GREEN v GILLETTE [2022] NZCA 408

GREEN v GILLETTE [2022] NZCA 408 [29 August 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA278/2019[2022] NZCA 408BETWEEN THOMAS PATTON GREENAppellantAND NATHAN DANIEL GILLETTERespondentHearing: 14 July 2022Court: Dobson, Peters and Downs JJCounsel: Appellant in personRespondent in personJudgment: 29 August 2022 at 11.00 amJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant is to pay the respondent the amount of disbursementsincurred by the respondent in the categories usually allowed. If necessary,the amount is to be fixed by the Registrar.____________________________________________________________________Table of contentsPara noIntroduction [1]The factual background [12]The High Court judgment [18]Issues on the appeal [28]Mr Gillette's misrepresentations inducing shareholder agreement [29]Ownership of the intellectual property [42]Mr Gillette's standing as a director of SunPower [53]Valuation of the 49 per cent shareholding [60]Costs [82]REASONS OF THE COURT(Given by Dobson J)Introduction[1] This appeal involves the shareholders in a closely held company where theirbusiness relationship ended in litigation. The appellant (Mr Green) was the foundingshareholder of a business based in Nelson called SunPower Ltd (SunPower) whichwas 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) thatMr Gillette would acquire a 49 per cent shareholding in SunPower for $98,000 andbecome an employee of it. Their business venture together did not go well. Mr Greenretained effective control of the company and in June 2016 terminated Mr Gillette'semployment with the company. In August 2016 Mr Green incorporated a newcompany SunPower Solar Ltd (SunPower Solar), and in September 2016 heunilaterally 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 sevenitems totalling that amount.1[3] In or about April 2017 Mr Green sold the business assets then held bySunPower Solar to a third party (BSC Shipping) for $120,000. He also negotiated anemployment agreement with BSC Shipping pursuant to which he was to be paid asalary of $80,000 per annum.[4] Mr Gillette pursued a claim in the Employment Relations Authority forunjustified dismissal and obtained a determination from the Authority in January 2017requiring SunPower to pay approximately $50,000 for arrears of salary, otherentitlements and compensation, plus a penalty of $10,000 and other costs.2 Given thatSunPower had been reduced to a shell by Mr Green's sale of its assets before that time,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 inMr Green's shareholder current account, there appeared to be no evidence as to why, on transferof the assets, Mr Green repaid that amount.2 Gillette v Sunpower Ltd [2017] NZERA Christchurch 1.Mr Gillette subsequently obtained a further order from the Authority making Mr Greenpersonally liable for approximately $20,000 of the earlier award.3[5] Mr Gillette also commenced a claim, initially in the District Court, allegingmisrepresentations and breaches of the Fair Trading Act 1986 inducing his entry intothe contract to purchase the 49 per cent shareholding in SunPower and his entry intothe employment agreement. He also claimed that the steps taken by Mr Green in,among other things, selling the assets of the company constituted oppression of himas a minority shareholder under s 174 of the Companies Act 1993.[6] The proceedings were commenced in April 2017 and were subsequentlytransferred to the High Court. The claims were heard over three days in April 2019with the parties being the only witnesses. On 17 May 2019 Cooke J delivered areserved decision.4 In it he dismissed Mr Gillette's claims for misrepresentation andfor misleading or deceptive conduct inducing Mr Gillette's purchase of the shares andentry into the employment agreement.5 The High Court judgment did uphold the claimfor minority oppression.6 The Judge treated the sum of $120,000 for which the assetsof SunPower Solar had been sold in 2017 as the appropriate reflection of fair value ofSunPower at the point at which Mr Green had stripped it of its assets.7 The judgmentaccordingly ordered that Mr Green was to pay Mr Gillette $60,000, together withinterest from the date of judgment. In return for that payment Mr Gillette was directedto execute share transfers for his 49 per cent shareholding in SunPower back toMr Green.8[7] On appeal Mr Green challenges the High Court findings of oppression and alsochallenges the fair value adopted as the measure of his liability to pay out Mr Gillette.In the High Court Mr Gillette appeared on his own behalf. Mr Green was representedby counsel on a legally aided basis. Both parties have represented themselvesthroughout the appeal in this Court.3 Gillette v Roofpower Installations Ltd [2017] NZERA Christchurch 198.4 Gillette v Green [2019] NZHC 946 [High Court judgment].5 At [23]–[29] and [33]–[37].6 At [49] and [63].7 At [68]–[69].8 At [70].[8] Notwithstanding that the High Court judgment was more than three years old,there was a flurry of activity by both parties in the period shortly before the hearing ofthe appeal. On 27 June 2022 Mr Gillette applied for leave to bring a cross-appeal andalso made an interlocutory application for discovery in relation to documents claimedto be relevant to it. For his part, on 28 June 2022 Mr Green filed an application forfurther discovery of documents, for the striking out of Mr Green's synopsis ofargument and a motion for summary judgment in favour of the appellant. Especiallyin light of the lapse of time since the High Court judgment and given irregularities inwhat both parties were pursuing, all those recent applications and motions weredismissed.9[9] Accordingly, this judgment is confined to the grounds advanced by Mr Greenfor challenging the High Court finding of his liability for oppression of Mr Gillette asa minority shareholder in SunPower, and from the Judge's analysis of the fair value ofthe company which dictated the extent of the award ordered against Mr Green, inMr Gillette's favour.