Seah Teong Kang v Seah Yong Chwan: Testamentary Gift of Shares, Winding Up, and Section 259 of the Companies Act

The Court of Appeal dismissed an appeal by Seah Teong Kang and Seah Chiew Tee, co-executors of the will of Lee Koon, against Seah Yong Chwan, executor of the estate of Seah Eng Teow. The appeal concerned a testamentary gift of shares in Teow Aik Realty (S) Pte Ltd, a company in winding up. The court held that the specific gift of shares did not fail, even though Section 259 of the Companies Act, which governs share transfers during winding up, was not strictly complied with. The court found that the appellant acquired an equitable interest in the shares independently of Section 259, through the executor's assent to the distribution of the liquidation surplus.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal concerning a testamentary gift of shares in a company undergoing winding up. The court considered the impact of Section 259 of the Companies Act.

1.7 Decision Date

9 September 2015

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Seah Teong Kang	Appellant	Individual	Appeal Dismissed	Lost	Tan Tian Luh of Chancery Law Corporation Earnest Lau of Chancery Law Corporation
Seah Chiew Tee	Appellant	Individual	Appeal Dismissed	Lost	Tan Tian Luh of Chancery Law Corporation Earnest Lau of Chancery Law Corporation
Seah Yong Chwan	Respondent	Individual	Appeal Dismissed	Won	Tay Yong Seng of Allen & Gledhill LLP Alexander Yeo of Allen & Gledhill LLP

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Chao Hick Tin	Justice of the Court of Appeal	No
Andrew Phang Boon Leong	Justice of the Court of Appeal	Yes

4. Counsels

Counsel Name	Organization
Tan Tian Luh	Chancery Law Corporation
Earnest Lau	Chancery Law Corporation
Tay Yong Seng	Allen & Gledhill LLP
Alexander Yeo	Allen & Gledhill LLP

4. Facts

The testator bequeathed shares in Teow Aik Realty (S) Pte Ltd to several legatees, including his wife.
At the time of the testator's death, Teow Aik Realty (S) Pte Ltd was in the process of being wound up.
The executor of the will, Seah Yong Chwan, distributed the liquidation surplus to the specific legatees without seeking court sanction for a transfer of shares under Section 259 of the Companies Act.
The testator's wife, Seah Teong Kang, argued that the testamentary gift of shares had failed due to non-compliance with Section 259.
The executor had made multiple attempts to distribute the liquidation surplus to the appellant, but she refused to accept the cheques.
The company was dissolved on 19 June 2013.

5. Formal Citations

Seah Teong Kang (co-executor of the will of Lee Koon, deceased) and another v Seah Yong Chwan (executor of the estate of Seah Eng Teow), Civil Appeal No 40 of 2014, [2015] SGCA 48
Lee Koon (by her attorneys Seah Teong Kang and Seah Chiew Tee) v Seah Yong Chwan (executor of the estate of Seah Eng Teow, deceased), Originating Summons No 875 of 2013, [2014] 1 SLR 1439

6. Timeline

Date	Event
1983-01-01	Teow Aik Realty (S) Pte Ltd incorporated.
2007-12-17	Winding up proceedings commenced against Teow Aik Realty (S) Pte Ltd.
2007-12-19	Testator made his will.
2008-07-22	High Court ordered the winding up of Teow Aik Realty (S) Pte Ltd.
2011-03-02	Testator passed away.
2012-04-20	Respondent obtained a grant of probate.
2012-05-30	Liquidators issued a Notice of Return to Contributories.
2012-06-20	Respondent made first attempt at distributing liquidation surplus.
2013-02-28	Appellant issued a letter of demand.
2013-03-22	Respondent replied to Appellant’s letter of demand.
2013-06-12	Appellant replied through her solicitors, maintaining that the Sum fell into the residuary estate and proposing going for mediation.
2013-06-19	Order dissolving the Company and releasing the liquidators was made.
2013-09-18	Appellant commenced OS 875/2013.
2013-09-26	Respondent made a final attempt at distributing the liquidation surplus.
2013-11-07	OS 875/2013 came up for hearing before the High Court judge.
2014-01-01	Decision from which this appeal arose is reported at [2014] 1 SLR 1439.
2015-09-10	Judgment reserved.

7. Legal Issues

Validity of Testamentary Gift of Shares
- Outcome: The court held that the specific gift of shares did not fail, as the appellant acquired an equitable interest in the shares independently of Section 259.
- Category: Substantive
- Sub-Issues:
  - Effect of winding up on share bequest
  - Compliance with Section 259 of the Companies Act
  - Passing of equitable interest in shares
Interpretation of Section 259 of the Companies Act
- Outcome: The court held that Section 259 is concerned with the 'transfer' of shares and does not prevent the transmission of equitable interest in shares to the appellant.
- Category: Statutory Interpretation
- Sub-Issues:
  - Scope of 'transfer' under Section 259
  - Application of Section 259 to testamentary gifts
  - Purposive interpretation of Section 259
Doctrine of Assent
- Outcome: The court held that the executor's conduct in attempting to distribute the liquidation surplus constituted an implied assent, which was effective to pass equitable interest in the shares to the appellant.
- Category: Substantive
- Sub-Issues:
  - Effect of executor's assent on specific bequests
  - Passing of equitable ownership upon assent
  - Assent inferred from conduct

8. Remedies Sought

Declaration that the liquidation surplus formed part of the testator's residuary estate.
Order for the transfer of the liquidation surplus to the appellant.

