Burden v ESR Group (NZ) Limited
[2021] NZHC 597
•23 March 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2014-404-2456
[2021] NZHC 597
UNDER the Copyright Act 1994 and the Fair Trading Act 1986 IN THE MATTER
Of alleged infringement of Copyright and breach of the Fair Trading Act 1986
BETWEEN
IAN JAMES BURDEN
First Plaintiff
AND
PLANTATION GROWN TIMBERS (INTERNATIONAL) LIMITED
Second Plaintiff
PLANTATION GROWN TIMBERS (VIETNAM) LIMITED
Third Plaintiff
Continued over
Hearing: 11 June 2020 Appearances:
A H Brown QC & JRE Wach for Plaintiffs J G Miles QC & A J Pietras for Defendants
Judgment:
23 March 2021
COSTS JUDGMENT OF DUFFY J
This judgment was delivered by me on 23 March 2021 at 2.30 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
BURDEN & ORS v PLANTATION GROWN TIMBERS (INTERNATIONAL) LIMITED & ORS [2021] NZHC 597 [23 March 2021]
Continued ….
ESR GROUP (NZ) LIMITED
First Defendant
MORROW MARKETING MANAGEMENT LIMITED
Second Defendant
CRAIG MORROW
Third Defendant
GALAXY HOME (VIETNAM) LIMITED
Fourth Defendant
CHIEF EXECUTIVE OF NEW ZEALAND CUSTOMS
Fifth Defendant
[1] The present matter for determination is essentially about the quantum of costs and disbursements to be awarded to plaintiffs who enjoyed success in this Court and a measure of success in the Court of Appeal.
Background
[2] ESR imported and sold furniture in New Zealand. The plaintiffs alleged this furniture was a secondary infringement of their copyright and a breach of the Fair Trading Act 1986. On 7 July 2016 I delivered a judgment finding that the first plaintiff, Mr Burden, was successful in his claim against ESR for infringement of copyright.1 I also found that the Custom’s notice Mr Burden and the third plaintiff had issued under s 136 of the Copyright Act 1994 (CA) was valid, and that the imported furniture was therefore pirated goods that were lawfully detained by Customs under s 140 of the CA. I dismissed the balance of Mr Burden’s claims and those brought by the second and third plaintiffs. ESR appealed and all plaintiffs cross appealed against the judgment.
[3] The Court of Appeal upheld some findings made in this Court, but set aside others.2 It found the second and third plaintiffs (hereafter the plaintiffs) were the owners of the copyright and therefore entitled to enforce the copyright. It upheld other findings as follows: ESR was liable for secondary infringement of the plaintiffs’ copyright in technical drawings of the Irish Coast range of furniture; the s 136 Customs notice and the determinations of the chief executive of Customs (the chief executive) that followed were valid; ESR’s counterclaim against the validity of the s 136 notices and the detention of the pirated goods under part 7 of the CA was correctly dismissed. However, the Court set aside this Court’s findings in respect of liability for the preliminary drawings and the first importation.3
[4] The Court of Appeal ordered that costs should lie where they fell. This was in part because both parties made litigation decisions which unnecessarily slowed the proceeding. First, the plaintiffs had been obliged in part to re-shape their case before the Court of Appeal. Second, the plaintiffs had been granted an indulgence by that
1 Burden v ESR Group (NZ) Ltd [2016] NZHC 1542.
2 ESR Group (NZ) Ltd v Burden [2017] NZCA 217.
3 At [78].
Court in relation to the admission of new evidence on appeal. Third, the plaintiffs’ changes of stance, which led to their success on appeal, were made late in the day. 4 The Court remitted the question of costs in the High Court back to this Court for determination.
[5] Against this background it now falls to me to determine the costs to be awarded for the hearing in this Court. The plaintiffs seek in the alternative to recover: (a) indemnity costs; or (b) increased costs; or (c) scale costs. They also seek disbursements.
[6] The plaintiffs now owe Customs the sum of $196,297.79 under an indemnity for storage costs arising out of the detention of pirated goods. The indemnity was given by Mr Burden and the third plaintiff in accordance with the requirements of reg 6 of the Copyright (Border Protection) Regulations 1994 (the Regulations). A key issue is whether the storage costs which have accrued to the plaintiffs under the border protection measures regime in Part 7 of the CA are recoverable, either as costs or disbursements in this proceeding. If they are not recoverable under one of those heads the plaintiffs will have to bear those costs in full.
[7] ESR asserts that the storage costs can only be recovered as special damages. Since the plaintiffs did not plead recovery of the storage costs as special damages and have instead elected an account of profits as their remedy, storage costs would therefore be irrecoverable. If ESR is right, other copyright claimants who utilise the CA’s border protection measures but elect an account of profits as their remedy in legal proceedings will have to bear the storage costs that flow from enforcing their rights.
[8]I propose to deal with the claim for reimbursement of the storage costs first.
Recovery of storage costs
[9] On or about 20 May 2013, Mr Burden and the third plaintiff gave written notice to Customs pursuant to s 136 of the CA that they claimed copyright in the artistic works that underlie Irish Coast furniture (the notice).5 Under reg 6 of the Regulations
4 At [83].
5 Burden v ESR Group (NZ) Ltd, above n 1, at [247].
every person who issues a notice under s 136 is required to provide security and/or indemnity. In this case, a bond of $5000 and an indemnity to cover the handling and storage costs of any detained goods were provided. In 2014, this notice led Customs to detain on arrival at the New Zealand border furniture that ESR was importing for sale in this country.6 It followed that once Customs had detained suspect pirated goods Mr Burden and the third plaintiff became liable to indemnify Customs for the costs of handling and storing those goods (the storage costs). The length of this proceeding has led to storage costs of $196,297.79 accruing under this indemnity.
[10] Whether the plaintiffs can recover the storage costs is a complicated question which has troubled this Court substantively and procedurally. The substantive question hinges on how the storage costs are characterised. ESR claims the storage costs fall outside the settled meanings of either costs or disbursements and argue they are a form of special damages. There is also the further complication of a procedural issue. I propose to deal with this towards the end of the judgment. I now turn to the substantive question raised by the claim for the storage costs.
Statutory scheme and purpose
[11] It is first helpful to consider the statutory scheme and purpose of the border protection measures in Part 7 of the CA under which the plaintiffs incurred the storage costs.
