FUBON BANK (HONG KONG) LTD v. BHC PHARMACEUTICAL (HONG KONG) LTD AND OTHERS

DCMP 1262/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1262 OF 2014

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DECISION

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1.  The applicant in these proceedings is Fubon Bank (Hong Kong) Limited. By an Originating Summons dated 21 May 2014, the applicant seeks reliefs by way of interpleader in respect of the sum maintained in its account no. 128-828-0-706620-3 (“The Bank Account”).

2.  The Bank Account was opened by the 1^st claimant BHC Pharmaceutical (Hong Kong) Limited on about 28 February 2004 with the International Bank of Asia Limited (which was later acquired by Fubon Bank Limited and then renamed as Fubon Bank (Hong Kong) Limited).

3.  The balance of the Bank Account of the 1^st claimant with the Applicant is currently HK$261,924.88 (“the Sum”), which is only a modest sum.

Background of adverse claims to the balance in the Bank Account

4.  The 1^st claimant is a company incorporated in Hong Kong.  According to the last annual return filed with the Companies Registry dated 23 February 2010, the following persons are its shareholders:-

(1)     Ms Lee Evonne Qi Yun (“Evonne Lee”) holding 50% share capital of the 1^st claimant;

(2)     Ms Chan Bik Sum Iris (“the 2^nd claimant”) holding 25% share capital of the 1^st claimant; and

(3)     Mr Lau Yiu Kwong (“the 3^rd claimant”) holding 25% share capital of the 1^st claimant.

5.  As at 23 February 2010, the directors of the 1^st claimant stated in its annual return were Mr Lee Simon Jian Jia (“Simon Lee”), Evonne Lee, the 2^nd and 3^rd claimants.

6.  Subsequently according to some further Forms “Notification of Change of Secretary and Director (Appointment/Cessation)” filed with the Companies Regisry, Simon Lee resigned as director of the 1^st claimant on 28 October 2010.  The 2^nd and 3^rd claimants resigned as directors of the 1^st claimant on 29 March 2011.  The only director thus remaining was Evonne Lee.

7.  Since then, there has been no further annual returns or companies records filed by the 1^st claimant and the above information about shareholders and directors of the 1^st claimant appears to have been very out of date.

8.  On 12 October 2010, the applicant received written instruction of the 1^st claimant acting via the 2^nd and 3^rd claimants to suspend withdrawal of payment from the Bank Account due to a dispute between the 2^nd and 3^rd claimants and alleged there had been unauthorized use of company fund of the 1^st claimant.

9.  On 2 November 2010, the applicant received a letter from Messrs Tung Ng Tse & Heung, solicitors (“TNTH”) on behalf of the 1^st claimant under the instructions of Evonne Lee to instruct the applicant to close the Bank Account.

10.  By a letter dated 4 November 2010, Messrs C Y Chan & Co, solicitors (“CYC”) purportedly on behalf of the 1^st claimant and under the instructions of the 2^nd and 3^rd claimants wrote to the applicant requesting the applicant to activate the Bank Account.  The applicant then replied to CYC by a letter dated 9 November 2010 stating that the Bank Account was frozen as instructed by the 1^st claimant acting via the 2^nd and 3^rd claimants and asked CYC to clarify with its clients.

11.  Subsequently the applicant sent a letter on 10 November 2010 to TNTH giving notice that the Bank Account would be terminated with effect from 16 November 2010.

12.  The applicant followed the instructions from the 1^st claimant and closed the Bank Account on 16 November 2010.

13.  On 25 November 2010, the applicant sent a letter to the 1^st claimant giving notice that the Bank Account was closed on 16 November 2010 and the remaining net balance was HK$261,924.88.  The applicant further enclosed a draft confirmation to the 1^st claimant to request all the directors of the 1^st claimant (i.e. Evonne Lee, Simon Lee, the 2^nd and 3^rd claimant) to confirm how the applicant might deliver the cashier order representing the net balance to the 1^st claimant and who might give a valid receipt on behalf of the 1^st claimant in that regard.

14.  It was obvious to the applicant at that material time that there had been serious shareholders’ disputes in respect of the affairs of the 1^st claimant and there had been allegations about unauthorized use of the 1^st claimant’s funds.

15.  There was no response to the applicant’ letter dated 25 November 2010.

16.  Then by three letters dated 23 October 2013, 12 November 2013 and 31 March 2014, TNTH (acting on behalf of the 1^st claimant on the instructions of Evonne Lee, its sole director) demanded the applicant payment of the Sum in the Bank Account plus interest to the 1^st claimant within seven days failing which they would have instructions to commence legal proceedings against the applicant without further notice.

17.  CYC (on behalf of the 2^nd and 3^rd claimants) objected to the release of the Sum in the Bank Account to the 1^st claimant by two letters dated 14 November 2013 and 19 December 2013.  CYC requested the Sum in the Bank Account be distributed to the three shareholders in accordance with their respective shareholdings in the 1^st claimant, ie 50% to Evonne Lee, 25% to the 2^nd claimant and 25% to the 3^rd claimant.

18.  In addition, on 27 November 2013, the 2^nd claimant wrote personally to the applicant objecting to the release of the Sum in the Bank Account to Evonne Lee on the ground that she was the largest creditor of the 1^st claimant and she made shareholder loans in a total sum of HK$1,007,084.00 to the 1^st claimant.

19.  There were a few more subsequent consequence but to cut the matter short, the applicant has been unable to ascertain the precise shareholders and directors of the 1^st claimant as there has been no updated records and statutory records being filed and was unable to accede to any particular request, whether from the 1^st claimant through TNTH or the 2^nd and 3^rd claimants through CYC.

