Spirits International B.V. v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69 (20 May 2011)

Last Updated: 20 May 2011

FEDERAL COURT OF AUSTRALIA

Spirits International B.V. v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69

Citation:		Spirits International B.V. v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69
Appeal from:		Application for leave to appeal: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2010] FCA 1293
Parties:		SPIRITS INTERNATIONAL B.V. (REGISTERED IN THE NETHERLANDS) v FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT and FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO)
File number:		NSD 1686 of 2010
Judges:		RARES, BUCHANAN AND FOSTER JJ
Date of judgment:		20 May 2011
Catchwords:		PRACTICE AND PROCEDURE – trial of separate questions – case management – discretion to make further directions– whether leave to appeal should be granted from a decision to order the trial of separate questions
Legislation:		Convention for the Protection of Human Rights as Fundamental Freedoms Federal Court of Australia Act 1976 (Cth) Federal Court Rules O 29 r 2 Foreign States Immunities Act 1985 (Cth) Trade Marks Act 1955 (Cth) ss 22, 28 Trade Marks Act 1995 (Cth) ss 88, 207, 234
Cases cited:		Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 referred to Adams v Cape Industries plc [1990] Ch 433 referred to Attorney-General (United Kingdom) v Heinemann Publishers Pty Ltd (1988) 165 CLR 30 referred to Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 referred to AWB Limited v Cole [No 2] [2006] FCA 913; (2006) 233 ALR 453 referred to Bass v Permanent Trustee Company Ltd [1999] HCA 9; (1999) 198 CLR 334 cited Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 referred to Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 referred to British American Tobacco Australia Services Limited v Laurie [2011] HCA 2; (2011) 273 ALR 429 referred to Cammell v Sewell [1858] EngR 919; (1858) 3 H&N 617 referred to CEO of Customs v Au [2005] NSWCA 119 cited City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784; (2009) 73 ACSR 86 referred to Commonwealth v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 cited Coulton v Holcombe (1986) 162 CLR 1 referred to Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 applied Dissidomino v Butcher Paull & Calder [2004] WASC 122 cited Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2010] FCA 1293 Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 referred to In re the Will of F.B. Gilbert (dec) (1946) 46 SR(NSW) 318 referred to Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 considered Kemeny v Kemeny [1998] FamCA 34 cited Kuppers v New South Wales Fire Brigades [2005] NSWSC 193 cited Landmark Building Developments Pty Ltd v Toyama Pty Ltd [2004] NSWSC 1103 cited Landsdale Pty Ltd v Moore [2009] WASCA 176 referred to Lewis v Nortex Pty Ltd (in liq) [2002] NSWSC 124 cited Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 cited Minero Pty Ltd v Redero Pty Ltd (unreported, Supreme Court of New South Wales, Santow J, 29 July 1998) cited Nicholls v Michael Wilson and Partners Limited [2010] NSWCA 222; (2010) 243 FLR 177 referred to Olbers v Commonwealth (No 3) [2003] FCA 651 cited Pemberton v Hughes [1899] 1 Ch 781 referred to Price v Dewhurst [1837] EngR 717; (1837) 8 Sim 279; (1838) 4 My & Cr 76 referred to Spencer v Commonwealth [2008] FCA 1256 cited SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189 referred to Tepko Pty Ltd v Water Board (2001) 206 CLR 1 referred to Tiufino v Warland [2000] NSWCA 110; (2000) 50 NSWLR 104 cited Whiteley-Bond v Abletts Transport Pty Ltd [2009] ACTSC 81 cited Zegarac v Pitcher Partners [2009] FCA 1061 referred to
Date of hearing:	4 March 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	171
Counsel for the Applicant:	Mr R Cobden SC with Mr P W Flynn
Solicitor for the Applicant:	Mallesons Stephen Jaques
Counsel for the Respondents:	Mr S C G Burley SC with Mr A R Lang
Solicitor for the Respondents:	Sagacious Legal Pty Limited

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1686 of 2010

BETWEEN:	SPIRITS INTERNATIONAL B.V. (REGISTERED IN THE NETHERLANDS) Applicant
AND:	FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT First Respondent FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO) Second Respondent

JUDGES:	RARES, BUCHANAN AND FOSTER JJ
DATE OF ORDER:	20 MAY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Leave to appeal be refused.
2. The applicant pay the respondents’ costs.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1686 of 2010

BETWEEN:	SPIRITS INTERNATIONAL B.V. (REGISTERED IN THE NETHERLANDS) Applicant
AND:	FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT First Respondent FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO) Second Respondent

JUDGES:	RARES, BUCHANAN AND FOSTER JJ
DATE:	20 MAY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

RARES J:

1. The primary judge ordered that four questions involving the legal effect of decisions by courts of the Russian Federation be heard and determined separately and before the trial of the proceedings. The principal question in this application for leave to appeal, which was argued as the appeal itself, was whether his Honour erred in ordering those separate questions.

BACKGROUND

2. The proceedings concern the ownership of trademarks of well-known brands of Russian vodka. Two entities that represent, or claim to represent, the Russian Federation Federal Treasury Enterprise (FKP) Sojuzplodoimport (FKPS) and Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP VO) (FGUP) (the cross-claimants collectively) brought a cross-claim against Spirits International BV (Spirits) the current registered owner of the trademarks in the Register of Trade Marks established under s 207 of the Trade Marks Act 1995 (Cth) (the 1995 Act). The cross-claimants sought a declaration that one or other cross-claimant is the owner or entitled to ownership of the trade marks, rectification of the Register by recording that cross-claimant as registered owner or cancellation of the trade marks. The cross-claim is the only unresolved part of the proceedings below and the issues it raises are part of an international dispute that is not confined to the right to be registered as owner of the marks in Australia. The pleadings closed with Spirits’ defence to the further amended cross-claim filed on 16 September 2005. The reply filed on 12 August 2005 appears to have remained unaltered.
3. It appeared to be common ground that a company called by various names but known by its short trading name of “Sojuzplodoimport” (Sojuzplodoimport) had been formed as an entity in 1966 under the laws of the former Union of Soviet Socialist Republics (USSR). In December 1991 the USSR was dissolved and was succeeded in Russia by the Russian Federation.
4. Although the parties’ pleadings disputed the various names by which Sojuzplodoimport has been known since 1966, it was common ground that that entity continued to exist until around the time of the creation of the Russian Federation in late 1991 and early 1992. The cross-claimants assert that Sojuzplodoimport in fact has continued to exist since then. In contrast, Spirits asserts that on 20 January 1992, Sojuzplodoimport ceased to exist as a legal entity and its assets and liabilities vested in a new entity, Foreign Economic Joint Stock Company Sojuzplodoimport, with a short trading name of “VAO Sojuzplodoimport” (which it is convenient to call, as the parties have done, “VAO-SPI”). Based on the cross-claimants’ reply to Spirits’ defence it appears to be almost common ground that:
   • on about 20 September 1990, the State Commission of the USSR Council of Ministers on Food Supply jointly decided with the Sojuzplodoimport Labour Collective to “effect” (according to Spirits) or “commence the procedure of” (according to the cross-claimants) “transformation” of Sojuzplodoimport pursuant to the then laws of the USSR;
   • on about 19 December 1990 Spirits alleges, but the cross-claimants do not admit, that the founders of the proposed VAO-SPI entered into a founders’ agreement to set up that entity and, pursuant to that agreement, they authorised Sojuzplodoimport’s management to take all necessary steps to effect its legal transformation into VAO-SPI;
   • on 5 September 1991 a meeting of the founders and shareholders of the proposed VAO-SPI was held and passed resolutions in relation to its proposed share capital and articles of association;
5. The other cross-claimant, FKPS, was created by an order of the Government of the Russian Federation in 2001. FKPS claims to be the registered owner of the trade marks in the Russian Federation and the appointee of its Government and Sujozplodoimport to recover and protect, outside its territory, the rights of the Russian Federation in relation to trade marks for alcohol products.

THE LEGAL CONSEQUENCES CLAIMED TO FLOW FROM THE FORMATION OF VAO-SPI

6. Spirits contends that the formation of VAO-SPI vested the ownership of and rights to the trade marks in VAO-SPI. In particular, Spirits relies on first, the recitation in VAO-SPI’s charter to the effect that it was the legal successor of Sojuzplodoimport and, secondly, the fact that, at the time of VAO-SPI’s formation, over half of its shareholders were State enterprises of the Russian Federation. From this disputed premise, Spirits argues that VAO-SPI had the right to enter into dealings with the trade marks that form the root of Spirits’ current registration in Australia.
7. By 1976, Sojuzplodoimport had been registered under the Trade Marks Act 1955 (Cth) (the 1955 Act) in Australia as owner of three trade marks in class 33 for wines, spirits and liqueurs, namely CHN (device) (called “the House Mark”), STOLICHNAYA (label) and MOSKOVSKAYA (label).
8. On 25 October 1991, Sojuzplodoimport entered into an agreement with Caldbeck Pty Ltd, an Australian company. Caldbeck was appointed exclusive distributor in Australia of Russian vodka products sold by Sojuzplodoimport including those sold under and by reference to the trade mark STOLICHNAYA. The parties are at issue about whether it was Sojuzplodoimport or VAO-SPI that entered into a deed of assignment on 21 February 1992, in which the assignor assigned to Caldbeck the registered STOLICHNAYA label mark. The cross-claimants do not appear to accept that the deed bound Sojuzplodoimport.
9. In April 1992, Caldbeck applied to the Registrar of Trade Marks to be registered as owner of the STOLICHNAYA label mark, however, that application was rejected in August 1992.
10. On 14 September 1992, VAO-SPI entered into a deed with Caldbeck under which VAO-SPI assigned to Caldbeck the House Mark and the STOLICHNAYA and MOSKOVSKAYA label marks. Caldbeck applied to the Registrar for registration as owner of the three marks on 28 September 1992. The cross-claimants allege that either or both of VAO-SPI and Caldbeck represented to the Registrar that VAO-SPI was, or was the legal successor to, Sojuzplodoimport, the registered owner of each of the three trade marks and that, consequently, Caldbeck was entitled to be recorded in the Register as their registered owner because of their assignment to it by VAO-SPI. The cross-claimants allege that each of those representations to the Registrar was false and one or more of those representations induced the recording of Caldbeck as the registered owner of the three trade marks on 23 December 1992. Spirits relied on the recording as reflecting the correct position.
11. In the meantime, on 12 November 1992, Caldbeck applied to the Registrar for registration of two other trade marks in class 33 in respect of alcoholic beverages including vodka, namely STOLI (word) and STOLICHNAYA (word). Those two trade marks were registered on 4 March 1994 in Caldbeck’s new corporate name, Inchcape Liquor Marketing Pty Ltd. Inchcape had adopted its new name on 1 March 1993.
12. On 4 August 1995, VAO-SPI and Inchcape commenced proceedings against the Registrar in this Court under s 22 of the 1955 Act (the 1995 proceedings). They sought orders that the 1992 registration of the assignments of the three trade marks be declared void and that each of those marks be recorded as being owned by VAO-SPI as from 21 January 1992. In those proceedings VAO-SPI and Inchcape represented that Sojuzplodoimport had ceased to exist with effect from 20 or 21 January 1992, VAO-SPI was its legal successor and that the rights and obligations of Sojuzplodoimport had been transferred to VAO-SPI by operation of Russian law with effect from 20 or 21 January 1992.
13. On 18 September 1995, a judge of this Court made orders that the Register be rectified by removing Inchcape as the registered owner of the three marks in its name and instead recording VAO-SPI as their registered owner (the 1995 Orders).
14. On 18 October 1995, the Registrar recorded VAO-SPI as the registered owner of the three marks in accordance with the 1995 Orders. The cross-claimants assert that the 1995 Orders were made on the basis of the allegedly false representations. Spirits denies that the representations were false and asserts that the 1995 Orders were made by this Court on the basis of evidence filed and read in the 1995 proceedings.
15. Subsequently, on 28 November 1995, the Registrar recorded Inchcape as the registered owner of each of the three marks once again. Later, other trade marks for vodka products and the five trade marks referred to above were all registered by the Registrar with VAO-SPI or United Distillers (Aust) Ltd which ultimately changed its name to Diageo Australia Ltd who dealt with or through VAO-SPI in the period 1996 to 1999. Thus, by early 1999 Diageo was recorded as the registered owner of all of the trade marks in issue in the proceedings.
16. In December 2004, FKPS applied to the Registrar for registration of a number of trade marks identical or deceptively similar to the STOLICHNAYA and MOSKOVSKAYA word and label trade marks. FKPS will not be able to obtain registration of those marks while Spirits is registered owner of the trade marks.
17. On 5 September 2005, the Registrar recorded Spirits as the registered owner of the contested trade marks. This was a consequence of interlocutory orders made on 13 May 2005 that required Diageo to cause the marks to be assigned to Spirits pending the resolution of the proceedings.
18. The cross-claimants assert that Caldbeck obtained the recordal of its registration as owner pursuant to the 1995 Order as a result of fraud, false suggestion or misrepresentation. Alternatively, the cross-claimants say that the recordal would be contrary to s 28 of the 1955 Act because the use of the marks would be likely to deceive or cause confusion, was contrary to law or not entitled to protection by a court. That assertion appears to have been directed to s 234 of the 1995 Act. Spirits denies those assertions. It relies on the deeming provision in s 234(2) of the 1995 Act that provides that the registration of a trade mark under the 1955 Act, such as the 1995 registrations of the three original marks is taken to be valid in all respects after a period of 7 years from the date of registration unless it is shown that, relevantly, the original registration was obtained by fraud or would be contrary to s 28 of the 1955 Act.
19. Spirits also pleads a number of other defences to the cross-claim. First, it asserts that the claims are made on behalf of the Government of the Russian Federation and amount either to a confiscation or expropriation by it of personal property located in Australia or to the enforcement here of governmental powers in the interests of that Government. Secondly, Spirits pleads that the cross-claimants’ challenges to the validity of the January 1992 transformation of, and succession of assets from, Sojuzplodoimport into VAO-SPI were statute barred and not maintainable by reason of s 181 of the Civil Code 1994 of the Russian Federation. Thirdly, Spirits pleads that the cross-claimants are not entitled to any relief in respect of the marks because:
    • VAO-SPI assigned its rights in the various marks for value to a Russian enterprise, Closed Joint Stock Company Sojuzplodoimport (called ZAO) on about 31 March 1998;
    • each of ZAO and Spirits was a bona fide purchaser of those rights for value without notice of any prior rights or interest in them;
    • on about 12 April 1999 ZAO assigned the rights in the marks to Spirits;
    • in those premises, Spirits owns the marks free from any rights or interests of the cross-claimants, the Government of the Russian Federation or any other Russian body or entity.
20. Fourthly, Spirits relies on three assignments of a number of the trade marks VAO-SPI made to Diageo in about October and November 1996 and August 1997. Spirits contends that the cross-claimants are not entitled to any relief because Diaego was entitled to deal with VAO-SPI as at the date of each assignment as absolute owner of each relevant mark pursuant to s 22(1) of the 1995 Act.
21. Fifthly, Spirits pleads that during the period between January 1992 and 2000, the Government of the Russian Federation represented that Sojuzplodoimport had been transformed into VAO-SPI in accordance with applicable law, VAO-SPI was Sojuzplodoimport’s legal successor and all Sojuzplodoimport’s assets and liabilities had vested in VAO-SPI by operation of law from 20 January 1992. Spirits alleges that in reliance on those representations:
    • it and VAO-SPI assumed that VAO-SPI had acquired ownership of the House mark and the STOLICHNAYA and MOSKOVSKAYA label marks with effect from 20 January 1992; and
    • it assumed that it had acquired ownership of those and other marks from ZAO in about April 1999;
    • each of it, VAO-SPI and ZAO had used and registered, or authorised the use and registration of, the respective trade marks in Australia and throughout the world.
22. Spirits contends that these matters estop the cross-claimants and the Government of the Russian Federation from asserting that the cross-claimants have any right or interest in any of the relevant trade marks or any entitlement to relief.
23. Sixthly, Spirits pleads that the cross-claimants and the Government of the Russian Federation are guilty of laches, acquiescence or delay, because of their failure to assert any of the rights now claimed until at least 2000, and in some cases later, despite their knowledge that, throughout the world, VAO-SPI and each of its successors in title was holding itself out as owner of the relevant marks. Last, Spirits denied that each cross-claimant was a person aggrieved within the meaning of s 88 of the 1995 Act and, so, lacked standing to bring the cross-claim.

