WAI KAM CHIU AND ANOTHER v. CHIM SIU FAN

CACV 376/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 376 OF 2007

(ON APPEAL FROM DISTRICT COURT NO. DCCJ 830 OF 2006)

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J U D G M E N T

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Hon Cheung JA :

1. The plaintiffs claimed $179,855 against the defendant.  After a trial by Deputy District Judge Ronald Cheung which lasted nine days, the plaintiffs’ case was dismissed.  Pursuant to leave granted by the Judge, the plaintiffs appeal against the judgment. 

The plaintiffs’ case

2. The plaintiffs are the owners of the premises known as No. 15, South Wall Road, Ground Floor, Kowloon City, Kowloon (‘the premises’).  By a provisional tenancy agreement dated 29 November 2005 the plaintiffs let the premises to the defendant for a term of two years from 1 January 2006 to 31 December 2007 at the rent of $26,000 per month inclusive of rates and management fees.  The defendant had an option to renew the tenancy upon its expiration. 

Terms of the provisional tenancy agreement

3. The following were the relevant terms of the provisional tenancy agreement :

Clause 1

The parties agreed to enter into a formal tenancy agreement on or before 1 December 2005.

Clause 5

The rental deposit shall be $52,000 and part of it in the sum of $26,000 shall be paid by the defendant upon signing of the provisional tenancy agreement.

Clause 7

Upon signing of the formal tenancy agreement the defendant shall pay the balance of the rental deposit of $26,000 and the rental for the first month at $26,000. 

Clause 10

In consideration of the service rendered by Wallmate International Limited (‘Wallmate’), the estate agent (‘the Agent’) ‘concluding the tenancy of the said premises; the Agent shall after the agreement be entitled to receive $13,000 from the Landlord’. 

Clause 11

‘If for any reasons either the Landlord or the Tenant fails to complete the deal in the manner herein contained the defaulting party shall compensate at once the Agent HK$13,000 as liquidated damages’.

Clause 12(a)

The parties agreed to appoint Kam and Fan, Solicitors, to be their solicitors and they agreed to bear the cost of the solicitors for the preparation and execution of the formal tenancy agreement and stamp duty in equal shares. 

Clause 13(2)

Rent free renovation period of one month from 1 December 2005 to 31 December 2005 was granted to the defendant.

Clause 13(3)

The plaintiffs ‘shall remove the relevant unauthorized structure in light well area of the unit to facilitate the application of a food and beverage licence, but the tenant shall be responsible for the application for the relevant licence.  If because of the unauthorized structure in the light well area, the food and beverage licence cannot be obtained, then both parties agree to cancel the tenancy agreement, and the tenant shall be entitled to the refund of the deposit’.

The cheque

4. Pursuant to the provisional tenancy agreement the defendant gave a cheque of $25,000 to the 1st plaintiff.  It was written in the provisional tenancy agreement that in relation to this cheque ‘支票過妥賬始作實’(Translation: ‘Receipt of payment confirmed only upon clearance of cheque’).  The provisional tenancy agreement further recorded that ‘Cheque HK$25,000.  Still owing cash HK$1,000.  Total HK$26,000’.

The repudiation

5. The plaintiffs claimed that the defendant had failed to attend the office of Kam and Fan to sign the formal tenancy agreement on or before 1 December 2005.  Further despite her failure to enter into the formal tenancy agreement, the defendant had entered the premises and caused certain electrical appliances, equipment and decorations of the premises to be demolished. 

6. The plaintiffs claimed that the defendant had repudiated the provisional tenancy agreement and the repudiation was accepted by them by the service of the writ. 

