THE INCORPORATED OWNERS OF TIMLEY COURT v. SECRETARY FOR JUSTICE

HCMP 96/2024

[2024] HKCFI 920

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 96 OF 2024

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BETWEEN

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REASONS FOR JUDGMENT

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A. INTRODUCTION

1.  This is the application by the Plaintiff by Originating Summons dated 18 January 2024 (“OS”) for a vesting order under section 45 of the Trustee Ordinance (Cap 29) (“TO”) in respect of two undivided shares allocated to the common areas of Timley Court.

2.  The Plaintiff is the Incorporated Owners of Timley Court (“IO”), which was incorporated on 5 April 2022 under the laws of Hong Kong.

3.  The Secretary for Justice has been joined as a Defendant to these proceedings but have indicated that it has no objection in principle to the reliefs sought in the OS, will not assert any claim for bona vacantia in the subject shares, and sought to be excused from attendance at today’s hearing. This application is thus unopposed.

B. RELEVANT BACKGROUND

4.  Under the Second Schedule of the Deed of Mutual Covenant for Timley Court (“DMC”), 2 undivided shares (“2 Undivided Shares”) had been allocated to the common areas (“Common Areas”).

5.  Clauses 7(a) and (b) of Section II of the DMC provide that:

“(a) Upon the execution of this Deed, the Undivided Shares allocated to the Common Area together with all the Common Areas to which they relate shall be and are hereby vested in the Manager as the trustee for the benefit of all the Owners free of all costs and considerations." (Emphasis added)

"(b) The Undivided Shares allocated to the Common Areas together with all the Common Areas to which they relate shall be assigned by the Manager, on termination of his appointment, to the Manager's successor in office as manager undertaking the management of the Land and the Building or to the Corporation (if so required by it when formed) as trustee for the benefit of all the Owners free of all costs and consideration.” (Emphasis added)

6.  Clause 2(c) of Clause A of Section III of the DMC provides that the Manager’s appointment shall be terminated "upon winding up of the Manager or his being struck off the register of companies kept by the Companies Registrar".

7.  In this case, Perfect Skill Property Management Company Limited (柏健物業顧問有限公司), which was the Manager under the DMC and was vested with the 2 Undivided Shares pertaining to the Common Areas, was dissolved by an order of the Court dated 11 November 2009, and hence its appointment as Manager was consequently terminated pursuant to Clause 2(c) of Clause A of Section III of the DMC.

8.  Upon the termination of the Manager’s appointment, the 2 Undivided Shares shall be assigned to the Manager's successor in office or the IO pursuant to Clause 7(b) of Section II of the DMC.

9.  However, since the date of dissolution of the Manager, the 2 Undivided Shares have not been assigned to the IO.

10.  The IO has thus issued the OS seeking reliefs including (inter alia) for an order that the 2 Undivided Shares be vested in the IO as the new trustee for the benefit of all the owners of Timley Court.

C. LEGAL PRINCIPLES

11.  The general legal principles for a vesting order under the TO have been summarized in Lead Properties Limited v Secretary for Justice, Harvest Fortune Limited v Secretary for Justice, Billion Glory Properties Limited v Secretary for Justice [2022] HKCFI 3297 at paragraphs 5 to 6:

“5. Section 45 of the Trustee Ordinance (Cap 29) (“the Ordinance”) provides:

‘In any of the following cases, namely— ...

(b) where a trustee entitled to or possessed of any land or interest therein, whether by way of mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any other person—

... (iii) cannot be found, or, being a corporation, has been dissolved ;

... the court may make an order (in this Ordinance called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct ...’

6. Once the preconditions set out in the statute have been satisfied, the Court has the discretion to vest the property directly in the beneficiary: see Re Lee Yang, Shiu Chuen Joyce [2021] 4 HKLRD 252 at §16 per DHCJ Paul Lam SC.”

12.  Procedurally, the Secretary for Justice is a proper defendant because when a company is dissolved, every property and right vested in or held on trust for the company immediately before the dissolution may be vested in the Government as bona vacantia: see Lead Properties Limited at paragraph 7.

D. ANALYSIS

13.  Applying the above legal principles, I am satisfied that this is a proper case for the Court to make the vesting order sought by the Plaintiff:

(1) The previous Manager which held the 2 Undivided Shares has been dissolved and it is no longer capable of acting as trustee in respect thereof;

(2) The 2 Undivided Shares have not been assigned to any successor and/or incorporated owners since the date of its dissolution;

(3) The IO, which has been incorporated in 2022, is entitled to be assigned the 2 Undivided Shares as the manager’s successor pursuant to the terms of the DMC;

(4) The Secretary for Justice, who has been properly joined as the Defendant herein, has confirmed that he will not assert any claim for bona vacantia in the subject shares.

E. DISPOSITION AND COSTS

14.  By reason of the aforesaid, the following orders were made at the hearing on 26 March 2024:

(1) The two undivided shares allocated to the Common Areas (as defined in the Deed of Mutual Covenant registered at the Land Registry by Memorial No. 8038037 on 30 March 2000) (“DMC”) together with all the Common Areas to which they relate which were previously vested in Perfect Skill Property Management Company Limited (柏健物業顧問有限公司) (which was dissolved by an order of the Court dated 11 November 2009) as trustee shall be vested in the Plaintiff as the new trustee, to be held for the benefit of all the owners of Timley Court and in accordance with the terms of the DMC.

(2) The Defendant’s costs of this action, in the agreed sum of HK$12,000, shall be paid by the Plaintiff.