to discharge their burden to prove: 1) the alleged cause leading to alleged mal-functioning of Toilet D1 and Toilet C as well as ceiling leakage and floor sewage allegedly found in Shop BC; 2) that IO was in alleged breach of the DMC and the Ordinance; and 3) that, as a result thereof, WF and Sarwin have suffered from alleged loss and damage and are entitled to damages and injunctive relief as they claimed.

G. Assessment of factual and expert witnesses

25.  Despite Mr Cheng’s submission below to the contrary, which shall be discussed below, I find Mdm Wong an honest and reliable witness. As a business woman, her evidence makes, I think, commercial sense and is inherently plausible. Moreover, save for specific matters mentioned below, much of her evidence are well corroborated by many contemporaneous documents of various sources, including her correspondences with IO, divers government departments and others, and photos and videos taken at different times. In the box, she could give evidence herself on most matters during the entire period concerned. Save for matters that she could not reasonably be expected to recall due to long lapse of time these proceedings have taken to progress to trial, she was, I think, generally not shaken after cross-examination. Save as otherwise stated below, I accept her factual evidence referred below (but disagree with her view of the law on s.40 of the Ordinance).

26.  To the contrary, Mr Lam has no personal knowledge for events before 2012, when he first became a member of management committee of IO (MC). For these old events, he has either to read incomplete[9] documents left in IO’s possession and/or to rely on hearsay from Lam Senior. At times, he simply cannot answer. A second notable feature of Mr Lam’s evidence is that he was not consistent in his evidence. Under cross-examination by Mr Lai, he gave no few answers consistent with opposite case (which I give full weight as admissions against IO’s interest) and inconsistent with IO’s own case. Save as otherwise stated below, I accept such evidence given by him that is common ground or not disputed by the other side.

27.  I find Ms Lam a fair, impartial and reliable single joint expert. She was well qualified to act as quantum expert. As an expert, she took great care of the reliability of her comparable she made use of. She answered questions from both parties’ counsels fairly and without bias in favour of either side. To me, she gave cogent reasons to explain her answers and opinion. At the same time, she acknowledged limitations she had on any particular points. In the box, upon questioning by parties, she gave clarifications on her observations and enquiries as recorded in her 2 Valuation Reports. Unless otherwise stated below, I accept them as clarified. For her opinion, save for matters outside her expertise discussed below, I also elect to accept her opinion.

28.  As shall be seen and discussed below, Mr Cheng’s main criticism with Mr Wong in his closing submissions lies with some of his expressed opinions and the basis, if any, he allegedly arrived at the same. He also attacked Mr Wong for alleged material omissions in the Liability Report. However, Mr Cheng did not dispute with Mr Wong’s expertise. Neither did he dispute Mr Wong inspecting the Building on the day of his inspection, his making visual inspection at scene, the records he retrieved and kept, his arranging for CCTV survey to be carried out and the results thereof. I accept all such undisputed opinion given by Mr Wong in the Liability Report. For such opinion of Mr Wong that IO took issue, I shall determine the same as and when I come to discuss the same below.

H. Resolution of Issues in LDBM 360/2014

(1) Toilet D1 gone out of function from 2001 or not?

29.  Mr Cheng made 3 points on this issue. First, Mdm Wong’s assertion that Toilet D1 was defective and out of function is, he said, no more than a bare assertion. Mdm Wong never explained why she held such a view nor provided any evidence to substantial her allegation.

30.  Secondly, it was said that Mr Wong had not inspected Toilet D1 by flushing its water closet and that Mr Wong had allegedly admitted in the Liability Report that he did not know whether the water closet in Toilet D1 was functional[10] or not. Mr Wong was quoted to have opined as follows:

“In the original design, the sewer drains from the water closets are connecting to Manhole B1. The CCTV survey reveals that Manhole B1 was abandoned, it is not in function at present. Color water test carried out in the three water closets, but the test could not locate where they are drained to. Without the information where are the sewage is drained to, it is not possible to find out the reason for the defect and out of function of the water closets. (underline, italics and bold supplied)”[11]

31.  Thirdly, in order to confirm if Toilet D1 was functional or not, Ms Lam had, on 27 May 2022, flushed Toilet D1 twice. She noticed that Toilet D1 could flush normally and there was no backflow of the sewage[12]. Her evidence in this respect should, Mr Cheng argued, be preferred.

32.  For reasons below, this tribunal can, I think, only give limited weight to Ms Lam’s evidence above.

(1) She has never been appointed liability expert to give opinion on liability issue like this one.

(2) Under cross-examination, she confirmed that she had not actually used Toilet D1 on the day in question. She did not flush anything like toilet paper into Toilet D1.

(3) Her observation of no sewage backflow was made after two flush on one single day whereas WF’s complaint of Toilet D1 lasted over a much longer period of over a decade.

33.  In contrast, with the necessary expertise over the field in question, Mr Wong was appointed joint liability expert. He had arranged for the CCTV survey carried out to explore the underground sewerage system and to verify its serviceability. He not only inspected the 3 water closets (which include Toilet D1 and Toilet C), but also flushed them by carrying out color water test on them. For these reasons, Mr Wong is, I think, more qualified, and in a better position, to give his opinion on the functionality of Toilet D1 than Ms Lam is.

34.  As Mr Lai rightly submitted, I am afraid Mr Cheng had misread what Mr Wong said in [30].

(1) By his italicized words in [30], Mr Wong was, I think, saying that he cannot say further on the cause of defect and non-functioning of the 3 water closets than their unauthorized alteration because the color water test cannot tell him where the sewerage of them was drained to.

(2) For “unauthorized alteration” to the 3 water closets, Mr Wong had clearly explained in the Liability Report that their original connection with Manhole B1 (and in turn to B2) had been abandoned. The flow to Manhole B2 had been diverted by open Catch Pit C1 (made up of PVC pipe unacceptable to Buildings Department (BD)) to Manhole B3 (not found in approved BD records and considered unauthorized building works). There was grade 4 service defect of “potential blockage” in the pipe between Manhole B3 and B4, and there were grade 5 service defect and structural defect with the pipe between Manhole B4 and government Manhole FMH7011470, with “high risk of backing up or causing flooding”[13].

(3) Put it another way, Toilet D1 (and Toilet C) has suffered from service defect and structural defect of its downstream pipelines due to its unauthorized diversion. It (or they) can no longer function properly according to its original design.

(4) And Mr Wong had, I think, plainly opined that Toilet D1 (and Toilet C) cannot function properly according to its original design by clarifying as follows:

“We clarify that, without first rectifying the defects and unauthorized alterations to the underground sewer systems, the three water closets, even reconnected to the underground sewer according to BD record, the water closets cannot be function properly and without contravention to the Building Ordinance (bold supplied).”[14]

35.  For reasons above, I accept and give full weight to the above expert opinion of Mr Wong.

36.  Moving to IO’s 1^st point, Mdm Wong’s evidence on water closets was, I think, corroborated by the aforesaid expert opinion of Mr Wong. Indeed, Mr Wong’s opinion that the said unauthorized alteration could have been made as early as 2 decades ago (due to defects in underground drains and sewers occurring even earlier in time)[15] also gives, I think, support to Mdm Wong’s evidence that Toilet D1 (and Toilet C) has gone out of function since 2001. At various parts of her witness statement and supplemental witness statement, she did, I note, advert to unauthorized alteration of pipelines, blockage of downstream pipelines and problem of sewage backflow in water closets from time to time to explain IO’s prohibition of poo in water closets[16]. Such evidence went beyond, I think, bare assertion.

37.  I therefore decide to accept Mdm Wong’s evidence in the above respect as well.

38.  All evidence considered, I find on balance that Toilet D1 did go out of function from 2001 until trial as alleged by WF.

(2) Malfunctioning of Toilet D1 caused by defective underground drains and sewers or not?

39.  Mr Cheng submitted that, even if the existing drainage connection of Toilet D1 could be considered as an unauthorized alteration, it does not necessarily mean that such an alteration had caused blockage and damage on the underground drains and sewers of the Building. There is, he argued, no evidence to establish such causal link. He relied again on what Mr Wong said in [30] to claim that Mr Wong could not identify the cause leading to alleged defect and mal-functioning of Toilet D1.

40.  This tribunal can do no better than to repeat its earlier observation on Mr Wong’s opinion on issue (1) above. Using scientific CCTV survey, Mr Wong did, I accept, find blockage and damage of underground drains and sewers of the Building and unauthorized alterations to its underground sewer systems, both of them causing, inter alia, Toilet D1 (and Toilet C) to go out of its normal function according to its original design approved by BD.

41.  On my reading and acceptance of Mr Wong’s opinion evidence at issue (1) above, I am satisfied that WF had proven on balance that Toilet D1 had gone out of function at all material times due to defective underground drains and sewers at the Building (including its unauthorized alteration).

(3) IO in breach of the Ordinance and/or DMC or not?

42.  On this issue, Mr Cheng referred to Court of Appeal’s judgment in Lau Chun Wing Rod v The Incorporated Owners of Po On Building[17] and submitted that IO was not in breach of its duty to maintain the common parts of the Building under s. 18(1)(a) of the Ordinance. It was held that this sub-section “does not provide an insurance to the extent that if some part of the building becomes in disrepair the Incorporated Owners automatically and necessarily become liable. Nevertheless, liability may arise if there is fault. It also arises if, having been made aware of a defect which requires remedy, the Incorporated Owners fail to take appropriate steps”[18].

