FEDERAL COURT OF AUSTRALIA
Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Pleadings Issues) [2024] FCA 223
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The parties provide a minute of order giving effect to these reasons within 7 days.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
PERRAM J:
Introduction
1 The Cross-Claimants are Federal Treasury Enterprise (FKP) Sojuzplodoimport (‘FKPS’) and Federal Public Unitary Enterprise External Economic External Economic Union Sojuzplodoimport (FGUP VO) (‘FGUP’) (collectively, ‘FKP’). FGUP is the modern name for an entity of the former Union of Soviet Socialist Republics which until at least 20 January 1992 was entitled to be registered as the owner of several well-known trade marks including the famous STOLICHNAYA trade mark. The registered owner of these marks in Australia is presently the Cross-Respondent (‘Spirits’).
2 For many years a debate has persisted in the courts of a number of countries about who the true owner of the marks is and this debate has, from time to time, ensnared various distributors and licensees of the marks. The present matter is one such bout of litigation which began in this Court in 2004. FKPS and FGUP were drawn into this litigation and they cross-claimed against Spirits seeking rectification of the Register of Trade Marks to record FGUP as the true owner of the marks. The rest of the litigation settled some time ago but this cross-claim remains extant. It has had a chequered history which for many years was mired in issues concerning the failure of the Russian Federation, which stands behind FKP, adequately to comply with an invitation from this Court to give discovery. I eventually temporarily stayed the cross-claim to permit adequate discovery to be given and indicated that if this was not done within one year, I would consider permanently staying the proceeding: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345. When adequate discovery was not given I then permanently stayed the cross-claim: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802 and Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772. The permanent stay was reversed by the Full Court on the basis that FKP should have been given the opportunity to pursue claims it had which might not have been affected by the adequacy of the Russian Federation’s discovery: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. [2021] FCAFC 77; 159 IPR 58 (‘FKP v Spirits (FC)’).
3 It is convenient for the purposes of these reasons to describe FKP’s claim as a claim that it is the true owner of the marks.
4 By its Third Further Amended Cross-Claim (‘the Cross-Claim’) FKP asserts this claim and that it is entitled to be recorded as the owner of the marks in the Register of Trade Marks. It alleges that the current registered owner of the trade marks, Spirits, is not their true owner. By its Defence to the Cross-Claim (‘the Defence’), Spirits alleges that on 20 January 1992 VVO, the entity which then owned the trade marks, was lawfully transformed into another entity, VAO-SPI, as a result of which VAO-SPI became the owner of the trade marks. Spirits is a successor in title to VAO-SPI so this interpretation of history leads to Spirits being the true owner of the trade marks. On the other hand, FKP asserts that it is the modern form of VVO. Its perspective on history is that the transformation of VVO into VAO-SPI never happened, as a result of which VVO (and hence FKP) has at all times remained the true owner. The basic dispute between FKP and Spirits is therefore whether following the collapse of the Soviet Union, VVO was transformed into VAO-SPI or not.
5 To this basic claim Spirits puts forward three defences. First, it seeks to prevent FKP from even claiming to be the true owner of the trade marks through a plea of estoppel by representation. Spirits’ two other defences are designed to deal with the eventuality that FKP establishes that it is the true owner of the trade marks. In that circumstance, Spirits argues that FKP should be denied relief by reason of a defence of laches based on FKP’s delay in articulating its claims or, alternatively, because the Court should not, for similar and other reasons, exercise its power under s 88(1) of the Trade Marks Act 1995 (Cth) (‘the Act’) to amend the Register of Trade Marks to record FKP as their owner.
6 It will be noted that the estoppel argument precludes FKP from claiming to be the true owner of the trade marks whereas the two delay defences are not preclusive but proceed on the basis that FKP has otherwise proven it is their true owner. The estoppel defence and the delay defences can never therefore operate at the same time and are necessarily alternatives operating in different circumstances.
7 For its part FKP claims that it too has the benefit of an estoppel on the issue of the transformation of VVO into VAO-SPI. This estoppel is an issue estoppel said to arise from judgments given by the Dutch courts. In parallel litigation about the equivalent marks, the Dutch courts have held that the transformation of VVO into VAO-SPI did not occur. A substantial question between the parties is whether the three defences just mentioned can be pleaded as defences in the face of that issue estoppel if it arises.
8 The parties have agreed that this question is to be determined by a sudden death summary judgment application. FKP will, in due course, apply for summary judgment on the basis of the Dutch issue estoppel. If it is successful then there will be judgment for FKP on the Cross-Claim. However, FKP has also agreed that if it fails on the summary judgment application then the Cross-Claim will be concluded in favour of Spirits and the Cross-Claim dismissed.
9 It will be noted that when the summary judgment application is eventually heard it will, at least, pit one preclusive doctrine, issue estoppel, against another, estoppel by representation. FKP will say the issue of the transformation has been determined in its favour and cannot be litigated by Spirits and Spirits will say that FKP is prevented from contending that the transformation did not occur because of representations made by the Russian Federation. What happens when an issue estoppel meets an estoppel by representation is, at this stage, unclear and for present purposes irrelevant. At the time of the summary judgment application there will also be a question as to whether the two discretionary defences based on, inter alia, delay can stand in the face of the issue estoppel. The outcome of this question is likewise unclear at this stage.
10 The applications now before the Court are a prelude to this forthcoming summary judgment application. The fewer of these three defences FKP has to face on the summary judgment application the better from its perspective. FKP therefore seeks in advance of the summary judgment application to have the three defences – estoppel, laches and the exercise of the discretion under s 88(1) – struck out on the basis that they fail to disclose a reasonable defence or are otherwise an abuse of process: Federal Court Rules 2011 (Cth) (‘FCR’) rr 16.21(1)(e)-(f). For its part Spirits seeks to adjust its pleading to meet some of the objections raised by FKP.
11 The evidence received on such a strike out application may include the documents referred to in the relevant particulars and evidence tending to show that a defence is an abuse of process. It may also include other evidence ancillary to these purposes. The application is not, however, a summary judgment application and the question is not the question posed under FCR r 26.01(1)(e) of whether Spirits ‘has no reasonable prospects of successfully defending the proceeding or part of the proceeding’. It follows that evidence tending to show that the Defence has no reasonable prospects of success is not relevant to a strike out application under FCR rr 16.21(1)(e)-(f). FKP may reventilate these matters at the summary judgment application where they belong.
12 Spirits’ application for leave to amend the Defence on the other hand is governed by FCR r 16.53 which does not specify the standard to be applied. In Caason Investments Pty Ltd v Cao [2015] FCAFC 94; 236 FCR 322 at [21] a majority of the Full Court described the circumstances in which leave should be refused in this way:
Leave to amend should be granted unless the proposed amendment is futile, such that the issue sought to be added is unlikely to succeed, the amendment is likely to be struck out or would cause substantial prejudice or injustice to the opposing party in a way that cannot be compensated by costs: Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66 at [21] to [22]; Medich v Bentley-Smythe Pty Ltd [2010] FCA 494 at [8].
13 In KTC v David [2022] FCAFC 60 at [111] Wigney J (with whom Anastassiou and Jackson JJ agreed on the relevant principles at [329] and [418]) paraphrased ‘is unlikely to succeed’ as ‘has no reasonable prospects of success’. That latter formulation reflects the language of the summary judgment test in s 31A of the Federal Court of Australia Act 1976 (Cth) (‘the FCA Act’). Whether the standard on a summary judgment application ought to be the standard applied on amendment applications is an interesting question. Plainly, leave should not be granted to raise a claim that would only be struck out. I can perhaps see some force in the idea that leave to amend should not be granted if it is shown that summary judgment would be given on that claim. However, the difficulty with that view is that it turns every amendment application potentially into a summary judgment application on which evidence may be adduced by both parties. It is far from clear that this would be in accordance with the requirements of s 37M(1) of the FCA Act that the Court’s powers be exercised to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.
14 There is utility in maintaining the distinction between pleading debates and summary judgment debates even accepting that they may overlap in the case of amendment applications. In this case, it was very clear to the parties that the present application was to be concerned with pleading points. To the extent that FKP has an argument that summary judgment should be given on a defence it should advance this argument at the time at which summary judgment is to be considered. For present purposes, I do not propose to consider those of FKP’s submissions which are grounded in summary judgment principles. It is not shut out from advancing these arguments at the proper time. To the extent that summary judgment principles are theoretically applicable on the present applications, given that I am to hear an actual summary judgment application, I would exercise the Court’s power in FCR r 1.32 to postpone any consideration of a summary judgment issue to that hearing.
15 Objection was taken to FKP’s evidence on the present application on the basis that it did not observe this distinction. I admitted the evidence subject to its relevance. As will be seen, my conclusion is that the evidence is not relevant on a strike out application or an amendment application concerned, as the procedure the parties have adopted is, only with pleading adequacy.
16 It is necessary to note another feature of the procedure the parties have created. In the context of strike out applications, it is often said that one asks whether the pleading raises a triable issue. Relatedly, it is also sometimes said that at trial a more complete complexion may appear on the facts pleaded or that the result at trial may be driven by the full context. Of course, in this case there will be no such trial due to the summary judgment procedure the parties have agreed.
17 Insofar as amendment applications are concerned, there are analogous principles which concern the circumstance where the granting of leave to amend will by reason of delay cause prejudice to the respondent in being forced to meet the amended case at trial. A particular example is afforded by an amendment application brought many years after the events in question. In this case the period of time is around 30 years.
18 The question which arises here is whether in assessing contentions of this kind one is to bring to account the known fact that there will be no trial. Because there will be no trial, the facts will not become clearer in their full context and the respondents will not be prejudiced in their ability to meet any late amendment. Both parties contended for an asymmetrical outcome on this issue by which the fact that there would be no trial was used to each’s own advantage whilst at the same time denying the other the same latitude. I am clear that whichever approach is taken must be the same for both parties.
