Re C.A. Pacific Securities Ltd (in Liquidation)

HCCW 37/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) ACTION NO. 37 OF 1998

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Before: Hon. Yuen, J.A. sitting as an additional judge of the Court of First Instancein Chambers (open to the public)

Date of hearing and decision: 24 July 2009  

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DECISION

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1.There are before me 2 summonses both filed on 24 June 2009 dealing with unclaimed trust assets which remain from the collapse in January 1998 of CA Pacific Securities Ltd (“the Company”).

Background

2.The Company had many clients whose securities were held in CCASS, a computerised book-entry settlement system where unnumbered share certificates are immobilised and deposited with a central share depositary.

3.Unfortunately there was a shortfall in many of the securities, mainly because CA Pacific Finance Ltd had pledged certain securities to its lenders.

4.The court was asked to resolve questions concerning the ownership of the remaining securities and how they should be dealt with by the liquidators of the Company (“the Liquidators”).

Ruling that assets were held on trust

5.In a judgment handed down on 17 December 1998, I decided that individual clients acquired and retained a proprietary interest in the securities they purchased as individual beneficiaries. That decision also applied to corporate action entitlements such as bonus issues and dividends, as well as cash. The Liquidators therefore stood in the position of trustees.

Distributions

6.On 30 June 2003 and 30 April 2004, the Liquidators made distributions of trust assets in the form of securities and cash. However certain distributions were not collected by the clients.

Order dealing with uncollected assets

7.In respect of these unclaimed trust assets, on 1 November 2006 I made an order giving directions to the Liquidators for advertisements to be placed to notify clients that assets which remain uncollected by clients 12 months after the date of any further cash distribution shall be regarded as unclaimed assets and be lodged with the Official Trustee.

8.Since then there has been another distribution on 23 March 2007 which I understand is the last distribution.

9.Pursuant to the order of 1 November 2006, on 23 March and 23 July 2007 the Liquidators advertised for clients to collect the assets to which they are entitled, notifying them that failure to do so would result in the lodging of unclaimed assets with the Official Trustee.

Residual Unclaimed Trust Cash (“RUTC”)

10.However according to the Liquidators, there is still nearly $19m in cash including interest, remaining uncollected (see schedule B to the 6^th Affirmation of Rainier Lam Hok Chung). This amount has been referred to as the Residual Unclaimed Trust Cash (“RUTC”). The sums, which range from minimal to substantial, are from accounts belonging to 719 clients whom the Liquidators have notified by letters sent to their last known addresses and by the advertisements mentioned above. However these persons have failed to claim the sums.

Summons under Trustee Ordinance

11.On 24 June 2009 the Liquidators issued a summons under s.67 Trustee Ordinance Cap. 29 for payment of the RUTC into court to be dealt with by the Official Trustee.

12.With regard to the lodging of cash with the Official Trustee, the material parts of the Trustee Ordinance Cap. 29 provide as follows:

“67(1) Trustees ... having in their hands or under their control any moneys belonging to any trust, shall be at liberty ... to pay the same, with the consent of the Official Trustee and in accordance with such directions as they may receive for the purpose from him, into the court; and the said trust moneys shall be paid through the Treasury into a bank authorized by the Chief Executive on deposit bearing interest, or otherwise, to the account of the Official Trustee ... in the matter of the particular trust ... in trust to attend the orders of the court.

(2) Any trust moneys paid into a bank pursuant to subsection (1) which –

(a) remain unclaimed for a period of 5 years from the last making of an order of the Court in relation thereto; or

(b) if no order shall have been made, remain unclaimed for a period of 5 years from the date of payment into the bank,

shall be transferred by the Official Trustee to the general revenue of Hong Kong”.

13.The present application does not apply to unclaimed securities to which s.68 TO would apply.

Order

14.Coming back to the application regarding the RUTC, I am satisfied that the Liquidators’ affirmation complies with the requirements of s.67 TO. The Official Trustee has confirmed in a letter dated 20 July 2009 that he has no objection to an order being in made in terms of the summons. Having considered the summons and the Liquidators’ affirmation in support, I have no doubt that it would be correct to make an order in terms of the summons.

Dissolved companies trust cash (“DCTC”)

15.The other summons filed on 24 June 2009 deals with cash in the accounts of 9 clients which are companies. The Liquidators’ search of the Companies Registry has disclosed that these companies were dissolved between October 1999 and November 2007.

Companies Ordinance

16.Pursuant to s.292 Companies Ordinance, Cap. 32,

“(1) Where a company is dissolved, all property and rights whatsoever vested in or held for the company immediately before its dissolution ... shall be deemed to be bona vacantia and shall accordingly belong to the Government, and shall vest and may be dealt with in the same manner as other bona vacantia accruing to the Government”.

Summons under Companies Ordinance

17.That being the law, the Liquidators have applied for an order that they be at liberty to pay the total sum of approximately $3.5m cash to the Government.

Order

18.Having considered s.292 CO, the summons and the Liquidators’ affirmation in support, I would also make an order in terms of the summons.

Mr Bryan O’Hare of Lovells for the Liquidators

The Official Solicitor in his capacity as Official Trustee, excused from attendance as requested (20 July 2009)

The Official Receiver, excused from attendance as requested (22 July 2009)