Bontex International Ltd v. Kaiser Investment (Group) Ltd and Another

HCA 1560/2021

[2026] HKCFI 117

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1560 OF 2021

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BETWEEN

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(by Original Action)

AND BETWEEN

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(by Counterclaim)

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J U D G M E N T

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A. INTRODUCTION

1.This is a tenancy dispute concerning the 1/F, 2/F and 3/F of AKVO Hotel, No.57 Jervois Street, Sheung Wan, Hong Kong (“the Property”). The plaintiff in the original claim (“Bontex”, also the 1^st defendant in the counterclaim) was the landlord. The 1^st and the 2^nd defendants in the original claim (“Kaiser” and “Hiew” respectively, and “Ds” collectively, also the plaintiffs in the counterclaim) were the tenant and a director of the tenant respectively.

2.Hiew was and is an experienced architectural and interior designer. He is also an experienced businessman operating various restaurants at different locations for over a decade.[1]

3.Kaiser and Hiew named Bontex and the following individuals (“the Individuals”) as the defendants in the counterclaim:

(1) Stewart Wong (the 2^nd defendant in the counterclaim), a shareholder of Queentex Development Limited (“Queentex”, holding the sole share of Bontex);

(2) Matthew Chow (the 3^rd defendant in the counterclaim), a director of Hanison Project Management Limited (“HPML”);

(3) Paul Yip (the 4^th defendant in the counterclaim), a senior marketing manager of HPML.

4.Bontex’s claim against Kaiser and Hiew is a claim for outstanding rental payments and damages arising from Kaiser’s premature termination of a lease agreement dated 14 November 2018 entered into by Bontex as landlord, Kaiser as tenant and Hiew as guarantor (“the Lease Agreement”). Kaiser and Hiew rely upon some alleged misrepresentations and an alleged breach of the quiet enjoyment promised in the Lease Agreement as defences to Bontex’s claim. They also rely upon the same matters to put forward the counterclaim.

5.In these proceedings, Kaiser and Hiew were legally represented at all times until 16 June 2025. Thereafter, Kaiser was not presented by any solicitor in these proceedings. No director of Kaiser has obtained leave from the Registrar to act for Kaiser in these proceedings. In other words, Kaiser became unable to take any steps in these proceedings after 16 June 2025. Hiew has been acting in person after 16 June 2025.

6.In the pre-trial review held on 19 June 2025, no one properly representing Kaiser attended the hearing. Accordingly, in accordance with Order 25 rule 1C(2) of the Rules of the High Court, I ordered that Kaiser’s counterclaim be provisionally struck out. Kaiser had not made an application to restore its counterclaim within the 3-month period provided in Order 25 rule 1C(3). Accordingly, in accordance with Order 25 rule 1C(6), Kaiser’s counterclaim stands dismissed, and the defendants in the counterclaim are entitled to have costs of Kaiser’s counterclaim.

7.The remaining matters to be dealt with in the trial are the following:

(1) the original claim made by Bontex against Kaiser and Hiew; and

(2) whether Hiew himself has made a counterclaim which is independent of Kaiser’s counterclaim; if yes, Hiew’s counterclaim.

8.In the trial, Mr Kevin Li represents Bontex and all the defendants in the counterclaim. Hiew is acting in person.

B. THE PARTIES’ RESECPTIVE CASES

B1. Bontex’s Case

9.Bontex’s case is as follows:

(1) By the Lease Agreement, Bontex leased the Property to Kaiser for a fixed term of 3 years commencing on 15 November 2018 and ending on 14 November 2021 at a monthly rental of HK$220,000 payable in advance without any deduction or set-off.

(2) Under the Lease Agreement, Kaiser should be responsible for the rates and electricity charges in respect of the Property during the term of the tenancy.

(3) The Property was leased to Kaiser for non-domestic purpose.

(4) Hiew signed a guarantee in favour for Bontex to guarantee the due observance and performance of the Lease Agreement by Kaiser and would hold Bontex harmless from all costs, damages expenses it may suffer as a result of its entering into the Lease Agreement with Kaiser and as a result of a breach of any terms and conditions of the Lease Agreement by Kaiser (“the Guarantee”).

(5) In breach of the Lease Agreement, Kaiser failed to pay the monthly rental and other charges since 15 July 2019.

(6) In breach of the Lease Agreement, on or about 27 December 2019, Kaiser returned the keys to the Property to Bontex.

(7) By reason the aforesaid, Kaiser evinced an intention no longer to be bound by the Lease Agreement and repudiated the Lease Agreement. Bontex accepted the repudiation and terminated the Lease Agreement.

(8) Upon inspection of the Property, Bontex found that Kaiser left a large quantity of trade articles, kitchenware, equipment and miscellaneous items (“the Articles”) in the Property. At the request of Kaiser, Bontex allowed Kaiser to remove the Articles from the Property on 5 February 2020.

(9) In breach of the Lease Agreement, Kaiser had failed and/or refused to deliver the Property to Bontex in good, clean and tenantable repair and condition, to reinstate the Property to its original state and condition and at Kaiser’s costs to reinstate or restore any damage or defect caused thereto to the satisfaction of Bontex as landlord.

(10) In breach of the Lease Agreement, Kaiser had closed the Property for business and ceased to carry out its business as a Chinese restaurant at the Property since about 1 December 2019 without the prior consent of Bontex. In January 2020, Bontex appointed a building surveyor to survey the conditions of the building services installation, including mechanical ventilation and air conditioning installation, electrical installation and plumbing and drainage installation, of the Property since the restaurant had stopped operation for some time. As a result, Bontex has incurred a sum of HK$18,000 being the professional charges for the aforesaid survey report to review the conditions of the building services installation at the Property.

(11) Since Bontex recovered possession of the Property on or about 5 February 2020, Bontex re-listed the Property in the property market for replacement tenant(s) whilst reserving its right to claim for Kaiser and Hiew for its loss and damage.

(12) Bontex claims against Kaiser for breach of the Lease Agreement. Bontex also claims against Hiew based upon the Guarantee.

B2. Ds’ case

10.Ds’ case is as follows:

(1) Between April and June 2018, Paul Yip invited Hiew to inspect the Property on various occasions. In response to Hiew’s enquiry whether the Property had any problems, Paul Yip orally represented to Hiew by phone and in person that the Property did not have any problems and was suitable for running food and beverage business. (“Paul Yip’s 1^st Representation”) Ds contend that “any problems” in the question put to Paul Yip “implied structural, operational and/ or licensing problems”[2].

(2) On 11 September 2018, Stewart Wong, Matthew Chow and Hiew met at the Shatin Jockey Club. Afterwards, a meeting was held between Stewart Wong, Matthew Chow, Paul Yip and Hiew at the office of Hanison Construction Holdings Limited (“Hanison Holdings”). In that meeting, Stewart Wong, Matthew Chow and Paul Yip orally represented to Hiew that the Property (a) would be handed over by 1 November 2018 for renovation and licensing application so that the Chinese restaurant can be opened before the peak season in the Chinese New Year 2019; (b) did not have any hidden problems (including structural problems); (c) was suitable for the purpose of running a high-end Chinese restaurant; and (d) would be managed by HPML, being in the same way as Hiew’s previous business dealings with Paul Yip and Matthew Chow concerning some other properties (“the Trio’s Representations”).

(3) On 21 September 2018, in a meeting amongst Matthew Chow, Paul Yip and Hiew in a coffee shop in San Po Kong:

(a) Hiew asked Matthew Chow whether the Property had any problems which made it unable to be rented out for a long time since its completion. In response, Matthew Chow orally represented to Hiew that the said Property did not have any problems. (“Matthew Chow’s Representation”). Ds contend that “[s]uch reference to “any problems” implied structural, operational and/or licensing problems”.[3]

(b) Hiew further asked if the Property was suitable for running food and beverage business and whether there would be any problem in applying for the necessary licence for the said purpose. Paul Yip orally reconfirmed that the Property was suitable for running food and beverage business and that there would be no problem with the food and beverage licence if it was so applied (“Paul Yip’s 2^nd Representation”).

