China Fair Land (Qingdao) Ltd v. Lo Sum Sum

DCCJ 1383/2014

[2024] HKDC 1579

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1383 OF 2014

--------------------

--------------------

--------------------

JUDGMENT

--------------------

Introduction

1.This is the judgment on the quantum of damages payable by the defendant to the plaintiff.

2.The plaintiff, a limited company, is the owner of Flat F, 25^th Floor, Block 6, City Garden, No 233 Electric Road, Hong Kong (“Property”).  The plaintiff became the legal owner of the Property pursuant to an assignment dated 30 September 2009, and has been leasing it out since.

3.The defendant is the registered owner of Flat F, 26^th Floor of the same building, ie the flat immediately above the Property.

4.The present proceedings arose from the water seepage from the defendant’s flat to the Property.

5.The Writ of Summons was issued on 11 April 2014.

6.On 16 May 2017, upon parties’ joint application, Deputy District Judge Eric Tam, inter alia, entered judgment on liability against the Defendant, and provided for consequential directions for the further conduct of the proceedings (“Judgment”).

Scope of the present trial

7.The present trial is set down for assessing the quantum of damages.

8.Nevertheless, there was certain confusion as to what the plaintiff was actually seeking from the Court in the present trial.

9.In the written opening submissions, the plaintiff seemed to seek an injunctive order in the terms of the one pleaded in prayer (b) of the Statement of Claim[1], mandating the defendant to carry out suitable repair work to stop the water seepage (which is subsisting as the evidence shows).  There was, however, no summons before me properly setting out the plaintiff’s application as such.

10.Mr Paul Wong, counsel for the plaintiff, clarified in his oral opening submissions that the plaintiff would not make any application for any injunctive relief at the present stage.

11.It is unfortunate that the plaintiff is apparently labouring under a long-standing confusion as to the proper procedure for invoking the Court’s jurisdiction to mandate the defendant to properly remedy the water seepage problem.

12.In paragraph 18(2) of the decision of HHJ H Au-Yeung (as he then was) dated 31 May 2021 ([2021] HKDC 646) dealing with the plaintiff’s application for an order similar to prayer (b) of the Statement of Claim, the learned Judge confirmed that such order was already granted under the Judgment.  Even though the order as sought was already granted as a final order under the Judgment, the plaintiff still sought an interlocutory order in the same terms. As a result, the plaintiff’s application therein was dismissed for being procedurally misconceived.  It was equally misconceived to seek the same order at the present stage again.  Clearly, instead of repeatedly applying for what has already been granted, the plaintiff should make an application for enforcing that order.

13.The present situation is unfortunate as it is unsatisfactory.  The Judgment was granted seven years before the trial.  The defendant is still failing to properly repair her flat in order to stop the seepage.  On the other hand, the plaintiff has repeatedly denied itself a proper opportunity to enforce the Judgment.  Such situation should not last for any longer.  Both parties must properly carry out to the Judgement as soon as practicable.

Heads of damages as claimed by the plaintiff

14.The plaintiff claims altogether 5 heads of damages.  The details of the plaintiff’s claims as well as the defendant’s stance on each of the heads, as clarified during the trial and/or crystalised during the closing submissions, are as follows:

Plaintiff’s claims		Defendant’s stance
(i)	The repair costs (inclusive of pre-action expert costs) up to 2016 in the amount of $66,470[2](“Pre-2016 Repair Costs”)	The defendant partially agrees up to the amount of $59,968
(ii)	Further repair costs from 2016 onwards in the amount of $25,188 (“Post-2016 Repair Costs”)	The defendant agrees to this head in full
(iii)	Loss of rental income from February 2010 to 7 August 2022 in the total amount of $622,600 (“Loss of Rent”)	The defendant agrees up to $236,600
(iv)	Labour costs for handling the water seepage problem in the amount of $30,000 (“Labour Costs”)	Primarily, the defendant denies this head in total; alternatively, the defendant argues that no more than $20,000 should be awarded
(v)	General damage in the amount of $150,000 (“General Damage”)	Primarily, the defendant denies this head in total; alternatively, the defendant argues that no more than $20,000 should be awarded

15.The details of the disputed heads of damages will be further analysed below.

