POLO COURT DEVELOPMENT LTD v. TENY LTD

DCCJ 2134/2020

[2025] HKDC 629

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2134 OF 2020

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DECISION

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1.  This is the PTR for a trial scheduled to start on 3 June 2025.

2.  Mr Lau Ying Biu acts for the plaintiff (“P”). Miss Joyce H Y Lee acts for the defendant (“D”). Having read their written submissions it seemed clear to me that the disputes between the parties insofar as today’s directions are concerned boiled down to two matters, namely (1) whether D should be allowed to file and serve a supplemental witness statement for Cheung Wah Hang on or before 14 April 2025 (“Issue 1”); and (2) whether the witness statement of Norman Chang can be adopted as his evidence-in-chief at the trial (“Issue 2”).

3.  I had serious concerns vis-à-vis both issues and raised written requisitions, inviting the parties to address me on them orally today, which they did.

4.  On Issue 1, my main concern was D never provided this Court with a draft of the intended supplemental witness statement so that I could not scrutinize its contents and determine their propriety. It appeared to me that giving D a blank cheque would be dangerous in that if the contents of the supplemental witness statement turn out to be inappropriate, or if those contents would create a need for further investigations being conducted by P, the trial due to start in 8 weeks’ time could be derailed and costs would be wasted. Mr Lau Ying Biu, acting for P, sensibly submitted he was never in a position to consent to D’s application unless he had been provided with a draft.

5.  The legal principles are trite but in light of the application they need to be set out here so that the parties can understand why I am refusing to hear the application in the absence of a draft.

6.  It is best that I start with Keiron Peter Arch Rochester v Glory Sky Previous Metals Limited[2023] HKCFI 2536 where Wilson Chan J, in my view entirely correctly, stated this (§9): -

“… A supplementary witness statement may be allowed to be served to give the witness of a party the chance to fill in gaps in his own statement or to answer the statement of the opposite party…”

7.  A judicial officer who had been in private practice at one point or another would fully understand the necessity or desirability of the parties making applications to file and serve supplemental witness statements does arise frequently. Sometimes, as was the case in Li Chun Pong Raymond v Li Maggie Hang Yung[2024] HKDC 1211 (§120), the solicitors on record were at fault in that important questions were never asked of the witness in question, resulting in court documents being defective. In this connection, interviewing a witness is not that different from using ChatGPT, DeepSeek or similar AI models – one can only get useful answers if one asks the right questions. Defective prompts would lead to defective answers. Witnesses are usually without legal background. It is the job of a competent solicitor to prompt lay persons to provide the necessary evidence addressing the real issues in dispute in a helpful manner. If that was done badly, but the defect was most fortunately discovered in good time, the solicitor (be it the same, or a different, one) who discovered the defect is duty-bound to advise the client to attempt to rectify the defect before trial. An application to file and serve supplemental witness statements can be an admirable rescue mission. Of course, and this arises even more frequently, the solicitors on record can be completely blameless. Staying on the theme of ChatGPT, DeepSeek or other AI models – sometimes using the most appropriate prompts still lead to false or otherwise inadequate answers. If a solicitor (be it the same, or a different, one) discovered that the existing witness statements are no good because of a miscommunication in the past, or the failure of the witness to be helpful at the first interview, the solicitor who realized this is also duty-bound to advise the client to attempt to rectify the defect before trial.

8.  However, with the potential disruption which any application to file and serve supplemental witness statements may cause to the trial of the action, we have rules governing such applications. In my view, the best summary of such rules is in the dictum of Mr Recorder William Wong SC in Re Cao Zhong[2021] HKCFI 3143, at §23, as follows: -

“To summarise, the relevant considerations for a judge exercising his discretion are: -

(1) the merits of the proposed application: whether the application if granted would assist the court in securing the just resolution of the dispute in accordance with the substantive rights of the parties;

(2) whether there is any disruption to the trial or any milestone date;

(3) the presence or absence of any real prejudice to the other party;

(4) any conscious flouting of the rules of court, practice directions and/or case management directions/timetables, or any over-reaching or deliberate manoeuvring on the part of the applicant; and

(5) the objectives of the Civil Justice Reform.”

9.  One can look at the list above and come to the firm view that whilst there is no rigid rule requiring the presentation of a draft, the reality of the matter is that in the absence of a draft, a judicial officer is usually in no position to determine whether leave should or should not be granted.