(c) In a further meeting held amongst Matthew Chow, Paul Yip and Hiew in around October 2018 in a restaurant at San Po Kong, Paul Yip’s 1^st Representation, Paul Yip’s 2^nd Representation, Matthew Chow’s Representation and the Trio’s Representation were orally repeated.

(4) Induced by and/or in reliance on Paul Yip’s 1^st Representation, Paul Yip’s 2^nd Representation, Matthew Chow’s Representation and the Trio’s Representations, Hiew caused Kaiser to enter into the Lease Agreement, which also contained the Guarnatee.

(5) The staircase connecting the 1/F and the 2/F (“the Subject Staircase”) was included in the Lease Agreement.

(6) Paul Yip’s Representation, Matthew Chow’s Representation and the Trio’s Representations were false:

(a) The “Staircases” were and are unauthorised building structures which constituted hidden problems of the building.

(b) The Property was not suitable for the purpose of running a high-end Chinese restaurant due to the continuous malfunctioning of the air-conditioners.

(c) The Property was not managed by Hanison Management but by Salient Property Management Limited (“Salient”), a company operated by Alwin Wong (son of Stewart Wong).

(7) Paul Yip’s 1^st Representation, Paul Yip’s 2^nd Representation, Matthew Chow’s Representation and the Trio’s Representations were made by Stewart Wong, Matthew Chow and Paul Yip on behalf of Bontex negligently or recklessly.

(8) Ds further contend that Bontex has breached Clause 3.1 of the Lease Agreement, which provided that the tenant should have quiet enjoyment of the Property during the term of the tenancy[4].

(a) “Clause 1 and Schedule Part V of [the Lease Agreement] provides that [Bontex] shall let and [Kaiser] shall take the Property “(including the staircase connecting the 1^st and 2^nd Floor thereof)” (ie. the Staircases referred to herein above).”[5] (Emphasis added)

(b) In breach of the Lease Agreement, the Staircases were unauthorised building, which rendered [Kaiser] unable to enjoy the quiet enjoyment of the Property.

(9) As a result of the unauthorised Staircases, Kaiser was unable to obtain the renewal of insurance for the running of the Chinese restaurant in November 2019.

(10) By reason of the aforesaid, Bontex had repudiated the Lease Agreement and the Guarantee. Ds accepted the repudiatory breach and rescinded the Lease Agreement and the Guarantee on 11 December 2019 and has been discharged from all future obligations.

11.Ds counterclaim[6] for the renovation costs incurred on the Property and the operational costs of the restaurant operated by Kaiser at the Property before the termination of the Lease Agreement.[7]

B3. Reply to the defence, and defence to the counterclaim

12.Bontex denies the existence of the misrepresentations and any repudiatory breach of the Lease Agreement by Bontex. Bontex also requires Ds to prove that the Subject Staircase was authorised building structure. Bontex further relies upon Clause 4.16 of the Lease Agreement as a defence to the claim based upon misrepresentations. Clause 4.16 of the Lease Agreement will be discussed in [60(3)], [61] and [62] below.

13.Bontex averred that Kaiser opened and began to operate a restaurant at the Property in or around March 2019.

14.Regarding the air-conditioning of the Property, Bontex relies upon Clause 2.6.2 of the Lease Agreement and contends that the obligation to maintain and repair the air-conditioning equipment was on Kaiser. Clause 2.6.2(b) of the Lease Agreement is as follows:

“To constantly maintain and keep at the expense of the Tenant all airconditioning systems, including outdoor and indoor units thereof where applicable, in a good and tenantable state and in proper repair and working condition at all times during the term.”

15.Bontex and the Individuals raise the following points in the defence to the counterclaim:

(1) By virtue of Clause 4.11 of the Lease Agreement, Bontex shall not be in any way liable to Kaiser. Clause 4.11 of the Lease Agreement is as follows:

“4.11 Exclusion of Landlord's Liability

4.11.1 The Landlord shall not be in any way liable to the Tenant, his licensees, invitees or to any person or persons claiming any right title or interest under the Tenant for any damage or injury which may be sustained by the Tenant or by any such person or persons as aforesaid on account of the defective or damaged condition of the premises or the Landlord's fixtures fittings equipment and furniture therein or any part thereof and in particular the Landlord shall not be responsible to the Tenant or any person or persons as aforesaid for any damage caused by or through or in anywise owing to any typhoon leakage of water or electric current from the water pipes or electric wiring or cable situated upon or in anyway connected with the said premises unless such damage shall result from the breach by the Landlord of one or more obligations hereby imposed after notice requiring compliance shall have been given and there shall not have been compliance within a reasonable time.

4.11.2 The Landlord shall not be under any liability to the Tenant or to any person whomsoever for any accident loss injury or damage which may be caused to the Tenant or any occupier of the said premises or his servants or invitees arising from any defect in the said building or arising from accidents which take place in any common areas of the said building.

4.11.3 The Landlord shall not under any circumstances be liable to the Tenant for any defect in or break down of the lifts escalators or ventilation system airconditioning system condenser water supply system electric power and water supplies or other common facilities nor shall the said rent or the said airconditioning fees abate or cease to be payable on account thereof.”

(2) Even if Bontex and the Individuals had made the misrepresentations to Kaiser and Hiew as alleged, Kaiser affirmed the Lease Agreement and the Guarantee despite having the full knowledge of the misrepresentations, and were therefore not entitled to terminate the Lease Agreement.

C. THE EVIDENCE

C1. The witnesses

16.Bontex and the Individuals have called 5 witnesses to give oral evidence at the trial:

(1) Stewart Wong

(2) Matthew Chow

(3) Paul Yip

(4) Alwin Wong

(5) Thomas Law

17.Kaiser and Hiew filed two witness statements made by Hiew, and one witness statement made by Wong Sze Chiang (“SZ Wong”). However, Hiew did not call SZ Wong to give oral evidence in the trial. Hence, the contents of SZ Wong’s witness statement are not evidence in the trial. Only Hiew gave oral evidence in support of his case at the trial.

18.An expert report dated 13 September 2023 concerning the Subject Staircase made by a single joint expert, Mr Franklin Yu (“Yu”), was filed in these proceedings. Upon Hiew’s request, Yu attended the trial and answered questions from the parties.

C2. Principles on evaluation of evidence given by witnesses

19.The principles concerning assessment of evidence given by witnesses are trite. The Court would take into account the following[8]:

(1) Whether the party’s case is inherently plausible or implausible;

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment; and

(4) the demeanour of the witnesses.

20.Examples of a witness’s unsatisfactory approach to giving evidence include: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence, and selective disclosure.[9]

21.New evidence that emerges for the very first time during cross-examination should be examined with a great deal of skepticism. In Li Jian Chao v TC Orient Lighting Holdings Ltd[10], DHCJ Winnie Tsui (as she then was) said:

“89. When a witness makes a new allegation or provides for the first time an account of events at trial on an issue which has long been in dispute between the parties, the court is almost bound to treat the new allegation or the new account with some degree of scepticism. This is particularly so when the issue is all along hotly disputed in pleadings and witness statements. The court would be even more sceptical if the witness is unable to explain why he could not have made the allegation or given the account earlier and well in advance of the trial. In these circumstances, the truth of these last-minute revelations are often very much in doubt.” (Emphasis added)

22.While there is a long passage of time between the material events and the trial, contemporaneous documentation is of particular importance. In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd [11], Stock JA (as he then was) said:

“…… Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance. ……

I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. This is particularly so in a case such as the present, where events have taken place so long before trial and where there exists a mountain of contemporaneous documentation that can be used to point the way. This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts ……” (Emphasis added)

23.Where an oral agreement is being asserted by a party, the absence of any contemporaneous record may suggest that the alleged oral agreement was not concluded. In Leung Chin Sing, Rabo v Ko Chun Hay Kelvin[12], DHCJ Jian Pao SC said:

“42. It is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint. …… Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded ......” (Emphasis added)

In my view, the dictum of the learned judge does not only apply to alleged oral agreements, but also applies to alleged oral discussions bearing significance in commercial negotiations.

24.In considering the validity of a criticism made against a witness, the rule in Browne v Dunn^[13] is relevant. The following would need to be borne in mind[14]:

(1) The rule in Browne v Dunn is a rule of practice or procedures designated to achieve fairness to witnesses and a fair trial between the parties.

