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 The Highland Towers Judgment -
 Civil Suit No. S5-21-174-1996

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7th & 8th Defendant

Plaintiff's allegations

According to the plaintiffs between 1990 and December 1993, the 8th defendant was the lawful occupier of the Metrolux Land as project manager for and on behalf of the 7th defendant. In the course of the development of the Metrolux Land, the plaintiffs alleged that the 7th and 8th defendants' servants and /or agents carried out extensive and widespread clearing by cutting down trees, plants and vegetation which caused a change in the flow direction of the natural water path. This led to concentration of water run-off to the Arab Malaysian Land. Alternatively, the clearing of the Metrolux Land had caused greater surface run-off of water resulting in higher infiltration and percolation into the soil. In turn, these charged the Arab Malaysian Land with water to cause the landslide which brought down Block 1 and the forced abandonment of Block 2 & 3. The following are listed as the particulars of negligence of these defendants:

1. Failed to consider the impact of their works on the drainage requirements of the neighbor's lands.

2. Failed to take any or adequate precautions to ensure that water from Metrolux Land would not surcharge the Arab Malaysian Land and Highland Towers Site to reduce slope stability.

3 Diverted water to the neighboring land.

4 Block the flow of streams and watercourses.

5 Deposited filth, mud, silt and other materials in streams and watercourses.

6 Caused erosion, escape of filth, mud and silt from Arab Malaysian Land to the Highland Towers Site.

7 Created hazards on Metrolux Land.

In support of the plaintiffs' claim, two material witnesses testified - Mr. Rickard (PW 4) and Mr. Hooi (PW 10).

Rickard's Evidence

According to Mr. Rickard, a resident of Highland Towers for 3 years prior to the collapse of Block 1, he tracked up the hill behind Highland Towers on the 8.1.1994. This was some twenty-two days after the collapse of Block 1. He followed the East Stream until he reached the top. This spot he identified as the Metrolux Land which stood on a ridge known as Bukit Antarabangsa. On it he saw "total deforestation" with "serious erosion and scars". One particular item which caught his attention, and of vital importance to the plaintiffs' case, was an earth bund (East West Bund) running east to west across Metrolux Land at the southwestern corner, as well as a silt pond close by. He described this East West Bund as an earth bund of one meter in height created for the purpose of blocking the natural flow of water coming from the higher sections of the Metrolux Land to the lower level in the north and directing it to the East Stream. Having no camera with him, no picture was recorded of this.

On the 15.1.1994, this witness went up again to the Metrolux Land from Highland Towers following the East Stream. This time he noticed heavy siltation in the stream with vegetation flattened on either side. He noticed that the East West Bund was still in existence. No photograph was again taken.

Then on the 7.2.1994, as a member of the ad hoc committee of the residence association of Highland Towers, he accompanied some Inquiry Commission members who included Dr. Nik Ramlan, to the Metrolux Land. This time he brought along a camera which captured a number of valuable photographs depicting the condition of the area at the material time. Two things struck him on this visit. Firstly, the East West Bund was demolished. However from the photograph P10, he pointed out the remnants of this. Secondly, he found along the edge of the southern corner of the Metrolux Land, at the entrance of the East Stream, a newly constructed earth retention wall (Earth Retention Wall) built right up to the boundary of the Metrolux Land. With this structure, effectively, this Court was told subsequently by the 7th and 8th defendants' witnesses, no water could be discharged to the East Stream from Metrolux Land.

Some six days later, Mr. Rickard went up the East Stream again and with a camera he took a series of photographs which are displayed in exhibit P10. These pictures reflect the narration of this witness that this stream was heavily silted with sandy deposits right up to the area where the water entered the pipe culvert. The pipe culvert, he stresses, was in an exceeding poor condition, broken at various intervals with water leaking therefrom.

Brief Description Of Metrolux Land In Connection To East Stream

Before proceeding further, it is necessary to elaborate briefly the nature of the Metrolux Land in relation to the East Stream. The Metrolux Land is vast, consisting of many acres. Development of residential houses was initiated in the north, at the lowest part of the land. In the other parts of the land no construction had commenced at the time of the collapse of Block 1 but the area was denuded of vegetation. As one proceeds south, the land rises steeply with two hillocks on its extreme sides forming its boundary. The East Stream is at the far southeastern corner of this part of the land. Since this southwestern corner was the subject of intense study by experts on drainage, I shall refer to it as the Metrolux Site to differentiate it from Metrolux Land which covers the entire area belonging to the 7th defendant.

Hooi's Evidence

Mr. Hooi is a civil engineer with vast experience in the field of water technology. He has, at the commencement of his testimony, disclosed that his sister owned an apartment in Highland Towers but he declared that this would not, and had not, influenced him in his preparation of an expert report and in the oral testimony he was to give. By his demeanor and the quality of his testimony which is supported by theories based on factual data I believe this assertion and accepts his evidence as tendered.

