Gillette v Green

[2018] NZHC 1050

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2017-442-42

[2018] NZHC 1050

BETWEEN

NATHAN DANIEL GILLETTE

Applicant

AND

THOMAS GREEN

First respondent

ROOFPOWER INSTALLATION LIMITED

Second respondent

Hearing:

11 May 2018

Appearances:

Mr N D Gillette in person

Ms A R Goodison for respondents

Judgment:

14 May 2018

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]                  In this case the plaintiff, Mr Nathan Gillette, sues the defendants, Roofpower Installation Ltd and its director, Mr Thomas Green, for alleged breaches of a shareholders’ agreement and breaches of the Fair Trading Act 1986. There is also an employment component of the litigation, with proceedings having been commenced in the Employment Relations Authority.

[2]                  The proceeding was commenced on 13 April 2016. Regrettably, it is not much closer to trial. There has been some discovery exchanged. Otherwise, the parties have been engaged in extensive interlocutory skirmishing in relation to the enforcement of an Employment Relations Authority decision, the details of which are irrelevant for present purposes. No doubt the parties have incurred substantial costs.

[3]The amount at stake excluding interest and costs is modest — $138,000.

GILLETTE v GREEN [2018] NZHC 1050 [14 May 2018]

[4]                  Before the Court today it is the plaintiff’s application for discovery. The plaintiff’s notice of application was dated 24 August 2017. This seeks discovery not only against the defendants but also against a company by the name of Sunpower Solar Ltd, to which, the plaintiff says, the assets of the second defendant were transferred after it was incorporated on 18 August 2016 and which Sunpower Solar subsequently sold to a third party.

[5]                  There is no formal application before for the Court for non-party discovery. However, during the course of the hearing, the plaintiff made an oral application for such an order. I indicated that I would be prepared to grant that application. I am satisfied that there is no prejudice to Sunpower Solar. At all material times that company was controlled by the first defendant, and the solicitors and counsel acting for the defendants have been aware since 24 August 2017 that the plaintiff was seeking discovery against Sunpower Solar.

[6]                  During the course of the hearing I was able to establish from the plaintiff that he was concerned to obtain three categories of documents:

(a)bank statements for the first defendant’s personal current and other accounts for the period commencing 1 January 2016 down to the date on which the second defendant stopped trading in mid-2017;

(b)the second defendant’s financial statements, management accounts and bank statements for the same period of time;

(c)Sunpower Solar’s financial statements, management accounts and bank statements for the period 18 August 2016 (when it was incorporated) down to mid-2017 when, it is said, the company transferred its assets to a third party and ceased to trade.

[7]                  Because the plaintiff had not filed any formal skeletal outline of his submissions prior to the hearing, I was obliged to tease out the bases upon which he sought those three categories of documentation and I now summarise these, and my conclusions in respect of them.

[8]                  As to the first category, part of the plaintiff’s argument in this case is apparently that the first defendant transferred funds totalling over $100,000 from the company to his personal account. The plaintiff was able to direct me to the second defendant’s financial statements and bank statements which appeared on their face to show a number of transfers of funds from the company to an account which, the plaintiff says, is the first defendant’s current account. I enquired of the plaintiff what additional information would be provided by viewing the first defendant’s bank statements. I suggested to him that all that would do is show corresponding receipts into the first defendant’s account, and I could not see how that would advance his case at all. If for example the first and second defendants were to put forward a defence that these transfers were made between them for company purposes and that the funds were used to discharge company obligations, that would be for them to demonstrate. On that basis I have concluded that it would be inappropriate to make an intrusive order requiring the first defendant to reveal his personal financial affairs in the context of this litigation.

[9]                  I take a different view of the plaintiff’s application in relation to the financial affairs of the second defendant and Sunpower Solar Ltd.

[10]              The second defendant, as a party to this proceeding, is of course obliged to provide discovery, and I would have thought, having regard to the terms of the plaintiff’s statement of claim, that its financial affairs for the period 1 January 2016 down to mid-2017 when it ceased to trade were relevant and discoverable in response to an order for standard discovery. Ms Goodison did not contend otherwise. During the course of the hearing, she did mention that standard discovery to date had already included the lion’s share of the documentation being sought, but that two accounts had apparently been overlooked. That is to be rectified.

[11]              With respect to Sunpower Solar, in my view, the tests relating to applications for particular discovery against third parties are met and the documentation sought from Sunpower Solar is both relevant and discoverable.

[12]              For those reasons, I will make the orders sought in relation to discovery by the second defendant and Sunpower Solar.

[13]              This case cries out for intensive case management. Having made enquiries of the plaintiff and Ms Goodison as to the current state of the proceeding and the steps required to move the matter forward to trial, I issue the following direction:

(a)within 15 working days of 11 May 2018, that is to say by 1 June 2018:

(i)the second defendant is to provide the plaintiff with discovery of all financial statements, management accounts and bank statements for all accounts held by it for the period commencing 1 January 2016 and concluding at the time that it ceased to trade in mid-2017;

(ii)the company Sunpower Solar Ltd is to discover to the plaintiff all financial statements, management accounts and bank statements for all accounts held by it for the period from its incorporation on 18 August 2016 down to the date in mid-2017 when it sold its assets to a third party and ceased to trade;

(b)in relation to the orders in (a) above, the standard listing and exchange protocols are to apply, so that the plaintiff is to receive electronic versions of all discovered documents;

(c)in addition I direct that if the plaintiff doesn’t have any documentation previously discovered to his former solicitors by the defendants’ solicitors, then the defendants’ solicitors are to provide him with further copies of the same, as per the same protocols;

(d)any further interlocutory applications in this proceeding, relating to discovery or otherwise, are to be filed and served by 15 June 2018.

(e)the Registrar is to list the case for a teleconference as soon as possible after 15 June 2018 with a view to dealing with any outstanding interlocutory matters, identifying an appropriate close of pleadings date, setting the substantive proceeding down for trial and issuing

appropriate pre-trial directions. In this regard, Mr Gillette and those acting for the defendants are reminded of their obligations under the Rules to file either a joint memorandum addressing all of the matters referred to, or, if they cannot agree, individual memoranda.

Associate Judge Johnston

Solicitors:

Zindels, Nelson for respondents