[12] The purpose of the Copyright Bill 1994 was to update the existing legislation and give effect to the copyright provisions in the international Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPs).7 The TRIPS agreement resulted from the GATT Uruguay multilateral trade negotiations, to which New Zealand was a party. TRIPS parties agreed that copyright legislation should include border protection procedures to prevent the importation of pirated copyright goods.8
6 This followed determinations under s 137 of the Copyright Act that the goods were pirated goods, which enabled them to be detained pursuant to s 140 of that Act.
7 (29 November 1994) 545 NZPD 5105.
8 One of the rules and disciplines of TRIPS is to make provision for: (a) adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights;
(b) effective and appropriate means for the enforcement of trade-related intellectual property rights, taking into account differences in national legal systems.
In New Zealand, these procedures are now provided for by the border protection measures of Part 7 of the CA.9
[13] Under Part 7, the owner of copyright in various specified works can give written notice under s 136(1) to the chief executive claiming copyright and requesting detention of any pirated copies that are in or may come into the control of Customs. Under reg 4(1) of the Regulations every person giving a notice under s 136 is obliged to provide evidence of copyright ownership. Under reg 6, every person who issues a s 136 notice must provide a security and/or indemnity to the chief executive.
[14] Part 7 makes elaborate provision for what is to happen on receipt of a s 136 notice.10 The chief executive must either accept or decline the notice within a reasonable period of receipt.11 An accepted notice remains in force for the period specified in the notice12 unless revoked by the claimant or discharged by order of the Court under s 141 of the CA.
[15] Customs maintains a detailed list of accepted copyright notices on the NZ Customs Intellectual Property Rights Notices website. Customs officers are more likely to recognise pirated versions of copyright works identified by an accepted notice on the website.
[16] Under s 137, the chief executive may investigate any imported item in the control of Customs which may be a pirated copy of the notified works identified by an accepted notice. For the purposes of that investigation the chief executive may require the claimant or any person who has an interest in the item to supply information.13 Whether or not an investigation proceeds, the chief executive must determine whether the imported goods appear to be a pirated copy. Notice of any such determination must then be given to the claimant and any person appearing to have an interest in the item.14
9 The procedures in Part 7 where amended in 2016, which is after the time when they were used by the plaintiffs. In this judgment I shall discuss the procedures as they were in 2013 and 2014.
10 As noted by the Court of Appeal in ESR Group (NZ) v Burden, above n 2, at [69].
11 Section 136(3).
12 Section 136(2).
13 Section 137(2).
14 Section 139.
[17] Following this determination, s 140 provides for Customs to detain the suspect items. Detention continues until a court orders discharge of the notice or release of the item, or makes a substantive decision on whether the item is pirated. Any person may apply to the court seeking any of these three outcomes.15
[18] Where a copyright decision is to be made, any persons with an interest in the item will be notified by the courts and given the opportunity to either appear in court or appeal against any order made in the proceedings.16 No order may take effect until the appeal window has expired, or final determination is reached, or the appeal is abandoned.17
[19] Section 141(A) provides that the importer or consignee of the copies may consent to forfeiture of the items to the Crown.
[20] If the court decides that an item is a pirated copy, the court must make an order that the item be forfeit to the Crown, or destroyed, or otherwise dealt with as the court thinks fit.18 In considering what order to make, the court must consider whether other available remedies could adequately compensate the claimant, and protect their interests, and whether disposal will adversely affect the claimant.19 If the court decides the item is not pirated, it may order any party to the proceedings to pay compensation to the importer, exporter or owner of the item, as the court sees fit.20
[21] The Part 7 statutory border protection measures provide an effective and efficient procedure to ensure copyright ownership is protected. Rather than have to keep watch on whether pirated items are entering New Zealand and on such discovery apply to the Court for pre-trial orders to prevent the distribution of those items, all an owner need do is to give notice to Customs and once a s 136 notice is accepted, Customs provide the necessary surveillance and detention to ensure pirated items do not enter the New Zealand market to the detriment of the copyright owner. Further, once legal proceedings are brought under Part 7, copyright owners’ rights are protected
15 Section 141(1)-(3).
16 Section 141(5).
17 Section 141(6).
18 Section 142(1).
19 Section 142(2).
20 Section 142(4).
until final disposition through exhaustion of all appeal rights. Thus, copyright owners need not take steps to preserve their legal rights pending disposition on appeal. The regime operates to ensure that local and international copyright owners have an efficient means of protecting and enforcing their copyright. New Zealand thereby discharges its international obligations as a signatory of TRIPS.
[22] This proceeding demonstrates the effective operation of the Part 7 regime. Mr Burden and the second plaintiff gave notice dated 20 May 2013 claiming copyright in the works set out in schedule 1 of the notice, in relation to the Irish Coast Collection. The chief executive accepted this notice under reg 6 and made a direction for security. The plaintiffs duly paid a bond of $5,000 and provided an indemnity.
[23] In 2014, the chief executive subsequently determined that goods imported by ESR in July, August and September appeared to be pirated copies of the Irish Coast protected works. This triggered an obligation on behalf of Customs to serve the plaintiffs and ESR with notice of this finding.21 Under s 140, the suspect items were detained in the custody of the chief executive. The plaintiffs then had 10 days to initiate proceedings against ESR, or the goods would be released to ESR.22
[24] The plaintiffs brought proceedings in this Court within the requisite time frame, seeking, inter alia, declarations under s 141(3) that the furniture items were pirated copies.23 ESR first exercised the rights Part 7 affords importers who wish to challenge the detention of their goods by bringing an interlocutory application in this proceeding before Muir J seeking an order under s 141(2) of the CA for the release of the various shipments of imported furniture that were being detained as pirated goods. The application, which the plaintiffs opposed, was declined on 14 July 2015. ESR next challenged the detention of the imported goods in the trial of this proceeding. I
21 Section 139.
22 Section 140(1)(e).
23 Once proceedings are initiated within the requisite time the goods will only be released once one of the following circumstances arises: (a) the chief executive is served with an order made in proceedings under section 141(1) that the notice be discharged; (b) the chief executive is served with an order made in proceedings under section 141(2) that the item be released; (c) any proceedings under section 141(3) in respect of that item (including any appeal) are determined by a decision that the item is not a specified item that is a pirated copy; (d) any proceedings under section 141(3) in respect of that item, including any appeal, are abandoned.
found the detention and determinations by the chief executive were lawful. The Court of Appeal upheld those findings.24
[25] One aspect of the Part 7 regime however is lacking. Neither Part 7 nor the regulations provide a mechanism for recovery of storage costs incurred through the indemnity required by Customs pursuant to reg 6. In this regard the civil regime contrasts with the separate criminal regime in the CA, which provides for the prosecution of Copyright offences by the Crown. That regime specifically provides for recovery of costs incurred by Police or Customs in “retaining the thing for the purpose of the proceedings” following successful conviction.25
How to characterise the storage costs
[26]The successful plaintiffs in this case seek to recover storage costs of
$196,297.79 from the defendants. These costs accrued as a direct consequence of the plaintiffs’ statutory obligations under Part 7 of the CA. The extended duration of the proceedings, on account of the defendants’ appeal, is also a factor.
