BENNY LEE WAI KHEONG AND ANOTHER v. LAM KEN CHUNG SIMON AND ANOTHER

DCCJ 342/2021

[2026] HKDC 480

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 342 OF 2021

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.  This case concerns a dispute between the former landlord and former tenant of a residential flat at Unit B, 4/F, Block 8, Cavendish Heights, 33 Perkins Road, Jardine’s Lookout, Hong Kong (“Flat”) and Car Parking Space No 28 on Lower Ground 1 of Block 8 (“Car Park Space”) (together, “the Property”).

2.  By a written tenancy agreement dated 20 May 2019, the 1^st Plaintiff, Mr Benny Lee Wai Kheong, and the 2^nd Plaintiff, Ms Hui Wai Han Linda, as owners and landlords of the Property, let it to the 1^st Defendant, Mr Lam Ken Chung Simon, and the 2^nd Defendant, Ms Lisa Tang, as tenants for a fixed term of three years commencing on 1 August 2019 and ending on 31 July 2022, at a monthly rent of HK$59,000 inclusive of rates, management fees and service charges, with a rent-free period from 15 to 31 July 2019 (“Tenancy Agreement” or “Tenancy”).

3.  The Plaintiffs are husband and wife. They purchased the Property as joint tenants on 3 December 2009 and have from time to time let it out since then. They themselves have for many years resided in another flat in Block 5 of Cavendish Heights. The 1^st Plaintiff works in sales and customer success for a multi‑national company with business throughout the Asia‑Pacific region, and he was the principal point of contact with the Defendants in relation to the Tenancy. As for Ms Hui, it is not disputed that she took only a minimal part in the matters now in issue, and both Defendants confirmed that they had not met her before seeing her in court at the start of the trial.

4.  The Defendants are also husband and wife, each in a second marriage. The 1^st Defendant is a practising barrister in Hong Kong, called to the HK Bar and the UK Bar in 1989. He worked in the then Attorney General’s Chambers until about 1991, when he entered private practice. In the course of his practice he has dealt with contract and general civil matters, with a particular focus on land law. The 2^nd Defendant is employed by an environmental company, Alba (“Alba”), where she has worked for some 11 years in an administrative and managerial capacity. Before moving into the Property in mid‑2019 to live together, they lived separately: the 1^st Defendant at Grand Promenade in Sai Wan Ho and the 2^nd Defendant, with her two daughters from her first marriage, at Provident Centre in North Point (“Provident Centre”).

5.  In or about mid‑2020, building renovation works to the external façade and common parts of Block 8 of Cavendish Heights commenced (“Block 8 Building Renovation”). These works were carried out using the traditional method of bamboo scaffolding with full mesh covering (“Traditional Method”), as opposed to the steel platform and scaffolding with partial mesh system previously used for Blocks 1 to 7 of Cavendish Heights (“Platform Method”). The Defendants complained of substantial disturbance, including noise, dust, loss of light and ventilation, and the removal or disabling of air‑conditioning units. They ceased paying rent from 1 July 2020 and, on 17 August 2020, vacated the Property and returned the keys.

6.  The Plaintiffs deny that they are responsible for the disturbance and contend that the Defendants committed a repudiatory breach of the Tenancy Agreement. They treated the Tenancy as terminated and now claim against the Defendants for rent arrears and damages for loss of rent for the unexpired term up to 30 April 2022, when the Property was eventually re‑let at a monthly rent of HK$60,000 (with a rent-free period from 19 April 2022 to 30 April 2022), subject to giving credit for sums received (including the remaining rental deposit in the sum of HK$59,000.00 and the reimbursement for a hob purchased by the Defendants in the sum of HK$7,230, which are undisputed), and for interest and costs.

7.  The Defendants resist the claim and counterclaim for damages. In essence, their defences and counterclaims rest on the following grounds:

7.1. They were induced to enter into the Tenancy Agreement by misrepresentations as to the timing and method of the Block 8 Building Renovation, namely that renovation would not commence in the near future and that, when it did occur, the same Platform Method as had been used for Blocks 1 to 7 would be adopted, with minimal disturbance (“Misrepresentation”);

7.2. The Plaintiffs were in repudiatory breach of the covenant for quiet enjoyment when the Block 8 Building Renovation was in fact carried out using the Traditional Method;

7.3. The Tenancy Agreement should be rectified to include a tenant-only early termination clause (“Early Termination Clause”), which they say was wrongly omitted by mistake; and

7.4. In any event, the Plaintiffs failed to mitigate their loss by insisting on an unrealistically high rent when re-letting the Property while the renovation works for the Block 8 Building Renovation were ongoing.

The Defendants counterclaim for damages for misrepresentation and/or breach of the covenant for quiet enjoyment. Their pleaded heads of loss include moving fees, agency fees incurred in securing alternative accommodation, and the rental difference between the contractual rent under the Tenancy Agreement (HK$59,000) and the rent they paid for their new accommodation at Flat C1, 12/F, Tower C, Wilshire Towers, 200 Tin Hau Temple Road, North Point, Hong Kong (“Wilshire Towers Flat”) after moving out of the Property.

B. THE ISSUES

8.  For the purpose of this trial, the parties prepared a Joint Statement of Issues in Dispute for this action:

8.1. Whether, at the time the Tenancy Agreement was entered into, the Plaintiffs were aware that building renovation would be carried out in the near future, and that the Traditional Method would be used. (“Issue 1”)

8.2. Whether the Plaintiffs did make representations to the Defendants that the building renovation work would not be carried out in the near future, and even if it were to be carried out the Platform Method would be used. (“Issue 2”)

8.3. Whether the Plaintiffs were in breach of the covenant of quiet enjoyment. (“Issue 3”)

8.4. Whether the Defendants were entitled to terminate the Tenancy. (“Issue 4”)

8.5. Whether the Tenancy was subject to the Early Termination Clause. (“Issue 5”)

8.6. Whether the Plaintiffs have failed to mitigate their loss. (“Issue 6”)

8.7. The amount of loss and damage suffered by the Plaintiffs, if any. (“Issue 7”)

8.8. The amount of loss and damage suffered by the Defendants, if any. (“Issue 8”)

8.9. What were the agreed express and implied terms of the Tenancy Agreement. (“Issue 9”)

8.10. Whether the Defendants were in breach of the Tenancy Agreement. (“Issue 10”)

8.11. Whether owners of a flat can be held responsible for the Incorporated Owners’ (“IO”) decision to renovate the whole building. (“Issue 11”)

8.12. Whether using the traditional method of renovation, namely mesh and bamboo scaffolding, removal of air-conditioners (ie the Traditional Method), can amount to breach of quiet enjoyment by the landlord. (“Issue 12”)

8.13. Before signing the Tenancy Agreement, whether the Defendants were aware of upcoming building renovation that would take place within the near future or the next few years. (“Issue 13”)

8.14. Whether the pre-tenancy negotiations and representations were still relevant after signing the Tenancy Agreement. (“Issue 14”)

8.15. Whether the Defendants were induced to enter into the Tenancy Agreement by the alleged representation that the Platform Method would be used for building renovation. (“Issue 15”)

C. LATE DISCOVERY OF TELEPHONE BILLS AND APPLICATION TO ADDUCE SUPPLEMENTAL EVIDENCE AT TRIAL

9.  Before turning to the facts, evidence and substantive analysis of the issues, it is necessary to address certain preliminary issues which arose during the trial.

10.  On the second day of trial, after the 1^st Plaintiff had completed his evidence, the Defendants applied orally for leave to adduce certain telephone bills for the 2^nd Defendant’s mobile number 9821 8823 (“Telephone Bills”). On the third day of trial, when the 2^nd Defendant was giving her evidence‑in‑chief, they further sought leave for her to give supplemental oral evidence explaining how to read and understand those bills, without providing any draft supplemental witness statement beforehand. Such additional evidence was directed to the question whether a telephone call between 8:26 am and 8:29 am on 17 May 2019 between the 1^st Plaintiff and the 2^nd Defendant (“Phone Call”), relied on by the Plaintiffs as the occasion on which the Early Termination Clause was allegedly agreed to be removed from the Tenancy Agreement, had in fact occurred, and was of particular relevance to Issue 5. The Plaintiffs opposed both applications.

11.  In order to avoid trial time being taken up by argument on these applications, and after discussion with counsel, the following course was agreed:

11.1. The Defendants would be permitted to refer to the Telephone Bills, and I would hear the 2^nd Defendant’s supplemental evidence‑in‑chief, limited to explaining how to read and understand the bill, on a de bene esse basis.

11.2. The parties would address the admissibility of that material in their closing submissions, and I would rule on whether to admit it as part of this judgment.

12.  There appears to be no dispute between the parties that the applicable legal principles for admitting late or new evidence during trial were set out in TYT v TLH [2020] HKFC 153 at §§83-86, which cited Balram Chainrai v Kushnir Family Holdings Ltd [2018] HKCFI 17 with approval. The following factors should be taken into account with flexibility and balanced against each other whenever the court is asked to exercise its discretion to admit fresh evidence at a late stage:

12.1. The three conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 are relevant:

(a) that the evidence could not have been obtained with reasonable diligence for use at the trial;

(b) that the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and

(c) that the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.

12.2. The court would consider materiality, cogency and relevance of the evidence as well as its impact on the outcome.

12.3. The court would consider whether there are exceptional circumstances to justify introducing new evidence at a late stage.

12.4. The court would consider the underlying objectives of Order 1A including costs-effectiveness, expedition as reasonably practicable, proportionality and procedural economy, fairness between parties etc; and

12.5. The court would consider any other relevant factors such as delay, conduct etc.

13.  The Plaintiffs opposed the applications on the basis that the evidence was sought to be introduced at a very late stage, after the 1^st Plaintiff had completed his evidence‑in‑chief and in the middle of trial. Relying on authorities such as Amrol v Rivera [2008] 4 HKLRD 110 and Cheung Wei Man & Another v Centaline Property Agency Ltd & Others (HCA 286/2000, 25 September 2003) where the courts expressed strong disapproval of late disclosure and “trial by ambush”, Mr Alvin Tsang, counsel for the Plaintiffs, submitted that if the Defendants wished to challenge the existence of the alleged Phone Call on 17 May 2019 by reference to Telephone Bills, they could and should, with reasonable diligence, have obtained those records well before trial, particularly once the 1^st Plaintiff’s witness statement filed on 22 September 2022 (“P1 1^st WS”) and the Amended Reply and Defence to Counterclaim filed on 16 August 2024 (“AR & DCC”) made clear that the Plaintiffs’ case was that the relevant discussion had taken place “over the phone”. He characterised the applications as an attempted tactical ambush which was inherently prejudicial. As to the probative force of the Telephone Bills, he argued that they were in any event inconclusive, since it was possible for a call to have been made to the 2^nd Defendant without appearing on the bill (for example, if call‑forwarding to another number or to a temporary travel SIM had been used), and that there was no proper basis for alleging that the 1^st Plaintiff had lied about the Phone Call.

14.  The Defendants, through their counsel Mr Daneel Heung, submitted that the lateness was justified by a change or clarification in the Plaintiffs’ own case. He, in gist, contended that the references to a discussion “over the phone” were, in context, ambiguous and could reasonably be read as referring to a WhatsApp call made using the phone but over data, rather than a conventional voice call over the mobile network. It was stressed that their earlier understanding, borne out by the Answers to Further and Better Particulars to the Reply and Defence to Counterclaim filed by the Plaintiffs on 16 September 2021 (“Answers to F&BP”), was that the Plaintiffs’ case was a “WhatsApp call” case. On that footing, obtaining traditional telephone bills, which would not usually capture WhatsApp data calls, would not have been a meaningful way of testing the Plaintiffs' case. It was only when the 1^st Plaintiff, in cross‑examination, expressly disavowed WhatsApp and committed himself to saying that the relevant call was a normal voice call over the mobile network that the records for number 9821 8823 became directly relevant and probative, since a call from Hong Kong to the 2^nd Defendant in Taiwan would be expected to attract international call charges and to appear on the Telephone Bills. It is the Defendants’ case that they then acted with reasonable promptness to obtain and deploy those bills.

15.  Weighing the matter in the round and balancing the factors identified in TYT v TLH and the authorities there cited, I consider it appropriate to allow the Defendants’ applications to adduce the Telephone Bills and to permit the 2^nd Defendant to give limited supplemental oral evidence explaining how to read and understand them.

