MIMOSA HONG KONG LTD v. CHEUNG WING YAN VICKY

DCCJ 3767/2020

[2023] HKDC 1429

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3767 OF 2020

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JUDGMENT

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INTRODUCTION

1.  The present action involves a tenancy dispute between the plaintiff (“Company”) and the defendant (“Cheung”) over a premises known as 11 Ngau Pui Wo, Sai Kung (“Premises”).

BACKGROUND

2.  The Premises comprise a three-storey house of 2,100 sq. ft. (“House”) and a garden of over 20,000 sq. ft. (“Garden”). The Garden is enclosed to the front and both sides of the House. In order to access to the House, one has to walk across part of the Garden from the main entrance gate.

3.  Cheung acquired the ownership of the Premises in October 2019 and engaged an estate agent, Sunshine Property Consultant Limited (“SPC”), to put up a rental advertisement with photos depicting the House and the Garden (“Advertisement Photos”) for the purpose of leasing out the Premises for Cheung.

4.  Mr. Wong Chi Wai (“Wong”), after viewing the Premises, entered into a provisional tenancy agreement (“Provisional Agreement”) with Cheung dated 21 January 2020. The Provisional Agreement was in the standard form of Wong’s estate agent, Homeplus Property Consultants Ltd (“HPC”), through which Wong contacted Cheung through SPC, (the two estate agents, collectively, “Estate Agents”). Mr. Joe Lui (“Joe”) and Mr. Danny Yan (“Yan”) were the persons respectively represented HPC and SPC.

5.  An appendix was attached to that standard form. It stipulated that the landlord was to complete the items of work listed therein before handing over the Premises to the tenant, including a series of work to be done for the Garden. The tenancy was stated to be for residential purpose for a term of 4 years.

6.  The Company was incorporated on 18 March 2020.

7.  By a tenancy agreement (“Tenancy Agreement”) signed between Cheung and Wong, as a director of the Company, dated 7 April 2020, the Premises was leased out to the Company as tenant for a term of four years, from 1 June 2020 to 31 May 2024, at the monthly rental of HK$85,000 (inclusive of management fees, government rates and government rents), with one-month rent-free period from 1 to 31 May 2020.

8.  The Tenancy Agreement contained an “Appendix” (“Appendix”), an “Annex 1” and an “Annex 2” (“Annex 2”), which set out a number of items of renovation work to be carried out at the Premises by Cheung, including some works for the Garden.

9.  The Company was required to pay HKD340,000 as security deposits. Cheung also acknowledged receipt of the first deposit of HK$170,000 and the first month rent of HK$85,000 in the total sum of HK$255,000 (“Tenant’s Payments”) in the Tenancy Agreement.

10.  Cheung was not in Hong Kong from January 2020 to late May 2020. She and Wong had no direct communication until a telephone conversation between them on 1 June 2020 (“June Conversation”), in that Cheung identified herself as a “Miss Lee”.

11.  On 1 May 2020, the handover date of the Premises as scheduled in the Tenancy Agreement, Wong went to the Premises and took some photos of it. He did not take up the Premises.

12.  On 11 May 2020, the solicitors then acting for the Company (“Company’s Solicitors”) sent a letter to Cheung (“11 May Letter”). A list of incomplete renovation works of the Premises (“May List”) and a quotation which the Company had obtained for the turf works of the Garden were attached thereto.

13.  In the said letter, the Company complained about Cheung’s failure to complete the renovation work and to hand over the Premises with the renovation work completed on 1 May 2020. It nevertheless allowed one more month for Cheung to complete the outstanding renovation work with the handover date of the Premises be postponed to 1 June 2020 and the rent-free period and the rental period be postponed accordingly. It also offered to take up the renovation work with the expenses incurred to be deducted from the monthly rental as an alternative.

14.  By letter dated 15 May 2020, Cheung replied that she needed more time to consider.

15.  Later, SPC notified the Company that it no longer had any instructions to act for Cheung.

16.  By letter dated 21 May 2020, Cheung disagreed with some of the items set out in the May List but did not respond to any proposal of the Company.

17.  By letter dated 21 May 2020 (“21 May Letter”), the Company’s Solicitor asked Cheung to contact the Company directly to discuss and to reach consensus on the turf work of the Garden.

18.  By letter dated 26 May 2020, Cheung requested the Company to telephone her personal assistant, “Miss Lee”, for handover of the Premises on 1 June 2020.