[10] Shortly before the hearing it became apparent that the case on appeal had beeninadequately prepared. It did not include the briefs of evidence of the parties or thetranscripts of their relatively lengthy cross-examinations. The parties had prepared anagreed bundle of documents for use at the High Court hearing and that was alsoomitted from the case on appeal. Mr Green had not complied with the obligations inr 39 of the Court of Appeal (Civil) Rules 2005. There was scope for concern at theselectivity in including only documents that were relevant to his own arguments onappeal. He had not conferred with Mr Gillette as respondent on the content of the caseon appeal.[11] Mr Green had also filed a supplementary bundle of documents, some of whichwere clearly not before the High Court as they were created after the High Courtjudgment issued. After discussion with the parties during the hearing and subsequentconfirmation from them of the extent to which documents in the supplementary bundle9 Green v Gillette CA278/2019, 30 June 2022 [Minute of Dobson J] at [4].submitted to this Court were indeed before the High Court, we were satisfied that wecould deal with the issues raised by the appeal without more.10The factual background[12] Both Messrs Green and Gillette are originally from the United States ofAmerica. Mr Green has been a citizen of New Zealand for some time. Mr Gillettebecame interested in becoming a shareholder and employee of SunPower whilsttravelling in New Zealand in December 2015. Negotiations moved relatively quicklyand the parties agreed on terms for him to be an employee, and to acquire shares up toa 49 per cent holding. A shareholder agreement was prepared and promptly signed on18 January 2016. It provided for acquisition of tranches of shares over a period oftime, and for Mr Gillette to be appointed a director of the company once he had secureda certain shareholding.[13] Mr Gillette relied on confirmation from SunPower of his employment by it toobtain appropriate visa status for himself, his wife and children to reside inNew Zealand. Mr Green subsequently complained that Mr Gillette materiallymisrepresented his work skills and qualifications, relevantly meaning that he was notqualified to take on the role that they agreed he would undertake as a SunPoweremployee.[14] Mr Green was concerned that Mr Gillette's sales efforts had not produced anynew business and on 22 June 2016 terminated Mr Gillette's employment by SunPower.[15] Mr Green complains that Mr Gillette failed repeatedly to sign the CompaniesOffice form accepting appointment as a director within relevant time limits, so that theCompanies Office records do not show his status as a director during the period of hisinvolvement with SunPower.[16] For his part, Mr Gillette complains that the prospects for the SunPowerbusiness were materially overstated by Mr Green and that he was induced to becomea shareholder with inadequate and misleading disclosure as to the company's financial10 The Court of Appeal registry was able to procure the briefs and transcript of evidence given in theHigh Court, together with the exhibits produced to that Court by the parties.performance and prospects. He disputes that his non-appointment as a directorresulted from any omission on his part.[17] On Mr Green's version of events Mr Gillette absented himself from all aspectsof management of the company and from his responsibilities as an in-substancedirector and as a shareholder from the time of his dismissal. Claiming to act in theabsence of engagement by Mr Gillette and on advice as to how to protect the assets ofthe company, Mr Green unilaterally incorporated SunPower Solar in August 2016 andeffected a transfer of SunPower's assets to the new company in September 2016.SunPower Solar paid what appears to have been depreciated book value for thetangible assets of the business. On Mr Green's version of events, by way of his furtherfinancial contributions and his hard work, he restored value to the business assets thenbeing conducted by SunPower Solar, from a business with no positive or negligiblenet asset value, to a point where he was able to sell the assets for $120,000 inApril 2017.The High Court judgment[18] The misrepresentations which Mr Gillette claimed had induced him to enterinto the purchase of shares included the extent of profit in the company's previous yearon top of the salary Mr Green had paid himself, as well as more general assertions inthe nature of puffery as to the company's prospects. The shareholder agreementpursuant to which the purchase occurred had been drafted by a Nelson lawyer retainedby Mr Gillette with the assistance of his wife who was a lawyer practising inSingapore. The agreement contained an entire agreement clause stipulating that itsterms superseded all prior negotiations. In the absence of any written representationsby Mr Green, the Judge found that the claims of misrepresentation were too vague tobe made out and that the entire agreement clause in the shareholder agreementprecluded the claims of misrepresentation.11[19] Although not the subject of an express finding, the tenor of the Judge's analysissuggests that Mr Gillette could have been more exacting in requiring informationincluding items such as financial statements in writing, before making the11 High Court judgment, above n 4, at [23]–[29].commitments he did.12 Mr Gillette's evidence was to the effect that he was not shownany financial statements, but was able to view financial data displayed on a computerscreen for "maybe a few minutes". The causes of action for misrepresentation andbreach of the Fair Trading Act were accordingly dismissed.[20] Mr Gillette separately alleged that there had been misleading or deceptiveconduct on Mr Green's part in relation to inducing him to become an employee ofSunPower. His employment claims had been resolved in terms of salary and otherbreaches of his employer's obligations by the award in the Employment RelationsAuthority. In terms of other inducements, the Judge was not persuaded that Mr Greenhad a plan from the outset to deceive Mr Gillette into entering into the employmentagreement and that cause of action was also dismissed.13 The issues on those causesof action are not relevant to the appeal.