19 I do not think that the procedure which the parties have adopted brings about any change to the principles to be applied. In particular, I do not see how the fact that there is to be no trial would permit me to alter the operation of either FCR rr 16.21 or 16.51 as it has been interpreted. Even if I were permitted to refashion the law concerning amendment and strike out applications to accommodate the fact that the trial on which both are premised will not occur, neither party offered me a coherent set of new principles to replace it.
20 In that circumstance, the fact that there is to be no trial is an interesting one, no doubt, but the procedural questions are still the same and remain grounded upon the assumption that there will be a trial. Thus, I consider it open to both parties to invoke what hypothetically may happen at a trial which will not occur.
21 It is useful to deal with each of the defences separately.
The estoppel defence: strike out application
22 The estoppel defence is at §65 of the Defence as follows:
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) [VVO] was transformed into VAO-SPI in accordance with applicable law;
(ii) VAO-SPI was the legal successor to [VVO]; and
(iii) all assets and liabilities of [VVO] had vested in VAO-SPI by operation of law with effect from 20 January 1992.
Particulars
Articles of Association of the Closed Foreign Economic Joint-Stock Company “Sojuzplodoimport”, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 20 January 1992
Order 229 of the Ministry of Agriculture of the Russian Federation dated May 1992
Certificate issued by Chamber of Commerce and Industry of the Russian Federation dated 7 August 1992
Declaration of the First Deputy of the Ministry of Agriculture of the Russian Federation, dated 22 October 1992
Declaration of the Chairman of the Rospatent, dated 23 October 1992
Declaration of the First Deputy of the Ministry of Foreign Economic Relations of the Russian Federation, dated 28 October 1992
Declaration of the First Deputy to the Ministry of Agriculture of the Russian Federation, dated 29 December 1992
Declaration of the First Deputy to the Ministry of Agriculture of the Russian Federation, dated 19 October 1993
Decision of the Rospatent, dated 6 May 1994
Letter dated May 1994 from Minstry of Foreign Economic Relations to Chairman of the Government of the Russian Federation
Letter dated 29 July 1994 from Rospatent to Head of the State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation
Letter dated 5 August 1994 from State Committee of the Russian Federation on Antimonopoly Policy and Support of New Economic Structures to State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation.
Notice dated 6 February 1995 from Ministry of Agriculture and Food Products
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 2, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 10 March 1995
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 3, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 26 June 1996
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 4, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 21 May 1997
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 5, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 28 July 1997
Judgment of Conviction in the name of the Russian Federation, Court of Kirov district, dated I April 1998
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 6, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 14 April 1998
Letter dated 11 September 1998 from Ministry of Internal Affairs of the Russian Federation to ZAO
Letter dated 1 3 May 1999 from Ministry of Internal Affairs of the Russian Federation to ZAO
Letter dated 14 May '1999 from ZAO to Ministry of Internal Affairs of the Russian Federation
Judgment of Conviction in the name of the Russian Federation, Court of the town of Dzerzhinsk, Nizhny Novgorod region, dated 6 August 1999
Expert Opinion on the questions put to the expert of the Internal Affairs Department of the town of Lermontov, dated 20 August 1999
Articles of Association of the Open Joint-Stock Company "Plodovaya" Kompaniya, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 8 February 2000
Further particulars may be provided after discovery.
(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;
Particulars
Deed of Assignment dated 14 September 1992 between VAO-SPI and Caldbeck Pty Ltd
Deed of Assignment dated 5 September 1994 between VAO-SPI and Inchcape Liquor Marketing Pty Ltd
Agreement dated 4 September 1996 between VAO-SPI and Diageo
Deed of Assignment dated 3 October 1996 between Inchcape Liquor Marketing Pty Ltd (formerly known as Caldbeck Pty Ltd) and VAO-SPI
Deed of Assignment dated 4 October 1996 between VAO-SPI and Diageo
Deed of Assignment dated 8 November 1996 between VAO-SPI and Diageo
Licensing Agreement dated 21 March 1997 between VAO-SPI and Diageo
Trademark Assignment Contract dated 26 December 1997 between VAO-SPI and ZAO
Supplement to Trademark Assignment Contract dated 12 January 1998 between VAO-SPI and ZAO
Agreement dated 31 March 1998 between VAO-SPI, ZAO and Diageo
Deed of Assignment dated 2 June 1998 between VAO-SPI and ZAO
Deed of Assignment dated 12 August 1997 between VAO-SPI and Diageo
Contract of Assignment of Rights to the Trade Marks dated 12 April 1999 between ZAO and the Cross-Respondent
Deed of Assignment dated 25 November 1999 between ZAO and the Cross-Respondent
Assignment and Amendment Agreement dated 14 August 2001 betweeen SPI Limited, S.P.I. Spirits (Cyprus) Limited, the Cross-Respondent, ZAO and Diageo
Further particulars may be provided after discovery.
(e) the allegations made by the Cross-Claimants in paragraphs 4(f), 4(h), 14, 24, 25, and 54-48 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;
Particulars
The Cross-Respondent refers to paragraphs 5, 5A, 6, 7 and 52A of the Third Further Amended Cross-Claim.
(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.
23 FKP submits that there are five problems with §65. These are:
(a) it does not contain an allegation of a legal relationship which it should because it is a pleading of equitable estoppel;
(b) it does not allege that the representations were made to Spirits;
(c) the estoppel is pleaded to defeat the operation of Russian law which is not possible (T17.39);
(d) the matters set forth in the particulars cannot support the material facts which are alleged because they do not particularise clear and unambiguous representations (T22.33); and
(e) the pleading of equitable estoppel is defective because it seeks to hold FKP to the Russian Federation’s representations whereas it should plead the reversal of detriment: T17.5.
24 At the hearing, FKP raised two further points which have no place in the present dispute. First, FKP sought to develop a submission that the various Russian Federation entities nominated by Spirits as having made the representations did not have authority to make them. This line was pursued on the basis of expert opinion evidence from Mr Alexander Muranov on aspects of Russian law. This is a summary judgment point, not a pleading point, and is not relevant to the present strike out application. It may be raised at the summary judgment hearing.
25 Secondly, Mr Shavin KC for FKP sought to take me to evidence that tends to show that Spirits knew that the representations were not true. Although he accepted that this was not relevant to a pleading debate he advanced it as ‘an extra overlay’: T13.19. Since it does not bear on any of the pleading issues, it is not necessary to deal with this point either.
Points (a) and (e): absence of an allegation of legal relationship and failure to plead the reversal of detriment
26 FKP submits that an essential requirement of a pleading of equitable estoppel is that it alleges that there is a legal relationship between the party in whom an assumption has been induced and the party who did the inducing. In the case of §65 of the Defence the party induced is Spirits and the party inducing is the Russian Federation (who may conveniently be treated for present purposes as a privy of FKP). FKP submits that §65 does not contain any allegation of a pre-existing legal relationship between the Russian Federation and Spirits and for that reason should be struck out.
27 Respectfully, I do not agree. At §65(a) Spirits pleads three representations as to present or past matters; namely, that VAO-SPI was the owner of the trade marks, that it was the legal successor to VVO and that all the assets and liabilities of the Soviet-era entity had vested in VAO-SPI by operation of law from 20 January 1992. On the basis that, by the conduct of the Russian Federation, Spirits (and others) were induced to assume that VAO-SPI was the owner of the trade marks, Spirits then pleads that it altered its position on the basis of that assumption by using the trade marks around the world and licensing others to do so.
28 This is a pleading of estoppel by representation. The learned author of Estoppel by Conduct and Election (3rd ed, Sweet & Maxwell, 2016), Patrick Keane KC, at [1-006] suggests that the elements of an estoppel by representation in the sense presently being discussed are:
(a) a statement or other conduct that constitutes a representation of fact;
(b) its communication to the representee;
(c) the representee’s justifiable belief in its truth and his alteration of position in that belief;
(d) an attempt by the representor to contradict his representation; and
(e) prejudice to the representee as a result of his alteration of position if contradiction of the representation were permitted.
29 The identical statement in the second edition of that text by KR Handley KC was cited as accurate by the New South Wales Court of Appeal in Carbone as Trustee for the S & N Carbone Family Trust v Mills [2019] NSWCA 15 at [70] per Sackville AJA (with whom Beazley P and Barrett AJA agreed).
30 The first of the elements refers to a representation as to facts. However, a statement of mixed fact and law is a statement of fact. Thus as Brennan J explained in Waltons Stores (Interstate) v Maher (1988) 164 CLR 387 (‘Waltons Stores v Maher’) at 415-416, estoppel by conduct (or ‘in pais’) has been applied to bind a party to treat a conveyance as valid (Sarat Chunder Dey v Gopal Chunder Laha (1892) LR 19 Ind App 203) and to bind an insurer to treat as valid a claim lodged out of time (Yorkshire Insurance Co v Craine (1922) 2 AC 541). The application of that principle to estoppel by representation (as a subset of estoppel in pais) is accepted by Mr Keane in Estoppel by Conduct and Election at [2-014]. I do not read what the Full Court said in FKP v Spirits (FC) at [367] as being contrary to this conclusion.
31 On their face, therefore, the representations pleaded in §65(a) satisfy the first requirement of an estoppel by representation. FKP alleges, however, that the pleading is defective because it does not contain an allegation of a pre-existing legal relationship between the parties. It says that such a requirement emerges from the six elements set out by Brennan J in Waltons Stores v Maher for the establishment of an ‘equitable estoppel’. The passage is at 428-429:
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiffs action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
32 This is about promissory estoppel and is not directed at an equitable estoppel by representation where the representation is as to a factual matter or mixed factual and legal matter. This is evident from the balance of the reasons of Brennan J where his Honour discussed estoppel in pais. Even assuming in FKP’s favour that the estoppel pleaded at §65 is an equitable estoppel by representation rather than a common law estoppel by representation, I do not therefore accept that the pleading at §65 is deficient for this reason.