[27] In their submissions, the parties have identified three mutually exclusive possibilities:
(a)First, ESR contends that the storage costs are special damages. As the plaintiffs elected an account of profits as their remedy, the storage costs will therefore be irrecoverable
(b)Second, the plaintiffs contend that the storage costs are in the nature of costs of or incidental to the proceeding.
(c)Third, the plaintiffs contend in the alternative that the storage costs are recoverable as disbursements.
24 ESR Group (NZ) Ltd v Burden, above n 2.
25 Section 134V(3).
[28] There is a fourth possibility that neither the plaintiffs nor ESR have addressed: that the storage costs cannot be categorised in any of the above ways. If so, they will be irrecoverable.
Special Damages
[29] The material question is not so much whether the storage costs are special or general damages, but whether the loss is too remote to be recoverable as damages at all. If the liability to Customs is held to be a loss recoverable as damages, then the claim would be for special rather than general damages because the storage costs would then be a consequential pecuniary loss that was susceptible of precise quantification.26
[30] Copyright infringement is made actionable at the suit of the copyright owner and the available remedies are set out in s 120 of the CA which provides:27
120 Infringement actionable by copyright owner
(1) An infringement of copyright is actionable by the copyright owner.
(2) In proceedings for infringement of copyright, all such relief by way of damages, injunctions, accounts, or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right.
…
[31] Section 120(2) of the CA expressly identifies two monetary remedies for breach of copyright: damages and an account of profits. One excludes the other.28 Here the plaintiffs elected an account of profits.29
[32] Damages are a compensatory remedy.30 Section 120(2) implicitly refers to the tortious measure of loss by treating copyright infringement as analogous to
26 See, for example, McKenzie v Shell Co of New Zealand Ltd [1960] NZLR 208 (HC); Attorney- General v N [2002] 1 NZLR 651 (CA).
27 This is subject to ss 121-122: s 120(3). Neither of these provisions are particularly material for present purposes.
28 Tiny Intelligence Ltd v Resport Ltd [2009] NZSC 35, [2009] 2 NZLR 581.
29 As to the principles governing such elections, see Tiny Intelligence Ltd v Resport Ltd., above n 27.
30 General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197 (HL) at 212 per Lord Wilberforce. Even a claim for additional damages under s 121(2) of the Copyright Act 1994 is a claim for compensation: see Tiny Intelligence Ltd v Resport Ltd, above n 27, at [22]- [46].
infringement of any other property right. An award of damages is calculated to place the plaintiff in the same position they would have been in but for the tortfeasor’s wrongful act or omission.31
[33] Damages for copyright infringement fall under two heads: (a) damages for sales which the plaintiff has lost at the expense of the defendant; and (b) recompense for the use of the plaintiff’s copyright in respect of any remaining infringements produced or sold by the defendant.32
[34] In Feltex Furnishings of New Zealand Ltd v Brintons Ltd the Court of Appeal identified three ways of measuring damages for copyright infringement:33 (a) where the effect of the infringement is to divert sales from the owner of the property right to the infringer, the appropriate measure of damages is typically the profit the owner would have made had they effected the sales themselves; (b) where the property right is exploited through granted licences and the defendant infringes by using the property without a licence, the defendant will be required to pay the royalties it would have paid had it acted legally; and (c) where a normal rate of profit or a normal or established rate of royalty cannot be proved, the plaintiff must produce evidence to guide the Court to establish the true measure of loss. Here the Court will often use a notional royalty or licence fee.
[35] Damages for copyright infringement can include the loss of prestige associated with losing an important piece of business.34 The Australian and New Zealand courts have also held that a proper measure of copyright value diminution should also account for damage to reputation resulting in lost business and market share.35 A plaintiff can also obtain additional damages on the basis of the flagrancy of the infringement and any benefit accruing to the defendant.36
31 Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed, Thomson Reuters, Wellington, 2011) at 1.5.2; Ian Finch (ed) James & Wells Intellectual Property in New Zealand (3rd ed, Thomson Reuters, Wellington, 2017) at 4.12.1.
32 Finch, above n 31, at 4.12 at 491.
33 Feltex Furnishings of New Zealand Ltd v Brintons Ltd (1992) 4 NZBLC 102,913 (CA).
34 Tiny Intelligence Ltd v Resport Ltd, above n 28.
35 Prior v Lansdowne Press Pty Ltd [1977] VR 65 (VSC) at 70; Review Australia Pty Ltd v New Cover Group Pty Ltd (2008) 79 IPR 236 (FCA) at [44]; Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2009) 81 IPR 378 (FCA); Dennison Manufacturing Co v Prestige Toys Ltd (No 2) (1980) 1 NZIPR 357 (HC).
36 Copyright Act 1994, s 121(2).
[36] While the courts have been alive to the difficulties of assessing the measure of loss in copyright infringement cases, the standard approach is the compensatory measure employed in tort. General law principles regarding recoverability of loss require the loss to flow directly and naturally from the infringement, and not be too remote.37
[37] On the above analysis, a plaintiff’s expenses incurred as a consequence of enforcing copyright do not constitute damages. Accordingly, the storage costs in this case do not fit squarely with types of loss recognised as recoverable in damages for copyright infringement.
[38] Here the plaintiffs chose to utilise the Part 7 regime and enforce their legal rights. They gave notice under s 136 and provided the requisite security and indemnity. Thus, the indemnity liability took effect before ESR’s infringement was known to the plaintiffs. The costs indemnity is a statutory requirement entailed upon copyright owners who seek the benefit of the CA’s border protection measures.
