Federal Court of Australia

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. [2021] FCAFC 77

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    Orders 1 and 3 of the orders made by the primary judge on 31 October 2019 be set aside.

3.    Within 14 days of the date of these orders, the appellants file and serve proposed minutes of orders and submissions (limited to 3 pages) as to consequential orders and on the question of costs.

4.    Within 14 days of the receipt of the appellants’ proposed minutes and submissions, the respondent file and serve responding proposed minutes and submissions (limited to 3 pages) on such topics.

5.    Liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Table of Contents

THE COURT:

1    This appeal arises from a long-running dispute over the ownership of the trade marks STOLICHNAYA and MOSCOVSKAYA. The litigation in this Court commenced in December 2004. Most of the proceeding settled some years ago. All that remains is a cross-claim brought by two Russian entities, Federal Treasury Enterprise (FKP) Sojuzplodoimport and Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP VO). On 31 October 2019 the primary judge ordered that any further proceeding on the cross-claim be permanently stayed. This is an appeal from that order. Leave to appeal had earlier been granted by the primary judge. For convenience we will refer to the appellants collectively as FKP unless it is necessary to distinguish between them.

2    The basis for the permanent stay order was the failure of the Russian Federation, which stands behind FKP, to comply with an invitation to give discovery over “an unreasonably extensive period of time” ([2019] FCA 1772 at [2]). In those circumstances his Honour decided that the cross-claim had become an abuse of process.

3    The permanent stay order gave effect to three sets of reasons previously delivered by the primary judge. His first set of reasons was delivered on 20 November 2017 (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345) and explained the basis for his temporary stay order (the temporary stay reasons). His second set of reasons was delivered on 30 May 2019 (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802) which discussed the basis of a proposed permanent stay but otherwise made no final orders (the permanent stay reasons). His third set of reasons was delivered on 31 October 2019 (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772) culminating in his order permanently staying the cross-claim (the form of orders reasons).

4    Before proceeding further, it is convenient to say something about the cross-claim.

5    In February 2005, FKP commenced their cross-claim against the respondent to the present appeal, Spirits International B.V. (Spirits), a company registered in the Netherlands. This is the only part of the larger main proceeding that is still on foot.

6    The cross-claim alleges that FKP are the true owners of certain trade marks, including the STOLICHNAYA and MOSCOVSKAYA trade marks. We will refer to these trade marks as the Australian trade marks to distinguish them from the equivalent trade marks that are the subject of cognate litigation being conducted by FKP, including in Russia, the US and the Netherlands.

7    In contrast, Spirits asserts that it is the owner of the Australian trade marks; it is presently the registered owner.

8    The principal relief FKP seek is rectification of the Register of Trade Marks pursuant to s 88 of the Trade Marks Act 1995 (Cth) to record the second appellant (FGUP) as the registered owner of the Australian trade marks or otherwise to cancel them.

9    The cross-claim alleges that the Australian trade marks were misappropriated shortly after the collapse of the former Soviet Union.

10    It is common ground that before 20 January 1992 an entity called VVO was the registered trade mark owner.

11    A key issue is whether VVO was transformed on 20 January 1992 into a new entity, VAO. We will refer to this issue as the transformation issue throughout our reasons.

12    In the cross-claim, FKP allege that the transformation did not occur, with the result, it is said, that VVO remained in existence and was the true owner of the Australian trade marks until it was re-named and re-organised as FGUP in 2001. It is said that since then, FGUP has been the Australian trade marks’ true owner.

13    In its defence to the cross-claim, Spirits says that on 20 January 1992 VVO was transformed into VAO, which acceded to all of VVO’s property. It is said that in 1998 the Australian trade marks were then transferred from VAO to another entity, ZAO, which in 1999 assigned them to Spirits.

14    Further, Spirits says that even if the transformation of VVO into VAO did not occur, the Register should not be rectified for three reasons. First, it says that FKP delayed in bringing the cross-claim and Spirits is therefore entitled to assert laches to defeat such rectification. Second, it says that VAO was long held out as the successor entity to VVO by the Russian Federation (the Federation). Accordingly, it says that the Federation’s emanations, FKP, cannot now be heard to say otherwise. That is to say, Spirits pleads and relies upon a form of estoppel by conduct or equitable estoppel. Third, it says that relief should be refused under s 88 as a matter of discretion for reasons not dissimilar to those upon which the laches and estoppel defences rest. We will refer to these defences collectively as the discretionary defences.

15    In their reply, FKP say that they are entitled to rely upon various issues estoppel arising from decisions in the Netherlands (the Dutch decisions) in relation to the transformation issue and the discretionary defences. In its rejoinder, Spirits relevantly denies the issues estoppel, denies that the Dutch decisions answer the discretionary defences, and says that the Court should not recognise the Dutch decisions. On this latter point Spirits has sought to invoke the principle in Arnold v National Westminster Bank plc [1991] 2 AC 93 at 108 and 109 (the Arnold principle), suggesting that special circumstances exist such as should deny the operation of any issue estoppel. We will return to discuss the problematic invocation of this questionable principle later.

16    The primary judge permanently stayed the cross-claim on 31 October 2019. He did so on the basis that the Federation had failed unreasonably to give discovery and that its continuing inaction or delay had reached a point where the proceeding had become an abuse of process.

17    With respect, we have reached a different conclusion.

18    We agree with the primary judge that some form of permanent stay of aspects of the cross-claim was warranted. But in our view, his Honour’s discretion miscarried in ordering a permanent stay of all of the cross-claim. His Honour ought to have permitted the cross-claim to be litigated to the extent of permitting a consideration of the issues estoppel allegedly raised by the Dutch decisions and their operative effect, and to allow a consideration of the viability of Spirits’ discretionary defences.

19    Given that the form of orders reasons are affected by House v The King (1936) 55 CLR 499 error, the permanent stay order should be set aside. We considered whether we should re-exercise the relevant discretion for ourselves. On balance, however, it seems more appropriate for the primary judge to re-consider the matter in light of our reasons. This will provide the necessary flexibility for his Honour to properly consider how best to deal with the issues estoppel and the discretionary defences in light of the material which would be before him on a re-hearing.

(a)    Background

20    Before analysing the arguments on appeal in detail, it is necessary to give further background concerning the three decisions and the three sets of reasons.

The temporary stay decision

21    On 23 November 2005, Spirits filed a notice of motion seeking discovery from the Federation, having indicated in correspondence that the categories it sought went to both the transformation issue and the discretionary defences. Schedule B to the notice of motion listed 12 entities that it was said that the Federation “includes, but is not limited to”. During the course of this proceeding it has come to be accepted that this list should be treated as containing 13 entities, which we will refer to as the Federation entities. We set out a table of these Federation entities later in our reasons.

22    The hearing of the motion was fixed for 3 March 2006. But prior to the hearing, the notice of motion was amended including to abandon the list of Federation entities. A potential consequence of the removal of the Federation entities from the amended notice of motion was that every agency of the Federation would need to be searched. Accordingly, on 5 July 2006, Edmonds J, who concluded that the Federation was the real principal cross-claimant, declined to order discovery against it in the form sought in the amended notice of motion. He indicated that he would hear the parties on the categories of discovery that might be given by the Federation before formulating the precise terms of any order (SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 2) (2006) 155 FCR 150 (the 2006 reasons)).

23    On 5 September 2006, Edmonds J ordered that unless the Federation provided discovery of categories to be agreed or determined, the cross-claim would be stayed pending further order. His Honour granted FKP leave to appeal from this order.

24    On 28 March 2007, the Full Court allowed an appeal from Edmond J’s order (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International N.V. (2007) 157 FCR 558 (the 2007 Full Court reasons)).

25    The Full Court proceeded on the basis that the Federation had appointed FKP as its representative in the proceeding and that the Federation was the real cross-claimant. It did not cast doubt on the necessity for the Federation to provide discovery. But it said that Edmonds J’s decision was subject to an error, which was that it was not necessary for the fair conduct of the proceeding for an order to be made effectively requiring the Federation to undertake the process of discovery without first giving the Federation the opportunity to do so voluntarily and in co-operation with FKP (at [20]–[22] and [24]).

26    The Full Court noted there was power to make an order of the kind Edmonds J had made even if the Federation was not “the real plaintiff”, because, as FKP accepted (at [10]):

[R]elevant and potentially significant documents are held by the Russian Federation or its various instrumentalities which FKP and FGUP do not themselves hold or have power to obtain, and where FKP, at least, is acting in the interests of the Russian Federation and ultimately for its benefit …

27    The Full Court observed that “the only sanction for non-compliance [with such an order] would have been a stay of the main proceedings” (at [15]). Further, it stated (at [23]) that:

The Court would expect the parties and the Russian Federation to cooperate in undertaking the necessary discovery process. Of course, if such an expectation is not met, then the Court has power to ensure that justice is done between the parties …

28    Some years later, on 4 December 2013, Edmonds J ordered by consent that FKP provide discovery of documents within the categories specified in Annexure B to those orders (the discovery categories).

29    The 4 December 2013 orders did not deal with the Federation and were confined in their operation to FKP, presumably because the parties understood that the Federation first had to be invited to give discovery voluntarily.

30    In that regard, on 27 August 2014, FKP’s solicitors, Agility Legal, wrote to Spirits’ solicitors, King & Wood Mallesons, and said:

[Our] clients have prepared requests to be sent to each of the Russian Federation State bodies named in schedule B of your client’s motion dated 23 November 2005 for documents in their possession, custody or power that fall within the agreed categories of documents for discovery by the cross-claimants. All of the requests will be delivered by the end of this week, at the very latest. We have been instructed that it may take between two and six months to receive a response from each state body.

31    On 16 October 2014, FKP’s solicitors wrote to Spirits’ solicitors and said:

[I]t would appear that the relevant State bodies are voluntarily, and in co-operation with your client, undertaking the discovery process. We can see no prejudice being caused to the parties as a result of the delay in obtaining responses from the remaining State bodies, who have indicated that a response will be forthcoming in the coming weeks. Therefore, our view/position is that it would be premature for your client to file an interlocutory application in relation to the production of these documents by the Russian Federation.

32    Accordingly, by no later than October 2014, the Federation had been invited to give and was said to be undertaking discovery in accordance with the same discovery categories as FKP.

33    By November 2015, however, only around 110 documents had been discovered and only by some of the Federation entities.

34    On 18 November 2015, Spirits’ solicitors wrote to both the Federation’s Ambassador and the Federation’s Trade Mission, both in Australia, asking them to request that each of the Federation entities provide documents in their possession, custody or control which fell within the discovery categories. We need not linger on this correspondence or reflect on how fruitful (or otherwise) these communications turned out to be.

35    On 19 August 2016, Spirits applied for a stay of the cross-claim on the basis that the Federation had failed to give discovery, notwithstanding that it had been invited to do so.

36    At the hearing of the stay application on 2 November 2016, FKP submitted that they were “taking this application on at the factual level” on the basis that the Federation’s discovery had been adequate. Importantly, FKP, according to Spirits, did not argue that the Federation was not required to give discovery relating to the discovery categories because no order had been made for it to do so. Spirits submitted that it is not now open to FKP to adopt a different position on the present appeal. We discuss this matter later.

37    On 20 November 2017, his Honour ordered a stay of the cross-claim until further order.

38    In staying the proceeding on a temporary basis, the primary judge found that the Federation had not made a reasonable attempt to give discovery and held that the failure to do so constituted an abuse of process (see at [17], [60]–[62] and [65] of the temporary stay reasons).

39    In particular, the primary judge found that certain documents had not been discovered by FKP, namely documents which had been seized from the premises of VAO and ZAO between 1999 and 2002 and in 2007 (at [19]–[38]) and six particular kinds of documents that were said to be responsive to the discovery categories (at [39]–[59]). He found that the documents which had not been discovered were relevant to the transformation issue. There seems to have been a debate between the parties before us as to whether his Honour also found such documents to be directly relevant to the discretionary defences. We will return to this later.

40    In the temporary stay reasons, his Honour said (at [7]):

So the critical question in the case is whether VVO was transformed on 20 January 1992 into VAO, as Spirits contends, or not, as FKP/FGUP contends. There are some other issues too, such as the effect for res judicata purposes of some related proceedings before the Dutch courts and other issues such as estoppel and laches. But these are not relevant to the disposition of Spirits’ application for a stay.

41    The primary judge, after observing that the Federation had failed to respond to the invitation to give discovery, concluded that it was necessary to stay the proceeding until further order. In doing so, he considered (at [65]) whether he should instead make the order originally made by Edmonds J on 5 September 2006, that is, an order that unless the Federation gave proper discovery by a given date, the proceeding would be stayed. But he held that that had, “in effect, already happened once” as the “invitation had been sent but not really responded to” and that it was “difficult to justify putting Spirits to the inconvenience and expense of making this application a second time” (see at [64] and [65]). Accordingly, he stayed the proceeding until further order, “fully cognisant of the gravity of that exceptional step”, but seeing “no other way of ensuring that these proceedings are conducted fairly” (at [65]).

42    The primary judge also ordered that, if proper discovery had not been given by 30 November 2018, Spirits could apply to dismiss the proceeding (see at [65] and [66(4)]).

43    Before moving on, it is necessary to make some brief observations concerning the temporary stay reasons.

44    The orders made as part of the temporary stay reasons were:

 1.    The proceeding be stayed until further order.

2.    The Cross-Claimants pay the Cross-Respondent’s costs of the application for the stay.

 3.    The stay in Order 1 does not prevent the Cross-Claimants from applying to lift     the stay on the basis that they have caused proper discovery to be given by the     Russian Federation.

 4.    In the event that proper discovery has not been given by 30 November 2018,     the Cross-Respondent be granted leave to file an interlocutory application     seeking the dismissal of the Cross-Claim.

45    What was meant by “proper discovery” was unclear in the absence of discovery orders being made against the Federation. But it would seem that what was intended was the discovery categories stipulated by Edmonds J on 4 December 2013 and embracing the 13 Federation entities.

46    Further, at [15]–[17] in the temporary stay reasons, it was said:

The present application for a stay represents the end-point of the drawn-out process commenced by the Full Court’s decision. On 4 December 2013, the parties were able to agree what the relevant categories for this discovery process should be and, on that day, Edmonds J made further orders giving effect to that agreement. As I understood it, there was no substantive complaint about FKP/FGUP’s own compliance with those orders. The difficulty instead lay in FKP/FGUP’s efforts to have the Russian Federation give discovery of the same matters.

Those efforts were as follows. In the second half of 2014, the solicitors for FKP/FGUP wrote in similar terms to 11 entities of the Russian Federation. Some of these entities produced small numbers of documents but some produced no documents at all. In all, approximately 110 documents were obtained as a result of these requests.

For the reasons which now follow, I do not think the Russian Federation has made a reasonable attempt to give discovery in terms of the categories specified by Edmonds J on 4 December 2013. The cross-claim will be stayed until further order. If proper discovery is not given by 30 November 2018, I will entertain an application, at that time, to dismiss the cross-claim as an abuse of process and/or for want of prosecution.

47    Aspects of this reasoning are problematic. On 4 December 2013, it was the parties that agreed the discovery categories, not the Federation or the Federation entities. Further, no order had been made against the Federation or the Federation entities.

48    Let us return to the chronology.

49    Subsequently, FKP did not seek or obtain leave to appeal the temporary stay decision.

50    Spirits said that in the circumstances it is not open to FKP to argue on the appeal before us that it was wrongly decided. That is an accurate statement insofar as the temporary stay order is concerned. But if part of the temporary stay reasons is problematic and has influenced his Honour’s later consideration in the permanent stay reasons or the form of orders reasons, then it cannot be so quarantined.

51    No discovery at all, let alone “proper discovery”, was given by 30 November 2018.

52    Accordingly, on 7 December 2018, Spirits applied to dismiss the proceeding. Spirits later sought an order that the proceeding be permanently stayed, an order which his Honour ultimately granted.

53    On 7 March 2019, FKP discovered 7,427 pages of documents. Many of these documents were in Russian and/or redacted.

54    On 8 March 2019, FKP filed an interlocutory application seeking to lift the temporary stay of the cross-claim. Both Spirits’ application and FKP’s application were heard on 14 March 2019.

Permanent stay decision

55    On 30 May 2019, the primary judge published his permanent stay reasons, but made no final orders.

56    As his Honour recorded in his reasons, FKP submitted that they had undertaken “reasonable searches” and given proper discovery.

57    There is cognate litigation underway in the US District Court for the Southern District of New York between the same parties. A discovery master, Discovery Master Brodsky, has been appointed by that Court to manage issues related to discovery in that proceeding.

58    FKP said that they had given Spirits various documents produced pursuant to an order of Discovery Master Brodsky on 9 November 2017 (the first Brodsky order). These documents were discovered by the Federation entities listed at [104] of the permanent stay reasons, together with the State Archive and subsidiary agencies of the Ministry of Finance and the Ministry of Economic Development and Trade (the Brodsky Federation entities).

59    Further, FKP said that insofar as the first Brodsky order did not cover the Federation entities listed at [68] (the non-Brodsky Federation entities), they had made further and reasonable inquiries of those entities.

60    We discuss the 13 Federation entities and their Brodsky or non-Brodsky status later in our reasons.

61    The primary judge held that FKP’s approach involved asking the wrong question. He said that the correct question was whether the Federation, not FKP, had given proper discovery (at [61] and [62]–[65]).

62    His Honour held that the evidence did not establish that the Federation had given proper discovery (at [61]). Indeed, the primary judge concluded that the Federation had “not made reasonable efforts to give discovery and that this failure [was] on-going” (at [133]). His Honour also made specific findings about the Federation’s failure to give proper discovery in relation to various Federation entities (see at [80], [85], [88]–[90], [93]–[94], [101]–[102], [130] and [133]–[134]).

63    He concluded that subject to a “carve-out”, it was appropriate to permanently stay the cross-claim as an abuse of process insofar as the allegations made in it were related to the topics in respect of which the Federation had failed to give discovery (see at [157] and [160]–[162]).

64    His Honour considered this appropriate because the proceeding had been brought on the Federation’s behalf, but the Federation had not to any extent co-operated in providing discovery, despite being given more than a fair opportunity to do so (at [153]). Further, it was unfair that the litigation should be conducted in such a fashion where the Federation used FKP in effect “as its cat’s paw” (at [154]). Further, Spirits had been prejudiced by the Federation’s failure to give discovery because access to the documents held by the Federation was significant to ensuring its ability to fairly propound its defence and the non-production of those documents had occasioned unjustifiable oppression to Spirits’ ability to do that (at [155] and [157]). Further, he said that the delay to the proceeding that had been caused by the Federation’s failure to give discovery since 2015 was itself a substantial species of prejudice to Spirits (at [155]).