33 In any event, even if the principle identified by Brennan J in Waltons Stores v Maher at 428 did have any application to estoppel by representation, it does not support Mr Shavin’s submission that Spirits must plead an existing legal relationship. What it says, and what the actual facts in Waltons Stores v Maher show, is that what is necessary is either an assumption about the existence of a legal relationship or an expectation that a legal relationship would come into existence. As the reasons of Brennan J also show at 420, the range of expectations which the principle encompasses includes an expectation that the holder of a legal right will not exercise that right against the person in whom that expectation has been induced (‘In cases of promissory estoppel, the equity binds the holder of a legal right who induces another to expect that that right will not be exercised against him’). Thus, even if §65(a) did include a representation in relation to the future to the effect that the Russian Federation would treat VAO-SPI and Spirits as the owner of the trade marks, this would fall squarely within that principle. This should be borne in mind when it becomes necessary to deal with Spirits’ application to amend §65(a) to include what is, in fact, a plea of promissory estoppel.
34 I also reject the submission that §65 is defective because in cases of equitable estoppel equity reverses the detriment suffered rather enforces the representation. This is for three reasons.
35 First, in the case of estoppel by representation in equity it has been clear since at least Jorden v Money (1854) 5 HLC 185 that equity will enforce the representation. As was said in that case at 210:
And then it is said that upon a principle well known in the law, founded upon good faith and equity, a principle equally of law and of equity, if a person makes any false representation to another, and that other acts upon that false representation, the person who has made it shall not afterwards be allowed to set up that what he said was false, and to assert the real truth in place of the falsehood which has so misled the other. That is a principle of universal application, and has been particularly applied to cases where representations have been made as to the state of the property of persons about to contract marriage, and where, upon the faith of such representations, marriage has been contracted. There the person who has made the false representations has in a great many cases been held bound to make his representations good.
36 Secondly, it is now seemingly clear even in the context of proprietary estoppel and promissory estoppel that relief is not limited to reversal of the detriment and does not need to be moulded to reflect the minimum equity required to do justice. Rather, the usual remedy that should be granted in these cases is enforcement of the assumption induced, unless to do so in the circumstances of a particular case would be wholly inequitable and unjust: Sidhu v Van Dyke [2014] HCA 19; 251 CLR 505 at [85] per French CJ, Kiefel, Bell and Keane JJ (with whom Gageler J agreed at [89]); Giumelli v Giumelli [1999] HCA 10; 196 CLR 101 (‘Giumelli’) at [33] and [48] per Gleeson CJ, McHugh, Gummow and Callinan JJ (with whom Kirby J agreed at [63]); Ashton v Pratt [2015] NSWCA 12; 88 NSWLR 281 at [113] per Bathurst CJ (with whom McColl and Meagher JJA agreed at [222] and [223]). Thus, even on this view of the estoppel being pleaded by Spirits, the proposition advanced by FKP cannot be a pleading requirement.
37 Thirdly, it is likely that the plea at §65 also encompasses a plea of common law estoppel by representation to which no such limitation on any view applies. As I explain later in these reasons when dealing with the laches defence, the claims made by FKP include claims at law (under s 88(1) of the Act) and claims in equity (for constructive trust and rectification) so that a sensible reading of §65 is that it comprises a plea of estoppel by representation at law in answer to the legal claims (of the kind discussed by Dixon J in Grundt v Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641) and a plea of estoppel by representation in equity in response to the equitable claims (of the kind discussed by Dixon J in Thompson v Palmer (1933) 49 CLR 507).
38 I thus reject propositions (a) and (e) above.
Point (c): no pleading of estoppel possible contrary to Russian law
39 FKP submitted at T31.18 and at §§18-24 of its written submissions that neither Russian nor Australian law permitted an estoppel to be pleaded against a statute. As to the former, it referred to evidence from Mr Muranov that Russian law had no concept of estoppel until at least 2011. As to the latter, it referred to the principle in Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 (‘Kurtovic’) that officials cannot bind themselves as to the manner in which statutory powers will be exercised since these powers are to be exercised in the public interest. Although not articulated, I apprehended that both submissions were directed at a conflict of laws problem; namely, the determination of which legal system was to govern the allegations of estoppel. If there was no sufficient evidence as to the Russian position then the default rule that Australian law would apply implied that the principle in Kurtovic was to be applied to the estoppel pleading.
40 This is not a pleading point although it may be a summary judgment point. When the time comes for it to be advanced in the proper forum I am not sure that FKP’s present understanding of the conflict of laws issue is sound. It seems to me that a better framework might involve looking at how estoppel by representation has been handled in a conflict of laws context. This may involve considering these questions or questions like them:
(a) Whether the doctrine of estoppel by representation forms part of the procedural law of the forum because it is a rule of evidence or whether for conflict of laws purposes at least it is treated as substantive law.
(b) Whether an estoppel by representation is governed by the proper law of the contract in cases where there is a contract. Here it would be useful to examine the decisions of the Canadian Supreme Court in Allen v Hay (1922) 69 DLR 193 and the Hong Kong Court of Final Appeal in First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd (2012) 15 HKCFAR 569 at 611.
(c) Whether that principle extends to cases which do not concern contracts. Here it would be useful to consider the decision of the English Court of Appeal in Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd (The ‘Amazonia’) [1990] 1 Lloyd’s Rep 236 at 247 where Staughton LJ observed that ‘[i]n a case of estoppel by convention where a foreign element is involved, one has … to look for something which can conveniently be called the proper law of the estoppel’.
(d) If it is appropriate to identify a ‘proper law of the estoppel’, what is the proper law of the estoppel pleaded at §65?
Points (b) and (d): communication of the representation to Spirits and whether, if communicated, representation conveyed
41 None of the particularised representations in §65(a) is alleged to have been made to Spirits. I do not, however, accept FKP’s submission that the pleading is thereby necessarily defective. It is possible that a communication made generally is made to any person who receives it. As Mr Keane observes in Estoppel by Conduct and Election at [3.001], ‘[t]he terms of the representation and the surrounding circumstances may show that it was made to persons generally so that anyone who knows of it is a representee’. An example of a representation made to persons generally is afforded by ACN 074 971 109 Pty Ltd (as Trustee for the Argot Unit Trust v The National Mutual Life Association of Australasia Ltd [2008] VSCA 247; 21 VR 351 at [191], [200], [203]-[204] (per Buchanan, Nettle and Dodds-Streeton JJA). I reject FKP’s submission that this case was not concerned with estoppel.
42 Turning then to the particularised documents, beyond a bland and, with respect, unhelpful submission that the particulars to §65 did not support the representations, FKP eschewed any analysis of this issue in its written submissions in chief which Spirits pointed out in its submissions. In particular, FKP did not develop the argument by reference to what any of the particulars were or why, when examined, the particularised matter did not support the allegation. I do not consider that my is role to conduct such an exercise merely because FKP suggested, without any explanation, that the particulars did not support the representations. Spirits, on the other hand, did submit that one of the particularised documents, a declaration of the First Deputy to the Minister of Agriculture of the Russian Federation dated 29 December 1992 said this:
By meeting dated 5-09-1991 and according to the [Russian Federation] Law “About Enterprises and Undertakings” as well as according to the Regulation of the Council of Ministers under [Russian Soviet Federative Socialist Republic] under Ref. No. 601 of 25th December 1990, [VVO] was reorganized, and now its name is: -foreign economic joint stock company [VAO-SPI]. Due to the above reorganization, [VAO-SPI] has become the sole and legitimate successor to [VVO] and, therefore, it undertook all its rights on the trade marks.
43 In reply, FKP submitted that its original submission that the particulars provided did not support the representations had gone unanswered. Since FKP did not in fact advance any explanation for why the particulars did not support the representations this is hardly surprising. In relation to the declaration of 29 December 1992 FKP submitted that the making of any such representation was beyond the remit of the Ministry of Agriculture. Again, as I have explained, this is not a strike out point.
44 In his oral submissions, Mr Shavin said at T38.45 ‘[t]here is nothing in paragraph 65 or the particulars to it or the matters particularised which establishes the sort of representation that they would need to found an estoppel’. However, as with FKP’s written submissions, I do not regard this as amounting to a submission of substance.
45 Thus, at the end of the day, FKP has not attempted to explain why the particularised documents do not support the representations alleged. In the case of the single document which has been the subject of debate, it is clear that it contains the statement alleged. Whether that declaration was made generally or to whom it was addressed is unclear to me. In particular, it is unclear to me that a declaration by a government official might not be generally addressed in the sense discussed above. In the case of that document, I conclude therefore that it contains the statement and that its terms leave arguable, in a strike out sense, that it was generally addressed.
46 In the case of all of the other particularised documents, FKP has said nothing. Thus there is no submission for me to consider. It is not my role to wade through the voluminous particulars to form a view of the matter myself. This is for two reasons. First, the parties did not assemble the documents in the particulars in any convenient way. Secondly, were I to reach the view that a particular document could not support the representations alleged or constitute a communication made generally in the sense I have discussed, this view would not have been advanced by FKP and hence acceptance by me of my own reasoning would be procedurally unfair to Spirits who will have been afforded no opportunity to respond to it. This in turn would carry with it the risk, ever present for judicial officers, of self-persuasion.
47 Into the same class of the unexplained may be put Mr Shavin’s submission that the representations pleaded were not clear and unambiguous. If this was directed at the terms of the actual pleaded representations appearing in §65(a) then I reject it because they are clear. If, instead, it was another nonchalant wave of the hand at the particulars then I reject it for the reasons I have just given.
