Gallien v Hopkins

[2018] NZHC 287

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KOTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2017-419-178 [2018] NZHC 287

BETWEEN

BRENT NORMAN GALLIEN and HELEN

LOUISE ROBERTSON as Trustees of the
NSN Trust
Plaintiffs

AND

PHILIP REX HOPKINS Defendant

Hearing:	1 March 2018
Appearances:	P Cornege for Plaintiffs S J Rawcliffe for Defendant
Judgment:	1 March 2018

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

GALLIEN & ANOR v HOPKINS [2018] NZHC 287 [1 March 2018]

The Summary Judgment Application

[1]      The defendant (Mr Hopkins) applies for summary judgment claiming the plaintiffs cannot succeed by their claim that Mr Hopkins orally agreed to purchase the plaintiffs’ shares in Control Services Limited (CSL) for $175,000.

The plaintiffs’ claim

[2]      The plaintiffs plead an oral contract was formed on 25 May 2016 on terms:

(a)      Mr Hopkins would prepare, by instructing a professional advisor, the necessary documentation to give effect to the agreement reached;

(b)Mr Gallien would cease being involved in CSL which owned the parties engineering business;

(c)       The plaintiffs would sell and Mr Hopkins would purchase the plaintiffs’

50 shares in CSL;

(d)Mr Hopkins would, as soon as practicable, pay the sum of $175,000 together with facilitating the transfer of ownership of a Nissan vehicle to the plaintiffs.

[3]      It is pleaded that the following day Mr Hopkins confirmed to Mr Gallien in writing that he had instructed lawyers to prepare the formalities to give effect to the contract. Also and in order to prevent Mr Gallien being involved any further in CSL’s business  he terminated Mr Gallien’s  access  to  CSL’s  mobile phone account,  he terminated access to CSL’s email system, and he warned Mr Gallien to stay off CSL’s premises.  He did provide Mr Gallien with the Nissan vehicle.

Background

[4]      On 1  March  2014  Mr  Gallien commenced  employment  with  CSL as  an automation  engineer.    In  about  March  2015  Mr  Gallien  together  with  his  trust

purchased 50 of the 100 shares in CSL, and Mr Gallien was appointed a director of

CSL.

[5]      Mr Gallien sold his Nissan vehicle on 3 June 2015 to CSL for $25,000 which was utilised for part payment of the purchase of shares.

[6]      On 25 March 2016 Mr Gallien and Mr Hopkins had an argument.  There was a discussion about Mr Gallien leaving and ceasing to be involved in CSL and him selling the shares owned by him and his trust.

[7]      Mr Gallien says Mr Hopkins offered to repurchase the shares, that he accepted the offer and upon those terms previously noted in paragraph [2] herein.  Mr Hopkins response is that Mr Gallien wanted his $150,000 back for the shares, that the offer was not accepted and there was no oral contract as pleaded. Mr Hopkins says an agreement regarding the sale of the shares needed to be in writing and that communication after

26 May 2016 made it clear no concluded agreement was enforced.  He admits on 26

May 2016 replying to an email from Mr Gallien noting that he, Mr Hopkins would instruct a lawyer to prepare an agreement for sale and purchase.

[8]      Mr Hopkin acknowledges that when Mr Gallien advised he would not be returning to work, that he blocked Mr Gallien’s use of the phone and email system. He says Mr Gallien took the Nissan vehicle on 25 May 2016 and has retained it since.

[9]      Later that afternoon Mr Hopkins reports CSL’s accountant calling him and advised Mr Gallien had called to find out how much his shares in the company were worth and that Mr Gallien had said he was not returning.

[10]     Regarding his email to Mr Gallien the following day Mr Hopkins explains his reference to instructing a lawyer “as per your instruction …” as referring to Mr Gallien who was asking to sell his shares. Mr Hopkins says as at that time they had not reached an agreement as to the price for the shares as a valuation would be required, but he was prepared to include the vehicle as part of any arrangement as he had taken it with him.

[11]     Then he says on 31 May 2016 he received an email from Mr Gallien advising he was wanting to keep company equipment as compensation for mileage – a reference Mr Hopkins says that makes it clear that the terms of his exit were still being negotiated.

[12]     Mr Hopkins denies offering or agreeing to purchase Mr Gallien’s shares for

$175,000 plus giving him the company car (the Nissan vehicle); and says that the actions of Mr Gallien subsequent to the meeting in May 2016 make it clear that no binding agreement was entered into.

Principles

[13]     This application on behalf of the defendant seeks in effect to strike out Mr Gallien’s claim.  If there are material disputes of fact which cannot be resolved on affidavit then summary judgment will be refused.  In issue for the Court is whether a binding agreement was reached on 25 May 2016 for the purchase of the plaintiffs’ shares.   If there was no agreement on 25 May 2016 then the claim must fail, and therefore the claim for summary judgment will succeed.

