EFFISCIENT LTD v. LEHMANBROWN LTD AND ANOTHERS

EFFISCIENT LTD v. LEHMANBROWN LTD AND ANOTHERS

The court accepted the court-appointed expert Mr Kenneth Yeo's valuation methodology and conclusions because Lehman failed to provide evidence showing the 2010 results were anomalous or to comply with case management directions; the proper valuation of the company at the valuation date was US$2,800,000 and Lehman's 50% share US$1,400,000; damages for unfairly prejudicial conduct were assessed on the balance of probabilities using the best available evidence (maintenance of 2007 profit baseline adjusted 50% for other factors) at US$716,055; Lehman's application to adduce late expert evidence was refused for non-compliance with directions and lack of reasonable notice.

Citation
EFFISCIENT LTD v. LEHMANBROWN LTD AND ANOTHERS
Parties
Petitioner: Lehman & Co Management Limited; Cross Petitioner / 1st Respondent: Effiscient Limited; 2nd Respondent: LehmanBrown Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
28 November 2012
Case Number
HCCW383/2010
Procedural Posture
Companies (winding Up) (section 168 a Companies Ordinance) / Judgment on Quantum (court of First Instance)
Outcome
Cross-petition allowed on terms previously ordered; Lehman required to sell its 50% share to Effiscient at court-determined price; valuation and damages awarded; costs order nisi made against Lehman.
Legal Topics
Share Valuation, Unfairly Prejudicial Conduct, Appointment and Duties of Court Expert, Admissibility of Expert Evidence, Assessment of Damages, Set Off Against Purchase Price, Case Management Directions
Source Language
EN
Company Law Civil Procedure Evidence Valuation Law Equity and Trusts Share Valuation Unfairly Prejudicial Conduct Appointment and Duties of Court Expert +4 more

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Parties

Lehman & Co Management Limited

Petitioner

Effiscient Limited

Cross Petitioner / 1st Respondent

LehmanBrown Limited

2nd Respondent

Procedural Posture

Companies (winding Up) (section 168 a Companies Ordinance) / Judgment on Quantum (court of First Instance)

Legal Issues

  1. 1 Whether the court-appointed expert's valuation and report were admissible and reliable
  2. 2 Whether Lehman could adduce late expert evidence and rely on alternative valuation methodologies
  3. 3 Proper valuation methodology and quantum for purchase of 50% share

Ratio Decidendi

The court accepted the court-appointed expert Mr Kenneth Yeo's valuation methodology and conclusions because Lehman failed to provide evidence showing the 2010 results were anomalous or to comply with case management directions; the proper valuation of the company at the valuation date was US$2,800,000 and Lehman's 50% share US$1,400,000; damages for unfairly prejudicial conduct were assessed on the balance of probabilities using the best available evidence (maintenance of 2007 profit baseline adjusted 50% for other factors) at US$716,055; Lehman's application to adduce late expert evidence was refused for non-compliance with directions and lack of reasonable notice.

Court Disposition

Cross-petition allowed on terms previously ordered; Lehman required to sell its 50% share to Effiscient at court-determined price; valuation and damages awarded; costs order nisi made against Lehman.

Orders

  • Value of LehmanBrown Limited as at 17 September 2010 assessed at US$2,800,000; value of Lehman & Co Management Limited 50% share assessed at US$1,400,000
  • Damages payable by Lehman to Effiscient for unfairly prejudicial conduct assessed at US$716,055