Re Gt Capital Ltd

HCMP 250/2024

[2024] HKCFI 1007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 250 OF 2024

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D E C I S I O N

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1.This is an ex parte application made under sections 56 and 62 of the Trustee Ordinance, Cap 29 (“the TO”) and Order 92, Rules of the High Court (“RHC”) by the Originating Summons dated 15 February 2024.

2.The applicant took out a summons to amend the Originating Summons on 18 March 2024 and this court granted the application at the outset of the hearing.

3.The applicant in the present case was incorporated in Hong Kong and carried on business as a licensed securities broker.

4.Section 56 of the TO empowers the court to authorise dealings with trust property and section 62 allows trustees having in their hands or under their control money or securities belonging to a trust to apply to the court to pay the same into court and the same shall, subject to the rules of the court, be dealt with according to the orders of the court. Order 92 of the RHC sets out the mechanism under which applications pursuant to sections 56 and 62 of the TO are to be made.

5.The foregoing provisions are not infrequently relied on by finance security companies to dispose of unclaimed monies and securities in their possession upon cessation of their businesses.

6.The applicant, having passed the resolution to cease its business on 30 November 2021, now asks this court to exercise the discretion in its favour so that it can finally dispose of the unclaimed monies and securities in its possession holding on trust for its clients.

7.The principles governing these applications are well-established.

8.Mr Chu, counsel for the applicant, helpfully refers this court to some authorities including Re Gold Fund Securities Company Limited [2020] HKCFI 2884 per K Yeung J and Re Ying Wah Securities Company Limited [2023] HKCFI 834 per DHCJ Roxanne Ismail SC. Guided by the principles expounded in such cases, this court now proceeds to examine the merit of this application, which is supported by the affirmations of Chau Yau-keung, the manager of the applicant.

9.In his first affirmation, Mr Chau explained that the applicant gave due notice in writing to his client on 3 December 2021, informing them that the applicant would cease its business on 31 December 2021. The applicant further asked them to withdraw their cash and/or securities in their accounts as soon as possible. In addition, the applicant posted advertisements in two newspapers in Hong Kong on 30 and 31 December 2021. From December 2022 to June 2023, the applicant continued to issue various reminders by way of letters and e‑mails to its clients and urged them to withdraw their cash and securities at their respective securities accounts.

10.Despite all these efforts, as at 5 February 2024, there remains 81 accounts which could not be closed and the unclaimed assets in these 81 accounts consist of unclaimed cash in the sum of HK$877,583.90, unclaimed securities which physical certificates can be withdrawn in the total value of HK$650,868.57 as at 31 December 2023 and unclaimed securities which physical certificates could not be withdrawn due to their delisted status.

11.There is also a negative balance of HK$1.2 million in some of the client margin accounts. This negative balance shows the margin lending of the applicant to his clients and this is outside the ambit of this application.

12.In this kind of applications, the court has to be satisfied that the unclaimed assets are held by the applicant as trustee and the applicant has used reasonable endeavours to contact and/or obtain instructions from the beneficiaries.

13.For the first requirement, I have no hesitation that it is borne out by evidence. As pointed out by DHCJ Roxanne Ismail, SC in Re Ying Wah Securities Company Limited, at paragraph 17, unless the contrary is shown, a broker is a trustee over the money and securities it holds on behalf of its clients.

14.Now, Mr Chau in his affirmation also exhibited a standard client agreement and I have perused the same. I accept Mr Chu’s submission that the provisions in the standard client agreement supports the existence of a trust relationship between the applicant and its clients.

15.As regards the second requirement, I am satisfied that on the evidence, the applicant has made sufficient and appropriate endeavours to contact and/or obtain instructions from its clients. Reminders have been sent to them and in the present case, notices have been given to its clients more than two years before this application. Sufficient time have been given to its clients to react. This application is evidently necessary for the applicant to facilitate its liquidation.

16.In the circumstances, I grant the application and make an order in terms of the Amended Originating Summons. In particular, I would make it clear that I allow the applicant to recover its costs of this application from the unclaimed cash and this is the effect of paragraph 3 of the Amended Originating Summons.

17.Lastly, I thank Mr Chu for his helpful submission.

Mr Ian Chu, instructed by Raymond Cheung & Chan, for the Applicant