65    But the primary judge also held (at [160]) that FKP ought to be permitted to pursue so much of the proceeding as was unaffected by the failure of the Federation to voluntarily give discovery.

66    In this context, it is to be noted that the primary judge referred at [159] to what was said by Edmonds J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2010] FCA 1293. In ordering a trial of separate questions, which was not ultimately pursued, as to whether certain foreign judgments established, inter alia, issues estoppel binding on Spirits, Edmonds J noted (at [95]) that a resolution of those questions may resolve the chain of title issues. Further, Buchanan J in the Full Court (Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport (2011) 91 IPR 438 (the 2011 Full Court reasons)), refusing leave to appeal from that decision, recorded Spirits’ concession that an affirmative answer to each of the separate questions would all but eliminate Spirits’ prospects of resisting the cross-claim (at [129]).

67    As is apparent, his Honour envisaged that a further hearing would take place as to the nature of the final orders to be made concerning the ambit of the permanent stay.

The form of orders decision

68    On 14 October 2019, his Honour heard further argument concerning the form of orders to be made.

69    On 31 October 2019, he determined and ordered that there be a permanent stay as to the whole of the cross-claim.

70    The primary judge in his form of orders reasons considered but rejected FKP’s application to pursue their contention that Spirits was bound by adverse issues estoppel. For the purposes of that hearing, FKP relied only on those issues estoppel arising from the Dutch decisions.

71    It is to be noted that at the time of his Honour’s form of orders reasons, the Dutch decisions in one sense were not final. But on 24 January 2020, the Supreme Court of the Netherlands dismissed Spirits’ appeal. We discuss this Supreme Court decision and the Dutch proceedings in more detail later in our reasons.

72    FKP submitted that in determining FKP’s application for a carve-out from the permanent stay, the primary judge did not consider, properly or at all:

(a)    what impact any non-provision of documents in the control of the Federation would have upon Spirits’ ability to propound the discretionary defences, especially as most of the discovery categories were framed by reference to the transformation issue;

(b)    given the facts upon which the Dutch decisions found that VVO was not transformed into VAO, what documents could change that conclusion; and

(c)    whether the needs of justice as between the parties to the proceeding warranted FKP from being locked out from making an application for judgment on the grounds that Spirits was precluded by the Dutch issues estoppel from relying on its pleaded defences.

73    We discuss these criticisms later. But first we should address FKP’s application to adduce new evidence.

(b)    Leave to tender new evidence

74    FKP seek leave under s 27 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to rely upon the affidavit of their solicitor, Ms Michelle Fox, affirmed on 27 April 2020. They also seek leave to tender the final judgment of the Supreme Court of the Netherlands on 24 January 2020 and two decisions in the US proceeding in which Discovery Master Brodsky held that FKP’s discovery is now complete (the second and third Brodsky orders).

75    The discretion under s 27 must be exercised judicially, although it is not at large, despite the absence of any express limitations. In particular, like any power conferred by the FCA Act, it must be exercised in the way that best promotes the overarching purpose of the civil practice and procedure provisions, namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible (s 37M).

76    The power is not limited to fresh evidence, being evidence of which an applicant was unaware at the time of the original hearing, but this circumstance is not irrelevant. In many cases, although not the present, it will be material to consider whether the evidence could have been called at trial and, if it could have been, the reasons for why it was not so called.

77    Further, an important consideration is whether the further evidence would have produced, or at least would be likely to have produced, a different result had it been available at the trial. In other words, the evidence must at least be probative of an issue.

78    We have no difficulty receiving the final judgment of the Supreme Court of the Netherlands together with the English translation. Indeed, this was not objected to. But we do have difficulty receiving the second and third Brodsky orders. In one sense they are truly new evidence. But this does not assist FKP.

79    In relation to the Brodsky orders, Ms Fox made reference to the following.

80    First, she explained that the primary judge had referred to the first Brodsky order in his permanent stay reasons (at [57] and [150]). The first Brodsky order had been made by Discovery Master Brodsky on 9 November 2017 and contained what we will refer to as the US discovery categories, albeit that it is not necessary for our purposes to delve into the detail of that order.

81    Second, it was pointed out that on 22 August 2019 the Discovery Master published the second Brodsky order in the US proceeding. The application which resulted in the second Brodsky order concerned an application by FKP to lift the stay ordered under the first Brodsky order. The Discovery Master under the second Brodsky order denied, without prejudice to renew, the motion to lift the stay.

82    Third, it was said that on 21 February 2020, the Discovery Master published the third Brodsky order in the US proceeding regarding the motion to lift the discovery stay. Under the third Brodsky order, the stay under the first Brodsky order was lifted. Under the first Brodsky order, the Discovery Master had granted Spirits’ motion to compel FKP to produce certain documents in the custody of the Federation, and granted Spirits’ motion to stay all discovery pending such production.

83    Each of these orders has been challenged in the US proceeding. FKP have challenged the first Brodsky order and Spirits has challenged the second and third Brodsky orders.

84    At the time of the hearing of the appeal before us, each of the challenges remained pending.

85    The second and third Brodsky orders concern discovery in the US proceeding, which the primary judge addressed in his permanent stay reasons at [57] and [150] by reference to the first Brodsky order. The primary judge handed down these reasons on 30 May 2019. As Ms Fox pointed out, the second and third Brodsky orders post-date those reasons, having been handed down on 22 August 2019 and 21 February 2020, and accordingly could not have been tendered before the primary judge.

86    The second and third Brodsky orders relate to grounds 1, 2 and 3 in FKP’s notice of appeal, which we will set out in a moment. It is FKP’s submission that, if the primary judge had not made the errors of principle that he made in his permanent stay reasons, the second and third Brodsky orders would have produced a different result, being one in favour of FKP.

87    FKP said that the primary judge assessed the substantial discovery they provided on their own behalf and as a result of obtaining documents from the Federation entities and that he did so in part by reference to compliance with the first Brodsky order (see [104]–[129]).

88    FKP submitted that the second and third Brodsky orders are contrary to the primary judge’s finding in his permanent stay reasons at [56] that “[t]here has been extensive debate about discovery in [the US] proceeding which remains ongoing”. In the permanent stay reasons at [123]–[129] the primary judge made a series of remarks to the effect that production in the US proceeding was not complete. The order and reasons constituting the second and third Brodsky orders were that FKP’s production was as complete a production of responsive documents as it was reasonable to expect. The Discovery Master in the second and third Brodsky orders rejected Spirits’ arguments as largely grounded in speculation juxtaposed against the credible proof that FKP had conducted a reasonable search for relevant documents from the Brodsky Federation entities (at [67]) (see the third Brodsky order, pages 2 to 3). The US discovery was provided to Spirits ([58]).

89    In the permanent stay reasons at [105] the primary judge said that “[the question of whether] the searches done in the pursuit of the US Proceeding are complete” was a relevant consideration in the Australian proceeding, subject to him finding, which he did not, that the Australian discovery categories were necessarily encompassed by the US discovery categories. FKP submitted that the primary judge ought to have found that the US discovery categories are relevantly commensurate with the Australian discovery categories, with the result, so it is said, that it is a relevant consideration on appeal that the Discovery Master considered the matter and held that searches in the US proceeding are complete.

90    FKP submitted that, when consideration is given to the reasonable efforts by FKP in obtaining documents from the Federation entities, the proceeding ought not to have been stayed, and the injustice of the stay is heightened by the second and third Brodsky orders, where the Discovery Master held, on 21 February 2020, that FKP’s discovery was complete and dismissed Spirits’ arguments as speculative.

91    FKP accepted that one important consideration in determining whether the s 27 discretion should be exercised is whether the further evidence would have produced, or at least would be likely to have produced, a different result had it been available at the trial. And the focus of this consideration is the likely impact of the new evidence upon the trial judgment, as opposed to foreseeing the likely impact of the further evidence upon the appeal judgment.

92    FKP submitted that the second and third Brodsky orders are likely to have produced a different result had they been available at the trial.

93    First, FKP said that the primary judge in his permanent stay reasons found that the US discovery was provided to Spirits ([58]) and assessed the substantial discovery provided by FKP, on their own behalf and on behalf of the Federation, in part by reference to compliance with the US discovery orders (at [104]–[129]).

94    Second, FKP said that it was Spirits that tendered the first Brodsky order before the primary judge.

95    Third, FKP said that the primary judge’s findings in his permanent stay reasons at [56]–[57] and [123]–[129] concerning the US discovery, including that “[t]here has been extensive debate about discovery in [the US] proceeding which remains ongoing”, were clearly based upon findings in the first Brodsky order (see pp 33 and 39).

96    FKP said that the primary judge did not regard himself as prohibited by s 91 of the Evidence Act 1995 (Cth) from relying upon these findings, and submitted that he would not be so prohibited in relation to findings in the second and third Brodsky orders. FKP asserted that the scope of s 91 was unresolved, with some judges taking a restrictive approach. So, in Re HIH Insurance Ltd (in liq) [2015] NSWSC 790 at [58] Brereton J observed that:

[W]hat s 91 is addressing is the formal record of conviction, the formal record of acquittal or the formal judgment or order disposing of a case in a civil case. It is not addressing the reasons for judgment, the findings of fact made by a judge in the course of coming to the final conclusion, nor the remarks on sentence, all of which remain no more than the opinion of the judge.

97    In contrast, FKP pointed to National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Queensland) (2001) 183 ALR 700 at [48] where it was said that “relaxation of the general rule” in s 91 may occur, including in the absence of injustice. It was said that Spirits points to no injustice. Moreover, it was said that under s 190(3), the court may dispense with the application of s 91.

98    Similarly, FKP said that the primary judge did not regard himself as precluded from relying on the findings in the first Brodsky order by the fact that they were not final and submitted that he would not be so precluded in relation to findings in the second and third Brodsky orders. All three sets of orders are under appeal.

99    Fourth, FKP said that the further evidence is contrary to the primary judge’s finding identified above. They argued that the Discovery Master rejected Spirits’ arguments against the proposition that FKP had given proper discovery as largely grounded in speculation juxtaposed against the credible proof that FKP had conducted a reasonable search for relevant documents from the Brodsky Federation entities.

100    Fifth, FKP submitted that the primary judge ought to have found that the US discovery categories were relevantly commensurate with the Australian discovery categories.

101    We reject the tender of the second and third Brodsky orders.

102    The second and third Brodsky orders are not probative of any issue on appeal and do not affect the disposition of the appeal.

103    First, the issue of whether the Federation and, for that matter, FKP have given proper discovery is to be determined based on discovery given in the Australian proceeding, not discovery given in the US proceeding. That was the approach that the primary judge followed in his permanent stay reasons.

104    Discovery in the Australian proceeding involves Federation entities that are not subject to the US discovery orders; as we have said we will discuss these non-Brodsky Federation entities in further detail later in our reasons. And as his Honour said at [56], “[t]he fact is that the Australian Discovery Categories and the entities to be interrogated were settled before the US Proceeding was even commenced”.

105    Further, the fact that the non-Brodsky Federation entities were not subject to the first Brodsky order entails that discovery in the Australian proceeding of documents located as a result of searches carried out for the US discovery, even if this occurred in full, would not be adequate (see the permanent stay reasons at [70]).

106    Second, in the permanent stay reasons, the primary judge did not relevantly rely on the decision of the Discovery Master by which the first Brodsky order was made. That is, his Honour did not rely on any facts found or conclusion reached in the first Brodsky order as to compliance with discovery.

107    Indeed, in the permanent stay reasons the primary judge only referred to the content of the first Brodsky order twice.

108    At [57] the primary judge noted that the first Brodsky order had been made and was subject to review. His Honour did not expand or expound upon, let alone rely upon, the findings or reasoning in the first Brodsky order as to compliance with discovery.

109    And having already rejected FKP’s attempt to re-ventilate the “real plaintiff” issue at [140]–[149], at [150] in obiter his Honour noted “for completeness” that a similar argument had also been rejected in the first Brodsky order.

110    Third, FKP’s attempt to rely on factual findings made in the second and third Brodsky orders is, in any event, precluded by s 91 of the Evidence Act. We agree with what Brereton J said in Re HIH Insurance at [58] and Hunt AJA in Ainsworth v Burden [2005] NSWCA 174 at [94] and [109]. The second and third Brodsky orders cannot be tendered so as to use the findings of fact stated therein as proof of the existence of those facts. And there was no other legitimate basis or purpose for their tender advanced by FKP. Further, we reject the bootstraps argument advanced under s 190(3). The conditions for the exercise of our power under s 190(3) have not been enlivened. And even if they were, we would not exercise our discretion in favour of FKP.

111    Fourth, the second and third Brodsky orders are not final. Spirits has challenged their adoption by the US District Court appointing the Discovery Master. The challenge proceeds as a de novo hearing concerning objections to findings of fact and to conclusions of law (see rules 53(f)(3) and (4) of the Federal Rules of Civil Procedure (US)).

112    Fifth, not all of the US discovery was provided to Spirits in the Australian proceeding. FKP’s position was that approximately 13,000 documents had been discovered in the US proceeding (see the permanent stay reasons at [51]). In contrast, a tranche of 7,427 pages of documents was given to Spirits’ Australian solicitors on 7 March 2019, a week before the hearing of the permanent stay application. Many of those documents were in Russian and/or redacted (see at [52]).

113    For these reasons, leave is refused and the tender of the second and third Brodsky orders is accordingly rejected.

(c)    Some general principles

114    It is necessary at the outset to say something about the relevant principles governing the grant of a permanent stay for a failure to give proper discovery and an appeal from a decision granting such a stay.

115    It is uncontroversial that the primary judge had the power to stay the proceeding to prevent an abuse of the process of this Court. But as Gummow ACJ, Hayne, Crennan and Bell JJ explained, “the term ‘abuse of the process of the court’ may be used in different senses” (Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [88]).

116    Resonating harmoniously with that theme, McHugh J in Rogers v The Queen (1994) 181 CLR 251 at 286 said that although the categories of abuse of process are not closed, cases usually fall into one of three categories:

(1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute.

117    In UBS AG v Tyne (2018) 360 ALR 184, Kiefel CJ, Bell and Keane JJ said (at [1]) that either of two conditions enliven a court’s power to stay proceedings for an abuse of process, namely where the use of the court’s procedures occasions unjustifiable oppression to a party or where such use serves to bring the administration of justice into disrepute. Both conditions are relevant to the present context.

118    In determining whether either condition is satisfied, a consideration of all the relevant circumstances is required, which necessitates “a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case” (see Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 per Lord Bingham of Cornhill).

119    In determining whether the bringing or continuance of a proceeding is an abuse of process, relevant civil procedure statutory provisions such as s 37M of the FCA Act must also be considered. As Kiefel CJ, Bell and Keane JJ said in UBS AG (at [38]):

The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. These wider interests are reflected in s 37M(2) of the FCA. As the joint reasons in Aon Risk Services Australia Ltd v Australian National University explain, the “just resolution” of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the FCA. Integral to a “just resolution” is the minimisation of delay and expense.

(Citations omitted.)

120    Further, in dealing with one condition justifying a stay, being unjustifiable oppression or vexation, and asking whether there is no other fair and practical way of ensuring justice other than a stay, it is relevant to consider whether one can ultimately address any oppression, vexation or injustice short of a stay in determining the relief one might ultimately grant (Rozenblit v Vainer (2018) 262 CLR 478 at [34] per Kiefel CJ and Bell J, at [47] and [48] per Keane J and at [66], [100] and [111] per Gordon and Edelman JJ). And as was said by the plurality in Victoria International Container Terminal Limited v Lunt [2021] HCA 11 at [20], if a less draconian means than a stay can cure any prejudice, then those means should be used. We will return to this question later.

121    Further, failure to give proper discovery is inimical to the conduct of a fair trial and protection of the Court’s processes (Australian National Airlines Commission v The Commonwealth (1975) 132 CLR 582 at 593). In some circumstances it may warrant a stay. Clifton (Liquidator) v Kerry J Investment Pty Ltd [2020] FCAFC 5; 379 ALR 593 discussed such a scenario.

122    One other general point should be made. As the decision to grant a stay is discretionary, the principles of restraint applicable to appellate review stated in House v The King, and elaborated in later cases, apply. As Kitto J said in Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627, the principle as to appeals from discretionary decisions “is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong”.

(d)    The permanent stay reasons

123    FKP raised three grounds of appeal concerning the permanent stay reasons (grounds 1 to 3 of the notice of appeal). Unless otherwise indicated, references to the primary judge’s reasons in this section are references to the permanent stay reasons.

124    Ground 1 is to the effect that the primary judge erred in finding that the Federation and FKP had failed unreasonably to give discovery and that their continuing inaction or delay had reached a point where the cross-claim had become an abuse of process (see at [61], [133], [153] and [160], the form of orders reasons at [17], and the temporary stay reasons at [62]).

125    Ground 2 is to the effect that the primary judge ought to have found that the cross-claim was not an abuse of process, given the primary judge’s findings that:

(a)    FKP were the emanation of the Federation charged with the task of returning to the Federation ownership of the trade marks (see at [9]);

(b)    FKP had been and were making reasonable efforts to obtain documents within the discovery categories in the control of the Federation and to provide them to Spirits (see at [134], [137], [139] and [151]);

(c)    FKP had complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013 (see at [151]); and

(d)    it was a serious thing to do to seek to persuade a foreign state, not otherwise amenable to this Court’s processes, by the imposition of pressure on the parties before it, to produce documents, such that the circumstances in which this might occur were rare (see the temporary stay reasons at [64]).

126    Ground 3 is to the effect that the primary judge erred in finding that there remained substantial searches for documents in the control of the Federation which had not been conducted and which would not be conducted in the foreseeable future (see at [61] and [130]). In essence, it is said that the primary judge:

(a)    erred in finding that neither the Federation nor FKP had conducted the searches necessary for the Ministry of Internal Affairs on the basis that reasonable searches of the Investigation Committee were not complete (at [94]);

(b)    erred in finding that FKP had not discovered the criminal case against Mr Sorochkin in full (at [100]);

(c)    erred in finding that the 8,000 pages located in the Federal Agency for the State Property Management had not yet been provided to Spirits (at [124]);

(d)    erred in finding that FKP were continuing searches of the electronic database of the Apparatus (see at [128]), and that the primary judge ought to have found that such searches were complete; and

(e)    ought to have found that FKP’s searches of the Federal Service on Intellectual Property, Patents and Trademarks (Rospatent) were complete.

127    At the outset we should say that we reject grounds 1 and 2. But as to ground 3, and with respect to the experienced primary judge, there are some inaccuracies and infelicities in the expression of his reasons concerning the searches for documents of some of the Federation entities. But those imperfections do not materially alter or affect his Honour’s ultimate conclusions in the permanent stay reasons, save as to the scope of any permanent stay order which we discuss in detail below in the context of the form of orders reasons.