According to Mr. Hooi, it is necessary to first identify the catchment area selected for study. In this case it is the area related to the East Stream commencing from its source. Once the catchment area is determined the amount of water flowing into the East Stream can be calculated. To ascertain the catchment area, he followed these procedures. He personally visit to the area concern. Obtained a topography map of the place and aerial photographs taken of the area in 1992 from the survey department. Secured a drainage plan (exhibit P18) prepared and drawn by the 7th & 8th defendants' own engineers known as H.S. Liao & Rakan of the entire Metrolux Land With these, he marked out the boundary of the Metrolux Site with all natural drainage found therein. Then by drawing a line to join the ridges of this zone he mapped out the catchment area. Next, by using a photograph he identified the section of this land which was cleared of vegetation. From here he formulated Figure B in his report (P44). This figure has the entire Metrolux Land, Highland Towers Site, Arab Malaysian Land and the immediate surrounds marked out on a plan. The area denuded of vegetation in the Metrolux Land is colored in mustard while the East Stream from its source is marked out in blue and the catchment area is delineated by a circular line. An enlargement of this plan, with all the features as described, is displayed in figure B of his report. In figure B, Mr. Hooi subdivided the catchment area into 4 parts. He selected the part that contributes to the East Stream. Limiting to this section he calculated the discharge of water to the East Stream when the land is with vegetation and when it is denuded of it. He arrived at a calculation that the cleared area in this catchment contributing to the East Steam has an runoff increased by approximately 22% for a return period of 2 years as compared to this part of the land covered with vegetation. By this, he concludes that "the clearing of the land within the Metrolux boundaries which lay within the catchment had a significant contribution to the runoff entering the drainage system, and consequently to overflow into the hillside".

7th & 8th Defendants' Version

From the above testimonies two relevant matters are identified. The first concerns the physical condition of the Metrolux Site. The second involves the additional runoff from the Metrolux Site to the East Stream.

Concerning the physical condition, the defendants' witnesses deny the presence of the East West Bund as observed by Mr. Rickard. Miss Visanathamala (DW 13), the consulting engineer in charge of earth works at the Metrolux Site at the material time, denies the existence of such a blockage. She claims that there was no necessity for such a structure since by the natural contour the land water would flow naturally to the north where it would be picked up by the main drains constructed at the lower northern region of the Metrolux Land. From here the water would be drained into Sungei Sering, situated on the other side of Bukit Antarabangsa Miss Visanathamala then insists that when she visited the Metrolux Site, some 3 days after the collapse of Block 1, she noticed the Earth Retention Wall. This wall, she claims was constructed by the contractors who excavated this section when they brought down the level from the original to the required depth. Effectively, this wall would, in her opinion would block off any water run off to the East Stream.

DW15 is one Mr. Lee, the consulting engineer of the Metrolux project and was Miss Vasanathamala's superior. He too confirms the existence of the Earth Retention Wall which he saw constructed in September 1993 and was still there during his monthly site meetings with the contractors.

Mr. Douglas Yee (DW 12) has described himself as an expert in hydrology and hydrogeology. The former is the study of surface water flow pattern over land, the amount of runoff of such water at any particular place and provisions for such runoff. The latter pertains to movement of ground water through the soil from which a subterranean flow regime can be ascertained. Besides detail analysis on the contribution of the water runoff from the Metrolux Site to the East Stream, which I shall deal with later, this witness also confirms two things. The first is: by the nature of the surface flow pattern and the existence of the Earth Retention Wall there was no surface water runoff entering the East Stream. The second is: by the geology of the area, ground water will flow towards the north of Metrolux Land without discharging into the East Stream. In addition, this witness adds that during his site visits he observed that the originating tributary of the East Stream inside Metrolux Land was dry. The other, which was close to the Metrolux boundary, had only trickles of water. The actual volume of water that contributed to the East stream was from a third tributary. This was located some distance away from Metrolux Land. In short, he concludes that hardly any water from the Metrolux Site contributed to the East Stream.

After careful study of the evidence and due consideration to the theories forwarded I am of the following views:

Whether There Was Discharge Of Water From Metrolux Site To The East Stream

Firstly, from the testimony of Mr. Richard and the photographs presented there were substantial of deposits of silt and sandy materials in the East Stream close to the source at the Metrolux Site. The 7th and 8th defendants never denied this fact. So where did these come from when there was no other development in this catchment area that fed to the East Stream except the earth works at the Metrolux Site?

