LING LEUNG KIT HING AND ANOTHER v. WORTH RUSSELL JAMES AND OTHERS

HCA 8/2015

HIGH COURT ACTION NO 8 OF 2015

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REASONS FOR DECISION
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1.  This is the plaintiffs’ appeal from (1) the order of Master Chow dated 17 September 2015 whereby their statement of claim was struck out as against the 1^st defendant (“D1”) and (2) the costs order dated 17 November 2015.  The plaintiffs’ applications to make the proposed amendments to the statement of claim, a draft of which was attached with their submissions and the further proposed amendments drafted by the plaintiffs’ counsel at the hearing (as mentioned below) were disallowed.  Accordingly, at the conclusion of the hearing, the appeal was dismissed.  Costs in favour of D1 were summarily assessed at $80,000.

BACKGROUND FACTS

2.  The plaintiffs are the owners of Shop 12, Ground Floor, Ka Wai Building, 144‑166 Java Road, North Point (“the building”).

3.  The first three defendants are the respective owners of Flats B1, B2 and B3 on the 1^st floor of Block B of the building (“the first floor properties”), each of those properties consisting of a covered part and a flat roof.  This appeal only concerns and affects D1.

4.  The plaintiffs’ complaint concerns water seepage from the properties situated on the 1^st floor onto the plaintiffs’ property on the ground floor. 

5.  It is pleaded in §6 of the statement of claim that the flat roofs of the first floor properties adjoin each other and form a continuous roof (“Roof”) which is immediately above:

(a) the plaintiffs’ property,

(b) other units on the ground floor, and

(c) common parts of the building. 

6.  The 4^th defendant (“D4”) is the Incorporated Owners of the building (“the IO”) responsible for maintenance of the common parts. 

7.  It is then pleaded in §5 of the statement of claim that D4 “is responsible for the maintenance of the common parts of the [b]uilding which covers in particular the waterproofing membrane under the Roof …”. That allegation is repeated and reasserted in §7 of the statement of claim.

8.  §§8‑11 of the statement of claim identified three sources from which water seepage affected the plaintiffs’ property, namely:

(1) the external face of the parapet of the Roof during raining;

(2) the defective waterproofing membrane under the Roof; and

(3) the joints of the Exposed Part of the sewer waste pipe running through the flat roof slab of Flat B2.

9.  At the hearing, Mr Lam counsel for the plaintiffs advised the court that so far as D1 is concerned, only the defective water proofing membrane (“the membrane”) is relevant. 

10.  Notwithstanding this clarification, other than that the plaintiffs’ property is situated on the ground floor, its precise location and area and how it relates to D1’s property is not apparent from the statement of claim.  What is clear is that in addition to the plaintiffs’ property there were other shop units as well as common parts on the ground floor of the building.

11.  I propose first to address the statement of claim as it presently stands.

NO LOCUS STANDI

12.  Mr Hughes counsel for D1 submitted that the statement of claim as it stands must be struck out as the plaintiffs do not have any standing to bring a claim against D1 in relation to the common parts of the building.

13.  Section 16 of the Building Management Ordinance, Cap 344 (“BMO”) provides as follows:

“When the owners of the building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly-

(a) any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office; and

(b) unless specified or designated, those parts specified in schedule 1.”

Schedule 1 of the BMO lists the following common parts:

“1. External walls …

…

3. The roofs …

4. Parapet walls …

…

6. … sewers … waste pipes …”

14.  The effect of section 16 is that when the owners have been incorporated, no individual owner has the right to bring a derivative or minority action in relation the common parts of the building and proceedings are to be brought exclusively by and against the corporation: see See Wah Fan v IO of Ki Tat Garden (Phase I) [2000] 3 HKLRD 406 at 411B; [2003] 3 HKLRD 1 where at §20 Cheung JA stated:

“20. It is clear from the wording of s.16 that the rights and obligations of the owners in respect of the common parts of a building are to be enforced by and against the corporation to the exclusion of the owners. It is in mandatory terms. This Court has been consistent in affirming this position in a series of cases dating back as early as 1978 …”

15.  The plaintiffs referred to Cosmos Legal Consultant Ltd v Skycherry Development Ltd & Anor, unreported, DCCJ 2548/2009, 14 May 2013 where the defendant was the owner of the flat above and not the IO.  But in that case, it is unclear from the report whether or not the owners had been incorporated.  In any event, I can derive no assistance from it.  It is not authority for the proposition that where section 16 of the BMO applies, it is open to the plaintiff to bring an action against an individual owner in respect of any act or omission concerning the common parts since it would be contrary to the long line of Court of Appeal authorities.

16.  Wealth Summit Development (Nominee) Ltd v Ng Shun Oi & Ors, unreported, HCA 1592/2003, 12 October 2005, another authority Mr Lam relied on is again of no assistance for the same reason.  In that case, water leakage started to occur at the 2^nd floor ceiling during redecoration work on the flats on the floor above.  Although there were incorporated owners of the building, failure of the waterproofing membrane of Flat 3A was found to be the cause of water leakage to the corresponding area of the 2^nd floor.  Nowhere in the report is there any suggestion that the membrane was within “the common parts” of that building.

17.  It is clear beyond peradventure that on the pleading as it stands, the plaintiffs have not shown any locus standi to sue D1 in relation to any defect or deficiency in the membrane (which as pleaded falls strictly within the common parts) by reason of section 16 of the BMO.

