Oraka Technologies Ltd v Geostel Vision Ltd

[2019] NZHC 1325

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2005-419-000809

[2019] NZHC 1325

BETWEEN

ORAKA TECHNOLOGIES LIMITED

First Plaintiff

ORAKA GRADERS LIMITED
Second Plaintiff

MICHAEL WILLIAM SCHWARZ
Third Plaintiff

AND

GEOSTEL VISION LIMITED

First Defendant

PAUL DAYNES AND GORDON ROBERTSON

Second Defendants

NAPIER TOOL & DIE CO LIMITED

Third Defendant

On the papers
Judgment:	12 June 2019

JUDGMENT OF HINTON J

[Interest and Costs]

This judgment was delivered by me on 12 June 2019 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Counsel:

Brian Henry, Barrister, Auckland Kevin Glover, Barrister, Auckland

Philip Skelton Queens Counsel, Auckland

ORAKA TECHNOLOGIES LIMITED v GEOSTEL VISION LIMITED [2019] NZHC 1325 [12 June 2019]

[1]On 23 April 2018, I gave judgment for the first plaintiff in the sum of $510,000.

[2]    A number of submissions were subsequently filed with regard to interest and costs. Unfortunately, these were not brought to my attention until recently, when I was away on sabbatical. In fact, I had considered that counsel were holding off in light of the further appeal filed in the Court of Appeal. I have now addressed these issues at the earliest opportunity.

Interest

[3]    The judgment sum of $510,000 was for notional licence fees for infringement of copyright from mid-2001 to mid-2009.

[4]    Interest should be at the Judicature Act rate. I do not agree with the first plaintiff that a notional contractual rate should apply, effectively carrying over from the concept of a notional licence fee, or that I should take a generous view of the start date for that reason. There is no support for that approach in the authorities. In fact, the notional licence fee cases which have considered interest, seem to have consistently taken the standard approach of interest at Judicature Act rates (or the equivalent). None of the exceptions to that general approach is applicable.

[5]    For the same reasons, I also do not agree that interest should be compounded, or calculated in a way that has a compounding effect.

[6]    In terms of the commencement date for the interest calculation, I consider that interest should run on the full judgment sum from the mid-point of the breach period, which I fix at 1 May 2005. I take that approach because in effect there were individual breaches running from mid-2001 to March 2009. As the defendants acknowledge, I do not have information as to the number of cup assemblies produced during each year. By taking a mid-point of the breach period, I am allowing in a rough and ready way for interest to run from the date of breach in each case. I note that counsel for the first and second defendants responsibly accepts that this is one possible approach to interest.

[7]    I do not agree with the defendants that interest should run only from when proceedings were issued  or from the date of judgment, or from any date later than    1 May 2005, or that interest should cease to run from a date earlier than judgment. I do not consider either achieves a remotely just result.

[8]    The defendants rely on alleged delay and inefficient conduct of the proceedings. I do not accept that the first plaintiff has caused delay any more than the defendants have, or that any such delay would be material in this case. As Harrison J said in the Court of Appeal’s November 2016 judgment, both sides must share the blame.1 The purpose of interest is to put the plaintiff in the position they would have been in had they received payment within a reasonable time from when it was due. In the meantime, the defendants have had the benefit of that money. I consider that principle applies here and it is the principle upon which I have reached the above conclusion. In fact, I accept the submission of the first plaintiff that the actual effect of the breaches exceeds the sum of damages and interest.

[9]    Interest is therefore payable on the judgment sum at the applicable Judicature Act 1908 rate or rates from 1 May 2005 to the date of judgment. I leave it to the first plaintiff to quantify the resulting interest sum. Hopefully this can be agreed.

Costs and disbursements

[10]The first plaintiff seeks costs, as follows:

(a)For the 2016 hearing on a 2B basis in the sum of $27,206, plus disbursements in the sum of $86,117.53.2

(b)For the 2017 hearing on a 3C basis in the sum of $108,570, plus disbursements in the sum of $112,524.38.