19.  On 1 June 2020, Wong and his partner were allowed to gain access to the Premises (“June Visit”). Cheung was not there. Wong telephoned the “Miss Lee” at site, and, during the June Conversation, he complained that the renovation work of the Premises was not completed. During the June Visit, he only finished taking some photos of the Premises, mainly of the Garden (“June Photos”). He was not able to gain access to the Premises since then.

20.  Wong followed up the matter with the “Miss Lee” by a few WhatsApp messages exchanged between them (“June Messages”).

21.  By letter from the Company’s Solicitor dated 26 June 2020 (“26 June Letter”), the Company notified Cheung that her failure and refusal to complete the renovation work and to hand over the Premises with completed renovation work amounted to repudiatory breach of the Tenancy Agreement. It accepted her repudiation and demanded compensation.

22.  By letter of the same date, Cheung asked the Company for payment of rent and second deposit payment within the next seven days, failing which, the Company would be treated as repudiatory breach of the Tenancy Agreement.

23.  On 22 July 2020, the Company commenced the present proceedings.

24.  On 14 September 2020, Cheung filed the Defence and Counterclaim.

THE COMPANY’S CLAIM

25.  At the present trial, the Company confirms that its claim is confined to and premised on only two repudiatory breaches allegedly to have been committed by Cheung: -

(a)  Cheung failed and refused to complete the renovation work of the Premises (more specifically, the Garden) in accordance with the terms of the Tenancy Agreement; and

(b)  Cheung failed to hand over the Premises in tenantable condition due to its failure to complete the said renovation work.

26.  The Company also reduces the quantum of damages sought to a sum of HK$297,500 (“Company’s Sum”), being the Tenant’s Payments of HK$255,000 and the estate agency commission paid to HPC of HK$42,500. The other item of damages sought in the statement of claim is abandoned.

27.  Cheung agrees that if the court rules that Cheung has repudiated or renounced the Tenancy Agreement, she is liable to pay the Company’s Sum to the Company.

THE PARTIES’ POSITIONS

28.  Notwithstanding a number of allegations were raised by the parties in the pleadings and in the witness evidence, both parties confirm that the following matters are in agreement and the trial should accordingly proceed on such basis that: -

(a)  the parties’ respective claims are premised solely on the written terms of the Tenancy Agreement. The Provisional Agreement should only be considered as factual matrix of the Tenancy Agreement and the parties do not seek to enforce any of those terms;

(b)  there is no dispute that the handover date of the Premises was postponed from 1 May 2020 to 1 June 2020;

(c)  the Company has had no access to the Premises after 1 June 2020 and was not involved in the photo-shooting of the Premises by Cheung’s agent on 27 August 2020 (“August Photos”);

(d)  despite that the August Photos are purportedly produced in the form of a surveyor’s report, Cheung has not sought leave to adduce expert evidence and only the photos but not the statements or opinions given therein should be considered as evidence for this trial;

(e)  the dates of the photo-shooting of the June Photos and August Photos are not challenged;

(f)  the parties elect not to adduce expert evidence or ask for separate proceedings for damages to be accessed.

THE TERMS OF THE TENANCY AGREEMENT

29.  The Company seeks to rely on the following terms of the Tenancy Agreement: -

(1)	Clause 11:	the Landlord and the Tenant mutually agree to be in compliance with the additional terms and conditions as listed in Annex 2.
(2)	Annex 2 contains the following terms: -
	Clause 3(1):	the Landlord shall complete the items as listed in the “Appendix” and pay all the costs incurred before the handover of the Premises (“在交樓前，業主需把“Appendix”事項完成並支付一切開支。”).
	Clause 3(4):	the Landlord shall provide easy-growing, evergreen grass turf or grass turf of the same level (“業主須提供粗生、四季常綠或同等級的草皮。”).
	Clause 3(5):	the Landlord shall consult and reach consensus with the Tenant before laying the grass turf and refurbishing the outer walls (“業主在舗草皮及翻新外牆前，須與租客協商並取得共識。”).
	Clause 3(6):	the Landlord shall lay grass turf on the slopes of the Garden (“業主須在花園斜坡舗草皮”).
	Clause 4(1):	the Tenant shall be responsible for the maintenance of the grass turf and the plants during the tenancy, and, to return the grass turf and the plants in good condition to the Landlord at the end of the tenancy (“租客在租約期間負責保養草皮和植物，並在租約到期後將狀況良好的草皮和植物交還給業主。”).
(3)	The Appendix contains the following terms: -
	Clause 1:	the Landlord shall be responsible for and complete the following items before handing over the Premises to the Tenant (“在交物業給租客之前，業主須負責及完成以下事項”):
		item (l): remove the weeds and lay natural grass turf in the whole garden, the Tenant shall be responsible for the maintenance and make good the grassland and the plants of the garden during the tenancy period and restore the same to the same condition at the end of the tenancy (“整個花園清除雜草及種上真草草皮，在租約期内，租客須負責保養及维修花園草地及植物，並在租约完结時還原相同狀況。”).