[39] This liability was dormant until Customs detained the ESR imported goods as suspect pirated copies. The liability then came to life and was capable of quantification. This circumstance was reinforced by the plaintiffs bringing legal proceedings, which included a claim under s 141(3) of the CA within the requisite time frame. Without that last step the liability would have returned to its previous dormant state after 10 working days. In these circumstances I consider the liability initially flowed from the plaintiffs’ decision to utilise the statutory regime, and then subsequently, and more importantly, from their decision to bring legal proceedings including a claim under s 141(3) of the CA. It was these decisions that caused liability for the storage costs to take hold.
[40] The plaintiffs would not have taken the steps that triggered their protection under Part 7 but for a general concern that others might attempt to import pirated versions of their copyright into New Zealand. I acknowledge the plaintiffs would not have taken the more specific steps under Part 7 by bringing a proceeding under
37 See Claydon Architectural Metalwork Ltd v DJ Higgins & Sons Ltd [1997] FSR 475 (HC); A-One Accessory Imports Pty Ltd v Off Road Imports Pty Ltd (No 2) (1996) 34 IPR 332 (FCA).
s 143(3) but for ESR importing the pirated copies into New Zealand. However, I consider the part ESR has played here is too remote. The more proximate cause of the loss is the plaintiffs’ decision to implement a statutory scheme that requires an indemnity for costs relating to its implementation.
[41] Moreover, if ESR’s infringement were to be understood as a cause of the storage costs then equally it could be said that the plaintiffs would not have incurred their legal costs in this proceeding but for ESR’s infringement. However, no-one is suggesting the latter could be recovered as special damages in this proceeding.
[42] In Boswell v Millar the Court of Appeal rejected the argument that legal costs could be recoverable as damages in a breach of contract claim:38
The courts have consistently rejected the notion that such costs are recoverable as a head of damage, because they are too remote – they are losses flowing from steps taken by [the plaintiff] to enforce her contractual rights, rather than flowing from the breach itself.
[43] The Court of Appeal in Boswell v Millar was referring to legal costs arising in a breach of contract claim. I acknowledge that a claim for infringement of copyright is akin to a tortious claim for infringement of other property rights and in this way is different from a claim for breach of contract. However, the tests for remoteness are converging, as was recognised in McElroy Milne v Commercial Electronics Ltd, where the Court of Appeal agreed that in contract, tort or equity an equivalent approach to causation and remoteness is now favoured:
While the measure of damages in contract and tort may differ in some circumstances, and while remoteness is sometimes referred to in contract in terms of the contemplation of the parties while in tort it is commonly foreseeability, the circumstances of this case do not call for differentiation.
[44] I see no logical reason for distinguishing between the rejection of recovery of legal fees as damages in a breach of contract context and in a tort or copyright context. Whenever a defendant’s conduct gives rise to a civil claim, the plaintiff incurs legal costs as a consequence of that conduct. However, it is certainly not the case that this reasoning means legal fees are always recoverable as damages. When it comes to the
38 Boswell v Millar [2014] NZCA 314 at [50].
attempted recovery of legal fees arising from the pursuit of a legal claim, I consider the reasoning in Boswell v Millar regarding remoteness is applicable to all forms of civil action. For the same reasons I consider the storage costs are too remote to be recoverable as special damages.
[45] The greatest portion of the storage costs flows directly from the plaintiffs’ decision to bring this proceeding within the 10 working days stipulated in s 140(1)(e). Had they not brought this proceeding within the statutory time frame Customs would have had to release the goods to ESR, and only minimal storage costs would have been incurred.
[46] Moreover, the detention by Customs and consequent storage costs are entwined with and parasitical on the commencement and continuation of this proceeding. The storage costs continued to accrue for the duration of this legal proceeding, in this Court and at the appellate level. The storage costs are therefore directly linked to this proceeding rather than to the losses caused by the infringement.
[47] Customs’ detention of ESR’s goods is analogous to detention by court order, such as an interim injunction or freezing order. The costs associated with obtaining an interim injunction or a freezing order in this proceeding could not be recovered as special damages. Nor, therefore, should the storage costs that arise from detention under Part 7.
[48] Further, storage costs do not resemble costs that are recoverable as special damages because they are known. The requirement to expressly plead special damages reflects the principle that these losses are unexpected and unknown.39 ESR knew storage costs would likely be incurred. Part 7 and reg 6 is publicly available information. ESR knew its imported goods were being detained by Customs and also knew it could apply to the Courts for release of those goods under Part 7. It took those measures but was unsuccessful. The indemnity for the storage costs can hardly have come as a surprise to ESR because this is the statutory effect of reg 6. It would have been obvious to ESR that the costs being incurred by the plaintiffs for the storage of the pirated goods were growing over time. It would also have been obvious to both
39 This requirement is well settled in case law and is now found in r 5.33 of the High Court Rules.
parties that a solution to the growing storage costs was available under s 141A of the CA, which allows for an importer of detained items to agree to their forfeiture to the Crown. This would have been one way of bringing the storage costs to an end. However, it required ESR’s cooperation. There is no evidence to suggest to me that the parties explored this option.
[49] The availability of s 141A to an importer is one way that it can reduce a risk that it may later find itself facing a copyright owner’s claim for reimbursement of an expensive storage bill. But this process was not used. Here the failure of ESR to persuade Muir J at the interlocutory hearing to set aside the s 136 notice and its consequences, followed by the failure in the substantive proceeding, were early warnings to ESR of the growing risk it faced from the increasing storage costs.
[50] Accordingly, I find that where a proceeding has sustained the continued detention of pirated goods, it follows that storage costs resulting from an indemnity given under reg 6 can never be recoverable as special damages.
Are the storage costs recoverable as costs or disbursements in the plaintiffs’ legal proceeding?
[51] This Court’s jurisdiction to award costs in this proceeding for copyright infringement and a determination under s 141(3) of the CA is still to be found in the Judicature Act 1908:40
51G Jurisdiction of court to award costs in all cases
(1) Where any Act confers jurisdiction on the High Court or a Judge thereof in regard to any civil proceedings or any criminal proceedings or any appeal, without expressly conferring jurisdiction to award or otherwise deal with the costs of the proceedings or appeal, jurisdiction to award and deal with those costs and to make and enforce orders relating thereto shall be deemed to be also conferred on the court or Judge.
(2) Such costs shall be in the discretion of the court or Judge, and may, if the court or Judge thinks fit, be ordered to be charged upon or paid out of any fund or estate before the court.
