CRYSTAL BRIGHT HOLDINGS LTD v. ALLEN INDUSTRIES LTD

DCCJ 2815/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.2815 OF 2015

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J U D G M E N T

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BACKGROUND

1.  This is a water seepage case happened in an industrial building known as Sum Lung Industrial Building, number 11 Sun Yip Street, Hong Kong (“the Building”).  At all material times, the plaintiff (P) is the registered owner of the 3^rd floor of the said building (“Property”) and the defendant (D) is the registered owner of flat A on the 4^th floor (“Flat 4A”).

2.  P alleged that water seepage from Flat 4A to the ceiling of P’s Property commenced since or about September 2014 and its staff complained to the management office of the water seepage at about the same time.  The affected area was at the south side of P’s Property, adjacent to the light well of the Building (“Affected Area”). P found severe dampness, water stains and cracks at the ceiling and walls of the Affected Area. Immediately above the Affected Area are the male and female toilets of Flat 4A.

3.  P has been using its Property as a warehouse.  Owing to the water seepage, P moved away its goods stored within the Affected Area to elsewhere in the Property.

4.  In or about October 2014, P engaged Chun Yuk Design Project Ltd (“Chun Yuk”) to repair the concrete ceiling and walls of the Affected Area and to investigate the cause of water seepage, which was carried out by P’s surveyor Ms Lau Shan-la.

5.  The repair works were carried out from November to December 2014 costing HK$121,914.06 and Ms Lau charged HK$40,000 for the survey report.  P eventually paid Chun Yuk a total of HK$161,914.06 through its related company K & M Management Limited (“K&M”).

6.  P instructed its solicitors to issue the letter before action on 30 December 2014, followed by several rounds of exchange of correspondence between the legal representatives of the parties.  However, parties were unable to resolve the matter.  Finally, P issued the writ of the present proceedings against D on 22 June 2015.

7.  P claims against D in this action for a total sum of HK$241,914.00 with the following breakdown without seeking any injunctive relief:

(i)   Costs of reinstating the damaged areas	HK$121,914.00
(ii)   Surveyor’s fee	HK$ 40,000.00
(iii)   Loss of enjoyment of the property	HK$ 80,000.00 _____________
	HK$241,914.00

8.  Since P’s counsel Miss Law has conceded that surveyor’s fee should be claimed as legal costs instead of damages, this trial only needs to deal with the other two heads of damages.

ISSUES

9.  The causes of action as pleaded in the Statement of Claim are:

(a) Negligence;

(b) Nuisance;

(c) Breach of Clause 5 of the DMC; and/or

(d) Breach of s.34H of the Building ManagementOrdinance(Cap 344) (“BMO”).

10.  In the opening submissions, D’s counsel Mr Tang has fairly conceded that if the court found that Flat 4A is the source of the water seepage at the Property, D is prepared to accept that D is liable at least on the basis of clause 5 of the DMC and/or s.34H of the BMO.  In light of such concession, P no longer relies on the first two causes of action.

11.  D not only denies liability of causing any water seepage to the P’s Property, but also puts forward a positive case that common water pipes at the light well and the defective light well wall being the cause of water seepage, based on its expert’s opinion.

12.  Although D denies P’s entitlement to any damages, it does not put forward any positive case to dispute the quantum.  However, it contests vigorously the claim of loss of enjoyment.

13.  In gist, there are only two main issues for this trial:

(1) Whether Flat 4A is the source of the water seepage; and

(2) If D is found liable, what is the quantum of damages.

SOURCE OF WATER SEEPAGE

14.  On 1 December 2015, Master D To granted leave to the parties to adduce expert evidence as to “whether the damage suffered by the Plaintiff was caused by water seepage from the Defendant’s premises”. The respective experts are Ms Lau, an engineer, for P and Mr Chiu Chi Pun, a building surveyor for D.  In fact, both experts had already prepared their respective solo reports before the granting of the leave.  Ms Lau inspected the site on 19 November 2014 and issued her report on 13 December 2014.  Mr Chiu carried out the site inspection on 22 July 2015 and subsequently compiled his survey report dated 5 August 2015.

15.  As per the direction of Master D To, the experts met on 9 April 2016 to discuss their opinions as expressed in their survey reports.  A joint statement of the experts dated 15 June 2016 was compiled after the meeting.   Eventually, parties have managed to agree to adduce the aforesaid expert evidence without calling their respective experts to give oral evidence.

16.  The two experts do not have great dispute as to the occurrence of water seepage at the Property but have different opinions as to the cause of the water seepage.

