嘉威大厦(渣華道)業主立案法團 v. 張振傑 and Another

LDBM 82/2019

[2024]HKLdT 9

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 82 OF 2019

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JUDGMENT

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1.Introduction

1.1The Applicant (“A”) is the Incorporated Owners of Ka Wai Building (“Building”) in North Point. The 1^st Respondent (“R1”) is the owner of Flat A1 (“Flat 1A1”) on the 1^st Floor and Portion of Flat Roof of Block A of the Building (“R1’s Property”). The 2^nd Respondent (“R2”) is the owner of Flats A2 (“Flat 1A2”) and B5 (“Flat 1B5”) on the 1^st Floor and Portion of Flat Roof of Block A (“R2’s Properties”).

1.2The Building is a 25-storey composite building with 2 domestic blocks and ground floor for non-domestic use. The Building’s occupation permit was issued on 13 November 1984.

1.3It is common ground that the portions of the flat roof attached to Flats 1A1, 1A2 and 1B5 are private properties owned by R1 and R2, but underneath the flat roof is a waterproofing membrane, which is a common part of the Building.

1.4On 24 February 2012, the Buildings Department (“BD”) issued an order in respect of the Building pursuant to section 26 of the Buildings Ordinance Cap 123 (“2012 Building Order”). The 2012 Building Order was not complied with within the originally-prescribed or extended period. On 7 August 2017, BD informed A that any further delay in complying with the 2012 Building Order might result in (1) prosecution and (2) BD carrying out or causing to be carried out the specified works and recovering from A the costs of such works (and surcharge).

1.5In addition to the need to comply with the 2012 Building Order, in early 2018, the owner of Shop Nos 6-10 on the ground floor of the Building (through solicitors) complained to A about water seepage into the shop units. An expert report commissioned by the complainant stated that the water seepage was probably caused by, inter alia, the defective waterproofing membrane on the flat roof.

1.6At the EGM on 4 October 2018 (and the adjourned meeting on 25 October 2018), resolutions were passed in relation of the scope of the works to be carried out (1) to comply with the 2012 Building Order and (2) to address the water seepage problem (“Major Renovation Works”). It was further resolved that Man Yuen Construction Engineering Company Limited (“Man Yuen”) be selected amongst the tenderers as the main contractor of the Major Renovation Works.

1.7At all material times, PWL Building Inspection and Management Limited (“PWL”) was the consultant engaged by A in respect of the Major Renovation Works.

1.8A letter of acceptance of Man Yuen’s tender was signed by A, Man Yuen and PWL variously on 16 and 17 January 2019 (“LOA”). Although A and Man Yuen only signed a formal contract on 25 March 2019 (“Original Contract”), there is no dispute that the Major Renovation Works commenced on 15 February 2019 (“Commencement Date”).

1.9As at the Commencement Date, there were extant demolition orders issued against unauthorized building works (“UBWs”) at the flat roof of R1 and R2’s Properties. In respect of R1’s Property, the demolition order was issued on 24 June 2016 (“2016 Demolition Order (R1)”). In respect of R2’s Properties, the demolition orders were issued on 9 March 2009 (“2009 Demolition Orders (R2)”).

1.10After the Commencement Date, the 2016 Demolition Order (R1) was withdrawn but another demolition order was issued against R1’s Property on 10 May 2019 (“2019 Demolition Order (R1)”). The 2009 Demolition Orders (R2) were subsequently withdrawn but “replaced” by orders issued on 2 June 2020 (“2020 Demolition Orders (R2)”).

1.11In addition to the UBWs, there were other structures erected at the flat roof of R1 and R2’s Properties. By the time of trial, there is no longer any dispute that such structures (UBWs and non-UBWs) largely had to be removed before the waterproofing works on the flat roof forming part of the Major Renovation Works could be carried out.

1.12Slightly more than 2 months after the Commencement Date, on 24 April 2019, A issued the present proceedings against R1 and R2[1] seeking inter alia (1) a mandatory injunction against R1 and R2 to remove the UBWs and to reinstate their flat roof to its original state and appearance and (2) compensation for additional repair costs and/or consultant fees occasioned by their failure to give access to their flat roof for the Major Renovation Works to be carried out.

1.13The Notice of Application and Notices of Opposition were subsequently amended. In their latest versions, A seeks (1) indemnification of specified sums from R1 and R2 for the additional costs and consultant fees occasioned by their failure to give access to their flat roof for the Major Renovation Works to be carried out and (2) an injunction prohibiting future erection of UBWs and/or structures which may cover the external wall or common pipes. R1 and R2 counterclaim for property damage caused by poor or negligent execution of the Major Renovation Works and R2 for costs incurred by reason of Man Yuen’s failure to reinstate the flat roof floor titles, the uncompleted windowsill, and the partition wall of the flat roof of R2’s Properties.

1.14At the hearing, A was represented by Mr Andrew Wong of Huen & Partners (“Huen”) and R1 and R2 by Ms Malanie Chan of counsel.

1.15In the course of the trial, Mr Wong and Ms Chan accepted that (1) various aspects of the claim and counterclaims ought not be pursued and (2) the remaining case pursued by them is not fully reflected in the latest versions of the Notice of Application or Notice of Opposition. As to the latter, I bore in mind section 10(5)(a) of the Lands Tribunal Ordinance and cases such as Goodwell Property Management Ltd v Garg Lalit Kumar & Anor, LDBM 242 of 2011, 12 July 2012. I allowed the parties to compile a revised agreed list of issues, which was finalized on 30 May 2023 (“RALOI”). As addressed below, it is fair to say that the compilation of the RALOI was principally to allow A to clarify the basis for its indemnity claim, which was not done in either the Notice of Application (even after amendment) or even in Mr Wong’s opening. I further directed the parties that their closing submissions should only address the issues contained in the RALOI.

1.16A, however, sought to expand the RALOI for the first time at the hearing on 26 July 2023, which hearing was for the parties to top up their extensive closing submissions already lodged. For the reasons set out below, in the exercise of my case management discretion, I decline to accede to A’s belated attempt to tread beyond the RALOI.

2.Overview

2.1The RALOI sets out the following issues for my determination.

(1)  According to the Original Contract and the facts of this case:

(a)  Whether a new contract (as evidenced in writing in the correspondence between A and Man Yuen from 24 June to 10 July 2020) has been formed between A and Man Yuen for Man Yuen to conduct the outstanding waterproofing works of R1 and R2’s respective flat roof (“Outstanding Works”)?

(b)  If so, what are the terms of the new contract between A and Man Yuen?

(c)  If the answer to 1(a) is affirmative, whether the new contract is binding on A?

(d)  If the answer to 1(c) is affirmative, and given Man Yuen has already received the entire contract sum of the Original Contract, whether Man Yuen’s entitlement in the new contract should be a total of HK$183,053, as worked out in the Table attached to the RALOI (“Table”)?

(2)  After the commencement of the Major Renovation Works, were there any structures of on the flat roofs of R1 and R2 that hindered Man Yuen from carrying out the Outstanding Works?

(3)  Did R1 and R2 obstruct A and/or Man Yuen from entering their flat roofs at a reasonable time to carry out the Major Renovation Works?

(4)  Whether the delay between the certified completion date and the completion of the Outstanding Works was caused by R1 and R2?

(5)  Whether A is liable to pay the sum of HK$7,000 to Man Yuen for the removal of appurtenance fixed to the external wall of R1’s flat roof?

(6)  In the event that A is liable to make payment to Man Yuen for any sum under the new contract, whether R1 and R2 are liable to indemnify A because A has not complied with the requirements under section 20A of the Building Management Ordinance Cap 344 (“BMO”) in procuring the new contract?

(7)  Whether A has the duty to demolish and reinstate structures that are non UBWs for owners of flat roofs during the Major Renovation Works?

(8)  Whether there was proper mitigation of loss by A:

(a)  Whether A could have gained entry into the subject flat roof for carrying out the Major Renovation Works by giving reasonable notice to R1 and R2 (as opposed to obtaining written consent (or consent in any form) from R1 and R2)?

(b)  Regarding structures and/or items (both UBWs and non-UBWs) on the subject flat roof that allegedly hindered the Major Renovation Works, whether A could have obtained an injunction from the court for the demolition and/or removal of the same based on the DMC[2] or otherwise?