16.  The Answers to F&BP expressly stated that the alleged verbal communication on 17 May 2019 between the 1^st Plaintiff and the 2^nd Defendant was via WhatsApp, and that position was never formally amended. Although P1 1^st WS at §50 and AR & DCC at §22(1A) described the discussion as having taken place “over the phone”, those later references, even when read with the remaining part of the said §50 and the said §22(1A) (which contrast a discussion “over the phone” with sending a draft tenancy agreement by “WhatsApp group chat”), did not clearly withdraw the earlier WhatsApp plea and remained reasonably capable of being understood as referring to a WhatsApp voice call made over data via the phone. In these circumstances, the Defendants were entitled, up to the trial, to proceed on the basis that the Plaintiffs’ case involved WhatsApp communication, in which case conventional call records would not assist. The practical need for the Telephone Bills only arose when, in cross‑examination, the 1^st Plaintiff clarified that the discussion was said to have been conducted over the mobile network rather than via WhatsApp. The Defendants then obtained and produced the Telephone Bills on the day after, and I accept that as a prompt and legitimate response to a material clarification in the Plaintiffs’ case. The requirement of reasonable diligence, as adapted from Ladd v Marshall, is therefore satisfied, and I do not regard the late deployment of the evidence as a tactical ambush.

17.  The Telephone Bills are, on their face, relevant, material and apparently credible evidence on a live issue, namely whether there was in truth a telephone call on 17 May 2019 (ie the Phone Call) in which the alleged agreement to remove the Early Termination Clause from the Tenancy Agreement was discussed. If the records show no relevant international call on that date, they provide contemporaneous documentary material tending against the 1^st Plaintiff’s account, even though they may not be conclusive and must be evaluated with the rest of the evidence. The Telephone Bills appear to be a genuine telephone account for the relevant number, and their authenticity, accuracy and completeness can be explored in the 2^nd Defendant’s evidence and tested by cross‑examination; I therefore regard them as apparently credible for present purposes. I do not consider their late production to amount to an unfair ambush, but rather a legitimate forensic response to a development that only emerged clearly in oral testimony. Given that the Telephone Bills were a consolidated company account issued to Alba (ie the 2^nd Defendant’s employer), containing records for multiple staff numbers and using codes and abbreviations to distinguish categories of calls, it is also in the interests of a fair trial that the 2^nd Defendant be allowed to give focused evidence‑in‑chief explaining how to identify the relevant entries (including the date and time of calls, and whether they are local or international), so that the court can properly understand and evaluate the document and the Plaintiffs can cross‑examine on an informed basis.

D. FACTS AND EVIDENCE

18.  Cavendish Heights is a large residential development comprising eight multi‑storey blocks. Blocks 1 to 7 (“Blocks 1 to 7”) were built earlier and have an IO for the seven blocks. Block 8 has its own separate IO and Management Committee (“Management Committee”), although all blocks are managed by the same management company (“Manager”).

19.  There appears to be no dispute that by about 2008 to 2009, Block 8 was showing signs that large‑scale maintenance was required. From late 2016 onwards, discussion and planning for major repairs and renovation to Block 8 continued, and at least two extraordinary general meetings (“EGM”) of the IO were held in 2018 to discuss the project. On 6 December 2018, an EGM of the IO was held at which resolutions were passed to determine the scope and design of the proposed work and to task the Management Committee with starting the tender process to seek a contractor (“6 Dec 2018 EGM”). Yuen Hing Construction & Engineering Co Ltd (“the Contractor”) was later appointed on 9 March 2020 pursuant to a resolution passed at an EGM on that date. Nothing in the minutes suggests that the Plaintiffs attended those EGMs, and the 1^st Plaintiff’s evidence in cross‑examination that, to the best of his recollection, he did not do so was not challenged, although he accepted that he had attended at least one other meeting where photographs of the planned exterior façade and samples of the proposed colour were shown. The Defendants place weight on the 6 Dec 2018 EGM: they say that by then the scope and design were fixed and the tender was authorised, so that six months later at the time the Defendants viewed the Property in May 2019, there was, on their case, no reasonable ground for the 1^st Plaintiff to say that the Block 8 Building Renovation would not take place “in the near future”. The 1^st Plaintiff said in his cross-examination that he did not regard the 6 Dec 2018 EGM as a late stage in a long-running process, that Block 8 had been discussing renovation for years, and that he could not keep track of all such discussions and had no specific memory of reading those minutes, although he accepted that he might have glanced at them at the time when they were left in his mailbox.

20.  Before letting the Property to the Defendants, the Plaintiffs had let it to a Ms Chang under a tenancy agreement dated 16 April 2014 and a further agreement dated 10 July 2016 when she wished to extend for another two years. Under those leases, either party could terminate the tenancy early by giving not less than two months’ written notice or paying two months’ rent in lieu, provided Ms Chang had occupied the premises for a minimum period (24 months under the first lease and 30 months under the second). On or about 13 April 2019, Ms Chang notified the 1^st Plaintiff that she would give two months’ notice to terminate the tenancy in June 2019, prompting the Plaintiffs to seek new tenants.

21.  The 1^st Plaintiff arranged for the Property to be advertised for rent on the Internet and through estate agents. On 14 May 2019, the 2^nd Defendant first contacted him via WhatsApp to express the Defendants’ interest in renting the Property and wrote:

“你好，李先生，我們對您的物業很有興趣，而我們亦不介意簽長一點的租約。但是我們昨天看看我們的租約，發現9月一日才到期。但是我們仍然希望可以在你租客搬出的時候看看樓。我先生是大律師，我是在德國環保公司工作的。”.

That led to the arrangement of the viewing on 15 May 2019.

22.  When the 1^st Plaintiff showed the Property to the Defendants on 15 May 2019, Blocks 1 to 7 were undergoing major renovation using the Platform Method, and the Defendants saw those works as they walked through the estate. It is common ground that the possibility of future renovation to Block 8 was discussed during the viewing, although the content of that discussion is in dispute. The Plaintiffs say the 1^st Plaintiff stated that renovation to Block 8 was under discussion and planning and might or would happen at some point in the future, but that he did not say it would not commence in the near future or that the Platform Method would be used. The Defendants say that the 1^st Plaintiff represented that renovation at Block 8 would not commence “in the near future”, and that when it did occur the same Platform Method as in Blocks 1 to 7 would be used, with minimal disturbance. The 2^nd Defendant further said in cross‑examination that she particularly recalled the 1^st Plaintiff using the Cantonese phrase “你都住過和富中心，你都知道開始計劃到實際施工都要一段時間”. She confirmed she was not paraphrasing and could remember those words very clearly.

23.  Following the viewing, the parties began negotiating the tenancy principally via WhatsApp and email. In her first WhatsApp message to the 1^st Plaintiff soon after the viewing, the 2^nd Defendant wrote:

“Hi Ben, we really like the apartment and we would like to propose to rent it for 3 years fix lease for 58k, and if by that time the renovation still not finish, we may even have the outer clause that we will stay until the renovation is over…”.

24.  After some further discussions between the 1^st Plaintiff and the 2^nd Defendant, a draft tenancy agreement was then sent by the 1^st Plaintiff on the same day on 15 May 2019 for the Defendants’ consideration. Between 15 and 20 May 2019, the Defendants made comments on successive drafts and the 1^st Plaintiff circulated revised versions via WhatsApp and email. It is worth noting that, in the first draft, there was a mutual early termination clause, namely Clause 5a, which became the subject of dispute. The said Clause 5a provided that (“Clause 5a”):

“5. THE PARTIES FURTHER AGREE EITHER PARTY MAY TERMINATE THIS TENANCY AGREEMENT UNDER THE FOLLOWING CONDITIONS:-

a. Notwithstanding anything to the contrary hereinbefore contained, either party shall be entitled to terminate this Tenancy Agreement earlier than as herein provided by serving not less than 3 months written notice or by paying 3 months' rent-in-lieu to the other party provided that the said written notice shall not be served before the expiration of the 24^th month of the Term”

25.  Regarding the said Clause 5a, the 1^st Defendant specifically commented and suggested via WhatsApp to replace “either party shall be entitled to terminate” by “the Tenant shall be entitled to terminate” and further stated that:

“We like the premises very much and would like to stay for the full 3 years if possible”.

In the subsequent WhatsApp message sent on 17 May 2019, the 1^st Plaintiff expressed his agreement to the said suggestion for Clause 5a.

26.  There were then also negotiations on the rent and whether it was to be inclusive of the management fees and service fees. The 1^st Plaintiff said that it was his “normal practice” with his previous tenants that “the monthly rent is just for the rental of the premises and the management fee/service fee is separate”, but he was prepared to “strike a middle-ground” with the Defendants to have an “all-inclusive” rate of HK$60,000 to include all management fees and service charges. In response, the 2^nd Defendant replied in the same morning at 8:26 am that:

“Morning, all along we thought it was inclusive and can be compromised it on 59k with all the terms agreed above…We do like the Apartment a lot and hope u can consider as we are willing to stay through the whole renovation period and we consider ourselves relatively trouble free tenants as well.”

27.  Approximately three minutes later, at 8:29 am, the 1^st Plaintiff replied:

“Lisa and Simon – thank you for your interest and I truly appreciate your speed of response and sincere interest. I agree – let’s proceed with this on Monday. I will send over a revised draft shortly and if you agree, I will have my wife sign 3 copies of the agreement for our final signature on Monday …”

28.  In subsequent drafts of the tenancy agreement sent to the Defendants, Clause 5a was removed altogether. As discussed in Section C above, the parties are in dispute as to whether there was a verbal discussion between the 1^st Plaintiff and the 2^nd Defendant during the said three-minute interval between 8:26 am and 8:29 am on 17 May 2019, ie the Phone Call, in which they agreed that the Early Termination Clause would be removed. I will come back to this question when considering Issue 5 at Section F2 below.

29.  Eventually on 20 May 2019, the parties executed the final form of the tenancy agreement, ie the Tenancy Agreement in the lobby of Block 8. The Defendants then obtained the keys and access cards from the 1^st Plaintiff and took possession of the Property on 14 July 2019.

30.  It is common ground that during the first year of the Tenancy the Defendants paid rent as it fell due and, apart from routine matters, there were no major disputes between the parties.

31.  On 9 March 2020, another EGM of the IO of Block 8 was held at which resolutions were passed to approve and accept a proposal to carry out the Block 8 Building Renovation and to accept the Contractor’s tender to carry out the work.

32.  In around late April/May 2020, the Defendants noticed that bamboo scaffolding started to be erected surrounding the outer walls of Block 8 and by mid-May, the Management Office notified residents to arrange a survey concerning renovation works, including details about their air-conditioning units.

33.  In early June 2020, the kitchen hob failed; the Defendants purchased a replacement, and the Plaintiffs agreed that the cost of HK$7,230 (after discount) would be reimbursed and credited against sums otherwise due from the Defendants.

34.  On 10 June 2020, the 1^st Plaintiff sent a WhatsApp message to the 2^nd Defendant stating that Block 8 Building Renovation would be starting and asking her to help complete a survey form about the condition of the Property, as requested by the Contractor.

35.  In or around June 2020 (following the EGM of the IO on 9 March 2020), Block 8 Building Renovation commenced using the Traditional Method. There is no dispute that the Property became surrounded by bamboo scaffolding and mesh for an extended period, that hacking and drilling generated noise and dust, and that the proposed works included removal and reinstatement of certain external air‑conditioning units. On 26 June 2020, the Defendants raised complaints about the disturbance with the 1^st Plaintiff by WhatsApp. The said WhatsApp message is as follows:

“Good morning Ben! I hope this message finds you well.

As you are probable aware, the renovation of Block 8 has started. This is something that we expected at the time when we entered into the lease with you in Jun/Jul last year. There are however the following matters which are out of our expectation:

(1) We expected the renovation of Block 8 to be carried out in a way similar to that of Blocks 1-7 – i.e., steel scaffolds would be use which are quieter, neater and do not entail the wrapping of the building by mesh, and which does not require the temporary removal of air-conditioners. It now turns out the traditional method of using bamboo scaffolds is adopted. The building is being enclosed by mesh and the noise of work is really loud.

(2) While we may be willing to try our best to tolerate the mesh and the noise, there is one matter which we cannot possibly put up with. Today, we were told by the Management that it may be necessary to remove some of our air-conditioners in order for renovation work to be carried out. In particular, we were told that it is most likely that the air-conditioner of the master bedroom will have to be removed from mid-July until the end of the entire renovation project. I have to say that it is entirely unacceptable. How can we possibly be expected to live in an apartment with no air-conditioners in Hong Kong summer (even if it is only the master bedroom that is deprived of air-conditioning)? I'm afraid the apartment would simply become uninhabitable.

(3) In relation to the parking space, our understanding at the time of the lease was that, although there would a period of time that we would have to move our car to another place within the same development, the period would be short and the management would make arrangements for us to park. We were told this morning that the carpark would be out of use for an entire month (assuming no delay in work progress or otherwise it could be longer), and that we shall have to make our own parking arrangements during the period.

