CHIU HO KWAN KELVIN AND ANOTHER v. DOMAY INDUSTRIAL LTD

DCCJ 2208/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.2208 OF 2016

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ASSESSMENT OF DAMAGES

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1.  The 1^st and 2^nd plaintiffs began this action of negligence by writ of summons issued on 10 May 2016. For defendant’s failure to give notice of intention to defend, on 28 Nov 2016, they obtained interlocutory judgment against the defendant for damages to be assessed.

2.  The two plaintiffs are husband and wife. They seek to recover altogether 5 heads of damages for loss and expenses they suffered or incurred due to water seepage (discovered on 2 Feb 2015) from factory unit owned by defendant to office unit rented by the 1^st plaintiff husband (the office unit) one floor immediately below[1] in an industrial building in San Po Kong.

3.  Their total claims are particularized at para 11, and prayer (b), of their Statement of Claim dated 9 May 2016 (SOC) in the sum of $427,520. The breakdowns are: -(1) damaged furniture and equipment - $56,450; (2) damaged goods of 1^st plaintiff - $230,000; (3) damaged goods of 2^nd plaintiff - $31,070; (4) costs of repairs etc. - $90,000; and (5) costs of surveyor - $20,000.

4.  At the hearing before me, none turned up on behalf of the defendant. After hearing counsel Ms Cathy Chan (Ms Chan) instructed by Messrs. Yip & Co. for the plaintiffs, I am satisfied on the affirmations of service before me that the defendant has been properly notified of this hearing and I decided to proceed with the assessment in the absence of the defendant.

5.  Ms Chan has helpfully prepared a written opening submissions for the hearing and I am grateful for her assistance. She called altogether 3 factual witnesses in the following order, namely, the 1^st plaintiff, Mr Wong Chung Yin (Mr Wong) and Ms Shing Tsz Lam (Ms Shing). The 3 of them adopted their respective witness statements as their evidence in chief.

6.  No direction for adducing expert evidence was given and Ms Chan fairly agreed that a condition survey report dated 19 March 2015 for the office unit (the report) prepared by Wong Man Hong Surveyors Ltd. (the surveyor) be admissible as factual evidence only and such parts thereof by way of opinions should be disregarded by this court.

Analysis

7.  I have fully and carefully considered all evidence and submissions before me.

Wasted rental

8.  First of all, the 1^st plaintiff claims wasted rental of the office unit for the 3-month period from 2 Feb 2015 to 1 May 2015 at a total sum of $12,600 at para 13 of his witness statement. This claim, Ms Chan agreed, was nowhere pleaded in SOC and cannot be considered at this assessment of damages.

Assessment of evidence

9.  I accept and give full weight to the documentary evidence before me in the assessment bundle.

10.  As for the 3 witnesses called, I find nothing inherently improbable in their evidence. Their evidence was generally consistent with one another. Mr Wong’s evidence corroborated that of 1^st plaintiff on the claim for costs of repair etc. and that of Ms Shing corroborated that of 1^st plaintiff on damaged goods of 1^st plaintiff. And the documents before me also lend support to their evidence. In particular, I find the many photos of the office unit taken by the surveyor shortly after discovery of the water seepage very helpful in assessing 1^st plaintiff’s evidence (and in making my assessment).

11.  Having carefully considered all the evidence before me, I find all 3 witnesses called honest and reliable. I accept their evidence as I find below. My findings are as follows.

Background

12.  At all material times, the 1^st plaintiff ran a trading business in the trade name of “Creation Industries Company” at the office unit and the 2^nd plaintiff also ran there a garment trading businessin the trade name of “Millennium Uniform Acc. Ctr”.

13.  At all material times, the 1^st plaintiff rented the office unit from Luen Fat Decoration and Construction Company Limited (Luen Fat) at a monthly rental of $4,200. The 2 plaintiffs jointly paid the rental of the office unit. Its gross area was about 500 square feet.

14.  At all material times, Luen Fat carried on a decoration business and its director was Mr Wong. Luen Fat did not own the office unit; it rented the office unit and other adjoining units from other and in turn let them out to, inter alia, 1^st plaintiff.

15.  Ms Shing has an English name of Iris and she was at all material times an insurance agent.

16.  On 2 Feb 2015, the 1^st plaintiff returned to the office unit and found out that that there was severe water seepage inside, with water dripping continuously from the ceiling, causing the floor to be flooded and wet, the furniture and goods inside to be soaked and damaged, accompanied with strong repellent odor.