Secondly, as to whether there existed the Earth Retention Wall before the collapse of Block, 1 Miss Vasanathamala's evidence on this point is of little value. She can only confirms the existence of this wall after Block 1 has collapsed, not before. Thus, she is unaware of whether this configuration was erected before the collapse of Block 1.

As for Mr. Lee's (DW15) evidence which confirms the existence of this wall since September 1993, I am very skeptical. He made this statement without tendering any details of this wall. Further, by his demeanor I find him to be an unreliable witness. He seems to be exceedingly bias towards these defendants who are still his clients. This can be reflected on two occasions. The first was when asked under cross-examination as to why he thought there was silt in the East Stream he replied that it could be due to erosion in the same area. But there was clearly no development along this course of the East Stream. The next is his "no comments" reply to a question asked during cross-examination on the creation of the silt pond at this corner of the Metrolux Site. This attitude may be due to the fact that he is still engaged by the 8th defendant as the engineer for the project and several others handled by the 8th defendant within Bukit Antarabangsa. Further, I find it unlikely that this witness visited this part of the site to observe details when he had delegated such work to his junior, Miss Vasanathamala.

Against these implication of the existence of this Earth Retaining Wall is the unbiased observation of Dr. Nik Ramlan who went up to this part of the Metrolux Site soon after the collapse of Block 1. He remarked that someone had "recently" dammed the flow path from Metrolux Site "to the Highland Towers area and had tried to stop the flow from the plateau into the channel". This is obviously in reference to this Earth Retention Wall. This perception from an independent and knowledgeable person, whose mind was focused as an investigator to the cause of collapse of Block 1, has substantial probative value and I am inclined to accept it as the truth to imply that this retention wall was a relatively new creation; not that as claimed by the 7th and 8th defendants.

Fourthly, the photographs taken by Mr. Rickard of this Earth Retention Wall as found in exhibit P10 speaks a lot by itself. Though the 7th and 8th defendants' witnesses argue that they represent a wall that was in existence for sometime, I doubt this claim. I am of the view that this wall, depicted in the pictures, is a recent creation of soil from another area dumped on site. It does not appear to be soil excavated from the same area by a "cut and fill method" carried out by the contractors. Some surviving vegetation can be observed in this heap to indicate that this lot is foreign. Though erosion lines are noticeable on the surface of the soil it is not conclusive that it has been there for some substantial period of time. It could have been formed during the 2 months from the time of collapse of Block 1 to the time when Mr. Rickard took these pictures.

Fifthly, is the noticeable absence of the 8th progress earth works report. It was the practice of the earth works contractor at the Metrolux Site to submit progress report after certain work was carried out to the 8th defendant's engineer for verification and approval to facilitate payments for such services. Such report would reveal the amount of earth excavated and the location where it was done. By this, one can verify approximately when this Earth Retaining Wall was erected and whether this wall was made up of localized material since these defendants have claimed that this wall was erected when the contractors excavated this part of the land. This report - the 8th progress report - supposed to cover the period just before the collapse of Block 1 is mysteriously missing. All other reports which are in sequence and numbered consecutively are available except progress report number 8. Even a subsequent report - number 9 - is present. But why is this most crucial report - number 8 - gone missing, especially when this may determine whether the Earth Retaining Wall was built at this time or much earlier? In the absence of any convincing reason other than it being lost, serious aspersion is cast on these defendants for refusing disclose for fear that no earth work was affected in this part of the land to support their claim that such a wall was in existence before the collapse of Block 1 and not after.

Sixthly, concerning the East West Bund, these defendants have consistently maintained that: (a) there was no necessity for such a structure since by the natural contour of the Metrolux Land water would flow down hill towards the north; and (b) when it reaches downhill, main drains at the lower region of the Metrolux Land would pick it up and carry it through other housing schemes in Bukit Antarabangsa before discharging into Sungei Sering.

But this is not quite the factual position as explained by Mr. Douglas Yee relating to water runoff from the Metrolux Site. The two hillocks which I briefly disclosed earlier, and which I shall refer to them as the eastern hillock and the western hillock according to their position, generate water after rainfall. Water from the eastern hillock would, according to Mr. Douglas Yee's water-flow chart titled "catchment C" as illustrated at page 6 of his report (P35), did enter the east Stream, and not completely flowing towards the north. Of course, if the Earth Retention Wall was there then this water would be prevented from entering the East Stream. Water originating from the western hillock however, would naturally flow into the East Stream as marked out under "Catchment C2" in Mr. Douglas Yee's flow chart. But this, according to him, was blocked by an earth outcrop (which may not be there at the material time of the collapse of Block 1 since this composite pictures formulating these flow charts were taken much later after the tragedy) to force the water to turn left down hill towards the north. Thus from these charts, water in the Metrolux Site did not naturally flow downhill as these defendant wish this Court to believe; some flowed into the East Stream.

