Burden and Others v Esr Group (NZ) Ltd and Others

• Jurisdiction: New Zealand
• Judge: Venning J
• Judgment Date: 03 July 2019
• Neutral Citation: [2019] NZHC 1546
• Court: High Court
• Docket Number: CIV-2018-404-002775
• Date: 03 July 2019

[2019] NZHC 1546

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

CIV-2018-404-002775

Civ-2014-404-002456

Under The copyright Act 1994 and Fair Trading Act 1986

In the Matter of Infringement of copyright and breach of the Fair Trading Act 1986

Between

Ian James Burden

First Plaintiff

PGT-Reclaimed (International) Limited

Second Plaintiff

Plantation Grown Timbers (Vietnam) Limited

Third Plaintiff

and

ESR Group (NZ) Limited

First Defendant

Elisa Norah Mclennan

Second Defendant

Appearances:

A Brown QC and J Oliver-Hood for Plaintiffs

J Miles QC and A Pietras for Defendants

Civil Procedure — application to amend pleadings — proposed amendment included a fresh cause of action — High Court Rules 2016 — Copyright Act 1994

Application by Burden (“B”) for leave to amend the third amended statement of claim in under r7.7 High Court Rules 2016 (“HCR”) (steps after close of pleadings date restricted) proceedings under the Copyright Act 1994 (“CA”) and Fair Trading Act 1986 (“FTA”) against ESR Group (NZ) Ltd (“ESR”) which applied to strike out B's claim against them. The proposed amendment included a fresh cause of action alleging primary infringement. B owned companies (“the Plantation interests”) which designed and manufactured furniture in Vietnam and produced and sold ranges of furniture. ESR was a furniture importer and retailer. In 2014 B had obtained a High Court (“HC”) declaration that ESR had infringed B's copyright. The Court of Appeal allowed Plantation's cross-appeal about which interest were the copyright owners. The CA also accepted that, while the HC was correct to find that ESR was liable for secondary infringement, it was only liable in respect of the importations of goods into New Zealand in 2014. The Plantation interests now sought leave to amend their claim against ESR in the 2014 proceeding to allege, in addition to the claim for secondary infringement, a further and new cause of action alleging primary infringement and secondary infringement in relation to the two furniture collections sold or offered for sale by ESR from May 2013. ESR and the second defendant, ERS director McLennan (“M”) sought to strike out a 2018 proceeding alleging both primary and secondary infringement of copyright by ESR and M as director and breach of the FA.

The issues were: whether the amendments fall within the orders made by the HC, whether there was a similarity between the existing and proposed causes of action and whether there would be prejudice to the parties.

The proposed amended claim referred to further infringing items that were not expressly pleaded in the 2014 proceeding. When the orders were considered in context they were entirely consistent with the pleading which referred to issuing copies to the public with the knowledge requirement stipulated under s36(b) CA (possessing or dealing with infringing copy - in the course of business sells or lets for hire) and s36(c) CA (the course of a business, offers or exposes for sale or hire). The declarations were also consistent with that interpretation.

The Court had resolved the issue of the Plantation interests ownership of the copyright and found ESR had been liable for secondary infringement from 28 August 2014, but, as yet, there had been no finding that ESR has committed primary infringement. While it was open to amend the pleading at the inquiry stage to encompass the additional items of furniture as particulars it was not open to plead and establish a separate and distinct cause of action for primary infringement given the issues that such a cause of action could give rise to.

ESR would be unfairly prejudiced by having to face a new cause of action at the inquiry into damages phase of the 2014 proceedings. They were entitled to have the 2014 proceedings finalised on the basis they faced at the liability trial and as confirmed by the Court of Appeal.

It was not in the interests of justice to permit the amendments sought to plead primary infringement and secondary infringement prior to 28 August 2014. The application was declined. Leave was granted to amend the pleadings to represent the Court of Appeal's findings as to ownership of copyright and to include the inquiry for damages for secondary infringement in relation to the additional items of furniture It would be draconian to prevent the Plantation interests from pursuing a claim for primary infringement merely on the basis that they failed to seek leave to amend their pleadings in the 2014 proceedings to add a claim of primary infringement. The issues of ownership of copyright had been resolved and were res judicata. The only issues in the second proceeding would be whether there had been primary infringement by the defendants and if so, the damages that followed.