9. Cause of Actions

Declaration that the sum formed part of the Testator’s residuary estate
Order that the Respondent transfer the Sum to her forthwith

10. Practice Areas

Estate Planning
Probate
Corporate Litigation
Insolvency
Wills and Estates

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Lee Koon (by her attorneys Seah Teong Kang and Seah Chiew Tee) v Seah Yong Chwan (executor of the estate of Seah Eng Teow, deceased)	High Court	Yes	[2014] 1 SLR 1439	Singapore	The judgment being appealed from.
Commissioner of Stamp Duties (Queensland) v Hugh Duncan Livingston	Privy Council	Yes	[1965] AC 694	Australia	Cited for the principle that the whole ownership interest in a deceased's assets passes to the executor.
Official Receiver in Bankruptcy v Schultz and another	High Court of Australia	Yes	(1990) 170 CLR 306	Australia	Cited for the application of the Livingston principle to specific bequests.
Bryen v Reus	New South Wales Supreme Court	Yes	[1961] SR (NSW) 396	Australia	Cited to support the view that specific legatees have only a chose in action against the executor during the period of administration.
George Attenborough & Son v Solomon and another	House of Lords	Yes	[1913] AC 76	United Kingdom	Cited for the principle that an assent by a personal representative transforms them into a trustee of the bequeathed asset.
Wise v Whitburn	English High Court	Yes	[1924] 1 Ch 460	United Kingdom	Cited for the principle that an assent can be inferred from the executor's conduct.
In re Grosvenor	English High Court	Yes	[1916] 2 Ch 375	United Kingdom	Cited for the principle that after assent, the executor holds the shares as trustee for the legatee.
Re Kenzler	Supreme Court of Queensland	Yes	(1983) 7 ACLR 767	Australia	Cited for the principle that the passing of interest in shares upon the executor's assent is a transmission, not a transfer.
Waters v Winmardun Pty Ltd and Ors	Supreme Court of Victoria	Yes	(1990) 3 ACSR 378	Australia	Cited with approval for the principle in Re Kenzler that shares devolved under a will to the legatee by way of transmission (and not by transfer).
Atwell v Roberts	Supreme Court of Western Australia	Yes	[2013] WASCA 37	Australia	Re Kenzler was cited with approval.
Inland Revenue Commissioners v Laird Group plc	House of Lords	Yes	[2003] 1 WLR 2476	United Kingdom	Cited for the principle that the purpose of making the legal title to shares non-transferable is merely to freeze the company’s register of members at the date of the winding up.
Rudge v Bowman	Court of Queen’s Bench	Yes	(1868) LR 3 QB 689	United Kingdom	Provides a useful illustration of the operation of s 127 of the 1986 Act.
Kong Swee Eng v Rolles Rudolf Jurgen August	Singapore High Court	Yes	[2011] 1 SLR 873	Singapore	Steven Chong J considered whether s 259 applied to prohibit a sale and purchase agreement of shares on the ground that completion of the sale was scheduled to take place only after the commencement of winding up.
Jordanlane Pty Ltd v Kitching and others	Supreme Court of Victoria	Yes	[2008] VSC 426	Australia	Demonstrates that the Australian position in respect of their statutory equivalent (viz, s 468 of the Corporations Act 2001 (Cth)) is similar to that in the UK.
Beluga Chartering GmbH (in liquidation) v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (Deugro (Singapore) Pte Ltd, non-party)	Singapore High Court	Yes	[2013] 2 SLR 1035	Singapore	Observed that our statutory insolvency scheme has its “ultimate roots” in the Companies Act 1948 (c 38) (UK).
Beluga Chartering GmbH (in liquidation) and others v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (deugro (Singapore) Pte Ltd, non-party)	Singapore Court of Appeal	Yes	[2014] 2 SLR 815	Singapore	Decision was reversed in Beluga Chartering GmbH (in liquidation) and others v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (deugro (Singapore) Pte Ltd, non-party) [2014] 2 SLR 815, but not on this particular point).
In re Fry, Deceased	English Court of Appeal	Yes	[1946] 1 Ch 312	United Kingdom	Mr Lau, relied upon the English Court of Appeal decision of In re Fry, Deceased [1946] 1 Ch 312 (“Re Fry”) to argue that the failure to comply with s 259 in the present case, akin to the failure of the transferor in Re Fry to obtain prior approval for the share transfer in that particular case, must result in the Appellant failing to obtain an equitable right in the Shares (as was the decision in Re Fry).

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed) s 259	Singapore
Insolvency Act 1986 (c 45) (UK) s 127	United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

Testamentary gift
Specific bequest
Winding up
Liquidation surplus
Section 259 Companies Act
Executor's assent
Equitable interest
Transmission
Transfer
Residuary estate
Beneficial ownership
Shares
Companies Act
Assent

15.2 Keywords

testamentary gift
winding up
companies act
shares
liquidation
estate
will

17. Areas of Law

Area Name	Relevance Score
Law of Wills	80
Succession Law	75
Winding Up	60
Company Law	50
Trust Law	30

16. Subjects

Wills and Estates
Company Law
Insolvency Law
Trusts