17.  Ms Lau has conducted electrical conductivity and microwave scanning tests in the so-called “Room Area” (ie the red area of the floor plan in Ms Lau’s report, on the west side of the light well) which found high moisture content reading on the ceiling.  Same tests were conducted at the “Warehouse Area” (ie the blue area of the floor plan in her report, on the east side of the light well) with similar findings.   The third test was infra-red scanning and its thermography showed unusual low temperature from the ceiling to the wall at the Warehouse Area, but no unusual low temperature area on the light well surfaces between the Property and Flat 4A.  All tests were done after 3 consecutive days of no rainfall. 

18.  Ms Lau also considered other possible cause of water seepage, such as ingress of the rain water to the light well wall surfaces and leaked water pipe at the light well surfaces and eliminated such causes at the end for the following reasons:

(i) No spalled concrete, cracked concrete, leaked water pipes or any signs of seepage on the wall of the light well between the Property and Flat 4A were observed on the day of inspection;

(ii) The infra-red thermography showed no unusual low temperature area on the light well surfaces between the Property and Flat 4A; and

(iii) Spots with high moisture readings taken by electrical conductivity test and microwave scanning test were not close to the light well.

19.  Thus, Ms Lau concluded that the water seepage at the Property was caused by the leaked waste water pipes and defective waterproofing flooring at the toilet of Flat 4A and not from the fresh water pipes and light well.

20.  Although Mr Chiu did not “expel that the seepage has been taken place at the plaintiff’s premises[1]”, he was of the view that “the extent of the seepage areas at the plaintiff’s premises could not be proven due to inaccessible plaintiff’s premises.”

21.  Mr Chiu disagreed with Ms Lau’s conclusion for the following reasons:

(i) If the waste water pipes were leaking, there would be dripping in the Property instead of mild or intermittent water seeping.

(ii) Flat 4A was vacant from 8 November 2013 to 4 September 2014 and therefore no person would use the toilet area in that period until 16 September 2014 by the new tenant. After moving in, the new tenant carried out renovation work until December 2014 which including conversion of the original toilet to warehouse area and hence no water pipe or wet flooring would be situated at the original toilet area of D’s premises.

(iii) Mr Chiu was informed by D’s representative that Flat 4A where it was immediately above the room area of the Property has been converted to a store room.

(iv) Mr Chiu criticised Ms Lau of using infra-red scanning at the light well as inappropriate because of its limitations for metal or plastic materials of which the water pipes were made, relying on Professional Guide to Water Seepage Investigation, Diagnosis Testing & Reporting in Residential Buildings by the Hong Kong Institute of Surveyors.

22.  Mr Chiu has formed a different view as to the source of the alleged water seepage.  He opined that the dilapidated wall surfaces of the light well would become weak points which would allow water going inside the flats.  Therefore, he was of the view that it was “most possible” that water seepage from the defective light well surfaces causing spalled concrete, cracked concrete surfaces and peeled off plastering and painting.  Apart from water leakage from the water pipes at the light well, water would seep inside the flats easily when water pipes were broken.

23.  Mr Tang, counsel for D, cast doubt on the overall reliability of Ms Lau on the following grounds:

(i) Ms Lau had not entered Flat 4A to carry out any inspection.

(ii) She was not impartial as she was instructed by Chun Yuk, the contractor who carried out the repair works for P.  There was a conflict of interest when she was asked to estimate the repair costs and she just adopted the contractor’s quotation.

(iii) She paid the least attention to the light well and carried out the inaccurate infra-red test only.

(iv) There were some spots with higher moisture levels situated close to the light well, contradictory to Ms Lau’s finding that the high moisture spots were far away from the light well.

(v) Ms Lau has failed to deal with the issue of no water usage during the period before 15 September 2014 as the water bills indicated, which allegedly would effectively rule out Flat 4A as the source of water seepage.

24.  First of all, I do not share Mr Tang’s view that the impartiality of Ms Lau has been compromised because she was engaged by Chun Yuk.  When Master D To granted leave to the parties to adduce expert evidence on 1 December 2015, it was limited to the cause of water seepage.  Leave to adduce expert evidence as to quantum issue has never been granted by court.  Therefore, Ms Lau’s opinion of the quotation of Chun Yuk would not be taken into account in the first place. I do not see any reasons to believe that the reliability of Ms Lau’s expert evidence on the cause of water seepage would be compromised merely because of the identity of her employer.