(2) The general principle is that, where an attack on a witness' evidence is to be made, notice should normally be given to the witness in cross-examination of the nature of the attack if such is not otherwise obvious.

(3) There is no breach of the principle if the witness knew or ought to have known that his version of events was being challenged or that adverse inferences might be drawn against him.

(4) Even if the procedural rule is transgressed, it does not inexorably follow that matters which have not been put to a witness in cross-examination cannot be relied on. It may be a question of the weight to be given to a witness’ testimony taking into account all the available evidence. Thus, for example, a witness’ evidence may be so incredible as to be incapable of belief or his evidence may be unsupported or contradicted by known facts and contemporaneous documents.

(5) The principle does not inflexibly require every point which might be used against the witness to be put to him. There is no hard-and-fast rule. The paramount consideration is fairness to the witness. In essence, the principle is breached if in all the circumstances, an omission to cross-examine on a specific point is unfair to a witness.

25.See also the recent comments made by the Court of Appeal on the rule in Browne v Dunn in Pang Kam Chuen v Pang Kam Bor[15]. In that case, Cheung JA said:

“89. …… the rationale of the rule is based on fairness and one should not apply it rigidly and its application depends on the circumstances. As Lord Hodge DPSC of the United Kingdom Supreme Court observed in Griffiths v TUI (UK) Ltd [2023] UKSC 48 :

‘(vii) The rule should not be applied rigidly. It is not an inflexible rule and there is bound to be some relaxation of the rule, as the current edition of Phipson recognises in [12 – 12] in sub – paragraphs which follow those which I have quoted in [42] above. Its application depends upon the circumstances of the case as the criterion is the overall fairness of the trial. Thus, where it would be disproportionate to cross – examine at length or where, as in Chen v Ng, the trial judge has set a limit on the time for cross – examination, those circumstances would be relevant considerations in the court’s decision on the application of the rule....’” (Emphasis added)

C3. Witnesses called by Bontex and the Individuals

26.In view of the fact that Hiew was acting in person at the trial, before Bontex and the Individuals called their witnesses to give evidence, I had reminded Hiew that when he cross-examined each witness called by Bontex and the Individuals, he would need to confront the witness on every matter in respect of which Hiew was of the view that the witness was not telling the truth, so that the witness would have an opportunity to respond to the challenge. If he did not challenge the witness on any factual issue and therefore did not offer an opportunity to the witness to explain on that matter during cross-examination, he might not be able to submit that the witness was not telling the truth on that issue in his final submissions, for it would not be fair to the witness in doing so. Hiew understood the reminder given by the Court. The relevant exchanges are as follows:

“官：你認為原告方嘅證人講嘅事情有啲咩嘢地方唔係真嘅、講得唔啱嘅，你必須要係就住呢啲事情向原告方嘅證人係提問，要質詢佢，呢一個係一個當庭對質嘅環節，你要向證人指出，證人所講嘅甚麼事情唔係事實、講得唔啱，讓證人有機會去到回應，咁樣先係一個公平嘅安排，如果就住某一個事情，你認為證人講嘅唔係事實、佢講得唔啱嘅，但係你喺盤問嘅時候冇向證人指出，咁可能你喺結案陳詞階段就唔能夠話呢個證人講嘅唔係事實、講得唔啱，因為你喺盤問佢嘅時候並冇向佢係咁樣指出。…… 邱先生，是否明白我嘅解釋？

第二被告人：明白。”[16]

27.I have seen and heard the evidence given by the witnesses called by Bontex and the Individuals. I would discuss the evidence given by each witness called by Bontex and the Individuals in turn in the paragraphs below.

C3.1 Stewart Wong

28.Stewart Wong is one of the two directors of Bontex. The other director of Bontex is his son, Alwin Wong. Bontex is a private company and is not a company in the Hanison Group. The AKVO Hotel is a property beneficially owned by Stewart Wong.

29.Stewart Wong confirmed that there was a meeting in the Hanison Holdings’ office in Shatin on 11 September 2018, and the meeting was attended by him, Matthew Chow, Paul Yip and Hiew. According to Stewart Wong, there were some general discussions on the leasing of the Property in the meeting. Stewart Wong said that no misrepresentation as alleged by Ds was made in that meeting.

30.As to Stewart Wong’s evidence that no misrepresentation as alleged by Ds was made in the meeting on 11 September 2018, the evidence was not challenged by Hiew while Hiew was cross-examining Stewart Wong.

31.The allegation that the Trio’s Representations were made by Stewart Wong, Matthew Chow and Paul Yip to Hiew in the meeting on 11 September 2018 is an important ingredient in Ds’ case. As a matter of fairness, if Stewart Wong’s evidence concerning that meeting is disputed, the challenge should be put to Stewart Wong and let Stewart Wong have an opportunity to respond to the challenge. Since Stewart Wong’s evidence on the meeting on 11 September 2018 has not been challenged during cross-examination, Hiew would not be entitled to say that Stewart Wong’s evidence concerning that meeting is untrue.

32.In any event, I have no reason to doubt Stewart Wong’s evidence. I regard Stewart Wong as an honest and reliable witness, and I accept his evidence.

C3.2 Matthew Chow

33.Matthew Chow mentioned the following in his evidence:

(1) He has joined the Hanison Group since 1998. He has been responsible for, inter alia, sales and leasing matters in the Hanison Group. He came to know Hiew through the introduction of Paul Yip in 2009, when Hiew through his company rented a shop in Tsim Sha Tsui owned by the Hanison Group.

(2) In or about December 2017, Stewart Wong contacted him and asked him to assist in finding some potential tenants for the AKVO Hotel. Matthew Chow agreed to help Stewart Wong because of the personal relationship between them. Matthew Chow then contacted Hiew, and Hiew expressed an interest in the AKVO Hotel. Throughout all the discussions, Matthew Chow did not make the misrepresentations as alleged in Ds’ pleaded case.

(3) By the Lease Agreement dated 14 November 2018, Bontex leased the Property to Kaiser. Hiew also executed the Guarantee in support of the Lease Agreement.

(4) Since about July 2019, Kaiser had been in default in paying rent. On or about 24 September 2019, Paul Yip and him met Hiew at the Dragon King Restaurant in the Mikiki shopping mall to discuss Kaiser’s outstanding rent (“the 2019 Dragon King Meeting”).

34.Matthew Chow has given clear evidence that no misrepresentation as alleged by Ds in their pleaded case had been given by him. This was not challenged by Hiew when he was cross-examining Matthew Chow. The alleged misrepresentations made by Matthew Chow is an important part of Ds’ case. As a matter of fairness, if Matthew Chow’s denial of the alleged misrepresentations is disputed, the challenge should be put to Matthew Chow so that Matthew Chow would have an opportunity to answer the challenge. Since Matthew Chow’s denial of the alleged misrepresentations has not been challenged during cross-examination, Hiew would not be entitled to say that Matthew Chow’s denial is untrue.

35.In any event, having seen and heard Matthew Chow’s evidence, I am of the view that Matthew Chow is an honest and reliable witness, and I accept his evidence.

C3.3 Paul Yip

36.Paul Yip mentioned the following in his evidence:

(1) He is the Senior Marketing Manager of HPML. He joined the Hanison Group in or about October 2006 and mainly handled the sales and marketing matters. He came to know Hiew through leasing of a shop in Tsim Sha Tsui to Hiew in around May 2009. He also introduced another shop in Tsim Sha Tsui to Hiew in or about September 2013.

(2) In or about April 2018, Matthew Chow asked him to follow up with Hiew in the leasing matter in respect of AKVO Hotel. Hiew was interested in the prime location of AKVO hotel.

(3) In or about July 2018, Hiew requested the computer drawings and general building plans of AKVO Hotel. Subsequently on 11 September 2018, in the meeting attended by Stewart Wong, Matthew Wong, Paul Yip and Hiew at the Hanison Office in Shatin, Hiew presented a written proposal for operating a high-end Chinese restaurant at the Property.

(4) On 21 September 2018, there was a meeting at a coffee shop in San Po Kong attended by Matthew Chow, Paul Yip and Hiew. In that meeting, they discussed general matters concerning the tenancy of the Property.