Witnesses

16.There are only two factual witnesses:

(a)  The plaintiff has called one of its directors, Mr So Ja Hung Sam (“Mr So”), as factual witness; and

(b)  The defendant has testified.

17.I find that Mr So was a truthful witness.  However, his evidence involves certain subjective matters which were not necessarily valid even though I accept that he was an honest witness.  Also, Mr So only started working for the plaintiff in 2011.  Certain disputed matters took place before his employment and therefore were outside of Mr So’s personal knowledge.

18.On the other hand, the factual evidence of the defendant was irrelevant to the remaining issues in the present trial.

19.There were three expert witnesses:

(a)  One Ms Lau Shan La and one Mr Tsang Tat Ming Jacob were supposed to be called by the plaintiff and the defendant respectively, giving opinion on the existences of water seepage and the repair work that was necessary.  However, given the defendant’s agreement on the Post-2016 Repair Costs, the oral evidence of these two experts became unnecessary and they were excused from attending the trial; and

(b)  One Mr Hui Wai Chun Raymond of Midland Surveyors has produced a report dated 22 November 2022 assessing the market rent of the Property as of 6 September 2016, 31 August 2018, 12 July 2019 and 30 July 2020 (“Valuation Report”).  Both parties did not dispute the Valuation Report, and therefore Mr Hui Wai Chun Raymond was also excused from attending the trial.

Analysis

i.  Pre-2016 Repair Costs

20.The dispute under this head is confined to the following items:

(a)  $2,102 for installing heater and relevant apparatus on or about 17 November 2010;

(b)  $2,800 for replacing the 3-phase power heater and relevant apparatus on or about 20 November 2010; and

(c)  $1,600 (being the difference between $4,000 as claimed by the plaintiff and $2,400 as the defendant is prepared to accept) for repainting the ceiling and various walls within the Property.

21.For the sums of $2,102 and $2,800 that were incurred in November 2010 for installing or replacing the heaters within the Property:

(a)  They were incurred in November 2010, which was before Mr So started his employment with the plaintiff.  Therefore, Mr So had no personal knowledge as to the circumstances in which the said expenses were incurred;

(b)  In paragraph 20 of Mr So’s 1^st witness statement, he referred to the tenant’s compliant about the sounds of explosion in the master bathroom of the Property, which led to the replacement of the water heater and other relevant apparatus;

(c)  However, the only documentary evidence showing the tenant’s complaint about the sounds of explosion in the master bathroom were dated 13 October 2011 and 20 November 2011 respectively.  Such emails were apparently irrelevant to the expenses incurred in November 2010;

(d)  Given the lack of evidence to substantiate the assertion that these sums were incurred as a result of the water seepage from the Defendant’s Property, I disallow the plaintiff’s claim of the same.

22.For the disputed $1,600 for repainting the ceiling and various walls of the Property:

(a)  The defendant argued that the evidence was unclear as to the exact area(s) within the Property that required repainting, and the relevant invoice showed that the repainting affected by the water seepage.  Therefore, only 50% of the expenses claimed by the plaintiff should be allowed;

(b)  Mr So during cross-examination accepted that an item of $300 for replacing parts of the window frame and the toilet cover was irrelevant to the water seepage. However, Mr So disagreed that the repainted area substantially exceeded the affected areas, as he explained that if that was the case, the expenses would be much larger than the sum claimed.  In the closing submissions, the plaintiff conceded that the areas that were repainted were slightly beyond the affected areas.  Therefore, the relevant expenses should be reduced to $4,000, instead of $4,800 as originally claimed;

(c)  I accept Mr So’s evidence to be truthful and sensible.  If the repainting took place at the whole of the living room and master bedroom as the defendant suggested to Mr So during cross-examination, the relevant expenses were more likely to be much higher than $4,500 as charged;

(d)  I therefore allow the plaintiff’s claim of $4,000 as expenses for repainting the affected areas inside the Property.

