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Submitted by // K Bowers, Partner / Solicitor Advocate
25 May 2017


A tenant does not always get to walk away

Introduction

This case concerned a water overflow incident. The Plaintiffs were the registered joint-tenant owners and occupiers of a flat (Flat 16A) in a residential building. The 1st Defendant was the registered owner and landlord of the flat above the Plaintiffs' flat (Flat 17A) ("Landlord"), while the 2nd Defendant was the tenant of Flat 17A ("Tenant"). The case examined the liability of the Tenant to the Landlord in respect of the water overflow incident which arose out of the fault of the Tenant.

Background

The Plaintiffs commenced the action against both the Landlord and the Tenant claiming loss in the sum of HK$588,251 and general damages for discomfort, anxiety, distress and inconvenience, caused by water overflowing from Flat 17A into the Plaintiffs' flat ("Incident"). The Landlord issued a Third Party Notice against its Insurer under a policy covering certain risks in relation to the flat. It also issued a Contribution Notice against the Tenant.

The Third Party Action against the Insurer was settled before trial. The Plaintiffs and the Landlord also settled the action between them ("Settlement") by the Landlord paying the Plaintiffs HK$200,000 (inclusive of interest) ("Settlement Sum") and the Plaintiffs' costs of this action, upon which the liability of both the Landlord and the Tenant as against the Plaintiffs would be discharged. The remaining issue was the Landlord’s claim against the Tenant.

Landlord's claim against the Tenant

The Court accepted the Landlord's evidence that the Incident was caused by the water tap in the kitchen of Flat 17A not being turned off properly or at all on the day in question, resulting in water damage to the Plaintiffs' flat.

Regarding the acts or omissions by other occupants of the Tenant's flat, the Court found that it did not matter that there was "no direct proof" to show it was the Tenant who personally failed to turn off the water tap in the kitchen, and found the Landlord's claim against the Tenant proved. It was held that the Tenant owed a duty of care to the Plaintiffs and the Landlord, and was "negligent in not having turned off, or caused to be turned off, the water tap, properly or at all".

The Landlord claimed that the Tenant had also breached clauses 2(g) & (m) of the Tenancy Agreement, pursuant to which the Tenant agreed "…not to do or permit to be done in or upon the said premises or any part thereof anything which may be or become a nuisance annoyance damage or disturbances to the Landlord or the tenants or occupiers of other property in the neighbourhood or anywise against the law or regulations of Hong Kong" and "..not to contravene any of the terms, covenants and conditions contained in the ... Deed of Mutual Covenant ...". The Court had no difficulty in ruling that the Tenant had breached these 2 clauses of the Tenancy Agreement and held that it was therefore "just and equitable" to order the Tenant to indemnify the Landlord to the full extent of the Plaintiffs' claim.

The Court then moved on to consider the relief claimed by the Landlord in respect of its claim against the Tenant, which included the settlement sum and legal costs.

Settlement Sum

The Court was satisfied that HK$200,000 would "likely be, or less than the amount that would likely be, awarded to the plaintiff" and was ''reasonable'', and therefore ordered the Tenant to indemnify the Landlord in respect of the Settlement Sum.

Legal Costs

The Landlord claimed the following two sets of costs:-

1. the Plaintiffs' costs of the action agreed to be paid by the Landlord to the Plaintiffs under the Settlement ("Plaintiffs' costs"); and

2. the Landlord's own costs in defending the Plaintiffs' action / reaching the Settlement ("Landlord's costs").

The Court accepted that the Plaintiffs' costs and the Landlord's costs were ''reasonably foreseeable from, and were the natural consequences of, the 2nd defendant [Tenant]'s breach, and were not too remote'', and did not find it unreasonable for the Landlord to defend the Plaintiffs' action because of reasons including the following:-

1. the Plaintiffs' claim was all along quite exorbitant; and

2. the Tenant, as the party at fault, refused to admit liability and had been absent in the proceedings.

The Court ruled that the Landlord was ''quite innocent'' and held that the Tenant was liable to indemnify the Landlord in respect of both the Plaintiffs' costs and Landlord's costs.