43.  There is, argued Mr Cheng, no evidence suggesting that Mdm Wong had made any specific complaint to IO prior to these proceedings that Toilet D1 had become unusable by reason of blockage and damage of underground drains and sewers of the Building. Accordingly, it was said that IO is not liable for breach of its duty under the Ordinance in respect of Toilet D1.

44.  I am afraid, however, that, prior to December 2014, Mdm Wong did by herself and her solicitors write to IO on 20 and 30 January 2014 to complain that all toilets at G/F of the Building had become unusable by reason of defects of underground drains and sewers of the Building.

45.  More importantly, as early as on 25 September 2001, IO did, I find, learn of repair request from BD of such defective underground pipes and manholes of the Building i.e. the cause of such toilet mal-functioning (and BD threatened that it would issue order under s.28(3) of Buildings Ordinance[19] (BO) against IO). As was admitted by IO, BD did on 15 August 2007 issue an order under s.28(3) of BO to require IO to investigate and report on drains (including underground drains and manholes) of the Building, and to submit remedial proposal for BD’s approval before commencing remedial works (the 2007 Drainage Order)[20]. IO was, I find, also convicted for failing to comply with 2007 Drainage Order in April 2008.

46.  Under cross-examination, Mr Lam had also admitted (and I find) that the IO had still not fully complied with the 2007 Drainage Order (or, I may add, its replacement order in 2015[21]) by trial, though 3 authorized persons[22] had been appointed by IO in the past to assist it doing so.

47.  Mr Lam in its witness statement[23] (and IO in its Defence to Counterclaim[24]) had also admitted (and I find) that underground drainage system of the Building are “common parts” of the Building on the proper application of the DMC and provisions of the Ordinance[25]. On Mr Wong’s opinion which I accept, the underground drainage system of the Building is for common use of the Building[26].

48.  As such, IO was, I think, at all material times since 2001 (and 2007) duty bound under s.18(1)(a) & s.18(1)(b) of the Ordinance to maintain the underground drainage system of the Building in a state of good and serviceable repair and clean condition and to carry out such works of the said underground drainage system as ordered by BD under the 2007 Drainage Order respectively.

49.  IO had, in my view, plainly failed in its aforesaid duties under the Ordinance on [44] to [46]. Had IO complied with its duties, WF would, I think, have a functional Toilet D1 made available for its use at all material times since 2001.

50.  Hence, I find IO liable to WF for breach of the Ordinance in respect of Toilet D1.

51.  For the above conclusion, I find it unnecessary to rule on WF’s claim against IO for breach of clauses 10(a)(ii) & (iii), 10(c) and 10(g) of the DMC[27]. Were it necessary for me to rule on them, I would have found:

(1) no breach of clauses 10(a)(ii) or (iii) as there is no evidence that it was IO which made structural alteration of (or altered, injured or interfered) the underground drains and sewers of the Building;

(2) IO in breach of clause 10(c) since 2001 as it had, on facts I find above, permitted sewage backflow to happen from time to time in Toilet D1 which was, or may become, nuisance to others; and

(3) clause 10(c) likely on its terms not applicable to the facts of this case.

(4) Relief, if any, to be granted to WF in LDBM 360/2014?

52.  WF sought against IO 1) damages for having Toilet D1 out of its normal function and 2) two mandatory injunctions to require IO complying with the 2007 Drainage Order and also to repair and/or rectify problems of underground drains and sewers of the Building.

53.  Mr Cheng challenged WF’s claim to damages by relying on pair analysis conducted by Ms Lam. The result was that market rent of Shop D1 would not be affected even if Toilet D1 were out of function. Hence, the loss of rental income to Shop D1 due to Toilet D1 out of function is, on Ms Lam’s opinion, NIL as at date of the 2^nd Valuation Report.

54.  While I accept that Ms Lam had properly carried out her pair analysis and I also accept her analysis result, her test was, I agree with Mr Lai, premised on WF having a functional Toilet D1 for Shop D1. On my conclusion of issue (1), WF did not have a functional Toilet D1 for Shop D1. Under cross-examination, Ms Lam also agreed with Mr Lai that if Toilet D1 could not be used for poo as was said by Mdm Wong at para 33 of her supplemental witness statement, she would assess the loss to WF at $500 per month.

55.  While IO has pleaded that 6-year time bar should apply to this claim, on the authority of Wing Ming Garment Factory Ltd v IO of Wing Ming Industrial Centre and Others[28], I find 12-year time bar for specialty under s.4(3) of Limitation Ordinance[29] applies to WF’s claim under the Ordinance as well as under the DMC.

56.  Hence, I would award damages in sum of $124,500 to WF for having defective Toilet D1 i.e. $500 per month for the 12-year-period before its counterclaim (i.e. 23 January 2015) and at the same monthly loss thereafter until this judgment in October 2023[30].

57.  Moving to 2 injunctions sought by WF, Mr Cheng made no submission against them in LDBM 360/2014. In all circumstances of this case, including duties owed by IO under the Ordinance and damage caused to WF for their breach, I think it appropriate to grant one suitably worded injunction to require IO to comply with such existing drainage order of BD to rectify all such existing problems of underground drains and sewers of the Building. Indeed, such compliance is, I think, long overdue.

I. Resolution of Issues in LDBM 361/2014

(1) Foul water leakage at ceiling of Shop BC from 2006 or not?

58.  IO’s closing submissions on this issue are solely confined on severity and continuity of foul water leakage at ceiling of Shop BC as complained by Sarwin.

59.  First, though Mdm Wong gave evidence that she immediately complained to then chairman of IO about such leakage at ceiling of Shop BC once it began in November 2006, she made, it was said, no written complaint to IO until 20 January 2014 (and the next complaint letter Mdm Wong wrote to IO was dated 14 November 2014, in which she complained of leakage incident happening on 29 October 2014 and 30 October 2014).

60.  Secondly, though Mdm Wong claimed to have instructed an architect surnamed Chan (Architect Chan) to investigate such ceiling leakage in January 2007, Sarwin did not call Architect Chan to testify at trial and thus there is no first-hand evidence from him as to how serious the alleged leakage problem was at that time.

61.  Sarwin, it was noted, had also not called a professional technician surnamed Ho (Technician Ho) who had allegedly investigated the cause of such ceiling leakage on 29 June 2010 as claimed by its solicitors in their letter to IO dated 30 January 2014. Hence, there is also no first-hand evidence from Technician Ho as to how the alleged investigation was conducted and upon what basis he came to his opinion on the cause of the leakage.

62.  It was accordingly submitted by Mr Cheng that, for over 7 years, Mdm Wong/Sarwin had made only 5 complaints to IO regarding alleged leakage at the ceiling of Shop BC. And for the long period from 2008 to 2013, there is, it was said, no evidence of any such complaint made to IO. These support, it was argued, that alleged ceiling leakage problem was not as serious or continuous as claimed by Sarwin.

63.  Fourthly, it was said that Ms Lam’s enquiry results and observation on her inspection to Shop BC on 27 October 2020 lend support to similar contention made by IO. In gist, Ms Lam said that that a staff told her that a basket is used to collect water dropping from the ceiling at the bottom left corner of Shop BC. She, however, did not note there was water dropping from that ceiling rapidly. The said staff told her that leakage would become more serious when it was rainy[31]. Ms Lam also noted that there were still inventories placed for sales right under the leakage area and she was informed by the staff that the basket was not replaced very often. Hence, Ms Lam believed that ceiling leakage problem at Shop BC as at her inspection did exist but not to a serious extent[32].

64.  Regarding a compact disc of photos and video footages allegedly taken by, inter alia, Sarwin’s licensees of Shop BC recording ongoing alleged water seepage/leakage in Shop BC (the CD), which was supplied by parties’ solicitors to Ms Lam for her making valuation and produced by her at trial as Exhibit R2, Mr Cheng urged this tribunal not to rely on the dates marked on the files or folders contained in the CD to arrive at the conclusion that water seepage/leakage did occur on those dates as marked. There is, he argued, no evidence to show that the photos or footages contained in those files or folders with a specific date were indeed taken on those dates as specified.

65.  Finally, Mr Cheng stressed that Mr Wong had not described in the Liability Report the degree of seriousness of leakage he found in Shop BC on his day of inspection. That omission, it was suggested, showed that the problem was not serious as claimed, or else Mr Wong would have specifically described it.

66.  Let’s start with continuity.

67.  It should be said at the outset that IO never disputed the existence/happening of such ceiling leakage at Shop BC at some stage. Never did Mr Cheng put to Mdm Wong that Sarwin had made it up. Though Mr Lam had claimed in his statement that IO would say that many 2006 and 2007 complaints would either have been dealt with or resolved by Sarwin, Mr Cheng had never put to Mdm Wong that it was resolved by any particular method or at any later point in time. Mr Cheng had only put to Mdm Wong the ceiling leakage problem to Shop BC was not as serious as she had complained of.

68.  For avoidance of doubt, the IO had not taken any action over the said ceiling leakage to Shop BC either. Under cross-examination, Mr Lam admitted that the “underground drainage works” that IO resolved to delete from renovation works carried out to the Building in 2012 and 2013 did not originally cover the 3 Vertical Pipes.