Besides, you may also be aware that, despite completion of renovation work of Blocks 1-7 and the Clubhouse, the swimming pool (which apparently has not been renovated) is still closed, with no date of reopening (we were told that tender for the renovation of the swimming pool has not even started). This is again totally out of expectation, for we expected the enjoyment of the full Clubhouse shortly after the commencement of lease.

I wonder if you, as the owner of the premises, might be able to contact the Owners’ Incorporation to voice out our concerns, in particular in relation to (2) above. We love your apartment and we wish to stay on if at all possible. A summer without air-conditioners (even if just for the master bedroom) is however totally out of the question.”

36.  On 28 June 2020, there were further WhatsApp exchanges between the 1^st Defendant and the 1^st Plaintiff:

The 1^st Defendant asked:

“Hi Ben, I hope you have had some time to find out and consider the situation. May we have your thoughts, please? Alternatively, could we meet to discuss, either at the lobby of your block or ours?”

The 1^st Plaintiff replied:

“Hello Simon. Apologies for not responding earlier - I have been dealing with some personal challenges these past few days.

I am more than happy to speak to the Cavendish Management office to see if they can stagger the dismantling of the air conditioning.

I certainly understand the inconvenience the renovations will cause as I have also gone through over 2 years of this in my block as well.

If it would help, perhaps a portable air conditioning unit of might help and we can consider a way to arrange this”

The 1^st Defendant then replied:

“Thanks for your reply Ben. You are right in that we expected to go through what you went through when Blocks 1-7 were under renovation. What is unexpected is however that they have adopted a totally different renovation method from that used in your block, as l explained in my earlier message. Furthermore, I don't think any portable air-conditioner is powerful enough for a space the size of the master bedroom, not to mention the sitting-dining room areas.

Ben, we need to talk to reach an agreement in view of the current situation. Is it possible for us to meet tomorrow evening, say at 7 pm, in the ground floor lobby of either your block or mine? Face to face discussions are always better than messaging.”

37.  The 1^st Plaintiff, as appears in the WhatsApp chat record, then took steps including liaising with the management office and the renovation contractors with a view to assisting the Defendants and minimising the disturbance to them.

38.  The Defendants ceased paying rent as from 1 July 2020.

39.  On 3 July 2020, there were further correspondences via WhatsApp, between 1^st Defendant and the 1^st Plaintiff. After being requested by the 1^st Plaintiff to honour the Tenancy Agreement to pay rent, the 1^st Defendant replied:

“Hi Ben,

Since you mentioned the tenancy agreement, I think I should say a few words to set the record straight. Under clause 3d of the agreement, the tenant is entitled to peaceful enjoyment of the premises. This clause cannot be honoured due to the building renovation. We are, however, thinking hard to see if we may tolerate the situation, not that we are obliged to, but because you have been a reasonable landlord, and we want to avoid the hassle of having to move again in less than a year. We appreciate your effort in trying to make the situation more bearable, but it must be understood that this is done not just for our benefit, but more importantly so that the breach under the peaceful enjoyment clause could be mitigated. lt is hoped that, upon the understanding above, we can achieve an amicable solution of problems caused by the building renovation.”

40.  On 17 July 2020, the 1^st Defendant, through the Defendants’ solicitors Fung, Wong, Ng & Lam (“FWNL”), wrote to the Plaintiffs relying on Clause 3d of the Tenancy Agreement (tenant’s peaceful enjoyment) and an implied covenant of quiet enjoyment, alleging repudiatory breach by reason of the Block 8 Building Renovation, purporting to accept that repudiation and to terminate the Tenancy Agreement. The said Clause 3d provides that:

“3. DURING THE TERM, THE LANDLORD AGREES WITH THE TENANT AS FOLLOWS:

…

d. Provided the Tenant has paid the Rent in accordance with this Agreement and has duly observed and performed all the terms in this Agreement, the Tenant may peacefully hold and enjoy the Premises during the Term without any interruption by the Landlord.”

41.  On 28 July 2020, the Plaintiffs’ solicitors Messrs C S Chan & Co (“CS Chan”) by letter denied the allegations, stating inter alia that the Defendants had been fully aware that Block 8 would undergo major renovation during the three‑year tenancy and had expressed willingness to stay through the entire renovation period, that the building works were acts of the IO rather than the Plaintiffs, and that the Plaintiffs had not and could not be in breach of the covenant of quiet enjoyment.

42.  On 30 July 2020, FWNL wrote again on behalf of the Defendants, alleging misrepresentation (ie the Misrepresentation) for the first time and drawing attention to Clause 4g of the Tenancy Agreement (“Clause 4g”), which provides:

“This Agreement supersedes all prior negotiation, representation, understanding and agreement made by the parties.”

43.  On 10 August 2020, CS Chan sent a further letter denying any misrepresentation and maintaining the Plaintiffs’ position.

44.  Following further exchanges of WhatsApp messages and solicitors’ correspondence, the Defendants vacated the Property and handed back the keys on 17 August 2020, thereby delivering up vacant possession to the Plaintiffs. The Plaintiffs treated the Defendants’ conduct as a repudiation of the Tenancy Agreement and elected to claim rent and damages, while the Defendants maintained that they were entitled to bring the Tenancy to an end. The Defendants then moved to the Wilshire Towers Flat which they accepted in cross-examination was larger in size, with a saleable area of about 1,600 square feet and according to the 2^nd Defendant, has four rooms.

45.  After repossessing the Property, the Plaintiffs instructed estate agents to market it for letting and, at times, for sale. It is not in dispute that, notwithstanding the efforts, no new tenancy was concluded while the scaffolding remained in place, and in the meantime, the Plaintiffs commenced the present action on 21 January 2021. According to the email from the Cavendish Heights Management Office, which is not disputed by the parties, the bamboo scaffolding for Block 8 was dismantled from about October 2021 to November 2021. There also appears to be no dispute that after the air-conditioners of the Property were dismantled on 24 August 2020, they were reinstalled back at the Property on 6 July 2021. And, as stated above, the Property was eventually re‑let under a new tenancy commencing in April 2022 at a monthly rent of HK$60,000 inclusive, with a short rent‑free period from 19 to 30 April 2022.

46.  By the order of Master Louise Chan dated 19 December 2022, leave was granted to the parties to adduce expert evidence on:

46.1. The difference between the Platform Method and the Traditional Method.

46.2. The market rent of the Property as at 20 May 2019 and since termination on 17 July 2020.

The expert reports of Mr Chris Tang for the Plaintiffs dated 23 August 2023 and Mr Mak Chi Biu and Mr Lai Wah Chi for the Defendants dated 21 August 2023 and 21 June 2023 respectively, and the joint expert statements on liability dated 28 March 2024 and on quantum dated 25 April 2024 (“Joint Letter of the Valuation Experts”), were then also ordered to be tendered as evidence without calling the makers.

E. THE WITNESSES

47.  Before I turn to consider the issues that fall for determination, I will first provide a brief summary of my assessment of the witnesses.

48.  In assessing credibility and making findings of facts, I adopt the following principles:

48.1. As summarized by K Yeung J in Wah Sung Construction & Piling Limited v Cheer Wide Limited [2024] HKCFI 45 at §53:

“Counsel has cited to me a number of cases on the approach in assessing the credibility and reliability of witnesses. I remind myself when considering a witness’ credibility of the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or undisputable evidence, with contemporaneous conduct and documents, the internal consistency of the witness’ evidence amongst their witness statements and with pleadings, and any material change of case. I need to consider the totality of the evidence. I remind myself that lies themselves do not necessarily mean that the entirety of that witness’s evidence is to be rejected. I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility.”

48.2. The Court bears in mind not only the witnesses’ demeanour in court, but also the history of events, the contemporaneous documents and the inherent probabilities of the witnesses’ accounts: Esquire (Electronics) Ltd v The Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439 at 494C.

48.3. In Hui Cheung Fai and Anor v Daiwa Development Limited and Ors (HCA 1734/2009, 8 April 2014) at §§77, 81-82, it was said by DHCJ Eugene Fung SC (as he then was):

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) …

…

81. The practical approach to assessing credibility of witnesses in a case such as the present may have best been summarised by the words of Robert Goff LJ, as he then was, in The Ocean Frost [1985] 1 Lloyd’s Rep 1 at 57:

“Speaking from my experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.”

82. Whilst these words were spoken in the context of a fraud case, I believe they are applicable to any case where a witness’s credibility features prominently in the court’s determination …”

48.4. Moreover, it is also well established that if a witness has told lies on a central issue, that may have a significant adverse impact on the credibility of his or her evidence as a whole: Progetto Jewellery Co Ltd v Lau Chiu Ying [2020] HKCFI 209 at §§28-31.

49.  On the Plaintiffs side, only the 1^st Plaintiff was called to give evidence. On the Defendants’ side, both the 1^st and 2^nd Defendants gave evidence, and they also called Ms Christina Cheung (張雲華) (“Ms Cheung”), a former owner of a flat and car parking space of Block 8 and a former committee member of the Management Committee of IO of Block 8.

50.  One observation I make in this case is that the contemporaneous documents, in particular the WhatsApp messages exchanged (including the immediate responses when matters were first raised), provide the most reliable account of the facts and the sequence of events as they unfolded. In my view, they are of particular relevance to my evaluation of whether the 1^st Plaintiff made the alleged Misrepresentation and whether the Tenancy Agreement should be rectified to reinstate the Early Termination Clause.

51.  I find that the 1^st Plaintiff was, on the whole, a credible and reliable witness. His evidence was largely consistent with the contemporaneous documents, and his case remained broadly consistent, with no material internal inconsistency between his oral evidence and his own documents. Save in relation to mitigation of damages, to which I return below in Section F6, he appeared to be doing his best to give a fair and accurate account. Although, I ultimately find, on the evidence, against him on the existence of the Phone Call regarding the removal of the Early Termination Clause (in Section F2 below), I nonetheless agree with the principles for assessing credibility set out in Hu Lan v David Golden [2023] HKCFI 873 at §36(5), cited by Mr Tsang in his closing submissions that:

“It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie”.

I have borne that in mind when assessing the credibility of the other parts of the 1^st Plaintiff’s evidence on the key issues in dispute. In any event, whether there was such Phone Call is, as I explain below, not decisive as to whether there was an agreement to remove the Early Termination Clause.

52.  On the other hand, I am afraid I am of the view that the evidence given by the Defendants is generally not reliable. Both the 1^st Defendant and the 2^nd Defendant gave me the clear impression that they were trying to present a picture that they were misled by the 1^st Plaintiff’s alleged Misrepresentation into entering the Tenancy Agreement. On the evidence available as a whole, I consider that, in reality, they were seeking an excuse to extricate themselves from a bad bargain which they had consciously entered into when the disturbance arising from the anticipated building renovation turned out to be much worse than their own expectation. Their attempt to present a different picture was not candid. As will be apparent from the sections below, there are numerous respects in which their evidence is unsatisfactory and sits uneasily with the objective facts and inherent probabilities.

53.  As for Ms Cheung, she has no financial interest in the outcome of this action. The main thrust of her evidence was that all owners of Block 8, including the Plaintiffs, should from the outset have been aware that, when the Block 8 Building Renovation was discussed and considered, it was always understood and agreed that the Traditional Method would be used. That belief appears to rest on her understanding that the IO was in continuous contact with the owners regarding the renovation and its costs. However, it is undisputed that Ms Cheung does not know the Plaintiffs and that they were not members of the Management Committee of the IO, unlike Ms Cheung, who would therefore have been privy to far more detailed information about the project than an ordinary owner. It is also agreed that none of the minutes, nor any attachments to the minutes in evidence, identifies any specific start date for the works or specifies the scaffolding method, and there is no evidence that the belief Ms Cheung attributes to “all” Block 8 owners was in fact communicated to, or shared by, the Plaintiffs. Thus, while I do not regard her as an incredible witness, I must be cautious and am unable to attach any significant weight to her evidence in the absence of contemporaneous documents or other corroborating evidence.

F. DISCUSSION ON THE ISSUES

54.  To avoid repetition, and to address the underlying legal and factual questions in a logical sequence, I have grouped and re‑categorised certain issues for the purposes of analysis rather than dealing with each of them in isolation. I also note from the parties’ respective closing submissions that there is no longer any dispute on Issue 14 that the pre-tenancy negotiations and representations were still relevant after the signing of the Tenancy Agreement.

F1. Misrepresentation/ Pre-contract Knowledge and Defendants’ awareness of the Building Renovation and Inducement (Issues 1, 2, 13 and 15)

55.  The general principles in relation to the law on misrepresentation are not disputed. A useful summary was given by DHCJ Alexander Stock SC in Joytex Development Limited v Super Homes Limited [2018] HKCFI 2286, at §77:

“77. I consider it helpful to outline a few core principles …

(1) Generally, an actionable misrepresentation requires a false statement of past or present fact, as distinct from a statement of opinion or intention; though a statement of opinion/intention or as to the future may entail an implied statement of fact.

