HSBC INSTITUTIONAL TRUST SERVICES (ASIA) LTD v. TIN LIK AND ANOTHER

HSBC INSTITUTIONAL TRUST SERVICES (ASIA) LTD v. TIN LIK AND ANOTHER

The trustee was entitled to distribute the entirety of the Trust's net assets without retention because the 1st defendant had been fully notified of the basis and extent of the set-offs since 2007, had repeatedly been given opportunity to challenge them yet did not commence proceedings; the set-offs had a solid contractual basis under the Sale and Purchase Agreement; service was properly effected; accordingly the risk of a successful claim did not justify withholding funds from unit holders.

Citation
HSBC INSTITUTIONAL TRUST SERVICES (ASIA) LTD v. TIN LIK AND ANOTHER
Parties
Plaintiff (trustee): HSBC Institutional Trust Services (Asia) Limited; 1st Defendant (vendor/guarantor): Tin Lik; 2nd Defendant (manager): RREEF China REIT Management Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 June 2011
Case Number
HCMP242/2011
Procedural Posture
Trustee Application for Directions Under Order 85 R.2 (distribution of Trust Assets) / Judgment on Originating Summons / Chambers Application
Outcome
Application granted
Legal Topics
Distribution of Trust Assets, Retention Against Prospective Claims, Set Off, Service of Process, REIT Termination and Delisting, Costs Payable Out of Trust
Source Language
EN
Trust Law Civil Procedure Securities Regulation Property Law Corporate Law Distribution of Trust Assets Retention Against Prospective Claims Set Off +3 more

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Parties

HSBC Institutional Trust Services (Asia) Limited

Plaintiff (trustee)

Tin Lik

1st Defendant (vendor/guarantor)

RREEF China REIT Management Limited

2nd Defendant (manager)

Procedural Posture

Trustee Application for Directions Under Order 85 R.2 (distribution of Trust Assets) / Judgment on Originating Summons / Chambers Application

Legal Issues

  1. 1 Whether trustee may distribute entire net assets of the Trust without retaining funds to meet any possible claim by the 1st defendant
  2. 2 Whether the 1st defendant was validly served with the originating summons
  3. 3 Whether the 1st defendant has waived or abandoned any right to challenge the set-offs by failing to commence proceedings

Ratio Decidendi

The trustee was entitled to distribute the entirety of the Trust's net assets without retention because the 1st defendant had been fully notified of the basis and extent of the set-offs since 2007, had repeatedly been given opportunity to challenge them yet did not commence proceedings; the set-offs had a solid contractual basis under the Sale and Purchase Agreement; service was properly effected; accordingly the risk of a successful claim did not justify withholding funds from unit holders.

Court Disposition

Application granted

Orders

  • Plaintiff directed to proceed to distribution of the entirety of the net assets of the Trust without any retention to meet any possible claim by the 1st defendant
  • Order nisi that the plaintiff's costs of this application be paid out of the Trust on a trustee basis