WEALAGE INVESTMENTS LTD v. RG PROPERTY MANAGEMENT LTD

LDPD 68/2025

[2026] HKLdT 13

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDPD 68 OF 2025

__________________________

__________________________

________________

J U D G M E N T

________________

1.  The Applicant is the registered owner of Flat No. G, 8th Floor, Lido Apartments, Nos. 860-878 King's Road, Hong Kong (“Premises”). The Respondent is a company and the tenant of the Premises pursuant to a Tenancy Agreement dated 25 November 2024 (“Tenancy Agreement”).

2.  The Applicant brings this application as landlord for recovery of possession of the Premises and other relief, on the basis that the Respondent has breached the Tenancy Agreement.

3.  The Applicant was represented by Mr Jackson Chow and the Respondent by Ms Belinda Law.

Agreed Facts

4.  The following persons were involved:

(1)  On the Applicant’s side:

(a)  Wong Siu Ying (“Madam Wong”), a director and shareholder of the Applicant;

(b)  Mak Tze Hing (“Ms. Mak”), Madam Wong’s daughter;

(c)  Mak Lai Him Raymond (“Raymond”), Madam Wong’s son;

(d)  Ivy, the estate agent of the Applicant

(2)  On the Respondent’s side:

(a)  Ho Hoi Ying (“Ms. Ho”), a director of the Respondent;

(b)  Chen Hui Hua (“Eva”), of Heyday Property Limited, the estate agent of the Respondent.

5.  The following facts were agreed by the parties:

(1)  On 17 November 2024 Madam Wong, Raymond, Ivy, Ms. Ho and Eva attended the Premises. Madam Wong for the Applicant and Ms Ho for the Respondent signed a Provisional Tenancy Agreement dated 17 November 2024 (“Provisional Agreement”).

(2)  On that day Madam Wong on behalf of the Applicant also signed a Confirmation Letter (“Confirmation Letter”). It provided “The Landlord acknowledges and agrees that the Premises are used for the purpose of staff accommodation” (Respondent’s translation) or “staff dormitory” (“Applicant’s translation).

(3)  On 21 November 2024 Ms. Ho, accompanied by Eva, met with Ivy for Ms. Ho to sign the Tenancy Agreement on the Respondent’s behalf.

(4)  On 23 November 2024 Ms. Mak and Madam Wong met with Ivy and Eva at the Premises for Madam Wong to sign the Tenancy Agreement on the Applicant’s behalf. The Tenancy Agreement provided that the Applicant shall lease the Premises to the Respondent for a term of 2 years from 9 December 2024 to 8 December 2026 at a rent of HK$19,000 per month, with a rent free period from 25 November 2024 to 8 December 2024.

(5)  The formal Tenancy Agreement for the lease of the Premises is dated 25 November 2024.  Possession of the Premises was handed over to the Respondent on 25 November 2024.

(6)  The Applicant seeks to recover possession of the Premises and terminate the Tenancy Agreement alleging breaches of Clauses 2 and 3 of the Tenancy Agreement by the Respondent.

(7)  On 26 November 2024 the Respondent arranged to construct bamboo scaffolds outside the windows of the Premises. The Respondent’s case is that (i) it planned to replace the air conditioning unit; (ii) it had mistaken the Premises for another property that it had rented and inadvertently arranged to install skeleton frames inside the Premises (collectively “Relevant Works”) which were immediately removed.

(8)  Madam Wong and Ms. Mak made complaints to Ms. Ho on the same day.

(9)  The Respondent has used the Premises as accommodation for imported workers of its corporate clients (“Relevant Usage”).

(10)  On 27 November 2024 Ms. Mak on behalf of the Applicant informed Ms. Ho that the Tenancy Agreement was terminated with immediate effect.

6.  The Tenancy Agreement contains, inter alia, the following express terms:

(1)  Clause 2, “The Tenant shall not make any alteration and / or additions to the Premises without the prior written consent of the Landlord, which consent shall not be unreasonably withheld.”

(2)  Clause 3, “The Tenant shall not assign, transfer, sublet or part with the possession of the Premises or any part thereof to any other person. This tenancy shall be personal to the Tenant named herein.” 

(3)  Clause 7 “… if the Tenant shall commit a breach of any of the terms and conditions herein contained, it shall be lawful for the Landlord at any time thereafter to re-enter the Premises whereupon this Agreement shall absolutely determine …”

(4)  Schedule II, User Clause 1, “The Tenant shall not use or permit to be used the Premises or a part thereof for any purpose other than for residential Purpose only”.

(5)  Remarks: D (additional, Chinese manuscript, translation) “The landlord acknowledges and agrees that the Premises are used for the purpose of staff accommodation”. Respondent’s translation is that “accommodation” should be “dormitory”.

(6)  Remarks: E (additional, Chinese manuscript, translation) “The Tenant will install a shower screen in the bathroom and will not restore it to its original state upon vacating the Premises; all other aspects will be returned to the landlord in their original condition”.

7.  The Applicant’s Notice of Application dated 17 January 2025 case is that the Respondent has committed the following breaches of the Tenancy Agreement, entitling the Applicant to terminate the tenancy and recover possession by virtue of Clause 7:

(1)  Unauthorised Alterations: On or about 26 November 2024, the Respondent arranged for bamboo scaffolds to be erected outside the Premises and installed skeleton frames inside (the Relevant Works), without the Applicant’s prior written consent, in breach of Clause 2 of the Tenancy Agreement.

(2)  Parting with Possession/Subletting: The Respondent used the Premises as accommodation for imported workers of its corporate clients (the Relevant Usage), which amounts to parting with possession or subletting, in breach of Clause 3 of the Tenancy Agreement.

8.  The Respondent’s Notice of Opposition dated 19 March 2025 denies breaching the Tenancy Agreement:

(1)  Clause 2, because the works were temporary, related to air-conditioning, and promptly removed.

(2)  Clause 3, because it retained exclusive possession and the arrangement with imported workers was a licence, not a sublease.

(3)  Further, the Applicant was aware of and consented to the intended use, agreeing to and signing the Confirmation Letter and “Remark D”, Schedule II of the Tenancy Agreement.

Issues

9.  The Agreed List of Issues dated 30 June 2025 are:

(1)  Whether the Respondent has made alternation and/or additions to the Premises without the prior written consent of the Applicant, in breach of Clause 2 of the Tenancy Agreement which entitled the Applicant to terminate
the Tenancy Agreement and recover the possession of the Premises?

(2)  Whether the Respondent has, by the Relevant Usage, assigned, transferred, sublet or part with the possession of the Premises or any part thereof to other person?

(3)  Whether Madam Wong had knowledge of and gave consent to the Relevant Usage before signing the Provisional Agreement on 17 November 2024?

(4)  Whether Clause D of the “Remarks” section of Schedule II to the Tenancy Agreement and Madam Wong’s endorsement of the Confirmation Letter constituted the Applicant’s acknowledgment and consent to the Relevant Usage?

(5)  If Issue 2 is answered in the affirmative, whether, taking into account Issues 3 and 4, the Respondent breached Clause 3, entitling the Applicant to terminate and recover possession?

10.  The Respondent considers that the Agreed List of Issues raise the following legal questions for determination:

(1)  How should the Tribunal approach the interpretation of the Tenancy Agreement in light of the Provisional Agreement and Confirmation Letter?

(2)  What constitutes “alteration and / or additions” as stated in Clause 2 of the Tenancy Agreement?

(3)  What do the terms “assign”, “transfer”, “sublet”, “part with the possession” and “personal to the Tenant” mean in Clause 3 of the Tenancy Agreement?

Legal Principles

Construction of leases

11.  Leases are contractual in nature and are to be construed in accordance with general principles of contract law: Megarry & Wade, The Law of Real Property, (9^th Edition), §16-006.

12.  The Applicant relies upon Eminent Investments (Asia Pacific) Ltd v. DIO Corp (2020) 23 HKCFAR 487 at §§43-44, authoritative guidance on the construction or interpretation of contractual terms:

“43. It is a truism that the starting point is the ordinary and natural meaning of the words of the contract, and of course in the vast majority of cases that is the ending point also. But, as Ma CJ pointed out in Fully Profit (Asia) Ltd v Secretary for Justice, in the more difficult cases it is not particularly helpful to refer to the “ordinary and natural meaning” of words because in such cases there can be much debate over exactly what is the ordinary or natural meaning of words; and in those cases the surer guide to interpretation is context.

44. In Wood v Capita Insurance Services Ltd, Lord Hodge JSC reviewed the many cases on interpretation and emphasised that interpretation was a unitary exercise. That is why, where there are conflicting interpretations, account should be taken of the natural and ordinary meaning of the provision in question, the purpose of the contract and of the provision, other relevant provisions, the facts and circumstances known or assumed by the parties at the time that the contract was executed, the quality of the drafting of the instrument, and commercial common sense.”

13.  The Respondent relies upon Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] 1 WLR 575, where Lord Hamblen JSC at §29 summarised the relevant general principles to contractual interpretation from Wood v Capita Insurance Services Ltd [2017] AC 1173:

“(1) The contract must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean.

(2) The court must consider the contract as a whole and, depending on the nature, formality and quality of its drafting, give more or less weight to elements of the wider context in reaching its view as to its objective meaning.

(3) Interpretation is a unitary exercise which involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its implications and consequences are investigated.”

14.  In cases such as the present where the drafting of the contract was not done by legal professionals, the court has been inclined to place more emphasis on the factual background known to the parties at or before the execution of the contract. The Respondent refers to Wood at §§10-13, including:

“…

11…Interpretation is, as Lord Clarke JSC stated in the Rainy Sky case (para 21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause (the Rainy Sky case, para 26, citing Mance LJ in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 1 All ER (Comm) 299, paras 13, 16); and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: the Arnold case, paras 20, 77. Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms.

…

13…The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance…”

15.  In cases of inconsistencies between written and printed clauses in a contract, written clauses specially negotiated by the parties will prevail: Lewison, The Interpretation of Contracts, 8^th Ed, §§9.88-9.97. In Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 715, Lord Bingham at §§9, 11-12 reiterated that the task of the court was to ascertain and give effect to the intentions of the contracting parties when construing a commercial document, in particular:

“11…it is common sense that greater weight should attach to terms which the particular contracting parties have chosen to include in the contract than to pre-printed terms probably devised to cover very many situations to which the particular contracting parties have never addressed their minds…

12…The court must of course construe the whole instrument before it in its factual context, and cannot ignore the terms of the contract. But it must seek to give effect to the contract as intended, so as not to frustrate the reasonable expectations of businessmen.”

16.  Where ambiguity exists, and two semantically plausible interpretations are available, the court may prefer the construction that accords with the approach of honest and reasonable business-people, especially where poor drafting is apparent: BCCM Group Pty Ltd v. ASAP23 Pty Ltd [2022] SASCA 139 at §54.

Meaning of “alterations / additions”

17.  The Respondent’s case is that the word “alterations” in a lease agreement is to be construed as only alterations which would affect the form or structure of the building: Halsbury’s Laws of Hong Kong, Vol 36, §235.339 and Bickmore v Dimmer [1903] 1 Ch 158 at §167.

18.  This construction was revisited in BMR Bagshot Ltd v Dorchester Mansions (1997) Limited [2021] EWHC 2951 (Ch). The disputed works at the leased flat involved:

“… the demolition of internal walls, new partitioning to the hall, living room, dining room, kitchen, bathroom, Master bedroom and three other bedrooms, the creation of new suspended ceilings to all of these areas, new electrical installation, replacement radiators to most rooms, a new en suite bathroom to one of the bedrooms, installation of a new kitchen window, ceiling mounted sliding doors to the living room, and new plumbing, doors and air conditioning to the some rooms.” : at§7

19.  Although it was agreed that such works did not affect the structural integrity of the building, the English Court of Appeal found that it was necessary to first identify what the premises were and then determine whether the works amounted to alterations to those premises.

20.  Applying this test at §26, the Court found that “the extensive nature of the works, particularly in relation to demolition of walls and ceilings, affected the form or structure ‘of the Premises’.”  Therefore, regard must be had to the extensiveness of the works in relation to the premises when determining whether certain works amount to alterations.

Meaning of “assignment, transfer, subletting, parting with possession”

21.  First, the Respondent refers to the general principles for determining whether an agreement creates a lease or licence. The “three characteristic hallmarks of a contractual tenancy, as distinct from a contractual licence, are (1) exclusive occupation, (2) rent and (3) a term which the law regards as certain”:  Halsbury’s, Vol 36, §235.008.

22.  In contrast:

“[a] licence is normally created where a person is granted the right to use premises without becoming entitled to exclusive possession of them, or where exceptional circumstances exist which negative the presumption of the grant of a tenancy. If the agreement is merely for the use of the property in a certain way and on certain terms while the property remains in the owner’s possession and control, the agreement operates as a licence, even though the agreement may employ words appropriate to a lease.”: Halsbury’s, Vol 36, §235.010.

23.  What distinguishes a tenancy from a licence is whether the occupant enjoys exclusive possession of the premises. A covenant against “subletting” is not broken by the granting of a licence when exclusive possession of the premises remains with the tenant: Halsbury’s, Vol 36, §235.347.

24.  For covenants against “assignment or parting with possession”, Halsbury’s, Vol 36, §235.345 provides:

“…A covenant ‘not to assign or part with the possession of the premises’ goes further and is broken as, for example, where the tenant makes an equitable assignment of the lease and places the assignee in possession; but a tenant who retains the legal possession of the whole of the premises at all material times does not commit a breach of the covenant by allowing other people to use the premises. A covenant against parting with possession may, therefore, not be effective in preventing a tenant from allowing other persons to occupy the premises.”

25.  Iu Tze Shi v Hop Woo Firm (1950) 34 HKLR 258, an appeal from the then Tenancy Tribunal, determined whether the subtenant had parted with the possession of the demised premises or any part thereof, citing at 262-263 from the headnote of Chaplin v Smith (1926) 1 KB 198, that:

“A lessee who has covenanted not to part with possession of the demised premises does not commit a breach of the covenant by merely permitting another person to have the use of the premises, so long as the lessee retains the legal possession himself.”