(2) Where there is a dispute as to the meaning conveyed, the court interprets the relevant words or conduct. The approach is objective, viewing the communication from the perspective of a reasonable person in the position of the representee. The test is whether: (a) the words or conduct in fact led the representee to believe the alleged false fact; and (b) it was reasonable for the representee to believe it from the words or conduct as he perceived them. In applying the test, the characteristics of the representee, including level of sophistication, are taken into account.

(3) Where an implied representation is alleged, the question is what a reasonable person would have inferred was being impliedly represented by the representor's words and conduct in their context.

(4) The statement must have the character of one upon which the representee was intended and entitled to rely.

(5) The representee must have in fact relied on the statement; though this can sometimes be inferred. The representation need not be the only or main cause of the decision to contract. It is generally sufficient that it be a cause (in other words, a material inducement).”

56.  On the issue of the Plaintiffs’ knowledge of the timing and method of renovation prior to the execution of the Tenancy Agreement, the Defendants’ case is that, by mid‑May 2019, the Plaintiffs knew that the Block 8 Building Renovation would commence in the near future and that the Traditional Method would be used. The Defendants rely on the minutes of the 6 Dec 2018 EGM and subsequent documents, such as progress reports and notices, which show that by late 2018 the IO had resolved the scope and design of the works and authorised the Management Committee to proceed to tender. They submit that tender is the last major step before commencement, and invite the inference that, given the six‑month interval between that EGM and the viewing on 15 May 2019, there could be no reasonable basis for describing the works as remote. They also rely on Ms Cheung’s evidence that, within the Management Committee and the Manager, there was, as submitted by Mr Heung, an “overwhelming consensus” that the Traditional Method should be used, given the problems encountered with the Platform Method in Blocks 1 to 7, the projecting balconies of Block 8 and the private ownership of its roof. From this, they argue that the Plaintiffs “must have known” both the likely timing and the intended method.

57.  In addition, the Defendants ask the Court to infer knowledge from the Plaintiffs’ status as long‑standing owners. They say that the 1^st Plaintiff had an obvious interest in the works, had previously lived through the renovation of Block 5, and was faced with a substantial financial contribution of around HK$1.1 million. They submit that it is “inconceivable” that he would not have kept himself closely informed about when and how the works would be carried out, particularly given their potential impact on the rental value of the Property and his decision to let it.

58.  On the other hand, while the Plaintiffs accept that, by May 2019, they were aware that the Block 8 Building Renovation was under planning and discussion and that such works might well occur during the term of the Tenancy, they deny knowing the commencement date or scaffolding method. It is the 1^st Plaintiff’s evidence that neither he nor the 2^nd Plaintiff sat on the Management Committee, that they did not attend the relevant meetings or vote by proxy, and that his knowledge of the Management Committee, the general meetings of the IO and the Block 8 Building Renovation was mainly derived from reading the minutes. In cross‑examination, he accepted that his general practice, given his busy schedule, was that if minutes were placed in his letterbox he would not read every line, but would skim through them to see if anything struck him as important, otherwise he would discard them. He said he was not aware that any proposed start date for the works had been fixed, nor what method would be used, and that he only first became aware, in or about March 2020, upon reading a notice from the IO informing him of his liability to pay his share of the renovation costs, that renovation and refurbishment would be carried out on Block 8 at some point in the future. He further said that he only came to know that the Traditional Method would be adopted in around June 2020, when the works started and he saw that that method was being used. He also did not agree that, despite the resolution passed on 6 Dec 2018 EGM, the planning for the building renovation had by then reached a late stage, saying that discussion about whether and when to do the Block 8 Building Renovation had been ongoing for years and he could not keep track of all of them.

59.  In my judgment, the evidential burden lies on the Defendants to establish that, by mid‑May 2019, the Plaintiffs knew, or ought to have known, both the likely timing of the Block 8 Building Renovation and that the Traditional Method would be used, and they have not discharged that burden. The documentary record does not support the inference of specific knowledge which the Defendants seek to draw. The 6 Dec 2018 EGM’s resolution authorised the tender process and recorded the choice of design options, but it did not state when works would begin or contain any communication to flat‑owners identifying a commencement date or confirming that the Traditional Method had been selected. The subsequent minutes and reports, while indicating ongoing planning and procurement, likewise do not identify a commencement date or any decision on scaffolding method prior to the execution of the Tenancy Agreement. These are undisputed and it is fairly accepted by the Defendants that there is no direct evidence proving that the Plaintiffs had actual knowledge of the same, or that any such information was ever conveyed to them in clear terms. In particular, the Defendants fairly accept that neither of them personally saw or heard anyone tell the Plaintiffs that the Traditional Method would be used for the Block 8 Building Renovation, and their witness Ms Cheung did not suggest that she saw or heard any such communication. The alleged “overwhelming consensus” stemming from Ms Cheung’s evidence within the Management Committee and Manager goes only to their internal thinking. Her evidence, as explained above, rests essentially on her own assumption that all owners “should have known”, rather than on any concrete interaction with the Plaintiffs. There is no minute or circular addressed to owners at large stating that the Traditional Method had been selected, still less that works would start within a particular timeframe.

60.  I also accept that it is not uncommon for flat‑owners, even long‑standing ones, not to participate actively in owners’ meetings or to follow closely the discussions or planning of building renovation projects, but instead simply to pay their apportioned share of the renovation costs as and when required and go with the flow. Against that background, the 1^st Plaintiff’s explanation of his practice of only skimming minutes is not inherently implausible and is consistent with his evidence that, apart from a general awareness that works were being contemplated which he candidly acknowledged, he did not know when they would begin or what method would be used. The leap from that general awareness to the specific knowledge alleged by the Defendants—that works would commence in the near future and that the Traditional Method would be used—is not justified on the evidence. Their "should have known" argument rests on speculation. Taken together with the absence of any direct communication to the Plaintiffs about the adoption of the Traditional Method and the lack of contemporaneous documents showing that such information was brought home to them, I am not persuaded that it has been proved, on a balance of probabilities, that the Plaintiffs knew, as at the time they entered into the Tenancy Agreement in May 2019, either the timing or the scaffolding method for the Block 8 Building Renovation.

61.  As to whether the Plaintiffs made the alleged Misrepresentation to the Defendants, the Defendants’ case is that the 1^st Plaintiff did make clear express representations, and corresponding implied representations, about both the timing and the method of any renovation to Block 8:

61.1. They say that during the viewing on 15 May 2019, after the 2^nd Defendant saw renovation works to Blocks 1–7 using the Platform Method and steel platforms in the carpark, she asked the 1^st Plaintiff whether Block 8 would be renovated in a similar way, and she further recounted in some detail her experience at Provident Centre which had undergone renovation and refurbishment work adopting the Traditional Method for over a prolonged period of about 10 years. She described that experience as terrible in that:

(a) The mesh envelope of the buildings impeded the penetration of air, wind and light, and trapped the dust and noise generated by renovation work, to the grave discomfort of people residing there;

(b) Her younger daughter, who suffered from asthma when she was small, was particularly vulnerable to the adverse effects of such building refurbishment work; and

(c) She dreaded the experience of having to remove air-conditioners to allow work to be carried out to the building.

61.2. The Defendants then allege that the 1^st Plaintiff responded along the following lines:

(a) Blocks 1 to 7 were built earlier and had therefore started renovation first;

(b) His family had lived through Platform-Method works in Block 5 with only minimal disturbance;

(c) The same method would be used for Block 8 if and when major renovation was carried out there;

(d) The air-conditioners would only be removed for a minimal amount of time (as renovation work would be carried out one floor at a time), and that the Management Office would try to schedule the work to be carried out in winter; and

(e) The Block 8 Building Renovation would not commence in the near future. In that respect, the 2^nd Defendant in cross-examination, added for the first time that the 1^st Plaintiff used the specific Cantonese Phrase, effectively telling her, by reference to her experience at Provident Centre, that she would know renovations take a long time from planning to commencement. For ease of reference, I set out again the wording of the said Cantonese Phrase:

“你都住過和富中⼼，你都知道開始計劃到實際施工都要一段時間”

The Defendants say that these replies were understood to mean that any renovation and refurbishment would either fall in the latter part of the Tenancy at the earliest, if not completely outside the tenancy period, and that the Platform Method would be used, with implied representations that the 1^st Plaintiff had reasonable grounds to believe for both.

62.  The Defendants place particular reliance on the inherent probabilities arising from the 2^nd Defendant’s previous bad experience under the Traditional Method at Provident Centre, her younger daughter’s asthma and the family circumstances in 2019 (that her father was receiving palliative care at a hospital at Chung Hom Kok and thus her daughter could not move to stay with the grandparents, as she did when they were at Provident Centre, to avoid the adverse impact of the building refurbishment). They contend that it is highly unlikely she would have failed to ask about the method and timing, or would have entered a three‑year tenancy at full market rent in a building where renovation was plainly imminent, without the assurances alleged. They also rely on their supposed trust in the 1^st Plaintiff, his background and demeanour, and the 2^nd Defendant’s outspoken character in the witness box as supporting their version of the conversation, and they point to valuation evidence that properties under the Traditional Method usually command significantly reduced rent to argue that it would be inconsistent with common sense for them to have agreed to pay full market rent absent such assurances. As to the delay in raising the Misrepresentation expressly, they explained that references in the WhatsApp on 26 June 2020 to “our expectations” (referred to in §35 above) were already a subtle complaint which the 1^st Plaintiff, as the person who had made the alleged Misrepresentations, would understand, and they attribute the lack of earlier explicit allegation partly to the 1^st Defendant’s then desire not to be confrontational and partly to his mistaken view that Clause 4g precluded them from raising misrepresentation.

63.  The Plaintiffs’ position is that the 1^st Plaintiff never gave any assurances of that kind. His evidence is that he told the Defendants that the Block 8 Building Renovation was under discussion and planning, that it might or would happen at some point in the future, and that he himself did not know when it would begin or what method would be used. He accepted that he told them about his own experience living through renovation in Block 5 using the Platform Method and that, there was noise and dust and it was uncomfortable. Although he personally considered that the discomfort was not so bad as to require moving out, he did not say so to them.

64.  The Plaintiffs rely in particular on the WhatsApp messages sent by the 1^st Defendant on 26 June 2020 (referred to in §35 above) where he first raised concerns about the renovation. It contained no complaint that the 1^st Plaintiff had said renovation would not occur in the near future, or that a particular method would be used, but instead referred only to the Defendants’ “expectations” and requests that the Plaintiffs to convey their concerns to the Management Office. The Plaintiffs say this is objectively consistent with no prior assurances having been given and explains why the 1^st Plaintiff did not challenge the source of those expectations.

65.  The Plaintiffs further contend that the Defendants’ case on misrepresentation rests on an impermissibly circular use of their own pleaded allegations to interpret the WhatsApp: the alleged representations are assumed to have been made in order to prove that they were made. They also mount a challenge to the 2^nd Defendant’s credibility, pointing to what they characterise as recent fabrication in her evidence about what the 1^st Plaintiff said during the 15 May 2019 viewing and to her inability to give a satisfactory explanation for why a supposedly crucial conversation, ie the Cantonese Phrase quoted above, was omitted from all pleadings and witness statements. They stress that neither the WhatsApp on 28 June 2020 or 3 July 2020 (referred to in §§36, 39 above), nor FWNL’s letter dated 17 July 2020 (admittedly drafted by the 1^st Defendant who is an experienced barrister) contained any complaint of misrepresentation, and argue that the 1^st Defendant’s explanation based on Clause 4g is incredible. Mr Tsang further submits that, if such assurances had genuinely been central, the Defendants would reasonably have insisted on recording them in the Tenancy Agreement or at least raising them contemporaneously.

66.  In my view, the alleged Misrepresentations were oral, and the competing accounts rest heavily on credibility and inherent probabilities, tested against the contemporaneous documents. For the reasons I endeavour to state below, I do not find that the 1^st Plaintiff, as alleged by the Defendants, represented that the Block 8 Building Renovation would not be carried out in the near future, or that, if and when such works were carried out, the Platform Method would be used.

67.  First, the contemporaneous WhatsApp messages are especially revealing:

67.1. On 15 May 2019, shortly after the viewing and thus shortly after the alleged Misrepresentations were said to have been made, the 2^nd Defendant messaged the 1^st Plaintiff stating that “… and if by that time the renovation still not finish, we may even have the outer clause that we will stay until the renovation is over….” (referred to in §23 above)

67.2. Two days later, on 17 May 2019 at 8:26 am, she added: “… We do like the Apartment a lot and hope you can consider as we are willing to stay through the whole renovation period…” (referred to in §26 above).