Secondly, if the Earth Retaining Wall had been built before the collapse of Block 1 then, to be viable and effective, there must be in existence ready-made main drains at the lower portion of the Metrolux Land to receive the water coming down hill. Otherwise, water would be flowing in an uncontrolled manner to affect ongoing construction work then taking place at this lower northern section of the Metrolux Land. But from the evidence tendered, no concrete main drains were constructed at this lower part of the slope. Only erosion channels were exposed from the photographs tendered; not drains as claimed by these defendants.

By these revelations, I believed that there was a need for a barrier, like the East West Bund to prevent water from flowing down hill in order not to interfere with ongoing construction works below. With an existing avenue - the East Steam, it is probable that these defendants under these circumstances must have utilized this stream as a conveyance to discharge runoffs from their land, and in order to do, so they must have erected the East West Bund to prevent water to flow down hill onto the lower part of their land. This discharge into the East Stream added extra volume of water to this watercourse besides eroded materials from the Metrolux Site. These have contributed to the collapse of Block 1. I do not believe that there was no Earth Retaining Wall constructed to prevent such flow as claimed by the 7th & 8th defendants before the collapse of Block 1. Such claim, I find is a creation of these defendants as an afterthought to evade liability.

Contribution Of Water From Metrolux Site To East Stream

The material difference between Mr. Hooi's opinion and that of Mr. Douglas Yee is the amount of surface water runoff from the catchment area of the Metrolux Site to the East Stream just before the collapse of Block 1. In Mr. Hooi's view there was an additional runoff of 22%. Mr. Douglas Yee, on the other hand, feels that the additional runoff calculated on the basis of this area "not being deforested" is only 12% and, if the said land was developed, it is 5% - 6%. The greater degree of the former, he explains, is due to the steep gradient of the land which causes a higher degree of surface runoff as compared to a relatively flat surface which permits water to concentrate in percolating into the ground.

After hearing the mass of evidence adduced to explain the concept and methodology used by these two experts in arriving at the respective opinions, I find that the difference in their conclusion lies primarily on the materials and raw data used to determine the location of the boundary of the Metrolux Land. In the case of Mr. Hooi, he relied on the drainage plan submitted by the consultant engineers of these defendants. For Mr. Douglas Yee, he used a surveyed plan prepared by a surveyor, also engaged by these defendants. The significant difference in these two plans is that in P18 (the drainage plan) there are distinctively 4 originating tributaries in the Metrolux Site which flow into the East Stream. In the survey plan used by Mr. Douglas Yee it shows only 1 with another just tipping the boundary. Indeed, as candidly admitted by Mr. Hooi, if the boundary of the Metrolux Land were incorrect then his calculation would be wrong. But what makes one more accurate than the other when both are, ironically, supplied by same defendants? Of course, Mr. Douglas Yee criticized P18 and declared that it is far from accurate. But by the same token, how can one be certain that the survey conducted by the surveyor, who was not called to testify and whose identity cannot even be ascertained, does not contain faults. P18 was an important plan drawn and prepared by the consultant of the 7th and 8th defendants and submitted to the authorities for drainage approval. Surely the boundary of the Metrolux Land would have been ascertained before it was presented for submission since it involved provisions to cater for sufficient drainage system for the entire Metrolux project. So why should it be inaccurate? In fact, the survey plan relied on by Mr. Douglas Yee is suspected to be used for covering up the disadvantages to these defendants. By these reasons, I am inclined to find that Mr. Hooi is not incorrect in his calculation for the runoff when he relied on P18.

Mr. Douglas Yee also criticized Mr. Hooi for not considering the land in the catchment area to be sufficiently flat since the terrain in this area has been excavated. By not taking into consideration this factor, he said, Mr. Hooi's calculation would be incorrect. I find this accusation not quite justified. Though earth works in the form of excavation was carried out in the area, but the land was not completely flattened. Substantial part of the land are still comparatively hilly, as is displayed by the two prominent hillocks which are noticeable on the photographs as well as when this Court visited the site.

Next, Mr. Douglas Yee commented that Mr. Hooi's usage of the aerial photograph to determine the catchment area is inaccurate. Such photograph, being black and white, would only produce shades of Gray. By this method the catchment area can never be located. If this theory of Mr. Douglas Yee is true then Mr. Hooi would not even be able to ascertain anything except, presumably by guesswork. But after comparing the catchment area of both these experts, surprisingly, I find them to be remarkably and strikingly similar. Thus either Mr. Douglas Yee is wrong in his view or Mr. Hooi's guesswork is a coincidentally correct. Nevertheless since both catchment areas are relatively similar, I find this factor makes very little difference to their respective calculations.