26.  The Tribunal at 263, also endorsed the following paragraphs of Stening v Abraham [1931] 1 Ch 470 at 473:

“I must entirely disclaim any attempt to define the meaning of parting with possession generally. It must always be a question of fact and the construction of the particular agreement in each case, and it cannot be determined by looking at the document alone.

  But in my view a lessee cannot be said to part with the possession of any part of the premises unless his agreement with his licensee wholly ousts him from the legal possession of that part.”

27.  Thus, a tenant cannot be considered to have parted with possession of any part of a property if he retains legal possession of that part.

28.  The Respondent also relies on Clarence House Ltd v National Westminster Bank plc [2010] 1 WLR 1216 at §§31-32, for the English Court of Appeal’s analysis of what constitutes “parting with possession”, albeit in the context of virtual assignments:

“31. The strict meaning given to the covenant in Lam Kee Ying Sdn Bhd v Lam Shes Tong [1975] AC 247 was stated, at p 256, to be that: ‘A covenant which forbids a parting with possession is not broken by a lessee who in law retains the possession even though he allows another to use and occupy the premises.’ Their Lordships approved the judgment of Farwell J in Stening v Abrahams [1931] 1 Ch 470, 473-474 that a lessee who grants a licence to another to use the demised premises does not commit a breach of the covenant

  ‘unless his agreement with his licensee wholly ousts him from the legal possession…nothing short of a complete exclusion of the grantor or licensor from the legal possession for all purposes amounts to a parting with possession.’

32…(2) Because this is a common phrase in a standard alienation clause, ‘possession’ must be given its normal, albeit also its technically legally correct, meaning. The true meaning must take its colour from its context. Whilst ‘possession’ and ‘occupation’ are different concepts (the difference between the tenant and the licensee such as the lodger) and whilst they must not be conflated as Judge Hodge said, nevertheless their juxtaposition is part of the context and serves to emphasise that aspect of physical control which is part of possession. As Lord Browne-Wilkinson pointed out in a different context in J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419, para 40:

  ‘there are two elements necessary for legal possession: (1) a sufficient degree of physical custody and control (‘factual possession’); (2) an intention to exercise such custody and control on one’s own behalf and for one’s own benefit (‘intention to possess’).’

And as Chadwick LJ said in Manchester Airport plc v Dutton [2000] QB 133, 142: ‘possession is synonymous…with exclusive occupation – that is to say occupation (or a right to occupy) to the exclusion of all others, including the owner or other person with superior title…’  The hallmark of the right to possession is the right to exclude all others from the property in question. That is the ordinary and normal sense of the word and that is the meaning which it should be given in this covenant.”

29.  In Australia the Supreme Court of Victoria in Swan v Uecker [2016] 50 VR 74, held that the tenant’s letting of an apartment on a short-term basis of 3 to 5 days via Airbnb amounted to the grant of exclusive possession to the guests, and thus constituted a sublease in breach of a prohibition against subletting without the landlord’s consent. The Court made clear that the relevant test is whether exclusive possession is granted, and that the substance of the arrangement, rather than its form or the use of labels such as “licence”, is determinative. The fact that the arrangement was structured to resemble a hotel or guesthouse operation, with short-term stays and host-imposed rules, did not prevent the finding of a sublease, where exclusive possession was in fact granted to the guests for the duration of their stay: Swan at §§31, 40, 47, 75.

Meaning of “sharing possession”

30.  In Mean Fiddler Holdings Ltd v Islington LBC [2003] EWCA Civ 160, the lease contained a clause which stated that the tenant was “not to assign transfer charge underlet or part with or share the possession or occupation of part only of the Property”: at §12. The tenant, who operated a nightclub at the premises, allowed external promoters to stage club nights at the premises. However, the tenant was exclusively responsible for everything concerned with the premises. It controlled who could enter the premises, safety, how the building and equipment were used, compliance with licence requirements and the building insurance: at §15.

31.  The English Court of Appeal had to determine whether there was a breach of the covenant against “sharing possession”, as it could not be contended that the tenant parted with possession. The starting point was the nature of the permitted use. In light of the tenant’s permitted use of the premises as a nightclub, the Court found at §35 that the approach adopted by the lower court at §§23-24 was appropriate:

“…I think the touchstone has to be not, as Mr Gaunt contends, the significance of the presence in terms of the business carried on or the use of the premises, but, as Mr Lewison submits, its significance in terms of control of the premises. The covenant is concerned with alienation of the property. It is the effect of physical presence upon the property not upon its use, that seems to me to be the context in which I must determine whether, as a matter of fact and degree, the carrying on of the claimant’s business by permitting an external promotor to promote virtually all events at the premises in their regular weekly slots, involves sharing occupation. …

… The true question must in my judgment be, whether a third party has been allowed to have such share of control of the property itself as to amount to occupation, in the context of this covenant. I have concluded that the claimant’s arrangements with its external promoters did not involve a sharing of occupation or any other breach of clause 2(23)(a) of the lease.”

32.  Mean Fiddler demonstrates that control of the premises in light of the premises’ intended use is an important factor in determining whether an occupant has shared possession. Ms Law submits that given that “sharing” possession has a lower threshold than “parting with” possession, whether the tenant has control over the demised premises must be a determinative factor in ascertaining whether the tenant has parted with possession of a property.

Meaning of “personal to the tenant”

33.  Authorities have found that the phrase, “personal to the tenant” means the rights of the tenant under the agreement cannot be conferred upon a third party: System Floors Ltd. v Ruralpride & Anor (1995) 69 P & CR D18. The meaning of this phrase, often appearing in standard tenancy agreement templates, must be construed in light of the agreement as a whole and the factual matrix at the time of the agreement which sheds light on the intentions of the contracting parties.

34.  In Ha Sau Mei Winnie v Ng Wai Wing & Anor CACV 258/2011, unrep., 12 November 2012, the plaintiff and the defendants entered into three inter-related agreements with the goal of effecting the sale of the defendants’ catering service business. One of these agreements was a tenancy agreement between the 1^st defendant as landlord and the brother of the plaintiff as tenant, which contained the clause, “This tenancy shall be personal to the Tenant named herein.” 

35.  The defendants committed certain breaches under the remaining two agreements and the plaintiff brought proceedings against the defendants as an undisclosed principal. The plaintiff was awarded damages at trial. On appeal, the defendants challenged the trial judge’s factual finding that the three agreements were not personal in nature and that the plaintiff, as an undisclosed principal, was entitled to sue on them. The Court of Appeal rejected this ground of appeal at §55:

“Again, the Judge had looked at all the relevant circumstances carefully, including the fact that the Three Agreements were inter-related for the single purpose of selling the defendants’ catering business. He noted Clause 3 of the Tenancy Agreement which provided the Agreement was personal to the signing parties. But he placed it in the overall context of the Three Agreements, noting that the Transfer Agreement and the Takeover Agreement did not contain any provision similar to Clause 3 and that quite the contrary, Clause E of the Takeover Agreement allowed Mr Wong and Mr Har to sell the Equipments to a third party upon full payment. The Judge also found that the defendants were willing to sell their business to whoever that was willing to buy at a price that they regarded as sufficiently attractive.”

36.  Ms Law relies upon the case to demonstrate that the Court is entitled to look beyond an agreement to determine the extent of the personal nature of an agreement.

Meaning of “residential purpose”

37.  In Bermondsey Exchange Freeholders Ltd v Koumetto [2018] 4 WLUK 619, the County Court at Central London  held that the provision of short-term accommodation to transient, unrelated occupants through platforms such as Airbnb amounted to a commercial use, which was qualitatively different from use as a residential flat by a family or individual as their home. The Court emphasised that such commercial arrangements undermine the residential purpose contemplated by the lease and are in breach of user covenants restricting use to residential purposes only: Koumetto §§31, 65–66. Mr Chow says that similarly, the Respondent’s arrangement here is inconsistent with the residential purpose or use covenant, as it introduces a revolving door of unrelated occupants in a manner akin to hotel or guesthouse use, rather than maintaining the Premises as a genuine residence.

Witnesses

38.  The following persons testified affirming their witness statements as their evidence in chief. Witnesses on behalf of the Applicant:

(1)  Madam Wong, Wong Siu Ying Witness Statement 11 June 2025 and Supplemental Witness Statement dated 19 June 2025.

(2)  Ms. Mak, Mak Tze Hing Witness Statement dated 11 June 2025.

(3)  Raymond, Mak Lai Him Raymond Witness Statement dated 11 June 2025.

39.  Witnesses on behalf of the Respondent:

(1)  Ms. Ho, Ho Hoi Ying Witness Statement dated 16 June 2025 and Reply Witness Statement dated 23 June 2025.

(2)  Eva, Chen Hui Hua Witness Statement dated 16 June 2025.

Witness assessment

40.  The general principles for assessing the credibility of witnesses who had given evidence in court are summarised in Hu Lan v David Golden [2023] HKCFI 873 at §36:

“(1) 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;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4) The court should consider a witness’ motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5) 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;

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

Madam Wong

41.  Madam Wong is a 76 years old director and shareholder of the Applicant. Mr Chow makes the following submissions on Madam Wong’s evidence:

(1)  Her evidence was clear, consistent, and compelling. She repeatedly affirmed that her understanding, based on the Respondent’s representations and the information provided by the estate agent, was that the Premises would be used solely as accommodation for the Respondent’s own staff, not for the staff of third-party companies. Had she known the true intended use, she would not have agreed to the tenancy at all.

(2)  At the time of signing the Provisional Agreement, neither the Respondent nor its agents, Ms. Ho or Eva, disclosed that the Premises would be used for staff of other companies. She only discovered this after the tenancy commenced, when Ms. Ho, admitted over the telephone that the Premises was to be used for overseas staff of Tai Hing and Man Wah Bing Teng. This admission prompted her to take immediate action to protect her interests as landlord.

(3)  She explained that the Confirmation Letter was presented to her after she signed the Provisional Agreement. It was represented as relating only to cleaning and maintenance arrangements. She did not consider it significant at the time, as she believed it merely facilitated cleaning and maintenance for the Respondent’s own employees occupying the Premises. She was not provided with a copy of the Confirmation Letter and it was not put to her that she or Ivy were given a copy.

(4)  At no stage did she attempt to deny that she had signed the Confirmation Letter. Therefore the suggestion that Madam Wong concealed the existence of the Confirmation Letter due to its absence from her first witness statement is unfounded.

(5)  Madam Wong did not shy away from acknowledging facts that could be unfavourable to her case, such as reliance on her estate agent and lack of independent verification of the Respondent’s business. Her willingness to address matters candidly speaks to her honesty and the reliability of her testimony.

(6)  When asked why Ivy was not called as a witness Madam Wong frankly answered that Ivy was not willing to testify at court, but that she was willing to provide necessary documentation. In any event, Madam Wong’s evidence and the Applicant’s case is not predicated on Ivy.

42.  Ms. Law submitted that despite her advanced age, Madam Wong clearly understood the questions posed to her and was both capable and lucid. Madam Wong had the ability to review the Provisional Agreement. However, much of her oral evidence lacked logic or commercial common sense:

(1)  Madam Wong refused to acknowledge that she could have mistaken her property agent’s signature for the Respondent’s signature when she signed the Provisional Agreement on 17 November 2024.

(2)  Madam Wong could not proffer any reasonable explanation for why she as landlord needed to sign the Confirmation Letter if the Premises were to be occupied by the Respondent’s own staff. She repeated her understanding that the regular cleaning and minor repairs of the Premises to be performed by the Respondent as stated in the Confirmation Letter were staff benefits provided by the Respondent.

(3)  Madam Wong agreed that the Respondent did not have any duty to disclose the benefits it provided to its own staff and that she did not understand why such benefits were disclosed to her. There is no evidence that she as landlord raised any questions to either Ivy or Ms. Ho during their meeting on 17 November 2024 in this regard.

43.  Madam Wong testified that on 17 November 2024 she signed the Provisional Agreement as soon as she arrived at the Premises and that she then had a discussion with the renovation worker who had arrived at around the same time. However, Ms Law says that this is at odds with Raymond’s testimony where he said that there was a discussion in the kitchen among Madam Wong, Ivy, Ms Ho and Ms Chen that lasted not more than 30 minutes when Madam Wong signed the Provisional Agreement.

44.  I found Madam Wong to be a sincere and honest witness. Her account was entirely plausible. In my view, it was not incumbent upon the Applicant to explain why the Respondent proffered the Confirmation Letter for signature. Her credibility was not undermined by cross-examination or other evidence, such as documents. I accept her evidence as more particularly addressed below.

Ms. Mak

45.  Mr Chow submits that Ms. Mak’s evidence was entirely consistent with and corroborative of Madam Wong’s account. She testified that she relied on her mother and the estate agent, Ivy, for information about the transaction, and that at no time prior to signing the Tenancy Agreement was she informed that the Premises would be used for accommodation of third-party staff. Ms. Mak confirmed that both she and her mother were assured by the estate agent that the Premises would be used for the Respondent’s own staff.

46.  Ms. Mak explained that her due diligence was limited because of these assurances, and she only discovered the true intended use after the issue of unauthorised works arose and after Ms. Ho admitted the arrangement over the telephone. Upon learning of the Respondent’s breaches, including the erection of scaffolding, installation of metal frames, the plan to add an additional toilet without consent, and the Premises’ use as accommodation of third-party staff, Ms. Mak acted promptly to investigate, object, and initiate termination of the tenancy.

47.  Mr Chow contended that Ms. Mak displayed her candour by supplying the Tribunal with the complete chain of WhatsApp communications between Ms. Mak and Ivy, as well as between Ms. Mak and Ms. Ho. Nowhere in the WhatsApp communications was it mentioned or otherwise implied that the Premises would be used to house staff of the Respondent’s third-party corporate clients or that the Respondent was allowed, or even requested permission, to perform the relevant alternations. Her witness statement stated that Ivy expressed that the tenant was desperate to sign the tenancy agreement as soon as possible.

48.  Ms. Mak explained that she did not mention the Relevant Usage in her WhatsApp messages and the draft Tenancy Cancellation Agreement because at the material time, her only knowledge that the Premises were intended to house staff of the Respondent’s corporate clients was based on what Ms. Ho had verbally told her, but she did not have concrete evidence that those staff had actually moved in. Mr Chow says that in any event, the absence of reference to the Relevant Usage in her WhatsApp messages or the draft Tenancy Cancellation Agreement does not amount to a waiver of the Applicant’s rights, nor does it undermine Ms. Mak’s credibility.