(c)  Whether the Applicant could have adopted the advice of PWL, that is, to remove the renovation works on the flat roofs by way of “omission” (a viable option under the Original Contract)?

(d)  After gaining entry into the flat roofs, if there were any structures and/or items on the flat roofs which hindered the Major Renovation Works, whether A could have asked Man Yuen to remove and/or alter the same (both UBWs and non-UBWs)?

(9)  If the answer to (7) is affirmative, has R2 (after taking reasonable measures to mitigate the loss) suffered the following losses due to A’s violation of the DMC?

Costs in engaging contractor to repair the damage, defects, and unfinished parts caused by Man Yuen at the sum of HK$220,000, including Man Yuen’s failure to reinstate the flat roof floor tiles and the uncompleted windowsill, and the partition walls of the flat roof.

2.2In the following sections of the judgment, I will deal with each of the issues in the RALOI but not in the order set out therein.

2.3A called 4 factual witnesses, namely 呂朱永嫻 (“Mrs Lui”), 陳水明 (“Mr Chan”), 盧秋梅 (“Ms Lo”) and 梁仲銘 (“Mr Leung”). At all material times: Mrs Lui was A’s treasurer and/or a member of the management committee of A; Mr Chan was a director of PWL[3]; Ms Lo was A’s chairperson; and Mr Leung was a project manager of Man Yuen overseeing the Major Renovation Works.

2.4On the Respondents’ side, R1 and R2 gave evidence.

2.5Neither side called any expert evidence, whether on the issue of delay to the Major Renovation Works or quantum of their monetary claims.

2.6In the course of the trial, numerous points were raised by the parties. Whilst I have considered all the matters raised by both sides, I do not find it necessary to deal with each and every of them in this judgment. The lack of focus by the parties, especially on the issues of delay to the Major Renovation Works, was contributed by the parties’ refusal, despite prompting by the tribunal prior to the trial, to adduce relevant expert evidence.

3.Issue 1: Whether a new contract was formed between A and Man Yuen

3.1As stated above, the Original Contract for the Major Renovation Works was signed by A (as employer) and Man Yuen (as the main contractor) on 25 March 2019 and witnessed by PWL (as the consultant). PWL’s role under the Original Contract is set out at, inter alia, clause 1.3.1:

“工程顧問須向僱主負責，其職責是審視及監督本工程的施工過程，包括材料及施工質量，按照各合約條件施工量證明書，審核各糧單申請書、簽發付款證明書及施工指示，以及視乎需要發出其他資料以便本工程可以正常進行。”

3.2The Original Contract is based on the Standard Form of Contract for Minor Works[4] (2003 January Version) and incorporates a number of other documents, including (1) Man Yuen’s tender dated 15 May 2018 (“Tender”) and (2) the LOA. The Tender itself incorporates a number of documents including the Standard Form of Contract for Minor Works (2003 January Version), General Condition of Contract (“GCC”), Special Condition of Contract (“SCC”) and Appendix to Condition of Contract (“Appendix”).

3.3LOA Clause 2 provides that the Original Contract is a lump sum contract of HK$32,599,750 for Items 1 to 10 enumerated therein. In addition to Items 1 to 10, there are two optional items, namely Item 8.2.1 (Waterproofing Works at the Flat Roof[5]) and Item 8.2.2 (Open Channel Works at the Flat Roof[6]) (“Optional Items”), which are relevant to the Outstanding Works. Clause 2 provides:

“上述「選擇性項目8.2.1 - 8.2.2」包括於工程總額。工程顧問會於工程階段確認進行全部有關工程或部份工程(按量數計算)，會視乎實際情況而定。如只確認進行「選擇性項目8.2.1 - 8.2.2」之部份工程，有關部份工程金額會依據承判人所提交之標書項目明細之價格及實際面積或數量而計算，有關金額不會多於「選擇性項目8.2.1 - 8.2.2」之項目總額。”

3.4Under the Original Contract, the Optional Items would only be carried out upon confirmation by PWL depending on actual site conditions and might or might not be carried out in full. The Optional Items, if carried out only in part, would be subject to measurement but in any event any sum thereby payable to Man Yuen would not exceed HK$1,170,450 for Item 8.2.1 or HK$67,500 for Item 8.2.2. Under Clause 1.4.1 of the Original Contract, any instructions issued by PWL must first be approved by A[7].

3.5At the time of tender, there were 4 different proposals with varying contract periods. In the end, proposal 3 was selected, and pursuant to Original Contract Clause 2.1, the contract period was 450 calendar days.

3.6The Commencement Date of the Major Renovation Works was 15 February 2019, but they remained incomplete as at the original completion date, namely 9 May 2020. It was only on 29 July 2020 that PWL issued a completion certificate (“Completion Certificate”), certifying that the Major Renovation Works under the Original Contract was completed on 3 July 2020 (“Certified Completion Date”). Under Clause 2.1, Certified Completion Date was defined as: “完工日的定義則為，由承判人 [Man Yuen] 以書面申報完工並獲工程顧問 [PWL] 及僱主 [A] 認同本工程已完成及簽發完工證明。” The letter issued by PWL dated 29 July 2020 to Man Yuen (enclosing the Completion Certificate) refers to a site inspection and meeting with A on 23 July 2020 at which PWL and A agreed that the Major Renovation Works were completed on 3 July 2020.

3.7Also on 29 July 2020, PWL issued a payment certificate to Man Yuen (“PC 17”) to enable it to collect the sum certified therein from A. It is apparent from PC 17 that, despite the delay in the completion of the Major Renovation Works, no liquidated damage was imposed against Man Yuen. I was told by Mr Chan that extension of time was granted to Man Yuen by reason of inclement weather up to the Certified Completion Date.

3.8Relevant to these proceedings is the assessment of the Optional Items in PC 17 (ie encompassing the Outstanding Works referred to at Issue (1)(a)). There are two notable matters.

3.9First, it is clear that instructions were given to carry out the Optional Items in full (§3.4 above).

3.10Secondly, and importantly, those items were certified as 100% complete, despite A’s case that the Outstanding Works remained incomplete as at the Certified Completion Date but were only completed on or about 5 September 2020. I am told by Mr Chan that that was a decision made by A.

3.11About a year later, following the expiry of the defect liability period, on 26 July 2021, PWL issued to Man Yuen a payment certificate for the final payment. I am told by Mr Chan that:

(1)  in relation to the Outstanding Works, they were not dealt with under the Original Contract;

(2)  the reason for Man Yuen receiving 100% payment (ie as if the Outstanding Works were completed under the Original Contract) was because A formed the view that R1 and R2 had prevented access to their parts of the flat roof from being given to Man Yuen.

3.12Although Man Yuen had already received 100% payment for the Optional Items under the Original Contract (ie including the Outstanding Works as if they had been completed and included in the Original Contract), it is A’s case that Man Yuen is entitled to further payment for carrying out the Outstanding Works.

3.13According to its programme submitted as part of its Tender (“Tender Programme”), Man Yuen had originally planned to carry out the waterproofing works at the whole of the flat roof in one go. During the execution of the Major Renovation Works, the waterproofing works at the flat roof were carried out in two tranches (apart from the Outstanding Works, Block B was completed in around March 2019 and Block A in around December 2019). Man Yuen’s waterproofing subcontractor left site in March 2020. Resources therefore, Man Yuen contended at the material time, had to be remobilized to complete the Outstanding Works when access to the relevant areas was thereafter obtained.

3.14Issue 1 relates to the basis of A’s claim.

3.15Under the Original Contract (GCC 8.1 as amended by SCC-13), provisions are made for Man Yuen to apply for direct loss and expense (“DL&E”). In fact, this appears to be the basis Man Yuen contemporaneously relied upon for its claim in relation to the Outstanding Works: see, for example, Man Yuen’s email to PWL dated 4 July 2020 in which it was stated that an application for DL&E was being made (“以下是申請工程延誤所新增的損失費 (DL&E) 的信件”).