(collectively, “Relevant Terms”)

THE COMPANY’S CASE

30.  The Company’s case can be briefly summarized as follows.

31.  Wong and his business partners were photographers. In January 2020, they began looking for a premises with a large garden with a plan to use it for residence as well as a venue for wedding event photography.

32.  Upon viewing the Premises, the Premises was not well-renovated and the Garden was not properly maintained nor turfed as the Advertisement Photos depicted. After negotiations through the Estate Agents, Cheung agreed to carry out renovation of the Premises, including, to remove the weeds and to lay natural, easy-growing and evergreen grass turf at the whole Garden.

33.  Given the House was rented together with the large Garden and Cheung’s agreement to carry out renovation work on them, the higher monthly rent of HK$85,000 was accepted, which was far more than the rents of other 3-storey houses in Sai Kung ranging from HK$35,000 to 50,000.

34.  After signing the Tenancy Agreement, Cheung failed and refused to discuss about laying of turf on the Garden despite repeated requests. The renovation work of the Premises was not completed on the contractual handover date on 1 May 2020.

35.  Notwithstanding the Company’s indulgence to postpone the handover of the Premises from 1 May 2020 to 1 June 2020 as well as its proposal to offer different ways to complete the outstanding renovation work of the Garden, through the Estate Agents and the Company’s Solicitors, Cheung still failed to complete the renovation of the Premises or accept the Company’s proposal to take up the renovation works by 1 June 2020.

36.  During the June Visit, Wong found that the renovation work at the Garden was not completed. The Garden was not turfed but still filled with weeds, dried branches, debris and rubbish. Several parts of the Garden were bare grounds. During the June Conversation and the June Messages, Cheung refused to complete the renovation work but insisted the Company to take possession of the Premises and only offered to provide 15 more days of rent-free period.

37.  Cheung’s failure and refusal to complete the renovation work and to hand over the Premises in tenantable condition in accordance with the Tenancy Agreement amounted to repudiatory breach of the Tenancy Agreement. The Company accepted the repudiatory breach by the 26 June Letter and is accordingly entitled to be awarded the Company’s Sum.

CHEUNG’S CASE

38.  It is Cheung’s case that in order to honour her part under the Tenancy Agreement, she spent a sum of HKD872,500 to renovate the Premises, including the Garden.

39.  Due to the outbreak of COVID-19, the renovation work of the Premises was delayed ending up with the agreement between the parties to postpone the handover date of the Premises from 1 May 2020 to 1 June 2020. Accordingly, the start date of the one-month rent-free period was altered to 1 June 2020 to 30 June 2020 and the commencement of the rental period was changed to 1 July 2020. Other terms and conditions under the Tenancy Agreement remained unchanged.

40.  By 1 June 2020, all renovation works of the Premises were completed and the Premises was ready for handover to the Company. It was the Company which repudiated the Tenancy Agreement for it had wrongfully refused to take up the Premises, and, failed to pay the second part of the security deposits in the sum of HK$170,000. The 26 June Letter is a clear proof of the Company’s repudiatory breach and renunciation of the Tenancy Agreement.

41.  On such basis, Cheung counterclaims: -

(a)  the costs of the renovation work incurred of HK$872,500;

(b)  the estate agency commission paid to SPC of HK$42,500;

(c)  the loss of rental income to be assessed.

ISSUES IN DISPUTE

42.  The issues in dispute are:

(1)  what was the renovation work Cheung was contractually bound to carry out at the Garden under the Tenancy Agreement;

(2)  whether Cheung failed and refused to complete such work by 1 June 2020;

(3)  if yes, whether Cheung’s failure and refusal to complete such work and her failure to hand over the Premises with the renovation work completed to the Company amounted to repudiatory breach of the Tenancy Agreement which made her liable to pay the Company’s Sums;

(4)  if no, whether the Company was in repudiatory breach due to its refusal to take up the Premises and to pay the second part of security deposits;

(5)  if yes, whether Cheung is entitled to the damages as claimed in the counterclaim.

DISCUSSION

CONSTRUCTION OF THE TENANCY AGREEMENT

43.  The Company complains Cheung to have been in breach of the Relevant Terms which amounted to a repudiatory breach of the Tenancy Agreement.

44.  The test for contractual interpretation is well-established. The approach to construction is objective. The question is not what one or other of the parties meant or understood by the words used, but the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to all the parties in the situation in which they were at the time of the contract.

