15 Dec 2015

The Final Curtain of the Yung Kee Saga

On 11 November 2015, the Court of Final Appeal (CFA) allowed the appeal in Kam Leung Sui Kwan, Personal Representative of the Estate of Kam Kwan Sing, The Deceased v Kam Kwan Lai (FACV 4/2015), and ordered to wind up Yung Kee Holdings Limited (the Company), a company incorporated in the British Virgin Islands (BVI) and the ultimate holding company of the Yung Kee Restaurant.

During his lifetime, the late Mr Kam Kwan Sing (the older brother) accused Mr Kam Kwan Lai (the younger brother) of arrogating power to himself, which is contrary to the intention of their father, the late Kam Shui Fai (the founder of the Restaurant), to allow the brothers to co-manage the Restaurant. As such, in 2010 the older brother initiated proceedings in the Hong Kong court to wind up the Company. Both the Court of First Instance and Court of Appeal ruled that, since the Company is registered overseas, the Hong Kong court has no jurisdiction over the dispute. The older brother’s widow, Madam Kam Leung Siu Kwan, appealed to the CFA on his behalf.

Since the shareholders of the Company and its subsidiaries are based in, the businesses are located in, the income are generated in, and the events that led to the dispute occurred in Hong Kong, pursuant to section 327(c) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32), the CFA took the view that the Company satisfies the requirement of a sufficient connection with Hong Kong, such that the Hong Kong court has jurisdiction to hear the petition. The CFA endorsed the trial judge’s view that there existed a mutual understanding that each brother was entitled to participate in the business and had to be properly consulted. The breach by the younger brother of such understanding, which is contrary to the founder’s intention, prevented the old brother from managing the business. As a result, the CFA concluded that it is just and equitable to wind up the Company.

Meanwhile, the CFA ordered that the winding up order be stayed for 28 days to allow the parties to agree the terms on which the older brother’s shares in the Company might be purchased in the event that agreement could be reached. On 9 December, the parties agreed to apply for a 7-day extension in order to reach a consensus on the purchase price. If no such agreement is concluded before the deadline, the Company will be wound up automatically.