[21] Mr Gillette's claim for oppression as a shareholder under s 174 of theCompanies Act was the final cause of action and was the one that the High Courtupheld. The terms of s 174 are as follows:174 Prejudiced shareholders(1) A shareholder or former shareholder of a company, or any otherentitled person, who considers that the affairs of a company havebeen, or are being, or are likely to be, conducted in a manner that is,or any act or acts of the company have been, or are, or are likely to be,oppressive, unfairly discriminatory, or unfairly prejudicial to him orher in that capacity or in any other capacity, may apply to the court foran order under this section.(2) If, on an application under this section, the court considers that it isjust and equitable to do so, it may make such order as it thinks fitincluding, without limiting the generality of this subsection, anorder—(a) requiring the company or any other person to acquire theshareholder's shares; or(b) requiring the company or any other person to paycompensation to a person; or(c) regulating the future conduct of the company's affairs; or(d) altering or adding to the company's constitution; or12 At [23]–[24].13 At [33]–[37].(e) appointing a receiver of the company; or(f) directing the rectification of the records of the company; or(g) putting the company into liquidation; or(h) setting aside action taken by the company or the board inbreach of this Act or the constitution of the company.(3) No order may be made against the company or any other person undersubsection (2) unless the company or that person is a party to theproceedings in which the application is made.[22] The Judge considered five out of a larger number of criticisms raised byMr Gillette as evidencing Mr Green's conduct in oppressing him as a minorityshareholder of the company. These matters were:14(a) that Mr Gillette had not been appointed a director as provided for in theshareholders agreement between them;(b) that Mr Gillette was excluded from financial and operationalinvolvement in the company;(c) that Mr Green controlled all financial matters, in particular distributionof funds to the extent that he would withdraw funds for his ownpurposes as he wished;(d) that Mr Green threatened to close the business down with the adverseconsequences for Mr Gillette that he would lose the money he hadrecently invested and also his employment that was critical to hisimmigration status, to pressure him into signing further documentsvarying the original agreement; and(e) that Mr Green unilaterally formed a new company and transferred theassets of the business to it without seeking shareholder approval oradvising Mr Gillette of the steps being taken.14 At [40].[23] The Judge found that Mr Green continued to exert effective control overmanagement and governance of SunPower during the period in which Mr Gillette wasthe minority shareholder. He had sole control over banking matters and also oversupply arrangements. Mr Green had provided personal guarantees for the supply ofmaterials and in that regard the Judge recognised that he was somewhat more at riskthan Mr Gillette was. Notwithstanding that, the Judge accepted that Mr Gillette waseffectively excluded from any meaningful input into the financial performance of thecompany and was excluded from access to accounting and management records.15[24] In reviewing the exchanges between the parties when their differences aroseduring June 2016, the Judge accepted Mr Gillette's evidence that he was forced to signdocuments that purported to defer his right to become a director under the shareholdersagreement. The Judge found that whether or not Mr Gillette was a director insubstance (he was not registered as such with the Companies Office), recognition of adirector's position would not have made an effective difference because Mr Greenasserted complete control.16[25] The Judge found the evidence on these matters sufficient to make out therequirements of s 174 in that Mr Green had engaged in oppressive, unfairly prejudicialconduct in dealing with Mr Gillette as the minority shareholder.17 The Judge thenconsidered the circumstances in which Mr Green procured the sale of the businessassets of SunPower to SunPower Solar in September 2016 and treated that conduct asa more obvious reason for applying s 174 to afford Mr Gillette a remedy foroppression. The Judge found that Mr Green unilaterally effected the transfer of all thebusiness assets from SunPower to SunPower Solar paying only $6,600 for identifiedtangible assets.18 The Judge observed that there was no payment for goodwillnotwithstanding that that was the principal asset of SunPower.19 Those steps were alltaken without advising Mr Gillette that they were occurring.2015 At [41].16 At [42]–[47].17 At [48]–[49].18 At [51]. It is understandable that the Judge would not include some of the items Mr Greenpersuaded us SunPower Solar had paid for (that is, $7,900, see [2] above) but the difference is notmaterial.19 At [51].20 At [63].[26] As to remedy, the Judge considered the appropriate form would be to requireMr Green to acquire Mr Gillette's 49 per cent holding, for what the Judge determinedto be fair value.21 In fixing fair value the Judge reflected on Mr Gillette having paid$98,000 for the 49 per cent share, and that SunPower Solar's business was sold inApril 2017 for $120,000.22 The Judge rejected Mr Green's claims that there was nonet value in the SunPower business because of Mr Gillette's failure to generatebusiness, when contrasted with Mr Green's successful efforts in generating a positivelevel of business for SunPower Solar in the last quarter of 2016 and the first half of2017.23 The Judge also rejected claims by Mr Green that the improved value of thebusiness assets was attributable to his having injected funds to clear indebtedness ofSunPower.24[27] The Judge accordingly concluded that the price at which Mr Green had soldthe business assets of SunPower Solar reflected fair value for the shares of SunPowerat the time he oppressed Mr Gillette as the minority shareholder of that company.25The Judge ordered that Mr Green was to pay Mr Gillette $60,000 together with anyinterest from the date of judgment, and that on payment of that amount Mr Gillettewas to execute share transfers for the 49 per cent of the shares in SunPower back toMr Green.26Issues on the appeal[28] Mr Green's principal criticisms of the judgment under appeal may be listed asfollows:(a) First, Mr Gillette fraudulently falsified details of his experience andqualifications, thereby inducing Mr Green to enter into the shareholderagreement with him.21 At [64].22 At [68].23 At [56]–[58].24 At [60]–[61].25 At [69].26 At [70].