ALVAREZ & MARSAL ASIA LTD v. NICHOLAS TIMOTHY CORNFORTH HILL

ALVAREZ & MARSAL ASIA LTD v. NICHOLAS TIMOTHY CORNFORTH HILL

The ATA and LAIL Agreement created new monetary debts (FADD and SLD) owing by A&M Asia that were assigned to Hill and thus enforceable by him; where no payment terms are given such debts are payable on demand; 'net book value' in the ATA is to be interpreted as the nominal book value at completion (not merely recoverable value) and the SLD was quantified at HK$20,127,885; collections of monies from ongoing jobs must be applied first to discharge RSM Corporate accounts receivable (earliest debtor first); payments of US$800,000 to the two departing shareholders were repayments of shareholder borrowings on commercial terms and hence excluded from the 80% subordination requirement.

Citation
ALVAREZ & MARSAL ASIA LTD v. NICHOLAS TIMOTHY CORNFORTH HILL
Parties
Plaintiff in HCA 56/2007 and Defendant in HCMP 2461/2006: Nicholas Timothy Cornforth Hill; Defendant in HCA 56/2007 and Plaintiff in HCMP 2461/2006: Alvarez & Marsal Asia Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 December 2008
Case Number
HCMP2461/2006
Procedural Posture
Civil Dispute Concerning Contract Interpretation, Company and Partnership Arrangements / Interim Judgment After Trial Hearing
Outcome
Interim judgment: plaintiff Hill succeeds on core contract interpretation points — A&M Asia liable for FADD and SLD, SLD quantified and payable on demand, receipts to be applied earliest-debtor-first; subordinated distribution clause does not capture certain shareholder loan repayments to departing shareholders...
Legal Topics
Contract Interpretation, Statutory Demand, Assignment of Debts, Goodwill Payment, Subordination of Distributions, Accounts Receivable Priority, Meaning of Net Book Value
Source Language
EN
Contract Law Company Law Partnership Law Commercial Law Civil Procedure Property/assignment Contract Interpretation Statutory Demand +5 more

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Parties

Nicholas Timothy Cornforth Hill

Plaintiff in HCA 56/2007 and Defendant in HCMP 2461/2006

Alvarez & Marsal Asia Limited

Defendant in HCA 56/2007 and Plaintiff in HCMP 2461/2006

Procedural Posture

Civil Dispute Concerning Contract Interpretation, Company and Partnership Arrangements / Interim Judgment After Trial Hearing

Legal Issues

  1. 1 Whether A&M Asia was liable to pay the Fixed Assets and Deposits Debt (FADD) and the Subsidiaries Loans Debt (SLD)
  2. 2 Whether the FADD and SLD were payable on demand or subject to a pay-when-paid condition
  3. 3 Proper construction of 'net book value' for calculation of the SLD

Ratio Decidendi

The ATA and LAIL Agreement created new monetary debts (FADD and SLD) owing by A&M Asia that were assigned to Hill and thus enforceable by him; where no payment terms are given such debts are payable on demand; 'net book value' in the ATA is to be interpreted as the nominal book value at completion (not merely recoverable value) and the SLD was quantified at HK$20,127,885; collections of monies from ongoing jobs must be applied first to discharge RSM Corporate accounts receivable (earliest debtor first); payments of US$800,000 to the two departing shareholders were repayments of shareholder borrowings on commercial terms and hence excluded from the 80% subordination requirement.

Court Disposition

Interim judgment: plaintiff Hill succeeds on core contract interpretation points — A&M Asia liable for FADD and SLD, SLD quantified and payable on demand, receipts to be applied earliest-debtor-first; subordinated distribution clause does not capture certain shareholder loan repayments to departing shareholders...

Orders

  • Declared that A&M Asia is liable to pay the Fixed Assets and Deposits Debt (FADD) and the Subsidiaries Loans Debt (SLD) assigned under the ATA/LAIL Agreement
  • Declared SLD payable on demand and quantified at HKD 20,127,885 (amount as at Completion Date 30 June 2005)