69.  As such, I find it inherently plausible or likely that the said ceiling leakage problem to Shop BC would persist over time after its appearance.

70.  Reading para 25 to 58 (except 39 & 40) of Mdm Wong’s witness statement, para 18 to 24 of her supplemental witness statement and the exhibits thereto, one can tell that the ceiling leakage problem to Shop BC did continue over time until trial after it first appeared in 2006.

71.  On top of [59] to [63], Mr Cheng had, I think, omitted to refer to, inter alia, the followings:

(1) Though Architect Chan was not called, the temporary measure of installing in 2007 of a meal box at the ceiling of Shop BC (the Metal Box) to contain, and redirect, leaked foul water to other drainage pipe remains until today. The Metal Box could be seen in subsequent photos, including photo P7 taken lately by Mr Wong[33].

(2) Letter of leakage complaint dated 13 June 2009 from Mdm Wong to IO[34];

(3) Though Technician Ho was not called, the photos taken on his occasion of investigation on 29 June 2010 remain useful record today and serve to corroborate Mdm Wong’s subsequent oral complaint to then chairman of MC;

(4) Letter of Joint Office of BD and Food & Environmental Health Department (Joint Office) to Mdm Wong re leakage to Shop B dated 25 March & 28 May 2013[35];

(5) Letter and emails of leakage complaint from Mdm Wong to IO re Shop BC dated 24 & 29 April, 25 May 2013[36];

(6) Letters of leakage complaint from Sarwin and its solicitors to IO re Shop BC dated 7 and 14 November 2014^[37];

(7) Photos and video footages of leakage within Shop BC taken mainly on different dates from 2016 to 2018 contained in the CD; and

(8) Letter from Sarwin’s solicitors to IO’s solicitors dated 15 October & 23 November 2021[38] together with photos.

72.  Regarding the CD at (7) above, it was prepared in order to provide information to enable Ms Lam to make an informed quantum assessment. Considering the details of files and folders found therein, I find it likely (and accept) that the dates so marked are accurate record of their dates of taking. Indeed, one finds in a few files/folders MC minutes, IO’s notices and BD’s warning letter to IO[39] posted at noticeboard of the Building with their dates matching[40] the dates so marked in the files/folders.

73.  On balance, I find it likely that foul water leakage did persist at ceiling of Shop BC from 2006 until trial.

74.  Moving to severity, I think any general assessment made by Mdm Wong, like anyone else’s, must be subjective and relative. Indeed, it is no easy task to describe with words the severity of leakage incident and that likely explains, in my view, why Mr Wong had not so described in the Liability Report.

75.  Instead, in line with evidence and records adduced before me, I prefer to find that foul water leakage smelling badly had occurred at ceiling of Shop BC from time to time from 2006 until trial as recorded in letters, emails, photos and footage put before me (and as observed by Mdm Wong as she testified). That also accords with Mr Wong’s expert opinion at [78].

(2) Ceiling leakage of Shop BC caused by the 3 Vertical Pipes or not?

76.  Mr Cheng started off reminding this tribunal that there is no presumption about source of seepage/leakage in water leakage cases. The burden rests throughout on the victim to prove the alleged source (and not on the alleged wrongdoer to prove otherwise or to find the real source). And the doctrine of res ipsa loquitur does not apply.

77.  It is stressed that Mr Wong had not carried out any scientific test[41] to ascertain the cause of ceiling leakage to Shop BC. Among other observation and opinion[42] he gave in section 6 of the Liability Report[43], his 2 key opinion on cause of ceiling leakage (i.e. water seepage are found in the joints of the pipes in the site inspection (photo P6) and leakage is found at the location of the pipes on the ceiling of 1/F (photo 8)) was based alone, he submitted, on visual inspection, which is not a scientific or reliable test of determining source of water seepage according to Fung Hing Wang v Tang Chung Keung Raymond[44].

78.  Mr Cheng acknowledged that Mr Wong had opined that there is ongoing water seepage/leakage from the ceiling of Shop BC (in Shop B) at present/in his inspection[45] and that the 3 Vertical Pipes are the source of the said water seepage/leakage[46].

79.  But the fundamental flaw of Mr Wong’s opinion, said Mr Cheng, is that Mr Wong had failed to provide the basis upon which he formed the aforesaid view on source. It is, he argued, too superficial for Mr Wong to form such view based solely on visual observation without conducting any scientific test[47].

80.  For the reasons above, Mr Wong’s aforesaid opinion on source of water seepage/leakage to ceiling of Shop BC should, it is submitted by IO, be rejected. There is thus insufficient evidence for this tribunal to conclude that the cause of ceiling leakage/seepage to Shop BC was the 3 Vertical Pipes.

81.  I disagree with IO’s submission on this issue.

82.  I fully agree with Mr Lai that Fung Hing Wang, supra, is distinguished from our case in that the former was a case where water travelled through “concrete floor slap”. Visual observation by naked eyes is thus impossible such that one needs to resort to scientific tests of one sort or another to ascertain and verify the seepage route[48]. But, according to Mr Wong, the source of leakage to the ceiling of Shop BC i.e. the 3 Vertical Pipes was plainly visible by his naked eyes[49] and explainable with photos he had taken (if not, also by previous records like photos and footage previously taken), as corroborated by results of scientific CCTV survey he had arranged[50]. In the circumstances of this case, Mr Wong has, I think, sound foundation to give his opinion and he had adequately explained the source of the ceiling leakage to Shop BC in the Liability Report.

83.  With due respect to Mr Cheng, I do not find it fatal for Mr Wong not to have stated in the Liability Report the 5 matters referred to at para 46 of IO’s closing submission.

(1) It does not, I think, matter at all which one or more of the 3 Vertical Pipes had seepage problem found. As shall be stated below, they are all “common parts” within the responsibility of IO.

(2) Neither does it matter where the leaking joints are located so long they were found on the 3 Vertical Pipes.

(3) For seriousness of foul water seepage, I repeat [74] herein.

(4) It goes, I think, without saying that foul water leaked “downwards” from ceiling to the ground.

(5) For similar reasons given to (1) and (2) above, (5) is, I think, also neither here nor there.

84.  I therefore decide to accept Mr Wong’s opinion at [78] and give them full weight.

85.  Considering all evidence on this point, the foul water ceiling leakage to Shop BC at all material times since 2006 was, I find, caused by the 3 defective Vertical Pipes coupled with defective downstream pipelines of the Building.

(3) Foul water leakage at floor of Shop BC from 2001 or not?

86.  Save that, on 10 April 2003 and 12 June 2003, sewage leaked out onto Shop BC after underground drains burst, it was said by IO that Mdm Wong could not identify other incidents where sewage leakage had occurred at floor of Shop BC. Mdm Wong, said IO, had agreed under cross-examination that she did not recall how often sewage leakage had occurred at Shop BC.

87.  Mdm Wong sought to rely on a termination notice dated 20 September 2020 (the Termination Notice)^[51] issued by one “Mr. Fu” (defined in her witness statement to mean Mr Fu Shing Yeung (FSY)) to support her claim of frequent sewage leakage. However, FSY was never called at trial as a witness of Sarwin.

88.  Mr Cheng submitted that adverse inference that FSY’s evidence, if called at trial, could not assist Sarwin’s case could, and should, be drawn against Sarwin for its failure to call FSY.

(1) This tribunal was referred to the applicable principles set out in the judgment of Lai Cheong Ming v. Cheng Chung Yu Eric trading as Hui Fung Metal Work Factory and Another[52];

(2) It is submitted that FSY is a material witness who might be expected to give material evidence on an issue in dispute and also a witness whom Sarwin would reasonably be expected to call; and

(3) On the evidence of Mdm Wong in the box, she could contact FSY through her estate agent if she wished but that she had not so done to call him as Sarwin’s witness; and

(4) It is thus not a case where the witness could not be located or is unwilling to testify as a witness.

89.  In the absence of such material witness who were or ought to be present at Shop BC at all such times when alleged sewage leakage occurred at Shop BC, this tribunal, it was argued, could not have sufficient basis to conclude that the liquid on the floor of Shop BC was sewage and not rainwater. One cannot, it was argued, tell the smell of liquid captured in a photo or video footage.

90.  In any event, it was said by IO that, during his inspection, Mr Wong did not discover any sewage leakage at Shop BC.

91.  Hence, the IO submits that there is insufficient evidence to prove that sewage leakage had happened frequently at Shop BC from 2006 until trial as alleged.

92.  Mr Lai pointed out, and I agree, that Mdm Wong had in fact said in the box that sewage leakage occurred “very frequently” at Shop BC. But, unless one keeps a proper written record of leakage incidents to monitor their frequency (which Mdm Wong had not done), any rough estimate subjectively made by her cannot be accurate and full weight cannot, I think, be given to it.

