RE GOLD FUND SECURITIES CO LTD

HCMP 1705/2020

[2020] HKCFI 2884

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1705 OF 2020

________________________

________________________

________________________

________________________

D E C I S I O N

________________________

1.  This is the Applicant’s application by ex parte Originating Summons for an order under section 62 of the Trustee Ordinance (Cap 29) to pay certain unclaimed cash and securities into court (the “Unclaimed Assets”).

2.  The application is supported by the affidavit of Liu Kit Shan, Evelyn dated 9 October 2020.  Ms Liu is a director and the Responsible Officer of the Applicant.

3.  The Applicant is a securities broker. 

4.  From 19 July 2004, the Applicant has been (and has only been) carrying out Type 1 regulated activity (dealing in securities).

5.  In carrying on business as a securities broker, the Applicant has been holding various client accounts in which clients’ cash and securities are deposited.

6.  Ms Liu has produced before me copies of the Applicant’s standard form contracts with its clients at various stages of its business.  According to those contracts, the Applicant has been acting as a trustee of its clients in respect of the cash and securities each deposited with the Applicant.  That is also consistent with the relationship of a securities broker and its customers in general.

7.  On 10 February 2020, the Applicant’s board of directors resolved to cease its business from 31 March 2020 and to wind it up by voluntary liquidation.

8.  The Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited have both been informed of the Applicant’s cessation.

9.  The Applicant has since February 2020 been taking steps to contact its clients.  Those steps included the issue of letters, the making of calls, the issue of letters through its solicitors, and the publication of Chinese and English notices in newspapers.

10.  Despite those efforts, there remain 47 accounts which have not been closed as the clients variably (i) could not be contacted; (ii) have passed away but personal representatives not yet appointed; (iii) though could be contacted have failed to execute any transfer for their securities.

11.  Sections 62(1) and (2) of the Trustee Ordinance (Cap 29) stipulates as follows:

“ Payment into court by trustees

(1)  Trustees, or the majority of trustees, having in their hands or under their control money or securities belonging to a trust, may pay the same into court, and the same shall, subject to the rules of court, be dealt with according to the orders of the court.

(2)  The receipt or certificate of the proper officer shall be a sufficient discharge to trustees for the money or securities so paid into court.”

12.  I have been shown a number of authorities, which include Re Drake & Morgan Limited, unrep, HCMP 1490/2009, 27 August 2009, Re Glenlyon Limited [2018] HKCFI 1038, and Re ABN Amro Bank N.V. [2018] HKCFI 1559.  There have been ample precedents in which securities companies were pursuant to section 62 of the Trustee Ordinance (Cap 29) allowed to pay into court unclaimed cash and deposits of its clients who could not be contacted.  That has been described as a “flexible and pragmatic” solution for securities houses to cease business and at the same time to deal with unclaimed assets in a way which protects the interests of their clients.

13.  In general, what have to be established for an application of the present nature are (1) the assets in question are held by the applicant as trustee, and (2) despite reasonable endeavours, the beneficiaries cannot be contacted or are unresponsive, or the trustee is otherwise unable to obtain instructions as to how to deal with, dispose of or return the trust assets.

14.  I have set out the facts above.  I am satisfied that the Applicant have established both requirements.

15.  The Unclaimed Assets fall into 3 categories:

(a)  cash (as set out in Annex 1 of the Originating Summons);

(b)  unclaimed securities which physical certificates could be withdrawn (as set out in Annex 2 of the Originating Summons); and

(c)  unclaimed securities which physical certificates could not be withdrawn (as set out in Annex 3 of the Originating Summons), as the listing status of those securities have been cancelled or suspended, and the share re-registration / splitting services are no longer provided.

16.  For category (a) the cash may simply be paid into court.

17.  For category (b), the certificates may be withdrawn and deposited with the court.

18.  For category (c), I note that their total value is small, which is estimated to be HK$218.40.  That is hardly surprising given the listing status of the securities.  I grant the Applicant leave to sell or otherwise dispose of (including forfeiture thereof) the same as it sees fit, and to pay any proceeds into court.

19.  I make an Order in terms of the draft order, to the effect that:

(a)  it be declared that the Unclaimed Assets as set out in the Annexes to the Originating Summons are held by the Applicant as trustee for each of the named customers;

(b)  the 3 categories of Unclaimed Assets be dealt with as above;

(c)  notification of this order and the rights of the customers to apply for payment out by way of advertisements in a Chinese-language and an English-language newspaper within 14 days from the date of this Order, and by way of letters to each of them at their last known addresses; and

(d)  upon compliance of the above, the Applicant be discharged from any obligations or claims in respect of the Unclaimed Assets.