Re Mtf Securities Ltd

HCMP 2065/2022

[2023] HKCFI 312

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1339 OF 2022

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Before: Deputy High Court Judge H. Au-Yeung in Chambers (Open to Public)

Date of Hearing: 1 February 2023

Date of Judgment: 1 February 2023

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JUDGMENT

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THE APPLICATION

1.This is the application made by MTF Securities Limited by way of an ex parte originating summons filed on 8 December 2022, as amended pursuant to leave given at the beginning of this hearing (“the Amended Originating Summons”), for an order, inter alia, to pay unclaimed cash and securities (“the Unclaimed Assets”) into court and otherwise dispose of them pursuant to sections 56 and 62 of the Trustee Ordinance (Cap.29, Laws of Hong Kong) (“the Ordinance”).

BACKGROUND

2.The applicant was incorporated in Hong Kong on 31 December 1985, and was previously known as Megafields Investments Limited, Esmail Stockbrokers Limited, Esmail Securities Limited and Magusta Securities Limited. It has changed its name to MTF Securities Limited since 17 November 2000.

3.At all material times, the applicant has been a securities broker licenced by the Securities and Futures Commission (“the SFC”) for dealing in securities. It is also an Exchange Participant of the Stock Exchange of Hong Kong Limited (“SEHK”). It has provided local securities trading services and electronic trading platforms to enable its clients to place orders and make investments in the stock market.

4.On around 7 December 2021, the shareholders of the applicant decided to cease the applicant’s business.

5.Subsequent to the making of such a decision, the applicant issued a notice of cessation of business on 14 January 2022 to all its clients, so as to inform them about its intention to cease business with effect from 6 March 2022, subject to the approval of the SFC.

6.On 7 March 2022, the applicant issued a further notice to all its clients and informed them that they would have to close their accounts with the applicant.

7.The aforesaid notices have been sent by post to all the applicant’s clients. For those clients who have not come forward as requested, registered post has also been sent. Various telephone calls had also been made in an attempt to contact its clients.

8.On 15 July 2022, the applicant caused advertisements in Chinese language and English language to be published in Sing Tao Daily and the Standard respectively, in which a final notice for voluntarily closure of account was given. Its clients were reminded that the applicant would seek appropriate court orders for the disposal of unclaimed assets after 31 July 2022.

9.Despite such efforts, there are still 8 clients who have not approached the applicant for the purpose of retrieving their assets (“the Uncontactable Clients”). This application is therefore rendered necessary.

THE LEGAL PRINCIPLES

10.Section 56(1) of the Ordinance provides that:

“Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, expenditure, or other transaction, is in the opinion of the court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, if any, as the court may think fit and may direct in what manner any money authorized to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.”

11.Pursuant to the above statutory provision, if the Court considers it expedient to do so, it would confer power(s) on a trustee for the purpose of managing or administering trust properties vested in such a trustee. The powers as provided by the said provision are wide-ranging, and the Court would confer on the trustee such powers which are necessary for the aforesaid purpose. Before making the order, the Court would have to be satisfied that the applicant trustee did not have such powers in the first place.

12.While conferring such powers on the applicant trustee, the Court may also impose terms and conditions as it thinks fit, and direct the manner in which the authorised expenditure and costs of the transactions involved are to be paid or borne between capital and income.

13.Section 62 of the Ordinance stipulates that:

“62. Payment into court by trustees

(1) 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.

[…]

(5) Every transfer, payment and delivery made in pursuance of any such order shall be valid and take effect as if the same had been made on the authority or by the act of all the persons entitled to the money and securities so transferred, paid or delivered.”

14.The applicant for an order under section 62 of the Ordinance has to establish that:

(1) The assets in question are held by the applicant as trustee; and

(2) Despite reasonable efforts, the beneficiaries cannot be contacted or unresponsive, or the trustee is otherwise unable to obtain instructions as to how to deal with, dispose of or return the trust assets.

DISCUSSION

The applicant as trustee

15.Having perused the account opening documents of the Uncontactable Clients, I am satisfied that, as far as the Unclaimed Assets are concerned, the applicant has been a trustee of its clients.

The applicant’s attempts to return the trust assets

16.I have considered the evidence filed by the applicant which I have briefly summarised above. It is evident that the applicant has spent reasonable effort in an attempt to return the trust assets to the 8 Uncontactable Clients.

The unclaimed trust assets

17.The unclaimed trust assets may be categorised as follows:

(1) Unclaimed cash;

(2) Unclaimed securities of companies which are still listed and being traded in Hong Kong;

(3) Unclaimed securities of a company which is not listed at all (i.e. Mountbatten Corporation which is incorporated in the Cayman Islands); and

(4) Unclaimed securities of a company which had been de-listed and wound up (i.e. SMI Holdings Group Limited).

18.As far as the unclaimed cash is concerned, since the two requirements under section 62 of the Ordinance referred to above have been satisfied, I agree that it is appropriate to make an order under the said section 62 for payment of the same into court.

19.For the same reasons, I am satisfied that an order should be made for the unclaimed securities of companies which are still listed in Hong Kong to be paid into court.

20.For the unclaimed securities of Mountbatten Corporation which is not listed in Hong Kong, the share certificate thereof is currently held by the applicant. An order should therefore be made for such a certificate to be deposited into court.

21.The unclaimed securities of SMI Holdings Group Limited cannot be paid into court. Since the requirements under section 56 of the Ordinance are satisfied, I consider it appropriate to grant an order that the applicant may sell or otherwise dispose of (including the forfeiture of) those securities.

ORDER

22.By reasons of the aforesaid, I make an order in terms of the Amended Originating Summons (as slightly amended in a number of places which have been agreed to by Mr Lee for the applicant), and further order that the costs of and occasioned by this application (which is summarily assessed on a trustee basis at $88,053) be paid to the applicant out of the Unclaimed Cash.

Mr Lee Ming Tak of Lee & Yik Lawyers for the applicant