A dialog with unreadable characters appear during Lucid-> Precise desktop upgrade

A dialog with un-readable characters pop up during Lucid-> Precise desktop upgrades making it impossible to complete the upgrade. Occurs with both amd64 and i386 upgrades and has been observed in every upgrades using KVM.

Steps:
1. Install Lucid desktop (amd64 or i386)
2. Update the packages using sudo apt-get update or the Update manager in System-> Adninistration
3. Upgrade the system to Precise using update-manager -c -d in the terminal or Update manager tool above
4. The above said pop up dialog will appear. ( the acreen shto attached)

ProblemType: Bug
DistroRelease: Ubuntu 12.04
Package: update-manager 1:0.156.14.11
ProcVersionSignature: Ubuntu 2.6.32-45.102-generic 2.6.32.60+drm33.26
Uname: Linux 2.6.32-45-generic i686
ApportVersion: 2.0.1-0ubuntu17.1
Architecture: i386
Date: Fri Jan 11 13:07:05 2013
GsettingsChanges:

InstallationMedia: Ubuntu 10.04.4 LTS "Lucid Lynx" - Release i386 (20120214.2)
MarkForUpload: True
PackageArchitecture: all
ProcEnviron:
 TERM=xterm
 PATH=(custom, no user)
 LANG=en_GB.utf8
 SHELL=/bin/bash
SourcePackage: update-manager
UpgradeStatus: Upgraded to precise on 2013-01-11 (0 days ago)
VarLogDistupgradeAptclonesystemstate.tar.gz: Error: [Errno 13] Permission denied: '/var/log/dist-upgrade/apt-clone_system_state.tar.gz'