(b) Second, the Judge wrongly treated the intellectual property beingapplied by SunPower as if owned by the company when Mr Greenclaims that he personally owned the intellectual property.(c) Third, the Judge erred in analysing the circumstances of Mr Gillette'sputative appointment as a director.(d) Fourth, the Judge erred in fixing the value of Mr Gillette's 49 per centshareholding. Arguably at the time of Mr Gillette's exclusion, hisshareholding had no positive value.Mr Gillette's misrepresentations inducing shareholder agreement[29] On appeal, Mr Green has argued that he was induced to enter into theshareholder agreement with Mr Gillette by Mr Gillette falsely representing that he hadthe requisite skills to undertake the sales role for the specialised solar panel businessoperated by SunPower. Specifically, the curriculum vitae Mr Gillette presented toMr Green included as work experience a period as an electronics specialist in theUnited States Air Force, and in terms of his education that he had obtainedUnited States Air Force avionics and electronics certifications. Mr Green claimed thatMr Gillette had subsequently confirmed to him that those representations were false.He had challenged Mr Gillette to produce certificates as proof of those qualificationsand claimed that Mr Gillette could not do so. For his part, Mr Gillette denied that hehad made any such acknowledgement and maintained that the details in his curriculumvitae were accurate.[30] Mr Green argued that the difficulties that developed during the periodMr Gillette was working with the company were caused by his lack of competence inthe tasks allocated to him as an employee. Had the issue been confronted in a timelyway, Mr Green argued that he would have had grounds for cancelling the agreement.[31] This issue was not squarely put to the Judge and the Judge made no finding asto whether Mr Gillette had either innocently or fraudulently misrepresented hisqualifications or work skills in the curriculum vitae that he provided for Mr Green intheir initial negotiations.[32] There is no scope to entertain a new ground for resisting liability on appeal inthese circumstances. In any event, we are not persuaded that a misrepresentation asto Mr Gillette's skills as an employee could constitute any sufficient justification forMr Green as majority shareholder to ignore Mr Gillette's interests as a minorityshareholder sufficiently to absolve him of his liability for oppression under s 174.The shareholders agreement made no reference to the relevant work skills thatshareholders might contribute to the business of the company as employees.Further, as Mr Green invoked on his own behalf in argument in the High Court, itcontained a whole agreement clause (cl 19.3) recording that it constituted the parties'full agreement and superseded any previous negotiations, proposals or agreements.[33] In his oral submissions Mr Green also addressed an additional criticism ofMr Gillette's performance under the shareholder agreement that appeared not to havebeen raised in any of his written documents filed with this Court. The terms forMr Gillette's purchase of a 49 per cent shareholding provided that he was initially toacquire 26 per cent of the shares with two payments, first of $32,000 on settlement ofthe agreement and thereafter the remaining $20,000 on the 60th day afterestablishment of the employee position intended for Mr Gillette. The agreement thenprovided for Mr Gillette to have an option to acquire a further 23 per cent of the sharesat the same price per share, to be exercised at any time up to a certain point after hiscommencement as an employee.[34] Mr Green's new argument was that the staged timing for acquisition of theshareholding was "a rigid timeline to allow us to get to know each other". He arguedthat he was induced by Mr Gillette to collapse that timetable so that, on Mr Green'sperception, he owed greater obligations to Mr Gillette as a 49 per cent shareholderfrom an earlier point in time than was contemplated.[35] There is nothing in this point. The timing for later acquisitions provided in theshareholder agreement was permissive at Mr Gillette's option. Mr Green did not haveany right under the terms of the agreement to delay Mr Gillette's acquisition of theshareholding. Nor is there any suggestion in the evidence that he would at the timehave sought to defer taking some of Mr Gillette's money. In any event, the obligationsowed by the majority shareholder to a minority shareholder would not have beenmaterially different had the holding only been, say, the first 26 per cent.[36] Mr Green made much of the lack of communication from Mr Gillette once hehad been dismissed in or around the third week of June 2016. Mr Green did not raisethis as a separate ground of appeal and it was unclear whether he emphasised the lackof responses from Mr Gillette as either a complete excuse for Mr Green's own conductin transferring the assets of the company without consultation, or that Mr Gillette'slack of participation in some way lessened the seriousness of Mr Green's breach of hisobligations under s 174.