Li Yen Tung and Another v. K.N. Textile Ltd

HCA000395/2002

HCA 395/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 395 OF 2002

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Coram: Recorder Ronny Wong, SC in Court

Dates of Hearing: 18 - 21 and 24 May 2004

Date of Judgment: 15 July 2004

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J U D G M E N T

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The Golden Bear Industrial Centre

1.Golden Bear Industrial Centre ("Golden Bear") is an industrial building located in Tsuen Wan. The 1st Plaintiff is the owner of Workshops E, F, G and H on the 5/F. The four units have a total floor area of about 1260 square metres. At all material times, the 1st Plaintiff retained Workshops G and H for his own use.

2.The 2nd Plaintiff is an import and export trader of artificial flowers. It used to own a factory called Forerunner Fabric Flower Factory which was closed down in 2002. The 2nd Plaintiff is the owner of Workshop G on the 8/F of Golden Bear.

3.Since March 1999, the 2nd Plaintiff obtained a licence from the 1st Plaintiff to use Workshops E and F on the 5/F.

(a) Through its agent the 1st Plaintiff also granted a tenancy in favour of the 2nd Plaintiff in respect of Workshop E on the 5/F for two years from 1 October 2001 to 30 September 2003 at a monthly rent of $7,000. This tenancy was renewed for a further term of one year from 1 October 2003 to 30 September 2004 at the same rent.

(b) The 1st Plaintiff through the same agent granted a tenancy in favour of the 2nd Plaintiff in respect of Workshop F on the 5/F for a two years' term between 1 April 2001 to 31 March 2003 with rent at $7,000 per month. There was no renewal of this tenancy after its expiration.

4.The 2nd Plaintiff used Workshop G on the 8/F as its office and Workshops E and F on the 5/F for storage. As the 1st Plaintiff spent most of his time outside Hong Kong, the 2nd Plaintiff kept all the keys to Workshops E, F, G and H on the 5/F.

5.The Defendant manufacturers denim and other cloth. It is the owner of Workshops E, F, G and H on the 6/F of Golden Bear. It went into occupation in 1994 and carried out its weaving operations in those units.

6.The 1st and 2nd Plaintiffs are claiming damages against the Defendant in respect of :

(a) damage done to the 1st Plaintiff's Workshops and to the 2nd Plaintiff's goods by blue cotton fluff blown from the Defendant's Workshops on the 6/F to the Plaintiffs' Workshops on the 5/F.

(b) damage done to the 1st Plaintiff's Workshops and to the 2nd Plaintiff's goods by water seeping from the Defendant's Workshops to the Workshops of the Plaintiffs.

(c) the 2nd Plaintiff's loss of use of Workshops E and F.

The blue cotton fluff

7.By letter dated 21 April 1999, the Incorporated Owners of Golden Bear Industrial Centre ("the Incorporated Owners") wrote to the Defendant indicating complaints had been received from Workshops D and E on the 3/F of substantial accumulation at the rear staircase of cotton fluff that came out from the Defendant's units. The Defendant was asked to close its doors at the rear staircase and to direct its staff to clean the fluff so accumulated.

8.The 2nd Plaintiff first raised its complaint with the Incorporated Owners by letter dated 8 December 2000. The 2nd Plaintiff pointed out that the fibre and dust pollution in Workshop E on the 5/F was getting more serious. The 2nd Plaintiff threatened to report the matter to the Authorities should the Incorporated Owners fail to take appropriate action. The Incorporated Owners wrote to the Defendant on 28 December 2000. They invited the Defendant to take various remedial steps. They urged the Defendant not to use high pressure hose to discharge cotton fluff from its windows.

9.The Government took action in March 2001. By letter dated 6 March 2001, the Food and Environmental Hygiene Department directed the Incorporated Owners to clean the landings and the external walls between the 4/F and 22/F. The Incorporated Owners complied with this notice on 30 April 2001. The costs involved were shared amongst various weavers in Golden Bear including the Defendant.

10.The 28 December 2000 letter from the Incorporated Owners to the Defendant did not produce the desired effect. By letter dated 14 August 2001, the Incorporated Owners drew the Defendant's attention to the severe pollution in the lift lobbies and the stairs and reiterated the remedial steps which the Defendant ought to take.

11.Sometime in August 2001, the Defendant installed two large exhaust fans on the 6/F. The first exhaust fan was installed at Workshop C on the 6/F facing Workshop F on the 5/F. The second exhaust fan was installed at Workshop D on the 6/F facing Workshop E on the 5/F.

