RAINBOW MORE LTD v. THE INCORPORATED OWNERS OF THE ARCADIA

LDBM 141/2015

[2018] HKLdT 30

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 141 OF 2015

________________

________________

____________________________

JUDGMENT

____________________________

1.  The respondent is an owners’ incorporation of a real estate development of which the applicant is an owner. This trial concerns whether, and if so, under what circumstances the owners’ incorporation is liable to an owner for damages resulting from default on the part of the corporation’s building contractor. It is the parties’ common ground that the contractor’s work was defective which caused damages to the applicant’s chattels and to the interior of his unit as a result of water seeping through the external wall. The applicant accuses there being delay and/or inaction on the part of the respondent to make good the defective external walls despite repeated demands and requests. The respondent denies.

Brief Background

2.  Along No. 8 Forfar Road, Kowloon City stands a residential development known as The Arcadia comprising, inter alia, 2 residential 14-storeyed towers with 4 units on each floor (i.e. 112 units), 4 semi-detached houses, a club house and a swimming pool. The Arcadia was completed and occupied in or about 1989. The respondent is the owners’ incorporation of The Arcadia (“IO”). All owners including the applicant and the IO are subject to a Deed of Mutual Covenant dated 25 January 1990 and registered with the Lands Registry by memorial no. UB4323336 (“DMC”).

3.  There is an Emergency Vehicular Access (“EVA”) within The Arcadia. The EVA is in fact a large space on the ground floor of at least 6 metre wide. Fire engines can enter and park there in case of emergency. There is no dispute that the EVA is a common area of The Arcadia.

4.  The applicant is the registered owner of Unit B of Ground Floor of Block 2 (“the Unit”) of The Arcadia. The Unit has all along been occupied by the applicant’s sole director Mr Chan Hon Chuen (“Chan”) and his family as their home since December 2004. It is a 3-bedroom unit with an open front Yard and a back Yard (referred to as “Front Yard” and “Back Yard” respectively). In order to understand how the Unit might be affected by the renovation work, it is essential to understand its layout and its position relative to other part of the development.

5.  The Front Yard is of a split-level design. Immediately before the renovation, its elevated part and the EVA are of the same water level. They are only separated by a short parapet wall open with an iron gate which is the only access to the Unit. After entering the iron gate, the 3-bedroom Unit is a few steps down at the end of the lower part of the Front Yard. Accordingly, except the elevated part of the Front Yard, the Unit is basically situated at a level below the EVA.

6.  There is an open drain covered with metal grilled runs on one side of the EVA. The same drain runs straight underneath the said parapet wall. It continues to run along the elevated part of the Front Yard and across the upper landing of the descending steps. If the EVA floor is raised, the original design of the drain may be unable to collect the water before it flushes to the Front Yard. Further, the drop in height may cause water running faster in the drain towards the Unit. It may lead to flooding of the Front Yard, and thus the Unit.

7.  It is the applicant’s case that the EVA level was raised by the IO’s contractor by 40 mm. Serious flooding to the Unit was caused as a result. Despite the applicant’s protest, neither the EVA was lowered nor the Front Yard raised. The applicant said in order to protect its properties it was forced to raise accordingly the Front Yard floor level. It now claims reimbursement of the expenses incurred.

8.  This, however, is only one of the applicant’s many claims against the IO.

9.  On14 June 2008 it was resolved by the owners of The Arcadia that the buildings required major renovation. In particular, the renovation aimed to fix the water seepage problem attributable to the external walls that had troubled many owners for years[1]. After some hiccups, Lee Cheong Construction & Materials Limited (“LC”) was appointed the building contractor[2], and Spence Robinson LT Limited (“Spence”) the IO’s consultant of the renovation project. It helped also supervise the work of LC. The then management company was one Sino Estate Management Limited (“SEML”). An ad hoc sub-committee comprising representatives of SEML, Spence and the management committee (“MC”) of the IO was formed particularly to deal with matters arising from the renovation and to monitor its progress.

10.  The renovation includes, inter alia, re-paving the EVA floor and doing water proofing works to the external wall of the buildings. The latter involves hacking off of the existing tiles jacket of the buildings and re-tiling the same. It was then estimated by Spence that roughly $24 million was required for the entire renovation project[3]. LC revised its quotation and its appointment was approved by owners[4]. The applicant paid its contribution of $206,518 by 4 instalments.

11.  Unfortunately, the renovation has become a nightmare for owners of The Arcadia. It is the parties’ common ground that works carried out by LC were defective, and service rendered by Spence unsatisfactory. The renovation created more problems than before. According to the report of the IO chairman dated 18 December 2013, they were able to identify 3,632 defects spreading over almost each and every part of The Arcadia. As can be seen below, substantial costs for remedying the defects, professional consultation and legal action have been incurred, and will continue to be incurred. 

12.  According to the contract signed by the IO and LC, the renovation was to commence on 10 December 2009. It should have been completed by 23 February 2011[5]. Any delay is subject to a liquidated damage of $15,000 per day. There had been delay in LC’s work. Apparently dissatisfied with the quality of work by LC and the delay, the IO refused to issue a certificate confirming the renovation was practically completed on 15 September 2011, which was a date recommended by Spence[6]. It is not in dispute that LC abandoned its work in or about March 2012. At trial, the IO is still engaging in arbitration with LC for outstanding contract fees and compensation after LC’s proceedings in the Court of First Instance (“CFI”) had been stayed. The IO is also entangled in 2 more arbitrations with respectively Spence and the insurer who issued a bond in favour of the IO on matters arising from the renovation. Several owners were suing the IO for damages caused by water seepage through the defective tiling work of LC, either in this Tribunal or in the CFI.

13.  It is the applicant’s case that the renovation had caused it to suffer loss and damages which were attributable to the negligence and/or poor workmanship of LC and/or the failure on the part of the IO to discharge its duties under both the Building Management Ordinance, Cap 344 (“BMO”) and the DMC. The applicant said the IO has a duty to properly supervise LC and/or Spence. In addition to claiming general damages, the applicant claims specific damages under the following 8 heads:

i)  Water seepage: the applicant first complained to the IO about water seepage to its living room and the 3 bedrooms in or about May 2010[7]. It is its case that because of defective waterproofing membrane underneath the tiling work, debonded external wall tiling, missing grouting and sealant around windows, there has been serious water seepage into the Unit, causing damages to various parts inside. The causes of the water seepage have been identified and accepted by the IO as early as May 2011 when Spence urged LC to remedy the situation. However, despite the applicant’s repeated protests, demands and requests to the IO, up until the date of trial, such seepage has not been fixed, and is continuing. The applicant says that the IO is simply too slow or virtually takes no practical or effective steps, amounting to breach of duties under the BMO and DMC;

ii)  Flooding: it is the applicant’s case that despite its warning on 17 April 2011 through Chan[8], who is a quantity surveyor by profession, that LC was found intending to raise the EVA ground level by 40 mm[9], the IO took no action to stop it. The EVA ground level was eventually raised. Several incidents of flooding to the Unit had taken place during rainy days. Water collected on the entire EVA flushed down to the Unit through the Front Yard which was then at a level 40 mm below the EVA. The applicant’s request to the IO to raise correspondingly the Front Yard, which was considered the only practical way to prevent flooding, was rejected. With a view to protecting itself from further flooding, the applicant immediately raised the Front Yard level to the same as the EVA, and claims against the IO for the expenses incurred. At trial, Ms Wong of counsel for the IO accepted that according to the renovation contract, LC was supposed to hack off the existing floor tiles of the EVA and re-make it to the same level as before. LC did not do so and thus the EVA level had been raised relative to the Front Yard;

iii)  Termites treatment: it is the applicant’s case that because of poor workmanship, holes were found at the external walls situated within the Front Yard just outside the door entrance of the Unit. The external wall was a common area. Termites were found in those holes on 22 May 2011[10]. Chan said never had any termite been found since he moved in in or about December 2004[11]. Chan took the view that once a colony of termites had established it would be difficult to get rid of them. It would then be disastrous to all wood furniture and floorings in his Unit. Since notice to the IO brought about no immediate action, Chan decided to take prompt action by engaging a pest control company to do the treatment. The applicant now claims for the costs so incurred;

iv)  Damage to tree: it is the applicant’s case that on 29 December 2010 LC’s workers had applied liquid with an irritating smell like acid to clean the newly-laid tiling. Cleaning started from top levels and liquid fell down like rain[12]. It repeated on the next date. However, neither precautionary measure to protect properties below nor advance notice to owners had ever been issued. A report was immediately made to the IO and SEML on each occasion. However, nothing was done according to Chan. As a result, a tree in a planter box in the Front Yard was adversely affected. Further, in or about March 2011, half of the said tree was trimmed away by LC’s workers. Though LC initially agreed to replace it but that never materialized. The applicant replaced it and now asks for the costs of replacement from the IO;

v)  Damage to steel cabinet and its contents: The applicant placed a big steel cabinet of size 8 feet (length) x 6 feet (height) x 2 feet (depth) in the Back Yard. On 27 March 2011 when Chan happened to get something out from the steel cabinet, which he said he used to do about once a week, he found that the roof of the cabinet was dented. There was also an awning which Chan used to extending to cover one side of this cabinet so that access to this cabinet from his Back Yard was covered. He then withdrew the awing. It was found that some nylon cloths and 6 mm plywood planks had been placed on the cabinet’s top which were used by LC’s workers as access and working platform. He immediately notified the IO. However, no action was taken. On 5 April 2011, he found out the roof of the steel cabinet had collapsed. As a result of the broken cabinet roof, many of his documents stored inside were damaged by water seeped into it. Despite LC had initially agreed to buy him a replacement, it never took place because of the dispute between the IO and LC. The applicant replaced the same in 2013 and claimed the IO for reimbursement as well as loss and damages for the documents/chattels stored in it;

vi)  Damages to Awning: it is the applicant’s case that when Chan inspected the steel cabinet on 27 March 2011, the awning was still intact. However, when he re-inspected the cabinet on 5 April 2011, apart from the collapsed cabinet roof, Chan found out that the fabric of the awning was heavily loaded with garbage which were mainly paper boxes of building materials, broken tiles, concrete chips, etc. The fabric was damaged and the arms of the awning were rendered not functioning properly. He said LC had agreed to compensate his loss. Again, it did not materialize because of the litigation between LC ad the IO. The applicant now asked the IO to pay for the costs of replacement;

