顏小明 對 多福大厦業主立案法團

LDBM 79/2007

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION

NO. 79 OF 2007

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J U D G M E N T

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1.  The applicant is the owner of Flat B, 17^th Floor (“the Flat”) of Dolford Mansion (“the Building”), at No. 1-3 Chatham Court, Tsim Sha Tsui, Kowloon.  The respondent is the Incorporated Owners of the Building (“the IO”).

2.  The applicant accused the IO of a breach of its duty under Section 18 of the Building Management Ordinance (“BMO”) and Clause 3 of the 4^th Schedule of the Deed of Mutual Covenant (“DMC”) in failing to maintain the common parts of the Building.  The applicant claims for mandatory injunction and damages in respect of water leakage problem at the Flat.

Undisputed Background

3.  The applicant acquired the Flat on 12 March 2001.  The Flat is situated at the top floor of the Building directly beneath the rooftop with the bedroom immediately below 2 water tanks on the roof (floor plan at page 1497 Bundle F), one for city water (“Fresh Water Tank”) and the other for flushing water (“Flush Water Tank”). Sea water is being used as flushing water since around August 2001 (page 1544 Bundle F). 

4.  The applicant had started complaining to the IO about the water leakage found inside the Flat since 2001.  The opening for air-conditioner at the Flat was being covered by plastic sheet since March 2001 until 2003 when it was being sealed with glass pane.  On 13 October 2001, repair work had been conducted on the water tanks by Rich Engineering Ltd (“Rich”) (page 1578 Bundle F). 

5.  The applicant issued the proceedings in the High Court on 19 December 2001 and by an order of the High Court, the case was transferred to the District Court on 18 March 2002 (DCCJ 2434/2002).  By an order of the District Court on 16 January 2003, the action was stayed for new action to be commenced in the Lands Tribunal.

6.  In June 2002, the IO engaged Mayer Waterproofing Construction Co. Ltd. (“Mayer”) to conduct repair and water-proofing work on the roof and the external wall of the Building (page 1390-1392 Bundle F).  The work performed by Mayer completed on 25 June 2002. 

7.  In July 2002, the applicant engaged Vincent Ip & Associates, Architects & Engineers (“Vincent Ip”), to conduct inspection of the Flat and to investigate the condition of the water leakage problem. 

8.  The applicant kept complaining to the IO about cracks were still found on the roof and there was water leakage in July and October 2002.  Mayer inspected the roof and the Flat on 21 February 2003 and 6 April 2003 respectively.

9.  On 13 June 2005, the IO engaged Rich to replace all damaged pipes and also to perform waterproofing repair work on the rooftop of the Building.  However, Rich opined that repair works to the rooftop would aggravate the spalling of concrete on the ceiling of the Flat so the applicant should repair the ceiling of the Flat before anything done to the rooftop.  The applicant disagreed.  Eventually, repair work was only done to the external wall of the water tanks as well as the upper roof of the stairhood but not the water-proofing system on the rooftop.

10.  On 10 January 2006, the applicant received a letter from the Building Department advising him to arrange for repair to the exposed reinforcement on the ceiling of the Flat.

11.  The applicant issued the proceedings in this case on 8 March 2007.  Due to the failure of the parties to agree on the appointment of experts and inaction by the parties between August 2009 and July 2011, the trial of this case was only heard in 2012.

12.  On 26 March 2008, the IO engaged the Hong Kong Macau Water Proofing Eng Co. Ltd. (“HK Macau”) to conduct water seepage test on the rooftop and to repair the water-proofing work on the roof and to the side of a window of the Flat.  Work completed on 18 April 2008.

13.  At this trial, the applicant is asking for :

(a)  a mandatory injunction against the respondent to carry out all reasonably necessary repair to the water tanks, the water proofing membrane and the external walls of the Building to the satisfaction of an Authorised Person (“AP”) jointly appointed by the parties with costs of engaging the AP to be borne by the respondent;

(b)  damages in the sum of HK$204,550 as repairing costs and the sum of HK$888,000 being loss of rental income up to 12 July 2012.

Relevant Provisions of the DMC and BMO

14.  For easy reference, the relevant provisions of the DMC and the BMO are copied herein.

15.  Clause 3 4^th Schedule of the DMC

“It shall be the duty of the Manager to manage and provide services in respect of the said Building and in particular the Manager should arrange for … repairing maintaining and cleansing of the common parts services and facilities.” (page 1525 Bundle F)

16.  Section 18 (1) of the BMO

“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 obligation contained in the deed of mutual covenant (if any) for the control, management and administration of the building.”

The Agreed List of Issue

17.  Before trial, it is agreed that the issues to be determined are as follows :

(a)  Whether there has been water leakage at the Flat since about March 2001?

(b)  What was the cause of the water leakage at the Flat:

(i)    the water proof membrane of the roof (“the Membrane”);

(ii)   the Flush Water Tank;

(iii)  the external wall (“the External Wall”);

(iv)  the windows and air-conditioner openings of the Flat;

(v)   the applicant’s failure in his duty to maintain the Flat in good repair?

(c)  Whether the duty of the IO under Section 18 of BMO is absolute?

(d)  Had the IO taken reasonable steps to discharge its duty under the BMO or DMC to keep the common parts of the Building in good repair?

(e)  Whether the applicant’s failure under paragraph (b)(v) above had obstructed the IO in its discharge of duty?

(f)   If liability is established, what is the quantum of damages on:

(i)    repair costs;

(ii)   loss of rental income; and

(iii)  nuisance;

(g)  Whether the applicant has failed to mitigate his damages?