45.  The approach has been clearly set out by the Court of Final Appeal in Jumbo King Ltd v Faithful Properties Ltd & Ors [1999] 2 HKCFAR 279 at 296:

“If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation of the agreement - evidence of such negotiations is inadmissible - and has no way of knowing whether a clause which appears to have an onerous effect was a quid pro quo for some other concession. Or one of the parties may simply have made a bad bargain.”

46.  In Marble Holdings Ltd v Yatin Development Ltd [2008] 11 HKCFAR 222 at 231-233, the Court of Final Appeal reviewed the relevant authorities and affirmed the relevant principles that, if the words used are free from ambiguity, their natural and ordinary meaning will apply unless the relevant circumstances demonstrate otherwise.

47.  With these principles in mind, I now turn to consider the construction of the Tenancy Agreement.

48.  In my view, the textual meaning of the Relevant Terms is without ambiguity. It is plain, clear and straightforward. The language used is in Chinese which Cheung is proficient in. The wordings used are simple and in the language used in ordinary life. The natural and ordinary meaning of the Relevant Terms is clear that Cheung was contractually obliged to remove the weeds and lay natural, evergreen and easy-growing grass turf on the whole garden before handing over the Premises to the Company.

49.  Under Clause 11 of the Tenancy Agreement, both parties agreed to be in compliance with the terms and conditions specifically listed out in Annex 2.

50.  Clause 3(1) of Annex 2 obliged Cheung to complete the work as listed in the “Appendix” and pay all the costs incurred before the handover of the Premises. Under Clause 1 (l) of the Appendix, she was obliged to complete the work of removing the weeds and of laying natural grass turf in the whole garden before handing over the Premises to the Company.

51.  Clause 3(4) of Annex 2 required her to provide easy-growing, evergreen grass turf or grass turf of the same level. Clause 3(6) of Annex 2 required her to lay grass turf on the slope of the Garden. Clause 3(5) of Annex 2 required her to consult and reach consensus with the Company before laying the grass turf.

52.  On the other hand, Clause 4(1) of Annex 2 and Clause 1 (l) of the Appendix imposed a duty on the Company to be responsible for the maintenance of the grass turf and the plants during the tenancy period, and, to return the grass turf and the plants in good condition and to the same condition as when the Company took it on the date of handover to Cheung at the termination of the tenancy.

53.  The obligations imposed on Cheung were unequivocal and specific. The acts to be done were to remove the weeds (“清除雜草”) and to lay grass turf (“舗草皮”). The place upon which the acts were to be done was the entire Garden. The date of completion of the work was fixed to be before the handover of the Premises to the Company. Cheung was the one who had to complete the work and pay the expenses.

54.  In my view, a reasonable reader noting the parties’ choice to use the terms “grass turf” (“草皮”), “laying of grass turf” (“舗草皮”), within the four corners of the same document is clearly to impose specific duty on Cheung that she must provide the grass and the surface layer of earth held together by its roots.

55.  The specification of the grass of the grass turf is well-defined in the Tenancy Agreement. It has to satisfy the three requirements of natural, easy-growing and evergreen, or, the same level of grass turf (“真草” “粗生” “四季常綠或同等級的草皮”).

56.  The combined effect of the Relevant Terms clearly and specifically obliged Cheung to remove the weeds, and, to provide the surface layer of the whole Garden on which natural, easy-growing and evergreen grass is growing, consisting the grass and the soil in which its root grows, on the contractual date of handing over the Premises to the Company.

57.  Plainly, the words used are free from ambiguity. Their natural and ordinary meaning makes sense and workable in ordinary life. It also sits well with the overall purpose of the Tenancy Agreement as well as the facts and circumstances known or assumed by the parties at the time that the Tenancy Agreement was entered into.

58.  The Garden forms an integral part of the whole Premises and was much bigger than the House in size. Its location is prominent to the use and enjoyment of the Premises which enclosed the front and both sides of the House. One has to walk along the path surrounded by the Garden to gain access to the House.

59.  Coupled with the common fact that the Premises was for residential use of the directors of the Company and/or their nominated persons, commonsense dictates that a garden turfed with natural, evergreen and easy-growing grass without weeds will significantly contribute to the use and enjoyment of the Premises and add much value to it.

60.  The express requirements for clearance of weeds and laying of natural, evergreen and easy-growing grass turf were obviously not accidental but deliberate. The use of the words “laying of grass turf” was apparently to ensure that the Company would be provided with the Garden fully and tidily filled with growing natural green grass upon taking up the Premises. The selection of the words of “evergreen”, “easy-growing” “natural grass” was to secure a green garden which would not be sensitive to seasonal changes and could be easily maintained over the years.

