Green v Gillette

[2022] NZCA 408

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA278/2019
 [2022] NZCA 408

BETWEEN	THOMAS PATTON GREEN Appellant
AND	NATHAN DANIEL GILLETTE Respondent

Hearing:	14 July 2022
Court:	Dobson, Peters and Downs JJ
Counsel:	Appellant in person Respondent in person
Judgment:	29 August 2022 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.

BThe appellant is to pay the respondent the amount of disbursements incurred by the respondent in the categories usually allowed.  If necessary, the amount is to be fixed by the Registrar.

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Table of contents

Para no

Introduction

The factual background

The High Court judgment

Issues on the appeal

Mr Gillette’s misrepresentations inducing shareholder agreement
Ownership of the intellectual property
Mr Gillette’s standing as a director of SunPower
Valuation of the 49 per cent shareholding

Costs

REASONS OF THE COURT

(Given by Dobson J)

Introduction

1. This appeal involves the shareholders in a closely held company where their business relationship ended in litigation.  The appellant (Mr Green) was the founding shareholder of a business based in Nelson called SunPower Ltd (SunPower) which was in the business of selling and installing domestic solar power systems.  SunPower’s business was established by Mr Green in 2014. 

2. In January 2016 Mr Green agreed with the respondent (Mr Gillette) that Mr Gillette would acquire a 49 per cent shareholding in SunPower for $98,000 and become an employee of it.  Their business venture together did not go well.  Mr Green retained effective control of the company and in June 2016 terminated Mr Gillette’s employment with the company.  In August 2016 Mr Green incorporated a new company SunPower Solar Ltd (SunPower Solar), and in September 2016 he unilaterally transferred the assets of SunPower to SunPower Solar for $7,900.  The only record of the sale was itemised credits in SunPower’s bank account for seven items totalling that amount.[1]  

   [1]The highlighted items on the relevant bank statement also included a payment into the account of $2,000 with a narration of “Patrick loan”.  Given substantial and fluctuating amounts in Mr Green’s shareholder current account, there appeared to be no evidence as to why, on transfer of the assets, Mr Green repaid that amount.

3. In or about April 2017 Mr Green sold the business assets then held by SunPower Solar to a third party (BSC Shipping) for $120,000.  He also negotiated an employment agreement with BSC Shipping pursuant to which he was to be paid a salary of $80,000 per annum.

4. Mr Gillette pursued a claim in the Employment Relations Authority for unjustified dismissal and obtained a determination from the Authority in January 2017 requiring SunPower to pay approximately $50,000 for arrears of salary, other entitlements and compensation, plus a penalty of $10,000 and other costs.[2]  Given that SunPower had been reduced to a shell by Mr Green’s sale of its assets before that time, Mr Gillette subsequently obtained a further order from the Authority making Mr Green personally liable for approximately $20,000 of the earlier award.[3]

   [2]Gillette v Sunpower Ltd