THE FOREIGN JUDGMENTS

24. The cross-claimants assert two decisions of the Courts of the Russian Federation and a decision of the European Court of Human Rights (ECHR) establish either a judgment in rem or issue estoppels binding on Spirits in the proceedings below. The cross-claimants say that those decisions establish that VAO-SPI was neither Sojuzplodoimport nor its legal successor and that Sojuzplodoimport continued to exist after VAO-SPI came into existence in January 1992. The cross-claimants want to prove, on the separate questions, that these decisions have such an effect so as to avoid the need to address the underlying circumstances that led to the creation of VAO-SPI.
25. On 31 October 2000, the Deputy Prosecutor General of the Russian Federation applied to the Court of Arbitration of Moscow (the Moscow Court) to challenge VAO-SPI’s memorandum of association, and in particular the provision declaring that it had succeeded to Sojuzplodoimport. On 21 December 2000, the Moscow Court appears to have declared that the succession provision was null and void. It appears to have held that VAO-SPI was a new company, separate and distinct from Sojuzplodoimport, which continued to exist. The Moscow Court appears to have also found that the claim by the Deputy Prosecutor had not been made outside the applicable limitation period.
26. VAO-SPI appealed to the Appeals Instance of the Moscow Court (the Appeal Court). By then VAO-SPI had changed its name to OAO-Plodovaya Kompaniya, but it is convenient to continue calling it VAO-SPI in these reasons. On 19 February 2001, the Appeal Court appears to have held that the Deputy Prosecutor General had no standing to bring the proceedings before the Moscow Court. It also appears to have held that those proceedings were deficient because Sojuzplodoimport was not a party. Accordingly, it set aside the Moscow Court’s decision.
27. No appeal was taken from the Appeal Court’s decision. However, on 13 June 2001 the Deputy Prosecutor General applied to the Presidium of the Supreme Court of Arbitration of the Russian Federation (the Supreme Court) for supervisory review of the Appeal Court’s decision. On 16 October 2001, the Supreme Court appears to have held that the Deputy Prosecutor General had standing to bring the proceedings in the Moscow Court. It also appears to have held that the claim was not brought outside any limitation period and that VAO-SPI was not the legal successor of Sojuzplodoimport, which continued to exist. The Supreme Court ordered that the Appeal Court’s order be cancelled.
28. The decisions of the Moscow Court and the Supreme Court can be described conveniently, as they were in the separate questions and in argument, as “the Russian Judgments”.
29. On about 2 January 2002, VAO-SPI challenged the Supreme Court’s decision before the ECHR. On 7 June 2007, the ECHR refused relief to VAO-SPI. It appears to have held that the decisions of the Moscow and Supreme Courts had not interfered with VAO-SPI’s property in contravention of Article 1 of Protocol No 1 of the (European) Convention for the Protection of Human Rights as Fundamental Freedoms (the European Convention). The ECHR appears to have held that no questions of ownership of any trade marks was in issue in the Russian Courts.

THE CROSS-CLAIMANTS’ BASIS FOR SEEKING THE SEPARATE QUESTIONS

30. The cross-claimants gave particulars of the decisions of the Moscow Court and Supreme Court to support their pleading that, after VAO-SPI came into existence, Sojuzplodoimport continued to exist and had neither been transformed into, or been succeeded by, VAO-SPI. The cross-claimants have not pleaded any case in chief or in reply asserting the facts in the Russian Judgments or ECHR decision on which they rely. However, the cross-claimants attached to their written submissions to this Full Court a draft of an example of an amended reply that attempted to plead these matters.
31. Spirits pleaded in its defence (filed on 16 September 2005) that the Appeal Court’s decision was final and binding under Russian law because no appeal had been filed from that decision. It also alleged, and the cross-claimants’ reply (filed on 12 August 2005) admitted, that its ECHR application was then pending. The reply admitted that the Appeal Court had set aside part of the Moscow Court’s decision and then pleaded, economically, that the Supreme Court “issued a decision unfavourable to VAO-SPI”. No attention was given by the parties to the lack of any pleading of these issues when the matter was argued before the primary judge and he did not address it.
32. The cross-claimants contend that the consequence of the decisions of the Moscow Court, the Supreme Court and the subsequent decision of the ECHR is to estop Spirits from relying on the paragraphs in its defence that pleaded that Sojuzplodoimport had ceased to exist, its rights and obligations had been transferred to VAO-SPI on about 20 January 1992 and VAO-SPI then became the legal successor of Sojuzplodoimport. Those contentions were the foundation of questions (a) and (b) in the orders made by the primary judge.
33. The cross-claimants also contend for two other consequences of the Russian Judgments, reflected in the other two questions in the orders made by his Honour, namely, that Spirits was precluded from asserting or relying upon its defences that:
    • because the Government of the Russian Federation had represented between January 1992 and 2000 that Sojuzplodoimport had been transformed into AVO-SPI, and that Spirits had relied on those representations in acquiring the trade marks in issue (see [21]-[22] above), the cross-claimants were estopped from relying on their pleading to the contrary: question (c)
    • the Government of the Russian Federation and the cross-claimants were not entitled to relief because of their laches, acquiescence and delay (see [23] above): question (d).

THE PRIMARY JUDGE’S DECISION

34. The primary judge structured his judgment by setting out the relevant passages in the cross-claim and defence, and summarising in detail the opposing submissions of the parties. He then identified in paragraph [95], which is quoted in full by Buchanan J at [133] in his judgment, his salient reasons for ordering the hearing of the separate questions, including by reference to features of the cross-claimants’ submissions. The primary judge concluded that it was in the interests of the efficient case management of the proceedings that he should order, as the cross-claimants had sought, that the four questions be heard separately and before the other issues in the proceedings pursuant to O 29 r 2 of the Federal Court Rules. The order was:

“1. The following questions be determined as separate questions before the trial in the proceedings (defined terms having the same meaning as in the Further Amended Cross-Claim, unless otherwise indicated):

(a) Is Spirits International precluded, by reason of the judgments particularised in paragraphs 14(d)(i) and (ii) of the Further Amended Cross-Claim (‘the Russian Judgments’) from asserting or relying upon any matters relating to the alleged succession of VAO-SPI to Sojuzplodoimport in or about January 1992, namely, any of the matters pleaded in paragraphs 4(h), 5(c)(i), (iii) and (vi), 13(b), 14, 23, 24, 34 and 35 of the First Cross-Respondent’s Defence to the Further Amended Cross-Claim (‘the Spirits International Defence’)?

(b) Is Spirits International precluded, by reason of the judgment of the European Court of Human Rights dated 7 June 2007 in the case of OAO Plodovaya Kompaniya v Russia, Application No. 1641/02, from asserting or relying upon any matters relating to the correctness, validity or finality of the Russian Judgments, namely, the matters pleaded in paragraphs 5(c)(iii), (vi), (viii), (ix) and (x) of the Spirits International Defence?

(c) Is Spirits International precluded, by reason of the Russian Judgments, from asserting or relying upon any matters relating to any alleged representation made by the Government of the Russian Federation as to the succession of VAO-SPI to Sojuzplodoimport, namely, the matters pleaded in paragraph 66, and paragraph 68 to the extent particularised by the second particular to that paragraph, of the Spirits International Defence?

(d) Is Spirits International precluded, by reason of the Russian Judgments, from asserting or relying upon any matters relating to any alleged delay by the Government of the Russian Federation in challenging the validity of the succession of VAO-SPI to Sojuzplodoimport, namely, the matters pleaded in paragraph 67, and 68 to the extent particularised by the first particular to that paragraph, of the Spirits International Defence?”

LEAVE TO APPEAL

35. The primary judge’s decision was interlocutory and dealt with a matter of practice and procedure. Particular caution is exercised by appellate courts in reviewing decisions of primary judges pertaining to practice and procedure. There are no rigid or exhaustive criteria on which an appellate court may interfere in such matters, although, generally, injustice flowing from the order appealed against will be relevant: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson and Brennan JJ applying the well-known dictum of Jordan CJ in In re the Will of F.B. Gilbert (dec) (1946) 46 SR(NSW) 318 at 323. In Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 at 231 [29] McHugh, Kirby and Callinan JJ said that the principles that govern the grant of leave to appeal from an interlocutory order are well established. The applicant for leave must establish that the decision in question is attended by sufficient doubt to warrant the grant of leave and, that substantial injustice will result from a refusal of leave to appeal.
36. Spirits raised the following grounds on which it sought to base its appeal, namely, that the primary judge exercised his discretion on a wrong basis because he:

(1) proceeded solely or primarily, on the hypothesis that one or more of the separate questions would be answered in favour of the cross-claimants;

(2) assessed, first, the prospects that each question would be answered in favour of the cross-claimants and then proceeded on the basis that those prospects were sufficiently good that the prospects of a contrary answer could be ignored;

(3) failed to appropriately consider the consequences for the proceedings if any of the questions was answered in favour of Spirits;

(4) found that use of a separate question to determine whether an issue estoppel arises out of a foreign judgment was “all the more compelling” than in the case of an Australian judgment;

(5) failed to take into account, first, the principle that separate questions comprising mixed questions of fact and law should only be answered with reference to facts clearly found or agreed and, secondly, to apply that principle to find that, because the cross-claimants had not pleaded material facts alleged to give rise to the issue estoppel, it was not appropriate to order the hearing of separate questions.

37. Ground (5) above was not based on any argument that Spirits had put to his Honour. The cross-claimants contended that Spirits should not be allowed to raise it on appeal relying on Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7. This was because Spirits should be bound by the way it had conducted its case on the motion below.
38. Leave to appeal should be granted because, for the reasons below, the decision of the primary judge is attended by sufficient doubt and serious injustice would result from a refusal of leave.

PRINCIPLES APPLICABLE TO THE DISCRETION TO ORDER A SEPARATE TRIAL

39. Separate trials have the attraction of potentially eliminating an issue or issues from the principal proceedings in a way that conduces to their efficient and speedy final determination. But experience over a very long time has shown that that attraction can be a trap into which unwary parties and Courts can fall. Often a separate trial causes the very delay, additional expense and uncertainty of outcome that it was intended to avoid, as Newnes JA, with whom Buss JA agreed, said in Landsdale Pty Ltd v Moore [2009] WASCA 176 at [20].
40. A separate trial can be a procedure that is a valuable tool in reducing the time and expense of litigation. However, it is essential that any separation of issues occur only when all of the issues in the litigation are defined with clarity. Unless that is done, it will be difficult to evaluate the full repercussions of such a decision on the proceedings as a whole. Moreover, once a separate issue has been ordered, heard, decided and any appeals finalised, often the ingenuity of lawyers will identify some further permutation that was not covered by the separate issue.
41. In Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at 55 [168]- [170], Kirby and Callinan JJ (with whom on this issue Gaudron J agreed at 18 [52]) observed in their dissenting judgment that the attractions of trials of issues rather than of cases in their totality are often more chimerical than real. They noted that common experience demonstrated that savings in time and expense were often illusory, particularly when the separate trial overlaps with the parties’ preparation for other factual matters. They said that a party might feel aggrieved if their case were knocked out on the trial of a preliminary or single issue, and might suspect that the abbreviated course had been adopted to meet the Court’s, rather than the parties’, interests. And, they noted that there was a potential for further appeals, particularly if the separate issue, having been decided one way initially, were reversed on appeal and the matter sent back for a full trial of the whole of the issues.
42. In AWB Limited v Cole [No 2] [2006] FCA 913; (2006) 233 ALR 453 at 460-463 [26]- [40], Young J reviewed the authorities from which (without reciting the authorities to which his Honour referred) the following principles can be distilled:

(1) As a general rule the starting point is that all issues of fact and law should be determined at the one time.

(2) A party seeking the determination of separate questions must satisfy the Court that it is “just and convenient” for the order to be made. The order must be made on concrete facts, either established or agreed, for the purpose of quelling a controversy between the parties so as to produce a conclusive or final judicial decision on the issue, which is of a real, not hypothetical, importance to the determination of the controversy.

(3) There are special problems where the separate issue involves a mixed question of fact and law, although it may still be able to be decided as a separate issue. However, care must be taken in precisely formulating the question and specifying the facts upon which it is to be decided.

(4) The Court must have all relevant matters before it as a precondition of it being asked to exercise its discretion if the separate question involves the grant or refusal of declaratory relief.

(5) It may still be appropriate to determine a separate question even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided or if the decision will obviate unnecessary and expensive hearings of other questions.

(6) Generally speaking an issue will not be appropriate for separate determination if it is simply one of two or more alternative ways in which an applicant or plaintiff frames its case and its determination would leave other significant issues unresolved.

(7) It is relevant to consider whether:

• the separate questions will contribute to the saving of time and cost by substantially narrowing the issues for trial or even lead to the disposal of the proceedings;
• they will contribute to the settlement of the proceedings;
• they will give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of the trial;
• there will be any significant overlap between the evidence adduced on the hearing of the separate question and a trial;
• the questions will prolong, rather than shorten, the proceedings: see too City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784; (2009) 73 ACSR 86 at 95-96 [26]- [27] per myself.
  

43. It is the duty of the parties and the Court to find the most efficient and sensible way of getting to the heart of the controversy as quickly as possible to produce a just outcome. As Newnes JA said in Landsdale [2009] WASCA 176 at [21]:

“[21] The starting point is that ordinarily the trial of an action should include all issues arising in the action. The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues, bearing in mind the uncertainties inherent in litigation, and that, once embarked upon, it is a course from which it may be difficult and even impossible to retreat. It should only be embarked upon where its utility, economy and fairness to the parties is clearly made out: Tepko (206 CLR at 55 [170]).”