There are other areas of differences between these two experts but I find them minor compared to the main conflict on the boundary as stated above. I shall not dwell into these since, as agreed by both experts, hydrology is not an exact science; it is based on a lot of guesswork and assumptions.

Before I conclude on the finding of facts in this area, I find it difficult to comprehend on two aspects of Mr. Douglas Yee's testimony. The first was his discovery of only 1 originating tributary of the East Stream in the Metrolux Land, which he said was dry, and another tributary nearby which had only trickles of water. This is strange, for during this Court's visit to the site, I observed a substantial flow of water in a tributary which seems to originate from the Metrolux Land. In fact there were even some Indonesian workers, obviously engaged with the development work on the Metrolux Site, bathing there. Secondly, I did inquire as to the source of this water. Mr. Douglas Lee replied that it was from the ground and extracted by the insertion of a pipe to the soil. If this is true, then firstly, Mr. Douglas Yee's theory of no ground water flowing from Metrolux Land into this area, except to the north, must also be incorrect. Secondly, it is very probable that this stream with abundance of water originates from the Metrolux Land giving more credence that P18, which was used by Mr. Hooi.

By reasons aforesaid, I find Mr. Hooi's conclusion on the amount of water runoff is more probable than that presented by Mr. Douglas Yee. With such increase in water runoff there was a surcharge on the Arab Malaysian Land which was a factor that effectively caused the collapse of Block 1.

Preliminary Issue

Having determined the facts I shall now proceed to apply it to the law. The legal principles applicable to the liabilities of negligence and nuisance have been extensively set out in the course of my analysis into the liabilities of other defendants. I do not propose to repeat them here unless necessary and relevant.

Before I proceed to discuss each of the causes of action individually, I shall first deal with an issue raised by the 7th & 8th defendants that is common to both the claims of negligence and nuisance.

This relates to the assertion by the 7th & 8th defendants during submission that they should not be made responsible for the acts of their independent contractors. According to the 7th defendant, they have granted an exclusive Power of Attorney to one Dato Loy to develop the Metrolux Land, and Dato Loy in turn gave a Power of Attorney to the 8th defendant to manage the development. Instead of handling the development themselves, the 8th defendants declares that, by a Power of Attorney, they appointed a firm of contractors known as MBf Construction Sdn Bhd to carry out this job. Thus by these series of appointments, these two defendants argue that: they were not in possession of the land and they are not liable for the acts of their independent contractors.

Obviously, this approach is an after thought for it was never pleaded in the Statement of Defence of these two defendants. In fact, on the contrary, as pointed out by plaintiffs' counsel, these defendants in paragraph 10 of their Statement of Defence admitted to have conducted ordinary building works on the said land. With such an admission, I do not think they can raise this issue of exemption of liability for the work done by independent contractors at this stage. To support this is my decision in Metroplex Development Sdn Bhd v Mohd Mustana bin Makuddas (1995) 2 MLJ 276 citing the oft quoted judgment of Shama J in Janagi v Ong Boon Kiat (1971) 2 MLJ 196, which is:

"The court is not entitled to decide a suit on a matter which no issue has been raised by the parties. It is not the duty of the court to make a case for one of the parties when the party concerned does not raised or wish to raise the point. In disposing of a suit or matter involving a disputed question of fact, it is not proper for the court to displace the case made by a party in its pleadings and give effect to an entirely new case which the party had not made out in its own pleadings. The trial suit should be confined to the pleas on which the parties are at variance".

Further, even if this issue is allowed to be raise, I am not convinced that these defendants can be exempted from the liability for the acts of their independent contractors. As a general rule, it is true that an employer of an independent contractor is not liable for the fault or negligence of such a contractor. But there are exceptions. One such exception relates non-delegable duty. This covers "all cases involving extra hazardous acts or omissions, or situations created by them, which all involve special danger to others" - Supreme Court decision in Datuk Bandar Dewan Bandaraya v Ong Kok Peng & Ano. (1993) 2 MLJ 234 @ 239. It is my view that to carry out development work on any land for that matter is normal and not hazardous, but when the land to be developed is perched high on a hill with a populated community below, then the situation is different - an extra hazardous situation will be created if such development work is carried out. This is even more serious if the hill is to be stripped bare of vegetation and its natural water courses unattended. Worse, if there is to be a diversion of watercourses downhill. The extra hazard here is the surcharge of water and silt deposits to cause drains to clog resulting in overflow that may consequent in slope failure downhill to affect lives and properties. The factual situation in our present case is the very case in point. Thus, under such circumstances, these defendants are not exempted from the liabilities for the acts of their independent contractors.