48 I therefore reject points (b) and (d). Each of points (a)-(e) having failed, no basis is shown for striking out §65.
The estoppel defence: amendment application
49 In tandem with FKP’s efforts to strike out §65 Spirits also sought to adjust its terms. This it did by an amendment application. By the time of the hearing the amendment application had itself been amended. Its final form was an amended interlocutory application filed on 15 March 2023 to which was attached a proposed amended defence. This is not the version in the Court Book. The proposed amended form of §65 bears two forms of mark-up. The first in blue represents the changes proposed in the first form of the proposed amended defence. The second, which is in yellow highlighting, represents the fresh amendments proposed when the amendment application was itself amended shortly before the hearing. The history of these two rounds of amendment is not relevant to any issue I must deal with save one to which I will turn in due course. In the interests of clarity, I will indicate the proposed amendments to §65 only by underlining and will not seek to distinguish between these two rounds of amendment. With that observation, the proposed amended version of §65 is as follows:
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) [VVO] was transformed into VAO-SPI in accordance with applicable law;
(ii) VAO-SPI was the legal successor to [VVO]; and
(iii) all assets and liabilities of [VVO] had vested in VAO-SPI by operation of law with effect from 20 January 1992;
(iv) further or in the alternative, it would not assert any right or interest it (or [VVO], if the transformation pleaded in paragraph 4(h) of this Defence did not take place) may have had in the trade marks referred to in sub-paragraphs (b) and (c) below.
Particulars
The representations were explicitly or otherwise impliedly made in the particularised documents.
Articles of Association of the Closed Foreign Economic Joint-Stock Company “Sojuzplodoimport”, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 20 January 1992
Order 229 of the Ministry of Agriculture of the Russian Federation dated May 1992
Certificate issued by Chamber of Commerce and Industry of the Russian Federation dated 7 August 1992
Declaration of the First Deputy of the Ministry of Agriculture of the Russian Federation, dated 22 October 1992
Declaration of the Chairman of the Rospatent, dated 23 October 1992
Declaration of the First Deputy of the Ministry of Foreign Economic Relations of the Russian Federation, dated 28 October 1992
Declaration of the First Deputy to the Ministry of Agriculture of the Russian Federation, dated 29 December 1992
Declaration of the First Deputy to the Ministry of Agriculture of the Russian Federation, dated 19 October 1993
Decision of the Rospatent, dated 6 May 1994
Letter dated May 1994 from Minstry of Foreign Economic Relations to Chairman of the Government of the Russian Federation
Letter dated 29 July 1994 from Rospatent to Head of the State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation
Letter dated 5 August 1994 from State Committee of the Russian Federation on Antimonopoly Policy and Support of New Economic Structures to State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation.
Notice dated 6 February 1995 from Ministry of Agriculture and Food Products
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 2, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 10 March 1995
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 3, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 26 June 1996
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 4, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 21 May 1997
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 5, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 28 July 1997
Judgment of Conviction in the name of the Russian Federation, Court of Kirov district, dated I April 1998
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 6, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 14 April 1998
Letter dated 11 September 1998 from Ministry of Internal Affairs of the Russian Federation to ZAO
Letter dated 1 3 May 1999 from Ministry of Internal Affairs of the Russian Federation to ZAO
Letter dated 14 May '1999 from ZAO to Ministry of Internal Affairs of the Russian Federation
Judgment of Conviction in the name of the Russian Federation, Court of the town of Dzerzhinsk, Nizhny Novgorod region, dated 6 August 1999
Expert Opinion on the questions put to the expert of the Internal Affairs Department of the town of Lermontov, dated 20 August 1999
Articles of Association of the Open Joint-Stock Company "Plodovaya" Kompaniya, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 8 February 2000
The documents identified at [68], [84(a)-(d), (g), (h)], [85(a)-(b), (f)], [86], [90(a)-(uu)] and [91]-[105] of the Affidavit of Alexey Victorovich Oliynik affirmed on 1 December 2015.
The documents at tabs 70-76 of the Court Book for the interlocutory hearing on 21 and 22 March 2023.
Further particulars may be provided after discovery.
(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:
(i) VAO-SPI acquired ownership of the House Mark, the Stolichnaya Label Mark and the Moskovskaya Label Mark with effect from 20 January 1992; and/or
(ii) insofar as the Russian Federation (or [VVO] if the transformation pleaded in paragraph 4(h) of this Defence did not take place) may have had any right or interest in the trade marks referred to in sub-paragraph (i) above, the Russian Federation would not assert such right or interest against VAO-SPI, ZAO or the Cross-Respondent;
(c) acting in reliance on the representations pleaded in sub-paragraph 65(a) above and induced by those representations, the Cross-Respondent assumed that:
(i) 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; and/or
(ii) insofar as the Russian Federation (or [VVO] if the transformation pleaded in paragraph 4(h) of this Defence did not take place) may have had any right or interest in the trade marks referred to in sub-paragraph (i) above, the Russian Federation would not assert such right or interest against the Cross-Respondent.
(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;
Particulars
Deed of Assignment dated 14 September 1992 between VAO-SPI and Caldbeck Pty Ltd
Deed of Assignment dated 5 September 1994 between VAO-SPI and Inchcape Liquor Marketing Pty Ltd
Agreement dated 4 September 1996 between VAO-SPI and Diageo
Deed of Assignment dated 3 October 1996 between Inchcape Liquor Marketing Pty Ltd (formerly known as Caldbeck Pty Ltd) and VAO-SPI
Deed of Assignment dated 4 October 1996 between VAO-SPI and Diageo
Deed of Assignment dated 8 November 1996 between VAO-SPI and Diageo
Licensing Agreement dated 21 March 1997 between VAO-SPI and Diageo
Trademark Assignment Contract dated 26 December 1997 between VAO-SPI and ZAO
Supplement to Trademark Assignment Contract dated 12 January 1998 between VAO-SPI and ZAO
Agreement dated 31 March 1998 between VAO-SPI, ZAO and Diageo
Deed of Assignment dated 2 June 1998 between VAO-SPI and ZAO
Deed of Assignment dated 12 August 1997 between VAO-SPI and Diageo
Contract of Assignment of Rights to the Trade Marks dated 12 April 1999 between ZAO and the Cross-Respondent
Deed of Assignment dated 25 November 1999 between ZAO and the Cross-Respondent
Assignment and Amendment Agreement dated 14 August 2001 betweeen SPI Limited, S.P.I. Spirits (Cyprus) Limited, the Cross-Respondent, ZAO and Diageo
Further particulars may be provided after discovery.
(e) the allegations made by the Cross-Claimants in paragraphs 4(f), 4(h), 14, 24, 25, and 54-48 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;
Particulars
The Cross-Respondent refers to paragraphs 5, 5A, 6, 7 and 52A of the Third Further Amended Cross-Claim.
(g) by reason of one or more of the following:
(i) the matters pleaded in sub-paragraphs (a) to (f) above;
(ii) the motivations of the Government of the Russian Federation with respect to the matters in sub-paragraph (a) above and the knowledge of the Government of the Russian Federation with respect to the matters in sub-paragraphs (b)-(d) above;
(iii) the Government of the Russian Federation’s motivations in bringing and maintaining these proceedings through the Cross-Claimants and in seeking to reclaim the trade marks referred to in sub-paragraphs (b) and (c) above, including the benefit or windfall that would be obtained from VAO-SPI, ZAO and Cross-Respondent having used, authorised the use of and registered the trade marks referred to in sub-paragraphs (b) and (c) above in Australia and throughout the world,
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.
50 Two sets of issues arise about these amendments. The first concerns their legal viability which FKP contests. The second is FKP’s contention that the discretion to grant leave to amend should be exercised against Spirits even if the amendments are viable for reasons relating to the procedural history and because Spirits is said to have led evidence on the application which shows that the transformation did not occur.
Legal viability
51 The proposed new §§65(a)(iv), 65(b)(ii) and 65(c)(ii) introduce what is plainly a pleading of promissory estoppel based on representations about how the Russian Federation would behave in the future. Here it is necessary once again to deal with Mr Shavin’s submission that Waltons Stores v Maher requires the pleading of a pre-existing legal relationship for a plea of promissory estoppel. As I have explained above, this submission is wrong and I reject it. The proposed plea of promissory estoppel is orthodox and legally viable.
52 The addition of the first particular to §65(a) is unobjectionable and merely clarifies what was plainly the case. The proposed final two particulars to §65(a) are also legally viable. Mr Darke SC, for Spirits, took me through these particulars which are extensive. I am satisfied that the particularised documents are capable of supporting one or more of the representations pleaded at §65(a). I also accept his submission that at any trial it would not simply be a question of examining the particulars in isolation but of reading the documents in the context of the evidence as a whole (T73.15).
53 The addition to §65(g) of new subparagraphs (ii) and (iii) expands the allegation that it would be unconscionable for FKP now to depart from the assumptions induced by the conduct pleaded in §65(a). Spirits accepts that the unconscionability flows from the failure of the party to fulfil the assumption that has been induced. But it submits that the assessment of unconscionability is to be conducted in all the circumstances of the case citing Commonwealth v Verwayen (1990) 170 CLR 394 at 444-445 per Deane J.
54 As to the proposed §65(g)(ii), I accept that the knowledge of the Government of Russia that VAO-SPI and Spirits were making the assumptions pleaded at §§65(b)-(c) and acting on them as alleged in §65(d) is relevant to the question of whether a departure from the assumptions induced would be unconscionable. I also accept Mr Darke’s submission that the intentions of the Government of the Russian Federation are also potentially relevant. In Waltons Stores v Maher Brennan J took into account the intentions of Waltons at 418 (‘Waltons intended that he should act on that assumption or expectation by continuing to build the store in order that Waltons should enjoy the option of completing the exchange and proceeding to take the lease if it should appear expedient to do so’). That is not so dissimilar to the plea at §65(g)(ii).
55 As to the proposed §65(g)(iii), here the point is the motivations of the Government of Russia in causing FKP to bring the present proceeding including, in particular, an alleged motivation it has to obtain a windfall from the value added to the marks by Spirits and its predecessors. In my view, were it shown that this was the motivation of the Government of Russia this would be capable of bearing upon the question of unconscionability. It would be part of the surrounding context against which the unconscionability of any departure from the induced assumptions would be measured. Certainly, this is true at the level of a strike out application.
56 The pleas at §§65(g)(ii) and (iii) also bear upon the application of the maxim that those seeking equity should do it, remembering that FKP seeks equitable relief in these proceedings: see, e.g., Giumelli at 123-124 [42] per Gleeson CJ, McHugh, Gummow and Callinan JJ; Langman v Handover (1929) 43 CLR 334 at 351-352 per Rich and Dixon JJ.