vii)  Damage to outdoor units of air-conditioners: it is the applicant’s case that on 1 May 2011, there was strong acidic smell as well as yellow liquid dripping down its Back Yard. It repeated on 2 May 2011. As a result, all outdoor units of the Unit were damaged. Chan immediately notified the head of security staffs. He considered that had the IO taken steps to stop and/or put in place precautionary measures and/or supervise properly LC’s workers carrying out the works, particularly in the application of corrosive liquid since his first complaint on 30 December 2010, the damage to the air-conditioners could have been avoided; and

viii)  Damages to glasses: it is the applicant’s case that as early as March 2010, there had been complaints by owners that their glasses had been damaged by cement slurry while LC was carrying out the renovation work. These complaints were well documented in the meeting minutes of the IO. According to his estimate, over 20 owners had made complaints to the IO of this nature.  On 15 May 2011, Chan found out that some of the window glasses of the Unit were damaged by cement slurry. He later discovered that according to the contract between the IO and LC, LC should have applied a protective cover on owners’ windows before carrying out its work. That had never been done. Neither Spence nor the IO had seen fit to enforce this obvious provision of the renovation contract. Only polystyrene foam boards were stuck to glasses of the Unit using blue-tek, and these boards were sometimes missing. It is the applicant’s case that had the IO taken heed of owners’ complaints regarding the window problem, Spence and/or the IO should have discovered the problem and taken measures to enforce the protective film contract terms. Since it not being the case, the IO simply fails its duty.

14.  The applicant asks for:

i)  A mandatory order that the IO do carry out the rectification works to the external walls of the building to stop the water seepage problem of the Unit[13];

ii)  Damages representing costs incurred/to be incurred or already expended in the internal repair, replacement of damaged items or treatment of termites, as the case may be, at quantum as per the expert report (see [18] below);

iii)  General damages of $80,000; and

iv)  Costs and interest.

15.  The IO denies liability. Its defence, so far as can be discerned from submission of Ms Wong of counsel for the IO, can be grouped under the followings broad heads[14]:

i)  The duties and obligations of the IO under the BMO and the DMC are not absolute. The IO is only required to do what is reasonably required in the circumstances in discharging its duties and obligations under the BMO and DMC. In the circumstances of this particular case, the IO has already taken reasonable steps in the selection of contractor and consultant; employing additional staffs for the management office to cope with the additional works arising from the renovation and to supervise the project; devising appropriate measures to resolve the problems caused by the failure on the part of the contractor and/or consultant to carry out works properly; assisting owners in claiming damages against the contractor/consultant; chasing after works outstanding or required rectification;

ii)  The loss and damages suffered by the applicant was caused by LC and/or Spence for which the IO is not vicariously liable, whether under contract, the DMC or otherwise;

iii)  The IO has already taken out arbitration proceedings against LC and Spence for damages caused by them to individual owners; and

iv)  There was no undue delay on the part of the IO. The IO and all owners were victims, and the long time taken for rectification is attributable to the huge costs to be incurred to which owners were unwilling to make contribution.

16.  The material facts of this case, after hearing submission of counsel and the evidence of the witnesses, are basically not in dispute. It is the applicable legal principles that they differ. In the interlocutory stage, the IO disputed the causes of water seepage and the quantum of damages. Mr Kenneth Chan, a Chartered Building Surveyor, and Mr Chang Ka Chung, a Quantity Surveyor, have been appointed as the Single Joint Experts on these 2 disputed areas respectively. The causes of water seepage and the quantum of damages were later agreed on by the parties. By consent, their reports and conclusions are admitted as agreed, and their attendance of trial is dispensed with.

17.  In a nutshell, the parties now agree that the water seepage is caused by the poor workmanship of LC’s work while hacking off the original tiling of the external work and re-making the same. The damages caused to window surrounds, structures, walls and air-conditioner hoods or latent defects exposed in the renovation process have not been fixed before re-tiling[15]. Re-sealing work surrounding windows is also defective. The cause is in fact exactly as that found by the IO by its consultant SSL in as early as September 2012: see [50(xii)] below.

18.  Quantity surveyor Mr Chang’s conclusion of damages under various heads of claims is as follows[16]:

	Head of Claims	Amount Claimed (HK$)	Amount Assessed and Agreed (HK$)
i)	Rectification of water damages to the interior of the Unit	45,000	46,299.2
ii)	Accommodation	72,420	72,420
iii)	Raised floor level at Front Yard	20,000	22,552
iv)	Damages to steel cabinet and replacement	13,680	13,680
v)	Damages to books, files, certificates and contents	40,800	16,623
vi)	Damage to awning and replacement	8,000	8,620.37
vii)	Glass scratches and replacement	10,000	19,260.56
	Total:	209,900	199,455.13

19.  Both parties agree to adopt the quantum assessed by Mr Chang as the damage for the respective heads of claim if judgment on liability is entered against the IO.

20.  Mr Fan for the applicant has stated that the applicant is not seeking to argue that the IO has not exercised due care in the selection of its contractor and consultant. At the commencement of trial, counsel for both parties also agree that for the proper disposal of the applicant’s claims, the followings are the issues for the trial:

i)  Whether the IO is liable to repair the external wall and rectify all the water leakage problems left behind by LC under the BMO;

ii)  Whether, as a matter of law, the IO is liable for damages caused to the applicant by its contractor;

iii)  Whether, as a matter of law, the IO is responsible for loss and damages to the applicant if there is delay and/or inaction on its part in rectifying the defects; and

iv)  Whether in the circumstances of this case, the IO is liable to the applicant for the damages and loss claimed.

21.  At the commencement of trial, Ms Wong indicated to the Tribunal that the IO is prepared to carry out the necessary rectification work to the external wall of the building with a view to stopping water from seeping into the Unit. She indicated that it was on a without admission of liability basis. However, she is unable to obtain instruction from the IO as to when the work can be carried out and completed. She submitted it was because the MC had yet to resolve on the matter.

The Factual Witnesses

22.  Chan, the only director of the applicant gives evidence on the applicant’s behalf. Chan confirms and relies on:

i)  the Notice of Application dated 1 June 2015 together with the documents attached;

ii)  his 1^st witness statement dated 19 April 2016 together with the documents attached; and

iii)  his 2^nd witness statement dated 31 May 2016 together with the documents attached.

23.  Madam Law Ka Ming (“Law”), a MC member of the IO testified on behalf of the IO. She confirms and relies on:

i)  her 1^st witness statement dated 29 March 2016[17] together with the documents attached; and

ii)  her 2^nd witness statement dated 31 May 2016 together with the documents attached.  

24.  Both witnesses orally supplemented their evidence at trial and gave detailed explanation on some of the documents exhibited. Lengthy statements and voluminous documents sufficient to fill up 8 box files were filed and extensively referred to at trial.

The Applicable Principles

The Applicant’s Argument

25.  Mr Fan relies on section 18 of the BMO and certain provisions of the DMC which impose an obligation on the IO to effect repair to the common parts of The Arcadia. It is Mr Fan’s submission that although an owners’ incorporation does not have an absolute duty to owners likes an insurer, authorities support the proposition that liability to owners may arise if there is delay and particularly when, having aware of a defect which requires remedy, it fails to take appropriate steps to rectify. He refers this Tribunal to a number of authorities including the CFI decision in Wide Power Corporation Limited v The Incorporated Owners of Manhattan Court[18], the Court of Appeal (“CA”) decision in Lau Chun Wing Rod v The Incorporated Owners of Po On Building[19], the Court of Final Appeal (“CFA”) decision in Leung Tsang Hung v The Incorporated Owners of Kwok Wing House[20] etc. in support of his proposition.

26.  It is his submission that the IO in the present case simply fails to take appropriate action to stop the damages from happening despite the applicant’s repeated alerts, notices and complaints. There has been undue delay despite the IO may be in a difficult position.

The IO’s Argument

27.  Ms Wong submitted on behalf of the IO that if independent contractors were engaged, generally the employer should not be liable for any loss and liability caused by these contractors. The IO does not rely on other authorities or provisions of the DMC to justify that the alleged acts or omission of the IO are exempted or otherwise attracting no liability save and except the following passage in Clerk and Lindsell on Torts (22^nd Ed) at paragraph 6-62[21]:

“If the employer has employed an independent contractor to do work on his behalf the general rule is that the employer is not responsible for any tort committed by the contractor in the course of the execution of the work. Furthermore, since the employees of the contractor, whilst acting as such, stand in the same position as their employer, it is equally the case that the employer of the contractor is not liable for the torts committed by the contractor’s employees. Of course, even though the damage complained of may have been caused by the wrongful act or omission of an independent contractor or his employee, it may also be attributable to the negligence or other personal fault of the employer. If, for example, he has negligently selected an incompetent contractor, or if he has employed an insufficient number of men, or has himself so interfered with the manner of carrying out the work that damage results, he will himself have committed a tort for which he can be held liable. Again if the employer has authorized or ratified the independent contractor’s tort then, of normal principles, he will be jointly liable for that tort.”

(Emphasis added by the Tribunal)

28.  In the present case, it is common ground LC and Spence are independent contractors. Since the applicant does not seek to argue there is any negligence on the IO’s part in their appointment, Ms Wong submitted that the IO therefore should not be liable for any loss and damages caused by them.

Discussion

29.  In the Tribunal’s view, the applicant’s losses and damages can be broadly grouped under 2 categories, namely,

i)  those attributable to wrongful acts done directly to the applicant by LC who is an independent contractor appointed by the IO and whose appointment is, as agreed by the parties, without negligence; and

ii)  those attributable to wrongful acts done to the common areas of The Arcadia by LC in respect of which the IO owes the owners an independent duty.

30.  The applicant’s claims for damages to its tree, steel cabinet, awning, air-conditioners and glasses belong to the first category while those arose from water seepage from external wall, raise of EVA floor level and termite treatment fall under the second category.