Whether there has been water leakage at the Flat since about March 2001?

18.  The applicant said that upon completion of the sale of the Flat, he found more serious water leakage in the bedroom.  He then started complaining to the then chairman of the IO and the manager of the Building since mid-March 2001, orally, by letter as well as at the owner’s meeting. 

19.  The respondent, on the other hand, contended that there was water seepage problem at the Flat in around September or October 2007 on 2 small areas on the wall of the living room and the ceiling of the balcony, as found by its expert, Mr. Lee Chun Fat (“Mr. Lee”).  Before this, inspection by Mayer on 6 April 2003 and by the caretaker of the IO on 11 August 2004 showed no water leakage.

20.  Having considered the factual evidence as well as the expert evidence adduced by both parties, I found on a balance of probabilities, that there was water leakage inside the Flat since March 2001. 

21.  There is no dispute that the applicant started complaining to the respondent about the water leakage from the roof and the external wall time and again ever since he acquired the Flat in 2001 (see paragraph 9 of the statement of Madam Ng at page 104 Bundle A).  If there was in fact no water leakage problem with the Flat, one would wonder why the applicant should spend so much effort in raising the matter by way of complaint with the IO. 

22.  If there was no water leakage in 2001, it would be absurd for the applicant to engage Vincent Ip to inspect the Flat on 2 July 2002.  The findings in the report prepared by Vincent Ip (“the Ip’s Report”) did confirm the fact that there was water leakage inside the Flat in 2002.  And judging from the photos taken by Vincent Ip (page 206-208 Bundle B), the water leakage problem must have existed for some time.  The applicant’s contention is supported.

23.  Apart from this, the observation by Mr. Stewart Wong (“Mr. Wong”), another expert of the applicant also rebutted the IO’s contention.  Mr. Wong was first involved in this case since August 2003 and had visited the Flat a number of times ever since and had prepared 8 reports.  In his 1^st Report (page 501-560 Bundle C), he recorded the fact that live water leakage was found during his visits between 26 August 2003 to 3 April 2004 as observed by him (photo at page 524-530 and 538 Bundle C).  The moisture content measurement conducted by Mr. Wong in the bedroom of the Flat showed a result of 100% and this is consistent with water leakage inside the Flat.  In his 2^nd Report (page 561-589 Bundle C), Mr. Wong recorded the result of dampness check on the ceiling of the living room and the bedroom conducted on 15 and 20 September 2006 which showed again a reading of 100%.  He concluded that such a finding did support the fact that there was water leakage on the ceiling.  There is nothing to rebut these evidence from Mr. Wong.  I accept his evidence which tend to show that water leakage did occur inside the Flat in 2003 and 2004.

24.  As for the inspection by Mayer on 6 April 2003 is concerned, Mayer reported to have found “no water stain” inside the Flat (page 1400 Bundle F).  Yet it is also recommended by Mayer in its report that professionals should be engaged to conduct tests in order to ascertain the cause and location of the water leakage.  I found the two findings are inconsistent with one another.  Had Mayer not found any water stain inside the Flat which suggested no water leakage occurred, why was there the need to engage professionals for further tests to be conducted?  I found the observation by Mayer is in conflict and not reliable.

25.  As for the inspection by the Manager’s staff on 11 August 2004, this was recorded in a letter to the applicant dated 30 December 2004.  There is no contemporaneous record produced nor the relevant staff being called to give evidence to substantiate this fact.  I declined to attach any weight to such evidence.  And given the fact that Mr. Wong, expert of the applicant had found water leakage inside the Flat in April 2004 by way of scientific test, I declined to accept the evidence of the Manager’s staff by way of observation only.

26.  I found that there was water leakage inside the Flat since about March 2001.

What was the cause of the water leakage?

27.  Both parties had engaged a number of experts to find out the cause of the water leakage.  Summary of the findings of each expert are enclosed in Appendix A attached to this judgment.

28.  The applicant’s case is that the water leakage problem was caused by defects in the water tanks, the external wall as well as the water-proof membrane of the roof floor slab.  The applicant’s expert observed live water dripping and signs of water leakage at the ceiling with stalactites formed at 2 different locations of the ceiling inside the bedroom.  Multiple cracks were found on the walls of the water tanks as well as on the floor of the roof slab.  Scientific tests result are consistent with the findings of water leakage.

29.  The IO, on the other hand alleged that the water leakage was caused by rainwater and/or dampness coming from the windows/window frames and the air-conditioner opening of the Flat during rainy seasons as well as the failure by the applicant to maintain the Flat in good repair, resulting in high room humidity with moisture trapped inside the concrete.  The IO’s experts found no evidence of water seepage through the roof, the external walls or the water tanks except a small area on the wall next to the window at the living room and a small area on the ceiling at the balcony area.  Dr. Lau opined that the weak point on the wall was caused by poor workmanship during construction and leakage through window, window frames and concrete around the windows are common in Hong Kong.  And the other defects found inside the Flat were not caused by water or moisture but instead by insufficient concrete cover, poor workmanship and dilapidation over a long period of time.

30.  I found the existence of the 2 stalactites inside the bedroom had rebutted all the allegations of the IO and rendered the IO’s contention on the cause of leakage implausible.

31.  All the expert witnesses agreed that the formation of stalactites required constant seepage of water from a constant point for a substantial period of time.  The existence of the stalactites since around 2008 is not in dispute.  The experts of the IO had expressed their view as to the formation of the stalactites under cross-examination.  The overall conclusion is that the existence of the stalactites showed water leakage from above.