10.  As I mentioned in Lei Yukang v Lin Youjun[2023] HKDC 568 (§20), and also in Licksun Company Ltd[2025] HKDC 372 (§5): -

“Practitioners are reminded of what was said by DHCJ Herbert Au-Yeung in JTM324 Strategic Advisors, Inc v Permex Co Ltd [2023] 1 HKLRD 1437 [2023] HKCFI 403 (at §18). A court of law is not a rubber-stamp. All parties to all civil actions and their legal representatives should assist the court by making all necessary inquiries, and placing all relevant materials before the court, in a timely and helpful manner.”

11.  In the context of an application to file and serve supplemental witness statements, “relevant materials” would include the supplemental witness statements in draft forms.

12.  Miss Joyce H Y Lee, acting for D, sensibly accepted that the normal practice was for an applicant for leave to provide the Court with a draft supplemental witness statement first, so that the Court can scrutinize the intended contents. She profoundly apologized for not having submitted one on this occasion, with a full explanation. I accepted her apologies and explanation but the more pertinent question was what, then, should be done going forward.

13.  Since it appeared to be possible for the matter to be dealt with by the parties by consent for as long as D’s legal team can come up with a draft supplemental witness statement within 7 days from today my decision is to simply refuse to deal with the matter today, and impose an unless order for D to take out a proper inter partes summons with a draft supplemental witness statement annexed, failing which D should be barred from making any application for leave to file and serve supplemental witness statements before the commencement of the trial. There should also be an affirmation in support from D explaining (1) the serious delay; and (2) in what way can the supplemental witness statement assist the trial judge in the adjudication of this matter.

14.  Turning to Issue 2, P’s original submissions that the witness statement of Norman Chang should somehow not be adopted as evidence-in-chief were incomprehensible. P’s real options were to (1) make a proper application to have the witness statement expunged; or (2) let the statement get adopted as evidence-in-chief exactly as it is and deal with any perceived problem with its contents by way of cross-examination and submissions on weight. After some oral discussions, Mr Lau Ying Biu, acting for P, chose option (2) and formally withdrew his objection to the witness statement of Norman Chang being adopted as evidence-in-chief without prejudice to his future submissions on issues of weight, etc.

15.  That was most sensible.

16.  All things considered, I hereby make the following order: -

(1)  The trial shall commence on 3 June 2025 at 9:30 am as scheduled.

(2)  D’s solicitors shall, on or before 17 April 2025, provide to P’s solicitors both hard and electronic copies of the transcripts for all audio recordings which D would seek to rely on as evidence at the trial for P’s agreement. All transcripts as agreed or revised shall be inserted into the trial bundles and clearly marked as agreed or not agreed as the case may be by 24 April 2025 at the latest.

(3)  This reasoned decision be inserted into the trial bundles and the index should be updated accordingly. For all reasoned decisions in the trial bundles, Neutral Citation Numbers should be clearly set out in the index. Under no circumstances should the parties remove the Neutral Citation Numbers.

(4)  Unless D takes out an inter partes summons with a draft supplemental witness statement annexed by 4 pm on 15 April 2025, D be debarred from making any application to file or serve supplemental witness statements.

(5)  Such an inter partes summons must be accompanied by an affirmation in support and be listed before any Judge (and not a Master) of the District Court. Parties should then seek to have this inter partes summons dealt with by consent if possible.

(6)  P shall lodge and serve both hard and soft copies of P’s written opening, list of authorities, copies of authorities by 4 pm on 19 May 2025. Soft copies of P’s written opening shall be in both PDF and MS Word formats.

(7)  D shall lodge and serve both hard and soft copies of D’s written opening, list of authorities, copies of authorities by 4 pm on 26 May 2025. Soft copies of D’s written opening shall be in both PDF and MS Word formats.

(8)  The trial should be conducted bilingually, that is to say with submissions being made and received in English, and with live oral evidence being given and received in Cantonese.

(9)  Translation of documents be dispensed with.

(10)  All filed and exchanged factual witness statements and expert reports, including the factual witness statement of Norman Chang, can be adopted as evidence-in-chief, provided that the witness in question tenders himself or herself for cross-examination.

(11)  Leave be granted to the parties to play audio recordings in Court using their own electronic devices or portable speakers.

