ATLANTIC LINK LTD v. THE INCORPORATED OWNERS OF YEN YING BUILDING AND OTHERS

DCCJ 1306/2018

[2022] HKDC 1530

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1306 OF 2018

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DECISION ON COSTS

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Introduction

1.  This court handed down the judgment dated 3 August 2022 after trial (“the Judgment”) whereby P obtained judgment against all 15 Ds. At the end of the Judgment, the parties were directed to make written submissions on costs of the action and costs of P’s summons dated 9 October 2020 (“P’s Summons”).

2.  P and all Ds except D9 and D12 have lodged with this court their written submissions accordingly. Nothing was heard from D9 and D12. I have considered all the written submissions and decided to make my determination on costs on paper.

3.  In this Decision, I shall adopt all the abbreviations used in the Judgment. I shall first make my determination on the costs of P’s Summons and then the costs of the entire action.

Costs of P’s Summons

4.  P submits that despite the dismissal of its application by P’s Summons, costs should still be in the cause. I cannot agree.

5.  The application was, in my view, premised on some misconceptions. The crux of P’s complaint, which it now still maintains, was that the relevant Ds decided not to call Mr Patrick Lau, who was their expert, to testify at trial notwithstanding the order which I made at the Pre-Trial Review hearing (“the PTR Order”) to the effect that unless otherwise directed by the trial judge, all the experts should attend the trial to testify. P said this decision of the relevant Ds was a blatant breach of the PTR Order.

6.  In P’s Summons, it was stated that in view of the alleged breach, P applied for an order that the Joint Report be admitted to be expert evidence without the attendance of the experts.

7.  Mr Patrick Lau’s evidence in the Joint Report supported the case of P. Understandably, P would be eager to have his evidence in addition to the evidence of Mr Stewart Wong. However, the relevant Ds had the fundamental right to choose their witnesses for the purpose of the trial. If they decided not to call Mr Patrick Lau, the natural consequence was that his evidence contained in the Joint Report should be ignored. There was no breach of the PTR Order at all. 

8.  I cannot accept P’s submission that Mr Patrick Lau was actually appointed by the court and so he must attend the trial to testify. He remained to be a witness of the relevant Ds throughout though he owed the court an independent duty. Nor can I accept that once his evidence had been disclosed, he must be called as a witness.

9.  P did not want to give up the evidence of Mr Patrick Lau and it eventually issued a subpoena to call him to testify. At the end, all three experts gave live evidence.

10.  In the circumstances, P’s Summons had no merit and was thus dismissed at trial. P must pay costs of P’s Summons to Ds, to be taxed if not agreed with certificate for one counsel where applicable.

Costs of the action

11.  On any view, P is the overall winner of the action and should normally be entitled to costs. Some of Ds, nevertheless, contend that P should not.

12.  First, it was disclosed after trial to this court that some of Ds made sanctioned payments prior to the trial. D3, D7, D8, D9 and D12 made a sanctioned payment of HK$250,000 on 22 June 2020. D14 made a sanctioned payment of HK$50,000 on 2 September 2020 and D5 did the same on 8 September 2020.

13.  These sanctioned payments were expressly made in settlement of the whole of P’s claim. P accepted none of these sanctioned payments.

14.  D5 now contends that P fails to do better than its sanctioned payment in that it was only ordered to pay HK$2,687.50 as its share of the damages awarded to P. D5 seeks indemnity costs against P under O.22 r.24 after 6 October 2020 when the time for the acceptance of its sanctioned payment expired.

15.  There is no substance in this submission. As fairly pointed out by D7 and D8, none of the sanctioned payments made covers the non-monetary reliefs sought by P. These sanctioned payments are ineffectual for the purpose of O.22 and could not be said to be more advantageous than the Judgment entered in favour of P.

16.  D14 also relies on its sanctioned payment but it further relies on its agreement with P embodied in a consent summons dated 14 September 2020 (“the Consent Summons”). As an enclosure of the letter dated 18 September 2020, P’s solicitors lodged with this court a copy of the Consent Summons, which was signed by P and all of the Ds except D7, D8, D9 and D12. The Consent Summons was not filed and no order was made on the same.

17.  The Consent Summons contained repair orders against all Ds except D2, which ceased to be the Manager of the Building in June 2020. As against D1, the repair order related to the common part of the Building. As against the 2/F Owners, the repair order related to T2 and as against the 3/F Owners, the repair order related to T3. The Consent Summons further provided that the issue of damages and costs be reserved for the trial judge.

18.  Mr Cheung, for D14, submits that, given the sanctioned payment and the Consent Summons, P should not be awarded any costs of the trial against D14 and instead P should pay indemnity costs, or alternatively standard costs, of the trial to D14 by reason of its sanctioned payment and the Consent Summons. As a further alternative, there should be no order as to costs of the trial as between P and D14.

19.  I am unable to accept Mr Cheung’s submission. P was entitled to insist on its injunctive relief and refuse to accept D14’s sanctioned payment in the first place.        

20.  I do not think the Consent Summons could have the effect of making D14’s sanctioned payment include an injunctive relief against D14. I also note that in the Consent Summons, D14 did not accept to pay any costs to P at all. The issues of damages and costs were expressly reserved for the trial judge. P could not be expected to accept the sanctioned payment after D14’s signing the Consent Summons as now suggested by Mr Cheung. To resolve the damages and costs issues, the trial as between P and D14 could not have been avoided. The combined effect of the sanctioned payment and the Consent Summons does not render the assistance to D14 that it now alleges.

21.  That said, I agree with D7, D8 and D14 that in my consideration of the costs issue, I should take into account the conduct of Ds including all the pre-trial steps taken by them to protect their costs position.

22.  On the other hand, it is submitted that P should be deprived of some of its costs as P failed in its claim for loss of rental income. Mr Wong, together with Ms Li for D2, further highlights to this court that P failed in its claim against D2 in respect of T3.

23.  I am not convinced that the rule laid down in Re Elgindata No.2 [1992] WLR 1207 should be invoked here. P’s claim for loss of rental income did not take up any significant amount of the court’s time and there was no expert evidence adduced in support of this claim. I find that the claim was bona fide. It was rejected only because P failed to prove causation. 

24.  As regards P’s claim against D2 in respect of T3, similarly it did not consume much court’s time and involve additional evidence. I do not think that the determination on this claim constitutes an event that P should be ordered to pay costs.

25.  Mr Wong raises the issue of apportionment. He submits that in the Judgment, this court finds that D1 to D8 are liable for water seepage from T2 and D1 and D9 to D15 are liable for water seepage from T3 and liabilities to pay damages were apportioned equally between the two groups of Ds. He submits that P’s costs should be similarly apportioned.

26.  I agree with Mr Wong. Apportionment is only logical and fair.

27.  Next, I have to deal with P’s application for indemnity costs against D2 for the entire action and against D7-9, 12 and 14 (collectively “the Disputing Ds”) for costs incurred after the Joint Report. 

28.  I have perused the authorities helpfully cited to me by Mr Tse, for P here but not at trial. Most of them involve unsuccessful plaintiffs who failed to take heed of their own experts and insisted on their hopeless claims. In Wates Construction Ltd v HGP Greentree Allchurch Evans Ltd [2005] EWHC 2174 (TCC), Judge Peter Coulson QC quoted the following dicta of Simon Brown LJ in Kiam v MGM Ltd No2 [2002] 1 WLR 2810:

“I for my part understand the court there [in Reid Minty] to have been deciding no more than that conduct, albeit falling short of misconduct deserving a moral condemnation can be so unreasonable as to justify an order for indemnity costs. With that I respectfully agree. To my mind, however, such conduct would need to be unreasonable to a high degree. Unreasonable in this context certainly does not mean merely wrong or misguided in hindsight. An indemnity costs order made under Pt44, unlike one made under Pt 36, does, I think carry at least some stigma. It is, of its nature, penal rather than exhortatory.”

29.  I have considered all the complaints of P about D2 made by Mr Tse. I am not persuaded that the conduct of D2 was unreasonable to such a high degree that indemnity costs should be ordered against D2 despite my rejection of some of its evidence. In particular, I did not make any factual finding that the Two Letters were mere fabrication and false evidence though I rejected Madam Chung’s explanation for their belated disclosure.

30.  With regard to the Disputing Ds, I agree that their challenge to the evidence of the experts was not reasonable. At the PTR hearing, only D14 confirmed that it would require cross-examination of the experts and on that basis the PTR Order was made. I can accept that Ds were entitled to test the evidence of the experts but they did so without sound basis. My disapproval at how counsel for the Disputing Ds cross-examined the experts is evident in the Judgment and I need no reiteration. These Ds indeed prolonged the trial unnecessarily.

31.  However, I should not lose sight of the following matters. First, the trial was in any event inevitable given P’s claim for substantial damages albeit rejected at the end. Second, P itself even secured the attendance of Mr Patrick Lau by subpoena when it should be content with the uncontradicted evidence of its own expert.

32.  All in all, in view of the whole circumstances, I do not find the conduct of the Disputing Ds and D2 to be so unreasonable to the extent that an award of indemnity costs is justified. I do not think I should exercise my discretion to allow costs on indemnity basis against them.

33.  Whilst these Ds prolonged the trial, other Ds took a reasonable and realistic approach. They made an attempt to shorten the trial by signing the Consent Summons and they acted in accordance with their agreement with P in the Consent Summons throughout the trial. Unlike D14, they took a minimal part in the trial and did not challenge any evidence.

34.  D1, D3, D4, D6, D10, D11, D13 and D15 in their written submissions repeated their complaints against D2 and D7 made in their opening submissions and explained how they were reluctantly dragged into this bitter lawsuit. This court refused to deal with their Contribution and/or Indemnity Notice against D2 and D7 and their complaints therein were not investigated. I cannot accept their allegations in the absence of a proper investigation and they cannot have any bearing on my costs decision here.

35.  Whilst I have some sympathy with these Ds, they should know that litigation is a serious matter even in a simple water seepage case and that there would be consequences for every action and inaction in the proceedings. They themselves should find out how their interests could be best protected.

36.  Nevertheless, I shall take into account the conduct of Ds at trial in my apportionment of the respective liabilities of Ds to pay costs to P.

Conclusion and order

37.  Based on the foregoing analysis, I come to the conclusion that P should have costs of the action including their costs arising from these written costs submissions to be taxed on the standard basis if not agreed with certificate for one counsel. None of Ds has taken effective measures to protect their respective costs positions. Such costs should be borne by Ds in the following manner.

38.  First, up till the commencement of the trial on 14 October 2020, 50% of such costs be borne in equal shares by D1, D2 and the 2/F Owners and the remaining 50% of such costs be borne in equal shares by D1 and the 3/F Owners.

39.  Thereafter, each of D2, D7, D8, D9, D12, D14 should bear 15% of the costs of P. For the remaining 10%, D1 being responsible for both T1 and T2, should bear 2% and each of D3, D4, D5, D6, D10, D11, D13 and D15 should bear 1%.

40.  On the other hand, P should pay costs of P’s Summons to Ds, to be taxed if not agreed with certificate for one counsel where applicable.

41.  Again, at the time of handing down this Decision, those Ds acting in person will be informed in punti that oral interpretation of this Decision could be arranged for them at their written request to be made within 7 days. 

42.  Lastly, it remains for me to thank the parties for their written submissions and the legal representatives for their assistance.

DCCJ 1306/2018

[2022] HKDC 825

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1306 OF 2018

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BETWEEN

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JUDGMENT

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Introduction

1.  This matter appeared to be a simple and straightforward water leakage case at the pre-trial review hearing. It turned out to be a full blown trial involving rigorous cross-examinations and complicated legal arguments.

2.  P is the registered owner of a property known as Office I, 2^nd Floor, Yen Ying Building (“the Building”), 221 Jaffe Road, Hong Kong (“2I”). P is also the registered owner of two other units known as Office G (“2G”) and Office H (“2H”) on the 2^nd floor of the Building. In this action, P complains about the water seepage problem causing damage to 2I since August 2015 and claims against Ds for, among other things, damages and injunctions.

3.  There are 15 defendants, some of them are represented by different counsel and some of them act in person. An introduction of them at the outset is necessary.

4.  D1 is the Incorporated Owners of the Building whereas D2 was a property management company appointed by D1 to manage the Building from May 2000 onwards. I was informed by way of the parties’ written submissions that D2 ceased to be the manager of the Building on 30 June 2020.

5.  D3, D5, D6, D7 and D8 are registered owners of Offices A (“2A”), C(“2C”), D (“2D”), E(“2E”) and F (“2F”) on the 2^nd floor of the Building respectively. The late Mr Lo was the registered owner of Office B (“2B”) on the 2^nd floor of the Building and D4 is the personal representative of his estate. For easy reference in this Judgment, D4 is regarded as the registered owner of 2B. P, D3, D4, D5, D6, D7 and D8 are collectively referred to as “the 2/F Owners” in this Judgment.

6.  D9, D12, D13, D14 and D15 are respectively the registered owners of Offices A, E, G, I, J on the 3^rd floor of the Building (respectively (“3A”), E(“3E”), G(“3G”), I(“3I”) and J (“3J”)). D10 is the registered owner of both Offices B, C and H (respectively “3B”, “3C” and “3H”) and D11 is the registered owners of both Offices D and F (respectively “3D” and “3F”) on the 3^rd floor. D9, D10, D11, D12, D13, D14 and D15 are collectively referred to as “the 3/F Owners” in this Judgment.