49.  Mr Chow added that Ms. Mak did not evade negative facts, openly acknowledging her reliance on her mother and the estate agent, and her lack of a detailed background check on the Respondent. This candour is said to further enhance the credibility of her evidence.

50.  Whereas Ms Law submitted that while Ms. Mak appeared confident, there were many occasions where she did not provide direct answers to simple questions:

(1)  When asked whether the Respondent was a well-known company to Ms. Mak, she replied that she was not in the same industry and thus could not say.

(2)  Asked whether the Respondent had a right to house its own employees in the Premises without the inclusion of Remark D in the Formal Agreement, Ms. Mak did not directly answer the question.

(3)  Asked whether she objected to the Respondent’s building of a new toilet during her phone call with Ms. Ho on 26 November 2024 at around 3:54pm, Ms. Mak did not give a straight answer on both occasions.

(4)  Ms. Mak spoke about scaffolding works and installation of split type air conditioner and did not directly answer the question until pressed a second time about whether she agreed there was no sufficient or solid evidence that the Respondent was going to build a new toilet.

51.  On the issue of subletting, Ms. Mak’s oral evidence is said to be inconsistent with both logic and her witness statement:

(1)  She testified that she had asked Ivy about whether using the Premises as staff accommodation for the Respondent’s own employees would amount to subletting. However, it defies logic that she would have asked about subletting if she had thought the Premises were to be occupied by the Respondent’s own staff in the first place..

(2)  She also said that this conversation was not in her witness statement because it did not appear on her WhatsApp record. However, her witness statement included contents about her telephone call with Ivy in the evening of 16 November 2024 which were also not in her WhatsApp record. This is a key dispute. If the call had really taken place, Ms. Mak would not have neglected to include it in her witness statement.

52.  I consider the above matters neutral, at worst, for the Applicant. In my view her responses were natural and showed candour, particularly when she was being required to form a view. I found Ms. Mak to be straightforward and forthright. She readily admitted the limits of her direct knowledge on matters. I do not accept her evidence defies logic The Respondent sought to shift the blame to Ms. Mak for not doing due diligence and failing to research the Respondent or question, to deflect from the fact that it did not provide the Applicant with any written information or its materials prior to entering the Provisional Agreement or Tenancy Agreement. In my view, it was the Respondent’s responsibility to provide particular information, if it considered such information material to the Tenancy Agreement, or the landlord and tenant relationship. I accept Ms. Mak’s evidence, as more particularly addressed below.

Raymond

53.  Mr Chow claims that Raymond’s evidence supports the Applicant’s case. He also recalled that the Confirmation Letter was presented only after the Provisional Agreement was signed, and that the discussion about the use of the Premises occurred only after signing. He explains the Applicant’s discovery of the works and the breaches and the Applicant’s prompt response. He was informed by workers on site about the construction of a new toilet and immediately relayed this information to his mother and sister, facilitating their swift response to the unauthorised works.

54.  Raymond could not give material evidence in relation to the Provisional Agreement, as he was not on the kitchen when it was signed. The matters he did have personal knowledge of were not successfully challenged. I accept his account of the works at the Premises. I found him to be a credible witness.

Eva

55.  Eva was the property agent acting for the Respondent in the transaction. Eva was never an employee of the Respondent. Nonetheless, her witness statement contained assertions regarding the Respondent’s general business operations, usual procedures and general policy, matters outside her personal knowledge. When challenged, Eva attributed these portions of her statement to information provided by others, particularly Ms. Ho, and to the drafting process conducted by the Respondent’s solicitors. Ms Law seeks to salvage part of Eva’s evidence by reference to her eventual admission that she could not speak for how other property agents dealt with the Respondent, and that what she included as the Respondent’s business services and usual procedure of renting residential premises in her witness statement, could only have come from her own dealings with the Respondent.

56.  Mr Chow asserts that Eva’s impartiality as a witness is undermined by her own admissions. She acknowledged that the Respondent was her client in multiple transactions, her commission income depended on successful transactions with the Respondent and she anticipated a continuing business relationship with the Respondent in the future. She did not dispute that her financial interest was aligned with the Respondent’s success in this and future transactions, raising legitimate concerns about her independence and objectivity as a witness. I do not accept that such a financial interest, of itself, must undermine a witness’s independence.

57.  Mr Chow took issue with Eva’s attitude. In her testimony, Eva repeatedly emphasised that her role as a witness was limited to recounting the events of 17 November 2024 when the Provisional Agreement was signed and she resisted answering questions about events outside this narrow time frame. Eva expressly stated her unwillingness to answer questions beyond the events of 17 November 2024, insisting that she should only be asked about matters within her personal knowledge, as she wished. This refusal to engage with broader questions is said to reflect a lack of candour and cooperation expected of a witness giving evidence. When questioned about other matters arising from her witness statement or events on 16 November 2024 within her personal knowledge, Eva reverted to discussing only the events of 17 November 2024, disregarding the questions. Mr Chow concludes that her selective answering suggests that Eva was a scripted witness for the Respondent, providing rehearsed responses, rather than genuine recollections.

58.  Eva only willing gave evidence on matters she thought to be relevant. Ms Law seeks to excuse Eva for being selective on the basis that Eva was in a hurry as she had to go to Mainland China to accompany her mother to see the doctor on Day 2 of the trial. Therefore, her testimony should not be discredited because she was concerned about whether she could finish her evidence in time to do so.

59.  Eva admitted to mistakes or inaccuracies in her witness statement. For example, that the reference to “Wilman Yin” as an employee of the Respondent was incorrect. The same mistaken reference of “Wilman Yin” as an employee was also made in the witness statement of Ms. Ho. Mr Chow says that further shows Eva to be a scripted witness for the Respondent. Her allegation that she “informed the applicant” about the use of Premises was admittedly wrong, as she had no direct contact with the Applicant. These admissions call into question the reliability of her evidence.

60.  Eva could not read English and relied on Respondent’s solicitors to translate and prepare her witness statement in English. She stated that she trusted the Respondent’s solicitors not to include content she had not provided, but also admitted she could not fully verify the accuracy of her own statement. She sought to shift responsibility for these “mistakes” in content onto the Respondent’s lawyers, alleging that they failed to accurately record her instructions and included content she did not provide. Nevertheless, Eva confirmed that she signed the witness statement after it was interpreted to her in Chinese, indicating her acceptance of its contents at the time. She also confirmed the content as true at the start her oral evidence.

61.  Ms Law seeks to adopt Eva’s excuses about inability to read English, to explain various matters in her witness statement. I reject any suggestion that this is an issue of translation. Her inability to recall the exact words she told the Respondent’s solicitors for the purpose of drafting her witness statement does not determine to her credibility. She is not required to recall exact words. What is significant is whether her evidence is consistent both internally and with undisputed facts. I have considered her evidence in its entirety, in context, against the other material evidence.

62.  Mr Chow says that Eva’s uncooperative and uncandid attitude is compounded by her acceptance that her witness statement contained assertions beyond her personal knowledge. For example, she admitted she was unaware that the Respondent provided accommodation for students, despite this being stated in her own witness statement.

63.  Eva claimed that she had clearly informed Ivy that the Premises was intended for staff accommodation of large companies. However, there is no written record, not even WhatsApp communications, to corroborate this; Eva alleged that all material terms, including the agreed monthly rental, were agreed verbally between Eva and Ivy, but there is no objective evidence of the substance of these communications. She conceded that her belief that the landlord was aware of the intended use was based on inference rather than direct evidence, acknowledging that she could not confirm what Ivy had relayed to the landlord. There is no evidence of the actual communication between Eva, or the Respondent, and Ivy, nor as to what, if anything, Ivy communicated to Madam Wong or Ms. Mak regarding the intended use of the Premises.

64.  Eva testified that 2 copies the Confirmation Letter were signed, 1 for the Respondent and 1 for the “landlord”. However, this version is not corroborated by Ms. Ho, who testified that there was only 1 copy of the Confirmation Letter. I accept that this is a material inconsistency between the Respondent’s own witnesses, further undermining Eva’s reliability (or that of Ms. Ho).

65.  Eva agreed that the use of the Premises as staff accommodation, be it for the Respondent’s own staff or for the staff of the third-party corporate clients, was an important term, yet this was not included in the Provisional Agreement, appearing only in the separate Confirmation Letter. She did not advise the parties to include this term in the written agreement, undermining the existence of any mutual understanding as to the Relevant Usage.

66.  Mr Chow submits that Eva’s claim that the Confirmation Letter formed part of the Provisional Agreement is a recent fabrication. First, it was never the Respondent’s pleaded case that the Confirmation Letter is part of the Provisional Agreement. Second, this claim was not mentioned in any of the Respondent’s witness statements. Third, this was never put to Madam Wong or any witness of the Applicant. Fourth, it is common ground that the Provisional Agreement had 3 copies, yet the Confirmation Letter had only 1 (or 2 according to Eva), the discrepancy in the number of copies does not tally with a claim that the Confirmation Letter formed part of the Provisional Agreement. Fifth, unlike the draft Provisional Agreement, which was sent to the Applicant on 16 November 2024, the draft Confirmation Letter was not sent to the Applicant or Ivy before the meeting on 17 November 2024.

67.  In summary, Mr Chow submits Eva’s evidence is undermined by her lack of independence, selective and evasive attitude, admitted errors, inconsistencies with the Respondent’s other witness, and incoherent account. These factors collectively raise concerns as to her credibility and reliability as a witness.

68.  Eva disavowed parts of her witness statement, inter alia, blaming solicitors for content. I am not satisfied that it is a document that gives a truthful account of matters that Eva can personally attest to. In my view first, this is not a language or translation issue. Eva, as with any witness, is responsible for her own evidence. The Respondent does not suggest that the solicitors failed in their duties when taking Eva’s evidence, preparing, translating and obtaining her signatures, appended to her witness statement and the statement of truth. The Applicant relies heavily on the witness statements of Ms. Ho, prepared by the same firm.  It appears that Eva readily signed whatever was proffered in support of the Respondent. Eva also confirmed the truth of the content of her witness statement, before adopting it as her evidence in chief for the proceedings.

69.  Nor am I satisfied that Eva was attempting to answer questions honestly to the best of her personal knowledge when in the witness box. I find Eva to be entirely unreliable. She had scant regard for what was required of her in giving evidence, only displaying marginally more concern when her duty to be honest and answer question was impressed upon her. Had Eva needed to leave as a matter of priority, I have no doubt an application to accommodate that would have been made. I cannot rely on evidence given by Eva. Where Eva’s evidence differs from that of the Applicant’s witnesses, I prefer that of the Applicant’s witnesses.  

Ms. Ho’s Evidence

70.  Ms. Ho is a director and shareholder of the Respondent. Her job title is Business Development Manager, with responsibility for tenancy matters.

Scaffolding

71.  Ms. Ho stated that on 26 November 2024, the Respondent arranged for bamboo scaffolds to be erected for replacing the existing window-type air conditioner with a split-type air conditioner, which was a decision made by the Respondent’s “work department” based on furniture layout. The Applicant does not accept the scaffolding was to install a replacement air conditioner, rather than for more extensive works. There is no documentary evidence, such as contractor’s invoices or instructions, to support that the Respondent had a genuine plan to replace an air conditioner. Ms. Ho admitted that the Respondent had not actually purchased the split-type air conditioner before the scaffolding works commenced.

72.  The Tenancy Agreement did not provide for the Respondent to replace an air conditioner, whereas at the Respondent’s request, Remark E was inserted into the Tenancy Agreement to provide for the Respondent to install a bathroom shower screen. Ms. Ho’s reason why the functioning window air conditioner needed to be replaced, was to fit the furniture. However, ultimately, there was no replacement and Ms. Ho conceded that rearranging the furniture would avoid the need for replacement. Ms. Ho’s explanations are contradictory, varying to suit her purpose. She was adamant that the Respondent would not go to any unnecessary expense of adding a toilet, if the Fairwood Contract did not require they do so. Yet she claims they were going to replace a functionally air conditioner with a new split-type air conditioner, with the considerable expense that would entail, which was unnecessary. The Applicant maintains in truth the Respondent was carrying out plumbing works to install a new toilet, not simply replacing the air conditioner.

73.  Mr Chow says that Ms. Ho did not provide a straightforward answer to questions about third-party insurance for the scaffolding works, instead obfuscating with references to “engineering contractor” further undermining her credibility.

Metal Frame

74.  Ms. Ho claimed that the installation of metal frames was a “mistake” committed by the Respondent’s contractor, Kobe, and that these works were intended for another Service Point. However, she admitted that she was unable, or forgot, to produce any documentary evidence, such as contractor instructions, invoices, or communications, to support there was genuinely a mistake and/or to demonstrate that it was made by Kobe. The Respondent did not even adduce say WhatsApp text messages or other communications with Kobe to corroborate this account.

75.  Ms. Ho agreed that Kobe had made a site visit before the commencement of the construction works for measurements, and that the metal frame actually fitted the ceiling height of the Premises. Mr Chow considers it untenable to suggest that the metal frame was intended for another premises. Considering all of the evidence, and the absence of support for Ms. Ho’s account, I would agree. Given the previous site visit and that the furniture layout was claimed to be relevant to the air conditioner replacement also, the mistake explanation is implausible.

76.  Mr Chow concludes that Ms. Ho’s explanations for the scaffolding and metal frame works were untenable, unsupported by contemporaneous documentary evidence.

Additional Bathroom

77.  She insisted that only 1 toilet was necessary in the Premises because it was to house 12 persons, that 2 toilets were only required for 16 or more occupants, and that only 1 toilet was needed for 15 occupants. This is inconsistent with the sample service contract, which provides for 2 toilets for 14 persons. Ms. Ho was unable to explain this discrepancy, dismissing the sample contract as “only a sample”, despite having relied on it to support the Respondent’s case.

78.  Ms. Ho also said that there was a verbal understanding with Fairwood that one toilet was sufficient for 12 persons, but she could not produce any documentary evidence to substantiate this claim. Mr Chow asserts that it is inconceivable that a listed corporation, such as Fairwood, would rely on a “verbal understanding”, without any written records, to modify the terms of a written agreement.