25.  Secondly, Mr Tang agreed that the argument of no water usage in Flat 4A to exclude Flat 4A as the source was only valid until 15 September 2014, as there was no evidence on water usage after that day. P’s pleaded case is that they found water seepage in their Property since or about September 2014[2].  Although Ms Lau did put down in the chronology of her solo survey report that water seepage occurred at the Property roughly before September 2014 according to the information provided by her client, ie Chun Yuk, it has never been P’s case that water seepage began sometime before September 2014. 

26.  According to D, its tenant moved in Flat 4A on 16 September 2014.  It is undeniable that since then the tenant could have used the toilets located immediately above the Affected Area of P’s Property. Besides, Ms Lau also pointed out at page 5 of the Joint Statement that the aggravation of the water seepage coincidentally occurred since the leasing out of Flat 4A.  Therefore, Mr Chiu’s elimination of Flat 4A as the source of water seepage in this case based on no water usage at Flat 4A obviously could not stand after 15 September 2014.

27.  Mr Tang attempted to contradict Ms Lau’s finding that the high moisture spots were far away from the light well by picking some spots with higher moisture reading but situated closer to the light well.  However, I do not think this submission is conclusive, as Miss Law for P has pointed out that there were spots with much higher moisture reading which were further away from the light well.

28.  Further, save and except for the infra-red thermography test at the light well wall and pipes, the methodology of Ms Lau’s survey including electrical conductivity test, microwave scanning test and infra-red thermography test (conducted indoors), the readings and the interpretation of the readings were not criticised by D’s expert, Mr Chiu. Thus Mr Tang’s query as to the Ms Lau’s finding that the higher moisture spots were further away from the light well is in fact not supported by any expert evidence.

29.  Having considered all the tests results, I accept that the spots with higher moisture level at the Property are in general further away from the light well.

30.  Regarding Mr Chiu’s criticism of Ms Lau’s infra-red scanning at the light well, Ms Lau replied in in the Joint Statement[3] by admitting the limitation and said as follows:

“the infrared scanning to a light well is theoretically inaccurate since the light well surface is not under direct sunlight. Sometimes, the temperature difference between the wet surface (seepage area) and the dry surface (area in good condition) may not be high enough to measure if the surfaces are not exposed to direct sunlight. However, in many cases, the unusual low temperature area can be measured at the warehouse area in the plaintiff’s premises even without any direct sunlight…”

31.  Besides, Ms Lau did not come to the conclusion by the Infra-red scanning at the light well alone, but based on the multiple tests results and eliminated “light well” as a source of water seepage. 

32.  Therefore, I am satisfied that the overall reliability of Ms Lau’s findings is not affected by the limitation of infra-red scanning at the light well because of the above reasons.

33.  Mr Tang also drew my attention to the peculiarity of the expert evidence that neither expert had entered the property of the other side to do the inspection.  Mr Tang thus submitted that “the reliability of both experts may be a cause of concern”[4] and urged the court to be cautious when assessing the evidence of the respective experts.

34.  A water seepage survey done without entering the property of the other side is of course undesirable and I bear this in mind when assessing the expert evidence of each side.  I find that the respective expert opinions on the cause of water seepage are not inherently improbable.  Therefore, I have to decide which version is more probable.

35.  Another peculiarity in this case is that the experts carried out their respective surveys at different time.  It is not in dispute that D’s expert conducted the survey on 22 July 2015 about 8 months after P’s survey on 19 November 2014.  When D’s expert conducted the survey, P had finished the repair works of the ceiling and walls of the Affected Area about 7 months ago in December 2014 and the D’s tenant had also completed the renovation work including the conversion of the male and female toilets into storage area, at the area in Flat 4A immediately above the Affected Area. 

36.  Owing to the lapse of time and the aforesaid change of circumstances, D’s expert missed the opportunity to carry out tests in Flat 4A to ascertain the source of water seepage.  At last, D’s expert could only resort to visual inspection to finish his survey.  Even the so-called “most possible” cause of the water seepage (through the defective light well wall surfaces and leaked common water pipes at the light well) has never been put to any tests. Without any supporting empirical evidence, Mr Chiu’s opinion remains as a theory to explain the water seepage at the end of day.

37.  In fact, most of the tests done and all the data collected by Ms Lau (P’s expert) are not challenged by Mr Chiu.  Thus, most of Ms Lau’s findings are not subject to any challenge by Mr Chiu’s expert evidence. D’s main challenge against P based on “no water usage” at Flat 4A was no longer valid after the tenant’s moving in on 16 September 2014.  Further, D’s proposed source of water seepage, ie from the light well, is simply lack of proof.  Even after taking into account of the criticism of P’s infra-red scanning, Ms Lau’s expert evidence on the whole prevails over Mr Chiu’s.