61.  The importance of securing the Garden turfed with natural, evergreen and easy-growing grass was further reflected in Clause 3(5) of Annex 2 which required prior discussion for reaching consensus between the parties before laying of grass turf by Cheung.

62.  The significance of such work was further echoed by Clause 1(l) of the Appendix which obliged the Company to be responsible for the maintenance of the grass turf throughout the tenancy period, and, to return the grass turf to the same condition as at the time of handover, to Cheung at the end of the tenancy.

63.  Objectively construed, the Relevant Terms were deliberated to express the parties’ clear intentions and purposes that Cheung was to hand over the Garden, which was turfed with growing natural, evergreen and easy-growing grass without weeds, to the Company on the handover date. The Company was obliged to return the Garden in the same condition to Cheung upon termination of the tenancy. The mutual benefits and obligations of both parties were carefully defined.

64.  Even though I accept that the quality of the grass turf was not required to reach the level of “excellent” condition, the Garden which was turfed with natural, evergreen and easy-growing grass without weeds was what the Company had bargained for and what Cheung had agreed to provide on the handover date.

65.  For the reasons aforesaid, I am of the view that the ordinary meanings of the words used in the Tenancy Agreement are unequivocal and make sense in ordinary life. Such interpretations sit comfortably with the nature, background and the purpose of the tenancy and practical commonsense. The removal of the weeds and laying of natural, evergreen and easy-growing grass turf on the Garden (“Garden Work”) is a fundamental condition of the Tenancy Agreement which goes to the root of it. The breach of it would amount to a repudiatory breach.

THE STATE OF THE GARDEN ON 1 JUNE 2020

66.  It is the common fact and the pleaded case of both parties that the renovation work of the Premises was not completed on 1 May 2020 and the handover date was accordingly postponed to 1 June 2020. This court is invited by the parties to consider the state of the Garden on 1 June 2020 only but not prior to that.

67.  Having considered the witness evidence of Wong and Cheung, who were the only two witnesses testified at trial, and the documentary evidence before me, I form the view that the Garden Work was not completed on 1 June 2020 for the following reasons.

68.  Wong gave detailed evidence that the Garden Work was not completed on 1 June 2020, making reference to the June Photos and the layout plans of the Premises.

69.  Wong’s evidence was detailed and logical which is fully supported by the contemporaneous documents. The June Photos depict that the Garden was clearly not turfed. Not only that a number of large pieces of bare grounds are seen at different parts of the Garden, the remaining parts of the Garden are also found filled with weeds, withered plants and debris heaps, which half-buried bottles and shoes.

70.  Messy weeds (wild grass or wild plants) are seen everywhere. Some of them turned brown or wilt and some matted down. Some of them were also covered with soil lumps, broken branches, debris and rubbish. The Garden is seen not laying with grass-turf.

71.  Wong’s evidence is also consistent with his complaints about the incompletion of the Garden Work in the June Conversations, the June Messages and the 26 June Letter, in that he specifically complained that the weeds and debris of the Garden were not removed and the Garden was not turfed.

72.  Further, according to the transcripts of the June Conversations and the June Messages, Cheung actually admitted that some parts of the Garden were bare grounds without grass. Her offer (“June Offer”) of an additional 15-day rent-free period, or to arrange her gardener to follow up the work as an alternative, expressly for making good the Garden and to plant grass on the bare grounds, after the Company’s taking up of the Premises, is solid evidence that the Garden Work was not completed on 1 June 2020.

73.  Her explanation in Court that her offer was purely a gesture to please her tenant is clearly an afterthought which contradicts her position during the June Conversation.

74.  On the evidence before me, I am convinced that the Garden which Cheung insisted to hand over to the Company on 1 June 2020 was obviously not what the Company had bargained for and what Cheung had agreed to hand over under the Tenancy Agreement. The Garden Work was indeed not completed.

75.  Even if I only take into account the use of the Premises was solely for residential use and without any regard to the Company’s unpleaded suggestion that it also planned to use it as a venue for wedding event photography, it is commonsense that a green garden turfed with natural, evergreen and easy-growing grass is a pleasure to look at, and forms a valuable green buffer to capture runoff rain water, in particular, for the slope and the garden adjacent to the House for residential use, which would significantly enhance the use and enjoyment of the Premises. In fact, Cheung, under cross-examination, agreed that the rental value of the Premises would be substantially lower if the Garden was not turfed.

