Having unilaterally taken control of their Nelson company now known as RoofPower Installations Ltd, sold its assets at an undervalue to his new company for some $6000 and then on sold to a third party for $120,000, Thomas Green was ordered to pay $60,000 compensation to former joint venture investor Nathan Gillette.
This after Mr Green was ordered to pay Mr Gillette $20,600 by the Employment Relations Authority for aiding and abetting RoofPower’s breach of Gillette’s employment contract.
The High Court was told Mr Gillette came to New Zealand from Singapore in 2016 on a visa backed by an employment contract with RoofPower. Mr Green had set up RoofPower two years previously. Their deal saw Mr Gillette putting up $98,000 to become a 49 per cent shareholder in RoofPower and becoming sales manager on a $60,000 salary with promised bonuses if sales targets were met. The two quickly fell out. Within months, Mr Green stopped paying his salary. Seven months after their joint venture arrangement was agreed, Mr Green unilaterally transferred company assets across to a new company. The transaction was not approved by shareholders as required by the Companies Act. The deal was not documented.
Mr Gillette sued. His claims that Mr Green misrepresented RoofPower’s profitability were dismissed. There were conflicting views over what Mr Green had said during negotiations. Justice Cooke ruled Mr Gillette was entitled to a remedy under Companies Act ‘minority oppression’ rules. He had been unfairly prejudiced. His salary had been stopped, supposedly because of a lack of cash, whilst Mr Green in control of RoofPower’s bank account continued to use company cash to meet his own day to day expenses. Management decisions were not made jointly, contrary to their shareholders’ agreement. Mr Green delayed appointment of Mr Gillette as a director, using threats to compromise his visa residency as leverage forcing Mr Gillette’s agreement to a deferral. Mr Gillette was effectively excluded from any real input into the financial performance of the company or access to accounting information, Justice Cooke said. He was treated as no more than an employee, despite his shareholding investment as part owner.
Evidence was given that Mr Green negotiated an $80,000 employment contract with the third-party purchaser of RoofPower’s assets. This employment was later terminated.
Gillette v. Green – High Court (17.05.19)
19.092