RE HAI TONG SECURITIES (HK) BROKERAGE LTD (海通證劵(香港)經紀有限公司)

HCMP 1387/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1387 OF 2011

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J U D G M E N T

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1.  The applicant applies ex parte under Section 62 of the Trustee Ordinance, Cap.29 and Order 92 of the Rules of the High Court for an order that it can pay the unclaimed cash together with interest, if any, of its two clients into court. The details of the clients and their monies are set out in a schedule exhibited as KWM-1 in an affirmation of its director Kwan Wai Man filed on 22 July 2011.

2.  The following facts are from the affirmation of Mr Kwan.  The applicant is a Hong Kong company incorporated on 24 July 2007. It is a wholly owned subsidiary of Haitong International Holdings Limited, formerly known as Hai Tong (HK) Financial Holdings Limited (“HIL”).

3.  Haitong International Securities Group Limited (“HISGL”) is also a wholly owned subsidiary of HIL.  It used to be known as Tai Fook Securities Group Limited and was acquired by HIL in December 2009.  It is a listed company in Hong Kong.  It also has a wholly owned subsidiary called Haitong International Securities Company Limited (“HTISCL”) which was formerly called Taifook Securities Company Limited.

4.  The applicant is licensed by the Securities and Futures Commission (“SFC”) to carry on the business of dealings in securities and futures contracts which are regulated activities under the Securities and Futures Ordinance, Cap.571.  HIL, after the acquisition of HISGL, did not want the applicant to continue with the regulated activities.  It also suggested to the clients of the applicant to move their business to HTISCL, the wholly subsidiary of HISGL. 

5.  The applicant used to have about 2,000 clients. It applied to the SFC on 24 March 2011 for revocation of its licence.  The licence has however not been revoked as the applicant is still holding monies belonging to two of its clients.  All its other clients have removed their assets from the applicant and closed their accounts.  The worth of the assets belonging to the two remaining clients are HK$12,009.07 and HK$15,840.00. 

6.  The applicant has posted a letter dated 8 April 2010 to its clients at their last known addresses informing them about the acquisition of HISGL by HIL and requested the clients to open a new account with and transfer their assets to HTISCL on or before 30 June 2010.  A further notice was sent by the applicant to the clients on 2 July 2010 informing them that their accounts and the applicant’s trading platform had been terminated on 30 June 2010.  The notice also requested the clients to open an account with HTISCL if they had not yet done so.  There was a further notice dated 9 August 2010 of the same effect.  There was another notice dated 3 November 2010 from the applicant advising the clients of the termination of the applicant’s electronic trading platform and requesting the clients to contact the applicant’s customer service department if they had not yet transferred their assets to HTISCL. 

7.  By another notice dated 11 April 2011 the applicant notified its clients of its cessation of business by the end of April 2011 and the agreements and securities/futures contracts trading accounts of the clients with the applicant would be terminated on 30 April 2011.  The staff of the applicant had also telephoned the clients from April 2010 onwards to request them to transfer their assets to HTISCL.  Emails were also sent to those clients who had provided the applicant with their email addresses. 

8.  The applicant has also advertised in the 25 May 2011 editions of The Standard and Sing Tao Daily about its cessation of business and requested its clients to contact it.  However there are still two clients who have failed to respond to the applicant and their assets above-mentioned are still held by the applicant.  Finally, the applicant’s solicitor sent a notice dated 8 June 2011 to the two non-responding clients advising them of the applicant’s intention to make this application and asking them to collect their assets by 22 June 2011. 

9.  Clause 3.1 of section 1 of the agreements between the applicant and these two clients provides that the applicant should act as agent for the clients in effecting transactions in relation to securities on the clients’ behalf.  Clause 5.2 of section 1 authorises the applicant to act upon the instructions of the clients to deal with the securities in their accounts.  Clause 10.1 of section 1 allows the applicant to deposit the money of the clients in a designated account for safe keeping.  It is thus clear that the applicant is the agent of the two clients and it holds their monies as their trustee (see Re Peregrine Brokerage Limited & Anor [2004] 1HKLRD 856; Re Celestial Finance Limited & Anor, HCMP 657/2005, 21 June 2005; Re Chekiang First Securities Company Limited, HCMP923/2006, 7 June 2006; Re CMB International Capital Corporation Limited, HCMP355/2011, 28 April 2011).

10.  In the premises I am satisfied that the two non-responding clients have been notified about this application.  I am also satisfied that the applicant is entitled to the following declaration and order:

(1) I declare that the items of cash and securities set out in the schedule in Exhibit KWM-1 to the affirmation of Kwan Wai Man filed on 22 July 2011 are held by the applicant as trustee for the two clients against whom the items of unclaimed client’s cash and securities are stated in the schedule.

(2) The applicant do have leave to pay into court the unclaimed clients’ cash and securities particularised in the said schedule.

(3) The applicant shall give notification of the declaration in paragraph 1 above and this order and the rights of the two clients to apply for payment out of their respective unclaimed cash/securities under Order 92 of the Rules of the High Court, Cap.4(a) by way of advertisements in one Chinese language and one English language daily newspaper within 7 days from the date of this order and by way of letters to the two clients at their last known addresses.

(4) Upon compliance of paragraph 3 above, Order 92, rule 4 of the Rules of the High Court is deemed to have been complied with by the applicant.

(5) Any unclaimed cash and securities be dealt with in accordance with Rule 33 of the High Court Surplus Fund Rules Cap.4B.

(6) No order as to costs for this application.