12.By letter dated 29 August 2001, the 2nd Plaintiff complained to the Incorporated Owners that their storage in Workshop F on the 5/F was severely polluted resulting in serious damage to their goods. The Plaintiffs threatened to institute proceedings should they receive no satisfaction. The letter came to the attention of Mr Lee Pui Kam ("Mr Lee"), the supervisor of the Management Office in Golden Bear. According to the notation of Mr Lee on this letter, he notified Mr Wong Miu Hing ("Mr Wong") of the Defendant at 10:50 on 30 August 2001 and Mr Wong promised to arrange workers to clean the affected unit once. Mr Wong says he visited Mr Wei Chin Chih ("Mr Wei"), director of the 2nd Plaintiff, together with Mr Lee. All the Defendant's workers were then committed to meet a delivery deadline. He promised Mr Wei to clean his unit after completion of delivery in several days' time.

13.No cleaning of the 2nd Plaintiff's Workshop was done by the Defendant prior to the 2 or 3 September 2001. Severe water damage occurred in the 2nd Plaintiff's Workshops in early September 2001 as further described below.

14.By letter dated 3 September 2001, the 2nd Plaintiff renewed its complaints about pollution in Golden Bear. The 2nd Plaintiff urged the Environmental Protection Department and the Incorporated Owners to take action. Mr Wei further sought the support of the Press and his District Council. By letter dated 27 September 2001, the Food and Environmental Hygiene Department confirmed that their inspection on 11 September 2001 revealed fluffy materials covering the external walls and the landings at blocks C, D, E and F and they had served notice on the Incorporated Owners directing cleaning of the external walls.

15.The Environmental Protection Department provided Mr Wei with an update on 15 October 2001. They pointed out that the Defendant had installed two exhaust fans in August but such installations failed to alleviate the pollution problems. They served notice on the Defendant for the installation of filters and their inspection on 12 September 2001 indicated that the Defendant had complied with such notice.

16.The 2nd Plaintiff complaints continued. Mr Wei wrote to the Food and Environmental Hygiene Department on 16 November 2001. He pointed out that Workshops E and F on the 5/F were still severely polluted. He invited that Department to visit those units for confirmation.

17.On 10 May 2002, the Incorporated Owners issued another warning letter to the Defendant asking the Defendant to take immediate measure to curb the flow of fluffy materials.

18.On 2 November 2002, the 2nd Plaintiff engaged Wai Hong Cleaning & Pest Control Co. Ltd. ("Wai Hong") to clean up Workshops F, G and H "so that they can be used again". Wai Hong was paid $5,800 for their work. No cleaning was done to Workshop E. According to Mr Wei that was reserved for storage of their damaged goods as evidence.

Water Seepage

19.Golden Bear is an old industrial building. It was designed in such a way that the drainage pipes of the 6/F were installed at the ceiling of the 5/F.

20.According to Mr Lee, in May 2001 he received complaints from Mr Tsui of Workshop G on the 4/F about water seeping into his unit. He went to Workshop G on the 5/F with Mr Tsui and Mr Wei and they found water on the ceiling, the walls, the parapet and near the door of the toilet for that Workshop. Their investigation of Workshop G on the 6/F revealed no trace of water. Mr Wei said he would conduct further inquiries.

21.By letter dated 24 May 2001, Mr Wei informed the Incorporated Owners that the water supply to Workshop G on the 5/F had long been severed. His investigations revealed that water was seeping down from the 6/F and the water affected the ceilings and walls of the corresponding 4/F and 5/F units leading to complaints by the former. The Incorporated Owners was asked to take action vis-a-vis the 6/F.

22.According to Mr Wong, the Defendant received a further complaint of water seepage from Mr Wei on 3 September 2001. He went to the 5/F and found part of Workshop E and a small portion of Workshop F submerged by water which he estimated at 1 cm thick. The water emanated from the pipes in the female toilet in Workshop E. The water from those pipes got into Workshops E and F.

23.According to Mr Lee, the connection joint of the drainage pipe for the 6/F had broken and large quantity of water was flowing down from that damaged joint. A substantial part of Workshop E and two of its toilets were affected. The goods stored in the Workshop were also wetted. Mr Wong gave instructions to his worker to stop using water in Workshop E on the 6/F. The flow of water subsided as a result of those instructions. He subsequently received a call from Mr Wong who complained that Mr Wei refused to give him access to effect repairs and to clean up the affected areas. He telephoned Mr Wei on 4 September 2001 seeking to make an arrangement for such cleaning up. This was declined by Mr Wei who indicated that cleaning had to be deferred as he was taking steps to formulate his claims.

