李明月 v. 秀企業有限公司及另一人

LDBM 452/2007

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 452 of 2007

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Dates of Hearing: 2 & 3 April and 13, 16 & 17 June 2008

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JUDGMENT 

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Background

1. The Applicant is the owner of Flat A, 19^th Floor, No. 9 Mount Sterling Mall, Mei Foo Sun Chuen, Kowloon, Hong Kong (“the Flat”).  The 1^st Respondent is the management company managing Stage VII of Mei Foo Sun Chuen (“the Estate”), where the Flat is situated.  The 2^nd Respondent is the owners’ corporation of Stage VII of the Estate.

2. The Applicant’s application is to request the 1^st and 2^nd Respondents to repair the Flat and to pay compensation for loss and damage caused by water leakage from the roof and the external wall into the Flat, which amounts to over $2 million.  The Flat is situated immediately below the roof of the building in question.  It is not disputed that the water leakage first started sometime in July 2005 and the complaint about water leakage was first made to the 1^st Respondent on 29 July 2005.  There is also no dispute that the water leakage ceased in the latter part of 2006.

3. The Applicant’s daughter, Ms. Tzeng Li Wen, represents the Applicant at the trial.  Ms. Tzeng confirms that the Applicant’s claims are based on the 1^st and 2^nd Respondents’ breaches of the Deed of Mutual Covenant of the Estate (“the DMC”) and the Building Management Ordinance, Cap. 344 (“the BMO”).  On behalf of the Applicant, Ms. Tzeng also amended the Notice of Application to specify the provisions relied upon by the Applicant.  They are clauses 1 and 14.8 of the DMC, paragraphs 2(1), 2(9) and 4(10) of the Second Schedule of the DMC, and sections 18(1)(a) and (c) and 34I(1)(b)(i) and (ii) of the BMO.

4. The Respondents have no dispute about the obligations to maintain the common parts, such as the roof and the external walls, imposed on them by these provisions, but deny that they were in breach of the DMC or the BMO as alleged by the Applicant.  The Respondents also challenge the expertise of the Applicant’s expert, Mr. Stewart Wong of Proficient Surveyors & Co., as well as the damages claimed.  These form the 3 main issues in this case.

Provisions of the DMC

5.       Clause 1 of the DMC states as follows:-

“Each of the parties hereto for him and his executors administrators and assigns hereby grants unto the other his respective executors administrators and assigns the full right and privilege to the exclusive use occupation and enjoyment and the rents and profits of the Unit or the Space set out opposite his name in the First Schedule hereto TO THE INTENT that each of the parties hereto shall be entitled to the exclusive use occupation and enjoyment and the rents and profits of the Unit or the Space set out opposite his name as aforesaid.”

6.       Clause 14(8) of the DMC states as follows:-

“Common Parts” means all parts of the Building and Section except the Units the Spaces the Access Area and the MFIL Area.”

7.       Clauses 2(1) and 2(9) of the Second Schedule of the DMC states as follows:-

          “The Manager shall have the following obligations:-

(1) To be responsible for the management of the Building the Common Parts and the Access Area.”

…

(9)        To keep in a clean and tidy condition free from all refuse or obstructions and maintain in good order and repair the Access Area and Common Parts and all facilities and amenities comprised therein and to provide all artificial lighting ventilation and other services necessary for the reasonable use safety and enjoyment of the same.”

8.       Clause 4(10) of the Second Schedule of the DMC states as follows:-

“The Manager shall be under no liability to any Owner for the breach by the Manager of any of the Terms herein unless such breach is caused by the wilful neglect or default of the Manager.”

Provisions of the BMO

9.       Section 18(1)(a) and (c) of the BMO states as follows:-

          “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;

…

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

10.     Section 34I(1)(b) of the BMO states as follows:-

“(1)     No person may-

…

 (b)    use or permit to be used the common parts of a building in such a manner as-

(i)        unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier of the building; or

(ii)       to cause a nuisance or hazard to any person lawfully in the building.”