20.  Eventually the applicant through its solicitors wrote a letter dated 3 April 2014 to both TNTH and CYC giving them final notice that unless their respective clients could reach agreement on the handling/distribution of the Sum in the Bank Account, the applicant would proceed to make application for interpleader relief under Order 17 rule 1 of the Rules of the District Court.

21.  TNTH replied to the applicant by way of a letter dated 17 April 2014 requesting the applicant to withhold any proceedings and stated they would revert after taking instructions from its client Evonne Lee.  But there has been no response so far.

22.  CYC also replied to the applicant by way of a letter dated 23 April 2014 stating that they could not reach an agreement with TNTH as to the release of the Sum in the Bank Account and that their clients had no objection to putting the Sum in the Bank Account into court.

23.  On 21 May 2014, the applicant commenced the present proceedings seeking interpleader relief.

The Interpleader proceedings

24.  The Originating Summons was first heard on 2 July 2014.  All claimants were absent.  At that hearing, the court raised enquiries about two specific matters, namely:-

(i) Whether there is a possibility that the sum will sit idle in court indefinitely;

(ii) Whether service on the respective claimants is effective.

25.  The court then made further directions to ensure that the respective claimants would be brought to the attention of the present proceedings and adjourned the hearing to today.

26.  Since then, the applicant has filed further evidence to show that they have taken steps:-

(1) to effect service on the 1^st claimant at its registered address by way of personal service and by way of registered post;

(2) to effect service on the 2^nd and 3^rd claimants at their last known addresses, i.e. the addresses shown in the annual returns by way of registered post;

(3) to effect service on Evonne Lee by way of email issued to her email address as stated in form FR1 registered with the Companies Registry

27.  Importantly the applicant also served all the documents in these proceedings to TNTH and CYC even though both firms said they did not have instructions to accept service of these proceedings on behalf of their respective clients.

28.  At the hearing today, all claimants are again absent.

29.  On the second matter of whether service on the claimant is effective or not, I am satisfied that the applicant has complied with the rules about services of documents to all parties in these proceedings.  I am also satisfied that more likely than not TNTH and CYC would have informed their respective clients about the development of these proceedings.  All the claimants seem to me make an informed choice not to participate in these proceedings for reasons best known to themselves.

30.  As regards the first matter of whether there is a possibility that the Sum in the Bank Account will sit idle in court indefinitely, counsel for the applicant Mr Kwong draws the court’s attention to section 18 of the District Court Ordinance, Cap 336 which reads:-

“(1) When any sum of money remains unclaimed in the Court for a period of 5 years, the Chief Justice may, on application by the Registrar of the High Court, order such sum to be transferred to the general revenue of the Government.

  (2) Before making any order under subsection (1), the Chief Justice may direct that such notice, if any, as he thinks necessary shall be given and to such parties as he may think fit.”

31.  Hence, if none of the claimants bother to claim the Sum, it is open to the Registrar of the High Court to apply to the Chief Justice for the Sum to be transferred to the general revenue of the Hong Kong Government. 

32.  In actual practices, the Registrar of the High Court would from time to time issue notices stating that unless a lawful claim is brought, applications will be made to the Chief Judge for the moneys remaining unclaimed in court to be transferred to the Hong Kong Government.

33.  In that regard, the applicant has satisfactorily addressed the two concerns or matters raised by the court at the first hearing dated 2 July 2014.

34.  Mr Kwong further submits that the present case is an appropriate case for interpleader.

35.  In this connection, the relevant principles are well established and there are four conditions to be satisfied for one to be entitled to the relief of interpleader, which are:-

(1) The applicant is under a liability in respect of a debt or in respect of any money… and he is, or expects to be sued for or in respect of that debt or money… by two or more persons making adverse claims thereto;

(2) The applicant claims no interest in the subject-matter in dispute other than for charges or costs;

(3) The applicant does not collude with any of the claimants to that subject-matter; and

(4) The applicant is willing to transfer that subject matter into court or to dispose of it as the court may direct.

See: Order 17 rules 1 and 3 of the Rules of the District Court.

36.  In the present case, the four conditions for invoking interpleader proceedings are satisfied.  The Sum in the Bank Account does not belong to the applicant.  There are adverse claims to the Sum by the shareholders of the 1^st claimant and the applicant is not in a position to adjudicate and/or form views on the shareholders’ disputes amongst the claimants themselves.  The applicant does not collude with any of the claimants and is willing to transfer the Sum in the Bank Account into court.

37.  Since the Bank Account was closed and it is inappropriate for the applicant to hold the Sum forever, the best way is to put the Sum into court under the present interpleader proceedings and let the claimants take action to claim the same if they see fit.

38.  In the premises, I make the following order that:-

(1) The applicant do pay the sum of HK$201,924.88 into court, being HK$261,924.88 less the applicant’s costs assessed by summary assessment at HK$60,000;

(2) The applicant’s application be adjourned to a day to be fixed by the 1^st, 2^nd and 3^rd claimants;

(3) The applicant be excused from the adjourned hearing;

(4) The Order be served on the 1^st, 2^nd and 3^rd claimants;

(5) There be liberty to apply.

39.  It is then up to the 1^st, 2^nd and 3^rd claimant to restore the hearing if they wish to claim the Sum paid into court under these proceedings after first deducting the applicant’s costs incurred as summarily assessed above.

40.  Lastly I thank counsel of the applicant for his able assistance.