(12)  Should a party wish to play video clips at the trial using the Court’s TV screen, that party should liaise with the Court’s clerk in good time to ensure there shall be no technical impediment for the same to be done.

(13)  Costs of this PTR with Certificate for Counsel be in the cause.

17.  For the record, I am aware Miss Joyce H Y Lee, and Holman Fenwick & Willan, were new to the case. I hope they would perform their duties better than their predecessor, who somehow failed to appear in Court in April 2021 and wasted costs – see [2021] HKDC 508 (§§7, 8 & 23). All practitioners should take their professional obligations seriously.

18.  I thank both advocates for their most able assistance.

Mr Lau Ying Biu of Liu, Chan & Lam for the plaintiff

Ms Joyce Lee, instructed by Holman Fenwick & Willan, for the defendant

DCCJ 2134/2020

[2022] HKDC 57

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2134 OF 2020

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BETWEEN

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REASONS FOR DECISION

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Introduction

1.  This is an Order 14 application for summary judgment.

2.  The background leading to the present application has been set out in detail by Deputy District Judge Kay Seto in her Decision given on 23 April 2021, whereby the learned Judge set aside the summary judgment obtained in default. She gave directions for the parties to file further affirmations with an adjournment for substantive arguments for the original Order 14 summons taken out on 26 January 2021. I gratefully adopt the detailed background as set out in there.

3.  The Order 14 summons resumed before me on 6 December 2021. At the conclusion of the hearing, I granted the defendant unconditional leave to defend with costs in the cause. I now give reasons for my decision.

Background

4.  In brief, this is a water leakage case. The plaintiff is the registered owner of Unit 16, 12^th Floor, Wah Sang Industrial Building, Wong Chuk Yeung Street, Fo Tan, New Territories. The plaintiff complains that there was water leakage from the defendant’s premises immediately above, ie Unit 16, 13^th Floor, from late August 2019 to early May 2021. The plaintiff claims damages.

5.  It is not disputed that the defendant's premises have been used as a factory for making “steamed rolls” (a traditional Chinese dim sum made with rice flour). Machinery and embedded drainage system were installed. However, the defendant denies that the wastewater generated, if any, from the manufacturing process had caused any water damage to the plaintiff’s premises.

6.  There are two pro-forma investigation reports provided by the plaintiff in its 1^st Affirmation in support of the Summons. The first one is the report compiled by the plaintiff’s surveyor Hong Kong Building Inspection and Structural Diagnostic Limited (“HKBI”) dated 28 November 2019 (“the HKBI Report”). After several professional tests being conducted at the ceiling of the plaintiff’s premises on 8 October 2019, HKBI concluded that there was water seepage penetrating from the floor slab of the defendant’s premises to one particular part of the ceiling of the plaintiff’s premises in front of the loft office (“the seepage area”). Further, HKBI stated in their report that they had eliminated all possible sources of water seepage other than that originated from the defendant’s premises.

7.  The second one is an undated report provided by Easy Living Consultant Limited (“Easy Living”), which was commissioned by the Joint Office of the Building Department and the Food and Environmental Hygiene Department (“the Joint Office”). We shall call it “the Joint Office Report”. After conducting several colour water tests and ponding tests on 4 January 2020, Easy Living found that, inter alia, leakage of the drainage pipes and from the floor slab of the defendant’s premises were unlikely. It was concluded in the Joint Office Report that the source of water seepage was “uncertain” and that it was a fail case.

8.  On the other hand, the defendant would, in turn, rely on the Joint Office Report to support its Defence. The defendant put the plaintiff to strict proof of the source of the alleged water seepage. Nonetheless, the water seepage continued.

Subsequent events

9.  There was a new development since the last hearing before Deputy District Judge Kay Seto on 23 April 2021. The defendant had carried out renovation works at the defendant’s premises from late April to early May 2021. Since then, according to the plaintiff, the water leakage has stopped.

10.  The plaintiff has filed an updated report, compiled by HKBI dated 7 June 2021 (“the Updated Report”), to confirm the cessation of water seepage after the renovation works carried out by the defendant in early May 2021 and to comment on the deficiency of the ponding tests conducted by Easy Living on behalf of the Joint Office.

