Green v Gillette
[2022] NZCA 49
•11 March 2022 at 9.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA278/2019 [2022] NZCA 49 |
| BETWEEN | THOMAS PATTON GREEN |
| AND | NATHAN DANIEL GILLETTE |
| Court: | Clifford and Collins JJ |
Counsel: | Appellant in person |
Judgment: | 11 March 2022 at 9.30 am |
JUDGMENT OF THE COURT
AThe application to strike out is dismissed.
BThere is no order for costs.
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REASONS OF THE COURT
(Given by Collins J)
Introduction
Mr Gillette has applied to strike out Mr Green’s appeal. The application is made under r 44A of the Court of Appeal (Civil) Rules 2005 (the Rules), and alleges Mr Green:
(a)is continuing to default in complying with procedural directions made by this Court;
(b)has failed to prosecute the appeal with due diligence; and
(c)is pursuing an appeal that is frivolous, vexatious, or otherwise an abuse of process.
Background
In 2014, Mr Green formed a company called SunPower Ltd (SunPower). In January 2016, Mr Green and Mr Gillette entered into a shareholders’ agreement under which Mr Gillette obtained the right to acquire up to 49 per cent of the shares of SunPower for $98,000. Mr Gillette duly paid Mr Green for the shares.
Also in January 2016, Mr Gillette became employed by SunPower as its sales manager on a salary of $60,000.
By the end of March 2016, Mr Green told Mr Gillette that SunPower did not have sufficient money to pay his salary. Numerous disputes then developed between Mr Green and Mr Gillette. Mr Gillette ceased working for SunPower in July 2016.
Mr Gillette commenced proceedings before the Employment Relations Authority (the ERA) alleging he had been unjustifiably dismissed from SunPower. The ERA awarded Mr Gillette $26,043.96 for arrears of salary. The ERA also directed SunPower pay to Mr Gillette $10,000 by way of additional penalty.[1]
[1]Gillette v Sunpower Ltd [2017] NZERA Christchurch 1.
In the meantime, Mr Green sold SunPower to another company he owned for a sum well below the true value of the company. He later onsold the business to another entity for $120,000, which was its true market value.
In November 2017, the ERA ordered Mr Green pay $20,067.20 to Mr Gillette for aiding and abetting the breach of employment contract by SunPower.[2]
[2]Gillette v Roofpower Installations Ltd (previously named Sunpower Ltd) [2017] NZERA Christchurch 198.
Mr Gillette also commenced proceedings alleging, amongst other matters, oppression of a minority shareholder contrary to s 174 of the Companies Act 1993.
In a judgment delivered in May 2019, Cooke J said that Mr Green’s conduct was a straightforward case of unfair prejudice directed towards Mr Gillette. The Judge explained:[3]
… 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 …
[3]Gillette v Green [2019] NZHC 946 at [63].
In June 2019, Mr Green filed a notice of appeal. He subsequently made three informal applications for extensions of time to file a case on appeal and apply for a hearing. Each of those requests was granted by the Registrar under r 43(1B)(a) of the Rules.
Mr Green also unsuccessfully applied for legal aid. He is now representing himself. Mr Gillette is also self-represented.
In a judgment dated 30 October 2020, this Court declined Mr Green’s fourth application for an extension of time to file the case on appeal and apply for a fixture. In doing so, the Court said “that the merits of the appeal are weak”.[4]
[4]Gillette v Green [2020] NZCA 533, [2021] NZCCLR 4 at [22].
The consequence of this Court declining Mr Green’s fourth application under r 43(2) of the Rules was that the appeal was treated as abandoned under r 43(1).
Mr Green then successfully applied to have this Court recall its 30 October 2020 judgment.[5] The recall was granted because of new information placed before the Court which indicated Mr Green may have been confused by comments from the Registrar that led him to believe he did not have to take steps to prepare the case on appeal pending determination of his application for waiver of security for costs. This provided “a partial explanation for the delay in progressing his appeal which was not previously drawn to [the Court’s] attention”.[6]
[5]Gillette v Green [2021] NZCA 323.
[6]At [15].
The Court reiterated that the “prospects of success on appeal are weak” but observed that it could not be said “the appeal would inevitably fail”.[7]
[7]At [16].
In granting the recall application this Court required Mr Green to file the case on appeal by 27 August 2021.[8] He complied with that direction.
[8]At [20].
Although Mr Gillette cites all three limbs of r 44A(1) in his strike-out application, and his submissions refer to the delays that have occurred in prosecuting the appeal, the primary focus of his argument is that Mr Green’s appeal is completely devoid of merit and that he has acted in bad faith by pursuing his appeal.
Mr Green refutes Mr Gillette’s contentions and argues that his appeal has merit.
Analysis
Failure to comply with procedural directions
We can understand Mr Gillette’s frustration at the delays that have occurred in prosecuting the appeal. Those delays have, however, been fully examined by this Court in its two earlier judgments.
In its recall judgment this Court explained why the delays have occurred and why it was not appropriate to deny Mr Green the opportunity to pursue his appeal.
Nothing contained in Mr Gillette’s current application and supporting submissions causes us to depart from the reasons given in this Court’s recall judgment when allowing Mr Green the opportunity to pursue his appeal. Although the delays have been unfortunate, Mr Green is not in “continuing default in complying with … any procedural direction or order made by a Judge”.[9]
Failure to prosecute the appeal with due diligence
[9]Court of Appeal (Civil) Rules, r 44A(1)(a).
As we have explained at [19] to [21], while there have been unnecessary delays in prosecuting the appeal, those delays have been examined and this Court has concluded Mr Green should be allowed to pursue his appeal. Striking out the appeal because of Mr Green’s failure to prosecute the appeal with due diligence would not be consistent with this Court’s reasons in its recall judgment permitting Mr Green to continue with his appeal. The delays that have occurred do not warrant striking out the appeal for failure to prosecute the appeal with due diligence.
Frivolous, vexatious or otherwise an abuse of process
We continue to adhere to the view that Mr Green’s prospects of succeeding on appeal are weak. We cannot, however, say that his appeal will definitely fail.
The assessment that Mr Green has a poor chance of succeeding does not equate to his appeal being frivolous, vexatious or otherwise an abuse of process.
Proceedings are frivolous if they trifle with the Court’s processes and are vexatious if they involve, inter alia, procedural impropriety. Proceedings may be otherwise an abuse of process if, for example, they have been brought with an improper motive or in an attempt to obtain a collateral advantage.[10]
[10]Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [89].
We cannot, at this juncture, conclude that the proceedings are frivolous, vexatious, or otherwise an abuse of process. All we can reiterate is that while the grounds of appeal appear weak, there is a slim prospect of success. Accordingly, the appeal should be permitted to proceed to hearing and determination in the usual way.
Result
The application to strike out is dismissed.
There is no order for costs.
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