93.  Moreover, looking at para 13 to 24, 39, 40, 45, 47 to 49, 55 to 57 of her witness statement and para 19 & 23, 24 of her supplemental witness statement and exhibits thereof, Mdm Wong gave evidence of, I think, sewage leakage incidents occurring at Shop BC on much more than the 2 specific dates mentioned by IO at [86] due to defective underground drains and sewers of the Building. Among others, she had referred to:

(1) BD’s letter dated 25 September 2001 to IO pointing out that foul water had, in breach of BO, leaked from damaged underground drains and manhole of the Buildings[53];

(2) letter dated 18 January 2002 from Drainage Services Department (DSD) to her pointing out that its staff had, in the past 12 months, been sent out on 26 emergency missions to clear up blocked underground drains at the Building to avoid foul water leaking onto pedestrian walkway outside the Building[54];

(3) letter dated 23 June 2003 from Wanchai District Office to her pointing out discovery of damaged underground drains and sewage backflow by BD on 28 April 2003[55];

(4) letter dated 22 August 2012 from Joint Office to her recording their 6 July 2012 inspection result of foul water flooding at Shop BC due to damaged underground pipes[56]; and

(5) letter dated 20 January 2014 from her to IO complaining of unauthorized foul water drains causing foul water leaking onto floor of Shop BC[57].

94.  BD’s issue of, and IO’s continuing failure to comply with, the 2007 Drainage Order, in so far it relates to underground drains, is another piece of evidence supportive of Mdm Wong’s evidence of continuing backflow occurring at Shop BC.

95.  The CD, one note, also contains no small number of files and folders of photos and footage taken, I accept, from, inter alia, 2016 to 2018 capturing incidents of leakage onto pedestrian walkway at Johnston Road (and clearance of the same).

96.  In further support of Mdm Wong, Mr Wong also saw fit to have opined that the “blockage and damage of the underground drains and sewers caused foul water leaking to Shop B from time to time”[58] (assuming that he did not see sewage backflow on the day of his inspection as submitted by IO).

97.  With respect to Mr Cheng, he had, I think, never put to Mdm Wong that there had not been sewage or foul water backflow (but only rainwater backflow) at Shop BC, or that liquid found on its floor was rainwater and not foul water. Neither did Mr Lam so claim in his evidence. Nor was such issue taken by IO in Reply and Defence to Counterclaim.

98.  Assuming that FSY could reasonably be expected to give material evidence on the aforesaid non-issue, for reasons below, I agree with Mr Lai that he is not a witness that Sarwin could reasonably be expected to call.

(1) FSY was by trial no longer a licensee of Sarwin over Shop BC. According to Mdm Wong and on the Termination Notice, his licence of Shop BC had been terminated on 30 September 2022. At trial, he was only a former licensee of Sarwin.

(2) Mdm Wong did not, I think, enjoy any personal, or close personal, relationship with FSY. Their relationship was, one thinks, purely commercial i.e. licensor and licensee.

(3) On Mdm Wong’s evidence, she had, one note, never exchanged telephone numbers with FSY. She could only contact FSY through estate agent. All her meetings and dealings with FSY (including execution of licence agreements) were arranged by estate agents who charged commission for their service.

99.  Hence, I do not agree with Mr Cheng that adverse inference should be drawn against Sarwin for not calling FSY at trial.

100.  In fact, when Mr Cheng asked Mdm Wong whether or not she had contacted FSY to become Sarwin’s witness through estate agent, she actually replied and explained: “we have no contact with one another (大家無聯繫)”, “I did not. Each of us was busy with their own business (各有各忙)”. Mr Cheng did not challenge such answers or explanation given by Mdm Wong afterwards. I find such explanation credible and accept it.

101.  Were FSY a witness that Sarwin could reasonably be expected to call, Mdm Wong’s credible explanation above for his absence at trial, even if it may not be wholly satisfactory so as to nullify such absence, could at least, in my view, reduce the potential detrimental effect of such adverse inference to be drawn.

102.  Assuming that FSY’s evidence on this issue would not be favourable to Sarwin when he is called, in view of the mass of other evidence, both factual (from Mdm Wong and a number of government departments, including the 2007 Drainage Order, letters, photos and footage in the CD or otherwise) and expert (i.e. the opinion of Mr Wong), adduced by Sarwin on this issue and discussed above, I remain of the strong view that Sarwin has established on the balance of probabilities that, from 2001 until trial, there had from time to time been foul water leakage smelling bad odor to floor of Shop BC (and onward leakage to pedestrian walkway) as Mdm Wong had testified and as had been recorded in these other evidence.

(4) Floor foul water leakage of Shop BC caused by defective underground drains and sewers or not?

103.  On such evidence discussed on last issue, including expert opinion of Mr Wong, I am equally satisfied that Sarwin has proven that defective underground drains and sewers of the Building (including their unauthorized alteration) had caused the aforesaid foul water leakage to the floor of Shop BC (and onto pedestrian walkway).

104.  On this issue, despite the clear opinion of Mr Wong repeated at [96], Mr Cheng complained here again that Mr Wong had failed to give any basis as to why he formed such opinion. There was, he said, no indication of any scientific test being undertaken to identify the alleged cause. Mr Wong had, he argued, committed similar error as he did in giving his opinion on issue (2) above[59] and his expert opinion on this issue should also be rejected.

105.  For similar reasons I gave on issue (2) above and others, I reject Mr Cheng’s repeated submission here.

(1) Mr Wong had arranged for scientific CCTV survey to have been carried out to explore the underground drainage system of the Building and verify its status. Mr Wong did not make, and rely on, visual inspection alone.

(2) Mr Wong had, I think, adequately explained in the Liability Report the results of CCTV survey to buttress his opinion on source of foul water leakage to floor of Shop BC.

(3) And Mr Wong’s source opinion was in line with (and supported by) the views previously expressed by BD, DSD and Joint Office in correspondences and the making of the 2007 Drainage Order against IO by BD.

(5) Toilet C gone out of function from 2001 or not?

106.  By way of similar submission made to issue (1) in LDBM 360/2014, Mr Cheng submitted that Mdm Wong’s evidence of Toilet C being out of function is no more than bare assertion. She did not explain it. Nor did she provide evidence to substantiate it. Secondly, Mr Wong did not, he argued, flush Toilet C, and did not know whether its water closet was functional[60] or not.

107.  I hope I can be forgiven to repeat all my observations and findings at [33] to [37]. By reason of them, Sarwin has, I think, also proven on balance that Toilet C has remained out of function at all material times since around 2001 as alleged.

(6) Malfunctioning of Toilet C caused by defective underground drains and sewers or not?

108.  Mr Cheng made submission here [61] in almost identical terms to those he made on issue (2) in LDBM 360/2014 regarding Toilet D1. I hope I can also be forgiven by repeating what I have said at [40]. Sarwin has, I find, also proven that the malfunctioning of Toilet C at all material times was caused by defective underground drains and sewers of the Building (including its unauthorized alteration).

(7) 3 Former Toilets unable to be reinstated due to defective underground drains and sewers or not?

109.  According to the original design of the said underground drainage system set out in the Liability Report, sewerage of the 3 Former Toilets are designed to be collected by Manhole B1 which in turn connects to Manhole B2[62]. However, the pipeline between these 2 manholes had been, said Mr Wong and I accept, abandoned for quite some time. The flow to Manhole B2 had been diverted to open Catch Pit C1 not shown in the original BD plan and made up of PVC pipe not up to BD’s acceptable standard[63].

110.  I further accept from Mr Wong that all drainage works have to agree with BD approved plans. Alteration of drainage system needs to obtain approval from both BD and DSD beforehand. As the underground sewerage drainage system of the Building deviated from BD approved plan, BD will not grant it retrospective approval. Reinstatement of the same to the approved plan (and submission of amendment plan for its alteration for BD’s approval) is needed[64].

111.  Hence, on Mr Wong’s evidence and opinion I accept above, the 3 Former Toilets cannot, I think, be reinstated due to the defective underground drainage system of the Building (including its unauthorized alteration).

(8) IO in breach of the Ordinance and/or DMC or not?

112.  This issue is similar to issue (3) in LDBM 360/2019. For issue (3) in LDBM 360/2019, it relates only to Toilet D1 being out of function since 2001, whereas we are now concerned with

(1) Toilet C being out of function since 2001;

(2) foul water leakage at floor of Shop BC since 2001;

(3) foul water leakage at ceiling of Shop BC since 2006; and

(4) inability to reinstate the 3 Former Toilets.

113.  Applying Lau Chun Wing Rod, supra, Mr Cheng submitted that IO had taken appropriate steps once it had been made known of the leakage problem in Shop BC. IO had been following up with Sarwin’s leakage complaints. And IO had all along maintained communication with Sarwin and answered queries of Mdm Wong based on its available information at the material times.

114.  In order to carry out comprehensive inspection of the underground drainage system of the Building, IO, it was said, had no choice but to request access to Shop BC but such request was refused by Sarwin. Without access to Shop BC, IO, it was argued, was unable to verify the real cause of alleged water leakage and/or to comply with the 2007 Drainage Order.

115.  In this context, Mr Cheng quoted Mdm Wong’s evidence that she had, since 1994, never seen any of the 6 manholes being buried by concrete underneath Shop BC until and unless Mr Wong had removed the surface concrete to unearth them in September 2019 in order to prepare the Liability Report.

