Baker v Hodder
[2017] NZCA 355
•3 August 2017
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA520/2016 [2017] NZCA 355 |
| BETWEEN | CHRISTOPHER DUNCAN BAKER AND KATHRYN ANN BAKER |
| AND | WALLACE DOUGLAS HODDER AND ANN ADELE HODDER KADD FARM LIMITED |
| Hearing: | 3 August 2017 |
Court: | Clifford, Simon France and Toogood JJ |
Counsel: | J W Maassen and S F Clark for Appellants |
Judgment: | 3 August 2017 |
Reasons: | 17 August 2017 |
JUDGMENT OF THE COURT
AThe application to adduce further evidence is declined.
BThe appeal is dismissed.
CThere is no order as to costs.
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REASONS OF THE COURT
(Given by Clifford J)
A moot appeal
This is an appeal against a decision of Ellis J in the High Court in proceedings commenced under s 174 of the Companies Act 1993. Ellis J ordered that the appellants (Kathryn and Christopher Baker), 30 per cent minority shareholders in the second respondent (Kadd Farm Ltd), sign a special resolution authorising the sale of that company’s principal asset, a farm called Heron Creek.[1] The Bakers now appeal that decision.
[1]Hodder v Baker [2016] NZHC 2384.
At the commencement of the hearing of this appeal we asked counsel for the Bakers, Mr Maassen, to address us first on the question of whether or not the appeal was moot. We framed that issue for Mr Maassen in light of the Supreme Court’s decision in Gordon‑Smith v R and on the basis that, given Heron Creek had been sold and the proceeds used to pay the debts of Kadd Farm, there was no live issue between the parties.[2]
[2]Gordon-Smith v R [2008] NZSC 56, [2009] 1 NZLR 721.
Having heard from the parties on that question, we retired to consider the question of mootness. When we returned, we provided a brief oral decision dismissing the Bakers’ appeal on the grounds that it was moot. We indicated that we would subsequently provide a written judgment recording our reasons and putting them in context. We now do so.
Facts
Mr and Mrs Baker are the son-in-law and daughter respectively of the first respondents, Ann and Wallace Hodder. Kadd Farm is owned by the Hodders as to 70 per cent and by the Bakers as to 30 per cent. Kadd Farm was incorporated to purchase Heron Creek which, together with some adjoining land (Iramutu), was leased to a company owned by Mr Baker (DB Contracting Agricultural Ltd). The Bakers operated Heron Creek and Iramutu as a grass supply farm. That venture did not prosper.
Eventually the Hodders and the Bakers agreed that Kadd Farm should sell Heron Creek, to pay off debt. An offer was made which the Hodders wished to accept but which, because of other unresolved issues, the Bakers did not. The Bakers declined to support the special resolution required to approve that sale, a major transaction for Kadd Farm.
The proceedings
The Hodders then commenced proceedings under s 174 of the Companies Act for an order that the constitution of Kadd Farm be amended so that a special resolution only required 70 per cent of the company shares to be voted in favour of the transaction and for directions requiring the board of Kadd Farm to sell Heron Creek.
They did so on the basis that the Bakers’ refusal to sign the required special resolution constituted conduct that was oppressive, unfairly discriminatory or unfairly prejudicial to the Hodders. It was motivated not by concerns regarding the interests of Kadd Farm, but rather because the Bakers were using the requirement for their approval as a bargaining chip in their other disputes with the company and the Hodders.
The Hodders filed those proceedings in the High Court at Palmerston North on 16 September 2016. That same day they applied for interlocutory orders transferring the proceedings to the High Court at Wellington, for those proceedings to be afforded urgency and for directions for service, all on the basis that the matter would be determined by reference to affidavits and annexed documentary evidence. Urgency was called for, the Hodders’ deposed, because the contract to sell Heron Creek had a final settlement date of 7 October 2016. Ellis J, who was duty Judge in the High Court at Wellington at the time, made those interlocutory orders as sought. After some further interlocutory skirmishes, Ellis J heard the Hodders’ application on 5 October, and released her judgment the next day.
The Judge, with reference to the decision of Lang J in the High Court in Fairway Holdings Ltd v Furno Ltd,[3] ordered the Bakers forthwith to sign the special resolution necessary to authorise the sale of Heron Creek.[4] The Judge declined to stay her decision, as requested by the Bakers, so that they could appeal to this Court.[5] The Bakers did not seek to appeal either that decision, or the grant of substantive relief, to this Court. Either later that day or on 7 October, the Bakers signed the relevant special resolution. Kadd Farm has subsequently sold Heron Creek.
The appeal
[3]Fairway Holdings Ltd v Furno Ltd [2014] NZHC 858.
[4]Hodder v Baker, above n 1, at [64].
[5]At [68].
The Bakers filed this appeal on 17 October 2016. In so doing they posed a number of questions to this Court. Those questions, in essence, asked whether the High Court had erred:
(a)in its findings that the Hodders had made out the basis for relief pursuant to s 174 of the Companies Act; and
(b)in the way it had declined the various interlocutory applications made by the Bakers in an unsuccessful effort to prevent the matter being dealt with under urgency.
In the course of his submissions on the issue of mootness, Mr Maassen explained that his concern was that, in some way, Ellis J’s judgment might be a bar to proceedings which the Bakers may consider it necessary to bring in the future. As we understood matters, the Bakers and the Hodders were endeavouring to resolve their differences. Of course, those efforts may not be successful.
Putting aside any challenge that might have been made on the merits, given the obvious issue of mootness involved, Mr Maassen focused on what he submitted was the utility of this Court deciding the point of jurisdiction at issue: namely whether s 174 of the Companies Act provides for the type of order the High Court made. But, as we pointed out to Mr Maassen, until proceedings are commenced and that issue becomes live in those proceedings, we would simply be providing an advisory opinion. That is not our role.
We also bore in mind Mr Parker’s position for the Hodders that, as matters currently stood, he could not see why Ellis J’s decision would act as a bar to any foreseeable way in which the Bakers might wish, through new legal processes, to resolve their dispute with the Hodders. For example, if the issue of jurisdiction under s 174 did become live, it is difficult to see how Ellis J’s decision — at that point under challenge as being made without jurisdiction — could itself be a bar to the High Court considering that issue. In our view, a new legal process (if any was in fact commenced by the Bakers) would be the proper context for the determination of the issues the Bakers sought to raise on appeal. Until such proceedings are commenced, and the issues which the Bakers sought to determine by this appeal actually arise, they are moot.
Mr Maassen also explored the possibility of us deciding that jurisdictional question in the context of a separate appeal against the costs order made by Ellis J.[6] But, as we pointed out, no such appeal had been filed. If the Bakers wished to separately appeal that costs order, they may seek leave to do so out of time.
[6]Hodder v Baker [2015] NZHC 548.
It was for these reasons we declined to hear this appeal. As we emphasised in Court, that decision is neither based on, nor does it reflect, any assessment of the merits as between the Bakers and the Hodders on any aspects of their family dispute.
Outcome
We note that there was an application to adduce further evidence. As matters have transpired, it is no longer necessary to consider this. The application is accordingly declined.
The appeal is dismissed.
In the circumstances, there is no order as to costs.
Solicitors:
Cooper Rapley, Palmerston North for Appellants
Parker Cowan Lawyers, Queenstown for First Respondents
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