[37] Mr Gillette denied that there was any point in engaging with Mr Green on thelatter's terms. From his perspective, Mr Green was never going to share control of thecompany or recognise Mr Gillette's entitlement to participate in governance decisions.He instanced his 1 August 2016 letter to Mr Green as his attempt to seek engagementon matters of concern to him. It appears many of those issues had been outstandingfor some time, and there is no evidence of positive engagement in response to the letterfrom Mr Green or on his behalf.[38] In response to Mr Green's claim that he was responsible for "deadlock[ing]"SunPower, Mr Gillette made the point that to impose any sort of deadlock on thecompany's decision-making, he would first have to have been given a role in thatdecision-making which had never occurred.[39] It is sufficiently clear on the evidence that Mr Green retained sole control overall aspects of the governance of SunPower throughout the period during whichMr Gillette was a shareholder. It is untenable to suggest that the absence ofengagement by Mr Gillette in the period after he had been dismissed by Mr Greeneither justified the steps Mr Green then took unilaterally, or in some way lessened therelative seriousness of the oppressive conduct.[40] Section 175 of the Companies Act includes a list of conduct in relation togovernance of a company that is to be treated as unfairly prejudicial for the purposesof s 174. That list includes in s 175(1)(l) the undertaking of a major transaction inrespect of the company's assets which is the essential complaint involved in this case.[41] We are satisfied that the finding of breach of Mr Green's obligations unders 174 could not be altered by some different consideration of the circumstances inwhich there was a lack of positive communication between the parties during therelevant period. Had Mr Green given, say, 21 days' notice of his proposal to undertakea major transaction including sale of the company's assets, then it is clear thatMr Gillette would indeed have responded.Ownership of the intellectual property[42] Mr Green submitted that the Judge had erred in treating the intangible assetsof SunPower, and in particular its goodwill and intellectual property, as being ownedby the company. Instead, Mr Green contended that he retained all such items as hispersonal property. It followed that, on Mr Green's reconstruction, SunPower had onlyits tangible assets to sell to the new company he formed, whereas it was open to himto include the goodwill and other aspects of intangible assets when he sold the secondbusiness on to a third party in April 2017. Arguably, this error had resulted in theJudge substantially overvaluing the assets when fixing fair value of Mr Gillette's 49per cent holding. It was also implicit in Mr Green's argument that if he only dealt withthe modest tangible assets ignoring Mr Gillette's entitlement to participate, then thatwas far less serious oppressive conduct.[43] The shareholder agreement addressed ownership of intellectual property in thefollowing terms:16. Intellectual Property16.1 Each Shareholder acknowledges and agrees that the Company ownsand will continue to own any Intellectual Property created, made ordeveloped by or on behalf of the Company in the course of theBusiness including (without limitation) any Intellectual Propertydeveloped by any Shareholder contracted to the Company when suchIntellectual Property was created, made or developed as part of orincidental to the performance of such contract. For the avoidance ofdoubt, this will not include:(a) Any Intellectual Property created by the relevant Shareholderoutside the terms of any such contract;(b) Any Intellectual Property that was in existence prior toembarking on the performance of any such contract which ismerely applied by the relevant Shareholder in performance ofany contract with the Company; and/or(c) Any Intellectual Property not for the direct or indirect benefitof the Business.16.2 Each Shareholder acknowledges and agrees that:(a) The Company or its licensors are the sole owners of theIntellectual Property;(b) It has no right over, interest in, or ownership of anyIntellectual Property;(c) It will not assert any right over, interest in, or ownership ofany Intellectual Property;(d) It will not consent or challenge in any legal proceedings orotherwise undermine the Company's or its licensors'proprietorship, ownership or use of the Intellectual Property;and(e) All the goodwill and rights resulting from the use of theIntellectual Property by that party or otherwise will enure forthe benefit of the Company.[44] Mr Green addressed ownership of intangible property somewhat tangentiallyin answering a question from the Judge during his evidence:Well the company [SunPower Ltd] consisted of plant, some stock and sometools and my know how and website and things. So yes I transferred myselfand I transferred the furniture and the tools and the stock.[45] The Judge dealt with the issue as follows:27[59] Next it was argued that the goodwill of the business was personal toMr Green. I accept that a purchaser would have regarded Mr Green'scontinued involvement as important in preserving the goodwill of thebusiness. That is why the buyer was prepared to offer employment with theadditional $80,000 per annum in salary to have Mr Green continue. But thatwas over and above the amount paid for the company's goodwill. It is alsoclear that the goodwill was an asset owned by SunPower, and effectivelytransferred to Sunpower Solar when the business was transferred. Undercl 16.2(a) of the Shareholders Agreement Mr Green warranted that thecompany was the sole owner of the intellectual property, and intellectualproperty was broadly defined, and included all intellectual property rights andconfidential information used in the business. It clearly encompasses thegoodwill of the business operated by SunPower.27 High Court judgment, above n 4.[46] Mr Green's argument on appeal was that all of the intellectual property that hetook with him from SunPower came within the exclusions described in cl 16.1(a) and(b) of the shareholder agreement, namely having been created by him outside the termsof any contract between him and the company or constituted intellectual property thatwas in existence prior to his own contract with the company.