116.  In its Defence to Counterclaim, IO further pleaded that its alleged breach of duties were “caused, contributed to or self-induced by Sarwin without any fault or breach (bold supplied)” on its part^[65]. IO complained therein that Sarwin had:

(1) lodged complaints to BD in January 2011, March and July 2012 against one Mr Vincent Ip (Mr Ip) i.e. IO’s appointed authorized person (AP) to comply with the 2007 Drainage Order (also IO’s appointed consultant for renovation works);

(2) failed to allow IO’s appointed renovation contractor (the Contractor) to access Shop BC to inspect the underground drainage system underneath the same after BD had on 29 July 2011 approved Mr Ip’s remedial proposal to the said system;

(3) failed to turn up at MC meeting on 15 March 2014 to discuss the issue of underground drainage system of the Building and/or to give any response to IO’s request to access Shop BC to repair the same; and

(4) sought by its solicitors’ letter dated 23 May 2014 to impose 7 undertakings (or preconditions) on IO before allowing IO to have access to Shop BC to inspect and repair the said underground drainage system when it was not entitled at law to so impose.

117.  It was averred by IO in Defence to Counterclaim that Sarwin was not bona fide in allowing IO to enter Shop BC to inspect and/or repair the said underground drainage system and/or to comply with the 2007 Drainage Order^[66].

118.  Separately, regarding leakage at ceiling of Shop BC, there was, it was suggested by IO in its closing submission[67], another possible cause of leakage, which Sarwin was fully aware of but did not investigate. By a letter dated 7 November 2014, Sarwin’s solicitors, it was noted, wrote to Fook Wah Kun Kee Knitting Factory Limited (1/F Owner), complaining that 1/F Owner had sealed up the 3 Vertical Pipes, causing leaked water to accumulate and to leak from 1/F to the ceiling of Shop BC[68]. And there is, it was said, no evidence that IO had been made aware of this possible another cause of leakage leading to leakage at ceiling of Shop BC.

119.  In all the circumstances of the case, IO, it was urged by Mr Cheng, had taken all appropriate steps to deal with Sarwin’s complaints about leakage of Shop BC and that it should not be held liable towards Sarwin for breach of its duties under the Ordinance.

120.  I start dealing with IO’s submission at [118] that there was another possible cause of ceiling leakage to Shop BC due to sealing of the 3 Vertical Pipes by 1/F Owner. I am afraid the same is not open to IO to rely upon for the following reasons:

(1) IO had, I think, never pleaded the aforesaid possible cause nor put the same to Mdm Wong.

(2) Nor had the same been considered by parties’ single joint liability expert (i.e. Mr Wong) in its Liability Report.

(3) This matter was raised belatedly for the first time in IO’s closing submission.

121.  On Mr Wong’s expert opinion, the 3 Vertical Pipes are “for the common use of the Building”[69]. Applying provisions of the DMC and of the Ordinance[70] to such opinion I accept, the 3 Vertical Pipes are, I think, “common parts” of the Building for which IO is under a duty at s.18(1)(a) of the Ordinance to maintain in a state of good and serviceable repair and clean condition.

122.  IO had, I find, apparently failed in its aforesaid statutory duty over the 3 Vertical Pipes (or else their material would not have changed from original approved cast iron shown in BD’s record plan to PVC as opined Mr Wong[71] and I accept, and ceiling leakage would not have occurred to Shop BC as complained to IO by Sarwin as early as from 2006). Mdm Wong on behalf of Sarwin had, I accept, as early as in November 2006 orally complained to the then chairman of IO about ceiling leakage to Shop BC (see [59]). And, as was said at [68], IO had until trial not taken any action at all on the 3 Vertical Pipes to stop the said ceiling leakage.

123.  As Mr Lam admitted using his word of “possible” or “possibly” under cross-examination, I find it likely IO took the view as early as 2013 that the 3 Vertical Pipes were the responsibility of 1/F Owner and not its responsibility such that it forwarded Sarwin’s complaint to 1/F Owner on its receipt. The repair of these pipes “above ground level” did not, Mr Lam agreed, form part of “underground drainage works” originally found within renovation works carried out by IO to the Building in 2012 to 2013.

124.  Hence, there is, I agree with Mr Lai, no question of IO’s contractor being refused access to Shop BC to repair the 3 Vertical Pipes.

125.  Hence, I have no doubt (and I would find) that IO is liable to Sarwin for breach of s.18(1)(a) of the Ordinance regarding ceiling foul water leakage to Shop BC from 2006 until trial.

126.  Moving to ii) foul water leaking at floor of Shop BC, iii) Toilet C going out of its normal function, as from 2001, and iv) inability to reinstate the 3 Former Toilets, their common cause lies with defective underground drainage system of the Building (including its unauthorized alteration). I repeat herein IO’s duty to maintain such “common parts” and to carry out the 2007 Drainage Order under s.18(1)(a) & s.18(1)(b) of the Ordinance respectively as explained at [47] and [48].

127.  As Mr Lam had admitted in the box, the 2007 Drainage Order has so far not been complied with by IO. And on the evidence of Mdm Wong I accept, Sarwin has so far still been deprived of a functional Toilet C for its use and Shop BC still suffers today from foul water leakage onto its floor from time to time. Absent works carried out by IO to remedy the defective underground drainage system of the Building, the 3 Former Toilets cannot be reinstated even up to today.

128.  And IO had received complaint from Sarwin about, or had learnt from government department of, foul water leakage at floor of Shop BC and defective underground drains and sewers of the Building as early as from 2001.

129.  Hence, I have no hesitation finding IO also liable to Sarwin for breach of s.18(1)(a) & s.18(1)(b) of the Ordinance in respect of ii) foul water leaking at floor of Shop BC, iii) Toilet C going out of its normal function, as from 2001, and iv) latter’s inability to reinstate the 3 Former Toilets for such period from 2001 until Sarwin allegedly began to refuse access of Shop BC to IO for inspection and/or repair of underground drainage of the Building at the earliest in April 2012.

130.  Did Sarwin’s alleged refusal of access of Shop BC to IO to inspect and/or repair underground drainage of the Building, including its imposition of 7 undertakings on IO, in [116(4)] prevent IO being held liable for breach of the Ordinance towards Sarwin after April 2012 as pleaded by IO at [116] and submitted by Mr Cheng?

131.  On this point of access to Shop BC, I find the material events as follows. They developed in the following manner and in the following chronological order.

(1) On 9 March 2010, IO has appointed Mr Ip, an AP, as its consultant for renovation works of the Building as well as to comply with the 2007 Drainage Order.

(2) Mr Ip submitted remedial proposal as required by the 2007 Drainage Order to BD in April 2011 and obtained BD’s approval in July 2011.

(3) On 24 December 2011, Mr Ip assisted IO to engage one renovation contractor (the Contractor) to carry out renovation works to the Building, which works included underground drain replacement works to be made in line with BD’s approved plan.

(4) Between January 2011 and March 2012, Mdm Wong on behalf of Sarwin had repeatedly (including at general meetings of IO) sought to obtain from Mr Ip (and had chased him for) all remedial drainage documents submitted to BD, including any lately approved drainage plan.

(5) During the above 14 months, Mdm Wong even saw fit to enlist assistance of Lam Senior and BD staff to obtain above documents from Mr Ip but all their effort was in vain (Mdm Wong was enraged and complained Mr Ip to BD as Mr Ip was said by her to have given his words to provide her with those requested documents).

(6) On 18 April 2012, IO at general meeting resolved that the Contractor could commence the renovation works of the Building. Discussion then arose of seeking access to Shop BC to allow the Contractor to carry out “underground” drainage works.

(7) By email dated 20 July 2012 to Lam Senior, Mdm Wong’s assistant proposed that the Contractor be allowed access to Shop BC on condition that lately approved drainage plan be provided to Mdm Wong for her to take second professional opinion on it at Sarwin’s own costs.

(8) By letter dated 23 July 2012 copied to IO and Mr Ip, the Contractor provided original approved BD plan (and not lately approved drainage plan) to Mdm Wong. As lately approved drainage plan was not supplied to Mdm Wong, Sarwin thereafter did not allow the Contractor to have access to Shop BC.

(10) In the meantime, there were on-going discussions between Mdm Wong and Lam Senior on the above topic, with Lam Senior claiming to Mdm Wong on 12 October 2012 that submitted drainage plan had been returned by Water Supplies Department and thus there was no lately approved drainage plan in the hands of Mr Ip.

(11) On 25 January 2013, IO purported to resolve to delete, inter alia, “underground drain replacement work” from renovation works to the Building and instructed Mr Ip to issue partial completion certificate.

(12) On 7 February 2013, Mr Ip issued partial completion certificate certifying renovation works of the Building (except underground drainage) had been completed on 31 January 2013.

(13) On 1 March 2013, the previous chairman of MC was removed by owners’ resolution in an extraordinary general meeting held pursuant to requisitions signed by 5% of owners of the Building[72]. Mr Lam was elected chairman of new MC and Lam Senior secretary of new MC. Mdm Wong’s assistant also became an alternate MC member.

(14) After BD on 12 July 2013 served on IO a warning letter about the 2007 Drainage Order, the manager of the Building on 7 October 2013 invited the Contractor and Mdm Wong to attend a meeting with BD to discuss the matter. Mdm Wong by her reply letter dated 15 October 2013 effectively declined to attend.

(15) On 24 October 2013, a meeting of some MC members was held, during which Mr Ip showed members the lately approved drainage plan, whose design did not require access to Shop BC. However, such alternative design was objected by MC members and was not adopted (the same MC members, accompanied by Mr Ip and BD staff, took the opportunity to inspect Shop BC with its occupant’s permission but without prior consent of Sarwin or Mdm Wong, who was again enraged and made a written protest on 4 November 2013 to IO about their illegal activities).

