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Glenn Andrew Walker v/s G2 Finance Holdings Limited

    CA No. 392 of 2013

    Decided On, 09 December 2013

    At, Court of Appeal of New Zealand

    By, THE HONOURABLE MR. JUSTICE RANDERSON
    By, THE HONOURABLE MR. JUSTICE FRENCH & THE HONOURABLE MR. JUSTICE MILLER

    For the Applicant: P J Andrew, Advocate. For the Respondent: E B Sweet, Advocate.



Judgment Text

French, J.

Introduction

[1] Mr Walker had judgment entered against him in the District Court in favour of G2 Finance Holdings Ltd (G2 Finance).[1] He appealed to the High Court but the appeal was dismissed by Keane J.[2]

[2] Mr Walker now seeks leave under s 67 of the Judicature Act 1908 to appeal Keane J’s decision to this Court, Keane J having refused to grant him leave.[3]

Background

[3] Mr Walker was previously the managing director of G2 Finance. In 2007, G2 Finance loaned him AUD 60,000 for the purpose of purchasing shares in the company. Mr Walker did not purchase the shares personally. They were purchased in the name of his family trust.

[4] The relationship between Mr Walker and G2 Finance broke down and in 2010 G2 Finance issued proceedings in the District Court seeking repayment of the loan. Mr Walker did not dispute that the loan had matured but sought to offset the debt with two cross-claims. The first was a claim of unjustifiable dismissal and the second was a claim of oppression against a minority shareholder under s 174 of the Companies Act 1993. Those are not claims that can be heard in the District Court[4] and accordingly they were struck out for want of jurisdiction by Judge Gibson. On 7 February 2012, Judge Gibson entered judgment against Mr Walker for the sum of NZD 111,049.89, being the principal and interest outstanding on the loan. The Judge, however, also stayed execution of the judgment on the condition that Mr Walker file his unjustifiable dismissal claim in the Employment Relations Authority within 28 days.

[5] On appeal to the High Court, Mr Walker argued that Judge Gibson had erred in entering judgment against him on the undisputed debt. Mr Walker contended that he had a complete right of set-off in equity on the basis of the proposed oppression proceedings under s 174 of the Companies Act.

[6] In dismissing the appeal, Keane J held that the oppression claim could not qualify as an equitable set-off because the parties to the proposed s 174 claim would not be the same as the parties to the District Court proceeding. The oppression claim could only be advanced by the trustees of Mr Walker’s family trust, not by Mr Walker. It was the trust that was the shareholder. The same view had been expressed (obiter) in the District Court.

[7] Dissatisfied with that outcome, Mr Walker now seeks to appeal to this Court.

Discussion

[8] In order to obtain leave, Mr Walker must satisfy us that the proposed appeal raises a question of law and/or fact capable of bona fide and serious argument in a case that involves either a public or private interest of sufficient importance to outweigh the cost and delay of a further appeal.[5]

[9] The question Mr Walker wishes this Court to consider is as follows:

Whether the High Court and District Court were correct to conclude that a lack of identity of parties was fatal to the equitable set-off claim when the relief to be sought in the proposed s 174 oppressive and prejudicial conduct proceedings would, if granted, extinguish the respondent’s right to recover the outstanding loan.

[10] In our view, the law relating to equitable set-off and identity of parties is settled. The general rule is that a lack of mutuality of parties will be fatal to any cross-claim except in rare and unusual circumstances.[6] Further, even if there are rare and unusual circumstances justifying waiving the requirement for mutuality, the claim and cross-claim must still be interdependent. As noted in Grant v NZMC Ltd, what is required is that judgment on the one cannot fairly be given without regard to the other.[7] The defendant’s claim must call into question or impeach the plaintiff’s demand.

[11] Correctly analysed, the proposed appeal therefore concerns the application of settled law to the facts. It is fact-specific and does not involve a novel legal issue of general public importance.

[12] The other difficulty that Mr Walker faces is that despite having had four years to do so, the family trust has never filed the proposed s 174 oppression proceedings. We note too that although the unjustifiable dismissal claim was filed within 28 days of Judge Gibson’s decision in February 2012, it has never been prosecuted. Mr Walker says that the delays are due to difficulties in obtaining legal aid. However, as far as the family trust is concerned, Mr Walker has known for some considerable period that the trustees will never obtain legal aid.

[13] The costs and delay to G2 Finance in this already protracted matter have been considerable. In our view, it would not be in the interests of justice for there to be any further delays.

Outcome

[14] The application for leave to appeal is accordingly dismissed.

[15] Counsel advised us that Mr Walker was legally aided for the purposes of this application. There will therefore be no order as to costs.

1. G2 Finance Holdings Ltd v Walker DC Auckland CIV-2010-004-925, 7 February 2012.

2. Walker v G2 Finance Holdings Ltd [2013] NZHC 183.

3. Walke

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r v G2 Finance Holdings Ltd [2013] NZHC 1082. 4. Under the Employment Relations Act 2000, the Employment Relations Authority and Employment Court have exclusive jurisdiction to hear claims of unjustifiable dismissal. A claim under s 174 of the Companies Act 1993 can only be heard in the High Court. 5. Waller v Hider [1998] 1 NZLR 412 (CA) at 413. 6. Hamilton Ice Arena Limited v Perry Developments Ltd [2002] 1 NZLR 309 (CA); Herring v Herring [2010] NZCA 500, [2011] 2 NZLR 433. 7. Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) at 12–13.
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