Oraka Technologies Ltd v Geostel Vision Ltd - [2015] NZHC 991

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2005-419-809 [2015] NZHC 991

BETWEEN
ORAKA TECHNOLOGIES LIMITED

First Plaintiff

AND

ORAKA GRADERS LIMITED Second Plaintiff

AND

M SCHWARZ Third Plaintiff

AND

GEOSTEL VISION LIMITED First Defendant

AND

P DAYNES AND G ROBERTSON Second Defendants

AND

NAPIER TOOL & DIE CO LIMITED Third Defendants

Hearing: 2 March 2015

Appearances:

AE McDonald for Plaintiffs
KJ Crossland for Defendants

Judgment:

12 May 2015

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 12 May 2015 at 11:00 am
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

ORAKA TECHNOLOGIES LIMITED v ORAKA GRADERS LIMITED [2015] NZHC 991 [12 May 2015]

Background

[1] This is a breach of copyright case which was commenced in 2005. It has a tortuous history which includes two substantial judgments in this Court and the Court of Appeal, and an unsuccessful application by the third defendant for leave to appeal to the Supreme Court. The present state of play is that the Court of Appeal has entered judgment for the first plaintiff for copyright infringement and directed this Court to conduct an inquiry into damages.1

[2] After further interlocutory proceedings, and a revised close of pleadings date of 13 June 2014, the plaintiffs now seek leave under r 7.7 of the High Court Rules to file an amended statement of claim. The third defendant opposes the application.

The parties

[3] There are three plaintiffs in this dispute. Collectively, they make up a small, family operated enterprise:

(a) Mr Schwarz is the third plaintiff. He is the inventor of the Oraka asparagus grader. It is a machine that sorts asparagus into bunches for retail sale. The subject matter of the dispute is the copyright in the grader’s cup assembly, a component which is critical to the operation of the grader.

(b)Oraka Technologies Ltd (“Technologies”) is the first plaintiff. It was the original corporate entity used from 1993 by Mr Schwarz and his wife to commercialise the asparagus grader. Technologies owns the copyright in the grader’s cup assembly.

(c) Oraka Graders Ltd (“Graders”) is the second plaintiff. It is the
subsequent corporate entity which Mr Schwarz established to manufacture and sell the grader from 2001 onwards. Graders uses the

1 Oraka Technologies Limited v Geostel Vision Limited [2013] NZCA 111.

copyright in the grader’s cup assembly under an oral licence from

Technologies.

[4] The third defendant, Napier Tool & Die Co Ltd (“Napier Tool”), opposes the application for leave. Napier Tool is a small provincial tool making business founded and formerly owned by Mr Bob Witham. Mr Witham sold the business many years ago to a larger company, TruTest Ltd.

The nature of the proceedings

[5] In 2001, Mr Witham, at the request of an existing customer, Mr Armstrong, designed a tip cup assembly for use as an aftermarket replacement part for asparagus grading machines sold by Graders. Geostel Vision Ltd (Geostel), a competitor of Technologies founded by a former business partner of Mr Schwarz, acquired Mr Armstrong’s…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 991
Decision Date: 12 May 2015

CaseChat Overview and Summary

In Oraka Technologies Ltd v Geostel Vision Ltd, the High Court was asked to consider an application by the plaintiffs to amend their statement of claim after the close of pleadings, seeking to change the basis on which they would quantify their damages for copyright infringement. The plaintiffs sought to change their approach to a "loss of business" methodology rather than a "lost sales" basis. The defendant opposed the application on the basis that it would cause undue delay and prejudice, that the proposed amendment lacked merit, and that it amounted to the creation of a new cause of action. The Court found that the amendment would not cause undue delay or prejudice as the damages hearing had already been delayed by the plaintiffs’ proposal. The Court also found that the amendment did not lack merit as it was open to argument that Mr Schwarz was in effective control of the companies and could have caused Technologies to enter into a contract to sell or lease any of the rights in the tip cup. The Court further found that the amendment did not amount to the creation of a new cause of action as the issues of liability had been determined on the existing pleadings and all that the Court was left to do was assess which, if any, of the plaintiffs had suffered recoverable loss. The plaintiffs were granted leave to file the proposed amended statement of claim after the close of pleadings, with an issue in relation to costs reserved for further argument.

Orders