31.  This Tribunal accepts the legal proposition advanced by Ms Wong that generally, the IO is not liable for any acts or omission of independent contractors selected without neglect. That may, perhaps provide an answer to the first category of claims. However, this legal proposition does not provide a complete answer to the applicant’s claims under the second category which the IO has an independent duty to its owner. In the present case, the DMC and BMO imposed directly upon the IO duties and obligations and in the Tribunal’s view, they are non-delegable. Any discussion without touching upon these areas will be incomplete. Further, even according to Clerk & Lindsell (see highlighted part above), the IO is not immune from liability if there is fault or neglect on its part, or if such fault or neglect has been ratified or adopted. 

32.  Section 18(1) of the BMO stipulates:

“The corporation shall –

(a) maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition;

(b) …

(c) do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building.”

33.  Mr Fan draws the Tribunal’s attention to certain provisions of the DMC. It should be noted that according to the same DMC[22], the rights, duties, powers and obligations for the control, management and administration of The Arcadia shall be vested in the IO after it was incorporated. This Tribunal considers the following clauses of the DMC are pertinent for the present discussion:

“Clause 9

(e) Without in any way limiting the generality of the foregoing the Manager [i.e. the IO] shall have the following powers and duties namely: -

…

(6) To repair and keep in good repair and condition and to keep in clean and sanitary condition …… the Common Areas, their equipment, apparatus, services, facilities and other common parts of the Buildings and if necessary to repair or replace the same or any part(s) thereof.

…

(11) To prevent the obstruction of any of the Common Areas …… and other common parts of the Buildings and in particular the staircases, driveways within the Buildings…

…

(15) To prevent and to take legal action if necessary to remedy any breach by any Owner or other person of any provisions of …. this Deed [DMC].

(16) To prevent any person detrimentally altering or injuring any part of the Buildings ….

…

(27) To do all such other things as are reasonably incidental to the Management of the Buildings.

…

(h) Neither the Manager [i.e. IO] nor any servant agent or other person employed by the Manager [i.e. IO] shall be liable to the Owners or any of them or to any person or persons whomsoever whether claiming through, under or in trust for any Owner or otherwise, for or in respect of any act, deed, matter or thing done or omitted in pursuance or purported pursuance of the provisions of this Deed [i.e. DMC] not being an act or omission involving criminal liability or dishonesty or wilful neglect and the Owners shall fully effectually indemnify the Manager [i.e. IO] and all such persons from and against all actions, proceedings, claims and demands whatsoever arising directly or indirectly out of or in connection with the Management of the Buildings or any act, deed, matter or thing done or omitted as aforesaid and all costs and expenses in connection therewith and not involving criminal liability, dishonesty or wilful neglect on the part of the Manager or such person or persons concerned. (emphasis added)

(i) The Manager [i.e. IO] shall only be required to use their best endeavours in performing their duties under this Deed [i.e. DMC].

Clause 15

(b) Nothing herein shall in any way prejudice any provisions in or the application of the Multi-storey Buildings (Owners Incorporation) Ordinance [i.e. the predecessor of BMO].”

34.  Clauses 9(h) and (i) appear to operate to exempt the IO from liability for any acts or omissions on the part of the IO. This issue has not been raised and argued. However, for completeness sake this issue needs be dealt with. This Tribunal’s preliminary view is that the said sub-clauses cannot help the IO.

35.  Lee Ming Yueh v Broadway-Nassau Investments Ltd & Another[23] concerned a claim by an owner against the DMC manager for breach of duty under the DMC and BMO to maintain the roof top which is the common part of the building. The Tribunal found that the manager has not breached its duties. There are sub-clauses in the DMC of the relevant development in that case similar to the aforesaid sub-clauses (h) and (i). Although the applicability of the exemption clauses has not been argued in Lee Ming Yueh (supra), Hon Cheung JA appeared to have approved the meaning of “wilful default” explained by Bowen LJ in Re Young and Harston’s Contract (1886) 31 Ch D 168, 174-175 in [27] of that decision as follows:

“The term “wilful default” … is not a term of art … Default is a purely relative term, just like negligence. It means nothing more, nothing less, than not doing what is reasonable under the circumstances—not doing something which you ought to do, having regard to the relations which you occupy towards the other persons interested in the transaction. The other word which it is sought to define is “wilful”. …… it generally, as used in courts of law, implies nothing blameable, but merely that the person of whose action or default the expression is used, is a free agent, and that what has been done arises from the spontaneous action of his will. It amounts to nothing more than this, that he knows what he is doing, and intends to do what he is doing, and is a free agent.”

(Emphasis added)

36.  Under clause 9(h), the liability of the IO will not be exempted if it can be established that the acts or omissions by the IO amount to a wilful neglect. In the Tribunal’s judgment, “neglect” does bear similar meaning to “default”. Applying the definition approved in Lee Ming Yueh (supra), in order to establish “wilful neglect”, one simply needs to prove that the IO freely chooses and knows what it has not done which one ought to do. So, knowingly neglect of somethings which the IO ought to have done will not exempt it from liability to its owners.

37.  Furthermore, clause 15 of the DMC expressly provided the DMC is without prejudice to the BMO. Accordingly, the BMO and whatever construction of its provisions as enunciated in case law will be applicable to the present case. The IO cannot seek immunity from liability under the DMC and/or BMO relying on clause 9(h). This Tribunal understands Ms Wong is not relying on the said provision.

38.  Lo Yuk Chu v Hang Yick Properties Management Ltd[24] is a CA decision concerning whether an owners’ incorporation is liable to water damage to an owner caused by flooding as a result of blocked sewage pipe. The relevant DMC imposed duties on the manager to keep all common sewers clear from obstruction and common facilities in good working order. The duties are similar to the present case to those allegedly breached by the IO. It is essential to appreciate common facility, namely, sewage pipe, was involved. The learned Power ACJ (as the NPJ then was) refused the argument of an absolute duty and stated:

“These requirements, if they are absolute duties, could only be satisfied by employing a virtual army of maintenance and security staff. This could never have been the intention of the parties. …

The overall duty imposed on the respondent by the Deed of Mutual Covenant is one of ‘proper’ management. Such management entails doing all that is reasonably required of a manager in the circumstances.” (at p 282 BC)

(Emphasis added)

39.  Power ACJ went on to state that in order to satisfy such duty by the manager (equivalent to the IO in the present case) to the owner, it would be required to:

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

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

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

iv) act expeditiously to remove obstructions which do occur.” (at p 282 GH)

(Emphasis added)

40.  The aforesaid provides a very good guideline to this Tribunal in approaching the claims of the applicant.

41.  Lau Chun Wing Rod (supra) is an appeal against my decision in which s.18(1) of the BMO was engaged and that the owners’ incorporation was held in breach thereof. Hon Rogers VP stated in [12] and [13] of the decision the following:

“12. 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. On the judge’s finding the defendant did so fail to take appropriate steps. Likewise, it would seem that the case in negligence and nuisance is, on the facts, clear.

13. In view of the way in which the appeal was presented, it was pointed out that the judge had not held that the defendant was liable simply because there was some defect that became apparent in the premises. He held the defendant was liable because it failed to act effectively when it should have taken action. What is required to be done in carrying out the duty will differ according to the circumstances but in this case the judge clearly held that the defendant failed to take proper and necessary steps at a timewhen it had been alerted that it was necessary to do so and that it continued to fail in that regard for a very lengthy period.” (Emphasis added)

42.  So an owners’ incorporation may be liable if it does not take appropriate steps towards a defect in the common areas or its properties despite being alerted that it was necessary to do so. Lau Chun Wing Rod (supra) was applied in Lee Ming Yueh (supra).

43.  The CFA decision of Leung Tsang Hung (supra) concerns duty of an owners’ incorporation in a fatal accident to a third party. In that case a triangular-shaped concrete block detached and fell from a canopy illegally erected at the common area of a building on the 11^th floor and killed a hawker below. Although the law of public nuisance[25] was at issue, it shed light on the duties of an owners’ incorporation generally. In the course of discussion, the legal attributes of an owners’ incorporation were analysed. Section 18(1)(a) and (c) was discussed.  Hon Ribeiro PJ stated in [80] of the decision the following:

“… They [i.e. the owners’ incorporation] exercise a sufficient degree of control over the common parts of the building to justify making them subject to a duty which is actionable on the basis of omission in respect of nuisance hazards arising on or emanating from those common parts, subject to proof of the other necessary elements of liability [i.e. public nuisance liability].”

44.  In [23] and [25] of Leung Tsang Hung (supra), Hon Ribeiro PJ had this to say:

“23. In my view, the law has now evolved to the point where the question is simply whether the defendant knew or ought to have known of the relevant nuisance hazard. Thus, it must be shown that a defendant whose positive act creates the hazard knows or ought to have known that it is the likely consequence of his act. And a defendant who is potentially liable on the basis of an omission must be shown to have had knowledge or presumed knowledge that a nuisance hazard is the likely consequence of his failure to carry out his applicable duty.

…

25.  It is also important not to confuse strict or absolute liability with liability arising under a non-delegable duty.  Where a defendant is under a duty to nullify a nuisance …, that duty is non-delegable. He remains liable even though he has engaged an apparently competent independent contractor to eliminate the nuisance hazard if, through the latter’s negligence or otherwise, the hazard is not in fact removed, resulting in injury to the plaintiff.”

45.  The principles that an owners’ incorporation assumes no absolute duties under section 18 of BMO as if it were an insurer but may attract liability if there is fault on its part, or when it fails to take appropriate steps after being made aware of a defect which requires remedies have been applied in many CFI decisions: see for example Wide Power Corporation Limited (supra) at [20] and [21].