7.  On each of the 2^nd and the 3^rd Floors, there are a communal female toilet and a communal male toilet. The two female toilets are the focal point of this action and it is the pleaded case of P that water originating from the female toilet on the 2^nd floor (“T2”) and the female toilet on the 3^rd Floor (“T3”) (collectively “Ts”) has been seeping into 2I thereby causing damage to 2I.

8.  At this juncture, a brief introduction of the Building would be helpful. The construction of the Building was completed in or about 1977 and the Deed of Mutual Covenant (“the DMC”) in relation to the Building is dated 26 March 1977. The Building is at present a composite development with shop units on the ground floor, office premises on 2^nd floor and 3^rd floor and residential units on 4/F to 22/F. There is a church on the ground floor (“the Church”).

9.  On or about 7 August 1984, a Sub-Deed of Mutual Covenant (“the Sub-DMC”) was executed. 14 equal undivided shares of the 130 shares of the Building were allocated to 9 office units on the 2^nd floor, viz, 2A to 2I.

10.  As shown in the floor plans of the 2^nd floor and the 3^rd floor, T3 adjoins 3J sharing a partition wall and likewise T2 adjoins 2I sharing another partition wall (“the Wall”). Inside 2I, a manager room is partitioned sharing about one third of the Wall with a panel of window on the inner side of the external wall facing the street. 3J is immediately above 2I and 2H and likewise T3 is immediately above T2. Immediately beneath T2 is a function room of the Church.

11.  Direct references to Ts in the DMC and the Sub-DMC are as follows:

(1) Clause 4 of the DMC -

“Each undivided parts or share of and in the said premises and the said Building and the right to the exclusive use occupation and enjoyment of and part of the said Building shall be held by the person entitled thereto subject to the following: -

…

(f) The exclusive rights for the owner or owners for the time being of each of the First, Second and Third Floors of the said Building to use and enjoy the lavatories now constructed on each of the said First, Second and Third Floors respectively. The owner or owners of each of the said First, Second and Third Floors of the said Building shall each be responsible for the repair cleansing and maintenance of such lavatories in the particular floor as they shall respectively have the right to the exclusive use and enjoyment thereof.”

(2) Clause 2 of the Sub-DMC –

“Subject as hereinbefore mentioned, the First and the Second owners shall have the right to use in common with others having the like right thereto for all purpose connected with the proper use and enjoyment of the said office units on the said Second Floor of the said Building the lift, lift-hall, corridor, lobby, lavatories, staircases and other facilities (if any) on the said Second Floor of the said Building for common use.”

12.  By an assignment dated 12 December 1984, Hoi Tong Construction Company Limited acquired 2I. It is unknown when P acquired 2I from the said company or in fact they are the same entity. This is irrelevant for the present purpose and it is not in dispute that P has started renting out 2I in the 1990s.

13.  Madam Kwan is a practising solicitor. She is both the partner of Messrs Ip Kwan & Co (“IK”), the solicitors for P, and the director of P. Madam Chen is Administration Assistant of IK and since about 2011, she has handled the rental matters in respect of 2I.

14.  The last tenant of 2I is Fullhold Design & Consultants Limited (“Fullhold”). Fullhold became the tenant of P occupying 2I in 2013 and left 2I prematurely before the termination of its renewed tenancy on or about 31 August 2017 allegedly due to the water seepage problem. Madam Ng was in charge of Fullhold at 2I and time and again complained to P since August 2015 about the water seepage problem.

Issues to be determined

15.  Mr Sham, together with Ms Chun, for P, has identified the following three central issues calling for determination by this court:

(1) whether any of Ds has the duty to manage and keep good maintenance of Ts;

(2) whether at the material times there was water seepage from T2 and/or T3 into 2I causing damage;

(3) if the answers to the foregoing questions are both in the affirmative, has any of Ds been in breach of his duty and should be liable for damages.

16.  I agree that these are indeed the pertinent questions arranged in logical order. I also agree with Mr Wong, together with Ms Li, for D2 that I should consider the actual scope and nature of the duties owed by Ds, if any, and whether such Ds have done sufficiently to discharge such duties. I should also determine the quantum of damages recoverable by P and the question of apportionment. I agree with his submissions and shall look into these matters.

17.  I should add that Ds are very much divided despite their joint legal representation at the outset. D1, D2, D3, D4, D6, D7, D8, D9, D10, D11, D12, D13 and D15 were represented by Messrs. S.K. Lam, Alfred Chan & Co. (“SKLAC”) and filed their joint defence (“the Joint Defence”).

18.  At the trial, these Ds went separately ways. Each of D1 and D2 instructed its own legal representatives. So did D7 and D8 on the one part and D9 and D12 on the other. D3, D4, D6, D10, D11, D13 and D15 acted in person. However, they have not applied to amend the Joint Defence or file another defence for their purpose.

19.  These changes of legal representation are understandable. D2 and D7 are subsequently targeted by D1, D3, D4, D6, D10, D11, D13 and D15. The latter 8 Ds, to a large extent, share the view that D2 and D7 have badly handled P’s water seepage problem without their full consent and knowledge.

20.  Belatedly, D1 issued a Contribution and/or Indemnity Notice dated 13 July 2020 to D2 and D7. Likewise, D3, D4, D6, D10, D11, D13 and D15 issued an almost identical document dated 23 September 2020 against D2 and D7. Despite the frequent complaints about D2, D7 and SKLAC of the latter group of Ds acting in person at trial, this court made it clear that their Notices could and would not be dealt with at this stage. These Ds failed to apply to the court for directions in respect of the Notices pursuant to O.16, r.8(4), Rules of the District Court. It is impossible to handle their general allegations against D2 and D7 at this trial.

21.  On the other hand, D14, independently represented throughout, issued a Contribution and Indemnity Notice dated 2 September 2020 against all other Ds. In its Notice, it is stated that, as a matter of law, its co-defendants should be liable at the same time on a joint and several basis by virtue of their undivided shares in and/ or the provisions under the DMC of the Building.

22.  I shall not separately deal with D14’s Notice. D14 did not apply for the requisite directions in the first place and more importantly, its Notice is unnecessary and serves no meaningful purpose.

23.  D1, D3, D4, D5, D6, D10, D11, D13 and D15 have indicated to this court in writing by separate documents that their position. They agree that the water seepage originates from Ts and the external wall of 2I in accordance with the conclusions of P’s expert report. They further agree that T2 is accountable for 50% of the damage of 2I, T3 40% and the external wall 10%. They also agree to pay their share of certain amount of damages.

24.  In the closing submission, Mr Wong submits that D2’s primary position is that D2 owed no duty to P in respect of Ts. And even such a duty existed, it was only one of reasonable care and D2 had already discharged such duty. Lastly, Mr Wong submits that P has failed to prove the actual source of water seepage up to the requisite standard.

25.  D7 and D8 refuses to accept that Ts were ever in lack of repair and caused the water seepage to 2I. They seek to challenge the conclusion of the joint experts. They further contend that the damage caused to 2I did not lead to the loss now claimed by P.

26.  D9 and D12 take a similar stance save that they are only concerned with T3.

27.  D14 denies the allegation that T3 is one of the sources of the water seepage to 2I. It has engaged its own expert Mr Victor Ho for the purpose of these proceedings.

Duties of Ds in relation to T2 and T3

28.  I believe that stage is adequately set and I start my analysis of the central issues in turn.

29.  P in its pleaded case relies on the aforementioned provisions in the DMC and the Sub-DMC and says that P itself, D3, D4, D5, D6, D7 and D8 are responsible for the repair and maintenance of T2 and D9, D10, D11, D12, D13, D14 and D15 are responsible for the repair and maintenance of T3.

30.  All these Ds make an admission on this in their respective defences. All these Ds did not deny their duties at trial. D5 and D14 have filed their own separate defences and all other Ds have filed the Joint Defence through SKLAC.

31.  The basis on which P says D1 and D2 have the duty to manage Ts is different. Its pleaded case is that the registered owners of the units on the 2^nd and 3^rd floors of the Building have appointed, authorised and/or dedicated the management of Ts to D1 and/or D2 and thereafter D1 and/or D2 have assumed the responsibility and have the de facto control over Ts.

32.  P gives the following particulars in respect of this contention:

(1) D2 and its staff keep and maintain the doors of Ts, access to and egress from Ts by the users, among other persons, its staff, the owners, tenants and/or visitors the Building;

(2) D1 charges and receives monthly management fees through D2 for the management and maintenance of the Building which includes, among other things, provision for the maintenance of Ts;

(3) D2 manages and maintain Ts by, among other things, employing and deploying cleaners or cleaning contractor to clean Ts;

(4) the staff of D1 and/or D2 including the caretakers and cleaners use Ts as common facilities for their own toileting purpose and for other purposes relating to the management and maintenance of the Building including, among other things, for supply of water to clean the common parts and facilities of the Building.

33.  In the Joint Defence, in reply to the said allegations of P, it is admitted, contrary to the fact, that the 2/F Owners jointly own T2 and have appointed D2 to manage T2 at their own expense. Then it is denied that the 3/F Owners have appointed, authorized and/or delegated the management of T3 to D1 and/or D2. They further aver that the 3/F Owners had arranged their own cleaner to clean and maintain T3.

34.  With regard to T2, D1 and D2 aver that D2 kept the key to T2 and the security guard employed by D2 would provide the key to the owners, tenants and/or licensees of the units on the 2^nd floor for their use of T2. It is expressly admitted that D1 charges and receives monthly management fees through D2 for the management and maintenance of T2 and D1 and D2 agree that D2 would maintain T2 and not T3.

35.  It is further admitted that D2 managed and maintained T2 by employing and deploying cleaners or cleaning contractor to clean T2. Lastly it is averred that the staff of D2 including the caretakers and cleaners use T2 for toileting purposes and for the purposes relating to the management and maintenance of the Building.

36.  Given the state of the pleadings, I refused to accept any cross-examination of P’s witnesses on the issue as to whether D2 was responsible for the management and maintenance of T2 in the course of the trial.

37.  Notwithstanding this, Mr Wong, in his closing submissions, goes to great length to suggest that the pleaded case of P against D2 is inadequate and D2 has not really accepted the full duty of maintenance in relating to T2 in the Joint Defence.

38.  I am not persuaded by his submissions despite his admirable effort.

39.  In paragraph 11 of the Statement of Claim, it is pleaded that the 2/F Owners are responsible for the repair and maintenance of T2. As said, this paragraph is admitted in the Joint Defence.

40.  Then in paragraph 12 of the Statement of Claim, P alleges that the 2/F Owners and 3/F Owners have appointed, authorized and/or delegated the management of T2 and T3 to D1 and D2. The context dictates that the management duties of T2 include the duty of repair and maintenance of T2. The particulars given thereunder are only examples of how D2 performed such duties and they are not meant to be exhaustive.

41.  Thus, I agree with Mr Sham that, on a fair reading of paragraph 12 of the Joint Defence, it is clear and unambiguous that D2 admits that it had the duty to manage and maintain T2. Those particulars concerning how D2 managed and maintained T2 were merely examples and cannot be taken as its conclusive job description.

42.  I also note that in the Joint Statement of Issues signed by all parties dated 6 September 2019, D2 did not raise any issues about its admitted duty to manage and maintain T2.

43.  D2 has not made any application to amend the Joint Defence to qualify the admissions made in respect of its duty. Nor has D2 made any application to withdraw or resile from the admissions in paragraph 12 of the Joint Defence.

44.  In the circumstances, I need not consider whether I should exercise my discretion to allow D2 to withdraw or resile from the admissions. Even such an application had been made, it would not have been allowed on the application of the guiding principles expounded in Braybrook v Basildon and Thurrock University NHS Trust [2004] EWHC 3352 (QB) at para.45, cited with approval by the English Court of Appeal in Sowerby v Charlton [2006] 1 WLR 568 at para.35 and the Court of Appeal in Lo Li Li Lily v Lui Fung He [2016] 3 HKC 483 per Kwan JA at paras.19-21.

45.  Mr Wong points out that all along P has mistaken that T2 is a common area of the Building and this erroneous belief led P to believe that D2 had the duty to repair and maintenance T2. He further points out that the evidence shows that D2 was not contractually bound to repair and maintain T2 under its property management contracts with D1.

46.  I do not find any merit in this submission. It is true that P in its pre-action letter dated 1 March 2018 and Madam Kwan in her witness statement stated that T2 is a common area (and so is T3), P’s pleaded case contains no such mistake and its claim is not made on this basis. P relies on the express specific duties of the 2/F and 3/F Owners under the DMC and the Sub-DMC and not their purported ownership of Ts. Mr Sham makes it clear in his opening submission that Ts are not common parts of the Building. Curiously, it is D2 and the 2/F Owners except P which admit that the 2/F Owners jointly own T2 and have appointed D2 to manage it at their own expense in the Joint Defence.

47.  Moreover, given the admissions in the Joint Defence, it is not open to D2 to argue against its duty to repair and maintain T2. Had there been no such admissions, P could have adduced further evidence to make good its allegations. It is unfair for D2 to wait until the trial to take a different position.

48.  Mr Sham submits that in light of the admissions of D2, it is not necessary to rely on P’s alternative case based on the principles of assumed responsibility. I agree with him and indeed it adds little to the claim of P given the admissions of the relevant Ds.

49.  Mr Sham refers this court to Henderson v Merrett Syndicates Ltd [1995] 2 A.C. 145. Simply put, it was held that where a person assumes responsibility to perform professional or quasi-professional services for another who relied on those services, then the relationship was sufficient to give rise to a duty on the part of the person providing the services to exercise skill and care in doing so.

