Peterson v Lucas Mill Pty Ltd
[2012] NZHC 2398
•17 September 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-007762 [2012] NZHC 2398
UNDER the Copyright Act 1994
BETWEEN CARL JAMES PETERSON Plaintiff
ANDLUCAS MILL PTY LTD First Defendant
ANDREX CAMERON LUCAS Second Defendant
ANDKATICA LUCAS Third Defendant
ANDWARREN GEOFFREY LUCAS Fourth Defendant
ANDJENNIFER MARGARET LUCAS (DISCONTINUED)
Fifth Defendant
ANDGEOFFREY WILFRED LUCAS Sixth Defendant
ANDDOLORES VIVIENNE LUCAS Seventh Defendant
CIV-2011-404-007543
UNDER THE Patents Act 1953
IN THE MATTER of an application to revoke claims 7-19
of Lucas New Zealand patent No. 282742
BETWEEN C J PETERSON Applicant
ANDLUCAS MILL PTY LTD First Respondent
ANDREX CAMERON LUCAS Second Respondent
PETERSON V LUCAS HC AK CIV-2009-404-007762 [17 September 2012]
CIV-2001-404-003668
UNDER THE Patents Act 1953
IN THE MATTER of New Zealand Letters Patent No
282742
BETWEEN REX CAMERON LUCAS First Plaintiff
AND G W LUCAS & SONS PTY LTD (now
LUCAS MILL) Second Plaintiff
ANDPETERSON PORTABLE SAWING SYSTEMS LIMITED
(IN LIQUIDATION) First Defendant
ANDCARL JAMES PETERSON Second Defendant
Hearing: 22 June 2012
Appearances: Plaintiff in person
T J Walker and J C Dickson for the Defendants
Judgment: 17 September 2012
JUDGMENT OF GILBERT J
This judgment was delivered by me on 17 September 2012 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:
Counsel: T J Walker, Auckland: [email protected]
J C Dickson, Auckland: [email protected]
J K Gorman, Wellington: [email protected]
Copy to: C J Peterson: [email protected]
[1] Since early 1999, Mr Peterson and the Lucas parties have been pursuing claims and counterclaims against each other in respect of the intellectual property rights to various sawmills. The Lucas parties claim that these proceedings have been fully and finally settled by a settlement agreement and should therefore be struck out. Mr Peterson disagrees. He says that he has cancelled or avoided the settlement agreement.
[2] The Lucas parties applied to strike out Mr Peterson’s claims in the copyright proceeding[1] on the basis of the settlement agreement. Bell AJ ruled that the settlement agreement was binding on the parties. He did not strike out the proceeding but adjourned the application to enable the settlement to be implemented.
[1] CIV-2009-404-007762.
[3] Mr Peterson applies to review this decision. He claims that the settlement agreement is not enforceable because it was an unconscionable bargain procured in bad faith by misrepresentation and duress and in circumstances amounting to undue influence. Mr Peterson argues that the Judge was wrong to summarily dismiss these contentions as being unarguable.
[4] The Lucas parties also apply to review the decision arguing that indemnity or increased costs should have been awarded rather than 2B costs.
[5] The Lucas parties further apply for an order striking out Mr Peterson’s claims in the patent proceeding[2] and a separate proceeding brought by Mr Peterson in November 2011 to revoke the Lucas patent (the revocation of patent proceeding).[3]
These applications are also based on the settlement agreement. Mr Peterson cross applies for summary judgment on the revocation of patent proceeding.
[2] CIV-2001-404-003668.
[3] CIV-2011-404-007543.
[6] It would be an abuse of process for any party to attempt to pursue claims compromised by a settlement agreement. There is no dispute that the settlement agreement covers the patent proceeding and the copyright proceeding. However,
Mr Peterson says that the settlement agreement does not cover the revocation of
patent proceeding because it had not been commenced at the time of the settlement agreement and is being pursued by him in the public interest with the consent of the Attorney-General. In any event, Mr Peterson says that he has cancelled or avoided the settlement agreement. The essential question for the purpose of the present strike-out and review applications is whether Mr Peterson’s contentions are arguable.