32.  Mr. Cheung confirmed that the moisture within the air would not be enough to cause water drips.  So the stalactites and the water dripping cannot possibly be a result of the atmospheric moisture.  Mr. Cheung opined that it cannot be caused by something within the Flat but rather above the Flat or from the external wall.

33.  Mr. Lee confirmed that ingress of rainwater through windows or air-conditioner openings and change of room temperature would not result in the formation of stalactites.  Instead, he opined that it was likely that there was water leakage from the water tanks and the roof, with leakage from the water tanks more likely.  He accepted that the stained cracks on the external wall below the water tanks did raise the reasonable suspicion that there was leakage from the tanks.  He also agreed that with the existence of the stalactites, stained cracks and water dripping inside the Flat, coupled with the result of the chloride test, the only possibility is that the water tanks and/or the roof and/or the external wall are in leakage.

34.  Even though Dr. Lau had in his report indicated that he did not know how the stalactites were formed, he had suggested that the reason may due to water leakage above or condensation as a result of change of temperature in the opening and closing of windows.  Yet, his evidence is also that there was only 25% chance for the stalactites to be formed by condensation and if it was not condensation, it must be leakage from above.  The microwave scanning test conducted by Dr. Lau also supported this finding since the moisture accumulation on the ceiling of the bedroom was more extensive at 110mm instead of at 30mm, i.e. the further into the ceiling, the more moisture found.  This shows water must have come from above and not from the surface of the ceiling. This also supports the finding that the water proof membrane of the roof must be defective so that water seeps through it onto the concrete of the ceiling.

35.  Judging from the evidence of the IO’s experts above, there is no other explanation for the formation of the stalactites except water leakage from above the Flat, i.e. the water tanks and the roof.  This supports the conclusion found by the applicant’s experts.  The fact that there was water dripping with stalactites formed had proved the IO’s allegation of rainwater coming into the Flat through the windows/window frames or air-conditioner openings, moisture trapped inside the concrete/Flat or room humidity cannot stand.  The opinion of Mr. Lee, Mr. Cheung and Dr. Lau had proved this not to be the case.  The IO’s contention as far as the cause of the water leakage is concerned is not supported by its own expert evidence and must be rejected.

36.  The IO is relying on the water dye test conducted by Mr. Cheung to show that the water-proof membrane is still effective since no colour dye was found in the Flat after the test.  The effectiveness of the test conducted by Mr. Cheung is in issue.  Mr. Cheung only flooded the roof for 2 hours whilst the applicant’s expert opined that it should be flooded for at least 24 hours for effect to be shown.  Whilst Mr. Cheung relied upon the General Procedures issued by the Joint Office of the Building Department and the Food and Environmental Hygiene Department (Exhibit R4), the applicant’s expert relied upon the General Specification for Building issued by the Architectural Services Department. 

37.  Having considered the evidence, I found the opinion of the applicant’s expert should be preferred.  Exhibit R4 relied upon by Mr. Cheung is only catered for testing of water leakage on floor slabs of balcony/bathroom/kitchen and not for rooftop.  I agreed with the applicant that the standard for rooftop may not be the same for balcony or bathroom.  The reliance of Mr. Cheung on Exhibit 4 to justify a flooding of 2 hours is unjustified.  What’s more, when HK Macau performed a similar flooding test of the roof, it also recommended a flooding of 24 hours (page 1421 Bundle F).  This is consistent with the request made by the applicant’s experts to Mr. Cheung.  This tends to show that a 24 hour flooding should be the norm otherwise HK Macau would not have proposed the same in its ordinary course of work.

38.  There is also this dispute on the sufficiency of the colour dye.  The applicant’s exert opined that the colour used was too light so nothing seen on the ceiling of the Flat.  Mr. Cheung disagreed with this.  I found this to be irrelevant since experts for both parties did conduct infrared thermographic test inside the Flat after the flooding and confirmed the moisture inside the ceiling had increased.  Mr. Cheung also agreed under cross-examination that the infrared thermographic test confirmed there was water inside the ceiling and this should not be air humidity since it would not be that substantial and the only conclusion to be drawn from the test result was that there was water leakage. Even though the colour water didn’t show on the ceiling of the Flat, I found the infrared thermographic test do confirm that there was water leakage from the water tanks and/or the roof with water goes through the roof slab onto the concrete of the ceiling, the only reasonable inference must be that the water-proof membrane of the roof is ineffective.

39.  Furthermore, the rust stain found on the external wall of the water tanks do support the conclusion that there was water leakage from the water tanks.  This finding of the applicant’s experts was endorsed by Mr. Lee and the infrared thermographic survey conducted by Mr. Cheung on the external wall of the Flush Water Tanks also confirmed that there were cracks with water trapped inside.  I found there was water leakage from the water tanks.

40.  As for the leakage from the external wall, the tests conducted by Mr. Cheung and Mr. Lee in 2010 and 2008 respectively did confirm that there was weak point on the external wall with water seepage.  This also supports the conclusion reached by the applicant’s experts.

41.  The IO is trying to contrast the condition of the common area on the 17/F with the condition inside the Flat.  The condition of the common area on the 17/F is much better than the Flat with no water seepage found by the IO’s experts.  But this argument cannot stand since Dr. Lau also agreed that there was no problem with the common area since it was far away from the water tanks.  This is also the observation expressed by the experts of the applicant.