23.The total amount of the Pre-2016 Repair Costs awarded to the plaintiff should be $59,968 (as conceded by the defendant) plus $4,000 (as held above), ie $63,968.

ii.  Loss of Rent

24.The plaintiff’s claim for the loss of rent can be divided into three sub-categories, namely:

(a)  Rent deduction of $1,000 per month from Feb 2010 to Jan 2014 covering 48 months and totalling $48,000 (“Rent Concession”);

(b)  The loss of rent during the vacant periods between leases, which were said to be unusually long due to the existence of the water seepage problem (“Vacancy Rent”); and

(c)  The difference between the actual rent received by the plaintiff and the market rent, which was alleged to be caused by the existence of the water seepage problem (“Rent Difference”).

iia.     Rent Concession

25.It is the plaintiff’s case that a deduction of $1,000 in rent was agreed with the then tenant, one Ms Shek, between February 2010 to January 2014 (48 months altogether) in order to avoid a termination of the leases.  Ms Shek ceased to rent the Property in February 2014 when the current lease expired.

26.The defendant does not challenge the fact that such concession was given to Ms Shek.  Her main dispute was whether the plaintiff was “compelled” to do so as Mr So alleged in his witness statement.  Ms Pauline Leung, counsel for the defendant, highlighted the fact that the plaintiff managed to raise the rent from $27,000 to $30,000 during that period.  Also, the defendant referred to emails from Ms Shek setting various complaints from her, and not all of which were relevant to the water seepage problem.  For example, Ms Shek complained about dilapidating wardrobe, leaking toilet bowl, window frame, toilet cover, drainage, kitchen cabinet and blockage of the bathtub.  Therefore, the $1,000 concession could not be only attributable to the water seepage problem.

27.In an email from Mr Lawrence Cheung to Ms Shek dated 6 October 2011, Mr Lawrence Cheung made it clear that whilst the rent of the Property would be increased to $30,000, effective from 12 October 2011 to 11 October 2013, there would be a concession of $1,000 per month for as long as the water seepage subsisted.  The defendant could not point to any evidence that could show that Mr Lawrence Cheung’s statement in the said email was untrue.

28.Furthermore, under cross-examination, Mr So pointed out that in the various receipts issued to Ms Shek during that period, there was a consistent deduction of $1,000 for “Repair & Maintenance”.  He further suggested that, had it not been the water seepage problem but simply other complaints, the deduction for “Repair & Maintenance” would not be that uniform and consistent.  Mr So’s explanation was sensible and was consistent with Mr Lawrence Cheung’s email to Ms Shek on 6 October 2011.

29.Given the subsistence of the water seepage problem, it makes sense that a rent concession would be offered to the tenant.  On the other hand, it would be unusual if the rent was completely unaffected by the water seepage problem.  Even though the overall rent was increased from $27,000 to $30,000 in October 2011, it was probably owing to the upward market trend.  Mr Lawrence Cheung’s email dated 6 October 2011 made it clear that the $1,000 concession would only be given until the water seepage problem could be resolved.  The rent under the lease and the concession for water seepage problem were treated separately.

30.I therefore accept the plaintiff’s case that the $1,000 concession was attributable to the water seepage problem.  Also, $1,000 was about 3.7% of $27,000 and 3.3% of $30,000, which was insubstantial and seemingly proportionate to the inconvenience and loss of enjoyment caused by the water seepage problem.

31.I allow the claim of Rent Concession in the total amount of $48,000 in full.

iib.  Vacancy Rent

32.Parties agree on the following market rents for the Property during different periods as set out in the Valuation Report.  I shall adopt the same to assess the Vacancy Rent to be awarded to the plaintiff (if any):

Valuation Periods (1-year interval)		Market Rent (Monthly)
From	To
6 September 2016	5 September 2017	$37,000
6 September 2017	30 August 2018	$38,000
31 August 2018	11 July 2019	$40,000
12 July 2019	29 July 2020	$40,000
30 July 2020	29 July 2021	$36,000

33.The plaintiff claims for the loss of rental income during four periods when the Property was left vacant, namely:

(a)  From 15 February to 12 April 2014 (for $35,000 per month, totalling $70,000) (“2014 Vacancy”);

(b)  From 13 March to 15 September 2016 (for $35,000 per month, totalling $175,000) (“2016 Vacancy”);

(c)  From 15 May to 21 July 2019 (for $40,000 per month, totalling $80,000) (“2019 Vacancy”); and

(d)  From 19 July to 7 August 2020 (for $36,000 per month, totalling $36,000) (“2020 Vacancy”).

34.The plaintiff’s case is that those vacant periods were “unusually long” and were entirely attributable to the water seepage problem.

