Ace-Kirker v Piper

[2017] NZHC 2827

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV2016-404-000500 [2017] NZHC 2827

BETWEEN

WAYNE LIONEL ACE-KIRKER AND

MICHELLE LOUISE BAKER AS TRUSTEES OF THE UTOPIA FAMILY TRUST

Plaintiff

AND

JAMES PIPER Defendant

Hearing:	17 November 2017
Appearances:	K Robinson for the Plaintiff AJB Holmes for the Defendant
Judgment:	17 November 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

W L ACE-KIRKER AND M L BAKER AS TRUSTEES OF THE UTOPIA FAMILY TRUST v J PIPER [2017] NZHC 2827 [17 November 2017]

[1]      Issues between the parties concern the plaintiff’s engagement of the defendant in about July 2004 to represent Mr Ace-Kirker and obtain IP protection in relation to inventions including locks and locking devices for the transport industry.

[2]      Ms Denise Tyrer-Harding, a patent attorney, was at that time employed by Pipers Patent Attorneys (Pipers), a specialist intellectual property firm.  The plaintiff claims Ms Tyrer-Harding was responsible for acting for Mr Ace-Kirker. The plaintiff pleads that between 2005 and 2006 Ms Tyrer-Harding on behalf of Mr Ace-Kirker as a trustee of the Utopia Family Trust (UFT), filed patent applications in 10 regions including New Zealand, India, Australia, South Africa, USA, Canada, Europe, China, Singapore, and Hong Kong.

[3]      On or about 26 May 2005 Mr Ace-Kirker assigned his IP rights in relation to the inventions to the UFT.

[4]      The plaintiff says that until February 2010 Mr Ace-Kirker on behalf of the UFT paid all fees owing to the defendant in accordance with the fees agreement – by which Ms Tyrer-Harding was to be the person at all times acting for Mr Ace-Kirker and in respect of which services fees were recorded in a costing strategy document written by Ms Tyrer-Harding on 7 July 2004.

[5]      On or about 23 February 2010 Ms Tyrer-Harding went on leave and Pipers engaged another employee to complete work during that time for Mr Ace-Kirker. It is pleaded between March and April 2010 Pipers rendered additional invoices totalling approximately $82,730.88 for work dating back to 1 November 2004.  Such invoices were, Mr Ace-Kirker says, in breach of the costing strategy and the parties’ contract of retainer.

[6]      Issues arose between the parties.  The plaintiff disputed most of the invoices rendered.   Pipers responded that “it would write to all its agents in the relevant countries advising they no longer acted for Mr Ace-Kirker, and that Pipers would be retaining the files until the outstanding accounts had been paid”.

[7]      Pipers contacted its agents in overseas jurisdictions and, in effect instructed those agents to close their files and incur no further costs in relation to them.  Those agents replied inter alia, confirming no further action would be taken and the patent would lapse.

[8]      A dispute arose between the parties regarding Mr Ace-Kirker’s right to access

Pipers’ files.

[9]      In October 2010 Pipers rendered additional invoices to Mr Ace-Kirker totalling

$87,393,90 for work dating back to July 2003. In December 2010 Pipers filed a claim in the District Court at Auckland seeking $170,124.78 plus costs and interest, in respect of the March and October invoices.

[10]     That proceeding was defended and subsequently the parties entered into a settlement agreement in which all disputes over invoices were resolved. Subsequently the plaintiff lost all the international patents, in New Zealand and in other jurisdictions.

[11]     The plaintiff pleads claims of a breach of contract and in particular, regarding two of the obligations it says Pipers had to them as his patent attorneys.

[12]     The plaintiff also pleaded negligence claiming a breach of duty to exercise reasonable skill and care in the performance of its duties.  Finally, it is pleaded Pipers owed the plaintiff fiduciary duties to act in its best interest and in good faith towards the plaintiff.

[13]     By Mr Piper’s statement of defence he pleads this proceeding concerns the same facts and issues raised by the Piper’s proceeding under CIV 2010-004-2863 regarding which on 16 August 2013 the parties signed an agreement recording their full and final settlement in relation to that proceeding. The statement of defence notes that as part of the settlement on 6 August 2013 Mr Ace-Kirker swore an affidavit as to his financial means.   Mr Piper says that proceeding was discontinued on the understanding and belief that the issues which led to the proceeding had been resolved. This proceeding is, he claims, an attempt to reopen those issues and relitigate the facts. It is also claimed the proceeding is an abuse of process and/or is Limitation Act barred.

[14]     The present application by Mr Piper for security for costs was filed on 14 July

2017.   It seeks that the plaintiff pays security in the sum of $35,000 and for the proceeding to be stayed pending that payment being made.

[15]     The application pleads the plaintiff is impecunious and the claims are of dubious merit.

[16]     It is claimed neither Mr Ace-Kirker nor UFT would be able to pay costs if its proceeding was unsuccessful.

[17]     It is Mr Piper’s case that the claim is based on alleged breaches of duty said to have occurred after the plaintiff’s retainer was ended on 25 March 2010.  Claims of alleged breach could not, Mr Piper says, have caused any loss of patents because the plaintiff could maintain his patents and was not prevented from doing so by Mr Piper.

[18]     It is claimed that the proceeding is just an attempt to reopen issues and relitigate facts which have been resolved and settled.

