Re Xin Hua Securities (Hong Kong) Ltd

DCMP 252/2023

[2023] HKDC 579

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 252 OF 2023

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D E C I S I O N

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1.These are my reasons for decision. This is an ex-parte application by originating summons for an order to pay certain unclaimed assets into court, under sections 56 and 62 of the Trustee Ordinance (Cap 29) and Order 92 of the Rules of the District Court.

Background

2.The applicant is a company incorporated in Hong Kong and had been providing advice and services to its clients for dealing in futures contracts until 15 September 2021. The applicant was licensed under the Securities and Futures Ordinance to carry on Type 2 licence regulated activity of dealing in future contracts in Hong Kong and Type 5 licence regulated activity advising on future contracts in Hong Kong.

3.The applicant ceased business on 15 September 2021 and informed the Securities and Futures Commission of its intention to cease business on 19 August 2021. The applicant then took reasonable steps to notify its clients of its cessation of business and to advise them to claim back the assets held. However, there are 4 clients who did not respond or were unable to be reached, leaving unclaimed cash held by the applicant that forms the subject matter of the present application. The 4 clients and their respective securities accounts’ balance are set out in Schedule 1 hereto.

The Application

4.The jurisdiction of the court pursuant to section 62 of the Trustee Ordinance and Order 92 of the Rules of the District Court is summarised and set out in Re Gold Fund Securities Company Limited [2020] HKCFI 2884 at paragraphs 12 to13:

“12. I have been shown a number of authorities, which include Re Drake & Morgan Limited, unrep, HCMP 1490/2009, 27 August 2009, Re Glenlyon Limited [2018] HKCFI 1038, and Re ABN Amro Bank N.V. [2018] HKCFI 1559. There have been ample precedents in which securities companies were pursuant to section 62 of the Trustee Ordinance (Cap 29) allowed to pay into court unclaimed cash and deposits of its clients who could not be contacted. That has been described as a “flexible and pragmatic” solution for securities 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, dispose of or return the trust assets.”

5.During the course of the applicant’s business, its clients have given standing instructions to the applicant to deal with their money in future contracts. According to Re Drake & Morgan Limited HCMP 1490/2009 (unreported, 27 August 2009), at paragraph 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.”

6.The applicant is seeking a declaration to the effect that it is a trustee of his clients in respect of the unclaimed assets, and an order for such funds held on behalf of respective clients to be paid into court, thereby discharging the applicant’s trustee’s obligation in respect of the same. Further, the applicant is also seeking apportioned costs of this application, to be borne by each of its clients and their individual balance to be paid into court after deduction of costs as per Schedule 2 hereto. The applicant undertakes to file a supplemental affirmation setting out the apportionment of costs within seven days.

Disposition

7.I am satisfied that the present application is made within the jurisdiction according to section 62 of the Trustee Ordinance and Order 92 of the Rules of the District Court. I am also satisfied that the applicant has made reasonable efforts to contact all of the 4 clients in question, but all of them have failed to respond. For the above reasons, I allow this application and make the following order:

(1) There be a declaration that the unclaimed cash standing in the applicant’s bank account 015-514-68-03576-1 at The Bank of East Asia, Limited as set out in Schedule 1 hereto is held by the applicant as trustee for each of its clients as set out therein;

(2) The applicant do have leave to pay into court the unclaimed cash as set out in paragraph 7(1) above, subject to deduction of costs of and occasioned by this application, apportioned between each of the applicant’s clients as set out in Schedule 2 hereto;

(3) The applicant shall notify the applicant’s clients as set out in Schedule 1 hereto of their rights to apply for their payment out of the unclaimed assets as set out in Schedule 2 hereto under Order 92 of the Rules of the District Court (Cap 336H) and such notice shall be given by way of advertisements in a Chinese-language and an English-language daily newspapers and by way of letters to such identified clients at their respective last known addresses within 28 days from the date of this order;

(4) There be a declaration that upon compliance with paragraphs 7(1) to 7(3) above, the applicant be discharged from any obligations or claims in respect of the unclaimed assets as set out in the above and Order 92, rule 4 of the Rules of the District Court, Cap 336H is deemed to have been complied with by the applicant;

(5) There be liberty to apply;

(6) Costs of and occasioned by the said ex-parte originating summons be to the applicant summarily assessed at HK$131,334 and be paid out of the unclaimed assets as set out in paragraph 7(2) above before making the payment in.

Ms Melinda Chiang, instructed by Cheung Yan & Associates, for the applicant

	SCHEDULE 1
Client's Name	Securities Account No.	Amount in Cash
WU JIONG (吳炯)	680011	HK$ 71,196.42
MA CHUNLIN (馬春林)	683032	HK$ 297,370.17
MA CHUNLIN (馬春林)	683036	HK$ 7,299.00
SUN CHENG (孫鋮)	680002	US$ 88.30
LIU JINGBO (劉鏡波)	683021	US$ 1,156.02

	SCHEDULE 2
Client's Name	Costs deducted	Balance to be paid into Court
WU JIONG (吳炯) (Account No. 680011)	HK$24,249.46	HK$46,946.96
MA CHUNLIN (馬春林) (Account No. 683032)	HK$101,284.12	HK$196,086.05
MA CHUNLIN (馬春林) (Account No. 683036)	HK$2,486.04	HK$4,812.96
SUN CHENG (孫鋮) (Account No. 680002)	HK$234.12	HK$453.27
LIU JINGBO (劉鏡波) (Account No. 683021)	HK$3,065.15	HK$5,934.12