79.  Ms. Ho admitted that when confronted by Ms. Mak via WhatsApp on 26 November 2024 regarding plumbing works, she did not deny that such works were taking place. Her subsequent explanation in re-examination, that the plumbing was solely for air conditioning, was unsupported by any documentary evidence and was not mentioned in her witness statement. I accept that appeared to be an afterthought, suggesting recent fabrication to explain.

80.  Ms. Ho admitted that on 26 November 2024, she received 2 telephone calls from Madam Wong, who in the second call, relayed that Mr. Hui from the Management Office had stated that the construction works were more extensive than just air conditioning replacement. Ms. Ho said then she told Madam Wong during the telephone call, “I am not afraid to tell you, we actually rented the Premises to Tai Hing and Man Wah Bing Teng for their overseas employees to live in”, and that she offered to show Madam Wong the contracts between the Respondent and its corporate clients. Mr Chow points out that these are implausible and unnatural responses by Ms. Ho, if Ms. Ho had already fully explained and Madam Wong had previously agreed to the Premises being used as the Respondent’s corporate clients imported workers’ quarters, during the 17 November 2024 meeting. In my view Ms. Ho’s evidence is consistent with her telling Madam Wong for the first time that the Premises were to be “rented” to third party clients or were to be occupied and used by those client’s employees.

81.  Mr Chow concludes that Ms. Ho’s account of whether the Respondent was required to build an additional toilet for Fairwood was inconsistent with her own documentary evidence and unsupported by any written confirmation from Fairwood.

Provisional Tenancy Agreement

82.  Mr Chow relies upon Ms. Ho’s inability to provide a clear and satisfactory explanation as to why the “employee quarter” or “staff accommodation” usage, she claimed was central to the transaction, was not expressly included in the Provisional Agreement. This despite the presence of other hand-written clauses in the document, and given her experience in handling numerous tenancies. In my view this is a material omission. Ms. Ho attempted to justify this omission by referring to the existence of the Confirmation Letter. However, she failed to explain why such a material term would be omitted from the principal contractual document. If she thought the additional terms necessary they ought to be in the primary document, not a letter signed subsequently. I accept that the absence of any written record or logical explanation for this omission raises doubts as to whether there was genuinely an express or apparent mutual understanding between the parties regarding the permitted use of the Premises at the time of signing the Provisional Agreement.

83.  Ms. Ho’s oral evidence was that at the time of signing of the Provisional Tenancy Agreement, the Confirmation Letter was already signed. Ms. Ho’s testimony contradicts her witness statement and Eva’s witness statement, both of which suggested that the Confirmation Letter was signed immediately after the Provisional Tenancy Agreement was signed.

84.  Mr Chow submitted that Ms. Ho gave verbose details of her explanations to Madam Wong on 17 November 2024. However, the same was not put to Madam Wong, calling into question the reliability of her recollection and the veracity of her account

Confirmation Letter

85.  Ms. Ho’s evidence that only one copy of the Confirmation Letter was signed and that it was handed to Ivy, together with the tenant’s copy of the Provisional Agreement, for the purpose of preparing the Tenancy Agreement, that neither the Respondent nor Eva retained a copy at the time, and there is no documentary evidence showing when or if the documents were returned is also said to undermine her credibility. This unconventional arrangement was not recorded in her witness statement, and unsupported by any contemporaneous documentation. Mr Chow says that the English version of the Confirmation Letter, relied upon by the Respondent, was produced only for the purposes of litigation and does not reflect the contemporaneous agreement.

86.  Ms Law disputes this. Ms. Ho’s explanation of the work flow with the property agent delivering all relevant documents to the Respondent only when all documents are signed and the tenancy agreement is stamped is consistent with the RGPM x Agent Work Checklist with her witness statement dated 16 June 2025, which lists all documents that are required to be delivered to the Respondent once collected, prioritising the scanning and emailing of the full tenancy agreement to the Respondent if time is required to collect all documents for physical delivery. Further, Ms. Ho testified that there was only one copy of the Confirmation Letter, even though she could have easily corroborated Eva’s testimony that there should have been two copies.

87.  Her testimony regarding the distribution of the Confirmation Letter was inconsistent with Eva’s testimony. Thus, Mr Chow considers that Ms. Ho’s credibility is further called into question by the Respondent’s reliance on an English version of the Confirmation Letter, which includes the phrase “its clients”, thereby expressly allowing the Respondent to use the premises as the staff quarters of its clients. Ms. Ho admitted during cross-examination that this version was prepared only for the purpose of these proceedings “to avoid similar disputes in the future”, and did not exist at the time of the transaction. This admission was not made in her witness statement, when this English version of the Confirmation Letter was referred to. The contemporaneous Chinese document signed on 17 November 2024 did not contain such language. The attempt to rely on a post-event, litigation-driven document, rather than the actual document signed at the time, suggests an effort to bolster the Respondent’s case and cause confusion, further undermining Ms. Ho’s credibility.

88.  The Confirmation Letter signed by Madam Wong did not disclose to the Applicant that it was the staff of the Respondent’s clients who would occupy the Premises, rather than its own staff. I have no doubt that the addition of the words “its clients” to the version of the Confirmation Letter that was prepared for and produced in these proceedings was to rectify a perceived material omission in the actual Confirmation Letter that the Respondent had Madam Wong sign on behalf of the Applicant.

89.  In my view, Ms. Ho could not provide a satisfactory explanation as to why the Respondent chose to adduce a more favourable version of the Confirmation Letter, or with such addition, in these proceedings, given it was not contemporaneous and of no evidential value. Ms. Ho’s insistence on the relevance of the English version, despite these deficiencies, does undermine both the transparency of the Respondent’s case and Ms. Ho’s credibility as a witness. The Respondent’s conduct regarding the Confirmation Letter supports the conclusion that the Relevant Usage was not explained to or disclosed to Madam Wong or Ms. Mak prior to the Tenancy Agreement.

Tenancy Agreement

90.  Mr Chow continued that Ms. Ho’s credibility is further diminished by her admissions regarding the Tenancy Agreement. She agreed that the Tenancy Agreement did not include any express clause permitting use of the Premises for third-party or corporate client staff accommodation. The absence of any express provision or amendment of the permitted use is inconsistent with her assertion that there was a clear and mutual understanding between the parties. The lack of any documentary evidence or written record reflecting such a mutual understanding, especially given Ms. Ho’s experience and the Respondent’s prior practice of negotiating such terms also undermines her credibility. Her reliance on verbal understandings and post hoc explanations, unsupported by written confirmation must diminish the weight to be attached to her evidence. Ms. Ho also failed to provide a coherent logical answer as to why Remark D was necessary, if the Confirmation Letter signed was to like effect.

91.  Other matters relied upon by the Applicant are that Ms. Ho alleged  that during the meeting on 17 November 2024, Madam Wong asked whether South Asians would be living in the Premises. This contradicts her witness statement, where she alleged that Madam Wong asked whether Southeast Asians would be living in the Premises. Further, when asked how she could be certain that the particular seven photographs in the Trial Bundle were the ones shown to Madam Wong on 17 November 2024, she provided a lengthy and irrelevant response. Instead of addressing the question, she claimed the Respondent had the right to conduct unsolicited inspections, unplug charging devices, prohibit workers from bringing third parties into the room, and forbid smoking, drinking, and partying. Similarly, when asked to clarify the meaning of her statement that the private space was “literally” exclusive space, she gave a similarly verbose and irrelevant response. This is said to show that Ms. Ho was focused solely on advancing the Respondent’s case rather than providing her genuine recollection.

92.  In summary, Mr Chow submits that Ms. Ho’s testimony regarding the Provisional Agreement, Confirmation Letter, and Tenancy Agreement is undermined by inconsistencies, omissions, and a lack of contemporaneous evidence. Her reliance on a litigation-driven document and unsupported verbal assertions casts doubt on the Respondent’s case that the Applicant was fully informed of, and agreed to, the use of the Premises as staff accommodation for third-party corporate clients. Mr Chow says that Ms. Ho’s testimony on the key issues of scaffolding, metal frame installation, bathroom requirements, the Provisional Agreement and Confirmation Letter, and her overall credibility, is undermined by inconsistencies, lack of contemporaneous evidence, and reliance on recent fabrications or post-event rationalisations.

93.  Whereas Ms Law submits that Ms. Ho attempted to understand and answer the questions as best as she could, despite her occasional hesitance, which could simply be a sign of nervousness. Her oral evidence accorded with business sense and was consistent with contents of her witness statements. Ms Law maintains that her genuine and sincere attempt to explain her side of the story and the internal consistency of her oral evidence and witness statements demonstrate that she is a credible witness.

94.  I accept that the Respondent’s witnesses relied on persons who did not testifying. Eva asserted that she had fully informed Ivy that the Premises would be used for staff accommodation for third parties. Ms. Ho also testified that the sole copy of the Confirmation Letter was given to Ivy. The Respondent says the Applicant should have called Ivy, but the Respondent could have done so. Further, Ms. Ho sought to shift the responsibility of the alleged “mistake” of the installation of metal frame to Kobe, whom the Respondent did not call. Further still, Ms. Ho insisted there was a verbal agreement or understanding between the Respondent and Fairwood that the Premises only needed 1 toilet, but no direct evidence from Fairwood was adduced.

95.  I have found Ms. Ho to be an unreliable witness. Whenever her account differs from that of Madam Wong or Ms. Mak I prefer that of the latter two witnesses for the reasons set out.

Agreed List of Issues

Issue 1: Whether alteration and/or additions had been made to the Premises in breach of Clause 2 of the Tenancy Agreement

96.  Clause 2 expressly provides: “The Tenant shall not make any alteration and/or addition to the Premises without the prior written consent of the Landlord, which consent shall not be unreasonably withheld”.

97.  Contractual interpretation requires the Tribunal to consider the agreement as a whole, including the natural and ordinary meaning of the provision, its purpose, and its context: Eminent Investments at §43. The construction of Clause 2 is to be informed by both its language and its function within the broader tenancy framework. A lease too must be interpreted as a whole, giving effect to all parts so as to render them harmonious: BCCM at §52. The meaning of any one part of a lease may be revealed by reference to other parts, and all clauses should be construed to work together.

98.  Accordingly, the Tribunal must consider other relevant provisions of the Tenancy Agreement, including Schedule II, User Clause 1, which provides that the Tenant shall not use or permit to be used the Premises or part thereof for any purpose other than for “residential Purpose only”. Mr Chow argues this contextual restriction is material to the interpretation of what constitutes an “alteration” or “additions” under Clause 2, as works that change the nature or permitted use of the premises may amount to an alteration in law. I also consider the User Clause material to Issue 2, and the construction of Clause 3.

99.  Works affecting the use or nature of the Premises fall within the definition of “alteration”. Halsbury’s, Vol 36 §235.339 states:

“The determination of whether a particular act constitutes an alteration requires consideration of the user of the premises and the nature and extent of the work undertaken. If the alteration changes the nature of the demised premises, the tenant may also be guilty of waste.”

100.  In Park Kit Investment Ltd v Cheung Wan Ping (HCA 5349/1998, 23 November 1998) Sakhrani J held that the use of premises as an elderly care home was a use other than as a “dwelling” within the meaning of section 115A of Landlord and Tenant (Consolidation) Ordinance, Cap 7. The Applicant argues by analogy, the use of the Premises as third party staff accommodation is not a pure residential use, but one of mixed commercial and residential use and that this is relevant to the assessment of whether the works altered the nature of the Premises.

101.  The Applicant’s case is that the erection of bamboo scaffolding for the purpose of the plumbing works, installation of metal frames, and the proposed construction of an additional toilet are properly characterised as “alterations”, because they materially changed the structure and potential use of the Premises. The Respondent undertook these works without first obtaining the Applicant’s written consent. Madam Wong and Ms. Mak only became aware of these works after being notified by the management office and upon receiving photographs from Raymond.

102.  Having regard to the principles on what constitutes alterations and/or additions in the context of a lease agreement set out above, the Respondent submits that no alteration and/or additions were made to the Premises and thus it did not breach Clause 2 of the Tenancy Agreement.

103.  The Respondent considers it unclear what the Applicant says it did to the Premises which constituted “alteration and / or additions”.  What is clear is that the Premises were immediately restored to their original state on 26 November 2024. Photographs and video taken on 16 December 2024 show that no alterations or additions had since been made to the Premises.

104.  Ms Law submits that the oral evidence of Ms. Ho regarding: (i) the miscommunication between the Respondent and its contractor about the partitioning of the living room at the Premises on 26 November 2024; (ii) the purpose of the scaffolding works at the Premises on 26 November 2024; (iii) the Respondent’s order for its contractor to remove all scaffolding by the evening of 26 November 2024 due to the Applicant’s concern about third party liability insurance; and (iv) the fact that the Respondent did not need to build an additional toilet at the Premises, was consistent with her witness statements. The Applicant sought to construe the Fairwood Service Contract with Ms. Ho, comparing it with the sample agreement also provided by the Respondent, to establish that the Respondent needed to build an additional toilet at the Premises. However, the Fairwood Service Contract states that the Respondent only needs to provide two toilets if a property is occupied by 16 to 22 persons.

105.  The Applicant does not dispute that the Premises would house only 12 persons. Ms Law submits that from a business perspective, it would not make sense for the Respondent to incur additional expenditure to build a toilet when the Fairwood Service Contract does not so require. However, Ms. Ho also claims that they were going to incur the additional expense of installing a split-type air conditioner, that was not necessary and when they were not required to do so.

106.  The Respondent says that in any event, the photographs and video which were taken on 16 December 2024, show that neither the form nor structure of the Premises had been altered. The Applicant never suggested that the Respondent did any construction or renovation works to the Premises after 16 December 2024, that constituted alteration and/or additions, contrary to Clause 2 of the Tenancy Agreement.