24.The Defendant engaged a contractor Ngan Po Shu to carry out the repairs. By a receipt dated 10 September 2001 addressed to Workshop F on 6/F, Ngan Po Shu acknowledged payment for $600 to replace a section of pipe in the toilet.

25.On 6 November 2002, Mr Wei on behalf of the 1st Plaintiff complained to the Incorporated Owners about water leakage in the toilet in Workshop G on the 5/F. According to the photographs taken on that occasion, water marks can clearly be seen from the worn out pipes. The Defendant again engaged Ngan Po Shu to carry out repairs. According to a receipt dated 7 November 2002 addressed to the Defendant at Workshop G on the 6/F, Ngan Po Shu was paid $1,200 for replacing a section of toilet pipes from the ceiling to the external wall.

The surveyors (structural)

26.The 2nd Plaintiff engaged Asia Pacific Adjusters Limited ("Asia Pacific") on 3 September 2001. They inspected the Plaintiffs' Workshops on the same day. According to their first report dated 12 September 2001, they observed a large quantity of fluff having been accumulated on the windows, fire exit doors and staircases of Workshops E and F. The plaster and painting of the ceiling slabs in the eight toilets in Workshop E and F were all soaked by water which percolated from the floor above. There were signs which indicated a large volume of water coming down from the ceiling slab of Workshop E.

27.The Plaintiffs further engaged Messrs Chan, Kan & Associates Ltd. to advise them on the water seepage problems. Mr Kenneth C Y Kan ("Mr Kan") was the director of Messrs Chan, Kan & Associates Ltd in charge of this assignment. Mr Kan is a Registered Architect. He obtained his professional qualifications in 1971. He had been involved as an expert in twenty to forty cases. He visited the Plaintiffs' premises on 17 November 2001 and produced a report dated 21 December 2001. According to his evidence before me :

(a) In relation to Workshop E

(i) He pointed out that a large exhaust fan was found installed at the external wall of Workshop D on the 6/F opposite Workshop E.

(ii) He observed fluffy materials having been accumulated on the windows and the external walls. The walls and the goods therein were totally dusted with blue coloured fluff.

(iii) He opined that the male and female toilets in that Workshop were in a very dilapidated state. He drew attention to stalactites that were found hanging from the bottom of the P.V.C. drainage pipes at high level of the toilets. He said that was concrete evidence of water seepage from above.

(iv) He adverted to a large patch of blue water stain mark on the floor. He pointed out that above the water stained area, there were water stains evidencing water had seeped down from the floor above.

(b) In relation to Workshop F

(i) He pointed out that a large exhaust fan was installed at the external wall of Workshop C on the 6/F opposite Workshop F.

(ii) He found a substantial quantity of blue fluffy materials in this Workshop.

(iii) The male and female toilets in this Workshop were in a very dilapidated state.

(iv) He found a large patch of blue water stain mark in this workshop but he cannot find corresponding stain mark. He concluded that flooding could only be due to water seepage from above.

(v) He found a box of deer horns in this Workshop "stained with water, and moulds were formed on the horns".

(c) In relation to Workshop G

(i) He found this Workshop to be reasonably good and tidy.

(ii) He said that "there were evidences that the toilets, the corridor and lobby nearby had been subjected to water seepage from the toilets on the 6/F". He drew attention to water stain marks; spalled concrete; rusted reinforcement bars; cracked plaster and peeling off paint work. He placed reliance on his Photo 26 showing exposure of rusted reinforcement bars. He said the rusting was due to long term presence of water. He also placed reliance on his Photo 29 in relation to a corner of the walls near the female toilet. He said he touched the wall and the plaster was chalky and the chalked plaster was due to long term water seepage. He was of the view that water seepage was the main contributing factor to these conditions.

(d) In relation to Workshop H

(i) He said the conditions of this Workshop were similar to Workshop G.

(ii) He pointed out however that water stain marks and cracked plaster were found at random at the ceiling and beams of this Workshop. He said he touched the water stain mark as shown in Photo 33 of his report. He said the mark was a water stain mark because of long drip on the beam.

(iii) It was pointed out to him that the toilets in Workshop H on the 6/F had been converted into a mechanic's store in 1994. He conceded that with such conversion the water seepage should not have happened.