57 I would therefore accept that proposed §§65(g)(ii) and (iii) are sufficiently viable to permit the amendments to be made.
58 FKP makes two points as to why I should not grant Spirits leave to amend. First, the application to amend has been brought late and without explanation. Secondly, evidence led by Spirits on its application to amend its laches defence tends to show that a Mr Shefler, who FKP alleges was both an officer of VAO-SPI and Spirits by 1996, had always been aware that the transformation had not occurred and that VVO was the true owner of the marks. The submission was that the Court should not permit the amendments to §65 where the evidence before it showed that VAO-SPI and Spirits knew that the transformation had not occurred and hence that the pleadings of reliance could not be correct.
59 As to delay and the lack of explanation, the first round of amendments were provoked by comments made by the bench during the hearing of the appeal on the permanent stay applications (and some parts of its reasons). I would infer that the more recent round of amendments were made in response to the submissions made in support of the strike out application. I do not think that the delay which has occurred is to be attributed to Spirits. The last decade has been consumed in efforts to get the Russian Federation to give proper discovery. My conclusion that it had not done so was not disturbed by the Full Court. The party principally responsible for that delay is the Russian Federation.
60 On the other hand, a substantial delay was also occasioned by the many years it took for the balance of the proceeding to settle leaving only FKP’s cross-claim to be resolved. I do not think that either party is responsible for this.
61 However, the fact remains that it is now more than 30 years since the events giving rise to this litigation occurred. Whilst FKP and the Russian Federation are responsible for quite a lot of this delay they are not responsible for all of it.
62 Turning then to the question of prejudice, I do not think that any prejudice is caused to FKP by the new plea of promissory estoppel at §§65(a)(iv), 65(b)(ii) and 65(c)(ii) insofar as they relate to the particulars already provided.
63 I do not think the addition of the new first particular to §65(a) gives rise to prejudice since it does not extend beyond the particulars which have already been provided.
64 On the other hand the addition of the final two particulars to §65(a) raises new matters of fact which have not previously been articulated. These include that:
(1) in writing, the Government of the Russian Federation and other officials and authorities:
(a) referred to or confirmed VAO-SPI as the successor to VVO;
(b) referred to or confirmed VAO-SPI’s rights to export vodka; and
(c) offered assistance to VAO-SPI in relation to the registration or enforcement of its trade marks overseas.
(2) VAO-SPI corresponded with the Government of the Russian Federation and other officials and authorities in relation to matters including assistance in the payment of debts incurred by VVO prior to 1992, and at no time in that correspondence did the Russian Federation raise any question as to the validity of the transformation of VVO into VAO-SPI or the succession of VVO's assets and liabilities to VAO-SPI;
(3) in December 1992 a meeting took place between the heads of the Committee on Patents and Trademarks, vodka manufacturing factories, VAO-SPI and experts at which it was agreed that, amongst other things, the factories and VAO-SPI would prepare a charter of the trade marks for Russian vodkas and submit applications to register those trade marks;
(4) in July 1993, following a letter from the Ministry of Foreign Economic Relations, the Government of the Russian Federation directed that Ministry together with the Trade and Industrial Chamber of Russia and the Committee on Patents and Trademarks to take measures aimed at restoring the registration of the trade marks for Russian vodkas, with the Ministry suggesting that the trade marks be restored in the name of VAO-SPI; and
(5) in November 1993 a meeting took place between the heads of the Committee on Patents and Trademarks, vodka manufacturing factories, VAO and the State Committee on Antimonopoly Policy at which a draft order was formulated to revoke the decision of the Rospatent annulling VAO-SPI’s trade marks in Russian vodkas and the draft order was subsequently transmitted to the Deputy Chairman of the Council of Ministers with a request that the order be made; and
(6) in December 1993, the heads of the Departments of Agro-Industrial Complex and Science, Culture and Education wrote to the Chairman of the Council of Ministers noting the lack of domestic trade marks for Russian vodkas and urging that the issue be resolved.
65 These relate to events which occurred a long time ago. Allowing these matters to be raised for the first time so late in the proceeding creates a real species of prejudice for FKP. It is the species of presumed prejudice referred to by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 555-556. There may be context to each of the documents now referred to which qualifies their impact. Many of the people involved are likely either to be elderly or dead. I do not think that it would be fair to make FKP face ancient allegations of this kind which have not previously been raised. That is so even where I would attribute one third of the delay to FKP and the Russian Federation. I therefore will not permit the addition of the last two particulars to §65(a).
66 Much the same can be said in the case of proposed §§66(g)(ii) and (iii) which make fresh allegations about the motivations of the Government of the Russian Federation in making the representations in §65(a) and about its knowledge of the assumptions under which Spirits then operated in §§65(b) and (c). I do not think that it would be just to require FKP to meet such new allegations so long after the events in question. This is particularly so in light of the definition of the Government of the Russian Federation now proposed at the end of the Defence in these terms:
For the purposes of this Defence, “Government of the Russian Federation” includes the ministries, agencies, officials and bodies:
(a) referred to in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802 at [15]-[16];
(b) referred to in the affidavit of Mikhail Tsyplaov, sworn 28 February 2006 at [30]-[31];
(c) identified as the author(s) or recipient(s) of the documents referred to in the affidavit of Alexey Victorovick Oliynik affirmed 1 December 2015 at [68]-[71], [84(a)-(h)], [85(a)-(f)], [86]-[89], [90(a)-(uu)] and [91(a)-(l)] and [92]-[105] (other than VAO and VZAO); and
(d) referred to in the particulars to [65] and [66] of this Defence.
67 In substance this translates into a list of at least the following Ministries, agencies, officials and bodies:
(1) President of the Russian Federation
(2) First Deputy Minister of Agriculture of the Russian Federation
(3) First Deputy Minister of the Ministry of Foreign Economic Relations of the Russian Federation
(4) Chairman of the Russian Soviet Federative Socialist Republic Committee on Patents and Trademarks (i.e. Rospatent)
(5) Chairman of the Government of the Russian Federation
(6) Deputy Chairman of the Government of the Russian Federation
(7) Head of the State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation
(8) The Apparatus of the Government of the Russian Federation
(9) Administrative Office of the President of the Russian Federation
(10) Ministry of Finance of the Russian Federation
(11) Ministry of Agriculture and Food Products of the Russian Federation
(12) Ministry of Internal Affairs of the Russian Federation
(13) Federal Security Service of the Russian Federation
(14) Ministry of Economic Development and Trade of the Russian Federation
(15) Federal Agency for Federal Property Management
(16) Federal Service on Intellectual Property, Patents and Trademarks
(17) Federal Service on Financial Markets
(18) Accounting Chamber of the Russian Federation
(19) State Archive of the Russian Federation
(20) Investigative Committee of the Russian Federation
(21) Closed Foreign Economic Joint-Stock Company ‘Sojuzplodoimport’ / Vneshneeconomicheskoje Aktsionemoje Obschestvo
(22) Chamber of Commerce and Industry of the Russian Federation
(23) Rospatent
(24) Ministry of Foreign Economic Relations of the Russian Federation
(25) State Committee of the Russian Federation on Antimonopoly Policy and Support of New Economic Structures
(26) Government of Moscow, Moscow Registration Board
(27) Court of Kirov District
(28) Court of Dzerzhinsk, Nizhny Novgorod
(29) Internal Affairs Department of Lemontov
(30) Open Joint-Stock Company ‘Plodovaya’ Kompaniya
(31) Federal Ministries of the Russian Federation
(32) Federal State Bodies of executive power, comprising:
(a) Federal Ministries, Federal Services and Federal Agencies of the Russian Federation whose activities are directed by the President of the Russian Federation, and Federal Services and Federal Agencies reporting to such Federal Ministries;
(b) Federal Ministries directed by the Government of the Russian Federation, and Federal Services and Federal Agencies reporting to such Federal Ministries; and
(c) Federal Services and Federal Agencies directed by the Government of the Russian Federation.
68 Now to require FKP to embark on a factual inquiry into the motivations and knowledge of these entities and persons in making the representations pleaded in §65(a) and their knowledge of the assumptions and actions in §§65(b) and (d) would be prejudicial given the lapse of time.
69 I therefore reject the application to amend to raise new §§65(g)(ii) and (iii).
70 For completeness, I reject FKP’s submission based on the role of Mr Shefler for three reasons. First, this is a matter for trial. No doubt, the evidence concerning Mr Shefler tends to suggest that he knew that VVO had not been transformed into VAO-SPI but I do not think I should proceed on the basis that this is the universe of evidence on this topic. Secondly, as Mr Darke submitted at T73.47, even if one assumes that VAO-SPI knew that it was not actually the successor in title to VVO, this is far from fatal for Spirits’ plea of promissory estoppel and arguably provides the very reason that the representations alleged against the Government of the Russian Federation could have been understood as undertakings as to future enforcement of its rights (i.e. ‘Yes, we know the marks are not yours but we will not be taking a point about this’). Of course, if VAO-SPI and/or Spirits knew that the Government of the Russian Federation was ignorant of the true course of events this argument would be blunted but that observation only underscores that this is a trial question and not an appropriate submission to entertain on an amendment application. The appropriate procedural course for this submission is not to refuse the amendment but to permit FKP to seek summary judgment on this defence in due course.
71 For those reasons, I would allow Spirits to amend §65 by adding §§65(a)(iv), 65(b)(ii) and 65(c)(ii), and the new first particular to §65(a) but otherwise refuse the application.