35.The defendant has raised various challenges for each of the vacant periods, which should be analysed individually.

36.For the 2014 Vacancy:

(a)  The evidence shows that the after the tenancy agreement with Ms Shek expired on 14 February 2014, a joint-inspection of the locations within the Property where water seepage was found took place on 4 March 2014.  Mr So’s evidence was that the exercise did not take place earlier as Ms Shek was not available until then;

(b)  On 14 March 2014, the plaintiff entered in an agreement with a new tenant to lease the Property for $30,000 per month for two years, commencing on 13 April 2014;

(c)  On 15 March 2014, the plaintiff received a quotation for the renovation work for the Property from a contractor;

(d)  On 17 March 2014, the plaintiff paid a deposit to the contractor for the repair work;

(e)  On 26 March 2014, the plaintiff obtained a quotation for extra works which are apparently not related to the water seepage problem;

(f)  On 4 April 2014, the work at the Property was completed;

(g)  On 6 April 2014, the plaintiff and the new tenant executed a tenancy agreement for 2 years commencing on 13 April 2014, with a rent free period from 6 to 12 April 2014;

(h)  Mr So accepted that, after Ms Shek vacated the Property, certain renovation was done to the Property and not all of the work was related to the water seepage problem.  The plaintiff simply took the opportunity to renovate the Property comprehensively rather than simply focusing on the repair work for the water seepage problem;

(i)  The defendant argues that the plaintiff could not prove that the 2014 Vacancy was caused by the water seepage problem, as certain renovation work would be necessary in any event, even if the water seepage problem did not exist.  Also, the two-month period of vacancy was not unusually long;

(j)  I take the view that the water seepage problem has clearly necessitated certain renovation work. Whilst it was agreed by Mr So that the plaintiff took the opportunity to renovate other parts of the Property beyond those affected by the water seepage problem, I do not accept that the water seepage problem did not contribute to the vacancy period;

(k)  I also accept the plaintiff’s argument that the pool of potential tenants who are willing to accept the existence of water seepage within a property (even with a proportionate discount of the rent) would be smaller than the pool of potential tenants for a property without water seepage problem.  Time to locate the former type of tenants and to negotiate for a proper rent with them would be longer than the normal circumstances;

(l)  On the other hand, it would be highly unusual to suggest that, had it not been the water seepage problem, the Property would be rented out immediately after the end of the lease with Ms Shek.  A seamless transition from one existing tenant to another requires matters that would be out of the plaintiff’s control, e.g. the existing tenant fully cooperates with the landlord to allow potential tenants’ inspections before the end of the lease, and the new tenant does not request for any renovation or modification of the property;

(m)  Also, having continuously rented the Property to Ms Shek for at least four years as of 14 February 2014, the Property would naturally have wear and tear that would require certain refurbishment in order to attract new tenants;

(n)  Having considered the actual events during the 2014 Vacancy, I take the view that the water seepage problem had prolonged the vacancy of the Property by 1 month, roughly represented by the time taken for the joint-inspection with Ms Shek to take place and certain extra time needed for renovation specific for water seepage;

(o)  There is no dispute about the market rent of the Property being $35,000 as of the 2014 Vacancy;

(p)  The plaintiff should be awarded $35,000 for the Loss of Rent during the 2014 Vacancy.

37.For the 2016 Vacancy:

(a)  Parties agreed that the market rent of the Property during this period was $35,000;

(b)  The 2016 Vacancy began on 13 March 2016 upon the expiring of the previous tenancy on 12 Mach 2016;

(c)  On 23 April 2016, joint inspection of the Property by court appointed experts took place;

(d)  On 4 May 2016, the plaintiff received (i) two offers from two different real estate agencies at monthly rents of $45,000 and $38,000 respectively, and (ii) a quotation for minor repair work at the Property from the contractor;

(e)  On 19 May 2016, the experts produced a joint report.  Upon the receipt of the joint report, the plaintiff took the view that no additional repair work would be required;

(f)  On 20 May 2016, the plaintiff engaged property agents to lease the Property at the monthly rent of $42,000.  According to Mr So, it was the median of the two offers that the plaintiff received on 4 May 2016;