1      Napier Tool & Die Ltd v Oraka Technologies Ltd [2016] NZCA 554 at [83].

2      The first plaintiff refers to the hearing as 2015, but it was in fact April 2016.

2017 costs

[11]   The first plaintiff is entitled to costs on a category 2 band B basis for the 2017 hearing. The proceeding has been consistently treated in that way. I do not consider that there is justification for band C to apply on the basis that the case involved fixing of a notional licence fee. While such cases are relatively uncommon, the issue was neither novel nor particularly complex.

[12]   The costs calculation should apply to all steps taken, including preparing briefs of evidence. I agree with the defendants that Mr Black’s evidence was not particularly helpful and to some extent was inadmissible. However, I do not consider the defendants were put to much extra cost as a result and I consider the first plaintiff will have been put to material extra cost as a result of the evidence put forward for the defendants, which I considered was also unhelpful because of the extreme assumptions adopted. Both parties took unreasonable positions in my view, but the first plaintiff succeeded, and in a sum well in excess of the calculations advanced by the defendants. I also accept, as evidenced by the difficulties all parties experienced, that although the relevant law is not complex, the issue as to what evidence was relevant was vexed. Viewed overall, I consider the first plaintiff is entitled to costs on a 2B basis, without adjustment.

[13]   As neither side has supplied me with a costs calculation on that basis, I again leave it to the first plaintiff to provide an appropriate schedule. Hopefully again, that can be agreed and not be the subject of yet another ruling.

[14]   The first plaintiff is entitled to all reasonable disbursements in respect of the 2017 hearing. I have reviewed the disbursements invoices provided by the first plaintiff for the 2017 hearing. Assuming the work addressed in the McGrath Nicol invoice number 7906 is all in relation to Mr Black’s evidence, then the fee is to be reduced by 50 per cent, as I consider it excessive. Also, the small invoice referenced to Sealegs and the charge relating to travel and accommodation are to be excluded. I consider the other invoices reasonable. I found Mr Davies’ evidence helpful, and considerable time being spent on addressing the defendants’ briefs is quite understandable when their position was that the notional licence fees should be

negligible. The first plaintiff refers to incurring disbursements in respect of witnesses who were called for the 2017 hearing where the work had been charged to the earlier 2016 hearing. I do not have sufficient information to make any adjustment in that regard.

[15]   Counsel are to resolve between themselves any outstanding queries raised by Mr Skelton with regard to GST on the disbursements claimed by the first plaintiff.

2016 costs

[16]In terms of costs for the 2016 hearing, the plaintiff seeks costs in the sum of

$27,206 (on a 2B basis) and disbursements in the sum of $86,917.53. The plaintiff does not identify or discuss the basis for that claim. The claim cannot be justified.

[17]   As the third defendant submits, the Court of Appeal has already ruled that the costs for the 2016 damages hearing in this Court are to follow the outcome of the appeal.3 In other words, as the successful appellants, the costs must be in the defendants’ favour.

[18]   The third defendant has asked that costs and disbursements be fixed in its favour for the 2016 hearing in the total amount of $72,661.99 in accordance with a memorandum which it provided to the first plaintiff dated 6 March 2017, to which the first plaintiff has apparently not responded. I have no submissions from the first plaintiff in response to the third defendant’s claim for costs and disbursements. I have to proceed on the basis that the amount claimed is reasonable, and therefore fix costs and disbursements in favour of the third defendant for the 2016 quantum hearing in the total amount of $72,661.99.

[19]   The first and second defendants do not appear to have sought costs in respect of the 2016 hearing. Rather, they say that the plaintiff has not paid the first and second defendants’ costs as subsequently ordered by the Court of Appeal and Supreme Court. They seek a direction that those costs be paid as soon as possible. However, I expect there is a significantly higher sum owing to the first plaintiff.

3      Napier Tool & Die Ltd v Oraka Technologies Ltd [2016] NZCA 554 at [81].

[20]   I am concerned that some memoranda may still be missing and so reserve leave should there be issues arising. Otherwise, hopefully counsel can now agree the form of final orders.

Hinton J