FRED LEE and CHOW WAI LAN, CHRISTINE, trustee of the property of LAW SHUI KEI, a bankrupt v. LEE & WU (a firm) AND ANOTHER

HCMP 504/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 504 OF 2016

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D E C I S I O N

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INTRODUCTION

1.  Mr Law was a practising solicitor in Hong Kong operating his firm by the name of Martin Law & Co. (“the Firm”) as a sole proprietor.  He was adjudicated to be a bankrupt in May 2014 and Mr Fred Lee and Chow Wai Lan Christine were appointed as the trustees-in-bankruptcy of Mr Law (“the Trustees”) in November 2014.

2.  Lee & Wu, a firm of solicitors, (“the cessation agent”) replaced Messrs T K Tsui & Co (“Tsui”) to become the cessation agent of the Firm in January 2013.

3.  This is an application of the Trustees for directions relating to the monies now sitting in the two accounts of the Firm with Hang Seng Bank (“the Accounts”) pursuant to O.85 r.2 and/or section 82 of the Bankruptcy Ordinance, Cap.6.

4.  Mr Lee of the cessation agent attended the hearing and indicated that the cessation agent takes a neutral stance in this application.  Mr Law did not appear at all.

The Application

5.  The Accounts consist of a client account (“the Client Account”) and an office account (“the Office Account”), both being frozen for the time being.  This application concerns the beneficial ownership of the monies in the Client Account only.  The Trustees believe that the monies in the Office Account belonged to Mr Law.  The credit balance of the Client account presently stands at about HK$850,000.

6.  Generally speaking, money in a client account is held on trust by the solicitor for his client.  The complication of this matter is that Mr Law alleges that he has already secured all the claims made against the Client Account by his own fund in his account with the Bank of China pursuant to the Solicitors’ Accounts Rules, Cap 159F as evidenced by the Accountant’s Report to the Law Society dated 29 June 2012 in his affirmation.  In the Accountant’s Report, Mr Ng of UC CPA (Practising) Limited certified to the effect that he was satisfied that during the accounting period the Firm has complied with the provisions of the Solicitors’ Accounts Rules.

7.  This assertion, however, fails to convince the Trustees entirely.  First, it is not supported by documentary evidence.  Further, Tsui, having an uneasy relationship with Mr Law, refuses to cooperate to disclose more information about the Accounts.  Hence, the Trustees make this application under section 29 of the Trustees Ordinance, Cap 29 (“the TO”).

8.  As a prudent step, the Trustees advertised a notice in two local newspapers on 12 May 2017 to invite claims against the bankruptcy estate of Mr Law.  No claim whatsoever has been received by the Trustees.

9.  I am satisfied that the advertisement could protect the Trustees against both the creditors of the Firm and the beneficiaries: Re Aldhous [1955] 1 WLR 459.

10.  Against this background, this court is convinced that, absent any claims despite the advertisement, coupled with the assertion of Mr Law, Mr Law is the beneficial owner of the monies in the Client Account and hence the monies are the properties of his bankruptcy estate available for distribution by the Trustees.

11.  In the premises, this court makes a declaration that the monies in the Account have beneficially vested in the bankruptcy estate of Mr Law.  The Trustees should give at least three months’ notice by way of an advertisement in the Gazette and two local newspapers of their intention to make distribution of the monies in the Accounts.  Absent any claim, the Trustees should proceed with the distribution of the monies among the creditors of the bankruptcy estate with the protection from liability pursuant to section 29 of the TO.  I further allow that the parties do have liberty to apply.

12.  Mr Oh, for the Trustees, agrees that costs of both the cessation agent and the Trustees should be paid out of the bankruptcy estate, to be taxed if not agreed.  Accordingly, I make an order to this effect.

13.  Lastly, I thank Mr Oh for his assistance rendered to this court.