38.  In the circumstances, I have no difficulty to accept P’s expert opinion and reject D’s expert evidence.  I find that P has succeeded to discharge the burden of proof of the cause of water seepage at the Property on balance of probabilities, based on the opinion of Ms Lau, that the water seepage at the Property was caused by the leaked waste water pipes and defective waterproofing flooring at the toilet of Flat 4A.

LIABILITY

39.  As Mr Tang has conceded that if the court finds for P that Flat 4A is the source of the water seepage, D would be liable for breach of Clause 5 of the DMC and/or section 34H of the BMO.  In light of D’s concession, Miss Law for P is prepared to abandon the cause of action of nuisance and negligence.

40.  For the above reasons, I find that D is liable for breach of Clause 5 of the DMC and/or section 34H of the BMO for causing the water seepage at the Property.

QUANTUM

Repair Costs

41.  D puts P to strict proof on the amount of expenses actually incurred for reinstating the damaged area.  P claims such costs in the sum of HK$121,914.00.  D submits that P has failed to prove it has incurred such expenses and is thus not entitled to such damages.

42.  D challenges P’s evidence of incurring the repair costs on the following grounds:

(i) Both the quotation and receipt of the repair works issued by Chun Yuk were addressed to K&M not P;

(ii) No witnesses from P handling the payment of the repair works have been called to give evidence and the court was invited to draw adverse inference against P for the absence of such witnesses;

(iii) Mr Kenny Wong, the project manager and 1^st witness for P, was actually an employee of K&M, but not involved in accounting matters or the payment of the such repair costs;

(iv) Kenny at first said that K&M paid for the works, but later changed his evidence that K&M paid first and reimbursed by P;

(v) There is no proof of payment by K&M to Chun Yuk;

(vi) There is lack of proof of reimbursement by P to K&M either.

43.  It is not in dispute that P and K&M have the identical shareholders and directors according to their respective annual returns.  This may explain why Kenny regarded P and K&M as the same group of companies because they were owned by the same “bosses”.  According to the witness statement of Mr Jacky Fok, the second witness for P, Chun Yuk received HK$161,914.06 from P’s “agent” and he confirmed in court that the agent was indeed K&M.  The authenticity of the quotation dated 31 October 2014 issued by Chun Yuk to K&M, and the receipt dated 18 November 2014 also issued by Chun Yuk to K&M are not in dispute.

44.  In short, D does not challenge Chun Yuk had carried out the works and received the sum from K&M, but it queried whether P had paid back K&M.  Such evidence has been unclear until Kenny Wong confirmed that P had reimbursed K&M.  Mr Tang for D criticised Kenny for changing his evidence and there was lack of documentary proof of the reimbursement.  In light of the shareholding and directorship of P and K&M, it is not surprising for a layman like Kenny to mix up the identities of these two companies sometimes, as to him these two companies were just the alter ego of his “boss”.  Thus I do not agree that Kenny has intentionally changed his evidence and I also do not agree with Mr Tang’s submission that Kenny is an unreliable witness.

45.  Although P must bear the burden of proof of incurring the repair costs, the standard of proof is on balance of probability which is not as onerous as the criminal standard, and in particular when there is no evidence to contradict the evidence of P’s witnesses and its documents on this issue.  In the circumstances, I cannot see any reasons to doubt Kenny’s evidence that P has reimbursed its agent K&M.  I am unable to share with Mr Tang’s view that I shall draw adverse inference against P because of the lack of evidence from any accounting staff of P or documents showing actual payment by P, because the circumstances do not justify such inference to be drawn.

46.  I find that P has discharged the burden of proof on balance of probability that it has incurred the repair costs of HK$121,914.  As there is no evidence suggesting such repair costs being unreasonable, I find that such sum is reasonable and D is liable for the same.

Loss of Enjoyment of the Property

47.  P claims HK$80,000 under this head.  Parties have serious argument as to whether this is a claim of general damages or special damages.  Such claim appears in the prayer of the Statement of Claim without any particulars.  Miss Law in her opening submissions confirmed that it was a claim of general damages for P’s inconvenience and discomfort caused by the loss of enjoyment of Affected Area, but Mr Tang contended this head of claim being special damages in nature and it failed for want of evidence to substantiate such loss.