This proposition is not limited to a claim of negligence. It similarly applies to nuisance as is noted in the case of Matania v The National provisional Bank Ltd & Anor. (1936) 2 All ER 633. In this case the complaint by the plaintiff was dust and noise caused by the building operations of the defendants. The Court decided that although one of the defendants had employed an independent contractor, this defendant is still liable in damages for nuisance caused because the very nature of the work carried out involved a risk of damage to the plaintiff.

The next issue is the argument by Dato Sethu, leading counsel for these two defendants, that the plaintiffs have no right to bring this action for negligence against these defendants because the plaintiffs are not persons who were the proprietors or in possession of property that was damaged i.e. Block 1. In short, what he meant is that a plaintiff cannot sue for negligence if the act or omission of the defendant did not directly injure the plaintiff's person or property - but only caused consequential loss. In such situation, according to him, there is no duty owed by these defendants to the plaintiffs. In support of this proposition, he cited a number of cases, all of which, adhered to the principle originated from the case of Cattle v Stockton Waterworks Co (1875) LR 10 QB 453. This principle is best explained by Scrutton LJ in Elliott Steam Tug CO LTD v Shipping Controller (1922) 1 KB 127 @ 139 as follows:

"In common law there is no doubt about the position. In a case of a wrong done to a chattel the common law does not recognized a person whose only right are a contractual right to have the use of services of the chattel for purpose of making profits or gains without permission of or property in the chattel. Such a person cannot claim for injury done to his contractual right."

Looking at this closely, this proposition concerns pure economic loss of which I need not, as expressed in the earlier part of this judgment, elaborate since I am reaffirming my views stated in the case of Dr. Abdul Hamid Abdul Rashid v Jurusan Malaysia Consultants (supra). However, as this argument of Dato Sethu touches on another aspect of the concept of pure economic loss, I shall proceed to analysis it, though the ultimate result is similar to what I have stated in Dr. Abdul Hamid Abdul Rashid .

Pure economic loss, as can be deducted from the dictum of the cases above, refers to financial loss suffered by a plaintiff which is unconnected with, and does not flow from damage to his own person or property. The learned authors in Clarke & Lindsell on Tort, 17th edition, have classified four different ways in causing such loss. The first is where the loss to the plaintiff follows physical damage to property in which he has no proprietary interest at the time of the damage but to which he has some relationship. The second is where causation is through the negligent provision of services. The third is causation through reliance by the plaintiff on a statement (as is the Hedley Byrne type of situation). And the final category involves defective products or buildings with which the plaintiff has expended money on repairs or replacement. Dr. Abdul Hamid Abdul Rashid's case falls within the second group and going by the facts presented our present case should be in the first classification.

The rational behind this restriction and leading to the creation of this terminology of "pure economic loss" is the fear of opening "an exceeding wide field of claims", or creating "endless indeterminate liability", or " the overkill may present it own disadvantages". A summary of all this is classically expounded by Cardozo CJ in the American case of Utramares v Touche (1931) 255 NY 170 - to prevent a floodgate and avoid the creation of liability "for an indeterminate amount for an indeterminate time to an indeterminate class". A factual hypothesis of this is best illustrated in a passage of the judgment of Lord Penzance in Simpson & CO v Thomson (1877) 3 App Cas 279 where he disclosed that:

"...if , by negligence of a wrongdoer, goods are destroyed which the owner of them had bound himself by contract to supply to a third person, this person as well as the owner has a right of action for any loss inflicted on him by their destruction. But if this be true as to injuries done to chattels, it would seem equally so as to injuries to the person. An individual injured by a negligently driven carriage has an action against the owner of it. Would a doctor, it may be asked, who had contracted to attended to him and provide medicines to him for a fixed sum by the year, also have a right of action in respect of the additional cost of attendance and medicine cast upon him by that accident? And yet it cannot be denied that the doctor had an interest in this patient's safety. In like manner an actor or singer bound for a term to a manager of a theater is disable by a wrongful act of a third person to the serious to the manager. Can the manager recover loss from the wrongdoer? Such instances might be indefinitely multiplied, giving rise to rights of action which in modern communities, where every complexities of mutual relation is daily created by contract, may be both numerous and novel".