50.  Mr Wong’s objection to this alternative case is misplaced. Firstly, he submits that the allegation of assumption of responsibility is immediately preceded by the allegation that D1 and/or D2 have been appointed, authorised and/or delegated the management of Ts by the 2/F and 3/F Owners. He argues that in the absence of authorisation or delegation, there cannot be any assumption of responsibility.

51.  I cannot accept his submission. Not a single owner out of the 2/F Owners says that D2 managed and maintained T2 without his or her authorization. No such allegation is made in the pleading. Nor does D2 ever deny its management and maintenance of T2 with or without the authorization of any of the 2/F Owners including P.

52.  Secondly, Mr Wong argues that it will give rise to difficult issues if this court holds that a property manager can be held liable for activities carried on in privately owned premises. I do not think that the principles on assumption of responsibility cease to have application to a property manager in respect of his management of a private place or in fact any matters even if there is an assumption of responsibility coupled with the concomitant reliance.

53.  In the present case, D2 did voluntarily undertake the provision of such services. P and other 2/F Owners relied on D1 and D2 to perform professional services in the management and maintenance of T2 and in particular to procure repair and remedial work to be done at T2. Hence, on the particular facts of the present case, the principles of assumption of responsibility are invoked and D2 did owe an implied duty to exercise reasonable care and skill in its management and maintenance of T2.

54.  T3 calls for separate consideration. The relevant Ds do not accept that D2 was tasked with the management and maintenance of T3 in their pleadings. The 3/F Owners do not admit having appointed, authorized and/or delegated to D2 such duties.

55.  P has failed to adduce credible evidence to show that D1 and D2 have ever taken up the management and maintenance of T3 by reason of the 3/F Owners’ appointment, authorisation and/or delegation despite the express denial in the Joint Defence. Its pleaded case is not borne out by evidence. In fact, Mr Sham makes no submission on the alleged management and maintenance of T3 by D1 and/or D2 in his written closing submissions.

56.  In the Joint Defence, it is pleaded that the 3/F Owners had arranged their own cleaner to clean and maintain T3 and D1 and D2 deny that they were ever responsible for the maintenance of T3.

57.  Mr Li, the director of D10 and D11, stated in his witness statement that cleaning worker employed by D2, namely, Madam Ying, took up the cleaning job of T3. D10 and D11 paid her a monthly fee of HK$500. This appears to be in support of the allegation in the Joint Defence.

58.  In her witness statement, Madam Cheung, Housing Manager of the Property Division of D14, stated that D10 and D11 took the lead among the 3/F Owners in organising the management of T3 at all material times and they had employed cleaners for daily cleaning of T3. Before August 2017, D14 was not required to pay any cleaning fee but thereafter D14 has contributed 1/10 of the cleaning fees of T3. The receipts issued by one Madam Lee to D14 evidenced such contributions by D14.

59.  Mr Li confirmed that Madam Lee had told him that she required D14 to pay contribution to the cleaning fee of Madam Ying. I have studied the receipts issued by Madam Ying. They bore the company chop of a company not being D10 and D11 though they were described as the owners of 3B and 3C.

60.  Madam Ying was not called to testify. There is nothing to show that she was engaged by the 3/F Owners to clean and maintain T3 not in her personal capacity but as the employee of D2.

61.  Despite their averments in the Joint Defence, Mr Li and D13 in their witness statements point out that D2 were on some occasions involved in the management of T3 such as sending out notices relating to the renovation and repair works carried out at T3 in 2016. They also rely on the fact that D2 actively procured the legal representation for the 3/F Owners in these proceedings and contend that D2 must be responsible for the management and maintenance of T3. However, they did not testify.

62.  I hold that all the relevant Ds were bound by their pleaded case in the Joint Defence, which is also supported by the evidence of D14 too. The 3/F Owners and not D1 or D2 have the duty to manage and maintain T3.

Causes of the water seepage

63.  I am fully cognizant of the fact that factual evidence is of equal importance and relevance as with expert evidence. That said, I decided to study the expert evidence first. If by the tests done on T2 and T3 it is shown that they are waterproof and no water can leak out therefrom, it will go a long way to negative P’s case.

Expert evidence

64.  By the Order of Mr Registrar Ho dated 2 October 2018, the parties were granted leave to adduce expert evidence on liability and quantum issues limited to one water leakage expert. D4 and D5 were separately given to nominate their respective water leakage expert. It was further ordered that all the experts shall on or before 27 November 2018 conduct a joint inspection of the Building and conduct such tests as may be agreed among them and immediately thereupon hold a without prejudice meeting for the purpose of preparing a joint expert report.

65.  Pursuant to the said Order, by a joint instruction letter dated 26 November 2018 (“the Joint Instruction Letter”), P instructed Mr Stewart Wong, D1, D2, D3, D6, D7, D8, D9, D10, D11, D12, D13 and D15 instructed Mr Patrick Lau. D14 instructed Mr Victor Ho as mentioned before.

66.  In the Joint Instruction Letter, it was indicated that the experts would be given access to 2I, 3J and Ts for inspection and examination. The following questions were expressly posed for the experts:

(1) the cause for the damages found in 2I and the origin/source, extent and duration of the water seepage into 2I (if any);

(2) renovation on the Building (including common parts) and T2 and T3 had taken place at different times by different parties since mid-2016, whether the water leakage from the common parts (e.g. T2 and T3, external wall, etc) (if any) have by now been rectified; and

(3) P and D14: whether and/or to what extent 3J should be responsible for the water leakage into 2I (D15 has not provided any document to show that she has undertaken any repair works in her unit since August 2015); SKLAC: whether and/or to what extent 3J should be responsible for the water leakage into 2I (if any).

67.  Each of Mr Stewart Wong, Mr Lau and Mr Ho prepared his separate expert report. In addition, they prepared a joint export report (“the Joint Report”) in the form of the table setting out all their agreements and disagreements. The Joint Report dated 17 December 2019 was signed by all three of them.

68.  According to the Joint Report, Mr Stewart Wong administered some tests to find out the sources of water seepage into 2I, namely, dye colour water tests (“dye water test”), moisture contents test and chloride content test. Mr Lau, in addition, performed his own chloride contents tests, conductivity tests, infra-red scanning and microwave scanning to verify the results of the foregoing tests. All the three experts inspected 2I, T2, T3, 3J and the external wall.

69.  Mr Stewart Wong conducted a chloride content test on 14 May 2019. He spaded off from the lower part of the Wall inside 2I some plaster as sample and one sample from the lower part of the wall inside 3J shared by the adjacent T3. Mr Stewart Wong took them to a laboratory for a chloride content test. The laboratory test report shows that the chloride content by mass of the sample is 0.56%. More likely than not, the chloride content was caused to exist due to the previous presence of salty flush water. Mr Stewart Wong maintains that this test result shows that salty flush water from T2 and T3 seeped into 2I through the Wall and 3J.

70.  Mr Lau himself chiseled some paint and plaster from the bottom level of the Wall inside 2I for ammonia and chloride content test. The test result confirmed ammonia and chloride content of the sample.

71.  On the same day, Mr Stewart Wong performed a dye water test on the wash hand basin, water closet and the floors of T2 and T3. For T2, Mr Stewart Wong first took record of the moisture contents on the Wall inside 2I and UV light torching the floor and the Wall. He used florescent greenish dye water to pond the entire floor of T2 for about 2.5 hours. Afterwards, he took UV light torching the floor and the Wall inside 2I.

72.  It was found that florescent greenish dye water was found to have seeped through the base of the Wall and entered 2I. As a result, the floor of 2I and the lower part of the Wall were stained.

73.  Mr Stewart Wong also observed that the damp proof membrane in the floor slab and the lower part of the Wall of T2 were dilapidated and worn out. He concluded that water including salty flush water in T2 had seeped through the floor and the lower part of the Wall to 2I.

74.  Mr Lau recorded the findings of the dye water test done by Mr Stewart Wong. He too observed that there was an additional sign of fluorescence dye colour on the floor adjourning the external wall inside 2I. Basically, Mr Lau agreed with the findings of Mr Stewart Wong in relation to the condition of 2I after the day colour test.

75.  Mr Ho agreed that there were signs of fluorescence dye colour inside 2I near the external wall.

76.  With regard to T3, Mr Stewart Wong administered a similar dye water test on the floor. This time he used florescent reddish dye water to pond the entire floor of T3 for 2 hours.

77.  Mr Stewart Wong observed that during the dye water test, florescent lighted water was found appearing on the seam between the floor of 3J and the lower part of the wall of T3. Under UV light torching, florescent light sports appeared on the ceiling of T2 showing there was water seepage from T3 to T2. Dye water was also seen seeping through the external wall of T3 towards the external wall of T2 causing dampness.

78.  Whilst Mr Lau agreed to the observations of Mr Stewart Wong, he observed that the dye colour was found to have leaked from T3 to the common staircase as well.

79.  For the results of the moisture contents test/conductivity test in respect of T2, Mr Stewart Wong and Mr Lau were in agreement with each other generally. After the dye water test, there was a general increase in the moisture contents at the floor and the lower part of the Wall inside 2I.

80.  The conductivity test carried out by Mr Lau also showed that there was an increase in dampness at the lower part of the Wall and the floor at isolated locations in 2I as evidenced by the readings of his protimeter.

81.  After the dye water test in T3, the moisture contents test/conductivity test was done too. Mr Stewart Wong found that there was a general increase in the moisture contents at the ceiling and upper part of the Wall of 2I adjacent to the underside of T3 and below 3J. Mr Lau and Mr Ho agreed with Mr Wong’s findings of the moisture contents in regard to 2I. Furthermore, there was a general increase the moisture contents at the lower part of the party wall and on the floor of 3J after the dye water test.

82.  The conductivity test carried out by Mr Lau gave similar results. They indicated that there was a significant increase in dampness on the high level of the Wall near the window behind the external wall inside 2I.

83.  In addition to the moisture contents test/conductivity test, Mr Lau conducted infra-red scanning. He explained that those areas with lower temperature were suspected in wet condition because of the higher heat capacity of water.

84.  Before the dye water test in T2, there were spots of dampness on the Wall at and below the windows facing the street. After the test, there was a sign of significant increase in dampness of the floor hole in 2I (“the Floor Hole”) whereas there was no sign of change in dampness of the Wall and the floor.

85.  After the dye water test in T3, Mr Lau detected that there was a sign of increase in dampness on the ceiling corner near the external wall inside 2I. However, Mr Lau found that there was no sign of change in dampness of the floor slab inside 3J.

86.  Lastly, Mr Lau carried out microwave scanning before and after the dye water tests in Ts. Before the tests, it was already found that there were locations of water seepage on the Wall at low level inside the manager room of 2I.

87.  After the dye water test in T2, microwave scanning showed that there was a sign of increase in dampness on the Wall at low level both in the manager room and the general office area of 2I.

88.  After the dye water test in T3, it was revealed by microwave scanning that there was a sign of increase in dampness on the ceiling of all the manager room and the general area inside 2I.

89.  In relation to the foregoing findings, Mr Stewart Wong and Mr Lau are generally in agreement. Mr Ho indeed raises only a few minor and insignificant disagreements and on the whole he agrees with those findings.

90.  The respective conclusions reached by the experts individually are recorded in the Joint Report. It would be sufficient to mention the following on this issue.

91.  Mr Stewart Wong concluded that the sources or origins of the water seepage into 2I are T2, T3 and the external wall.

92.  Based on the site observation and the test results in 2I, T2, T3 and 3J, Mr Lau found that water seepage problem had been in existence in the manager room inside 2I of the Wall and ceiling adjoining T2 at low level and high level.

93.  By reason of (1) apparent dampness/leakage and dye colour found on the pipeline of the drainage pipe and wash hand basin of T2 and T3 after the dye water test and (2) presence of chloride and ammonia content of the plaster samples collected at the low level of the Wall inside 2I, Mr Lau opined that the water seepage in 2I is due to the defects of the drainage of T2 and T3.

94.  Moreover, due to the additional sign of florescent dye colour found in the holes on the floor and on the ceiling corner adjourning the external wall side of 2I, Mr Lau concluded that there was water seepage through the floor slab due to the failure of the waterproofing layer of T2 and T3.

95.  Mr Lau maintained that his findings were supported by the results of the conductivity checking, infrared scanning and microwave scanning.

96.  Lastly, based on his observation that there were cracks, stain marks and peel off paint found on the internal side of the external wall of 2I and the apparent defects of the window frames of 2I, Mr Lau concluded that, subject to water spray test on the external wall, water seepage through the external walls outside 2I, 3J, T2 and T3 is highly likely. Mr Ho agrees with him in this regard.

97.  Mr Stewart Wong agrees with Mr Lau’s conclusions in the main. Whilst agreeing that the external wall is one of the sources of water seepage into 2I, Mr Stewart Wong was not convinced that a water spray test on the external wall is viable and desirable. He opined that the 2 examination days were already packed with tests and that a water spray test may tamper the condition of 2I. Lastly, Mr Stewart Wong said that a water spray test may cause further damage to 2I and possibly the Church on the 1^st floor.

98.  Additionally, Mr Stewart Wong contends that the flush water supply pipes and fittings of T2 and T3 also causes leakage of water based on the chloride contents and ammonia tests.

99.  Mr Lau does not agree to this contention. There was no apparent dampness found on the exposed pipeline and no water ponding was found in 2I and in the vicinity of reported water seepage locations. Mr Ho supports Mr Lau’s disagreement.