Costs of surveyor

17.  The 1^st plaintiff instructed the surveyor to inspect, inter alia, the office unit to investigate the cause of, and to assess the loss and damage caused by, the water seepage.

18.  On 4, 6 & 9 Feb and 12 Mar 2015, the surveyor attended and inspected the office unit and completed the report on 19 Mar 2015. The total fee paid for such survey was, I find, $20,000, as was evidenced by a debit note issued by the surveyor before me. This sum, Ms Chan agreed with me, should be recoverable as one item of disbursement in the legal costs incurred by the plaintiffs.

Damaged furniture & equipment

19.  Various furniture and equipment in the office unit totaling 16 items more particularized at para 16 of 1^st plaintiff’s witness statement was, I am satisfied, damaged and contaminated by the odorous water as a result of the seepage.

20.  On this aspect, the surveyor has, I accept, kept a helpful inventory (appendix 1 inventory), and photographic record (appendix 2 photos), of them by way of Appendix 1 and 2 respectively in its letters dated 19 Mar 2015 and 16 May 2017. Having looked at appendix 2 photos and compared them against 1^st plaintiff’s evidence and such admissible factual contents of the report, I am satisfied all such 16 items as described were there at the office unit and damaged by the water seepage, rendering them a total loss.

21.  At para 16 of his witness statement, the 1^st plaintiff set out the purchase prices of these 16 items and their current values after depreciation, making a total claim of $56,450. Save for one invoice dated 6 Mar 2013 which supports the purchase price of one Riso photocopier in the sum of $46,000, no document was produced to prove the purchase price of the other 15 items, or the current value of all 16 items.

22.  The 1^st plaintiff explained that purchase documents of the other 15 items could not be produced as they were purchased some time ago. That of photocopier can be produced as the machine was still under guarantee. He, however, managed to give the purchase prices and current depreciated values of all 16 items from accounting records prepared by accountant. I confess to have some reservation here as accounting records could be produced (but not produced), if the purchase documents are no longer kept by 1^st plaintiff or his accountant.

23.  Nevertheless, absent accounting records, I am prepared to award the 1^st plaintiff a discounted total sum of $50,000 for his head of claim. The invoice of photocopier produced supports the bulk of 1^st plaintiff’s claim here. The remaining 15 items are, I observe, of relatively smaller and modest amounts and I do not find them excessive or unreasonable in general, having looked at, and compared them against appendix 2 photos before me.

Costs of repair etc.

24.  As photos taken by the surveyor on 4 & 6 Feb 2015[2] show, I accept that, as a result of the water seepage, the wooden flooring of the office unit came to become wet. Damp patches, spalling concrete, peeling off and rusting reinforcement were also found on the ceiling and walls as a result[3].

25.  I find that Luen Fat disclaimed responsibility for such internal repairs required by the aforesaid under its lease with 1^st plaintiff, who had therefore to pay for these himself.

26.  The 1^st plaintiff, I accept, engaged Luen Fat to replace the false ceiling, the wooden flooring and to repaint the walls of the office unit and paid Luen Fat a total of $45,000 for these repairs. Such works began in Mar 2015 and were completed in late Apr 2015.

27.  The 1^st plaintiff, I also accept, paid Luen Fat $3,000 for trash removal in the process.

28.  The 1^st plaintiff, I further accept, paid Luen Fat the respective sums of $36,000 and $6,000 for temporary storage of such undamaged items formerly kept at the office unit for a period of 3 months at a ground floor shop of Luen Fat in Kwun Tong and for the transportation involved in the process.

29.  The above works and services, and the expenses thereof, are corroborated by Mr Wong and the quotation and 2 receipts issued by Luen Fat before me.

30.  On enquiry of the court, the 1^st plaintiff added in the box[4] that he had in Feb 2015 sought oral quotations from contractor engaged by the building manager and from a nearby shop before engaging Luen Fat for the above works and services.

31.  He said he decided to engage Luen Fat as it could provide all the above works and services required. The others could not, for example, provide for temporary storage space or trash removal. And he could not find temporary storage space as short as 3 months with estate agents (a term of at least 6 months is required, he said). Finally, the other repair costs quoted were more expensive than that of Luen Fat.

32.  Having carefully considered plaintiff’s explanations in para 30 & 31 above, though there is absent before me written quotations from other contractors, I am prepared to accept on balance that the respective amounts of $45,000 and $3,000 charged by Luen Fat for such repair works it carried out at the office unit and for the trash removal involved are reasonable and not excessive. In coming to this conclusion, I have taken into account the size of the office unit and its damage shown on the photos before me.