But his principle often produced unfair results. A case in point relating to pure economic loss in a physical damage to property situation is Candlewood Navigation Corporation LTD v Mitsui O.S.K. Lines LTD (1986) AC 1. Here the 1st plaintiff is the owner of a vessel known as 'The Ibaraki Maru' which was let out on a 'bareboat chater' to the 2nd plaintiff. Effectively this puts the 2nd plaintiff in possession of the boat. The 2nd plaintiff then re-lets the vessel to the 1st plaintiff on time charter, which does not confer possession. In an accident the vessel was damaged by the defendant's ship. While the 2nd plaintiff can recover the cost of repair from the defendant, who was found negligent for the accident, the claims by the 1st plaintiff for the hire charges paid by the 1st plaintiff, even when the vessel was out of action, and for revenue which the 1st plaintiff lost for being unable to use the vessel were rejected. All this was due to the fact that the 1st plaintiff, in law, was not in possession (or for that matter not the owner) of the vessel. Before the Privy Council on appeal it was argued that the 1st plaintiff was indeed the owner, but this contention was rejected on ground that for the two items claimed, the loss suffered by the 1st plaintiff was in its capacity as charter, not as owner.

This approach has caused grave concern to some Commonwealth law practicing countries. Though having provided "a mechanical and fairly easily applied test for the resolution of disputes (and hence for the avoidance of prolong litigation)" as eloquently pointed out by Mr. W.H. Roger, the author of Winfield & Jolowicz, 15th edition, this strict rule had produced unjust results. For this, the Canadian Supreme Court in the case of Canadian National Rly CO v Norsk Pacific S.S. CO LTD (1992) 91 D.L.R. (4th) 289, in a factual situation similar to this category of classification of pure economic loss, announced that liability should be imposed based on the test of foreseeability of loss to an identifiable plaintiff and 'proximity'. McLachlin J. announced this approach in this manner:

"comprehensive...consideration of proximity requires that the court review all the factors connecting the negligent act with the loss; this includes not only the relationship between the parties but all forms of proximity - physical, circumstantial, casual or assumed indicators of closeness. While it is impossible to define comprehensively what will satisfy the requirement of proximity or directness, precision may be found as types of relationships or situations are defined in which the necessary closeness between negligence and loss exists."

I am of the view that this approach is fair and equitable and should be adopted. I have in Dr. Abdul Hamid Abdul Rashid case furnished my reasons to rally against the fear of the creating "endless indeterminate liability". I shall not repeat it here but for those readers who wish to be acquainted with it, reference can be made to the said case. All that is required of me now is to reproduce a passage from the said judgment of my views on this subject (which has not changed, but instead strengthened) for application to the facts of this case. It is:

"With these arguments, one wonders why there is such limitation imposed upon a claim for pure economic loss, for after all the entire concept of negligence is to extend liability beyond the borders of privity. To impose such a restriction is highly inequitable particularly in cases where the duty of care and the breach of such duty are found to be substantiated."

With this, I do not agree with this contention of Dato Sethu and shall resort to determine liability of the 7th & 8th defendants base on foreseeability and proximity to ascertain whether these defendants owe a duty of care to the plaintiffs, to be followed by whether this duty was breached resulting in damages.

Analysis - Negligence

On the factor of foreseeability, this Court is required to decide whether the 7th & 8th defendants did reasonably foresee that their acts would cause damage to the plaintiffs. After examining all the evidence adduced, my answer is in the positive. As property developer and/or manager of development projects on a hill, these defendants must have known or ought to have known that by diverting watercourses on their land to the East Stream they would increase the volume of discharge to this outlet. With an extensive area of their land denuded of trees, they must have foreseen that water flowing over this area would carry with it eroded soil and silt which would be deposited down stream. And as proved, these caused or contributed to the failure of the drainage system resulting in the collapse of Block 1 and forced evacuation of Block 2 &3.

As to the question of proximity, Dato Sethu alludes that there was insufficient proximity between the plaintiffs and the defendants to create such a duty of care. He says there was no immediate physical closeness between the Metrolux Land with Arab Malaysian Land and Block 2 & 3. The Metrolux Land, he stresses, is some distance away from both the Arab Malaysian Land and the Highland Towers Site. In fact, from the layout plan, various intervening lots belonging to other individuals separates them.

Though this is true but under the principle of Donoghue v Stevenson proximity is not confined to physical proximity. In the words of Lord Aitkin it :

" extend(s) to close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act".

The act complained of was the division of water and silts from the Metrolux Land into the East Stream which caused the water to overflow onto the slope of the Arab Malaysian Land resulting in the failure of the retaining wall that triggered off a landslide which eventually brought down Block 1 and the forced the plaintiffs to evacuate Block 2 & 3. Though the location of the originating cause was some distance away from the ultimate effect of the cause, these two were closely and directly related. In this instance, we are concerned with the element of water that traversed lands that caused no loss to the immediate physical neighbors but drastically to those some distance away. But when one retraces the origin of this effect it relates to the acts of these defendants as the cause. With such close and direct connection between cause and effect, I am satisfied that the plaintiffs have proved proximity to both the acts complained of and the parties concerned.