46.  It is essential to note that in all the above-mentioned cases, the duty owed by the owners’ incorporation concerns common areas and/or facility in respect of which the corporation has a duty. From the above, the principles applicable to the present case can be summarized as follows:

i)  If the owners’ incorporation has exercised due care in engaging an independent contractor to do work on its behalf the general rule is that the corporation is not responsible for any tort committed by the contractor in the course of the execution of the work, unless the IO has authorized or ratified it, or if one can point to some other legal principles in respect of which the IO is liable, or the IO has committed personal fault;

ii)  in respect of the maintenance and management of the common areas and facilities, section 18 of the BMO does not impose an absolute liability which make the owners’ incorporation an insurer, but its duty thereunder is non-delegable. In other words, the corporation can engage independent contractors to carry out its obligations on its behalf but nevertheless the obligations to maintain remain its primarily. The corporation cannot avoid liabilities under the BMO and DMC simply by engaging independent contractors;

iii)  An owners’ incorporation exercises sufficient degree of control over the common parts of the building. That justifies making it subject to a duty which is actionable on the basis of omission in respect of nuisance hazards or other damages cause to a party including an owner arising on or emanating from those common parts; and

iv)  the overall duty imposed on an owners’ incorporation by the DMC is one of proper management. Such management entails doing all that is reasonably required of an owners’ incorporation in the circumstances. Liability may arise if there is fault on its part or if it fails to take appropriate steps to remedy a defect which it has been made aware of. It should take proper and expeditious action if there is indication of malfunction to remove the problem. Knowledge or presumed knowledge is required to be established.

47.  This Tribunal will apply the above principles to examine each heads of claims of the applicant.

1.  Water Seepage

48.  The renovation started in or about December 2009, and was considered by Spence practically completed on 15 September 2011: see [12] above. The applicant’s first complaint about water seeping into his Unit was by email of 22 May 2010 to SEML, the then management company of The Acarida[26]. By then, LC was still working for the project. It was not until some 22 months later, i.e. in or about March 2012, that LC abandoned its work.

49.  At the time of trial, almost 7 years have elapsed since the applicant’s first complaint, or about 5 years from LC leaving the project. Yet no rectification to the external wall to stop the seepage problem has been carried out. Neither has any time-table been fixed for such rectification. In the Tribunal’s judgment, the problem has remained for too long. It will be necessary to examine whether and if so, what knowledge the IO has about the water leakage, and what in fact has been done to see whether the long delay is justified.

50.  The followings can be gleaned from records and is not controversial. This Tribunal accepts them as facts:

i)  May 2010[27]: Chan started to complain water seepage into the Unit through external wall;

ii)  25 April 2011[28]: Chan complained further by email that the Unit suffered from persistent water damage despite LC’s repair. He urged the IO through SEML to address the problem;

iii)  7 May 2011[29]: a meeting was held between SEML, Spence and Chan. It was stated test would be carried out after LC had finished further outer wall repair;

iv)  31 May 2011[30]: Spence urged LC by memo to rectify the leakage problem caused by LC’s renovation of the external wall;

v)  Between September and November 2011[31]: Chan wrote at least 4 emails to the MC of the IO including the then chairman, complaining, inter alia, persistent water leakage and asked for urgent rectification. Various photos were also attached;

vi)  December 2011: the IO commissioned Planning Service International (Asia) Ltd (“PSI”) to do a hammer tapping test to the external wall limited from ground level to 2.4 metre;

vii)  Between 3 to 11 January 2012: PSI carried out the test. In its undated report[32], PSI found out that of 65.93 sq metre being the external wall area of the Unit, tiling on 15.544 sq metre was debonded. The debonded tile ratio of the Unit was 23.6%[33] which is amongst the highest revealed in the test. The average debonded tiling for the surveyed area was 16.5%;

viii)  16 & 18 April 2012[34]: Chan complained to, inter alia, IO and SEML that since no action had been taken to rectify the problem, he would take whatever steps he considered appropriate to repair his home;

ix)  23 to 24 July 2012: It was the applicant’s case after the passage of Typhoon Vicente, water seepage problem of the Unit was aggravated. Several complaints were made to the IO;

x)  27 August 2012: Survey Specialist Ltd (“SSL”), another specialist commissioned by the IO started to find out the cause of water seepage to units of The Arcadia during Typhoon Vicente;

xi)  29 August 2012: upon instruction of the IO, based on the PSI report, SEML wrote to the Buildings Department complaining of, inter alia, LC’s poor workmanship in the re-tiling work. It was said that the debonded tiles reached up to 72.841% and it was an alarming figure;

xii)  24 September 2012: SSL submitted its report identifying in its conclusion the following[35]:

“In summary, I opine that the water seepage defects were mainly caused by the substandard work of external wall retiling during the renovation of the Arcadia as listed below:

(i) defective waterproofing coating underneath the replaced external wall tiles;

(ii) defective waterproofing coating around the window opening and grouting of window frames;

(iii) improper raising of window sill at the external wall which blocked a great number of weep holes at the bottom part of the window frames which did not conform to Tender Drawing no. AD-01 issued by the Architect;

(iv) incomplete wall tiles grouting/pointing at external walls;

(v) poorly applied sealant/missing sealant around window frames.”

xiii)  2 December 2013: The IO issued a notice for an AGM scheduled for 18 December 2013. One of the agenda items was to pass resolution to engage consultants for rectification of 7 categories of work, one of which was to deal with the defective works left behind by LC/Spence including defective tiling;

xiv)  16 December 2013: The IO chairman Mr Cheng in his background report for the 2013 AGM[36], expressly acknowledged the water seepage problem was caused by the defective re-tiling work of LC. He stated 60 units (out of 116 units of The Arcadia) were suffering from different degrees of water damage. Mr Cheng stated that the MC of the IO had prioritized the following 5 categories of rectification works:

(1)  main pedestrian gate;

(2)  carpark gate;

(3)  swimming pool and its glass balustrade;

(4)  EVA and the lower level pedestrian passage; and

(5)  water-proofing work to the glass fibre structures of the club house.

Fixing of the defective tiling was not among them. The MC, while acknowledging it had a statutory duty to maintain and repair the outer wall[37], appeared not able to form a view as to how to tackle the difficult questions associated with the repair, including the methodology and claims of some owners against the IO;

xv)  18 December 2013: The AGM proceeded as scheduled. It was resolved that one ISS Building Consultancy Ltd (“ISS”) was appointed as consultant on how to remedying the 7 categories of the defective works, including the defective work left behind by LC/Spence. This should, on the face of it, include fixing of the water seepage problem caused by the defective tiling. A consultancy fee of $2,556,000 was also approved[38]. However, the last item on the agenda, namely, a specific item on how to handle water seepage problem could not be passed. It was recorded in the AGM minutes that all 12 owners then present at the AGM all casted abstention votes. Although it was not resolved in the AGM’s minutes that the IO only went ahead of the 5 prioritized rectification works, it appeared from the minutes the MC did make such appeal to the owners at the AGM[39];

xvi)  11 February 2014: from the documents disclosed, some owners of The Arcadia expressed that they would challenge the appointment of ISS in an EGM[40]. The appointment, though still going ahead, resulted in a letter of intent of 27 January 2014 without specifying what items of works should commence. ISS signed and returned the letter of intent to the IO on the same date[41]. It was not in dispute that the IO had then been advised that legally, unless and until the appointment of ISS was overturned in a subsequent EGM, the resolution appointing ISS was valid;

xvii)  16 April 2014[42]: presumably upon instruction, ISS submitted a “proposed design and project management consultancy service for renovation work”. Basically it was an estimate of the time required for different options of repair to different areas of The Arcadia including the 5 prioritized works and the external façade of buildings. In relation to specifically the repair of the external façade, there were 2 options proposed by ISS. They were patch repair (option A) costing about $4.75 million[43] and comprehensive repair (option B) costing about $12.9 million[44]. If repair work was to cover all the 7 areas, for patch repair, the work would start on February 2014 and be expected to finish by end of October 2015 lasting for 623 days. For comprehensive repair, work could start in February 2014 and be expected to finish by February 2016, lasting for 713 days. From the time line, no matter which option, the prioritized works were to proceed first, presumably upon instruction of the IO. The rectification work was divided into 6 stages with construction being stage 5;

xviii)  13 June 2014[45]: It was not until then the IO directed ISS to do the so-called “stage 1 feasibility studies” regarding the 5 prioritized works and rectification works to the external façade. According to the ISS original report, feasibility studies were originally scheduled to start on 10 February and end on 29 July 2014;

xix)  17 February 2015[46]: presumably after the stage 1 and ISS had prepared its report[47], the IO instructed ISS to do the stage 2 which was the detailed design stage and stage 3 which was the tendering stage. According to ISS’s report, whatever option the IO elected, stage 2 was originally scheduled to take place between 30 July to 27 October 2014 and stage 3 between 20 October 2014 to 12 February 2015;

xx)  8 June 2015: the MC of the IO considered 4 repair works, namely, repairs to the main pedestrian gate, vehicle entrance gate, swimming pool and the access road to the carpark should be accorded priority over other repairs[48]. The then MC was directed to look for independent quotation for these 4 items of work. It was decided further discussion in the MC was required before replying to ISS’s request for further instruction. Chan said that since then, ISS’s work was on hold;

xxi)  29 August 2015: at this EGM although it was agreed by the meeting that no resolution would be passed, it was recorded in the minutes that due to the expensive fee of ISS, its consultancy service should be suspended[49]. On the other hand, it was recorded the tendering process in respect of 4 prioritized works (not relating to the external wall) should go ahead because the IO considered them urgent. It was also recorded the IO was concerned whether the external wall repair, if effected, would affect the then ongoing arbitration proceedings with LC/Spencer;

xxii)  10 October 2015: at this EGM the question of whether ISS should be fired was discussed. Due to divided views among owners this agenda item was not put to vote. It seems whether ISS’s fee could be recovered in the arbitration was one of the owners’ concerns[50];  

xxiii)  23 October 2015: being dissatisfied with the apparent inaction of the IO over rectification of the external wall, the applicant, through its legal representative, wrote to the IO reminding it of its duty over the debonded tiles and water leakage[51];   

xxiv)  30 January 2016: at this EGM, it was resolved IO’s consultancy contract with ISS be terminated[52]; and

xxv)  24 March 2017: Ms Wong on behalf of the IO indicated that the IO could not accept the applicant’s proposal that the IO should complete the rectification to the outer wall of his Unit within 6 months’ time though she accepted, which this Tribunal considers correctly, the IO was duty bound to effect the repair. Her case was that the MC had to discuss and deliberate on the matter before giving approval, if any.