42.  I found the water leakage inside the Flat was caused by leakage from the water tanks above the Flat as well as the external wall of the Building.  The water proof membrane of the roof floor slab is also ineffective to prevent the water running and showed on the ceiling of the Flat.

The applicant’s failure in his duty to maintain the Flat in good repair

43.  The IO alleged that water leakage was caused by the applicant’s failure to arrange for the repair of the Flat upon his acquisition.  Given my finding that the cause of the water leakage was from the water tanks, the external wall as well as the water-proof membrane of the roof, I can’t see how the applicant’s failure to repair has anything to do with the leakage.  In any event, there is no expert evidence to support such a contention.

44.  There is also the dispute as to whether the applicant should arrange for the repair before the water leakage problem has been cured.  The IO alleged that the applicant should and this is also viable according to the opinion of the applicant’s own expert, Dr. Lam.  On the contrary, it is the applicant’s evidence that the contractors he engaged after acquiring the Flat for the renovation work told him that there was no point for the renovation work to be performed before the water leakage problem was being fixed.  Such an observation was endorsed by Mr. Wong and Dr. Lai.

45.  I found the argument of the applicant a sensible one.  The cause of the water leakage originated from the water tanks, the water-proofing membrane of the roof as well as the external wall.  The water leaked will cause damage to the ceiling and the walls inside the Flat.  Any renovation work done to the ceiling and the walls will be ruined by the water leakage again unless and until the leakage problem had been cured.  This is a natural consequence.  There is no evidence to suggest that if repair works were to be conducted by the applicant, the damage could be levied; on the contrary, the repair work will be wasted if the water leakage is still subsisting. 

46.  There is no expert evidence from the IO to support the contention that the applicant should repair the Flat before any work to be done on the roof.  The IO is relying on what Dr. Lam said in his report dated 13 June 2009 to argue that Dr. Lam also agreed that repair work should be done to the Flat before the water tanks are to be repaired.  It is found by Dr. Lam in the said report that “the water tank is highly likely to be separated from the structural system, i.e. not cast monolithically to the roof slab…The significance of this is that the water tank has a base slab which is supported by the roof slab (i.e. ceiling) of the bedrooms.  Therefore, to alleviate the water seepage, it is necessary to carry out repair directly from the ceiling of the premises and to the base slab of the water tank” (page 468 Bundle C).  Dr. Lam had explained in his testimony that since the water tank got its own floor slab, repair should be done to the floor slab of the water tank to stop the leakage before repair work should be done to the ceiling of the Flat.  Dr. Lam further explained that if the leakage was not cured, water would be trapped in the roof slab and after a period of time when the roof slab could not hold the water anymore, water dripping would appear.  So, his conclusion is that the repair of the floor slab of the water tanks should be done directly from the ceiling of the Flat below.  I found what Dr. Lam said in his report and relied upon by the IO is just a repetition of such a conclusion.  If this is the case, there is no point for the applicant to arrange for the repair work of the Flat, in particular on the ceiling, to be conducted because the repair of the water tanks involved the opening up of the ceiling of the Flat.

47.  I found that the applicant’s failure to arrange for repair work to be conducted at the Flat before the water leakage problem has been cured is reasonable and cannot be blamed.

Whether the duty of the IO under Section 18 of BMO is absolute

48.  There is no dispute that it is the IO’s duty to maintain the common parts of the Building in a state of good and serviceable repair under Section 18 of BMO.  It is also not in dispute that such a duty is never intended to be absolute in the sense that the overall duty imposed was one of proper management, i.e. doing all that was reasonably required in the circumstances (Lo Yuk Chu v Hang Yick Properties Management Ltd [1996] 4 HKC 278).  However, liability may arise if there is fault on the part of the IO or having been made aware of the defects which required remedy, the IO takes no appropriate steps (Lau Chun Wing Rod v The Incorporated Owners of Po On Building  CACV 20/2007).

49.  The respondent, in its final submission, raised that there is no provision in the DMC to require the IO to maintain the common parts of the Building.  It is contended that such a duty is being imposed on the Manager of the Building by Clause 12(v) of 4^th Schedule DMC (page 29 Bundle S2).  And it is provided in Clause 6 of 3^rd Schedule of the DMC that “during such time as any Manager is appointed and acting, the function of the Committee shall be limited to representing the owners in all dealings with the Manager” (page 24 Bundle S2), so there is no basis for the applicant to allege that the IO owed a duty to maintain, or cause the Manager to maintain the common parts of the Building.

50.  I found the IO’s contention misconceived.  The whole paragraph of Clause 6 3^rd Schedule reads as follows :

“During such time as any Manager is appointed and acting, the function of the Committee shall be limited to representing the owners in all dealings with the Manager. Subject thereto the Committee shall be responsible for and shall have full power to undertake the management of the said premises and to exercise all the powers conferred on the Manager by this Deed.”

51.  It is apparent from the last sentence of Clause 6 of 3^rd Schedule that the Manager is taking up the management of the Building from the IO.  Upon the appointment of the Manager, the duties of the IO are overtaken by the Manager. The Manager is just an agent of the IO, carrying out the duty on behalf of the IO.  This tallies with the provision under Section 18(2)(c) BMO which empowers the IO to “retain and remunerate a manager … to carry out on behalf of the corporation any of the duties or powers of the corporation under this Ordinance or the deed of mutual covenant”.  Upon appointment of the Manager, the IO must have retained the responsibility in making sure that the Manager did discharge its duty properly under the DMC.  To accept the respondent’s contention that upon the appointment of the Manager, the IO will be relieved of its responsibility is an affront to common sense.  The respondent’s contention that it is only the Manager’s duty but not the IO’s to maintain the common parts of the Building cannot be accepted.