[7] The issues are therefore:
(a) Was Mr Peterson arguably entitled to avoid the settlement agreement because his consent to it was vitiated by duress?
(b)Was Mr Peterson arguably entitled to avoid the settlement agreement because of undue influence?
(c) Was Mr Peterson arguably entitled to cancel the settlement agreement because of misrepresentation?
(d)Does the settlement agreement prevent Mr Peterson from pursuing the revocation of patent proceeding in the public interest?
(e) Was the Judge wrong to decline indemnity costs or increased costs to the Lucas parties on the strike-out application?
Was Mr Peterson arguably entitled to avoid the settlement agreement because his consent to it was vitiated by duress?
[8] It is helpful to describe the litigation and the circumstances leading to the settlement agreement before examining whether Mr Peterson has arguably avoided or cancelled it. Mr Rex Lucas commenced the patent proceeding against Mr Peterson and his company in February 1999 alleging that Mr Peterson’s “Islander” branded sawmills infringed the patent for the “Lucas” sawmill. Mr Lucas succeeded in this Court and in the Court of Appeal in respect of one of the patent claims. However, the Supreme Court upheld Mr Peterson’s appeal finding that this claim lacked novelty and was therefore invalid. The Lucas parties discontinued their remaining claims against Mr Peterson and his company in July 2009. By that time
Mr Peterson’s company had been struck off the Companies Register and Mr Peterson was impecunious.
[9] However, that did not bring an end to the proceeding. Mr Peterson brought a counterclaim under s 74 of the Patents Act 1953 seeking damages for unjustified threats of infringement proceedings. This counterclaim was struck out by Priestley J on 2 December 2009. Mr Peterson has appealed this decision to the Court of Appeal but the appeal has not been heard.
[10] In late 2009, Mr Peterson commenced the copyright proceeding against the Lucas parties alleging that the Lucas sawmill infringes his copyright in a portable sawmill. The Lucas parties unsuccessfully applied for an order for security for costs but Doogue AJ’s decision declining this application was overturned on review. Woodhouse J made an order on 23 December 2010 requiring Mr Peterson to pay security for costs in the sum of $10,000 and directed that the proceeding be stayed pending payment. Mr Peterson has appealed this decision but this appeal has also not yet been heard.
[11] Mr Peterson did not pay security for costs as ordered so the Lucas parties applied for an order that the proceeding be struck out unless security for costs was paid. This application was listed for mention on 5 October 2011.
[12] Mr Warren Lucas telephoned Mr Peterson on 3 October 2011 to see if he could persuade him to bring the proceedings to an end. During the course of what was a lengthy conversation, Mr Lucas advised Mr Peterson that Lucas interests had recently acquired the worldwide copyrights associated with the “Stubbe” sawmill which is in some respects similar to the “Turbosawmill” manufactured by Mr Peterson’s son’s company. According to Mr Peterson, Mr Lucas threatened to bring copyright infringement proceedings against his son’s company in relation to the Turbosawmill unless Mr Peterson dropped all of his claims. Mr Peterson says that he was “shocked and dismayed” at the prospect of his son’s business being destroyed by the same Court processes that he believed had destroyed his own business. He says that he “panicked” and entered “spur-of-the-moment” discussions in which he tentatively agreed to abandon his claims in return for the payment of a
sum, which the parties have agreed should be kept confidential, and a commitment by the Lucas parties not to pursue any copyright infringement claims against his son. Mr Lucas said that he would consult with his family and reply the following day.