The damages

7. The plaintiffs’ claim of $179,855 was made up as follows :

1) $26,000 being the amount of the initial deposit;

2) HK$105,000 being damages caused to the electrical appliances, equipment and decorations of the property;

3) HK$46,855 which was made up as follows :

(1)	Legal costs incurred for the preparation of the formal tenancy agreement	HK$6,000.00
(2)	Loss of rent for the period from 01/01/2006 to 16/02/2006 at HK$26,000.00 per month	HK$40,857.00
(4)	Stamp Duty paid on the provisional tenancy agreement	HK$1,998.00

The defence

8. The defence was that the parties had at the time of the provisional tenancy agreement reached an oral agreement concerning the conditions which had to be fulfilled by the plaintiffs before the defendant was required to enter into the formal tenancy agreement.  The plaintiffs failed to fulfil these conditions and accordingly the defendant was not required to enter into the formal tenancy agreement.

9. The defendant was in the restaurant business.  She was the proprietor of five Thai restaurants in the Kowloon City area.  The Judge set out the evidence of the defendant on how the provisional tenancy agreement was signed

‘127.       (The defendant) saw an advertisement board displayed outside the subject premises advertising its availability for leasing.  The advertisement gave the telephone number of Wallmate.  She called and spoke to PW2 (i.e. the Agent in Wallmate) expressing her interest in viewing the subject premises.  An appointment was thus made.

128.          The next day she met PW2 at the subject premises.  That was the 1st viewing of the subject premises.  She could not remember the exact date but put it to be on a date between 10 to 20 November 2005 in relation to her 1st viewing of the subject premises.  The subject premises were vacant at the time.  She told PW2 that she intended to rent the subject premises to start a Thai restaurant.  She viewed the condition at the rear of the subject premises and noticed the presence of illegal structures there.  She indicated to PW2 that she would require the illegal structures to be removed.  She appreciated that the presence of illegal structures would adversely affect her prospect of obtaining a restaurant licence from the government authorities.  She informed PW2 that she would not rent the subject premises unless the illegal structures were removed.  She told PW2 to relate what she said to the 1st Plaintiff.  PW2 agreed to do so. …..

130.       There was a 2nd viewing of the subject premises.  The Defendant viewed the subject premises again the following day bringing with her a Mr. Mo who was in the trade of helping people to make applications for restaurant licences.  PW2 in their presence called the 1st Plaintiff informing the latter that unless the illegal structures were removed, the Defendant would not rent the subject premises.  After the telephone conversation, PW2 told the Defendant that the 1st Plaintiff would identify the illegal structures and have them removed.  The Defendant made an appointment with PW2 to attend the subject premises the following day for the purpose of taking a photograph of the illegal structures to be removed.  The Defendant told PW2 to show the photograph to the 1st Plaintiff to indicate to him the illegal structures that she wanted him to remove.

131.       There was a 3rd visit to the subject premises.  On the following day, the Defendant and PW2 met at the subject premises for the third time.  PW2 took the photograph.  The photograph taken by PW2 is not before the Court.  The Defendant said that the missing photograph depicted about the same things as shown in the photograph at B45 but she was in the photograph standing at a spot at the rear lane, outside the ground floor level rear external wall and pointing to the metal platform above.  The Defendant told PW2 to show the photograph to the 1st Plaintiff.  PW2 agreed to do so.  The Defendant also requested PW2 to make an appointment for her to meet the 1st Plaintiff at the subject premises in order that she might explain to the 1st Plaintiff what were the illegal structures that she would require him to remove.  PW2 did make the appointment with the 1st Plaintiff.