[14]     The position on behalf of Mr Hopkins is that there is clear and acceptable evidence to confirm no binding agreement was reached between the parties, as to the sale of the plaintiff ’s shares on 25 May 2016, or indeed on any other date.

[15]     Ms Rawcliffe for Mr Hopkins submits the key piece of evidence relied on by Mr Hopkins is the letter from the plaintiffs’ solicitors dated 7 December 2016 which states:

5.Mr Gallien remains prepared to accept a proposal made by your client when the parties working relationship ceased.  That is your client (or his trust) re-purchases Mr Gallien’s (and his trust’s) shares in the company on a basis of payment of $175,000 and retention of the vehicle in our client’s possession, together with any accrued entitlements payable.  He again reasserts this offer on a calderbank basis.

6.The offer is subject to full Deed of Settlement being drafted and executed between the parties on normal commercial terms. We do not anticipate drafting this Deed unless the amount of the offer is acceptable.

7.To avoid doubt, if proceedings are commenced Mr Gallien will be seeking full and fair value for his shares which is likely to be well above the amount offered above.

[16]     Ms Rawcliffe submits it is clear from this communication that there cannot have been a binding agreement already in place; that the use of the word “proposal” in paragraph [5] makes it clear an offer was not made when the working relationship ceased.

[17]     Subsequently the plaintiffs made an offer to Mr Hopkins for the sale of the shares which was subject to a deed of settlement being executed if the amount was accepted.  That was an offer capable of acceptance but it was not accepted. Then it is said the plaintiffs reasserted this offer on a calderbank basis which further supports Mr Hopkins position that no agreement was on foot between the parties.

[18]     The plaintiffs’ claim stands or falls upon a pleading that an oral agreement for the purchase of shares was concluded on 25 May 2016. Mr Gallien said he would exit the business if the price he paid for the purchase of the shares was repaid to him.  He says Mr Hopkins agreed to this.

Assessment

[19]     The clear evidence is that Mr Gallien left CSL’s premises that afternoon it having being agreed he would take the Nissan vehicle with him.  Within days he was removed/excluded from use of business facilities.

[20]     Mr Hopkin’s email two days later confirmed instructions being given to a lawyer to provide a sale and purchase of “your shares as per your instruction on Wednesday 25 May 2016.  To be fair and reasonable I have also included the Nissan in the agreement.”

[21]     Although it has not been pleaded it is open to the plaintiffs to amend their pleading to assert that the email of 27 May 2016 amounted to an acceptance of the

‘instruction’/offer that Mr Hopkins refers to in that correspondence. It is clear that the parties only had one conversation on 25 May 2016 and, as Mr Cornege submits,

accordingly the ‘instruction’ that the defendant refers to in that correspondence can only have been about the offer to sell his shares for the price paid for them.

[22]     It appears, as Mr Cornege submits, that the provision of discovery might identify correspondence containing the instruction given to the lawyer to draft the agreement as advised by the email of 27 May 2016.  Likewise CSL’s accountant may have evidence regarding the substance of his communications with both parties on 25

May 2016.

[23]     Regarding submissions on behalf of Mr Hopkins that the subsequent settlement discussions support claims that a contract was not concluded on 25 May 2016, the Court’s view is that engaging in discussions about a settlement of matters does not necessarily mean the plaintiffs’ claim of a breach of contract could not succeed.  The Court agrees the correspondence between the parties agreeing to discuss resolution of various issues in a without prejudice context cannot be evidence in itself that the agreement did not exist.

[24]     It is submitted for Mr Hopkins that an email from Norling Law dated 7

December 2016 on behalf of the plaintiffs does not by its use of the words ‘the proposal’ provide a concession that no contract was formed on 25 May 2016.  In the Court’s view the use of those words would better be tested by trial examination in due course.

Conclusion

[25]     There is not sufficient evidence for the Court to conclude that the plaintiffs claim of an oral agreement entered into on 25 May 2017 cannot be proved.

[26]     There are material disputes of fact that cannot be resolved on the affidavit evidence.

[27]     The parties have yet to complete discovery.  Discovery will likely assist with resolution of the parties’ issues.

[28]     A proper assessment of the value of later correspondence should be left for trial examination in due course.

[29]     It is the Court’s view that Mr Hopkins has not proved that the cause of action in the plaintiffs’ statement of claim cannot succeed.

Judgment

[30]     The application for summary judgment is dismissed.

[31]     2B costs and disbursements are to be paid to the plaintiff.

Associate Judge Christiansen