40 Pursuant to s 186 and sch 5, cl 10(1) of the Senior Courts Act 2016 this proceeding (being commenced in 2014) was to be “continued, completed, and enforced only under the” Judicature Act 1908 “as if that Act had not been repealed by this Act”. See further Sutcliffe v Tarr [2017] NZCA 360, [2018] 2 NZLR 92 at [22].
[52] Pursuant to this provision, costs are in the discretion of the Court, as is the position under r 14 of the High Court Rules.41 Departure from this regime requires good reason.42 Despite this proscription, and the grant of statutory authority to award costs in all cases, the word “costs” is not defined in statute or in the Rules.43
[53] The meaning of “costs” is said to result from a long-standing rule of practice that now finds expression in the costs regime, rather than the interpretation of any particular rule of court or statutory provision. 44 This rule of practice can be traced as far back as Coke’s Institutes of the Laws of England in which he analysed the Statute of Gloucester 1276 (Eng). On Coke’s analysis, costs provide a partial indemnity to a successful party for their legal expenses.45
[54] Today costs awards are generally scale costs, awarded on the basis of a reasonable contribution in respect of work done.46 What is reasonable is determined by the Rules Committee formula, by which the number of “days” that a lawyer ought to have reasonably spent on the work necessary for the successful party to succeed,47 having regard to the complexity and importance of the proceeding, can be determined.48 Permitted recovery is calculated by multiplying that number of “days” by a rate set by the Committee,49 having regard to the prevailing market rate for legal services of given quality.50 Exceptions are only made in cases where that calculation
41 High Court Rules 2016, r 14.1. The High Court Rules 2016 have applied to the proceeding as from 1 March 2017 (s 186 and sch 5, cl 11(2)), subject to certain limited exceptions set out in cls 11(3) and 12 of sch 5. Therefore, Part 14 of the High Court Rules 2016 applies in this proceeding, rather than the corresponding provisions of the Rules as in force immediately before 1 March 2017.
42 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]-[24] and [28]; Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002 16 PRNZ (CA) at [27].
43 Edelman J, commenting on the analogous New South Wales regime in Bell Lawyers v Pentelow in his concurring judgment, noted that the relevant statutory provisions affording a jurisdiction to award costs have long been “expressed in such wide terms as to leave the circumstances for its application as a matter of judicial development”: Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, (2019) 372 ALR 555 at [81].
44 McGuire v Secretary for Justice [2018] NZSC 116, [2019] 1 NZLR 335 at [62].
45 McGuire v Secretary for Justice, above n 44, at [55] fn 42. For examples of the long-standing and well-established rule (as developed in the context of the unavailability of an award of costs for litigants-in-person) see [56] fn 44.
46 See Hon Robert Fisher “The new High Court costs regime” (1999) LawTalk 532.
47 High Court Rules 2016, rr 14.2(1), 14.3, and 14.5(1) and sch 3.
48 Rule 14.5(2).
49 Rules 14.2(b) and 14.3 and sch 2.50 As to the process by which the daily recovery rates are set by the Committee, see Andrew Beck and others McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR14.4.01].
would produce entirely inadequate or excessive recovery,51 or there is reason to sanction a party by the award of indemnity costs.52
[55] The costs regime indicates that the purpose of costs is to ensure the losing party makes a payment towards the winning party’s legal expenses. Under r 14.2(1)(a) the party who fails should pay costs to the successful party,53 and r 14.2(1)(f) expresses the “indemnity principle” that recovery according to the formulaic scale just described cannot exceed “actual costs”.
[56] The formula by which costs are determined is exclusively concerned with litigation preparation. As a whole, the statutory costs regime expresses the long- standing rule of practice described above.54
[57] The Rules also provide helpful indicia on the meaning of the word “costs” in the definition of “disbursements” given in r 14.12(1), and an exception stated in r 14.2(2). Rule 14.12(1)(c) excludes counsel’s fee as a disbursement, which makes it clear that counsel’s fees are within the general scope of legal professional services covered by the costs regime. Rule 14.2(2) overrides the provision in r 14.2(1)(f) that an award of costs should not exceed the costs incurred by the party claiming costs by creating an exception that allows for recovery of costs for legal professional services, even though they have been provided under a conditional fee agreement. The plain meaning to be inferred from these indicia is that the Rules relating to “costs” mean costs for legal services as distinct from the other costs that are incurred in bringing a proceeding.
[58] The plaintiffs rely on the phrase “costs incidental to a proceeding” in r 14.1(1) to argue that the storage costs are recoverable. They argue for an expansive meaning which captures costs beyond the provision of professional legal services. I reject that argument. The phrase “costs incidental to a proceeding” does not allow recovery of something other than costs arising from legal professional services. To suggest otherwise would entail giving the word “costs” in the phrase “costs incidental to a
51 Rules 14.6(3)(a) and (c) and 14.7(a)-(e).
52 Rules 14.6(3)(b) and 14.7(f).
53 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].
54 See Senior Courts Act 2016, s 145.
proceeding” a significantly different meaning from that given to this word as it appears in the phrases “costs of a proceeding” and “costs of a step in a proceeding” which also appear in r 14.1(1). The plaintiffs’ proposed meaning would also be significantly different from the use of the word “costs” throughout Part 14. The phrase “costs incidental to a proceeding” allows recovery of out-of-pocket legal expenses.55 This reading is also consistent with the principle that costs cannot be awarded in respect of pre-proceeding conduct because only an extant proceeding can incur incidental costs.56
[59] Moreover, reading storage costs as “costs incidental to a proceeding” entails reading the word “costs” in that phrase as capable of including non-legal costs associated with a proceeding. Non-legal costs are commonly understood as disbursements.
[60] Accordingly, I am satisfied that the plain meaning of “costs’ in r 14.1, even with the inclusion of the phrase “incidental to a proceeding”, cannot be read to encompass non-legal costs like the storage costs. To do so would entail a major departure from how the word “costs” is understood elsewhere in rr 14.1 and 14.2.
[61] The next question is whether “costs” in r.14.1 should be interpreted purposively to include storage costs. I acknowledge that a successful party should not be left out of pocket in seeking to vindicate its rights.57 However, to read “costs” in the phrase “incidental to a proceeding” as capable of including non-legal costs would be inconsistent with the scheme and purpose of the costs regime; such reading would do violence to the common understanding of “costs” in r 14. It would be to find that recovery of the storage costs by this route ought to be available because such recovery ought to be possible.