The law

11.     In Lo Yuk Chu v. Hang Yick Properties Management Ltd. [1996] 4 HKC 278, where there was an obligation imposed by the deed of mutual covenant on the manager to maintain all common facilities, the Court of Appeal held that the deed of mutual covenant was never intended to impose an absolute duty on the manager to ensure that no common facility ever broke down.  The overall duty imposed by the deed of mutual covenant was one of ‘proper management’, which meant doing all that was reasonably required of a manager in the circumstances.  The fact that a specific task was listed, without being qualified by words such as to ‘take reasonable steps to’ did not turn a manager into an insurer against the consequences of a drain becoming obstructed through no failure on its part to act reasonably.

12.     Although the facts of the case in Lo Yuk Chu may not be the same as the present case, I think the same rationale applies here.  The obligation imposed by the DMC on the Respondents to maintain the roof and the external walls cannot be an absolute duty on the part of the Respondents to ensure nothing would go wrong.  As long as the Respondents have acted reasonably in the circumstances of the case to manage the Estate properly, the Respondents are not in breach of the DMC.

13.     Moreover, paragraph 4(10) of the Second Schedule of the DMC expressly gives the manager an exemption from liability, i.e. the manager will not be liable for any breach unless the breach is caused by the manager’s willful neglect or default.  Thus, even if the Respondents were in breach of the DMC as alleged by the Applicant, they would still not be liable if the breach was not caused by the Respondents’ willful neglect or default.

14.     As to the breach of section 18(1)(a) of the BMO, the Court of Appeal in Lau Chun Wing Rod v. The Incorporated Owners of Po On Building, CACV 20/2007, held that Section 18(1)(a) does not provide an insurance to the extent that if some part of the building becomes in disrepair the Incorporated Owners automatically and necessarily become liable.  Nevertheless, liability may arise if there is fault.  It also arises if, having been made aware of a defect which requires remedy, the Incorporated Owners fail to take appropriate steps.

15.     I think the same rationale as laid down in Lau Chun Wing Rod’s case should also apply to sections 18(1)(c) of the BMO, as I do not see much distinction that could be drawn from these two subsections.

16.     Thus, to make the 2^nd Respondent liable under sections 18(1)(a) and (c), the Applicant must establish that the 2^nd Respondent failed to take appropriate steps after it had been made aware of the water leakage problem.

17.     Likewise, I do not think that section 34I(1)(b) imposes an absolute duty on the Respondents either.  The Applicant must establish that the Respondents had acted unreasonably and inappropriately in dealing with the water leakage problem, after it was made known to them.  In fact, section 34I(2) of the BMO stipulates that any person who contravenes subsection (1) shall be deemed to be in breach of an obligation imposed on him by the deed of mutual covenant in respect of the building.  Thus, like any other breach of the DMC, the exemption in paragraph 4(10) of the Second Schedule of the DMC shall also apply.

18.     In short, it must be established that the Respondents had not acted reasonably in dealing with the water leakage problem after it was made known to them or that they were in willful neglect or default of their duties before they could be made liable to the Applicant’s claims.

Liabilities of the Respondents

19.     Having carefully considered all the evidence before me, and applying the above principles of law, I am however unable to reach the conclusion that the Respondents had acted unreasonably or were in willful neglect or default.

20.     Based on the evidence of both parties, it is my finding that, when the water leakage first appeared, it was at the window and flowerbed to the living room of the Flat.  Ms. Tzeng also gave evidence to this effect. The 1^st Respondent responded immediately to the first complaint on 29 July 2005 by sending several staff to inspect the Flat and try to find out the source of leakage.  The 1^st Respondent also asked New Progress Construction Co. Ltd., which was at that time the contractor doing maintenance and repair work for the external walls, to conduct the inspection.  As water was found near the window and flowerbed, it was suspected that the water leakage was related to the external wall outside the Flat.  The 1^st Respondent then engaged Luen Sing Construction Co. (“Luen Sing”) to carry out repair work on the external wall and flowerbed near to where water was found.  The repair work by Luen Sing was commenced on 22 August 2005 and completed on 30 August 2005.

21.     Thus, it is not a case that the 1^st Respondent did not take any action at all.  In my view, they had done what they could in the circumstances to resolve the problem for the Applicant.  It was reasonable that the 1^st Respondent needed sometime to go through the process of engaging a contractor to do the work.  So there was no delay on their part.

