Roast Goose Family Fights as Asia Estate Battles Increase
Kam Shui-Fai’s roast goose restaurant Yung Kee, founded in Hong Kong in 1942 with about $500 in savings, was so successful it won a star in Michelin’s 2009 guide for the city and is now worth at least $169 million.
Six years after Kam’s 2004 death, his eldest son Kinsen sued the family company alleging that his younger brother had shut him out of management and sent a letter of “hatred and vindictiveness” to their mother. Kinsen Kam died on Oct. 5, before Hong Kong High Court Judge Jonathan Harris ruled on the case in a decision released yesterday.
The Kam dispute follows other family battles in Hong Kong courts, including the world’s biggest legal fight for the estate of property tycoon Nina Wang, valued at one time at $12 billion, and 90-year-old casino billionaire Stanley Ho suing some of his children and their mothers last year. Insufficient estate planning and recent legal changes may have contributed to a rise in such battles, lawyers including Marcus Dearle said.
“It is now far harder to settle high net worth cases,” the Hong Kong and Singapore managing partner at law firm Withers said, noting that divorce battles have increased following a 2010 ruling that an equal split of assets should be the default.
In December, Dearle’s client Florence Tsang won a record $160 million divorce judgment from a Hong Kong court, which said she was entitled to properties in London and Hong Kong, HK$5 million ($645,161) for a yacht and HK$4.6 million for joining social clubs in both cities.
About a quarter of the world’s high net-worth individuals now reside in Asia, Africa or Latin America, according to an October global wealth report by Credit Suisse Group AG, and China may surpass Japan to be the second wealthiest country by household assets by 2017.
“There is a lot more money to fight over,” said Richard Norridge, a lawyer with Herbert Smith Freehills in Hong Kong who advises on succession issues. “The abolition of the estate duty in Hong Kong and Singapore may also have led the wealthy to pay less attention to structuring their affairs to avoid tax.”
Hong Kong’s estate tax was abolished in 2006 and Singapore’s in 2008. Only about half of people in Asia have a will, in contrast with nearly 94 percent of people in the U.S. who do, according to a 2011 report from Barclays Plc’s wealth management service on succession issues.
Stanley Ho sued five of his 17 children and two of the women he calls “wives” in January 2011 over a $1.6 billion stake in Asia’s biggest casino company, SJM Holdings Ltd. (880), alleging that they transferred his share to themselves without his consent.
After two months in court, during which SJM shares fell seven percent, a settlement was reached in which Angela Leong, the mother of Ho’s five youngest children, said that family members had agreed on “balanced participation” in the business.
The estate of Ning Wang, Asia’s richest woman when she died in 2007, was fought over for five years by a former adviser who claimed she left it to him in a will. Wang herself had fought her father-in-law in court for six years over the fortune.
Another protracted battle for the estimated $18 billion fortune left by Taiwanese entrepreneur Wang Yung-ching has lasted four years across at least three legal jurisdictions. Wang founded Formosa Plastics Group in 1954 and built it into a company with $60 billion in annual sales before he died in 2008. He left behind a wife, two other women who were mother to his nine children, and no will.
His eldest son, Winston Wong, last year sued three of his half-siblings in Hong Kong for siphoning off assets into offshore trusts and betraying his father’s wish for family unity. Wong brought a similar lawsuit in New Jersey in 2009 and has also pursued litigation in Taiwan.
“Many family relationships can break down amid feelings of entitlement or betrayal,” said Gavin Lewis, the head of Asia disputes at Herbert Smith Freehills. “What distinguishes Asian and Hong Kong families is the large companies that are still in private hands.”
In the Yung Kee roast goose restaurant case, Judge Harris dismissed Kinsen Kam’s request that his brother be ordered to buy his stake in the business, or that it be wound up, because the family’s wealth exists in a company incorporated in the British Virgin Islands. Courts there should decide the dispute, Harris ruled.
In a 76-page ruling, the judge decided other issues such as the potential value of Kinsen Kam’s stake if it was sold.
An unfortunate feature of this case is that the parties agreed in principle that one brother should buy the other’s shares, but they couldn’t agree on a price, the judge said.
His decision on valuation will hopefully assist the parties with an amicable solution “without the need for further recourse to the courts.”
The case is re Yung Kee Holdings Ltd., HCCW154/2010 in the Hong Kong Court of First Instance.
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