[62] While a purposive reading could be attempted, I consider the better prospect for a purposive reading lies with the meaning of “disbursements” in r 14.12.
55 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160], approved [2007] NZSC 26, [2007] 3 NZLR 169 (SC) at [40]-[41].
56 Braeburn Dairies Ltd v McGregor & White Electrical Ltd HC Dunedin CIV-2009-412-668, 16 December 2011 at [14].
57 See Fisher, above n 46, at 7; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [8] per Hammond J.
Disbursements
[63] The remaining alternative is that the storage costs are recoverable as a disbursement under r 14.12. This rule defines disbursements, in opposition to costs, as:
disbursement, in relation to a proceeding,—
(a)means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and
(b)includes—
(i)fees of court for the proceeding:
(ii)expenses of serving documents for the purposes of the proceeding:
(iii)expenses of photocopying documents required by these rules or by a direction of the court:
(iv)expenses of conducting a conference by telephone or video link; but
(c)does not include counsel’s fee.
(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—
(a)of a class that is either—
(i)approved by the court for the purposes of the proceeding; or
(ii)specified in paragraph (b) of subclause (1); and
(b)specific to the conduct of the proceeding; and
(c)reasonably necessary for the conduct of the proceeding; and
(d)reasonable in amount.
[64] The definition of disbursements typically includes expenses that are “paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs”. Examples given in r 14.12(1)(b) are court fees, the costs of serving and copying documents as required by the rules, and telecommunications costs, but not, as r 14.2(1)(c) states, counsel’s fee. While “costs” encompasses legal professional services in litigation,
“disbursements” encompasses non-legal expenses incurred out-of-pocket and/or incidental to the litigation process. Seen in this way, disbursements are expenses associated with the costs of litigation but exclusive of the fees paid to the legal professionals.
[65] The categories of disbursements are not closed.58 Here the largest portion of the storage costs were incurred because the plaintiffs chose to bring this proceeding. Had it not been for the commencement of this proceeding 10 working days after their detention the pirated goods would have been released and no further storage costs would have accrued. Accordingly, the storage costs for which the plaintiffs seek reimbursement from ESR are a direct result of the plaintiffs bringing this proceeding. Without the proceeding there could be no detention, and therefore no storage costs in the sum now sought. Accordingly, I am satisfied that on a plain reading of “disbursements” the largest portion of the storage costs are a disbursement.
[66] Had I considered the storage costs would not qualify as a disbursement on a plain reading of this word, I would have adopted a purposive reading that enabled the storage costs to be claimed under this head. To find otherwise would significantly reduce the effectiveness of the border protection measures in Part 7. In turn, this would undermine the scheme and one of the purposes of CA, to uphold New Zealand’s international obligations as a signatory to TRIPS. If the storage costs are irrecoverable, successful plaintiffs who use the Part 7 measures would be left with no means of recovering the storage costs incurred during their legal proceedings. Such an outcome would be an absurdity that cannot have been within the legislative purpose of Part 7 of the CA or the purpose of r 14.12, which is plainly intended to allow for recovery of any expenses, (other than those of the legal professionals involved), that are associated with legal proceedings.59 It is well established that “so far as its wording allows legislation should be read in a way which is consistent with New Zealand’s international obligations”.60
58 High Court Rules 2016, r 14.2(2)(a)(i).
59 Albeit in the context of interpretation of a provision in the Parole Act 2002, in Booth v R [2016] NZSC 127; [2017] 1 NZLR 223 at [112] to [114] William Young J stated that he would favour a purposive interpretation, despite that approach being perhaps only just available on the language of the Act, to a literal approach that would produce absurdities.
60 New Zealand Airline Pilots Association Inc v Attorney-General [1997] 3 NZLR 269 (CA).
[67] It follows that I find the plaintiffs can recover from ESR the cost of indemnifying Customs for the storage costs. The plaintiffs seek $196,297.79. This sum includes a portion of costs incurred before the proceeding was commenced. In accordance with the general principle that recovery of costs and disbursements does not include those incurred before the litigation commenced, I consider pre-litigation storage costs (for 10 days) should be subtracted from the sum now sought. The plaintiffs have leave to correct the sum of their claim for storage costs. The balance of the storage costs is the result of the long detention of the pirated goods. There is no evidence to suggest the quantum sought by Customs is unreasonable. Accordingly, I am satisfied that once the $196,297.79 is adjusted to remove the costs of the first 10 days of storage the balance is reasonable.
Recovery of legal costs and disbursements other than the storage costs
Who is entitled to legal costs?
[68] There is much in dispute between the parties concerning costs, including who is entitled to an award. The plaintiffs contend they were ultimately the successful party and should be granted indemnity or in the alternative increased costs. ESR contends that it was the overall winner in this Court and therefore it should be awarded costs, which it seeks be increased from scale costs.
[69] The general approach is that the successful party is entitled to an award of costs. I consider that the plaintiffs were the successful party in this Court. I do not see the outcome in the Court of Appeal as substantially altering that result. Nor do I see any reason to depart from the general approach in this case.
[70] The linchpin of the plaintiffs’ claim was that ESR was importing and selling pirated copies of someone else’s copyright works. This was asserted in the infringement of copyright claim and in the claim under s 143 of the CA. ESR’s defence was essentially that the purported copyright works were not original works, and were not, therefore, capable of supporting a copyright claim. Had ESR been correct, the plaintiffs’ claim would have failed completely. Further, the plaintiffs were fully successful in their claim under s 143 of the CA, despite the fact that Mr Burden gave the s 136 notice and the third plaintiff being described in the notice as a licensee.
[71] There were some untidy aspects to the plaintiffs’ claim. First, in this Court they successfully asserted Mr Burden was the owner and the second and third plaintiffs were exclusive licensees. This was found to be wrong in the Court of Appeal, but not in a way that was fatal to the overall success of the claim. Instead, the Court of Appeal found that the second plaintiff and third plaintiffs were the owners of the copyright works and could therefore sue for infringement. Thus, the Court of Appeal’s correction of the error of this Court (which was based on the plaintiffs’ pleaded case) meant that ownership of the copyright was not a critical issue. The key point is that some of the plaintiffs could enforce the copyright.