(5) On 8 November 2018, Paul Yip sent a document titled “Tenant’s Handbook & Fitting Out Guide” (“the Guide”) to Hiew through whatsapp. As stated in Clause 2.0 of the Guide, the manager of AKVO Hotel was Salient.

(6) He did not make any misrepresentation as alleged by Ds in their pleaded case.

(7) By the Lease Agreement dated 14 November 2018, Bontex leased the Property to Kaiser for a fix-term of 3 years. Hiew also executed the Guarantee in support of the Lease Agreement.

(8) Since about July 2019, Kaiser had been in default in paying rent. On or about 24 September 2019, Matthew Chow and him met Hiew at the Dragon King Restaurant in the Mikiki shopping mall to discuss Kaiser’s outstanding rent.

37.In his evidence-in-chief, Paul Yip clearly denied that he had made any misrepresentation as alleged by Ds. His denial not challenged by Hiew during cross-examination. The alleged misrepresentations made by Paul Yip is an important ingredient of Ds’ case based upon misrepresentation. As a matter of fairness, if Paul Yip’s denial of the alleged misrepresentations is disputed, the challenge should be put to Paul Yip so that Paul Yip would have an opportunity to answer the challenge. As a result of the absence of any challenge against Paul Yip’s denial of the alleged misrepresentations, Hiew would not be entitled to say that Paul Yip’s denial is untrue.

38.In any event, I am of the view that Paul Yip is a forthcoming witness who has told the truth in his evidence. I accept his evidence.

C3.4 Alwin Wong

39.Alwin Wong is the son of Stewart Wong. Alwin Wong is one of the two directors of Bontex, and a director of Salient. In his evidence, Alwin Wong mainly focused on some matters which have already been stated in the documentary evidence. In my view, Alwin Wong’s evidence remains intact after cross-examination. I accept his evidence.

C3.5 Thomas Law

40.Thomas Law is the Senior Project Manager of Hanison Construction Limited. In 2015, Stewart Wong asked him to act as the Project manager for Bontex to oversee the construction of AKVO Hotel. He was then seconded to Bontex in June 2015 for AKVO Hotel site coordination and supervision works on daily basis. After seeing Yu’s Expert Report, he reviewed the documents and concluded that Scenario 1B and Scenario 1C described in the Expert Report (see [55] below) did not occur in the construction of AKVO Hotel.

41.For the reasons below, I attach no weight to Thomas Law’s evidence:

(1) Thomas Law had not explained based upon reviewing what documents he could reach the conclusion that Scenario 1B and Scenario 1C did not occur in the construction of AKVO Hotel. Without knowing what documents he had seen, it would not be prudent to accept that the conclusion made by him is the correct conclusion.

(2) Under cross-examination, Thomas Law admitted that he did not have any professional qualification. Thus, it is questionable whether he would be capable to understand the documents concerning the construction of AKVO Hotel correctly.

(3) I should also say that Thomas Law is a factual witness, not an expert witness. He may only give factual evidence, not opinion evidence. Any opinion evidence given by him would not be admissible evidence. His conclusion after reviewing the documents as mentioned in [40] above is an opinion evidence.

C4. Hiew

42.In his witness statement and supplemental witness statement (the truthfulness and the accuracy of the matters stated therein have been confirmed by Hiew in his evidence-in-chief), Hiew mentioned the following:

(1) Hiew adopted the contents of the Defence and Counterclaim[17] filed in these proceedings.

(2) He came to know Matthew Chow and Paul Yip in 2009, when they invited him to rent a property in Tsim Sha Tsui to operate a western restaurant.

(3) He claimed that at all material times, (a) Matthew Chow was an Executive Director of Hanison Construction Holding Limited (“Hanison Construction”), and (b) Paul Yip was a Senior Marketing Manager of HPML, a subsidiary of Hanison Construction. For over 10 years before entering into the Lease Agreement, he had been renting shops through the introduction by Matthew Chow and Paul Yip. Based upon those previous dealings, he trusted Matthew Chow and Paul Yip, as well as Stewart Wong who was introduced to Hiew by Matthew Chow and Paul Yip.

(4) In around April 2018, Paul Yip approached Hiew on behalf of Stewart Wong and invited Hiew to rent the Property in AKVO Hotel. Hiew was given to understand that AKVO Hotel was owned by Bontex, and Bontex was owned by Stewart Wong. Hiew was also given to understand that Stewart Wong engaged Hanison Construction in the building and construction of AKVO Hotel, and HPML in managing the same.

(5) Between April and June 2018, Paul Yip kept on persuading Hiew to rent the Property. “At the same time, in response to [Hiew’s] enquiry whether the Property had any problems, Paul Yip orally represented to Hiew by phone and in person that the Property did not have any problems and was suitable for running food and beverage business. Such reference to “any problems” implied structural, operational and/ or licensing problems (“Paul Yip’s1^st Representation”).”[18]

(6) “In July 2018 …… Matthew Chow once represented to [Hiew] in the Pacific Coffee, coffee shop in San Po Kong Port 33 that the Property was suitable for operating a restaurant. He said that he would be part of the management team for the project of having a restaurant operated in the Property.”[19]

(7) On 11 September 2018, Stewart Wong, Matthew Chow and Hiew met at the Shatin Jockey Club. Afterwards, Stewart Wong, Matthew Chow, Paul Yip and and Hiew had a meeting at the Hanison Holdings’ office in Shatin. “At the meeting, Stewart Wong, Matthew Chow and Paul Yip represented to Hiew that [the Property]: (a) would be handed over by 1 November 2018 for renovation and licensing application so that the Chinese restaurant can be opened before the peak season in the Chinese New Year 2019; (b) did not have any hidden problems (including structural problems); (c) was suitable for the purpose of running a high-end Chinese restaurant; (d) would be managed by Hanison Management, being in the same way as my previous business dealings I had with Paul Yip and Matthew Chow in Hart Avenue and The Cameron (the “Trio's Representations”).”[20]

(8) “On 21 September 2018, a meeting was held amongst Matthew Chow, Paul Yip and [Hiew] in Pacific Coffee, coffee shop at Port 33, San Po Kong. The meeting was to further discuss the rental arrangement of the Property. During the meeting, [Hiew] specifically asked Matthew Chow whether the Property had any problems which made it unable to be rented out for a long time since its completion. In response, Matthew Chow represented to [Hiew] that the Property did not have any problems. Such reference to “any problems” implied structural, operational and/ or licensing problems (“Matthew Chow's Representation”). [Hiew] further asked if the Property was suitable for running food and beverage business and whether there would be any problem in applying for the necessary licence for the said purpose. Paul Yip reconfirmed that the Property was suitable for running food and beverage business and that there would be no problem with the food and beverage licence if it was so applied (“Paul Yip's 2^nd Representation”).”[21]

(9) “A further meeting was held amongst Matthew Chow, Paul Yip and [Hiew] around October 2018 in Dragon King Restaurant at Mikiki, San Po Kong. During the meeting, Paul Yip’s 1^st Representation, Paul Yip’s 2^nd Representation, Matthew Chow's Representation and the Trio’s Representation were repeated.”[22]

(10) On 14 November 2018, Hiew caused Kaiser to enter into the Lease Agreement, which also contained the Guarantee given by Hiew. Hiew signed the Lease Agreement because he was induced by and/or in reliance on Paul Yip’s 1^st Representation, Paul Yip’s 2^nd representation, Matthew Chow’s Representation, and the Trio’s Representations.

(11) After taking possession of the Property, Hiew discovered the various problems, including the following:

(a) The Staircases in the plan attached to the Lease Agreement had a discrepancy with the approved building plan. The unauthorised Staircases might jeopardize Hiew’s licensing and insurance applications and create potential dangers to users of the Staircases.

(b) The manager of the Property was not HPML, but was Salient. Salient was very uncooperative when Hiew was renovating and operating the restaurant in the Property. At first, Hiew was under the impression that Salient was a subsidiary of HPML. “It was until February 2019 when Salient wrote to Kaiser stating that Salient was the manager that [Hiew] finally realised that [HPML] did not play a role in the management of the Restaurant at all.”[23]

(c) “Between April 2019 and throughout the summer of 2019, as the air-conditioning of the Property failed to function properly, the said Property had very high temperature of over 30 degree Celsius. This made the Property unfit for the operation as a high-end Chinese restaurant. Numerous verbal complaints were received from customers.”[24]

(12) As a result of Bontex’s breaches of the Lease Agreement and the misrepresentations, Hiew suffered loss and damage, including renovation costs incurred on the Property and the operational costs of the Restaurant. Further Bontex had overcharged Kaiser utility charges in the amount of HK$1,276.11.