44. The primary judge had regard to these principles. His Honour also noted that a number of authorities had ordered separate questions in relation to issue estoppel and related doctrines. He said that the inquiry in such cases was confined to the effect of the previous judgment rather than addressing any evidence of the underlying facts. The primary judge said:

“Indeed, it would usually subvert much of the benefit of those doctrines to delay their consideration until trial, as the parties would be put to the cost of litigating the previously decided issues in the meantime. Where those matters involve the determination and application of foreign law, and they have been decided in the foreign jurisdiction by courts at the highest level, that purpose is all the more compelling.” (emphasis added)

BACKGROUND – SPIRITS’ PROPOSED COLLATERAL ATTACK ON THE RUSSIAN JUDGMENTS

45. This last quoted passage founded the fourth ground of appeal. However, what his Honour said there was not an error. It was an uncontroversial and, indeed, commonsense observation. If the highest court of a foreign nation had decided an issue of its law that has also arisen in the forum, in general, that would provide a compelling reason to ascertain, as soon as practicable, whether the effect in Australian law of that decision was to create an issue estoppel or res judicata or a related consequence. The primary judge did not err in taking that factor into account.
46. More importantly, Spirits contended that it would mount a collateral attack on the Russian Judgments as part of its case on any separate hearing. That attack would assert that those judgments would not be recognised in Australia because they involved a denial of natural justice, because of the actual or apparent bias in the Supreme Court in favour of the policy of the Government of the Russian Federation. His Honour’s summary of Spirits’ submissions recorded that Boele v Norsemeter Holding A/S [2002] NSWCA 363 [24] was cited for the proposition that it is a defence to an action on a foreign judgment that the defendant was not afforded natural justice in the foreign proceedings.
47. Spirits argued that its evidence for that attack would be likely to overlap with evidence that would also be given in any event at the trial. Spirits argued that the question of bias of the Supreme Court would involve a complex examination of, first, the relationship between the Russian Courts and Government, secondly, the creation of each cross-claimant by the Government of the Russian Federation and its predecessors, thirdly, the distribution of the assets of the USSR on its dissolution, fourthly, the alleged attempt, after years of acquiescence, by the Government in 1999 to 2002 to wrest back assets that its predecessor had privatised, and finally, the alleged acquiescence of the Russian Courts in the latter alleged activity of the Government.
48. The cross-claimants argued that none of the above matters had been pleaded by Spirits. However, that, no doubt, was because the cross-claimants had not pleaded, as material facts, the effect of the Russian Judgments. The cross-claimants also argued that the allegation of systemic bias of the Russian Courts was difficult to follow given that the Appeal Court had decided in favour of VAO-SPI. The cross-claimants asserted that it was a “novel” assertion that bias formed a defence against the enforceability of a foreign judgment.
49. The primary judge set out the competing arguments in his reasons and expressed his “overall preference” for those of the cross-claimants.

CONSIDERATION – COLLATERAL ATTACK

50. In Boele [2002] NSWCA 363 at [24] Giles JA, with whom Handley and Beazley JJA agreed, approved the statement in an earlier edition that now appears in Davies, Bell and Brereton : Nygh’s Conflict of Laws in Australia (8th ed: Butterworths 2010) at [40.79] that the requirement of natural justice in the procedure of a foreign court in this context are, first, that each party must have had the opportunity of presenting his or her case before an impartial tribunal, and, secondly, each party must have been given due notice of the proceedings. Spencer Bower and Handley: Res Judicata (4th ed: Lexis Nexis 2009) at [4.32] and [17.27] make the same point.
51. The cross-claimants contended that this requirement or principle related to “a quite different context”, being an action to enforce the foreign judgment at common law. It is not necessary to decide if that curious distinction is correct. Prima facie it seems odd that, for example, an issue estoppel arising from a foreign judgment would be recognised in proceedings here even though that judgment had been given without, say, the defendant being served with, or aware of, the foreign proceedings, yet an action here to enforce such a judgment would not be enforced here because of the same denial of natural justice. And, it would seem odder still if those inconsistent outcomes could occur where the foreign court was actually biased against the person claimed to be subject to an issue estoppel arising from its decision.
52. As Lindley MR said in Pemberton v Hughes [1899] 1 Ch 781 at 790-791, if the foreign court was a court of competent jurisdiction, an English court would never inquire whether the jurisdiction had been properly or improperly exercised “... provided that no substantial injustice, according to English notions, has been committed”: see too Adams v Cape Industries plc [1990] Ch 433 at 563-564 per Slade, Mustill and Ralph Gibson LJJ; and per Scott J at 497-498 with the cases he cited. The width of that approach has attracted criticism: cf Nygh’s Conflicts of Laws in Australia (8th ed) at [40.85]. It is not necessary to express a final view on this because the issue will be one for the primary judge (see too Spencer Bower and Handley; op cit at [4.32]).
53. The learned authors of Spencer Bower and Handley: Res Judicata (4th ed: Lexis Nexis 2009) at [17.08]-[17.12], say that fraud, including certain forms of judicial misconduct, defeats a prima facie case of estoppel based on a foreign judgment and that such a fraud “... may be a breach of the rule that no one shall be judge in their own cause (Price v Dewhurst [1837] EngR 717; (1837) 8 Sim 279; affirmed [1838] EngR 956; (1838) 4 My & Cr 76; [17.08 n 3] Cammell v Sewell [1858] EngR 919; (1858) 3 H&N 617, 646)”. That is consistent with the sense in which the term “fraud” is understood in Australian public law, namely, the exercise of a statutory power in bad faith, without any requirement for moral obliquity: SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189 at 194-195 [11]-[13] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ.
54. A judicial decision arrived at by an Australian Court that is actually or apparently biased will be set aside on appeal: see e.g. British American Tobacco Australia Services Limited v Laurie (2011) 273 ALR 429; [2011] HCA 2. It appears to be an open question whether any rule of private international law would compel an Australian Court to recognise and give effect to an issue estoppel or res judicata based on a decision of a foreign court that was actually or apparently biased.
55. The bias argument raised by Spirits was challenged by the cross-claimants as difficult to raise on the basis that it had not been pleaded. However, that difficulty was because the cross-claimants had not pleaded the effect of the Russian Judgments or the nature and extent of the estoppel or related consequence on which they rely. Spirits’ claim of bias ought to be pleaded. If such a pleading were to disclose an arguable case, it may or may not be capable of resolution as a separate question.
56. These matters demonstrated that it was not a ripe time for the primary judge to order the separate questions. Indeed, each of the questions uses the word “precluded” without identifying whether that is because of an unidentified issue estoppel or some other equally unidentified preclusive reason that is supposed to have been established by the Russian Judgments.

WHY QUESTIONS (A) AND (B) WERE ORDERED

57. In essence, the cross-claimants argued that Spirits was estopped by the Russian Judgments from relying on its claim that VAO-SPI had succeeded to the rights of Sojuzplodoimport. One reason they put was because Spirits was a privy of VAO-SPI. They also argued that the Russian Judgments operated in rem.
58. His Honour saw obvious utility in dealing with the separate questions in (a) and (b) whether the Russian Judgments had the effect of precluding Spirits from asserting, as facts, that:
    • VAO-SPI had become the legal successor of Sojuzplodoimport in about January 1992;
    • Sojuzplodoimport had ceased then to exist as a separate legal entity;
    • all of Sojuzplodoimport’s assets and liabilities had vested in VAO-SPI by operation of law;
    • the Appeal Court’s judgment was final and binding;
    • the procedure of seeking review of the Appeal Court’s judgment by the Supreme Court by way of “supervision” or “protest” used by the Deputy Prosecutor General was a violation of the due process requirements of Art 6(1) of the European Convention;
    • the Russian Judgments were relevantly valid, correct and final because of the decision of the ECHR.

CONSIDERATION – QUESTION (A)

59. Ascertaining the precise subject matter of an issue estoppel and its legal consequences for the rights of the parties can raise very difficult questions. These were explained with his customary lucidity by Dixon J in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 531-533 in the following passage:

“The principle upon which the parties are precluded from denying to the clause an operation and effect sufficient to catch the undisposed of share of income is called estoppel by record or issue-estoppel.

A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.

Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J. in R. v. Inhabitants of the Township of Hartington Middle Quarter ((1855) [1855] EngR 264; 4 E. & B. 780 at p. 794[1855] EngR 264; , [119 E.R. 288 at p. 293]), the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous.

In the phraseology of Lord Shaw, "a fact fundamental to the decision arrived at" in the former proceedings and "the legal quality of the fact" must be taken as finally and conclusively established (Hoystead v. Commissioner of Taxation [1926] A.C. 155). But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation.

The difficulty in the actual application of these conceptions is to distinguish the matters fundamental or cardinal to the prior decision or judgment, decree or order or necessarily involved in it as its legal justification or foundation from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment, decree or order. In the present case the decretal order refers in terms to the clause the meaning and effect of which is now in question.” (emphasis added)

60. A central issue raised by Spirits’ defence is the true legal effect of the creation of VAO-SPI in January 1992 and whether it succeeded to Sojuzplodoimport or not. Prima facie, if the Russian Judgments have decided that Sojuzplodoimport has continued to exist and was not succeeded by VAO-SPI, and that result created an issue estoppel or res judicata binding on Spirits, a not insubstantial part of the proceedings will be resolved. The ECHR decision appears to state that the Russian Judgments did not decide anything about Sojuzplodoimport’s trade marks.
61. However, Spirits’ defence does not plead any basis on which VAO-SPI had a legal right to assign ownership in the trade marks, if the true position in January 1992 was that it had not succeeded Sojuzplodoimport and all the latter’s assets had not vested in VAO-SPI. Spirits must plead the facts, if any, that, since the decision of the ECHR, now underlie its claim that the Appeal Court decision is operative in the law of the Russian Federation. Then, the cross-claimants can plead, with more precision than in their draft, a proper reply identifying the precise matters that they say were established by the decisions of the Supreme Court and the Moscow Court, and if relevant, the ECHR. After this, Spirits will have to add a rejoinder to allege what, if any, material facts it must prove to make good, first, its assertion that the Deputy Prosecutor General was not a privy of Sojuzplodoimport and, secondly, any collateral attack on the Russian Judgments or Courts from which the cross-claimants plead estoppels arose in their reply: cf Spencer Bower and Handley : Res Judicata (4th ed Lexis Nexis 2009) at [18.09].
62. This re-pleading should be able to occur quickly given that each party seems to know its own case well enough. The parties and his Honour will be able to assess whether either or both of the pleaded and fully particularised amended defences of want of privity between the Deputy Prosecutor General and Sojuzplodoimport and collateral attack on the Russian Judgments, that Spirits has foreshadowed, have a sufficient basis for it or them to be an issue or issues that should go to trial. If Spirits does have such a basis, then consideration will need to be given to the appropriate procedure to resolve the controversy in accordance with the overarching purpose of the Court’s civil procedure rules: see Pt VB of the Federal Court of Australia Act 1976 (Cth). Additionally, in this event, it will be necessary to consider if there is any substance in Spirits’ contention of overlap between the evidence of expert witnesses on the effect of the decisions of the Russian Courts (which will also deal with the issue of privity between the Deputy Prosecutor General and Sojuzplodoimport), the legal effect of the documents created between 1990 and 1992 relating to Sojuzplodoimport’s relationship, if any, with VAO-SPI (including its formation in January 1992) and Spirits’ foreshadowed collateral attack.
63. Importantly, the primary judge only expressed an overall preference for the cross-claimants’ submissions and did not deal expressly with Spirits’ collateral attack argument in reaching his conclusion that he would order separate questions. For the reasons given above in relation to the collateral attack argument, it is not possible to assess whether the separation of issues will have utility or be appropriate unless all the issues are properly and fully identified by pleadings.
64. Spirits also argued that there would be some evidentiary overlap between the matters addressed on the separate questions and its defence that any relief granted to the cross-claimants would amount to the confiscation or expropriation of Spirits’ personal property located here for the benefit of the Government of the Russian Federation. This argument is difficult to follow. If the Russian Judgments create any estoppel of the kinds claimed by the cross-claimants, and all of Spirit’s other defences fail, the only consequence of the Court granting relief to the cross-claimants would appear to be that of restoring to them what is rightfully theirs. With certain limitations principally concerned with its non-commercial activities as a sovereign, such as its penal, revenue or public laws, a foreign State is as entitled to recover its ordinary personal property in another jurisdiction as any other person: cf Attorney-General (United Kingdom) v Heinemann Publishers Pty Ltd [1988] HCA 25; (1988) 165 CLR 30 at 40 per Mason CJ, Wilson, Deane, Dawson, Toohey and Gaudron JJ; see also the Foreign States Immunities Act 1985 (Cth).
65. The cross-claimants’ case is that valid decisions of the Moscow and Supreme Courts have held that the documents on which Spirits and its predecessors in title relied for their dealings with the trade marks did not divest Sojuzplodoimport of its ownership of those rights. If that contention is correct, no basis for finding any confiscation or expropriation can arise, as his Honour observed. On the other hand, if Spirits’ collateral attack were made good, but the documents, on their true construction, had not transferred the rights in the trade marks to, or vested them in, VAO-SPI, then Spirits will also not suffer confiscation or expropriation.

CONSIDERATION – QUESTION (B)

66. It is also not appropriate to deal with question (b) at the present time. The pleadings do not disclose what either side’s case under the European Convention is following the decision of the ECHR. The pleadings were drafted in 2005, two years before the ECHR decision. Spirits has not pleaded the material facts that it must establish to make good its pleading that the Supreme Court’s decision did not set aside the judgment of the Appeal Court. Such a pleading, and any answer that the cross-claimants may plead to it, are essential in order to understand what the issues in this dispute are and, then, to examine how the Russian Judgments, the Appeal Court’s and the ECHR’s judgments bear on the resolution of those issues. Nor have the cross-claimants pleaded what they now seek to derive from the decision of the ECHR.
67. No doubt the amended pleadings that are necessary can, and should, be produced promptly and in time to formulate, if it is then appropriate, an issue or issues that his Honour, quite sensibly, sought to resolve by fixing the hearing of the questions for later this year. There is no reason why his Honour’s objective should not be met on this point, if a separate hearing would be appropriate once a properly pleaded controversy was exposed that warranted this course.
68. Prima facie, however, it is not likely that the general topic raised in question (b) will involve any time at a hearing. VAO-SPI lost before the ECHR on a point on which Spirits, in its 2005 defence, relied. It is difficult to see how Spirits’ current defence relating to the ECHR can remain as part of the proceeding. And since VAO-SPI was a party to the proceedings in the Russian Courts and the ECHR and it is a predecessor in title to Spirits, it is difficult to see how Spirits can assert some right of VAO-SPI under the European Convention that VAO-SPI either did not agitate or lost before the ECHR.