[13] Mr Lucas duly called Mr Peterson on 4 October 2011 and accepted Mr Peterson’s settlement offer. Mr Peterson then said that the settlement should be in Australian dollars. Although Mr Lucas had understood that Mr Peterson’s offer was in New Zealand dollars given that Mr Peterson was in New Zealand and the proceedings were in New Zealand, he nevertheless agreed to this and said that he would arrange for his solicitors to send an email setting out the terms of settlement for Mr Peterson’s approval.
[14] The Lucas’ solicitors sent an email to Mr Peterson that day confirming that the copyright proceeding and the patent proceeding would be fully and finally settled in return for the agreed payment. The settlement would also prevent the claims in the copyright proceeding and the patent proceeding being brought again or substantially repeated in any court or tribunal. The solicitors proposed other standard settlement terms, including that the settlement would be kept confidential and the payment would be made and accepted without any admission of liability by any party. The email also dealt with the mechanics of settlement, including reimbursement of monies paid into Court and the filing of notices of discontinuance and abandonment of the appeals upon payment of the settlement sum. The solicitors made no reference to the threatened copyright proceeding relating to the Turbosawmill. The solicitors asked Mr Peterson to confirm that the email recorded a binding agreement following which they would prepare a memorandum for the Court hearing the following day.
[15] Mr Peterson replied suggesting a minor amendment to the proposed mechanics of settlement. Whereas the Lucas’ solicitors had proposed that they would hold the signed notices of discontinuance pending payment, Mr Peterson suggested that these notices should be held by a third party. He said that “everything else seems in good order”.
[16] The Lucas’ solicitors sent a further email on 4 October 2011 offering their undertaking to hold the signed notices of discontinuance and not file them until payment was received into Mr Peterson’s account. The solicitors said that if Mr Peterson accepted this proposal and was otherwise happy with the terms of a memorandum which they had prepared for filing with the Court, he should sign and return the memorandum. Mr Peterson did so saying “I accept all the terms as written”. The joint memorandum, which Mr Peterson signed on 4 October 2011, advised the Court that the parties had reached an agreement to settle and hoped to be in a position to discontinue the proceeding by the end of the following week.
[17] On 6 October 2011, the Lucas’ solicitors sent Mr Peterson various documents to implement the settlement. These were notices of discontinuance of the copyright and patent proceedings, notice of abandonment of the appeals and a letter seeking release of monies paid into court by the Lucas parties in respect of the costs awarded by Doogue AJ on the security for costs application. The solicitors also proposed an agreed statement to be made to the press in the event of any enquiry being made about the proceedings or the settlement.
[18] Mr Peterson replied by email the following day. This was four days after the initial telephone discussion in which Mr Peterson had proposed terms of settlement:
Curiously, one of the motivating factors in making this offer to your clients suddenly disappeared shortly after my last conversation with Warren Lucas. That is, one of my family members was facing an urgent financial challenge requiring immediate assistance. That has now been rectified, and I do not hold the same urgency for settlement; particularly for such a small sum. Consequently, there is a very strong argument towards foregoing the agreement and demanding a larger sum. I have been hanging in the balance, and have received conflicting advice from my other family members. But having had a couple of days to mull this over, I have decided to proceed subject to the deposit your clients paid into the Court being released to me to cover my costs concerning the hearing before Justice Doogue. Should your clients agree to this, I will action the necessary documents on Monday, and will at that time provide you with the bank account details necessary.
[19] The Lucas’ solicitors replied later that day saying that although there was already a binding agreement, the Lucas’ were prepared to accept this further variation proposed by Mr Peterson.
[20] On 12 October 2011 Mr Peterson sought advice from the Whakatane Citizens Advice Bureau. He says that it was only then that he realised that the record of the settlement agreement drafted by the solicitors did not include the Lucas’ promise not to bring copyright infringement proceedings against his son’s Turbosawmill project. Mr Peterson says that he believed that this was a “cunning omission” designed to enable the Lucas parties to “torpedo” any future prospects for the Turbosawmill while bringing an end to his own claims. Mr Peterson did not believe at that stage that he was bound by any settlement agreement because he had not signed anything and so he sent an email to the Lucas’ solicitors later that day, saying:
No doubt your clients will be interested to know that I now do not intend to settle. I have signed nothing and do not intend to. And I will not be bluffed into aborting my rights therein. Further, your clients can be forewarned that a notice of proceeding will be forthcoming regarding the revocation of their NZ patent; and likewise I will begin proceedings soon in Australian courts for copyright infringements there.