3.16However, GCC 8.1 as amended by SCC-13 prescribes the situations in which a claim for DL&E may be made and the manner in which a claim is to be made. As Mr Chan accepted in his oral evidence, the only qualifying circumstance in the present case was PWL’s issuance of an instruction requesting Man Yuen to postpone the Outstanding Works. It is common ground that no such instruction was issued to Man Yuen. In closing, subject to the volte-face adopted in his application to expand RALOI, Mr Wong confirmed that Man Yuen could not claim DL&E under the Original Contract[8].

3.17Given the above, it was only during the trial that A advanced the contention that a new contract was formed between A and Man Yuen in July 2020 to carry out the Outstanding Works at additional costs, as evidenced in writing in the correspondence between A and Man Yuen from 24 June to 10 July 2020 (“Relevant Correspondence”), ie Issue 1(a)).

3.18The Relevant Correspondence is as follows.

3.19By Man Yuen’s email dated 24 June 2020 to Mrs Lui and PWL, Man Yuen submitted a draft claim for DL&E.

3.20By an email dated 26 June 2020 to Man Yuen and Mrs Lui, PWL commented on Man Yuen’s draft claim, suggesting some of the calculations were on the high side.

3.21On 29 June 2020, Man Yuen sent a letter to A (copied to PWL) setting out the justification for its claim for extra payment and its quotation in the sum of HK$823,079.20[9] on the basis that the duration for the works was 90 days and it was entitled to a markup of 15% on the basis of inflation (“29/6/20 Letter”). It should be pointed out that the quotation included items in addition to the Outstanding Works (ie works carried out at the external wall of R1 and R2’s Properties (“External Wall Works”) which A no longer pursues). Of significance is the following statement:

“上述工程由於貴法團未能履行合約，在工程預期內不能與 1A1, 1A2, 1B5 單位協調讓本司工人進入該三單位平台完成有關工程。因為工程延誤，本司該項目之分判商已 於 2020 年 3 月撤離現場。現本司需要重新安排繼續完成這三單位被延誤的各項工程， 因此本司無可奈何地視作新工程處理及衍生之費用重新報價，而之前採購材料可繼續用。” (emphasis added)

3.22By an email dated 30 June 2020 to Man Yuen, Mrs Lui and Huen, PWL commented on the quotation provided by Man Yuen in the 29/6/20 Letter as follows:

“1. 新增的預備工程(Preliminary)

計算因個別業戶過遲提供平台予文源進行工程之額外預備工程費用，應按文源預算報告完工日期與該 3 單位同意文源進場工作所需時間之差距計算，簡單而言，如文源按照進度表能於日子A 完成，而該 3 單位同意於日子B交場予文源，文源需時C時間完成工程，因防水工程會延誤整工程，故才有額外預備工程費用，所以計算額外預備工程費用則是:(C – (B-A))*額外每日之預備工程費用。

為清晰表示 A,B,C 三個時間差距，文源須提供更多關鍵日子以作判斷，包括實際拆棚時間、拆棚後再處理 1/F 至 2/F 外牆部份之時間及預算完工時間、預算整項工程完工時間

內文不宜指出向該 3 單位收取，因沒有直接合約關係

2. 翻手做 1A1, 1A2, 1B5 新增的損失費

請列明其他平台防水工程完工時間、預算完成所有平台防水工程之時間以及該 3 單位同意進場進 行防水工程之時間。

最後，相關申索取決於顧主與法團之間同意而定，我司會按合約條款及合理基礎予以意見。謝謝。” (emphasis added)

3.23It is plain from the above that PWL still treated the 29/6/20 Letter as a DL&E claim under the Original Contract. It was also PWL’s view that Man Yuen ought to have supplied additional information to justify its claim.

3.24As stated at §3.15 above, Man Yuen’s email dated 4/7/20 to PWL (copied to Mrs Lui) still treated its request for extra payment as a DL&E claim.

3.25On 10 July 2020, PWL commented further on what it thought to be appropriate reductions to the quotation submitted by Man Yuen in the 29/6/20 Letter. PWL suggested that Preliminaries be reduced from HK$235,000 to HK$132,000[10]. On the same day, by a letter to A (copied to PWL), Man Yuen accepted PWL’s suggestion to reduce the costs for Preliminaries from HK$235,000 to HK$132,000. The agreed quotation was therefore [HK$823,079.20 – HK$235,000 + HK$132,000 =] HK$720,079.20. It is not clear whether Man Yuen had provided further substantiation for its claim, as noted by PWL in its email dated 30 June 2020.

3.26Only 5 days later, the Notice of Application was amended to include the agreed quotation in A’s claim against R1 and R2. The other claims are HK$18,000, being 3 months (or 90 days) of fees payable to PWL for the time taken to complete the works, and HK$7,000[11] for Man Yuen removal for certain items at R1’s Property. The total sum claimed in the Amended Notice of Application is therefore HK$745,079.20.

3.27Mr Wong also relied on the oral evidence of Mr Chan and Mr Leung that they regarded the carrying out of the Outstanding Works as a new contract. However, both Mr Chan and Mr Leung accepted that the assertion that a new contract was formed was never mentioned in their witness statements.

3.28What seems to me to be painstakingly obvious is that at the material time, A, PWL and Man Yuen (and apparently Huen as well) were all proceeding on the basis that the Outstanding Works were to be treated as a DL&E claim under the Original Contract. However, after it was pointed out on the first day of the trial that the DL&E claim did not comply with the contractual mechanism, A (and its witnesses) tried to remedy the situation by mounting a case that a new contract had been formed.

3.29The problem in A’s claim did not stop there. Where, as here, Man Yuen had received 100% payment for the Optional Items, a further question arose, namely the basis of the quantification of the extra payment for the Outstanding Works. In this regard, Mr Chan fairly accepted in oral evidence that the Outstanding Works could have been dealt with by way of an omission under the Original Contract thereby reducing the sum certified as being due to Man Yuen. As stated above, under the Original Contract, the Optional Items, if carried out in part, were in any event subject to measurement. Mr Chan said that he had advised A shortly after Chinese New Year in 2020 of that possibility.

3.30The other problem is that it is not entirely clear whether Man Yuen was entitled to impose a 15% markup on the basis of inflation. LOA Clause 2.2.4 provides:

“本合約為承包形式合約，以上合約工程總額除另有說明外， 是包括專業人士(相關設計圍則及相關部份審批之費用)、人工、材料、質量、施工、搬運、安裝及一切風險等，而且是不受勞工供應、物料價格波動或經濟通漲等因素影響，除此之外亦包括一切因實地環境而須更改施工方法之項目都不得調整合約工程總額。所有工程需完成而達至屋宇署、僱主及我司滿意，以達致解除相關的命令。另外，必須提交工程文件記錄。”

3.31Further, SCC-13 renders it uncertain (1) whether Man Yuen had complied with the condition precedent for making a DL&E claim under the Original Contract and (2) whether Preliminaries could be claimed at all:

“各方同意於標準合約條款第 8.1.1條後加上下列條款 (第 8.1.2條)：

(i) 承判人須於出現該原因後一個月內提交書面通知予合約管理人，並包括一份仔細及附上損失及/或費用證明，以供合約管理人審閱。如承到人未有於出現該原因後一個內提裝書面通知及仔細及附上損失及/或費用證明予合的管理人，承判人員立即被撤回追討權利。

(ii) 承判人不得就其程延期而提出預備工程 [Preliminaries]的損失及費用支出，所有損失及費用支出已被當作包括工程合約總價內。”

3.32Given the problems identified above (none of which was addressed in the witness statements or A’s written opening), in the RALOI, Mr Wong made a number of significant concessions (ie Issue 1(d)). The sum pursued in closing represents a drastic reduction from the sum claimed in the Amended Notice of Application (HK$745,079.20) to HK$190,053[12]. As I understand Mr Wong, the concessions included (1) abandoning the amounts related to the External Wall Works[13] and confining the claim to the Outstanding Works[14], (2) giving credit for the value of omission of the Outstanding Works from the Original Contract sum[15], (3) foregoing the markup of 15% sought to be charged by Man Yuen[16] and (4) reducing the Preliminaries claimed from HK$132,000 to HK$35,000[17].

