LATENT DAMAGE IN HONG KONG

The Hong Kong Court of Appeal in The Bank of East Asia Ltd v Tsien Wui Marble Factory Ltd [2000] 1 HKC has given detailed consideration to the law relating to latent damage and the tort of negligence. The ratio of the case is not entirely easy to discern given the divergence in the views expressed by the five judges who heard the case. In outline the court held that the cost of rectifying the defects in a building should be characterised as pure economic loss and that the cause of action accrues to the building owner when he first suffers financial loss or detriment, even when he is not aware of the fact that he has suffered such economic loss. In the absence of any clear evidence as to the date on which the financial loss was suffered, it was held that the court was entitled to treat the date on which physical damage to the building first occurred as the time at which the cause of action accrued. In other words, the court held that the discoverability test adopted by the Privy Council in Invercargill City Council v Hamlin [1996] AC 624 was not applicable in Hong Kong. The case is discussed in more detail by Bateson and Mak at [2000] International Construction Law Review, pp675–688.