Laches and acquiescence: strike out application
72 The current pleading of laches and acquiescence is at §66 of the Defence:
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 related to the validity of the transformation of [VVO] into VAO-SPI on or around 20 January 1992;
(b) since 1992, VAO-SPI has held itself out as the legal successor to [VVO] with the full knowledge and, until 2000, acquiescence of the Government of the Russian Federation;
Particulars
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport", approved and sealed by the Government of Moscow, Moscow Registration Board, dated 20 January 1992
Order 229 of the Ministry of Agriculture of the Russian Federation dated May 1992
Certificate issued by Chamber of Commerce and Industry of the Russian Federation dated 7 August 1992
Letter dated 19 August 1992 from the First Deputy to the Ministry of Agriculture of the Russian Federation to the Acting Prime Minister of the Russian Federation
Declaration of the First Deputy of the Ministry of Agriculture of the Russian Federation, dated 22 October 1992
Declaration of the Chairman of the Rospatent, dated 23 October 1992
Declaration of the First Deputy of the Ministry of Foreign Economic Relations of the Russian Federation, dated 28 October 1992
Declaration of the First Deputy to the Ministry of Agriculture of the Russian Federation, dated 29 December 1992
Letter dated 22 February 1993 to VAO-SPI to Government of the Russian Federation
Letter dated 17 May 1993 from Chairman, VAO-SPI to the Trade Representative of the Russian Federation in Australia
Letter dated 26 May 1993 from the Office of the Trade Representative of the Russian Federation in Australia to Inchcape Liquor Marketing Pty Ltd
Letter dated 11 October 1993 from VAO-SPI to Government of the Russian Federation
Declaration of the First Deputy to the Minstry of Agriculture of the Russian Federation, dated 19 October 1993
Letter dated 12 November 1993 from Ministry of Finances of the Russian Federation to VAO-SPl Letter dated May 1994 from Ministry of Foreign Economic Relations to Chairman of the Government of the Russian Federation
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 2, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 10 March 1995
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 3, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 26 June 1996
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 4, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 21 May 1997
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 5, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 28 July 1997
Articles of Association of the Closed Foreign Economic Joint-Stock Company "Sojuzplodoimport" Version 6, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 14 April 1998
Articles of Association of the Open Joint-Stock Company "Plodovaya" Kompaniya, approved and sealed by the Government of Moscow, Moscow Registration Board, dated 8 February 2000
Further particulars may be provided after discovery.
(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.
Particulars
The Cross-Respondent repeats the particulars in sub-paragraph (b) and paragraph 64 above.
Decision of the Rospatent, dated 6 May 1994
Letter dated 24 May 1994 from VAO-SPI to the Ministry of Foreign Economic Relations of the Russian Federation
Letter dated 29 July 1994 from Rospatent to Head of the State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation
Letter dated 5 August 1994 from State Committee of the Russian Federation on Antimonopoly Policy and Support of New Economic Structures to State Commission on ensuring the state monopoly on alcoholic products at the Government of the Russian Federation.
Notice dated 6 February 1995 from Ministry of Agriculture and Food Products
Letter dated 11 September 1998 from Ministry of Internal Affairs of the Russian Federation to ZAO
Letter dated 13 May 1999 from Ministry of Internal Affairs of the Russian Federation to ZAO
Letter dated 14 May 1999 from ZAO to Ministry of Internal Affairs of the Russian Federation
Judgment of Conviction in the name of the Russian Federation, Court of the town of Dzerzhinsk, Nizhny Novgorod region, dated 6 August 1999
Expert Opinion on the questions put to the expert of the Internal Affairs Department of the town of Lermontov, dated 20 August 1999
Further particulars may be provided after discovery.
(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 Australia 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 Stoil 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 made by the Cross-Claimants in this proceeding are made on behalf of the Government of the Russian Federation;
Particulars
The Cross-Respondent refers to paragraphs 5, 5A, 6, 7 and 52A of the Third Further Amended Cross-Claim.
(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-Respondent is guilty of laches;
(j) by reason of the matters pleaded in sub-paragraphs (a)-(g) above, the Second Cross-Respondent is guilty of laches; and
(k) by reason of the acquiescence and/or laches of the Government of the Russian Federation, or further and 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
73 In her oral submissions at T40, Ms Cochrane SC, also for FKP, identified the objections to this pleading as follows:
(a) the pleading fails to identify the substantive nature of the claim to which laches is said to constitute a defence and to plead by reference to that claim three matters:
(i) knowledge of the wrong giving rise to the claim;
(ii) delay in bringing the claim once knowledge of the wrong was apprehended; and
(iii) unconscionable prejudice caused to Spirits by the delay;
(b) the acquiescence plea is bad because Spirits fails to identify calculated inaction by the other party which encouraged Spirits reasonably to believe that its actions or omissions were not opposed or accepted; and
(c) the party seeking to plead laches or acquiescence must be willing to do equity in that the relief sought must not exceed the unconscionable prejudice caused to it by the delay or acquiescence.
74 In its written submissions, FKP identified these additional problems:
(d) if successful the plea of laches would have the effect of achieving the transformation of VVO into VAO-SPI which was prohibited by Russian law;
(e) the plea of laches is contrary to factual findings by the Dutch courts about the conduct and knowledge of Mr Shefler; and
(f) laches is not a defence to a claim for rectification under s 88(1) of the Act.
Point (a): failure to plead necessary elements of laches defence
75 Laches is an equitable defence. FKP relies on what was said by the New South Wales Court of Appeal in Crawley v Short [2009] NSWCA 410; 262 ALR 654 (‘Crawley’). In that case Young JA, with whom Allsop P and Macfarlan JA relevantly agreed, said this (at [163]-[165]):
The elements of the defence of laches are: (i) knowledge of the wrong; (ii) delay; and (iii) unconscionable prejudice caused to the opponent by the delay.
The key element is whether, in all the circumstances, “it would be practically unjust to give a remedy”: per Lord Selborne LC in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239–40. Normally, that means that the defendant must show both delay and detriment suffered by the delay, Fisher v Brooker [2009] 4 All ER 789; [2009] 1 WLR 1764; [2009] UKHL 41 at [64] (Fisher) per Lord Neuberger with whom Lord Hope, Lord Walker, Baroness Hale and Lord Mance agreed.
It is sometimes said that the essential nature of the defence is that the claim of the plaintiff is released in equity. This is often, but not always the case. Sometimes laches operates as an estoppel, see Fisher and Ashburner’s Principles of Equity 2nd ed (Butterworth & Co, London, 1933) p 520. The result of a successful plea of laches is that the plaintiff’s equitable claim is dismissed.
76 FKP submits that to identify the wrong referred to in the first element it is necessary to identify the wrong claimed in the equitable suit to which laches is being pleaded by way of defence. Reliance is placed upon the observation of Deane J in Orr v Ford (1989) 167 CLR 316 (‘Orr v Ford’) at 342 that ‘[t]he appropriate starting point of a consideration of the availability of a defence of laches is the precise identification of the substantive nature of the claim to which laches is said to constitute a bar’. Although this was said in dissent in the result, the New South Wales Court of Appeal in Crawley at [172] accepted that his Honour’s exposition of the defence of laches ‘has been held to be the leading analysis of the principle of laches’. I did not understand this to be in dispute.
77 It was Ms Cochrane’s submission that there were only two claims in the Cross-Claim to which the defence of laches could be apposite. The first of these was a claim to a constructive trust and the second a claim to rectify the Register of Trade Marks on the basis of fraud, false suggestion or misrepresentation. In his submissions, Mr Darke for Spirits submitted that laches was also a defence to the claim for a declaration that FKP was the owner of the marks which appears in prayer 2 of the relief claimed in the Cross-Claim. It is therefore necessary first to consider whether laches may be pleaded in answer to a claim for a declaration of right.
The declaration of right
78 The relevant claims for relief in the Cross-Claim are:
2. A declaration that FKPS, or in the alternative [FGUP] is the owner of or is entitled to ownership of the House Mark, the Stolichnaya Label Mark, the Moskovskaya Label Mark, the Stoli Word Mark, the Stolichnaya Word Mark, the Ohranj Label Mark, the Ohranj Word Mark, the Derivative Stolichnaya Marks and the Derivative Moskovskaya Marks.
3. An order that the Register be rectified by recording FKPS, or, in the alternative [FGUP] as the registered owner of the House Mark, the Stolichnaya Label Mark, the Moskovskaya Label Mark, the Stoli Word Mark, the Stolichnaya Word Mark, the Ohranj Label Mark, the Ohranj Word Mark, the Derivative Stolichnaya Marks and the Derivative Moskovskaya Marks.
4. Further or in the alternative, an order that the Register be rectified by cancelling the registration of the House Mark, the Stolichnaya Label Mark, the Moskovskaya Label Mark, the Stoli Word Mark, the Stolichnaya Word Mark, the Ohranj Label Mark, the Ohranj Word Mark, the Derivative Stolichnaya Marks and the Derivative Moskovskaya Marks.
4A. Further or in the alternative, a declaration that Spirits International holds its right, title and interest in the Stolichnaya Label Mark, the House Mark, the Moskovskaya Label Mark and the Derivative Marks on constructive trust for FKPS and/or [FGUP].
79 The present question is concerned with prayer 2. What is sought is a declaration that FKP is the owner or is entitled to ownership of the marks. Prayers 3 and 4 seek rectification of the Register. Prayer 4A seeks a constructive trust over Spirits’ right, title and interest in the marks. The way the marks have been defined in the Cross-Claim does not carefully distinguish between that kind of ownership of marks which entitles a person to apply for registration and the kind of ownership of the property conferred upon the owner of a registered trade mark by s 21(1) of the Act: see, for example, §§ 2(c) and 5(b).
80 The pleader of prayers 2 and 4A has made two alternate assumptions. The first is that FKP already owns the marks. The second is that FKP is entitled to own the marks but does not presently do so. The first assumption cannot be referring to ownership of the registered marks since no one disputes that Spirits is the registered proprietor and hence that FKP does not own them. It is therefore a reference to ownership of the marks separate from ownership of the registered marks.