FKP’s efforts to obtain documents from the Federation entities

128    FKP contended that they had engaged in a reasonable search for documents held by the Federation entities falling within the discovery categories. They pointed to the following matters in support of that general proposition.

129    First, the primary judge found that FKP had complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013 (see at [151]).

130    Second, the primary judge found that FKP had been and were making reasonable efforts to obtain documents within the discovery categories in the control of the Federation entities and to provide them to Spirits (see at [134], [137], [139] and [151]).

131    Third, FKP submitted that the primary judge erred in rejecting Ms Natalie Semenova’s 2019 evidence as to the breadth and unexpected nature of the discovery requirement (at [39]). Ms Semenova, an in-house lawyer for FKP, has been responsible for the administration of the US and Australian proceedings since September 2009. It is said that contrary to the primary judge’s analysis at [39] and [40], FKP’s solicitors’ 27 August 2014 letter was no basis for rejecting her evidence. Further, it is said that the primary judge erred at [42] in construing FKP’s solicitors’ 16 October 2014 letter as suggesting that a process of discovery by the Federation would soon be finished.

132    Fourth, FKP submitted that the primary judge erred in finding that there remained substantial searches for documents in the control of the Federation which had not been conducted and which would not be conducted in the foreseeable future. It is said that the primary judge ought to have found that discovery was substantially and relevantly complete.

133    Fifth, FKP submitted that in considering the nature and extent of the discovery given, the primary judge erred by assuming, without any evidence, that discovery across each of the categories from each of the Federation entities was critical, even if the issues were confined to the discretionary defences.

134    Sixth, notwithstanding the absence of orders against the Federation, in particular orders that set out explicitly the steps required to satisfy the discovery requirement, FKP submitted that the primary judge penalised the Federation for not performing specific discovery tasks (see at [80]).

135    Seventh, FKP submitted that the effect of the primary judge’s decisions was to require the Federation to give discovery of any documents that fell within the discovery categories, without any express order having been made requiring the Federation to do so. In this respect, FKP argued that the primary judge appears to have segued from concluding that the Federation was the real cross-claimant (at [140]–[149]) to treating an invitation that it provide discovery (temporary stay reasons at [4]) into an obligation requiring it to do so (at [62]–[65]), notwithstanding that the Court had declined to make such an order.

136    Eighth, FKP submitted that the primary judge asked himself the wrong question at [61] and [65]. The true question was whether FKP complied with the order that they provide discovery, rather than whether the Federation, which was not the subject of any order, had taken reasonable steps to give discovery (at [34]–[38]).

137    Ninth, FKP submitted that the primary judge imposed on FKP and the Federation a task incapable of being fulfilled, given the breadth of both the discovery categories and the entities from which documents were to be obtained. And in this respect there was a lack of specificity as to what was required to establish that they had satisfied the task. Indeed, the primary judge acknowledged in his permanent stay reasons (at [88] and [135]) the lack of clarity and proceeded on the basis that the Federation did not have to produce affidavits of discovery.

138    Tenth, FKP submitted that the primary judge, in considering whether the Federation had discharged the discovery requirement, erroneously did not have regard to activities undertaken by FKP to obtain discovery from the Federation entities; see at [61], [62], [65], [66], [118] and [153]. Further, it is said that although [61] and [130] contain bare conclusions to the effect that even if FKP’s efforts are taken into account they are insufficient, it stands in contrast to the primary judge’s findings at [134], [137], [139] and [151] that FKP had been and was making reasonable efforts to obtain documents within the discovery categories in the control of the Federation and to provide them to Spirits.

139    Eleventh, FKP submitted that, contrary to the suggestions in the temporary stay reasons at [36] and [40], the permanent stay reasons at [56] (last sentence) and the form of orders reasons at [17] (last sentence), the imposition of any discovery requirement upon the Federation had never been agreed to, settled or determined by consent. Rather, FKP argued that the correspondence between the parties demonstrates that FKP had simply indicated to Spirits in 2014 that requests were to be sent to the Federation entities for documents in the discovery categories. FKP later indicated that the relevant Federation entities appeared to be voluntarily undertaking the discovery process. The evidence was that FKP only had authority to agree on the discovery categories for their own documents, not for discovery by other Federation entities. We again note that the 4 December 2013 orders, including the discovery categories set out in Annexure B, did not identify or extend to the Federation entities.

The Federation entities – General

140    It is convenient at this point to set out each of the 13 Federation entities and their status as a Brodsky or non-Brodsky Federation entity.

141    At this point a number of observations should be made.

142    The third Federation entity, the Ministry of Finance, is not itself a Brodsky Federation entity. Rather, it controlled Rosalcohol, which is a Brodsky Federation entity. As such, the Ministry of Finance is included as a Brodsky Federation entity in respect of the documents produced by Rosalcohol in the US proceeding.

143    Similarly, although the seventh Federation entity, the Ministry of Economic Development and Trade, is not itself a Brodsky Federation entity, it controlled the Federal Agency for the State Property Management and Rospatent, being, relevantly, both Brodsky Federation entities and the eighth and ninth Federation entities. As such, it is appropriate to treat the Ministry of Finance as a Brodsky Federation entity in respect of the documents produced by the Federal Agency for the State Property Management and Rospatent.

144    The 12th Federation entity, the State Archive, stored archival documents for several of the Brodsky Federation entities and was in fact searched by those entities for the purpose of satisfying their US discovery obligations. Thus, though the State Archive was not the subject of a discovery order in the US proceeding, as the primary judge noted, “it is clear that it has also been involved, as a matter of practical reality, in the searches conducted for the US proceeding” (at [69]). For this reason, it is convenient to include the State Archive as a Brodsky Federation entity for the purpose of our reasons given that that entity produced documents in the US proceeding.

145    Expert evidence before the primary judge showed that the State Archive stored documents of federal executive bodies and operated as a library, which both Spirits and FKP could access on generally equal terms (see at [74]).

146    It is now convenient to distinguish further between the Brodsky and non-Brodsky Federation entities.

The first to fourth, seventh to ninth and 12th Federation entities (the Brodsky Federation entities)

147    We begin with the Brodsky Federation entities.

148    The US discovery concerning the Brodsky Federation entities had been provided to Spirits. The US discovery contained documents from eight of the Federation entities, being the first to fourth, and seventh to ninth and 12th Federation entities. As we have said, though the third, seventh and 12th Federation entities were not themselves the subject of the first Brodsky order, these entities produced documents in the US proceeding because, in respect of the Ministry of Finance and the Ministry of Economic Development and Trade, their subsidiary agencies were subjects of the first Brodsky order, and, in respect of the State Archive, as a practical reality given the nature of that entity. As such, it is appropriate to treat these entities as Brodsky Federation entities for present purposes.

149    FKP submitted that the primary judge ought to have found that the US discovery categories were relevantly commensurate with the Australian discovery categories.

150    They argued that there was no basis for his Honour’s finding at [108] that category 2, which we will set out shortly, was not covered by the US discovery, given the primary judge’s acknowledgement that this case was concerned with chain of title in the trade marks in Russia in 1992, as opposed to any chain of title issues specific to the Australian or US registered trade marks (see the temporary stay reasons at [1] and the final orders reasons at [4] and [5]).

151    FKP also argued that the primary judge ought to have accepted their submission that categories 18 and 19, which we will set out shortly, concerned FKP only and were relevantly covered by FKP’s discovery, which the primary judge accepted was complete, with the result that other entities within the Federation were unlikely to hold any relevant documents.

152    FKP submitted that the primary judge also erred in finding (at [128]) that FKP were continuing searches of the electronic database of the first Federation entity, the Apparatus. Based upon the evidence before him, FKP argued that the primary judge ought to have found that such searches were complete. Further, it is said that FKP’s searches of the Apparatus for the US proceeding were completed. The Apparatus later confirmed that if FKP needed to repeat its searches for the Australian proceeding it could do so. It is pointed out that no further documents were found in the repeated searches, with the result that all relevant documents were discovered to Spirits on 7 March 2019.

153    Next, FKP submitted that the primary judge also erred in finding (at [124]) that the 8,000 pages located in the eighth Federation entity, the Federal Agency for the State Property Management, had not yet been provided to Spirits. But the 8,000 pages, which included documents generated by the Agency’s predecessor, the Ministry of Property Relations of the Russian Federation, were reviewed by FKP’s US attorneys for privilege and 3,618 pages were discovered and produced. It is said that his Honour was in error concerning [124] and [131] (seventh dot point).

154    Finally, FKP submitted that the primary judge ought to have found that FKP’s searches of the ninth entity, Rospatent, were complete (cf at [127] and [131]). Rospatent confirmed that FKP could repeat its searches for the Australian proceeding if necessary. Those searches were completed and no further documents were found. It is said that all relevant documents were produced to Spirits in the Australian proceeding on 7 March 2019.

155    By contrast, Spirits submitted that FKP’s approach to the Brodsky Federation entities was misconceived for various reasons.

156    First, Spirits pointed to his Honour’s finding at [122] that FKP’s argument must fail because the discovery categories were not encompassed by the US discovery categories ([121]) and that it was “not enough to satisfy the categories … that documents have been produced in compliance with the Brodsky Order” (at [122]). Spirits submitted that four of the discovery categories were “not necessarily encompassed under the Brodsky Order”.

157    Second, Spirits submitted that FKP’s challenges to findings made for specific Brodsky Federation entities should be rejected as they were supported by the evidence.

158    In our view his Honour was correct to conclude that three of the Australian discovery categories, being categories 2, 18 and 19 were not substantially encompassed in the first Brodsky order. We will return to category 8 in a moment.

159    Category 2 was to the following effect:

Documents dated between 20 January 1992 and November 2004 recording or evidencing the ownership of or title to the Australian Trade Marks.

160    His Honour said in his permanent stay reasons at [108] and [109]:

US Request for Production 4 was ‘All documents relating to your purported chain of title to the Trademarks’ but ‘Trademarks’ was defined to mean, summarising, various US trademarks. I reject therefore the submission that US Request for Production 4 included any documents caught by Category 2. US Request for Production 5 is as follows:

REQUEST FOR PRODUCTION NO. 5:

All documents on which you rely, to which you have referred, or that you have used to form any opinion or understanding about whether or not SPI has any interest in the Trademarks or any of the Foreign Trademarks, or about whether or not PepsiCo, Allied Domecq, or William Grant previously had any interest in the Trademarks or any of the Foreign Trademarks.

‘Foreign Trademarks’ is defined in a way which would include the Australian trademarks. However, US Request for Production 5 is concerned with documents which have been used by the Cross-Claimants to form an opinion as to whether SPI has any interest in the Foreign Trademarks. Category 2, by contrast, is not subject to any such limitation. I therefore reject the submission that Category 2 is fully encompassed in US Requests for Production 4 and 5.

161    There is no reason to doubt his Honour’s conclusion.

162    Category 18 was to the following effect:

Documents evidencing or relating to the involvement of the Russian Federation in this proceeding (Federal Court Proceeding (NSD1816 of 2004) and in the conduct of this proceeding.

163    His Honour said at [116]–[118]:

The Cross-Claimants did not submit that Category [18] was encompassed in the requirements of the Brodsky Order. Instead, they submitted that they had already given discovery of this category of documents. There were two aspects to this. The first was that they relied upon a finding by me at [15] of the First Stay Decision. The second was a contention that they had conducted reasonable searches for these documents.

I do not accept either submission. Paragraph [15] of the First Stay Decision says this:

The present application for a stay represents the end-point of the drawn-out process commenced by the Full Court’s decision. On 4 December 2013, the parties were able to agree what the relevant categories for this discovery process should be and, on that day, Edmonds J made further orders giving effect to that agreement. As I understood it, there was no substantive complaint about FKP/FGUP’s own compliance with those orders. The difficulty instead lay in FKP/FGUP’s efforts to have the Russian Federation give discovery of the same matters.

This says nothing about the primary question here which is whether the Russian Federation has given discovery. For the same reason, it is not to the point that the Cross-Claimants allege they have made reasonable searches.

164    Category 19 was to the following effect:

Documents relating to the negotiation, drafting and grant of the Power of Attorney from FGUP to FKPS dated 8 December 2003.

165    The primary judge said at [120]:

The Cross-Claimants submitted that Category 19 fell within US Requests for Production 10 and 11. These are set out above; they appear to me to have nothing to do with Category 19.

166    His Honour concluded at [121]–[122]:

In light of these matters, it appears to me that Mr Swinson is correct. Categories 2, 8, 18 and 19 of the Australian Discovery Categories are not necessarily encompassed under the Brodsky Order. It is not necessary in that circumstance to assess the correctness of his claims in relation to particular classes of documents.

This means that the Cross-Claimants’ argument must fail. It is not enough to satisfy the categories of discovery approved by Edmonds J that documents have been produced in compliance with the Brodsky Order.

167    At [121] his Honour also included category 8, but it is apparent from what he said at [114] that this was a slip.

168    His Honour then explained that, given the non-overlap of the Australian discovery categories with the US discovery categories and the fact of there being non-Brodsky Federation entities, it was not strictly necessary to consider how complete the searches had been under the first Brodsky order. Nevertheless he went on to make the following observations:

The Federal Agency for the State Property Management

124    8,000 pages have been located but they have not yet been provided to the Cross-Respondent. Production is therefore incomplete.

The Ministry for Agriculture

125    Searches of this Ministry are not complete. The Ministry informed the Cross-Claimants that it would collate the documents for the period 2004-2009 after which they will be permitted to inspect them. Plainly, this process is not complete.

126    Certain documents of the Ministry of Agriculture are deposited with the State Archive. Ms Semenova has deposed that the State Archive searches are complete resulting in 100 pages of documents. Nevertheless, the continuing searches at the Ministry itself demonstrate that discovery is not complete.

The Russian Agency on Patents and Trademarks

127    It appears as though 1,000 pages of documents have been identified as relevant to the Australian Proceeding, I am unable to fully determine the position in relation to this agency as the evidence is too unclear.

The Apparatus

128    Although 1,000 pages of documents have been produced from the Apparatus this process is not yet complete as FKP is continuing searches of the electronic database.

The Administration of the President

129    The President’s office does not send documents to the State Archive and destroys documents after 5 years unless they are important. Nevertheless, the Cross-Claimants were permitted to search and found 18 pages of reports.

169    At [124] his Honour neglected to mention that 3,618 pages had been provided to Spirits. Further, his Honour’s statements in [126] (last sentence), [127] and [128] do not appear to be accurate. Nevertheless, these errors and omissions do not assist FKP. The issue before the primary judge did not turn on the completeness of the discovery ordered in the US proceeding.

170    In summary then, with respect to the Brodsky Federation entities, his Honour was correct to find that there were various Australian discovery categories that were not embraced by the US discovery categories.

The fifth, sixth, 10th, 11th and 13th Federation entities (the non-Brodsky Federation entities)

171    We now turn to the non-Brodsky Federation entities. We begin with FKP’s complaints.

172    FKP alleged that, in relation to the fifth Federation entity, the Ministry of Internal Affairs, the primary judge erred in finding at [94] that neither the Federation nor FKP had concluded the searches necessary for this entity on the basis that reasonable searches of the 13th Federation entity, the Investigation Committee, a separate and independent state body, were not complete.

173    As to the sixth Federation entity, the Federal Security Service, which was the federal executive body responsible for the provision of security of the Federation, Ms Semenova set out inquiries made by FKP of the Federal Security Service, in which the Federal Security Service indicated that it had no relevant documents. FKP said that the primary judge concluded at [86] and [87] that these indications were false apparently because President Putin did not direct the Federal Security Service to swear an affidavit to that effect. But there was no order requiring it to do so, as the primary judge accepted (at [135]).

174    FKP submitted that documents of the 10th Federation entity, the Federal Service on Financial Markets (the former regulator of financial markets), were likely to be of tangential relevance. Ms Semenova gave evidence that this entity’s documents were in the State Archive and described the searches conducted by FKP of the State Archive. As we have said, the State Archive was also searched as part of the US discovery (at [77]).

175    FKP submitted that the 11th Federation entity, the Accounting Chamber, was a permanent standalone supreme body that performed independent external audits of the use of federal budget funds. Evidence was given as to FKP’s inquiries of this entity. As the primary judge recorded (at [83]), it had produced documents relating to the audit of FKP. But it held no other documents and documents from the period were deposited in the State Archive. FKP submitted that, other than documents the subject of the specific audit of FKP, documents of the Accounting Chamber from that period were likely to be of tangential relevance. Further, as we have said, evidence was given as to searches conducted by FKP of the State Archive. And the State Archive was searched as part of the US discovery.

176    FKP also submitted that the primary judge erred in finding at [100] that FKP had not discovered the criminal case against Mr Sorochkin in full. FKP discovered only that part of the criminal case which had not previously been discovered by Spirits in the US proceeding (see Ms Semenova’s evidence at [173]).

177    By contrast, Spirits submitted that, as the non-Brodsky Federation entities were not the subject of the US discovery orders, on no view could compliance with those orders satisfy the Australian discovery obligation in relation to those entities.

178    Further, Spirits submitted that many of the primary judge’s findings in relation to the non-Brodsky Federation entities have not been challenged. Spirits pointed to findings that:

(a)    searches of the State Archive were not complete ([80]–[81]);

(b)    searches for records of the Accounting Chamber had not been conducted ([84]–[85]);

(c)    searches of the Federal Service on Financial Markets, Ministry of Economic Development and Trade and Ministry of Finance were not shown to have been completed ([89], [90], [93] and [94]); and

(d)    searches of the Investigation Committee were “not remotely close to being finished, indeed, [they have] scarcely commenced” ([101]).

179    Spirits also submitted that FKP’s assertion that documents from certain of these entities were likely to be of tangential relevance was without any evidentiary foundation. Further, Spirits submitted that such a proposition implies an approach which is inconsistent with Clifton. We discuss Clifton below. It suffices to say at this point that Spirits has sought to draw too much out of Clifton.

180    Spirits further submitted that the primary judge did not err in finding that searches in relation to the Ministry of Internal Affairs were incomplete. It argued that this conclusion necessarily followed from his Honour’s unchallenged findings that its documents were held by the Investigation Committee, searches of which were not “remotely close” to being finished (at [94] and [101]).

181    We should say something about the primary judge’s findings concerning the searches of the non-Brodsky Federation entities and also the State Archive.

182    In relation to the State Archive, his Honour concluded in the permanent stay reasons that the searches of the State Archive were incomplete (at [81]). That conclusion has not been successfully impugned.