3.33The divergence between A’s original claim and the claim pursued in the RALOI enabled Ms Chan, understandably, to mount a scathing attack against A’s case on Issue 1. She submitted that there was plainly no new contract because, amongst other factors:

(1)  the case on a new contract is only made for the first time at the trial;

(2)  on the evidence, there was no consensus ad idem, no acceptance by A of the terms offer in Man Yuen’s letter dated 10 July 2020 and no concluded agreement;

(3)  it cannot be said that the claim of HK$183,053 (ie the sum set out at Issue 1(d)) was a term of the new contract.

3.34I have considered Ms Chan’s submissions carefully. However, I bear in mind that the existence of the new contract is not a matter in dispute between its immediate parties (ie A and Man Yuen), but a matter raised by R1 and R2.

3.35In my view, objectively assessed, the Relevant Correspondence shows that an agreement was reached between A (through PWL) and Man Yuen that the Outstanding Works and the External Wall Works were to be carried out by Man Yuen at the sum of HK$720,079.20.

3.36I do not regard the failure to comply with GCC 8.1 (as amended by SCC-13) assists R1 and R2 on Issue 1(a). The effect of any such non-compliance is a matter strictly between the immediate contracting parties and does not concern R1 and R2. It is open to the immediate contracting parties to deal with any such non-compliance by way of a variation or, as here, an asserted new contract.

3.37As stated above, the issuance of the Completion Certificate was a decision made by A. The issuance of the Completion Certificate marked the commencement of the Defect Liability Period pursuant to Original Contract Clause 2.4. It does not appear to me it can sensibly be suggested that the Outstanding Works were defect rectifications. Further, as already alluded to, Mr Chan confirmed in his evidence that the Outstanding Works were not dealt with in the final payment application. In other words, A, PWL and Man Yuen all treated the Outstanding Works as being outside the scope of the Original Contract. Whilst Man Yuen had been paid in full under the Original Contract for the Optional Items, it is not part of Ms Chan’s submissions in closing that the New Agreement was not supported by consideration.

3.38For the purpose of Issue 1, I am not asked to form a view on the wisdom or reasonableness of A (with PWL’s involvement) agreeing to extra payment (in particular the extent) to Man Yuen. The inescapable conclusion from the inclusion of Issue 1(d) is that A now takes the view it was perhaps unwise to agree on the extent of the extra payment or to deal with the Outstanding Works in the manner which it did.

3.39For the above reasons, I answer Issues 1(a) and 1(c) in the affirmative. In relation to Issue 1(b), the term of the contract was for Man Yuen to carry out the Outstanding Works and the External Wall Works on terms set out in its letter in 29/6/20 Letter, as amended by its letter dated 30 July 2020 (“New Contract”).

3.40Issue 1(d) seeks my determination on whether Man Yuen’s entitlement under the New Contract should be a total of HK$185,053. I have no doubt that Issue 1(d) was included on Mr Wong’s initiative, as Ms Chan has throughout stated (and for the reasons set out below I agree with her) that the figure of HK$185,053 cannot be substantiated. It is plain that Issue 1(d) is included in order to advance a more “reasonable” claim against R1 and R2, in the light of the fact that the New Contract is now acknowledged to be perhaps too favourable to Man Yuen. It is a very odd situation because the attempt to reduce Man Yuen’s entitlement under the New Contract is not contained in A’s witness statements and not explored with any of the witnesses at the trial, especially Mr Leung. Man Yuen is not a party to these proceedings and it seems to me quite inappropriate to determine whether Man Yuen’s entitlement should be significantly reduced without it having any opportunity to contend otherwise.

3.41In my view, the answer to Issue 1(d) is plainly no. Man Yuen’s entitlement under the New Contract must be determined by reference to its terms. Mr Wong in closing contended that the terms of the New Contract are those found by me[18], namely the New Contract was for Man Yuen to carry out the Outstanding Works and the External Wall Works on terms set out in Man Yuen’s letter of 29/6/20 Letter, as amended by its letter dated 30 July 2020. There is nothing to suggest (and Mr Wong did not contend otherwise), whether by way of implication of term or proper construction, that the New Agreement was to the effect that credit should be given for the fact that Man Yuen had already received the entire contract sum under the Original Contract.

3.42But proceeding on the basis the claimed sum is what A believes it is entitled to be indemnified by R1 and R2, I agree with Ms Chan that the calculations in the Table in any event cannot be substantiated.

3.43The Table consists of 4 parts. On the left-hand side is a valuation of the omission of the Outstanding Works from the Original Contract sum. On the right-hand side are (1) the costs of carrying out the Outstanding Works, (2) Preliminaries and (3) Consultant Fee. Except the claim for Consultant Fee, each of the other components is problematic.

3.44In relation to the valuation of Outstanding Works from the Original Contract sum, Mr Wong carried out a simplistic exercise of comparing the percentage of completion for Items 8.2.1 and 8.2.2 certified in IP 16 and IP 17. From that exercise, he reasoned that the omission should be between 5% to 20% for the various subitems under Items 8.2.1 and 10% for Item 8.2.2.

3.45I am unable to accept Mr Wong’s calculation. On Man Yuen’s own documents (ie the 29/6/20 Letter), the entire area of the flat roof is 640 m² (although it appears from the Schedule of Rates in the Original Contract that the total area is 620 m²). According to the Table, the total areas of R1 and R2’s flat roof is 237 m². Therefore, purely using area as the reference, the Outstanding Works would appear to be around [237/640 x 100%=] 37%. Mr Chan was not asked in evidence the basis for PWL’s assessment of the completion percentages in the payment certificates, and it appears to me that Mr Wong’s simplistic calculation and reliance on a comparison between PC 16 and PC 17 are flawed. In any event, I am of the view that even using area as a reference may be overly simplistic as a basis for valuing an omission.

3.46In relation to the costs of carrying the Outstanding Works and Preliminaries, Mr Wong in closing simply asserted what he considered to be the correct sum[19]. Even after Mr Chan challenged the lack of any apparent basis for the calculation[20], no further explanation or substantiation was offered by Mr Wong[21].

3.47For the above reasons, I answer Issue 1(d) in the negative. I should point out that Issue 1(d) does not require me to assess on my own what is Man Yuen’s entitlement under the New Contract. Even if it does, I am of the view that on the state of the evidence adduced at the trial and submissions made in closing, and without the benefit of expert evidence and proper submissions, I am not in a position to do so.

4.Issue 6: Non-compliance with section 20A of the BMO

4.1Given my observations on Issue 1, in particular Issue 1(d), I proceed to next deal with Issue 6.

4.2Section 20A(1) to (8) provide as follows:

“(1) The procurement of all supplies, goods or services required by a corporation in the exercise of its powers and the performance of its duties under the deed of mutual covenant (if any) or this Ordinance shall comply with such standards and guidelines as may be specified in a Code of Practice relating to such procurement.

(2) Subject to subsection (2A), any supplies, goods or services referred to in subsection (1) the value of which exceeds or is likely to exceed -

(a) the sum of $200,000 or such other sum in substitution therefor as the Authority may specify by notice in the Gazette; or

(b) a sum which is equivalent to 20% of the annual budget of the corporation or such other percentage in substitution therefor as the Authority may specify by notice in the Gazette,

whichever is the lesser, shall be procured by invitation to tender.

(2A) Subsection (2) does not apply to any supplies, goods or services which but for this subsection would be required to be procured by a corporation by invitation to tender (referred to in this subsection as relevant supplies, goods or services) if -

(a) the relevant supplies, goods or services are of the same type as any supplies, goods or services which are for the time being supplied to the corporation by a supplier; and

(b) the corporation decides by a resolution of the owners passed at a general meeting of the corporation that the relevant supplies, goods or services shall be procured from that supplier on such terms and conditions as specified in the resolution, instead of by invitation to tender.

(2B) Where any supplies, goods or services are required under subsection (2)(b) to be procured by invitation to tender, whether a tender submitted for the purpose is accepted or not shall be decided by a resolution of the owners passed at a general meeting of the corporation.

(3) (Repealed 5 of 2007 s. 16 )

(4) All tender documents, copies of contracts, accounts and invoices and any other documents in the possession of a corporation and relating to the procurement of supplies, goods and services shall be kept by the corporation for such period, being not less than 6 years, as the corporation may determine.

(5) A contract for the procurement of any supplies, goods or services shall not be void by reason only that it does not comply with subsection (1).