43.In my judgment, Hiew is an untruthful and unreliable witness. His evidence is inherently improbable on various material aspects and contradicted by contemporaneous documents. Some matters mentioned by him for the first time under cross-examination are clearly matters invented by him in the witness box with no truth therein.

44.I am of the view that Hiew’s evidence on the alleged representations is untrue.

(1) According to Hiew, all the alleged representations were made to him orally. All the matters in the alleged representations were important matters and would affect his decision on whether to cause Kaiser to rent the Property or not. However, none of the alleged representations has been recorded in writing. In all the emails and all the instant communication messages disclosed in these proceedings, there is no record and no indication that any of the alleged representations had been made to Hiew. In my view, if the alleged representations had indeed been made to Hiew and Hiew regarded these as important matters, Hiew would have mentioned the same in the electronic communications with at least some of the Individuals. Further or alternatively, Hiew would have made some written records of these alleged representations. Bearing in mind the principle as set out in [23] above, in view of the absence of any written record in support of the alleged representations, the existence of the alleged representations is extremely doubtful.

(2) Paul Yip’s 1^st Representation

(a) In [16] of Hiew’s witness statement, Hiew said that Paul Yip’s 1^st Representation was made to him by Paul Yip orally by phone and in person between April and June 2018. Hiew said that despite the lapse of time, he could remember the key points.

(b) As to the details of the alleged making of this representation to him by Paul Yip, as revealed in the cross-examination, Hiew in fact could not remember the details.

“問： Okay。根據你嘅證人陳述書，你就話喺4 月至6 月間，Paul Yip 係有同你電話溝通喇？

答：唔。

問： 有親身見面㗎，係咪呀？

答： 我唔係好記得一次定兩次，我記得好似一次喥，先見過一次。”[25] (Emphasis added)

“問：唔係，而家講緊Paul 先。

答：Paul 先，okay，好，好，好。

問：4 月至6 月，你嘅證供係咁講，證人供詞。

答：係。

問：係得Paul 嘅啫？

答：唔。

問：你define 咗嗰個就係Paul 嘅first representation？

答：係。

問：Okay。你嘅講法係Paul 喺嗰段期間講咗幾多次咁樣嘅陳述？

答：講過兩次。

問：兩次，而家你記得嘅？

答：大約兩次喥，因為我兩次都問過--兩次見面都見過，同佢講問--喺電話問過一次同埋見面問一次。

問：而家你嘅講法就記得喇？

答：係喇。

問：但係當其時嘅證人供詞就冇寫低喇，同唔同意？

答：同意。”[26] (Emphasis added)

As to between April and June 2018, (i) whether Hiew met Paul Yip once or twice; (ii) Paul Yip made the alleged representation to Hiew for how many times, Hiew could not give the exact details. This shows the unreliability of Hiew’s evidence concerning Paul Yip’s 1^st Representation, which was allegedly made by Paul Yip to him at a time more than 3 years before Hiew filed his pleadings in these proceedings.

(c) Under cross-examination, Hiew said that the first time Paul Yip contacted him to talk about the Property was a phone conversation. Thereafter, all the communications between him and Paul Yip were shown in the whatsapp exchanges between them.

“答：我記得第一次係我喺杭州返嚟嗰陣時，佢啱啱落機嗰陣時畀個電話我，咁嗰陣時我做緊個project 喺上面，咁我記得第一次就係咁樣。

問：Okay。

答：之後就嗰啲喺我嗰個WhatsApp 度都反映晒我哋同佢溝通嘅嘢。”[27]

As said in the above, there is no record and no indication of any alleged representation in the electronic communications disclosed in these proceedings. I treat the answer highlighted in the above as an admission by Hiew that all the exchanges between him and Paul Yip concerning the Property are captured in the whatsapp messages exchanged between them. The absence of any record or indication concerning Paul Yip’s 1^st Representation indicates that the alleged representation is untrue.

(3) The Trio’s Representations

(a) Regarding the Trio’s Representations, Hiew alleged that the representations set out in [10(2)(b)], [10(2)(c)] and [10(2)(d)] above are false.

(b) There is no dispute that in the meeting on 11 September 2018, Hiew gave a written proposal to Stewart Wong, Matthew Chow and Paul Yip. In the written proposal, Hiew proposed to operate a high-end Chinese restaurant at the Property.

(c) Concerning the representations alleged in [10(2)(b)] and [10(2)(c)] above, Hiew’s evidence under cross-examination is as follows:

“問：就算跟你嘅講法，Paul 講過第一次，點解仲要問第二次呢？

答：係...

問：如果根據你咁信任佢嘅話？

答：喺電話度同喺見面會補問囉。

問：補問？

答：補問多次囉。

問：Okay。咁補問完，你信喇，應該？

答：我信㗎。

問：如果根據你講法？

答：我信佢㗎。

問：咁去到9 月11 號，點解又問多次呢？

答：因為Matthew Chow 囉，佢出現囉。

問：佢出現就要問多次，點解？

答：係呀，因為佢senior 啲吖嘛。

問：你嗰陣時，根據你講法係點問呢？

答：「喂， Matthew，呢單嘢有冇咩嘢問題導致到我哋睇唔到嘅會影響我哋個餐廳呀？」咁樣。

問：呢個就係你嘅講法就係Matthew 答你嘅？

答：唔係，我問佢嘅。

問：你問佢，跟住呢？

答：佢話「冇喎」。

問：Okay。呢個就Matthew 答你？

答：係呀。

問：Stewart 同埋--Stewart Wong 同埋Paul Yip 就冇答你，係咪？

答：冇。”[28] (Emphasis added)

“問：我個問題就係話，根據你嘅講法，已經好信任Matthew 喇，即係我當你頭先講嘅證供，9 月11 號，因為見到Matthew 再問多次，佢又再答咗你喇，根據你講法？

答：係喇，reaffirm 啫。

問：點解需要reaffirm 啫，你唔信佢咩？

答：咁我都係有權可以問多次㗎嘛，係咪呀？

問：有權，但我嘅問題就係問，你唔信佢咩，點解要問多次呀？

答：我想問多次，當時。

問：有咩嘢原因要問多次？

答：冇咩嘢特別原因，想問多次。

問：咁咪唔係好合理囉？

答：有話合理唔合理嘅咩，傾偈？

問：我向你指出，根本就冇呢一個對話，你同唔同意？

答：唔同意。”[29]

(d) According to Hiew, he believed what Paul Yip repeatedly told him in Paul Yip’s 1^st Representation. However, he needed to ask Matthew Chow in the meeting on 11 September 2018 for an oral confirmation. In my view, Hiew’s evidence is inherently improbable. Had Hiew really regarded that the representations alleged in [10(2)(b)] and [10(2)(c)] above were really important, being an experienced businessman and an educated professional, he would have had requested a written confirmation from Bontex’s representatives, or would have had recorded the oral confirmation given in the meeting in writing. In the absence of any written record of the alleged representations, the inherent probability is that these alleged representations had not been made in the meeting.

(e) Regarding the representation alleged in [10(2)(d)] above, the documentary evidence shows that (i) on 8 November 2018 (ie before Kaiser entering into the Lease Agreement and before Hiew giving the Guarantee), Paul Yip through whatsapp sent the Guide to Hiew, in which it has been clearly set out that the manager of the building was Salient; (ii) on 20 November 2018, Paul Yip asked Hiew to write a cheque to Salient and send the same to Salient to pay some vetting fee; (iii) on 27 November 2018, Paul Yip asked Hiew to send the cheque to Salient. Hiew was referred to these documents under cross-examination. Hiew’s evidence concerning these documents is as follows:

“問： Okay。所以你簽嘅時候，你會有睇過[the Guide]喇，點都？

答： 係，after 個租約。”[30]

“問： ...就係話11 月8 號嗰陣時候，你未睇[the Guide]。

答： Okay。

問： 咁你最遲11 月20 號都會知喇？

答： 11 月20 號，係。

問： 甚至乎...