67.3. These messages are difficult to reconcile with the Defendants’ present case that they had been assured that Block 8 Building Renovation would only take place in the latter part of the Tenancy. Their natural reading is that the 2^nd Defendant understood there was a real prospect of renovation during the Tenancy and that the Defendants were prepared to tolerate it, and they were not concerned with when the works would start or end, but rather signal a willingness to endure the renovation if necessary. That the Defendants anticipated renovation occurring at any time during the Tenancy, and not only in its later part as pleaded, is further borne out by the 1^st Defendant’s own message to the 1^st Plaintiff on 26 June 2020, after the works had started, in which he wrote: “As you are probable aware, the renovation of Block 8 has started. This is something that we expected at the time when we entered into the lease with you…” (referred to in §35 above). The 2^nd Defendant’s message offering to “stay through the whole renovation period” and the 1^st Defendant’s acknowledgement that renovation was “expected” at the time of entering into the lease are, in my view, inconsistent with the notion that they had been assured there would be no such works during most of the term.

67.4. Further, none of the WhatsApp messages sent after the commencement of the Block 8 Building Renovation records any complaint that the 1^st Plaintiff had said renovation would not occur in the near future, or that he had assured the Defendants that the Platform Method would be used. Instead, the Defendants speak of their “expectations” and ask the 1^st Plaintiff to pass their concerns to the Management Office, and the 1^st Defendant framed his expectation not as an absence of works, but as an expectation that works would be carried out in a different way. Nowhere in those messages is it said that the 1^st Plaintiff had told them that renovation would not start in the near future or that the Platform Method would be used. That language is more naturally consistent with expectations formed by the Defendants themselves (and accords with the phrase “we naturally think…” used by the 1^st Defendant in cross‑examination) rather than with specific assurances given by the 1^st Plaintiff, and it objectively explains why the 1^st Plaintiff did not challenge the source of those expectations in reply. Mr Heung’s submission that the messages must be read through the lens of their own case – so that “expectations” are taken as tacit shorthand for prior express representations – is circular: it assumes the truth of the very propositions that are in issue, and I agree with Mr Tsang that it is a fallacious argument.

68.  Secondly, I have reservations about the Defendants’ credibility on this issue:

68.1. The absence of any complaint of misrepresentation in the WhatsApp message on 3 July 2020 (referred to in §39 above), in which the 1^st Defendant even described the 1^st Plaintiff as a “reasonable landlord” and spoke of considering whether to stay to avoid the hassle of moving again, sits uneasily with the present allegation that the 1^st Plaintiff had earlier made fundamental and untrue assurances about timing and method which went to the heart of the family’s health and housing decisions, particularly bearing in mind the 1^st Defendant’s previous WhatsApp message to the 1^st Plaintiff back in 29 May 2019 that he described himself as someone who “[hate] people who doesn’t keep his words” (said in the context where the 1^st Defendant was upset and disappointed because, according to the Defendants, the 1^st Plaintiff could not honour his alleged promise to allow them to move into the Property by end June or early July 2019 due to the 1^st Plaintiff’s intention to extend the lease to the then existing tenant until end of June 2019).

68.2. The further absence of any allegation of misrepresentation in the FWNL’s letter dated 17 July 2020, drafted by the 1^st Defendant himself, is also notable. He explained that he then believed, without legal research, that Clause 4g precluded reliance on misrepresentation, although it is now common ground that this was legally incorrect. Even on that premise, if Clause 4g was thought to prevent reliance on prior statements, that would have been a powerful reason from the outset to insist that any assurances be recorded in the Tenancy Agreement itself. Yet, in cross‑examination, the 1^st Defendant accepted that he did not think of doing so at the time. That, again, sits uneasily with his evidence about the importance of the alleged representation. Given his experience as a practising barrister and the obvious importance of any such assurances if they had been given, the fact that no such clause was proposed or insisted upon undermines the suggestion that representations of this nature were central to the bargain.

68.3. The 2^nd Defendant’s evidence included, for the first time only in cross‑examination, the specific Cantonese Phrase said to have been used by the 1^st Plaintiff on 15 May 2019 during the viewing of the Property, even though this was never mentioned in any pleading or in her witness statement. If such a phrase had in fact been used, it would have been a material piece of evidence in support of the Defendants’ case on misrepresentation and it is difficult to see why it would have been omitted from those documents if it genuinely featured in the 2^nd Defendant’s clear recollection of the conversation after so many years. By contrast, while the 2^nd Defendant also referred to the remark “原來個業主一路講緊大話”, I do not regard that remark as being of the same materiality, and I do not consider its omission from the pleadings and witness statements to carry the same weight in assessing her credibility overall.

68.4. Against the backdrop of contemporaneous messages which, in my view, objectively point away from any representation having been made that the Block 8 Building Renovation would only happen at a later stage of the Tenancy or that the Platform Method would be used, the Defendants’ present attempt to recast those messages as confirming prior assurances, coupled with the lateness and manner in which key phrase was introduced in evidence, further reinforces my conclusion that their account is unreliable

69.  Thirdly, I do not accept that the inferences which the Defendants seek to draw from the 2^nd Defendant’s previous bad experience under the Traditional Method, her daughter’s asthma, her family circumstances in 2019 and the so-called “maternal instinct”, as submitted by Mr Heung, are sufficient to establish that the alleged representations were made. People behave differently in different settings for many reasons. It does not follow, merely from the 2^nd Defendant’s concern for her daughter and her outspoken personality, that she must have asked the 1^st Plaintiff detailed questions about scaffolding, or that the Defendants would not have entered into the Tenancy absent the specific assurances alleged. Further, even if the Defendants had expected the Platform Method to be used, dust and noise would still have been inevitable, which in turn raises why, if their younger daughter’s asthma truly weighed so heavily in their choice of home, they nonetheless chose this Property rather than premises where refurbishment was unlikely. There are obvious alternative explanations, including the possibility that the Defendants assumed that any renovation would be handled in a way they regarded as acceptable, or that they were prepared to tolerate a degree of risk in light of other advantages of the Property.

70.  Fourthly, the Plaintiffs’ evidence is consistent and supported by the documents. The 1^st Plaintiff’s account is that he acknowledged the possibility of future renovation works to Block 8, referred generally to his own experience of the Platform Method in Block 5, but did not give any assurance about when Block 8 would be renovated or what method would be used. That version fits with the WhatsApp messages, with the absence of contemporaneous complaint, and with the broader context in which the Plaintiffs themselves did not know, as at May 2019, either the commencement date or the method ultimately to be adopted for Block 8.

71.  Standing back, and weighing the evidence as a whole, I am of the view that the contemporaneous documents, the internal and external consistency of the Plaintiffs’ evidence, the weaknesses in the Defendants’ explanations for the absence of timely complaint and the difficulties in Defendants’ evidence lead me to conclude that the Defendants have not proved, on a balance of probabilities, that the 1^st Plaintiff made the alleged representations.

72.  As to Issue 13, the contemporaneous WhatsApp messages already discussed show that, before and shortly after entering into the Tenancy Agreement, the Defendants understood and expected that the Block 8 Building Renovation might well take place during the term of the Tenancy and were at least initially prepared to “stay through the whole renovation period”. Their own references to “expectations” and expressed willingness to remain during the works are inconsistent with any suggestion that they were unaware of renovation within the near future or during the Tenancy. I therefore find that the Defendants were aware, before signing the Tenancy Agreement, that the Block 8 Building Renovation could take place during the Tenancy.

73.  As to Issue 15, I have found that the 1^st Plaintiff did not, in fact, represent either that the Block 8 Building Renovation would not be carried out in the near future or that, if and when it occurred, the Platform Method would be used, and that the Plaintiffs themselves did not know, as at May 2019, which method would ultimately be adopted. The Defendants therefore could not have been induced to enter into the Tenancy Agreement by a representation that was never made. In any event, the absence of any contemporaneous complaint that assurances had been given as to method or timing, and my reservations as to the reliability of the Defendants’ account of the alleged conversation, mean that I do not accept that any such alleged representation on those matters in fact operated as an inducement.

74.  For these reasons, the Defendants’ misrepresentation defences fail on the facts because the alleged misrepresentations were not made. Even if one were to assume, contrary to my finding on Issue 1, that the 1^st Plaintiff could have known more of the IO’s internal intentions, the Defendants have in any event not proved that the 1^st Plaintiff represented any such knowledge to them in the terms pleaded. Accordingly, I have not found it necessary to decide whether, if a representation had been made, it would have been one of fact or opinion (and, if opinion, whether it would have implied a representation of fact that the maker has reasonable grounds to support it, as discussed in Tin Wan Tung v Wong See Yin [2018] HKCFI 1143) at §§72-73, or whether the Plaintiffs would have had a defence under s 3(1) of the Misrepresentation Ordinance (Cap 284), because the Defendants have failed at the threshold in establishing that any such representation was made.

F2. Rectification and Terms of the Tenancy Agreement (Issue 5)

75.  Having rejected the Defendants’ misrepresentation defences, I turn next to Issue 5, which concerns whether the Tenancy was subject to any early termination clause.

76.  The Defendants address Issue 5 by advancing a rectification claim for common mistake and/or unilateral mistake, contending that the Tenancy Agreement should be rectified to include a tenant‑only Early Termination Clause, so that the Tenancy was always subject to such a term. Mr Heung referred me to Lau Wai Kwong v Lau Cheung Kam Ling Margaret [2023] HKCFI 1097 at §§63 and 67 for the requirements for rectification:

76.1. For common mistake:

“63.1 The parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified;

63.2 There was an outward expression of accord;

63.3 The intention continued at the time of the execution of the instrument sought to be rectified;

63.4 By mistake, the instrument did not reflect that common intention”

76.2. For unilateral mistake:

“67.1 He (Party A) erroneously believed that the document to be rectified contained a particular term or provision, or did not contain a particular term or provision which, mistakenly, it did contain;

67.2 The other party (Party B) was aware of the omission or inclusion, and that it was due to a mistake on the part of Party A;

67.3 Party B omitted to draw the mistake to the notice of Party A;

67.4 The mistake must be one calculated to benefit Party B.”

77.  On common mistake, the Defendants argue that both parties always intended that the tenancy would include an early termination clause, as reflected in Clause 5a of the first draft, and the Defendants negotiated an amendment to make that right exercisable only by the tenant, which was agreed by the Plaintiffs, and that the omission of the Early Termination Clause from the final Tenancy Agreement was a mistake. They say that such omission from the final Tenancy Agreement resulted from an accidental deletion by the Plaintiffs, unnoticed by either side.

78.  In the alternative, they allege unilateral mistake. The Defendants say they believed that Clause 5a, revised so that only the tenant could terminate, remained in the final Tenancy Agreement. They submit that the Plaintiffs either knew, or at least appreciated, that Clause 5a had been removed and that its omission would benefit them by locking the Defendants into paying rent for the full three‑year term, yet chose to remain silent. They contend that this suffices to establish the knowledge element for unilateral mistake in rectification, including wilful eye‑shutting or reckless failure to inquire, and invite the Court to rectify the Tenancy Agreement by inserting a tenant‑only Early Termination Clause in the terms set out in §239 of the Defendants’ Closing Submissions.

79.  The Defendants also attack the credibility of the 1^st Plaintiff’s account of the so-called “Phone Call” of 17 May 2019, during which he says he spoke to the 2^nd Defendant by phone and reached agreement that the Tenancy would be a fixed three-year term without any break clause in return for rent of HK$59,000 inclusive. As discussed above, to rebut the Plaintiffs’ said case, the Defendants rely on the Telephone Bills to show that no roaming call from Hong Kong was received by the 2^nd Defendant’s mobile on 17 May 2019. Mr Heung submits that the Plaintiffs’ reliance on an alleged Phone Call agreeing to remove the clause is a retrospective attempt to shore up their opposition to rectification.

80.  The Plaintiffs’ case on rectification is straightforward. After the 1^st Defendant’s comments on the originally draft clause 5a, there was then the alleged Phone Call between the 1^st Plaintiff and the 2^nd Defendant. Insofar as how the alleged Phone Call was made is concerned, the 1^st Plaintiff explained during cross-examination that he simply redialled the 2^nd Defendant’s mobile number from his own mobile, since she had called him before, and that he did not use a WhatsApp call because they were in a group chat and a WhatsApp call would have created a three‑way call (which could not be the case as he recalled that the 1^st Defendant did not participate in the said discussion). The 1^st Plaintiff then prepared and circulated four revised drafts on 17 May 2019, in which Clause 5a had been deleted. The Defendants responded with comments on those drafts, including corrections to names and ID numbers, changes to the rent formula (to make it “all inclusive”), suggestions on the witnessing requirement and insertions of the parties’ addresses, but said nothing about the absence of Clause 5a. Ultimately, they signed a Tenancy Agreement which did not contain any early termination clause. The 1^st Plaintiff says that he understood, from this sequence and from his discussions with the 2^nd Defendant, ie the Phone Call, that they had agreed to a fixed three-year tenancy without a break option.

