Lam Kit Yee Vanessa (As Sole Executrix of the Estate of Lam Wai Ming, Deceased) v. Skylab Ltd

HCMP 2737/2024

[2025] HKCFI 596

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2737 OF 2024

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D E C I S I O N

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1.This is the application of Lam Kit Yee Vanessa (the “Plaintiff”) the sole executrix and sole beneficiary of the estate of her late father Lam Wai Ming (the “Deceased”) made in her representative capacity. By Originating Summons dated 20 December 2024 (“OS”), the Plaintiff seeks an order that she be registered as member in respect of the shares registered in the name of the Deceased in Skylab Limited (the “Company”).

Relevant background

2.The Company was incorporated on 28 July 1978 as an asset holding vehicle for the Deceased and his family. Its current assets include the family home at 16A Hereford Road, Kowloon Tong and a number of industrial units in William Enterprises Industrial Building in Choi Hung Road.

3.By Special Resolutions passed on 9 May 1992 and registered on 16 June 1992, the Company adopted its own customised Articles of Association (“Articles”), displacing Table ‘A’ regulations.

4.The Deceased and his late wife, Madam Cheung Siu King (who died in 2011), had 5 children, namely, Anita, Ivan, the Plaintiff, Mandy and Benjamin. Ivan and Benjamin are the 2 directors of the Company. They resided in Hong Kong apart from Ivan who, according to the Plaintiff, has been primarily resident in Thailand since about 1997.

5.At the date of his death on 21 August 2022, the Deceased was the registered holder of 3,995,000 Class “A” and 5000 Class “B” shares in the Company (collectively, the “Deceased’s Shares”).

6.A year or so earlier, on 29 July 2021, the Deceased executed a will (the “Will”) appointing the Plaintiff as sole executrix and bequeathing his entire estate to her.

7.Several few days later, on 2 August 2021, the Deceased, Ivan and Benjamin resolved to allot 24 million Class ‘A’ shares to the Plaintiff (the “Allotment”), making her the majority shareholder of the Company.

8.The Plaintiff obtained a grant of probate to the Deceased’s estate[1] on 19 February 2024 (the “Grant”).

9.On 26 August 2024, the Plaintiff sent a written notification to the Company’s registered office requesting the board to register her as member in respect of the Deceased’s Shares pursuant to section 158(1) of the Companies Ordinance, Cap 622 (the “Ordinance”).

10.A copy of the Plaintiff’s notification request was delivered to Messrs HM Tsang & Co (“HMTC”), Ivan’s solicitors in HCMP 1408/2024 (“HCMP 1408”), being proceedings which Ivan commenced on 5 August 2024 for a declaration that the Allotment was void and invalid.

11.On 20 September 2024, Benjamin, as director of the Company, sent a letter[2] by post to Ivan in Thailand and by WhatsApp to his Hong Kong number, that having read the Plaintiff’s notification request and its enclosures, he had no objection to the registration requested. He also prepared and enclosed written resolutions for Ivan to sign and return within the following 7 days. In the event that Ivan did not agree, to provide reasons therefore, having regard to the duties imposed on the Company by section 158 (2) of the Ordinance.

12.HMTC replied on 26 September 2024 to the effect that

(i)  Ivan does not accept the contents of the Will or believe that the Plaintiff is entitled to be registered as a member of the Company; and

(ii)  pending resolution of HCMP 1408 and any action to be commenced in respect of the Will and the Grant, it would not be in the interests of the Company to register the Plaintiff as a member.

13.HMTC are solicitors for Ivan and do not claim to be representing the Company.

14.It is to be noted that the outcome of HCMP 1408 can have no bearing on the present application. As regards any challenge to the Will or Grant, even an extant action to remove the applicant as administratrix is not a ground for refusing the applicant’s request to be registered as a member: see G-Toys Manufacturing at §38. In the present case, no such action is even on foot.

Relevant provisions

15.Sections 158, 159 and 161 of the Ordinance which govern registration of shares transmitted by operation of law provide as follows:

“158. Registration or refusal of registration

(1) This section applies if the right to shares is transmitted to a person by operation of law and the person notifies the company in writing that the person wishes to be registered as a member of the company in respect of the shares.

(2) Within 2 months after receiving the notification, the company must either—

(a) register the person as a member of the company in respect of the shares; or

(b) send the person notice of refusal of registration.

(3) If a company refuses registration, the person may request a statement of the reasons for the refusal.

(4) If a person makes a request under subsection (3), the company must, within 28 days after receiving the request—

(a) send the person a statement of the reasons; or

(b) register the person as a member of the company in respect of the shares.

(5) If a company contravenes subsection (2) or (4), the company, and every responsible person of the company, commit an offence, and each is liable to a fine at level 4 and, in the case of a continuing offence, to a further fine of $700 for each day during which the offence continues.