[47] Mr Green also submitted at one point that cl 16 only gave the companyownership of intellectual property created after the shareholder agreement wascompleted. That is an untenable interpretation. The exclusion in cl 16.1 applies toitems of intellectual property that were created or acquired outside the scope of anyshareholder's employment by the company.[48] It is tolerably clear that Mr Green had used SunPower as the vehicle fordeveloping the relevant business. He claimed to have built the business up whilstcontrolling SunPower. When he agreed to sell a minority stake to Mr Gillette, heprovided the acknowledgement in cl 16.2 that the company was the sole owner of theintellectual property and that he had no right over it, subject only to the exceptions incl 16.1 that meant he could retain ownership of anything created, effectively, outsidehis work for the company.[49] The Judge did not consider the scope of the exclusions in cl 16.1 of theshareholder agreement. However, it is understandable that the origins of individualcomponents of the intellectual property were not focussed upon in any detail at theHigh Court hearing. When the terms of cl 16 of the shareholder agreement areassessed in light of the history of the business and reflecting on the types of intellectualproperty that were referred to in general terms, we are not persuaded that the Judgeerred in reaching the conclusion he did about the company's ownership of theintellectual property.[50] The balance sheet in evidence for SunPower recorded its total current and fixedassets at $65,270.61 at 31 March 2015 and $72,005.13 at 31 March 2016. After takinginto account liabilities owing at those dates, the net asset position reduced to zero atthe end of March 2015 and a deficit of $2,175.90 at the end of March 2016.[51] In contrast, in Mr Green's negotiations with Mr Gillette in January 2016, heattributed a value to the company of $200,000, to arrive at the price of $98,000 for49 per cent of it. The clear inference is that the value resided in the company'sintangible assets, essentially comprising its intellectual property. In his oralsubmissions Mr Gillette acknowledged that Mr Green is highly skilled at what he does,that he was effectively buying into those skills, and pointed to the absence of anyevidence that Mr Green had identified any parts of the intellectual property being usedby the company that were retained as his separate property.[52] The evidence does not include a breakdown of intangible assets or valuesattributed to it at various times. However in general terms, it would clearly includeitems such as licences to operate, logos, the know how in relation to solar panels, thecommunication details which would have enabled SunPower Solar to give anappearance of continuity, as well as the network of connections which would havebeen built up during the period in which Mr Green conducted the business ofSunPower. Expert valuers could readily value such items at substantially differentamounts. In general terms, it is clear that they were of significant value, and on anyview, exceeded the value of tangible assets by many multiples. It was the whole ofthe company's undertaking that Mr Green dealt with, in breach of obligations toMr Gillette.Mr Gillette's standing as a director of SunPower[53] Clause 3.4 of the shareholder agreement committed Mr Green to appointingMr Gillette as a director immediately upon payment of what was then contemplatedas the second tranche of money paid to lift his shareholding to 26 per cent. Each ofthe parties blames the other for Mr Gillette not having confirmed status as a directorof the company from the date of acquisition of the relevant tranche of shares.[54] On Mr Green's version, he provided a form for Mr Gillette to indicate hisacceptance of the appointment on 24 February 2016. In late March Mr Green contendsthat the Companies Office removed Mr Gillette's appointment as a director because ofthe non-filing of a signed acceptance of his appointment. A second acceptance formwas supposedly provided to Mr Gillette on 1 April 2016, but was again not signed.[55] Mr Gillette's version was that he was keen to accept appointment but wasblocked by Mr Green's failure to co-operate in formalising the appointment. In oralsubmissions, Mr Gillette complained that Mr Green controlled log-in to theCompanies Office register for the company, so that it was unrealistic to expect him tocomplete filing of the signed acceptance form. On his version of this matter, heprepared and signed an acceptance form in August 2016. Mr Green criticised thisdocument as "fraudulent".[56] We did not take Mr Green to go so far as to argue that if Mr Gillette hadpositively engaged by accepting formal appointment as a director, then Mr Green'sdialogue with him about the future of the company may have been more inclusive.[57] The Judge dealt with this point as follows:28[47] There is a dispute between the parties as to the responsibility for thefailure for Mr Gillette being registered as a director of the company at theCompanies Office — both say the other is responsible for failing to take theadministrative steps required. Mr Gillette was never formally registered. Buteven if he had been formally registered it would have made no effectivedifference as Mr Green had complete control regardless. I reject Mr Green'sargument that Mr Gillette was a director in substance.[58] The Judge's final observation in that paragraph suggests that in the High Court,Mr Green was arguing that Mr Gillette's position throughout the relevant period wasas if he had been formally appointed a director.