100.  Mr Ho’s focus is on the external wall. His conclusion is that based on the dye water test to Ts, signs of water leakage were found on the external wall outside both Ts. Water could seep through the weak points within the external wall from inside and vice versa. He highlighted that there is no evidence indicating any direct or indirect potential water leakage from T3 to 2I.

101.  Mr Ho suggested that if the floors of Ts can be kept from accumulation of water, the possibility of water seeping from the floors of the two toilets to the external wall is minimal.

102.  Mr Ho pointed out that with the possible leakage at one point in the ceiling of T2, it would unlikely have any causal effect to 2I, especially if there is no accumulation of water on the floors of Ts.

103.  Before doing my analysis of their findings and conclusion, it is worthwhile to remind myself of the relevant principles relating to expert evidence, on which the defence side has made lengthy submissions.

104.  First, in Sun Cheong Construction Co Ltd v The Incorporated Owners of King Fu, Ho Fu, Ki Fu and Ka Fu Buildings (unreported, HCCT 27/2010, 22.8.2019), Mimmie Chan J said this about expert evidence at §45,

“The duty of an expert is to assist the Court in determining issues on a subject which require expertise and specialist knowledge. His evidence of opinion or belief has to be explained, rationalised and analysed. It is trite, that the Court is not bound to accept the opinion evidence of an expert, as the Court has to be satisfied that the opinion is well-founded and justified as reliable evidence.”

105.  For the nature of a joint expert report, my attention is drawn to Hong Kong Civil Procedure 2022 Vol.1, §38/39/6,

“An order that experts meet and agree a joint statement made pursuant to O.38 cannot confer upon those experts an authority to bind the parties instructing them and such statements made at the conclusion of a “without prejudice” meeting is not automatically an open statement. In practice, however, an expert would have difficulty in giving evidence contrary to the view expressed to at such a meeting.”

106.  The lack of binding effect of such joint expert statement/report is shown by authorities: Wide Fortune (HK) Limited v Chan Kwok Chung (unreported, DCCJ 2578/2018, 6.8.2020), Robin Ellis Ltd v Malwright [1999] 68 ConLR 122, Documentary Evidence in Hong Kong (2^nd Ed), Hodgkinson & James on Expert Evidence: Law and Practice.

107.  Unless the parties expressly agree to be bound, such joint expert statement/report is not binding on them. And a party is entitled to cross-examine an expert engaged by him: Phipson on Evidence (19^th Ed), §33-32.

108.  On this basis, this court allowed the defence side to cross-examine Mr Lau despite the objection of Mr Sham and the two experts were cross-examined at length by different counsel.

109.  I should add that both Mr Stewart Wong and Mr Lau explained in court that water or liquid can flow inside the Wall and other concrete surfaces such as floor slabs and walls without external force by a process called capillary action. The flow sometimes could be even in opposition to gravity. They opined that moisture or water at the bottom of the Wall could go up to a limited extent (about 1 metre) by capillary action.

110.  Mr Stewart Wong and Mr Lau also said under cross-examination that the damage found in 2I due to water seepage appeared to have been caused over a long period of time and not on an isolated occasion.

111.  My attention was somehow drawn to some authorities in which Mr Stewart Wong’s evidence was heavily criticized and rejected. I will not have any preconception of his reliability, nevertheless.

112.  More importantly, in the present case, there was no criticism or objection raised by Mr Lau and Mr Ho to the testing methods and procedure adopted by Mr Stewart Wong. Though I agree that, as pointed out by counsel in their written closing submissions there were certain inconsistencies in his answers and explanations under cross-examination, the results of his tests, unchallenged by the other two experts, speak for themselves.

113.  His conclusions are actually agreed by Mr Lau. Mr Lau struck me to be a fair witness having ample experience in water seepage matters. He sounded scientific and testified in a confident manner.

114.  The same could not be said about Mr Ho. He did not carry out any test himself and he did not make any comments on the proprietary of the tests carried out by Mr Stewart Wong and Mr Lau. He spoke the minimal about their conclusions and he made an effort to attribute the water seepage to the defects of the external wall albeit in the absence of any tests done on the external wall in his draft report.

115.  Under cross-examination, Mr Ho changed his position and indicated his agreement with the analysis of Mr Lau notwithstanding his observations in the Joint Report. Mr Ho expressly agreed with the results of the dye water test done in T3 showing water seepage to 2I. He even mentioned that he should correct what he stated in his draft report. I do not understand why he had not stated his correct position before he attended the trial.

116.  In my judgment, Mr Lau’s conclusion is reasonable and reliable and is based on the uncontradicted test results. I have little hesitation in accepting his evidence and analysis.

117.  I should make it clear that I cannot conclude that the water seepage to 2I originates from T2, T3 and the external wall on the expert evidence alone. With more, I can only conclude that T2, T3 and the external wall can be a source of water seepage into 2I. I too have to consider the factual evidence and make the essential factual findings before I can resolve the disputes between the parties.

118.  The defence side left no stone unturned in their effort to challenge the evidence of Mr Stewart Wong and Mr Lau. Mr Lai, counsel for D7 and D8, Mr Fan, counsel for D9 and D12 and Mr Cheung, counsel for D14 respectively cross-examined Mr Stewart Wong and Mr Lau extensively and attacked their reliability in their respective lengthy written closing submissions.

119.  I do not find it necessary to deal with all the challenges manfully mounted. I shall deal with the major arguments.

120.  The main line of argument of the defence counsel is that there is no evidence as to how Ts are used and hence no evidence that there is ever accumulation of water. Their case theory is that in cases of only small quantity of water splashing onto the floors of T2 or T3, the water would either evaporate or somehow absorbed in the concrete slab: Hui Ling Ling v Sky Field Development Limited (unreported, HCA35/2007, 8.5.2012) per Recorder Yuen SC at §65. Mr Stewart Wong and Mr Lau accepted this under cross-examination. If there is never any water accumulation on the floors of Ts, there should be no seepage to 2I. This sounds logical.

121.  I accept that the experts have not been provided specific information about the use of Ts. I understand that they were provided the pleadings of all the parties but I do not think they shed any light on the question.

122.  However, I do not find such information can in any way affect the specific tests done on the two days and the findings made thereof. Even if there is not a single drop of water in T2 or T3, it does not mean that the usual tests cannot be properly administered to find out the waterproofness of such premises and accurate findings cannot be obtained therefrom.

123.  Another line of argument taken by the defence is that the experts failed to take any tests on the external wall, which they say is the main if not the sole source of water seepage.

124.  I too agree that a test on the external wall would be helpful. The Joint Instruction Letter actually required the experts to check whether the external wall has been properly repaired. I find none of the reasons given by Mr Stewart Wong for not taking a spray test to be valid. The experts could take all the time they needed to take all the proper and necessary tests on the external wall. I fail to understand why neither Mr Lau nor Mr Ho insisted a spray test or any test at all to be done on the external wall.

125.  Yet, the experts, in spite of the lack of any such test, agree that the external wall is one of the sources of water seepage based on their observations. I accept their unanimous conclusion. Indeed, to a layman, the extensive damage and water marks below the windows on the external wall highly suggest that there was water seepage from the external wall.

126.  Mr Lai contends that neither Mr Stewart Wong nor Mr Lau could rule out the possibility that the building materials of 2I contain chloride and ammonia and so the chloride and ammonia contents found in the test samples did not come from the salty water originating from the drainage pipe in T2.

127.  His submission is based on the allegation that the two control samples taken from the unaffected part of the Wall by Mr Lau were also found to contain chloride and ammonia. Mr Lai relies on a paragraph in the draft report of Mr Lau and the relevant tests of such control samples.[i]

128.  In Mr Lau’s report, he merely stated that he had taken two reference samples, namely RA and RC. He did not say where these two samples were taken and whether these were control samples meaning they were taken from places where there was no sign of water leakage. Under cross-examination, he explained that he took these two samples on the Wall near the partition wall of the manager room. He merely said that he chose the location away from where he took the test sample.

129.  The reference samples or the control samples should not be taken from the Wall in my view. They should be taken from an isolated location inside 2I say the wall opposite to the Wall and the experts should be asked to take a test on such samples. In the absence of a proper test of such samples, the contention of Mr Lai is speculative and cannot be accepted.

130.  Mr Lai next submits that 3J can be accountable for the chloride and ammonia contents found in the Wall because it was well documented that a public drainage pipe in 3J had a leakage problem in August 2015.

131.  Mr Lai refers this court to the minutes of an owners’ meeting dated 7 August 2015. In the document, it was mentioned that a public drainage pipe inside 3J had leakage but the owner of 3J refused to let the contractor enter 3J for inspection.

132.  There is no other evidence about the alleged leakage. The severity of the alleged leakage is unknown. It is not known whether any salty water seeped into 2I through the ceiling and reached the lower part of the Wall. This is not the complaint of P. In any event, the alleged leakage had occurred more than 4 years before the tests. This alleged leakage should be brought to the attention of the experts in the Joint Instruction Letter and the experts should carry out proper investigation. The defence should ask their expert to conduct Chloride and ammonia tests on the samples of the floor slabs of 3J to make good this allegation. It is unfair to Mr Lau to raise this matter with him for the first time under cross-examination.

133.  Mr Fan highlights to me that none of the experts reported their observation of any leakage of the pipes in T3 and/or any unpleasant odour in T3. Then the drainage pipe in T3 should be in good order.

134.  I cannot agree with Mr Fan. Mr Lau did find apparent dampness and leakage on the pipeline of the drainage pipe of wash hand basin in T3.[ii]

135.  A point is taken about the microwave scanning test. Mr Lai submits that the results show that lesser moisture contents were detected on the Wall near 2I and there were more moisture contents further away from 2I.

136.  This is not my understanding of the test results. If anything, they show that there was obvious dampness found in the lower part of the Wall before and after the dye water test. I would also think that it cannot be assumed that the density and porousness are the same throughout the Wall.

137.  Mr Lai refers this court to a publication of The Hong Kong Institute of Surveyors entitled “Professional Guide to Water Seepage” (“the Guide”) and points out that water near the surface of the test object will heavily affect the readings.

138.  Mr Lai then suggests that the slight increase of the moisture contents detected may be due to the dampness of the surface of the Wall. I can see no merit in this submission. In any event, I fail to see how this can explain away the dampness of the Wall due to the water seepage from T2.

139.  Mr Lai casts doubt on the readings of the conductivity test conducted by Mr Lau. It is true that even lower readings in respect of some locations of the Wall were recorded after the dye water test. Mr Lau explained that the room temperature might be different after the 2-hour ponding and this explained that the reading might even drop after the test. Mr Lau accepts that there are minor errors in this kind of test and there are pitfalls of the tests as mentioned in the Guide. Overall speaking, the readings in respect of the Wall show that the upper part and the lower part of the Wall were rather wet before the test and there was a particular point (Point 4) having a markedly increased dampness. The accuracy of this reading was not challenged. I believe this reading could sufficiently support Mr Lau’s conclusion though Mr Lai managed to get Mr Lau to agree that he had not relied on this reading to support his overall conclusion.

140.  Lastly, I accept that there are indeed limitations of the Joint Report. The experts failed to address the extent and duration of the water seepage into 2I and whether and to what extent 3J should be responsible for the water seepage into 2I. They were expressly asked to do so in the Joint Instruction Letter.

141.  For the former issue, I can understand that the experts may not have sufficient factual information to make any findings. As noted above, I have only the opinion of both Mr Stewart Wong and Mr Lau that the damage caused to 2I shows that the water seepage persistently took place over a period of time rather than on an isolated occasion.

142.  For the latter issue, Mr Wong in his draft report pointed out that it was impossible to perform any meaningful test or assessment in 3J due to severe obstructions found in the premises. The photos attached to his draft report show the obstructions.

143.  I fail to understand why D15 was not demanded by the parties and in particular SKLAC, which acted for D15 at the material time, to clear up obstructions so that the experts could do the necessary tests in 3J pursuant to the Joint Instruction Letter. I understand that it is not in P’s claim that water seeps into 2I through 3J. Nevertheless, it is the main argument of the defence that 3J should be the source of water seepage into 2I. They should insist that their experts could be enabled to properly answer the question in the Joint Instruction Letter to make good their assertion.

144.  To sum up, I find the challenges to the expert evidence in the Joint Report unmeritorious. In particular, the belated attack on the reliability of Mr Lau’s evidence is unhelpful. The Joint Report was filed almost one year before the trial and only D14 had indicated that cross-examination was needed at trial. The other Ds should have asked Mr Lau, whom they instructed, for his clarifications and if necessary a supplemental expert report well before the trial.

145.  Having accepted the conclusions in the Joint Report, I find that all of T2, T3 and the external wall can be a source of water seepage to 2I. I do not agree with the defence that P is required to prove why and how water seeped into 2I from the two toilets.

146.  I believe it is too onerous a burden to require a plaintiff to prove the actual activities taking place in a defendant’s premises in order to prove his water leakage claim. In the present case, the alleged sources of water seepage are the two toilets. If they were a library or a grain store, I would find the argument of the defence side to have force.

147.  It is no rocket science that the floors of a communal toilet can sometimes be wet and there can even be water accumulations. This is everyday experience and common knowledge of an ordinary person. T2 was used by the cleaners of D2 for its water supply to clean the Building on a daily basis and the volume of water used in T2 is not hard to fathomed. If the defence contends that the floors of T2 and/or T3 were always in a dry condition and there was never water accumulations, they could call Madam Ying to be their defence witness to make good their contention.