132.       There was a 4th visit to the subject premises.  PW2 arrived there first followed by the Defendant.  The 1st Plaintiff came later.  The three of them went to the rear of the subject premises.  The Defendant told the 1st Plaintiff what were the illegal structures that she would require him to remove.  The 1st Plaintiff said that he was prepared to have the illegal structures removed but he was also concerned that the Defendant might not rent the subject premises after the illegal structures were removed.  The Defendant told the 1st Plaintiff that she was sincere about the deal and that she would certainly rent the subject premises when the illegal structures were removed.  The 1st Plaintiff proposed that the Defendant should sign a Provisional Tenancy Agreement and pay a sum as earnest money.  The Defendant said that she was prepared to sign a Provisional Tenancy Agreement only if it was not to have contractual force.  It would be something to allay the 1st Plaintiff’s worry of the Defendant’s refusal to rent the subject premises.  The 1st Plaintiff indicated agreement.  The 1st Plaintiff then returned to the point about the earnest money.  The Defendant said that she was prepared to pay the 1st Plaintiff the earnest money but that the 1st Plaintiff had to ensure that all the illegal structures were removed before the signing of the Formal Tenancy Agreement.  The 1st Plaintiff indicated agreement.  The Defendant asked if the 1st Plaintiff would accept a post-dated cheque issued by a friend of hers towards payment of the earnest money.  The 1st Plaintiff indicated agreement.  The 1st Plaintiff said that the Formal Tenancy Agreement should be signed on 1 December 2005.  The Defendant asked if it was all right to have the cheque dated 1 December 2005.  The 1st Plaintiff indicated agreement.  The Defendant asked when she should sign the Provisional Tenancy Agreement and pay the earnest money.  The 1st Plaintiff made an appointment with the Defendant on 29 November 2005 for doing that.

133.       On 29 November 2005, the Defendant attended the office of the 1st Plaintiff with a view to sign the Provisional Tenancy Agreement.  The Defendant, the 1st Plaintiff and PW2 were present on that occasion.  There was a further discussion before the signing.  The Defendant said to the 1st Plaintiff and PW2 that the Provisional Tenancy Agreement was not to be binding as it was made only to show the 1st Plaintiff her sincerity in the deal so that the 1st Plaintiff may have peace of mind to proceed with the removal of the illegal structures (in the sense that the 1st Plaintiff did not have to worry that the Defendant would not rent the subject premises after the illegal structures were removed).  There was also a discussion concerning the rent free period.

134.       The Defendant said that she would be giving the 1st Plaintiff a sum as earnest money.  She would need to go to view the subject premises to verify that the illegal structures were in fact removed before she would inform the 1st Plaintiff that the cheque could be presented for payment.  The Plaintiff then wrote on the Provisional Tenancy Agreement the phrase “to be (a) real (deal) when (the) cheque is cleared （支票過妥始作實）”.  That was before the signing of the Provisional Tenancy Agreement.

135.       The Defendant also said that on that occasion she asked the 1st Plaintiff to inform her once the removal of the illegal structures was completed so that she could arrange funds to be put into the cheque account and have all the matters settled.  The 1st Plaintiff indicated agreement.

136.       It was in such circumstances that the parties signed the Provisional Tenancy Agreement.’

10. The defendant on 30 November and 1 December 2005 went to the premises and discovered that the demolition of the illegal structure had not commenced.  Hence on 1 December 2005 she informed the 1st plaintiff that she would not rent the premises and informed the 1st plaintiff not to cash the cheque.  This was accepted by the 1st plaintiff who agreed to cancel the provisional tenancy agreement.  Despite his promise, the 1st plaintiff still presented the cheque for payment.  The defendant further stated that as the plaintiffs had never given the keys of the premises to her, she had not carried out any demolition or decoration work in the premises. 

The plaintiffs’ denial

11. The plaintiffs denied that there was any such agreement to remove the illegal structures on or before 1 December 2005.  Further the defendant had never told the 1st plaintiff not to present the cheque for payment and the 1st plaintiff had never agreed with her about the mutual release of obligations under the provisional tenancy agreement.  He had employed a contractor to remove the illegal structures.  He also called the agent from Wallmate and the contractor to support the plaintiffs’ case.

Basis of the decision

12. The Judge held that the defendant in effect was relying on a collateral contract.  The collateral contract was that the provisional tenancy agreement would not become binding unless :

(1) the illegal structures in the premises were demolished by the 1st plaintiff before 1 December 2005;

(2) the plaintiff had informed the defendant of the completion of the demolition; and

(3) the defendant had given consent to the presentation of the cheque for payment. 