51.  The gist of Law’s evidence was that the IO had done its best in the circumstances. Although it takes quite some time, there is no delay, or the delay is excusable. Her explanation is basically this:

i)  The MC of the IO had done what is reasonably required to be done in the selection of contractors and in supervision of their work. This included the engagement of one extra management company staffs, one-third of an engineer and setting up of a special committee to monitor the progress of the renovation;

ii)  LC was willing to make good the defects to the Unit. It was simply because it later abandoned the project that rectification work not carried out or damaged items not replaced;

iii)  Chan did not allow LC to do re-tiling to his Back Yard by denying LC’s workers access through his Unit;

iv)  In an EGM held on 7 October 2011, after the date of practical completion, i.e. 15 September 2011, proposed by Spence was disapproved, the IO immediately resolved to engage independent professional surveyor to assess the quality of LC’s work for the purpose of the contract[53]. The IO also resolved to retain lawyers to pursue after those responsible for their faults in the renovation exercise;

v)  In a MC meeting held on 20 October 2011[54], it was resolved that priority should be given to inspection of the quality of the following 3 areas of works, namely, (a) the tiling work of the 2 buildings; (b) the marble on the walls of the 2 buildings; and (c) the marble walls along the wall of Forfar Road. SSL was appointed. This showed the IO concerned the water leakage problem very much. Chan also agreed that in this connection, a report by SSL had been prepared;

vi)  In or about June 2013, the IO has already instructed solicitors to pursue after LC and Spence. According to legal advice, if the IO pursued arbitration against LC and Spence, the IO would be able to recover the damages suffered by the IO as well as by the individual owners. However, if the IO did not, it might end up shouldering claims of individual owners[55];

vii)  After LC had abandoned the work, the IO was financially tight because the consequent remedial works and legal proceedings required substantial funds[56]. Many owners were unwilling to contribute fund to complete the defective and outstanding works left behind by LC. The repair costs then estimated by SEML were respectively $31 million and $42 million respectively for patch repair and comprehensive repair for all the defects[57];

viii)  In fact, the MC did propose and the IO did resolve eventually appointing a consultant to deal with the defects left behind by LC (including water seepage) at the AGM held on 18 December 2013. However, due to running out of time, owners remaining at the AGM casted abstention votes on how to deal with the water seepage problem. The abstention votes were probably caused by presence of police which was called to the scene because of heated dispute between owners[58]. From what has been stated in [43] to [47] of Law’s witness statement dated 29 March 2016[59], the reasons for it took longer than expected to decide on how to deal with the water seepage problem appears to financial difficulties and divided views on how to go about fixing the problem; and

ix)  The IO would like do all the water leakage cases in one go, and would not be handling them on individual case basis: see the meeting minutes of the MC meeting held on 6 July 2015[60].

   Discussion

52.  In the Tribunal’s judgment, it was beyond dispute the IO knows from the very beginning that water damages to many units, and in particular the applicant’s Unit, was caused by LC’s defective re-tiling work. So far, a total of 3 consultants had been engaged to find out the cause. They were PSI in 2011, SSL in 2012 and ISS in 2013. Based on PSI’s report, the IO even made complaints to the Buildings Department. In any event, when SSL set out its conclusion of the water seepage to the IO in its report of 24 September 2012[61], the water seepage problem of the Unit, and its cause were crystal clear to the IO.

53.  Concerning the dispute on whether Chan has ever refused entry of LC’s workers to carry out the repair, Chan did not deny. However, he had an explanation. According to the renovation contract between the IO and LC, LC was responsible to build whatever access that might be required at its own costs for carrying out its renovation work. He was unwilling to allow access of LC’s workers and moving of building materials and debris through his Unit. Apart from messing up his Unit and causing inconvenience, it also posed a security issue as only his wife and daughter were home during daytime. In any event, LC could build a scaffolding and access bridge to finish all that were required to finish its job at no extra costs to the IO. After hearing the parties, this Tribunal accepted his explanation. He had a good reason not to use his house as access for the repair. At any rate, his refusal cannot be regarded as unreasonable.

54.  The Tribunal has a lot of sympathy to the IO in the matter. The renovation ends up in a mess and brings about a huge financial burden on the IO. It is noted that as at as at 14 March 2015, some $2.5 million had been incurred on arbitration[62], not to mention other rectification works. It was also noted that a resolution to raise $1.8 million as further arbitration expenses was not approved[63]. It is not in dispute that as at the AGM held on 14 March 2015, the renovation fund has been depleted substantially by, inter alia, the surveying expenses, arbitration and litigation expenses. The renovation fund of the IO diminished from about $3.2 million (as at 27/2/2013) to about $97,367 (as at 13/3/2015). The IO has only $179,614.15 sitting in its bank accounts then[64].

55.  However, while it is true the IO is under financial difficulties during this period, this Tribunal does not believe it the real reason for the IO not able to take any effective step to repair the leakage in these 5 years.

56.  Firstly, although the IO was facing financial difficulties, they did manage to raise quite substantial funds for the various works post-renovation, e.g. engagement of ISS at $2,556,000[65], repair of water supply system at $491,300[66], arbitration expenses of $3 million[67], litigation fund for the present case of at least $1 million[68], repair of pedestrian main gate, carpark gate and changing room of swimming pool at the aggregate of $1,339,404[69], temporary repair work to stop water seepage of $0.5 million and further consultancy fee of $1.5 million[70].

57.  It is noted that the $0.5 million raised was to effect temporary repair work to stop water seepage in a number of serious cases[71] on a non-admission of liability basis. The resolution was passed on 14 January 2017. In the Tribunal’s judgment, $0.5 million is a relatively small amount compared with the total funds raised during this period. Yet it can help stop seepage problem, at least on a temporary basis, for a number of units.

58.  In fact, the applicant had procured quotations from 3 contractors for repair of the external wall of its Unit. They were in the range of $202,000 and $227,000. According to these quotations, work could be finished in about 2 months’ time[72]. It was stated in these quotations the remedial work would be a comprehensive waterproofing and retiling work, and not temporary measure as contemplated by the IO aforesaid. A reasonable inference is that if the repair is to be on a temporary basis, the costs would be less than $202,000.

59.  The 2017 resolution referred to in [57] above and the applicant’s said quotations support the applicant’s contention that financial difficulty is not the IO’s genuine reason not dealing with the water seepage problem of the Unit.

60.  Given the relative small amount to be incurred to solve the applicant’s problem, or even a lesser sum if on a temporary basis, question arises as to why the IO did not propose the same earlier. After hearing the evidence of Law and submission of Ms Wong, in the Tribunal’s view, the IO simply has no or no satisfactory explanation. It is a matter of priority rather than financial difficulty.

61.  Secondly, the costs of repair for a comprehensive ($31 million) or patch ($18 million) repair of the 7 major items of the entire estate had never been put by the IO to the general meeting for a vote. Neither had the repair of the outer wall specifically (only $4.75 million for patch or $12.9 million for comprehensive) ever been put to vote or discussion by the owners in general meeting. Law did not seek to dispute that. Accordingly, whether owners would be unwilling to contribute, for example, patch repair of the external wall of the buildings at as low as $4.75 million, as suggested by the IO is in serious doubt. It is particularly so when over 50% of units are suffering from different degree of water seepage[73], and some have even sued the IO in the Tribunal and in the CFI for water leakage. The Tribunal does not think the IO has a strong case to say owners would be unwilling to contribute because of financial problem. A majority of them were suffering from the water seepage problem. Logically they should have voted for an immediate course to remove such problem. From the evidence adduced at trial such option has never been put to vote by owners at general meeting.

62.  Thirdly, on the other hand, it was resolved in the MC meeting held on 6 July 2015 to the effect that the IO would not be doing any repair to units affected by water seepage for the time being. Instead, repair would be effected to all affected units in one go. Priority of repair would be assigned according to the seriousness of the seepage[74].

63.  This Tribunal agrees that generally it will be good management to rectifying all defects in one go and/or according to a rationally assigned priority. In so doing, fairness and certain degree of economy can be achieved. However, such practice should still be subject to the governing principle of it being done with reasonable expedition, otherwise it will amount to a licence to delay. From the undisputed evidence in the present case, such so-called “good management” decision only came up in mid-2015[75] after outcries from affected owners (including the applicant) for inaction for at least 3 years[76]. Further, it was not until 14 January 2017, i.e. almost 2 years later that the IO resolved to raise $0.5 million for fixing the problem of water seeping through the external wall. Even then, it was only limited to seriously affected units, and on a temporary instead of permanent basis[77]. At trial, there is simply no evidence whatsoever from the IO of any plan for fixing the overall water seepage problem of The Arcadia through external walls. Neither is there any evidence of any list of priority, not to mention the time-table for repairing the applicant’s Unit. It is to be noted that the purpose of raising $0.5 million is for a temporary measure. It is still not “tackling the matter in one go” as resolved by the MC. The Tribunal cannot help forming a view that it is a short-term measure of the IO responding to mounting pressure from dissatisfied owners because of its inaction for too long.

64.  In fact, from the meeting minutes of the MC and IO, they appeared undecided and not knowing what to do in the reality of the difficult situation forced upon them by LC. For example, although it was acknowledged that the problem of water leakage through the outer wall was serious and prevalent in The Arcadia, the MC did not wish to allow individual owners to take up the repair themselves for fear of uncertain legal consequences that might arise after the repair. The MC resolved to withhold any decision except to seek further legal advice: see [41] of Law’s witness statement dated 29 March 2016[78] and meeting minutes of the MC meeting held on 10 October 2013[79]. Take another example, the IO did not know whether by effecting the repair, the outcome of the arbitration with LC/Spence would be affected: see the meeting minutes of the EGM dated 29 August 2015[80]. By reason thereof, the IO refrained from voting on effecting repair to defects left behind by LC. Further, it is to be noted that in an earlier EGM held on 12 October 2014, the agenda item of effecting repair to external wall to stop the water seepage problem had been adjourned for further discussion on the next occasion[81]. By the EGM held on 29 August 2015, the same subject was further adjourned[82]. It appears from the evidence that the IO/MC somehow allow the matter to drag on, probably not being able to come up with a satisfactory solution on one hand, and somehow gathered that their position in the arbitration proceedings might be adversely affected if a status quo is not maintained on the other[83].