(16) On 13 November 2013 and 20 January 2014, Mr Ip wrote to BD to propose to follow the “original” BD approved drainage plan and to withdraw the remedial proposal lately submitted in 2011 respectively. On 6 February 2014, BD approved Mr Ip’s proposal to follow the original BD approved drainage plan to make replacement.

(17) By its manager’s letter dated 6 March 2014, IO informed Mdm Wong of IO’s (and Mr Ip’s) decision to follow the “original” drainage plan as approved by BD and enclosed minutes and correspondences in (15) and (16) above. Access to Shop BC to inspect and repair was sought again and Mdm Wong was invited to attend another MC meeting scheduled on 15 March 2014.

(18) Mdm Wong gave no response and did not turn up at MC meeting held on 15 March 2014.

(19) On 9 May 2014, IO’s solicitors wrote to Sarwin to give notice to seek access to Shop BC, pursuant to s.40(1) of the Ordinance and clause 14 of the DMC, in order to inspect and repair underground drainage underneath the same in compliance with the 2007 Drainage Order and threatened application to court if their request was refused.

(20) On 23 May 2014, Sarwin’s solicitors replied IO’s solicitors, saying that Sarwin was ready, willing and able to allow access to IO as sought. However, as the existing underground drainage system was, they said, “illegal”, they disputed IO having any legal basis to “repair” such illegal structure. They demanded IO to give 7 undertakings (including a) not to carry out “alleged repair work” and to “remove” existing illegal system and e) the drainage system to be “reinstated” in line with approved plan) before giving access of Shop BC to IO.

(21) On 4 June 2014, IO’s solicitors replied to Sarwin’s solicitors saying that IO sought access of Shop BC to “inspect” its underground drainage and manholes. They gave final notice to demand compliance with their 9 May 2023 notice and threatened proceedings under s.40 of the Ordinance. They did not reply at all on the 7 undertakings sought by Sarwin’s solicitors.

(22) On 11 June 2014, Sarwin’s solicitors wrote back to seek clarification from IO’s solicitors whether proposed inspection of Shop BC by IO was restricted to visual inspection only.

(23) No correspondence passed between parties thereafter on this issue of access to Shop BC even up to December 2014 when IO began proceedings in LDBM 361/2014 against Sarwin to recover outstanding management fee and contribution to renovation fund.

132.  Considering both parties’ conducts on the above access issue, I am driven to conclude that both IO and Sarwin had fault.

(1) I first agree with Mr Lai that Mdm Wong’s request to Mr Ip for lately approved drainage plan was a reasonable one, as Mr Lam had also admitted in the box. On the above facts, I think IO could easily have arranged for Mr Ip to supply her with it. No valid objection was raised before me and I think IO was at fault for not doing so.

(2) Contrary to IO’s stance, though Sarwin had at about the same time other disputes with IO, I find it likely that Sarwin (or Mdm Wong) was bona fide in allowing IO to access Shop BC as its solicitors said in their letter. It is in Sarwin’s own interest for such floor leakage of foul water in Shop BC (if not that of Toilet C out of function) to be resolved. Her offer of 2^nd professional advice at Sarwin’s expenses is also proof of her good intention.

(3) Had IO arranged Mr Ip to supply lately approved drainage plan to Sarwin as requested, I tend to think it likely Sarwin would allow the Contractor to access Shop BC to carry “underground drain replacement work”, whose deletion from renovation works of the Building by IO was, Mr Lam said, unnecessary (if not also improper[73] as said by him).

(4) But I think Mdm Wong was also at fault in not attending MC meeting on 15 March 2014 to discuss about access to Shop BC after IO had through its manager made it clear it to her on 6 March 2014 that IO (and Mr Ip) had, with BD’s permission, reverted to original approved plan to go about complying with the 2007 Drainage Order, in which case it served no more useful purpose for her or Sarwin to insist on obtaining lately approved drainage plan.

(5) I disagree with Mdm Wong’s view expressed in the box (and Mr Lai’s submission) that Sarwin was entitled at law to impose the said 7 undertakings on IO: The Incorporated Owners of Kin Tak Building v Harvest Win Investment Ltd[74]. Such unilateral imposition of undertaking or precondition by owner or occupier is nowhere provided for in s.40 of the Ordinance. It makes, I think, IO’s access right under s.40 of the Ordinance nugatory (or at the mercy of individual owner or occupier).

(6) Whether IO must reinstate the drainage system, due to its alleged illegal status, in line with original approved plan or that IO be allowed to repair the same to comply with the 2007 Drainage Order[75] should, I think, be decided by the authority which issued the said order i.e. the Building Authority. Mdm Wong should not, I think, take the law into her hands. She could have taken the matter up with BD if required (as she did by complaining to BD against IO and Mr Ip). Sarwin was, I think, at fault in imposing the 7 undertakings as precondition for access of Shop BC being granted.

(7) At the same time, IO’s solicitors could have, I think, pointed out to Sarwin’s solicitors that BD had agreed to IO (and Mr Ip) following the original approved plan and there was thus no question of “repair” of “illegal” structure as was suggested by them in their letter dated 23 May 2014. IO was, I think, at fault in not so pointing out the said change of plan to Sarwin. Had it so done, I think it likely that Mdm Wong might have a change of her heart.

(8) Alternatively, as Mr Lam agreed in the box with Mr Lai that all 7 undertakings are reasonable^[76], IO could have, I think, replied Sarwin agreeing with all 7 undertakings (including undertakings a) and e) as IO had by then reverted to original approved plan) to secure access of Shop BC to proceed with its underground drainage works. It was also, I think, at fault in not doing so in this respect.

(9) Had Sarwin maintained any unreasonable refusal stance and/or did not acted bona fide as alleged, IO could have, I think, applied to court to exercise its access right under s.40 of the Ordinance[77] as it had given notice thereof to Sarwin on 9 May 2023 (and, I think, repeated to Sarwin on 4 June 2023[78]). Had IO so applied to court[79], the chances are that, I think, it will prevail after adjudication. Indeed, IO could, and should, have exercised such access right earlier than it did on the above facts I find.

133.  As such, IO had not proven that its subsequent breach of s.18(1)(a) & s.18(1)(b) of the Ordinance regarding ii) foul water leaking at floor of Shop BC, iii) Toilet C going out of its normal function, as from 2001, and iv) Sarwin’s inability to reinstate the 3 Former Toilets were “caused, contributed to or self-induced by Sarwin without any fault or breach (bold supplied)” on its part as it pleaded.

134.  In summary, I would also find IO liable on all counts here towards Sarwin for breach of its duties under the Ordinance. IO had, I think, at all material times failed to take all appropriate steps to discharge its duties under the Ordinance.

135.  Due to my conclusion above, I also find it unnecessary to rule on Sarwin’s case against IO for breach of clauses 10(a)(ii) & (iii), 10(c) and 10(g) of the DMC^[80]. Were it necessary for me to rule on them, I would have found:

(1) no breach of clauses 10(a)(ii) or (iii) as there is no evidence that it was IO which made structural alteration of (or altered, injured or interfered) the underground drains and sewers of the Building;

(2) IO in breach of clause 10(c) since 2001 (or 2006 as the case may be) as it had, on facts I find above, permitted sewage backflow to happen from time to time in Toilet C (and permitted leakage to continue at ceiling and floor of Shop BC) which was, or may become, nuisance to others; and

(3) clause 10(c) likely on its terms not applicable to the facts of this case.

(9) Relief, if any, to be granted to Sarwin in LDBM 361/2014?

136.  Sarwin sought against IO 1) damages for ceiling and floor leakage to Shop BC, Toilet C being out of its normal function and its inability to reinstate the 3 Former Toilets, and 2) two mandatory injunctions identical to those sought by WF in LDBM 360/2014 plus a third injunction requiring IO to repair and/or rectify the leakage problem caused by the 3 Vertical Pipes.

137.  In terms of quantum of damages sought, Sarwin asked for:

(1) reasonable costs of repair or renovation to Shop BC caused by water leakage in sum of $150,000 as estimated by Mr Wong[81]; and

(2) alleged actual loss of rental income of Shops B, C, F & G estimated in the total sum of $13,231,130.13 from 1 April 2001 to 31 March 2020^[82] as was claimed by Mdm Wong at para 36 to 39 of her supplemental witness statement[83].

(3) If (2) is not awarded by this tribunal, Sarwin would accept Ms Lam’s assessment of NIL loss for its ability to reinstate the 3 Former Toilets for Shops B, F & G ^[84] (as the 3 Former Toilets were utilized alternatively as saleable area of Shop G[85]) and seek in lieu of (2),

(i) loss of rental income due to water seepage/leakage in Shop BC assessed at $2,558,348 from 2 December 2006 to 20 January 2021 (and thereafter at $5,055 per month) as opined by Ms Lam by applying discount rates of 15% for the period before 14 August 2019 and of 5% for the period thereafter[86]; and

(ii) loss of rental income due to defective Toilet C from 18 January 2002 to 18 January 2020 in sum of $231,697 (and $1,000 per month thereafter) as opined by Ms Lam[87].