81 The Act recognises the ownership of marks in this sense. Only a person claiming to be the owner of a trade mark may apply for its registration (s 27) and registration of a mark may be opposed because the applicant for registration is not its owner (s 58). The owner of a trade mark is entitled to have the Register rectified to record itself as the owner of the mark under s 88. The Act recognises therefore both the species of mark which is registered and therefore a form of personal property (s 21(1)) and the species of mark ownership of which grounds the entitlement to apply for registration (s 27(1)(a)). It also contemplates that the ownership of the marks and the ownership of the registered marks may be vested in different persons although the entitlement to seek rectification under s 88 is evidently intended to permit that state of affairs to be brought to an end.
82 The immediate question is whether ownership of a trade mark (as opposed to ownership of a registered trade mark) confers rights at law or in equity. The legal or equitable nature of an unregistered trade mark is not a topic which has received a great deal of attention. Unregistered trade marks may be protected at law by an action for damages in the tort of deceit. They may also be protected in equity either by a suit for an injunction to prevent a passing off or an action in equity’s exclusive jurisdiction to protect a property right: Weingarten Bros v G & R Wills & Co [1906] SALR 34 (‘Weingarten’) at 54 per Way CJ; Heydon JD, Leeming MJ and Turner PG, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, LexisNexis Butterworths, 2015) (‘Meagher, Gummow & Lehane’) at [43-015]. There are differences between what must be shown at law and in equity relating to the intention of a respondent but these are not material for present purposes.
83 What is relevant is that the action in equity depends on the existence of a property right: Weingarten at 54; Edelsten v Edelsten (1863) 1 De G J & S 185; 46 ER 72. An example of the property right that was previously thought to be involved in a case concerning an unregistered trade mark is the latter decision. That case was concerned with a trade mark consisting of an anchor. One of the issues was whether the plaintiff had proven property in the trade mark. Lord Westbury LC dealt with this issue in the following terms at 200-201:
On the first question, what is the trade mark of the Plaintiff, and whether he had acquired property in it before the alleged imitation of it by the Defendants; it is proved that the mark of the Plaintiff consists of the emblem or representation of an anchor stamped on a disc or circular piece of tin, about the size of a shilling, and on which are also impressed a number denoting the size of the wire and the words “Iron Wire,” and which metal stamp is attached as a tally to each coil or bundle of wire sent out from the manufactory of the Plaintiff.
The Plaintiff also uses the device of an anchor stamped on his circular-letters, invoices, and bills relating to his goods, and by these means the wire of the Plaintiff has long since gained and possesses a peculiar denomination in the trade: – “The Anchor Brand Wire” or “Anchor Wire,” and being of very superior quality it is much sought after in the market, and has acquired high reputation. The Plaintiff began to use this tally and device in the month of September 1852, and has used it continuously in an extensive trade down to the present time.
These facts are so far from being disputed by the Defendants, that they distinctly state their belief in the third paragraph of their answer that, “in consequence of the said trade mark of the Plaintiff the wire of the said quality so manufactured by him became known in the trade as ‘Anchor Brand Wire,’” and admit “that it has, from the excellence of its quality, obtained a high reputation.” It is plain, therefore, that the Plaintiff has all the essentials of a right of property in the trade mark claimed by him, and that this right extends to two things, first, the device or emblem of an anchor attached to the wire, and second, the name “Anchor Brand Wire” or “Anchor Wire,” which has resulted from the use of the device, and has become the distinctive appellation in the market of the wire manufactured by the Plaintiff.
84 So the right of property consisted of the fact that the use of the mark had become the distinctive appellation in the market of the Plaintiff’s wire which, in modern terms, might be called a trade reputation or goodwill. Whilst Lord Westbury’s view appears to have been that this property right was in the trade mark itself, since Spalding v Gamage (1915) 32 RPC 273 it has been generally accepted and is now ‘beyond argument’ that the right protected by the law of passing off is ‘a proprietary right in the goodwill or reputation of his business likely to be injured by the defendant’s conduct’: ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) FCR 302 at 340 per Lockhart J. Thus it has been said by the Full Court to be uncontroversial that ‘unregistered trade marks … are not recognised under Australian common law as a species of property; rather, the business goodwill or reputation generated by the use of unregistered trade marks can be protected by an action for passing off’: Kraft Foods Group Brands LLC v Bega Cheese Limited [2020] FCAFC 65; 377 ALR 387 at [117] (per Foster, Moshinsky and O’Bryan JJ), citing JT International SA v Commonwealth [2012] HCA 43; 250 CLR 1 (‘JT International’) at [31], [40] (per French CJ), [106] (per Gummow J), [292] and [300] (per Crennan J).
85 The property right in goodwill has been described as ‘legal’ in nature: Commissioner of Taxation v Murry [1998] HCA 42; 193 CLR 605 at [23] (per Gaudron, McHugh, Gummow and Hayne JJ); Wadlow C, Wadlow on the Law of Passing-Off (6th ed, Sweet & Maxwell, 2021) at [1-47] and [3-292]; Davison M and Horak I, Shanahan’s Australian Law of Trade Marks and Passing Off (7th ed, Thomson Reuters, 2022) at [95.2905]; McLelland MH, 'New Horizons in Passing-Off' (1961) 3 Sydney Law Review 525. This characterisation is supported by the fact that such a right may be vindicated by a common law action in the tort of deceit and the availability of an injunction in equity’s auxiliary jurisdiction, as noted above. On the other hand, an action is also said to arise in equity’s exclusive jurisdiction to protect this property right. That would suggest that the right is equitable in nature. On the basis of the authorities above, however, I consider the better view to be that the property right involved is a right recognised at law and enforced in equity. The claim in prayer 2 is therefore a claim to the ownership of legal property.
86 The alternate basis for the declaration in prayer 2 is that FKP is entitled to be the owner of the marks but is not presently so. However, there is no claim articulated in the Cross-Claim that explains any basis on which VAO-SPI ever ceased to be the owner of the marks in that sense. Hence, if this is the kind of ownership that the pleader had in mind in relation to this aspect of prayer 2, then it is unsupported by the pleading. On the other hand, if ownership means ownership of the property right which grounds an entitlement to apply for registration under s 27(1)(a) of the Act or seek rectification of the Register under s 88 then it matches up with the allegations which are made in the Cross-Claim. This is, however, the same as the first aspect of the rights claimed in prayer 2.
87 As such, this second aspect of prayer 2 is either unsupported by anything in the Cross-Claim or is the same as the first aspect. I will read it as a redundant claim. Were I wrong in that reading then it should be struck out on the basis that it is unsupported by any allegations.
88 The power of the Court to make a declaration of right is not equitable but derives from s 21(1) of the FCA Act:
The Court may, in civil proceedings in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.’
89 I respectfully agree with von Doussa J in Rogers v Resi-Statewide Corporation Limited (No 2) (1991) 32 FCR 344 at 351 that the effect of s 21 is that if a declaration of right is made under it and no further equitable relief is granted there can be no occasion for the imposition of any condition on an applicant (as there would be if the declaration were granted in equity). The passage of a similar provision to s 21 led Sir Herbert Cozens-Hardy MR to observe in Chapman v Michaelson [1909] 1 Ch 238 at 242, in response to a submission that a declaration was a purely equitable remedy, that: ‘The simple answer is that it is not equitable relief. It is a mere accident that the judgment has been given in the Chancery Division and not in the Kings Bench Division, since this action might perfectly well have been brought in the Common Law Courts.’ The same position is taken by the learned authors of Meagher, Gummow & Lehane at [19-315]. See also Smith v Coastivity Pty Ltd [2008] NSWSC 313 at [80]-[87] per McDougall J.
90 More recently it has been accepted in obiter by the Full Court of South Australia that where a declaration of right is sought in respect of a legal right the remedy is not equitable: H Stanke & Sons Pty Ltd v O’Meara [2007] SASC 246; (2007) 98 SASR 450 at [39] per Duggan, White and Kelly JJ. The Full Court also thought that if the claim underlying the declaration sought involved the application of equitable principles then the ‘true nature of the relief’ would be equitable, although it appeared formally to reserve its conclusion on this point: [39]-[41].
91 The learned authors of Meagher, Gummow & Lehane do not agree with this conclusion at [19-315] because, in their view, ‘[t]he character of a statutory power, such as the power to make declarations, does not become ”legal” or “equitable” according to the character of its subject matter’. For myself, I would agree with this statement and respectfully disagree with the Full Court of South Australia.
92 In any event, for the reasons I have given, ownership of an unregistered trade mark carries with it a property right in goodwill at law. Whether laches is available as a defence to an action seeking to assert that property right depends upon whether the owner seeks to assert it at law or in equity. In this case, FKP seeks to assert it by means of a declaration of right pursuant to s 21(1) of the FCA Act which, for the reasons above, I consider to be an action at law. As such, the claim in prayer 2 is a claim at law in respect of which a defence of laches is not available.
The constructive trust claim
93 The Cross-Claim pleads the constructive trust at §59A. It is alleged that it would be against good conscience for Spirits to retain ownership of the marks where it knew (or ought to have known) of the matters pleaded in §14. Without setting §14 out in detail it may be summarised as saying that VVO had not been transformed into VAO-SPI. Other than through the indiscriminate phrase ‘at all material times’, the allegation at §59A does not identify any time at which it is alleged that Spirits knew of this and neither does §14. The particulars to §59A also direct attention to §2A and §14A. In §2A is contained an allegation that from about 1996 Mr Yuri Shefler was the controlling mind of VAO-SPI and was also the controlling mind of Spirits. It also alleges that from about 1996 Mr Alexey Oliynik was an employee and/or officer of both VAO-SPI and Spirits. At §14A it is then alleged that VAO-SPI ought to have known of the matters in §14; that is to say, that the transformation had not occurred. Taking these together, it is reasonably clear that the constructive trust claim includes the allegation that Spirits knew, via VAO-SPI and through Mr Shefler and Mr Oliynik, that the transformation had not taken place and knew from about 1996.