48.  Both counsel have submitted authorities to support their argument.  Having considered those authorities, it suffices to say that the label “loss of enjoyment” has been used in both general and special damages claims.  It has been put under the head of claim of general damages for inconvenience and discomfort but in other cases submitted by D “loss of enjoyment” has been claimed as a head of special damages distinct from general damages.  However, there are no discussions as to the legal implication on the usage of such term found in any of those cases.  I consider those cases are just examples of such head of claim but none of them are authorities in favour of one way or the other.  At the end of the day, it depends on the facts of individual case.

49.  It is trite law that general damages are usually concerned with non-pecuniary losses like pain and suffering in personal injury cases and inconvenience and discomfort in water seepage cases.  According to P, its goods previously placed within the Affected Area had been relocated for fear of any damage to the goods by the leaking water.  It is not the P’s case that it has incurred additional storage costs in relocating the goods somewhere else.  The goods in question were still stored within the Property but in other parts unaffected by water seepage.  It is therefore quite obvious that such claim of loss of enjoyment is the non-pecuniary loss of P for the inconvenience it suffered when being deprived from using the Affected Area.  Therefore, I consider such head of claim as a kind of general damages.

50.  P relies on the following cases as comparable for general damages:

(i)   Yim Wai Ling & Another v. Yuen Chik Wah & Another (DCCJ 663/2013, unrep, 12 Aug 2016);

(ii)   Lee Wai Chuen v. Cheung Chor Keung (DCCJ 3098/2006, unrep, 7 Jan 2011);

(iii)   So John & Anor v. Lau Hon Man & Ors [1993] 2 HKC 356;

(iv)   Chan Fei Lung v. Mansion Products Ltd & Ors [1990] 1 HKC 504;

(v)   Leung Yung Chun v. Chan Wing Sang [2000] 1 HKLRD 456;

(vi)   Ngan Ping Chi v. Lam Chi Hao Louis (DCCJ 462/2003, unrep, 31 Dec 2003);

(vii)   Lau Lai Tan Wah v. Cheng Mei Fong (DCCJ 4976/2004, unrep 15 June 2006);

(viii)  ; Chung Che Shum v. Dong Sai Ming Fernando (DCCJ 21504/2001, unrep, 15 Feb 2007);

(ix)   Wong Hon Hung v. Jolly Birds Ltd (DCCJ 5341/2006, unrep 24 June 2008);

(x)   Lam Sik Heung Perdita v. Siu Yuet Kwan (DCCJ 2424/2009, unrep, 17 Oct 2012);

51.  P relies on Well Force Company Limited v. Boomway (Hong Kong) Limited & Others (HCA 4480/1994, unrep, 7 July 1998) and Century Way Investment Limited v. Willbert Limited & Another (DCCJ 3710/2013, unrep, 23 December 2016) to support that a company is entitled to general damages for inconvenience and discomfort.  In particular, in the latter case, Deputy District Judge Winnie Tsui (as she then was) applied So John and in paragraph 102 awarded the plaintiff company a conventional sum to compensate for the inconvenience and discomfort affected by water seepage.

52.  In view of the above authorities, I accept that P is entitled to award of general damages for inconvenience caused to P because of the loss of enjoyment of the Affected Area.  However, P’s authorities are not very helpful in assisting the court to assess the quantum of damages by comparison, as all of them involve domestic premises unlike the industrial premises in the present case.

53.  There is no dispute that P used the Property as a warehouse.  Kenny gave evidence that goods originally kept within the Affected Area were moved elsewhere within the Property but for the water seepage.  Nevertheless, there is no evidence on the quantity or volume of goods relocated and how inconvenient it was because of this relocation exercise. In light of a period of water seepage of no more than 3 months and the lack of evidence of great inconvenience caused, I regard the present case as the least serious category and award a sum of HK$10,000 under this head. 

CONCLUSION & ORDER

54.  As P has conceded the surveyors’ fee should be claimed as costs, I therefore enter judgment against D in the sum of HK$131,914 (including general damages for loss of enjoyment of HK$10,000 and special damages of reinstating the Affected Area of HK$121,914).

55.  P is also awarded interest on the judgment sum at judgment rate from the date of writ until full payment.

Costs

56.  Although the judgment sum is less than HK$150,000 where it is required to justify the attendance by counsel, both counsel are helpful to the court during the whole trial and in particular their legal submissions and their cooperation resulting in narrowing down the issues, which are much appreciated.

57.  I therefore make an order nisi that costs of the whole action be to P, to be taxed if not agreed, with certificate for counsel and such order nisi shall become absolute after 14 days from the date hereof, unless parties make any applications to vary it within such time.

58.  Lastly, I am grateful to both counsel for their kind assistance rendered to this court.