183    In relation to the Accounting Chamber, his Honour said (at [85]):

I conclude therefore that neither the Russian Federation nor the Cross-Claimants have conducted reasonable searches for documents of the Accounting Chamber. No adequate reason is proffered for why the State Archive has not been searched for the Accounting Chamber’s documents beyond the Cross-Claimants’ lack of resources. As with the State Archive itself, there is no evidence of the Russian Federation taking any step to produce the Accounting Chamber’s documents.

184    That conclusion has not been successfully impugned.

185    As to the Federal Service on Financial Markets, the Ministry of Economic Development and Trade and the Ministry of Finance, the primary judge appeared to accept that extensive searches had been undertaken, but that searches of the State Archive for documents lodged by these entities had not been completed (see at [89]–[93]).

186    The state of the searches of the State Archive should be put in context. Ms Semenova gave the following evidence concerning searches of the State Archive after the temporary stay decision (see her affidavit at [151]–[155]):

The State Archive can be accessed by any member of the public in order to search for documents. To locate documents relevant to the US Proceeding, FKP employee David Kobakhidze attended the State Archive to search for documents in January 2018. At this time Mr Kobakhidze, was told that pursuant to a directive, Order for the Use of Archival Documents in State and Municipal Archives of the Russian Federation dated 1 September 2017, No. 143 (adopted by the Federal Archive Service of Russia), making copies of the materials was subject to a fee and that it would come at a cost of $0.50 per page. FKP was therefore required to negotiate and conclude a contract with the State Archive so that FKP could pay for the photocopies and proceed with its searches. That contract was finalised on 5 June 2018 for searches conducted during 2018. A new contract was finalised on 6 February 2019 for searches conducted during 2019.

Between June - December 2018 FKP employees David Kobakhidze, Ivan Sokolov, Alexey Golubtzov, Alexandr Loktev, Pavel Shalaginov, Mariana Rumyantzeva, Alexandr Tarasov, Julia Seryapina and Oksana Borushevskaya visited the State Archive to undertake searches.

In addition to the information provided above in respect of searches of the State Archive in respect of specific entities:

a)    FKP has conducted searches in the State Archive on at least 30 days between June and October 2018.

b)    FKP employees typically attend the State Archive in groups of 1 - 3 persons and search for documents for an entire day;

c)    the searches take place in the archival repositories of the State Archive which is located at Bolshaya Pirogovskaya Street, 17, Moscow;

 d)    The State Archive stores the documents of:

  1.    the Apparatus of the Government;

  2.    the Ministry of Agriculture;

  3.    the Chamber of Accounts;

  4.    the Ministry of Economics;

  5.    the Ministry of Finance; and

6.    the Ministry of Property (a predecessor of the Federal Agency for State Property);

e)    FKP employees have manually reviewed approximately 1,800 document folders, each typically containing about 200 pages of documents; and

f)    Through this process, FKP employees have spent in excess of 280 hours searching for documents in the State Archive.

As a result of the searches above, approximately 1,100 pages of documents were located which were deemed responsive to FKP’s US Proceeding and which are also responsive to the discovery obligations of FKP in this proceeding.

FKP are continuing to search the State Archive for any documents which may be responsive to the discovery categories in this proceeding. At the time of deposing this affidavit, FKP have completed a contract with the State Archive which will allow FKP to continue searching the State Archive during 2019.

187    So, although it is true to say that the searches of the State Archive were incomplete, we consider that the searches were more substantial than the primary judge painted in his reasons. Further, it is also not to be forgotten that the State Archive was in essence a library that Spirits could also access. Of course that did not remove or ameliorate any discovery obligation, but it is relevant to the question of prejudice concerning any justification for any permanent stay based upon the non-provision of documents from the State Archive.

188    In relation to the Investigation Committee, his Honour concluded (at [101]):

Plainly the process of extracting documents from the Investigation Committee is not remotely close to being finished, indeed, it has scarcely commenced. Further, it seems that the process of extracting the documents from the Investigation Committee only began in earnest (at least from the Committee’s perspective) late last year. Again, there is no evidence to suggest that the Russian Federation has provided any assistance in relation to obtaining the documents of the Investigation Committee.

189    There were two criminal cases against the controllers of VAO and Spirits, documents for which were held by the Investigation Committee. The first was commenced in 2000 against Mr Sorochkin (criminal case no 18/432807-07) and the second was commenced in 2007 against Mr Shefler and Mr Skurikhin (criminal case no 18/432808-07). Both concerned VAO’s and its successors’ dealings with the trade marks. We should note for completeness that another criminal case concerning the lawfulness of the acquisition by ZAO of the trade marks had been initiated in 1999 but was discontinued.

190    As far as the first criminal case was concerned, relevant searches had been made and documents produced; discovery had largely been completed. As Ms Semenova deposed (at [173]):

On 21 December 2018 and 26 December 2018 FKP employee David Kobakhidze attended the Investigation Department for the Central Administrative District where he was allowed to copy any materials of the criminal case. There are 74 folders in total. Mr Kobakhidze spent 8 hours searching for documents and photocopied 1,252 pages of documents from 5 folders (those which were not fully produced by Spirits in the US Proceeding).

(Emphasis added.)

191    The primary judge said at [100]:

A similar position has resulted in the case of the criminal case against Mr Sorochkin being Criminal Case No 18/432807-07. There are 74 folders to be inspected and so far the Cross-Claimants have reviewed five folders from which 1,252 pages have been abstracted.

192    The context was inaccurately described, to the extent that his Honour was suggesting for the first criminal case that 69 folders remained to be reviewed (74 minus 5). He appears to have misunderstood FKP’s evidence, although in fairness it does not appear to have been properly explained to him. Sixty-nine of the 74 folders had already been searched and relevant documents from those 69 folders were produced to Spirits in the US proceeding. The remaining five folders (or documents therefrom) were not produced in the US proceeding. Accordingly, it is these folders that were searched for the purposes of the Australian discovery. This misunderstanding informed his Honour’s conclusion at [101].

193    As far as the second criminal case was concerned, his Honour accurately set out the searches made at [98]–[99].

194    In summary then, his Honour significantly overstated the position at [101].

195    Moreover, in terms of the Ministry of Internal Affairs, his Honour said (at [94]):

After a long correspondence, the position of the Ministry of Internal Affairs was that any of its documents would be held by the Investigation Committee. I discuss the position of the Investigation Committee below. The conclusion I reach is that reasonable searches of the Investigation Committee are not near being complete. I conclude therefore that neither the Russian Federation nor the Cross-Claimants have concluded the searches necessary for the Ministry of Internal Affairs.

196    But the statement as to the inadequacy of searches of the Investigation Committee must be seen in the light of the observations that we have just made.

197    In summary then, in some respects the primary judge overstated the deficiencies in the discovery that had been given, although this is not such as to substantially impugn his general conclusion as to the inadequacy and tardiness involved.

198    It is appropriate at this point to say something more about his Honour’s reasons.

199    His Honour said at [102]:

It follows readily from the above that neither the Russian Federation nor the Cross-Claimants have completed the discovery process. The Russian Federation has taken no steps at all to respond to the invitation. Everything has been left to the Cross-Claimants. There was no evidence of any effort by the Russian Federation itself to respond to the invitation. Even the proposition that the Cross-Claimants efforts on the discovery front are being done on behalf of the Russian Federation is a mere surmise on my part.

200    But it was not unreasonable to have FKP carry out the necessary steps.

201    At [103] his Honour described the discovery process as “not close to finalised”.

202    We do not consider that this gives an accurate impression. True it is that the searches of the State Archive had not been completed. But substantial work had been carried out there and elsewhere. Similarly, as far as the Investigation Committee searches were concerned, substantial work had also been carried out, particularly for the first criminal case.

203    His Honour said at [130]:

It is clear that the Russian Federation has itself taken no step to respond to the invitation issued to its Ambassador. However, I will assume in its favour that I should proceed on the basis that all of the steps taken by the Cross-Claimants to obtain documents from different entities of the Russian Federation are to be counted as efforts on its part. I do so notwithstanding that there is no evidence that the Russian Federation has done anything at all in response to the invitation to its Ambassador. But even so, the evidence I have referred to above shows that the Cross-Claimants’ efforts to search for documents are not close to being complete.

204    In our opinion, the last sentence is not an accurate characterisation.

205    His Honour said at [131]:

The following remain uncompleted:

•    The searches of the State Archive, including for documents of other Russian State entities held by the State Archive, are not complete and Ms Semenova does not say when they will be complete.

•    The searches of the State Archive for the documents of the Accounting Chambers have not even been commenced due to a lack of resources. There is no indication from Ms Semenova when resources will become available or when the Archive will be searched for these materials.

•    The searches for the documents of the Federal Service on Financial Markets are not complete.

•    The searches for the documents of Ministry of Economic Development of the Russian Federation are not complete.

•    The searches for the documents of Ministry of Finance of the Russian Federation are not complete.

•    The searches for the documents of Ministry of Internal Affairs of the Russian Federation and the Investigation Committee are not complete.

•    The searches of the documents of the Federal Agency for the State Property Management are not complete.

•    The searches of the documents of the Ministry for Agriculture are not complete.

•    It is not shown that the searches of the documents of the Russian Agency on Patents and Trademarks are complete. The position with respect to this agency is entirely unclear but the Cross-Claimants bear the forensic burden in making good their assertion, repeated at the hearing several times, that they had completed giving discovery.

•    The searches for the documents of the Apparatus are not complete.

206    But the second bullet point is problematic and the third, fifth, seventh and ninth bullet points appear to be incorrect.

207    His Honour said at [133] and [134]:

It is true that the last year reveals increased activity on the part of the Cross-Claimants. However, where the invitation was issued in 2014 and the proceeding stayed in November 2017 on the explicit basis that the Russian Federation had failed to give adequate discovery, this will not do. I conclude that the Russian Federation has not made reasonable efforts to give discovery and that this failure is on-going.

I do not draw that conclusion about the Cross-Claimants. Although they have not succeeded in discharging the invitation issued to the Russian Federation, in their case it can at least be said that they are making reasonable efforts.

208    First, it was apparent that FKP had made and were making reasonable efforts. Indeed, as his Honour said in the second and third sentences of [151]:

In that regard it is to be noted that the Cross-Claimants have complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013: see First Stay Decision at [15]. They have also been attempting, with more limited success, to respond on the Russian Federation’s behalf to the discovery invitation issued to the Russian Federation.

209    Second, there was no discovery order made against the Federation (cf [133]). Moreover, the statement that “this failure is on-going” was inapposite.

210    Further, there is a tension in his Honour’s reasons. He said (at [149]):

Even if I were minded to entertain the application I would dismiss it. The fact that any title to the trademarks was transferred to the Cross-Claimants does not have the consequence that the Russian Federation has ceased to be the real plaintiff. For example, there was no suggestion that the Cross-Claimants had purchased the trademarks from the Russian Federation nor that they were not pursuing the current proceeding on its behalf. All that has happened is an assignment to overcome a potential standing problem. There was no evidence before the Court which suggested that the Cross-Claimants were doing anything other than giving to effect to Acting President Putin’s direction to retrieve the trademarks. The assignment has not transformed the nature of the relationship between the Cross-Claimants and the Russian Federation.

211    But if that be so, everything done by FKP could also be seen as having been done also for the Federation.

FKP or the Federation?

212    FKP submitted that they had engaged in a reasonable search for documents held by the Federation entities falling within the discovery categories. But Spirits claimed that that perspective is only relevant if, contrary to his Honour’s approach, the correct question was whether FKP had given proper discovery.

213    Spirits said that, although not as critical of FKP as of the Federation, his Honour found that FKP had also failed to give proper discovery in relation to the documents of a number of the Federation entities. It argued that FKP has not shown error in these findings. We disagree. There were some errors. Moreover, FKP themselves appear to have made reasonable efforts, albeit that their searches were not complete.

214    FKP submitted that the correct question is whether FKP had given proper discovery, not the Federation. But we agree with Spirits that, given the findings and orders made concerning the temporary stay reasons, this is wrong. Moreover, as the primary judge observed in the permanent stay reasons at [62], if it was FKP’s discovery that was in issue, “the [Federation] would be able to throw up road blocks in the path of [FKP] and then claim those self-imposed obstacles in its own aid”.

215    Further, we agree with Spirits that FKP also overlooked the reasons the Federation was expected to give discovery, namely that it is the “real plaintiff” and holds relevant documents which had not been discovered. Further, it was for the Federation, as the real plaintiff, to give the requisite discovery or face the prospect of the proceeding brought on its behalf being permanently stayed.

216    Further, we also agree with Spirits that insofar as it is said that it was unclear what the Federation had to do in order to give proper discovery, there was no lack of clarity in the discovery categories in relation to which documents had to be discovered.

217    Further, although FKP contended that his Honour erred (at [39]) in rejecting the evidence of Ms Semenova about her “deep concern” as to the breadth of the discovery categories and that discovery was required from the Federation entities, no error is disclosed. In any event this was merely evidence of Ms Semenova’s state of mind.

218    We now move to another dimension of FKP’s arguments.

219    FKP submitted that in staying the proceeding as an abuse of process, the primary judge asked himself the wrong question. The correct question, they argued, was whether FKP had satisfied Pt 20 of the Federal Court of Australia Rules 2011 (Cth). FKP submitted that, if the primary judge had asked himself the correct question, he would have answered it in the affirmative, given his findings that, first, FKP had discharged their own discovery obligation and, second, FKP had engaged in reasonable searches for documents held by the Federation entities.

220    Further, FKP submitted that if the Federation, as the “real plaintiff”, ought to have been required to “cooperate” or undertake efforts in addition to searches undertaken by FKP to obtain documents from the Federation entities, then this ought to have been the subject of a specific order before the primary judge permanently stayed the proceeding.

221    FKP submitted that the primary judge’s error resulted in his decisions having the effect of requiring the Federation, for the first time, to give discovery and then staying the proceeding when he found that it had failed adequately to do so. This, they contended, gave rise to a miscarriage of justice.

222    It was submitted that Pt 20 of the Federal Court Rules had been satisfied by FKP, which were the cross-claimants and the only entities against which discovery orders had been made. There was no order requiring the Federation to give discovery and, in particular, no order of the kind envisaged by Edmonds J, providing clarity as to the identity of the Federation and what discovery by the Federation would look like.

223    In our view, FKP are foreclosed from making such points on appeal.

224    First, the parties have acted on the basis that the Federation was de facto required to give discovery.

225    Second, it would seem that at the hearing before the primary judge on 2 November 2016, the then senior counsel for FKP was prepared to proceed on the basis of Edmonds J’s earlier conclusion that the Federation was “the substantive plaintiff” and that on the question of whether discovery had been adequate, his attitude was “we’re running this on the facts”.

226    Third, FKP did not make this point to the primary judge.

227    FKP claimed that they were denied the opportunity to do so. They submitted that the focus at the 14 March 2019 hearing was on whether FKP had engaged in a “reasonable search” for documents held by the Federation entities.

228    Further, FKP claimed that the first time the primary judge indicated that, in determining whether any discovery exercise had been discharged, FKP’s activities were not relevant, was in the permanent stay reasons that followed from the 14 March 2019 hearing. FKP also claimed that the 14 October 2019 hearing was directed to orders giving effect to the temporary stay reasons and the permanent stay reasons.

229    We reject FKP’s contentions. The point they sought to make was not made before the primary judge. Nor is it open on appeal. The effect of the order forming part of the temporary stay reasons that, if proper discovery was not given by 30 November 2018, Spirits could apply to dismiss the proceeding, was to require proper discovery to be given by the Federation.

230    Moreover, the parties have understood the distinction between discovery from the Federation and FKP since the mid-2000s. The discovery orders of 4 December 2013 did not deal with the Federation because the parties understood that it needed to be invited to give discovery voluntarily, which invitation was extended. Further, FKP’s approach thereafter was to accept that the discovery categories applied to the Federation.

231    Further, in the 2006 reasons at [18], Edmonds J found that the Federation was the “real plaintiff”. That finding was not disturbed on appeal in the 2007 Full Court reasons.

232    We accept that the primary judge made clear in the form of orders reasons at [1] that the 31 October 2019 orders gave effect to the temporary stay reasons, the permanent stay reasons and the form of orders reasons. Further, given FKP’s decision not to challenge the primary judge’s 20 November 2017 orders before now, FKP had no way of challenging any of the findings in the temporary stay reasons. But none of that provides any excuse. FKP are now seeking to raise a point not put to the primary judge.

233    Finally, with respect to FKP’s challenge to the permanent stay reasons there is another matter to deal with. This concerns the test expounded by his Honour regarding the justification for a permanent stay. But it is more convenient to discuss this when we address the form of orders reasons. We should, however, note at this point that the test flagged by his Honour in the permanent stay reasons (at [160]) and applied in the form of orders reasons is problematic for reasons to which we will come in due course.

Notice of contention

234    Spirits contended that the primary judge erred in relation to his permanent stay reasons in leaving open the possibility that there may not be a permanent stay ordered of all claims. In other words, it claimed that the primary judge should not have entertained the hearing leading to the form of orders reasons. And if Spirits’ argument is accepted, then grounds 4 to 7 of FKP’s appeal are rendered moot.

235    Spirits contended that, even if there were some part of the proceeding unaffected by the Federation’s failure to give discovery, his Honour ought to have stayed the whole proceeding permanently in order to protect the integrity of the administration of justice and the Court’s processes and prevent oppression to Spirits. It argued that that was the appropriate course given the applicable principles and the primary judge’s findings that the Federation was the real plaintiff, had not to any extent co-operated in providing discovery, and had used FKP as its cat’s paw, and where Spirits had been substantially prejudiced by the delay in the proceeding caused by the Federation’s failure to give proper discovery.

236    Further, Spirits contended that granting a permanent stay without any potential carve-out was supported by authority. In Mango Boulevard Pty Ltd v Spencer [2008] QCA 274, the Court rejected the appellant’s argument, set out at [15] and [22] of that decision, that it ought to be able to continue to litigate an issue not “adversely affected by any failure to comply with the disclosure orders” (at [29]). At [23], in a passage cited in Clifton at [192], the Court said:

A party’s failure to comply with its [disclosure] obligations … may constitute an abuse of process even if the failure directly affects only some of the pleaded issues. … A party cannot be permitted to gain a forensic advantage by wilfully, recklessly or negligently failing to give proper disclosure on an issue of substance. Here, the failure to disclose went to an issue central to the [case] and also to one of the defences pleaded.

237    The primary judge relied on Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264. But Spirits argued that Palavi was distinguishable, because in the present case the primary judge had found that the failure to give discovery concerned “central” and “major” issues. Further, there were findings as to the Federation’s “intolerable” approach over a number of years (at [154]). What is more, the substantial prejudice to Spirits also included delay in relation to the whole of the proceeding, not just a part (at [155]).