[72] Second, in this Court the plaintiffs claimed copyright in preliminary sketches as well as technical drawings of the Irish Coast furniture. In the Court of Appeal, the claim for copyright in the preliminary sketch drawings was abandoned, but the claim for copyright in the technical drawings was upheld. Thus, ESR could still be held to account for importing and selling goods that were pirated copies of the technical drawings. The key point is that there were some artistic works capable of supporting the plaintiffs’ claim in copyright. Whether there were other works that also qualified or not was of lesser importance.
[73] Third, the findings this Court made on the various importations that the plaintiffs pleaded constituted a secondary infringement of copyright were found to be incorrect in relation to one such importation, but not regarding the other three importations. I do not consider much turns on this. ESR has argued that the last three importations were for smaller quantities of the pirated goods, and that had the claim simply rested on those importations the claim may not have been resisted so strongly. I reject that argument. The thrust of ESR’s defence was that it was free to import and sell the pirated goods because they did not infringe copyright. Had ESR been correct on that matter it would have been free to continue to import and sell those goods for as long as it wanted to. Thus, more was at stake for ESR than just the three specific importations.
[74] Fourth, before the Court of Appeal the plaintiffs had to apply to adduce fresh evidence in the form of a letter from patent attorneys AJ Park to prove ESR knew the importations were infringing copyright. This knowledge was essential for establishing
the plaintiffs’ claim for secondary infringement. The failure to adduce the evidence in this Court was due to an oversight by counsel. The relevant evidence was included in the common bundles of documents and ESR did not oppose its inclusion.61 Thus, the consequences of incorporation in the common bundle, as provided in r 9.5 of the High Court Rules, would in theory have been applicable to this document. This was not a situation where the A J Park letter simply was not before the Court in any form.62 Here it was present and readily available for production. Its inclusion in the common bundle meant that ESR knew of its presence and could have surmised the purpose of the inclusion. However, r 9.5(4) requires documents in the common bundle to be referred to by a witness in evidence or counsel in a submission other than closing submission before the document is automatically introduced into evidence. Under r 9.5(5) documents in a common bundle are not received into evidence if the process in r 9.5(4) is not followed. Under r 9.5(6) the Court may direct the rule, or any part thereof, is not to apply to a particular document.
[75] Here counsel failed to follow the r 9.5(4) process at trial and no one realised this at the time. Accordingly, the plaintiffs’ counsel did not apply under r 9.5(6) for leave to have the letter received into evidence. The omission by counsel could have been easily remedied during the trial. Had I realised it myself I could have raised the matter with counsel.63 The omission is an untidy aspect of the plaintiffs’ case, but it is not a serious omission. Nor does it appear to have been treated as such in the Court of Appeal. Accordingly, it does not substantially detract from the overall success the plaintiffs’ enjoyed in this Court.
[76] Fifth, there was a late amendment to the plaintiffs’ statement of claim. However, in my view, for the reasons given in the minute dealing with leave to amend, this was not a substantial amendment.
61 The common bundles are no longer available to me so I cannot see if an objection was recorded in it as per r 9.5(2). However, I note that no one at any time raised admissibility concerns relevant to this letter.
62 Rule 9.6 of the High Court Rules provides for what is to occur when a document is not included in the common bundle but a party wishes to introduce it into evidence.
63 I treated the letter as having been received into evidence.
[77] There is a further issue regarding the plaintiffs’ pursuit of a claim under the Fair Trading Act 1986. This claim failed. However, little attention or time was given to it at trial.
[78] The question, therefore, is whether the procedural untidiness and the failure of the Fair Trading Act claim are enough to warrant reducing the quantum of costs awarded to the plaintiffs’ as the successful party. In my view the plaintiffs’ conduct in this trial does not engage r 14.7, which is the rule permitting reductions to be made. Rule 14.7(a)(b) and (c) are not in issue. As to r 14.7(d) ESR would have to show the plaintiffs had failed in relation to a cause of action or issue which significantly increased ESR’s costs. The untidy aspects of the plaintiffs’ case and the failure of the Fair Trading Act claim, are not enough in my view to warrant a reduction in the costs they would otherwise receive. There is nothing that was done by the plaintiffs that could be described as having significantly increased ESR’s costs.
[79] The trial focused on two key questions: whether the copyright works were original or copies of works by another company called Broyhill; and whether the furniture ESR had imported was a three-dimensional copy of the Irish Coast copyright works. The plaintiffs were successful in all respects relevant to those questions. Accordingly, I see no basis to make the reduction ESR seeks. I have been referred to case law where deductions under r 14.7(d) were applied. However, each case will turn on its own facts. This was an ordinary case where the plaintiffs were largely successful in their claims. In parts they failed, but where they did so it had minimal impact on ESR’s efforts to oppose the plaintiffs’ claim. Accordingly, I am satisfied there is no basis to reduce the plaintiffs’ costs award under r 14.7(f) and (g).
Quantum of costs
[80] Typically, increased or indemnity costs are evaluated in relation to scale costs for the proceeding. Here the parties agree that scale costs should be calculated based on category 2B of the High Court Rules. ESR contends there were 13 sitting days rather than 15, as originally claimed by the plaintiffs, due to delays on the first day and further slippage. The plaintiffs have amended their calculation of scale costs by reducing the sitting days to 14.5, which they contend more correctly reflects the sitting
time. The plaintiffs’ amended category 2B costs are estimated at $89,089.00. ESR’s category 2B estimate (based on 13.5 sitting days) comes out at $90,984.00. When it comes to assessing the total sum for category 2B costs I consider a pragmatic approach is required here. I propose to adopt the plaintiffs’ estimate of $89,089.00. It is lower than ESR’s calculation despite the number of days. There can therefore be no prejudice to ESR.
[81] The next question is whether the costs award should be increased. Here the plaintiffs have identified scale costs as category 2B and have then sought an uplift. Rule 14.6 deals with recovery of increased costs. Under r 14.6(3)(a) the Court may order a party to pay increased costs if the nature of the proceeding or a step in it is such that time required by the party claiming costs would substantially exceed the time allocated under band C. Here the plaintiffs have not referred to the scale costs they could expect to receive under band C, so I am in no position to make this assessment. Under r 4.6(3)(b) ESR could be ordered to pay increased costs if it had contributed unnecessarily to the time or expense of the proceeding or a step in it by doing any of the things set out at (i) to (v) of this rule.