The finding

13. The Judge rejected the evidence of the 1st plaintiff and the agent and accepted the evidence of the defendant on the circumstances in which the provisional tenancy agreement was entered into by the parties and also on the subsequent events.

14. The Judge found that the defendant had established the collateral contract and

(1) the plaintiffs had not demolished the illegal structures in the premises on or before 1 December 2005;

(2) the defendant had not given consent to the plaintiffs to present the cheque; and

(3) the plaintiffs had not informed the defendant that the illegal structures had been demolished. 

15. In the circumstances the Judge held that the defendant was not required to enter into the formal tenancy agreement on 1 December 2005.

Procedural irregularity not pursued

16. When the plaintiffs applied for leave to appeal one of the grounds of appeal was that there was a material procedural irregularity in the trial in that the Judge had allowed the case to proceed on a different basis without granting the plaintiffs an adjournment to respond to it.  The alleged change was whether the defendants had properly pleaded and relied on collateral contract in the first place.  However this was not a point now pursued by the plaintiffs.  Instead the challenge is simply on whether the Judge was correct to find that collateral contract had been established in the present case.

Principles on collateral contract

17. The general rule is that parol evidence cannot be given to contradict the terms of a written agreement.  However an exception to this rule is collateral contract. 

18. Even though the parties intended to express the whole of their agreement in a particular document, extrinsic evidence may nevertheless be admitted to prove a contract or warranty collateral to that agreement.  The reason is that the parol agreement neither alters nor adds to the written one, but is an independent agreement.  Such evidence is certainly admissible in respect of a matter on which the written contract is silent.  In a number of older cases it was stated that evidence of such a contract or warranty must not contradict the express terms of the written contract.   However, more recently, the courts have admitted evidence to prove an overriding oral warranty or to prove an oral promise that the written contract will not be enforced in accordance with its terms : Chitty on Contract, 29^th Ed, Para 12─103.

19. A distinction has been drawn in cases between a collateral agreement which adds to the written agreement and a collateral agreement which contradicts it.  An example is In Henderson v. Arthur [1907] 1 KB 10, where Collins MR at page 12 stated that,

‘ It was somewhat faintly suggested that the agreement relied upon was a collateral agreement in the nature of a condition upon which the lease was entered into by the defendant.  But it appears to me, when the terms of the agreement are looked at, that it is not a merely collateral agreement, but provides in another and contradictory manner for doing what was subsequently provided for by the lease.  Under these circumstances I think that the agreement relied upon was not admissible in evidence, and that the appeal must therefore be allowed.’

20. But as Lewison in The Interpretation of Contracts paragraph 3.07 pointed out the distinction does not appear to survive City and Westminster Properties (1934) Ltd v. Mudd [1959] Ch. 129 and the subsequent line of cases. 

21. In City and Westminster Properties (1934) Ltd., the draft of a new lease presented to a tenant contained a covenant that he would use the premises for business purposes only and not as sleeping quarters.  The tenant objected to this covenant, and the landlords gave him an oral assurance that, if he signed the lease, they would not enforce it against him.  The tenant signed the lease, but later the landlords sought to forfeit the lease for breach of this covenant.

22. Harman J held that,

‘ If the defendant’s evidence is to be accepted, as I hold it is, it is a case of a promise made to him before the execution of the lease that, if he would execute it in the form put before him, the landlord would not seek to enforce against him personally the covenant about using the property as a shop only.  The defendant says that it was in reliance on this promise that he executed the lease and entered on the onerous obligations contained in it.  He says, moreover, that but for the promise made he would not have executed the lease, but would have moved to other premises available to him at the time.  If these be the facts, there was a clear contract acted upon by the defendant to his detriment and from which the plaintiffs cannot be allowed to resile.’