76.  Cheung contends that she has engaged gardeners to carry out gardening work on the Garden, who have sowed some grass seeds onto the Garden. She seeks to rely on the August Photos for proof that grass seeds had actually been sowed onto the Garden which took time to grow ending up with the Garden covered with grass as shown in the August Photos.

77.  I am not persuaded. The meanings of the Relevant Terms cannot reasonably be capable of any dispute. Objective construed, they can only mean Cheung was obliged to complete the Garden Work on the handover date.

78.  Cheung’s engagement of gardeners to carry out some work on the Garden or some seeds were sowed thereon was not sufficient to discharge her burden under the Tenancy Agreement. She was obliged to actually provide the Garden turfed with natural, evergreen and easy-growing grass with the weeds removed by 1 June 2020.

79.  Under the Tenancy Agreement, the Company was not obliged to take up the Garden not knowing whether grass would grow or not. Nor was it required to spend money, time and efforts to make good the incomplete Garden Work for Cheung. Plainly Cheung had no right to delay or prejudice the Company’s use and enjoyment of the Garden.

80.  Further, commonsense dictates, if grass seeds had been fully sowed all over the Garden, the conditions of the Garden would not have been at variance to such a significant extent as the June Photos depict, but should be much more consistently all over the place.

81.  In any event, the removal of the weeds, the dried branches, debris and rubbish was clearly incomplete by 1 June 2020. I share Wong’s view that they, on the contrary, formed a thick layer which actually posed impediments to the growth of natural grass.

82.  Thus analyzed, I find that Cheung failed to complete the Garden Work and to hand over the Premises with the Garden Work completed on 1 June 2020. She was in repudiatory breach of the Tenancy Agreement. Wong was not obliged to take the June Offer.

83.  The foregoing matters are sufficient to dispose of Cheung’s argument on the issue of liability. For completeness sake, I should add that the August Photos were taken more than 2 months after 1 June 2020. The Company had no access to the Premises during the period. Nor was it involved in the photo-shooting. What actually had been done on the Garden during the period remained unknown.

84.  Suffice it to say that Cheung, under cross-examination, admitted that some trimming work had been done during the period. She however did not account for those works in any details. In the circumstances, I am not persuaded that the August Photos depict the purely natural development of the Garden without any intervention since 1 June 2020.

85.  Further, the August Photos only cover some parts of the Garden. The photos are small in size and the photo images are too blurred to be viewed clearly. They could not constitute a solid proof of the completion of the Garden Work. On the contrary, some of those photos show that there were some bare grounds and withered weeds on the Garden.

86.  I might also add in passing that as early as in the WhatsApp messages of 27 April 2020 in the chat group amongst Wong, Joe and Yan (“WhatsApp Group”), Joe particularly pointed out to Yan that the debris, soil lumps and the weeds on the Garden had to be cleared and new grass turf had to be laid only after that.

87.  Wong’s WhatsApp message dated 29 April 2020 also complained to Yan that the gardener hired by Cheung had not sowed seeds over the whole Garden and the weeds and debris were not removed. Such message was echoed by Joe on the same day.

88.  Even on Cheung’s own evidence under cross-examination, she said that approximately 3,000 sq. ft. out of the 20,000 sq. ft. of the Garden was not turfed. She apparently was referred to the state of the garden as of 1 June 2020, which was the subject matter of the cross-examination. She did not explain how and when she came to know that about 3,000 sq. ft. of the garden was not turfed. It however indicates that a significant part of the Garden was not turfed as Cheung would have no reason to exaggerate the non-turfed area which would be against her interests.

89.  By reason of matters set out above, I come to the conclusion that Cheung was in repudiatory breach of the Tenancy Agreement.

FAILURE TO DISCUSS WITH THE COMPANY

90.  I am also convinced that Cheung had failed to discuss with the Company and to reach consensus with it on laying grass turf at the Garden as required under Clause 3(5) of the Tenancy Agreement.

91.  Such term must be approached from the stand-point of a willing landlord and a willing tenant, both possessed of reasonable common sense, both intending to see the transaction through to completion in terms of their bargain. This requirement clearly aimed at ensuring the Garden to be laid with grass turf in a standard which was agreeable to both parties. A reasonable person would have logically understood to mean that the Company’s requirements were to be taken into account.

92.  Wong’s evidence that Cheung had failed and refused to discuss about laying grass turf of the Garden is supported by the 21 May Letter as well as the messages in the WhatsApp Group. The messages in April and May 2020 evidenced the Company’s requests for discussion with Cheung through Wong, Joe and Yan. Those messages also illustrate that Yan had relayed the Company’s requests to Cheung from 28 April 2020 to 30 April 2020.

