Stilwell v Ice Group (NZ) Limited - [2012] NZCA 136

IN THE COURT OF APPEAL OF NEW ZEALAND

CA798/2010
[2012] NZCA 136

BETWEEN MAURICE GEORGE STILWELL
First Appellant

AND NOEL BUSSCHAU SWAN
Second Appellant

AND ICE GROUP (NZ) LIMITED
First Respondent

AND ERIC THOMSON
Second Respondent

AND NEW ZEALAND DATA LIMITED
Third Respondent

AND NETWORK CABLING SOLUTIONS LIMITED
Fourth Respondent

Hearing: 30 November 2011

Court: Chambers, Ellen France and Arnold JJ

Counsel: D E Smyth for Appellants
T G Stapleton and J A Langford for First, Second and Third Respondents
No appearance for Fourth Respondent

Judgment: 4 April 2012 at 11.30 am

JUDGMENT OF THE COURT

AThe appeal against the decisions of the High Court dated 28 October 2010 and 15 December 2010 is allowed.
BBoth decisions are quashed.
CAn order is made requiring the second respondent to acquire the shares of the appellants in the first respondent.
DThe terms of the acquisition are as follows:
(a)the shares are to be acquired at their fair market value as at 31 March 2005;
(b)if the appellants and the second respondent cannot agree on the fair market value of the shares or on a non-curial method for fixing that value, any of them may apply to the High Court for an order fixing the value (“the application”);
(c)how the application is dealt with is entirely a matter for the High Court;
(d)the High Court may add additional terms on which the acquisition is to take place;
(e)costs associated with the hearing of the application are entirely at the discretion of the High Court;
(f) the second respondent must pay the appellants interest on the fair market value as agreed or fixed by the High Court from 1 May 2005 to the date of payment at the rate specified from time to time under s 87 of the Judicature Act 1908.

E Nothing in order D prevents the parties from agreeing whatever terms they wish with respect to the acquisition of the shares.
FCosts in this Court are reserved. If the appellants and the second respondent cannot agree on costs, the parties may file memorandums for this Court’s consideration.
GIf the parties cannot agree costs in the High Court with respect to all matters in that Court to this date, the parties may file memorandums for that Court’s consideration. Costs will be fixed in that Court in light of the judgment in this Court and the reasons therefor.

REASONS OF THE COURT

(Given by Chambers J)

Table of contents

Para No

A Defence Force contract awakens sleeping partners [1]
Issues on the appeal [13]
Was the Judge right in finding Mr Thomson’s conduct was not

unfair to Messrs Stilwell and Swan as shareholders of Ice?              [21]
The appellants’ argument  [21]
The history of the men’s relationship up to the Defence business
opportunity  [25]

The Defence business opportunity [40]
The implications of these facts for the purposes of s 174 [57]

What relief should the Court grant to Messrs Stilwell and Swan? [66]

Result [77]

A Defence Force contract awakens sleeping partners

In early…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NZCA 136
Decision Date: 4 April 2012

CaseChat Overview and Summary

In the case of Stilwell v Ice Group (NZ) Limited, the New Zealand Court of Appeal addressed an appeal brought by Maurice George Stilwell and Noel Busschau Swan against the decisions of the High Court. The appellants sought relief under section 174 of the Companies Act 1993, alleging that Eric Thomson, the respondent, had conducted the affairs of Ice Group (NZ) Ltd in an oppressive and unfairly prejudicial manner. The primary issues revolved around the valuation of the appellants' shares in Ice Group (NZ) Ltd and the relief that should be granted.

The Court of Appeal found that Eric Thomson's conduct was unfairly prejudicial to the appellants. The court held that Mr. Thomson's failure to complete the share transaction with Mr. Stilwell and his failure to clarify matters with Mr. Swan led to an inevitable finding that the way he ran Ice Group (NZ) Ltd after 2005 was inappropriate. The court also determined that the appellants were right to complain under section 174.

Regarding relief, the Court of Appeal ordered that Eric Thomson must acquire the shares of Messrs. Stilwell and Swan. The shares were to be acquired at their fair market value as at 31 March 2005. If the parties could not agree on the fair market value of the shares or on a non-curial method for fixing that value, any of them could apply to the High Court for an order fixing the value. The High Court was given a wide discretion as to how it would fix the value in the event the parties could not agree it. Eric Thomson was also required to pay the appellants interest on the fair market value as agreed or fixed by the High Court from 1 May 2005 to the date of payment at the rate specified under section 87 of the Judicature Act 1908.

Costs in the Court of Appeal were reserved, with the possibility of the parties filing memorandums for the court's consideration if they could not agree on costs. Costs in the High Court were to be revisited in light of the Court of Appeal's judgment and reasons.

Orders