23. As the collateral contract introduced terms which add to or vary the terms of the provisional agreement, the Court views such collateral contract with suspicion and requires strict proof of the oral terms : Bank of India v. Surtani Murlidhar Parmanand t/a Ajanta Trading Corp [1994] 1 HKC 7.

Cheuk Tze-Kwok v. Leung Yin King and Another

24. Mr. Walter Lau, counsel of the plaintiffs, relied on the judgment of this Court (Fuad VP, Penlington and Nazareth JJA) in Cheuk Tze-kwok v. Leung Yin-king and Another [1993] 2 HKLR 169 to support his argument that the Judge was wrong to accept the terms of the oral collateral agreement which contradicted the written terms of the provisional tenancy agreement. 

25. In Cheuk Tze-kwok the plaintiff purchaser brought an action for specific performance of a written agreement for the sale of land after the defendant vendor failed to complete.  The agreement provided that in the event of a failure by the defendant vendor to complete the transaction, he was required to pay a sum equivalent to the deposit to the purchaser.  It further expressly provided that no specific performance of the agreement could be taken (Clause 7).  The action was struck out.  On appeal it was argued by the purchaser that there was an oral collateral contract between the parties that the agreement was absolutely binding.

26. This Court considered City and Westminister Properties (1934) Ltd. but held that the plaintiff could not bring himself within the principles laid down in that case.  This Court dismissed the appeal on the basis that the purchaser was not alleging there was any undertaking not to enforce Clause 7 but rather he was assured that there was no such clause; he was therefore seeking to rely on another oral agreement for the sale of the flat which did not contain the relevant clause; he could not do because it would be an oral agreement for the sale of land contrary to section 3 of the Conveyancing and Property Ordinance (Cap. 219) which required contracts for the sale of an interest in land to be in writing.

27. In my view Cheuk Tze-kwok did not adopt a different approach from City and Westminster Properties (1934) Ltd.  This Court did not say because the plaintiffs relied on a different contract therefore collateral contract was not applicable but rather the plaintiff failed because the collateral contract did not comply with the statutory requirement of being in writing.

28. Hence Cheuk Tze-kwok is not an authority that assists the plaintiffs.

Challenge on finding of fact

29. Mr. Lau argued that when the Judge made the finding against the plaintiffs he had proceeded erroneously on the following basis :

(1) He ignored the effect of a collateral agreement on a third party.

(2) He wrongly took judicial notice that the normal time between the signing of a provisional tenancy agreement and a formal tenancy agreement is substantially longer than just two days and he found it unusual that the parties had contemplated entering into a formal tenancy agreement just two days after they had entered into the provisional tenancy agreement.

(3)  He misconstrued the meaning of the clause‘支票過妥賬始作實’‘Receipt of payment confirmed only upon clearance of cheque’ as meaning that ‘there would only be a real deal when the cheque is cleared’.

(4)  He accepted the evidence of the defendant when her assertions were inherently improbable.

(5)  He wrongly accepted the evidence of the defendant when there were irreconcilable and unexplained inconsistencies between her oral evidence on the one hand and her pleaded case and witness statements on the other hand.

(6)  He ignored the weight of the evidence.

Effect of a collateral agreement

30. Mr. Lau argued that the provisional tenancy agreement was a three party agreement between the plaintiffs, the defendant and the Agent.  The defendant’s case of the conditions precedent not only affects the plaintiffs and the defendant on the one hand but also the Agent on the other hand.  There was no evidence that the Agent had agreed to the conditions precedent.  The provisional tenancy agreement could not be inoperative as against the plaintiffs but operative as against the Agent without an express agreement by the Agent.

31. This point can be dealt with shortly.  There was no evidence that the Agent had taken action to recover the commission from either the plaintiffs or the defendant.  He was present during the negotiation and signing of the provisional tenancy agreement when the terms were discussed.  He never expressed any disagreement that he would not be bound by the terms of the oral agreement.  His evidence was simply to deny what the defendant had said about the oral terms.  If the Judge accepted the evidence of the defendant and in the absence of any challenge by the Agent that he insisted on the strict terms of the written provisional tenancy agreement, my view is that the collateral agreement was binding on him as well.  He, after all, was an agent for both of the parties and in the circumstances, a finding that he was bound by the oral terms would not be difficult at all.