28.The Defendant called Mr David Chan ("Mr Chan") of Wellgo Archdecor Consultancy Limited. Mr Chan is a Registered Professional Surveyor. He attained that status in January 1997. Mr Chan produced two reports. According to his first report dated 8 May 2002, he was asked to comment on the likely cause of water seepage and concrete spalling problems. His first report is, however, in essence a commentary on Mr Kan's report of 21 December 2001. Mr Chan's second report was dated 6 June 2003. It was an update on the conditions of the Plaintiffs' premises. According to the evidence of Mr Chan :

(a) He carried out his inspection on 4 May 2002 and 14 April 2003.

(b) In relation to Workshop E

(i) He agrees with Kan that the presence of stalactites is "concrete evidence" of long term water seepage. During his inspection he could see water dripping from the stalactites at the rate of approximately 20 to 25 seconds per drop.

(ii) He is of the view that there are two contributing factors for the very dilapidated state of the toilets in the Workshop. He reckons that natural deterioration of the concrete structure coupled with lack of proper maintenance by the Plaintiffs over a considerable period of time account for 70% to 80% of such conditions. He would allow 20% to 30% for "adverse aggravation by water seepage from the Defendant's premises".

(iii) In relation to the large patch of blue water stain mark in this Workshop, he accepts that there is a good possibility that the same could have been caused by water seepage from 6/F.

(c) In relation to Workshop F

(i) As far as the state of the toilets in this Workshop is concerned, he holds the same views as those applicable to the toilets in Workshop E.

(ii) He commented on the water stains on the floor of Workshop F. He said corresponding water stain mark on the ceiling slab could not be found. He is of the opinion that there exists a possibility that the mark might be due to some other incidences and not to water seepage from the 6/F. He said the possibility of water going from Workshop E to Workshop F is very low. The distance between water patches was about 8 meters. If the water patches in Workshop F were caused by water from Workshop E then the space in between should have been affected as well. There is also a partition wall in between the two Workshops.

(d) In relation to Workshop G

(i) He modified the weightings between natural deterioration and water seepage for the conditions of the toilets in Workshop G. He is of the view that the weightings for water seepage could be reduced to 10% to 20%.

(ii) In relation to the walls near the female toilet as depicted in Photo 29 attached to Mr Kan's report, Mr Chan said he touched the upper parts of this corner and they were dry. He is of the opinion that there is a good possibility that the condition of those walls was due to water seepage from the toilet floor slab located behind the wall corner and not to water seepage from above. He also expressed the view that such damage might have been caused by water being soaked up and not to water flowing down from the ceiling.

(e) In relation to Workshop H

(i) Mr Chan is of the view that a good majority of the alleged water stains found on the 5/F ceiling soffit and/or beam soffits above the main workshop area should in fact be "oil stains". He says water stain marks are subtle and not rich in tone. The marks in question have glossy or glaring surface.

(ii) He did not however investigate as he had no instruction to do so.

29.Mr Kan and Mr Chan are ad idem in relation to Workshop E. They differ as to the cause of the water damage in Workshops F and G. Mr Chan is not prepared to accept any water damage in Workshop H at all. In support of their case, the Defendant placed considerable reliance on the fact that they had converted all the toilets in Workshops F and H on the 6/F into electrical switch room, staff rest room and mechanic's store. The female toilet in Workshop G on the 6/F had also been converted into a workshop office.

30.I am of the view that the root of the water seepage problem lies in the pipes which serve the 6/F but which are located on the 5/F. As indicated by paragraph 6 of the Closing Submission of Miss Saing, Counsel for the Defendant, the Defendant accepts that they are the owner of those pipes. It is their obligation to maintain those pipes and prevent water seeping from those pipes into the premises of the Plaintiffs.

31.In relation to Workshop F on the 5/F, I find in favour of the Plaintiffs. The receipt issued by Ngan Po Shu was addressed to Workshop F on the 6/F and the $600 was for replacement of pipes in the toilet. I infer therefrom that despite the conversions in Workshop F on the 6/F, the pipe works were still in use. Their conditions led to the water stain marks and spalling concrete as shown in Photos 8 and 9 annexed to the report of Mr Kan. As far as the water stain marks on the floor of Workshop F are concerned, I have the benefit of the evidence of Mr Wong. He admits in paragraph 9 of his statement that on 3 September 2001 water flowing from the pipes in the female toilet in Workshop E on the 5/F got into the storage areas of Workshops E and F. Despite the theoretical arguments of Mr Chan, I prefer the first hand evidence of Mr Wong.

