XCHRX RE C.A. PACIFIC FINANCE LTD. (in Liquidation)

HCCW 36/1998, 37/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NOS 36 AND 37 OF 1998

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D E C I S I O N

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1. I have before me an application for reclassification by Mr Chan Fun Ngok, Client Objection Reference No. 123, for reclassification of himself originally classified as "a margin client" to be classified as a "cash client".

2. The evidence before me shows that as far as Mr Chan Fun Ngok's account was concerned, all the statements that he was provided with carried a 02 suffix and not a 01 suffix.

3. Although he had on 3 previous occasions been late with payment and had been given financing, it would appear that he was given financing purely on the basis that he was a cash client. This is shown by the fact that the interest charged was on the entire purchase price and not on any percentage which would have been relevant in the case of a margin client. Also, the rate of interest charged was prime plus 10% which was a rate referred to in the client agreement with CAP Securities, where as CAP Finance would normally charge interest at the rate of prime plus 3% or 4%.

4. Furthermore, there are no statements from CAP Finance relating to this client.

5. Therefore even though in his case he had signed the MOD, the point remains that he was treated throughout by CAP Securities as a cash client of its own and not of CAP Finance, and therefore I would direct that his account be reclassified as a "cash client" account.