148.  In the absence of any such evidence, I am prepared to accept that P has proved, on balance of probabilities, that T2, T3 and the external wall are the sources and origins of the water seepage into 2I.

149.  Even if Ts are the sources of water seepage into 2I, it does not follow that D2 should necessarily be liable as manager of T2, D1 is liable as the IO and the 2/F Owners and 3/F Owners are liable as owners of T2 or T3. I should study the factual evidence and go into the history of the matter to resolve the issue of liabilities of different Ds. Before doing so, the following legal principles are pertinent.

150.  First, on the nature of the duty of a property manager of a building, in Lo Yuk Chu v Hang Yick Properties [1996] 4 HKC 278, Power Ag CJ said this,

“The overall duty imposed on the respondent by the Deed of Mutual Covenant is one of “proper” management. Such management entails doing all that is reasonably required of a manager in the circumstances. Things like keeping drains clear are specific aspects of a building manager’s overall duty. But the mere fact that such a thing is listed without being qualified by expressions such as “take reasonable steps to” does not turn a manager into an insurer against the consequences of a drain becoming obstructed through no failure on its part to act reasonably as a manager should.”

151.  This was cited with approval by Cheung JA in Lee Ming Yueh v Broadway-Nassau Investments Ltd [2015] 5 HKLRD 208 at para. 23. Cheung JA further cited the following dictum of Roger VP in Lau Chun Wing Rod v Incorporated Owner of Po On Building (unreported, CACV20/2007, 1.11.2007) at paras.12-13:

“This sub-section [section 18(1) of the Building Management Ordinance, Cap. 344] 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. On the judge’s finding the defendant did so fail to take appropriate steps. Likewise it would seem that the case in negligence and nuisance is, on the facts, clear.

In view of the way in which the appeal was presented, it was pointed out that the judge had not held that the defendant was liable simply because there was some defect that became apparent in the premises. He held the defendant was liable because it failed to act effectively when it should have taken action. What is required to be done in carrying out the duty will differ according to the circumstances but in this case the judge clearly held that the defendant failed to take proper and necessary steps at a time when it had been alerted that it was necessary to do so and that it continued to fail in that regard for a very lengthy period.”

152.  Thus, it is clear that the duty of an IO and a manager in the management of a building under the Building Management Ordinance, Cap.344 (‘the BMO”) is not absolute. The key question is whether they have taken the proper and necessary steps without undue delay to rectify the water leakage problem once they had knowledge of the same.

153.  Though D1 and D2 are not sued on any breach of their duty under the BMO, I believe that the same legal principles apply to them. Mr Sham fairly accepts that their duties are not absolute. In P’s pleaded case, D1 and D2 were allegedly in breach of their duties to manage the Building with reasonable care and skill only.

Factual evidence

154.  At all the material times, Madam Ng occupied 2I and operated the business of Fullhold in the manager room. She had the first-hand knowledge of the condition of 2I and personal experience in following up the water seepage problem and dealing with Madam Chen and D2.

155.  Madam Ng testified for P. She appeared to be forthcoming and straightforward. Her testimony is clear and firm and mostly supported by contemporaneous correspondence. I find her to be a credible and reliable witness and I am inclined to accept her evidence.

156.  An account of the relevant events evidenced by documentary evidence is as follows. Madam Ng first sent an email dated 7 August 2015 to Madam Chen complaining about the water leakage problem in 2I. She concentrated on the ceiling and the external wall. Attached to her email were some photos showing the damage.

157.  Two matters happened around that time. First, D1 and Yan Cheong Construction Engineering Ltd (“YC”) entered into a written agreement dated 28 April 2015 by which YC agreed to undertake the renovation work of the Building (“the Renovation”). YC sent out a questionnaire dated 12 August 2015 to each of the owners of the units in the Building and asked them to give information about any leakage problem.

158.  Another matter is that there was a serious flood in 3J in August 2015. Madam Ng said that the flood lasted for 2 days and water seeped into 2I through the wall(s) and ceiling. She went up to the 3^rd floor and found the corridor was flooded too.

159.  She then complained to the management office. She recalled that the management office sent a repair worker to inspect 2I.

160.  On the other hand, Madam Ng sent an email dated 13 August 2015 to Madam Chen enclosing some photos. She reminded P that water leakage problem caused by the external wall and the Wall should be taken care of in the imminent Renovation.

161.  On the next day, Madam Chen forwarded the photos to Madam Chung of D2. Madam Chen asked Madam Chung to arrange workers to inspect 2I. Madam Chung is the director of D2 and supervised the management of the Building.

162.  On 12 October 2015, Madam Ng sent a follow-up email to Madam Chen saying she had not received any reply from P. She further mentioned the new tenancy, the-peeing off of concretes from the ceiling, water seepage from T2 wetting the Wall and falling plasters from the ceiling.

163.  On 19 October 2015, Madam Chen replied to Madam Ng by email. She said that she had made enquiries with the management company and was told that they had already begun the renovation work on the external wall. She also demanded the management office to send a worker to inspect 2I. For the ceiling seepage problem, P suspected that 3I was the cause and P had already asked D2 to talk to the owner of 3I.

164.  Three minutes later, Madam Ng replied to Madam Chen by email and told her that a worker had inspected 2I in the previous week already. She was told that such remedial works were not with the ambit of the Renovation and so they needed a fresh quotation for such works.

165.  On 1 February 2016, Madam Ng emailed Madam Chen enclosing two photographs. She complained about falling plaster from the ceiling covering her desk. She asked the main contractor to follow up.

166.  On 25 February 2016, Madam Ng sent a chaser email to Madam Chen complaining about the lack of follow-up action. Up till then, water still seeped through the windows side and the plasters kept falling off from the ceiling.

167.  On 18 March 2016, Madam Ng sent an email to Madam Chen and asked to be advised as to when 2I would be “patched up”. She also complained about bad smell in 2I.

168.  In her witness statement, Madam Chung said on the same day she received an email from Madam Ng asking for confirmation as to when repair works could be completed. Madam Chung told her that both D2 and YC opined that the defective renovation works in 2I was the cause of the water seepage problem but P indicated that water seepage not only originated from the external wall but also Ts.

169.  On 29 March 2016, YC commenced the waterproofing works of the floor of T2 and completed the same in early May 2016. In the minutes of a meeting of D1 dated 28 April 2016, it was recorded that the waterproofing works of T2 had been completed. There was no mention about 2I being affected by the seepage from T2.

170.  As a result of negotiation, YC agreed not to charge for such works albeit not included in the Renovation. It transpired that the Church was required to pay HK$10,000 for those works. Apparently water had seeped into its function room from T2.

171.  In April 2016, D2 started notifying the 3/F Owners about the need to carry out certain renovation works in the two toilets on the 3^rd floor. Quotations have been obtained from contractors including YC. Eventually, Fully Contracting Co (“FCC”) was engaged to carry out the renovation works of the male toilet and T3 on the 3^rd floor. Such works was commenced in September 2016 and completed in early 2017.

172.  Allegedly on 10 May 2016 YC sent someone to inspect 2I and found no dampness on the ceiling and the wallpaper.

173.  On 16 November 2016, Madam Ng sent an email (“the 16/11 email”) to Madam Chen asking whether and when P would do anything to patch up 2I after leakage. She complained that 2I was like hell.

174.  Madam Chen said she had followed this up with Madam Chung and Madam Chung told her that she would discuss with D1 and YC.

175.  By an email dated 27 April 2017, Madam Ng informed that Fullhold would prematurely terminate the tenancy on 31 August 2017. Before that, Madam Ng told Madam Chen she could not tolerate the water seepage problem of 2I and she had breathing problem due to the bad smell inside 2I.

176.  After Fullhold vacated 2I, P sent Mr Kwan, a contractor, to 2I to inspect the damage. Photos were taken.

177.  On 6 September 2017, Mr Cho of YC received notification from D2 of the complaint about the persistent water seepage problem. On the following day he together with Madam Chung went to 2I for inspection. He observed that water seepage was particularly serious near the window side and he suspected it was due to the defective unauthorised installation of windows by P.

178.  By an email dated 28 September 2017, P complained to Madam Chung again about the water leakage problem and sent to her some photographs for their record.

179.  On 6 October 2017, IK on behalf of P sent a letter to D1 and D2 (“the 1^st IK Letter”) making specific complaints about water seepage through the Wall from T2 and the ceiling. Legal action was threatened if they failed to deal with the problem within seven days.

180.  On 24 October 2017, a meeting of the management committee of the Building was held. In the minutes of the meeting, it was recorded that 2I had written to complain about the water seepage from the external wall and asked for compensation. This, however, was not really the complaint of 2I in the 1^st IK Letter.

181.  In the said minutes, it was also recorded that the majority of feedback from the owners of the units in the Building concerned the water seepage from the external wall after the Renovation. YC was informed to take follow-up action.

182.  On 9 November 2017, IK sent another letter to D1 and D2 stating that they had received no reply whatsoever to the 1^st IK Letter. Enclosed with the said letter were some photos of 2I. In the photos, it can be seen that 2I was cleared up and extensive damage was caused by water seepage problem. IK pointed out that the water leakage problems were caused by T2 and the external wall and demanded a realistic timetable and method statement on repair of T2 and the external wall. Legal action was again threatened in the event of non-compliance with the demand.

183.  On 11 November 2017, a management committee meeting was held. According to the minutes of the said meeting, it was recorded that IK had demanded compensation based on the allegation that the external wall and T2 caused water seepage problem and 2I was damaged. It was reported that YC had confirmed that there was no proof of any common parts being the cause and in the course of the Renovation, request had been made to the occupying tenant of 2I to demolish certain decorative structures for inspection but was rejected. Therefore, discussion should be deferred after P’s proof of common parts being the cause.

184.  On 21 November 2017, D2 sent a letter to IK and reported the discussion in the said management committee meeting. It was alleged that in early 2016, YC approached the tenants for inspection but was told that it was not convenient to dismantle the decorative structure and remove the cabinets. As a result, YC was unable to carry out inspection.

185.  D2 further asked whether there was still leakage problem and they would inform YC to follow up the matters. YC would find out whether it was a leakage problem or just fair wear or tear.

186.  IK replied by way of a letter dated 23 November 2017. All the allegations of D2 were rebutted. IK welcomed YC to inspect 2I and urged it to fix an inspection time.

187.  On 8 December 2017, Mr Kwan and Mr Cho inspected 2I. Mr Kwan observed that water could seep through the wall skirt and the floor of T2 whereas Mr Cho pointed out that the walls and the floor of T2 were dry and so no water seepage was possible.

188.  On 2 January 2018, at the invitation of IK, the Food and Environmental Hygiene Department (“the FEHD”) sent its staff to inspect 2I. The FEHD sent P a letter dated 5 January 2018 stating their observation that the watermarks on the ceiling and the Wall were dry and there was no sign of seepage for the time being. The FEHD would not carry out further investigation in accordance with their established procedure.

189.  IK instructed Mr Stewart Wong to inspect T2 and 2I and found out that there was still water seepage from T2 to 2I. It was observed that the floor and the walls of T2 had no waterproof material. Mr Stewart Wong prepared a surveyor report dated 1 March 2018 (“the Report”).

190.  By a letter dated 1 March 2018 enclosing the Report to D1 and D2 (“the Last IK Letter”), IK highlighted that in the Report, Mr Stewart Wong found out that T2 and T3 were, and still are, the origin and sources of water seepage into 2I. IK demanded prompt rectification of the problem.

191.  In the minutes of a management committee meeting held on 12 March 2018, it was recorded that the Last IK Letter including the Report had been passed to the chairman of D1 and records of D2 and YC would be collected for their lawyers to make a reply.

192.  P received no reply before the Writ herein was issued on 28 March 2018.

193.  I have heard the live evidence of Madam Ng, Madam Chen, Madam Kwan, Madam Chung, Mr Cho and Mr Kwan, who were involved in the foregoing narrative.

194.  I first resolve the factual dispute as to whether Madam Ng had refused to remove decorative wooden panel so that the staff of YC could inspect 2I to check the water seepage problem.

195.  I believe Madam Ng that she was never asked to do so. The evidence of D2 on this issue is dubious.

196.  The evidence of Mr Cho is that the request was made by the foreman of YC called Mr Cheng during a visit not long after 1 September 2015. Thus, Mr Cho apparently relies on the words of Mr Cheng only.

197.  Then there are two controversial letters purportedly issued by D2 dated 8 September 2015 and 25 November 2015 (“the Two Letters”). In the former letter, D2 requested Madam Chen to remove the built-in cabinet so that Mr Cho could make the inspection into the water seepage problem. In the latter letter, D2 repeated the same request. Neither letters mentioned the alleged refusal of Madam Ng during the visit in early September 2015.

198.  Madam Ng did not receive these two letters in the mailbox. P had no notice of these letters. I believe their evidence in this regard.

199.  There is no reason why D2 did not follow up the matter in the absence of any response from P. More remarkably, when pressed for remedial works by P, D2 said nothing about its request ignored by P. D2 should tell P that it could not do anything further unless the request was complied with.

200.  It was not until November 2017 that D2 by its letter mentioned for the first time that in early 2016, its contractor was unable to carry out inspection due to the tenant’s refusal to “dismantle the decoration and remove the cabinets”.

201.  Inexplicably, in the said letter, the alleged refusal was made in early 2016 and not September 2015. D2 could not have made a mistake about the date given the Two Letters, if existed at that time.

202.  Mr Sham has made a cogent submission on the authenticity of the Two Letters. He told this court that the Two Letters were only disclosed by D2 after P took out an application for specific discovery. I can see the force in his submissions.