238    Based on these matters, Spirits submitted that this aspect of his Honour’s judgment involved House v The King error. In particular, Spirits submitted that at [158]–[160] of the permanent stay reasons the primary judge appears to have overlooked that the prejudice to Spirits was not limited to the effect of the Federation’s failure to give discovery on Spirits’ ability to defend certain issues in the proceeding, but included the delay that that failure had caused in relation to the whole proceeding. In that respect, Spirits submitted that his Honour failed to take account of a relevant consideration.

239    In our view, his Honour did not err in declining to order a permanent stay of the entire cross-claim at the time he published the permanent stay reasons. Indeed, for reasons to which we will come, his Honour erred in the form of orders reasons in ordering a stay of all of the cross-claim. The correct position was that only a stay of part of the cross-claim could be justified.

(e)    The form of orders reasons

240    FKP asserted four grounds of appeal concerning the form of orders reasons (grounds 4 to 7 of the notice of appeal). Unless otherwise indicated, references to the primary judge’s reasons in this section are references to the form of orders reasons.

241    Ground 4 asserts that the primary judge erred in determining FKP’s application for a carve-out from the permanent stay by asking whether:

(a)    it can be said that Spirits cannot succeed on the discretionary defences;

(b)    material within the discovery categories could have no conceivable bearing on the discretionary defences;

(c)    the documents within the discovery categories are irrelevant to FKP’s claim that they are entitled to rely on issues estoppel to defeat the discretionary defences; and/or

(d)    it can be said that the trial of the issues estoppel arguments would not involve documents which would have been discovered by FKP and the Federation (see at [17]–[19] and [27]).

242    We agree with FKP’s complaint concerning ground 4. These implicit tests or hurdles were too heavily weighted in favour of Spirits. They manifest an error in the test that was applied.

243    Ground 5 asserts that the primary judge erred in finding that, if the Dutch decisions did give rise to issues estoppel or res judicata on all issues arising from the defences, it was possible that at trial an issue might arise in relation to the discretionary defences. That issue was whether any documents that might have been discovered could affect Spirits’ entitlement to resist the application of the issues estoppel and res judicata and rely upon the discretionary defences. Further, in that context, it was said that his Honour erred in stating that he could not find that Spirits’ invocation of the Arnold principle could not succeed (see at [14], [20]–[23] and [25]–[27]).

244    Again, and with respect to the primary judge, there is force in FKP’s complaint embodied in ground 5, to the extent that he set the bar too low for Spirits to satisfy in order to justify a permanent stay. In other words, his Honour’s statements manifest the application of an incorrect test, even if as free-standing propositions they may be unobjectionable.

245    The assertions in grounds 6 and 7 are in some respects consequential.

246    Ground 6 asserts that the primary judge erred, given the speculative findings identified in ground 5, in precluding FKP from applying for judgment in reliance upon the issues estoppel and res judicata arising from the Dutch decisions and thereby precluding the Court from determining:

(a)    whether any of the circumstances about which the primary judge speculated in fact arose, such that an application of the Arnold principle would preclude FKP from obtaining judgment; and

(b)    whether it was in the interests of justice to grant FKP judgment.

247    Ground 7 states that the primary judge ought to have:

(a)    subject to the reservation in (b), permitted FKP to make an application for judgment on the grounds that Spirits is precluded from relying on its pleaded defences by issues estoppel or res judicata arising from the Dutch decisions;

(b)    reserved to Spirits an entitlement to seek to demonstrate at the hearing of that application that:

(i)    it was entitled to argue one or more of the discretionary defences; and

(ii)    in relation to any discretionary defence still open to Spirits, that:

(A)    Spirits suffered prejudice by reason of any discovery not provided by FKP; and

(B)    FKP should not be entitled to succeed on their application.

(iii)    further or in the alternative to (i) and (ii), the Arnold principle, when applied to the facts of this case should result in FKP being precluded from relying upon any issues estoppel or res judicata arising from the Dutch decisions.

248    We agree that his Honour, with respect, incorrectly so precluded and ought to have permitted the consequences referred to in sub-paragraphs (a) and (b)(i) and (ii). We will say more about the application of the Arnold principle later.

FKP’s principal points

249    The primary judge held, as part of the permanent stay reasons (at [160]), that FKP ought to be permitted to pursue so much of the proceeding as was unaffected by the failure of the Federation to voluntarily give discovery. The lens through which his Honour considered the issue addressed by the form of orders reasons is set out in [160] of the permanent stay reasons where his Honour said:

I will therefore permit the Cross-Claimants to pursue so much of the proceeding as is unaffected by the failure of the Russian Federation voluntarily to give discovery, if there be such. I will hear from the parties as to whether this is possible. Subject to that carve-out, the balance of the Cross-Claim otherwise presents as a clear case for a permanent stay on the grounds of abuse of process. The Russian Federation has had its day on discovery.

250    According to FKP, that did not reflect the correct test. We agree, and will expand upon this aspect later.

251    The primary judge considered FKP’s application to pursue their contention that Spirits was bound by adverse issues estoppel or res judicata, relying only on those arising from the Dutch decisions. It was not necessary for his Honour to determine the extent to which it was bound.

252    At the time of his Honour’s form of orders reasons, the Dutch decisions were not final in one sense. But they now are, given the decision on 24 January 2020 by the Supreme Court of the Netherlands finally dismissing Spirits’ appeal.

253    FKP said that the Dutch decisions, which culminated in that final judgment of the Supreme Court of the Netherlands, determined that VVO was not validly privatised or transformed into VAO and that, after the incorporation of VAO, VVO continued to exist and the trade mark rights continued to belong to VVO. So, at the time the trade marks were purportedly transferred to Spirits, VAO had no valid title to the trade marks. Underlying the Dutch decisions was the finding that VVO was a founding member and initial shareholder of VAO. This established conclusively VVO’s continued existence after VAO had been created. The Dutch decisions also determined that Spirits knew or ought to have known that VAO had no power to assign the trade marks to Spirits.

254    On the other hand, Spirits argued that the Dutch decisions could not give rise to any issues estoppel. Alternatively, Spirits said that it was entitled to call in aid the Arnold principle that an issue estoppel might not arise in circumstances where material became available to a party in a subsequent proceeding bearing on an issue determined in the first proceeding which could not by reasonable diligence have been obtained at the earlier time.

255    FKP argued that, in determining their application for a carve-out from the permanent stay, the primary judge did not consider various matters that he ought to have considered.

256    It is said that he did not consider, given the facts by which the Dutch decisions found that VVO was not transformed into VAO because it continued to have an independent existence after VAO was incorporated, what documents could change that conclusion.

257    It is said that he did not properly consider whether the needs of justice as between the parties to the proceeding warranted FKP being locked out from making an application for judgment on the grounds that Spirits was precluded from relying on its pleaded defences by the Dutch issues estoppel.

258    And it is said that he did not consider what impact any non-provision of documents in the control of the Federation would have upon Spirits’ ability to propound the discretionary defences, especially as most of the discovery categories were framed by reference to the transformation issue.

259    We tend to agree with these criticisms.

260    We need to say something more concerning the discretionary defences.

261    According to FKP, the relevant question to be answered was whether the discretionary defences were sustainable against either FKP or the Federation at all and if so, whether any further discovery by the Federation could have been relevant. It is said that the primary judge did not address this.

262    First, FKP submitted that to the extent that Spirits’ alleged estoppels in its defence to the cross-claim constitute promissory estoppels, they must fail as the pleaded representations do not rise to any representation that either the Federation or FKP would not assert their strict legal rights to apply the law of the Federation if VAO had not complied with it.

263    Second, FKP submitted that the pleaded representations go no higher than to suggest a belief that, consistently with VAO’s own assertions, VAO was the successor to VVO. But FKP submitted that such a representation is no higher than a statement of opinion, which cannot by itself found an estoppel. FKP also submitted that, if it is being said that the Federation is somehow precluded from exercising a prosecutorial discretion as to the enforcement of Russian law, neither that, nor relevant facts suggesting it, are pleaded.

264    Third, FKP submitted that a representation cannot in any event render valid something made invalid by statute.

265    Fourth, FKP submitted that the scope of discovery relevant to the discretionary defences bears no relationship to the discovery categories, which were directed to the transformation issue. FKP said that the primary judge erred in the form of orders reasons at [18] in concluding that the whole of the discovery as to the transformation issue could be relevant to the discretionary defences, even if FKP were to succeed on the Dutch issues estoppel.

266    Fifth, FKP submitted that the primary judge failed to assess to what extent, if at all, such discovery could be “critical” to the discretionary defences, given both their character as founded on representations of law and the extensive particulars of the alleged representations already pleaded by Spirits.

267    Sixth and more generally, FKP submitted that the primary judge erred (at [18]–[19] and [27]) by not adopting the approach in Aetna Pacific Securities Ltd v Hong Kong Bank of Australia Ltd (Supreme Court of New South Wales, 29 April 1993, unreported) at 14–16.

268    Seventh, FKP submitted that the primary judge addressed the wrong question when he asked whether it was possible that at trial an issue might arise as to whether any documents that might have been discovered might affect Spirits’ entitlement to resist the application of the Dutch issues estoppel and to rely upon the discretionary defences.

269    FKP also submitted that the primary judge asked the wrong question as to whether Spirits’ invocation of the Arnold principle cannot succeed.

270    Finally, FKP submitted that the proposal in ground 7 of the notice of appeal and the relief sought in prayer 4, identifying the way the matter should proceed, represent a correct application of the principle in Aetna. Ground 7 is set out above at [247]. The relief sought in prayer 4 of the notice of appeal is as follows:

In the alternative to prayers 2 and 3, the permanent stay of any further proceeding on the 3FACC pursuant to order 1 given on 31 October 2019 be lifted to the extent necessary to permit:

a.    subject to the reservation in b below, FKP to make an application for judgment on the grounds that Spirits is precluded from relying on its pleaded Defences by issue estoppels or res judicata arising from the Dutch Decisions and to present to the Court the decision of the Supreme Court of the Netherlands to be published on or about 24 January 2020 (referred to in Form of Orders Reasons, [6]) to the extent that it clarifies the existence in the Netherlands of issue estoppels and res judicata arising from the Dutch Decisions;

b.    Spirits to seek to demonstrate at the hearing of that application that:

  i.    it was entitled to argue one or more of the Discretionary Defences; and

  ii.    in relation to any Discretionary Defence still open to Spirits, that:

1.    Spirits suffered prejudice by reason of any discovery not provided by FKP; and

    2.    FKP should not be entitled to succeed on its application.

iii.    further or in the alternative to i and ii, the Arnold principle, when applied to facts of this case should result in FKP being precluded from relying upon any issue estoppels or res judicata arising from the Dutch Decisions.

271    FKP argued that the primary judge ought to have permitted them to apply for judgment on the basis of the Dutch issues estoppel, while reserving to Spirits an entitlement to seek to demonstrate at the hearing of that application that it was entitled to argue one or more of the discretionary defences and, in relation to any one still open to Spirits, that Spirits suffered prejudice by reason of any non-production of documents and FKP should not be entitled to succeed.

272    Before proceeding further, it is necessary to set out some more detail concerning:

(a)    the pleaded issue estoppel;

(b)    the Dutch decisions; and

(c)    the discretionary defences.

The pleaded issue estoppel

273    In its reply to Spirit’s defence to the third further amended cross-claim, FKP pleaded:

Issue estoppel

7A    In answer to paragraph 14, and in further answer to the whole of the defence to third further amended cross-claim, the cross-claimants say:

Findings of prior judgments

…

(d1)    on 14 June 2006, the District Court of Rotterdam in the Netherlands published judgment in case 194668/HA ZA 03-896 in proceedings in which FKPS had sought orders in relation to Benelux trademarks registered in the name of Spirits International (District Court Decision). The Court relevantly found that:

(a)    Sojuzplodoimport had not been validly privatized or transformed into a private enterprise, neither in accordance with USSR law, nor in accordance with Russian law;

(b)    After the incorporation of VAO-SPI. Sojuzplodoimport continued to exist and the trademark rights continued to belong to Sojuzplodoimport; and

(c)    At the time those trademarks were purportedly transferred to Spirits International, VAO-SPI therefore had no valid title thereto and Spirits International had not acted in good faith.

(d2)    on 24 July 2012, the Court of Appeal of the Hague in proceedings number 105.005.107/02, dismissed an appeal brought by Spirits International from the District Court Decision (Court of Appeal Decision). In dismissing the appeal, the Court of Appeal relevantly found that:

    (a)    Sojuzplodoimport was not transformed or privatized;

(b)    Spirits International did not act in good faith in relation to VAO-SPI’s lack of power of disposition in the trademarks transfer in 1997;

    (c)    FKPS was able to rely on that lack of good faith;

(d)    The trademark rights did not (ultimately) pass to Spirits International;

    (e)    FKPS could reclaim the trademarks; and

(f)    The statute of limitations for invocation of the absence of a valid transformation/privatization by FKPS had not expired.

(together with (d2) above, the Dutch Findings).

(d3)    on 20 December 2013, the Supreme Court of the Netherlands. In proceedings number 12/05013, dismissed an appeal brought by Spirits International from the Court of Appeal Decision and confirmed the Dutch Findings (Supreme Court Decision).

(together, the Dutch Decisions).

…

Finality

(e)    Each of … the Supreme Court Decision is final.

Privity of parties

…

(i)    The first cross-claimant and the cross-respondent were the only parties in the proceedings giving rise to the Dutch Decisions.

Issue estoppel

(j)    By reason of the matters set out in paragraphs (a) to (i) above, the cross-respondent is estopped from:

(i)    denying … the Dutch Findings, including by asserting or relying upon the matters pertaining to the alleged succession of VAO-SPI to Sojuzplodoimport pleaded in paragraphs 4(h), 5(c)(i), (iii) and (vi), 13(b), 24, 23, 24, 34 and 35 of the defence to the third further amended cross-claim;

…

(iii)    relying upon any alleged representations[,] contrary to … the Dutch Findings[,] made by the Government of the Russian Federation between 1992 and 2000, including by asserting or relying upon the alleged representation made by the Government of the Russian Federation as to the succession of VAO-SPI to Sojuzplodoimport pleaded in paragraph 65, and paragraph 67 to the extent particularised by the second particular to that paragraph, of the defence to third further amended cross-claim; and

(iv)    relying upon the time bar in Article 181 of the Russian Federation Civil Code or otherwise any alleged delay by the Government of the Russian Federation in commencing proceedings in respect of … the Dutch Decisions, including by asserting or relying upon the matters relating to the alleged delay by the Government of the Russian Federation in challenging the validity of the succession of VAO-SPI to Sojuzplodoimport pleaded in paragraphs 61, 66 and 67 to the extent particularised by the first particular to that paragraph, of the defence to third further amended cross-claim.

Abuse of process

7B    Further or in the alternative to paragraph 7A, by reason of the matters set out in paragraphs 7A(a) to (i) above, and each of them, the cross-respondent is precluded from:

(a)    denying … the Dutch Findings, including by asserting or relying upon the matters pertaining to the alleged succession of VAO-SPI to Sojuzplodoimport pleaded in paragraphs 4(h), 5(c)(i), (iii) and (vi), 13(b), 14, 23, 24, 34 and 35 of the defence to third further amended cross-claim;

…

(c)    relying upon any alleged representations[,] contrary to … the Dutch Findings[,] made by the Government of the Russian Federation between 1992 and 2000, including by asserting or relying upon the alleged representation made by the Government of the Russian Federation as to the succession of VAO-SPI to Sojuzplodoimport pleaded in paragraph 65, and paragraph 67 to the extent particularised by the second particular to that paragraph, of the defence to third further amended cross-claim; and

(d)    relying upon the time bar in Article 181 of the Russian Federation Civil Code or otherwise any alleged delay by the Government of the Russian Federation in commencing proceedings in respect of … the Dutch Findings, including by asserting or relying upon the matters relating to the alleged delay by the Government of the Russian Federation in challenging the validity of the succession of VAO-SPI to Sojuzplodoimport pleaded in paragraphs 61, 66 and 67 to the extent particularised by the first particular to that paragraph, of the defence to third further amended cross-claim.

as to do so would constitute an abuse of the processes of the Court.

Judgment in rem

7C    Further or in the alternative to paragraphs 7A and 7B:

   (a)    paragraphs 7A(a) to (e) are repeated;

(b)    each of … the Supreme Court Decision constitutes a judgment in rem, in that it decides the status of:

(i)    a person, namely VAO-SPI in that it was formed as a new entity and not by transformation of Sojuzplodoimport, and was not the legal successor to Sojuzplodoimport; and/or

(ii)    a person, namely Sojuzplodoimport, in that it continued to exist following the formation of VAO-SPI; and/or

(iii)    a thing, namely the provision in the charter of VAO-SPI to the effect that it was the legal successor to Sojuzplodoimport, in that it was invalid;

…

(c)    By reason of the matters referred to in paragraphs (a) and (b) above, the cross-respondent is precluded from:

(i)    denying … the Dutch Findings, including by asserting or relying upon the matters pertaining to the alleged succession of VAO-SPI to Sojuzplodoimport pleaded in paragraphs 4(h), 5(c)(i), (iii) and (vi), 13(b), 14, 23, 24, 34 and 35 of the defence to third further amended cross-claim;

(ii)    relying upon any alleged representations[,] contrary to … the Dutch Findings[,] made by the Government of the Russian Federation between 1992 and 2000, including by asserting or relying upon the alleged representation made by the Government of the Russian Federation as to the succession of VAO-SPI to Sojuzplodoimport pleaded in paragraph 65, and paragraph 67 to the extent particularised by the second particular to that paragraph, of the defence to third further amended cross-claim; and

(d)    relying upon the time bar in Article 181 of the Russian Federation Civil Code or otherwise any alleged delay by the Government of the Russian Federation in commencing proceedings in respect of … the Dutch Findings, including by asserting or relying upon the matters relating to the alleged delay by the Government of the Russian Federation in challenging the validity of the succession of VAO-SPI to Sojuzplodoimport pleaded in paragraphs 61, 66 and 67 to the extent particularised by the first particular to that paragraph, of the defence to third further amended cross-claim.

274    It its rejoinder to the reply, Spirits relevantly pleaded:

6    In rejoinder to paragraphs 7A(d1) – 7A(d3) of the Reply, the Cross-respondent:

(a)    admits that the Dutch Courts referred to in those paragraphs delivered decisions in the proceedings and on the dates referred to in those paragraphs; and

  (b)    otherwise does not admit these paragraphs.

