LEE HING WAREHOUSE LTD. v. SIU CHI KESUNG COMAN t/a YICK FUNG DYEING & BLEACHING FACTORY

1992 No. A8931

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The Plaintiff's claim relates to damage which occurred to goods kept on their premises by water emanating from a tank situate on the top of the building occupied by the Defendant which is adjacent to the Plaintiff's land.

2. The Plaintiff conducts a business as a warehouse and the goods in question were placed on the open area under the escape pipe of the tank prior to loading in a container.

It is the Plaintiff's case that shortly after 12 o'clock on the 31st August 1992 water spurted out from the tank and wetted the said goods. These goods were owned by Trade Winds International Ltd. and had been forwarded to the Plaintiff's warehouse by Dynamic Freight Services (HK) Ltd.

3. Mr. Stanley Leung, the General Manager of the Plaintiffs gave evidence concerning this occurrence. He said that when his attention was drawn to the water he gave instructions for an attempt to be made to cover the goods with plastic sheets. He also himself took a series of photographs which depicted the scene. These photographs were exhibited as evidence.

4. Mr. Leung said that the duration of the incident was approximately 15 minutes. He telephoned the Police and when they arrived he attended with them at the Defendant's premises. He said that when he was at these premises an apology had been tendered to him for what had occurred.

5. He strenuously denied that he had had any previous meetings or discussions with the Defendant concerning the water tank prior to 31st August.

6. In the same afternoon he arranged for a surveyor to undertake an inspection of the goods. The survey was performed on the 31st August and the 1st September and the resulting Survey Report was included by the agreement of the Defendant in the agreed bundle of documents. It is a detailed Survey Report and is itemised so as to record the varying extent of the damage to the goods.

7. Mr. Leung said that he immediately informed the Trade Winds and Dynamic of the problem and undertook negotiations with them to agree the quantum of damages which were to be payable for what had occurred. These negotiations were successful and particulars of the amounts agreed were set out in detail in the Statement of Claim.

8. Mr. Li, a caretaker with the Plaintiff also gave evidence. The scope of his evidence was basically limited to the escape of the water.

9. For the most part his evidence corroborated Mr. Leung's evidence. It would appear from his evidence that not much was achieved in covering the goods as there had been an exodus of workers from the Plaintiff at 12 o'clock for their luncheon break.

10. Mr. Lam, the gentleman who undertook the survey was tendered by the Plaintiff for cross-examination. This cross-examination did not in any important manner detract from the evidence contained in the Report.

11. I accepted all 3 of the witnesses for the Plaintiff as truthful and reliable witnesses and in all important respects Iaccept their evidence as being accurate.

12. Mr. Sin, the sole proprietor of the Defendant gave evidence concerning the incident. He said that the Defendant had been in business since 1987. The tank had always been in the same location. Although in an earlier affirmation he had stated that the tank had been constructed in July 1992 this was not correct as what had happened in July was that the tank had been refurbished.

13. The work in this connection had been undertaken by a Mr. Lam who was an authorised person to undertake such work. Mr. Lam had recommended that maintenance work should be performed and as a consequence of this advice one of his employees Mr. Yip had inspected the tank every alternate day.

14. A conscious decision had been made to design the escape pipe of the tank so that if it overflowed any water would flow onto the Plaintiff's adjoining land. The rationale of this decision had been that if the water escaped on to the street which was the other alternative members of the public might report the matter to the Police thus affording him no opportunity to take prior remedial measures.

15. Mr. Siu was definite that he had had 2 discussions with Mr. Leung prior to the incident on the 31st. On one of these occasions there had been what he referred to as a trial run. He had asked Mr. Yip to depress the ball float so that water would flow from the escape pipe. When this had occurred Mr. Siu said that Mr. Leung had been prepared to accept the position as he did not store goods in the area where the water would flow to. I myself asked Mr. Siu some questions on this aspect of the matter and I have to confess that some of the explanations given by Mr. Siu were less than fully convincing. When I pressed him on the purpose of the so called trial run he said that he had given Mr. Leung his name card and suggested that if there was an overflow he should contact him. He also said that he told Mr. Leung that if he (Mr. Siu) was not in he should contact other members of his staff. He was unable to provide any explanation as to why he had not referred to this in his evidence in chief.