107.  Mr Chow replies that the Respondent’s explanation that the works inside the Premises were a “mistake” is untenable and unsupported by any contemporaneous documentary evidence such as invoices, instructions, or communications. In any event, whether the works were intentional or a “mistake” is immaterial, as Clause 2 does not require intention for a breach to occur; the undertaking of “alteration and/or addition” itself constitutes a breach. The Respondent has admitted conducting the Relevant Works. The subsequent removal and restoration of the Premises does not negate the fact that a breach occurred. The issue is whether the Respondent breached Clause 2 by undertaking unauthorised works, not whether the Respondent subsequently remedied those works. The breach occurred at the time the material works were carried out without the requisite consent. This is correct, subject to the issue of notice to rectify.

108.  Further or alternatively, the Applicant submits that the significant nature and extent of the works, including the erection of bamboo scaffolding, installation of metal frames, and the proposed construction of an additional toilet, fall within the definition of “alteration” as recognised in BMR, where partitioning of Premises and the extensive construction works was held to constitute “alterations”. Thus the Respondent was in breach of the Clause 2, entitling the Applicant to seek recovery of possession of the Premises.

109.  I find that erecting the scaffolding was not, of itself, alteration or addition works in terms of Clause 2 of the Tenancy Agreement, being temporary in nature to facilitate other works. Ms. Ho accepted that there was plumbing works, claiming it was for the purpose of installing a split-type air conditioner. I consider her latterly added explanation for the plumbing works unconvincing. I do accept that the Respondent intended to carry out more extensive works, than simply installing a split-type air conditioner, but the exact nature of the works is not established. The Applicant has not proved that there were in fact alterations or additions, such as the installation of an additional toilet, at the point when the works were stopped.

110.  Ms. Mak did not appear to object to the change of air conditioning. Her initial and primary concern was the absence of insurance to erect scaffolding and the concerns raised by the management of the Building. Whether the removal of the air conditioner unit and the installation of a new air conditioner would amount to alteration and/or addition works is not in issue, as it never happened.

111.  I do not accept Ms. Ho’s evidence that this was all a mistake and that the contractor Kobe was supposed to carry out these works at another “Service Unit”. The story is wholly unsupported by any documentary evidence or records, where there should have been ample records, including of the instructions given to and communications with the contractor.

112.  The works that were actually carried out was the construction and installation of the metal frames within the Premises. They appear to have been secured. However, there was not partitioning boards or materials for construction of walls. Had the works been completed, depending on the nature and extent of the partitioning, it may have amounted to a breach. As it happened the Respondent did not need to make up the mistake story, because the works were stopped in their tracks.

113.  On the facts I am not satisfied that the actual works carried out within the Premises amounted to “alteration or additions” in terms of Clause 2 of the Tenancy Agreement. I find that the Respondent was not in breach of Clause 2 of the Tenancy Agreement.

Issue 2: Whether the Respondent has assigned, transferred, sublet or parted with the possession of the Premises or any part thereof to any other person in breach of Clause 3 of the Tenancy Agreement

Issue 2 - Applicant’s case

114.  Clause 3 provides “The Tenant shall not assign, transfer, sublet or part with the possession of the Premises or any part thereof to any other person. This tenancy shall be personal to the Tenant named herein”.

115.  In interpreting Clause 3, the Tribunal is invited to adopt a holistic approach, considering the agreement as a whole and the context in which the clause operates giving effect to all relevant provisions, construing them harmoniously: Eminent Investments and BCCM. When construing a commercial document the Court’s task is to ascertain and give effect to the intentions of the contracting parties: Homburg Houtimport at §9 per Lord Bingham. Mr Chow submits that Clause 3’s clear intention is to prohibit the Respondent, as a tenant, from granting occupation or possession rights to third parties, whether by assignment, subletting, or otherwise parting with possession; there is no indication that the Applicant intended the Premises for staff accommodation of unrelated corporate clients.

116.  The Applicant says that the Relevant Usage and the Respondent’s business of providing accommodation to third-party corporate clients’ imported workers for value, cannot be reconciled with the prohibition on subletting or parting with possession.

117.  In Australia Swan held that the tenant’s letting of an apartment on a short-term basis via Airbnb amounted to the grant of exclusive possession in breach of a prohibition against subletting. The substance of the arrangement, rather than its form or the use of labels such as “licence”, is determinative: Swan at §§31, 40, 47, 75. In Koumetto, the court at §§57 and 59 found that short-term letting via Airbnb, even with retained controls (such as reservation of right of entry) and provision of services (such as providing meals to Airbnb guests), constituted a breach of covenants prohibiting both subletting and permitting occupation by others. Neither the short duration of the arrangement, nor the provision of services, displaced the presumption that granting exclusive possession, for a period and for payment constitutes a letting or parting with possession in breach of such covenants.

118.  Mr Chow says that by analogy, the Respondent’s operation of staff accommodation for its corporate clients similarly involves the parting with possession in breach of Clause 3, notwithstanding any retained controls or the relatively short-term nature of the occupation. The critical question is whether the occupants are granted exclusive possession, and where that is the case, the arrangement will be characterised as a subletting or parting with possession, in breach of the tenancy agreement, regardless of any labels or ancillary controls imposed by the Respondent.

Bed spaces – “any part thereof”

119.  Further or alternatively, the Applicant relies upon Clause 3 prohibiting not only parting with possession of the whole Premises, but also “any part thereof”. Mr Chow argues that the issue is not limited to whether the arrangement constitutes a formal subletting, but extends to whether there has been a parting with possession of the Premises “or any part thereof”. Even if the Respondent retained some control over common areas such as the living room, bathroom or kitchen, the grant of exclusive occupation of particular bedspaces to designated employees of third-party clients constitutes a parting with possession of part of the Premises. Such arrangements fall foul of the Clause 3 prohibition. This approach is said to be consistent with the reasoning in Koumetto, which held that a covenant prohibiting “part with or share possession” of a premises is designed to capture both unauthorised leases and unauthorised licences: Koumetto §§42–44, and 53.

120.  The Respondent’s accommodation model emphasises privacy, with each occupant provided a private sleeping space and wardrobe, as reflected in the Respondent’s advertising materials. Ms. Ho admitted that the Premises was primarily intended for employees of Fairwood. The Fairwood Service Contract specified a minimum net usable floor area per person (3.4 sqm), and “private style” bedspace. Ms. Ho confirmed that each occupant enjoyed his/her own bedspace exclusively, which the Applicant claims demonstrates each occupant would exclusively occupy his/her own bedspace.

121.  Further, the Fairwood Service Contract terms show that the Respondent parted with possession: Clause 11.3 requires 30 days’ notice before rearranging staff, indicating limited control over bedspaces; Clause 11.4 similarly mandates 30 days’ notice before the Respondent relocated staff for repairs. The fact that the Respondent was required to give 30 days’ notice to reclaim or rearrange accommodation for its corporate client’s staff as stipulated in the clauses 11.3 and 11.4 of Fairwood Service Contract and the sample Service Contract, further demonstrates that those corporate client’s staff have exclusive right to possess the bedspaces during, at the very least, these notice period. The Respondent did not have unfettered control over the Premises, but rather had surrendered possession of specific parts thereof to third-party occupants.

122.  Although Ms. Ho in re-examination, asserted that the Respondent retained an “absolute right” to deploy or inspect the bedspaces and that employees were required to comply with its rules, this claimed absolute right is not reflected in the written Service Contract, nor did Ms. Ho provide any support during cross-examination, despite being given the opportunity to elaborate. Mr Chow concludes that even if Ms. Ho’s evidence is accepted at its highest, the retention of some managerial rights does not negate the fact that exclusive possession of specific bedspaces was granted to third-party employees of the Respondent’s corporate clients.

Residential purpose only

123.  Furthermore, the Applicant maintains that the Respondent’s operation of a staff accommodation business for third parties is fundamentally inconsistent with the express provision of the User Clause, Schedule II, Clause 1 of the Tenancy Agreement, which restricts the use of the Premises to “residential Purpose only”. The use of the Premises as staff accommodation for employees of unrelated corporate clients transforms the nature of the occupancy from genuine residential use to a commercial enterprise, thereby departing from the intended residential character of the tenancy.

124.  Mr Chow compares the facts here with Koumetto, where the provision of short-term accommodation through platforms such as Airbnb was held to amount to a commercial use, which was qualitatively different from use as a residential flat by a family or individual as their home. Such commercial arrangements undermine the residential purpose contemplated and are in breach of user covenants restricting use to residential purposes only: Koumetto §§31, 65–66. The Respondent’s arrangement here is said to be inconsistent with the residential use covenant, as it introduces a revolving door of unrelated occupants in a manner akin to hotel or guesthouse use, rather than maintaining the Premises as a genuine residence.

125.  The evidence establishes that the Respondent used the Premises as accommodation for staff of third-party corporate clients, such as Tai Hing and Man Wah Bing Teng, rather than solely for its own employees. Mr Chow submits that the systematic occupation of the Premises by employees of these third-party clients, with the Respondent acting as intermediary, constitutes subletting or parting with possession, which is expressly prohibited by Clause 3. The Respondent’s argument that these workers were merely “licensees” and that exclusive possession was retained is not supported by the factual matrix or the law. The Respondent’s conduct amounts to a clear and material breach of Clause 3.

Issue 2 – Respondent’s case

126.  The Respondent denies breaching Clause 3 because it has not assigned, transferred, sublet or parted with the possession of the Premises or any part thereof to any other person. The Respondent’s defence is that it has to date retained legal possession and complete control over the Premises. It is not disputed that imported workers of the Respondent’s corporate clients occupy bedspaces within the Premises. Ms Law submits that such occupation amounts to a licence rather than a lease on the grounds that:

(1)  The occupants do not have exclusive occupation of the Premises or any part thereof. The Respondent is entitled to perform surprise inspections on the occupants’ bedspace at any time and to remove chargers from their bedspace.

(2)  The occupants do not pay rent to the Respondent. Rather, the Respondent’s corporate clients pay the accommodation service fees based on the number of imported workers to be accommodated.

(3)  There lacks a term which the law regards as certain, as the occupants who reside at the Premises may be relocated to other rental properties managed by the Respondent at any time either upon the corporate client’s request or upon exercise of such right by the Respondent.

127.  Ms Law concludes that the occupation by the imported workers of the Respondent’s corporate clients at the Premises cannot and does not give rise to a sublease.

128.  Mr Chow replies that merely characterising the arrangement as a “licence” does not change the fact that exclusive possession was granted to third-party occupants: Koumetto at §53. Running a business akin to a hotel or guesthouse on leased premises constitutes a breach of a prohibition against subletting, even where the operator retains certain controls.

129.   Ms Law submits that despite the Applicant’s agreement to the said intended use, the Applicant now asks the Tribunal to find the Respondent to be in breach of Clause 3 of the Tenancy Agreement precisely because the Premises are being used as staff dormitory as agreed between the parties. The circumstances dictate that Clause 3 must be read and interpreted in conjunction with Remark D. As such, the interpretation of Remark D is crucial to the resolution of this dispute.

130.  The Respondent argues that Remark D, considered in conjunction with Clause 3, should be construed as permitting third-party staff accommodation, since the Respondent would always be allowed to house its own staff even without such a remark. The Applicant replies that this is a self-defeating argument: if Clause 3 already permitted the Premises to be used for third-party staff accommodation, Remark D would be unnecessary. The Respondent points to another example of redundancy. The installation of shower screen did not constitute a breach of any clauses of the Tenancy Agreement, since it was a minor work that did not amount to any structural alternations or additions. Nevertheless, the parties still inserted this “unnecessary” Remark E to expressly provide for the Respondent’s installation of shower screen.

131.  Ms Law submits that as the occupation by the imported workers of the Respondent’s corporate clients at the Premises cannot and does not give rise to a sublease, the issue is then whether the Respondent has parted with possession of the Premises or any part thereof. The Respondent relies in particular on Clarence House Ltd at §§31-32, for the English Court of Appeal’s analysis of what constitutes “parting with possession”, albeit in the context of virtual assignments. The test in determining whether a tenant has parted with possession of premises is whether the tenant retains legal possession of those premises. Lord Browne-Wilkinson’s definition of “legal possession” cited in Clarence House Ltd was also recently cited with approval by the Court of Appeal in Wong Chee Sing v Hung Wah [2025] 3 HKLRD 202 at §13.

Fairwood Service Contract

132.  Whether a tenant has parted with possession may depend on the legal relationship between the tenant and the occupant, which necessitates construing their agreement: Hong Kong Tenancy Law, 6^th Edition, Chapter 10, p.173. It is thus appropriate to examine the Fairwood Service Contract to determine whether the Respondent has (1) a sufficient degree of physical custody and control; and (2) an intention to exercise such custody and control on its own behalf and for its own benefit. Relevant factors include that the Respondent retains responsibility for utilities, security of the Premises, control over the identity and activities of the occupants and significantly, retains the right to enter at any time, which demonstrate that the Respondent has both factual possession and intention to possess.

133.  Tables at the end of the Fairwood Service Contract list the names of the workers who need to be accommodated, their respective work addresses and accommodation areas. The Respondent is to accommodate 232 imported workers of Fairwood.  The nature of the Fairwood Service Contract is the provision of accommodation services and not the leasing of specific properties. Nowhere in the Fairwood Service Contract is the address of the Premises mentioned. The Premises is only one of such rental properties it has leased in various parts of Hong Kong. The Respondent must have control over all the rental properties such that it can determine how these workers are to be allocated to each rental property according to their corresponding work areas.

134.  Ms Law submits that the Respondent’s right under the Fairwood Service Contract to determine the accommodation address of each worker necessarily means that the Respondent has complete physical custody and control over all its rental properties, including the Premises. The Respondent must also possess the requisite intention to exercise such custody and control, otherwise it cannot perform any of its obligations under the Fairwood Service Contract, such as ensuring that the requirements of the Hong Kong Labour Department are met or exceeded and relocating occupants to other properties where necessary for the purpose of maintaining harmony at all of its rental properties.

135.  The Applicant also relies on a tenancy agreement adduced by the Respondent for another Service Point, wherein the Respondent had crossed out a clause similar to Clause 3, as indicating that the Respondent was aware that Clause 3 would otherwise prohibit the Relevant Usage. Ms. Ho explained that the deletion was suggested by the property agent and the landlord for that specific tenancy agreement, and since this did not affect the Respondent’s stance that the usage of the property as its corporate clients’ staff quarters did not constitute transfer or subletting, the Respondent did not object. The other two tenancy agreements submitted by the Respondent also contained a clause equivalent or similar to Clause 3 of the Formal Agreement, neither of which was deleted.

