NICHOLAS TIMOTHY CORNFORTH HILL v. ALVAREZ & MARSAL ASIA LTD

NICHOLAS TIMOTHY CORNFORTH HILL v. ALVAREZ & MARSAL ASIA LTD

The ATA and LAIL Agreement created separate monetary debts (FADD and SLD) owing by A&M Asia which, absent express payment terms, were payable on demand; 'net book value' in the ATA, as used in context, means the nominal book figure in RSM Corporate' s accounts at completion (30 June 2005) and the SLD is quantified at HK$20,127,885; monies received on ongoing jobs must be applied first to RSM Corporate pre‑Completion receivables ('earliest debtor first'); payments to departing shareholders funded by documented shareholder borrowings on commercial terms fell within the contractual exclusion from the subordination requirement.

Citation
NICHOLAS TIMOTHY CORNFORTH HILL v. ALVAREZ & MARSAL ASIA LTD
Parties
Plaintiff/defendant (cross‑proceedings): Nicholas Timothy Cornforth Hill; Defendant/plaintiff (cross‑proceedings): Alvarez & Marsal Asia Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 December 2008
Case Number
HCA56/2007
Procedural Posture
Civil Contract / Company / Partnership Disputes (hca 56/2007 & HCMP 2461/2006) / Interim Judgment (court of First Instance)
Outcome
Interim judgment: partial judgment for Hill on construction issues and liability; factual/accounting issues remitted for account and further proceedings; costs reserved
Legal Topics
Asset Transfer Agreement Interpretation, Assignment of Debts (fadd and Sld), Goodwill Payment (lail Debt), Statutory Demand (companies Ordinance S178), Contract Construction Principles, Subordinated Distribution Clause, Demandability of Debts, Application of Recoveries ('earliest Debtor First')
Source Language
EN
Contract Law Company Law Partnership Law Commercial Law Debt Recovery Asset Transfer Agreement Interpretation Assignment of Debts (fadd and Sld) Goodwill Payment (lail Debt) +5 more

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Parties

Nicholas Timothy Cornforth Hill

Plaintiff/defendant (cross‑proceedings)

Alvarez & Marsal Asia Limited

Defendant/plaintiff (cross‑proceedings)

Procedural Posture

Civil Contract / Company / Partnership Disputes (hca 56/2007 & HCMP 2461/2006) / Interim Judgment (court of First Instance)

Legal Issues

  1. 1 Whether A&M Asia is liable to pay the Fixed Assets and Deposits Debt (FADD) and the Subsidiaries Loans Debt (SLD)
  2. 2 Whether the SLD and FADD are payable on demand or only from recoveries
  3. 3 Meaning of 'net book value' in calculating the SLD

Ratio Decidendi

The ATA and LAIL Agreement created separate monetary debts (FADD and SLD) owing by A&M Asia which, absent express payment terms, were payable on demand; 'net book value' in the ATA, as used in context, means the nominal book figure in RSM Corporate' s accounts at completion (30 June 2005) and the SLD is quantified at HK$20,127,885; monies received on ongoing jobs must be applied first to RSM Corporate pre‑Completion receivables ('earliest debtor first'); payments to departing shareholders funded by documented shareholder borrowings on commercial terms fell within the contractual exclusion from the subordination requirement.

Court Disposition

Interim judgment: partial judgment for Hill on construction issues and liability; factual/accounting issues remitted for account and further proceedings; costs reserved

Orders

  • Both FADD and SLD held by A&M Asia were liabilities owed to Hill and were payable on demand
  • The SLD is quantified at HKD 20127885 as at Completion Date (30 June 2005)