32.In relation to Workshop G on the 5/F, complaints were raised on 24 May 2001 and 7 November 2002. There was only partial conversion of the toilets in Workshop G on the 6/F. Ngan Po Shu repaired the pipes on the latter occasion. I am of the view that the failure of the Defendant to maintain the pipes accounted for the conditions of the ceiling in the male and female toilets in Workshops G on the 5/F as shown in Photos 24 to 27 of Mr. Kan's report. The water dropped onto the floor and spilled out onto the corridor in front of the female toilet. The corner of the walls soaked up the spillage resulting in the conditions as shown in Photo 29 of Mr Kan's report.

33.I have much greater difficulty with Workshop H. Given the conversions in Workshop H on the 6/F and having regard to the conditions of the ceiling in the toilets as depicted in Photos 30 to 32 of Mr Kan's report, I am not persuaded that water seepage as opposed to natural wear and tear was responsible for such conditions. As far as the remaining water marks are concerned, I find both Mr Kan and Mr Chan to be competent professionals who took care in the preparation of their reports. I am driven in the end to prefer the evidence of Mr Kan as Mr Chan's instructions were somewhat restrictive. He did not investigate whilst Mr Kan touched the marks and confirmed those as water marks. According to Mr Wong, the Defendant cleaned the factory floor on the 6/F every two days. It is likely that water used in such exercise resulted in those water marks.

Plaintiffs' claim for damage to structure and equipments

34.The Plaintiffs and the Defendant jointly instructed Widnell Limited ("Widnell") on the quantum and costs of various re-instatement or repairs works for workshops E, F, G and H on the 5/F. Widnell's estimates may be summarized as follows :

35.Item 1 - Rectify, replace or remove defective pipeworks :

(a) It is not easy to see the legal basis for this claim. The pipes in question belong to the Defendant. Miss Saing took no point against this claim. I presume her tacit concession rests on her client's failure to maintain those pipes resulting in the Plaintiffs doing their work.

(b) Given my findings in paragraph 33 above, I make no award in relation to Workshop H on the 5/F.

(c) The Defendant did not challenge the rates of Widnell. I therefore allow $3,000 for each of Workshops E, F and G making a total of $9,000.

36.Item 2 - Repair spalled concrete ceiling soffit and beams :

(a) Mr Chan challenged the estimates of Widnell. Widnell adopted as their starting point the unit rate of $2,000 per square metre including making food surfaces. After applying that unit rate to the area involved, Widnell added an additional sum to the resultant figure for making good surrounding area. Given the all in approach of Widnell, Mr Chan opined that there is no justification of such addition. I accept the challenge of Mr Chan.

(b) My award under this item is

(i) $7,200 for Workshop E (3.6 m² @ $2,000 per m²)

(ii) $20,000 for Workshop F (10 m² @ $2,000 per m²)

(iii) $21,000 for Workshop G (7.5 m² @ $2,000 per m² and 6 isolated patches @ $1,000 each)

(iv) $5,000 for Workshop H (5 isolated patches @ $1,000 each)

(c) My total award under this item is $53,200.

37.Item 3 - Replace defective toilet doors :

(a) I do not know the basis of the Plaintiffs' claim for such replacement.

(b) There is no evidence before me to indicate that these toilet doors were damaged by water seepage. Mr Kan made no observation on the doors shown in Photo 8 and Photo 16 of his report.

(c) There is also no evidence indicating these doors being affected by the blue cotton fluff.

(d) I disallow all claims under this item.

38.Item 4 - Replace defective sanitary fitments :

(a) There is no evidence to suggest any of the Plaintiffs' sanitary fitments were damaged by water seepage. Mr Kan said in his report that the "sanitary fitments were all dusted with blue coloured fluff". Photo 9 and Photo 14 attached to his report indicate that the toilets were filthy. I am unable to conclude from those photos that "water pipes and basins were choked" as pleaded in paragraph 5 of the Re-Amended Statement of Claim.

(b) Photos 10 and 11 attached to Mr Kan's report show the urinal and hand basins in Workshop F being covered by blue coloured fluff. As a result of the cleaning by Wai Hong on 2 November 2002, their conditions as depicted in Photos dated 21 November 2002 were much improved.

(c) I am not persuaded that water seepage or cotton fluff caused any damage to the sanitary fitments. I disallow all claims under this item.

39.Item 5

(a) I allow $4,000 for item 5.1 - Repair loosened plaster of female toilet in Workshop F;

(b) I allow $3,000 for item 5.2 - Make good water patches to floor outside male toilet in Workshop G;

(c) I also allow $3,000 for item 5.3 - Make good the defective wall plaster at the bottom to the wall of female toilet in Workshop G;

(d) I therefore allow a total of $10,000 for items 5.1 to 5.3 as loss arising from water seepage.