(g)  On 6 September 2016, the plaintiff entered into a tenancy agreement for the Property with a new tenant at the monthly rent of $35,000 for two years commencing on 16 September 2016.  The new tenant also enjoyed a rent-free period from 6 to 15 September 2016;

(h)  The vacancy between 13 March 2016 and 19 May 2016 occurred as a consequence of the present proceedings, where the defendant’s liability was confirmed in the Judgment.  It was reasonable for the plaintiff to keep the Property vacant pending the finalisation of the experts’ joint report in case any further inspection would be necessary.  The defendant should be liable for the plaintiff’s loss of rent during that period;

(i)  The vacancy between 20 May 2016 and 16 September 2016 would not be as straightforward;

(j)  The plaintiff originally asked for $42,000 per month, which was $7,000 higher than the agreed market rent of the Property at $35,000, i.e. 20% above the market rent.  It was not a realistic gesture even for a starting position for further negotiation. Even though the plaintiff had received from an estate agency a purported offer of as high as $45,000 on 4 May 2016, there is no evidence suggesting that it was a real offer as opposed to a mere attempt by the estate agency to attract the plaintiff;

(k)  There is no evidence as to when did the plaintiff start to reduce the asking rent, or how exactly did the plaintiff came to agree to lease the Property out for $35,000 per month in September 2016.  The only evidence from Ms So was that such figure was proposed by the eventual tenant;

(l)  Having considered the need of certain repair work that arose from the water seepage problem, namely repainting as set out in the contractor’s quotation, and the fact that the number of potential tenants that are willing to rent a property with water seepage problem would be relatively smaller, I find that the water seepage problem had contributed to 1 month’s vacancy of the Property starting from 20 May 2016;

(m)  Therefore, the damage for the loss of rent during the 2016 Vacancy should be $78,750 (i.e. $35,000 x 2.25 months).

38.For the 2019 Vacancy:

(a)  The agreed market rent of the Property during the 2019 Vacancy was $40,000;

(b)  Upon the expiry of the previous tenancy, inspection of the Property on 16 May 2019 revealed damages caused by water seepage at the ceiling as well as the false ceiling at the bathrooms and other parts of the Property;

(c)  Another inspection on 20 May 2019 revealed droplets on the ceiling of the master bedroom;

(d)  On 20 May 2019, the plaintiff engaged three property agents to lease the Property;

(e)  Between early June and July 2019, certain repair work was carried out at the Property, including repainting the ceiling and walls of the entire Property.  Obviously, the main reason for requiring repainting was the water seepage problem.  It is natural that most if not all tenants would not be willing to rent the Property if the damage to the ceilings caused by the water seepage were left completely unremedied.  Even though other repair work was also carried out, there is no evidence that it had prolonged the entire repairing exercise;

(f)  Having considered the need of certain repair work that arose from the water seepage problem, namely repainting as set out in the contractor’s quotation, and the fact that the relatively smaller number of potential tenants that are willing to rent a property with water seepage problem, I find that the water seepage problem had contributed to 1 month’s vacancy of the Property during the 2019 Vacancy;

(g)  Therefore, the damage for the loss of rent during the 2019 Vacancy should be $40,000.

39.For the 2020 Vacancy:

(a)  The 2020 Vacancy only lasted for 3 weeks between 19 July and 7 August 2020, during which the agreed market rent of the Property was agreed to be $36,000;

(b)  Certain repair work, including the repainting of the ceiling which was obviously necessitated by the water seepage problem, took place between 19 and 25 July 2020;

(c)  No other evidence has been adduced as to how the water seepage had contributed to the existence of this period of vacancy;

(d)  Eventually, a new tenancy was entered into on 8 August 2019 for $37,000, which was in fact higher than the agreed market rent of $36,000;

(e)  Given the brevity of the 2020 Vacancy, and the lack of evidence on any actual causation between the water seepage problem and the existence of such brief period of vacancy (which would be within normal expectation of time needed for identifying suitable tenants and conducting negotiations for rent even for properties without water seepage), I do not find that the defendant liable for any of the plaintiff’s loss of rent during this period.