Has the IO taken reasonable steps to discharge its duty?

52.  It is the contention of the IO that it had done all that was reasonably required to deal with the water leakage of the Flat by:

(a)  Tried their best to accommodate the applicant’s request by contacting the applicant in written form and even by registered post;

(b)  Had responded as quickly as possible to complaints raised by the applicant;

(c)  Tried their best to accommodate the applicant’s schedule in making appointment with qualified contractors to inspect the water leakage problem;

(d)  Though the applicant failed to show up time and again at the appointed time, the IO kept approaching the applicant for further appointment;

(e)  Had invited the applicant to join and become member of the IO and to attend the Owners’ Meeting;

(f)   Had consulted an architect (沈大中建築師) (“Architect Shum”) in around 2002 and engaged Mayer, Rich and HK Macau to perform repair work at the roof top of the Building and/or the external walls of the Flat; and

(g)  Had followed up on advice given by Rich by requesting the applicant to repair the internal of the Flat before the IO can arrange for repair on common parts.

53.  The applicant, on the other hand contended that the applicant had failed to take reasonable and appropriate steps to identify the true cause of the water leakage and to implement effective remedy to solve the problem.

(a)  Having made aware of the Ip’s Report, the IO had only arranged Mayer to relay the water-proof membrane on the roof and failed to deal with the cracks found on the external wall and the water tanks as suggested by Vincent Yip;

(b)  Upon receiving the complaint by the applicant that cracks were still found on the roof after the work by Mayer, the IO failed to take any remedial action;

(c)  Even though Mayer had in its report suggested test to be conducted to ascertain the cause and location of water leakage, the IO failed to engage professional consultant in this regard;

(d)  The IO had ignored all requests by the applicant for joint inspection and appointment of independent expert, enquiry as to follow up action to be taken on the Ip’s Report and cause of water leakage being caused by the use of sea water between 2004 and 2006;

(e)  Without engaging professional expert to look into the cause of the water leakage problem, failed to ensure that the renovation works done by Rich in early 2006 would be able to solve the water leakage problem;

(f)   The engagement of Rich did not include any repair work on the water tanks which had been highlighted in the Ip’s Report;

(g)  Repair work proposed to be done to the roof and the external wall were in fact not proceeded with and unreasonably insisted on requiring the applicant to complete the repair work inside the Flat before work done to the roof slab;

(h)  Even though HK Macau had suggested in around March 2008 in the quotation for a 24 hour flooding test to be conducted after the repair work on the roof, this was not done;

(i)    Upon service of the expert reports on the IO in this case, the IO had taken no further step to keep the common parts in good repair.

54.  There is no dispute that the IO has the duty to maintain the common parts of the Building in good repair.  Such duty is not absolute and liability will arise if, having made aware of a defect which requires remedy, the IO fails to take appropriate steps.  What amounts to appropriate steps is fact sensitive.  I found the appropriate steps must be addressed at finding out the cause of the water leakage as well as the remedial work to be done to levy the same.

55.  Having considered the evidence in this case, I found the IO had failed to take reasonable steps in both regard.

56.  The IO seemed to be taking all the initiative to liaise with the applicant upon receipt of his complaint, trying to arrange for qualified contractor to inspect the water leakage problem and had also engaged Mayer to carry out the repair work on the roof on 25 June 2006 (page 1390 Bundle F) before receipt of the Ip’s Report.  I agreed with the observation by Deputy Judge K. W. Wong (as he then was) in Lau Chun Wing Rod v The Incorporated Owners of Po On Building DCCJ 762/2004 that “any remedial action done … if administered blindly without first having diagnosed the problem, is meaningless and does not amount to taking reasonable steps in maintaining the roof” (at para. 117).  The engagement of Mayer by the IO falls squarely within this observation.  Without ascertaining the cause of water leakage, the work by Mayer cannot be accepted as reasonable steps taken in maintaining the roof.

57.  Even if what the IO done in engaging Mayer cannot be faulted, I found the IO had been lax in taking reasonable action after being made aware of the water leakage problem as revealed in the Ip’s Report.  Counsel for the IO submitted that the IO was never shown that there was water leakage until 2008 when the IO’s expert, Mr. Lee confirmed there was sign of water leakage after the ponding test.  I disagreed.  There is no dispute that the applicant had supplied the IO with a copy of the Ip’s Report and this must be the moment when the IO was made aware of the water leakage problem.

58.  As rightly pointed out by Counsel for the applicant, Mayer was only engaged to relay the water proof membrane without anything done to address on the water leakage on the external walls and cracks on the water tanks mentioned in the Ip’s Report.  It may be reasonable for the IO to rely on the Ip’s Report so that no expert of their own was being engaged then, but there is no reasonable explanation for the IO just to rely on part of the conclusion in the Ip’s Report but not the other.  The IO had not conducted any test on its own at that stage so as to justify their not accepting the opinion in the Ip’s Report about the problem on the water tanks and the external walls.  Yet, the IO had not performed any repair work on them.  I found the IO had not taken appropriate steps to confirm and/or remedy the problem with the water tanks and the external walls.

