RE GAINWELL SECURITIES CO LTD

HCMP 295/2018

[2018] HKCFI 1497

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 295 OF 2018

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D E C I S I O N

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1.  This is the ex parte application by the applicant for an order to pay certain unclaimed cash and securities (converted into cash) into court under section 62 and 56 of the Trustee Ordinance.

2.  The applicant was formerly known as Wako International (Hong Kong) Limited.  The applicant was incorporated in 1976 and changed to its current name on 10 July 2000.  At all material times when the company traded in securities as a licensed corporation with the Securities and Futures Commission its operation remained the same.  By a resolution, the applicant resolved to cease engaging in the said regulated activities starting from 17 July 2017.

3.  One of the conditions to complete the cessation processes imposed by the Securities and Futures Commission was to deal with unclaimed assets by way of a court application under the Trustee Ordinance. This is the said application.

4.  The principles have been succinctly and conveniently set out in a number of judgments including Re Drake & Morgan Limited (HCMP 1490/2009), a decision by Deputy High Court Judge Au (as Au J then was) dated 27 August 2009, in particular at paragraphs 11 and 12:

“11. Section 62(1) of the Trustee Ordinance provides:

‘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.’

12. Further, unless otherwise is shown, it is a general rule that a broker is a trustee over the money and securities it holds on behalf of its clients: Re Peregrine Brokerage Ltd [2004] 1 HKLRD 856 at 860J-861C, adopting Re CA Pacific Finance Ltd [1999] 2 HKLRD 1, 7D-F, 9H-I, 12F-H, 15H-J, 18G-J, 19G‑20A.”

5.  At paragraphs 15, His Lordship further observed that:

“15. With the matters as they presently stand, the applicant as a trustee cannot get a discharge in relation to the unclaimed assets, and cannot satisfactorily complete its procedures for the cessation of business by having its licence with the SFC properly revoked. Cf: Hong Kong Civil Procedure 2009, para 92/2/1.”

6.  And His Lordship further agreed with submissions of the counsel for the applicant in that case that Section 62 of the Trustee Ordinance was a “flexible and pragmatic” solution and would allow an applicant, who finds himself in the position as the present applicant, to properly cease its securities business and deal with unclaimed assets.

7.  In the present case there are 10 clients left, nine of whom are individuals and one a corporate, namely a BVI corporation.

8.  The only client of the 10 whose position is slightly more complicated is that of Mr Sun Chao-lin, who is a Taiwanese resident and by the time of this application had passed away. More time would be required for his estate in order to be in a position to apply for a payment out of the funds paid into Court.

9.  After hearing Mr Jason Wong, I make the following orders:

(1)  A declaration that the unclaimed cash and securities as set out in the Appendix of the Amended Originating Summons are held by the applicant respectively as a trustee for each of the customers as set out in the said Appendix. Such unclaimed cash and cash resulting from the disposal of securities do not form part of the assets of the applicant.

(2)  An order that the applicant do pay into Court the unclaimed cash as particularised in the Appendix.

(3)  An order that the applicant do have leave to realise the unclaimed securities (whether held in its own name or in the name of others) as particularised in the Appendix and then to pay the proceeds of sale into Court.

(4)  An order that a notification of this order and the rights of the customers of the applicant as set out in the Appendix to apply for payment out of their respective unclaimed moneys or securities, as the case may be, under Order 92 of the Rules of the 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, and by way of letters to such customers at their last known address, if any.

(5)  In the event that no claim is made within three months from the date of payment and deposit into Court, the unclaimed cash are to be transferred to the General Revenue of the Government of the Hong Kong Special Administrative Region of the People’s Republic of China, save that in the case of Mr Sun Chao-lin, the period be extended to 30 months from the date of the said payment and deposit into Court.

(6)  There be no order as to cost of this application.

(7)  There be liberty to apply. 

10.  Having considered the evidence before me and in particular the pro forma contracts between the applicant and its clients, I am satisfied that the applicant holds the unclaimed assets as a trustee, respectively for the 10 clients.  There is nothing in the contractual documents which were placed before this Court to show or otherwise suggest any contrary intention.

11.  This Court is also satisfied on the evidence before it that the applicant has made reasonable efforts to contact the 10 clients to deal with the unclaimed assets without success.

12.  As mentioned earlier, the only client who stands in a slightly different position is that of Mr Sun Chao-lin, who is deceased.  Miss Chris Pan, who appeared on behalf of an interested party, explained that Letters of Administration were being applied for in Hong Kong and it would take more than the usual three months to apply for a payment out of court, and to avoid the situation the said moneys would be otherwise paid into the General Revenue, I agreed to extend the period to 30 months, or such other period as the Court might allow in order to cater for this delay.  For all the other nine clients, I believe that the period of three months would be sufficient.

13.  It remains for me to thank Mr Wong for his assistance in this matter.