RE CINDA INTERNATIONAL FX LTD

HCMP 227/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 227 OF 2011

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J U D G M E N T

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1.  This is an ex parte application under section 62 of the Trustee Ordinance, Cap. 29 and Order 92 of the Rules of High Court. The applicant seeks an order for it to pay into court the unclaimed monies of its clients.

2.  The applicant has since 1 April 2003 been licensed by the Securities and Futures Commission (“SFC”) under the Securities and Futures Ordinance, Cap. 571 to carry on the business of leveraged foreign exchange trading for its clients.  This is a regulated activity.

3.  The applicant is required by the Securities and Future Regulations to maintain HK$18 million liquid capital which is 120% of the minimum liquid capital of HK$15 million. 

4.  The applicant has ceased business on 20 April 2010.  It has sought the revocation of the licence and the release of the liquid capital requirement by the SFC.  But the SFC would only be prepared to do so after the applicant has repaid all monies belonging to its clients and all unclaimed monies repaid or otherwise dealt with in accordance with an order of this court.

5.  In this application, the applicant has produced the various versions of client agreements that its clients had entered into with it insofar as they are relevant to the unclaimed monies in this application.  These agreements all provide that the applicant will act on behalf of the client to execute orders of leveraged foreign exchange trading given by the client.

6.  The applicant has also segregated its money from the clients’ moneys.

7.  It is thus clear that the applicant is the agent of its clients and holds the clients’ moneys as trustee for the clients (see: Re Peregrine Brokerage Ltd & Another [2004] 1 HKLRD 856; Re Celestial Finance Limited and Another, HCMP No.657 of 2005, 21^st June 2005; Re Chekiang First Securities Company Limited, HCMP No.923 of 2006, 7th June 2006; Re Unialpha Securities Limited and Another, HCMP No. 714 of 2006, 27 June 2006; Re Drake & Morgan Limited, HCMP No. 1490 of 2009, 27th August 2009; and Re Bocom International Holdings Company Limited, HCMP No. 1777 of 2009, 17th September 2009).

8.  Under the client agreements between the applicant and its clients, the applicant is entitled to terminate the agreements at anytime by written notice to the clients.

9.  The applicant has by letter of 5 March 2010 notified all its clients at their last known addresses the termination of the client agreements, the applicant’s cessation of business and that the clients should withdraw their cash balances from their accounts on or before 31 March 2010. 

10.  The applicant also ceased its business on 30 April 2010.  Despite this notice, there were still some clients who had not taken their moneys back on 30 April 2010.

11.  The applicant’s staff then attempted to contact these clients by telephone asking them to get their moneys back.  There were however some clients who did not provide their bank account number to the applicant for transfer of their money.  There were also some clients who did not wish to have the return of their moneys.

12.  On 14 January 2011, the applicant sent further notices to the clients with unclaimed moneys notifying them that the applicant would be making this application and asked them to get back their moneys on or before 28 February 2011.  

13.  Despite all these efforts, there are still 114 clients who have not claimed their moneys from the applicant.  The applicant therefore made this application with a view to pay the unclaimed monies into court.

14.  In the premises, I am satisfied that the applicant is entitled to the order sought.  I therefore order:

(1) a declaration that the items of unclaimed client monies set out in the schedule in Exhibit “LMC-2” (the “Schedule”) annexed to the Affirmation of Lau Mun Chung dated 16 February 2011 (the “Affirmation”) are held by the applicant as trustee for the clients against whom the items of unclaimed client moneys are noted in the Schedule;

(2) an order that the applicant do pay into court the unclaimed client moneys particularised in the Schedule;

(3) an order that notification of the orders and the rights of the clients of the applicant to apply for payment out of their respective unclaimed client moneys under Order 92 of the Rules of High Court be given by way of advertisements in a Chinese-language and an English-language daily newspapers within 14 days from the date of this Order, such advertisement to be substantially in the form of the draft advertisements at Exhibit “LMC-3” annexed to the Affirmation and by way of letters to these clients at their last known addresses.

(4) a declaration that, upon compliance with paragraph 3 above, O.92 r.4 of the Rules of High Court is deemed to have been complied with by the applicant.