59.  Even though the IO had asked Mayer to inspect the roof of the Building as well as the Flat upon receipt of the complaint by the applicant about cracks found on the rooftop, the IO just relied upon the visual findings of Mayer without conducting any scientific test on the roof.  After inspection, Mayer found the cracks on the roof did not cause the water leakage at the Flat but suggested the IO to engage professional consultant to conduct tests to find out the real cause for the water leakage.  Judging from this recommendation by Mayer, there is every reason for the IO to doubt whether the Mayer had the expertise in the diagnosis of water leakage problem.  Even if the IO is justified in accepting the expertise of Mayer, there is no justification for the IO not to follow the advice of Mayer in engaging professional consultant to ascertain the cause of the water leakage.  It is unreasonable for the IO to selectively accept only part of the advice of Mayer.  The IO had apparently failed to follow up on the advice of Mayer which the IO accepted as an expert.  By not conducting further test, I can’t see how the IO can insist that the water leakage problem had already been fixed by Mayer.  I found the IO had failed to take reasonable steps in discharging its duty in ascertaining the cause of the water leakage.

60.  The IO also relied upon the opinion of Architect Shum to justify its action.  Yet, the opinion of Architect Shum is just to confirm that the repair and water-proof work of Mayer was fine.  There is no evidence as to what Architect Shum had done to come to such a conclusion.  No expert report prepared by Architect Shum was produced and the findings of him was only related by Madam Ng in her evidence.  This court has hesitation in attaching any weight to such evidence. Even if what Architect Shum said was true, this did not answer the defect found by the Ip’s Report on the external wall and the water tanks.  I do not accept that the opinion of Architect Shum can be relied upon by the IO to claim that it showed the IO had already discharged its duty in repair. 

61.  Again, without doing anything to ascertain the cause of the water leakage, the IO engaged Rich to carry out inter alia, water-proof works on the roof and the external walls in September 2005.  As stated in paragraph 56 above, to arrange for repair work blindly without diagnosis of the cause of water leakage does not amount to reasonable steps in the discharge of its duty. 

62.  And the IO’s acceptance of the advice of Rich in insisting that the applicant should repair the ceiling of the Flat before Rich proceeded with the work on the roof is unreasonable.  As stated in paragraph 45-46 above, there is no point in mending the ceiling of the Flat before the water leakage problem is being solved since further damage would be caused to the ceiling with the continuing water leakage problem still in existence.  There is no expert advice on this matter sought by the IO and the IO just accepted the opinion of Rich.  Counsel for the IO submitted that there is no reason for the IO not to accept the advice of Rich.   I do not agree.  There was nothing to suggest that Rich was in a position to give opinion on the structure of the ceiling and the roof floor slab.  It is unreasonable for the IO just to accept such an opinion instead of engaging an expert to confirm the same.  By blindly accepting the opinion of Rich cannot be considered a reasonable step taken by the IO.  And if the IO agreed with the opinion of Rich, why would it still engage HK Macau to do the same work in 2008 when the condition of the spalling concrete on the ceiling should have further deteriorated.  I doubt if the IO was genuine in accepting the opinion of Rich or just use this as an excuse to delay the repair work.

63.  The work done to the external wall of the water tanks by Rich is again another attempt by the IO to conduct remedial work without first finding out the problem in it.  Neither was there any evidence to show that the remedial work done by Rich in this regard is effective to cure the problem.  Even Dr. Lau opined that more detailed test need to be conducted to ascertain if the patch up work on the external wall of the water tanks is sufficient to cure the problem.  The IO is again not acted reasonably in the discharge of its duty to ascertain what sort of cracks were on the water tanks and what kind of remedial work should be adopted in curing the same.

64.  The IO also alleged that the applicant had made it more difficult for the IO to discharge its duty by refusing to provide his telephone contact with the IO and insisted on receiving mail, rendering the communication between the parties less effective; refusing to deposit the key to the Flat with the management making it difficult for the IO to engage contractors; requiring written application from the IO for inspection and proof of personal identity at every inspection.  I found none of these acts of the applicant, even if they are proved, affect the IO in the discharge of its duty by doing what should be done as particularised in paragraph 56-63 hereinabove.

65.  I found the IO had failed to take reasonable steps to discharge its duty and had been in breach of S. 18 of BMO and Clause 3 4^th Schedule of the DMC in failing to maintain the water tanks, the water-proof membrane and the external wall in good repair.

What is the quantum of damages?

66.  The applicant is claiming for repair costs as well as loss of rental income.

Repair Costs

67.  It is the applicant’s case that the costs for the repair of the Flat amounts to HK$204,550 as assessed by Mr. Wong.  The IO relied on the assessment by Mr. Cheung and contended that a sum of HK$40,000 should be sufficient for such purpose.

68.  It must be noted that the assessment by Mr. Cheung is only confined to the repair of the defective mosaic tiles finishes on the external wall of the Flat and had not addressed on the internal repair of the Flat.  So, there is no evidence before this court to refute the assessment by Mr. Wong.  Having said so, this court still has to be satisfied that the damages assessed under this head are reasonable and necessary.

69.  The items under this head of claim which is subject to challenge by the IO as revealed in the cross-examination of Mr. Wong is the claim for the replacement of the teak parquet flooring, the replacement of the aluminium windows and the doors together with its frames. 