Judicial Notice

32. It is, of course, well established that judicial notice will only be taken of two broad categories of matters.  First, matters which are so notorious or clearly established or susceptible of demonstration by reference to a readily obtainable and authoritative source that evidence of their existence is unnecessary.  There are two subcategories under this head : those facts which can be noticed without inquiry and those facts which can be noticed after inquiry.  Second, statutory provisions may provide for judicial notice to be given of specific matters : Phipson on Evidence, 16th Ed. Paras 3─02 and 3─17.

33. The timing between a provisional agreement and a formal agreement is usually a matter of agreement between the parties and there is no ‘usual time’ as such.  Hence the Judge was wrong when he said he could take ‘judicial notice’ of the matter.  However, in my view, this is not something that is so fundamentally wrong that it would vitiate the finding of fact in the present case.  No matter how one looks at it, the time span here was indeed an extremely short one.  What the Judge clearly intended to say was that the time span in the present case was unusually short and that called for an explanation.  He said his approach was that

‘ How is that to be explained is something that is relevant for my assessment of the credibility of the conflicting versions of facts presented before me.  I should be looking for a version of facts more in alignment with this special arrangement.’

34. In my view this is an approach that the Judge was entitled to adopt. 

35. It is important to bear in mind the context in which this issue arises.  It is the defendant’s case that the plaintiffs had indicated their willingness to remove the illegal structures but as they were concerned that after they had carried out the removal work the defendant would not take up the tenancy, they then required her to sign a provisional tenancy agreement and to pay the earnest money.  The defendant was prepared to do so if the illegal structures were removed on or before 1 December 2005.  Hence the provisional tenancy agreement provided for the formal tenancy agreement to be signed on 1 December 2005.  The Judge found the evidence of the defendant to be supportive of the reason for the short time span.  This is clearly a matter the Judge was entitled to decide.

The cheque

36. The usually understood meaning of‘支票過妥賬始作實’is that the receipt of payment is confirmed only upon clearance of the cheque.  In other words the fact that the cheque has been received does not mean payment has been received.  It will only be treated as received upon clearance of the cheque.

37. In this case the defendant was not asked to give her understanding of this clause which is not permissible in construing the terms of an agreement.  She was instead asked about the circumstances in which this clause was written and her explanation was that she told the 1st plaintiff that she was willing to sign the provisional tenancy agreement and pay for the earnest money.  If the illegal structures would be removed to her satisfaction she would have the money ready to clear the cheque and once the money was paid the documents would be effective.  The 1st plaintiff then wrote out the clause and she gave the cheque to him.

38. If at the end of the day the Judge accepted the defendant’s version of events he would not be wrong to construe the clause in accordance with the evidence of the defendant.

Inherent improbability

39. Mr. Lau submitted that the defendant’s case is inherently improbable in the following aspects which I will deal with separately. 

Agreed date of demolition and Clause 13(3)

40. Mr. Lau argued that Clause 13(3) would not be consistent with the defendant’s case that the 1st plaintiff agreed to demolish all the illegal structures on or before 1 December 2005 because if the demolition had been completed then there would be nothing to prejudice her licence application which is the subject matter of clause 13(3).

41. The Judge was aware of the inconsistency.  This was extensively covered in the defendant’s cross-examination which was spread over three days.  However, the Judge was of the view that the defendant was not a lawyer and he was not surprised that she was unable to reconcile the difference.

42. In my view the fact that Clause 13(3) would be rendered otiose after all illegal structures had been removed does not necessarily mean there was no agreement on the removal before 1 December 2005 and its effect on the parties.  The Judge having seen and heard the evidence, particularly after such an extensive cross-examination, was clearly entitled to accept the evidence of the defendant.