136.  In view of the complete physical custody and control exercised by the Respondent over the Premises and its intention to exercise such custody and control for its own benefit as an accommodation services provider, the Respondent submits that it did not transfer, assign, sublet or part with possession of the Premises or any part thereof.

Discussion – Clause 3

137.  The intentions of the contracting parties at the time of signing of the contract are relevant when interpreting seemingly contradictory clauses in the contract. The Tenancy Agreement expressly prohibits the Respondent tenant from assigning, transferring, subletting, or parting with possession of the Premises “or any part thereof”, and expressly provides that the tenancy is “personal” to the Respondent. There are conflicting constructions. The Applicant’s interpretation is that the ordinary and natural meaning of this clause, viewed in the context of the entire agreement and the factual circumstances, clearly restricts the Respondent from allowing third parties, such as staff of external corporate clients, to occupy the Premises. Whereas, the Respondent’s interpretation is that the Tenancy Agreement must be read as a whole, and that Remark D shows that, the intention objectively construed was that the Relevant Use was contemplated and permitted.

138.  I find that the Respondent did not “sublet” the Premises, contrary to Clause 3 of the Tenancy Agreement. The Respondent did not part with possession. I do not consider the advance notice provisions in the Fairwood Service Contract inconsistent with the notion of the Respondent exercising exclusive possession over the Premises, when considered with all the terms and the reality of the arrangement. I find that the occupants were not granted exclusive possession of part of the Premises or the bedspaces.

139.  In my view the Clause 3 words “personal to the Tennant named herein” must be construed in light of Remark D that “The landlord acknowledges and agrees that the Premises will be used as staff accommodation”.

140.  The Respondent tenant is a company and the premises are domestic. Clause 3 provides “This Tenancy shall be personal to the Tenant”, but the tenant is not an individual person. Therefore, the person(s) who may occupy must be otherwise identified. The Tenancy Agreement, Remark D provides for “staff accommodation” or “staff dormitory”. That identifies the persons who may occupy, namely “staff”. It also describes a use, namely “accommodation” or “dormitory”. In context it could be construed as meaning the staff of the Respondent. The alternative construction of the Respondent is that staff dormitory means staff of their corporate clients. It relies on the factual matrix or extrinsic evidence to establish what the Applicant must be taken to have known at the time.

141.  Depending on the facts, a tenant company operating a business from a premises may change the character and purpose from residential. It is the use of the premises, rather than the benefit to the Respondent that is material. The Tenancy Agreement, Remark D expressly provides for staff accommodation. Therefore, the residential purpose is not limited to residence of say a named individual or a family home. Remark D colours or expands the permitted use of the Premises. The purpose to which the Premises are used, namely staff living quarters or housing, is still for the residence of the occupants. Use as staff accommodation remains a residential purpose. The business of the Respondent regarding the premises is not the touchstone. It’s significance in terms of control of the premises is material. Clause 3 concerns alienation of the property. It is the effect of physical presence upon the Premises not upon its use in context that determines whether as a matter of fact or degree the carrying on of the Respondent’s business providing accommodation at the Premises is a breach: Mean Fiddler at §§35. In my view given that the Tenancy Agreement Remark D provided for staff accommodation and that the Premises were being used for staff living quarters, the Premises were being used for residential purposes. The Schedule II User Clause 1 provides for residential purpose “only”.  On balance I consider the use of the occupants, rather than the commercial benefit to the Respondent, is determinative. The character of the Premises or nature of use has not changed from being residential to say commercial premises. The occupants or Fairwood have not been allowed to have such control of the Premises as to amount to parting with possession, contrary to Clause 3.

142.  I consider the present facts to be closer to the lodger situation, than the Airbnb model described in the above authorities. The Airbnb businesses operations that were found to amount to parting with possession factually, included giving the occupants exclusive control and possession, albeit for short periods of time. Whereas, I am satisfied that the Respondent retained possession of the Premises, notwithstanding that occupants were given certain rights to occupy a designated bedspace within the Premises. Neither the occupants, nor the commercial client Fairwood, could oust the Respondent. The occupants did not have the right to exclude the Respondent. The Respondent retained factual control. The three essential elements of a lease are not satisfied. The Respondent did not sublet or part with possession of the Premise or part thereof. For the reasons set out above I find that the Respondent retained legal possession.

143.  I find that upon a proper construction of Clause 3 of the Tenancy Agreement in the factual circumstances and legal context the Respondent did not part with possession of the Premises or any part thereof. In answer to Issue 2, the Respondent was not in breach of Clause 3 of the Tenancy Agreement. Notwithstanding my determination in light of the construction of Clause 3, I shall consider the other defences relied upon by the Respondent.

Issue 3: Whether Madam Wong had knowledge of and gave consent to the Relevant Usage before her signing of the Provisional Agreement on 17 November 2024

144.  The Respondent’s case is that Madam Wong as director of the Applicant signed a Confirmation Letter acknowledging and agreeing that the Premises were to be used for the purpose of staff dormitory when she signed the Provisional Agreement.  

Issue 3 – Applicant’s case

145.  The Applicant refutes the Respondent’s assertion that Ms. Ho explained the business nature of the Respondent and the Relevant Usage of the Premises to Madam Wong, who understood and agreed as untenable on the evidence. Rather, both Madam Wong and Ms. Mak gave clear and consistent evidence that, their understanding was that the Premises would be used for the Respondent’s own staff only. Madam Wong expressly denied being informed of the true intended use prior to signing the agreements, and she stated unequivocally that she would not have agreed to the tenancy had she known. Madam Wong indicated her disapproval of the Relevant Usage shortly after being informed.

146.  Contemporaneous written agreements carry significant weight in ascertaining the parties’ true understanding at the material time: Hu Lan §36(1). A critical contemporaneous document evidencing the parties’ intentions is the Provisional Agreement executed on 17 November 2025, before the disputes arose. Mr Chow submits that the absence of any provision in the Provisional Agreement regarding the Relevant Usage, strongly indicates that Madam Wong was neither informed of, nor did she consent to, such usage. The Provisional Agreement contains express written clauses, such as Clause 22, demonstrating that the parties were attentive to documenting material terms. If Madam Wong had been informed of and consented to the Relevant Usage, it would be reasonable to expect a corresponding provision to be included. The omission of any clause permitting the Relevant Usage is said to be telling.

147.  On the contrary, the Provisional Agreement contains a provision prohibiting alienation at Clause 10, which is similar in effect to Clause 3 of the Tenancy Agreement, and Clause 20 was expressly crossed out. The Provisional Agreement demonstrates an intention to restrict unauthorised occupation or use by third parties, and supports the conclusion that Madam Wong never consented to the Relevant Usage.

148.  Further, the Respondent failed to provide any credible explanation for the omission of a provision regarding the Relevant Usage in the Provisional Agreement. Although the Respondent seeks to rely on the Confirmation Letter as evidence of Madam Wong’s consent, it does not actually authorise the Respondent to use the Premises as staff quarters for its corporate clients.

149.  Furthermore, Eva and Ms. Ho were unable to provide consistent or reliable testimony about the circumstances surrounding the signing of the Confirmation Letter, giving contradictory evidence as to the number of copies of the Confirmation Letter. Ms. Ho claimed that the sole copy was given, together with the tenant’s copy of the Provisional Agreement, to Ivy, which is implausible.

150.  The burden rests on the Respondent to prove that Madam Wong consented to the use of the Premises for housing employees of unrelated corporate clients. The Applicant submits the Respondent has failed to discharge this burden. There is no credible evidence, either in the Provisional Agreement or in the Confirmation Letter, to support the contention that Madam Wong consented to the Relevant Usage.

Issue 3 - Respondent’s case

151.  The Respondent’s case is that the contemporaneous documentary evidence substantiates a lack of intent to conceal its intended usage of the Premises as staff quarters for its corporate clients is the WhatsApp message Ms. Ho sent to Eva on 16 November 2024, which specifically states that the Premises would be “lived in by employees of listed companies”.

152.  Ms Law submits that Ms. Ho’s oral evidence on what she discussed with Madam Wong during their meeting on 17 November 2024 was not shaken and entirely consistent with her witness statements. Mr Chow’s criticism that the details given by Ms. Ho at trial were not included in her witness statement is unfounded. I accept that in general terms a comparison of her oral answers with paragraphs of her witness statements shows they were.

153.  The time required to communicate the details allegedly provided to Madam Mok, as well as the discussion surrounding the Respondent’s request to install a shower partition, was in issue. I am satisfied that time-wise it was possible that some information about the Respondent’s business could have been relayed. That does not mean it was.

154.  Eva’s oral evidence and witness statement is relied upon to corroborate what Ms. Ho said during their meeting on 17 November 2024 and that she showed Madam Wong photographs of the Respondent’s other rental properties used to accommodate their corporate client’s imported workers. The Applicant maintains that Eva is not an independent witness. The Respondent replies to criticism of Eva, inter alis, that she was not the only property agent that the Respondent engaged and that she only wished to say what she knew. Given that Eva is the independent agent and one of the participants of the meeting it is only reasonable that the Respondent asked Eva to testify to what happened that day. Similarly, Madam Wong also asked Ivy to testify for the Applicant, but she had declined.  I do not consider the mere fact that Eva was a property agent of the Respondent, of itself, to be adverse to her credibility. Her honesty was called into question by her conduct and evidence.

155.  Whereas, the Respondent alleges that Madam Wong’s oral evidence is at odds with her witness statement, especially in relation to the Confirmation Letter.

156.  First, there was no mention at all of the Confirmation Letter in her first witness statement. Madam Wong said this was because she was not given a copy. However, she must have remembered signing it because she said she signed the Confirmation Letter after Ms. Ho explained that the Premises were to be occupied by overseas staff, so she could have mentioned this.

157.  Secondly, Madam Wong explained that she thought the purpose of the Confirmation Letter was to document the benefits that the Respondent was to provide to its staff, namely that it was the Respondent’s responsibility to provide regular cleaning and minor repair and maintenance to the Premises. However, all Madam Wong stated in her second witness statement was that “the Chinese Confirmation Letter only confirms that the Applicant agreed that the Premises would be used as accommodation for Respondent’s own staff.” Her evidence about the provision of staff benefits by the Respondent only first came out at trial.

158.  Thirdly, Madam Wong could not explain why the Respondent had to disclose the benefits that it was going to provide to its own staff on a letter which required Madam Wong’s acknowledgment and signature. The fact that she did not understand why this was required and did not bother to clarify why she needed to sign the Confirmation Letter lacks business sense, which she, as an experienced and literate merchant and landlord, should possess. I do not accept the Respondent’s said submissions.

159.  The Respondent’s theory is that Madam Wong knew and consented to the Premises to be used as staff dormitory for the Respondent’s corporate clients when she signed the Provisional Agreement and Confirmation Letter during the meeting on 17 November 2024, but that Ms. Mak, not having been present at that meeting and not having been told of the complete contents of the meeting by Madam Wong or Ivy, objected to the Premises’ intended use by the Respondent when she discovered the business carried on by the Respondent from her online search on 26 November 2024. Given Ms. Mak’s strong objection, Madam Wong had no choice but to side with Ms. Mak and allege that she thought the Premises were to be used for the Respondent’s own staff.

160.  According to the Respondent, lack of internal communication between Madam Wong and Ms. Mak and between the Applicant and its property agent Ivy, was what gave rise to the present dispute. The following is said to support the Respondent’s case:

(1)  Madam Wong never told Ms. Mak that she had signed the Confirmation Letter, only being made aware of its existence when given the Respondent’s witness statements in June 2025.

(2)  Madam Wong did not relay the complete discussions at the meeting with Ms Ho, Eva and Ivy to Ms Mak.

(3)  Ms. Mak agreed that it was Ivy’s responsibility to ensure that the Applicant received all documents relevant to the tenancy of the Premises, but Ivy did not give either Madam Wong or Ms. Mak a copy of the signed Confirmation Letter.

(4)  Ms. Mak only found out the Premises were used as staff dormitory for the Respondent’s corporate clients when she made an online search of the Respondent 26 November 2024.

161.  Ms Law concludes that in context, weighing the evidence of Ms. Ho and Eva against the inconsistent and illogical evidence of Madam Wong, it is inherently improbable that Ms. Ho did not clearly explain to Madam Wong the Respondent’s intended use of the Premises during their meeting on 17 November 2024, before or when, Madam Wong signed the Provisional Agreement and Confirmation Letter.  I am unable to accept that conclusion. The Respondent required premises to satisfy its own contracts, including with Fairwood. Ms Ho wanted the Tenancy Agreement signed on that day and I am not satisfied that she took the risk of, or time to explain the Relevant Usage to Madam Wong. I have found Eva to be unreliable. Ms. Ho’s evidence was self-serving. I do not accept her evidence in this regard. The evidence of Madam Wong is entirely plausible and had the ring of truth. There was nothing to suggest Madam Wong was subjugated to the will of her daughter. The Respondent’s theory is unsubstantiated and rejected.

162.  I accept that the documents, including the absence of any express provision, and the oral evidence of Madam Wong and Ms. Mak establish that no such consent was given.

163.  I accept that the Applicant had no knowledge of the Relevant Usage beyond what was expressly provided in the written terms of the Tenancy Agreement and the Confirmation Letter, which only indicate that the Premises was to be used as staff accommodation. There was no mention of third parties, such as the imported workers “of its corporate clients”.

164.  In answer to Issue 3, I find that Madam Wong did not have knowledge of and did not give her consent to the Relevant Usage before signing of the Provisional Agreement on 17 November 2024. She did not know or give such consent at any time on that day at the Premises, even after signing of the Provisional Agreement, or when she signed the Confirmation Letter.

Issue 4: Whether Remark D of Schedule II of the Tenancy Agreement and endorsement of the Confirmation Letter constituted the Applicant’s acknowledgement and consent to the Relevant Usage

165.  Remark D provides “The landlord acknowledges and agrees that the Premises will be used as staff accommodation”. Similarly, the Confirmation Letter states that the Applicant confirmed and agreed that the Premises be leased to the Respondent for the purpose of staff accommodation. Remark D is a written clause in the Tenancy Agreement, while the Confirmation Letter is a separate or an extrinsic document. They should be analysed separately.