答：我認同，我知道係Salient 喇。

問：Okay。

答：我不嬲都冇話唔認同係Salient 喇。

問：Okay。所以你不嬲都知嘅？

答：知，係Salient，但唔知佢唔係Hanison 控制。

問：唔緊要。但係你明知道係Salient，你嗰陣時都冇提出話「喂，同我嘅理解唔啱喎，我要...」

答：我之前係有問過佢哋話「係咪一樣呀，under 佢哋control？」佢話係吖嘛。”[31] (Emphasis added)

(f) Facing these questions, Hiew alleged that he had asked them (佢哋) and he (佢) confirmed that Salient was under their control (“the alleged episode”). The alleged episode is something entirely new mentioned by Hiew under cross-examination for the first time. The alleged episode, including the alleged confirmation given by the Individuals (or by some of them) that Salient was in the Hanison Group, must be a material matter in Hiew’s case. However, the alleged confirmation has never been pleaded in Hiew’s pleadings and has not been mentioned in Hiew’s witness statements. In my judgment, the alleged episode is untrue, which was made up by Hiew when he was giving evidence in the witness box.

(4) Matthew Chow’s Representation

(a) According to Hiew, Matthew Chow’s Representation was made in a meeting on 21 September 2018 in a coffee shop in San Po Kong. When Hiew was asked questions concerning this meeting under cross-examination, Hiew said that he could not answer the questions because Bontex had applied to delete some contents from his witness statement. Plainly, Hiew was evading the questions. The relevant exchanges are as follows:

“問：去到2018 年嘅9 月21 號喇，咁你、Matthew Chow 同埋Paul Yip 亦都係有會面過喇？

答：係。

問：今次就Matthew、Paul Yip 又係--即係同樣你見過好幾次喇，已經就住呢件事？

答：係，係。

問：咁冇理由你係會再需要問佢哋有冇任何潛在嘅問題吖，嗰啲嘢？

答：因為刪除咗嘅嘢，所以我答唔到你。

問：咩嘢叫「刪除咗嘅嘢」？

答：你申請咗刪除咗嘅嘢，我答唔到你。

問：我冇刪除嗰部分。

答：你申請咗中間刪除咗嘅問題。”[32]

“官：證人邱先生...

答：係，係。

官： ...我諗我唔想誤解你嘅證供喇。

答：係。

官：你睇番你D 文件冊226 頁喇，而家李大律師問緊嘅事情係2018 年9 月21 號吖嘛？

答：係。

官：咁應該係你226 頁。

答： 226，係。

官：第25 段嘅事情吖嘛？

答：唔，咁可能你提一提喇。

官：咁你25 段嘅內容冇任何部分被刪除㗎喎？

答：我講係裡面講嘅嘢係--哦，佢問我點解要問咁耐吖嘛，傾咁耐偈吖嘛，話仲要傾吖嘛，喺呢個會度。

官：你話裡面有啲內容刪除咗，你講--唔可以講，但整個25 段，我見唔到有任何內容被刪除咗？

答：我--可能我表達錯咗...”[33]

(b) Hiew was asked why he would think that it would be necessary for him to ask Matthew Chow again whether the Property had any problems in the meeting on 21 September 2018, given that Paul Yip’s 1^st Representation and the Trio’s Representations had been made to him and he believed those representations. Hiew answered that he wanted to seek a double-confirmation. For the reasons set out in [44(3)(d)] above, I regard this answer as inherently improbable.

(5) Paul Yip’s 2^nd Representation

For the reasons set out in the subparagraph above, I do not accept Hiew’s evidence concerning the alleged Paul Yip’s 2^nd Representation made in the meeting on 21 September 2018.

(6) Meeting in around October 2018

(a) It is Hiew’s case that there was a meeting in the Dragon King Restaurant in around October 2018 attended by Matthew Chow, Paul Yip and Hiew. In that meeting, Paul Yip’s 1^st Representation, Paul Yip’s 2^nd Representation, Matthew Chow’s Representation, and the Trio’s Representations were repeated.

(b) During cross-examination, Mr Li put to Hiew that there was no such meeting in the Dragon King Restaurant in around October 2018, and the only meeting in that restaurant was the 2019 Dragon King Meeting. Hiew adamantly denied and said that there were whatsapp messages in support of the existence of his claim that there was a meeting in the Dragon King Restaurant in around October 2018. However, Hiew was unable to identify the relevant whatsapp messages under cross-examination.

(c) After the cross-examination, Hiew was given time to find out the documents which were, according to him, in the trial bundles and would support his answers given in cross-examination. Hiew was reminded that he should refer to these documents in his re-examination.

(d) In his re-examination, Hiew did not mention any document showing the existence of the meeting alleged by him. Hiew also did not give any evidence concerning this alleged meeting in his re-examination.

(e) Surprisingly, in his written final submissions, Hiew made a submission that the following exchanges in the whatsapp exchanges between Paul Yip and him shows the existence of this alleged meeting:

“13/10/2018, 12:56 - Paul Yip: Hello, what time will u go on Monday?

13/10/2018, 13:20 - @: at 3pm

13/10/2018, 13:30 - Paul Yip: Ok, see if I can join

13/10/2018, 13:35 - @: great thanks

15/10/2018, 15:05 - Paul Yip: Have u arrived?

15/10/2018, 15: 18 - @: yes just arrived

15/10/2018, 15: 18 - Paul Yip: Hello I'm at 3/F”

15/10/2018, 15:18 - @: ok”

(f) This submission must be rejected.

(i) There is no evidence from Hiew in support of this submission. Hiew was given an opportunity to find out the documents in the trial bundles showing the existence of this alleged meeting. Hiew did not identify any such document in the trial bundle. Hiew’s final submissions can only base upon evidence in the trial, and cannot base upon any speculation or imagination.

(ii) Further or alternatively, by merely looking at the whatsapp exchanges identified in Hiew’s written final submissions, one would not be able to know whether those exchanges concern a meeting in the Dragon King Restaurant. To state the obvious, neither the name of restaurant nor the name of the shopping mall appeared in the whatsapp exchanges. Further, there is no evidence showing that the Dragon King restaurant was at the 3/F of the Mikiki shopping mall in October 2018.

(g) In my judgment, there is no reliable evidence proving the alleged meeting in around October 2018.

45.Regarding the Subject Staircase, for the reasons set out in subsection C5 below, I am of the view that there is no satisfactory evidence showing that the Subject Staircase is an unauthorised building structure. For the sake of discussion, even assuming that the Subject Staircase is an unauthorised building structure, that matter did not render Kaiser being unable to enjoy quiet enjoyment of the Property.

46.Ds rely upon the following two points in support of the contention that Kaiser had been deprived of the quiet enjoyment of the Property by reason of the unauthorised Subject Staircase:

(1) There had been various accidents happened at the Subject Staircase.

(2) As a result of the Subject Staircase, Kaiser was unable to obtain the renewal of insurance for the running of a Chinese restaurant in November 2019.

None of these points is supported by the evidence.

47.As to the alleged breach of the quiet enjoyment granted to Kaiser by reason of the alleged accidents at the Subject Staircase, there is no reliable evidence in support of the contention.

(1) The evidence in support of the alleged accidents at the Subject Staircase is in SZ Wong’s witness statement. As said in [17] above, SZ Wong did not attend the trial to give evidence and the contents in his witness statement are not evidence in this trial.

(2) There is nothing in Hiew’s witness statement and supplemental witness statement touching upon the alleged accidents at the Subject Staircase. I note that under cross-examination, it was put to Hiew that there had not been any accident at the Subject Staircase, and Hiew denied. However, the fact remains that Hiew did not say that he had witnessed any accident at the Subject Staircase. In any event, for the reasons set out in this judgment, I do not regard Hiew as a reliable witness.

(3) Applying common and commercial sense, if there was any accident at the Subject Staircase, that must be a serious matter and there should be some written documents recording the accident, for example, emails or letters to the manager of the building reporting the matter and urging the manager to take some remedial actions. The absence of any such written record indicates that the existence of the alleged accidents at the Subject Staircase is something inherently improbable.