40.In summary, the plaintiff should be awarded a total sum of $153,750 for the loss of rent during the 4 vacant periods.

iic.     Rent Difference

41.The plaintiff claims the difference between the market rent of the Property and the actual rent charged under various tenancies from 2014 to 2020 as follows:

Tenancies		Actual Rent	Market Rent (Agreed)[3]	Total Amount of Difference
From	To
13 Apr 2014	12 Mar 2016	$30,000	$35,000	$120,000
6 Sep 2016	15 Sep 2018	$35,000	$37,000	$48,000
16 Sep 2018	14 May 2019	$38,800	$40,000	$9,600
22 Jul 2019	19 Jul 2020	$38,000	$40,000	$24,000
			Total	$201,600

42.The defendant’s stance is that it is “questionable that the seepage had in fact affected the rental value” of the Property.  The defendant argued that any impact the seepage had on the rental value of the Property would be “minimal” given the “abatement of the seepage over the years”.  The defendant further argued that the lower than market rent was probably owing to gradual deterioration of the Property given the lack of major renovation over the years.

43.I find that the defendant’s arguments are invalid.

44.The market rent as set out in the Valuation Report was based on the assumption that “the interior of the Subject Property is finished [sic] to a reasonable standard and all the main utility services are provided”.  The defendant did not challenge any aspect of the Valuation Report.

45.Also, the defendant had not attempted to demonstrate that the interior of the Property was not furnished to a reasonable standard, so that the actual rent fell below the market rent.  In fact, evidence before me shows that the plaintiff renovated the Property during each of the vacancy periods as analysed in section iib above.  The defendant’s suggestion that the estate agency might not have informed tenants about the water seepage problem is no more than mere speculation.

46.As the evidence stands, but for the water seepage problem, there is no basis to suggest that the Property did not warrant a market rent.

47.In the absence of any proof that the Property’s interior was not furbished to a reasonable standard, the defendant’s suggestion that the tenants had agreed to a below market rent for the Property because of reasons other than the water seepage problem was devoid of any evidential basis.

48.I therefore allow the plaintiff’s claim for the difference in rent in full.

iid.     Total Loss of Rent

49.In summary, the plaintiff should be awarded the following sums for the loss of rent:

(a)  Rent Concession - $48,000;

(b)  Vacancy Rent - $153,750;

(c)  Rent Difference - $201,600; and

(d)  Total - $403,350.

iii.  Labour Costs

50.The plaintiff claims $30,000 as the costs of labour incurred for dealing with the water seepage problem.  Such claim is made on the basis that the plaintiff’s employees needed to deal with the complaints raised by the tenants of the Property about the water seepage problem from time to time, therefore the relevant wages of the plaintiff’s employees should be regarded as a special damage.

51.In the written closing submissions, the plaintiff indicated that it would withdraw the claim of the labour costs if the Court were to grant the general damage $150,000.  For reasons to be detailed below, I will not allow a general damage of as much as $150,000.  Therefore, the plaintiff’s qualified waiver of the claim of the labour costs does not cover the present situation.  I shall proceed to assess this head of the plaintiff’s claim.

52.The amount of $30,000 was calculated on the basis that, on every occasion either Mr So or his colleague Mr Lawrence Cheung (or both) needed to attend to the Property for handling the water seepage problem upon tenants’ complaints, the plaintiff claims a sum of $500 for half a day spent.

53.The defendant disputes the entire claim for the labour costs:

(a)  The main argument was that, given Mr So and Mr Lawrence Cheung were full time employees, dealing with problems of the properties owned by the plaintiff would be part of the regular duty of the plaintiff’s staff, and therefore the plaintiff would not incur extra costs for having to deal with the water seepage problem at the Property;

(b)  The defendant also challenges the basis of claiming $500 for half a day for being arbitrary, particularly when the monthly salary of Mr So was lower than $30,000 at the early stage of his employment with the plaintiff;

(c)  Alternatively, the defendant proposed $20,000 as the labour costs (but did not elaborate on the basis of such sum);

(d)  On the other hand, the defendant did not seem to challenge the accuracy of the records of Mr So and Mr Lawrence Cheung’s attendances to the Property as set out in paragraph 17 of Mr So’s 3^rd witness statement.