81.  Before addressing the rectification arguments, I will first address the Plaintiffs’ assertion that there was such an alleged Phone Call between the 1^st Plaintiff and the 2^nd Defendant in which they agreed to remove the Early Termination Clause, because, on their case, this would directly explain why Clause 5a disappears from all later drafts. Having considered the evidence as a whole, I am not satisfied that the Plaintiffs have proved, on the balance of probabilities, that there was such a call:

81.1. There is no record of any such call in the Defendants’ Telephone Bills for the relevant period. While I accept, as Mr Tsang submitted, that the absence of an entry in the Phone Bills may not be conclusive — one can posit technical explanations such as call‑forwarding which might prevent a particular call from appearing on a bill— but the absence of any record nevertheless remains a factor to be weighed in the overall evidential balance.

81.2. The contemporaneous WhatsApp exchanges immediately before and after the relevant time window, ie the messages at 8:26 am and 8:29 am (set out in §§26-27 above) do not support the existence of such a call:

(a) Read objectively, the 1^st Plaintiff’s reply at 8:29 am is a direct written response to the 2^nd Defendant’s message at 8:26 am about the rent level and their willingness to stay for the full three years through the renovation period. There is nothing in the language of that reply to indicate that there had been, in between, a phone call in which the rent and removal of the early termination clause were freshly debated and agreed.

(b) That said, while the time window relied on by the Plaintiffs is, in itself, very tight for what is said to have been achieved including the need to speak on the phone and resolved both the rent and the term of the Tenancy (which include the abandonment of a clause said to be important to the Defendants), and the need for the 1^st Plaintiff to compose and send the 8:29 am WhatsApp message on his phone, I do not find that it is impossible to complete them in such compressed period if the terms were in fact readily agreeable.

81.3. The way in which the Plaintiffs’ own case is framed in P1 1^st WS at §50 is noteworthy. He said:

“I recall that I discussed with Ms. Tang and/or Mr Lam the removal of the early termination clause from the tenancy agreement over the phone. In our WhatsApp group chat, I sent over the revised draft tenancy agreement to Ms. Tang and Mr Lam for them to comment. In the WhatsApp group chat, they asked for revisions on other matters, but did not raise any objection to the removal of the early termination clause, which I took as their agreement to the removal of the early termination clause and to a fixed term three-year tenancy agreement.”

That account places emphasis on silence and lack of objection as the foundation for agreement, rather than on any clear, positive acceptance allegedly communicated during the alleged Phone Call. In that respect, I agree with Mr Heung’s submissions that if there had in truth been a phone call in which the 2^nd Defendant positively agreed, on behalf of both Defendants, to waive what is said to have been an important “escape route” for the family, it is difficult to see why the 1^st Plaintiff did not rely squarely on that alleged positive agreement, rather than on the Defendants’ subsequent “lack of objection”, when formulating his case.

81.4. Taking these matters together, I am not persuaded that the Plaintiffs have discharged the burden of proving that there was an alleged Phone Call in which the parties positively agreed to remove the Early Termination Clause altogether.

82.  That conclusion does not, however, mean that the Plaintiffs’ case on Issue 5 “collapses”, as the Defendants suggest. Their case remains that, whatever may or may not have been said by phone, the Defendants knew from the sequence of revised drafts that Clause 5a had been removed and nevertheless proceeded to sign the Tenancy Agreement on that basis. Whether the Defendants have nonetheless made out a case for rectification is the question to which I now turn.

83.  On the evidence, I am not persuaded that there was a common continuing intention to include the Early Termination Clause at all, still less in the form now proposed by the Defendants. The negotiation history shows a progression from an initial draft containing a mutual break Clause 5a, headed in capital letters “THE PARTIES FURTHER AGREE EITHER PARTY MAY TERMINATE THIS TENANCY AGREEMENT UNDER THE FOLLOWING CONDITIONS:-” with a detailed termination provision set out on a standalone page, through the 1^st Defendant’s comments seeking to make it tenant-only, to a series of revised drafts in which the clause disappears entirely. Both Defendants accepted that the 1^st Defendant checked the revised draft to see whether their suggested amendments had been correctly made. It is against that background that one must assess their claim not to have noticed that Clause 5a had been completely removed. Clause 5a was not a minor or obscure provision. It appeared with a prominent capitalised heading on a separate page and dealt with an important matter of early termination. It is inherently implausible that a professionally trained reader who had just requested amendments to that very clause, and who then reviewed the revised drafts for changes, would have failed to notice that the entire clause had disappeared. After all, as held by Ribeiro PJ in Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at §§84-86:

“84. …Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory's assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.

85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:

We find in many of the authorities statements that a man's deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the man had taken no precautions at all, and there was no ground for his belief that he was signing something different from that which in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.

86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan & Another (2002) 5 HKCFAR 515 at p.533, Litton NPJ acknowledged:

…the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.”

84.  In any event, there is contemporaneous evidence that the 1^st Defendant read through the draft Tenancy Agreement carefully. On 17 May 2019, he sent a WhatsApp message pointing out an error in his ID card number on the signature page of the draft. He agreed in cross‑examination that to identify that error he would have had to scroll through the whole document on his iPad. It is, in my view, fanciful to suggest that he could scroll through an agreement of this nature, notice a minor numerical error on the last page, yet somehow fail to spot the absence of an entire page headed in capitals and dealing with early termination.

85.  The Defendants raised comments on other clause and matters in the revised drafts but never objected to the removal of Clause 5a. In that context, the assertion that the 1^st Defendant did not notice the removal of Clause 5a, and the Defendants’ subsequent characterisation of his conduct as “careless” is not credible. Given his professional background and the attention he had earlier paid to Clause 5a and suggested amendments to it, I do not accept that he simply signed the final Tenancy Agreement without checking its terms. The explanation that the Defendants relied on the 1^st Plaintiff’s apparent good character and background strikes me as an after‑the‑event justification, not a convincing account of how two well‑educated and sophisticated defendants came to sign a three‑year lease without a clause they now say was essential. That explanation, and the way it was advanced, further undermines the reliability of their evidence.

86.  In §166 of the Defendants’ Closing Submissions, Mr Heung further argued that one would “Naturally” expect a tenant‑only early termination clause to be moved into Clause 3 of the Tenancy Agreement, which concerns matters the landlord agrees to do for the tenant (with the heading “DURING THE TERM, THE LANDLORD AGREES WITH THE TENANT AS FOLLOWS”), so that the disappearance of the capitalised heading to Clause 5a was not significant. I regard that submission as speculative. The WhatsApp messages, at most, show only a request to amend Clause 5a so that the right was tenant‑only, they do not suggest moving it elsewhere in the document. Nor has any witness evidence been identified by Mr Heung to show that this was in fact what the Defendants thought at the time.

87.  The subsequent conduct of the Defendants, including their correspondence through solicitors, is also inconsistent with any genuine belief that a tenant‑only early termination clause existed or should have remained in the Tenancy Agreement. When disputes arose in mid‑2020 in relation to nuisance from the Block 8 Building Renovation, the Defendants and their solicitors plainly had the Tenancy Agreement under close scrutiny. They referred expressly to Clause 3d (quiet enjoyment) and Clause 4g (entire agreement) in WhatsApp messages and in solicitors’ letters, yet made no reference whatsoever to any early termination right or to any complaint that an agreed clause of that nature had been omitted. It is not credible that, had they believed the Early Termination Clause existed, they would not have invoked it at that stage. This also does not sit well with Mr Heung’s submissions at §151 that the Early Termination Clause was meant to be the 2^nd Defendant’s “back up plan in case the Platform Method still proved to be unbearable for the family, particular [her] Younger Daughter”. The suggestion that they only noticed the absence of such a clause when preparing their Defence and Counterclaim strains belief. The contemporaneous WhatsApp messages show that, even after the alleged Misrepresentation, the Defendants’ intention all along was to enter into a three-year fixed lease and to “stay for the full 3 years”, and the complete removal of Clause 5a is in line with what they intended. It can also be seen from the 1^st Plaintiff’s WhatsApp message on 15 May 2019 at 10:58 am (when the parties were in the course of negotiating the terms of the Tenancy) that one of the reasons he preferred the Defendants over another potential tenant was precisely that they were prepared to sign a three‑year fixed lease.:

“I understand but there is one second round discussion now with a foreign couple and they can move in on 01 August. They are prepared to sign a 2 year fixed lease plus a 1 year option BUT: (1) I prefer a local family … and (2) you are prepared to sign a 3 year fixed lease”

88.  In light of all this, I find that the Defendants have failed to prove any common continuing intention, objectively assessed, that the Tenancy Agreement should include an Early Termination Clause at the time of execution. Their case for rectification on the basis of common mistake therefore fails.

89.  Likewise, and for essentially the same reasons, I do not find that the Defendants have made out a case for rectification based on unilateral mistakes. I do not accept that they genuinely believed, at the time of execution, that a tenant‑only early termination clause remained in the Tenancy Agreement.

90.  Even if, contrary to my view, the Defendants did subjectively assume that Clause 5a (as amended) remained in the final Tenancy Agreement, I am not satisfied that the Plaintiffs had the requisite knowledge of any such mistake. Clause 5a was removed from all subsequent drafts, those drafts were provided to the Defendants, and the parties then proceeded to sign a Tenancy Agreement which, on its face, contained no Early Termination Clause. There is no cogent evidence that the Plaintiffs appreciated that the Defendants believed a tenant‑only early termination term remained, or that the Plaintiffs deliberately kept silent in order to take advantage of that belief.

91.  The Defendants’ suggestion that, because Clause 5a had been present in an earlier draft and its omission benefited the Plaintiffs, the Plaintiffs must have been under a duty to inquire whether the Defendants had noticed the change, misconceives the nature of the unilateral mistake jurisdiction. The authorities do not impose a general obligation to police the other party’s understanding of a clear written contract. What is required is knowledge (actual or of a sufficiently culpable kind) of the counterparty’s mistaken belief, and an attempt to take advantage of that mistake. On the facts of this case, that requirement is not satisfied.

92.  For these reasons, I hold that the Tenancy Agreement is not subject to any early termination provision, and that there is no basis for rectifying it to include the Early Termination Clause.

F3. Express and Implied Terms of the Tenancy Agreement (Issue 9)

93.  As to the express terms of the Tenancy Agreement, subject to the dispute as to whether it also included the Early Termination Clause (which I have resolved in favour of the Plaintiffs), there is no dispute that the express terms are all set out in the written, signed and stamped Tenancy Agreement. What remains is whether any terms are to be implied.

94.  The Plaintiffs’ case is that, in addition to the express terms of the Tenancy Agreement, there were implied terms that: (i) the Defendants would not be able to lawfully terminate the Tenancy by reason of any inconvenience or nuisance caused whatsoever by the Block 8 Building Renovation during the term of the Tenancy Agreement; and (ii) the Defendants would not be able to claim damages or compensation from the Plaintiffs arising from such inconvenience or nuisance (as pleaded in §§16 and 17 of the ASoC). These terms are said to arise because they are necessary to give the Tenancy Agreement business efficacy and/or are so obvious that they go without saying, having regard in particular to the parties’ pre‑contractual discussions about the renovations, the Defendants’ stated willingness “to stay through the whole renovation period”, and the Plaintiffs’ decision to forego higher‑rent but shorter‑term offers in favour of a three‑year tenancy with the Defendants.

95.  It is trite, and undisputed between the parties, that for a term to be implied it must be reasonable and equitable, necessary to give business efficacy to the contract (so that no term will be implied if the contract is effective without it), so obvious that it goes without saying, capable of clear expression, and not contradicting any express term: Attorney General of Belize and Ors v Belize Telecom Ltd & Anor [2009] 1 WLR 1988 at 1995E-H and Rich Place Investment Ltd v Oriental Patron Securities Ltd [2024] HKCFI 576 at §§57-60. Mr Heung submits that the Plaintiffs’ proposed terms do not satisfy that test. The Tenancy Agreement is a detailed written contract for a three‑year residential tenancy at an inclusive rent. It contains no express promise that the Defendants will remain regardless of the level of disturbance, and no express exclusion of liability for nuisance or disturbance arising from the works. It is the Defendants’ case that the agreement operates perfectly well without the proposed terms, there is nothing absurd or commercially incoherent in a tenancy where the tenants retain their ordinary rights in respect of serious nuisance, and the suggested terms are wide and one‑sided, and substantially cut down those ordinary rights rather than spelling out what the contract already means.