Conclusion

This case shows that a tenant owes a duty of care to its landlord and could be held liable to compensate its landlord for losses suffered by the landlord as a result of its own fault. The Court, in determining whether or not to order a tenant to contribute to the losses suffered by its landlord in respect of legal proceedings instigated due to a tenant's fault, should consider factors including the tenant's negligence, the breach of the Tenancy Agreement by the tenant, the reasonableness of the settlement amount, and the tenant's conduct in the proceedings. The case also demonstrates the use of Contribution Notices and Third Party Proceedings in situations where the ultimate liability of a Defendant may be attributable to another party.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

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Submitted by // J Wong, Partner
24 May 2017
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Submitted by // K Bowers, Partner / Solicitor Advocate
24 May 2017


For individuals and organisations alike, cybersecurity threats come from all angles 

Cybercrime transcends all platforms, from university admission boards to airport security units to state-election committees, and affects victims ranging from large financial institutions to mid-sized service providers to individuals. The recent 'WannaCry' ransomware attack, which has raised serious concerns about cybersecurity, infected an estimated 230,000 computer systems worldwide, including hospitals systems and transport networks. Cybercrime also conceals itself in increasingly sophisticated forms, including cyber surveillance, Trojan viruses, phishing emails and even malicious QR codes. Regulatory bodies and law enforcement around the world regard cybercrime as a rising security issue, and in May 2016, this concern prompted the Hong Kong Monetary Authority to implement the Cybersecurity Fortification Initiative, which assists Hong Kong banking institutions in improving their cyber resilience capabilities.

As the scope and number of cyber threats continue to grow in Hong Kong, organisations and individuals outside of the banking industry should also adopt more robust cybersecurity measures. This Alert emphasises the importance of vigilance on the cyber domain by drawing on two examples of recent cyberattacks.

Falling hook, line and sinker for a 'phishing' scam

'Spear-phishing' (a technique in which fraudsters impersonate trusted senders to send spoof emails which induce recipients into revealing confidential information) has become so advanced that even a cybersecurity services company has fallen prey to a spear-phishing scam. In March 2017, Defense Point Security, a company in Virginia which provides cybersecurity services to the US Government, announced that it was the victim of a targeted spear-phishing email that resulted in the external release of its employees' confidential tax information. Unfortunately, the sensitive information disclosed by Defense Point Security contained essentially all of the data the culprit needed to fraudulently file the employees' taxes and request a large refund in their names.

In Hong Kong, the HK Police Force's Commercial Crime Bureau has also reported an increase in the number of unauthorised fund transfers resulting from phishing email scams. In these situations, the fraudsters often purport to be reputable companies (such as well-known financial advisors) in order to deceive victims into transferring money into the culprits' own bank accounts.

Can you differentiate between a legitimate and malicious QR code?

A QR code (quick-response code) is a bar code which contains information that can be conveniently deciphered by smartphones. In recent months, China has seen an upsurge of transactions whereby individuals make payments by scanning QR codes with their smartphone cameras. As QR codes are composed of a seemingly random arrangement of black and white squares and cannot be verified as genuine by the naked eye, they can be manipulated. This has allowed cybercriminals to gain access to the confidential information of unsuspecting purchasers.

China's multibillion dollar bike-sharing industry is particularly susceptible to QR code scams and fraudsters have tricked purchasers into transferring money into their own bank accounts simply by replacing the original QR code on the share-bikes with fake ones. This problem is compounded by the fact that fraudsters can easily create fake QR codes via do-it-yourself websites. In the face of a lack of regulation governing the use of QR codes in China, Alipay and WeChat Pay (popular third-party payment processors in China) have frequently shouldered the loss whenever QR code scams have occurred.