54.Having considered the arguments, I award the plaintiff $30,000 for labour costs incurred for dealing with the water seepage problem:

(a)  Even though Mr So and Mr Lawrence Cheung were full-time employees of the plaintiff, it could not be argued that the water seepage problem had no impact on plaintiff’s personnel arrangements or productivity;

(b)  On the contrary, had there not been the water seepage problem, Mr So and Mr Lawrence Cheung could be deployed by the plaintiff for other profitable activities;

(c)  Therefore, the plaintiff is entitled to claim the labour costs arising from the need to handle the water seepage problem;

(d)  As to the quantum of the labour costs, $500 for half a day would give rise to a notional monthly salary of $25,000 (on the basis of 25 working days a month), which is not an extravagant sum;

(e)  Even though there is no evidence of Mr So and Mr Lawrence Cheung’s  respective salaries throughout the material times (except the evidence that Mr So’s current salary is $30,000), I am prepared to accept $500 for half a day as the approximate labour costs incurred by the plaintiff.

iv.  General Damage

55.The plaintiff claims $150,000 as the general damage for the water seepage problem:

(a)  For liability, the plaintiff has cited a number of authorities awarding such damages to a corporate plaintiff;

(b)  For quantum, the plaintiff referred to 方寶儀 v 涵碧別墅業主立案法團 [2023] HKLdT 39 where the Lands Tribunal had awarded $180,000 for water seepage lasting for 10 years.

56.The defendant objects to the claim for general damage, primary on the basis that given the plaintiff was a corporate landlord leasing the Property out for rental income at all material times, the plaintiff had not suffered from any inconvenience and/or discomfort.  Therefore, the bases for an award of general damage have not been established.  The defendant relied on Putai Limited v Yau Lee Ho, DCCJ 2666/2013, unreported, dated 19 December 2017, §§58 & 60 to support her argument.

57.General damage of nuisance is to compensate the plaintiff for any inconvenience and discomfort that it has suffered as a result of the water seepage.  It is not a penalty. 

58.On the facts of the present case, since the plaintiff acquired the Property in 2009, it was always leased out (subject to the vacancy periods between leases as already analysed above).  The plaintiff only owns the Property for investment purpose and never actually enjoyed it physically (eg by allowing its directors or employees to use the Property as their residence).  Also, the plaintiff has been awarded for (i) the Loss of Rent, and (ii) the Labour Costs which reflected the time and the notional salary for its staff to deal with the water seepage problem. Prima facie, the plaintiff’s inconvenience and discomfort has been compensated by the special damages one way or another, as the loss suffered by the plaintiff was economic in nature and has been quantified under the special damages.

59.The plaintiff argues that a corporate plaintiff should still be entitled to a general damage even though the Property was rented out at all times, such that the plaintiff had never enjoyed the Property physically.  The authorities that the plaintiff cited in support of such proposition were Top Victory (Asia) Limited v Kong Shui Sun [2023] HKDC 1697; Century Way Investment Limited v Willbert Limited, DCCJ 3710/2013, unreported, dated 23 December 2016; Crystal Bright Holdings Limited v Allen Industries Limited, DCCJ 2815/2015, unreported, dated 5 June 2017; and Rainbow More Limited v The IO of the Arcadia [2018] HKLdT 30.

60.The cases of Crystal Bright Holdings Limited and Rainbow More Limited are distinguishable from the present case.  They both involved corporate owners which actually enjoyed the subject properties.

61.In Crystal Bright Holdings Limited, the subject property was used by the plaintiff therein as its own warehouse.  The water seepage problem actually required its staff to take remedial measures which affected the said plaintiff’s operation.  Unlike the present case, no labour costs were claimed by the corporate plaintiff, which only claimed general damage.  Such difference was perhaps owing to the fact that it would be difficult for the plaintiff in Crystal Bright Holdings Limited to precisely estimate the actual labour costs incurred in dealing with the water seepage problem, whilst the plaintiff herein could do so given the good record kept by Mr So and Mr Lawrence Cheung, and the manner in which the Property was owned and managed by the plaintiff as a professional landlord.

62.In Rainbow More Limited, the subject property was used by the sole director of the corporate plaintiff therein as the family residence.  In those cases, no loss of rent was claimed as the subject properties were actually enjoyed by the corporate plaintiffs.