203.  Madam Chung explained under cross-examination that she did not know the importance of the Two Letters. This is not believable. She relies on the alleged refusal of Madam Ng to deflect the blame. The Two Letters best suit her purpose.

204.  It can be seen that Madam Ng made the complaint about T2 in August 2015 to Madam Chen. I believe Madam Chen had related the complaint to Madam Chung.

205.  In any event, in the witness statement of Madam Chung, she accepted that she had received the email of Madam Ng of 18 March 2016 and Madam Ng told her that T2 and T3 were the sources of the water seepage problem in addition to the external wall. Whether P or Madam Ng returned the questionnaire of YC is irrelevant. D1 and D2 were well-informed of P’s complaint.

206.  What D1 and D2 did to rectify the seepage problem was to engage YC to carry out the waterproof works at T2 in late March 2016, which was reportedly completed by early May 2016.

207.  After the completion of the works, Mr Cho said that on 17 May 2016 and 20 May 2016, YC did a dye water test at T2. YC found no dye at the function room but when Mr Cheng pressed the door bell of 2I, he was denied entry because of inconvenience.

208.  I do not believe his account. There is no reason why any one of Fullhold would refuse Mr Cheng to check the result of the dye water test given the test was to solve their long term water seepage problem. And there is no reason why D2 did not put this refusal on record and took follow up actions.

209.  Madam Ng’s evidence was placed under the microscope by defence counsel. I cannot accept their criticisms. Madam Ng was just a tenant suffering from water seepage problem. She is not a lawyer and one cannot read too much into her photos and her choice of words in her emails. The fact that she did not mention T2 or take photo of the Wall for a while does not mean that T2 ceased to be a source. Her request for patch up work after leakage in her 16/11 email cannot be taken that she already accepted that there was no more water leakage when her clear evidence is that the seepage persisted throughout.

210.  Having accepted the expert evidence as analysed above, I am of the view that T2 has remained a source of water seepage into 2I despite the works carried out by YC in May 2016. T3 has remained so as well despite the works carried out by FCC in September 2016. I refuse to accept the submissions of defence counsel that T2 ceased to be the one of the sources from 2017. Even if Mr Cheng, Mr Cho and/or the FEHD officer felt no dampness with a particular part of the Wall, it does not mean that there is no more seepage. Whilst the test findings of the experts were under serious challenge, there is no reason why their causal observations should be taken as definitive conclusion.

211.  The chronology of P refers to a notice dated 14 September 2020 and issued by Legend Intelligent Property Management Limited which is the current manager of the Building. There were 4 photographs in the notice showing the poor conditions of the ceiling and supporting beams of T2. By the notice, the owners of the units in the Building were informed that the seepage problem of T2 and T3 was serious and as a result, it was resolved that T2 would be closed.

212.  D1 and D2 cannot rely on the works carried out by YC to discharge their duties. Of course, they cannot be blamed merely because the works failed to fully rectify the seepage problem. They should be entitled to rely reasonably on YC being a qualified contractor. However, when they received the 1^st IK Letter, they should know that the problem had not yet been resolved. They should make an effort to take proper and necessary steps to remedy the situation within a reasonable time. They have plainly failed to do so and instead they look for excuses such as the alleged obstruction caused by Madam Ng, which I refuse to accept.

213.  In the premises, I am satisfied that P has proved its claim against D1 and D2 on balance of probabilities. P’s claim against all other Ds based on the breaches of the DMC and the Sub-DMC is also borne out by evidence.

214.  I proceed to determine the issue of damages recoverable by P and the issue of apportionment.

215.  P claims two types of damages in the Statement of Claim. First, it claims repair costs of the interior of 2I and the estimated amount is HK$39,500 and costs of the Report in the sum of HK$10,000. I believe the latter should be recoverable as costs rather than damages.

216.  Water seepage from T2 and T3 has caused visible damage to 2I. The amount claimed is not far from Mr Lau’s estimate. I have heard no submission that the amount claimed is unreasonable. In view of the fact that quotation was made in January 2018, taking into account inflation over the years, I allow HK$43,000 to be recoverable from Ds as repair costs.

217.  P further claims loss of rental income. Firstly, for the reminder of the tenancy with Fullhold, i.e. from 1 September 2017 to 31 March 2018, P claims HK$11,000 per month. Thereafter, P claims HK$11,000 per month until the completion of all the repair and remedial works of Ts.

218.  Mr Wong is right in pointing out that actually Fullhold paid HK$8,800 per month for the last tenancy. On the other hand, Mr Sham draws to my attention that the parties have agreed not to adduce evidence on the rental value of 2I.

219.  The real problem is not about the amount. It lies with causation. Fullhold terminated the tenancy prematurely because 2I was untenantable. It cannot be argued that it was not and the photographs of 2I showing its present condition speak volume. I find, as a matter of fact, it was untenantable. In the absence of any repair works, 2I remains to be untenantable.

220.  Madam Ng accepts that the flood of 3J in August 2015 caused severe damage to 2I. She could actually see water dripping from the ceiling for two days. P may have a claim against 3J in respect of the flood but its pleaded claim does not include the flood.

221.  Moreover, the external wall is now agreed to be one of the sources of water seepage. Madam Ng’s complaints were, more often than not, directed at the window side and the ceiling. Damage to the inner side of the external wall inside 2I can be easily discerned.

222.  There is no evidence where the bad smell comes from and what causes the bad smell. It may be emanated from an affected area caused by the 3J flood.

223.  Thus, the untenantable state of 2I is attributable to some factors other than Ts. It is not really a matter of apportionment. The damage caused by the 3J flood and/or the external wall alone may be sufficient to make 2I unusable.

224.  In other words, P has failed to prove that but for the damage caused by the water seepage from T2 and/or T3, 2I would have been tentantable throughout and continues to yield rental income.

225.  I then come to the conclusion that I should not allow any damages under this head.

226.  On the apportionment issue, I have received very limited assistance. Mr Stewart Wong suggests this ratio: T2: 50%, T3: 40% and the external wall: 10%. This is based on his assessment of the extent of damage caused by the respective source.

227.  Most of the Ds not represented by counsel agree to Mr Stewart Wong’s suggested apportionment.

228.  Mr Lau maintains that he did not have sufficient information and hence no comment is made on the apportionment of damages. Mr Ho says nothing on this issue at all.

229.  I agree with Mr Lau that there is insufficient evidence to carry out a meaningful exercise of apportionment. I do not know the extent of damage caused by each of T2 and T3. The external wall is not included in the claim of P and there is no evidence to support a finding of the extent of damage caused by the seepage through the external wall. To apportion 10% to the external wall appears to be arbitrary.

230.  Doing the best I can, in all fairness, the damages awarded to P should be equally apportioned between T2 and T3.

231.  Lastly, in the pleaded case, P accepts that by reason of its ownership of 4 undivided shares out of the total of 14 undivided shares allocated to the 2^nd floor of the Building and all the premises thereon, P is willing to pay or contribute 4/14 of the repair costs of T2 and to stop further seepage from T2.

Conclusion

232.  For the reasons given, I conclude that P’s claims against all the Ds are made out on the evidence. I order that judgment be entered against all the Ds.

233.  I am of the view that the injunctions sought in the prayer of relief are appropriate except that D2 no longer has the locus to act. I make an order that D1, D3, D4, D5, D6, D7 and D8 do forthwith carry out such repair and/or remedial works to stop and/or to prevent further water seepage from T2 to 2I with the contribution of P to 2/7 of the ultimate costs of such repair and remedial works and the concomitant costs.

234.  I further make an order that D1, D9, D10, D11, D12, D13, D14 and D15 do forthwith carry out such repair and/or remedial works to stop and/or to prevent further water seepage from T3 to 2I.

235.  P should recover from all the Ds a total amount of HK43,000 as damages. I order that D1, D2, D3, D4, D5, D6, D7 and D8 should pay P HK$21,500 in equal shares and D1, D9, D10, D11, D12, D13, D14 and D15 should pay P HK$21,500 in equal shares.

236.  In view of the nature of the damages awarded, I do not allow any pre-judgment interest thereon.

237.  Costs should normally follow the event. Yet, in the present case, I can see that there can be complications. Some Ds are unwilling and aggrieved. They could protect their costs position by appropriate means. Instead of making a costs order nisi, I invite the parties to make written submissions on costs of this action (including P’s summons dated 9 October 2020, which was dismissed at trial) and I intend to dispose of the costs issue on paper. I may give further directions upon receipt of the parties’ written submissions.

238.  I direct the parties to lodge with this court their respective written submissions (in either English or Chinese) within 49 days from the date of this Judgment, taking into account the summer vacation and the fact that some of the Ds are not represented. Each set of written submissions should not exceed 4 pages (A4 size) and should be printed in not less than 14 font size and 1.5 line spacing. Non-compliant submissions will be returned unread and no costs will be allowed for the preparation of the same.

239.  T2 and T3 are not the only sources of water seepage into 2I though being the only targets in P’s claims. P has won this hard-fought battle against Ds. However, the victory cannot help P eradicate the water seepage problem once and for all. There are clearly water seepage issues in the Building. Such issues must be taxing to all the parties concerned and are best resolved by competent construction works. Litigations simply do not assist. Parties should take a realistic and practical approach in these matter.

240.  At the time of handing down this Judgment, those Ds acting in person will be informed in punti that should they wish to have this Judgment orally interpreted to them, they can contact this court within 3 days and arrangement will be made for them.

241.  Last but not least, I thank all the legal representatives of the parties, especially Mr Sham, Ms Chun, Mr Wong, Ms Li, Mr Lai, Mr Fan and Mr Cheung, for their assistance and I am sure that all of them have put an enormous amount of effort into this trial. I should also thank all those unrepresented Ds for acting reasonably at trial.

Mr. Walker Sham and Ms. Nicole Chun, instructed by Ip, Kwan & Co., for the plaintiff

Mr. Thomas Leung of Tony Kan & Co., for the 1^st defendant (14 to 16, 19 to 21 October 2020) and the 1^st defendant was not represented and did not appear on 21 and 30 December 2020

Mr. Damian Wong and Ms. Winnie Li, instructed by Ho, Tse, Wai & Partners, for the 2^nd defendant

Mr. Chan Yee L. of C.T. Chan & Co. for the 5^th defendant

Mr. Lai Chun Ho, instructed by Oldham, Li & Nie, for the 7^th and 8^th defendants

Mr. Brian Fan, instructed by T C Wong & Co, for the 9^th and 12^th defendants

Mr. Tommy Cheung, instructed by Lo & Lo, for the 14^th defendant

The 4^th, 10^th, 11^th, 13^th and 15^th defendants appeared in person (Remarks: the 15^th defendant was absent in the afternoon on 14 October 2020, in the morning of 15, 16 and 19 October 2020, and for the whole day on 20, 21 October, 21 and 30 December 2020)

The 3^rd and 6^th defendants were not represented and did not appear

DCCJ 1306/2018

[2019] HKDC 1518

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1306 OF 2018

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BETWEEN

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DECISION

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INTRODUCTION

1.  This is an appeal against Master S H Lee’s Decision by the 1^st to 3^rd defendants, the 6^th to 13^th defendants and the 15^th defendant (together the “Appellants”).

2.  The 14^th defendant is represented by Messrs Lo & Lo (“LL”). They had written to the court indicating that they “will not claim any costs of and incidental to the hearing against any parties and will remain neutral (as it did in the hearing before the learned Master)” and that “they will not claim any costs of and incidental to the Notice of Appeal.”

3.  I queried Mr Cheung, counsel for the 14^th defendant as to how he could remain neutral given the history of the case and the stance that had been taken by them (as can be seen in the subsequent paragraphs). Mr Cheung confirmed to the court their neutrality related only to the hearing below and the present hearing. He accepted that if the court finds that the past conduct of the 14^th defendant (which was in line with that of the Appellants) attracts any negative costs order, they should be liable for such costs as well.

BACKGROUND

4.  The plaintiff is the registered owner of several units (including unit 2I) in a commercial building in Wanchai (the “Building”). The 1^st to 15^th defendants are the registered owners of other units on the 2^nd or 3^rd floor of the Building. In this action, the plaintiff claims against the defendants for damages and orders for repair to stop water leakage from the 2^nd floor and the 3^rd floor lavatories.

5.  Pursuant to a case management summons, Registrar Ho ordered on 2 October 2018 (amongst other things) that:-

“…

3. Leave to the parties to adduce expert evidence on liability and quantum regarding the alleged water seepage, limited to one water leakage expert.

4. The 4^th and 5^th Defendants shall, … nominate their respective water leakage expert by way of letter to all other parties on or before 23^rd October 2018 … failing which the party in default shall be deemed to have elected not to adduce such expert evidence.

5. Subject to compliance with the preceding paragraph, all parties’ water leakage experts shall on or before 27^th November 2018 conduct a joint inspection of the subject premises and conduct such water leakage tests as may be agreed between/among the experts and immediately thereupon hold a without prejudice meeting for the purpose of preparing a joint expert report …

6. The joint expert report must address, inter alia, the following matters:

i.if different parameters have been used, the parameters upon which each expert’s opinion is based and the reasons for adopting different parameters;

ii.the issues on which the experts have reached a common and in respect of each such issue what that common opinion is;

iii.the issues on which the experts have failed to reach a common opinion and their competing views on each issue; and

iv.the reasons for a given expert’s disagreement with any opposing expert’s views on each such issue.