WHY QUESTIONS (C) AND (D) WERE ORDERED

69. The primary judge accepted the cross-claimants’ arguments that questions (c) and (d) had utility in relation to the issues of laches, delay, representations by the Russian Government and estoppel. His Honour noted that Spirits had argued that Australian law would apply to its equitable defences concerning representations and delay that had occurred in Russia. He noted Spirits’ case as being that such conduct could prevent the cross-claimants asserting under Russian law, and as a matter of fact, that VAO-SPI was not the legal successor to Sojuzplodoimport, notwithstanding that those matters did not prevent a Russian court from finding that VAO-SPI was not the legal successor of Sojuzplodoimport. His Honour accepted the cross-claimants’ argument that, on the principles set out by Spigelman CJ, with whom McColl and Young JJA agreed, in Murakami v Wiryadi [2010] NSWCA 7; (2010) 268 ALR 377 at 402-406 [128]- [149], “... either Russian law would apply in such circumstances or, to the extent that Australian law applies, it would do no more than ‘enforce the expectations created under’ Russian law”.

CONSIDERATION – QUESTIONS (C) AND (D)

70. It is difficult to understand the basis of the cross-claimants’ argument that his Honour accepted. First, the Russian Judgments do not appear to deal with the issues of laches, delay, representations or estoppel as defences on which Spirits can rely. Secondly, the cross-claimants have not pleaded any basis to suggest that Russian law or the Russian Judgments have any such operation. Thirdly, on the pleadings, Spirits was a third party that was uninvolved in any events in the Russian Federation at any time. It dealt with a person, VAO-SPI, or its successor in title, Diageo. Spirits contended that VAO-SPI had been allowed by the Government of the Russian Federation to deal with the trade marks as their owner in the period between 1992 and 2000. Spirits’ case is that the Government failed for eight years to assert the rights that the cross-claimants contend always existed under the law of Russia, and that this allowed VAO-SPI to create, or appear to deal with, legal rights to the trade marks in Australia.
71. The assumption in question (c) is that the Russian Judgments create some unpleaded conclusory result that prevents Spirits, which is a stranger (or, if you will, successor to VAO-SPI’s title), from relying on these defences under Australian law to resist the cross-claimants’ attempt to divest Spirits of the right to registration of the trade marks here. The defences of laches, delay, representation and estoppel operate in the context of the cross-claimants’ actions and inactions in asserting their claimed rights in Australia before and, to some extent, after the Russian Judgments were given. The cross-claimants have not pleaded what in the Russian Judgments prevents Spirits from asserting that, if Sojuzplodoimport was the true owner of the Australian marks, Sojuzplodoimport’s own conduct should be found, on these legal and equitable bases, to defeat its claim.
72. Spirits’ defences of laches, delay, representations made to it and estoppel are independent of Russian law, and, indeed, assume that Russian law would not recognise them in the courts of that country. But the Russian Judgments do not appear to deal with the circumstances in which Spirits claims to have acquired ownership of, or an interest in, the trade marks under Australian law that the cross-claimants now seek to avoid. That is, Spirits’ defences are premised on the fact that the effect of, or the factual position arrived at, in the Russian Judgments for which the cross-claimants contend, namely, that Sojuzplodoimport remained in existence and retained ownership of its assets after VAO-SPI was created, will be accepted by Australian law. But, those defences then assert that Spirits dealt with a Russian corporate person, VAO-SPI that appeared to have the rights to the trade marks here. Spirits’ case is that it did so because the representations or inaction of the cross-claimants and the Government of the Russian Federation were the source of the rights it obtained here.
73. The cross-claimants’ argument that Russian law, or if Australian law applies, then the expectations created by Russian law, would be applied to determine Spirits’ rights to resist an order removing it as registered owner of the marks on legal and equitable grounds, is misconceived. In Murakami 268 ALR at 205 [146]-[148] Spigelman CJ said that there was no clear authority to guide the Court in determining a claim for an equitable interest under Australian law in respect of foreign property or a contract the proper law of which is foreign. He observed that for choice of law purposes, disputes, such as in that case over matrimonial property, may well fall into a separate category, and then said (268 ALR at 406 [148]):

“In determining a claim for an equitable interest under Australian law, this court will have regard to, and generally enforce, a relevant foreign element in the dispute. On the above analysis that element is a contract which gave rise to obligations which, the pleadings suggest, were not performed in a manner said to justify the intervention of equity. There will, of course, be circumstances in which equity will not enforce a foreign contract. No such issue has been raised in this case.”

74. Subsequently, in Nicholls v Michael Wilson and Partners Limited [2010] NSWCA 222; (2010) 243 FLR 177 at [342] Lindgren AJA, with whom Basten JA at [111] and Young JA at [116] agreed on this issue , said:

“[342] In so far as MWP’s claims raised questions of the existence and nature of fiduciary obligations and the remedies available for breach of them, Murakami v Wiryadi [2010] NSWCA 7; (2010) 268 ALR 377 is authority for the proposition that those questions were to be resolved by the application of the law of New South Wales.

[343] In Murakami, Spigelman CJ, with whom McColl JA and Young JA agreed, considered (at [131]) that the position with respect to fiduciary claims was as stated in the joint judgment of the Full Federal Court in Paramasivam v Flynn [1998] FCA 1711; (1998) 90 FCR 489. The Full Court’s starting point was a recognition that where a court of equity had been prepared to assume personal jurisdiction over parties, it had applied its own principles, not foreign law, to determine whether a personal equity existed between them. The Full Court recognised exceptions, such as the exception that might arise where the source of the fiduciary obligation was a contract governed by law other than the law of the forum (at 503B). That is not the present case for reasons mentioned earlier. The Full Court also acknowledged (at 503F) that:

‘... where the circumstances giving rise to the asserted duty or the impugned conduct (or some of it) occurred outside the jurisdiction, the attitude of the law of the place where the circumstances arose or the conduct was undertaken is likely to be an important aspect of the factual circumstances by reference to which the Court determines whether a fiduciary relationship existed and, if so, the scope and content of the duties to which it gave rise.’

[344] In Murakami, Spigelman CJ discussed “Choice of Law and Equitable Claims” at [128]–[149]. The Chief Justice drew attention to a different “choice of law” starting point supported by Professor T M Yeo in his book, Choice of Law for Equitable Doctrines (OUP, 2004) esp at [Intr 010–013], [Intr 020–021], [1.01]–[1.13], [2.10]–[2.17], and [8.17]. However, the Chief Justice also directed attention to the Foreword to that book, in which Justice Gummow wrote (at vi) that the question whether an equity exists in the plaintiff founded on the precepts and principles that inform the defendant’s conscience is not to be determined by a consideration of foreign law, despite connections with foreign legal systems.

[345] In Rickshaw Investments Ltd v Baron von Uexhell [2007] 3 LRC 223, the Court of Appeal of the Supreme Court of Singapore, while agreeing with Professor Yeo that the “lex fori only” approach should not be maintained, accepted (at [81]) that in a case where equitable duties arose “from a factual matrix where the legal foundation is premised on an independent established category such as contract or tort, the appropriate principle in so far as the choice of law is concerned ought to be centred on the established category concerned.”

[346] According to the primary judge’s finding of fact the proper law of the two contracts of employment was the law of New South Wales. Consistently with that finding of fact there was no occasion for an exception to be made to the lex fori only principle.” (emphasis added)

75. Here, it will be necessary to receive evidence about whether the alleged representations by the Russian Government were made to Spirits and the circumstances and places in which Spirits claims to have dealt with its predecessors in title to the Australian trade marks. The cross-claimants failed to explain how the Russian Judgments could prevent Spirits invoking the equitable defences of laches or delay. Spirits’ equitable defences invoke the principle that because of their conduct or inaction it would be unconscientious for the cross-claimants, and the Russian Government through them, to assert their claimed legal rights in Australia. That is because, Spirits says, they stood by for a long time before asserting that VAO-SPI had usurped those rights and only applied to this Court in 2004, under the 1995 Act, to set aside Spirits’ registration as owner of the trade marks. That is, those equitable defences have nothing to do with the operation of Russian law or the effect of the Russian Judgments.
76. Even if the evidence on the separate questions established that the Russian Judgments had the legal effect, binding on VAO-SPI, that the Government of the Russian Federation’s delay in taking the Russian proceedings did not avail VAO-SPI for any legal purpose, it is difficult to see how it is capable of binding Spirits in relation to its rights here and relieving the cross-claimants of the consequences that equity would visit on their conduct. First, Spirits was not a party to the Russian proceedings. Secondly, the defence here asserts laches or delay of the cross-claimants and Government of the Russian Federation in asserting their rights in Australia. That delay or laches in Australia is distinct from any period of overlapping delay that may have been an issue in the Russian proceedings. Delay by a person in exercising rights in one forum can have different consequences from the same or further delay in exercising the same or related rights in another forum. For example, suppose that a foreign judgment determined that a claimant remained entitled to sue in that forum despite its delay in asserting its right. Ordinarily, if the claimant then commenced proceedings against a third party in Australia, the foreign judgment would not have any relevance to the third party’s right to invoke a defence under Australian law that the local proceedings here against were it statute barred. There is nothing apparent on the face of the Russian Judgments to suggest that Spirits cannot rely here on the defences of laches, acquiescence or delay. And, if those judgments do entail such a consequence, it ought to be pleaded coherently so that the Court and the parties will be aware of that issue.
77. The cross-claimants did not articulate any basis on which the Russian Judgments could preclude Spirits from asserting its defences of laches and delay. Even if they had any factual basis for such an argument, that basis must necessarily be considered in the context of Spirits’ case based on Australian law, arising out of facts that happened after the Russian judgments. It is not practical or desirable to separate such issues from the trial.
78. Likewise, Spirits’ defences based on representations and estoppel are directed to representations allegedly made by the cross-claimants and the Government of the Russian Federation about the position of VAO-SPI in relation to the ownership of the trade marks and its rights to create interests in them, including outside that country. In simple terms, Spirits says that if the Government of the Russian Federation or Sojuzplodoimport were the true owner of the marks, by its conduct in relation to Spirits, it caused Spirits to act to its detriment in acquiring registered ownership of the Australian trade marks. Spirits’ defence pleads that the representations were made to VAO-SPI, ZAO and to Spirits.
79. It is not necessary to express any view here about any effect the Russian Judgments may have in respect of representations made to VAO-SPI as a party to those decisions, or to ZAO. This is because Spirits argues that the consequence under Australian law of representations made to it by the Government of the Russian Federation, or Sojuzplodoimport, precludes them from relying on the true position because that conduct induced Spirits to act as it did in Australia. The Russian Judgments do not appear to deal with this issue at all. Once again, there is no pleaded allegation of what those judgments did in this respect or how they could preclude these defences. Even if the Russian Judgments had referred to VAO-SPI’s lack of any right to deal with the trade marks in Australia, Spirits was not a party to those decisions and it is not apparent why it would be bound by them on these different issues. Rather, these defences strike at the cross-claimants’ claim to relief under the 1995 Act. That claim seeks to remove the status of registered owner of the Australian trade marks from Spirits. The Russian Judgments do not appear to deal with the trade marks or Spirits or how it acquired its interest in the Australian trade marks.
80. No pleaded case identified, even in the draft amended reply, how the Russian Judgments could arguably prevent Spirits from raising its defences based on laches, delay, representations and estoppel. His Honour adopted the cross-claimants’ argument that he did not need to reach a concluded view as to whether Russian or Australian law applied to those defences. He said that the separate determination of questions (c) and (d) in favour of the cross-claimants “... would relieve the Court once and for all of at least a substantial component of such a case”. On the material presently available, there is no real likelihood that either question (c) or (d) would be answered “yes”. It follows that his Honour erred in ordering questions (c) and (d), because these have no real utility in resolving any substantive issue in the proceedings.

CONCLUSION

81. For the reasons given above, the questions were not appropriate in light of the need for the parties to replead their cases. Spirits did not advert to the state of the pleadings before the primary judge, in contrast to its arguments put on the appeal. However, as the primary judge recorded, the cross-claimants did raise the pleading, or lack of pleading, of Spirits’ defence in relation to the ECHR issues and the collateral attack. But by that time, it was the cross-claimants’ case that sought to call in aid the ECHR decision in some unpleaded way.
82. In any event, the lack of definition in the pleadings of the issues relating to the four foreign judgments in this complex controversy is calculated to cause the separate questions to miscarry. The questions were tied to paragraphs in Spirits’ defence.
83. If separate questions are to settle once for all a controversy in the litigation, they must be posed on clearly identified facts that are either established before or at the hearing of the questions or agreed: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 359 [56] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. Thus, question (b) refers to the ECHR decision, when no pleadings identify that decision or any material fact that it established because it was decided nearly two years after the last pleading was filed. The inchoate state of the present pleadings does not define the controversy sufficiently to identify what the separate questions, once decided, would determine or what would still be open to be litigated at the trial, such as the collateral attack. Nor do questions (c) and (d) appear to have any utility. If the present separate questions are allowed to remain, there are likely to be further significant delays in a final resolution of the proceedings and added expense arising from dealing with them.
84. Moreover, there are likely to be one or two applications for leave to appeal (depending on whether one or both parties are unsuccessful) and possible appeals in respect of any determination of a question that results in a conclusive answer against one party’s interests. An appellate court would have to grapple with the same pleading issues that are referred to in these reasons.
85. Because it may be possible, once proper pleadings have been filed, to identify separate questions as to the effect and status of the Russian Judgments (including in respect of any collateral attack), the dates that the primary judge had set aside in October this year to hear questions (a)-(d), may still be able to be used for such a purpose. His Honour understandably sought a means to manage the proceedings efficiently. However, the current orders are likely to impede rather than facilitate the future course of this litigation because of the inchoate state of the pleadings and the apparently much wider, and not defined, forensic battleground that the parties appear to have chosen: cf Bass 198 CLR at 359 [111].
86. In my opinion, leave to appeal should be granted, the appeal allowed, the order for hearing the separate questions set aside and orders should be made for the parties to plead their cases promptly and properly. Since Spirits failed to argue the pleading issues below, and it may still be appropriate to order separate questions, the costs of the application for leave to appeal and the appeal should be costs in the cause below
    

I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate:

Dated: 20 May 2011

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1686 of 2010

BETWEEN:	SPIRITS INTERNATIONAL B.V. (REGISTERED IN THE NETHERLANDS) Applicant
AND:	FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT First Respondent FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO) Second Respondent

JUDGES:	RARES, BUCHANAN AND FOSTER JJ
DATE:	20 MAY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BUCHANAN J:

Introduction

87. The appellant (“Spirits”) is the registered owner of a number of Australian trade marks, all connected in one way or another with Russian vodka. Spirits claims to have been entitled to such registration through a chain of ownership and assignment beginning with an enterprise organised under Russian law which came into existence in 1966.
88. The proceedings in which the present appeal is brought are now represented only by a cross-claim against Spirits which seeks a declaration that one or other of the respondents to the appeal (FKPS and FGUP) are entitled to ownership of the Australian trademarks and an order that the Register of Trademarks be rectified either by recording one or other of FKPS or FGUP as their registered owner or, at least, by cancelling the registration which records Spirits as their registered owner. The dimensions and resolutions of the earlier claims by Spirits against the cross-claimants need not be discussed here. The fundamental basis for Spirits’ claim to be the owner of the Australian trademarks, and therefore entitled to continued registration as such, is the premise that a Russian corporate entity that was created in 1992, to which it directly traces its ownership, came into existence as the successor to the entity created in 1966. The basis for this contention will require some elaboration in due course. The cross-claimants assert that the 1992 entity was not the legal successor to the 1966 entity but was created under Russian law as a legally separate and independent one, with the 1966 entity remaining in existence. Indeed, the cross-claimants allege that FGUP is the current manifestation of the original 1966 enterprise.
89. The cross-claimants rely on two judgments of Russian courts as effective to definitively state the position under Russian law. Those two judgments, the cross-claimants say, will be shown by expert evidence to have conclusively decided (in 2000/2001) that the 1992 entity was not the successor to the 1966 entity. Thus, so the contention will be developed, the foundation for Spirits’ claims to ownership of three of the Australian trade marks (and a number of others derived from them) will be removed from its inception.
90. Spirits has various other lines of defence to the cross-claim, but there is no doubt that the issue to which I have referred is a crucial one for the proceedings. If the two Russian judgments do not have the force for which the cross-claimants contend the cross-claim will be seriously (perhaps fatally) compromised. On the other hand, if they do have the effect that, under Australian law as well as Russian law, the 1992 entity was not the successor to the 1966 entity, Spirits’ prospects of defending the cross-claim diminish significantly, perhaps to the point where its prospects are negligible.
91. It is worth noting that the present dispute about trade mark ownership is not confined to Australia, although the issues which require resolution in the proceedings are ultimately ones which arise under Australian law. The dispute ultimately concerns the rights to market various Russian vodka products under well-known and established marks and, it may safely be inferred, the commercial stakes are high. The dispute is a worldwide one. Recently, the present litigation was suspended consensually for two years while attempts were made to resolve the dispute world wide. Those efforts were unsuccessful.

