RE ABN AMRO BANK N.V.

HCMP 280/2018

[2018] HKCFI 1559

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 280 OF 2018

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REASONS FOR DECISION

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1.  The applicant applied by ex parte Originating Summons for an order pursuant to section 62 of the Trustee Ordinance (Cap 29) and Order 92 of the Rules of the High Court (Cap 4A), in respect of assets said to be held by it as trustee.

2.  At the hearing before me on 3 July 2018, I granted orders as set out in the Appendix hereto.

3.  I now provide my brief reasons for so doing.   

Outline facts

4.  The relevant facts appear from the 1^st, 2^nd and 3^rd Affirmations of Simon John Dodd, filed on the applicant’s behalf.  Mr Dodd is the Chief Executive of the Hong Kong branch of the applicant.  

5.  The applicant is a bank incorporated in the Netherlands, which is registered by the Hong Kong Monetary Authority to accept deposits and licensed by the Securities and Futures Commission to deal in and advise on securities.

6.  In April 2017, the applicant sold its private banking business inAsia and the Middle East to another bank, and no longer intends to continue private banking in those regions.

7.  Pursuant to that sale, most of the applicant’s private banking accounts were transferred to the purchaser bank, together with the assets in those accounts.  Certain of its other private banking accounts were closed.  

8.  However, there remain eight accounts (the “Residual Accounts”) belonging to seven clients (the “Residual Clients”) which have not been so transferred or closed.

9.  The assets in the Residual Accounts are the subject-matter of this application.  They comprise cash, shares, bonds and funds, the details of which have been set out in schedules to Mr Dodd’s affirmations.

10.  It is the applicant’s position that it has made lengthy and extensive efforts to contact the Residual Clients (or, in the case of two of the Residual Clients who are deceased, the representatives or beneficiaries of their estates), but has been unable to obtain instructions as how to deal with the assets in the Residual Accounts, in order to effect closure of those accounts.  

11.  By the Originating Summons, the applicant sought orders for, amongst other things, leave to sell or otherwise dispose of the assets in the Residual Accounts, and to pay the cash in those accounts and proceeds of sale into court; such that the applicant can obtain a discharge of its obligations as trustee. 

Principles

12.  A number of authorities deal with the principles applicable on an application under section 62 of the Trustee Ordinance. See, for example, the cases referred to in Re X Limited [2018] HKCFI 15, per Harris J at footnote 1.

13.  Many of the cases entail the scenario of a brokerage or bank which withdraws its relevant business from Hong Kong.  Orders under section 62 may be made where, despite a trustee’s reasonable endeavours, 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 trust assets.

14.  Further, under section 56 of the Trustee Ordinance, the court has power to order the sale of trust property when it is expedient to do so [1].

First hearing and resumed hearing

15.  The Originating Summons first came before me on 7 June 2018.  On that occasion:

(1)  I adjourned the Originating Summons with a direction that the applicant give notice to the Residual Clients of the adjourned hearing and orders to be sought.  

(2)  The applicant clarified that it would not seek an order in respectof the cash held in the Residual Accounts since, pursuant to the terms governing those accounts, the cash is not held on trust (whilst non-cash assets are held on trust). 

(3)  I indicated that in respect of the non-cash assets in the Residual Accounts it seemed preferable that, insofar as practicable, the assets be themselves paid into court, rather than being sold, particularly since the beneficiaries were not before the court.  The applicant indicated that it was, in principle, agreeable in respect of those assets which could be paid into court.

16.  Since the first hearing before me, the applicant filed Mr Dodd’s3^rd affirmation.  That affirmation details additional steps taken to give notice to the Residual Clients (or their representatives) of the resumed hearing date and orders sought.  The applicant received only one response, and that response did not indicate any objection to the orders sought.

17.  Mr Dodd’s 3^rd affirmation also explains that, based on enquiries made:

(1)  In respect of items 4 to 10 of the Schedule at exhibit “SJD-14” (which items comprise various shares in Hong Kong listed companies held in the Residual Accounts), it should be feasible for the applicant to pay those assets into court by depositing physical share certificates issued under the name of “the Registrar of the High Court”.

(2)  In respect of items 3 and 11 of the said Schedule (which comprise a bond and a fund), it appears infeasible to transfer these assets to court, since this can only be done by way of electronic transfer, and the Registrar of the High Court does nothold accounts of the type required in order to receive the assets in this way.

18.  Mr Dodd had previously affirmed that the items at 1, 2 and 12 of the said Schedule (comprising certain defaulted bonds, and shares in a private company) are illiquid, cannot feasibly be paid into court, and have little or no market value.  Accordingly, an order was sought for leave to dispose of those illiquid assets including by way of forfeiture.

Conclusion and orders made

19.  On the basis of the evidence presented, I am satisfied that the assets in the Residual Accounts, except for the cash, are held by the applicant as trustee. 

20.  I am further satisfied that the applicant has taken reasonable steps to contact the Residual Clients or their representatives, in order to obtain instructions as to how the assets should be deal with; and further to put them on notice of the orders which would be sought in the absence of such instructions.

21.  Despite those efforts, the applicant has not received instructions as to how to deal with or dispose of the assets in the Residual Accounts.

22.  Accordingly, I considered it appropriate at the resumed hearing to make the orders of the type sought by the applicant.     

23.  In respect of those of the assets which can be paid into court (ie items 4 to 10 of the Schedule at exhibit “SJD-14”), I made an order giving leave to that effect.  In respect of those of the assets for which the applicant has deposed to difficulties in making payment into court (ie the remaining items in the said Schedule), I made an order for them to be sold or disposed of, with the proceeds of sale (if any) to be paid into court.

24.  The precise form of order made is appended to these reasons.

Appendix

1.  It be declared that the Unclaimed Assets as defined in the 3^rd Affirmation of Simon John Dodd filed on 29 June 2018 (“SJD’s 3^rd Affirmation”) and particularised in the Schedule in exhibit “SJD-14” of SJD’s 3^rd Affirmation are held by the Applicant as trustee;

2.  The Applicant do have leave to pay into Court those of the Unclaimed Assets as particularised in items 4 – 10 of the Schedule in exhibit “SJD-14” of SJD’s 3^rd Affirmation by withdrawing the physical share certificates in the name of the Registrar of the High Court of Hong Kong and thereafter depositing the same into Court;

3.  The Applicant do have leave to sell or otherwise dispose of those of the Unclaimed Assets as particularised in items 3 and 11 of the Schedule in exhibit “SJD-14” of SJD’s 3^rd Affirmation, and to pay any proceeds from the sale of these assets into Court;

4.  The Applicant do have leave to dispose of (including forfeiture thereof) those of the Unclaimed Assets as particularised in items 1, 2 and 12 of the Schedule in exhibit “SJD-14” of SJD’s 3^rd Affirmation;

5.  Notification of the Order herein and the rights of the clients of the Applicant in respect of the Unclaimed Assets referred to in SJD’s 3^rd Affirmation to apply for payment out of their respective unclaimed assets under Order 92 of the Rules of the High Court be given by way of advertisements in one Chinese-language and one English-language daily newspaper in Hong Kong within 21 days from the date of the Order to bemade herein, and by way of letters to the clients or their legal or personal representatives at their last known addresses by post and/or by email;

6.  Upon satisfaction of paragraphs 2, 3. 4 and 5 above, the Applicant be discharged from any obligations or claims in respect of the Unclaimed Assets and Order 92 Rule 4 of the Rules of the High Court is deemed to have been complied with by the Applicant;

7.  There be liberty to apply; and

8.  There be no order as to costs of this application, including costs of the hearings on 7 June 2018 and 3 July 2018.