7 December, 2015
In Wah Ying Cheong Co Ltd v Chan Kwok Ping & Ors [2015] HCMP 3059C/1997, the Court held that where a trustee is unable to locate beneficiaries under a trust, the Court may order payment of trust monies into Court pursuant to s62 of the Trustee Ordinance (the "TO"). This case serves as a reminder to trustees that s62 TO can provide a practical solution where beneficiaries cannot be found and trustees wish to discharge their duties under the trust.
Facts
The plaintiff trustee held funds on trust for the estates of the 2nd to 4th Defendants (the "Beneficiaries"). A 2003 court order expressly stated that the funds were to be paid to the personal representatives of the Beneficiaries and not to any beneficiaries of the Beneficiaries' estates or the Beneficiaries' descendants.
Unfortunately, there were no personal representatives of the Beneficiaries' estates. As required under a 2004 court order, the plaintiff placed an advert inviting descendants of the Beneficiaries to apply for the appointment of personal representatives or judicial trustees so that the trust assets could be distributed. The plaintiff's advertisements did not bring forth any Beneficiaries.
The plaintiff applied for leave to pay the net trust monies (i.e. after payment of its costs and expenses) into Court under s62 TO.
The Court's jurisdiction
The Court has the power to order a trustee to pay money into Court pursuant to s62 TO. The receipt of the funds by a proper officer of the Court is sufficient to discharge the trustee from its duty to the beneficiaries. The rationale behind s62 TO is that it allows funds to be paid into Court pending proper representatives being appointed and prevents a trustee from incurring further costs on disputes and trust administration.
Court's decision
The Court held that on the evidence it was clear the trust funds had remained unclaimed for over a decade. The Court therefore ordered that the plaintiff pay the trust funds into Court pursuant to s62 TO.
The Court criticised the plaintiff for its delay in applying to Court for directions under s62 TO. It rejected the plaintiff's excuse that the reason for the delay was its search for beneficiaries by way of advertisements. The Court held that the delay was immaterial to the present application, save as to costs, but was still content to order that the plaintiff's costs be paid out of the trust fund.
The Court ordered the plaintiff to give notification of the order by way of advertisements in both English and Chinese language newspapers.
Commentary
This case serves as a reminder to trustees that the Court may order payment of trust funds into Court where beneficiaries cannot be located. This can provide a practical solution where trustees are unable to locate beneficiaries and wish to discharge their duties under the trust. Trustees should be wary of unnecessary delay in seeking the Court's direction under s62 TO as this can result in costs consequences in the proceedings.
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