[19]     Mr Holmes, counsel for Mr Piper refers to the decision of Associate Judge Bell when on 21 February 2017 His Honour heard Mr Piper’s application for summary judgment in relation to this proceeding.  By that application, Mr Piper alleged, inter alia:

(a)      The claim was barred by terms of their 2013 agreement; and it was an abuse of process;

(b)      That the UFT trustees did not have any standing to sue;

(c)      That he did not breach any professional duties because the retainer terminated at the end of March 2010; and

(d)The plaintiff did not suffer any loss, Mr Ace-Kirker having had the opportunity to maintain his patents and was not prevented from doing so.

[20]     Associate Judge Bell indicated that while the claim was weak, it was not sufficiently weak enough to allow the entry of summary judgment on defence.

[21]     By  their  memoranda  counsel  have  again,  in  length,  addressed  claims  of strength and weakness.  In the Court’s assessment, there is little by those assessments that persuades this Court to any other conclusion than that reached by His Honour Judge Bell.   It follows that the Court’s primary focus here should be upon other elements routinely addressed by security for costs applications.

Principles

[22]     Security may be ordered if:

(a)      There are reasons to believe a plaintiff is unable to pay the costs of the defendant if the plaintiff is unsuccessful in its proceeding (HCR 5.45 (1)(b)); and

(b)      The Judge thinks it is just in all the circumstances (HCR 5.45(2)).

(c)      If the Court considers security should be ordered then the Judge should direct how that be provided, and whether the proceeding ought to be stayed until it is provided.

Reason to believe plaintiff will be unable to pay costs if unsuccessful

[23]     The applicant needs to provide evidence of a plaintiff’s inability to pay costs. It is not a matter that requires proof but rather that there is very good reason to that security should be ordered.

[24]     Mr Robinson for the plaintiff submits there is no evidence of an inability to pay costs. Mr Ace-Kirker has not and has never been bankrupted and has not defaulted on payment of amounts owing to anyone.  He is not in receipt of legal aid nor a party to any litigation funding agreement.  He has financed this litigation thus far.  He has not defaulted in previous costs orders. There is no evidence he is disposing of assets.

[25]     Although Mr Ace-Kirker is presently unable to pay security if ordered in the amount claimed, the Court should not, counsel submits, accept that Mr Ace-Kirker will not be able to pay the costs award at some time in the future.

[26]     Counsel submits an award of security is likely to impact on Mr Ace-Kirker’s ability to fund this proceeding and this would cause a denial of access to justice.

[27]     Counsel submits the Court’s exercise of discretion involves a balancing of competing interests. That an award of costs might cause difficulties for Mr Ace-Kirker in pursuing this proceeding.

Considerations

[28]     There is credible evidence that the plaintiff trust would not be able to pay costs if  unsuccessful.   Affidavit  evidence from  Ms Tyrer-Harding and  Mr Ace-Kirker confirms the trust has no assets or income and, that the trust is in “a poor financial position”.  Although the trust pleads that Mr Ace-Kirker assigned his IP rights to the trust, Mr Ace-Kirker’s evidence deposes that no money or property was ever credited to the trust and, that all intellectual property remained in his name, and that the trust merely had a right to rewards from the intellectual property, and that there had been no rewards.

[29]     Nor, does it appear Mr Ace-Kirker has assets in his trust’s proceeding.  He describes himself as a beneficiary. In 2013 he stated his assets totalled $9,500 and that he was receiving a benefit from WINZ in respect of a back injury.  His affidavit in opposition to the security for costs application confirms he would presently be unable to pay security for costs.

[30]     These applications contemplate a balancing exercise being undertaken.  The claim appears to face pleadings and evidence issues and in that regard claims of loss of chance offer a significant challenge.  In issue is:

(a)       Whether the plaintiff held any rights to receive any future income from the patents; and

(b)      Whether  Mr  Piper  caused  the  impecuniousity  of  Mr Ace-Kirker.

Clearly if he did then it would be unjust for security to be awarded.

[31]     Mr Ace-Kirker  thinks  Pipers’ actions  contributed  to  his  present  financial situation – that it was a direct cause of the loss of patents and the patent application for various inventions that would have allowed Mr Ace-Kirker exclusivity regarding those and the ability to earn money from the IP.   In addition, it is claimed Pipers’ actions prevented him from earning potentially considerable amounts of money and that his job prospects had also been affected.

Conclusion

[32]     At best, for present purposes, the Court considers any assessment of prospects of success is far from clear.

[33]     The acceptable evidence is that the plaintiff is presently unable and, in the absence of evidence to show otherwise, can therefore be treated as being unable to pay litigation costs if unsuccessful.

[34]     In the Court’s view it is appropriate to award security for costs.

[35]     Mr Holmes for Mr Piper calculates that costs on a 2B basis, and estimating that a six-day trial would be required, would be no less than $51,000.   The defendant requests security be lodged in the sum of $35,000.

[36]     Mr Robinson for the plaintiff suggests that if security is ordered that it be provided for in tranches with the first tranche covering through to the end of the discovery phase.  In counsel’s estimate on a 2B basis that sum would be $18,000.

[37]     The Court agrees that security be fixed in the sum of $35,000 and that this be provided in tranches.

[38]     The first tranche requires the sum of $15,000 to be paid into Court and to be held on interest bearing deposit.  Until paid, this proceeding will be stayed.

[39]     The balance of $20,000 is to be paid by the close of pleadings date.

Costs

[40]     These are fixed on a 2B basis and shall be payable at the conclusion of this proceeding.

Associate Judge Christiansen