RE FORTUNE KING TRADING LTD

RE FORTUNE KING TRADING LTD

Although the claimant (Trustees) proved that Mr Luu provided the initial funds, the court found on the evidence (including Mr Luu's statements in the statement of affairs and in mortgage/legal charge documents, and the inference that company loan proceeds repaid Mr Luu) that those payments were loans to the Company which were repaid and therefore rebutted any presumption of resulting trust; accordingly the Company was both legal and beneficial owner and the Net Balance is company property; the Trustees failed to discharge burden of proof.

Citation
RE FORTUNE KING TRADING LTD
Parties
Company: Fortune King Trading Limited (君裕貿易有限公司); Trustees: Mr Wong Tak Man Stephen and Mr Osman Mohammed Arab (Trustees of the estate of Mr Luu Hung Viet Derrick); Creditor/claimant: Construction Limited; Liquidators: Ms Tso Yin Yee and Mr Pang Yiu Kwong (Liquidators, Vantage Advisory Limited)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
19 May 2017
Case Number
HCCW432/2012
Procedural Posture
Companies (winding Up) Proceedings Under Cap 32 / Application for Determination Under Section 200(3) of the Companies (winding Up and Miscellaneous Provisions) Ordinance
Outcome
Trustees' claim that the Net Balance is held on trust for the bankruptcy estate dismissed; Net Balance held legally and beneficially by the Company
Legal Topics
Resulting Trust, Beneficial Ownership of Sale Proceeds, Duties of Liquidators, Priority Between Creditor and Bankrupt Estate, Admission of Late Evidence
Source Language
EN
Company Law Trusts and Equitable Interests Bankruptcy Law Civil Procedure Property Law Resulting Trust Beneficial Ownership of Sale Proceeds Duties of Liquidators +2 more

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Parties

Fortune King Trading Limited (君裕貿易有限公司)

Company

Mr Wong Tak Man Stephen and Mr Osman Mohammed Arab (Trustees of the estate of Mr Luu Hung Viet Derrick)

Trustees

Construction Limited

Creditor/claimant

Ms Tso Yin Yee and Mr Pang Yiu Kwong (Liquidators, Vantage Advisory Limited)

Liquidators

Procedural Posture

Companies (winding Up) Proceedings Under Cap 32 / Application for Determination Under Section 200(3) of the Companies (winding Up and Miscellaneous Provisions) Ordinance

Legal Issues

  1. 1 Whether the net balance of sale proceeds of the Property paid into court is legally and beneficially owned by the Company or held on trust for the bankrupt estate of Mr Luu
  2. 2 Whether the presumption of resulting trust arises and if so whether it is rebutted
  3. 3 Whether the liquidators breached their duty to investigate competing claims and the evidential consequences

Ratio Decidendi

Although the claimant (Trustees) proved that Mr Luu provided the initial funds, the court found on the evidence (including Mr Luu's statements in the statement of affairs and in mortgage/legal charge documents, and the inference that company loan proceeds repaid Mr Luu) that those payments were loans to the Company which were repaid and therefore rebutted any presumption of resulting trust; accordingly the Company was both legal and beneficial owner and the Net Balance is company property; the Trustees failed to discharge burden of proof.

Court Disposition

Trustees' claim that the Net Balance is held on trust for the bankruptcy estate dismissed; Net Balance held legally and beneficially by the Company

Orders

  • The Trustees failed to prove a resulting trust; Net Balance to be treated as asset of Fortune King Trading Limited
  • The Liquidators are not entitled to recover their costs of and occasioned by the Summons out of the assets of the Company