40.Item 5.4 and 6 :

(a) The 2nd Plaintiff did not have Workshop E cleaned by Wai Hong on 2 November 2002 as they wanted to use that Workshop for storage of the damaged items as proof of their claims. This is not a reasonable attitude to take. The goods were surveyed by loss adjusters. They should have taken steps to dispose of the same. In the end not one item was tendered as evidence before me.

(b) The 2nd Plaintiff is however entitled to have Workshop E cleaned. Wai Hong did a satisfactory job for Workshops F, G and H at $5,800. I am of the view that an award of $3,000 is adequate under this head.

41.In relation to what I would loosely term as "structural damage", my total award in favour of the 1st Plaintiff is $72,200 ($9,000 under paragraph 35 + $53,200 under paragraph 36 + $10,000 under paragraph 39). The award in favour of the 2nd Plaintiff is $3,000 (under paragraph 40).

Damage to goods

42.Asia Pacific produced a second report dated 26 March 2002. They referred to the following eight items of goods and chattels that were allegedly contaminated by water or fluff.

Asia Pacific expressed the opinion in their second report that "the above damaged properties necessitated repacking and cleaning, etc due to fluff and water contamination".

43.The Defendant engaged McLarens Toplis ("McLarens") to report on the alleged damaged goods. McLarens was provided with a copy of Asia Pacific's 2nd report. They inspected the alleged damaged goods on 23 April 2002. According to their report dated 2 May 2002 :

(a) "... the powder like cotton fluff and/or dust scattered on the outer surface of the goods of item Nos. 1, 2, 3, 5, 6, 7, & 8 could be wiped off with cleaning clothes and/or removed by using vacuum cleaner."

(b) "for those affected goods in the torn polythene sleeve/polybags if any, could be cleaned by washing".

(c) any orchid (Item 4) "in the wet damaged cartons/boxes proven to be affected could be sorted out and required further reconditioned work accordingly".

44.Asia Pacific's schedule referred to in paragraph 42 above was incorporated into the Plaintiffs' Amended Statement of Claim dated 6 September 2002. Amongst the documents placed before me is a schedule of loss dated 11 November 2002. According to that schedule, the Chemical (Item 1) and the Flower Pot (Item 2) were cleaned and found still capable of being used. Those two items were therefore deleted. The remaining claims amount in total to HK$1,173,175.24.

45.The Plaintiffs did not call any representative from Asia Pacific. The Defendant called Mr Lam Kar Chi who signed the report on behalf of McLarens. He did not visit the Plaintiffs' premises to inspect the alleged damaged goods. He has no first hand knowledge on the state of the damaged goods. I do not find any assistance from his testimony.

46.At the trial before me, Mr Leung, Counsel for the Plaintiffs, sought to produce in stages a substantial amount of new documents ("the Belated Documents") to substantiate the remaining six items. The Belated Documents comprise of invoices, packing lists and other photographs of the items in question. Two additional statements, one from Mr Wei and another one from Mr Li Kai Shing ("Mr Li") of Asia Pacific were tendered in order to explain these Belated Documents and to outline the Plaintiffs' case on the six heads of claims. According to Mr Li, the Belated Documents were provided by Mr Wei to Asia Pacific for them to arrive at the value set out in their 2nd report. The Defendant did not relish the prospect of any further adjournment to tackle the Belated Documents. They withdrew their opposition to these Belated Documents and invited me to note the impact of the Belated Documents particularly on the question of costs.

47.Item 3 - Polyester fabric

(a) In respect of this item, the amount claimed in the Amended Statement of Claim was US$54,469.47. This was reduced by an amendment at the trial to US$43,872.47.

(b) According to the Belated Documents, the claim relates to thirty-two types of fabrics. Invoices going as far back as 1994 were produced evidencing the shipment of the fabrics to Forerunner Fabric Flowers Factory. Not every type of fabrics has a corresponding invoice.

(c) According to Mr Wei, the fabrics were used for the 2nd Plaintiff's silk flower trade. The fabrics cannot be used for the production of clothing. The fabrics were damaged by blue cotton fluff. Although the fabrics were packed the fluff managed to infiltrate into the fabrics. The damage was not discernible to the eyes but was apparent when the fabrics were dipped in water during the dyeing process. The presence of the blue cotton fluff affected the dyeing of the fabrics. His workers could not obtain the colour desired. Dark fabrics were more severely affected than others. He conducted tests to demonstrate such damage to Asia Pacific. He does not know why such test results were not included in Asia Pacific's report.