[21] The Lucas’ solicitors responded on 13 October 2011 saying that their clients
intended to enforce the settlement agreement. Mr Peterson replied that day:
For your information, the agreed terms were accepted under duress, as your client Warren Lucas threatened me (and through me my son) with copyright infringement against a Stubbe copyright. You may do well to ask your client about his blatent [sic] threats and explain how that impacts on good faith negotiations.
[22] The Lucas parties applied by memorandum dated 25 October 2011 for an order striking out the copyright proceeding on the basis of the settlement agreement.
[23] Mr Peterson opposed the strike-out application on the basis that no settlement agreement was reached and on the further basis that he was under “considerable duress” during the negotiations. The duress arose from advice he had recently received concerning a serious health condition; the time pressure of the Lucas’ application for an “unless” order which was due for mention on 5 October 2011; and Mr Lucas’ threat of copyright infringement proceedings against Mr Peterson’s son. Mr Peterson has since retreated from his initial position that no settlement agreement was entered into because he had not signed an agreement. He now accepts that a binding settlement agreement was reached.
[24] Mr Peterson said in his affidavit in opposition to the strike-out application that he was in a “state of shock” and not “in his right mind” at the time the settlement agreement was negotiated. That is why he did not notice that the written record of the agreement did not refer to the Lucas’ promise not to pursue any copyright infringement action in relation to the Turbosawmill. He claimed that the omission of this term demonstrated that Mr Lucas was not negotiating in good faith. Mr Peterson also filed an affidavit from a medical social worker who said that during the 10 day period from 3 October 2011 Mr Peterson was not his “usual self”, exhibited symptoms consistent with post traumatic stress syndrome and was not in a fit state to make important decisions.
[25] On 12 March 2012, Bell AJ struck out the copyright proceeding on the basis of the settlement agreement. He considered that there was nothing illegitimate about one party advising another that they have a cause of action which they are entitled to raise against them. He could not see anything illegitimate in Mr Lucas’ threat. In those circumstances he considered that there was no basis for Mr Peterson’s claim of
duress.[4]
[4] Peterson v Lucas Mill Pty Ltd & Ors HC Auckland CIV-2009-404-7762, 12 March 2012 at [46].
[26] Mr Peterson advised in a telephone conference on 23 March 2012 that he intended to apply to review Bell AJ’s decision. The Associate Judge extended Mr Peterson’s time for making this application to 4 April 2012. However, Mr Peterson did not bring the application until 12 April 2012. He also applied on that date for leave to adduce new evidence to support his claim that the Lucas threat to bring copyright infringement proceedings was illegitimate. Ms Walker, for the Lucas parties, did not oppose leave being granted. I am prepared to consider this new evidence under r 2.3(4)(b) of the High Court Rules on the basis that it is in the interests of justice to do so. I therefore must consider whether the copyright proceeding was rightly struck out in the light of this new evidence, not just the limited evidence available to the Associate Judge.
[27] I agree with the Associate Judge that there was nothing in the evidence before
him to indicate that Mr Lucas’ threat to bring copyright infringement proceedings
was illegitimate. Mr Peterson acknowledged that the Stubbe sawmill design “shared
some aspects” with the Turbosawmill. Apart from disputing that any agreement had been reached, Mr Peterson’s complaint in his affidavit filed in opposition to the strike-out application was that Mr Lucas had not acted in good faith in omitting this term from the written record of the settlement.