65.  In the AGM of 30 January 2016, ISS was fired on the ground its fee being expensive. By then, tenders for rectification had already been invited. The dismissal of ISS rendered the preparatory work for the intended external wall repair futile and money incurred wasted. The management company had to draft tender for appointment of another consultant for the external wall repair. No contractor can be appointed until after the consultant’s appointment[84]. At trial, the IO put in no evidence that it has sought advice on the impact, if any, of the repair on the outcome of arbitration. Neither has the IO produced any evidence that it had sought legal advice on implication of individual owners being allowed to effect repair to the external wall. The IO also adduces no evidence regarding any concrete plan for works, no matter on patch or comprehensive basis, not to mention any priority list of repair.

66.  Applying the principles summarized in [46] above, the IO is not exercising proper management in addressing the problem of water leakage from the external wall. They have a statutory duty under section 18(a) of the BMO and the relevant provisions of the DMC to maintain the common parts in a state of good and serviceable repair. They are fully aware of the problem for at least 5 years, if not 7 years, before trial. Yet they fail to take proper and expeditious action to remove the problem, no matter on a temporary or permanent basis. Except some surveys, they have done nothing concrete conducive to stopping water seepage through the external wall. For the sake of discussion, even assuming it was the owners who have resolved not to effect repair, it is still not a good excuse. If that were to happen, it only means that the owners are breaching their duty knowingly and collectively. It serves to explain the breach rather than excuse the IO from liability of such breach of duty.

67.  For the above reasons, this Tribunal shall grant a mandatory order against the IO to carry out the rectification works and/or to effect necessary repair to the external walls of the buildings within 30 days so as to stop water from seeping into the Unit, such work to complete within 120 days of commencement.

68.  In the circumstances, there is no reason why the IO should not be made liable for the damages arising. Since the quantum for damage for internal damage and accommodation has been agreed, this Tribunal awards against the IO damage in the total amount of $118,719.2, being the aggregate of $46.299.2 for rectification of the interior of the Unit and $72,420 for accommodation expenses to be incurred during the repair: see [18(i) & (ii)] above.

General Damage

69.  Mr Fan referred this Tribunal to a number of authorities to justify the applicant’s claim of $80,000 as damages for nuisance and inconvenience. In respect of this head, the first complaint was made in 2010. After the SSL report in September 2012, it was clear to the IO the cause of the water damage being attributable to water seeping through the external wall. No action was taken by the IO to remove the problem until trial. The applicant has, for at least 5 years, if not 7 years, been suffering from the problem.

70.  In Leung Yung Chun & Other v Chan Wing Sang & Ors[85], learned Hon Cheung J (as Cheung JA then was) awarded a sum of $80,000 as damage for inconvenience to the plaintiffs for enduring the leaking problem for 2 years.

71.  In Golden Nation Limited v Mak Ping Yiu[86], the learned judge awarded the same amount of $80,000 for nuisance and inconvenience for a period of about 5 years.

72.  In the District Court decision of Chung Che Shum & Other v Dong Sai Ming Fernando & Other[87], DDJ Chow awarded a sum of $80,000 for nuisance and inconvenience for about 2 years.

73.  In the present case, from the photos shown, there are water marks found on walls, ceiling near to external wall and window sills in the 3 bedrooms, dining room and sitting room of the Unit. Plastering and paints were peeling and falling off. Because of the dampness, mould and tiny bugs were found. Chan has properly documented all his problems with emails and photos and made a lot of complaints about his problems but to no avail. He had been kept waiting for decisions of the MC/IO but they continued to let him down. He and his family have to endure these nuisance and inconvenience for 7 years and are still suffering until rectification. He has to move out at least during the internal repair. A claim of $80,000 is a modest claim under this head. This Tribunal has no hesitation to award the same to the applicant.

2.  Flooding Resulting from Raise of the EVA Platform

74.  It is not in dispute the EVA floor level has been raised above that of the Unit’s Front Yard by about 40 mm[88]. Neither is there any dispute that as a result, flooding had occurred to the applicant’s Unit. The IO said it had never consented to LC deviating from the renovation contract. Its position is that it was a mistake committed by LC for which the IO should not be held liable[89].

75.  After reviewing the evidence as more particularly stated below, this Tribunal cannot accept the argument advanced on the IO’s behalf.

76.  The IO did not deny that Chan had forewarned in or about April 2011 the possibility of flood when he found out that the EVA floor level had been raised by about 40 mm[90]. Spence looked into the matters and had come up with 3 options, which had all been rejected by the applicant. The IO said the rejection of the proposed options by the applicant unreasonable. These options can be found in Spence’s memo to the IO date 14 June 2011. They were[91]:

i)  the already raised EVA would be made to flush with the Front Yard level;

ii)  a door sill of about 40 mm height would be built before the iron gate to stop water from flowing into the Front Yard; and

iii)  a hole would be made on the EVA floor near the Front Yard entrance so as to drain away accumulated water.

77.  It is also noted that in the said memo, Spence advised the IO that according to the renovation contract between LC and the IO, the re-paving work was supposed to cover floor of the EVA as well as the Front Yard (my emphasis). Now LC had omitted the Front Yard but at the same time, had raised the EVA level. Spence advised the IO to make deductions for the part of work which LC had not done. However, Spence did not appear to advise the IO to press for a complete re-do of the EVA so as to comply with the original contract requirements. Instead, Spence advised certain remedial works be done to the Unit. Spence reported all its proposed remedial options had been rejected by the applicant who requested a corresponding raising of the Front Yard and the height of steps. Such work costed an extra of $6,000. Spence specifically asked for approval of the IO for this additional sum[92].

78.  The problems caused by the raised EVA floor were particularly discussed in one of the MC meetings held on 27 June 2011[93]. It would be unnecessary for this Tribunal to refer to the response of other affected owners. Suffice it to say that the MC disapproved the applicant’s request. The MC’s rejection was based on the ground that privately-owned area was involved in the applicant’s proposal.

79.  Learning of the refusal, Chan gave a final notice to the IO to effect repair by 7 July 2011 failing which the applicant would do the remedial work in order to protect itself, and would seek reimbursements from the IO. Quotations from 3 contractors with prices ranging from $24,000 to $25,800 were also enclosed.

80.  Works were not started as initially intimidated. It is the applicant’s case that the Unit was seriously affected by ingress of water because of the level difference. The first incident happened on 11 July 2011[94] and the second on 10 August 2011 when amber rainstorm signal was hoisted[95]. The aforesaid emails and floods were unchallenged and this Tribunal accepted them as facts.

81.  The work to raise the Front Yard and the steps were carried out by the applicant in early August and finished by 22 August 2011.

82.  In the Tribunal’s judgment, it is totally reasonable for the applicant to reject Spence’s proposed alternatives and insist on raising correspondingly the Front Yard floor level and the steps. It would also be unreasonable for the IO to reject the applicant’s proposal.

83.  All the 3 options proposed by Spence and apparently endorsed by the IO suffered from one fatal drawback, namely, the EVA was still maintained at a level higher than the Front Yard. They are not a complete solution to flooding for the simply reason water collected from the entire EVA will flow to the Front Yard by the force of gravity. Option 1 involves aligning gradually the ground surface of the EVA down to meet smoothly with the unraised ground of the elevated part of the Front Yard (a remedial work which is referred to as “Four Sui” (科水) at trial). Obviously it cannot help solve the problem. The EVA is still at a higher level than the Front Yard. It is only a dress-up work, in the Tribunal’s view. Whether the door sill (Option 2) was effective to stop any overflowing depends on the amount of water and the speed of flow. The making of a drainage hole (Option 3) hinges on the effectiveness of this additional drain. Given typhoons accompanied with torrential rain are not uncommon in Hong Kong, and that Hong Kong normally has a rainy summer, even if all the 3 options were to be adopted, the risk of water over-flowing into the Unit remains very real as its cause is not removed.

84.  It is the applicant’s evidence (which this Tribunal accepts) that there was no incident of flooding prior to the raise of the EVA level. The fact that its Unit suffered from flooding on 2 occasions after the EVA’s floor was raised speaks for the correctness of Chan’s judgment.

85.  The applicant’s proposal aimed to address the root problem of any potential flood. Further, by raising the Front Yard floor level, the first step of the stairs will fall a greater height compared with others. Accordingly, it would also be necessary for works to be carried out to even out the height of each steps as well.

86.  The IO’s refusal to raise the Front Yard level was premised on the fact the Front Yard a privately-owned area. Is it not the original contract term that re-paving was to cover the Front Yard as well? This was confirmed by Spence[96] and a fact not disputed by the IO. By including the Front Yard to be covered in the original renovation contract, all owners in general meeting had in fact already approved that the floor re-paving work should cover privately-owned areas. It is LC who had made a mistake by, inter alia, omitting the Front Yard. It is not understood why Spence asked the MC for approval of additional payment to raise correspondingly the Front Yard floor level which the original contract covered. It is also not understood why the MC refused to approve work which the IO had by its previous resolution agreed to cover. The IO’s refusal to raise the Front Yard on the ground it being a privately-owned area is inconsistent with its previous resolution. It is unreasonable in the circumstances.

87.  It is Ms Wong’s submission that the IO had not approved LC’s mistake, and therefore it should not be responsible for LC’s mistake. With due respect, this Tribunal cannot accept her submission. The IO had not asked LC to correct the said mistake. Instead, by accepting Spence’s remedial options, the IO had adopted or ratified LC’s mistake, otherwise it should have asked LC to re-do the EVA in accordance with the original contractual requirements.

88.  Applying the principles aforementioned[97], the IO has been made aware of a problem in the common area. Instead of asking LC to comply with the contract requirement which will remove the cause of flooding totally, the IO adopted it. They, however, refused to take appropriate action to protect the applicant’s Unit from a mistake they adopted. In the Tribunal’s judgment, it is not proper management of the common area and is in breach of section 18(a) of the BMO and clause 9(e) of the DMC. In addition, the IO had ratified LC’s mistake. It really cannot hide behind the usual rule of an employer not liable for mistake of a carefully selected independent contractor[98]. In the circumstances of this case it is reasonable for the applicant to take prompt action to protect itself and mitigate its loss by carrying out the work without further reference to the IO. By then it had already suffered from flooding twice.

89.  The IO should be held liable for the applicant’s costs to raise the Front Yard floor level and even the steps. This Tribunal do award against the IO a sum of $22,552, being the agreed quantum[99].