(d) This case of Mr Wei manifested for the first time in the course of his evidence before me. I have borne in mind its inconsistency with the 2nd report of Asia Pacific. I am however impressed by Mr Wei as a witness. Given the amount of details in this case, the 2nd Plaintiff's advisers simply did not pay enough attention to the interests of their clients.

(e) I accept the evidence of Mr Wei and Mr Li that the relevant invoices were provided to Asia Pacific and the same were accepted by them as illustrative of the value of the fabrics which they surveyed. Whilst some of the items are not backed by corresponding invoices, Asia Pacific must have taken the other invoices into account to pitch the value of those items.

(f) I am prepared to allow the 2nd Plaintiff's claim under this item in full. I award in its favour the sum of HK$342,205.26 (US$43,872.47 x 7.8). Given the reduction of the original claim, I accept that the remaining fabrics has no resale value.

48.Item 4 - Orchids

(a) The orchids in question were packed in cartons. They suffered water damage as a result of the incident in early September 2001. The flowers were coated with glues and powder. Blue stains emerged on the flowers probably as a result of the blue cotton fluff.

(b) The 2nd Plaintiff's claim is supported by an invoice dated 26 July 2001 from Forerunner Floral Limited to a company by the name of Renaissance 2000 in the States. The invoice was for the sum of US$22,272 which is the amount claimed under this head. The invoice was for a total of ninety-seven cartons of artificial polyester flowers. Mr Wei explained that this is referable to the damaged orchids. Renaissance ordered a total of one hundred cartons. He was awaiting the remaining three cartons when the ninety-seven cartons stored were damaged in early September 1997. He refuted the suggestions of the Defendant that the orchids were rejects due to inherent defects. He tried to sell these to others but no one would have them.

(c) I accept Mr Wei's evidence. This invoice is good evidence of the then market value of these orchids. I award HK$173,721.60 (US$22,272 x 7.8) in favour of the 2nd Plaintiff.

49.Item 5 - Furniture

(a) This involves 121 pieces of furniture and the 2nd Plaintiff claims HK$37,430.

(b) According to McLarens, the 121 pieces were scattered with free float powder like fluff and/or dust on outer surface. Mr Wei said that the leather and the fabrics were severely polluted. An individual sitting on such furniture would be affected by the colour. It was impossible to rectify the defects. He could not resell the items in question. The claim is his estimate based on half the market price for the furniture as new.

(c) I have considered the photos in relation to this item. I am of the view that the items in question have some resale value. I would estimate that at HK$5,000. I therefore reduce the amount claimed from HK$37,430 to HK$32,430.

50.Item 6 - Clothing

(a) This is the largest single item amongst the 2nd Plaintiff's claim. The amount claimed is HK$507,206.60. It relates to twenty cartons of clothing at HK$296,422; forty-nine rolls of fabrics for clothing at HK$48,562.60 and twenty bags of clothing at HK$162,222.

(b) According to Mr Wei, these items stand in the same position as the polyester fabrics. Whilst they were stored in plastic bags, they were found contaminated when taken out of the bags. Spots were found on the clothing. He did not try to wash them. He offered them in the market but the price offered was very low. He did not identify the price so offered.

(c) This claim is supported by various invoices amongst the Belated Documents. The invoices (dated between 1993 to 1995) were addressed to "Mona" and "Passion". No explanation has been given to me as to their relationship with the 2nd Plaintiff. It would appear that the 2nd Plaintiff simply extracted the unit price from these invoices as the market price in 2001.

(d) I adopt the same approach for the forty-nine rolls of fabrics as the approach I used for the polyester fabrics. They were stored awaiting further processing. In their raw state, they retain their value. I am prepared to make a provisional allowance of HK$48,562.60 for the forty-nine rolls of fabrics.

(e) I am of the view that the clothing stands on a different footing. Clothing produced in 1993 would be grossly out of date in 2001. Doing the best I can, I would allow HK$152,881.33 being a third of the total of HK$296,422; and HK$162,222.

(f) The total for the fabrics and clothing in their undamaged state would be HK$201,443.93. According to the evidence of Mr Wei, they did have some resale value. Bearing that factor in mind, I allow HK$150,000 under this head.

51.Item 7 - Deer horn

(a) This claim is supported by an airwaybill dated 10 December 1998 amongst the Belated Documents. According to Mr Wei, they were packed in cartons and he did not examine its contents prior to August 2001.