(4) Without prejudice to all the above, even if there had been some accidents at the Subject Staircase, there is no evidence showing that those accidents were caused by the unauthorised alterations (assuming that there had been such alterations) of the Subject Staircase.

48.As to the alleged breach of the quiet enjoyment granted to Kaiser by reason of the alleged non-renewal of the insurance policy caused by the Subject Staircase, there is also no reliable evidence in support of the contention.

(1) The documentary evidence shows that:

(a) On 14 January 2020, someone on behalf of Hiew emailed some information and a surveyor’s report dated 23 December 2019 (“the Surveyor’s Report, which (according to Hiew) confirmed that the Subject Staircase was unauthorised) to Alice Yu of OCBC Wing Hang Insurance Brokers Ltd (“OCBC Wing Hang”) to ask for a quotation.

(b) On the same date, Alice Yu replied and said that they would pass the Surveyor’s Report to the insurance company for underwriting.

(c) On 22 January 2020, Alice Yu wrote a further email and informed Hiew that the insurance company, Asia Insurance, would need more time to get approval from the head office.

(2) Under cross-examination, Hiew was referred to the aforesaid emails. Mr Li put to Hiew that as shown in those emails, the contention that Kaiser could not obtain renewal of the insurance policy in November 2019 by reason of the alleged unauthorised Subject Staircase could not be true. In my view, Hiew could not give any satisfactory answer to this challenge.

(3) I agree that in the light of the emails, Hiew’s evidence concerning the alleged non-renewal of the insurance policy in November 2019 by reason of the alleged unauthorised Subject Staircase is simply a pack of lies.

49.Hiew relied upon a letter dated 18 January 2024 issued by New Dorbo Insurance Brokers Ltd (“New Dorbo”) to Kaiser in support of Ds’ contention that since the Subject Staircase is an unauthorised building structure, Kaiser was unable to obtain renewal of insurance policy. The contents of that letter are as follows:

“Re: [the Property]

We write to inform you that we are unable to provide any quotation for property and liability insurance at the above premises. According to the survey report you submitted stating that there is a staircase not approved by the Building Department, we would like to draw your attention that illegal/and/or unauthorised structure cannot be covered by insurance.”

50.In my view, no weight could be attached to the New Dorbo’s letter dated 18 January 2024.

(1) The emails mentioned in [48(1)] above show that the communication concerning renewal of insurance policy in January 2020 was between Hiew on the one hand and Alice Yu of OCBC Wing Hang on the other hand. Hiew has not informed this Court what was the final answer from OCBC Wing Hang concerning the renewal of the insurance policy.

(2) The New Dorbo’s letter dated 18 January 2024 shows that there must be communication between Hiew and New Dorbo before that letter. However, as to the communication between Hiew and New Dorbo before the letter dated 18 January 2024, no document recording such communication has been produced. Further, the contents of the survey report submitted by Hiew to New Dorbo are unknown. In the circumstances, the context of New Dorbo’s letter dated 18 January 2024 cannot be ascertained.

(3) Further, it is an undisputed fact that possession of the Property was returned to Bontex in December 2019. There is no evidence explaining why after more than 4 years, New Dorbo would issue the letter dated 18 January 2024 to Kaiser.

(4) With all the aforesaid unknowns, it would not be prudent to attach weight to New Dorbo’s letter dated 18 January 2024.

51.As shown in the above, Hiew’s evidence is untrue on various crucial issues in this trial. Save and except the matters agreed or not disputed by Bontex and the Individuals, I reject Hiew’s evidence in its entirety.

C5. Expert witness – Yu

52.On 6 February 2023, Master Phoebe Man granted leave that expert evidence on the following issue (“the expert issue”) be adduced at the trial:

“Whether the staircase connecting the 1/F and 2/F of [AKVO Hotel] … were unauthorised building structures.”

53.Yu is the single joint expert appointed by the Court. Yu has prepared an expert report dated 13 September 2023 (“the Expert Report”) on the expert issue. Yu has also attended the trial to answer questions raised by the parties.

54.Having read Yu’s qualifications as stated in the Expert Report, I accept that Yu has the requisite expertise to give expert evidence on the expert issue.

55.In the Expert Report, Yu has given the following opinion:

(1) The Occupation Permit for AKVO Hotel (“the OP”) was issued by the Building Authority on 13 December 2017.

(2) The licence for AKVO Hotel (“the Licence”) was granted by the Hotel and Guesthouse Accommodation Authority on 18 May 2018.

(3) The layout of the Subject Staircase at the scene is different from the layout of the same in the approved building plans.

(4) The following scenarios are possible:

(a) Scenario 1: Building works were carried out after the OP to modify the Subject Staircase but before the Licence. Scenario 1 can be subdivided into the following scenarios:

(i) Scenario 1A: the building works involved adding onto the existing stair floor slab steel frames and stone finishes to modify the Subject Staircase;

(ii) Scenario 1B: the building works involved the removal of the existing stair floor slab and the construction of a new stair floor slab;

(iii) Scenario 1C: the building works involved other methods of construction, the complexity of which was between that of Scenario 1A and Scenario 1B;

(b) Scenario 2: No building works were carried out after the OP to modify the Subject Staircase.

(5) For Scenario 1A, the building works involved adding steel frames with stone finishes onto the existing stair floor slab. Assuming that no alteration to the existing stair floor slab was necessary, and no screeding was laid, the building works did not involve the structure of the building and they were not minor works, the building works might be carried out without the approval and consent of the Building Authority by virtue of s. 41(3) of the Buildings Ordinance. The alternations would not be unauthorised building works.

(6) For Scenario 1B, the building works involved the structure of the building and were not exempted works and approval and consent by the Building Authority was required prior to the carrying out of the works. Since there is no record of such approval, the building works would be unauthorised. However, for Scenario 1B, the building works would have been done at a prominent location visible from outside the building site, and they would have needed to be carried out over a few months (for demolition and concreting). Since a simpler method complying with the Buildings Ordinance is available (like the one described in Scenario 1A above), Scenario 1B is unlikely.

(7) For the same reason, Scenario 1C is also unlikely.

(8) In Scenario 2, the layout of the Subject Staircase has not been altered at any time. The Buildings Department might have accepted that the deviations from the approved building plans as “positional deviations”, and notwithstanding the deviations, the Buildings Department still considered that it would be appropriate to issue the OP. In this scenario, there would be no unauthorised building work.

(9) If Scenario 1A or Scenario 2 is the reality, the Subject Staircase would not be an unauthorised building structure.

56.Having considered the Expert Report and Yu’s oral evidence, I am of the view that Yu has analysed the expert issue fairly. I agree with Yu that Scenarios 1B, 1C and 2 are unlikely. However, I note that in Scenarios 1A and 2, some assumptions are involved. There is no evidence showing whether these assumptions are indeed the truth or not. In my view, there is no sufficient evidence proving which scenario described in the Expert Report is the true scenario.

57.As to whether the Subject Staircase is an unauthorised building structure, I have also considered the following documents:

(1) In a letter from the Buildings Department to Bontex dated 8 October 2025[34], the Buildings Department said that “Staircase on G/F facing Hiller Street was altered”, and was regarded as an unauthorised building work. On the face of the letter, the staircase mentioned in the letter is not the Subject Staircase (which is a staircase connecting the 1/F and the 2/F of the Property). In his oral evidence, Yu said that the staircase in the letter would not be the Subject Staircase. If the Buildings Department intended to specify or to include the Subject Staircase in the description, the Buildings Department would say “the staircase on 1/F” or “the entire staircase”. I accept Yu’s evidence on this point.

(2) In a letter from the Home Affairs Department to Hiew dated 27 August 2025, the Home Affairs Department said:

“3. … it was noted that the staircase (ST-3) facing Hiller Street/Jervois Street from G/F to first landing deviated from the general building plans approved by the Buildings Department. …” (Emphasis added)

Plainly, the staircase mentioned in the letter is a staircase connecting the G/F and 1/F of AKVO Hotel, not the Subject Staircase.

