NEW TRANSDUCERS LIMITED v SLAB TECHNOLOGY LIMITED [2001] NZCA 150 (14 May 2001)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca 71/01

	between	NEW TRANSDUCERS LIMITED
		Appellant

	and	slab technology limited
		Respondent

Hearing:	14 May 2001
Coram:	Richardson P Thomas J Tipping J
Appearances:	J G Miles QC and K W McLeod for Appellant B Henry and K M Elcoat for Respondent
Judgment:	14 May 2001

judgment of the court delivered by THOMAS J

[1] The proposed appellant, New Transducers Ltd, is a wholly owned subsidiary company of NXT PLC ("NXT"), a public listed company in the United Kingdom.It is the registered proprietor of New Zealand Patent No.316547, which relates to flat panel loud speaker technology.

[2] The proposed respondent, Slab Technology Ltd ("Slab Technology"), is a New Zealand company which designs and arranges the manufacture of audio speakers.

[3] Slab Technology filed proceedings in the Commercial List in Auckland seeking a declaration that certain of its audio speakers do not infringe Patent No.316547.By way of an amended statement of claim, it now also seeks to revoke the Patent.

[4] NXT initially sought to have the original cause of action seeking a declaration of non-infringement struck out on the ground that it disclosed no reasonable cause of action.It argued that no, or no admissible, "claim of right" by Slab Technology could be made out.Slab Technology responded by asserting that the necessary "claim of right" existed by virtue of a letter from NXT to Slab Technology dated 25 May 2000 which asserted the validity of NXT's Patent and indicated that NXT would take whatever action was necessary to protect its interests.But NXT contended that this letter was privileged and was therefore unavailable for the purpose of demonstrating the purported "claim of right".

[5] In a written decision dated 8 December 2000, Fisher J held that NXT had a sufficient and admissible "claim of right" arising from the letter of 25 May.

[6] NXT sought leave to appeal against that decision to this Court.The application for leave was initially heard by Robertson J on 23 February 2001. Counsel for NXT raised a question of issue estoppel.He contended that Fisher J's ruling that the letter contains a sufficient "claim of right" is a ruling which would be binding throughout the case.Because the point had been pursued by way of a preliminary issue, he argued, NXT had lost an automatic right of appeal on that issue which it would have had if the matter had been raised within the context of a substantive hearing.

[7] Robertson J considered that the issue estoppel point was of sufficient importance to require clarification as to whether it would influence the question whether leave to appeal should be granted.He accordingly referred the matter to Fisher J.The application came back before that learned Judge on 9 March 2001.

[8] Fisher J declined leave to appeal.At the hearing, counsel for Slab Technology, Mr Henry, gave an undertaking on behalf of his client that it would not rely at trial upon the determination made by Fisher J in his decision of 8 December, that is, the Judge's ruling that the critical letter of 25 May was not privileged and established a "claim of right".Fisher J took the view that this dealt with the issue estoppel question.

[9] NXT has now sought leave to appeal in this Court.We consider that its application should be refused.

[10] Mr Miles, who appeared for NXT in this Court, argued that Slab Technology had effectively circumvented the correct procedure and thereby placed his client at a disadvantage.Slab Technology had relied on the Court's inherent jurisdiction based on a "claim of right".The correct procedure, Mr Miles contended, was to issue a proceeding seeking a declaration under s 75 of the Patents Act 1953.Pursuant to that provision, NXT would be entitled to a reasonable sum for its expenses in obtaining advice and, although at the discretion of the Court, in all likelihood would recover its costs incurred in connection with the proceeding.

[11] It appears that this argument was not pressed in the Court below.We do not have the benefit of the Judge's view on it.We are therefore not disposed to entertain the question on an application for leave to appeal.In any event, we are bound to say that we are not overly impressed with the point.Providing Fisher J's finding that the letter of 25 May is not privileged is sound and that it establishes a "claim of right", the exercise of the Court's inherent jurisdiction to grant a declaration if otherwise justified would not seem misplaced.

[12] Mr Miles' core argument, however, was that the letter of 25 May is privileged and that there is therefore no basis for Slab Technology's "claim of right".Although he sought to clothe the argument with jurisdictional potency, it was in substance a challenge to the Judge's finding that the letter was not part of the privileged negotiations as NXT had asserted.An appeal against such a finding falls far short of meeting the criteria for the grant of leave to appeal to this Court.Moreover, this issue will remain at large at the trial.We believe this would be the case even if Slab Technology had not given an undertaking not to raise issue estoppel at the trial.It is a substantive question and one which, as Fisher J noted, will benefit from the further evidence and material available at the hearing.

[13] For these reasons we reject Mr Mile's submission that, although an interlocutory decision, Fisher J's decision is in effect a substantive decision.Clearly it has no such permanence.

[14] Applying the well-established principles relating to an application for leave to appeal, we do not consider for one moment that leave should be granted.Our attitude is reinforced by the fact that the decision in issue is a interlocutory decision in a proceeding entered on the Commercial List.The principles to be applied in relation to such an application are well established.See Clear Communications Ltd v Attorney-General (1998) 12 PRNZ 287 (CA).

[15] Section 24G of the Judicature Act 1908 provides that no appeal shall lie from any interlocutory decision of the High Court in proceedings entered on the List without the leave of the High Court or this Court pursuant to applications brought within strict time limits.The object of the provision is to ensure that proceedings on the list are dealt with expeditiously.Fisher J correctly noted that "leave will normally only be granted if there is a question of law or fact capable of serious argument in addition to some interest of sufficient importance to outweigh the cost and delay of an appeal."We are unable to detect any question capable of serious argument and nothing at all to outweigh the importance of proceedings entered in the Commercial List from proceeding expeditiously.We are left with the firm impression that this application is the very kind of application which the Commercial List is designed to avoid.

[16] Application for leave to appeal is therefore refused.Costs are awarded to the respondent in the sum of $2,500, together with all reasonable disbursements, including travelling and accommodation expenses for one counsel, to be agreed, or failing agreement to be fixed by the Registrar.

Solicitors

A J Park, Auckland for Appellant

Knowles & Associates, Auckland for Respondent