Dato Sethu's next submission relates to the common law rule that an occupier of land situated at lower stream has no ground of complaint, or cause of action against an occupier whose land is at the upper section for permitting water that has come naturally onto his land to pass it onto his neighbor's land downstream. The case of Smith v Kenrick (1843-60) All ER Rep 273 is cited in support. But this rule, by established authorities, only applies when no artificial retention and diversion is applied to the water. As succinctly put by Mr. Piers Ashworth QC, sitting as a deputy judge of the High Court, in Home Brewery plc v William Davis & CO (Loughborough) LTD (1987) 1 All ER 637:

"There can be no doubt that an occupier of land has no right to discharge onto his neighbor's land water that he has artificially brought onto his land (Baird v Williamson (1863) 143 ER 83) or water that has come naturally onto his land but which he has artificially, or even unintentionally, accumulated there (Whalley v Lanchashire & Yorkshire Rly CO (1884) 13 QBD 131) or which by artificial erection on his land he has cause to flow onto his neighbor's land in a manner in which it would not, but for such erection, have done (Hurdman v North Eastern Rly. (1874-80)All ER Rep 735). If an occupier does any of these things he is liable to an action at the suit of his neighbor. Furthermore if he brings water onto his land and accumulates it on his land he may well be liable to his neighbor if that water escapes, even though he has no wish to discharge it and has taken every precaution against discharging it (Rylands v Fletcher (1868) LR 3 HL 330)."

In the factual matrix of our case, the water at the Metrolux Site was naturally on the land but these defendants had artificially erected barriers on their land to redirect its natural flow path into the East Stream which consequently caused the damage suffered by the plaintiffs. Such acts of these defendants are closely and directly connected to the damage and for this, the 7th & 8th defendant must be liable to the plaintiffs.

Proceeding further, Dato Sethu submits that the plaintiffs, not being riparian owners of the East Stream, cannot complain of the flow of water on the East Stream or of any diversion caused. For this, he cited the case of Pride of Derby & Derbyshire Angling Association LTD v British Celanese LTD (1952) 1 All ER 1326 which decided that a:

"riparian right is a claim by a riparian proprietor of land to the enjoyment of a natural stream flowing through his land. If water is polluted and his enjoyment in the natural flow of the stream is affected thereby, he may have a course of action against the polluters".

I find this proposition of Dato Sethu is of no relevance to the present claim of the plaintiffs. I wish to emphasize that we are not discussing about a claim by the plaintiffs, as riparian owner of the East Stream, against the defendants for polluting this stream. The plaintiffs' claim against these defendants is for negligently creating a danger which they could reasonably foresee would cause damage to the plaintiffs.

By my aforesaid reasoning, I find the 7th & 8th defendants owe a duty of care to the plaintiffs. Having decided on this, I shall proceed to determine whether this duty of care was breached.

The acts of the 7th & 8th defendants have been extensively discussed and elaborated warranting no necessity for repetition. From them I am of the view that these defendants have breached this duty of care they owe to the plaintiffs. My reasons are contained in my deliberation of the many issues raised by these defendants and again repetition is not necessary. As damages have resulted due to the acts of these defendants, I find negligence proved against the 7th & 8th defendants.

Analysis - Nuisance

Towards the claim of nuisance, the 7th & 8th defendants insist that they are natural users of their land within the meaning as explained in the beginning section of this judgment. To support this, they highlighted the fact that the plaintiffs, as downstream user of the East Stream, have no right to complain against the act of an owner living upstream. The case of Palmer v Bowman (2000) 1 All ER 22 is cited to justify this contention. Generally, as I have expressed earlier on this aspect of the law, this is not incorrect. But by the artificial changes to the source of the stream which affected the nature flow of water then going by the principle as detailed by Mr. Piers Ashworth QC in Home Brewery plc v William Davis & CO (Loughborough) LTD (supra) (which was cited with approval in Palmer v Bowman), the defendants are not exempted from causing nuisance. In this case, the erection of the East West Bund by the 7th & 8th defendants had diverted more water to flow into the East Stream and carried with it eroded soil to created a series of consequences that lead to the collapse of Block 1 and the forced abandonment of Block 2 & 3. By this very act, I find the 7th & 8th defendants are not reasonable users of their land.

On the foreseeability factor required to constitute actionable nuisance, the 7th & 8th defendants avert that they could not have reasonably foreseen during the course of their act that their act would result in damages the plaintiffs. Since the test on foreseeability is similar to that in negligence, and that I have already scrutinized it against the facts of this case, there is no requirement for me to restate except to reconfirm my finding that these defendants did or ought to have foreseen that their acts would cause damage to the plaintiffs.

Having found the 7th & 8th defendants being unreasonable users of their land, as well as they being able to foresee that their act would injure their neighbor - the plaintiffs, these defendants are liable to the plaintiffs for nuisance.

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