THE PLAINTIFFS’ PROPOSED AMENDMENTS AND FURTHER AMENDMENTS

(A) The amended statement of claim

18.  In order to address those criticisms, the plaintiffs sought leave to amend the statement of claim.  The proposed amendments are set out in the document entitled “Amended Statement of Claim” mentioned in the plaintiffs’ written skeleton.  D1 objected to the proposed amendments and submitted that they should be disallowed.

19.  D1 attacked the amended statement of claim on the basis that it provides no legal basis upon which D1 could be held to be liable for rectification of the common parts, damages, interest, etc to the plaintiffs.  It was said that no wrongdoing or breach of any obligation on the part of D1 could be discerned from the amended pleading.

20.  Mr Lam candidly accepted that even the amended statement of claim is deficient but submitted that the court ought not to strike out a deficient pleading that is capable of being put right by way of further amendment.

21.  In the present case, the plaintiffs have had ample time since Master Chow’s decision in September 2015 to reconsider its position in view of the objections taken and to put forward considered amendments.  That has not been done.  Given the circumstances, clearly there is a limit to the indulgence that is proper for a court to grant. 

22.  Given the history of this litigation, I did not consider it a proper exercise of the court’s discretion to grant open‑ended leave to amend the statement of claim without the plaintiffs formulating the precise amendments they seek to introduce.  In the result, the court gave one last opportunity to the plaintiffs to formulate the desired amendments and granted a short adjournment to enable that to be done. 

(B) The further amendments

23.  When the hearing resumed, Mr Lam submitted a written document containing further proposed amendments.  The amendments sought to be introduced by the amended statement of claim together with the further proposed amendments (hereinafter compendiously referred to as “the proposed amendments”) are shown below in italics and underlined:

“2. The 1^st defendant is the owner of the property at Flat B1, 1/F, Block B of the Building. The property consists of a covered part together with a flat roof. The flat roof together with the covered part, are within the exclusion (sic) possession and enjoyment of the 1^st defendant.

…

7. Between the Roof and the ground floor, there is a continuous water-proofing membrane. The said membrane and the external face of the parapet surrounding the Roof are common parts of the Building. Alternatively, the said membrane is not common part of the Building and is part of the properties of the 1^st, 2^nd and 3^rd Defendants for which the 1^st, 2^nd and 3^rd Defendants are responsible to maintain and keep at good conditions while the external face of the parapet is common part of the Building.

8. At least since April 2011 water, partly come from the external face of the parapet of the Roof during raining, has been seeping through the defective waterproofing membrane under the Roof down to the Property of the Plaintiffs, from the properties of the 1^st, 2^nd and 3^rd Defendants. The rest of the water has been seeping through the membrane comes from the defective pipes in the properties of the 1^st, 2^nd and 3^rd Defendants.

…

12. Despite demand, the 1^st, 2^nd, 3^rd and ^4th Defendants still failed to respond to the request of the Plaintiffs to rectify the said waterproofing membrane, the external face of the parapet of the Roof and the Exposed Part of the sewer waste pipe or to stop water from seeping into the Plaintiff’s property from the properties of the 1 ^st , 2^nd and 3^rd Defendants and the Plaintiff has thus incurred loss and sustained damage.

13A. The said water seepage as set out in paragraph 8 above constitute a nuisance. Further or alternatively, the said water seepage is caused by the negligence of the 1^st, 2^nd, 3^rd and 4^th Defendants.

Particulars of negligence

(i) Failing to rectify the defective waterproofing membrane (1^st to 3^rd Defendant, alternatively the 4^th Defendant)

(ii) Failing to rectify the defective Exposed Part (4^th Defendant);

(iii) Failing to stop water from seeping from their properties down to the plaintiff’s property (1^st to 3^rd Defendant).

(iv) Failing to rectify the defective pipes on their properties (1^st to 3^rd Defendant).”

24.  Mr Lam submitted that the court’s power to strike out under Order 18, rule 19 should only be used in plain and obvious cases.  Even a serious want of particularity may not justify striking out if the defect can be remedied and is not the result of a blatant disregard of court orders.  I need only mention the following specific matters emerging from the proposed amendments.

25.  It is nowhere stated in the proposed amendments that the Roof membrane has been designated in any instrument registered at Land Registry as being for the exclusive use, occupation or enjoyment by D1. The absence of any factual basis for the proposed amendment is fatal, quite apart from the fact that the proposed amendments to §§2 and 7 are directly contradictory to what has been pleaded in §5 of the statement of claim.  Further, it is also directly contrary to Mr Lam’s oral submission to the court shortly before the adjournment mentioned when he stated categorically that “the duty to repair the membrane is the duty of D4”.  He cannot have it both ways.

26.  In any case, the membrane is situated underneath D1’s property.  There is no factual basis pleaded that supports the assertion that the membrane forms part of D1’s property.

27.  Mr Hughes submitted (and I agree) that the allegation that (part of) the water seepage is from D1’s property is pure speculation with no factual underpinning.

28.  Similarly, the amendments to §§8 and 12 have no factual underpinning to support the allegation that seepage has been caused by the wrongful acts and/or omissions of D1.  It is not enough to plead seepage in the abstract: see Cosmos at §90 where it is stated:

“90. It is trite that water seepage is a form of nuisance. However, it is not uncommon for water seepage to occur in multi-story buildings in Hong Kong. There can be many different causes of water seepage. There is no presumption that water must necessarily leak from the flat above to the flat below.”

29.  The allegation contained in §8 of the proposed amendments relating to “defective pipes” also has no factual basis and is nothing more than pure speculation on the part of the plaintiffs.

30.  In my view, the proposed amendments do not raise any arguable cause of action against D1 and must be struck out.