[59] In any event, we agree with the Judge that it is not relevant to the issues nowpursued on appeal as to which of the parties was responsible for Mr Gillette notformally becoming a director. Certainly given the realities of the relationship betweenMessrs Green and Gillette, when assessing whether Mr Green abused his position ofpractical control over the company to oppress Mr Gillette, whether the latter was adirector or not is a matter of indifference.28 High Court judgment, above n 4.Valuation of the 49 per cent shareholding[60] Mr Green raised a number of criticisms of the Judge's approach in adopting asfair value of the shares in SunPower, the price paid by BSC Shipping for the businessassets of SunPower Solar some eight months after they were transferred. The first ofthese was the discrete challenge to inclusion in the valuation of intellectual propertywhich Mr Green asserted was in his own personal ownership. We have consideredand rejected that argument above.[61] The second criticism of the Judge's valuation was that it disregarded the benefitof Mr Green's good work once he had transferred the assets from SunPower inSeptember 2016 and re-established a supposedly profitable level of business forSunPower Solar in the period up to finding a buyer, and selling it in April 2017.[62] A component of this argument was Mr Green's contention that poorperformance by Mr Gillette in the first half of 2016 had harmed SunPower to the extentthat there was no goodwill in the business as at June 2016.[63] The Judge dismissed these arguments, having undertaken a comparison of theprofitability of SunPower in the year to 31 March 2015 (net operating profit of$30,294) with the profitability of that company to 31 March 2016 (small operatingloss of $2,176) and an operating loss for the year to 31 March 2017 of $28,907.There were explanations for the operating losses in the latter two years and the Judgediscerned no meaningful change in the financial performance of the business arisingfrom the trading activities that would explain a dramatic change in value of its assetsbetween August 2016 and April 2017. He found that the company's value existed inthe form of its potential given its established reputation and supply lines.29[64] There was no valuation or other expert evidence on the longer term impact ofa dip in the level of trading activity such as appears to have occurred in the first halfof 2016. There is no basis in the evidence, or in Mr Green's arguments on appeal, towarrant our rejecting the Judge's conclusion that the company's business was of a typethat is appropriately valued by looking at its established reputation and supply lines,29 High Court Judgment, above n 4, at [57].and its potential position in the market. We accordingly reject Mr Green's argumentthat his initiatives in the period between transferring the company's business toSunPower Solar and agreeing to sell that business deprive the sale price to the thirdparty of relevance in establishing fair value for the required re-purchase ofMr Gillette's 49 per cent shareholding.[65] There appears to have been no close analysis in the High Court as to the dateat which fair value of Mr Gillette's shares should be reconstructed. Nor did we receiveany analysis on the point from the parties in their submissions on appeal. Re-transferof the shares to Mr Green is only to occur as a consequence of the orders made by theCourt and Mr Gillette's contention was that he ought to have been entitled to unwindthe whole transaction, by getting back all of his original investment of $98,000 inreturn for transferring the shares to Mr Green.[66] The remedies provided for in s 174 contemplate flexibility so that the court canmake orders of a variety of types, as best suits the circumstances of each actionablebreach of the section. There can be no hard and fast rule for fixing fair value in a casewhere re-transfer of a minority shareholding is ordered.30 In this case, the appropriateapproach is to fix a value at the point in time at which the oppressive conduct byMr Green occurred.[67] On 2 August 2016 Mr Green obtained a short informal assessment of the valueof the shares in SunPower from his accountants, Crowe Horwath. In one relativelyshort paragraph each, the accountants addressed two modes of valuing the shares.The first assessed the shares on an earnings basis. Given that the draft profit and lossaccounts to 31 March 2016 showed a loss, it followed that there were no earnings tocapitalise, and on that method the accountants opined that the company had no value.Secondly, a valuation was projected on an assets basis. Using a balance sheet fromXero the accountants noted total assets of $76,122 and liabilities of $65,190. On thatbasis the company had net assets and accordingly equity of only $10,932.[68] The valuation on earnings was on a very narrow basis, and is inconsistent withthe amounts Mr Gillette was prepared to pay in January 2016 and which BSC Shipping30 See Stephen Revill and Linda Howes Company Law (online ed, Thomson Reuters) at [CA174.07].was prepared to pay eight months later. As to the asset valuation, no account was takenof the intangible assets. On the basis of our analysis above, that was the majorcomponent of the value in the company. The accountant's email ended with a caveatthat it reflected an assessment of the financial position "on what we have in front ofus" and "that this is a high level indication only". We are satisfied that, particularlywithout evidence of greater analysis and the opportunity for cross-examination, thatcannot represent a reliable indication of fair value for Mr Gillette's shares.[69] The third criticism raised by Mr Green in challenging the fair price set by theJudge is that it failed to have regard to the amount Mr Green paid from his ownresources to discharge debts owed by SunPower to suppliers.[70] Mr Green submitted that he had applied personal resources to clear $80,000 indebts owed to suppliers of SunPower and had also cleared a $30,000 overdraft.He submitted that the Judge ought to have had regard to that as affecting the value hewas able to obtain on a sale of SunPower Solar's business to BSC Shipping.