The parties

92. Spirits is incorporated in the Netherlands Antilles. Since 5 September 2005 Spirits has been the registered owner in Australia of the following marks:
    

Stolichnaya (label) mark (Australian Trade Mark No 298660);

Moskovskaya (label) mark (Australian Trade Mark No 298659);

Stoli (word) mark (Australian Trade Mark No 590304);

Stolichnaya (word) mark (Australian Trade Mark No 590305);

Ohranj (label) mark (Australian Trade Mark No 665684); and

Ohranj (word) mark (Australian Trade Mark No 719317).

93. Immediately before 5 September 2005 the registered owner of those marks in Australia was the second cross-respondent to the proceedings below, Diageo Australia Limited (“Diageo”). Diageo is incorporated in Australia. Diageo earlier operated under the names United Distillers (Aust) Limited, United Distillers and Vintners (Aust) Limited and Guinness United Distillers and Vintners Australia Limited.
94. FKPS and FGUP claim that each is “an economic entity of the Russian Federation” and entitled to sue. They also plead the matters in this paragraph which follow. They say that FKPS was created by “Order of the Government of the Russian Federation” in 2001. FKPS is responsible for vodka manufactured in Russia sold by reference to state owned trade marks. It is the registered owner of a number of trade marks for alcoholic products in the Russian Federation for the benefit of the Government of the Russian Federation. Its ownership of trade marks in Russia appears to be the result of decrees by the Government of the Russian Federation. Those trade marks include “Stolichnaya”, “Moskovskaya” and “Russkaya”. FKPS has been appointed by the Government of the Russian Federation to “recover and protect the rights of the Russian Federation in relation to trade marks for alcoholic products outside the Russian Federation”. FKPS is authorised by FGUP to act on its behalf in proceedings commenced outside the Russian Federation.
95. The cross-claimants allege that FGUP is the same entity as one first known as “All-Union Association (V/O) Sojuzplodoimport” (“Sojuzplodoimport”) which was created in 1966 within the former Union of Soviet Socialist Republics (“USSR”). The parties seem agreed that the legal status and name (from time to time) of Sojuzplodoimport was, until 5 January 1990, affected by the following instruments:

- Order 209 of the Ministry of Foreign Trade dated 30 June 1966;

- Order 410 of the Ministry of Foreign Trade dated 16 October 1978; and

- Order 673 of the State Committee of Agriculture of the USSR dated 13 October 1988.

96. In addition, the cross-claimants claim the following further instruments are relevant:

- Order 557 of the State Committee of Agriculture dated 17 July 1987;

- Order 672 of the State Committee of Agriculture dated 28 August 1987;

- Decision No 376 of the Council of Ministers of the USSR dated 24 March 1988;

- Order No 272 of the State Committee of Agriculture of the USSR dated 19 April 1988;

- Resolution No 590 of the Council of Ministers of the USSR dated 19 June 1990;

- Resolution No 835 of the Council of Ministers of the USSR dated 16 August 1990;

- Resolution No 601 of the Council of Ministers of the RSFSR dated 25 December 1990;

- Disposition No 896-r of the Cabinet of Ministers dated 14 August 1991;

- Order 3a (Schedule 2) of the State Committee of Food of the USSR dated 16 August 1991; and

- Decree of the President of the RSFSR dated 20 August 1991.

97. The cross-claimants claim that from 2001 to date the following instruments also applied to the entity created in 1966 now manifesting as FGUP:

- Order No 192 of the Ministry of Agriculture of the Russian Federation dated 22 February 2001;

- Order 93/r of the Ministry of Agriculture of the Russian Federation dated 28 June 2001;

- Charter of the Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP) approved by Order 93/r of the Ministry of Agriculture of the Russian Federation dated 28 June 2001;

- Order 1796-r of the Ministry of Property Relations of the Russian Federation dated 27 June 2001; and

- Moscow Chamber of Registration certificate dated 2 July 2001.

98. The cross-claimants say that, independently of the existence of Sojuzplodoimport (now FGUP) a separate corporate entity was created on 20 January 1992 in the following manner:
    11. In or about December 1991, the USSR was officially dissolved and was succeeded in Russia by the Russian Federation.
        
    12. On 20 January 1992, Foreign Economic Closed Joint Stock Company Sojuzplodoimport (VAO-SPI) was formed as a private corporate entity under the laws of the Russian Federation.
        

Particulars

(i) Certificate Registration No 007.600 dated 20 January 1992 issued by the Moscow Registration Chamber.

(ii) The then General Director of Sojuzplodoimport, Evgeniy Sorochkin, caused the registration of VAO-SPI by the Moscow Registration Chamber.

(iii) VAO-SPI was formed with the same registered address as Sojuzplodoimport.

(iv) Evgeniy Sorochkin was appointed as the General Director of VAO-SPI upon its formation.

13. The Charter of VAO-SPI contained a provision to the effect that VAO-SPI was the legal successor to Sojuzplodoimport.
    

Particulars

Article 3 of the Charter of VAO-SPI that was registered in the Registration Chamber of Moscow on 20 January 1992 (Certificate Registration No 007.600 dated 20 January 1992 issued by the Moscow Registration Chamber) states that VAO “Sojuzplodoimport” is a legal successor of VVO “Sojuzplodoimport”.

14. In fact:

(a) VAO-SPI was formed as a new entity and not by transformation of Sojuzplodoimport;

(b) the provision in the Charter of VAO-SPI to the effect that it was the legal successor to Sojuzplodoimport was invalid according to Russian law;

(c) VAO-SPI was not the legal successor to Sojuzplodoimport;

(d) Sojuzplodoimport continued to exist as a separate legal entity following the formation of VAO-SPI.

Particulars

(i) Ruling of the Court of Arbitration of Moscow dated 21 December 2000.

(ii) Decision of the Presidium of the Supreme Court of Arbitration of the Russian Federation Order of 16 October 2001.

(Emphasis added)

99. I shall return, in due course, to consider the significance of the two decisions which are referred to in the particulars to paragraph 14, set out above.
100. Spirits pleads the matter quite differently:

4(h)(i) on 20 September 1990, the work collective of Sojuzplodoimport and the State Commission of the USSR Council of Ministers on Food and Supply passed a joint resolution to effect the transformation of Sojuzplodoimport into an independent foreign economic joint-stock company (VAO), to be known as “VAO Sojuzplodoimport”.

Particulars

Minutes of the meeting of Sojuzplodoimport labour collective, dated 20 September 1990

Joint Decision of the Sojuzplodoimport labour collective and the State Commission of the USSR Council of Ministers on Food Supply, dated 20 September 1990

(ii) on or around 19 December 1990, the founders of the proposed VAO Sojuzplodoimport:

(A) entered into a founders’ agreement to set up VAO Sojuzplodoimport; and

(B) pursuant to that contract, authorised the management of Sojuzplodoimport to take all necessary steps to effect the legal transformation of Sojuzplodoimport into VAO Sojuzplodoimport.

Particulars

Minutes of the Meeting of the founders of the independent economic joint-stock company Sojuzplodoimport, dated 19 December 1990

Agreement between the founders of the independent economic joint-stock company Sojuzplodoimport, dated 19 December 1990

(iii) on 5 September 1991, at a constituent conference on the creation of VAO Sojuzplodoimport, the founders and shareholders of the proposed VAO Sojuzplodoimport:

(A) passed a unanimous resolution to found VAO Sojuzplodoimport;

(B) passed a unanimous resolution to set the authorised share capital of the proposed VAO Sojuzplodoimport; and

(C) approved the adoption of Articles of Association of the proposed VAO Sojuzplodoimport.

Particulars

Minute of the Incorporation Organizational Meeting of the Foreign Economic Joint Stock Company Sojuzplodoimport, dated 5 September 1991.

(iv) on or around 4 October 1991, USSR Ministry of Foreign Economic Relations approved the Articles of Association of the proposed VAO Sojuzplodoimport.

Particulars

Articles of Association of the Foreign Economic Joint-Stock Company “Sojuzplodoimport”, sealed 4 October 1991

(v) on or around 25 December 1991, the Chairman of the proposed VAO Sojuzplodoimport, acting on behalf of the founders and shareholders, filed an application for registration of VAO Sojuzplodoimport with the Moscow Registration Chamber.

Particulars

Letter from Sojuzplodoimport to Chairman of Moscow Registration Chamber, dated 25 December 1991

(vi) on 20 January 1992, an entity with the full trading name of Foreign Economic Joint Stock Company Sojuzplodoimport and a short trading name of “VAO Sojuzplodoimport” (“VAO-SPI”) was incorporated and registered as the legal successor to Sojuzplodoimport.

Particulars

Temporary Registration Certificate, dated 20 January 1992

Articles of Association of the Foreign Economic Joint-Stock Company “Sojuzplodoimport”, sealed 20 January 1992

Company Registration Certificate, dated 3 October 1996

(vii) with effect from 20 January 1992, all assets and liabilities of Sojuzplodoimport vested in VAO-SPI by operation of law;

(viii) with effect from 20 January 1992, Sojuzplodoimport ceased to exist as a legal entity; and

(ix) says that FGUP is not Sojuzplodoimport and is not the legal successor to Sojuzplodoimport.

(Emphasis added)

101. It may be seen, therefore, that the question of whether VAO-SPI is the legal successor to Sojuzplodoimport is directly in issue in the proceedings. It is also a matter of central importance in the proceedings.

The Australian trademarks

102. In order to understand the complex (and partially unexplained) series of transactions which follow, and their ultimate legal significance, it will be helpful to understand that Spirits’ claims to ownership of relevant Australian trade marks rest ultimately on the assignment to it of reversionary rights. Those reversionary rights came into operation upon the expiry of more temporary entitlements which were concurrent with Australian distribution rights.
103. Before 1966 a state owned entity of the USSR (V/O Prodintorg) was the registered owner of Australian Trade Mark No 179344 for “Stolichnaya” (label) in class 33 in respect of wines, spirits and liqueurs including vodka. In 1966 the Ministry of Foreign Trade of the USSR established Sojuzplodoimport to take over from V/O Prodintorg the exportation of certain food and alcohol products from the USSR including Russian vodka products sold by reference to trade marks including the trade marks “Stolichnaya”, “Moskovskaya” and “Russkaya”. No further mention need be made of “Russkaya”.
104. From 1966 to 1992 Sojuzplodoimport exported Russian vodka products from the USSR and imported and sold Russian vodka in Australia by reference to the trade mark “Stolichnaya”, a particular “house mark” to which I will refer shortly, the Stolichnaya label mark and the Moskovskaya label mark. Sojuzplodoimport thereby established a substantial and valuable reputation in the marks used in Australia. So much is admitted on the pleadings.
105. During this period (i.e. before the creation of VAO-SPI), Sojuzplodoimport became registered in Australia as the owner of three trade marks. They were identified in the cross-claim (and admitted) as follows:
     15. The following trade marks were registered in the name of Sojuzplodoimport as registered owner with effect from the dates set out below:
         

(a) Australian Trade Mark No 229680 for CHN (device) in class 33 in respect of wines, spirits and liqueurs (the House Mark) with effect from 12 June 1969;

(b) Australian Trade Mark No 298660 for STOLICHNAYA (label) in class 33 in respect of Russian vodka (the Stolichnaya Label Mark) with effect from 16 July 1976;

(c) Australian Trade Mark No 298659 for MOSKOVSKAYA (label) in class 33 in respect of Russian vodka (the Moskovskaya Label Mark) with effect from 16 July 1976.

106. On 25 October 1991 (i.e. before the creation of VAO-SPI on 20 January 1992) Sojuzplodoimport entered into an agreement with an Australian company, Caldbeck Pty Ltd (“Caldbeck”), which appointed Caldbeck exclusive distributor in Australia of Russian vodka products sold by Sojuzplodoimport, including those sold by reference to the trade mark Stolichnaya. The cross-claimants claim that on 21 February 1992 Sojuzplodoimport and Caldbeck entered into a deed under which Sojuzplodoimport assigned to Caldbeck the Stolichnaya label mark. It is alleged by the cross-claimants that pursuant to this agreement Caldbeck was entitled to the registration of the mark only for the term of the distribution agreement and that Sojuzplodoimport otherwise retained all rights, title and interest in the Stolichnaya label mark. Spirits denies the second part of this allegation. It says that this agreement was made by VAO-SPI, which was erroneously identified. This effectively marks the point at which the asserted history begins to divide the parties. It represents a division which is located in their respective positions about the legal character and status of VAO-SPI, after its creation on 20 January 1992. From this point forward Spirits claims a title to registration of the disputed trade marks which may be traced back to its contention that VAO-SPI was the complete successor to Sojuzplodoimport. Equally, the cross-claimants deny this contention and claim the continued separate existence of Sojuzplodoimport, which may now be recognised in FGUP. Accordingly, the cross-claimants assert FGUP’s right to all Sojuzplodoimport’s interests in registered Australian trademarks.
107. On 27 April 1992 Caldbeck applied to the Registrar of Trade Marks to be recorded as the registered owner of the Stolichnaya label mark but the Registrar of Trade Marks determined that Caldbeck was not capable of being recorded as the registered owner pursuant to the limited assignment which had been made.
108. On 14 September 1992 VAO-SPI and Caldbeck entered into a deed pursuant to which VAO-SPI purported to assign to Caldbeck the house mark, the Stolichnaya label mark and the Moskovskaya label mark. Caldbeck applied on 28 September 1992 to be recorded as the registered owner of those marks. The deed of assignment stated that VAO-SPI was the registered proprietor in Australia of the trademarks. The assignment was expressed to be concurrent with a distribution agreement made with VAO-SPI dated 25 October 1991. VAO-SPI did not exist at this date. The distribution agreement had been made with Sojuzplodoimport. Accordingly, the deed of assignment made on 14 September 1992 represented, in effect, that VAO-SPI was, or was the legal successor to, Sojuzplodoimport. On this occasion Caldbeck was recorded as the registered owner of the trade marks, being the house mark, the Stolichnaya label mark and the Moskovskaya label mark (23 December 1992).
109. On 12 November 1992 Caldbeck applied for registration of the following further marks:

- Australian Trade Mark No 590304 for STOLI (word) in class 33 in respect of alcoholic beverages including vodka (the Stoli Word Mark); and

- Australian Trade Mark No 590305 for STOLICHNAYA (word) in class 33 in respect of alcoholic beverages including vodka (the Stolichnaya Word Mark).