70.  Even though the witnesses of the IO failed to notice the condition of the flooring, I found the applicant also failed to adduce evidence that the flooring required a replacement.  Mr. Wong is the only witness who had testified in this regard. Yet, there is no photo taken to show the condition of the flooring even though Mr. Wong and the other experts of the applicant had taken a number of photos on the internal condition of the Flat.  Had there been damage to the flooring so much so that a replacement is required, one would expect particular attention will be paid to it by taking some photos to substantiate it.  In fact, Mr. Wong also agreed that it was his usual practice to take a close up shot if he noticed any damage.  Yet, he offered no explanation as to why photos of the flooring were not taken. 

71.  What’s more, Mr. Wong had only included this item in his assessment when he prepared his 3^rd report.  When first asked about this, Mr. Wong’s explanation is that the first two reports concentrated on the cause of water leakage with damages to be dealt with in later reports.  This is apparently not true since he did offer his detailed assessment of damages in his first 2 reports.  Mr. Wong then explained that the costs for the replacement had already been included in the first 2 reports by adding a “+” after the whole sum to indicate such a potential claim since there might be other losses in future.  But it was Mr. Wong’s opinion in his 1^st report that the flooring required localised repair instead of replacement, should he not include the costs for the repair of the flooring in his assessment when this was already a known head of expenses?  His explanation is beyond belief. 

72.  The same applies to the windows and the doors.  There is no photo to show the damage of the windows and the doors nor is there anything mentioned in the reports of Mr. Wong about any damage on them.  Although Mr. Wong said that the hinges of the window embedded in the concrete may become rusty hence required a replacement, this is just a wild guess by him since he agreed that he had not done any open up examination. 

73.  I found the assessment by Mr. Wong for the repair costs is necessary and reasonable except for the replacement of the teak parquet flooring, the aluminium windows and the doors with door frames.  The IO should only be liable for HK$168,900 under this head of claim. 

Loss of Rental Income

74.  Both parties had instructed Chartered Surveyor to prepare valuation report on the monthly rental of the Flat. 

75.  Mr. Pang Shiu Kee (“Mr. Pang”), the applicant’s expert, had made use of comparables of the Building in his analysis and reached his conclusion on the market rent of the Flat on yearly basis from 12 March 2001 to 12 March 2011.

76.  Mr. Keith Siu (“Mr. Siu”) is the expert for the respondent.  He had considered and analyzed a host of comparables from adjacent residential developments. Adjustment had been made based on the private domestic rental index for Class A, B & C published by the Rating and Valuation Department to derive the rental of the Flat on monthly basis from March 2001 to May 2012.

77.  Having considered the evidence as well as the reports of Mr. Pang and Mr. Siu, I found the opinion of Mr. Pang to be more reliable and should be preferred.  The IO had commented on Mr. Pang’s analysis by including the comparable of Flat 3A of the Building which comes with a sun roof with a size of over 3 times the property itself.  The respondent queried such a move had boosted up the average unit rate and is unreliable.  Mr. Pang agreed that the inclusion of Flat 3A in his analysis is unnecessary since even if it were to be taken out, the end figure is more or less the same.  Such a result showed that even though Flat 3A may well be excluded, the inclusion of such in the analysis did not render the result unreliable. 

78.  The shortcoming of Mr. Siu’s analysis is that, unlike Mr. Pang, he did not have the benefit of making use of comparables of the Building itself.  As agreed by Mr. Siu under cross-examination, by using comparables of the Building, no adjustment in respect of location, age, accessibility and size is required to be conducted and Mr. Pang’s report can more accurately reflect the rental value of the Flat.  Having said so, I must emphasise that this is through no fault of Mr. Siu since Mr. Pang is able to obtain the comparables of the Building which are not open to public directly from the Rating and Valuation Department.

79.  The unreliability of Mr. Siu’s opinion can also be reflected from the fact that in picking the comparables, he had to rely on comparables back in 1997 and 1999 and after adjustment, the unit rental rate is exceptionally low and unrealistic (at around $10 per sq. ft) for the year 2011 when the other comparables are in the range of $21 to $32 per sq. ft. (page 1107 Bundle E).  Again, this is through no fault of Mr. Siu because there was no recent comparables in the region where the Building situated.  But even though Mr. Siu agreed that comparables with exceptionally high or low rental value should be disregarded in the analysis, Mr. Siu had not done so in this case.  His explanation is that there is nothing to suggest that the information is questionable and as long as adjustment was properly made, the end figure is more or less the same. 

80.  I found the explanation by Mr. Siu unacceptable.  The unit rate for the comparables in the 1990s, even after adjustment, are apparently much lower than the other 3 comparables adopted by Mr. Siu which were in 2010 or 2011.  The acceptance of the exceptionally low rental unit rate of the 1990s by Mr. Siu had inevitably dragged the average unit rate down to $18.80.  Comparing this end figure with those transactions in the 2010 and 2011, one would undoubtedly come to the conclusion that the figures in the 1990s should be disregarded since they are by no means within the reasonable range of the market rental in 2000s and must raise reasonable suspicion that there is something peculiar about these transactions and should not be relied upon.  As suggested by the applicant, it would be unrealistic for someone to be able to rent a flat of about 1000 sq. ft. in Tsim Sha Tsui area at a unit rate of $10 in 2011.  Such a finding should be sufficient for Mr. Siu to have disregarded such a comparable.