[71] Mr Green had raised this argument in the High Court. The Judge dealt with itas follows:31[61] There are two answers to that suggestion. First it was not thecompany that was being sold, but its business assets. Any amounts investedinto the company by Mr Green might have been to the benefit of the company,but they did not change the value of its business. Secondly, and in any event,the evidence does not support Mr Green's contention as a matter of fact.The accounts to 31 March 2016 record that Mr Green owed SunPower Ltd$60,742 as a result of shareholder advances. To identify what Mr Greeninvested in the following financial year, it is necessary to consider the annualaccounts of both SunPower and Sunpower Solar, as the business wastransferred from one to the other during that financial year. The accounts ofSunPower record that Mr Green reinvested $83,606 into the companyeliminating Mr Green's debt of $60,741 and leaving the shareholders accountin credit to the amount of $22,865. That supports Mr Green's contention.But the accounts for Sunpower Solar for the same period shows Mr Green'sshareholders current account in deficit by $71,974. The net effect across bothsets of accounts is that Mr Green repaid or reinvested only approximately$10,000 of the $60,000 he had extracted. Presumably he was able to use someof the $98,000 paid to him by Mr Gillette for 49 per cent ownership to do so.31 High Court judgment, above n 4.[72] When pressed by us, Mr Green accepted that the Judge had correctly takenthese figures from the relevant financial statements. He criticised the presumptionmade in the last sentence.[73] As to the first of the Judge's reasons, its relevance may be subject to somequalification. Mr Green could argue that the extent of SunPower's debt was cripplingso that, without a cash injection, it would not have been possible to resurrect it as aviable business to enable its assets to be portrayed as such to a potential buyer. In thatsense, Mr Green's commitments subsequent to the unauthorised transfer of assets fromSunPower to SunPower Solar were necessary to demonstrate the viability of thebusiness to an extent that would attract a buyer.[74] Such a commercially prudent intervention may have occurred, but the assetsattracting the third party buyer are the same as those transferred from SunPower toSunPower Solar. In the context of a sale of assets, we agree with the Judge that theextent of working capital required to demonstrate the viability of the business cannotof itself affect the ascertainment of the fair price for 49 per cent of the shares in theoriginal business.[75] As to the net extent of Mr Green's commitment of personal resources, heagreed with the Judge's arithmetic. The upshot is that the net extent of additionalworking capital required from Mr Green in the period between transferring the assetsand selling them on to a third party is not exceptional and nor can it affect theappropriateness of what a third party has paid for the assets as an indication of the fairvalue of 49 per cent of the shares in the original company.[76] The last of Mr Green's criticisms of the Judge's determination of fair price wasthat, if the price achieved on his resale of the business was to be applied, then it oughtat least to have been a net recovery after deduction of direct expenses of sale.Mr Green submitted that he had paid a real estate agent's commission of $17,250(including GST) to procure the sale. He also referred to other "direct costs such asaccounting fees and legal fees associated with the sale", details of which hevolunteered to provide to the Court. This impact on the fair price is not addressed bythe Judge and it is unclear as to whether the point was taken by Mr Green at theHigh Court hearing.[77] The ascertainment of a fair price for 49 per cent of the shares was validly fixedby ascertaining what a willing third party buyer would pay for the assets. We do notaccept that that proxy for value has to take into account the costs to the vendor ofprocuring the sale. In any event, a commission of 12.5 per cent for a transaction ofthis nature appears unusually high. Mr Green advised us that the $15,000 fee was aminimum, irrespective of the value of the business assets. Even if costs of sale wereconceptually available as a deduction, we would not accept 12.5 per cent asappropriate.[78] We do not accept that the Judge's approach to establishing a fair price forMr Gillette's shareholding erred by virtue of not taking into account the costs of saleincurred by Mr Green as vendor.[79] We are accordingly not persuaded that Mr Green has made out any error in theJudge's approach to setting the fair price for Mr Gillette's shares. Standing back,Mr Gillette was persuaded to pay $98,000 for those shares on a very casual and vaguedescription of the present and likely future value of the business. He may well havebeen motivated not to question whether that was more than fair value by theopportunity the shareholding would provide for him to also gain employment andthereby have grounds to apply for the desired category of visa for him and his familywhich appears to have been important to him. Thereafter, a disastrous employmentsituation evolved. The appeal does not relate in any way to the resolution to his disputeas an employee in the Employment Relations Authority.[80] After approximately six months Mr Green, exerting complete control andwithout notice to Mr Gillette, had transferred the business undertaking to a separatecompany owned entirely by him. Eight months thereafter, he was prepared to sell thatsame business undertaking for $120,000. In the absence of reconstructed valuationsby experts several years after the events, we agree with the Judge that the price paidfor the business by a third party was the appropriate reference point for fixing the fairvalue for Mr Gillette's shareholding. Had independent valuers opined on the fairvalue, it seems highly likely that the price for which the same business was on-soldwould have had an important influence on their valuation in any event.[81] For all the foregoing reasons, the appeal is dismissed.Costs[82] Both parties were self-represented. Mr Gillette is entitled to an order requiringMr Green to pay him all reasonable disbursements incurred in the categories usuallyallowed, if necessary to be fixed by the Registrar.