[28] Mr Peterson says that he began developing the concept for the Turbosawmill and constructed a crude sawmill frame in 1977. He submitted a patent application for the concept in 2002 and did not become aware of the Stubbe patent until 2003. Mr Peterson acknowledges that there are some conceptual similarities between the two designs but he understands that Stubbe made only a few sawmills and allowed the patent to lapse many years ago. In his further affidavit filed for the review hearing he claimed that the Stubbe design is “outdated, impractical and technically unworkable” and is “freely in the public domain”. He says that, as far as he is aware, the Lucas parties have never manufactured a Stubbe sawmill and have no intention of doing so. In these circumstances, Mr Peterson considers that it would be a “Herculean task” for Mr Lucas to establish copyright infringement. He added that Mr Lucas has not provided a “single shred of evidence to support his claim”.
[29] Mr Peterson appears to have considered from the outset that Mr Lucas’
suggestion of copyright infringement proceedings was no more than a hollow threat:
It seemed obvious to me from the beginning that his threat was maliciously conceived to taint my son’s business with the stink of infringement proceedings rather than holding any prospect of long term success. And that he never intended to follow through on the threat, hoping instead that I would succumb to the threat and settle on token terms.
[30] Despite this, Mr Peterson said that he was temporarily coerced into agreeing to the settlement because he did not want his son’s business destroyed through litigation in the same way he considered his was. He believed that copyright infringement proceedings, whether they had merit or not, would deter investors, financiers, suppliers and customers and cause the company to fail.
[31] Mr Peterson has since regretted his decision to enter into the settlement. His preference now is not to settle and to deal with any copyright infringement proceedings that might be brought relating to the Turbosawmill:
My son may well be harmed by a Lucas copyright infringement proceeding. But in the end, I believe that the Courts will provide a just remedy for my family and my self and that will overshadow whatever harm comes his way now. I am also firm in the knowledge that the defendants have no chance in succeeding in such a claim and that the experience I have gained in the present cases will mitigate the harm otherwise coming his way.
[32] In these circumstances Mr Peterson claims that he was entitled to avoid the settlement agreement because he agreed to it under duress arising from the illegitimate and groundless threats by the Lucas parties to bring copyright infringement proceedings against his son. He submits that the Associate Judge was wrong to conclude summarily, without hearing the evidence, that Mr Lucas genuinely believed that he was entitled to bring such proceedings and that his threat to do so was therefore legitimate. I agree with the Associate Judge that on the basis of the evidence then available Mr Peterson had not made out an arguable case that Mr Lucas’ threat was illegitimate in the sense that he did not genuinely believe that he had a right to bring such a proceeding. The question is whether the position is any different in the light of Mr Peterson’s further evidence.
[33] Proceedings may not be brought for the sole purpose of inflicting harm on a defendant. Such proceedings would be vexatious and an abuse of the court process. In my view, it would not be legitimate to threaten to bring such proceedings to force a settlement.
[34] Mr Peterson submits that this is what Mr Lucas did. The difficulty with this is that Mr Peterson’s own evidence supports Mr Lucas’ contention that he was entitled to bring the proceedings. Mr Peterson acknowledges that there are similarities between the Stubbe sawmill and the Turbosawmill and that Mr Lucas “might have a real cause of action” although he believes that this is “extremely remote”. Even accepting Mr Peterson’s evidence at face value, the Court could not infer that Mr Lucas did not genuinely believe that he was entitled to bring the proceeding and that his threat to do so was illegitimate.
[35] However, even if the threat was illegitimate, it does not necessarily follow that Mr Peterson was arguably entitled to avoid the settlement agreement on the grounds of duress. This is because the threat must have coerced him into settling.
Mr Peterson argues that the threat was “highly coercive”. He says it left him with no reasonable or practical alternative but to enter into the settlement agreement because he considered his son’s business would be destroyed unless he did so. There are a number of difficulties with this assertion.
[36] First, it was Mr Peterson who proposed the terms of settlement, not
Mr Lucas.
