RE SHUN LOONG FINANCE LTD

DCMP 4204/2020

[2021] HKDC 1285

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4204 OF 2020

-------------------------------

-------------------------------

--------------------------

DECISION

--------------------------

1.  This is an application by Ex-parte Originating Summons for an order under section 56 of the Trustee Ordinance (Cap 29) to authorize the sale of certain unclaimed securities and the disposal of some unclaimed assets in very minor value, and under section 60 of the same Ordinance and Order 92 of the Rules of the District Court, to pay the sale proceeds and certain unclaimed cash into court.

2.  The applicant, which used to be a wholly owned subsidiary of Shun Loong Holdings Limited (“SL Holdings”), had been a licensed money lender.  SL Holdings had another wholly owned subsidiary, Shun Loong Securities Company Limited (“SL Securities”), which was a brokerage firm licensed by the Securities and Futures Commission to deal in securities. Clients of SL Securities might open a margin account with, and apply for credit facilities from, the applicant.  In so doing, these clients would be required to enter into a margin agreement and signed a memorandum of deposit and letter of set-off and authorization in favour of the applicant.  These were in standard forms.

3.  On 25 June 2003, SL Holdings was acquired by Sun Hung Kai Investment Services Limited (“SHKIS”, which was, and still is a subsidiary of Everbright Sun Hung Kai Company Limited (“EBSHK”)).  After the acquisition, SHKIS took steps to switch the clients of SL Securities and the applicant to SHKIS.  Some clients however remained with SL Securities and the applicant (“the Residual Clients”) either because they could not be contacted, or they had not agreed to the switch.  The assets of the Residual Clients therefore continued to be held by the applicant.

4.  On 13 November 2012, the applicant ceased its business operation when its money lender license expired that day.  With the passage of time, it is not precisely known now what the exact steps taken by the applicant were to try to return these assets to the Residual Clients, but it is believed, and it also seems likely, that certain steps had been taken. Despite that, there remained certain assets belonging to some of the Residual Clients’ that the applicant was unable to return to the client/owner.

5.  In around September 2019, EBSHK had decided to simplify its corporate structure, which involved, among others, de-registering the applicant.

6.  On 20 February 2020, a round of letters were sent by the applicant to the last known address of the Residual Clients who still have assets being held by the applicant, advising them to withdraw the cash balance and/or shares, and to formally close their margin accounts with the applicant.

7.  On 21 February 2020, an advertisement was placed in two widely circulated local newspapers, one in Chinese and one in English, namely Sing Tao Daily and The Standard, informing the Residual Clients to withdraw the cash balance and/or shares, and to close their margin accounts on or before 23 March 2020.

8.  18 clients of the applicant (“the 18 Clients”), who still have assets being held by the applicant, did not respond.  The total value of their cash and securities held by the applicant was HK$228,327.73 as at 30 November 2020.

9.  Hence, the applicant made this application.

10.  When the matter first came before me for hearing on 6 May 2021, I raised a number of queries, the answers to which were provided by the 3^rd Affirmation of Leung Hei Man filed on 3 August 2021 (“the 3^rd Aff”), to the best the applicant presently can.  An amendment to the Ex-parte Originating Summons was also sought amending the prayers to list various unclaimed assets into respective categories thereunder to be dealt with accordingly.  I give leave to so amend and would in due course refer to these assets according to the abbreviations given in the Amended Ex-parte Originating Summons (“AEOS”).

11.  In the 3^rd Aff, the applicant affirmed that even with best endeavours it could not locate the documents showing the transactions relating to the 18 Clients, but that based on available information, none of the 18 Clients had a negative balance, which meant that any loans made to these clients (and charges due) had been fully settled or repaid, and the assets held by the applicant in the names of the 18 Clients belonged to them and have been held on trust by the applicant.  That was indeed the position as provided in the standard form margin agreement, which has been exhibited.  I am satisfied that the applicant has been holding the subject remaining assets as trustee on trust for its clients.

12.  The applicant has referred me to a number of cases with similar circumstances where a similar order as now sought has been given, among them Re Gold Fund Securities Co Ltd [2020] HKCFI 2884. There, K Yeung J had this to say:-

“ 12.    … That has been described as a “flexible and pragmatic” solution for security 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, or dispose of or return the trust assets”

13.  I have set out the facts above.  I am satisfied that the applicant has established both the requirements.

14.  As mentioned, the applicant has now clearly categorized the unclaimed assets, and is seeking in the AEOS respective, and in my view appropriate, directions for their disposal.

15.  On the evidence proffered, I am satisfied that:-

(a)  the 36,173 shares in Eganagoldpfeil (Holdings) Limited, which had been delisted in January 2012, held in trust for the client named Yang Shih Tang (“the Delisted Shares”), now have little or no monetary value;

(b)  the sale proceeds of the Odd Lot Shares, as listed in paragraph 23 of the 3^rd Aff, would not have been sufficient to settle the relevant fees for stock trading if the Odd Lot Shares were sold; and therefore, their sale is not practically viable; and

(c)  it is more economical and proportion to allow the applicant to forfeit the Small-amount Cash totalling HK$114.95, which was held on trust for 7 clients, respectively in small amounts.

16.  I therefore think it fit and expedient, under section 56 of the Trustee Ordinance, that the applicant be authorized (a) to sell the unclaimed securities particularized in Part A of the Appendix of the AEOS (save the Delisted Shares and Odd Lot Shares) and (b) to dispose of the Delisted Shares, the Odd Lot Shares and the Small-amount Cash, including to forfeit them.

17.  In the premises, I shall make an order in terms of the AEOS.  Based on the Bill of Costs submitted and on a broad-brush basis, I would summarily assess the applicant’s costs at HK$55,000.