138.  Regarding damages, Mr Cheng first submitted that Sarwin had not suffered any alleged loss of rental because it was the conscious commercial decision of Mdm Wong to accept short-term licenses for Shop BC. His argument was based on the following evidence and reasoning:

(1) Under cross-examination, Mdm Wong testified that she considered market rent for Shop BC should be at least $100,000/month and that water and sewage leakage problem had resulted in 50% reduction in rental for the shop.

(2) And she repeatedly emphasized in the box that she had frankly informed all prospective tenants (and licensees) of the aforesaid leakage problem in Shop BC.

(3) Nonetheless, from time to time, Sarwin received expression of interest and offer from estate agents of renting Shop BC. In January 2017, it received such expression of interest from an agent[88]. In February 2007, it also received a written offer from an agent of an intended tenant willing to pay monthly rental of $100,000 for a fixed term of 2 years commencing 1 April 2007[89].

(4) In 2008, Sarwin even managed to let Shop BC to one Chun Au Knitting Factory Ltd (Chun Au)[90] for 2-year fixed term (from 1 April 2008 to 31 March 2010) at a monthly rental of $100,000. Chun Au, said Mdm Wong, completed the said term without making any claim for loss caused by water leakage or sewage leakage against Sarwin.

(5) On the aforesaid evidence, there was, argued Mr Cheng, no reason for Sarwin not to continue looking for (and letting out to) fixed-term tenants.

(6) Somehow, Sarwin decided to enter into short-term licenses over Shop BC after Chun Au ceased to be its tenant. Sarwin, Mr Cheng noted, managed to enter into numerous short-term licenses over Shop BC at a monthly license fee ranging from $50,000 to $75,000 (for most licenses) from 2010 to 20 September 2020.

(7) Accordingly, given that Mdm Wong opined that rental achieved for Shop BC would be just about 50% of its usual market rent due to its leakage problem, Sarwin still, it was stressed, managed to enter into numerous short-term licenses over Shop BC without suffering any loss and even making profit.

139.  For reasons below, I cannot agree with Mr Cheng.

(1) The fatal flaw of Mr Cheng’s submission is that the totality of evidence adduced show that Sarwin could not in fact secure fixed-term tenants for Shop BC for the long term though it was interested, and it was also in its interest, to do so. The prime location of the Building should be borne in mind in this context.

(2) The tenancies produced by Sarwin proved that, as Mr Lai pointed out, it also entered into fixed-term tenancies as long as 2 years over Shop D1, Shop F and Shop G at about the same period of time of its entry into short-term licenses over Shop BC (though there were also isolated short-term licenses over the former).

(3) It makes, I agree with Mr Lai, commercial sense for Sarwin to get more, stable and consistent, return on its investment by entering into fixed-term leases than short-term licenses. With respect, the suggestion Mr Cheng put to Mdm Wong that Sarwin preferred flexibility of short-term licenses[91] to explain her alleged conscious commercial decision does not make commercial sense.

(4) Regarding the 2 expression of interest and offer to rent Shop BC Mr Cheng relied on in [138(3)], he had not, I am afraid, pointed to any evidence that Mdm Wong had already disclosed of leakage problem of the shop before Sarwin received them, or that they did result in successful conclusion of fixed-term tenancies at the end or after Mdm Wong’s disclosure of leakage problem[92].

(5) Regarding the isolated instance of Chun Au’s 2-year lease over Shop BC, Mr Cheng had overlooked reference to disclosure of the 2007 Drainage Order, and tenant’s waiver for compensation for losses caused by drains and sewers, in the lease[93] and Mdm Wong’s evidence of Chun Au not renewing its tenancy after expiry (despite, one notes, its available option to renew for another 2 years at an increased monthly rental in the lease[94]).

(6) In fact, the numerous short-term licenses of Shop BC that Sarwin produced into evidence showed that it had to enter into short-term licence over Shop BC as early as in 2004. For the period from May 2004 to May 2017 (some gaps in between), Shop BC was consistently put on short-term licenses of 15-day term to, at most, 3-month term save the isolated 2-year lease to Chun Au in April 2008 to March 2010.

(7) I therefore accept Mdm Wong’s evidence that she did make frank disclosure of leakage problem to prospective tenants and licensees as she said and that, due to such problem, Sarwin was at all material times having disadvantage or difficulty in negotiating and securing fixed-term tenancy for Shop BC for the long term.

(8) And I further accept that, as a result, Sarwin was forced to take on short-term licenses (offered and arranged by estate agents) over Shop BC for the long term at such monthly licence fees that were lower than it could otherwise fetch with letting out Shop BC on fixed-term tenancies unaffected with leakage problem.

140.  Next, Mdm Wong, Mr Cheng submitted, is not a reliable and credible witness. She had, Mr Cheng submitted, grossly exaggerated the leakage problem of Shop BC. I am afraid I cannot agree with this submission either.

141.  Mr Cheng first pointed to a handwritten breakdown of return of security deposit[95] on early termination by one former licensee in December 2007/January 2008. There was an entry of “leakage repair paid by tenant costing $200” that required to be deducted. Had leakage problem been as serious as Mdm Wong claimed, the cost of fixing them, argued Mr Cheng, would not be just $200.

142.  Cross-examined on above, Mdm Wong was, I note, unable to recall this event as it was long ago. In any event, in fairness to her, she could not, I think, explain what repair this former licensee had seen fit to arrange and pay for[96], especially on an occasion of early determination of licence in December 2007 when it should otherwise expire in February 2008[97].

143.  Next, there are, Mr Cheng argued, reasonable grounds to suspect that Mdm Wong had used FYS to create an impression that leakage had happened all the time in Shop BC. I cannot agree with this submission either.

144.  First, Mdm Wong had sought to rely on an “undated” and “unsigned” complaint letter purportedly received by her[98], complaining about a leakage incident on 29 October 2014 (the Complaint Letter)[99]. When Mdm Wong was cross-examined on why it was written as “leakage in foul water pipe outside external wall”[100], she explained that it was a typographical mistake. Mr Cheng has seriously doubted if it could conceivably be a mistake but I am prepared to so find. The same leakage incident of “ceiling leakage from the 3 Vertical Pipes” to Shop BC on 29 October 2014 was recorded thrice in i) 2 complaint letters both dated 7 November 2014 from Sarwin’s solicitors to 1/F Owner[101] and IO’s solicitors[102], and ii) Sarwin’s complaint letter to IO dated 14 November 2014[103]. Had the Complaint Letter been specially prepared to bolster Sarwin’s case as claimed by IO, such mistake should not, one thinks, have appeared in the said letter.

145.  When Mdm Wong was further asked by Mr Cheng if Sarwin had paid compensation as sought in the Complaint Letter, she answered in the positive. This answer was, Mr Cheng also argued, inconceivable as clauses 8 and 10 of licenses Sarwin entered into with FSY, it was said, exempted Sarwin from making such compensation. Again, I accept Mdm Wong’s explanation that she paid it out of commercial consideration of maintaining good relationship with a licensee who was prepared to take on Shop BC despite its leakage problem.

146.  Secondly, Mdm Wong sought to rely on the Termination Notice to terminate license over Shop BC (as from 30 September 2022) due to its leakage problem. She, said Mr Cheng, changed her evidence in the box on its manner of delivery to her. She first said she was given in person. She later said that it could have been faxed to her. According to licence terms, FSY was not required to give prior notice to Sarwin when the license expired. Mr Cheng wondered why FSY suddenly chose to give it to Sarwin when it was not required. Again, I think Mdm Wong could not answer for the sender i.e. FSY. She just received it when she was sent with it likely, I think, by fax[104]. In any event, the discrepancy is, I agree with Mr Lai, immaterial given that there is no challenge to authenticity of this document.

147.  Under cross-examination, Mdm Wong was shown a license agreement dated 28 April 2016[105], in which one could see signature of FSY and signature of Fu Chung Po (FCP)[106]. She was then shown signatories of licenses Sarwin had entered into with FSY and with FCP respectively. Later, she was asked again about identity of the signatory appearing in the Termination Notice. Mdm Wong then, Mr Cheng stressed, found herself having difficulty to answer who signed it. As explained by Mdm Wong, though Sarwin had entered into licenses with FSY and FCP, she had, I accept, only met one male called “Mr Fu” on estate agents’ arrangement. As such, it is, one thinks, entirely no surprise that Mdm Wong could not identify (or distinguish) FSY and FCP, let alone their different signatures.

148.  Save cross-examining Ms Lam on matters related to discount rates she applied and making submission on them below, Mr Cheng did not see fit to challenge Mdm Wong’s alleged figures in cross-examination or made other submissions on quantum.

149.  The 2 discount rates of 15% and 5% adopted by Ms Lam, Mr Cheng submitted, are unreliable due to the following limitations suffered by Ms Lam and should not, he argued, be adopted.