3.  Termites Treatment

90.  The applicant first complained to SEML and Spence about the appearance of termites in its Unit on 24 May 2011[100]. It was apparent from Spence’s memo of 26 May 2011 to the applicant that since the start of the renovation work, the hygiene of the common areas was getting worse. The deterioration was attributable to LC not properly dumping the debris and carrying out the renovation works, including not sealing gaps/holes between the external wall and the door frame of the Unit[101]. The gist of Spence’s position is that it could not conclude the cause of the termites. Spence, however, advised the applicant to treat the problem immediately in order to avoid their attack on wooden furniture of the Unit.

91.  On 29 May 2011, Chan sent over 2 quotations for termite treatment to SEML and members of the MC. The quoted prices were $4,980 and $4,500 respectively. It was noted that in one of the quotations by a Christian Environmental Health Ltd dated 26 May 2011, the said pest control company stated that “termites were found entering the feet of the front door’s doorframe facing outside”[102].

92.  Chan was also able to find termites outside his Unit in unsealed gaps/holes at the bottom of the parapet walls left by LC’s renovation[103]. SEML was notified again by his e-mail of 5 June 2011. Photos were attached[104] . 

93.  Since the IO did not respond the applicant carried out the termite treatment at the costs of $4,500 on 7 June 2011[105].

94.  It is submitted on the IO’s behalf that the responsibility for the appearance of termites, and their treatment, fall on LC, not the IO.

95.  This Tribunal cannot accept this submission. On a balance, this Tribunal accepts Chan’s evidence in this respect in its entirety. The presence of termites in gaps/holes between the Unit’s door frame and external wall was attributable to the messy and unhygienic conditions caused by LC. However, these are common areas for which the IO are responsible. Applying the above principles[106], although such unhygienic situation was created by LC, the IO remains primarily responsible for these common parts and such responsibility is non-delegable. The failure to take prompt action to maintain the common parts in a clean condition amount to breach of section 18(a) of the BMO and clause 9(e)(6) of the DMC. As to how soon a problem needs be rectified depends on its nature. In the present case, there is a real and immediate risk of infestation of termites. Even Spence, the IO’s then consultant, considered prompt action was required. In the circumstances, the Tribunal considers it justified for the applicant to immediately appoint pest control company to eliminate the risk and to claim reimbursement from the IO.

4.  Damages to Tree

96.  It is common ground Chan complained to SEML and an MC member by an email of 30 December 2010 the downpour of irritating chemicals on 2 occasions, namely, the 29 and 30 December 2010. By then the tree in the planter box of the Front Yard was partly damaged. The applicant reserved its right for any loss and damages[107].

97.  SEML replied immediately the next day that they had already asked LC to stop that morning, and briefed them and Spence’s clerk of work to take preventive measures before carrying out such work. According to an email from SEML to Spence, the IO admitted no advance notice had ever been given to owners when LC washed the outer wall of the buildings[108].

98.  About 3 months later, Chan complained by email of 27 March 2011 that half of the tree was cut by LC without his prior approval[109].

99.  After negotiation, SEML informed Chan on 14 May 2011 that LC agreed to replace the damaged tree[110]. On 1 June 2011 it was said LC could replace the tree on 4 June 2011. The applicant said LC did not show up as promised[111]. The IO said the applicant insisted on a one-year guarantee which was unreasonable, and as a result the replacement did not materialize.

100.  The gist of Mr Fan’s submission is that the IO has failed to procure LC to discharge its contractual obligations to remedy its own fault, and no action had been taken by the IO to pursue after LC for the tree notwithstanding LC had promised a replacement[112].

101.  I cannot accept Mr Fan’s submission in this respect.

102.  It is the applicant’s case that the IO was not negligent in appointing their contractors including LC. The undisputed fact of this case is that the tree was found damaged or partly damaged from the sudden downpour of chemical on 2 consecutive days by end of 2010. There was no further downpour thereafter until May 2011, apparently, after the IO had reminded LC of not to repeat. In mid-March, the damage to the tree came by in a different form and without notice. Part of the tree was trimmed away.

103.  From the above, it is a tort committed directly by LC on the applicant in the course of execution of the renovation contract. The damage was caused in 2 separate incidents. The applicant can adduce no evidence to suggest the IO had either authorized or ratified this tort of LC.

104.  As a matter of principle, the IO is no insurer to owners of any mishaps that may happen to them when the IO’s contractors are carrying out their works. The applicant has failed to identify any legal principle by virtue of which the IO can be held liable for failure to procure LC to honour its promise to replace the said tree. Accordingly, the IO is not liable for the tort committed by LC on the applicant direct. In the Tribunal’s view, to hold the IO liable in the circumstances is akin to making the IO a guarantor of each and every owner for liabilities of its contractor, which is contrary to the established principles as set out in paragraph 6-62 of Clerk and Lindsell on Torts (22^nd Ed): see [27] above.

105.  Though the replacement cost of $4,100[113] is considered minimal, the applicant’s claim under this head should fail.

5.  Damages to Air-conditioners

106.  The applicant’s case is that its air-conditioners were damaged by (i) irritating liquid, which was acidic and corrosive, poured down; and (ii) a gondola, i.e. suspended working platform, hitting one of them. Both were done by LC’s workers. From the evidence which this Tribunal accepts, it occurred on 2 separate occasions.

107.  The applicant first complained on 2 May 2011 about its air-conditioner having been damaged[114]. By Chan’s email of that date, Chan said on 1 May 2011, irritating chemical was poured down in the Back Yard when LC’s workers were using it for cleaning external wall without any prior notice to owners. From the photos taken on 1 May 2011, the downpour had caused quite a messy situation to the Unit[115].This happened again the next day on 2 May 2011. Chan said he immediately made complaint but was unable to find any staff of Spence supervising the said work of LC’s workers[116]. Again, pictures were taken[117]. His second email of 2 May 2011 was sent only some 2 hours after his first one[118].

108.  Representative of Spence did a visual inspection of his air-conditioner on 23 May 2011. The said representative took the view that only dirt accumulated on the top of the outdoor unit. It should be working after cleaning[119]. On 12 July 2011, Chan urged SEML and Spence to “clean/rectify the malfunction including cleaning the condenser and/or rectifying damages caused by them”[120]. His said request was to no avail. It is noted that there is no complaint the air-conditioners being rendered not workable as a result.

109.  On 16 August 2011, as evidenced by the complaint record of SEML and the photos attached, the window-type air-conditioner in the master bedroom of the Unit was damaged when a gondola operated by LC’s workers bumped against it accidentally[121].

110.  On 16 April 2012, the applicant sent an email to SEML and Spence stating since no actions had been taken to rectify the damage done to the Unit, Chan would proceed to repair without further reference to them. Chan said the first action to take was to repair the condenser for the dining room and the air-conditioner of the master bedroom[122].

111.  On 30 April 2012, the applicant replaced the said 2 air-conditioners at a total cost of $14,030. Several photos of the damaged air-conditioners were sent to SEML and members of the IO[123].

112.  The applicant’s case is that there are provisions in the main renovation contract between LC and the IO stipulating that LC should be responsible for any damage caused to individual owners during the renovation. Further, it also provides if it is necessary for LC to remove air-conditioners before it can proceed with its work, LC should do so before work starts and re-fixes them after completion at its own costs. The applicant said it started as early as 30 December 2010 to complain about the pouring down of irritating chemical by LC’s workers. The first incident of such downpour occurred on 29 December 2010, and the second on the next day. Had the IO exercised proper supervision over LC in carrying out the renovation works, no matter in respect of work progress, compliance with contract terms and workmanship, the damages could have been avoided.

113.  It is most unfortunate that the applicant’s air-conditioners have been damaged by LC in the course of renovation. However, this Tribunal has reservation regarding the merit of its claim against the IO.

114.  Firstly, the applicant adduced no evidence whether the 2 replaced air-conditioners have been rendered beyond repair in the 2 incidents, and if they were not, whether the repair costs would be lower than those of replacement. The date of replacement was about a year after the alleged date of damage. There were no recorded complaints of the air-conditioners not working from Chan, who was ready to record almost each and every complaint. This Tribunal believes the said 2 air-conditioners were still working after the alleged incidents.

115.  Secondly, the applicant accepts the IO was not negligent in selecting LC and Spence. Further, the IO had put in additional effort to deal with the extra work brought about by the renovation. Apart from monitoring progress, systems were set up with a view to a speedy resolution of claims and/or complaints that might arise in the renovation. In the cross-examination, Chan accepted:

i)  the IO had set up a special sub-committee for the renovation project;

ii)  there was weekly progress meeting of that sub-committee attended by Spence and LC’s representatives who were there to answer queries and took prompt remedial actions;

iii)  one-third of an engineer and an additional officer of the management company were hired particularly for this renovation project;

iv)  there was a clerk of work of Spence on site; and

v)  there were also meetings at which representatives of Spence and LC were invited to answer queries that might be raised by owners regarding the renovation.

116.  From the available evidence, this Tribunal accepts the first reported incident of chemicals dripping down occurred on 29 and 30 December 2010: see [96] above. There is no dispute that Spence was immediately notified on 3 January 2011 of the complaint with a view to conveying the message to LC[124]. Thereafter there was no recorded downpour of chemicals until 1 & 2 May 2011: see [107] above. The Tribunal accepts LC had been duly reminded of not repeating that again, and any such cleaning should be with advance notice and proper precautionary measures. It can therefore be said that the aforesaid system worked well to the extent of at least stopping the same from happening again for a few months. 

117.  It is noted that in his email dated 7 April 2011 to SEML and Spence, Chan lodged complaint that LC had caused various damages to his properties including (i) steel cabinet; (ii) awning; and (iii) tree at the Front Yard[125]. There was no mention of any damage to any air-conditioners in that email. This Tribunal thus believes the condenser situated at the applicant’s Back Yard was damaged (be it completely or partially) in one downpour incident that occurred only on 1 and/or 2 May 2011.

118.  Obviously, the air-conditioner in the master bedroom of the Unit was damaged (be it partially or totally) in an accident happened on 16 August 2011: see [109] above.