16. Another aspect of his evidence which was unsatisfactory was his evidence relating to the malfunctioning of the cut off system of water to the tank. In 2 affirmations which he affirmed in relation to interlocutory proceedings he stated that the cut off system had mulfunctioned due to a loose screw when flooding had occurred at the beginning of August 1992. At the trial he gave evidence for the first time that the problem with the loose screw had occurred at the time of the flooding on the 31st August. He said that he had got the position wrong in the 2 affirmations. He thought that this might have been due to difficulties in communication.

17. This may be a matter of some consequence because according to Mr. Siu it had been as a result of difficulties encountered with the tank that he had claimed that the meetings with Mr. Leung had been arranged. If he had confused the occasions when the problem with the loose screw had been encountered it is possible that this might shed light upon his ability to recollect the sequence of events which had occurred.

18. I regret that I did not consider Mr. Siu to be a reliable witness. I have commented upon what seem to me to be rather unsatisfactory aspects of his evidence.

19. It is definitely my impression that where his evidence is at variance with Mr. Leung's I much prefer Mr. Leung's version of what transpired.

20. There is however one part of Mr. Siu's evidence which I do accept. I refer to his evidence that the Dye and Bleaching Industry has abnormal requirements for using water. Indeed all of the evidence relating to

the either construction or refurbishment of the tank supports this. This is important in establishing the fact that the storage of water in the circumstances of this case amounted to a non natural user of the premises.

21. The only other witness to give evidence for the Defendant was Mr. Chan, a caretaker. Mr. Chan gave evidence that he was able to remember that at the beginning of August 1992 a member of Mr. Leung's staff had attended on him and drawn his attention to water overflowing from the said tank. He had reported this to Mr. Siu when he returned to his office later in the day.

22. He said that there was another incident in mid August when Mr. Leung himself made a similar complaint. On this occasion Mr. Leung had gone with Mr. Siu to the roof to attend to the tank.

23. Mr. Chan had not kept any contemporaneous note of these events. Nor was he able to provide any convincing explanation as to how he had been able to remember the times he had referred to so accurately after such a lengthy period of time. The first time he had committed the matters to writing had been April 1993.

24. When balancing this evidence against Mr. Leung's categorical denial of earlier meetings in August with the Defendant relating to this matter I have come to the conclusion that Mr. Chan must have been mistaken in his evidence. As I have indicated earlier in this judgment I found Mr. Leung to be a truthful and reliable witness and I much prefer his evidence on this matter to either Mr. Siu's or Mr. Chan's.

Looking at the evidence as a whole I make the following findings of fact.

1. There were no meetings in August between these parties prior to what occurred on the 31st August 1992. One consequence flowing from this is that I do not accept that there was any element of consent on the Plaintiff's part.

2. A substantial volume of water did escape from the tank on that date and flowed on to the goods which were temporarily stored on the Plaintiff's land in the manner described in the Statement of Claim.

3. I accept the validity of the Surveyors Report and that the damage referred to in the report was entirely caused by the water which had escaped from the tank.

4. I accept that the damage has been proved in general terms. I will comment later on mitigation.

25. Having dealt with the facts I will now consider the law. I accept the validity of the submission made by Mr. Miu on behalf of the Plaintiff's that on the facts as I have found them this case comes within the scope of the doctrine enunciated in Rylands v. Fletcher (1868) L.R. 3 H.L. 330.

26. More specifically it is a very similar type of situation to that which arose in Western Engraving Co. v. Film Laboratories. Ltd. [1936] 1 All ER 106.

27. At p.108 Slesser L.J. said :

"I do not think for myself, that this is a case where it can be said that the conducting and the user of the water on the defendants' premises was really for the general benefit of the defendants and of the plaintiffs, and was a normal user for the purposes for which the land was occupied by both of them. Rather do I think that this is a case where the defendants have used water in a particular and peculiar way for their own purposes, and for their own purposes have allowed it to be in this film circulating bath, and have filled carboys with water; and it has been allowed to be there in order that they can carry on their industry, which necessitates the user of water. In other words, I am of opinion that this is a case which falls within the general principle of Fletcher v. Rylands (1866) L.R. 1 Exch. 265 on appeal sub nom. Rylands v. Fletcher (1868) L.R. 3 H.L. 330; 36 Digest 187. 311., and not within the exceptions to that principle. It falls, as I think, within this statement of BLACKBURN, J., in that case :

We think that the true rule of law is, that the person who for his own purposes brings on to his land and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape."