96.  I agree that the high threshold for implication is not met. The Tenancy Agreement is capable of sensible and coherent operation without these terms. At most, their absence leaves the Plaintiffs less protected than they would wish, which does not amount to necessity in the relevant sense. Nor can it realistically be said that, had an officious bystander asked at the time of contracting whether the Defendants were, for three years, giving up all rights both to terminate and to claim damages “due to any inconvenience or nuisance caused whatsoever by any building renovations”, both parties would unhesitatingly have answered “of course”. The language of the pleaded implied terms is notably broad, going well beyond what the factual matrix can support. It would preclude termination or damages even in the event of very serious and unexpected disturbance, and does so against a background where the parties demonstrably knew how to record specific terms when they wished.

97.  The pre‑contractual negotiations and the WhatsApp messages, including the 2^nd Defendant’s statement that they were “willing to stay through the whole renovation period”, show that the Defendants were aware of the possibility of building works and were at the time prepared, in general terms, to live with them. They also show that the Plaintiffs preferred a long, stable tenancy and were prepared to accept a slightly lower rent to secure such tenants. Those matters are part of the admissible background against which the contract is construed, but they do not convert expressions of intention or willingness into an unqualified contractual surrender of termination and damages rights. I therefore hold that no terms of the kind pleaded in §§16 and 17 of ASoC are to be implied into the Tenancy Agreement.

98.  Both parties have, in their pleadings, relied on the doctrine of estoppel by convention. The essential elements of that doctrine are undisputed and were summarised in First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd (2012) 15 HKCFAR 569 at §79: it requires a sufficiently certain common factual or legal assumption, shared and communicated between the parties and manifestly acted upon, and such that it would be unjust to permit departure from it by one party because the other party would suffer detriment.

99.  In the Reply, the Plaintiffs pleaded that there was a common assumption that the Defendants would not be able to terminate or claim damages because of the Block 8 Building Renovations and would stay throughout the three‑year term, and that the Plaintiffs entered into the Tenancy Agreement and gave up other offers on that basis. They allege that an estoppel by convention arises from this common assumption, preventing the Defendants from now asserting a right to terminate or claim damages by reason of the renovation works. But I note that in their Closing Submissions, however, the Plaintiffs did not press this as a distinct foundation for relief. In those circumstances, and given my findings on the facts and on implied terms, it is sufficient to say that I see no proper basis on which the Plaintiffs could use estoppel by convention to obtain what they have not secured by contract or to achieve indirectly what cannot be justified by implication, and I say no more about their estoppel plea.

100.  Insofar as the Defendants’ estoppel by convention case is concerned, their pleaded common assumptions mirror the alleged factual representations as to timing and method of the renovation works (at §11(d) of their Defence and Counterclaim). They contend that both sides proceeded on those assumptions and that the Plaintiffs are estopped from denying them, including when resisting the Defendants’ defences and counterclaims and when advancing their own implied‑term case. However, I have already rejected the misrepresentation defences and do not accept that any such common factual assumptions, in the terms pleaded, were in fact shared between the parties. Without a proven, sufficiently certain common assumption of that kind, there is no foundation for estoppel by convention as invoked by the Defendants.

101.  Accordingly, no terms of the kind alleged by the Plaintiffs are to be implied into the Tenancy Agreement, and neither side obtains any additional rights or defences by way of estoppel by convention.

F4. Quiet Enjoyment and Responsibility arising from the IO’s decision (Issues 3, 11, 12)

102.  It is the Defendants’ case that the covenant for quiet enjoyment obliged the Plaintiffs to ensure that the Defendants’ ordinary and lawful use of the Property was not substantially interfered with by the Block 8 Building Renovation. They rely on Chong Lap Fu George v Hydra Shipping Services and Ors [2009] 4 HKC 445 at 451C-F and Well Century Holdings Ltd v Leung Kam Yu [2003] 2 HKLRD 653 at 666H-I as authorities that dust, noise and other disturbances caused by construction can, depending on degree and duration, amount to a breach of the quiet enjoyment covenant and, in an appropriate case, a repudiatory breach justifying termination. On that basis, they contend that the Traditional Method adopted for the Block 8 Building Renovation – mesh and bamboo scaffolding, removal of air‑conditioners and associated dust and noise – did in fact cause serious and ongoing interference with the Defendants’ enjoyment of the Flat, and such interference falls to be treated as a breach of the landlords’ obligations under the Tenancy.

103.  Mr Heung argues that the Plaintiffs cannot avoid responsibility by contending that the relevant acts were those of the IO rather than their own. He places weight on the fact that the Block 8 Building Renovation was authorised by resolution in a general meeting under s 14(1) of the Building Management Ordinance (“BMO”), which provides that such a resolution “shall be binding on the management committee and all the owners”. He then further referred me to Kwan & Pun Co Ltd v Chan Lai Yee and Ors (CACV 234/2002, 15 November 2002), §39 to support the proposition that resolution of an owners’ corporation is the collective decision of all owners, whether or not they were present at the meeting or voted in favour, and submits that the renovation decision should therefore be treated as an act of all owners, including the Plaintiffs.

104.  The Plaintiffs’ position is that the Block 8 Building Renovation was carried out by the IO as a separate legal entity, and that neither the decision nor the works can be treated as acts of the Plaintiffs as landlord for the purposes of the quiet enjoyment covenant. They rely on the statement of principle in at §29 in Chong Lap Fu that the covenant “protects only against the acts of persons claiming under the landlord so far as they are successors in title to the landlord, or actually have the authority from him to do the acts” and that it “does not extend to acts of a stranger, notwithstanding that he purports to claim under the landlord”, while it “does, however, extend to all acts of the landlord himself which interrupt the enjoyment whether they are lawful or not”. They also rely on the passage at §33(2) in Chong Lap Fu (with reference to Kou Mei Juan v Incorporated Owners of Pak Cheung Building (Blocks C & D) Tung Choi Street (CACV 24/1985, 11 April 1985), at p 3), where the court held that “as a matter of law, the IO is an entirely separate and distinct person from the individual owners …, unless otherwise provided by the statute, there is thus also no issue of the IO’s act being regarded as an act of the individual owners (including the plaintiff).”

105.  Mr Tsang points out that this approach has been followed in Bright View Properties Ltd v New King Properties Ltd [2020] HKDC 1240 and White Dragon Ltd v Evertime Technology Development Ltd (LDPD 643/2017, 9 August 2017), both involving building renovation:

105.1. In Bright Views, HH Judge Andrew Li (as he then was), at §27, when considering a tenant’s quiet-enjoyment complaint, stated that:

“The major renovation of the building carried out by the incorporated owners could not be regarded as the plaintiff’s acts as landlord and constitute a breach of the covenant: see Chong Lap Fu George v Hydra Shipping Services Ltd 4 HKLRD 369 at §33.”

105.2. Similarly, in White Dragon, which concerned also renovation works at Cavendish Heights, Mr Lawrence Pang (Member of the Lands Tribunal), at §27 stated that:

“… in Chong Lap Fu … HH Judge Au (as he then was) held that the Incorporated Owners is an entirely separate and distinct person from the individual owners as landlord in a lease. Likewise, in my opinion, the purported act of the management office in the present case cannot be attributed as act of the applicant in breaching the covenant for quiet enjoyment…”

On this footing, Mr Tsang submits that the Defendants’ attempts to treat the IO’s resolution and works as acts of the Plaintiffs cannot be reconciled with the authorities.

106.  In response, Mr Heung contests the relevance or strength of Chong Lap Fu and the decisions in White Dragon and Bright View, on the basis that Chong Lap Fu concerned renovation of a single flat, that the IO’s powers there were exercised under s 16 of BMO (which provided the IO with the powers to manage common parts) rather than s 14 of BMO where an IO acted by general meeting resolution. He also contends that White Dragon and Bright View are either distinguishable or of limited weight.

107.  In my judgment, the Defendants’ attempt to attribute the IO’s decision and acts in carrying out the Block 8 Building Renovation to the Plaintiffs as landlord for the purpose of the quiet enjoyment covenant is not sustainable. Chong Lap Fu is directly in point and carefully reasoned. The reasoning in Chong Lap Fu is expressed in general terms and is not confined to small-scale or single-flat renovations. What is stated at §33 therein is a clear statement of principle: IO acts are not, without statutory provision, to be regarded as acts of individual owners, even though the IO represents their interests.

108.  The subsequent decisions in White Dragon and Bright View confirm that this principle applies in the context of major building renovations carried out by an IO. In Bright View, the court expressly held that even if the tenant’s version of events about the disturbance from renovation were accepted, “the major renovation of the building carried out by the incorporated owners could not be regarded as the plaintiff’s acts as landlord and constitute a breach of the covenant”. In White Dragon, the Lands Tribunal reached the same conclusion, holding that the IO’s acts could not be attributed to the owner-landlord as breaches of quiet enjoyment in the context of renovations at Cavendish Heights. There is no indication in any of these decisions of an exception for works authorised by general-meeting resolution, and no principled basis for limiting the Chong Lap Fu reasoning to renovation of a single flat.

109.  The Defendants’ reliance on s 14(1) of BMO and on Kwan & Pun Co is misplaced. S 14(1) of BMO provides that resolutions duly passed “shall be binding on the management committee and all the owners,” but binding effect is not the same as attribution of acts. To say that an IO resolution is binding on all owners is to say that owners must abide by the corporate decision. It does not say that the decision is, in law, the personal act of each owner for all purposes. To equate those two concepts would undermine the fundamental principle of separate legal personality. S 17 of BMO points in the same direction. It provides that, where a judgment is given against a corporation, execution may, with leave, issue “against any owner”. That is a specific enforcement mechanism, and it does not deem all IO acts to be acts of owners. If IO acts were already the acts of each owner, such machinery would be unnecessary or would be framed very differently.

110.  Against that background, the Defendants’ attempts to distinguish Chong Lap Fu, White Dragon and Bright View, in particular, on the basis that Chong Lap Fu involved s 16 BMO or that major refurbishment works to the whole building are somehow excluded from the principle are, in my view, misconceived. Those submissions focus narrowly on the particular factual situation in Chong Lap Fu while disregarding the general reasons the court gave for its decision. The underlying principle concerns the scope of the quiet enjoyment covenant and the separate legal personality of the IO, and that principle applies in the present case.

111.  In the circumstances, it is not necessary for present purposes to decide in detail whether the level of dust, noise and disruption complained of by the Defendants would, if attributable to the landlord, have amounted to a breach of quiet enjoyment or to a repudiatory breach. Even assuming in the Defendants’ favour that the interference was substantial, the critical point is that the renovation works in question were carried out by the IO and are not, as a matter of law, to be regarded as acts of the Plaintiffs for covenant purposes. On the authorities, they therefore cannot constitute breaches of the Plaintiffs’ covenant for quiet enjoyment.

112.  Accordingly:

112.1. On Issue 11, I find that owners of a flat cannot be held responsible under the quiet enjoyment covenant for the IO’s decision to renovate the building merely by virtue of being bound by the IO’s resolution.

112.2. On Issue 12, I find that, whatever the factual extent of the disturbance caused by the Traditional Method of renovation adopted by the IO, those works are not attributable to the Plaintiffs and so do not amount to a breach of quiet enjoyment by them.

112.3. On Issue 3, I find that the Plaintiffs were not in breach of the covenant of quiet enjoyment by reason of the Block 8 Building Renovation.

F5. Defendants’ entitlement to terminate the Tenancy and Breach (Issues 4 and 10)

113.  In light of my findings that there was no actionable misrepresentation, no breach of quiet enjoyment by the Plaintiffs, and no basis for estoppel by convention or rectification, the Defendants had no contractual or equitable right to terminate the Tenancy Agreement in July or August 2020. It is common ground that they ceased paying rent from 1 July 2020 and that they handed back the keys and vacated the Property on 17 August 2020. Those acts were inconsistent with continuing performance of the Tenancy Agreement and amounted to a repudiatory breach. The Plaintiffs were entitled to accept that repudiation, as they did.

114.  On Issue 4, I therefore find that the Defendants were not entitled to terminate the Tenancy. On Issue 10, I find that the Defendants were in breach of the Tenancy Agreement by failing to pay rent and by prematurely vacating the Property.

F6. Mitigation of Loss and Damages (Issues 6, 7 and 8)

115.  The applicable general principles on damages for breach of a tenancy agreement by a tenant and on mitigation are trite and were not in dispute. Where a landlord accepts a tenant’s repudiation of a tenancy, it is in principle entitled to recover, as damages, the rent and other payments which would have been receivable over the period for which the tenant remained contractually bound, subject to a duty to take reasonable steps to mitigate its loss by re-letting the premises at a realistic market rent. The duty to mitigate is not onerous - the landlord is not required to do more than act reasonably in the ordinary course of business, and the burden lies on the tenant to plead and prove that the landlord has failed to mitigate and to show, with some particularity, the extent to which the loss would thereby have been reduced: Foxhill Investments Ltd v Sino Golden International Group Holdings Ltd [2021] HKCFI 3662 at §§14-15, Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2015] 1 CLC 765 at §§31-33, 35 and 38 and Wayfoong Credit Ltd v Cheung Wai Wah Samuel [1990] 1 HKC 367 at 371E-F.