33.  I do not, however, accept the temporary storage and transportation charge paid to Luen Fat as reasonable. The monthly rent of the office unit was only $4,200 and the 1^st plaintiff paid as much as $12,000 for each month of temporary storage with Luen Fat. One wonders whether the 1^st plaintiff could with further reasonable effort rent another industrial unit of similar size for as long as 6 months at a total rental lesser than $36,000 charged by Luen Fat. He might have found it more convenient to have all works and services provided by Luen Fat but he is under a duty to mitigate his loss. Absent detailed written information on comparable storage space, I find on balance the 2 sums of $36,000 and $6,000 paid to Luen Fat excessive. I am only prepared to allow a total sum of $32,000 for the services involved.

34.  Hence, I allow a total sum of $80,000 for this head of claim by 1^st plaintiff.

Damaged goods of 1^st plaintiff

35.  At the introduction of her friend, Ms Shing, I accept her evidence and 1^st plaintiff’s evidence, came to know the 1^st plaintiff and she entered into an agreement in Dec 2014 to purchase 100 carton boxes of various kinds of baby products from 1^st plaintiff on behalf of her client and friend.

36.  The agreed purchase price of these goods to be purchased by Ms Shing was $230,000. Ms Shing paid 30% deposit in sum of $69,000 to 1^st plaintiff in Dec 2014 and the balance was to be paid on delivery in early Feb 2015. The 1^st plaintiff has described them in details at para 17 of his witness statement and their detailed descriptions, and their total purchase price, can also be found in one quotation and 2 invoices issued by 1^st plaintiff’s company to Ms Shing before me. Evidence by a debit note before me, the 1^st plaintiff’s company obtained them at a price of $180,000.

37.  When Ms. Shing, accompanied by 1^st plaintiff, came to the office unit on 2 Feb 2015 to inspect the good to be delivered to her, she discovered them to have been soaked and damaged by water seepage. And they discharged odorous smell. Such contaminated 100 carton boxes of baby products are, I find, particularized as item 17 in appendix 1 inventory and they had been captured in appendix 2 photos to have one box stacked on top of another in the office unit[5]. As a result of the water seepage, they were rendered a total loss.

38.  As the 1^st plaintiff could not deliver replacement goods to Ms Shing on or before 7 Feb 2015 as she requested, Ms Shing, I am satisfied, cancelled her purchase and recovered her deposit of $69,000 paid to the 1^st plaintiff.

39.  As such, the 1^st plaintiff lost his goods worth $230,000 at the time of his loss as a result of defendant’s negligence. He is, I agreed with Ms Chan, entitled to recover this sum from the defendant.

Damaged goods of 2^nd plaintiff

40.  The 2^nd plaintiff, I accept 1^st plaintiff’s evidence, had also kept garment goods of her company at the office unit on 2 Feb 2015 when he discovered water seepage.

41.  The 1^st plaintiff has particularized these 6 items at para 18 of his witness statement. Again, they are also found in appendix 1 inventory (as items 18 to 23 thereof) and had been captured in appendix 2 photos before me.

42.  I am satisfied that these garment goods of 2^nd plaintiff company were also soaked with water and damaged as a result of water seepage to the office unit. These contaminated goods, again a total loss, were purchased by 2^nd plaintiff’s company in the total sum of $31,070 in Dec 2014 on an invoice before me. The 2^nd plaintiff is, I agree, entitled to recover this sum from the defendant.

Summary of assessment

43.  In summary, the amounts I assess for such heads I allow are: - (1) damaged furniture and equipment - $50,000; (2) damaged goods of 1^st plaintiff - $230,000; (3) damaged goods of 2^nd plaintiff - $31,070; (4) costs of repairs etc. - $80,000.

Disposition

44.  Accordingly, I enter final judgment in 1^st plaintiff’s favour against the defendant in the sum of $360,000.

45.  I also enter final judgment in 2^nd plaintiff’s favour against the defendant in the sum of $31,070.

46.  Both final judgments are to carry interest at HSBC best lending rate(s) from time to time from 2 Feb 2015 to the date hereof, and thereafter at judgment rate until payment.

Costs of assessment

47.  I further order the defendant to pay the 1^st and 2^nd plaintiffs the costs of assessment of damages, including all costs reserved and the costs of this hearing before me. Failing parties’ agreement, such costs are to be taxed by taxing master.