(6) Where any supplies, goods or services are required under subsection (2) to be procured by invitation to tender, a contract for the procurement of the supplies, goods or services which does not comply with subsection (2) or (2B)—

(a) subject to any resolution passed by the corporation under paragraph (b) or any order made by the court under subsection (7), shall not be void by reason only that it does not comply with subsection (2) or (2B);

(b) subject to any order made by the court under subsection (7), may be avoided by the corporation by a resolution of the owners passed at a general meeting of the corporation but only for the reason that it does not comply with subsection (2) or (2B).

(7) In any legal proceedings in relation to a contract for the procurement of any supplies, goods or services to which subsection (2) or (2B) applies, the court may make such orders (including whether the contract is void or voidable) and give such directions in respect of the rights and obligations of the contractual parties as the court thinks fit having regard to all the circumstances of the case, including (but not limited to) the following factors -

(a) whether the supplies, goods or services have been procured by invitation to tender;

(b) whether a general meeting of the corporation has been convened to consider the procurement of the supplies, goods or services;

(c) whether the Code of Practice referred to in subsection (1) has been complied with;

(d) whether the contract has been split, for the sole purpose of avoiding the compliance of the requirements in subsection (2) or (2B), from a contract which should have been made for the procurement of supplies, goods or services of greater value;

(e) whether the supplies, goods or services were urgently required;

(f) the progress of any activities or works in relation to the supplies, goods or services;

(g) whether the owners have benefited from the contract;

(h) whether the owners have incurred any financial loss due to the contract and the extent thereof;

(i) whether the supplier of the supplies, goods or services under the contract has acted in good faith;

(j) whether the supplier of the supplies, goods or services under the contract has benefited from the contract; and

(k) whether the supplier of the supplies, goods or services under the contract has incurred any financial loss due to the contract and the extent thereof. (Added 5 of 2007 s. 16 )

(8) For the purposes of subsection (7), where the court makes an order that the contract is voidable at the instance of the corporation, it shall also make an order that a general meeting of the corporation be convened and held in such manner as the court thinks fit, so as to decide whether the contract is to be avoided.”

4.3There is no dispute that A’s entering into the New Contract, the value of which exceeded HK$200,000, did not comply with section 20(2) of the BMO. The exception carved out by section 20(2A) does not apply since, whilst the execution of the Outstanding Works may be said to be goods or services of the same type as the goods or services which were for the time being supplied to A by Man Yuen under section 20(2A)(a), A did not comply with section 20(2A)(b).

4.4Mr Wong and Ms Chan agree that the authorities suggest, given nature and purpose of 20A(2), it is more probable than not that non-compliance would render a non-compliant contract voidable rather than void: I/O of Hip Wo House v Gallant King Development Ltd, CACV 429 of 2006, 30 May 2007 §11. Section 20A(6) of the BMO also makes it clear that a non-compliant contract shall not be void by reason only that it does not comply with subsection (2) unless the owners resolve at a general meeting to avoid it for that reason or the court orders otherwise under subsection (7).

4.5Both Mr Wong and Ms Chan made submissions on the factors set out at section 20A(7) which I have considered carefully. It should be noted that neither Mr Wong nor Ms Chan has brought to my attention any authorities on how the court has previously weighed those factors or exercised its discretion under sections 20A(7) and (8).

4.6Mr Wong submitted, without any evidence in support, that it was impracticable to convene a meeting for choosing a contractor for the New Contract by reason of COVID-19. That may or may not be the case. I am also prepared to accept that section 20A(7)(e) and (f) operate in favour of A.

4.7However, in my view, given my observations in the preceding section, it seems to me that, in the circumstances of the present case, the weightiest factors are sections 20A(7)(g) to (h) and (j) to (k) which all pertain to the benefits or detriments of the owners or Man Yuen. For avoidance of doubt, I do not regard Man Yuen as not having acted in good faith under section 20A(7)(i).

4.8The present state of affairs is as follows. There is no evidence that Man Yuen will not strictly insist on its rights under the New Contract. Yet, the position adopted by A in these proceedings is that it is only seeking a fraction of that exposure from R1 and R2 and thus arguably leaving the rest of the owners exposed to the remainder.

4.9In closing, Mr Wong went so far to submit that Man Yuen’s “double benefit”, in the sense that it was paid for the Outstanding Works under the Original Contract and is entitled again to be paid again under the New Contract, “can be avoided by deducting the costs saved [form] “omission” from the contact price of the New Contract”[22]. Even were the foregoing an invitation to me to give such directions in respect of the rights and obligations of the contractual parties as I think fit under section 20A(7), I decline to do so, for the reasons set out in the preceding section. There is simply no reliable valuation on the omission and Man Yuen certainly has not been given an opportunity to state its position.

4.10In a similar vein, despite my misgivings on the reasonableness or wisdom of the New Contract, it is inappropriate for me to make an order under sections 20(7) and (8) that the New Contract is voidable at the instance of the corporation. First, it is a drastic order, as noted at Building Management in Hong Kong 3^rd Edition §6.87. Secondly, I am not inclined to make such a drastic order without Man Yuen being afforded the opportunity to contend otherwise. Whilst it may be the case that the owners ought to be entitled to consider whether New Contract should be avoided at a general meeting to be convened for that purpose, no doubt with the benefit of explanations and advice (legal or otherwise) to be proffered by all the relevant parties at that occasion, it seems to me that whether such a general meeting should be convened should be a decision best left to the owners.

4.11I therefore answer Issue 6 as follows. The New Contract is not void by reason that it does not comply with section 20A(2) of the BMO unless the owners resolve at a general meeting to avoid it for that reason.

5.Issue 2: After the commencement of the Major Renovation Works, were there any structures on R1 and R2’s flat roof that hinder Man Yuen from carrying out the Outstanding Works

5.1Issue 2 may be dealt with swiftly. In the light of Ms Chan’s concession that after the commencement of the Major Renovation Works, there were structures on R1 and R2’s flat roof that had to be removed before the Outstanding Works could be carried out[23], Issue 2 must be answered in the affirmative.

5.2I have not lost sight of the dispute between the parties on the additional question as to which party had the responsibility to remove some of the hindering structures. In particular, as regards R1, the dispute on responsibility has given rise to Issue 5.

6.Issue 3: Did R1 and R2 obstruct the Applicant from entering their flat roof at a reasonable time to carry out the Major Renovation Works

6.1In order to assess “reasonableness”, there must be a benchmark against which the acts of R1 and R2 are assessed. Further, as A’s claim is only premised on the Outstanding Works (having abandoned the claim in relation to the External Wall Works), I will confine the analysis to the waterproofing works on the flat roof.

6.2It is A’s case that Man Yuen had completed the waterproofing works at the flat roof (apart from the Outstanding Works) in December 2019 and its waterproofing subcontractor left site at the end of March 2020.

6.3It must be pointed out that A’s case is based simplistically on a factual account, without any expert evidence on programming. It is not entirely clear why the waterproofing works had to be completed in December 2019 such that it was thought reasonable for Man Yuen’s waterproofing subcontractor to leave site at the end of March 2020 (well before the end of the original contract period in May 2020), for the following reasons.

6.4According to the Tender Programme, the waterproofing works (Item 12) is not on the critical path of the Major Renovation Works and it was planned that it could be completed in one go within 30 working days. In oral evidence, Mr Chan accepted that it could be carried out at any time during the contract period, but Mr Leung explained that the intention was to carry out the waterproofing works before the dismantling of scaffolding.

6.5After the commencement of the Major Renovation Works, the actual work sequence departed from the Tender Programme. Instead of carrying out the waterproofing works in one go, as stated earlier, they were carried out in two tranches, and in particular, Block B was completed in March 2019 shortly after the Commencement Date in March 2019.

6.6The departure from the Tender Programme has not been explained by A. Mr Leung accepted that as part of its obligation under the Original Contract (Appendix Clause 1.14), Man Yuen had to submit (and did submit) a master programme against which progress was to be monitored. Under the terms of the Original Contract, the master programme had to be approved by PWL. The master programme has not been placed in evidence, and Mr Chan told me that he could not remember how Man Yuen planned the execution of the Major Renovation Works.