119.  In the Tribunal’s judgment, the IO had put in reasonable effort in relation to the renovation by engaging extra staffs and Spence as consultant. Immediately after the first incident of acid downpour taken place by end of 2010, the IO issued reminders to Spence/LC. There was then no further downpour for about 5 months’ time until May 2011. It shows that the mechanism put in place, to a certain extent, was working. There was no negligence in the selection of LC and Spence. However, it is most unfortunate that both of them were not performing up to standard at the same time, resulting in dripping of chemicals repeating again some 5 months later despite previous reminder. The bumping of the gondola against the air-conditioner was obviously a single isolated accident caused direct by LC’s workers.

120.  In the Tribunal’s judgment, these were torts committed by LC on the applicant direct. It will be impossible and obviously unreasonable for the IO to police Spence and/or LC in respect of each and every steps taken or to be taken in the course of their work. It would be unfair and too onerous a duty to require the IO to procure LC to comply with every contractual requirement in the sense, as impliedly suggested by the applicant, that if LC defaulted and/or absconded the IO would be liable instead. It cannot be right otherwise it will make the IO a guarantor of LC in the performance of the renovation contract.

121.  By applying the principles distilled in [46] above, the applicant’s claim under this head is dismissed.

6.  Damages to the Steel Cabinet and its Contents

122.  The basis of claim of the applicant under this head is similar to heads (4) and (5), and in a nutshell, is this. Had the IO exercised proper or more control over LC in the implementation of LC’s work, the steel cabinet, and the properties kept therein, would not have been damaged.

123.  It is common ground Chan of the applicant first lodged his complaint about the damaged steel cabinets on 27 March 2011 by his email[126]. It was stated the cabinet’s top had been used by LC’s workers as “… access to the light well. Apart from the fact that the roof was bent, leakages were found inside the cabinet as well”. In his follow-up email dated 5 April 2011, he wrote the following:

“To avoid further damage to the contents (books, files, etc…) inside the steel cabinet which may be caused by rain water or cleaning agent of the external wall tiles or otherwise, I would request your urgent proposal and remedial action.”

124.  Shortly thereafter and on 6 April 2011, LC agreed to replace the cabinet but only after the renovation was completed[127].

125.  However, Chan rejected the proposal on 7 April 2011 on the ground LC should replace it immediately[128]. He requested a proposal for temporary storage in the meantime for the stuffs such as books, files, notes for the time being stored in the damaged cabinet. The 100% waterproof requirement for their storage was emphasized. From one of his statements in the said email as follows, it could be inferred that the paper contents stored there had not been damaged by then:

“I wish to remind you that recovery from market will not be possible if subsequent water damage of the contents is happened.”

(Emphasis added)

126.  When cross-examined, Chan admitted he continued to keep all the aforesaid stuffs, which were mostly papers, in the steel cabinet after he found the cabinet’s roof was damaged. His explanation was that the documents kept there were voluminous, and he had already place a nylon sheet on the top of the papers to protect them from water damage.

127.  In any event, LC agreed to compensate and Chan had chosen his replacement (at a price of $12,880) on 2 May 2011[129] from the choices provided by LC. On 1 June 2011, LC even paid deposit of $6,440 for such replacement[130].

128.  The replacement did not materialize because LC had abandoned the work.

129.  As regards the damage to the contents of the papers stored inside, it is noted that the first time Chan raised the problem was about 2 years later on 26 March 2013 via his email in which he stated “to avoid further damages to the properties (largely books etc.) inside the cabinets”. He further requested the IO to arrange someone to attend a joint inspection when the damaged stuffs were removed from the cabinet before it was removed. A set of photos were taken of the damaged properties, mostly documents, when they were removed on 7 April 2013. It is apparent from the pictures that almost all contents inside suffered from water damage.

130.  The applicant initially claimed $13,680 being actual replacement costs of the steel cabinet[131], and $40,800 being its estimated damage in respect of the properties stored inside. It now claims $13,680 and $16,623 which are assessed by the quantum expert Mr Chang and agreed by the parties for respectively the 2 items.

131.  In the Tribunal’s judgment, like claims under heads (4) and (5), it was a tort directly committed by LC on the applicant. The IO should not be expected to police LC in the execution of any work process which it has already appointed a competent contractor to execute. In any event, the IO has appointed an apparently competent contractor Spence to help discharge its supervision duty, if any. LC had since admitted liability. For the reasons discussed under the head of “Damages to Air-conditioners” and more particularly in [115], [119] and [120] above, this Tribunal cannot agree that the IO is liable to the applicant under this head.

132.  In particular, Chan of the applicant knowingly kept his vulnerable properties in a cabinet which he knew had already been damaged and water and/or chemical damage being a real risk. He well-appreciated the risk of papers being kept in a damaged cabinet. That is perhaps why he requested an immediate replacement. Yet he did not keep his vulnerable properties somewhere else to avoid the possible damage. When he was aware of the risk the papers were still dry and intact. He therefore voluntarily assumed the risk. At the end of the day his own protective measures, namely, putting a nylon sheet on their top, simply did not work. He is to blame for the damage to his own properties stored inside the cabinet.

133.  The applicant’s claim under this head is dismissed.

7.  Damage to Awning

134.  Argument of applicant under this head is similar to claim heads (4) to (6) above: the damage could have been avoided if the IO had exercised adequate supervision and control over LC’s work, or if the IO could have urged and required LC to comply with its contractual obligation towards the IO[132].

135.  It is undisputed that the applicant first mentioned by email its awning being broken on 5 April 2011 on which an inspection took place. Chan stated[133]:

“… the roof [of the steel cabinet] has now been broken and the awning/fabric are fully loaded with debris. Not sure if the awning and the fabric have been damaged or twisted….”

136.  The photos[134] attached with the aforesaid email showed that the fabric of the awning was heavily loaded with garbage which were used paper cartoon boxes of building materials and debris such as broken tiles and concrete chips. It is the Tribunal’s finding that they were wasted materials dumped on it by LC’s workers in the course of the renovation.

137.  At trial, it was Chan’s evidence that he later found out fabric damaged and the arms of the awning not functioning properly. In any event, by LC’s letter to the applicant dated 6 April 2011, LC agreed to replace the same after the renovation[135]. Again, LC did not do so because of its litigation with the IO. He asked the IO to pay for the costs of replacement. It now claims $8,620.37 being the replacement costs assessed by Mr Chang Ka Chung.

138.  In light of LC’s admission by his letter to the applicant, this Tribunal accepted that the awning was damaged by LC in the course of the renovation.

139.  This is again a tort committed by LC on the applicant direct. The discussion in [115], [119] and [120] above are also relevant to this head of claim. The IO and Spence should not be expected to police each and every step taken by LC in the renovation. Applying the principles distilled in [46], the IO is not liable to the applicant for damage done to it direct by its contractor LC.

8.  Damage to Glasses

140.  Again, the basis of this head of claim is similar to heads (4) to (7) above.

141.  This applicant’s case is this. According to the renovation contract, there was a specific provision requiring LC to protect the windows before the start of the tile-hacking process. It was suggested in the contract that apart from a protective plastic film, boards made of polystyrene foam or other suitable material should be placed to guard the windows. The plastic film should remain even after the completion of the hacking off process and should only be removed until all surface work had been completed. Spence and IO should have asked LC to comply with this contractual requirement. Had they strictly and/or properly supervised LC to observe this contractual provision, the applicant would not have suffered from such damage.

142.  It is not in dispute as early as March 2010, there were large number of owners complaining that their windows were damaged during the hacking off process[136].

143.  Chan first complained on 15 May 2011 that there was cement paste sticking to window panes and frames of his Unit[137]. On 8 March 2012, there was also complaints that scratches were found in the glasses of window of his Unit[138].

144.  Law, said in her evidence (which this Tribunal accepts), that it was Spence’s advice that polystyrene foam boards were sufficient to prevent glass scratches. Chan accepted sometimes polystyrene foam boards were used. However, very often blue-tek was used to stick the foam board onto the window. In any event, from reading of the meeting minutes between LC, Spence, SEML and the IO, it is this Tribunal’s finding that LC had agreed to accept liability to replace the scratched glasses. LC was even in the process of repairing the windows of the affected owners[139]. It was because of its subsequent abandoning of work that makes the replacement action abortive.

145.  In the Tribunal’s judgment, polystyrene boards were used upon the advice of Spence. They offered certain protection against glass scratches in the renovation, but obviously, the protection would be insufficient. In any event the IO has done its best to engage Spence as its professional consultant to advise and to assist in supervising this big project. There is no reason for the IO not to rely on Spence for its professional advice as the IO has no professional knowledge in the matter. It happens the advice and supervision were unsatisfactory. It is the best the IO can do in the circumstances. In any event the complaint system put in place by the IO worked well. LC had admitted liability to repair and replace soon after the complaint.

146.  It is another example of a tort committed direct by LC on individual owners including the applicant. LC and Spence were independent and apparently competent contractors, the selection of them was without negligence. The discussion in [115], [119] and [120] above are also relevant to this head of claim. Applying the principles summarized in [46] and elaborated in aforesaid passage in para 6-62 of Clerk and Lindsell on Torts (22^nd Ed) (see [27] above), this Tribunal does not consider the IO should be liable for the applicant’s loss in this respect.   

Dispositions

147.  By reasons of the above, this Tribunal now grant the following orders against the IO:

i)  a mandatory order to carry out rectification works and/or to effect necessary repair to the part of external walls of The Arcadia so as to stop water from seepage into the Unit, such work to commence within 30 days of this order and to complete within 120 days after commencement;

ii)  to pay damages to the applicant in the total sum of $225,771.2, being the aggregate of

a)  $46,299.2 as to costs for repair of the interior;

b)  $72,420 as to accommodation to be incurred during such repair;

c)  $22,552 as to costs for raising of the Front Yard floor level;

d)  $4,500 as to costs of termite treatment; and

e)  $80,000 as to general damages for nuisance and inconvenience caused.

148.  Apart from those set out in the preceding paragraph, all other claims of the applicant against the IO are dismissed.

149.  In the circumstances of this case, this Tribunal proposes and now makes a costs order nisi that the IO do pay half of the applicant’s costs of this application, including all costs reserved, such costs be on District Court scale with certificate for counsel. This order nisi will be made absolute if there is no application to vary the same within 14 days from today.