159. Order of Court for registration

(1) If a company refuses registration under section 158, the person to whom the right to the shares was transmitted may apply to the Court for an order under this section.

(2) On an application under subsection (1), the Court may order the company to register the person as a member of the company in respect of the shares, if the Court is satisfied that the application is well-founded.

161. Evidence of grant of probate etc.

For the purposes of a transfer of shares or transmission of the right to shares, a company must accept as sufficient evidence of the grant of probate of the will or letters of administration of a deceased person the production to the company of a document that is by law sufficient evidence of that grant.”

16.Thus, upon the death of a member, the shares registered in his name devolve by operation of law to his personal representative through transmission but the personal representative does not become a member unless he consents and is registered as one: Karupayee Ammal v G-Toys Manufacturing Ltd [2020] 6 HKC 59 at §§25-27.

17.Also relevant are the Company’s Articles. They take effect subject to sections 158-159 and 161 of the Ordinance which prevail where the provisions conflict: G-Toys Manufacturing at §33[3].

18.Articles 37-41 provide for the transmission of shares. In pertinent part, they provide as follows:

“37. In case of the death of a Member, ... the legal personal representatives of the deceased where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the share provided that nothing herein contained shall release the estate of the deceased ... from any liability ...

38. Any person to whom the right to any share has been transmitted by operation of law may, upon such evidence being produced as may from time to time properly be required by the Directors and subject as hereinafter provided, elect either to be registered himself as holder of the share or to have some person nominated by him registered as the transferee thereof, but the Directors shall, in either case, have the same right to decline or suspend registration as they would have-had in the case of a transfer of the share by that Member before the event giving rise to the transmission ...

...

41. Any person to whom the right to any shares in the Company has been transmitted by operation of law shall, if the Directors refuse to register the transfer, be entitled to call on the Directors to furnish within 28 days a statement of the reasons for the refusal.”

Whether registration should be ordered

19.The Plaintiff’s notification request of 26 August 2024 satisfies the requirements of section 158(1). In those circumstances, subsection (2) requires the Company either to register the Plaintiff as a member of the Company or refuse registration. In the present case, there has been no response from the Company[4].

20.Mr Adrian Kwan, counsel for the Plaintiff, submitted that a refusal to register a transmission is a right vested in and must be actively exercised by the board of directors collectively, by resolution. The mere failure to pass a proposed resolution for registration is not a formal active exercise of the right to decline to register, citing Moody v W & J Shepherd (Bookbinders) Limited [1949] 2 All ER 1044 at 1047G-H and 1050E-G and Re Redford International Limited [2016] 2 HKLRD 27 at §14.

21.Thus, if a notice of refusal is not sent within 2 months, the Company must register the shares: see Re Yuen Kiu Kwan [2009] 3 HKLRD 1056 at §34; Re Redford at §15-16 and Lau Wai Yin Amy and Anor v Poon Chung Kwong Peter and Anor [2019] HKCFI 1056 at §§2, 4 and 14.

22.Applying those principles, as the Company did not send a notice of refusal within the two-month period, it is obligated to register the Plaintiff as member in respect of the Deceased’s Shares.

23.Moreover, its failure to do so within the two-month period without producing a notice of refusal of registration, prima facie, contravenes section 158(5) of the Ordinance: G-Toys Manufacturing at §35.

24.There are additional reasons why the Company must register the Plaintiff as member in respect of the Deceased’s Shares.

25.Relevantly, Article 37 provides that

“In case of the death of a Member … the legal representatives of the deceased where he was a sole holder, shall be the only persons recognised by the Company as having any title to his interest in the share ...”

26.Under section 161 of the Ordinance, the Company is bound to accept the Grant as sufficient evidence. It follows that as executrix of the Deceased’s estate, the Plaintiff is the only person recognised by law as the full owner of the Deceased’s Shares: G-Toys Manufacturing at §38.

Conclusion

27.For the reasons stated above, the Plaintiff is plainly entitled to the relief that she seeks in §1 of the OS. Costs must follow the event.

28.Accordingly, I make an order in terms of §§1 and 3 of the OS. The costs of the Plaintiff’s application be paid by the Company with certificate for counsel, such costs to be summarily assessed and payable forthwith.

29.I direct that (i) the Plaintiff’s statement of costs be lodged within 7 days hereof; (ii) the Company’s list of objections (if any) limited to 2 pages be lodged within 14 days thereafter; and (iii) the Plaintiff’s reply (if any) limited to one page per lodged within 7 days thereafter.

Mr Adrian Kwan, instructed by Messrs. Sit, Fung, Kwong & Shum for the plaintiff

The Defendant was not represented and did not appear