Applicable principles

11.  The principles relevant to Order 14 for summary judgments are well established. The defendant must show that there are triable issues. He has to satisfy the court that he has a “real or bona fide defence” (see Hong Kong Civil Procedures 2022, para 14/4/9).

12.  However, it is important to bear in mind that before the court looks at the defence, one must look at the plaintiff’s case first (Li Mingren v Questex Development Inc and another, unreported, CACV 141/2014, 18 November 2015, per Yuen JA, citing Billion Silver Development Ltd v All Wide Investment Ltd [2000] 2 HKC 262).

13.  The Court of Appeal had explained the same requirement in an earlier decision in Ju Yan Di Emperory Genesisy v Yan Wai Han [2015] 1 HLKRD 822, per Cheung JA at 827,

“It is well-established that the burden on the defendant in a summary judgment application is to show that he has a credible defence and he must condescend to give particulars of his defence. However, this does not mean that once the plaintiff invokes the application and irrespective of the strength of his case, the defendant bears all the burden of showing that there are triable issues in the case. This is because the starting point in a summary judgment application is that it should only be invoked when there is no defence to the claim. This means that the plaintiff must in the first place demonstrate that the defendant has indeed no defence.”

14.  Once the plaintiff has demonstrated a plausible prima facie case, the court will then consider whether the defendant’s assertions are believable, ie capable of belief, but not whether those are to be believed at the summary stage. Order 14 is for clear cases only, that is cases in which there is no serious material factual dispute and no serious dispute of legal questions involved. And the court must not embark on a mini-trial on affidavit evidence (Hong Kong Civil Procedure 2022, paras 14/4/9-9A).

15.  As to the legal principles relevant to water leakage cases, it is well established there is no presumption that water leakage was necessarily caused by the flat above, and the doctrine of res ipsa loquitur does not apply. It is not for the defendant to identify the source of leakage or to prove it did not come from the defendant’s flat. The onus is on the plaintiff to establish that the leakage originated from the defendant’s flat (Hui Ling Ling v Sky Field Development Limited, unreported, CACV 122/2012, 22 March 2013, per Kwan JA, at para 42).

16.  The above general principles are accepted by the parties and not in dispute.

The plaintiff’s prima facie case

17.  Mr Wong Cho Lik, counsel for the plaintiff, submitted that there was overwhelming evidence to show that the defendant’s premises had to be the source of the water seepage. In addition to the photos and video footage taken by the plaintiff about the water dripping, the plaintiff primarily relied on the following to identify the source of seepage:

(1) With the use of specialized equipment, HKBI had conducted a series of water seepage tests, such as electrical conductivity moisture meter test, rapid infrared thermographic scan, microwave tomography, etc., onto the ceiling of the plaintiff’s premises. Further, by way of visual inspection performed at the defendant’s premises, they found that the waterproofing material of the floor slab and surrounding walls was defective. It was concluded in the HKBI Report that the water was seeping through the defendant’s floor slab to the plaintiff’s ceiling;

(2) HKBI had eliminated all other possible sources of leakage by conducting further tests on the ceiling of the plaintiff’s premises. They concluded that there were no other signs of leakage surrounding the water seepage area; and

(3) There is new evidence that the water seepage ceased after the defendant had carried out the renovation works at the defendant’s premises in early May 2021.

18.  On the strength of the HKBI Report and the Updated Report, Madam Wong, the director of the plaintiff, has confirmed by way of affirmation that the plaintiff believes the defendant has no defence.

19.  However, I immediately discerned some problems in the plaintiff’s case as far as the present application is concerned. I do not think the plaintiff’s deposition is justified, and I am unable to accept that the defendant has no defence for the following reasons.

20.  First of all, there are two sets of expert reports, namely the HKBI Report (together with the Updated Report) and the Joint Office Report, being placed before this Court. Their conclusions are basically contradictory to each other. While the HKBI report was suggesting that the water was seeping through the floor slab of the defendant’s premises, the Joint Office Report just concluded otherwise. It can be seen from the Joint Office Report that after having conducted several rounds of colour water tests and ponding tests at the defendant’s premises, their surveyor could not show that the defendant’s premises were the source of the water leakage. More significantly, the ponding tests had flooded the entire defendant’s premises with water at about 20-47mm in height for about one hour. Still, no sign of water seepage was found on the ceiling of the plaintiff’s premises.