6.7What seems to me to be obvious is that even as at the Commencement Date, A was facing problems in gaining access to the flat roof, so much so that these proceedings were commenced shortly thereafter and initially against not only R1 and R2. Where it is accepted that the waterproofing works (encompassing the Outstanding Works) were not on the critical path and could be carried out at any time, it is entirely unclear, and it is unexplained, why it was thought appropriate or reasonable for Man Yuen to carry out the waterproofing works well before the original contractual completion date in May 2020.

6.8To exacerbate matters, it seems to me axiomatic that work sequences may change depending on site conditions and progress generally. In the present case, not only were the waterproofing works executed well before the original contractual completion date in May 2020, as a matter of fact, progress was generally delayed, so much so that even leaving the Outstanding Works aside, Certified Completion Date only took place on 3 July 2020.

6.9For the above reasons, I am of the view that, by reference to A’s factual case that (1) the waterproofing works (apart from the Outstanding Works) were completed in December 2019 and (2) Man Yuen’s waterproofing subcontractor left site at the end of March 2020, A has failed to prove that R1 and R2 had obstructed A and/or Man Yuen from entering their flat roof at a reasonable time to carry out the Outstanding Works.

6.10It is notable that Issue 3 is related only to the question of “entering” the flat roof of R1 and R2’s Properties. To further buttress my conclusion, the time of “entering” the flat roof of R1 and R2’s Properties was the same for the External Wall Works. A has abandoned the claim in relation to the External Wall Works because they were completed mostly before the Certified Completion Date. The real cause of the delay to the Outstanding Works, on a proper analysis, was not the timing of “entering” the flat roof of R1 and R2’s Properties but whether there remained any hindering structure even after Man Yuen was allowed to “enter” the flat roof, as is analyzed in Issue 4 below.

7.Issue 4: Whether the delay between the Certified Completion Date and the completion of Outstanding Works was caused by R1 and R2

7.1I should immediately point out that it is simply incorrect for A to assert that the waterproofing works were only part of the Outstanding Works for the purpose of Issue 4 at its Closing Submissions dated 19 July 2023 §§79 to 83. The term “Outstanding Works” is defined specifically by the parties as the outstanding waterproofing works at the flat roof of R1 and R2’s Properties at RALOI §1(a).

7.2The Certified Completion Date is 3 July 2020 and the Outstanding Works were completed on or about 5 September 2020.

7.3As stated earlier, shortly after the Commencement Date on 15 February 2019, A commenced the present proceedings against R1 and R2 on 24 April 2019.

7.4The evidence and submissions of the parties make references to disputes starting in early 2019. It does not appear to me that those early disputes are material or relevant for the purpose of Issue 4. Contrary to the position adopted by A in closing, it is necessary to deal with R1 and R2 separately, since it cannot be A’s case that they caused the delay jointly, as A advances against each a separate factual case. It is therefore possible that the delay may only be caused by one and not the other, or each may have caused delay but to a different degree.

7.5Again, it has to be noted that A’s claim on delay is not supported by any expert evidence. As such, I do not have any expert evidence on what would be a reasonable time to complete the Outstanding Works. Neither do I have the benefit of expert evidence in which potentially relevant delaying event are identified.

7.6It is A’s factual case that the Outstanding Works (and the External Wall works) took 61 working days (from 10 June to 5 September 2020)[24]. As noted earlier, the Tender Programme states that the waterproofing works at the entire flat roof would take 30 working days. Doing the best I can, where it was accepted by Mr Chan that the waterproofing works was not on the critical path and could be carried out at any time (and therefore not linked to the External Wall Works), I proceed on the basis that the reasonable time for completing the Outstanding Works would take 30 working days. I should point out that the foregoing is perhaps a generous finding for A, because under the Tender Programme, the period budgeted was for the entire flat roof, whereas the Outstanding Works appear to be concerned with only 34% of the flat roof by area. But it seems to me that some allowance reasonably has to be made for remobilization.

R1

7.7The photo records taken by Man Yuen show that R1 had instructed his own contractors to demolish the UBWs and reinstate the flat roof between 19 March and 15 April 2020.

7.8At stated above, the 2019 Demotion Order (R1) was issued on 10 May 2019, requiring R1 to demolish (1) a projecting structure erected underneath the bay window, (2) two fence walls erected on and over the flat roof adjacent to the premises, (3) one fence wall erected on and over the parapet wall facing the rear lane, and (4) a structure erected on and over the flat roof adjacent to the premises.

7.9In cross-examination, R1 said he could not remember why he did not deal with the 2019 Demolition Order (R1) earlier.

7.10Whilst R1 asserted at his witness statement §16 that he was told by Man Yuen at an inspection on 20 December 2019 that there was no obstruction by many of the structures on the flat roof of R1’s Property, he agreed in cross-examination that that was incorrect. It seems to me, where the Outstanding Works would have involved opening up the flat roof, it was self-evident that at least part of the structures covered by the 2019 Demolition Order (R1) would necessarily affect the waterproofing works (as was eventually accepted by R1 in cross-examination).

7.11Whilst R1 was carrying out the demolition works, on 3 April 2020, Man Yuen informed A that they would commence dismantling the scaffolding at Block B on 14 April and planned to dismantle the scaffolding at Block A on 15 May 2020. Man Yuen also stated that it was unable to gain access to R1 and R2’s Properties and that R1 and R2 had to demolish the UBWs and dividing walls at their own costs before they would commence the Outstanding Works.

7.12On 6 April 2020, Huen issued separate letters to R1 and R2 in, inter alia, the following terms (“6/4/20 Letter”):

“[Man Yuen] 將安排工人於完成所有可做的工程後清拆棚架並於2020年5月15日撤離。因 [A] 與 [Man Yuen] 簽署的合約是總價合約 (Lump Sum Contract)，如果由於閣下的阻撓而導致承建商未能完成工程，承建商無需負責，並將如期拆棚撤離，日後如 [A] 要求 [Man Yuen] 補做有關工程，[Man Yuen] 將另行報價收費，因此 [A] 於本案亦已包括向閣下申索因此而產生之額外工程顧問及維修費用。

請閣下珍惜此最後機會，盡快同意承建商進入貴單位之平台進行上述工程，否則 [A] 將按申請書所述向閣下追討因此而產生之額外工程顧問及維修費用。”

7.13R replied by email dated 14 April 2020, in which he informed Huen that access could be granted from 16 to 21 April 2020 (excluding Sunday) for Man Yuen to carry out the Outstanding Works and the External Wall Works. R1 clearly recognized that the time given was insufficient, as he stated that should more time be required, further arrangement could be made.

7.14On 15 April 2020, Huen replied R1 stating that R1 should allow at least around one month for the execution of Outstanding Works and the External Wall Works and reminding R1 to remove various structures before Man Yuen could carry out the relevant works.

7.15On 22 April 2020, Huen informed R1 that A, PWL and Man Yuen would attend R1’s Property for inspection on 27 April 2020.

7.16At the inspection on 27 April 2020, it was found that the following structures were yet to be dismantled or rectified: (1) the appurtenance affixed to the external walls, (2) a toilet hole and (3) an electric wire hose affixed to the bottom of the parapet wall.

7.17On 28 April 2020, Huen issued a letter to R1, attaching photographs taken at the inspection on the previous day of the structures hindering Man Yuen which were required to be demolished or rectified.

7.18On 25 May 2020, Huen issued a reminder letter to R1, attaching the photographs again and stated that the hindering structures were yet to be demolished or rectified and requested R1 to do so by 5 June 2020, failing which A would instruct Man Yuen to carry out such works and charge R1 for the same.

7.19On 9 June 2020 (presumably incorrectly dated), Huen issued a letter to R1 stating that as the hindering structures had not been removed, only part of the waterproofing works could be carried out (today) on 10 June 2020 and demanded R to remove them by 15 June 2020. A quotation by Man Yuen dated 28 May 2020 (in the sum of HK$7,000)[25] was enclosed.

7.20A instructed Man Yuen to remove the hindering structures on 16 June 2020. Mr Leung in oral evidence told me that such removal took about 2 working days.

7.21I have examined the photographs of the hindering structures and it is clear that none of them were items of value. I do not accept Mrs Lui’s evidence that it was prudent for A, since the hindering structures were R1’s private properties, to leave the matter in abeyance such that instructions were only given to Man Yuen to remove them on 16 June 2020. The hindering structures were identified at the inspection on 27 April 2020. Even assuming that it was prudent for A to first warn R1 before taking matters into its own hands, it seems to me that a 7-day notice would have been sufficient.