93.  Cheung could not produce any solid evidence to contradict Wong’s evidence that all his requests for discussion with Cheung, directly or through Yan, met with no success. Nor could she be able to suggest what actually had been discussed or consensus reached with Wong on the laying of grass turf. Instead, her reiteration of her liberty not to approach Wong or disclose her direct contact to him under cross-examination indicates her reluctance to discussion.

94.  All the evidence points to the single fact that Cheung had not discussed, still less of reaching consensus, with Wong on the laying of grass turf at the Garden. She was in breach of Clause 3(5) of the Tenancy Agreement. Her failure to discuss with the Company at all defeated the whole purpose of the requirement and was in itself a serious breach of the Tenancy Agreement.

95.  Looking at all the relevant matters in the round, I reach the conclusion that despite the allowance of one more month for Cheung to complete the Garden Work, Cheung still failed to discuss and reach consensus with the Company on laying turf at the Garden. She also failed to complete the Garden Work and to hand over the Premises with the Garden Work completed in accordance with the terms of the Tenancy Agreement by 1 June 2020. She was in repudiatory breach of the Tenancy Agreement which entitled the Company to accept her repudiatory breach and to claim for damages.

96.  I am also convinced that Cheung’s refusal to complete the Garden Work but insisted the Company to take up the Premises was manifestly declared that she did not intend to perform her obligations in relation to the renovation of the garden, which is an essential aspect of the Tenancy Agreement.

97.  The Company’s Sums are not in dispute and I so order.

COUNTERCLAIM

98.  Given my ruling of Cheung’s repudiatory breach of the Tenancy Agreement, Cheung’s counterclaim is dismissed.

99.  Purely for analysis purpose, even if I am wrong on the issue of liability and on the assumption that Cheung succeeds in proving that the Company was in repudiatory breach of the Tenancy Agreement (which I do not so find), I am not persuaded that Cheung should be award with her counterclaim other than nominal damages.

100.  Upon the enquiry of this court at the start of the trial, both parties confirmed that they do not ask for separate proceedings for damages to be assessed and the liability and quantum of the counterclaim is to be adjudicated and finally determined at this trial.

101.  In response to the Company’s challenge of claiming double compensation by seeking both costs already incurred (agency fees and renovation costs of the Premises) and loss of rental income, Cheung confirmed, through her legal representative, that she elected to claim for loss of rental income instead of the costs already incurred.

102.  Under the Amended Defence and Counterclaim, the counterclaim for loss of rental income is pleaded without any basic particulars. It does not indicate what actual loss is asking for under the head of claim of “loss of rental income”. No particulars as to the extent, calculation, period concerned or amount allegedly to be recoverable as loss of rental income and how those loss was the result of the Company’s breach is pleaded.

103.  At this trial, Mr. Chong, Counsel for Cheung, seeks to claim for a loss of monthly rental income at HK$85,000 since 1 June 2020 (“Fresh Proposition”), and further, attempts to base such claim on a new allegation of the Company’s wrongful registrations of the Tenancy Agreement and the present Writ of Summons against the Premises at the Lands Registry (“New Allegation”).

104.  In the circumstances, both counsel were invited to address this court on the potential shortcomings of the counterclaim during the trial. Mr. Chong replied that the counterclaim would be restricted to an amount of not more than HK$3,000,000, and, so far as the claim for loss of rental income is concerned, at an amount as this court finds reasonable.

105.  In my view, it is not permissible for Cheung now seeks to counterclaim for loss of rental income which involves the unpleaded propositions. A mere plead of “Loss of Rental Income: to be assessed.” does not support the Fresh Proposition or the New Allegation.

106.  Mr. Chong tries to seek support from the settled law that where a tenant fails to take up a lease as per the terms of agreement, the landlord is entitled to recover damages representing the rent which it would otherwise have received for the term of the lease subject to the deduction of any loss it could have avoided by taking reasonable steps to mitigate and the onus of proving the landlord’s failure to mitigate lies on the tenant.

107.  The problem of such argument is that the pleadings of Cheung’s counterclaim does not give rise to the operation of this legal principle. Nowhere in the Amended Defence and Counterclaim asks for damages to be assessed at the rent which it would otherwise have received for the term of the Tenancy Agreement.

108.  It is trite law that it is the pleadings that dictate the course of proceedings and it is not acceptable for unpleaded issues to be raised out of the evidence. A party is not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide on the approach of his case management on pleadings, seeking particulars and documents, adducing evidence, raising point of law to meet the case: Kwok Chin Wing v 21 Holdings Ltd [2013] 16 HKCFAR 663.