21.  In law, there is no presumption that water leakage was necessarily caused by the unit directly above. Therefore, the Joint Office Report remains as competing or inconsistent evidence before the court. Given the inconclusive nature of the reports, I do not think that the court can accept one expert report and reject the other at this stage without cross-examining the expert witnesses at trial.

22.  Second, there is self-deficiency in the HKBI Report itself. The surveyor said they had eliminated all other possible water seepage sources. However, I have some reservations as to the correctness of that statement. It is noted from the HKBI Report that they had done testing in all four directions from the seepage area to show there was no other seepage in the surroundings. At the time, they had recorded that there was another damp area (as shown by the moisture meter) on the ceiling near the party wall adjoining Unit 17 with peeling of the plastering and water stain (para 7.1.1.4, HKBI Report). Despite the fact that there was another damp area detected, the surveyor did not deal with it and went on to conclude (para 8.2) that there were no signs of leakage on the ceiling adjacent to both Unit 15 and Unit 17 on the 13th Floor. It is important to note that such another damp area immediately adjacent to Unit 17 was also confirmed by the Updated Report (para 6.1.1.2, Figs 16-20). This matter should also be addressed by the expert witnesses at trial.

23.  I do not find that the plaintiff has made out a plausible prima facie case, nor can the plaintiff say that the defendant has no defence. Where there are doubts as to the validity of the plaintiff’s case, such doubts would detract from the plaintiff’s right to summary judgment (Billion Silver Development Ltd v All Wide Investments Limited (Supra) at 268C-D).

24.  Counsel for the plaintiff then submitted that the Joint Office Report is of no assistance to the defendant. He said it is well-recognized, as provided in the Hong Kong Institute of Surveyors’ Guideline, that a negative result from a colour water test (or a ponding test) is not conclusive evidence that there was no water seepage and it poses no bar to the plaintiff in establishing liability on the defendant’s part, and that only a positive test result is firm proof of the source of leaking. He cited Good Century Investment Ltd v Yim Kin Kuo (unreported, DCCJ 4980/2013, 23 November 2015) and Yeung Chiu Wing & Chan Nga Sze v Ho Chi Ming (unreported, DCCJ 3244/2015, 17 November 2017).

25.  As said, the findings in the Joint Office Report are inconsistent with that of the HKBI Report. I am satisfied that the Joint Office Report made by an independent third party is cogent evidence that the defendant can rely on to show a triable issue or that it has a bona fide defence. Further, the two cases cited were cases after trial. It is of my view that they are examples to show why inconsistent test records should normally be examined at trial with experts' assistance. Since the court shall not embark on a mini-trial at the summary judgment application stage, the plaintiff is still facing two conflicting reports on the source of water seepage, to be resolved at trial.

26.  Counsel for the plaintiff then referred to the judgment of Deputy District Judge Winnie Tsui (as she then was) in Yui Tat Nam Darney & Another v Century Bridge Ltd (unreported, DCCJ 2399/2016, 28 October 2016). It was submitted that, in the case, albeit neither party had adduced any expert evidence on the source of the water leakage, the plaintiff had managed to put forward a positive and reasonable case that the origin of the water leakage was from the defendant’s unit.

27.  In my view, I do not see how Yui Tat Nam can advance the plaintiff’s case any further. I agree that Yui Tat Nam has laid down a proposition that expert evidence is not mandatory for the plaintiff to prove its case in a water leakage case. However, each case turns on its own facts. Suffice it to say that, in that case, there was no rebuttal evidence being provided by the defendant at all.

28.  One must bear in mind that it is for the plaintiff to establish that the source of water seepage was from the defendant’s premises, and identifying the source of water seepage is essential for attaching liability to a defendant (Hui Ling Ling v Sky Field Development Ltd (supra)). Can the fact that water seepage stopped after renovation works done in the defendant’s premises advance the plaintiff’s case further? At this stage, I am afraid it cannot. It is no answer to the challenges in the plaintiff’s case as the two events could have no correlation. The court would have to make a finding of facts in this respect at trial.

