Tribune Ltd v Connaught West Ltd And Another

HCMP 1270/2022 and HCMP 1947/2022

(HEARD TOGETHER)

[2023] HKCFI 2035

HCMP 1270/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1270 OF 2022

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1947 OF 2022

____________________

____________________

____________________

(HEARD TOGETHER)

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D E C I S I O N

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The Application

1. I have before me the first application for an order pursuant to section 48 of Occupational Retirement Schemes Ordinance, Cap. 426 (“Ordinance”), winding up an occupational retirement scheme domiciled in Hong Kong (“Scheme”) following its cancellation by the Mandatory Provident Funds Schemes Authority (“MPFA”). The Applicant seeks the appointment of Mat Ng and Nigel Trayers of Grant Thornton Recovery and Reorganisation Limited as liquidators. They are to be given powers to liquidate the Scheme broadly mirroring those of a liquidator of a company. Their fees and expenses will be charged on a time costs basis upon assessment by the court and paid out of the assets of the Scheme.

Background

2. As I understand the evidence the Scheme was established as a vehicle through which mainly United Kingdom nationals could invest in products which would be held within the Scheme, which was not only recognised in Hong Kong, but also recognised as a Qualifying Recognised Overseas Pension Scheme by HM Revenue and Customs in the United Kingdom. Holders of retirement pensions in the United Kingdom could invest their pension funds in the Scheme and this would afford them tax advantages and flexibility in managing the underlying investments. This I assume, it is not expressly stated in the evidence, was the Applicant’s, Ms Stanton, reasons for placing some of her assets in the Scheme. She is a teacher of media studies with the ESF and a United Kingdom national. She joined the Scheme on 14 November 2014. Like, I assume from the evidence, most members of the Scheme she was not an employee of the “employer” for the purposes of the Scheme which I explain in the following paragraph. The Applicant was introduced to the Scheme by a financial adviser, David Wilkinson, who controls the 1^st Respondent.

3. The way in which the Scheme was established is as follows. On 31 May 2012, Global Fiduciary Solutions Limited (“GFS”) was incorporated in Hong Kong. On 2 July 2013, the Scheme was established pursuant to a Hong Kong law-governed trust deed between GFS (as principal employer) and the 3^rd Respondent (as the then trustee) (“Trust Deed”). On 16 September 2013, the Scheme was registered with MPFA (being the Registrar of Occupational Retirement Schemes) under Scheme No R028832(1) in accordance with the Ordinance.

4. For reasons I explain later on 13 February 2019, GFS went into voluntary liquidation. GFS was dissolved on 28 January 2020. Under clause 20 of the Trust Deed, the Scheme shall be terminated if the principal employer is put into liquidation.

5. As of 31 August 2022, the Scheme’s registration under the Ordinance was been cancelled. The background to the cancellation of the Scheme’s registration under the Ordinance is set out in a decision of the Occupational Retirement Schemes Appeal Board (“Appeal Board”) dated 22 August 2022 (“Appeal Board Decision”), which is in brief as follows:

(1) On 27 July 2021, the MPFA issued a proposal to cancel the Scheme’s registration (“Cancellation Proposal”) because not all Scheme members were eligible persons within the meaning of section 2A of the Ordinance.

(2) On 4 October 2021, having considered the representations and objections received in response to the Cancellation Proposal, the MPFA proceeded to cancel the registration of the Scheme.

(3) On 14 December 2021, the liquidator of GFS sought to appeal to the Appeal Board against the MPFA’s decision to cancel the Scheme’s registration.

(4) On 22 August 2022, the Appeal Board upheld the MPFA’s decision.

6. As of 1 September 2022, the Applicant was entitled to US$32,777.26 under the Scheme.

7. I do not understand the above matters to be in dispute.

The controversy

8. It would appear that the underlying problem with the administration of the Scheme arises from disputes between the 1^st to 3^rd Respondents. In short it would appear that Mr Wilkinson entered into heads of agreement dated 24 June 2016 (“HOA”) with GFS to acquire its business. Clause 1.4 of the HOA provides that the 3^rd Respondent, who is the only trustee referred to in the HOA, would be removed and replaced with Mr Wilkinson’s nominee. On 29 June 2016 the 1^st Respondent was appointed as a trustee and the 3^rd Respondent retired. On 9 December 2016 GFS wrote to Mr Wilkinson informing him that clause 1 of the HOA had not been complied with and the HOA were no longer effective. On 8 December 2016, GFS purported to appoint the 2^nd and 3^rd Respondents as co-trustees of the Scheme. As a consequence of the termination of the HOA says the 2^nd Respondent, the 1^st Respondent is not a validly appointed trustee, although from the 30 June 2016, the 1^st Respondent has been registered as the sole trustee of the Scheme. The 2^nd Respondent disputes the validity of this appointment in HCA 525/2017. The Applicant’s position is that the 1^st Respondent remains the sole trustee as the 1^st Respondent GFS did not have the power to change the trustees. On 21 December 2020 the 3^rd Respondent again resigned as a trustee.

9. This mess gave rise to at least two practical problems. Third party investment product advisers were uncertain, who to take instructions from and members under the Scheme had difficulty obtaining access to their investments. Mr Peter Manktelow on behalf of the 2^nd Respondent explains how the 2^nd and 3^rd Respondents decided to resolve the problem in [18] of his affirmation:

“In due course, given the standoff and the frustration caused to the 2^nd and 3^rd Respondents and to the members of the Scheme, in order to try to bring matters to a conclusion and to enable the members to exit the Scheme with their funds, the process was commenced for the GFS, the principal employer of the Scheme, to be put into voluntary liquidation. GFS was ultimately dissolved on 28^th January 2020. Pursuant to the Trust Deed of the Scheme, the Scheme shall be terminated if the principal employer is put into liquidation. There are now produced and shown to me a copy of the special resolution of GFS passed on 13^th February 2019 and the company particulars of GFS on the Companies Registry website, at pages 35 to 36 of Exhibit ‘PDM-1’.”

10. The plan seems to have been to collapse the Scheme and then distribute the assets pursuant to clause 20 the Trust Deed, which provides:

“20. TERMINATION

(a) The Scheme shall be terminated:

(i) if the Principal Employer shall be placed in liquidation otherwise than as provided in Clause 20 hereof; or

(ii) if the Principal Employer gives the notice referred to in Clause 19 hereof but subject thereto; or

(iii) if for any reason the Scheme appears in the opinion of the Trustee to be unable to fulfil its functions; or

(iv) upon the expiration of the period specified in Clause 23 of this Deed.

(b) Upon termination of the Scheme, the Trustee shall (after the assets of the Scheme satisfying (i) all debts and liabilities owed to the Trustee and persons employed pursuant to Clause 11, to the extent not met by the Principal Employer or the Participating Employer, and (ii) all other debts, charges and liabilities owed by the Trust Fund) apply the assets of the Scheme so far as the assets available shall permit to the following purposes and with the respective priorities indicated:

(i) Firstly in securing for each affected Member at the date of termination the benefits to which he would have been entitled had he left service on the day preceding the date of termination, such benefits to be payable on termination of the Member’s service or on his earlier death.

(ii) Secondly in securing for each affected Member at the date of termination the benefits to which he would have been entitled had he reached his Normal Retirement Date and retired on the day preceding the date of termination less any benefits secured for that...