109.  Viewed in this light, the Company cannot be blamed for not pleading a duty to mitigate so as to challenge the counterclaim for loss of rental income while it did not actually know what loss Cheung was claiming until after the start of the trial. It should not be deprived of a right to be fairly informed of the case it has to meet and the claim of damages it has to answer: Hong Kong Civil Procedure 2023 Vol 1 at §18/12/11.

110.  By the same token, the New Allegation must not be allowed. It was neither pleaded nor mentioned in the witness statement. It should not be allowed to slip in to the present proceedings out of the blue by a belated disclosure of a land search record and several letters exchanged between the parties’ solicitors three working days before the trial.

111.  The rule of pleadings dictates that Cheung’s counterclaim is bounded by the Amended Defence and Counterclaim. It is unacceptable for the unpleaded Fresh Proposition and New Allegation to be raised as an ambush at trial. Further, not only that Cheung has not provided the Company with a fair chance to challenge the unpleaded propositions, she also fails to discharge her burden of proving loss.

112.  I am slow to accept Cheung’ evidence which is limited to her bare assertion that the Premises has not been rented out since 1 June 2020, an advertisement for leasing of the Premises which was printed from a website on 21 April 2021, a recent land search record of the Premises together with some solicitors’ letters, is sufficient proof for her claim for loss of rental income of a monthly sum of HK$85,000 since 1 June 2020, still less of showing she has taken reasonable steps to avoid loss.

113.  Given the election of claiming loss of rental income instead of costs already incurred, no damages arising from the claim for renovation costs should be awarded. For completeness sake, I might also add in passing that Cheung also failed to discharge her burden of proving the counterclaim for the costs of renovation of HK$872,500.

114.  Cheung was unable to account for the details as to when and what actual renovation works had been carried out. Nor could she produce solid corroborative evidence in support. Most of the amounts claimed are unsupported with proof of payments. It remains unproved if the amounts sought were reasonably incurred for performance of the Tenancy Agreement.

115.  Much reliance has been placed on several quotations, sales memos and invoices. Those documents are nevertheless brief and general in descriptions. They are also self-contradictory.

116.  Regarding the invoice and receipt of Gus Gardening Centre (“GUS”) in the sum of $145,000, generally and allegedly to be material costs before commencement of work, Cheung said that GUS commenced the renovation works on 24 February 2020. She nevertheless was not satisfied with its works and therefore engaged Thriving ASH Electrical Engineering Limited (“ASH”) to replace it in early May 2020.

117.  Regarding ASH, Cheung only produced a quotation in the total sum of HK$585,600. There is no evidence that what work had indeed been done with payment made. She neither specified the works respectively carried out by GUS and ASH, nor accounted for the duplication of their work and the wasted work caused by the replacement in any details.

118.  Likewise, regarding Wonderlee Company Limited (“WCL”), Cheung only produced a quotation for repairing a gate in the sum of HK$27,000. There is no solid evidence that the work had indeed been done with payment made.

119.  There is also a duplication of items claimed in the sales memo of Chong Fu Electrical Co (“CFE”), the invoice of GUS and the quotation of ASH which remains unaccounted for. CFE claimed for the sale of 7 split-type conditioners whereas GUS claimed for installation of 7 air conditioners. Both items were listed as item 9 of the quotation of ASH. Another duplication is the costs of repairing a gate claimed in the quotation of WCL and that of ASH.

120.  Thus considered, I accept the submissions of Mr. Cheung, the Counsel for the Company, that Cheung’s evidence is unreliable. She fails to discharge her burden on proving that she has incurred costs of renovation works in the total sum of HK$870,500, still less of such costs were reasonably incurred for the performance of the Tenancy Agreement.

121.  By reason of matters set out above, even if Cheung succeeds to prove the Company was in repudiatory breach of the Tenancy Agreement, which I do not so find, the counterclaim will only be awarded with nominal damages.

CONCLUSION

122.  Having considered all the evidence and submissions of both parties, I give judgment to the Company against Cheung in the sum of HK$297,500, with interest thereon at 1% above the best lending rate of HSBC from 22 July 2020 until judgment and thereafter at judgment rate until payment. I also dismiss the counterclaim.

COSTS

123.  I also make an order nisi that the costs of the action, including the main claim and the counterclaim and all costs reserved, to be paid by Cheung to the Company, with certificate for Counsel, to be taxed if not agreed.

124.  This costs order nisi shall become absolute in the absence of application to vary by summons within 14 days.

125.  I thank both Counsel for their assistance.