[82] Here ESR failed in its key arguments: (a) the copyright works were not original works; and (b) the furniture it imported for sale was not a copy of the plaintiffs’ copyright works. However, ESR’s arguments on those topics were not lacking in merit. ESR produced independent expert evidence from persons who provided opinions to support ESR’s arguments. Its defences and counterclaim were not without foundation. Although I was more persuaded by the plaintiffs’ case, I acknowledge that ESR had an arguable case.
[83] However, there were also untidy aspects of ESR’s case. First, ESR made a very belated attempt to amend its statement of defence to include an affirmative defence of commissioning. This contradicted their claim that the copyright works were not original. As it was too late by this stage to call fresh evidence, the attempt was futile. Nevertheless, the plaintiffs were obliged to deal with the late application while preparing to deliver their closing address on the substantive matters. Second, ESR decided not to call its witness Mr Morrow, at a very late stage.
[84] However, I am conscious of the untidiness of the plaintiffs’ case to which I have earlier referred. I have not seen that as something which warrants a reduction in the quantum of costs awarded to the plaintiffs, but I do see it as a counterweight to the notion that conduct of ESR in making a very late attempt to substantially amend its defence should suffer an award of increased costs. I also include here the way in which ESR at a very late stage chose not to call its witness Mr Morrow. These are both matters that reveal untidy aspects of ESR’s case. However, litigation is commonly an untidy process. The case where the pleadings and evidence run smoothly through to the end of trial is the exception. Here, the “untidiness factors” in each of the opposing parties’ cases, counterbalance each other.
[85] I am satisfied, therefore, that there should be no order for increased costs. The reasoning on that matter also largely deals with the application for indemnity costs. Here there is nothing about the conduct of ESR which in my view supports an award of indemnity costs.
Interest claim
[86] The plaintiffs seek five per cent interest under s 87 of the Judicature Act 1908.64 The judgment I delivered was on liability only. I did not determine any money sums. Section 87 permits recovery of interest in proceedings for recovery of any debt or damages. Whilst in a broad sense recovery of costs and disbursements becomes a debt once the awards are made, until that time they are contingent both as to liability and time of payment. The plaintiffs have not referred to any authority that would support it being awarded interest on the costs and disbursements awarded to it. Interest is payable on a judgment debt for costs and disbursements.65 However, before interest accrues under r 11.27 the Court must either have awarded costs in a specific sum or made a costs order in terms that allow costs to be determined or calculated without reference back to the Court. Neither of those conditions is satisfied here. It follows that the interest calculations the plaintiffs have provided, which appear to relate back
64 The proceedings were commenced before the Interest on Money Claims Act 2016 was passed. Part 1 of Schedule 1 of that Act preserves the effect of s 87 of the Judicature Act 1908 on proceedings commenced beforehand.
65 Chesterfields Preschools Ltd v Commissioner of Inland Revenue [2013] NZCA 44; [2013] 2 NZLR 499 at [20].
to the date of the delivery of the judgment on liability, cannot be sustained. I do not see how these awards can qualify for interest under s 87. Accordingly, I make no order for interest.
Remaining disbursements
[87] I am satisfied the balance of the disbursements sought by the plaintiffs are reasonable and within the expected range of expenses in this type of proceeding.
Procedural issues
[88]In the judgment included in the relief I granted was an order for:
Costs incidental to this proceeding, including costs for transport, storage and destruction of the infringing Irish Coast products.
[89] This order (the storage costs order) was made without me hearing from either party as to an award of costs and disbursements or the quanta of those awards.
[90] ESR contends the storage costs order was inadvertently taken from the prayer for relief in the statement of claim and wrongly included in the judgment. This is correct. The error can be seen from the fact that later in the judgment I also gave the parties leave to file memoranda on costs and disbursements, which suggests I expected to hear from them on those matters before making orders for costs and disbursements. This error was particularly important for ESR because it has argued that the storage costs are special damages rather than costs or disbursements in the proceeding. If the award of costs and disbursements that I made in the judgment and which forms part of the sealed judgment stands it would prevent me making a finding on the special damages issue in favour of ESR.
[91] The plaintiffs seek to maintain an award which they say was given to them in the judgment. The storage costs order given in the sealed judgment was given to Mr Burden. However, the Court of Appeal substituted the second and third plaintiffs for Mr Burden, so the benefit of the storage costs order now reads as made in their favour.
[92] ESR argues that the error I made can be cured by the slip rule under the High Court Rules.66 However, the error here is substantive and capable of affecting the rights of the parties. It is therefore not the type of accidental slip or omission that is typically cured by the exercise of r 11.10.
[93] The judgment I gave was delivered on 7 July 2016 and sealed on 24 January 2017. Had the error been recognised before sealing, that part of the judgment could have been recalled on application. Recall would have been appropriate because it was patently in the interests of justice to give the parties the opportunity to be heard on the question of costs and disbursements before orders of that nature were made. This is particularly so in regard to the plaintiffs’ claim to recover the storage costs from ESR.
However, once sealed a judgment cannot be recalled.67
[94] The erroneous order could easily have been corrected by appeal. However, the issue was not raised at the appellate stage.
[95] I do not consider it appropriate to use the slip rule to correct the error. However, the decisions I have reached on the substantive issues raised by the parties’ arguments on costs and disbursements means the earlier error has caused no real harm. The erroneous order in the sealed judgment says nothing about the quantum of costs and disbursements awarded to the plaintiffs. I have not been constrained by the erroneous order when it comes to assessing quantum. I consider it has always been open to me to determine that issue. It would have been better if the erroneous order had been set aside and the costs and disbursements issue determined afresh. However, here because of the views I have reached on the plaintiffs’ entitlement to costs and disbursements no material harm has been caused by the error. The decisions I have made today provide the quanta for the costs and disbursements orders included in the sealed judgment.
66 Rule 11.10.
67 High Court Rules 2016, r 11.11.
Summary of conclusions
[96]The plaintiffs are awarded scale costs of $89,089.00.
[97] The plaintiffs are awarded disbursements that include the storage costs incurred from the time the proceedings were commenced until the statutory detention of the pirated goods ended. This sum will need to be recalculated by the plaintiffs and they have leave to return to Court on this issue.
[98]The balance of the plaintiffs’ claim for disbursements is allowed.
[99]The plaintiffs’ claim for either increased or indemnity costs is dismissed.
[100]The plaintiffs’ claim for interest under the Judicature Act 1908 is dismissed.
[101] ESR, as the unsuccessful party, has no entitlement to costs, and therefore its claim for costs is dismissed.
Duffy J
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