110. On 1 March 1993 Caldbeck changed its name to Inchcape Liquor Marketing Pty Ltd (“Inchcape”) and, on 4 March 1994, the marks (the Stoli word mark and the Stolichnaya word mark) were registered in the name of Inchcape with effect from 12 November 1992. It is important to note that the asserted rights of Caldbeck (later Inchcape) and registrations in those names only had effect (whether sourced in an assignment on 21 February 1992 or on 14 September 1992) concurrently with the distribution rights given to Caldbeck by Sojuzplodoimport on 25 October 1991, before the creation of VAO-SPI.
111. On 4 August 1995 VAO-SPI and Inchcape commenced proceedings in this Court against the Registrar of Trade Marks seeking orders that registration of the assignments of the house mark, the Stolichnaya label mark and the Moskovskaya label mark be declared void (these were the registrations pursuant to the assignment from VAO-SPI which was expressed to be concurrent with the distribution agreement dated 25 October 1991). The application sought registration of those marks in the name of VAO-SPI from 21 January 1992, one day after the formation of VAO-SPI and a date earlier than the deed of assignment expressed to be from Sojuzplodoimport to Caldbeck on 21 February 1992.
112. On 18 September 1995 the Court made the orders sought and on 18 October 1995 VAO-SPI was recorded as the registered owner of the house mark, Stolichnaya label mark and the Moskovskaya label mark. On 28 November 1995 Inchcape was recorded as the registered owner of those marks as a result of a deed of assignment from VAO-SPI dated 5 September 1994.
113. In 1995 and 1996 VAO-SPI applied for the registration of further marks (Stolichnaya Ohranj (label) and Stolichnaya Ohranj (word)) which were in due course registered in the name of Diageo after deeds of assignment made in late 1996 between VAO-SPI and Diageo and between Inchcape and Diageo. Spirits pleads that thereafter, on 4 October 1996, a number of the earlier marks were assigned from VAO-SPI to Diageo, another on 8 November 1996 and another on 12 August 1997.
114. As I indicated a short while ago, some of the rights in question remained in existence only during the currency of the distribution agreement made on 25 October 1991. Part of Spirits’ case depends on a title deriving from the ultimate assignment to it of reversionary rights to ownership of the trade marks dealt with by the distribution agreement. Thus, Spirits pleads that VAO-SPI assigned its rights to the house mark, and also to the Stolichnaya label mark, the Moskovskaya label mark, the Stoli word mark, the Stolichnaya word mark, the Ohranj label mark and the Ohranj word mark to another Russian enterprise, Closed Joint Stock Company Sojuzplodoimport (“ZAO”) by agreements dated 31 March 1998 and that ZAO assigned those interests to Spirits on 12 April 1999, subject only to rights held by Diageo pursuant to a distribution agreement dated 4 September 1996.
115. Finally, the Stolichnaya label mark, the Moskovskaya label mark, the Stoli word mark, the Stolichnaya word mark, the Ohranj label mark and the Ohranj word mark were transferred to Spirits by Diageo pursuant to interlocutory orders made by the Court in the present proceedings on 13 May 2005 and on 5 September 2005 Spirits became the registered owner of those marks.
116. From that somewhat complicated (but abbreviated) pleaded history it may be seen that Spirits’ claim to entitlement to continued registration rests in large part upon the chain of dealings commenced by VAO-SPI in late 1992 whereby it asserted its entitlement to deal with the house mark, the Stolichnaya label mark and the Moskovskaya label mark. It seems accepted in the present proceedings that subsequent dealings including applications and registration of other marks were derivative from this initial foundation. In turn, at least as pleaded, VAO-SPI’s conduct appears to depend for its legitimacy at the time upon the propositions earlier referred to, namely that Sojuzplodoimport had ceased to exist with effect from 20 January 1992 when VAO-SPI was formed, that VAO-SPI was the legal successor to Sojuzplodoimport and that the rights and obligations of Sojuzplodoimport had been transferred to VAO-SPI by operation of Russian law.

The Russian decisions

117. The cross-claimants’ denial of Spirits’ entitlement to continued registration as the owner in Australia of the disputed trade marks depends on the contention that VAO-SPI was not the legal successor to Sojuzplodoimport under Russian law but was created as a separate legal entity. In this respect they rely on the two decisions of Russian courts referred to earlier, as follows:

- Ruling of the Court of Arbitration of Moscow dated 21 December 2000; and

- Decision of the Presidium of the Supreme Court of Arbitration of the Russian Federation Order of 16 October 2001.

118. The decisions will be the subject of expert evidence concerning their meaning and effect under Russian law, but translations into English are before the Court and their effect has also been summarised by the European Court of Human Rights (“ECHR”) in a judgment dated 7 June 2007, to which reference will be made again later. The English translation of the Russian judgments, and the summary of them by the ECHR, allow some appreciation of their terms and effect which is sufficient for present purposes.
119. It will be remembered that the charter of VAO-SPI, which was adopted upon its formation, contained a provision to the effect that it was the legal successor to Sojuzplodoimport. It is part of the intended case for Spirits that between 1992 and 2000 the Government of the Russian Federation also represented that VAO-SPI was the legal successor to Sojuzplodoimport and that all assets and liabilities of Sojuzplodoimport had vested in VAO-SPI with effect from 20 January 1992. However, after a change of authority in 2000 (“when Mr Yeltsin stepped down and Mr Putin stepped up”) a policy was adopted, so it will be argued, of “taking procedural steps in several countries, including Australia, with the aim of wresting ownership of foreign registrations for trade marks from their present owners”. It will be argued by Spirits that the proceedings leading to the two Russian judgments should be seen as part of that initiative.

The 2000 judgment

120. The judgment of 21 December 2000 records that the proceedings were commenced by the Deputy Prosecutor General of the Russian Federation “in defence of the state and public interests”. The judgment (as translated into English) records the following:

The action was brought, subject to the Public Prosecutor making its subject more precise, for holding invalid Article 2, Paragraph 2 of the first defendant’s charter in respect of its being declared a legal successor of VVO “Sojuzplodoimport” and for obliging the second defendant to register the amendments to the first defendant’s charter deleting the disputed part of the charter thereof.

...

The defendant’s objections against the claim are based on the fact that the same is the legal successor of VAO “Sojuzplodoimport”, which, in its turn, is the legal successor of the state enterprise VVO “Sojuzplodoimport”. The defendant refers to legal succession between the two latter organisations by virtue of the statement to that end in the foundation documents of VAO “Sojuzplodoimport”.

However, legal succession of one organisation from another arises not due to the statement in that respect in the charter but as a result of a reorganisation, so a statement in the foundation documents as such does not evidence legal succession, such succession must be confirmed by the original documents showing the reorganisation that was conducted.

...

The VAO “Sojuzplodoimport” registration record contains the application of VVO “Sojuzplodoimport” to the Moscow Registration Chamber dated 25.12.91 No. 12-1/396 for state registration of AO “Sojuzplodoimport”, in which it is named as a newly established enterprise (sheet 161 of the registration record).

Establishment of an enterprise by entering into a foundation agreement excludes its foundation by reorganising any other enterprise, as these are two different ways of setting up an enterprise.

As transformation of one enterprise into another means cessation of existence of the reorganised enterprise, the fact that in the aforementioned documents on establishment of AO “Sojuzplodoimport” VVO “Sojuzplodoimport”, VAO “Sojuzplodoimport” is described as one of the founders and legally exists down to date, and the founders of VAO “Sojuzplodoimport” actually set up a new legal entity having nothing to do with VVO “Sojuzplodoimport”. As that new legal entity was not and could not be a legal successor of VVO “Sojuzplodoimport”, the statement in the defendant’s charter on such legal succession is unlawful.

The 2001 judgment

121. There was an appeal from the judgment of 21 December 2000 to the Moscow Arbitration Court which, on 19 February 2001, held that the Deputy Prosecutor General lacked standing to act as claimant in the matter and cancelled the “award” made on 21 December 2000. In its defence to the cross-claim Spirits contends that no “appeal” was lodged against the decision of 19 February 2001 with the result that, under Russian law, it was “final and binding”. Nevertheless, the decision of 19 February 2001, it is clear, was challenged by the Deputy Prosecutor General and the challenge was accepted as valid. On 16 October 2001, in the second of the decisions relied on by the cross-claimants, the Presidium of the High Court of Arbitration of the Russian Federation (“the Presidium”) resolved to set aside the appeal decision of 19 February 2001 and reinstate the original decision of 21 December 2000. The Presidium recorded (as translated into English):

Cancelling the court’s award [...] the appeal instance court concluded that the public prosecutor who had brought an action in defence of the state interests failed to state who is a plaintiff in this trial, while the public prosecutor is not authorised to act by himself on behalf of the state.

However such a conclusion is inconsistent with the case and laws in force.

As can be seen from the case, the claims were filed by the public prosecutor in the interests of the Russian Federation. In accordance with Article 41, Part 1 of the Code of Arbitration Procedure of the Russian Federation the public prosecutor is authorised to bring an action to a court of arbitration for defending the state and public interests.

So the appeal instance’s ruling partially cancelling the first instance court’s award and terminating the proceedings is illegal and must be cancelled.

...

According to the foundation documents of VAO “Soyuzplodimport” it was established by several corporate founders (inclusive of the state enterprise VVO “Soyuzplodimport”.

As VAO “Soyuzplodimport” was established as a result of foundation but not transformation, right is the first instance court’s conclusion on invalidity of the provision of that company’s charter pursuant to which it is a legal successor of VVO “Soyuzplodimport”.

The ECHR judgment

122. On 20 December 2001 VAO-SPI challenged the decision of the Presidium in the ECHR. The judgment of the ECHR was delivered on 7 June 2007. Amongst the matters recorded by the ECHR were the following:
     25. The Court notes, firstly, that the subject matter of the parties’ dispute before the domestic instances, and of the applicant’s claims before the Court, was the existence of the universal legal succession between the State Foreign Trade Agency “Soyuzplodimport” and the applicant company. The question of ownership of individual assets, such as trademarks, was not as such contested in the impugned proceedings and subsequently does not call for the Court’s assessment.
         
     26. The Court further notes that the applicant company laid claim to the alleged corporate succession, which presupposes the existence of a bilateral deed between two companies or a unilateral deed from a reorganised company by which assets are reassigned. However, the applicant company has not presented any proof of the intention of the State Foreign Trade Agency “Soyuzplodoimport” to convert itself into another company or to reorganise itself so as to separate from its assets in favour of the applicant company. On the contrary, the Court considers it established that the State Foreign Trade Agency “Soyuzplodoimport” continued to exist in its original corporate form until 2001, when it was re-registered as a Federal State Unitary Enterprise “Soyuzplodoimport”.
         
     27. The Court also finds it pertinent that the applicant company has never succeeded in having its title to the legal succession established in domestic judicial proceedings. No court judgment has determined this point in the applicant company’s favour.
         
123. As was noted by the ECHR, the Russian judgments do not deal directly with questions of the ownership of trademarks or other property, whether in Russia or elsewhere. However, on their face, and subject of course to such enlightenment as expert evidence about Russian law might provide, the judgments do appear to deal in a definite way with the suggestion that VAO-SPI was the legal successor to Sojuzplodoimport. The same may be said of the ECHR judgment.

Other lines of defence

124. Although the assertion that VAO-SPI succeeded Sojuzplodoimport is a very important one for Spirits’ case, there are other matters on which it also relies. So, for example, the following is pleaded (omitting particulars):
     61. In further answer to the whole of the Further Amended Cross-Claim, the First Cross-Respondent says that:
         

(a) the claims made in the Cross-Claim are made on behalf of the Government of the Russian Federation;

(b) the effect of the relief sought by the Cross-Claimants in their prayer for relief would be the confiscation or expropriation, for the benefit of the Government of the Russian Federation, of personal property located in Australia;

(c) Further, or in the alternative to sub-paragraph (b), the effect of the relief sought by the Cross-Claimants in their prayer for relief would be to enforce the interests of the Government of the Russian Federation, which interests arise from the exercise of the governmental powers of that government; and

(d) by reason of the matters pleaded in sub-paragraphs (a), (b) and (c) above, the First Cross-Respondent says that the claims made in the Further Amended Cross-Claim are not justiciable or enforceable by an Australian Court.

125. Spirits also pleads that the claims made by the cross-claimants are statute barred by reason of s 181 of the Russian Federation Civil Code 1994. It further pleads that around 31 March 1998 the dealings between VAO-SPI, Diageo and ZAO whereby (for the purpose of Australian law) ZAO acquired rights in the relevant marks for value and without notice of any prior claim, which rights were subsequently assigned around 12 April 1999 to Spirits, have the result that Spirits owns the marks in Australia free from any prior rights or interests (which are denied) of the cross-claimants, the Government of the Russian Federation or any other Russian body. Spirits also argues that between January 1992 and 2000 the Government of the Russian Federation by its conduct represented that all the assets and liabilities of Sojuzplodoimport had vested in VAO-SPI by operation of law with effect from 20 January 1992, which conduct was relied upon by VAO-SPI and by Spirits. Spirits relies on notions of unconscionability, estoppel, acquiescence and laches. Spirits also has arguments, based on the Trade Marks Act 1955 (Cth) which are to the effect that its registration is unassailable in the present proceedings (see e.g. Trade Marks Act 1995 (Cth) s 234).
126. It is not necessary to attempt an evaluation of these lines of defence here. It is obvious that those of them which assert conduct on the part of the Russian Federation which is alleged to be fatal to the cross-claim have the potential for a wide-ranging and complex enquiry at many levels. What is noteworthy, however, is that no defences of this kind will be necessary if the central plank in the cross-claimants’ case (that VAO-SPI is not the legal successor to Sojuzplodoimport) is not accepted. The cross-claimants bear the onus on this question but they contend that Spirits is estopped from arguing to the contrary. It is the suggestion of an issue estoppel of this kind, and the method chosen to address it, which led to the judgment now under appeal.