Prevention is key in staying a (virtual) step ahead of today's cyber criminal

In 1993, Hong Kong passed legislation to combat the increasing role of technology in crime. The legislation amended criminal provisions under the Telecommunications Ordinance, Crimes Ordinance and Theft Ordinance by extending the definition of certain crimes to the virtual domain. For instance, burglary under the Theft Ordinance was expanded to include "unlawfully causing a computer to function other than as it has been established" and "unlawfully altering or erasing" or "unlawfully adding" any computer program or data held in a computer. In recent years, the HK Police's Cyber Security and Technology Crime Bureau and the Joint Financial Intelligence Unit ("JFIU") have also stepped up its efforts in handling cyber security issues. Where fraudulent transfers are discovered at an early stage, lawyers and the JFIU can collaborate to freeze the fraudster's bank account and recover the victim's assets.

In spite of concerted attempts to counteract cybercrime in Hong Kong, the reality is that prosecuting cybercriminals is difficult. Even where there is an effective legal regime and a progressive regulatory framework in place, identifying and apprehending cybercriminals is a complex task. Furthermore, where the fraudster did not carry out the fraud in the victim's resident country, jurisdictional issues appear. In an environment where the nature and methodologies of cybercrime are constantly evolving, individuals and organisations should adopt and implement updated IT security applications and risk-management protocols, which are crucial to avoid falling victim to cybercrime.


About Us
 
Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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Submitted by // K Bowers, Partner / Solicitor Advocate
24 May 2017


Mutual Taking of Evidence in the Mainland and Hong Kong - A Positive Step Forward! 

Introduction

"The Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between Courts of the Mainland and HKSAR" ("Arrangement") recently came into effect on 1 March 2017. The Arrangement aims at assisting Mainland and HKSAR litigants to obtain evidence in civil and commercial matters with enhanced efficiency and greater certainty. It provides for the terms on which the relevant Mainland and HKSAR authorities, upon request, will provide mutual assistance to each other in the taking of evidence in civil and commercial matters.

Arrangement

Pursuant to the Arrangement, the party requesting assistance must first submit a letter of request ("Letter of Request") and all relevant material (in Chinese or with a Chinese translation) through its designated liaison authorities (i.e. the Higher People's Courts in the Mainland and the Administration Wing of the Chief Secretary for Administration's Office of the HKSAR Government in the HKSAR). Moreover, the Supreme People's Court may make such request directly through the designated liaison authority of the HKSAR.

Upon receipt of the Letter of Request, the relevant designated liaison authority will transfer all documents received to the relevant court or other authorities for processing, or carry out the processing itself. The requested party shall then, to the extent possible, process and complete the request within 6 months from the date of receiving the Letter of Request.

The Arrangement will not bring any change to the law in the taking of evidence in civil and commercial matters, as it will be in accordance with the provisions of the law of the requested party. Furthermore, the evidential material obtained may only be used in the relevant proceedings mentioned in the Letter of Request.

Scope of Assistance

Interestingly, it is notable that the scope of assistance that may be requested by the Mainland and HKSAR courts under the Arrangement is not mirrored.

In seeking the taking of evidence, the People's Court of the Mainland can ask for (1) examination of witnesses; (2) obtaining of documents; (3) inspection, photographing, preservation, custody or detention of any property; (4) taking of samples of any property or carrying out of any experiments on any property; and (5) medical examination of any person.

On the other hand, a Court of the HKSAR can ask for (1) obtaining of statements from parties concerned and testimonies from witnesses; (2) provision of documentary evidence, real evidence, audio-visual information and electronic data; and (3) conduct of site examination and authentication.

Conclusion

Needless to say, the new regime for the mutual taking of evidence is a much welcomed development, especially given the increased number of cross-border disputes in this day and age, and can be seen as another step forward following the arrangement on mutual enforcement of arbitral awards (in 1999) and the reciprocal enforcement of judgments (in 2006) in civil and commercial matters between HKSAR and the Mainland.

The Arrangement provides clear guidance as to the requirements and procedures in place (for instance, what is required to be included in the Letter of Request and to where it should be sent). Not only should the new regime facilitate efficient evidence gathering, it should also enhance efficiency by reducing Court time and legal costs for parties involved in cross-border disputes between HKSAR and the Mainland.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 

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