Rent free period

43. Mr. Lau argued that as it would take time to apply for the licence and as the defendant was already given a one month rent free period, there was no pressing need to demolish the structure.

44. My view is that ultimately it is a question of fact whether the 1st plaintiff had agreed to complete the removal before 1 December 2005.  The Judge found that there was such an agreement.

Cancellation and ineffective agreement

45. Mr. Lau argued that the word ‘cancel’ is inept to refer to something which has no effect.

46. The parties were not legally represented when they signed the provisional tenancy agreement.  The legal effect of certain terms could not possibly be on their mind when they signed the agreement.

Nature of a cheque

47. According to the defendant she gave the cheque in order to give comfort to the 1st plaintiff who demanded earnest money.  It was submitted by Mr. Lau that a post-dated cheque from a third party with funds to be provided later to meet the cheque would not be of real comfort to the 1st plaintiff.

48. This is, of course, a valid argument that Mr. Lau is entitled to make.  However, ultimately this turns on a finding of fact by the Judge.  It is clear from the Judge’s finding that the 1st plaintiff was prepared to accept the arrangement.

Decision to remove

49. Mr. Lau argued that as the plaintiffs had already committed to incur expenses for the removal work, the assertion that the 1st plaintiff needed the earnest money made no sense.

50. In my view these two matters are not mutually exclusive of each other.  After all the parties were negotiating and I see no inherent improbability for the 1st plaintiff to require a commitment from the defendant.  In any event the Judge held that the evidence of the 1st plaintiff on the instructions he gave to the contractor was unsatisfactory and the contractor also gave different evidence on the commencement of the work.  While the Judge did not expressly state that the contractor’s evidence was not satisfactory, he did say that he would prefer the evidence of the defendant when there was conflict between her evidence and that of the contractor.

Effect on the agreement

51. Mr. Lau argued that on the defendant’s case on the clearing of the cheque the cheque could not be ‘banked’ before 1 December 2005.  That being the case the arrangement as suggested by the defendant would not work because the 1st plaintiff would not have known whether the defendant was required to sign the formal tenancy agreement or not.

52. Again the parties were not lawyers.  In any event if there was evidence of payment of funds on 1 December 2005, I cannot see why the parties could not sign the formal tenancy agreement on the same day.

Time for demolition

53. Mr. Lau argued that as the contractor said the demolition would take 10 days, the 1st plaintiff would not have agreed to a two day demolition.  Further the 1st plaintiff would not have agreed to remove the three poles which supported a structure on the upper floor not belonging to the plaintiffs.

54. Ultimately this is a matter of finding by the Judge.  There was also evidence that the work had commenced earlier.

Inconsistency of the defendant’s case

55. The Judge had clearly recognized the inconsistency in the defendant’s case but ultimately he decided in her favour.  He viewed the matter broadly and he found the defendant’s version to be more ‘in alignment’ with the agreement that the parties were to sign a formal tenancy agreement in just two days after the signing of the provisional tenancy agreement.  In my view the Judge was entitled to his view.  In any event the plaintiffs have chosen not to put in the full transcript of the evidence of the defendant.  This Court would not be in a position to assess the evidence in the same way as the Judge.

Weight of evidence

56. How the Judge assessed the weight of the evidence is a matter for him.

Conclusion

57. As a collateral contract introduces terms not readily apparent from the written agreement the Court views this with suspicion and scrutinize the evidence strictly.  However, in this case the Judge had clearly scrutinized the evidence on the collateral contract with care and found in favour of the defendant.  In my view all in all despite the able argument of Mr. Lau, the plaintiffs have not overcome the high threshold for this Court to disturb a finding of fact by the Judge.  The appeal is accordingly dismissed with costs to the defendant.

Hon. Yeung JA :

58. I agree with the judgment of Cheung JA and have nothing to add.

Hon. Yuen JA :

59. I agree with the judgment of Cheung JA.