…

12    In rejoinder to paragraph 7A(j) of the Reply, the Cross-respondent:

  (a)    denies the paragraph;

…

(c)    says that the Dutch Decisions were interim and are not final and are therefore incapable of giving rise to any issue estoppel;

(d)    says that if, which is denied, the Dutch Decisions are final, the Court ought not, as a matter of caution and in the exercise of its discretion, recognise these decisions as giving rise to any issue estoppel in this proceeding, by reason of the fact that the Dutch Decisions were decisions of a foreign court on matters governed by the law of a different foreign state;

…

(i)    … the Dutch Decisions did not involve any arguable identity of issue with the matters and defences pleaded in paragraphs 65, 66 or 67 of the Defence to Third Further Amended Cross-Claim, those being matters and defences which are independent of the issue of the corporate successorship, and which arise wholly under Australian law in relation to some events occurring in Australia … and accordingly paragraphs 7A(i)(iii) and (iv) of the Reply are liable to be struck out as disclosing no reasonable cause of action.

13    In rejoinder to paragraph 7B of the Reply, the Cross-respondent:

  (a)    denies the paragraph;

(b)    says that the Dutch decisions were interim and are not final and are therefore incapable of having the preclusive effect pleaded in this paragraph;

  (c)    says that by reason of the matters pleaded in paragraph 12(d) above:

(i)    the Court ought not, as a matter of caution and in the exercise of its discretion recognise the Dutch Decisions as having the preclusive effect pleaded in this paragraph;

(ii)    in the alternative to (i) above, is not a decision which the Court would, in its discretion, give any weight in determining whether there has been any abuse of process.

…

14    In rejoinder to paragraph 7C of the Reply, the Cross-respondent:

   (a)    denies the paragraph;

(b)    says that the Dutch decisions were interim and are not final and are therefore incapable of having the preclusive effect pleaded in this paragraph;

(c)    says that by reason of the matters pleaded in paragraph 12(d) above, the Court ought not, as a matter of caution and in the exercise of its discretion, recognise the Dutch Decisions as having the preclusive effect pleaded in this paragraph;

…

275    It can be seen that the Arnold principle is not expressly raised.

The Dutch and European Union decisions

276    It is appropriate to set out details of some of the foreign decisions relevant to the Dutch issues estoppel question. We only do so to indicate the fact of the various judgments being made and the issues that they purported to resolve and decide. Of course, the various findings are not being taken by us on the present appeal as proof of the facts asserted in the findings or as to their consequences. Before an Australian court, putting to one side the Arnold principle, the determination of the issue estoppel allegations will depend upon legal questions and analysis and not any discovery from FKP.

The Dutch proceedings

277    Since 2003, litigation has been under way in the Netherlands between FKP and Spirits in respect of the same disputed trade marks and on substantially the same issues as the proceeding in this Court (the Dutch proceedings).

278    On 14 June 2006, by an interlocutory judgment (the 2006 ruling), the three judge division of the District Court of Rotterdam (Civil Law Division) held, inter alia, that:

(a)    VVO was not validly privatised or transformed into private enterprise VAO, either in accordance with the laws of the Soviet Union, which according to Spirits is applicable to transformation, or the laws of the Federation, which according to FKP is the law applicable to the transformation question.

(b)    After detailed consideration of the minutes and official letters, the articles of association and the balance sheet, the Court found that it was an established fact that upon the incorporation of VAO, VVO acquired 28% of the shares and continued to be a shareholder until it was deprived of this capacity at the meeting of shareholders of 20 June 1993 because it had never fully paid up the shares. It also found that the continued existence of VVO after the incorporation of VAO “makes it impossible to assume transformation in accordance with resolution No. 590, which provides that the transformed state owned enterprise is succeeded by a VAO” (at [3.34]).

(c)    Spirits was not the proprietor of the trade marks. After incorporation of VAO the trade marks continued to be the property of VVO. The Court found that:

(i)    “[I]t has neither been alleged nor has it become manifest that there was actually a succession of VAO to the rights of VVO with the passing of the trademarks under universal title entailed thereby” (at [3.42]).

(ii)    “Spirits is not the proprietor of the trademarks, which were originally owned by [VVO]. After the incorporation of VAO these trademarks continued to be the property of VVO” (at [3.53]).

(d)    At the time the trade marks were purportedly transferred to Spirits, VAO had no valid title to the trade marks.

(e)    When the trade mark rights were transferred, Spirits was not acting in good faith in regard to ZAO’s power to dispose of them, given the matters described at [3.45]–[3.49], including that:

(i)    Mr Shefler, who was the co-founder and a major shareholder of Spirits, entered into the employment of VAO in 1996, became a member of the VAO Board in April 1997, and became Chairman in May 1997.

(ii)    Mr Shefler accordingly “could and should have known already in 1997, in any case prior to the sale of the trademarks of the [VAO] to the ZAO, that the VAO was not the successor of the VVO and that the VAO had therefore not acquired the trademarks with legal validity, or at any rate that he should have considerable doubts on this point” (at [3.47]).

(iii)    The knowledge of Mr Shefler could therefore be attributed to Spirits.

279    In the 2006 ruling, the District Court deferred the decision as to whether FKP had proper standing to sue.

280    On 28 June 2006, Spirits appealed the 2006 ruling to the Court of Appeal of The Hague. On 24 July 2012, the Court of Appeal dismissed Spirits’ appeal by interlocutory judgment (the 2012 ruling). The Court of Appeal confirmed the 2006 ruling and held, inter alia, that:

(a)    The question whether a valid transformation or privatisation occurred as a result of which VAO became the legal successor of VVO must be governed by the corporation statue of VVO. VVO’s corporation statute was the law that applied in Russia at the time.

(b)    The question whether, as a result of a valid transformation or privatisation, VVO’s trade mark rights passed from VVO to VAO by universal title was governed by the law that applied in Russia at the time.

(c)    The question of which law applies can be left aside given that the outcome was the same under both legal systems. That is, under both the law of the Soviet Union law and the law of the Federation, no valid transformation/privatisation was involved.

(d)    With respect to VVO:

(i)    VVO was specified as the founder and initial shareholder of VAO. VVO was specified as the first shareholder, holding over 28% of the shares. Accordingly, at the time that VAO was incorporated, which Spirits alleges completed the transformation process, VVO was regarded and mentioned as founder and initial shareholder of VAO. Thus, at that time VAO also assumed that VVO continued to exist alongside VAO.

(ii)    VVO continued to exist after the incorporation of VAO. This was not altered by the fact that VAO took over what is referred to as the OKAP number of VVO.

(iii)    The fact that VVO continued to exist after 20 January 1992 is also demonstrated by the fact that VVO entered into agreements with third parties after that date.

(e)    No valid transformation or privatisation of VVO took place because the requirements stipulated for this had not been satisfied. This was true under both the law of the Soviet Union and under the law of the Federation.

(f)    VVO’s trade mark rights did not pass to VAO under universal title.

(g)    The finding in the 2006 ruling that Spirits did not act in good faith in respect of ZAO’s disposition of the trade marks to it should be upheld.

(h)    FKP had a right of action and may also represent the interests of the Federation.

281    Spirits initiated an appeal in cassation against the 2006 and 2012 rulings in the Supreme Court of the Netherlands. On 20 December 2013, the Supreme Court dismissed Spirits’ appeal and confirmed each of the findings in respect of the 2006 ruling and the 2012 ruling (the 2013 ruling). Once the 2013 ruling was rendered, all interlocutory judgments rendered before it became final and binding with apparently res judicata effect as no further appeal was possible. Under Dutch law, this is apparently known as the doctrine of inviolability upon cassation.

282    In 2014, following each of the interlocutory appeals that culminated in the 2013 ruling, the substantive trial of the Dutch proceedings continued before the District Court of Rotterdam.

283    In the course of the continued proceedings, Spirits argued that the Federation, and as a result, FKP, had documents relevant to the Dutch proceedings which had been seized from ZAO and which Spirits therefore did not have in its possession. This was the first time Spirits had raised this argument, save for one small exception, where, in its appeal against the 2006 ruling, Spirits, as a side note, had devoted one sentence to a seizure of documents by the Federation, but until 2014 had never elaborated on this reference. Spirits argued that each of the previous rulings in the proceedings should be revisited as a result of the absence of this material.

284    On 25 March 2015, the three judge division of the District Court of Rotterdam rejected Spirits’ arguments that the 2006, 2012 and 2013 rulings should be revisited (the 2015 ruling).

285    The District Court held that the doctrine of the binding final decision as developed in the case law meant that the Court that explicitly ruled on a point in dispute without making any reservation could not, in principle, come back to this decision in the further course of the proceedings. The Court was bound by the final decisions previously handed down in the case that had not been challenged or that had been challenged unsuccessfully in cassation and therefore had become irreversible.

286    The District Court also held that there was no room for any review regarding the documents seized from VAO and ZAO in the period from 1999 to 2002 and in June and July 2007 because:

(a)    Spirits had not previously contended that the Federation had seized relevant documents.

(b)    In any event, Spirits must be deemed to have been aware of the seizures from the start of the proceedings because the alleged absence of documents must have been a problem in the transfer of the trade marks to Spirits.

(c)    To the extent that the seizures occurred after the transfer of the trade marks, these had in any event already taken place before the 2012 ruling, and Spirits had failed to present this issue to the Court of Appeal at that time.

(d)    Spirits must be deemed to know approximately, and to have known during the proceedings, what was seized from its legal predecessor, ZAO.

287    Further, based on the binding final decisions in the interlocutory judgment of the District Court in the 2006 ruling, as upheld by the Court of Appeal in the 2012 ruling and the Supreme Court in the 2013 ruling, the District Court proceeded on the basis that:

(a)    There was no valid transformation or privatisation of VVO and the trade mark rights were not transferred to VAO, and thus not to Spirits.

(b)    Spirits did not act in good faith regarding ZAO’s power of disposition at the time of transfer of the trade mark rights.

(c)    Spirits filed the registrations in bad faith.

(d)    FKP had not forfeited its right of action and that the claim had not been time-barred.

288    The 2015 ruling is apparently considered a final or end judgment under Dutch law, as opposed to an interlocutory judgment. Though the 2006 and 2012 rulings had apparently acquired res judicata effect when the 2013 ruling had been rendered, once the 2015 ruling was rendered even in the strictest interpretation of the doctrine of inviolability upon cassation (in which a final judgment is required) all of the interlocutory judgments, including the 2013 ruling, apparently had res judicata effect.

289    During 2015 and 2016, Spirits appealed the 2015 ruling in relation to the Court’s position concerning one of the disputed trade marks on the basis of the restated doctrine of reconsideration of a binding final decision. Despite the apparent binding effect of the interlocutory decisions by virtue of res judicata, Spirits again argued, inter alia, that these (and other) decisions of the Court should be revisited in the context of its appeal.

290    On 9 January 2018, the Court of Appeal of The Hague rejected Spirits’ arguments that the 2006, 2012 and 2013 rulings should be revisited, refusing to adopt the restated doctrine of reconsideration of the binding final decision (the January 2018 ruling).

291    The Court of Appeal in the January 2018 ruling applied the doctrine of inviolability upon cassation and again held that the interlocutory judgments had become final as of the date of the 2013 ruling. To avoid the apparent res judicata effect, Spirits had invoked arguments of fraudulent misrepresentation which were dismissed by the Court. The Court held that by the 2012 ruling it had decided finally, inter alia, that under both the laws of the Soviet Union and the laws of the Federation no legally valid transformation or privatisation of VVO had taken place and the trade mark rights were not assigned to VAO as a result of VVO’s transformation, under universal title or otherwise. The decision that no legally valid privatisation had taken place under the law of the Federation was not contested. The Court decided that VVO continued to exist in 1991 and 1992 alongside VAO and was therefore not succeeded by VAO.

292    The Court of Appeal noted that in the 2013 ruling the Supreme Court dismissed Spirits’ appeal in cassation that was directed against the 2012 ruling, and that the 2006, 2012 and 2013 rulings were final judgments that were not challenged or were challenged in vain.

293    On 9 April 2018, Spirits appealed the January 2018 ruling to the Supreme Court of the Netherlands. One of the arguments raised by Spirits on appeal was, again, the restated doctrine of reconsideration of a binding final decision. Spirits again argued that the 2006, 2012 and 2013 rulings should be reconsidered as resulting from, inter alia, an incorrect interpretation of the law.

294    The apparent res judicata effect of all decisions rendered and confirmed in the January 2018 ruling also occurred via a different route. Spirits filed separate appeals before the Court of Appeal of The Hague in cognate proceedings in the European Union (EU proceedings). Spirits’ appeals related to two of the disputed trade marks, including the Stolichnaya “S” trademark. Spirits advanced the same arguments on the merits in the EU proceedings, as those advanced in the Dutch proceedings before the Court of Appeal of The Hague which led to the January 2018 ruling.

295    On 2 October 2018, the Court of Appeal of The Hague handed down a decision in relation to the appeals in the EU proceedings in FKP’s favour (the October 2018 ruling). In that judgment, all relevant decisions made in the January 2018 ruling were made once again. The Court said (at [38]):

… To the extent that the appeal of the final decisions to the authority in the 2012 ruling, which cannot be challenged again in cassation by Spirits, does not succeed, the court rejects the non-trademark defenses on the same grounds as in the comprehensively justified 2018 ruling. This ruling is known to the parties and has been discussed in the appeals process.

296    In the January 2018 ruling, the Court of Appeal denied all of Spirits’ defences. In the October 2018 ruling, the Court of Appeal did the same, this time by reference to the January 2018 ruling.

297    By the October 2018 ruling, the Court of Appeal also found that:

(a)    FKP has been the holder of the Stolichnaya “S” trade mark;

(b)    Spirits has been infringing that trade mark; and

(c)    Spirits’ registration in relation to that trade mark was void.

298    Spirits has not appealed the October 2018 ruling and the appeal period has expired. Accordingly, the October 2018 ruling would appear to be binding on the parties under the principle of res judicata. As a consequence, all of the decisions made in the January 2018 ruling, including those which already became final in the 2013 ruling, which were reiterated in the October 2018 ruling have, again, apparently acquired res judicata.

299    We return to Spirits’ appeal of the January 2018 ruling.

300    The Supreme Court of the Netherlands sought an opinion of the Advocate General of the Supreme Court of the Netherlands in respect of Spirits’ appeal in cassation from the January 2018 ruling. Apparently, under Dutch law the Supreme Court of Netherlands seeks the advice of the Advocate General as a matter of course. It is generally accepted practice for the Advocate General’s opinion to be delivered to the Court, following which the Court will render its judgment. The Court often, but not always, adopts the opinion of the Advocate General. The Advocate General’s opinion was delivered on 20 September 2019. The Advocate General opined that he could not see any of Spirits’ complaints on its appeal in cassation succeeding and moved that the appeal be rejected.

301    On 24 January 2020, the Supreme Court of the Netherlands upheld the January 2018 ruling, with the result that it apparently has res judicata effect. All the interlocutory decisions and end decisions confirmed in the January 2018 ruling, as finalised by the 2013 ruling, including the 2006 and 2012 rulings, also apparently have res judicata effect. This apparent res judicata effect applies to both FKP and Spirits.

The EU proceedings

302    In addition to the Dutch proceedings, litigation is pending before the District Court of The Hague regarding the same disputed trade marks in 13 member states of the European Union. These proceedings were commenced in 2012.

303    On 17 May 2017, a three judge division of the District Court of The Hague held that the decision in the Dutch proceedings that no valid transformation from VVO to VAO occurred had the force of res judicata (the 2017 EU ruling).

304    Further, it concluded that, given that not all of the steps of the transformation process had been completed and VVO still existed after 20 January 1992, VVO was not transformed into VAO according to the law of the Soviet Union and, without a valid transformation, no transition by universal title of the trade marks from VVO to VAO occurred. Nor had the trade marks passed in any other way by universal title or any other title from VVO to VAO, which alleged unfounded that as of January 1992, it was the proprietor of the trade marks, which had continued to be Russian state property. Further, in the course of its analysis the District Court considered and rejected Spirits’ arguments that the view conveyed by the Federation that VAO was the legal successor to VVO was not decisive and can partly be explained because VAO presented itself as VVO’s successor.

305    The 2017 EU ruling did not consider whether factual findings in the Dutch proceedings, which formed the basis of the holding that Spirits did not acquire the trade marks in good faith, could form issues estoppels binding on Spirits under the applicable laws in each of the 13 EU member states. Instead, the District Court of The Hague gave the parties the opportunity to address the content of the law in each of those countries, in particular the acquisition in good faith of trade marks from an unauthorised seller. In answer to the District Court’s invitation, FKP filed two opinions of Lord Hoffman with respect to the laws of the United Kingdom. FKP also filed an opinion of Dr Robert Clarke regarding Irish law.

306    One other matter regarding the EU proceedings should be noted.

307    On 8 May 2019, the District Court of The Hague considered a motion by Spirits for discovery in the EU proceedings (the 2019 EU ruling). Partial discovery was ordered in light of the fact that in the 2017 EU ruling the District Court held that the decision in the Dutch proceedings regarding the question of whether ZAO and Spirits qualify as acquiring parties acting in good faith did not have the force of res judicata under the law of each of the 13 states subject to the EU proceedings. Spirits’ request for discovery of other documents was denied.

308    The District Court found that in September 2016 ZAO received six boxes of documents from the Investigation Committee; among them were 3,500 pages of seized documents. The Court also found that in February and March 2017 Spirits was given access to the entire case file in the first criminal case, being the case against Mr Sorochkin. The 19,000 documents on the file contained seized documents to which that claim relates and documents that were seized from ZAO in 1999 in connection with the criminal investigation under way at that time concerning the lawfulness of ZAO’s acquisition of the trade marks. FKP has appealed the 2019 EU ruling and the EU proceedings continue.

The Austrian proceedings

309    Proceedings were commenced in Austria in 2004. On 11 June 2018, the Supreme Court of the Republic of Austria concluded that the answers to the questions given in the Dutch proceedings were binding on the Austrian courts. In the result, the Court held that there had been a lawfully valid privatisation of VVO and therefore a transfer of trademark rights had not taken place, that the claim asserting the nullity of the privatisation was not statute-barred, and that FKP had the right to bring proceedings. On 7 September 2018, the Linz Court of Appeal awarded FKP the rights to the Austrian STOLICHNAYA and MOSKOVSKAYA trade marks.

310    Spirits appealed the September 2018 Austrian ruling. On 20 December 2018, the Austrian Supreme Court determined that it would await the final decision of the Supreme Court of the Netherlands in Spirits’ appeal of the January 2018 ruling in the Dutch proceedings before deciding the appeal.

The discretionary defences

311    Putting to one side the question of any issues estoppel or res judicata arising from the Dutch decisions, it is convenient to now address the other discretionary defences raised by Spirits.