116.  The Plaintiffs’ case is that, following the Defendants’ repudiation in ceasing to pay rent from 1 July 2020 and vacating the Property on 17 August 2020, they acted reasonably to mitigate their loss. On or about 18 August 2020, the 1^st Plaintiff instructed several estate agents to list the Property for rent at HK$62,000 per month inclusive and negotiable, and also for sale at about HK$40 million, leaving keys with at least one agent. The Plaintiffs produced and relied on a listing that appeared on 5 September 2020, but that particular entry was somehow referring to flat A, instead of the Flat which was flat B. The 1^st Plaintiff accepted in cross-examination that he had not noticed this error at the time, but maintained that he had in fact gone to several agents and left the keys with one of them. There was later an advertisement dated July 2021 which accurately related to the Property at an asking rent of HK$68,000 per month, which both parties accepted as documentary proof that the Property was being marketed after the Defendants vacated it. As a matter of fact, the Plaintiffs eventually entered into a new tenancy at HK$60,000 per month inclusive, with a rent-free period from 19 to 30 April 2022.

117.  The Plaintiffs emphasize that Block 8 was undergoing major renovation, with mesh and bamboo scaffolding in place, and that the scaffolding was only dismantled between October and November 2021. They rely on the evidence of Ms Cheung, who sold her own Block 8 flat in the summer of 2022 and said she would not have invited potential buyers to view her flat while scaffolding remained because it would have been too dangerous. They say that the dangers and risks to prospective tenants or buyers viewing a flat when scaffolding remains, and the associated potential liability for the owner, must be taken into account when assessing the reasonableness of their mitigation efforts. They also point to the impact of the Covid-19 pandemic (which began around March 2020 and effectively ended around May 2023 when the WHO lifted the global emergency) as further depressing demand and making it more difficult to secure a new tenant.

118.  Further, by reference to the cases Wing Siu Co Ltd v Goldquest International Ltd (HCA 4145/2001 & HCA 3183/2001 (Consolidated), 18 August 2006) at §16, Chinese Estates (Windsor House) Ltd v Eternal Ethos Ltd (HCA 1655/2011, 28 October 2014) at §30, Ajax International Co Ltd v Odyssey Italy Ltd (HCA 5359/1991, 11 December 1992) at §45 and Szeto Ming v Li Man Kee Gailey (DCCJ 1991/2008, 10 August 2010) at §54, Mr Tsang submits that, as a matter of common sense, renting out the Property (an upmarket / luxury flat) at a substantial discount because of building renovation would significantly devalue it in the eyes of future potential tenants even after the renovation works had been completed. He argues that future tenants would view a flat that had once been let at a deep discount with suspicion or skepticism, resist attempts to restore the rent to pre-discount levels, and use the historical discount (which would appear on the public record once a tenancy agreement was stamped and registered) as a bargaining chip, or else turn to comparable flats whose perceived value had not been “tainted” in this way. He also suggests that such a discount might affect the “profile” of tenants attracted to the Property and thereby impact its perceived value.

119.  On the facts, the Defendants argue that the Plaintiffs’ mitigation efforts were minimal. They note that the 1^st Plaintiff gave a single round of instructions in August 2020 to list the Property at HK$62,000, then largely left matters to the estate agents without monitoring how they carried out those instructions. One listing referred erroneously to Flat A; another advertisement, which the Plaintiffs accept related to the Property, showed an asking rent of HK$68,000, above the original instructions. The 1^st Plaintiff did not give further instructions, did not check the details of the marketing materials, and did not attempt to lower the asking rent despite an extended absence of interest from potential tenants. Mr Heung characterizes this as “only 1 step” taken by the Plaintiffs toward mitigation and submits that such a step is wholly unreasonable in light of the fact that the asking rent of the Property, whether HK$62,000 or HK$68,000, was close to double the agreed market rent (as per the Joint Letter of the Valuation Experts). Mr Heung also drew my attention to the fact that the 1^st Plaintiff, in cross-examination, accepted that he would not have let the Property at anything he regarded as an “undervalue” and indicated that his lower limit would have been around HK$50,000, which was still substantially above the agreed discounted rent. He thereby submits that this further shows the Plaintiffs were not acting as reasonable landlords trying to mitigate loss, but were effectively adopting an “all or nothing” approach inconsistent with their duty to mitigate.

120.  Insofar as the Plaintiffs’ arguments about “tainting” perceived value and attracting a different class of tenant are concerned, the Defendants say these arguments were speculative and unsupported by evidence. They point out that these propositions were developed in Mr Tsang’s submissions, not in the 1^st Plaintiff’s own evidence, and that no empirical or expert evidence was adduced. They also seek to distinguish Wing Siu Co Ltd and Chinese Estates (Windsor House) Ltd on the basis that those cases concerned whole-building landlords, where letting one unit below market rent could affect the rental tone for other units in the same portfolio. By contrast, the Plaintiffs here are single-unit owners and owe no duty to preserve the rental tone for other owners.

121.  I accept that the presence of scaffolding and associated risks, and the impact of Covid-19, made re-letting more difficult and are factors that must properly be taken into account when considering what was reasonable for the Plaintiffs to do in mitigation. I also accept that the Plaintiffs were not required to take extreme measures, to undercut market rent regardless of consequences, or to sacrifice legitimate concerns about rental tone.

122.  However, I do not accept the explanation advanced on behalf of the Plaintiffs for maintaining asking rents significantly above the level indicated in the Joint Letter of the Valuation Experts. Mr Tsang contends that granting a substantial temporary discount during the renovation period would “taint” the Property in the eyes of future tenants, who would thereafter view it with suspicion, resist a return to normal rent and use the historical discount as leverage, or else avoid the Property in favour of comparable flats without such a history. No empirical, expert or other cogent evidence was adduced to support this proposition. It is, at best, an assertion at a high level of generality. In circumstances where the burden lies on the Defendants to show that the Plaintiffs failed to mitigate, the Plaintiffs are nonetheless required to advance a coherent and evidence-based explanation for mitigation steps which are markedly out of line with objective market indicators. I am not persuaded that this speculative “tainting” concern justifies pitching the asking rent close to pre-renovation levels in the face of the joint experts’ valuation.

123.  As a matter of common sense, any future potential tenant would be informed that the building had recently been refurbished, which is likely to be a positive feature. Once it is explained that any substantial discount in rent was granted only during the period of refurbishment, when works necessitated the removal of air-conditioning units and the erection of scaffolding with mesh coverings, the existence of a temporary discount is plainly understandable. A future tenant who, despite such an explanation, insists on treating a past temporary discount as a reason to demand a permanent reduction, or who walks away solely on that basis, would in my view be acting unreasonably.

124.  The suggestion that a temporary substantial discount would attract a different income profile of tenants and thereby harm the Property’s perceived status is likewise unsupported by empirical or expert evidence. The authorities Wing Siu Co Ltd and Chinese Estates (Windsor House) Ltd (which the Plaintiffs relied on), were concerned with the effect of under-renting a single unit on the rental tone of an entire building portfolio, in circumstances where the landlord owned multiple units. They do not address the position of a single-unit landlord granting a time-limited discount to reflect exceptional disamenity during building renovation.

125.  By contrast, the disamenities here were concrete, time-limited and severe: scaffolding, mesh coverings, temporary removal of air-conditioning units and associated noise and dust during major renovation works, together with the impact of Covid-19. Those are precisely the sort of factors that objectively warrant a substantial discount to the asking rent during the period in question. The parties’ experts, in their Joint Letter of the Valuation Experts, notwithstanding the absence of directly comparable transactions, agreed that an allowance of 50% for refurbishment disturbance was appropriate and jointly valued the Property at HK$32,012.00 per month inclusive as at 17 July 2020. This expert evidence demonstrates that, in principle, there would have been a market for the Property at such discounted levels despite the ongoing works. As such, in my view, a reasonable landlord, acting to mitigate loss in these circumstances, should have been prepared to offer a substantial but time-limited discount in line with that expert assessment.

126.  I accept that landlords often quote an asking rent above their bottom line. The law does not require perfect mitigation. It requires reasonable steps, but the Plaintiffs did not do so. They instructed marketing at HK$62,000.00, allowed a higher figure of HK$68,000.00 to appear, did not take effective steps to correct or rationalise listings, and did not materially adjust their stance over an extended period. I therefore find that the Defendants have discharged the burden of showing that the Plaintiffs failed to take all reasonable steps to mitigate their loss.

127.  The Plaintiffs’ failure to reasonably mitigate their loss limits the recoverable loss to what would have been suffered had reasonable steps been taken: Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2015] 1 CLC 765 at §33. As such, the proper approach is therefore to assess damages on the basis that: (i) the Plaintiffs are entitled to the contractual rent up to the date of repudiation and for a reasonable period thereafter within which they could reasonably have been expected to re-let the Property; and (ii) beyond that reasonable period, their recoverable loss is confined to the difference between the contractual rent of HK$59,000 per month and the realistic rent which they could have obtained by re-letting until the new lease commenced: see also Pinaki Holdings Pty Ltd v HSDCTLVMB Pty Ltd [2019] NSWDC 855 at §88

128.  While the parties are in dispute as to the reasonable period within which the Plaintiffs were reasonably expected to have re-let the Property, the parties’ counsel have reached a consensus during the closing submissions that, if this matter comes into consideration, an appropriate range would be between 2.5 and 8 months. The length of reasonable time to find a new tenant is essentially a question of fact depending on the circumstances of each case. Having regard to the evidence of the works of the Block 8 Building Renovation, the pandemic conditions and the nature of the Property and development, I consider that a reasonable period for re-letting is 6 months from 18 August 2020. That is longer than in many reported cases, but in my view it properly reflects the combined effect of building works and Covid-19 on the likely time needed to find a tenant willing to take the Property at an appropriate discounted rent during the renovation.

129.  Adopting the sum of HK$29,600 per month as the realistic rent for the period after the said 6 months of re-letting period (that figure having been agreed by the parties through their counsel during their oral closing submissions for the period after 31 October 2020 and until the time the Property was re-let), the quantum of the Plaintiffs’ claim should be calculated as follows instead:

(1)	Rent for 1 to 17 August 2020 (pro rata): HK$59,000 x 17/31	HK$32,354.84
(2)	Damages for loss of rent for a reasonable period for finding a new tenant (6 months) 18 August 2020 to 18 February 2021: HK$59,000 x 6 months	HK$354,000.00
(3)	Damages for loss of rent from 19 February 2021 to 30 April 2022 (14 months and 10 days): (HK$59,000 – HK$29,600) x (14 + 10/28)	HK$422,100.00
(4)	Deduct: (i) Security deposit - HK$59,000 (ii) Hob replacement - HK$7,230
	TOTAL:	HK$742,224.84 ===========

130.  In light of my findings on liability, the Defendants were neither entitled to terminate nor to rescind the Tenancy Agreement, and none of their counterclaims succeeds, such that Issue 8 therefore does not arise for determination. Nonetheless, I would only add this. There is no dispute that damages for breach of the covenant for peaceful and quiet enjoyment may in principle include a reasonable sum for alternative accommodation, but on the evidence available before the Court, I see no justification for treating the Wilshire Towers Flat, which is materially larger than the Property by about 300 square feet and has four bedrooms rather than three, as reasonable replacement accommodation. The additional space and extra room are not shown to have been necessary. As to the claimed moving expenses, while both Moving Fees and Agency Fees would, in principle, be losses which would not have been incurred had there been a repudiatory breach by the Plaintiffs or a misrepresentation, only the Agency Fees of HK$33,500 are supported by documentary proof. In the absence of any evidence of actual payment, I am unable to allow the HK$20,000 said to have been incurred for removal costs, even though the amount itself might well be reasonable.

G. CONCLUSION

131.  For the above reasons:

131.1. I allow the Plaintiffs’ claim only to the extent of HK$742,224.84, plus interest at 1% above the HSBC prime rate on that sum accruing from 13 January 2021 (the date of Writ) until the date of this Judgment, and thereafter at judgment rate until the payment in full.

131.2. I dismiss the Defendants’ counterclaim.

132.  As to costs, while the Plaintiffs have succeeded in their claim, their failure to mitigate their loss has resulted in a significant reduction in the quantum recoverable. On balance, taking all the circumstances into account, I consider that a fair costs order in this case would be that the Plaintiffs be entitled to 90% of their costs. I therefore make an order nisi that the Defendants do pay to the Plaintiffs 90% of the costs of the action, including all the costs reserved (if any), to be taxed if not agreed, with Certificate for Counsel.

133.  It remains for me to thank counsel on both sides for their assistance.