Separate questions

127. The cross-claimants elected to attempt to deal initially with the issues raised on the pleadings by asking for the determination of four separate questions. In their amended form those questions were posed as follows:

(a) Is Spirits International precluded, by reason of the judgments particularised in paragraphs 14(d)(i) and (ii) of the Further Amended Cross-Claim (the Russian Judgments) from asserting or relying upon any matters relating to the alleged succession of VAO-SPI to Sojuzplodoimport in or about January 1992, namely, any of the matters pleaded in paragraphs 4(h), 5(c)(i), (iii) and (vi), 13(b), 14, 23, 24, 34 and 35 of the First Cross-Respondent’s Defence to the Further Amended Cross-Claim (the Spirits International Defence)?;

(b) Is Spirits International precluded, by reason of the judgment of the European Court of Human Rights dated 7 June 2007 in the case of OAO Plodovaya Kompaniya v Russia, Application No. 1641/02, from asserting or relying upon any matters relating to the correctness, validity or finality of the Russian Judgments, namely the matters pleaded in paragraphs 5(c)(iii), (vi), (viii), (ix) and (x) of the Spirits International Defence?

(c) Is Spirits International precluded, by reason of the Russian Judgments, from asserting or relying upon any matters relating to any alleged representation made by the Government of the Russian Federation as to the succession of VAO-SPI to Sojuzplodoimport, namely the matters pleaded in paragraph 66, and paragraph 68 to the extent particularised by the second particular to that paragraph, of the Spirits International Defence?

(d) Is Spirits International precluded, by reason of the Russian Judgments, from asserting or relying upon any matters relating to any alleged delay by the Government of the Russian Federation in challenging the validity of the succession of VAO-SPI to Sojuzplodoimport, namely the matters pleaded in paragraph 62, 67, and 68 to the extent particularised by the first particular to that paragraph, of the Spirits International Defence?

128. In the alternative the cross-claimants sought that the paragraphs of the defence which raised the issues be struck out.
129. If all the questions were answered against the cross-claimants, on one view the prospects for a full hearing of the case would not have been greatly diminished. However, as a matter of practicality, rejection of the underlying premise in each of the questions (that the judgments are conclusive of certain matters under Australian law) would signal a difficult task ahead for the cross-claimants in a final hearing. On the other hand, it was conceded by Spirits on the appeal that an affirmative answer to each of the questions would all but eliminate Spirits prospects of resisting the cross-claim. It is really the possibility of mixed answers which provides a more difficult task of assessing the merits of whether separate questions in the form proposed should be examined.
130. The first two questions raise directly the legal force and effect of the two Russian judgments and the judgment of the ECHR upon the question of whether VAO-SPI is the successor of Sojuzplodoimport. The cross-claimants contend that Spirits is legally estopped by those judgments from contending that it is. The answers to those questions would depend upon an evaluation of the status and effect of the judgments under Russian law and consideration of the extent to which the judgments preclude, as a matter of Australian law, the contentions which Spirits wishes to advance. An examination of those issues should be manageable and, forensically speaking, reasonably straightforward, even if legally complex. Examination of the third and fourth questions raises broader issues. Those questions would raise for consideration whether the judgments raised a legal bar to Spirits’ wider defences. Those wider defences do not depend necessarily on denying the effect of the judgments for which the cross-claimants contend. The wider defences may be capable of surviving even if the first two questions are answered against Spirits. That is because the lines of defence sought to be precluded by an affirmative answer to the third and fourth questions deny the enforceability in Australia of the Russian judgments and contend that the cross-claimants are themselves barred from relying upon them. If Spirits was not precluded from advancing those contentions the prospect for a further, possibly lengthy and complicated final hearing would remain.
131. The foregoing observations arise from even a superficial consideration of the nature of the issues suggested by the pleadings but one or two additional points might be made. If the matter goes to trial with no attempt having been made to narrow the range of issues for examination at a final hearing it would appear inevitable that such a hearing will be a very complex piece of litigation, both factually and legally, in which a considerable number of alternatives and possibilities will need to be kept in mind by the parties and the trial judge until the end of the proceedings. One potential benefit of the trial of separate questions (acknowledging of course the difficulty and complexity that such a course can sometimes itself entail) is that important questions can be examined and decided (and if necessary be the subject of an appeal) so that the alternatives and possibilities are restricted and the case is able, at a final hearing, to have greater focus and direction than would otherwise have been possible. Obviously enough, the respective merits of the alternative approaches have to be assessed and balanced in individual cases.
132. In the present case the primary judge was persuaded that the suggested questions should be answered in a separate trial of those issues. He reached that state of persuasion notwithstanding the arguments advanced by Spirits, including the proposition that “the nature and complexity of the issues raised by [the defence] is such that they can only be resolved properly in a full trial, with full discovery, cross-examination of witnesses etc, and not in any summary way on a separate question”. Spirits also contended that there would be considerable overlap of the factual and legal issues which would be required to be determined in a further hearing.
133. The primary judge’s conclusions are set out in the following paragraph of the judgment under appeal:
     95. Without any real doubt, I have come to the conclusion that it is in the interests of the efficient case management of this proceeding that I should accede to the motion of the cross-claimants and order, pursuant to O 29 r 2 of the Rules, the determination of the four (4) questions, set out in the amended notice of motion filed in Court on 9 August 2010, before trial in the proceeding. I am persuaded to this conclusion by my overall preference for the cross-claimants’ submissions over Spirits’ submissions, but in particular to the following:
         

(1) The terms and form of Spirits’ pleadings in its Defence (see [9] above).
(2) The 2001 Judgment, its relevant reasons and conclusion (see [7], [11], [12], [13] and [14] above).
(3) The ECHR Judgment and its relevant reasons (see [11] above).
(4) My disagreement with Spirits’ submission (see [20] above) that the determination of the separate questions will not be in any sense decisive of the outcome of the proceeding.
(5) My agreement with the cross-claimants’ submission that if preliminary question (1) is decided in favour of the cross-claimants, then that finding will obviate the need for the Court to reconsider the discrete question of the alleged succession of VAO-SPI to VVO-SPI’s assets under Russian law (see [36] above).
(6) My further agreement with the cross-claimants’ submission that it is doubtful that any of the defences under paras 61, 66, 67 or 68 would survive, or survive in substantial form, if preliminary question (1) is answered in favour of the cross-claimants’ contentions and that they certainly would not survive if preliminary questions (3) and/or (4) are answered in favour of the cross-claimants (see [37] above).
(7) My agreement with the cross-claimants’ submission that if preliminary question (1) is answered in favour of the cross-claimants, then under Russian law VAO-SPI was not ever the successor to the assets of VVO-SPI and Spirits’ confiscation case fails at the outset (see [46] above).
(8) My agreement with the cross-claimants’ submission that there is utility in preliminary questions (1), (3) and (4) notwithstanding Spirits intention to rely on discretionary factors under ss 88 and 89 of the Trade Marks Act (pleaded in para 68 of the Defence), certainly so far as the factors of delay and representation during the period between 1992 and 2000 are concerned.
(9) The same applies to preliminary question (3) insofar as Spirits relies on the defences of estoppel and laches as pleaded in paras 66 and 67 of the Defence.
(10) Finally, I am not persuaded that this is a case where if the four (4) preliminary questions are separately dealt with prior to trial, there is a real risk of conflicting findings of credit arising in respect of expert evidence on Russian law. Indeed, as the cross-claimants contend, the prior resolution of the four questions has the potential to substantially reduce, if not extinguish, the need for such expert evidence at trial.

The application for leave to appeal

134. Spirits applied for leave to appeal against this interlocutory ruling. A judge of the Court referred the application for leave to appeal to a Full Court and directed the parties to be prepared to put the whole of their arguments on the appeal, as well as on the application for leave to appeal, if the Full Court decided to hear all matters together. That is the course which has been followed. Spirits accepts that the following questions arise for consideration on an application for leave to appeal of this kind:

(a) whether in all the circumstances the decision is attended by sufficient doubt to warrant its being reconsidered by the Full Court; and

(b) whether substantial injustice would result if leave were refused, supposing the decision to be wrong.

(see Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 (“Decor”))

A prima facie case for leave?

135. Spirits relied on the judgment of French J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 (“Johnson Tiles”) (at [43]) to suggest that the present case fell at the end of a spectrum of interlocutory orders having “a significant impact upon the scope and outcome of the proceedings”. In my respectful view, reliance on this passage was taken out of context. In Johnson Tiles it is apparent that French J was concerned to make a distinction between decisions which, in a practical as well as a legal sense, finally determined rights and those which did not. Thus, his Honour said (at [42]):
     42. The application of the leave requirement should not involve the expenditure of significant intellectual energy on the distinction between final and interlocutory judgments. Admittedly that is a question “productive of much difficulty” — Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246 at 248 (Gibbs CJ). But the policy of the provision is plain enough. The time and resources of the Court and the parties should not lightly be taken up with appeals about decisions in connection with proceedings which do not finally determine the rights of the parties. In broad terms, of course, a judgment is treated as final if it finally disposes of the rights of the parties. Otherwise it is an interlocutory order ...
         

(Emphasis added – some references omitted)

136. Then his Honour went on to say (at [43]):
     43. ... Interlocutory orders cover a spectrum from those concerned solely with the mechanics of case management and pre-trial preparation to those which may, for one reason or another, have a significant impact upon the scope and outcome of the proceedings. If the order, the subject of the application for leave to appeal, is concerned with the mechanics of the pre-trial process then the scales are likely to be weighted against the grant of leave. However if while interlocutory in legal effect it has the practical operation of finally determining the rights of the parties “. a prima facie case exists for granting leave to appeal” — Ex parte Bucknell [1936] HCA 67; (1936) 56 CLR 221 at 225; Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at 400; Minogue v Williams [2000] FCA 125 at [18].
         

(Emphasis added)

137. It was the first sentence of this extract to which Spirits referred in its written submissions. However, it is clear that the present case does not meet the test suggested by his Honour for a prima facie grant of leave to appeal, having regard to the tests stated in Decor and other cases. The decision which Spirits wishes to appeal does not finally determine rights in a legal or in a practical sense, although a decision on the separate questions may do so. It is a decision about case management. Unless it could be shown that the parties were likely to be unfairly prejudiced by the decision, or that the course decided could have no utility, ordinarily such matters should be left in the hands of the docket judge.

The Decor tests

138. There are considerable difficulties in applying, to an application for leave to appeal of the present kind, the principle of determining whether the decision is attended by sufficient doubt to warrant it being reconsidered by a Full Court. No ruling was made, in the judgment under appeal, on any issue of fact or law in the proceedings. Such a ruling might be made as a result of the trial of the separate questions but that is not the present position. The decision concerned directions arising from the primary judge’s view of what was required for the efficient management of the proceedings. There is no single solution to such issues in most cases. Furthermore, case management is an ongoing process. If necessary, further procedural rulings or adjustments may be made to avoid injustice and/or to promote efficient litigation.
139. The possibility of substantial injustice, under the Decor tests, is addressed on an assumption of error. As already observed, an allegation of error in a case such as the present raises contestable questions depending on value judgments. Similarly, the question of whether substantial injustice would result, supposing the decision to be wrong, does not relate to the disposition of rights in the present proceedings by way of finding on any question of fact or any issue of law. Any suggestion of substantial injustice could only arise in present circumstances as a plea of potential prejudice in relation to the conduct of the proceedings, rather than as a complaint about a binding decision on substantive rights. Again, such a (binding) decision might in due course be made against Spirits on one or more of the questions but that is not the present position.
140. Spirits’ written submissions as to why substantial injustice would be caused to it if the separate questions were examined “supposing the decision [to do so] to be wrong” alleged four matters of prejudice to it: a possible perception of prejudgment by the primary judge; a “real sense of grievance” or injustice on the part of Spirits; that Spirits would remain subject to the “vexation” of the proceedings for longer than necessary; and the possibility of unfairness to Spirits resulting from continued uncertainty from any answers given.

Prejudgment

141. In a number of places in Spirits’ written submissions in support of its application for leave to appeal there were suggestions that the ruling made by the primary judge might suggest prejudgment of the separate questions. At the hearing of the appeal counsel for Spirits denied any reliance on notions of bias, or the related principles of natural justice and procedural fairness, preferring to leave the matter expressed as a general but unfocussed concern. There was no prejudgment simply because the primary judge attempted to make a tentative evaluation of the likely strengths and weaknesses of the arguments which would be advanced on a trial of separate issues. In my view this ground has no substance. I think it is regrettable that the suggestion was made.

Sense of grievance

142. This is just another way of complaining about the fact that the discretion invoked by the application for a trial of separate questions was exercised against Spirits. It does not afford an independent reason for granting leave to appeal if there would be no substantial injustice or prejudice caused, supposing the decision to be wrong.

Vexation for longer

143. This is a complaint about possible delay. Any such complaint must be seen in perspective. At present, Spirits is the registered owner of the trademarks. It is the cross-claimants who are attempting to upset that situation. The case has already been delayed, in part because the parties wished it to be. In any event, it is far from clear that delay is the inevitable, or even probable, consequence of a trial of separate questions. The trial of those questions is fixed for later this year. If it does not go ahead the final hearing, having regard to the range of matters which Spirits wishes to agitate, will take much longer to prepare, hear and decide. On the other hand, resolution of the separate questions (subject to consideration of the next ground) appears to have the potential to resolve, or eliminate, a number of matters which would contribute to the length and complexity of a final hearing. That is so however the questions might be resolved. That is so, for example, if they are all resolved in favour of Spirits. Such an outcome would represent a significant obstacle to acceptance of the premise at the heart of the cross-claim. It is so, Spirits accepted, if all questions were decided against it. It is so, although perhaps with less impact on a final trial, if the third and fourth questions only are answered in Spirits favour because it would then be clear that Spirits was not precluded from running its wider defences even if it was found not to be the true legal successor to Sojuzplodoimport. And it is so notwithstanding that leave to appeal might be sought against an interlocutory decision about the separate questions. I shall say something a little later about a related suggestion – that there would be a considerable overlap with matters needing attention at a final hearing if any of the questions were answered favourably to Spirits.

Continued uncertainty

144. In my view, the present is not a case where the questions can be said not to be directed to important issues, the resolution of which will likely bear directly on the disposition of the proceedings thereafter. For reasons which should appear significantly clearly from the discussion so far I do not share the view that the questions are inappropriate to provide an adequate vehicle for the resolution of the issues in the case to which they are intended to be addressed. Those issues are fundamental and important ones. The present contest is being fought as an issue about whether separate questions directed to those issues should be examined or not. It is not being fought on the basis that the questions are capable of improvement or require reformulation. As to such a possibility the primary judge did not receive much assistance from the appellant. Nor did the Full Court. Management of the case, including the precise formulation of the questions, should remain under the control of the primary judge. I would not exclude the possibility that the parties may assist his Honour further. I do not think it appropriate simply to attempt to redraft the questions to fill a gap that one or other party had chosen not to.

Conclusion about leave to appeal

145. In my view, none of the normal bases for the grant of leave to appeal, or a proper case in which to grant leave, are present in this case. The directions given by the primary judge for the trial of separate questions are procedural in nature, do not (whether finally or otherwise) determine substantive rights, are not attended by apparent error and do not give rise to a reasonable apprehension of substantial injustice. I would refuse leave to appeal.