81.  Apart from adopting such unrealistic comparables, I also found Mr. Siu’s usage of the Rental Indices prepared by the Rating and Valuation Department (“the Indices”) questionable. The Indices are divided into different classes (i.e. Class A to E) according to the size of the property.  Each class got its own index and there is also a column of figure for Class A, B & C collectively.  In analysing the comparables, Mr. Siu had used the collective figure of Class A, B & C instead of using the figure for that particular class which the property belonged to.  Mr. Siu, whilst accepting that it would be more accurate to adopt figure of that particular class, explained that he adopted the collective figure just to use a more simple method to present since by using the figure of particular class, even professionals had difficulties in understanding it.  If what Mr. Siu said is right, it would not be necessary for the Indices to be divided into different classes.  I accept Mr. Pang’s opinion that property of different classes should adopt the index of its class and there is no point in comparing 2 properties of different class.

82.  I accept the valuation of the annual rental by Mr. Pang and they are (page 774 Bundle C):

Relevant Date	Market Rental Value
12th March 2001	HK$6,600 per month
12th March 2002	HK$6,400 per month
12th March 2003	HK$5,200 per month
12th March 2004	HK$5,200 per month
12th March 2005	HK$5,600 per month
12th March 2006	HK$5,500 per month
12th March 2007	HK$6,100 per month
12th March 2008	HK$8,100 per month
12th March 2009	HK$5,800 per month
12th March 2010	HK$8,400 per month
12th March 2011	HK$8,100 per month

83.  There is no evidence from Mr. Pang as to the rental value for the year beginning 12 March 2012.  According to the calculation of the claim, the applicant is adopting the same figure for the year 2011 to calculate the monthly rental for March 2012 to July 2012.  I found this to be reasonable.  According to the assessment by Mr. Siu as to the monthly rental for March 2012 to May 2012, the rate for the monthly rental is the same.  Mr. Siu’s figure may be unreliable as found by this court, it should be able to reflect the trend of the monthly rental. Given the monthly rental remained unchanged for those months, it would be reasonable to adopt the monthly rental of March 2012 assessed by Mr. Pang for the months of April 2012 to July 2012.

84.  I found the IO is liable to pay damages for loss of rental in the sum of HK$888,000, for 12 March 2001 to 12 July 2012.

Nuisance

85.  There is no evidence adduced by the applicant in support of this head of claim.  The applicant’s claim under this head must fail.

Whether the applicant has failed to mitigate his damages?

86.  It is the contention of the respondent that the applicant had failed in this regard since the applicant had not conducted any renovation or repair work at the Flat since its purchase and left the Flat in an appalling condition and the applicant’s expert, Dr. Lam also agreed that it is viable to conduct repair work to the Flat even before the water leakage was cured.  Both the Building Department (page 56 Bundle S2) and the IO (page 1417 Bundle F) had requested the applicant to conduct repair work, but such requests were ignored by the applicant.  As a result of lack of renovation or repair, the Flat was left unoccupied for a long period of time and had accelerated the deterioration in it.  What’s more, the applicant had left the windows of the Flat open and the opening for air-conditioner at the living room covered with a plastic sheet fixed by clips only.

87.  The applicant contended that there is no substance in the IO’s allegation under this head.  It is the applicant’s evidence that the contractor he engaged for the renovation work told him that there was no point for the renovation work to be performed before the water leakage problem was being fixed.  Such an observation was endorsed by Mr. Wong and Dr. Lai.  And estate agent also told the applicant that no one will consider renting the Flat in such condition.  The applicant had also put the Flat on market by advertising on newspaper and on internet but no one was interested in renting the same. 

88.  It is not in dispute that the burden of showing that the applicant has failed to mitigate rested upon the IO.  And according to the case of Standard Chartered Bank v Pakistan National Shipping Corporation [2001] EWCA Civ 55, to discharge such burden, the IO has to show that the applicant has failed to take reasonable steps to mitigate his loss as well as the amount of loss that could have been reduced upon taking such reasonable steps.

89.  Given my finding that the cause of water leakage had nothing to do with the opening of windows and/or the air-conditioner opening, I fail to see how this can be relevant in mitigating the loss of the applicant.  There is no evidence that the opening of the windows and/or the air-conditioner opening had in any way aggravated the damage inside the Flat.

90.  As for the applicant’s failure to repair the Flat, judging from my findings in paragraph 45-46 above that the applicant cannot proceed to repair the Flat without the problem of water leakage being cured, I do not accept that by failing to repair, the applicant had been in breach of his duty to mitigate his loss.

91.  I also accept the evidence of the applicant that he had tried to engage contractors trying to renovate the Flat and had also tried to put the Flat on the market for rent.  Yet, his attempt all proved to be futile given the water leakage inside the Flat.  Judging from the photos showing the inside of the Flat, no one of sound mind would ever consider renting the place.  I found the applicant had not failed in his duty to mitigate his loss.

Conclusion

92.  I found the IO is liable in failing to maintain the water tanks, the water proof membrane of the roof and the external walls causing water leakage to the Flat.  The applicant do suffer damages in the repair of the Flat as well as loss of rental income.

93.  Furthermore, the IO had failed to respond to the applicant’s complaint reasonably and an injunction is amply justified to make sure that the IO will carry out repair work to stop the water leakage. 

The Order

94.  It is ordered that:-

(a)  An injunction requiring the respondent to carry out all reasonably necessary repair to the water tanks, the water proofing structure of the roof as well as the external walls of the Building within 6 months to the satisfaction of an authorised person jointly appointed by the applicant and the respondent but solely at the expenses of the respondent;

(b)  The respondent do pay the applicant damages in the sum of $1,056,900;

(c)  Cost order nisi that the respondent do pay the costs of the applicant with certificate for counsel, to be taxed at District Court Scale if not agreed;

(d)  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

 

 

  Summary of Expert Evidence