(1) Ms Lam admitted in the box that she could only rely on the photos and videos provided by parties’ solicitors in the CD to make her assessment;

(2) Not all the photos and videos provided to Ms Lam in the CD were dated (though some of their folders and file names contain dates). Out of total 13 photos included in 1^st Valuation Report, only three were marked with a date i.e. 29 June 2010. Ms Lam was given to understand that the remaining photos and videos in the CD were taken in 2010’s;

(3) Ms Lam admitted that she could only assume the conditions of Shop BC were as shown in the said 13 photos from 2010 to 15 August 2019, the date on which IO, she was told, carried out alleged repair work to clear blockage problem in the underground drains;

(4) Ms Lam also confirmed that, because she had not been provided with photos taken between 2006 and 2009, she could only assume the conditions of Shop BC for this period would be the same as shown in the said 13 photos;

(5) Ms Lam admitted that she could not, and did not, take into account frequency of water seepage (because she was not told) and where water seepage took place at dates other than her inspection day (because she was not told) except for those incidents recorded in the files contained in the CD;

(6) Accordingly, the 15% discount rate adopted by Ms Lam for the period from 2006 to August 2019 was solely based on the said photos and videos provided to her without her knowing frequency and location of the water seepage.

(7) Similarly, Ms Lam arrived at 5% discount rate for the period from August 2019 to current solely on her observation (and enquiry) during her inspection on 19 August 2019 without knowing frequency and location of the water leakage on other dates.

150.  It was submitted on behalf of IO that, by adopting a broad brush approach, the discount rate for all relevant periods should be no more than 1%.

151.  Absent IO’s contrary submission, I first award Sarwin the sum of $150,000 estimated by Mr Wong in [137(1)] as a reasonable assessment of the costs of repair and renovation required by Shop BC due to foul water leakage it has suffered.

152.  As for Sarwin’s alleged actual loss of rental income of Shops B, C, F & G totaling over 13 million from 2001 to 2020 at [137(2)], I find it not proven for the following reasons.

(1) Sarwin has not produced reliable and sufficient documents to prove the alleged amounts of its actual receipt over the aforesaid period prepared by Sarwin’s accountant in the form of a table[107]. No audited accounts, or tax assessments, of Sarwin for the relevant period are produced. Rental/licence agreements covering the entire relevant period for all 4 shops have not been produced either.

(2) Mdm Wong also made no reference to reinstatement costs of the 3 Former Toilets and time to be incurred for the said exercise (if not maintenance costs of the reinstated toilets), the former must of course be taken into account before arriving at any alleged net loss of rental suffered by Sarwin.

(3) And, as Mdm Wong admitted in her evidence, Sarwin had purchased Shops B, F & G without knowing presence of the 3 Former Toilets underneath. It is, in my view, highly speculative to tell after the event whether or not Sarwin would have spent money and time to reinstate the 3 Former Toilets and would have been able to secure fixed-term tenants requiring toilet and agreeing to pay a higher rental for such shops with toilet.

(4) At its highest, Mdm Wong said, one notices, that she “could have” reinstated the former toilets of Shops F & G in line with approved plans in order to attract higher rental[108]. She never said she “would” “definitely” do so or, even, “likely” do so.

(5) Had Toilet C and/or Toilet D1 been restored to normal function, as was also admitted by Mdm Wong in her supplemental witness statement[109], she could have opted not to reinstate the 3 Former Toilets and provided toilet facilities to occupants of Shops B, F & G by allowing them to use either or both of the 2 existing toilets.

(6) Contrary to Mdm Wong’s belief of higher rental on a tenancy with toilet, Ms Lam’s pair analysis result (which I accept) showed that, even with toilet, Sarwin’s shops could not have commanded higher rental than they did without.

153.  As Mr Lai acknowledged, I therefore accept Ms Lam’s opinion (and find) that Sarwin has suffered no loss for not being able to reinstate the 3 Former Toilets.

154.  For loss of rental income to Sarwin due to defective Toilet C, as Mr Cheng made no submission on Ms Lam’s assessment at [137(3)(ii)] or cross-examined on it at all, I accept her assessment and also make an award here in sum of $265,897 in Sarwin’s favour for, due to my conclusion at [55] on the applicable limitation period, the 12-year period before Sarwin’s counterclaim (i.e. 23 January 2015) and thereafter until this judgment[110].

155.  Coming to the last of Sarwin’s claim for loss of rental income due to water seepage/leakage in Shop C at [137(3)(i)], I fully agree with Mr Cheng’s submission at [149] that Ms Lam was laboring under various limitations when she was performing her difficult task of assessment.

156.  Indeed, Ms Lam was also, I think, mistaken to have believed in IO having conducted a repair to clear the blockage of the underground drains on 15 August 2019 when it was, in fact, an inspection arranged by Mr Wong to prepare for the Liability Report[111].

157.  However, IO’s alternative suggestion of adopting a discount rate of no more than 1% for all relevant periods concerned is, I think, wholly unrealistic and contrary to the sum total of evidence adduced before this tribunal.

158.  In my view, had the sum total of evidence adduced before this tribunal on foul water leakage on ceiling and floor of Shop BC over the years concerned be put before Ms Lam for her to decide on the applicable discount rate(s), including contents of documentary evidence other than the CD and oral evidence of Mdm Wong that the foul water smells badly, Ms Lam would, I think, more likely than not have adopted discount rates greater than those two she had adopted.

159.  Considering her evidence in the box, Ms Lam was, I think, also under the misapprehension that the leakage to Shop BC did not include foul water smelling badly. Though Ms Lam once replied Mr Lai that she would maintain the 2 discount rates she had adopted had such leakage to Shop BC be foul water, she clearly answered Mr Lai later that such discount rates would need to be increased if those foul water smelt badly (as any would-be customers would be deterred by such bad smell from entering or staying at the shop).

160.  On this head of claim, as Sarwin is, on Mr Lai’s submission, prepared to accept Ms Lam’s assessment despite it is more favorable to IO than the sum total of evidence adduced points to, I am also prepared to adopt Ms Lam’s assessment and make an award here in sum of $2,725,163 in Sarwin’s favour for the period from 2 December 2006 to date of Sarwin’s counterclaim (23 January 2015)^[112] and thereafter until this judgment^[113].

161.  As for mandatory injunctive relief, it was stressed by Mr Cheng that this tribunal has a wide discretion on granting or refusing the same. IO urged this tribunal not to grant the same because, given the uncooperative and hostile attitude of Mdm Wong towards IO, it is highly likely that Sarwin would impose strict, if not harsh, conditions upon IO for entry into Shop B and Shop C to carry out inspection and repair work, and if it does happen, IO would be put into a difficult situation, including finding itself having to begin new legal action again for the sake of complying with a court order.

162.  In reply to Mr Cheng’s submission, I would repeat what I have said earlier at [132] about IO’s access right under s.40 of the Ordinance and Sarwin’s corresponding duty under the said section. If, indeed, a new legal action is called for as submitted by him, IO has, I think, nothing but itself to blame for it elected not to sue Sarwin in this application to exercise such access right.

163.  In all the circumstances of this case, I have no doubt that it is appropriate to issue (and I would issue below) two suitably-worded injunctions to require IO to tackle with ceiling leakage problem to Shop BC arising from the 3 Vertical Pipes and to comply with such existing drainage order of BD to rectify all such existing problems and defects of the underground drains and sewers of the Building.

J. Disposition in LDBM 361/2014

164.  I enter the following judgments on Sarwin’s counterclaim in LDBM 361/2014 i.e.

(1) This tribunal hereby orders IO to:

(i) pay damages in sum of $2,725,163 to Sarwin, together with interest thereon at half HSBC prime rates from 2 December 2006 to judgment;

(ii) pay damages in sum of $265,897 to Sarwin, together with interest thereon at half HSBC prime rates from 23 January 2003 to judgment;

(iii) pay damages in sum of $150,000 to Sarwin;

(iv) comply within 120 days fully with such existing order issued by BD under s.28(3) of BO to rectify all existing problems and defects of underground drains and manholes of the Building (including sewage backflow and risk of sewage backflow to Toilet C, and foul water leakage and risk of foul water leakage to floor of Shop B and Shop C) to the satisfaction of BD; and

(v) rectify and eradicate all existing problems and defects of the 3 Vertical Pipes (including foul water leakage and risk of foul water leakage to ceiling of Shop B and Shop C) within 120 days.

(2) Sarwin and IO are to be at liberty to apply.

(3) Sarwin’s solicitors do draft, file and serve this order endorsed with penal notice on IO.

K. Disposition in LDBM 360/2014

165.  And I enter the following judgments on WF’s counterclaim in LDBM 360/2014 i.e.

(1) This tribunal hereby orders IO to:

(i) pay damages in sum of $124,500 to WF, together with interest thereon at half HSBC prime rates from 23 January 2003 to judgment; and

(ii) comply within 120 days fully with such existing order issued by BD under s.28(3) of BO to rectify all existing problems and defects of underground drains and manholes of the Building (including sewage backflow and risk of sewage backflow to Toilet D1) to the satisfaction of BD.

(2) WF and IO are to be at liberty to apply.

(3) WF’s solicitors do draft, file and serve this order endorsed with penal notice on IO.

L. Costs Orders Nisi in both Counterclaims

166.  Costs normally follow the event after trial. As I see it, both WF and Sarwin have emerged as the successful party in their respective counterclaims.

167.  I therefore make costs order nisi in LDBM 360/2014 that costs of WF’s counterclaim, including all reserved costs and costs of this trial together with certificate for counsel, be paid by IO to WF to be taxed if not agreed.

168.  And I also make costs order nisi in LDBM 361/2014 that costs of Sarwin’s counterclaim, including all reserved costs and costs of this trial together with certificate for counsel, be paid by IO to Sarwin to be taxed if not agreed.

169.  Finally, I thank Mr Cheng and Mr Lai for their submissions.