28. Similar sentiments were expressed by Scott I.J at p.109.

" SCOTT, L.J. : I agree. In the learned Judge's note, after it was submitted on behalf of the defendants, relying on Rickards v. Lothian [1913] A.C. 263; 36 Digest 194, 353., that there was no case to meet, the learned Judge says : "I hold that there is a case to answer." That decision rather goes to indicate that the Judge did consider the general principle of law in Fletcher v. Rylands (1866) L.R. I Exch. 265 on appeal sub nom. Rylands v. Fletcher (1868) L.R. 3 H.L. 330; 36 Digest 187, 311, which was discussed in Rickards v. Lothian (Carstairs v. Taylor (1871) L.R. 6 Exch. 217; 36 Digest 189, 314.) I myself take the view that where for manufacturing purposes water is brought on to various parts of the floor for the purpose of the manufacturing occupier of that floor and not for any common purpose with any other occupier of the building, you must presume that the principle in Fletcher v. Rylands (1866) L.R. 1 Exch. 265 on appeal sub nom. Rylands v. Fletcher (1868) L.R. 3 H.L. 330; 36 Digest 187, 311. applies. I do not think that is an ordinary user of the house such as is the case when water is present for the common domestic use of different tenements. The learned Judge was entitled to hold here that on the principle of Fletcher v. Rylands (1866) L.R. I Exch. 265 on appeal sub nom. Rylands v. Fletcher (1868) L.R. 3 H.L. 330; 36 Digest 187, 311. there had been a failure to keep in the water which was brought there for the defendants' own purposes and for the purposes of nobody else."

29. I have no doubt that the Defendants user of the premises in storing the large volume of water in the tank constituted a non natural user of the premises thus invoking the principles I have above referred to.

30. Even if I am wrong in this the circumstances which arose in this case would undoubtedly lead to a situation where the doctrine of res ipsa loquitur was applicable. The Defence has not provided any plausible or satisfactory evidence to explain or justify what occurred.

31. The consequence of all of this is that I have no doubt that the Plaintiff's must succeed in this claim.

32. The question which next arises is to what extent should damages be recovered.

33. It is evident that the goods were divided into 3 separate parts. On one of them being Invoice 2830 the loss was minimal as the vast majority of the shoes were salvaged as a result of the remedial measures which had been taken in China.

34. This was at variance with what was alleged to be the position concerning the other 2 parts. This comprises the greater part of the claim which is being made.

35. Correspondence has been exchanged between the interested parties and the position is set out at p.54 of the Agreed Bundle.

" TRADE WINDS INTERNATIONAL LTD.

September 21, 1992.

Dynamic Freight Services, Ltd.

4th floor, Cornwall House,

28, Tong Chong Street,

Quarry Bay, Hong Kong.

Dear Sirs,

Re:	Your Shipping Order Nos. DFS/VOT-2818
	& DFS/VOT-2819
	Total: 700 cartons (12.600 Pairs) Footwear

With reference to our letter dated September 2, 1992 and your letter dated September 3, 1992.

This is to inform you that after the captioned footwear had been returned to China for re-packing purpose, our Q.C. people in China discovered that nearly all of the footwear were covered by mold heavily and most of them were damaged seriously and have no sales value.

Under these circumstances, we are regret to inform you that we are prepared to lodge a total loss claim on your captioned shipping orders and will submit our debit note to you for the cost of the footwear, plus trucking and labour charges etc.

Please take note accordingly.

Yours faithfully, For and on behalf of Trade Winds International Ltd.

Signed

Kevin Au Shipping Manager"

36. I do not consider this statement to be at all satisfactory. There is little to suggest in the Survey Report that the shoes comprised in these other invoices suffered significantly differently to the damage which occurred to those referred to in Invoice 2830. It seems unlikely that all of the shoes would have had no re-sale value whatever. Doing the best I can on the very limited evidence available I propose deducting 50% from the amount of US$73,566.00 which has been claimed in respect of these goods. The claim will accordingly be reduced by US$36,783.00.

37. I will hear the parties on costs.