7.22What appears to be the real reason is that either A or Man Yuen had somehow thought fit to link up R1 and R2, presumably on the basis that it was more cost-efficient to remobilize the waterproofing subcontractor in one go. As explained by Mr Leung[26], as R2 only gave access to R2’s Properties for the Outstanding Works on 9 June 2020, Man Yuen only commenced the Outstanding Works at R1 and R2’s Properties together on 10 June 2020. It is notable that Man Yuen’s quotation was dated 28 May 2020 but only sent by Huen to R1 on 10 June 2020.

7.23Working backwards, 30 working days from 3 July 2020 should be 25 May 2020. In my view, the hindering structures having been discovered on 27 April 2020, it seems to me that the issue should have been resolved well before 25 May 2020. Absent any expert evidence to the contrary, it is, in my view, not justified for A or Man Yuen to link up what was happening in R1 and R2’s Properties.

7.24I am therefore of the view that the delay between the Certified Completion Date and the completion of the Outstanding Works was not caused by R1.

R2

7.25At the material time, R2 had engaged CJ Architects and Surveyors & Co (“CJ”) to handle the UBWs.

7.26As stated earlier, the 4/6/2020 letter was also issued to R2.

7.27On 15 April 2020, CJ issued a letter to Ms Lo, copying Huen. In the letter, CJ explained that the demolition of the UBWs was postponed from 12 February 2020 because of COVID-19 to 17 April 2020. CJ offered to allow access to Man Yuen from 20 April 2020 to 4 May 2020 to partially carry out the Outstanding Works and the External Wall works.

7.28Huen replied on 17 April 2020, in which it pointed out that the period offered in CJ’s letter was seriously inadequate and requested R2 to remove the structures and to reinstate the flat roof in the matter identified in the letter (comprising of 5 items).

7.29On 21 April 2020, A sent a letter to the BD to complain about UBWs at the flat roof of R2’s Properties. As set out below, this resulted in the issuance of the 2020 Demolition Orders (R2).

7.30By letter dated 4 May 2020 to CJ, Huen pointed out that of the 5 items identified in its letter dated 17 April 2020, 2 had been done leaving 3 items outstanding, and they continued to prevent Man Yuen from carrying out the works. Huen suggested a site inspection on 7 May 2020 and requested that the 3 outstanding items be completed by 11 May 2020.

7.31It appears that the site inspection took place instead on 5 May 2020 and photographs identifying the structures to be demolished were taken.

7.32On 11 May 2020, Huen issued a letter to CJ enclosing the photo records taken at the site inspection on 5 May 2020. R2 was requested to deal with the problems identified by 29 May 2020, failing which A would arrange Man Yuen to deal with and charge R2 for the same. It is also A’s case that access to R2’s Properties were given on 11 May 2020.

7.33On 18 May 2020, A followed up with BD on the complaint made on 21 April 2020.

7.34On 2 June 2020, BD issued the 2020 Demolition Orders (R2), requiring R2 to demolish projecting structures erected underneath the bay windows of the premises.

7.35Also on 2 June 2020, A issued another letter to CJ stating that the problems identified in its earlier letters of 4 and 11 May 2020 remained unresolved. As a result, Man Yuen was only able to complete the External Wall works of 1B5 and would complete the External Wall works of 1A2 by the end of the week. However, the waterproofing works scheduled to commence on 1 June 2020 could not be commenced.

7.36The photo records show that the 2020 Demolition Orders (R2) were dealt with on 8 June 2020. As stated above, it is Mr Leung’s evidence that he was granted access for the Outstanding Works at R2’s Properties on 10 June 2020, following the clearing of debris on 9 June 2020.

7.37As will be seen above, I have referred mainly to the documentary evidence. I have not been referred to any response from CJ disputing the same and certainly R2 has not called anyone from CJ to give evidence.

7.38However, even accepting Man Yuen was only able to start the Outstanding Works at R2’s Properties on 10 June 2020, 30 working days (which I have found to be the reasonable time to complete the entire Outstanding Works) would only take the period to 22 July 2020 (on my own calculation).

7.39The period between 10 June and 3 July 2020 account for 17 working days. The total area of the Outstanding Works is 237 m². Given the flat roof at R2 Properties is 204 meters, I am prepared to proceed on the basis that R2’s Properties should bear the majority of the time taken. I acknowledge that the foregoing apportionment is simplistic and is carried out without the benefit of any expert evidence.

7.40On the foregoing basis, I am prepared to find that R2 has caused a part of the delay between the Certified Completion Date and the completion of the Outstanding Works, but certainly not the entirety of that period.

8.Issue 5: Whether A is liable to pay the sum of HK$7,000 to Man Yuen for the removal of the appurtenance fixed top the external walls on R1’s flat roof?

8.1I have already set out in the preceding section the events relevant to Issue 5 above.

8.2Ms Chan submits that the items to be removed were Man Yuen’s responsibilities under the Original Contract.

8.3Man Yuen’s quotation of HK$7,000 is made up as follows:

(1)  拆除女兒牆上的燈喉: HK$2,000

(2)  拆除1A1 外牆的水喉等附屬物: HK$3,000

(3)  清走以上所有廢物: HK$2,000

8.4The provisions in the Original Contract relied on by Ms Chan are related to common parts and common facilities. Where, as here, the items covered by the quotation all involve private properties installed by R1 (even for those at the common parts of the Building), I accept Mr Wong’s submissions that the works carried out in the quotation were not included in the Original Contract.

8.5There is also no challenge to the reasonableness of the sum quoted in Man Yuen’s quotation.

8.6I answer Issue 5 in the affirmative.

9.Issue 7: Whether A has the duty to demolish and reinstate the structures that are non-UBWs for owners of the flat roof during the Major Renovation Works? and Issue 9: If the answer to (7) is affirmation, has R2 suffered loss

9.1As is plain from their formulation, Issues 7 and 9 are only relevant to R2. At the material time, R2 had carried out elaborate renovation at the flat roof of R2’s Properties. The non-UBWs under discussion are the floor tiles, uncompleted windowsill, and the partition walls.

9.2There are two aspects to Issue 7.

9.3On the first aspect, namely whether A has the duty to demolish the non-UBWs, Mr Wong referred to Clause 22 of Part A of Section IV of the DMC which provides:

“Each Owner may at his own expense install in that part of the Estate owned by him such additions, improvements, fixtures, fittings and decoration and remove the same Provided however that no such installation or removal shall cause any structural damage or interfere with the enjoyment of any other part of the Estate.”

9.4Mr Wong submitted that the installation of the structures at flat roof of R2’s Properties hindered the execution of the Outstanding Works, namely the repair of the waterproofing membrane which was a common part. I agree with him that it was R2’s obligation to remove the UBWs to enable Man Yuen to carry out the necessary repair works.

9.5The second aspect, namely that on resinstatement, is more controversial. Ms Chan referred to 2 cases, namely The Incorporated Owners of Wah Yuen Chuen v Leung Ching Kong Norman, LDBM 189/2004, 15 April 2005 and 郭鄒碧濃 v The Incorporated Owner of Tai Wo Building, LDBM 58/2014, 6 January 2015.

9.6In Wah Yuen Chuen, the IO conceived a renovation plan to remove “the pipes” on the external wall in the subject building. The IO also passed a resolution during a renovation plan to require the respondent to restore the floor slab inside the bathroom and demolish and restore the sanitary system at his own costs. The Tribunal in that case held that the IO has no right to require the respondent to renovate his property at his own costs. As such, the resolutions passed by the IO are therefore null and void to this extent. This is because the IO has no right to override the proprietary right of the respondent requiring him to restore the demolished sanitary system at his own costs.

9.7In Tai Wo Building, the respondent rooftop owner claimed the costs of restoring the rooftop at $174,600 from the IO on the basis that the sum in dispute was the costs of restoring the floor on the rooftop after the waterproof membrane work and it should therefore be borne by all owners, but not just the rooftop owner (“受爭議的174,600元是維修防水層工程完工後，還原之前因施工掘開了地面的工序，自然亦應由大廈所有業主負責，而不是由天台業主獨力承擔。” （at §8）). The Tribunal agreed with the respondent’s submission, and held that such restoration costs should be borne by all owners (“掘開天台的地面修理防水層後還原地面這工序是必須的，亦是保護整座大廈的防水設施的其中一項工序，支出應由所有大廈業主分擔。” (at §10)).