22.     It turned out that the repair work at the external wall and flowerbed did not stop the water leakage, as the real source of leakage was from the roof.  In fact, the waterproof membrane at the roof of the building in question had been replaced and re-laid in about 2003/2004 by a contractor, Kin Ching Construction Products Limited (“Kin Ching”).  So at the same time when Luen Sing was doing the repair work at the external wall and flowerbed, the 1^st Respondent also asked Kin Ching to carry out water testing at the parapet wall of the roof.  The test revealed that there was water seepage at the roof and Kin Ching was engaged to repair the water proofing system accordingly.  Kin Ching completed the work at the end of 2005, but the water seepage problem was not cured.  Kin Ching was asked by the 1^st Respondent to carry out further repair work to the water proofing system.  This time the repair work extended to a larger area of the roof than the previous occasion.  After this round of repair, the 1^st Respondent did not receive further complaint from the Applicant until 30 June 2006.

23.     Although the Applicant might have approached the Food and Environmental Hygiene Department sometime in May or June 2006, I accept the evidence of the Respondents that the Applicant only made further complaint that there was water seepage in the Flat to the Respondents at the general meeting of the 2^nd Respondent on 30 June 2006 (“the 2^nd Complaint”).

24.     On the next day of the 2^nd Complaint, the 1^st Respondent carried out an inspection of the Flat.  The Respondents then engaged Kin Ching to carry out further repair work to the water proofing system in July or August 2006.  There was no water seepage in the Flat subsequently, although there was still some residual dampness in the Flat found in October 2006.

25.     Thus, the Respondents did follow up with the Applicant’s complaints by asking contractors to carry out repair works. The 1^st Respondent might have been wrong in identifying the wrong source of leakage in the beginning, but as soon as they found out the real source of leakage at the roof, they also instructed contractor to carry out repair work.  The Applicant’s evidence did not contradict this, as it was also Ms. Tzeng’s evidence that the Respondents were doing some work at the roof from time to time although she was not aware of what the Respondents were doing.

26.     The wrong judgment of the Respondents in the beginning does not mean that the Respondents had failed in their duties.  They were still trying to maintain the common parts and to resolve the problem.  As aforesaid, the duty to maintain is not an absolute one.  I think the Respondents had done what is reasonable already even though they had made an honest mistake.  In any event, they had tried to remedy the leakage at the roof by engaging Kin Ching to do the repair work.  It was not the fault of the Respondents when Kin Ching could not do the job properly on the first two occasions and further works were needed.  It is certainly not a wilful neglect or default on the part of the Respondents.

27.     In the circumstances, I do not find that the Respondents were in breach of any provisions of the DMC or the BMO as alleged by the Applicant.  The Respondents are therefore not liable to any of the Applicant’s claims.

Applicant’s expert

28.     The Respondents challenge the qualification of the Applicant’s expert witness and dispute his findings.  I do not find it necessary to go into the details of the Respondents’ challenge.  Suffice to say is that an expert does not acquire his expertise by academic or professional qualifications alone.  Someone can simply become an expert by experience and through self-studies.  I agree that Mr. Stewart Wong does not process the academic or professional qualifications directly qualified him to be an expert on water leakage.  However, Mr. Wong did study the causes for water leakage in his other qualifications and he has experience in finding out the cause of water leakage in some 3,000 cases.  He was also accepted as an expert witness in many cases in court proceedings, although in a few cases he was rejected to be so.  From his evidence, Mr. Wong impressed me that he does have a sound knowledge of the causes for water leakage.  In fact his conclusion on the cause of leakage in the present case is the same as the Respondents’ expert.  I accept Mr Wong as an expert witness.

29.   As both experts agreed that the cause of water leakage is due to the defects in the water proofing system of the roof, I do not find it necessary to deal with the other disagreements between them.  They are not relevant to the issue of whether the Respondents were in breach of the DMC or the BMO.

Damages

30.     The parties also have disputes on the various items of claims made by the Applicant.  As it is my finding that the Respondents are not liable to the Applicant’s claims at all, it is not necessary for me to deal with these disputes.

Conclusion

31.     I therefore order as follows:-

(1) The Applicant’s application be dismissed.

(2) Costs order nisi:  Save where there are previous costs orders, the Applicant do pay the Respondents their costs of the proceedings with certificate for counsel to be taxed on High Court Scale if not agree.  If there is no application for costs by either party within the next 14 days, the costs order nisi shall become absolute.