312    In Spirits’ defence to the cross-claim it is pleaded in [65]:

In further answer to the whole of the Third Further Amended Cross-Claim, the Cross-Respondent says that:

(a)    during the period January 1992 to 2000, the Government of the Russian Federation represented that:

(i)    Sojuzplodoimport was transformed into VAO-SPI in accordance with applicable law;

   (ii)    VAO-SPI was the legal successor to Sojuzplodoimport; and

(iii)    all assets and liabilities of Sojuzplodoimport had vested in VAO-SPI by operation of law with effect from 20 January 1992.

(b)    acting in reliance on the representations pleaded in sub-paragraph (a) above and induced by those representations, VAO-SPI, ZAO and the Cross-Respondent assumed that VAO-SPI acquired ownership of the House Mark, the Stolichnaya Label Mark and the Moskovskaya Label Mark with effect from 20 January 1992;

(c)    acting in reliance on the representations pleaded in sub-paragraph (a) above and induced by those representations, the Cross-Respondent assumed that it acquired ownership of 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 from ZAO in or around April 1999;

(d)    on the basis of the assumptions referred to in sub-paragraphs (b) and (c) above, VAO-SPI, ZAO and Cross-Respondent have used and registered the trade marks referred to in sub-paragraphs (a) and (b) above in Australia and throughout the world, or alternatively have authorised the use and registration of those trade marks in Australia and throughout the world;

(e)    the allegations made by the Cross-Claimants in paragraphs 4(f), 4(h), 14, 24, 35, and 54-58 of the Third Further Amended Cross-Claim are contrary to the representations pleaded in sub-paragraph (a) above;

(f)    the claims made by the Cross-Claimants in this proceeding are made on behalf of the Government of the Russian Federation;

(g)    by reason of the matters pleaded in sub-paragraphs (a) to (f) above, it is unconscionable for the Government of the Russian Federation, through the Cross-Claimants, to now assert, and the Cross-Claimants are estopped from asserting, that the Cross-Claimants, or either of them, have any right or interest in any of the trade marks referred to in the Cross-Claimant’s prayer for relief; and

(h)    in the premises, the Cross-Claimants are not entitled to any of the relief sought in their prayer for relief.

(Particulars not reproduced.)

313    We should note that the bulk of the particulars which we have not set out refer to identified documents, although there is the usual catch all of further particulars being provided after discovery.

314    It is then pleaded in [66]:

In further answer to the whole of the Third Further Amended Cross-Claim, the Cross-Respondent says that:

(a)    all of the claims made by the Cross-Claimants in the Third Further Amended Cross-Claim relate to the validity of the transformation of Sojuzplodoimport into VAO-SPI on or around 20 January 1992;

(b)    since 1992, VAO-SPI has held itself out as the legal successor to Sojuzplodoimport with the full knowledge and, until 2000, acquiescence of the Government of the Russian Federation;

(c)    since 1992, VAO-SPI and its successors in title have held themselves out as the owners of all rights in the STOLICHNAYA and MOSKOVSKAYA trade marks throughout the world with the full knowledge and, until the dates specified in sub-paragraphs (d) and (e) below, acquiescence of the Government of the Russian Federation.

(d)    the Government of the Russian Federation did not assert any right or interest in the STOLICHNAYA and MOSKOVSKAYA trade marks, or any claim regarding the Cross-Respondent’s ownership of those trade marks, until 2000;

(e)    the Government of the Russian Federation did not assert any right or interest in the House Mark, the Stolichnaya Label Mark, the Moskovskaya Label Mark, the Stolichnaya Word Mark, the Stoli Word Mark, the Ohranj Label Mark and the Ohranj Word Mark, or any claim regarding ownership of those Australian trade marks, until 2004;

(f)    the Cross-Claimants did not assert any right or interest in the House Mark, the Stolichnaya Label Mark, the Moskovskaya Label Mark, the Stolichnaya Word Mark, the Stoli Word Mark, the Ohranj Label Mark and the Ohranj Word Mark, or any claim regarding ownership of those Australian trade marks, until 2004;

(g)    the claims by the Cross-Claimants in this proceeding are made on behalf of the Government of the Russian Federation;

(h)    by reason of the matters pleaded in sub-paragraphs (a)-(e) above, the Government of the Russian Federation is guilty of laches;

(i)    by reason of the matters pleaded in sub-paragraphs (a)-(g) above, the First Cross-Claimant is guilty of laches;

(j)    by reason of the matters pleaded in sub-paragraphs (a)-(g) above, the Second Cross-Claimant is guilty of laches; and

(k)    by reason of the acquiescence and/or laches of the Government of the Russian Federation, or further or alternatively the Cross-Claimants (or either of them), the Cross-Claimants are not entitled to any of the relief sought in their prayer for relief.

(Particulars not reproduced.)

315    It is unnecessary to reproduce [67A]. But the defence goes on in [67] to plead:

In further answer to the whole of the Third Further Amended Cross-Claim, the Cross-Respondent says that if (which is denied) either or both of the Cross-Claimants is an “aggrieved person” within the meaning of section 88 of the Trade Marks Act and if (which is denied) any of the grounds specified in section 88 of the Trade Marks Act is made out by either or both of the Cross-Claimants, the Court should in its discretion refuse to grant the relief sought in the Cross-Claimants’ prayer for relief.

Particulars

The Cross-Respondent refers to paragraphs 15 to 51 of the Third Further Amended Cross-Claim and to paragraph 67 of this Defence and says that the Government of the Russian Federation, or alternatively the Cross-Claimants, are guilty of gross delay in bringing any application for rectification pursuant to section 88 of the Trade Marks Act.

The Cross-Respondent refers to the matters pleaded in paragraph 66(a) of this Defence and says that the allegations made by the Cross-Claimants in paragraphs 4(f), 4(h), 14, 24, 35, and 54-58 of the Third Further Amended Cross-Claim are contrary to representations made by the Government of the Russian Federation to VAO-SPI, ZAO and the Cross-Respondent during the period 1992 to 2000.

The Cross-Respondent also refers to the matters pleaded in paragraphs 61, 62, 63, 64 and 65 of this Defence.

Further particulars made by provided following discovery.

316    It is appropriate at this point to say something about the parties’ submissions before the primary judge concerning the relevance of discovery to the discretionary defences. The primary judge was brief in his description of such matters in the form of orders reasons. To be more specific, as to the defences concerning laches, the estoppel by representation and discretionary considerations relevant to s 88 of the Trade Marks Act, Spirits made the following submissions to the primary judge in writing on 3 October 2019 (at [17]–[19]):

The defences … raise facts in issue concerning the RF’s state of mind and internal motivations at various points of time. Those facts are peculiarly within the knowledge of the RF; discovery by the RF (as opposed to by FKP) is the primary process available to Spirits to obtain evidence about those facts. The failure by the RF to give discovery going to those matters goes to the heart of Spirits’ ability to propound a defence: see Permanent Stay Judgment at [157].

The following classes of documents falling within the discovery categories, and the subject of the Court’s findings in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345 (Interim Stay Judgment), relate to the defences …:

(a)    as to: (1) the monthly reports referred to in Acting President Putin’s order of 13 March 2000 (Interim Stay Judgment at [2], [50]-[53]); (2) correspondence and documents created or received by the interdepartmental working group (Interim Stay Judgment at [55]-[56]); (3) documents leading to the creation of FGUP (Interim Stay Judgment at [57]-[58]); and (4) documents relating to steps taken by entities within the RF to assert VAO-SPI’s title to the trademarks (Interim Stay Judgment at [59]), as Spirits submitted at paras 78 and 79 of its Outline of Submissions filed 27 October 2016 (Spirits 2016 Submissions) in respect of Spirits’ application for a stay (emphasis added):

“[These] largely internal documents of the Russian Federation are highly relevant to Spirits’ defences of estoppel, laches and discretion… They will show the Russian Federation’s evolving and fluctuating internal position, at various points in time, as to who is or should be the true owner of the STOLICHNAYA trade marks… [The documents would] allow the Court to be better informed about how the change in position of the Russian Federation in around 2000 in relation to ownership of the STOLICHNAYA marks came about. That change of position is of vital importance in assessing Spirits’ equitable defences, and in the exercise of the Court’s discretion under s 88 of the TM Act.”

The Court referred to this submission at [53] and [56] of the Interim Stay Judgment;

(b)    the seized documents (Interim Stay Judgment at [19]-[38]). The documents were “seized with a view to investigating the legality of VAO’s ownership of the marks”: Interim Stay Judgment at [24]. The seizure of documents commenced in 1999: Interim Stay Judgment at [19]. The seized documents “seem last to have been in the possession of the Russian Federation”: Interim Stay Judgment at [38(c)]. For example, the seized documents may themselves reveal that the only reason the RF was in a position to obtain a favourable judgment from the Presidium in 2001 was because in 1999 it seized documents which deprived Spirits’ predecessor of the ability to prove the true facts in 2001 – in those circumstances, the documents would be directly relevant as to whether it was unconscionable for the RF to resile from its previous representations as to successorship, which are to the contrary to the Presidium Decision. Moreover, the seized documents would also be highly relevant to another of Spirits’ defences in addition to those referred to …, being that Spirits is a bona fide purchaser for value without notice, as well as the exercise of discretion under s 88 of the TM Act. This is because documents relating to the assignment of trade marks from VAO-SPI to ZAO in 1998 and from ZAO to Spirits in 1999 (relating to good faith and/or value) are potentially among the documents seized by the RF in their raids;

(c)    the secret archive (Interim Stay Judgment at [40]-[47]). These documents, like those referred to in para 18(a), relate to activities of the RF aimed at reinstating the rights to the trade marks: see eg Interim Stay Judgment at [42], [47]. Accordingly, the secret archive is relevant for reasons similar to those set out at paras 18(a) and 18(b) above. For example, the documents may show that the succession claim made by FKP in these proceedings originates in a legal contrivance deliberately set up by the RF to undo a legal state of affairs as to successorship which, to the knowledge of the RF, validly existed prior to Acting President Putin coming to power at the start of 2000. For the purposes of the laches defence, that would assist Spirits to show that the delay in the assertion of rights by FKP has no proper explanation but is the direct result of that contrivance.

Category 29(d) of Spirits’ discovery categories concerns documents, to the extent not covered by other categories, which support Spirits’ case with respect to laches, estoppel and discretion (among other issues). This category evinces the direct relationship between discovery and Spirits’ defences in the clearest possible terms. Even taken on its own, it is capable of sustaining the conclusion that no part of the proceedings is unaffected by the failure to give discovery.

317    In response to these submissions, FKP put written submissions to the primary judge on 8 October 2019 (at [102]–[109] and [114]–[121]), including the following:

Lack of relevance of the discovered documents

Spirits argues that the documents are relevant because they go to the state of mind and internal motivations of the Russian Federation at various points of time …

There is no foundation to the assertion by Spirits at [48] of its submissions that, “FKP must be taken to have accepted that discovery was relevant to Spirits’ arguments in its Rejoinder, if not also to Spirits’ positive defences.” In fact, FKP at the time, simply responded to a suggestion by Spirits that the Separate Questions not be pursued and intimated they may make an application to that effect. FKP on balance, decided to get on with the case. It did not make the concessions Spirits seek to have inferred. On the contrary, no such concessions were made as they would have been unfounded.

The state of mind and motivations of the Russian Federation are not relevant to any of the issues in dispute.

As we have seen, on the question of estoppel raised by Spirits, they must establish:

a.    Representations by VVO

b.    Reasonably relied upon by Spirit;

c.    As a consequence of which they suffered detriment.

The representations have already been identified by Spirits. The question as to whether they were made by VVO does not depend on the motivation or state of mind of the Russian Federation and will not be assisted by the discovery.

Similarly, the question of laches will not be dependant upon the state of mind or motivation of the Russian Federation. Thus the discovery will not be relevant to this issue either.

Finally, the question of discretion will turn upon the conduct of Spirits the subject of the final findings by the Dutch Courts giving rise to the res judicata and issue estoppels against Spirits supporting the final findings of Spirits’ lack of good faith in relation to the transfers of the trade marks so, here too, the discovery will have no relevance.

The assertions of relevance by Spirits … should be rejected. They do not explain how any documents could be relevant to overcoming the findings forming the foundation of the issue estoppels on the non-transformation of VVO into VAO; the factual irrelevance of the belief of, or statements by, the Russian Federation between 1992 and 1999, and the fact that Shefler was the controller of VAO, ZVAO and Spirits prior to and at the time of the transfer of the trademarks from VAO ultimately to Spirits, a fact which deprives the assertion of Spirits being a “bona fide purchaser for value without notice” of the trade marks from ZVAO, of any force.

318    In essence, FKP sought to circumvent Spirits’ points by legal argument, thereby seeking to downplay the relevance of the documents to these defences.

319    But Spirits said in its reply submissions of 10 October 2019 (at [14]–[22]):

FKP is faced with three incontrovertible propositions: (1) various of the discovery categories relate to Spirits’ positive defences – laches, estoppel and the exercise of the discretion under s 88 of the TM Act …: (2) those positive defences did not arise for consideration, and were not determined, in the Dutch Decisions … and (3) even if FKP were able to establish an issue estoppel (which is denied), this would not preclude Spirits from relying on its positive defences …

These propositions establish that no part of the proceedings is “unaffected by the failure of the Russian Federation voluntarily to give discovery”.

…

The question is whether they are “unaffected” by the RF’s failure to give discovery.

Secondly, FKP is wrong to say that the Permanent Stay Judgment proceeded on the basis that discovery in these proceedings was “directed to the questions of transformation and good faith”… Even prior to argument on the Permanent Stay Judgment, Spirits had made it clear that the discovery it sought was directed, inter alia, to its positive defences … Spirits did not depart from that position in arguing for a permanent stay and nor does the Permanent Stay Judgment depart from it.

Thirdly … Spirits’ allegation of laches concerns how VAO-SPI and its successors held themselves out from 1992 onwards … How there is res judicata with respect to that defence is not explained. The Dutch Decisions did not concern laches…

Fourthly … FKP asserts that the “state of mind and motivations of the Russian Federation are not relevant to any of the issues in dispute”, such that discovery on those matters is irrelevant. This is incorrect. As to:

(a)    laches, the knowledge of the party against whom laches is alleged is an important factor in determining whether laches is made out …:Spirits alleges that the RF had full knowledge of the conduct of VAO-SPI and its successors in title …

(b)    estoppel, unconscionability is determined by “reference to all circumstance of the case” … This necessarily includes the RF’s state of mind and motivations;

(c)    discretion under s 88 of the TM Act, the discretion to cancel a registered trade mark is “at large, constrained only by the general scope and objects of the [TM] Act”: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 351 ALR 436 at [146]. This necessarily includes the conduct, state of mind and motivations of the party seeking cancellation or those standing behind it. Further, as to the exercise of the discretion, Spirits relies on the matters pleaded in relation to laches (see SPS 15(1)), which include the matters regarding the RF’s knowledge set out at sub-para (a) above.

320    FKP’s rejoinder submissions dated 13 October 2019 sought to grapple with Spirits’ points.

321    Now we have set out more than is usual in terms of the parties’ arguments before the primary judge. But we assume that his Honour considered the detailed submissions.

Problematic features of the reasons

322    Before we turn to the parties’ specific arguments, it is appropriate to begin by expressing our own views as to various problematic features of the form of orders reasons.

323    First, his Honour referred (at [2]) to his earlier conclusions in the permanent stay reasons. He said (at [2]):

The basis of both decisions was that the Russian Federation, which stands behind FKP, had failed to comply with an invitation to give discovery over an unreasonably extensive period of time. I also concluded that FKP had itself failed to give complete discovery despite having been afforded a reasonable opportunity to do so. However, as I noted at [152] and [160] in the Permanent Stay Decision, there were potentially some issues which arose on the cross-claim to which the documents which ought to have been discovered by FKP and the Russian Federation might not have been relevant. In relation to any such issue, a permanent stay did not in principle appear appropriate since Spirits could not be prejudiced.

324    But this does not sit that well with what his Honour said in [151] of the permanent stay reasons:

I do not accept the Cross-Respondent’s submission that the proceeding should be dismissed for want of prosecution for it is evident that the Cross-Claimants are prosecuting the proceeding. In that regard it is to be noted that the Cross-Claimants have complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013: see First Stay Decision at [15]. They have also been attempting, with more limited success, to respond on the Russian Federation’s behalf to the discovery invitation issued to the Russian Federation. As such I do not think that it can be said that the Cross-Claimants are not prosecuting the proceeding: cf Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; 295 ALR 52 at 62 [44].

325    Clearly, so far as FKP were concerned, there has been substantial compliance with discovery.

326    Further, his Honour said (first sentence of [17]):

The reason the permanent stay was considered appropriate in the Permanent Stay Decision was because the Russian Federation and FKP had failed unreasonably to give discovery and their continuing inaction or delay had reached a point where the proceeding had become an abuse of process.

327    This was problematic with respect to the position of FKP.

328    Second, on various occasions his Honour did not apply the right test.

329    At [18], his Honour said:

The only way therefore that one can say that the discovered documents could not have been relevant to what is left of the proceeding is if one can say that Spirits cannot succeed on the Discretionary Defences. I reject the submission that the material which would have been discovered could not assist on the Discretionary Defences. Category 29(d) is an immediate obstacle to that contention. But in any event, the scale of the discovery categories goes to the entire history of the transformation and what the Russian Federation knew about it at various times. The contention that such material could have no conceivable bearing on the Discretionary Defences needs only to be stated to be rejected.

330    Contrary to the approach his Honour adopted, he ought to have considered how and to what extent Spirits was prejudiced by the deficiencies in discovery in pursuing the discretionary defences and in dealing with the issues estoppel arising from the Dutch decisions. The focus ought not to have been on the low bar of whether discovery “could not assist” or “could have no conceivable bearing”.

331    There is a further manifestation of the use of an inappropriate test at [19] where his Honour said:

Despite that, given that neither party sought to have any definitive determination of what issue estoppels the Dutch Decisions give rise to, it is difficult presently to say that the documents which would have been discovered must be irrelevant to FKP’s claim that it is entitled to rely on issue estoppel to defeat the Discretionary Defences.

332    This statement implies that his Honour was setting the bar too low in determining whether a permanent stay was warranted.

333    Further, the primary judge erred in his application of the principles discussed in Aetna, which his Honour had briefly mentioned in the temporary stay reasons at [61]. In Aetna, Giles J said that in determining whether a permanent stay of the proceeding was warranted, it was necessary to identify what effect any actual non-production of documents would have upon the conduct of the proceeding and then to only stay the proceeding if the needs of justice as between the parties to the proceeding justified that course.