29.  I would add that this Court does acknowledge the defendant carrying out renovations to the premises, which as the defendant stated, that was done without admitting any liability on the part of the defendant, to have stopped the water seepage, if any. At least, as a result of such renovations, there was no more water damage or nuisance, if there was any, caused to the plaintiff. However, the other side of the coin is that the parties’ experts can no longer conduct any more testing (such as a four-hour ponding test as suggested by the plaintiff’s surveyor) to confirm the source of the water seepage. I agree with Mr Henry Wong, the solicitor appearing for the defendant, that if there is any adverse inference which ought to be drawn against the defendant for having done the renovation works, it would be a matter for the trial judge to decide after hearing all the evidence.

Res judicata

30.  Mr Henry Wong for the defendant submitted that since the learned Judge at the hearing for setting aside the summary judgement had already made a finding that the defendant has shown “a real prospect of success”, the defendant had successfully passed the test of a higher threshold before coming to this court. It was submitted that in this hearing the defendant was only required to show there is a triable issue to go on to trial, which is of a lower threshold, and hence, this court should grant the defendant leave to defend which otherwise would result in inconsistent finding being made by the court.

31.  I think the defendant has raised a legal question here. To put it properly in issue, the question is: Whether, if without any new evidence, it would be res judicata or, more particularly, issue estoppel for the plaintiff to resurrect its Order 14 summons for summary judgment after the regularly obtained summary judgment in default had been set aside?

32.  As this hearing was proceeded on the ground of new evidence, it would not be an issue and certainly not require for this court to consider whether this court would be bound by the earlier decision of my learned colleague based on the higher level of threshold of “real prospect of success”. As there was no full argument by the parties before me, I would reserve this question for future occasion.

33.  For what it is worth, in my view, I would simply say that there is no res judicata or issue estoppel as issue estoppel is a form of estoppel by record and depends on the final decision of the court and the merits having been fully considered. I have three comments to supplement on this point. First, once the default summary judgment has been set aside, the previously obtained judgment is no longer in existence, and if there is any issue of res judicata, it would have to be confined to the court’s ruling of setting aside (P & O Nedlloyd BV v Arab Metals Co and others (No 2) [2007] 1 WLR 2288). Secondly, in general, the court’s decision on an application to set aside a default judgment does not determine the issues between the parties, but is merely an exercise of a discretion whether, taking into account the merits of the potential defences and all relevant factors, to grant a procedural or interlocutory remedy (Mullen v Conoco Ltd [1998] QB 382; see also The Law of Estoppel (2020), Michael Barnes QC at para 9.52). Thirdly, the decision made by the learned Judge who set aside the default judgment was based on a “provisional view” of the merits formed at the hearing only. Such a provisional view as to the merits of the case is in no way binding on any subsequent judicial hearing.

Conclusion

34.  For the aforesaid reasons, I found that there are triable issues in the present case. I refused to give summary judgment. I gave the defendant unconditional leave to defend. Costs of and occasioned by this application be costs in the cause with certificate for counsel.

Mr Wong Cho Lik, instructed by Liu, Chan and Lam, for the plaintiff

Mr Henry Wong, of Yung, Yu, Yuen & Co, for the defendant

DCCJ 2134/2020

[2021] HKDC 508

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2134 OF 2020

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D E C I S I O N

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1.  This is an application by the defendant by summons dated 15 April 2021 to set aside the default summary judgment entered against the defendant on 7 April 2021, pursuant to Order 14, rule 11 of the Rules of the District Court (Cap 336H) (“RDC”).

Background

2.  The plaintiff is the registered owner of Unit 16, 12/F, Wah Sang Industrial Building, 14-18 Wong Chuk Yeung Street, Shatin, New Territories (“Unit 1216”).  The defendant is the registered owner of Unit 16, 13/F of the same building (“Unit 1316”), which is situated directly above Unit 1216.  The defendant, which carries on the business of food manufacturing, has been using Unit 1316 to manufacture a Chinese dim sum known as steamed rolls.

3.  According to the plaintiff’s case, it discovered water seepage on the ceiling of Unit 1216 in around late August 2019.  The plaintiff engaged a company called Hong Kong Building Inspection and Structural Diagnostic Limited (“HKBI”) to investigate the source of water seepage.  HKBI carried out water seepage tests at Unit 1216 and Unit 1316 on 8 October 2019.  In its report dated 28 November 2019 (“HKBI Report”), HKBI opined that the waterproofing work in the floor slab of Unit 1316 was defective, causing the waste water generated from the defendant’s production of steamed rolls to seep through the ceiling of Unit 1216.  Further, HKBI noted that the defendant had constructed an unauthorised underground drainage system at Unit 1316 which accumulated waste water, some of which seeped through the floor slab of Unit 1316 into Unit 1216.