(b) According to report of Mr Kan, he noticed boxes of deer horns in Workshop F on the 5/F. The deer horns were "found to have been stained with water, and moulds were formed on the horns". Their conditions were depicted in Photo 12 and Photo 13 annexed to Mr Kan's report.

(c) According to the 2nd report of Asia Pacific, the deer horns had fluff contamination. A light blue coat can be found on the deer horns as shown in Photo 28 of that report.

(d) McLarens accepted that the carton was scattered with free float powder like fluff on top. They said when the carton was opened for inspection the interior of the carton and the contents were apparently unaffected.

(e) I reject the evidence of McLarens. Judging from the photo annexed to their report, I cannot see the basis of their assertion that the deer horns were unaffected.

(f) I reject the Defendant's contention that the state of the deer horns was attributable to the passage of time between 1998 and 2001. I infer from the report of Mr Kan that the moulds arose as a result of the water stains. The blue cotton fluff also played a part as indicated by the photo of Asia Pacific.

(g) I accept the evidence of Mr Wei that the deer horns have no resale value. I award the sum of HK$25,740 as claimed.

52.Item 8 - Polybags, samples and labels : The Defendant agrees to compensate the 2nd Plaintiff $3,000 in respect of this item.

53.My total award in favour of the 2nd Plaintiff amounts to HK$727,096.86 (HK$342,205.26 under paragraph 47(f) + HK$173,721.60 under paragraph 48(c) + HK$32,430 under paragraph 49(c) + HK$150,000 under paragraph 50(f) + HK$25,740 under paragraph 51(g) + HK$3,000 under paragraph 52). The Belated Documents are highly material in persuading me to come to this conclusion.

Damages for loss of enjoyment of Workshops E and F

54.In relation to Workshop E, the 2nd Plaintiff claim is for $7,000 per month for the period between December 2001 to 31 March 2004 and for $4,000 per month from 1 April 2004. In relation to Workshop F, the claim is for $7,000 per month from December 2001 to 31 October 2002.

55.I searched hard in the Re-Amended Statement of Claim dated 21 May 2004 for the averments in support of this claim. Paragraph 5 of the Re-Amended Statement of Claim pleads that the "air in the Plaintiffs' Premises was polluted". Paragraph 6 of the Re-Amended Statement of Claim pleads that "In the circumstances, the 2nd Plaintiff is obstructed and/or prevented from the full enjoyment of Workshops E and F of the Plaintiffs' Premises". These averments fall far short of justifying the claims summarised in paragraph 54 above.

56.Workshops E and F were used as warehouse. There is no evidence that they could not be so used before August 2001 because of the problem over blue cotton fluff. The two exhaust fans installed by the Defendant in August 2001 did aggravate that problem because they were titled at the wrong angle. At that juncture Mr Wei was content with the offer from Mr Wong to clean up the units although that offer was not honoured due to the then delivery schedule of the Defendant. The serious water damage occurred in early September 2001. I accept the evidence of Mr Lee that the Defendant's offer to clean up was not accepted by Mr Wei due to his anxiety to preserve the evidence. The 2nd Plaintiff took no step to clean up the units until 2 November 2002. Such cleaning up was confined to Workshops F, G and H. I am of the view that it is unreasonable for the 2nd Plaintiff to delay between September 2001 and November 2002. It is also unreasonable for them to exclude Workshop E from the cleaning exercise undertaken in November 2002. They were poorly advised to retain the damaged items in Workshop E and I see no reason why the Defendant should shoulder the consequence of such advice. The emphasis of the 2nd Plaintiff's complaints in 2002 moved from blue cotton fluff to machine vibration which is not the subject matter of this action. The tenancy for Workshop E was renewed for a further term of one year from 1 October 2003 to 30 September 2004 at the same rent. In these circumstances I see little justification to make any award for a claim which is not spelled out in the Re-Amended Statement of Claim and which received scant treatment in the evidence.

Order and costs

57.I order that there be judgment in favour of the 1st Plaintiff in the sum of HK$72,200 as per paragraph 41.

58.I order that there be judgment in favour of the 2nd Plaintiff in the sum of HK$730,096.86 (HK$3,000 under paragraph 41 + HK$727,096.86 under paragraph 53).

59.I anticipate there will be arguments between the parties as to the proper costs order to make in the light of my rulings. In the absence of any agreement between the parties, I direct that the matter should be restored for further arguments before me.

Representation:

Mr Richard Leung, instructed by Messrs Ruby Yeung & Co, for the Plaintiffs

Miss Anna Saing, instructed by Messrs Johnson, Stokes and Master, for the Defendant