[37] Second, if the threat of copyright proceedings against his son was truly what drove Mr Peterson to settle, it is hard to comprehend how he did not notice that this was omitted from the solicitor’s email recording the terms of the agreement. It is clear that he reviewed those terms carefully and was able to negotiate two variations in his favour.
[38] Third, in his email of 7 October 2011, Mr Peterson stated that he had been motivated to settle because he urgently needed money to assist a family member but that this need had since passed and as a result of this he had reconsidered his position. It is hard to reconcile this with Mr Peterson’s claim that it was the threat of copyright proceedings that had coerced him into settling.
[39] Fourth, Mr Peterson’s contention that he was coerced by the threat of the copyright proceeding cannot be reconciled with his statement that it was “obvious” to him “from the beginning” that Mr Lucas “never intended to follow through on the threat”.
[40] Fifth, he did not even regard himself as bound to a settlement agreement when he wrote his email on 7 October saying that he had been “hanging in the balance” and had considered foregoing the settlement and demanding a larger sum. He said that having discussed the matter with other family members and having mulled it over for a few days, he had decided to proceed so long as the monies paid into court by the Lucas’ were paid to him. This is not consistent with Mr Peterson’s claim that he was coerced into the settlement because he considered he had no reasonable alternative.
[41] Sixth, Mr Peterson did have other reasonable options. As he said in his most recent affidavit, he is prepared to meet any copyright infringement proceedings and is confident that he can mitigate any harm to his son’s business that might result.
[42] In the light of these uncontested facts, Mr Peterson’s assertion that he was coerced by the threat of proceedings into accepting the settlement is untenable. Even if Mr Peterson was in a “state of shock” on 3 October 2011 and “panicked” into proposing a settlement, he considered his position carefully over the next four days, discussed the options with his family, and confirmed his intention to proceed with the settlement. I conclude that Mr Peterson was not arguably entitled to avoid the settlement agreement for duress. In my view, the Associate Judge was correct to dismiss Mr Peterson’s duress claim.
Was Mr Peterson arguably entitled to avoid the settlement agreement because of undue influence?
[43] Mr Peterson did not raise undue influence as a ground of opposition to the application to strike out the copyright proceeding. Bell AJ was therefore not required to consider it. However, on review, Mr Peterson advanced undue influence as a further basis for avoiding the settlement agreement.
[44] In Royal Bank of Scotland Plc v Etridge (No.2)[5] Lord Nicholls, delivering the leading judgment, identified two broad forms of unacceptable conduct giving rise to undue influence. The first involves improper pressure or coercion through unlawful threats. The second involves taking unfair advantage of a relationship where one party has influence or ascendency over the other.
[5] Royal Bank of Scotland Plc v Etridge (No.2) [2002] 2 AC 774 HL.
[45] Mr Peterson and Mr Lucas have been engaged in litigation for many years. There could be no basis for suggesting that Mr Peterson reposed trust or confidence in Mr Lucas, quite the contrary. This leaves improper pressure or coercion through an unlawful threat as the only possible foundation for an undue influence argument in this case. Mr Peterson relies on the same facts to promote his undue influence
claim as he does for his duress claim. On the facts of this case, undue influence
could not succeed if Mr Peterson’s duress claim failed. It follows that the undue influence contention is untenable for the same reasons given in respect of the duress claim.
Was Mr Peterson arguably entitled to cancel the settlement agreement because of misrepresentation?
[46] Mr Peterson argues that the Lucas’ solicitors misrepresented the verbal accord reached by telephone in the written record of the agreement which they prepared because they did not record the agreement of the Lucas parties not to initiate copyright infringement proceedings in relation to the Turbosawmill. Mr Peterson claims that he was entitled to cancel the agreement in reliance on this misrepresentation. This argument is misconceived. The initial agreement was reached by telephone in the exchanges on 3 and 4 October 2011. The solicitors prepared the record of that agreement after it had been reached. Self-evidently, the email from the solicitors purporting to record the terms of the agreement could not have induced that agreement.