4.  On 20 May 2020, the plaintiff commenced these proceedings against the defendant by a specially endorsed writ.  The principal reliefs sought are as follows: (i) an order requiring the defendant to remove the unauthorised drainage system at Unit 1316; (ii) an order requiring the defendant to cause a proper waterproof membrane to be laid beneath its food production machines so as to prevent any further water seepage into Unit 1216; and (iii) damages to be assessed.

5.  The defendant, which has been legally represented throughout, filed a defence on 14 August 2020 and an amended defence on 17 August 2020.  It denies that the floor of Unit 1316 was non-waterproof or defective, and avers that any water generated in the course of producing steamed rolls would be discharged into the communal sewage pipe of the building.

6.  After the close of pleadings, on 26 January 2021, the plaintiff issued a summons returnable on 7 April 2021 for summary judgment under RDC Order 14, rule 1 (“Order 14 summons”).  There is no dispute between the parties that the Order 14 summons was duly served on the defendant’s solicitors on 29 January 2021.

7.  The defendant’s solicitors did not attend the hearing on 7 April 2021, which resulted in default summary judgment being entered against the defendant at the hearing.

8.  On 15 April 2021, the defendant issued the present application to set aside the default summary judgment.  In a supporting affirmation for the defendant’s application, the defendant’s solicitor in charge deposed that, as a result of an inadvertent mistake of the administrative staff of his firm, the Order 14 summons and the cover letter of the plaintiff’s solicitors were never passed to him and he was therefore unaware of the Order 14 summons and the hearing returnable on 7 April 2021.  He only became aware of the Order 14 summons on 8 April 2021 when Mr Lam Kwing Fu, a director of the defendant, informed him that a security guard of the building had told Mr Lam about the default summary judgment entered against the defendant.

9.  The defendant accepts that the default summary judgment has been obtained regularly by the plaintiff.

Approach to setting aside default summary judgment under RDC Order 14, rule 11

10.  The relevant legal principles applicable to the defendant’s setting aside application are not in dispute.

11.  Where default summary judgment has been obtained regularly, as in the present case, the primary consideration for the court is to look at the merits of the defence.  The defendant has to show a defence which has a real prospect of success.  The court is therefore required to form a provisional view of the merits of the case: see Chekiang First Bank Limited v Ng Chun Hing Benjamin, HCA 3473 of 2000 (12 December 2001), §12, per Ma J (as he then was).

12.  There are other considerations which a court must consider in deciding whether or not to set aside default judgment, such as the reason why default judgment was allowed to occur in the first place, any delay in setting aside and any consequent prejudice caused to the plaintiff.  The court’s approach is to conduct a balancing exercise of all relevant factors: see Morigood Development Ltd v Sunny Trading Co (a firm) [1999] 2 HKC 710, 717E-F, per Keith J (as he then was); Chekiang First Bank, supra, §13.

13.  I shall therefore deal first with the merits and whether I am satisfied that the defendant is able to demonstrate a defence which has a real prospect of success.

Merits of the defence

14.  Mr Wong, appearing for the defendant, submits that the findings in the HKBI Report, which are relied upon by the plaintiff as part of its pleaded case, are contradicted by the findings in an expert report commissioned by the Joint Office for Investigation of Water Seepage Cases set up by the Buildings Department and the Food and Environmental Hygiene Department (“Joint Office Report”).

15.  The Joint Office Report, which was prepared upon 4 investigations conducted at Unit 1216 and Unit 1316 between 30 December 2019 and 27 February 2020, stated, among other things, the following relevant findings:

(1)  During the inspection of the suspected areas of water leakage at Unit 1316 on 4 January 2020:

(a)  no water leakage or wet floor was noted (Section C, §2);

(b)  no sign of poor workmanship or dilapidation was noted at the floor surface, the wall surface enclosing the bathing area, and the water tight sealant between the bath tub and the enclosure wall (ibid); and

(c)  no concealed water borne services pipe, drainpipe or pipe duct was noted (Section C, §3).