9.9I am prepared to accept the above cases are authorities for the proposition that R2 should not be held solely responsible for the reinstatement of her own fittings and structures on the flat roof which were non-UBWs, when their removal was necessitated by works to be done to the waterproofing membrane. But I also agree with Mr Wong that the above cases are silent on the question of the extent. For example, in the present case, R2 had used very expensive tiles on the flat roof of R2’s Properties (in her words 價值不菲). Pursuant to the Original Contract, the flat roof was reinstated to a more “pedestrian” specification.

9.10I do not have to resolve the above aspect, as R2 simply did not adduce any evidence to substantiate the costs allegedly incurred by her in respect of the flat roof tiles, the windowsill, and the partition walls of the flat roof. Moreover, R2’s own evidence was that she would reinstate the tiles at her expense[27]. Ms Chan has not sought to address in closing the foregoing deficiencies and obstacles.

9.11For the above reasons, it seems to me that Issues 7 and 9 may simply be answered as follows: R2 has failed to substantial her claim arising from Issues 7 and 9.

10.Issue 8: A’s duty to mitigate

10.1In the light of my answers to Issues 1 to 4 and 6, the scope of Issue 8 are curtailed. First, Issue 8 is now only concerned with A’s claim against R2 and A has effectively conceded on Issue 8(c). Issue 8(a) is not applicable as the date of entry is not relevant to whether R2 caused the delay between the Certified Complete Date and the date of the completion of the Outstanding Works.

10.2The remaining issues are therefore Issue 8(b) and 8(d).

10.3Deputy High Court Judge Woo (as he then was) at Mega Yield International Holdings Ltd v Fonfair Co Ltd, HCA 948 of 2009, 5 March 2013 §33 summarized the legal principles of mitigation of damages as follows:

(1)  The claimant is to take all reasonable steps to mitigate his loss consequent upon the breach.

(2)  The onus of proving the claimant’s failure to have taken certain steps to avoid some part of his loss is on the defendant, who must show that the claimant ought as a reasonable man to have taken certain steps to mitigate his loss.

(3)  The claimant is not under any obligation to do anything other than in the ordinary course of business.

(4)  The standard is not a high one, since the defendant is a wrongdoer.”

10.4McGregor on Damages (21^st Edition) §9-079 states as follows:-

“In mitigating their loss, claimants are only required to act reasonably and the standard of reasonableness is not high in view of the fact that the defendant is an admitted wrongdoer. Lord Macmillan put this point well for contract in Banco de Portugal v Waterlow[28] ; his remarks apply equally to tort. He said: “Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticize the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.”

10.5McGregor on Damages (21^st Edition) §9-090 sets out one of the illustrations of what is not required of the claimant in mitigation which applies to Issue 8(b) of our present case:

“A claimant generally need not risk litigation against a third party: The cases that are concerned with claims of failure to mitigate by bringing proceedings are almost always concerned with allegations that the claimant ought to have brought an earlier claim against a third party. However, in one Australian case the novel submission was made that the claimant for damages for breach of a contractual provision restraining competition ought to have mitigated loss by bringing earlier proceedings for an injunction that would have prevented further trading. The trial judge, Stewart J, addressed this argument in obiter dicta, rightly giving it very short shrift. The submission was, in effect, that unless a claimant embarks in earlier, costly and potentially wasteful litigation it will be responsible for the consequences of the defendant’s wrongful conduct. That position is untenable, particularly in light of concerns for efficiency in litigation. As the judge observed, a further basis for the reasonableness of the conduct is the undertaking as to damages that would be required of a claimant for an injunction.”

10.6In my view, R2 has failed to establish Issue 8(b) and (d). The submissions advanced by Ms Chan were extremely general.

10.7As regards Issue 8(b), I do not believe A, in mitigation, had to embark upon further litigation to seek an injunction against R2. In any event, on the facts, A had made a complaint to the BD which resulted in the 2020 Demolition Orders (R2). There does not appear to be any dispute that R2 did deal with the said demolition order. Ms Chan did not specify the scope of the injunction which ought reasonably be pursued in mitigation by A.

10.8As regards Issue 8(d), the photo records show that the structures which were required to be removed or reinstated, unlike the situation in R1’s Property, were substantial and of value. In my view, any attempt by A to instruct Man Yuen to remove the same, without R2’s consent, would simply lead to further disputes.

11.Disposition

11.1A asks for the following orders:

(1)  The 1^st Respondent do indemnify A with the sum of HK$32,488.40 being extra expenses of and occasioned by the delay of the 1^st Respondent in allowing the Applicant’s contractor to enter his flat roof to carry out repair works of the common parts of the building together with interest;

(2)  The 2^nd Respondent do indemnify the Applicant with the sum of HK$157,564.60 being extra expenses of and occasioned by the delay of the 2^nd Respondent in allowing the Applicant’s contractor to enter his flat roof to carry out repair works of the common parts of the building together with interest;

(3)  An injunction order against the 1^st and 2^nd Respondent prohibiting the erection of unauthorized structure on their respective flat roofs, namely, the flat roofs of Flats A1, A2 and B5 on the 1^st Floor of Ka Wai Building (Java Road), 146-166 Java Road, North Point, Hong Kong, whether by the 1^st and 2^nd Respondent themselves or by their respective employees, agents, tenants or occupants of their premises; and

(4)  The counterclaim of the 1^st Respondent be dismissed;

(5)  The counterclaim of the 2^nd Respondent be dismissed.

11.2I have already found that A has failed to substantiate the quantum of the indemnity sought arising from the New Agreement. But the foregoing does not affect Issue 5 or the claim for PWL’s consultant fee in the sum of HK$6,000 per month.

11.3By reason of my answer to Issue 5, I make an order that R1 do indemnify A the sum of HK$7,000. A’s claim for an indemnity against R1 is only allowed to that extent.

11.4By reason of my answer to Issue 4, I make an order that R2 do indemnify A the sum of HK$6,000, being 1 month of addition consultant fees. A’s claim for an indemnity against R2 is only allowed to that extent.

11.5I dismiss A’s claim for injunction, as there is no evidence of likely future breach by either R1 or R2.

11.6As R1 no longer pursues his counterclaim. I dismiss R1’s counterclaim.

11.7As R2 has failed to substantiate her losses, I dismiss R2’s counterclaim.

11.8The parties are to draw up an order reflecting the above for my approval within 7 days hereof.

11.9In view of the outcome of the proceedings (and the abandonment of claims and counterclaims by the parties), I anticipate that parties wish to address me further on the of costs. Although A asks for interest, no submissions were made on the appropriate period or the appropriate rate. However, I note that A has not paid Man Yuen at all and it is unclear whether A has paid PWL either. I reserve the issues of interest and costs. A is to lodge and serve its submissions on interest and costs (limited to 5 pages) within 7 days, R1 and R2 are to lodge their submissions (also limited to 5 pages) within 7 days thereafter, and A is to lodge and serve its reply submissions (limited to 3 pages) within 7 days thereafter. Unless I direct otherwise, I will deal with the remaining issues on the papers.

12.A’s application to expand the RALOI

12.1As stated above, A sought to expand the RALOI at the hearing on 26 July 2023. The expansion sought was in relation to Issue 1, namely it wished to further rely on other bases for its indemnity claim should I find against it on the existence on the New Agreement, including a claim under the Original Contract and/or quantum meruit.

12.2In view of my finding that there was a New Agreement, the sought for expansion has become otiose.

12.3However, I should point out that even had I found against A on the existence of the New Agreement, I would have declined to allow the belated attempt to expand the RALOI. The change in position and its lateness have not been explained, in particular when the change in position is contrary to the submissions made in A’s written closing submissions.

Mr. Wong Charn Hung Andrew of M/S Huen & Partners, for the Applicant

Ms. Manalie Chan instructed by M/S Lo, Wong & Tsui, for 1^st and 2^nd Respondents