Remark D

166.  In construing Remark D, the Tribunal is invited to adopt a holistic approach, considering the Tenancy Agreement as a whole, including its purpose, other relevant provisions, in particular Clause 3 and the Schedule II User Covenant limiting use to “residential purpose only”, and the factual context at execution, to ensure all parts are harmonious and given effect: Eminent Investments and BCCM.

167.  Remark D was included at the Respondent’s request and must be read against the Tenancy Agreement’s restrictions. Mr Chow contends that the Respondent’s reliance on it as consent to the Relevant Usage is misplaced, as it lacks clear, unequivocal language authorising “use for third-party corporate clients’ staff accommodation”. Whereas, consent to subletting or parting with possession, requires explicit terms that align with the contract’s natural language and purpose, rather than inferences from general statements that undermine core obligations, such as residential use only. The absence of any express provision in Remark D waiving the prohibition on subletting or parting with possession is said to undermine the Respondent’s position which is against the contract’s overall coherence and factual matrix and business efficacy, straining the language: Eminent Investments at §§48-50.

Confirmation Letter

168.  The Applicant also relies upon the principles of interpretation set out in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101. The Tribunal’s task is to determine, objectively, what a reasonable person with all the relevant background knowledge would have understood from the contract’s language, without resorting to inadmissible extrinsic evidence, such as pre-contractual negotiations or ambiguous post-contractual documents: Chartbrook at §§14–25. The Applicant submits that the Confirmation Letter, as an extrinsic document signed only by Madam Wong, cannot constitute her consent to the usage. The exclusionary rule, reaffirmed in Chartbrook, provides that such documents are generally inadmissible to add to, vary, or contradict the terms of a formal written agreement, except in limited circumstances, not applicable here: Chartbrook at §§33–35, 41–42. The express prohibitions on subletting or parting with possession, cannot be overridden by the Confirmation Letter, absent integration or evidence of intent to make it part of the agreement: Chartbrook at §§59, 64–66. In any event the Confirmation Letter does not contain clear or unequivocal language authorising the use of the Premises for staff accommodation of third-party corporate clients.

169.  If genuine ambiguity remains after exhausting contextual and purposive analysis, including the agreement’s purpose and other clauses, applying the contra proferentem rule, any doubt in Remark D or the Confirmation Letter should be construed against the Respondent, who drafted and relies on them. Mr Chow acknowledges that the rule applies sparingly in negotiated commercial contracts after other tools fail: Wai Lung Yee Shirley & Another v Ng Cheuk Nam [2024] HKCFI 457 at §§64-68. In the absence of clear consent, no waiver of the prohibition on subletting or parting with possession can be inferred.

170.  The Respondent submits that the wording of Remark D is essentially the same as that in the Confirmation Letter. Madam Wong said that her understanding of both the Confirmation Letter and Remark D was that the Premises would be used for the Respondent’s own staff quarters. In other words, she acknowledged that Remark D and the Confirmation Letter conveyed the same message. Given the Respondent’s case that Madam Wong knew of and consented to the use of the Premises as staff quarters for the Respondent’s corporate clients when she signed the Provisional Agreement and Confirmation Letter on 17 November 2024, it must follow that the Remark D in the Tenancy Agreement also constituted the Applicant’s acknowledgement and consent of the same.

171.  There is no suggestion that Madam Wong, a director and shareholder of the Applicant, lacks the capacity or authority to sign the Provisional Agreement, Confirmation Letter and Tenancy Agreement on behalf of the Applicant. Her knowledge of and consent to the Relevant Usage when signing these documents must therefore be imputed to the Applicant. Ms Law reiterates that it is more consistent with business common sense to construe the term “staff dormitory” in Remark D to mean staff dormitory of the Respondent’s clients, because the inclusion of Remark D in the Tenancy Agreement would be redundant if it was construed as dormitory for the Respondent’s own staff. Ms. Mak admitted that whether the Premises were used as dormitory for the Respondent’s own staff or for staff of the Respondent’s corporate clients, she as landlord would not know how many people, what kinds of people and whether there were different people living at the Premises from month to month throughout the two-year rental term.

172.  Therefore, whether or not the construction of the term “staff dormitory” includes staff of the Respondent’s corporate clients should not matter to the Applicant, as long as the Respondent is able to perform its obligations of timely payment of rent and maintaining of the Premises in good condition under the Tenancy Agreement.

173.  I have found that Madam Wong did not consent. The Confirmation Letter is part of the factual context in which the Tenancy Agreement is to be construed objectively. It does not provide for the Relevant Usage. Remark D authorises use of the Premises as staff accommodation. Remark D does not expressly provide for and did not constitute an acknowledgment of and separate consent to the Relevant Usage by the Applicant. Neither refer to, nor expressly provide for, the Relevant Usage. There is no clear or unequivocal consent by the Applicant to the Relevant Usage. However, I have found that the Relevant Usage, as in fact implemented, did not breach Clause 3 of the Tenancy Agreement properly construed.

174.  In answer to Issue 4, subject to my construction of Clause 3, Remark D of Schedule II of the Tenancy Agreement and endorsement of the Confirmation Letter did not themselves constitute the Applicant’s acknowledgement and consent to the Relevant Usage.

Issue 5: If the Respondent has assigned, transferred, sublet or parted with the possession of the Premises or any part thereof, taking into account the answers to issues 3 and 4, whether the Respondent has breached Clause 3 of the Tenancy Agreement which entitled the Applicant to terminate the Formal Agreement and recover possession of the Premises

Issue 5 - Respondent’s case

175.  It is the Respondent’s case that it did not breach Clause 3 of the Tenancy Agreement such that the Applicant is not entitled to terminate the Tenancy Agreement and recover possession of the Premises. However, if the Tribunal finds that the Respondent was in breach of Clause 3, it relies upon the parties’ intentions of the Relevant Usage, as indicated by Remark D and the Confirmation Letter. Ms Law reiterates that it is more consistent with business common sense to construe the term “staff dormitory” in Remark D to mean staff dormitory of the Respondent’s clients for the reasons above.

176.  The Respondent’s theory is that the only reason Ms. Mak wished to terminate the Formal Agreement is because she thought that the Respondent had deceived Madam Wong. However, neither Madam Wong nor Ivy conveyed to Ms. Mak the complete contents of their discussion to Ms. Ho on 17 November 2024.

177.  Ms Law asserts that (1) the Respondent was transparent with its intended use of the Premises from the very beginning (see WhatsApp message at); and (2) Ms. Ho met Madam Wong face to face to explain the business operations of the Respondent and showed her photographs of how the Premises would be used on 17 November 2024, rather than relying solely on Eva to do so and that it would be unjust if the Respondent were found to have concealed its intention for the true use of the Premises as a result of the failure of Madam Wong and Ivy to fully inform Ms. Mak of the Relevant Usage.

178.  I do not accept that the Respondent was transparent in respect of the intended use of the Premises as claimed. Both Ms. Ho and Eva wanted to secure the Tenancy Agreement was duly executed for their own best interests as soon as possible. Neither Eva nor Ms. Ho informed Madam Wong or Ms. Mak of the Relevant Usage at any time prior to signing the Tenancy Agreement. I have no hesitation in finding neither Eva nor Ms. Ho were being truthful in this regard. I find that the Respondent did not fairly disclose the Relevant Usage to the Applicant or its true intention. What Madam Wong did or did not inform Ms. Mak is not the cause of the issues that arose between the parties.

Issue 5 - Applicant’s case

Whereas, Mr Chow concludes that in light of the Respondent’s material breaches of Clauses 2 and 3 of the Tenancy Agreement, the Applicant is entitled to terminate the tenancy and recover possession of the Premises. The evidence and the law support a finding that the Respondent has committed material breaches of the Tenancy Agreement and that there was no consent to the Relevant Usage.

179.  Based on the evidence, the Respondent invites the Tribunal to conclude that neither Clauses 2 nor 3 of the Tenancy Agreement had been breached by the Respondent and to dismiss the Applicant’s application for possession of the Premises. While the Applicant maintains that the Respondent was in breach of both Clause 2 and Clause 3 of the Tenancy Agreement.

180.  I have found in terms of Issue 2, that there was not material subletting or parting with possession. I do not accept that Madam Wong knew of and consented to the Relevant Usage or that the Confirmation Letter and Remark D, themselves, constituted acknowledgment or consent. However, the Respondent does not need to establish or rely on those arguments.

181.  Issue 5, whether the Applicant entitled to terminate the Tenancy Agreement and recover the possession of the Premises is answered in the negative, for the reasons stated above.

Determination

182.  The Respondent was not in breach of Clause 2 or Clause 3 of the Tenancy Agreement. I have found that despite the Respondent not being transparent as it claims and that the Applicant did not actually appreciate that the Premises was going to be used for the Respondent’s business, the Respondent did not part with possession of the Premises, or any part thereof, and that the Premises were still used for residential purposes. The Application must be dismissed.

SECTION 58 CPO, CAP. 219

183.  The Respondent made a belated application to rely on section 58 of the Conveyancing and Property Ordinance, Cap. 219 (“CPO”). The Respondent applied for leave to file and rely on Further Submissions of the Respondent dated 10 September 2025 (“R’s Application”). I have determined that the application be dismissed. In the event the Respondent does not need to rely upon section 58, CPO or revert to the additional arguments. I shall address them briefly.

184.  Section 58(1) and (2), CPO provide:

“(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice –

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and

(c) specifying the compensation, if any, which the lessor requires in respect of the breach,

and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.

(2) Where a lessor is proceeding, by action or otherwise, to enforce such a right of re-entry or forfeiture, the lessee may, in the lessor’s action, if any, or in any action brought by himself, apply to the court for relief; and the court may grant or refuse relief, as the court having regard to the proceedings and the conduct of the parties under the forgoing provisions of this section, and to all the other circumstances, thinks fit; and in the case of relief may grant it on such terms, if any, as to costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future, as the court, on the circumstances of each case, thinks fit.”

185.  The Respondent seeks leave to rely on section 58, CPO on the grounds that it is relevant to whether to the Lands Tribunal has jurisdiction to grant an order for recovery of possession of the Premises, submitting that if the Applicant has not satisfied the requirements therein, the Tribunal has no jurisdiction to grant the relief sought. Mr Chow says that R’s Application concerns only the validity of the Applicant’s notice(s) under section 58, CPO, but that the Respondent does not apply for relief against forfeiture under section 58(2), CPO. Relief under section 58, CPO is not automatic. The tenant must apply for relief; it is not granted as of right: Hong Kong Tenancy Law, p.194. Unlike non-payment of rent, where relief against forfeiture is mandatory, at least on the first occasion: section 21K of the High Court Ordinance, Cap. 4, and section 8(9) of the Lands Tribunal Ordinance, Cap. 17. The Applicant opposes R’s Application on both procedural and substantive grounds, inter alia, that the Applicant’s notice(s) is/are valid under section 58, CPO.

Section 58 Notice

186.  The Tenancy Agreement is a lease governed by section 58, CPO, which requires the landlord to issue a notice to the tenant in compliance with requirements (a), (b) and (c) of section 58(1) (“Section 58 Notice”) before the right to re-entry or forfeiture accrues. There are two documents that may be considered Section 58 Notices: (1) the lease cancellation agreement issued by the Applicant to the Respondent dated 27 November 2024 (“Lease Cancellation Agreement”); or (2) the letter of Messrs. Franki Ho & Associates to the Respondent dated 16 December 2024 (“December Legal Letter”). The Applicant accepts that the Lease Cancellation Agreement and December Legal Letter are the only documents that may be considered Section 58 Notices.

Lease Cancellation Agreement

187.  The Lease Cancellation Agreement, Article 2(1) complaint is breach of Clause 2 of the Tenancy Agreement:

“… by making unauthorized alterations/additions, including scaffolding works, intending to replace the window type air conditioner with a split type conditioner, and failing to provide third-party liability insurance. Additionally, multiple holes were drilled throughout the property for the installation of bed frames.”

The Respondent accepts that this satisfies requirement (a) of section 58(1), CPO.

188.  Article 3(2) requires the Respondent to “dismantle all unauthorized additions, clear all related waste and materials, and return all access cards and keys to Cheong Shing Property Agency on the date of cancellation of the lease.” This satisfies requirement (b) of section 58(1), CPO.

189.  However, the Respondent’s case is that the particular breaches complained of in Article 2(1) of the Lease Cancellation Agreement had already been remedied on 26 November 2024, before the issuance of the Lease Cancellation Agreement, as evidenced by the photographs sent by the Respondent’s contractor to Ms Ho at 5:51pm on that day. Ms Ho had also informed Ms Mak of the same on the telephone.

190.  Therefore, even if the Lease Cancellation Agreement constitutes a valid Section 58 Notice, the Applicant has no right of re-entry or forfeiture because the Clause 2 breach complained of in Article 2(1) did not exist on 27 November 2025, the day the Lease Cancellation Agreement was issued.

191.  Article 2(1) of the Lease Cancellation Agreement does not make any reference to the intended construction of an additional toilet, as alleged by Ms. Mak, Madam Wong and Raymond, nor to the breach of Clause 3 of the Tenancy Agreement or the use of the Premises as employee accommodation of the Respondent’s corporate clients. Ms Law submits that not particularising the intended construction of an additional toilet or the use of the Premises as employee accommodation of the Respondent’s corporate clients in the Lease Cancellation Agreement falls foul of requirement (b) of section 58(1) CPO, and hence no right of re-entry or forfeiture for these breaches accrued to the Applicant.

192.  In any event, on 27 November 2024 when the Lease Cancelation Notice was issued, the Respondent had not constructed an additional toilet, nor yet used the Premises as employee accommodation of the Respondent’s corporate clients. The Applicant therefore had no basis to issue a Section 58 Notice, nor to ask for repossession of the Premises on 27 November 2024 as no such breach had occurred.

193.  The Applicant disputes the Respondent’s assertion that the breaches complained of in Article 2(1) of the Lease Cancellation Agreement had already been remedied on 26 November 2024, and that this was imparted to the Applicant.

