Re The Hong Kong Metropolitan Bank (Nominees) Ltd (in Liquidation)

HCCW 279/1992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 279 OF 1992

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Before: Hon Kwan J in Chambers

Date of Hearing: 3 November 2005

Date of Decision: 3 November 2005

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D E C I S I O N

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1.This is an application by the joint and several agents of the liquidator of The Hong Kong Metropolitan Bank (Nominees) Limited (in liquidation) (“HKMBN”) for directions as to the ownership and disposal of certain shares currently registered in the name of HKMBN.  The application is made under section 56 of the Trustee Ordinance, Cap. 29 and section 200(3) of the Companies Ordinance, Cap. 32.

2.HKMBN was wound up on 30 September 1992 upon the petition of The Bank of Credit and Commerce Hong Kong Limited (in liquidation) (“BCCHK”).  The joint and several agents of the liquidator, who is the Official Receiver, were appointed on 13 November 1992.  The same individuals are also the special managers appointed by the Official Receiver as the liquidator of BCCHK.  HKMBN is 100% beneficially owned by BCCHK. 

3.The shares for which directions are sought are set out in 3 schedules annexed to the amended summons.

4.Schedule A is made up of shares in companies still listed on The Stock Exchange of Hong Kong Limited or the Singapore Stock Exchange, and for which the corresponding share certificates are still physically held by the joint agents, excepting the shares believed to belong to the estate of one Law Kin Man, as I shall mention below (“the Part A Shares”).

5.Schedule B is made up of shares where the joint agents have not been able to locate the share certificates, but in respect of which they have received dividends (“the Part B Shares”)

6.Schedule C is made up of shares bought by Law Kin Man, a customer of BCCHK, but registered in the name of HKMBN (“the LKM Shares”).  The assets of Mr Law are subject to a receiving order obtained by the Department of Justice pursuant to the Drug Trafficking (Recovery of Proceeds)(Designated Countries and Territories) Order.

7.Based on their extensive investigations, the joint agents are of the view that the Part A Shares and the Part B Shares are held by HKMBN on behalf of BCCHK.  The reasons in summary are as follows:

(1)	HKMBN’s role was to provide nominee services for the BCCI Group or BCCHK.
(2)	The books and records of BCCHK and HKMBN have been thoroughly examined and no other owners have been identified.
(3)	Advertisements were placed by the joint agents in newspapers and a notice was published in the gazette in 2001. The joint agents have not received any claims for beneficial ownership of these shares during the 13 years of the BCCHK liquidation and 14 distributions have been declared during this time with advertisements placed prior to each distribution being made.
(4)	Other hypotheses as to the ownership have been considered but seem unlikely.

8.For the Part A Shares, the joint agents seek a declaration that these shares are beneficially owned by BCCHK and a direction that they would be at liberty to sell the shares and pay the proceeds to the special managers of BCCHK.

9.The joint agents seek a similar declaration for the Part B Shares that these shares are beneficially owned by BCCHK.  As they do not have the share certificates, this declaration may assist them in negotiating with the various share registrars of companies to obtain replacement certificates without the need to provide indemnities or onerous statutory declarations.  They seek a direction that they be empowered to take such action as necessary to obtain replacement share certificates and consequent upon replacement certificates being obtained, they would be at liberty to sell and remit the proceeds to the special managers of BCCHK.

10.For both the Part A and Part B Shares, the joint agents also seek a direction that the dividends and warrants be paid by them to the special managers of BCCHK with interest accrued.

11.For the LKM Shares, they seek a declaration that these shares are owned beneficially by the estate of Mr Law and a direction that they would be at liberty to do all necessary acts to transfer the shares to the receiver of the estate, with an amount equal to the dividends entitlements attributable to these shares with interest.

12.Consequential directions are sought in respect of the sale of the shares.

13.The Official Receiver as liquidator of both HKMBN and BCCHK is agreeable to the proposed directions.

14.The Part A and Part B Shares are trust property and the court has power under section 56 of Cap. 29 to authorise trustees to deal with trust property where there is no trust instrument or law enabling the trustee to otherwise deal with the trust property.

15.It is proper to make the declarations and directions sought as stated above, in terms of paragraphs 1 to 6 of the amended summons.

16.As regards costs, the joint agents seek an order that the costs of the investigation into the ownership of the shares and the costs of this application be paid out of the proceeds of the shares.  They invoke the inherent jurisdiction of the court to make such costs orders in the administration of trust funds (Re Berkeley Applegate (Investment Consultants) Limited (in liquidation)(No. 2) [1989] Ch 32; Re CA Pacific Finance Limited (in liquidation) and Another (No. 2) [1999] 2 HKC 652 at 657I to 658A).  I am satisfied it is proper to so order, even though the application is brought by the joint agents in their capacity as such rather than by the liquidator or the special managers of BCCHK, as it is BCCHK which stands to benefit from this application.

17.Accordingly, I also make an order in terms as per paragraphs 7 to 11 of the amended summons.

Mr Tom Vaizey of Messrs Johnson, Stokes & Master, for the Joint Agents

Ms Rebecca Drake of the Department of Justice, for the US Government