334    In our view, the primary judge did not give sufficient consideration to the needs of justice as between the parties by failing to determine what effect any actual non-provision of documents by the Federation would have upon Spirits’ ability to defend the cross-claim in light of any issues estoppel that might flow from the Dutch decisions.

335    Third, his Honour at [20]–[23] accepted the application of the Arnold principle. In our view, he ought not to have done so.

336    It is important to be clear about what the principle in Arnold stands for.

337    Lord Keith referred to three concepts, namely:

(a)    cause of action estoppel;

(b)    issue estoppel of a type that arises where “a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re-open that issue” (at 105); and

(c)    issue estoppel of a type “where in the subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier” (at 106).

338    Now under Australian law, (a) would be described as a res judicata and (c) would be described as an Anshun estoppel. In the present case we are only dealing with (b), not (a) or (c).

339    Lord Keith envisaged that “there may be special circumstances where estoppel does not operate”. If his Lordship is to be taken as permitting of such an exception in an Anshun estoppel situation, we have no difficulty with it. But if he is intending to apply it to what we would consider to be a res judicata or a true issue estoppel (see (b) above), we would disagree. There is no such principle under Australian law. The High Court has not in any ratio or considered majority dicta ever gone so far. And it is not appropriate for an intermediate appellate court to so innovate (see also Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 at [487] per Tobias JA).

340    Further, even if there was such a principle and even if it applied to a type (b) issue estoppel, none of this helps Spirits.

341    Lord Keith stated (at 108 and 109):

It is to be noted that there appears to be no decided case where issue estoppel has been held not to apply by reason that in the later proceedings a party has brought forward further relevant material which he could not by reasonable diligence have adduced in the earlier. There is, however, an impressive array of dicta of high authority in favour of the possibility of this. It was argued for the defendants that exceptions to the rule of issue estoppel should be admitted only in the case of the earlier judgment being a default or a foreign judgment and further that an exception should not be recognised where the point at issue had actually, as here, been raised and decided in the earlier proceedings, but only where the point might have been but was not so raised and decided. The later dicta are, however, adverse to these arguments. It was argued that there was no logical distinction between cause of action estoppel and issue estoppel and that, if the rule was absolute in the one case as regards points actually decided, so it should be in the other case. But there is room for the view that the underlying principles upon which estoppel is based, public policy and justice, have greater force in cause of action estoppel, the subject matter of the two proceedings being identical, than they do in issue estoppel, where the subject matter is different. Once it is accepted that different considerations apply to issue estoppel, it is hard to perceive any logical distinction between a point which was previously raised and decided and one which might have been but was not. Given that the further material which would have put an entirely different complexion on the point was at the earlier stage unknown to the party and could not by reasonable diligence have been discovered by him, it is hard to see why there should be a different result according to whether he decided not to take the point, thinking it hopeless, or argue it faintly without any real hope of success. In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result, as was observed by Lord Upjohn in the passage which I have quoted above from his speech in the Carl Zeiss case [1967] 1 A.C. 853, 947.

342    And here lies the problem for Spirits. If it wanted to rely upon special circumstances it would need to show that it could not have obtained the relevant documents in the Dutch proceedings. In other words, the question is not the consequence of incomplete discovery in the Australian proceeding by FKP, but whether Spirits could have through reasonable efforts obtained the documents in the Dutch proceedings. We would have thought that that was also plain from Diplock LJ’s discussion in Mills v Cooper [1967] 2 QB 459 at 468 to 469 which provided the foundation for Lord Keith’s discussion in Arnold.

343    The primary judge (at [20]) accepted Spirits’ submissions based on Arnold. With respect, he should not have done so. There are other passages at [21]–[23] with which we also have difficulties.

344    In the last two sentences of [21] his Honour said:

For present purposes, I do not see how I can proceed on the basis that Spirits’ invocation of the Arnold principle cannot succeed because the principle does not exist. It is not entirely self-evident that this was FKP’s submission, although it certainly flirted with it.

345    But the Arnold principle did not apply and, even if it did, it is unlikely to succeed in the present circumstances in any event.

346    At [22] his Honour said:

Nor do I accept FKP’s submission that the Arnold principle is not engaged because Spirits does not presently point to any document that could enliven it. In the counterfactual where FKP and the Russian Federation gave proper and timely discovery, Spirits would have had access to the full range of discovered documents. They may, or may not have, included documents which would assist it in invoking the Arnold principle. Of course, Spirits does not have access to those documents at the moment (or at least not to the full range of them). But this inability on Spirits’ part is to be laid at the feet of FKP, so it seems to me, and not Spirits. It is FKP and the Russian Federation which have not given proper discovery. It would be surprising if it were open to FKP to submit that it should be entitled to proceed to a trial of part of the case to which its discovered documents might be relevant to a submission which Spirits wishes to make because no such documents had been produced by Spirits when Spirits’ inability to do so is a direct function of the failure of FKP and the Russian Federation to give discovery. It would be circular.

347    The first sentence of [22] is problematic. Further, the real question is whether the documents could have been sought by Spirits in the Dutch proceedings. They could have been, but Spirits chose not to.

348    At [23] the primary judge said:

I also do not accept FKP’s submission that the Arnold principle cannot be invoked because Spirits could have sought the documents in the Dutch proceedings. That seems to be an issue suitable for trial. To embrace it for present purposes would be tantamount to concluding that FKP must inevitably succeed on this issue and Spirits fail. But I do not see how such an inquiry could be conducted without considering much more closely the course of Spirits’ attempt to reopen the 2006 judgment of the District Court of Rotterdam.

349    As we have already observed, this was the real issue. If Spirits wanted to invoke the Arnold principle, this is what was required.

350    The primary judge went on to say (at [24]):

In particular, making the assumption in FKP’s favour that the Supreme Court of the Netherlands will dismiss Spirits’ appeal on 24 January 2020, the following questions would then arise:

(a)    are the documents which are the subject of Spirits’ reopening application before the District Court of Rotterdam the same documents the subject of the agreed discovery categories in this proceeding;

(b)    in the Dutch proceedings was Spirits entitled to seek discovery from the Russian Federation (as it has done here);

(c)    what is the precise nature of the juridical entitlement under Dutch law to seek discovery, and when precisely can it be granted;

(d)    does the fact that Spirits applied to reopen the 2006 District Court of Rotterdam decision and has pursued it all the way to the Supreme Court of the Netherlands mean that it has taken reasonable steps to obtain the documents in the Dutch proceedings under Arnold;

(e)    as a matter of Dutch law, did (or will) Spirits fail on its reopening because of the unreasonableness of its conduct or because of the asperity of Dutch civil procedure on the topic of discovery;

(f)    if Spirits’ conduct for the purposes of Dutch civil procedure was unreasonable does that entail that it was unreasonable for the purposes of Arnold;

(g)    are the reasons the District Court of Rotterdam gave for concluding that Spirits knew in 2006 about the documents seized from VAO by the Russian Federation applicable to all of the documents which are the subject of the agreed discovery regime in this case; and

(h)    where the hearing in this Court concerns what the consequences for FKP should be for failing to comply with a consensual discovery regime, is there something incongruous in FKP submitting that Spirits should fail because it failed to seek discovery in a jurisdiction which does not generally order discovery?

351    But these are the questions his Honour should have addressed before deciding whether to permanently stay the cross-claim.

352    The primary judge went on to say in the first two sentences of [25]:

These issues are trial questions and cannot sensibly be embarked on in the present hearing. The parties did not attempt to wrestle with them other than in a superficial way (and I do not say that by way of criticism—the superficiality is driven by the nature of the debate as one about the form of orders).

353    One can only agree. This is the very reason a permanent stay was not justified.

354    His Honour concluded at [26]:

Accordingly, I do not accept that I can determine at this hearing the contention that Arnold will not apply because Spirits did not seek the documents in the Dutch proceedings.

355    But if that be correct, it merely demonstrates why a permanent stay was not then justified.

356    His Honour then said in the first sentence of [27]:

Inevitably this must mean that I cannot say that the trial of the issue estoppel arguments would not involve the documents which would have been discovered by FKP and the Russian Federation.

357    But the trial of the issue estoppel arguments did not have to involve the documents but rather whether discovery of documents responsive to the discovery categories could have been obtained in the Netherlands.

358    Fourth, at [19] the primary judge seemed to countenance the possibility, that even if FKP’s points concerning the issues estoppel arising from the Dutch decisions were made good and even assuming that the Arnold principle did not apply, the discretionary defences could “remain live”. Countenancing that possibility, his Honour considered that the lack of complete discovery could still go to the discretionary defences.

359    With respect, this was an uncertain position. In these circumstances, rather than ordering a permanent stay of the entirety of the cross-claim his Honour should have addressed the possibility referred to in ground of appeal 7 or something analogous as was put to him at the hearing culminating in the form of orders reasons (see FKP’s supplementary outline filed on 9 October 2019).

360    In summary, each of the four matters that we have identified amounts to House v the King error. It follows that the discretion miscarried and must be re-exercised. Since we are not in a position to do so, the matter should be remitted to the primary judge to undertake that task. We will say something more about the form of the remitter later.

Arguments and analysis

361    We now turn to the parties’ specific arguments.

362    FKP advanced various arguments by way of challenge to the form of orders decision.

363    First, FKP contended that the primary judge failed to address whether the discretionary defences were sustainable either as a matter of law or such as would at least survive a summary judgment application.

364    By contrast, Spirits said that his Honour expressly addressed the question whether the discretionary defences were sustainable in light of the Dutch decisions (at [19]) and held that it could not be said they were not.

365    Spirits submitted that the alleged representations are not matters of opinion and are capable of founding an estoppel. Further, Spirits submitted that the test for laches is whether the claimant has, by inaction, put the defendant in a situation where it was inequitable and unreasonable to assert the remedy. Spirits also submitted that where the power to cancel a registered trade mark under s 88(1) is enlivened, nevertheless a discretion not to so cancel can be exercised if there is sufficient reason. The power under s 88(1) is “at large, constrained only by the general scope and objects of the [Trade Marks Act]”, but subject to s 89 (see Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514 at [146], [148]–[150], [158] and [159] per Nicholas, Yates and Beach JJ).

366    In addition, Spirits argued that the Federation’s knowledge is relevant to the discretionary defences. As to laches, the degree of the claimant’s knowledge needs to be evaluated. And as to estoppel and whether departure from the relevant assumption would be unconscionable, this must be resolved “by reference to all the circumstances of the case” (The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 445 per Deane J). And as to the s 88 discretion, considerations include the respective contributions of the parties to the state of affairs. Spirits says that during the 1990s, the Federation acted as if VAO owned the relevant marks.

367    We accept that an estoppel by conduct can preclude departure from a represented or assumed state of affairs whether of fact or law (Foran v Wight (1989) 168 CLR 385 at 435 per Deane J). Promissory estoppel is just a subset of estoppel by conduct.

368    With respect to the principles of promissory estoppel, we adopt what was said by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 420 and 421 and his six elements for establishing an equitable estoppel (see at 428 and 429). It is unnecessary to list them here.

369    Further, as to whether there can be an estoppel against the exercise of any statutory power (in this case, s 88), we would refer to the discussion by Gummow J in Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 at 207, 208, 211, 213, 227 and 228.

370    The primary judge did not consider whether the discretionary defences were sustainable as a matter of law; and if they were not, whether any deficiency in discovery was superfluous.

371    FKP had a case to put, which has now been denied to them, that no documents or statements by functionaries of the Federation could either give rise to a relevant estoppel or change the objective fact, established by the Dutch issues estoppel that, because VVO existed after the incorporation of VAO (a matter known to VAO), it is not possible for VVO to have been transformed into VAO.

372    Second, FKP submitted that his Honour failed to consider whether any documents not discovered were “critically relevant” to the discretionary defences. By contrast, Spirits argued that the test is whether there is “no realistic possibility” that the discovered documents “might be deployed” by Spirits as part of the discretionary defences (see Clifton at [203]).

373    FKP overstated the test. Spirits understated it.

374    Third, FKP submitted that the primary judge wrongly concluded that category 29(d) supported Spirits’ claims to prejudice and wrongly dismissed criticism of the breadth of that category.

375    We agree.

376    Category 29(d), the only category exemplified as directly relevant to the discretionary defences, is a “catch all” category as FKP described it. Category 29(d) is expressed as follows:

To the extent not already covered by the above categories. Documents:

…

(d)    which support the First Cross Respondent’s case as set out in paragraphs 60-88 of the Defence to the Second Further Amended Cross Claim.

377    It seeks documents which support Spirits’ case on the discretionary defences. The primary judge concluded that it supported Spirits’ claims to prejudice and wrongly dismissed criticism of the breadth of that category. He did so on the basis that “the category was determined by consent” (at [17]). But category 29(d) was not determined by consent insofar as it applied to the Federation entities. Strictly, it was determined by consent only insofar as FKP were concerned.

378    Fourth, his Honour also found that other discovery categories were relevant to the discretionary defences, stating that their “scale… goes to the entire history of the transformation and what [the Federation] knew about it at various times” (at [18]). Spirits sought to rely on categories 2, 10, 11, 15, 18 and 20 to 24.

379    But these categories are broad and in many respects unrelated to the issues that would arise in relation to the discretionary defences. There was little analysis by the primary judge.

380    Fifth, as to Spirits’ reliance on the Arnold principle, assuming contrary to what we have said that it applied, and Spirits’ resistance to any issue estoppel arising from the Dutch decisions, we agree with FKP that the primary judge should have concluded that further documents would be unlikely to change the transformation issue finding.

381    Sixth, we should say something more about the relevant test.

382    As stated in Clifton at [60], once Spirits had raised the question of the adequacy of discovery, FKP bore the onus of establishing the steps they took to comply with the order for discovery and satisfying the primary judge that they were, in the circumstances, adequate. As the permanent stay reasons explain, FKP failed to satisfy the primary judge that the steps taken were complete, although as we have said, his Honour overstated their inadequacy.

383    Spirits submitted that the relevant test was whether there was “no realistic possibility” that the discovered documents “might be deployed” by Spirits. We disagree. As we have already observed, that sets the bar too low. Moreover, it is contrary to authority.

384    Spirits relied on Clifton especially at [203] where the Full Court said:

We consider that unless this Court is satisfied that there is no realistic possibility of there being documents which might be deployed by the innocent parties to meet the defaulting party’s claims, the defaulting party’s claims (ie the appeals) should not be considered by this Court because to do so would be to consider them on a hypothetical and potentially false basis. It is tempting to think that most, if not all, of the relevant documents have been produced. We give the following example. We address below what we call the Charge issue. As we explain (at [366]–[380] below), the Liquidators appear to be right about the issue at least up to the point of the question of whether it is likely that Westpac would have consented to a sale of the RECs holding. We know the Liquidators sought production of documents from Westpac, among others (see [121] above), and we know that they have made extensive discovery. It is tempting to conclude that the possibility of identifying on discovery further documents relevant to this issue is so remote that it can be ignored. However, it is not for this Court to in effect “take a chance” on this issue. It was for the Liquidators to establish the absence of the realistic possibility we have described and they have failed to do that.

385    Spirits takes the remarks in Clifton out of context. What the Full Court said in Clifton at [203] was not an exposition of general principle, but an application of existing principle. The Full Court in Clifton made it clear (at [181] and [189]) that it was following High Court authority to the effect that, on the facts of each case, the Court must assess “what will best serve the interests of justice either particularly in relation to the parties or more generally having regard to the administration of justice” In Clifton at [196] the Full Court then turned to consider “what will best serve the interests of justice in this case having regard to its facts which are unique and different to those which were presented to the Court in … the … cases to which we were taken”.

386    Granting a permanent stay is a draconian remedy. It is fair to say that Spirits could not speculate as to what was missing. But it is not enough to say that discovery was not complete. Spirits needed to do more to persuade the Court that the interests of justice warranted a permanent stay. It ought to have explained why, with what it had, it was nevertheless still substantially prejudiced in its conduct of the discretionary defences. There was no such analysis either by Spirits or the primary judge.

387    Recently, in Victoria International Container at [18] Kiefel CJ, Gageler, Keane and Gordon JJ observed that:

The fundamental responsibility of a court is to do justice between the parties to the matters that come before it. In the performance of that function, the doing of justice may require the court to protect the due administration of justice by protecting itself from abuse of its processes. The power to stay, or summarily dismiss, proceedings because one party has abused the processes of the court is concerned to prevent injustice, and that power is properly exercised where the conduct of the moving party is such that the abuse of process on its part may prevent or stultify the fair and just determination of a matter.

(Footnotes omitted.)

388    And at [20] their Honours said that, “where a court is able, by means less draconian than summary termination, to cure any apprehended prejudice to a fair trial so as to ensure that justice is done, the court’s responsibility to the parties, and to the community, requires that those other means be deployed so that the matter before the court is heard and determined in accordance with the justice of the case”. Similarly, Edelman J said at [43] that “[i]f the integrity of the court can be protected by remedies less drastic than a permanent stay of proceedings then there is no justification for a court to go further than necessary to protect its processes by denying a party the liberty of a fair hearing”.

389    Seventh, FKP submitted that the proposal in ground 7 of the notice of appeal (see [247]) identifies the way the matter should have proceeded. In other words, his Honour should have permitted FKP to apply for judgment on the ground that Spirits is precluded from relying on its pleaded defences because of issues estoppel or res judicata arising from the Dutch decisions and to address the discretionary defences in the context of such an application.

390    By contrast, Spirits argued that there was no reason for the primary judge to reserve for some future occasion the question of whether Spirits was entitled to argue the discretionary defences when he had already found that it could not be said that Spirits was not so entitled. Spirits also argued that there was no reason for the primary judge to defer the question of whether Spirits had suffered prejudice by reason of the failure to give discovery, when he had already found that they had.

391    The problem with Spirits’ position is that his Honour’s findings were reached after he had misdirected himself on the appropriate test.

392    Finally, Spirits argued that orders for separate questions relating to any issues estoppel from foreign decisions had previously been made on FKP’s application, but FKP had elected to have those questions set aside by consent on 4 December 2013. That is not to the point. As we understand it, the separate questions were concerned with the Russian, not the Dutch, decisions (see the 2011 Full Court reasons at [127] per Buchanan J).

(f)    Conclusion

393    For the foregoing reasons, the appeal should be allowed and the permanent stay order lifted and modified.

394    In the circumstances, rather than re-exercise the discretion for ourselves, the matter should be remitted to the primary judge for reconsideration of a modified form of permanent stay order in accordance with our reasons.

395    On the question of costs, we are inclined to the view that FKP should have their costs of the appeal, but we will hear further from the parties if necessary.

Associate:

Dated:    21 May 2021