63.The Court in Toy Victory (Asia) Limited allowed a corporate plaintiff to claim both rental loss and general damage.  In coming to that ruling, the Court relied on Crystal Bright (already distinguished above), Century Way Investment Limited, Well Force Co Ltd v Boomway (Hong Kong) Ltd HCA 4480/1994, unreported, dated 7 July 1998, and Gwong Leung Property Holdings Ltd v Wong Kwok Tsoi [2022] HKDC 946.  Gwong Keung Property Holdings Ltd in fact also referred to Crystal Bright, Century Way Investment Limited and Well Force Co Ltd.

64.Similar to Rainbow More Limited, the subject property in Well Force Co Ltd was enjoyed by the sole director of the corporate plaintiff and his wife as their residence.  No claim for loss of rent was made at all.

65.In Century Way Investment Limited, a corporate plaintiff was awarded damages for the loss of rent as well as general damage for inconvenience and discomfort.  Two features of the said judgment are noteworthy:

(a)  First, the defendant did not dispute its liability for general damage.  Therefore, the Court had only spent three paragraphs on the assessment of general damage;

(b)  Second, the Court had referred to a number of authorities for the quantum of general damages, but all of those authorities only concerned personal plaintiffs who actually enjoyed the property personally.  None of them involves any claims for loss of rent.

66.In summary, unlike the present case, the issue of double-compensation was not argued thoroughly (if at all) in the authorities analysed above.

67.What appears to be problematic in the plaintiff’s claim of general damage was not the fact that it was a corporate owner.  Rather, it was the fact that the Property was always leased out.  The discomfort and inconvenience caused by the water seepage problem have both been compensated in the form of the Loss of Rent (which encompassed the vacancy rents arising from the delays in rent the Property out as well as the diminishment of its rental value) and the Labour Costs incurred for handling the problem.

68.Having said that, I take the view that the exceptional durability of the water seepage problem, which was substantially contributed by the defendant’s persistent failure to carry out the necessary repair work, must have caused extra inconvenience to the plaintiff which were not yet compensated by the Labour Costs.  The negotiation with potential tenants would be more complicated and time consuming, and the recurrent need to handle the water seepage problem must have caused inconvenience to the operation of the plaintiff that is yet to be reflected by the Labour Costs alone.  I therefore assess the general damage compensating such extra inconvenience to be $30,000.

Disposition

69.For reasons above, I award the following damages to the plaintiff:

Head of damages	Amount
Pre-2016 Repair Costs	$63,968
Post-2016 Repair Costs	$25,188
Loss of Rent	$403,350
Labour Costs	$30,000
General Damage	$30,000
Total	$552,506

70.To avoid the complexity of adopting a different start-date for each head of damages, both parties agreed that, subject to one caveat by the defendant, the pre-judgment interest should run on the entire sum that has been awarded herein from 1 January 2016, which was the approximate middle-point between the beginning of the water seepage and the trial.  The defendant’s caveat was that there was a delay of setting the matter down for trial by 1 year 8 months, which was the period between the date of the final expert report (January 2020) and the actual setting down of the matter for trial in September 2021.  I do not find such delay a sufficient reason to delay the running of interest:

(a)  The plaintiff explained that the delay in setting the matter down for trial was owing to the fact that the water seepage problem was subsisting even after the final expert report was circulated.  Therefore, it would be prudent to wait for another period to make sure that no further actions were required before the matter was set down for trial;

(b)  It is unfortunate and unsatisfactory that, notwithstanding the Judgment being granted in 2017, the defendant had not taken any substantive steps to cure the water seepage problem;

(c)  Given the continuing nature of the problem, the plaintiff’s decision to wait for another period before the matter was set down for trial was totally reasonable;

(d)  Also, both parties have the conduct of the proceedings.  There is no evidence that the defendant had pushed for setting the matter down for trial.  It is not open to her to blame the plaintiff for the delay;

(e)  Therefore, I reject the defendant’s complaint about the delay in setting the matter down for trial, and order that pre-judgment interest should start to run on 1 January 2016 on the whole sum awarded above, at 1% above the HSBC HKD Prime Rate effective from time to time.

71.As to costs of the proceedings, both parties agreed that the costs of the trial and all reserved costs should be to the plaintiff with certificate for one counsel.  I make the same order for costs accordingly.  Out of abundance of caution, such costs order is made on a nisi basis.

Mr Wong Paul, instructed by Ong & Chung, for the plaintiff

Miss Leung Pauline, instructed by Lam and Lai, for the defendant