7. The joint expert report shall be lodged with the court on or before 8^th January 2019

…

13. The parties do obtain counsel’s advice, if necessary, and do take out all further interlocutory application on or before 26^th February 2019.

…”

6.  Thus, it can be seen that the original time stipulated for the joint inspection to take place was on 29 November 2018. On 28 November 2018 [at 17:18 hours] (less than a day before the scheduled time for the inspection), solicitors for the Appellants (“SKLAC”) wrote to the parties to ask for a postponement of the joint inspection “to a date when sunny weather is expected for two days prior to and on the date of inspection. Nonetheless, if either the plaintiff or the 14^th defendant object to such postponement, Dr Lau will attend the inspection as originally scheduled.”  This request met with strong opposition from the plaintiff, whose solicitors (“IKC”) replied by letter on the same day to object to the basis of postponing the joint inspection. In the end, parties agreed over a telephone conversation that the experts shall still attend the appointment but solely to conduct visual inspection and to discuss the method statement directly.

7.  Subsequent to the visual inspection on 29 November 2018, some issues were raised by the parties, which led to a summons for case management directions, after which Master David Chan ordered on 11 March 2019 (amongst other things) that:-

“…

3. On or before 13^th May 2019, the plaintiff shall remove the whole false ceiling inside the plaintiff’s premises … and make the plaintiff’s premises available for inspection and examination to be performed by the parties’ water leakage experts …

4. on or before 13^th May 2019, the 15^th defendant do make her property … available for inspection and examination to be performed by the parties’ water leakage experts;

5. Notwithstanding the time limits stipulated in paragraphs 5, 7 and 13 of the Order of Mr Registrar Ho dated 2^nd October 2018, time for:

(1) the water leakage experts of all parties to conduct a joint inspection of subject premises and conduct such water leakage test as may be agreed between/among the experts and to immediately thereupon to hold a without prejudice meeting be extended to 20^th May 2019;

(2) the joint expert report to be lodged with the Court be extended to 22^nd July 2019;

(3) the parties to obtain Counsel’s advice, if so desired, and to take out all further interlocutory applications, if any, be extended to 2^nd September 2019.”

8.  The parties thereafter agreed through correspondence that the joint inspection should take place on i) 14 May 2019 on the 2^nd floor lavatory and unit 3J of the Building; and ii) on 20 May 2019 on the 3^rd floor lavatory and unit 3J of the Building. It is of note that in the letter dated 3 May 2019 from SKLAC, the expert for the Appellants insisted again that his availability for the joint inspection was subject to fine weather forecast on the day and the method statement having been agreed by the experts. IKC immediately replied and pointed out on the same day that there was no requirement in the court orders that the joint inspection should only be performed with an acceptable weather forecast and where the experts agreed on the method statement. 

9.  In fact, paragraph 6(i) of the Order dated 2 October 2018 expressly provided for the scenario where the experts cannot agree on the methodology to be adopted.

10.  By letter dated 8 May 2019, SKLAC again repeated that their expert’s availability for the joint inspection is subject to fine weather forecast on the day and the method statement having been agreed by the experts. IKC replied on the same day, reiterating the content of the court’s order dated 2 October 2018 and informed them that the plaintiff will perform the inspection on 14 May 2019 whether or not the defendants’ expert would attend. Solicitors for the 14^th defendant, LL asked on 9 May 2019 to postpone the joint inspection from 14 May 2019 to 20 May 2019 as they would like to have more time for the experts to re-consider the issues. SKLAC again repeated their expert’s view on weather and methodology by letter dated 10 May 2019 and asked to postpone the joint inspection to 20 May 2019. IKC rejected the proposal on the next day and reiterated their concerns on breaching the court order. IKC further informed them by letter dated 10 May 2019 that the plaintiff’s expert would attend the scheduled joint inspection in compliance with the court order whether the experts for the defendants would attend or not. SKLAC wrote back on the same day saying they will only do the inspection on 20 May 2019. The reason for this flurry of correspondence all on 10 May 2019 was due to the intervening public holidays, the next working day would have been 14 May 2019.

11.  When the plaintiff turned up with their expert on 14 May 2019, they were first denied access into unit 3J, and when eventually allowed access into 3J after much efforts, they discovered that only a small portion of the unit had been cleared. From the photos, it could be seen that the rest of the unit were covered with mountain-piles of scattered clothing and rubbish that obstructed access to the toilet inside unit 3J. The plaintiff’s expert eventually managed to carry out some water tests. IKC wrote to SKLAC setting out the difficulties encountered by the plaintiff’s expert and informed SKLAC that the 2^nd stage test would be carried out on 20 May 2019, the date originally requested by SKLAC and LL to be the joint inspection date.

12.  On 17 May 2019 SKLAC informed IKC that their experts would not attend the inspection on 20 May 2019, due to the same set of reasons: no agreed method statement had been reached between the parties and no satisfactory weather forecast.

13.  I pause to note that by now more than 20 letters had been exchanged between the solicitors within a short span of time. One can imagine the legal costs that have been incurred just for trying to agree a date for joint inspection. 

14.  Eventually, the plaintiff’s expert carried out examinations and tests on 20 May 2019 and the 14^th defendant’s expert attended on 20 May 2019 simply to “record the inspection in the 3^rd floor lavatory”. The plaintiff’s expert completed his report and circulated to the 14^th defendant’s expert on 11 July 2019.

APPLICATION TO VARY TIME

15.  On 18 July 2019, nearly 2 months after the time stipulated for the joint inspection to take place, SKLAC issued a summons on behalf of the Appellants seeking to vary the previous timetable prescribed under the orders dated 2 October 2018 and 11 March 2019. No affirmation in support was filed. Upon the filing of the plaintiff’s affirmation in opposition, the defendants filed the affirmation of Wong Justin Szecheh, a solicitor handling these proceedings. 

16.  I note that the 14^th defendant has not taken out any application to vary the time, even up to the day of this appeal. Mr Cheung indicated that they would adhere to any orders that the court makes in this regard. 

DISCUSSION

17.  Counsel agree that Order 25 Rule 3 of the Rules of the District Court is the appropriate Rule to consider in the Appellant’s application to extend the time stipulated for: 1) the joint inspection, 2) the lodging of the joint expert report, 3) obtaining Counsel’s advice, 4) the Case Management Summons. Ms Liao (counsel for the Appellants) initially submitted that the rules in relation to general time extension applications would be relevant too, but eventually she agreed that where the rules differ, Order 25 Rule 3 prevails.

18.  Mr Sham, counsel for the plaintiff, submitted that whilst generally speaking an appeal against a master’s decision is by way of a re-hearing, where the court is faced with an appeal against a case management decision made by a master, the judge should not ‘lightly interfere with the decision of the master and should only do so for good reason’. This is because a case management decision involves the exercise of discretion by a master. An appellate court would not lightly interfere with such a case management decision unless the decision of the master was found on some errors of principles or was clearly wrong^[1]. The authorities are consistent with §38 of Practice Direction 5.2: “The parties should note that case management decisions are matters within the discretion of the master or the judge making the decision and are generally not susceptible to appeals.”

19.  Ms Liao submitted that Mr Sham’s submission cannot be right. She relies on the last sentence in §25/1A/14 of Hong Kong Civil Procedure 2020: “However, it seems that a judge may exercise the case management discretion afresh in the usual way on appeal from a master (O.58 r.1).”  She distinguishes between i) an appeal from a master to a Judge and ii) an appeal from a Judge to the Court of Appeal, and says that the principle that an appellate court is reluctant to interfere with judges on matters of case management unless a judge is clearly wrong only applies to when the Court of Appeal hears appeals. I see no basis to draw that distinction. Indeed, cases such as Wan Shui Ha Alice v Ng Wing Yan^[2] and X v Dr Hung Cheung Tsui & Anor^[3]  (a Court of First Instance decision which binds me) show that the principle had been applied to appeals against case management decisions by masters. Ms Liao urged me to depart from these cases but I do not see any basis to do so.

20.  I agree with Mr Sham that the approach submitted by him is the approach the court should take in the present application.

21.  Ms Liao devoted considerable content in her skeleton submissions in trying to persuade the court that Dr Lau’s insistence on agreeing on the method statement and the inspection being carried out on a day with nice weather was reasonable, and indeed essential for the joint report to be of assistance to the court.

22.  The court should not be asked, and indeed is not equipped at this stage to rule on which of the methodologies adopted by the different experts is to be preferred. In 皇河實業有限公司 v Wan Chiu Yuen and Chan Mei Wah^[4], HH Judge Leung (as he then was) had said at §14-17:-

“14. It is desirable that the experts agree on the appropriate test and methodology. But if they cannot, they cannot. It is not disagreement between the parties, but their experts.

15. In case of experts’ disagreement, the court’s concern is that the experts explain their competing views. It becomes part of the court’s consideration in determining which expert’s opinion is to be preferred. …

16. For the purpose of the present application, numerous affirmations have been filed by the parties as well as their respective experts. By asking the court to rule on the experts’ difference as per their affirmations; and to direct a test or methodology to be adopted for the purpose of preparing the expert reports, the parties are effectively carving out part of the experts’ opinion for interlocutory determination prior to trial.

17. The determination of the difference in the expert opinion at this juncture is particularly undesirable, because in view of the results of the test to be carried out and the expert reports to be compiled, it may turn out that the experts would need to be called at the trial.”

23.  I respectfully agree and adopt the comments of the learned Judge. However, whilst the court does not adjudicate which of the methodologies propounded by the experts is to be preferred, it does decide on whether the conduct of the parties leading to the application to extend time was reasonable or acceptable.

24.  Essentially, Wong Justin Szecheh (one of the solicitors handling the file) for the Appellants said in his affirmation that they had refused to attend the joint inspection upon their expert, Dr Lau’s advice. There was no explanation as to the lateness of the application nor the reason why they followed the advice of the expert.

25.  I take exception to this attitude. Legal advisors should be the ones who have the conduct of litigation. Solicitors should have the expertise to advise their clients what is the proper course to take in litigation. Dr Lau may be an expert, but he is an expert not in the legal field. Whether parties ought to comply with a time limit prescribed by a court order would lie outside Dr Lau’s expertise. Legal advisors cannot and should not shirk from the responsibility of advising their clients how the case should be conducted, and when necessary, informing the expert of their view. Unless lay client or experts deliberately and unreasonably ignore or go against the advice rendered by their legal advisors, the ultimate responsibility of giving advice in taking certain steps in the course of litigation must rest with the legal advisors. I do not see from the affirmation of Mr Wong that this was the case. Upon receipt of their expert’s advice, SKLAC must have (or should have) considered if it was appropriate that the Appellants should follow that advice, in view of a time limit imposed by a court order.

26.  In the present circumstances, I am of the view that despite Dr Lau’s advice, it was unreasonable for the Appellants not to have adhered to the court’s timetable, for the following reasons:-

(1) There is no rule that experts must adopt the same method statement in a joint expert report. I can appreciate it would be desirable for them to do so as it will narrow down the issues in dispute that need to be decided by the court, but I am not aware of any authority (as confirmed by Ms Liao) which stipulates that it is essential for experts to agree on methodology before a joint expert report can be compiled.

(2) Paragraph 6(i) of the Order of Mr Registrar Ho dated 2 October 2018 already envisaged the possibility of the experts adopting different parameters – this supports the argument that the Registrar did not deem it essential for the experts to agree on the method statement before doing the joint inspection or the joint expert report. This paragraph was also repeatedly quoted by IKC in their opposition to the Appellant’s insistence on agreeing the Method Statement before a joint inspection could take place;

(3) IKC had repeatedly in their correspondence pointed out their intention to adhere to the time limit stipulated in the court orders to SKLAC and LL, despite their insistence to agree on the Method Statement. It was clear after the first 2 rounds of exchange of correspondence that the experts could not agree on the methodology. Under those circumstances, if the Appellants were of the view that due to the advice of their expert (which they have decided to follow), there was a possibility that they could not proceed and thus the timetable set by the court could not be adhered to, they ought to have sought directions from the court as soon as possible. They had not done so before the deadline, in fact they had only sought an extension two months after the deadline had passed. Up until now there is no explanation on why there was a 2-month delay.

27.  Having said that, I am of the view that such unreasonableness of the attitude taken by the Appellants and the 14^th defendant may not be determinative of the merits of the present appeal. This is because the Court of Appeal had in the case of Chan Cheung Ming Jacky v Siu Sin Man (Formerly Known as Siu Kit Ling)^[5] laid down principles concerning the case management function of the court.

28.  In that case, the Court of Appeal was concerned with an appeal against the trial judge’s refusal to allow a very late application (one day before the trial) to issue a subpoena. Although that case concerned a case in the Family Court, the comments made by Lam VP therein about how the court fulfils its case management functions stem from general civil case:-

“19. Since 1997, the role of the court in case management has assumed a greater prominence in our administration of civil justice. Even before CJR, in L v L (unrep., HCMC 1/2003, [2005] HKEC 1851) (20 April 2005), the court considered the application for leave to issue subpoena from a case management angle when such application was made after the evidence had been closed. In that case, the court conducted a balancing exercise before allowing the case to be reopened and granted leave for the issue of subpoena. Various factors were considered: the potential disruption to the trial, the prejudice that the other party may suffer, the explanation for the late application, the significance of the new evidence, the overall justice of the matter.

20. Under CJR, O. 1A and 1B were added to our rules (both the Rules of the High Court (Cap. 4A) as well as the Rules of the District Court). Order 1A r. 2 provides that whenever the court exercises its power under the rules (and that would include the power to grant leave to issue a subpoena), it must seek to give effect to the underlying objectives set out in r.1. Order 1A r.2(2) is also important:

In giving effect to the underlying objectives of these Rules, the Court shall always recognize that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.

