Green v Gillette [2020] NZCA 533 (30 October 2020)

Last Updated: 3 November 2020

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA278/2019 [2020] NZCA 533

	BETWEEN	THOMAS PATTON GREEN Appellant
	AND	NATHAN DANIEL GILLETTE Respondent

Court:	Cooper and Clifford JJ
Counsel:	Appellant in person Respondent in person
Judgment: (On the papers)	30 October 2020 at 3 pm

JUDGMENT OF THE COURT

1. The application for an extension of time under r 43(2) of the Court of Appeal (Civil) Rules 2005 is declined.

B The appeal is to be treated as abandoned under r 43(1).
____________________________________________________________________

REASONS OF THE COURT

(Given by Cooper J)

• [1] Mr Green has applied for an extension of time to file the case on appeal and apply for the allocation of a hearing date under r 43(2) of the Court of Appeal (Civil) Rules 2005 (the Rules).
• [2] The appeal is against a judgment of Cooke J in which the Judge upheld a claim made by the respondent, Mr Gillette, for relief under s 174 of the Companies Act 1993.^[1] In 2014, Mr Green formed a company called Sunpower Ltd (Sunpower). Mr Green and Mr Gillette entered into a shareholders’ agreement on 18 January 2016, under which Mr Gillette obtained the right to acquire up to 49 per cent of the shares in Sunpower for a total of $98,000, which he paid shortly afterwards.
• [3] There was also an employment agreement dated 21 January 2016, executed by Mr Gillette and Sunpower. This provided for a 90-day trial period, and an annual salary of $60,000 with potential bonuses payable if sales targets were met. However, the relationship between the parties deteriorated and by the end of March 2016 Mr Green had advised Mr Gillette that Sunpower did not have sufficient money to pay Mr Gillette’s salary. Payments of salary ceased, and Mr Gillette subsequently ceased working for Sunpower in July 2016.
• [4] Mr Gillette brought proceedings in the Employment Relations Authority (the ERA). The ERA decided Mr Gillette had been wrongly deprived of his salary and that he had been unjustifiably dismissed.^[2] It ordered the company to pay him $26,043.96 for arrears of salary between 22 February 2016 and 28 July 2016, and imposed a penalty of $10,000.
• [5] On 18 August 2016 Mr Green incorporated a new company, Sunpower Solar Ltd (Sunpower Solar). Sunpower Solar acquired Sunpower’s assets on or about 6 September 2016. Mr Gillette did not know about these developments at the time. Mr Green then took steps to market the business for sale. He was able to sell it to BSC Shipping for $120,000, after negotiating an employment contract with a related company under which he was to be paid a salary of $80,000 with potential bonuses. Once again, Mr Gillette was not made aware of these transactions.
• [6] Sunpower not having paid the judgment debt, the ERA subsequently ordered that the company’s debt to Mr Gillette be paid by Mr Green personally, finding Mr Green had aided and abetted the breach of the employment agreement by Sunpower.^[3] The ERA also ordered Mr Green to pay costs.^[4] Mr Green subsequently paid Sunpower’s debt and costs to Mr Gillette.
• [7] Mr Gillette commenced a proceeding in the District Court in April 2017, which was later transferred to the High Court. He advanced a number of causes of action. In the judgment under appeal, the Judge rejected claims based on misrepresentation and misleading or deceptive conduct,^[5] but held that the facts revealed what he described as a “[straightforward] case of unfair prejudice” directed towards Mr Gillette under s 174 of the Companies Act.^[6] The Judge continued:^[7]

The majority shareholder has utilised his control of the company to effectively take the whole business operation owned by the company, transferred it to his own company at under value, and then sold those assets for the true value to a third party. He has then kept all the proceeds of sale. No resolutions approving such a major transaction were passed, and these steps have taken place without any approval or involvement of the minority shareholder.

• [8] The Judge ordered Mr Green to pay Mr Gillette the sum of $60,000 for his 49 per cent shareholding in Sunpower.^[8] He directed that, on payment of that amount together with any interest that might have accrued, Mr Gillette was to execute transfers of the shares in Sunpower to Mr Green.^[9]
• [9] Mr Green made an application for legal aid, which was refused on 16 August 2019, a decision that was confirmed on 5 September 2019. Mr Green appealed that decision to the Legal Aid Tribunal. In the meantime, he made three informal requests for a one-month extension of time to file the case on appeal and apply for a hearing date, on 12 September, 14 October and 13 November 2019 respectively. Each request was granted by the Registrar, under r 43(1B)(a) of the Rules.
• [10] Mr Green’s appeal to the Legal Aid Tribunal was declined on 27 November 2019.^[10] Mr Green then filed the present formal application for an extension of time on 17 December 2019.
• [11] Both parties are self-represented. Like Mr Green, Mr Gillette is not in receipt of legal aid.

The application

• [12] The application is made under r 43(2) of the Rules. The relevant provisions of r 43 are as follows:

(1) An appeal is to be treated as having been abandoned if the appellant does not apply for the allocation of a hearing date and file the case on appeal within 3 months after the appeal is brought.

...

(2) The Court, on an interlocutory application, may—

(a) grant an extension of the period referred to in subclause (1); and

(b) grant 1 or more further extensions of any extended period.

...