194.  First, the evidence relied upon by the Respondent to show the Relevant Works were remedied was a video taken on 16 December 2024; there is no evidence that the remedial works were done on 26 November 2024, let alone that this is undisputed. It was only during discovery that the Applicant first saw the said video.

195.  Second, the WhatsApp screen capture was internal communication between Ms. Ho and the contractor. There is no documentary evidence showing that the information of remedy was imparted to the Applicant, nor is there any text message confirming the remedial works were done. The timing and content of the photographs remain unclear. On all of the evidence, including the photographs, I accept that the remedial works were done at that time, as claimed by the Respondent.

196.  Third, Ms. Mak expressly denied Ms. Ho’s claim that she informed Ms. Mak that “all Construction Works had already been reversed and the Property restored to its former condition… Ms. Mak answered okay”. Mr Chow says that it is inconceivable that, while Ms. Mak and Ms. Ho were communicating by WhatsApp on 26 and 27 November 2024, the alleged “okay” was only verbal. When Ms. Mak sent the Lease Cancellation Agreement, Ms. Ho did not confront Ms. Mak about any prior approval. Despite the Lease Cancellation Agreement and December Legal Letter, there was no written reply from the Respondent.

197.  Mr Chow submits that thus, when the Applicant issued the Lease Cancellation Agreement on 27 November 2024, which complies with section 58(1)(a) and (b), CPO, and when this action was commenced on 17 January 2025, the Applicant had no knowledge that the alleged remedial works were done. Therefore, the Lease Cancellation Agreement regarding Clause 2 breach is a valid Section 58 Notice.

198.  Further, the Applicant submits that as the Respondent did not apply for relief against forfeiture under section 58(2), CPO, the Tribunal does not need to consider whether such relief should be granted if the Respondent is found in breach of Clause 2. Relief against forfeiture is not automatic; it is a discretionary remedy which the tenant must actively seek by application: p. 194, Hong Kong Tenancy Law.

199.  I find that the Respondent was not in breach of Clause 2 when the Lease Cancellation Agreement was served. Therefore, it did not found an enforceable right of re-entry or forfeiture in terms of section 58, CPO.

200.  I am satisfied that, had the works constituted a breach of Clause 2 of the Tenancy Agreement, it had been remedied by the end of 26 November 2025. This does not turn on the Applicant’s knowledge. The works had been removed or rectified and the state of the Premises duly restored and/or breaches remedied before issue of the Lease Cancellation Agreement on 27 November 2025.

Breach of Clause 3 of the Tenancy Agreement

201.  The first time the Applicant complained of the breach of Clause 3 was in paragraph 3 of the December Legal Letter, which states:

“On 26 November 2024, it had come to our client’s attention that your company had, without our client’s prior written consent, made alternations [sic] and/or additions to the Premises and assigned, transferred, sublet and/or otherwise part with possession of the Premises or certain part thereof to other persons, which constitute blatant breach of Clauses 2 and 3 of the Tenancy Agreement.”

202.  No particulars were given in respect of the breach of either Clause 2 or 3. The Respondent submits that this does not satisfy the requirements of section 58(1), CPO.

203.  The second time the Applicant informed the Respondent of breach of Clause 3 was in paragraph (4) of the Attachment to Form 22 dated 17 January 2025, which states “…the Respondent has sublet and/or informed the Applicant that it would sublet the Premises to third parties.” Again, no particulars of the breach of Clause 3 were pleaded. The Applicant did not particularise the Respondent’s breach of Clause 3, until 11 June 2025, in paragraph 13 of Ms. Mak’s witness statement and paragraph 7 of Madam Wong’s witness statement.

December Legal Letter

204.  The December Legal Letter dated 16 December 2024 was the second notice, requesting the Respondent to deliver vacant possession of the Premises. Paragraph 3 of the December Legal Letter merely uses the wording of Clause 2 (“made alternations [sic] and/or additions”) and Clause 3 (“assigned, transferred, sublet and/or otherwise part with possession of the Premises or certain part thereof to other persons”) of the Tenancy Agreement to allege breach on the part of the Respondent. As no particulars of either of these breaches were given, Ms Law submits that this falls foul of requirement (a) of section 58(1), CPO.

205.  The December Legal Letter did not require or give an opportunity for the Respondent to remedy the breaches, but paragraph 4 demanded the Respondent to “quit and deliver up…vacant possession of the Premises as soon as practicable, in any event on or before 31 December 2024.”  Ms Law submits that this falls foul of requirement (b) of section 58(1), CPO. Thus, the December Legal Letter is not a valid Section 58 Notice which would entitle the Applicant to seek recovery of possession of the Premises.

206.  In any event, the photographs and video of the Premises taken by the Respondent on 16 December 2025 show that there were no alterations and/or additions to the Premises which altered the form or structure of the Premises, nor had anyone yet moved into the Premises. Accordingly, the Respondent had not committed breach of either Clause 2 or 3 on the day the December Legal Letter was issued.

Whether Clause 3 is capable of remedy

207.  The Respondent denies that use of the Premises as staff quarters of its corporate clients constitutes either subletting or parting with possession, but the question of whether Clause 3 is capable of remedy, as set out in section 58(1) CPO, is addressed in the event that the Tribunal found such use to be in breach of Clause 3.

208.  This issue of whether a breach is remedial was considered by the Lands Tribunal in Mutualbest Limited v Ngai Wah Kit LDPD 1548/2013, 23 December 2013, unrep. In Mutualbest, the respondent used the premises as a youth hostel, which the Tribunal found at §53 “involved the parting of possession of part of the Suit Premises without creating or transferring any legal interests in the Tenancy Agreement to the users.” The Tribunal at §§51-53 analysed the authorities Scala House & District Property Ltd v Forbes and Others [1974] 1 QB 575 and Akici v LR Butlin Ltd [2006] 2 All ER 872 to determine whether the act of using the premises in question as a youth hostel was capable of remedy.

209.  The Tribunal at §53 accepted Lord Justice Neuberger’s findings in Akici, cited in §52, that Scala House should not be followed and found:

“Applying the findings in Akici, this [the parting of possession by the respondent’s use of the premises as a youth hostel] should be a breach that is capable of remedy and the Notice issued should allow a reasonable time for the respondent to remedy the same. Since the Notice issued by the applicant failed to provide the same, it is not a valid Notice and the applicant had failed to satisfy the requirement under Section 58 of the CPO.”

210.  By the same reasoning, even if the Tribunal finds the Respondent’s use of the Premises as staff quarters of its corporate clients to constitute “parting with possession”, in breach of in Clause 3 of the Tenancy Agreement, the Respondent submits that the Tribunal does not have jurisdiction to grant an order for repossession of the Premises, because the Applicant did not issue a valid Section 58 Notice, to allow the Respondent reasonable time to remedy its breach.

211.  Only if the Tribunal finds that the Relevant Usage constitutes the breach of subletting, where the legal interests of the Tenancy Agreement had been transferred to the occupants of the Premises and which is not capable of remedy, would section 58 not apply to allow the Tribunal to grant the possession order that the Applicant is seeking. The Respondent asks the Tribunal to dismiss of the Applicant’s application on the additional basis that the Applicant failed to serve a valid Section 58 Notice on the Respondent.

Section 58 Notice for breach of Clause 3 – Applicant’s case

212.  Only the December Legal Letter mentioned breach of Clause 3. The Applicant submits that the December Legal Letter complies with section 58(1)(a), CPO by specifying “assigned, transferred, sublet and/or otherwise part with the possession of the Premises or certain part thereof to other persons, which constitute blatant breach of Clauses 2 and 3 of the Tenancy Agreement”. The Ordinance does not require the notice to contain further particulars.

213.  The Applicant accepts that the December Legal Letter did not afford the Respondent an opportunity to remedy the breach, in terms of section 58(1)(b), CPO but says that the Clause 3 breach is irremediable. In Akici at §§67 and 73, Lord Neuberger held that, absent special circumstances, a breach of covenant against parting with possession or sharing possession is generally capable of remedy, but where there is a creation or transfer of legal interest, the breach is irremediable. The Respondent has accepted that, if the Tribunal finds the Relevant Usage amounts to subletting, such breach is incapable of remedy according to the authorities.

214.  The Applicant reiterates its position that the Relevant Usage involves granting exclusive possession of bedspaces in exchange for payments over a period (24 months). This constitutes a lease/ tenancy, regardless of the label attached to this arrangement: Street v Mountford. The evidence shows a transfer of exclusive possession to third parties, for value, over a substantial period, which is an example of an irremediable breach. The harm to the landlord is not practically retrievable; the landlord cannot be restored to the position he would have been in but for the breach.

215.  I have found that the Relevant Usage did not amount to subletting. There was no transfer of legal interest to the occupants, nor of exclusive possession to any third party. Therefore, any breach would have been remediable. The December Legal Letter was not a valid Section 58 Notice in respect of breach of Clause 3.

Special circumstances

216.  Further or in alternatively, Mr Chow submits that the “special circumstances” referenced by Lord Neuberger are present here. Lord Neuberger did not provide a precise definition of “special circumstances”. Instead, whether special circumstances exist is a question of fact to be determined in the context of each case. The term “special circumstances” is understood to mean circumstances that are out of the ordinary course, unusual, special, or uncommon. It does not require the situation to be unique, unprecedented, or very rare, but it must not be something that is regularly, routinely, or normally encountered.

217.  The Applicant submits that the following amount to special circumstances:

(1)  The Relevant Usage involves a systematic and ongoing commercial operation, rather than an isolated or accidental breach;

(2)  The arrangement resulted in a fundamental alteration of the character and use of the Premises;

(3)  The breach persisted over a significant period and involved multiple third parties, thereby compounding the prejudice to the Applicant; and

(4)  There is no evidence of any attempt by the Respondent to remedy or mitigate the breach prior to the Applicant’s action, further highlighting the deliberate and serious nature of the conduct.

218.  The Applicant claims that taken together, these factors render the circumstances of the present case “special” within the meaning contemplated by Lord Neuberger, justifying the conclusion that the breach is irremediable. Therefore the Clause 3 breach in this case is irremediable and the December Legal Letter is a valid Section 58 Notice. Mr Chow concludes that in any event the Relevant Usage is continuous, and since no application was made for relief against forfeiture, the Tribunal is not required to consider whether the Respondent should be granted such relief.

219.  I appreciate that Madam Wong and Ms Mak genuinely feel aggrieved. However, upon a proper construction of the Tenancy Agreement and analysis of the facts, there was no material breach entitling the Applicant to terminate the Tenancy Agreement, re-entry or forfeiture. In my view the factors relied upon, whether taken individually or cumulatively, do not amount to special circumstances such that any alleged breach should be deemed irremediable for the purposes of section 58, CPO. The Applicant was not entitled to terminate the Tenancy Agreement on the bases sought. The Respondent need not apply for relief against forfeiture.

Procedural objection of Applicant

220.  The Applicant also opposes R’s Application on the basis that the Tribunal should refuse leave as a matter of procedural fairness and case management. R’s Application was made only after the conclusion of closing submissions. This is even later than the Applicant’s application to rely on the issue of “illegality”, namely whether the operation of a staff accommodation business at the Premises contravened the Bedspace Apartments Ordinance, Cap. 447 as an additional limb of the Respondent’s breach of the Tenancy Agreement. That application was dismissed by the Tribunal on the first day of trial for “delay” and because the trial dates were milestone dates. Such late applications to introduce new issues or arguments are not to be entertained save for exceptional circumstances. The parties had full opportunity to address all relevant issues in their opening and closing submissions. R’s Application is an impermissible attempt to re-open the case Mr Chow submitted that permitting the Respondent to rely on new grounds at this stage would be inconsistent with the Tribunal’s earlier ruling and would undermine the principle of finality in litigation. I do not accept that permitting the application would be inconsistent with the earlier ruling. Obviously each application must be considered on its own merits. The Applicant’s application was dismissed not simply because it was “late”, but because in light of the evidence, it put the trial dates at risk and the trial is a milestone date.

221.  The Applicant continues that it is particularly unfair to the Applicant given that the issue of “illegality” is of importance to the validity of a section 58 notice. This results in an inequitable situation where the Applicant is unable to advance an argument which may have a significant impact on the requirements and validity of a Section 58 Notice. As recognised in Akici at §68, the legality of the Respondent’s use of the Premises can directly determine whether the Relevant Usage is remediable and, in turn, to the content requirement and validity of the notice itself. I accept the argument that illegality may be relevant to any section 58 Notice.

222.  The Respondent’s Application to rely on section 58 was clearly made extremely late. In the event the Respondent does not need to apply for relief from forfeiture. Had it been necessary there may have been an issue as to whether any breach by the Relevant Usage was remediable. On the first day of trial I refused the Applicant’s application to introduce an unpleaded case that the use was illegal. Had the Respondent relied upon section 58, CPO from the outset, the Applicant may have raised illegality in response, and well before trial. In that event the state of the evidence and the case of each party may have been materially different. In the circumstances, as a matter of fairness, the Respondent ought not to be allowed to seek relief from forfeiture in respect of any breach of Clause 3, where the Applicant had not been able to advance a case on illegality. The Respondent’s late application should be refused.  

Costs

223.  Given the lateness of R’s Application and that the trial focused on the Agreed Issues, the Applicant submits that, even if the Tribunal is minded to grant R’s Application, no adverse costs order should be made against the Applicant in any event. Rather, it says that the issue of costs should be determined in accordance with the overall outcome of the trial, namely whether the Respondent is found to be in breach of Clauses 2 and/or 3 of the Tenancy Agreement, regardless of whether the Applicant’s right of forfeiture is ultimately enforceable.

224.  I see no reason why costs should not follow the event. The Application is dismissed with costs to the Respondent.

225.  However, the Applicant should not be responsible for the Respondent’s late application to rely on section 58, CPO. That necessitated a further round of submissions, re-visiting factual issues, as well as addressing new legal issues. The Applicant was unable to address illegality. I have regard also to the time incurred to deal with that dismissed application. Taking a broad brush approach, I make a costs order nisi that the Applicant shall pay 80% the Respondent’s costs, on the District Court scale, with certificate for counsel, to be taxed if not agreed. Either party may apply to vary the nisi order within 14 days hereof, failing which the nisi costs order shall become absolute.