…

27. The second caveat we have is about the comment of Poon J at [6] of his judgment on the possibility of an application being dismissed on the basis of delay alone. Whilst we would not rule out this possibility entirely, one must always bear in mind O. 1A r. 2(2). As with the exercise of other kinds of discretion, the exercise of case management power must be with reference to the facts and circumstances of the case before the court. There is no place for the application of a mechanical rule that the court will invariably refuse an application simply because a party is guilty of serious delay without any good explanation. The court must conduct an overall balancing exercise.

28. Further, we need to emphasise this: case management by the court does not mean that the judge will dictate the evidence to be adduced. Even in the context of family proceedings, our system is still primarily operated on an adversarial basis. In general, subject to the questions of admissibility and relevance, each party in the proceedings is at liberty to call whatever evidence he or she considers necessary provided that procedural requirements are complied with. Thus, in respect of an application for leave to issue a subpoena made in good time, the approach of Mortimer V-P should prevail. However, in respect of a late application, the court will have to examine all the relevant circumstances and the significance of the intended evidence to be adduced is one factor to be taken into account.

…

37. This Court has repeatedly stated that we will not interfere with case management decision unless the lower court has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task. In these circumstances, is there any ground for this Court to interfere with the Judge's refusal of leave by way of his exercise of case management power?

38. With respect to the Judge, we are of the view that his refusal of leave is clearly wrong in the circumstances of this case. Of the four reasons he gave, the first and fourth reasons appeared to be the principal reasons and they boil down to the question of delay. Whilst he was entitled to be critical of the delay on the part of the applicant in making this application, he was incorrect in effectively making the unexplained delay as determinative of the outcome without considering other relevant factors.  With respect, it is not helpful to start with a premise (as the Judge did) that “eleventh hour application is unlikely to be considered by the court unless in very exceptional circumstances”. Such a premise has a tendency of clouding the court's judgment in respect of other relevant considerations.

43. In our judgment, the Judge’s exercise of discretion was flawed and this Court should intervene. Assessing the position afresh, we are of the view that in this instance the overall justice of the matter points to leave being granted for the subpoena to be issued.”

29.  Applying the above principles to the present case:-

(1) the complaints against the unreasonable stance taken by the Appellants and the 14^th defendant essentially boil down to delay, and I am mindful of not letting the unreasonable stance of the defendants and the unexplained delay become determinative of the outcome without considering other relevant factors;

(2) the only milestone date that will be upset is a case management conference fixed for 13 December 2019, and trial dates have not yet been fixed;

(3) in a water leakage dispute case, the court depends heavily on the respective experts’ views and opinions as to the cause of the leakage. It can be envisaged that if the trial were to proceed only on the plaintiff’s expert report, the defendants would still enlist the help of their own experts behind the scene to challenge the plaintiff’s expert in cross-examination. In this scenario, the court may well be deprived of the full picture in terms of the expert evidence, and cross-examination of the defendants’ expert.

30.  Neither the case of Chan Cheung Ming Jacky nor the principles set out therein were brought to the attention of the Learned Master or discussed at the last application, and as a result, the Learned Master’s exercise of discretion was flawed. Assessing the position afresh I would allow an extension of the original deadlines.

31.  For these reasons, I would allow the appeal.

PERIOD OF EXTENSION

32.  By now, it would have been nearly a year past the original deadline for the production of a joint expert report on 27 November 2018. There should not be any further delay to the exercise. Having sought confirmations from the parties, the following Orders were made:-

Orders:-

(1) The water leakage experts of all parties do conduct a 1^st joint inspection of the subject premises on the 7 November 2019 and a 2^nd inspection of the subject premises on 14 November 2019. During these 2 joint inspections, all experts are required to carry out all relevant tests that are necessary for the preparation of a joint expert report. Unless each expert attends these joint inspections on 7 November 2019 and 14 November 2019, they are debarred from seeking further joint inspections of the subject premises for the preparation of the joint expert report. The 15^th defendant do make unit 3J of Yen Ying Building available on these two dates for inspection.

(2) Each expert is to prepare and exchange his own draft report on or before 30 November 2019 with the other two experts. Unless each expert exchanges his draft report on or before 30 November 2019, he is debarred from taking part in the preparation of the joint expert report and the corresponding party/parties is/are debarred from expert evidence being adduced in the trial.

(3) The experts are to have a without prejudice meeting on or before 6 December 2019 for the purposes of preparing a joint expert report. Unless each expert attends the without prejudice meeting on or before 6 December 2019, he is debarred from taking part in the preparation of the joint expert report and the corresponding party is debarred from having expert evidence adduced in the trial.

(4) The experts are to prepare a joint expert report to be filed into court on or before 17 December 2019.

(5) Parties are to seek and obtain counsel’s advice on or before 2 January 2020.

(6) The CMC originally listed for 13 December 2019 before Master S H Lee be vacated.

(7) The CMC will instead take place on 3 January 2020 at 10:30 am in Court 18.

(8) All other directions contained in paragraphs 2-10, 12-13 in the Order of Master S H Lee dated 24 September 2019 shall stand.

(9) The joint expert report shall address, amongst other things:-

(i) if different methodologies are used, the reason why such respective methodology is used.

(ii) the issues on which the experts have reached a common opinion and in respect of each such issue what the common opinion is.

(iii) Where the experts fail to agree on certain issues, what those issues are and the basis of their respective opinion on such issues.

(iv) Where possible give reasons for the issues the experts disagree upon.

COSTS

33.  Ms Liao asked for costs as she says they have won the appeal and that the plaintiff unreasonably objected to their application below. As seen from the history of the events herein, I do not agree that the plaintiff was unreasonable in resisting the application to extend time. Further, the Appellants are seeking an indulgence from the court to extend time, and I see no basis why they should not be responsible for the costs of the application. I also see no reason why the Appellants should not bear the costs of the wasted report done by the plaintiff’s expert. As the 14^th defendant took the same stance (except for the two hearings), I believe it is fair that their position on costs should be the same as that of the Appellants (except for costs of the two hearings). Thus, I made the following costs order nisi:-

(1) Costs of the application by summons dated 18 July 2019 be borne by the 1^st to 3^rd, 6^th to 15^th defendants except that there will be no order as to costs in relation to the application against the 14^th defendant in relation to the hearing on 29 August 2019 and the hearing today, with certificate for counsel, to be taxed if not agreed.

(2) Costs of the wasted expert report prepared by the plaintiff’s expert to be borne by the 1^st to 3^rd, 6^th to 15^th defendants on an indemnity basis, to be paid forthwith.

(3) There be no order as to costs in relation to the appeal.

Mr Walker Sham, instructed by Ip, Kwan & Co, for the plaintiff

Ms Tara Liao, instructed by S. K. Lam, Alfred Chan & Co, for the 1^st to 3^rd defendants, the 6^th to 13^th defendants and the 15^th defendant

The 4^th defendant was excused from attending the hearing

The legal representatives of the 5^th defendant was excused from attending the hearing

Mr Tommy Cheung, instructed by Lo & Lo, for the 14^th defendant

DCCJ 1306/2018

[2019] HKDC 1744

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1306 OF 2018

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DECISION

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Variation of Costs

1.  By a decision dated 15 November 2019 (the “Decision”), I allowed the appeal of 1^st – 3^rd, 6^th – 13^th and 15^th Defendants (together, the “Defendants”) against Master S H Lee’s order dismissing the Defendants’ application for an extension of time to inter alia file a joint expert report (the “Appeal”).  I made the following costs order nisi in the Decision:-

(1)     Costs of the application by summons dated 18 July 2019 be borne by the [Defendants] except that there will be no order as to costs in relation to the application against the 14^th defendant in relation to the hearing on 29 August 2019 and the hearing today, with certificate for counsel, to be taxed if not agreed.

(2)     Costs of the wasted expert report prepared by the plaintiff’s expert to be borne by the [Defendants] on an indemnity basis, to be paid forthwith.

(3)     No order as to costs in relation to the appeal.

2.  By a summons filed on 15 November 2019, the plaintiff applied to vary the costs order nisi, asking for costs of the Appeal on an indemnity basis, to be taxed if not agreed.

Grounds for Variation

3.  The Appeal was allowed and I had granted a short extension of time enabling the joint expert report to be filed.  To that extent, the Defendants had been successful in the Appeal.  By the mere fact of being successful in the Appeal, the Defendants have discharged their burden of showing they are entitled to costs.  The burden then shifts to the plaintiff to adduce sufficient evidence and argument that some other order is appropriate.

4.  Essentially, the plaintiff relies upon the unreasonable conduct of the Defendants leading up to the Appeal (as held by this Court in the Decision) to argue that the Defendants should bear the costs of the Appeal.  The plaintiff says the Defendants had brought the Appeal upon themselves as a result of the way they had conducted themselves.  The case of Daniels v Walker[1] is relied upon for the proposition that costs do not necessarily follow the event and the court may award costs against a winning party.

5.  I agree with the plaintiff’s submission that post-CJR, costs in interlocutory proceedings no longer start with the general rule that costs follow the event[2].  I also agree with the Hon To J in the case of Melvin Waxman v Li Fei Yu[3] at paragraph 14, that: “an order that a successful party shall have his costs only if he succeeds in the action, or bear his own costs or even pay the opponent’s costs are possible options under the new rule 3(2A), depending on the court’s perception of where justice lies.”

6.  Shortly after the application to vary the costs order nisi had been taken out, the plaintiff had proposed to the Defendants that the costs of the Appeal should be in the cause of these proceedings to dispense with further costs arguments. The Defendants did not agree to the Proposal. I am also not convinced that this is an appropriate case for costs to depend on the ultimate result after trial. At this stage, the Court is simply not in a position to have a view on the merits of the claim.  The question the Court should concentrate on is whether it was reasonable for the Defendants to have pursued the Appeal and whether it was reasonable for the plaintiff to have resisted it.  Given the fact that the Appeal was allowed, it was clearly reasonable for the Defendants to have pursued the Appeal.

7.  Whether it was reasonable for the plaintiff to have resisted the Appeal depends not only on the outcome of the Appeal but also on what were the arguments available to the plaintiff and whether there was any merit.

8.  As can be seen from the historical correspondence between solicitors for the Defendants and the plaintiff, it is an understatement to say that parties had been taking a confrontational stance every step of the way.  Animosity was apparent from both sides.  To that end, I can see why it might have appeared natural for the plaintiff to have resisted the Appeal.  However, animosity aside, the court expects parties to act reasonably and solicitors to advise lay client of the true legal position before they take any stance in the course of the proceedings.

9.  Principles concerning the case management functions of the court had been clearly set out in the case of Chan Cheung Ming Jacky v Siu Sin Man (Formerly Siu Kit Ling)[4]. Neither party referred the learned Master to that case.  In the Decision, I had already applied the principles and discussed how in water leakage cases the trial judge would have been greatly assisted by a joint expert report.  Before arriving at a decision to resist the Appeal, the plaintiff ought to have considered the possibility that the court would have been deprived of the assistance of a joint expert report and how that would impact upon the ability of the trial court to carry out its task.  I disagree with the plaintiff’s submission that it was reasonable for them not to have brought the Learned Master’s attention to the case of Chan Cheung Ming Jacky.

10.  In terms of the Defendants’ unreasonable conduct, I consider that the court has already shown its displeasure, and that the Defendants have been penalised:-

(1) In the costs order nisi, the Defendants’ right to recover their costs against the plaintiff has been deprived, despite the fact that the Appeal was allowed. 

(2) The plaintiff had already been awarded costs of the hearing before Master.  That costs order already dealt with the Defendants’ conduct, however unreasonable they might have been, at the court below.

11.  When considering the costs for the Appeal, the court is to take into account, amongst other things, the outcome of the Appeal and whether it was reasonable for the plaintiff to have resisted the Appeal.  Based on my observations in the Decision and hereinabove, I do not think it was reasonable for the plaintiff to have resisted the Appeal. 

12.  The plaintiff also says that since the Defendants were seeking an indulgence from the court for the extension of time from their own breaches of previous Court orders, they should in any event bear costs.  This, the plaintiff says, differentiates the present case from the case of Chan Cheung Ming Jacky and the costs order granted in that case should not be followed.  I did not make the costs order nisi in the Decision based only on the case of Chan Cheung Ming Jacky.  As discussed, I considered all the circumstances and conduct of the parties, both below and on Appeal.  The fact that the Defendants are seeking an indulgence from the Court had already been reflected in them having to bear costs of and occasioned by the application to extend time.  They have also been penalized by not being able to recover costs against the plaintiff, despite their Appeal was allowed.

13.  The plaintiff also submits that as I had made an order for the costs of the wasted report to be borne by the Defendants on an indemnity basis, I ought to also award the plaintiff the costs of the Appeal on an indemnity basis so that the two costs orders align.  I do not agree.  The considerations for making a costs order for a wasted report are completely different to that for the costs of the Appeal. It would be wrong to align them just for the sake of doing so.  As analysed above I do not think it was appropriate for the Defendants to bear the plaintiff’s costs of the Appeal.  I also see no reason which warrants an order for indemnity costs for the Appeal against the Defendants and I decline to so order.

14.  Consequently, I dismiss the plaintiff’s application to vary the costs order nisi in the Decision.

15.  In view of the result, I make an order nisi that the plaintiff is to pay the Defendants’ costs of and occasioned by the Summons dated 15 November 2019.