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1. The nuisance (both in its legal and non-legal sense) of water seepage often begins with a few innocuous drips that further leads to a maelstrom of problems if not promptly handled. Water seepage, which usually reflects poor building maintenance or subpar workmanship, is a silent urban curse that plagues many multistorey buildings in the city.
2. In 2006, the government set up the Joint Office of the Buildings Department and the Food and Environmental Hygiene Department in an effort to assist in identifying water seepage sources. The results have been mixed. Between 2016 to 2018, the Joint Office received an average of over 36,000 complaints. Of those cases that were investigated, failures of identifying the seepage source accounted for ~35%.
3. However, parties involved with civil proceedings relating to water seepage would likely engage their own experts to determine liability and quantum. Hence, the legal costs incurred are often disproportionate to the damages claimed, which generally range from tens to hundreds of thousand dollars only.
The Alleged $1,000,000 Water Seepage Incident
4. On 19 March 2022, a water seepage incident (“the Incident”) occurred when a pipe burst in a water meter cabinet (“the WMC”). The WMC was separated by a hallway and located across from a flat in one of the residential buildings of Victoria Skye, a housing estate located in Kai Tak (“the Unit”).
5. A Hong Kong Youtuber first reported the Incident on his channel known as <胡‧說樓市> (“WuChatProp”) on 11 April 2022. The Incident was further reported on the popular infotainment TVB programme, <東張西望>, on 14 April 2022.
6. The following salient information can be obtained from the two aforementioned sources:
7. Clause 26 of the Deed of Mutual Covenant of Victoria Skye (“the DMC”) also appears to hold the Owner responsible for the maintenance of the Burst Pipe. Clause 26 states:
“26. Each Owner shall, notwithstanding the obligations of the Manager to maintain the Development, keep the Unit…in respect of which he is entitled to exclusive possession, use and/or enjoyment and all those fixtures, fittings, services or facilities which exclusively serve the same, whether or not they are located inside his Unit in good repair and condition, and shall maintain the same at his own expenses to the satisfaction of the Manager, and in a manner so as to avoid any loss, damage, nuisance or annoyance to the Owners or occupiers of any other part or parts of the Development…”
8. At the outset, it is important to note that management has reported the Incident to their insurance company and there has been no commencement of legal proceedings yet. Furthermore, management denies that: (1) water supply was shut off 30 minutes after management staff was informed of the puddle of water in front of the Unit; and (2) they demanded the Owner be responsible for HK$1,000,000 in repair costs.
9. The Manager has a duty under the DMC to ensure owners maintain their property. If an owner defaults, the Manager is to provide any necessary maintenance and to take all possible steps to recover the costs and expenses incurred from the defaulting owner. For the sake of discussion, it is presumed the Manager will eventually commence legal proceedings against the Owner for the recovery of costs and expenses incurred as a result of the Incident. This would no doubt include the repair costs of the damaged lift.
10. As is typical of water seepage cases, the Manager would allege that the Owner is liable under the DMC, for nuisance, for negligence and/or for breach of the Building Management Ordinance (Cap. 344) (“BMO”).
11. One issue which would be hotly disputed is whether the Burst Pipe is a common part. If yes, then the responsibility would fall on the Manager to maintain. Otherwise, the responsibility would rest upon the Owner.
12. This question inevitably comes down to the proper construction of the DMC and the BMO.
13. Pursuant to section 2 of the BMO, common parts are defined as (a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and (b) unless so specified or designated, those parts specified in Schedule 1 of the BMO.
14. Courts have repeatedly observed that the abovementioned part (a) is worded such that the common part of any building can only be determined by a process of elimination – eliminating all those parts of the building specified or designated in an instrument registered in the Land Registry as being for the exclusive use, enjoyment or occupation by an owner. Furthermore, Courts have also repeatedly observed that part (b) is non-exhaustive.
15. Therefore, even if the Burst Pipe (or any pipe) is not defined in the DMC as a common part, unless that part has been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner, the BMO deems that part as a common part.
16. Assuming there is no such registration of the Burst Pipe in the Land Registry, then it should be considered a common part.
17. The Manager would likely point to the fact that the Burst Pipe has clearly branched off from the main communal pipe and that the water is delivered solely to the Unit. Therefore, pursuant to Clause 26 of the DMC, the Owner would be responsible for maintaining the Burst Pipe.
18. The Manager may further seek to rely on the Court of Appeal case of So John & Anor v Lau Hon Man & Others [1993] 2 HKC 356. In that case, the freshwater pipe laid in the concrete slab which served as ceiling for the appellants’ flat and floor of the respondents’ flat burst, causing considerable damage to parts of the ceiling and wall of the lower flat. The pipe which burst was used exclusively for the supply of fresh water to the respondent’s flat.
19. Hence, it could be argued that since the water of the Burst Pipe supplies exclusively to the Unit owned by the Owner, then the pipe clearly is a part which the Owner should be held responsible for maintaining.
20. To oppose the Manager’s claim, the Owner may seek to rely on another Court of Appeal case. In The IO of Summit Court v Full Surplus Investment Ltd and Another [2007] 3 HKLRD 351, the Court needed to determine whether branched out pipes serving individual units would be considered a common part. The defendants argued that after individual water meters were installed on to the water pipes, the said pipes could no longer be regarded as communal or common parts. Consequently, the water pipes serving each of the flats should be regarded as the individual property of that flat to which it supplied water. On the evidence, there was only one potable water pipe which ran along the floor from the potable water tank before branching out into separate water meters attached on the parapet wall (which was determined to be a common part as well).
21. Having considered section 2 of the BMO, the Court emphatically held that so long as the water pipes served the entire building, then the water pipes before branching out would be considered common part.
22. More importantly, the Court held that even after the pipes had branched out at or after the separate meters would not suddenly cause them to fall outside the definition of common parts because they had not been specified or designated in an instrument registered in the Land Registry for the exclusive use, occupation or enjoyment of an owner.
23. The defendants attempted to rely on So John, to argue that an owner should be responsible for a water pipe that delivered exclusively to his unit.
24. However, the Court pointed out that So John was not an authority that water pipes serving a flat exclusively could not be part of the common parts. Furthermore, it was common sense that even without separate water meters, pipes would branch out into individual flats and that such branch pipes would serve each individual flat exclusively. As a result, there was no reason why such branch pipes, which is part of the common water system, should not be regarded as common parts. In particular, the Court did not believe that separate meters, which enable separate payment for potage water exclusively consumed, should affect the common nature of the water supply system.
25. It would appear that the circumstances surrounding the Incident align closely with IO of Summit Court and that perhaps So John was decided on the facts of that particular case.
26. Furthermore, if the Burst Pipe is considered a common part, then by its very definition, the Owner would not be entitled to exclusive possession, use and/or enjoyment of the Pipe, thus rendering Clause 26 of the DMC possibly inapplicable.
27. If the matter proceeded to trial, there would also be other issues that need to be resolved. For example, the extent of contributory negligence, if any, of the management staff on the day of the Incident, whether the water seepage did in fact cause damage to the passenger lift and what the quantum of lift repair costs would be considered reasonable.
28. The Incident serves as a timely and important reminder for registered owners/management/incorporated owners of multistorey buildings to determine who should be responsible for maintaining water pipes that are located in locked away water meter cabinets.
29. Identifying the party responsible for maintaining water pipes early on will hopefully prevent water seepage from happening in the first place, and that in turn can prevent parties from engaging in lengthy and costly litigation.
This article first appeared in the April 2022’s E-newsletter of the Hong Kong Lawyer, the official journal of The Law Society of Hong Kong.
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