Peterson v Lucas Mill Pty Ltd [2012] NZHC 2804 (24 October 2012)

Last Updated: 16 November 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-007762 [2012] NZHC 2804

UNDER the Copyright Act 1994

BETWEEN CARL JAMES PETERSON Plaintiff

AND LUCAS MILL PTY LTD First Defendant

AND REX CAMERON LUCAS Second Defendant

AND KATICA LUCAS Third Defendant

AND WARREN GEOFFREY LUCAS Fourth Defendant

AND JENNIFER MARGARET LUCAS (DISCONTINUED)

Fifth Defendant

AND DOLORES 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

AND LUCAS MILL PTY LTD First Respondent

AND REX CAMERON LUCAS Second Respondent

PETERSON V LUCAS MILL HC AK CIV 2009-404-007762 [24 October 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

Second Plaintiff)

AND PETERSON PORTABLE SAWING SYSTEMS LIMITED (IN LIQUIDATION) First Defendant

AND CARL JAMES PETERSON Second Defendant

Hearing: On the papers

Judgment: 24 October 2012

_{COSTS JUDGMENT OF GILBERT J}

This judgment was delivered by me on 24 October 2012 at 5.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:

Counsel: T J Walker, Auckland: [e-mail]

J C Dickson, Auckland: [e-mail]

J K Gorman, Wellington: [e-mail]

Copy to: C J Peterson: [e-mail]

Introduction

[1] In a judgment delivered on 17 September 2012, I dismissed Mr Peterson’s application to review a decision of Bell AJ in which he ruled that the parties had compromised the copyright proceeding[1] in a binding settlement agreement. I struck

out the copyright proceeding, the patent proceeding[2] and the revocation of patent

proceeding[3] on the basis that all of these proceedings had been settled by this settlement agreement. I dismissed the Lucas parties’ cross-application to review the Associate Judge’s refusal to award them indemnity or increased costs.

[2] The Lucas parties now apply for costs on Mr Peterson’s unsuccessful review application and on their successful strike out applications. They seek a 50 per cent uplift on costs calculated on a 2B basis save for specific steps for which they claim costs on a 2C basis. They accept that Mr Peterson is entitled to an appropriate proportion of his disbursements relating to their unsuccessful review application. They suggest that one quarter of these disbursements should be allowed taking into account that four applications were considered at the hearing, three of which were

resolved in favour of the Lucas parties.[4] They also seek a direction that any costs

awarded in their favour be paid out of the monies they have paid into court representing the agreed settlement sum. This direction is sought because Mr Peterson claims to be impecunious and they are concerned that any costs award will otherwise be irrecoverable.

[3] Mr Peterson opposes the Lucas parties’ application for increased costs. He argues that he presented his case competently as a lay litigant and without the legal resources available to the Lucas parties. He submits that it would be unjust to

_{require him to pay increased costs.}

Legal principles

[4] The applicable legal principles are well settled. Relevantly, for the purposes of this case, the Court may award increased costs against a party who has contributed unnecessarily to the time or expense of the proceeding or a step in it in any of the ways set out in r 14.6(3)(b) of the High Court Rules. These include taking or pursuing an unnecessary step or argument that lacks merit or failing, without reasonable justification, to accept a settlement offer. The party seeking increased costs carries the onus of persuading the Court that such an award is justified. The decision whether or not to award increased costs is to be assessed after determining the appropriate scale costs.

Scale costs

[5] The Lucas parties seek costs on a category 2 basis which is the appropriate categorisation for this proceeding.

[6] The Lucas parties have provided a schedule detailing the steps taken in relation to the applications for which costs are now sought. There is no issue as to the relevant steps. The Lucas parties claim costs for most of these steps on a band B basis. This is clearly justified.

[7] The only potentially contentious issue regarding scale costs is whether these should be allowed on a band C basis for three of the steps:

(a) Preparing and filing the notice of opposition to Mr Peterson’s

application for review;

(b) Preparing for the hearing of the application for review; and

(c) Preparing submissions in support of the strike out application.

[8] If costs were allowed on a band C basis for these steps, it would mean that the Lucas parties would be entitled to recover the daily rate for six days. These applications were heard together and all depended on whether or not Mr Peterson

had validly cancelled the settlement agreement. Accordingly, there would have been considerable overlap in the preparation time required for these applications. For that reason, I consider that recovery for these steps on a band B basis is appropriate.

Should there be an uplift?

[9] The Lucas parties submit that an uplift is justified because Mr Peterson declined a settlement offer sent on a Calderbank basis. This offer was made on

16 April 2012, after Mr Peterson had applied for review of the Associate Judge’s decision and after the Lucas parties had cross-applied for review on costs. The offer was for both parties to withdraw their review applications and for Mr Peterson to discontinue the revocation of patent proceeding. The other terms of settlement required both parties to observe and implement the terms of the settlement agreement and to accept the Associate Judge’s ruling on costs.

[10] I cannot take this offer into account unless I find that Mr Peterson acted unreasonably in rejecting it. This assessment must be made at the time the offer was rejected. In my judgment dated 17 September 2012, I found that Mr Peterson did not act unreasonably in contesting the issue as to whether he remained bound by the settlement agreement. Mr Peterson was entitled to test the Associate Judge’s decision through the review process. I do not consider that he acted unreasonably in rejecting the settlement offer and pursuing his application for review. I am therefore not prepared to allow an uplift on costs based on Mr Peterson’s rejection of the settlement proposal.

[11] The Lucas interests also seek an uplift on scale costs on the basis that Mr Peterson’s contentions in the review hearing were untenable. They argue that his pursuit of the proceedings in the face of the settlement agreement was an abuse of process. They also submit that the documents filed by Mr Peterson were prolix and iterative and required the Lucas parties to spend more time than would otherwise have been necessary.

[12] The Lucas parties have not persuaded me that an uplift is justified in this case. I do not consider that Mr Peterson acted unreasonably or that he unnecessarily

contributed to the time or expense required to dispose of the applications. Mr Peterson conducted his presentation of the argument in a competent manner.

Result

[13] The Lucas parties are entitled to costs calculated on a 2B basis on Mr Peterson’s review application and on their applications to strike out the patent proceeding and the revocation of patent proceeding.

[14] I make no order for costs in respect of the Lucas parties’ cross-application for review of the costs award. However, Mr Peterson is entitled to 25 per cent of his reasonable disbursements for attending the hearing on 22 June 2012. These

_{disbursements are to be fixed by the registrar if the parties cannot agree.}

M A Gilbert J

---

[1] _{CIV 2009-404-007762.}
[2] _{CIV 2001-404-003668.}
[3] _{CIV 2011-404-007543.}

[4] Mr Peterson’s application for review, the Lucas parties’ application to strike out the revocation of patent proceedings, the Lucas parties’ application to strike out the patent proceeding and the Lucas parties’ application to review Bell AJ’s costs award.