[47] In any event, Mr Lucas acknowledges that the Lucas parties are bound by his promise not to pursue copyright infringement proceedings in relation to the Turbosawmill. He contends that this was a collateral promise rather than a term of the contract but the effect is the same; Mr Peterson and his son’s company will receive the benefit of this promise.
Does the settlement agreement prevent Mr Peterson from pursuing the revocation of patent proceedings in the public interest?
[48] Mr Peterson filed the revocation of patent proceeding on 10 November 2011 seeking to revoke claims 7 to 19 of the Lucas patent. This application replicates an earlier application made by Mr Peterson in the patent proceeding in February 2009. It is therefore covered by the settlement agreement in terms of which Mr Peterson not only settled the claims and actions in the patent proceeding but also agreed not to bring them again or substantially repeat them in any Court, tribunal or otherwise.
[49] Mr Peterson seeks to get around this difficulty by arguing that he elected non-suit on this counterclaim at a trial in this Court in 2001. He says that his revocation application has been a “dead” claim since 2001. That does not mean that the revocation claim was not a claim or action in the patent proceeding. The settlement agreement was not confined to claims that were being actively pursued. The parties clearly intended to settle fully and finally all claims in the patent proceeding and the copyright proceeding and not to repeat any such claim in any other proceeding. In my view, the revocation of patent proceeding is caught by the settlement agreement.
[50] Mr Peterson argues that even if the settlement agreement is binding and covers the revocation of patent proceeding, he should still be entitled to pursue it as an interested person acting in the public interest. The Attorney-General has granted consent to Mr Peterson’s application under s 41(3)(b) of the Patents Act. I do not consider that this enables Mr Peterson to depart from his settlement agreement. He agreed not to pursue any claim in the patent proceeding. One of those claims was his application to revoke claims 7 to 19 of the Lucas patent. He promised not to pursue that claim in any subsequent proceeding and he may not do so in any capacity, whether in his own interest, the public interest or otherwise.
[51] It follows that the revocation of patent proceeding must be struck out and his application for summary judgment on the claim must be dismissed.
Was the Judge wrong to decline indemnity costs or increased costs to the Lucas parties on the strike-out application?
[52] Bell AJ declined to award indemnity costs or increased costs against Mr Peterson despite finding that he was bound to the settlement agreement and that the copyright proceeding had to be struck out. The Associate Judge said that he would have been sympathetic to the Lucas’ application for indemnity costs but for the fact that the solicitors had not incorporated the promise not to sue for copyright infringement.
[53] The Lucas parties apply to review the costs decision arguing that the Associate Judge was plainly wrong in reaching this conclusion. They point out that Mr Peterson denied that there was any settlement agreement at all and did not raise any issue about the omission of the Lucas promise until 1 November 2011. As soon as the issue was raised, the Lucas parties offered to add this term to the agreement and confirmed that they intended to be bound by the promise. On this basis, the Lucas parties argue that indemnity costs ought to have been awarded for all steps taken after this issue was clarified.
[54] Mr Peterson failed but it does not follow that his conduct was improper or unreasonable. He was entitled to contest the issue as to whether he remained bound by the settlement agreement. The Associate Judge rejected his contentions but that does not mean that he acted improperly or unreasonably in advancing them. I do not consider that there is any proper basis to interfere with Bell AJ’s exercise of discretion in awarding costs on a 2B basis.
Result
[55] Mr Peterson’s application to review Bell AJ’s judgment is dismissed. The
Lucas’ application to review the judgment is also dismissed.
[56] The copyright proceeding, the patent proceeding and the revocation of patent proceeding are all struck out.
[57] Any application for costs should be made by memorandum to be filed and served within 14 days of the date of this judgment. Any memorandum in response
should be filed and served within 14 days thereafter.
M A Gilbert J
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