58.As a whole, in my judgment, as to whether the Subject Staircase is an unauthorised building structure, I am of the view that there is no conclusive evidence on this issue. The burden of proving the Subject Staircase being an unauthorised building structure is on Ds. Ds have failed to discharge that burden.

D. DISCUSSION

D1. Bontex’s claim against Ds

D1.1 Liability

59.The facts in Bontex’s case as summarised in [9] above are supported by indisputable evidence. Unless Ds can establish a valid defence to Bontex’s claim, Ds would be liable to Bontex. As set out in [10] above, the defences relied upon by Ds are (a) the alleged misrepresentations made by Paul Yip, Matthew Chow and Stewart Wong to Hiew; and (b) breach of the quiet enjoyment granted to Kaiser in the Lease Agreement by reason of the Subject Staircase, which allegedly is an unauthorised building structure. In my judgment, Ds have failed to prove these defences by evidence. Further or alternatively, these defences are not established as a matter of law.

60.As to the alleged misrepresentations:

(1) Based upon the evidence accepted by this Court, I reject Ds’ factual case on the alleged misrepresentations. In my judgment, Paul Yip, Matthew Chow and Stewart Wong did not make the representations to Hiew as alleged in Ds’ case. As a result of this factual finding, Ds’ case based upon the alleged misrepresentations must fail.

(2) Since Ds’ factual case based upon the alleged misrepresentations is rejected, whether there was any malfunctioning of the air-conditioners serving the Property as alleged by Ds is neither here nor there. Without prejudice to the aforesaid, according to Clause 3.01(c)(iii) of the Guide given by Bontex to Ds, it is Kaiser’s obligation (the obligation was admitted by Hiew under cross-examination) to submit a detailed air-conditioning layout plan to Bontex. Further, according to Clause 4.11.3 of the Lease Agreement, Bontex shall not under any circumstances be liable to Kaiser for any defect in or break down of the air-conditioning system. Thus, the alleged malfunctioning of the air-conditioners, even if true, cannot help Ds’ case in any event.

(3) Further, by reason of Clause 4.16 of the Lease Agreement, Ds’ case based upon the alleged misrepresentations cannot succeed in any event.

(a) Clause 4.16 of the Lease Agreement is as follows:

“Clause 4.16 No Warranties

This Agreement supersedes all previous agreements whether oral or in writing express or implied between the parties hereto and sets out in full and entire agreement reached between the parties hereto. Without limiting the generality of the foregoing, no warranties or representations whatsoever relating to the said premises or its state condition age area or the user thereof or the obligations of the Landlord whether express or implied have been made by the Landlord or by any third party on his behalf. If any warranty or representation express or implied has been made, the same is withdraw[35] or deemed to have been withdrawn immediately before the execution of this Agreement.” (Emphasis added)

(b) By the operation of this clause, even if any representation relating to the Property was made to Hiew (who was acting on behalf of Kaiser) in the negotiation stage, the representation was immediately withdrawn before the execution of the Lease Agreement

61.In Hiew’s written reply submissions, Hiew tries to rely upon the Control of Exemption Clauses Ordinance (“COECO”) and argues that Bontex cannot rely upon Clause 4.16 of the Lease Agreement. I reject this argument.

(1) Hiew has not explained he is relying upon which section(s) in the COECO, and why that section(s) is/are applicable in this case. In particular, Hiew has not explained why his argument would not be prevented by the exception in [1(b)] of Schedule 1 to the COECO, ie ss.7, 8 and 9 of the Ordinance do not apply to any contract so far as it relates to the creation of an interest in land.

(2) Mr Li has helpfully referred me to Yang Dandan v Hong Kong Resort Company Limited[36], in which DHCJ Kent Yee held that a contractual clause (which is similar to Clause 4.16 of the Lease Agreement in the present case) is not a clause limiting or excluding liability. The clause only allows written terms to supersede all previous written and oral agreements and representations. Mr Li relies upon this case and submits that Clause 4.16 is not an exemption clause and would not be subject to the control of COECO in any way. I agree and accept Mr Li’s submission.

(3) In any event, Ds have not raised COECO in their pleadings. Had the point been raised in their pleadings, Bontex would have had an opportunity to plead why Clause 4.16 of the Lease Agreement would satisfy the “reasonableness” test in COECO in any way and to adduce evidence to prove the contention. While Ds have not raised COECO in their pleadings, Hiew is not entitled to advance any argument based upon COECO in his final submissions.

62.In my judgment, there is no reason why Ds’ case based upon the alleged misrepresentations would not be barred by Clause 4.16 of the Lease Agreement.

63.As to the alleged breach of the quiet enjoyment granted to Kaiser, as stated in the above, there is no reliable evidence showing that there has been any accident at the Subject Staircase. There is also no reliable evidence showing that Kaiser was unable to obtain any renewal of insurance policy because of the Subject Staircase. That would be the end of Ds’ case based upon the alleged breach of the quiet enjoyment granted to Kaiser.

64.The above would be sufficient for disposing the liability issue in the original claim. It would not be necessary me to address the other points raised by Bontex in response to Ds’ case.

65.As a result of the above, Kaiser has breached the Lease Agreement as claimed by Bontex. By reason of the Guarantee, Hiew is liable to Bontex to the same extent.

D1.2 Quantum

66.As to the quantum claimed by Bontex, Mr Li has done a detailed calculation in his written final submissions. After taking back the Property from Kaiser, Bontex has leased the Property to some new tenants and has received some rental incomes from the new tenants from 15 February 2020 to 14 November 2021. Bontex has given credits to Ds corresponding to these rental incomes. Taking all the items claimed by Bontex and the rental incomes received from the new tenants into account, the total amount owed by Ds to Bontex as at 14 November 2021 is HK$5,160,308.26. Hiew does not dispute the correctness of this sum.

67.Mr Li submits that based upon Clause 4.3 of the Lease Agreement, Bontex is entitled to claim interest at the rate of 2% above the best lending rate offered by HSBC on the arrears of rent, rates and electricity charges for the period from their respective date of default to the date of the judgment. To simplify the calculation, Mr Li has helpful proposed that there could be pre-judgment interest on the whole sum as specified in the paragraph above at the rate of 2% over the HSBC’s best lending rate from 14 November 2021 until the date of the judgment. In my view, this is a fair and sensible approach, and I would adopt the same.

D2. Any counterclaim made by Hiew himself?

68.In the prayer at the end of the Counterclaim contained in the ADC filed by Ds, it is clear that the Counterclaim is made by Kaiser alone. In my judgment, there is no room to argue that Hiew himself has put forward a counterclaim personally, which is independent of the counterclaim made by Kaiser.

69.As said in the above, Kaiser’s counterclaim has already been struck out in the pre-trial review on 19 June 2025 by reason of Kaiser’s absence in the hearing. Save the question of costs, it would not be necessary for me to make a further order concerning Kaiser’s counterclaim in this judgment.

E. DISPOSITION

70.Bontex succeeds in its claim against Ds. There be an order that Ds do pay HK$5,160,308.26 to Bontex, together with interest at the rate of 2% over the HSBC’s best lending rate from 14 November 2021 until the date of this judgment, and thereafter at the judgment rate until full payment of the same.

71.As to costs, I have considered the following:

(1) Generally, costs should follow the event. There is no dispute that the general rule should apply.

(2) The matters raised by Ds in their defence to Bontex’s claim are also relied upon by Kaiser in support of its counterclaim.

(3) Bontex and the Individuals are represented by the same legal team in these proceedings. Mr Li accepts that a costs order in favour of Bontex would suffice.

In view of the above, I make a costs order nisi that costs of these proceedings be paid by Ds to Bontex, to be taxed if not agreed. Unless there is an application for variation of the costs order nisi made by an inter partes summons within 14 days after the handing down of this judgment, the costs order nisi shall become absolute without a further order.

72.I thank Mr Li for the assistance rendered to the Court.

Mr Kevin Li, instructed by Cheung, Yeung & Lee, Solicitors, for the Plaintiff (by Original Action) and the 1^st to 4^th Defendants (by Counterclaim)

The 1^st Defendant (by Original Action), also the 1^st Plaintiff (by Counterclaim), was not represented and did not appear

The 2^nd Defendant (by Original Action), also the 2^nd Plaintiff (by Counterclaim), appeared in person