The application to strike out B's entire claim in the 2018 proceedings was dismissed. The causes of action alleging breach of the FA and secondary infringement were struck out as an abuse of process, as is the cause of action against the second defendant M.

JUDGMENT OF Venning J

This judgment was delivered by me on 3 July 2019 at 2.15 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.

Introduction

1 The plaintiffs in CIV-2014-404-2456 (the 2014 proceedings) seek leave to amend the third amended statement of claim in those proceedings.

2 The defendants in CIV-2018-404-2775 (the 2018 proceedings) apply to strike out the plaintiffs' claim against them.

3 Both applications are opposed.

Parties

4 Mr Burden is an Australian citizen and managing director of both Plantation Grown Timbers (International) Limited (Plantation International) and Plantation Grown Timbers (Vietnam) Limited (Plantation Vietnam), (together the Plantation interests). At material times the Plantation interests undertook the design and manufacture of furniture in Vietnam and produced and sold ranges of furniture, including the Irish Coast Collection.

5 ESR Group (NZ) Limited, (ESR) is a New Zealand company which carries on the business of furniture importer and retailer. It imports and sells furniture under the style Roseberry and Westbury collections. Ms McLennan is the managing director of ESR. The remaining defendants in the 2014 proceedings are not relevant to the present applications. 1

The High Court proceedings

6 In the 2014 proceedings the Plantation interests sued ESR alleging breach of copyright. The copyright claim raised issues of authorship, ownership of the copyright works, copyright qualification, copying, secondary infringement, the effect of the importations and the notice issued by Customs. The Plantation interests also alleged ESR had breached the Fair Trading Act 1986.

7 Duffy J determined that Mr Burden owned the copyright in the relevant goods. 2 In general terms she granted the following relief: 3

• (a) a declaration that ESR had infringed Mr Burden's copyright by reproducing his copyright works;

• (b) a declaration that ESR's infringing products reproduced Mr Burden's copyright works and therefore each was a pirated copy imported other than for private and domestic use;

• (c) an injunction restraining ESR from further importing, selling, or dealing with its infringing products or otherwise infringing copyright; and

• (d) an order for delivery up of goods and related documents and a direction for the filing of affidavit evidence as to the extent of the importation.

8 The Judge reserved issues relating to damages or an account of profits. 4 She dismissed the Plantation interests' claim for breach of the Fair Trading Act. 5

The appeal

9 ESR appealed from the findings of breach of copyright. The Plantation interests cross-appealed against the Judge's finding that neither Plantation International nor Plantation Vietnam were owners or co-owners of the copyright and technical drawings.

10 The Court of Appeal allowed the cross-appeal. 6 It concluded that Plantation International was the owner of the copyright and the technical drawings until 28 October 2003. 7 From that date copyright vested in both it and Plantation Vietnam and both were entitled to sue in New Zealand for infringement of copyright.

11 The Court of Appeal also allowed the appeal in part. The Court accepted that, while the High Court was correct to find that ESR was liable for secondary infringement, it was only liable in respect of the importations of goods into New Zealand on 28 August and 5 and 12 September 2014, but not in respect of an earlier importation on 30 July 2014. 8

The proposed amended claim

12 The Plantation interests now seek leave to amend their claim against ESR in the 2014 proceeding to allege, in addition to the claim for secondary infringement, a further and new cause of action alleging primary infringement in relation to the Roseberry and Westbury Collections sold or offered for sale by ESR from 15 May 2013. The Plantation interests seek a declaration of copyright infringement, and an account of profits.

13 By way of brief explanation, Part 2 of the Copyright Act 1994 is headed “Infringement of copyright”. The two subheadings are “ Primary infringement of copyright” and “ Secondary infringement of copyright”. Primary and secondary infringement are different causes of action, with different requirements.

14 Primary infringement can arise in a number of ways. Of relevance to the plaintiff's application to amend their third amended statement of claim is s 31 of the Copyright Act 1994, which provides:

31 Infringement by issue of copies to public

The issue of copies of a work to the public is a restricted act in relation to every description of copyright work.

15 The term “issue” is defined in s 9 of the Copyright Act 1994:

9 Meaning of issue to the public

(1) References in this Act to the issue of copies of a work to the public mean the act of putting into circulation copies not previously put...