(2)  The source of water seepage into Unit 1216 was “uncertain” and “could not be ascertained” (Section E, §§1-2) on grounds including the following:

(a)  the colour water tests conducted on 4 January 2020 showed that leakage of the drainage pipe of Unit 1316 was unlikely (Section D, §1A);

(b)  the ponding tests conducted on 4 January 2020 showed that leakage from the floor slab of Unit 1316 was unlikely (Section D, §1B);

(c)  the moisture meter monitoring and visual inspections conducted on 30 December 2019, 14 January 2020 and 27 February 2020 showed that water supply pipe leakage was uncertain (Section D, §1D); and

(d)  the moisture content checks conducted on 30 December 2019, 14 January 2020 and 27 February 2020 showed that rainwater leakage from the building envelope was unlikely (Section D, §1E).

16.  In response, Mr Lau, appearing for the plaintiff, submits that the Joint Office Report is not satisfactory because it does not identify the source of water seepage into Unit 1216.  He also invites the court to ask the rhetorical question: if the water does not come from Unit 1316, where does it come from?

17.  For the purpose of the present application, it is not necessary for the court to come to any final conclusion on this issue.  In any event, it is for the plaintiff to prove the source of water seepage or leakage.

18.  It is well established that identifying the source of water is essential for attaching liability to a defendant for nuisance in water leakage cases. The onus is on the plaintiff to establish that the leakage originated from the defendant’s flat.  There is no presumption that water leakage was necessarily caused by the flat above, and the doctrine of res ipsa loquitur does not apply.  A defendant does not bear any burden of proving where the water came from: see Leung Yung Chun v Chan Wing Sang [2000] 1 HKLRD 456, 461I-J, per Cheung J (as Cheung JA then was); Hui Ling Ling v Sky Field Development Limited, CACV 122 of 2012 (22 March 2013), §42, per Kwan JA (as Kwan VP then was); Mohan Selvaraj v Grace Ka Man O’Brien[2020] HKCA 698, §17, per Lam VP.

19.  In the present case, I am of the provisional view that the findings in the Joint Office Report tend to support the defendant’s case that the water leakage into Unit 1216 did not come from Unit 1316, and that there is no defect in the floor slab and drainage system of Unit 1316 as alleged.  It seems to me that these findings, made by an independent third party, constitute cogent evidence which gives rise to a defence with a real prospect of success.

Other relevant considerations

20.  On the undisputed evidence before me, I am of the view that the defendant is not personally responsible for the reason why default judgment was allowed to occur in the first place.  There is no undue delay in the defendant’s application to set aside the default summary judgment.  It also appears to me that, if the default summary judgment is to be set aside, no real prejudice would be caused to the plaintiff.

Disposition

21.  For all these reasons, I am satisfied that it is an appropriate case in which to exercise my discretion under RDC Order 14, rule 11 to set aside the default summary judgment entered on 7 April 2021 against the defendant.  I would emphasise that the provisional view I have formed on the defence is based only on the existing affidavit evidence before the court.  In the light of the evidence to be received in due course, the court may reach a different decision as to the merits of the parties’ respective cases.

22.  Upon the parties’ consent, I give the following directions in relation to the conduct of the Order 14 summons:

(1)  unless the defendant files and serves its affirmation in opposition by 4:00 pm on 21 May 2021, judgment be entered for the plaintiff with costs;

(2)  leave to the plaintiff to file and serve its affirmation in reply, if any, within 21 days thereafter;

(3)  no further affirmations shall be filed or served without leave of the court; and

(4)  the Order 14 summons be adjourned to a date to be fixed for substantive argument, with 3 hours reserved.

(Submissions on costs)

23.  The parties agree that the defendant’s solicitors shall personally pay (i) the wasted costs of the hearing of the Order 14 summons on 7 April 2021, and (ii) the costs of the present setting aside application, to the plaintiff. Upon considering the plaintiff’s statement of costs and hearing the parties’ submissions thereon, those costs are summarily assessed at $64,945, to be paid by the defendant’s solicitors personally within 14 days of the date hereof: see RDC Order 62, rule 9B(1)(a).

24.  The costs of the Order 14 summons, save for those of the hearing on 7 April 2021, be reserved.

Mr Lau Ying Biu of Liu, Chan & Lam, for the plaintiff

Mr Wong Chuan Tao of Yung, Yu, Yuen & Co., for the defendant