The appeal

146. The appeal (if leave to appeal is granted) concerns a challenge to the exercise of a discretion. The grounds of appeal relied upon in an amended notice of appeal were expressed as follows (omitting particulars):
     1. His Honour exercised his discretion on a wrong basis, in that his Honour approached the exercise of his discretion solely, or in the alternative primarily, on the hypothesis that one or more of the separate questions would be answered in favour of the cross-claimants.
        
     2. Further, and in the alternative to ground 1, His Honour exercised his discretion on a wrong basis, in that his Honour entered into an assessment of the prospects that the separate questions would be answered in favour of the cross-claimants, and having done so, further erred by proceeding on the basis that those prospects were sufficiently good that the prospect of the separate questions being answered against the cross-claimants could be ignored.
        
     3. His Honour erred in failing to find, and failing to take into account, the consequences for the efficiency of the proceedings of any of the separate questions being answered against the cross-claimants.
        
     4. His Honour exercised his discretion on a wrong basis, in that his Honour found that the use of separate question [sic] to determine whether an issue estoppel arises out of a foreign judgment is “all the more compelling” than the use of a separate question to determine whether an issue estoppel arises out of an Australian judgment (at [19]).
        
     5. His Honour exercised his discretion on a wrong basis, in that his Honour failed to:
        

(a) take into account the principle that separate questions comprising mixed questions of fact and law, should only be answered with reference to facts as clearly found or agreed; and

(b) apply the principle in (a) to find that by reason of, inter alia, FKP and FGUP’s lack of pleading of material facts alleged to give rise to the issue estoppel, the present case was one in which it was inappropriate to state separate questions.

147. In order to succeed in an appeal based on grounds of that kind it would be necessary for Spirits to show that the primary judge misunderstood, or misapplied, the principles relevant to the exercise of his discretion. In my view he did not do so.
148. The primary judge (at [19]) said, with respect, correctly:
     19. Of course, the starting point is that in the ordinary course all issues of fact and law should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 140 – 142. The authorities abound with statements of caution as to the ordering of questions for separate determination, particularly where matters of fact are raised by such questions which are difficult to segregate as issues distinct from the remainder of the proceedings.
         
149. His Honour went on to observe that questions of issue estoppel, and related doctrines, are routinely dealt with as separate questions. He referred to: Whiteley-Bond v Abletts Transport Pty Ltd [2009] ACTSC 81; Spencer v Commonwealth [2008] FCA 1256 at [192]; Commonwealth v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322; Kuppers v New South Wales Fire Brigades [2005] NSWSC 193; CEO of Customs v Au [2005] NSWCA 119; Landmark Building Developments Pty Ltd v Toyama Pty Ltd [2004] NSWSC 1103; Lewis v Nortex Pty Ltd (in liq) [2002] NSWSC 124; Tiufino v Warland [2000] NSWCA 110; (2000) 50 NSWLR 104; Minero Pty Ltd v Redero Pty Ltd (unreported, Supreme Court of New South Wales, Santow J, 29 July 1998); Kemeny v Kemeny [1998] FamCA 34; Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508; Dissidomino v Butcher Paull & Calder [2004] WASC 122.
150. Concerning the operation of O 29 r 2 of the Federal Court Rules (under which the trial of a separate question may be ordered) his Honour referred to, and set out, the following statements by French J in Olbers v Commonwealth (No 3) [2003] FCA 651 at [7] and [8] as follows:
     7. Authorities relevant to the application of the order were referred to, and applicable principles summarised, by Branson J in Reading Australia Pty Ltd v Australian Mutual Providence Society [1999] FCA 718. Her Honour’s summary of the principles (omitting reference to the authorities) is as follows:
        

‘(a) the term “question” in O 29 r 1 includes any question of fact or law in a proceeding. The distinction in the rule between an “issue” and a “question” is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an “issue”, and less decisive matters of dispute being “questions”;

(b) a question can be the subject of an order for a separate decision under O 29 r 2 even though a decision on such a question will not determine any of the parties’ rights;

(c) however, the judicial determination of a question under O 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties;

(d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined;

(e) care must be taken in utilising the procedure provided for in O 29 r 1 to avoid the determination of issues not “ripe” for separate and preliminary determination. An issue may not be “ripe” for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved;

(f) factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may –

(i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or

(ii) contribute to the settlement of the litigation;

(g) factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may –

(i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;

(ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial – possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding ... This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or

(iii) prolong rather than shorten the litigation.’

8. The overarching consideration informing the discretion to make an order under O 29 r 2 is efficient case management. It is subject to the limitation that the Court cannot give an advisory opinion on theoretical or hypothetical facts even if such an opinion were likely to lead to a settlement or resolution of the proceedings.
   
151. It is important to note that the present case does not involve difficulties of the kind which were discussed by the High Court in Bass v Permanent Trustee Company Ltd [1999] HCA 9; (1999) 198 CLR 334 (especially at [45] – [59]). There was no misunderstanding by his Honour of the principles to be applied. No doubt there is room for differing views about whether the advantages of the course selected by the primary judge outweigh, or are outweighed by, the disadvantages. No one would suggest, in a complicated case of the present kind, that there were not advantages and disadvantages to be weighed. Nor is it a case where the course to be followed is so obvious that there is no respectable argument to the contrary. In my view, those matters emphasise the fact that what was required of the primary judge was a classic exercise of discretion. I think a Full Court should be slow to interfere with the exercise of that discretion and should not do so merely to substitute its own view.
152. It is not an answer to a decision to have a trial of separate questions that the questions might not be answered in a way which disposes of the proceedings as a whole. That will be so in almost every case where separate questions are posed. Were it otherwise the proceedings as a whole could be reduced on both sides to the disposition of those matters.
153. Spirits may desire an opportunity to keep all its arguments in play throughout a very extensive hearing until all matters are required to be resolved but that represents only a starting point in the debate. It might be a material circumstance if an answer to the questions would not bring with it the real possibility of finalising or substantially abbreviating the proceedings but that cannot be said in the present case. Spirits says it is not bound by the decisions within the Russian legal system so far as they might purport to declare the legal status of VAO-SPI from about 1992 or at the present time. If it is correct in that contention (for whatever reason it may choose to advance) then those judgments will not stand against it. Those judgments represent the central plank in the cross-claimant’s case. If that plank is removed in Spirits’ favour it seems highly likely that that will have a beneficial effect upon any conduct of the balance of the proceedings. On the other hand, if Spirits is found to be precluded from going behind the judgments in question, or denying their legal effect upon its present rights, that will also have a very significant effect upon the conduct of any further proceedings. It does not detract from the benefits of either of those possible outcomes that the trial of the separate questions might itself be a complicated or even lengthy affair. If those matters are not resolved in advance it seems likely that a trial of the final proceedings will be a very substantial enterprise. In my view, it was well within the discretion of the primary judge to respond to the suggestion that there seemed a way of sufficiently isolating some central and important issues which would have a material bearing upon the conduct of the litigation as a whole. The suggestion to the contrary amounts to saying that the course which his Honour favoured was really not open to him. That is clearly not the case.
154. A key proposition in Spirits’ argument that the decision under appeal was wrong was the suggestion (in connection with both leave to appeal and the appeal itself) that if one or more of the separate questions was answered favourably to Spirits (i.e. it was not precluded from arguing a particular matter) the final hearing would have to deal again with a range of factual and expert evidence called from overseas witnesses on both sides which was necessary to deal with the separate questions. In other words, the number of issues to be addressed at a final hearing, and the length of time taken to do so, would not have been appreciably reduced. I earlier accepted the possibility of a less definite outcome for the proceedings as a whole if some questions only were answered in favour of Spirits. However, that is a long way from a conclusion that there would be no, or insufficient, utility in separate questions being dealt with.
155. First, the possibility of a uniform outcome, one way or the other, cannot simply be put to one side. Secondly, there is a further point to be made about Spirits’ suggestion that, in respect of any of the questions (the third and fourth questions in particular) there will be a considerable overlap of evidence and submissions dealing with the questions and those requiring consideration at a final hearing. I am unable to see why that should be so. Even though the meaning and effect of Russian law is a question of fact, the questions posed for consideration raise legal questions which should not require anything approaching the factual case which will be in prospect if Spirits is not “precluded” from ventilating those matters at a final hearing. No doubt the questions were drawn with that in mind. I doubt that the same issues will arise for consideration again at a final hearing. It is possible that some of the same witnesses may be required but such an assumption cannot automatically be made or taken too far. Spirits identified in its submissions some matters about the nature of evidence which might be required at a final hearing. Those matters included: “representations made by the Russian Federation”; circumstances concerning an instruction by the Russian President, procedural steps taken by the Russian Government in various countries; the political circumstances in which VAO-SPI was formed; and the “acquiescence by the Russian Courts in implementing the plans of the executive”. The question for attention at a trial of the separate questions will not concern what conclusions should be reached about any of those matters, but rather whether Spirits is “precluded” from dealing with them. Attention to that question should not require the evidence which might be called at a final hearing to be duplicated. For my own part, therefore, I do not accept that a significant overlap of issues will arise under any of the possible outcomes if the separate questions are dealt with. When that issue is removed, as in my view it should be, there is little to be said in favour of the appeal.
156. I earlier set out the proposed grounds of appeal. It is clear that they amount to a complaint about the outcome of the exercise of a discretion in accordance with the relevant principles. Appealable error is not established by inviting a preference in an appeal court for a different result within the range of legitimate application of the relevant principles. In my view this is such a case.
157. Proper application of principle requires that the exercise of discretion of the primary judge not be set aside in such circumstances. If leave to appeal was appropriate I would dismiss the appeal.

Conclusion

158. I would refuse leave to appeal. If leave was granted I would dismiss the appeal.

Costs

159. I would order costs in accordance with the results I have indicated.
     

I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.

Associate:

Dated: 20 May 2011

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1686 of 2010

BETWEEN:	SPIRITS INTERNATIONAL B.V. (REGISTERED IN THE NETHERLANDS) Applicant
AND:	FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT First Respondent FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO) Second Respondent

JUDGES:	RARES, BUCHANAN AND FOSTER JJ
DATE:	20 MAY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

FOSTER J:

160. I agree with Buchanan J that the application by Spirits for leave to appeal should be dismissed with costs. I also agree with his Honour’s reasons for making those orders. However, I wish to add some brief observations of my own.
161. The decision from which leave to appeal is sought is an interlocutory decision relating to practice and procedure. It is, as Buchanan J observes, a case management decision. The decision of the primary judge does not finally determine any question of fact or law. Unlike, for instance, a judgment in an intellectual property case which determines all questions of liability separately from and in advance of all questions relating to pecuniary relief, his Honour’s decision is merely the first step along a procedural path designed to facilitate the expeditious disposition of several issues which are at the very heart of the case.
162. The decision of the primary judge is of such a character that an appellate court should be very wary indeed when asked to review it. In my view, this Court ought not to grant leave in a case such as the present unless it is comfortably satisfied that the primary judge has either misunderstood or misapplied the relevant principles governing the exercise of his or her discretion to order the trial of separate questions and that substantial injustice will result if leave is refused. In the present case, his Honour’s decision is not infected with any errors of this kind. His Honour correctly identified the relevant principles (at [18]–[19] of his Reasons) and applied them in the way that he considered best suited the case before him.
163. The authority which is often cited in this Court when leave to appeal from an interlocutory judgment is under consideration is Decor Corp Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397. In that case, at 398–400, the Full Court set out what it described as a “litmus test” comprising the following two integers:

(a) Whether, in all the circumstances of the case, the decision is attended by sufficient doubt to warrant its being reconsidered by the Full Court; and

(b) Whether substantial injustice would result if leave were refused supposing the decision to be wrong.

164. As the Full Court itself said in Decor Corp Pty Ltd, the test which it described is appropriate for the general run of cases. That test should not, however, be applied as if it were some hard and fast rule. Each case must be considered on its merits.
165. The flexibility of an appellate court’s discretion in respect of an application for leave to appeal from an interlocutory decision in relation to a matter of practice and procedure was emphasised by French J (as he then was) in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 at [42]–[44] (pp 583–584). As French J noted, the Court must exercise particular caution in reviewing decisions relating to matters of practice and procedure where no questions of general principle are at stake (see also Adam P. Brown Male Fashions Pty. Ltd. v Philip Morris Inc (1981) 148 CLR 170 at 177; Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 at [53] (p 78); and Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at [34] (pp 664–665)).
166. Goldberg J expressed the relevant test slightly differently in Zegarac v Pitcher Partners [2009] FCA 1061 at [16]. In that case, his Honour said that the applicant for leave to appeal is required to show that the decision appealed from will work a substantial injustice if it is not reviewed.
167. In the present case, at [95] of his Reasons (which has been extracted in full by Buchanan J in his judgment), the primary judge expressed a strong preference for the submissions advanced by the respondents (FKPS and FGUP). His Honour saw substantial benefits in terms of potential savings in costs and time and in terms of the efficient disposition of the whole case when he ordered the trial of the separate questions. It was open to his Honour to take the course which he did, notwithstanding that, in the end, depending on the outcome of the trial of those questions, the forebodings of Spirits may turn out to have been soundly based.
168. The question of whether Foreign Economic Closed Joint Stock Company Sojuzplodoimport (VAO-SPI) was the legal successor to Sojuzplodoimport and thus had the legal right to assign the relevant trade marks is squarely raised by the current pleadings as an issue for determination by the Court (see esp par 14 and par 24 of the Further Amended Cross-Claim and par 14 and par 24 of the Defence to that Cross-Claim). Furthermore, the respondents have asserted in their Cross-Claim that the effect of the Russian judgments dated 21 December 2000 and 16 October 2001 was that Sojuzplodoimport continued to exist as a separate legal entity following the formation of VAO-SPI with the consequence that VAO-SPI was never entitled to assign the relevant trade marks which ultimately ended up in the hands of Spirits. In addition, Spirits has pleaded that the Russian judgments “... do not have any force in Australia”. Thus, the legal effect in Australia of the Russian judgments is squarely raised on the pleadings in their current form. The ECHR judgment is mentioned on the pleadings as they currently stand although, because those pleadings predate the judgment of the ECHR, the parties’ respective contentions as to the legal effect of that judgment have not yet been squarely raised on the pleadings.
169. I think that the separate questions ordered by the primary judge are adequately anchored in the existing Cross-Claim and Defence to Cross-Claim, although the primary judge may well consider that, well before the trial of those questions, it would be appropriate to require the parties to articulate either by means of amended pleadings or some other appropriate process:

(a) The particular contentions of fact and law which they will advance at the trial of the separate questions;

(b) The basis for those contentions; and

(c) Even before evidence is put on, a description of the evidence which they will seek to adduce in support of their respective contentions.

170. By means such as these, his Honour will be able to continue to case manage the trial of the separate questions in a way which most fairly, reasonably and expeditiously readies those questions for hearing.
171. In my view, any perceived difficulties with the current pleadings or the management of the case are not so fundamental as to justify interference by this Court in his Honour’s continued management of the case and ultimate determination of the separate questions.
     

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Associate:

Dated: 20 May 2011