• [13] Under r 43(1B) the Registrar has the power to grant informal applications to suspend the three-month period referred to in r 43(1) for periods of up to one month at a time where an application for legal aid has yet to be finally determined. As noted, that power was exercised in Mr Green’s favour in this case. But he was advised he would need to make the current application in light of the Legal Aid Tribunal’s decision of 27 November 2019.
• [14] Mr Green’s application for an extension of time is advanced on a number of grounds. In essence, he says that he has complied with the Rules in seeking and being granted informal extensions of time while progressing his application for legal aid. He then made the present application within time, but says he needs more time to compile the case on appeal and apply for a fixture. He says:

The file required would be difficult for a lawyer to perform with only a few days’ notice, and I would ask as that representing myself I simply need additional time to now perform the required tasks ... now that I am not going to have legal representation ...

• [15] Mr Gillette opposes the application. He submits that Mr Green:

(a) has given no valid reason why an extension of time should be granted;

(b) has not paid the required security for costs; and

(c) has had some eight additional months to compile the case on appeal and apply for the allocation of a hearing date, and has repeatedly failed to obtain legal aid because his appeal is without merit.

Analysis

• [16] In approaching applications under r 43(2) the Court follows the approach explained in Schmidt v Ebada Property Investments Ltd.^[11] That case endorsed the approach taken in Airwork (NZ) Ltd v Vertical Flight Management Ltd, in which this Court explained that the predecessor to r 43:^[12]

... implements the philosophy that once a matter has been the subject of a determination in the High Court any party wishing to challenge that determination by an appeal to this Court must do so expeditiously or forfeit the right to pursue the appeal.

• [17] Where an extension has been sought the Court has to make a discretionary judgment.^[13] In considering the exercise of that discretion the Court considers the reasons why the appeal has not been prosecuted diligently, the merits of the proposed appeal and whether it is genuinely arguable, and the need to allow some latitude to litigants in person in the interests of justice.^[14]
• [18] We consider there is force in Mr Gillette’s observation that Mr Green has not advanced a compelling reason for an extension of time. The case on appeal has not been provided, and it is now almost 11 months since Mr Green’s application for legal aid was finally determined against him. He suggests in his submissions that the COVID-19 lockdown is partly to blame, but that is unconvincing. He has not explained how that might have prevented him from compiling the case on appeal. He makes no reference, for example, to difficulty in obtaining the relevant documents from solicitors who acted for him in the High Court. Nor does he give any other reason to explain why the case on appeal has not been provided.
• [19] Mr Green also suggests that the fact he had to apply for a dispensation with security for costs occasioned some delay, but he made an application to dispense with security for costs on 15 January 2020. That cannot explain the subsequent delay.
• [20] The delay in timetabling submissions and setting the present application down for hearing is in part attributable to the COVID-19 lockdown, but that can hardly have prevented the case on appeal being prepared. Mr Green has apparently simply relied on the fact the present application has been outstanding as a reason not to prepare the case on appeal. That was not a justified approach. Although it is necessary to make some allowance for the fact that Mr Green is a layperson, his obvious familiarity with the time limits in the Rules should have impressed upon him the need to progress the appeal.
• [21] It is difficult to assess the merits of the proposed appeal, because Mr Green has made no attempt to address them on the present application. He states numerous grounds in the notice of appeal, but none engages directly or convincingly with the Judge’s key finding at [63] of the High Court judgment, which we have quoted above.^[15] Rather, Mr Green apparently seeks to justify his actions by asserting, for example, that he:

... retained control of the business owing to his having been the founding father of the company, Sunpower Ltd (later called Roofpower Installations Ltd), and because the respondent was prepared to accept less control by agreeing to 49% of the shareholding rather than the 50% which had originally been requested ...

And further:

As to the respondent being excluded from financial or operational involvement in Sunpower Ltd, the respondent was entrusted with sales and they didn’t happen. The appellant had to get back into the ring as to this ... The respondent was at fault for not communicating better.

• [22] While other grounds of appeal challenge the Judge’s factual conclusions the attack is not on the primary findings of fact, but rather the inferences the Judge drew. The Judge fully explained his reasoning and overall we are left with the impression that the merits of the appeal are weak.
• [23] In summary, there has been a lengthy and unjustified delay and, to the extent they can be considered, the merits of the appeal appear to be weak. For these reasons, while making due allowance for Mr Green’s position as a layperson, we have not been persuaded there should be an extension under r 43 of the Rules.

Result

• [24] The application for an extension of time under r 43(2) of the Rules is declined.
• [25] The appeal is to be treated as abandoned under r 43(1).

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^[1] Gillette v Green [2019] NZHC 946 [High Court judgment].

^[2] Gillette v Sunpower Ltd [2017] NZERA Christchurch 1.

^[3] Gillette v Roofpower Installations Ltd (previously named Sunpower Ltd) [2017] NZERA Christchurch 198.

^[4] Gillette v Roofpower Installations Ltd (previously named Sunpower Ltd) [2018] NZERA Christchurch 16.

^[5] High Court judgment, above n 1, at [29] and [37].

^[6] At [63].

^[7] At [63].

^[8] At [70(a)].

^[9] At [70(b)].

^[10] Green [2019] NZLAT 028.

^[11] Schmidt v Ebada Property Investments Ltd [2012] NZCA 452.

^[12] Airwork (NZ) Ltd v Vertigo Flight Management Ltd [1999] 1 NZLR 29 (CA) at 30. The predecessor to r 43 of the Court of Appeal (Civil) Rules 2005 was r 10 of the Court of Appeal (Civil) Rules 1997.

^[13] Russell v Commissioner of Inland Revenue [2006] NZCA 381; (2006) 22 NZTC 19,807 (CA) at [10].

^[14] Crequer v Chief Executive of the Ministry of Social Development [2014] NZCA 284 at [13]–[14]; Rabson v Gallagher [2011] NZCA 204 at [9]; and Harris v Davies [2007] NZCA 358 at [8].

^[15] Above at [7].