94 Much has been written about the circumstances in which a constructive trust may arise. It may be possible that the constructive trust pleaded at §59A does not fall within an established category. But perhaps it may be seen as analogous to a claim for a constructive trust where a transaction is liable to be set aside, or perhaps by some kind of analogy with Black v S Freedman & Co (1910) 12 CLR 105, or perhaps as falling within the second category of constructive trust discussed by Millett LJ in Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400 at 408-409. However, no point has been taken about the adequacy of the pleading of the constructive trust at §59A and the kind of constructive trust at which the laches defence is directed is the precise kind of constructive trust pleaded at §59, whatever that may be.
95 I therefore take it to be uncontroversial on the present application that the wrong said to give rise to the constructive trust is the knowing retention of the trade marks since 1996 in circumstances where Spirits knew that it was not their true owner because the transformation had never taken place. For present purposes, this then is ‘precise identification of the substantive nature of the claim to which laches is said to constitute a bar’ referred to by Deane J in Orr v Ford.
96 The pleading at §66 alleges both knowledge and delay. As to knowledge, it alleges that the Government of the Russian Federation knew that VAO-SPI had been holding itself out as the owner of the marks since 1992 (§§66(b)-(c)). I note for completeness that Mr Darke submitted that knowledge was also pleaded by the reference to ‘acquiescence’ at §§65(b)-(c) and specifically disclaimed that the use of that word involved the invocation of a plea of acquiescence in the formal sense. The submission was that the word acquiescence implied not only that the Government of the Russian Federation knew that VAO-SPI had been holding itself out as the successor to VVO but that the Government of the Russian Federation knew that this was not the case. I accept this submission.
97 It is true therefore that the pleader has not pleaded that the Government of the Russian Federation knew all of the elements pleaded at §59A. Spirits alleges that the Government of the Russian Federation knew from 1992 that VAO-SPI did not own the marks but does not allege that the Government of the Russian Federation knew that VAO-SPI knew that it did not own the marks.
98 The question now is whether the failure to plead the Government of the Russian Federation’s knowledge of VAO-SPI’s knowledge that it was not the owner of the marks means that the plea of laches is bad as a matter of pleading.
99 The classic exposition of the defence of laches appears in the advice of the Privy Council in Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 (‘Lindsay Petroleum’) delivered by Lord Selborne LC (not Sir Barnes Peacock, the first Chief Justice of the Calcutta High Court: see errata). Two passages in the advice tendered to Her Majesty are relevant. The first is this oft-cited passage at 239-240:
Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.
100 This passage makes no mention of a requirement of knowledge. The second passage at 241 is in these terms:
In order that the remedy should be lost by laches or delay, it is, if not universally at all events ordinarily – and certainly when the delay has been only such as in the present case – necessary that there should be sufficient knowledge of the facts constituting the title to relief.
101 Thus ordinarily (but not necessarily universally) there must be knowledge of the facts giving rise to the right to the remedy. The kind of knowledge which is necessary to give rise to the defence is that which would make it inequitable for the plaintiff now to assert the claim. I do not think that it would be wise to give a precise account of what degree of knowledge is necessary but there is support in the authorities for the idea that having the means of knowing without actually knowing may be sufficient. Every case turns on its own facts and what level of knowledge might give rise to inequity in one case might not do so in another.
102 Two conclusions may be drawn from this. First, contrary to the submission of FKP that knowledge of the facts giving rise to the claim is an essential element of the defence, the correct position is that there should be such knowledge ‘if not universally at all events ordinarily’. Secondly, the kind of knowledge which gives rise to the defence will be guided by whether, having had that kind of knowledge, it would now be inequitable for the plaintiff to be permitted to pursue the claim.
103 I do not understand anything to the contrary to have been said in Mualim v Dzelme [2021] NSWCA 199; 157 ACSR 367 at [170] (per Gleeson JA, Bathurst CJ and Brereton JA agreeing); CSR Ltd v Amaca Pty Ltd [2016] VSCA 320; 62 VR 359 at [241]-[242] (per Maxwell P, Beach and Kaye JJA); Crawley at [163]-[165] (per Young JA, Allsop P and Macfarlan JA relevantly agreeing); Savage v Lunn [1998] NSWCA 203 (‘Savage v Lunn’) at 27-28 (per Sheppard AJA, Handley and Sheller JJA); or Orr v Ford at 341 (per Deane J). Certainly, none of these authorities intended to depart from Lindsay Petroleum.
104 The facts alleged in this case are somewhat unusual. It is alleged that since 1992 the Government of the Russian Federation has known that VAO-SPI was not the owner of the marks. On this allegation it has been open to the Government of the Russian Federation to seek rectification of the Register since that time. It would have been a ground of opposition to the registration of the marks that VAO-SPI was not their owner: s 58 of the Act. An application to cancel the registration of the marks could have been made on any of the grounds on which their registration could have been opposed: s 88(2)(a). Hence, on this account, since 1992 it was open to the Government of the Russian Federation (through VVO) to seek rectification of the Register. It could also have sought the declaration it now seeks in prayer 2 that it is the true owner of the marks. It did not need to know anything to proceed with either of those claims except that VAO-SPI was not the owner of the marks and VVO was. It is alleged to have known this since 1992.
105 The constructive trust claim does include, it is true, an allegation that VAO-SPI knew that it did not own the marks. Thus ‘ordinarily’ it would be necessary to make good a laches defence to this claim to allege that the Government of the Russian Federation knew that VAO-SPI knew that it did not own the marks.
106 However, it is not a universal requirement that a plaintiff must know the facts giving rise to the claim. In this case and at the level of a pleading debate, I can readily understand an argument being mounted that from the time that the Government of the Russian Federation knew that VAO-SPI was not the owner of the marks it should have been seeking to secure their recovery by whatever means were available. On one view, the laches clock began ticking from the time the Government of the Russian Federation knew that VAO-SPI was not the owner of the marks. It is at least arguable that FKP cannot now move the goal posts on the delay issues by putting forward a constructive trust argument that has as an element that VAO-SPI knew that it did not own the marks and thereby postpone the time from which any laches defence can run to the time that the Government of the Russian Federation acquired knowledge of VAO-SPI’s knowledge of that fact.
107 Those observations underscore the general nature of the inquiry as being into whether it would be inequitable for FKP now to assert the constructive trust claim. It is arguable that it would be unconscionable for it do so when, on the facts alleged, it eschewed bringing a rectification claim from 1992 despite having sufficient information to bring one. It is arguable that it cannot outflank this outcome by putting forward a claim in equity that alleges an element of which it may not have had knowledge until a later time.
108 I therefore do not accept that the pleading is defective for want of a sufficient allegation of knowledge.
109 Ms Cochrane also submitted that §66 contains no pleading that Spirits had been unconscionably prejudiced by the delay. I do not accept this submission. At §66(b) it is alleged that since 1992 VAO-SPI has held itself out as the successor of VVO and at §66(c) it is alleged that since 1992 VAO-SPI and its successors have held themselves out as the owners of the marks throughout the world. At §§66(d)-(f) allegations are made that the Government of the Russian Federation and FKP did nothing about the ownership of the marks until 2000 or, in the case of some of the marks, 2004. At §§66(g)-(k) all of these matters are then said to give rise to a defence of laches. In my view, the material facts on which the laches defence is based have been pleaded. I do not think that Spirits was bound to allege that these matters made it inequitable or unconscionable for FKP now to pursue the claims. This was adequately signalled to FKP by the use of the word laches.
110 I therefore do not accept that the pleading of laches in §66 is defective from a pleading perspective in relation to the constructive trust claim.
The claim for rectification of the Register
111 The claim for rectification of the Register is made on the basis of fraud, false suggestion or misrepresentation: §§54-56 of the Cross-Claim. The claim is explicitly made under s 88 of the Act and not as a claim in equity to rectify an instrument: §59. I deal later with FKP’s submission that laches cannot be pleaded in answer to a statutory claim. This section deals only with Ms Cochrane’s invocation of Crawley.
112 It is necessary first to identify the wrong involved. There are two alternate wrongs alleged. Simplifying for present purposes, the first is the recording in the Register as the owner of the trade marks a company called Caldbeck Pty Ltd: §54. Caldbeck was recorded as the owner of the trade marks at a time prior to Spirits. This is said to be as a result of the matters pleaded in §§16-27. At §21 it is alleged that a deed was entered into between Caldbeck and VAO-SPI under which the marks were assigned to Caldbeck on 14 September 1992. At §22 it is alleged that Caldbeck applied to be recorded on the Register as the owner of the trade marks on 28 September 1992. At §23 it is alleged that at the time of that application VAO-SPI and Caldbeck represented that VAO-SPI either was VVO or was its legal successor; that VAO-SPI was the owner of the trade marks; and that Caldbeck was entitled to be recorded as the owner of the marks because of the deed of assignment. At §24 it is pleaded that each of these matters was false. At §24A it is pleaded that VAO-SPI knew or ought to have known that this was the case.
113 The particulars for this allegation are those subscribed to §14A. Unlike the pleading of the constructive trust at §59A the pleader has not included a reference to §2A where the allegations concerning the roles of Mr Shefler and Mr Oliynik are made. Since those allegations concern their position from about 1996 this makes sense. The pleading does not identify how VAO-SPI knew or ought to have known that the representations made around the time of the application to have Caldbeck recorded as the owner of marks were false but no point is taken about this.
114 It follows that the fraud, false suggestion or misrepresentation alleged in paragraph 54 occurred by 28 September 1992 when that application was made.
115 The second rectification claim is in the alternative to the first and is pleaded at §55. Here it is said that the recording in the Register of VAO-SPI as the registered owner of the trade marks was procured by fraud, false suggestion or misrepresentation. This is said to be because of the matters pleaded at §§32-39. At §32 and 33 it is alleged that Caldbeck and VAO-SPI commenced proceedings in this Court to have Caldbeck’s registration declared void and to have the marks recorded as being owned by VAO-SPI as from 21 January 1992. It is alleged at §34 that in support of that application both Caldbeck and VAO-SPI represented that VVO had ceased to exist with effect from 20 or 21 January 1992; that VAO-SPI was the legal successor to VVO; and that the rights and obligations of VVO had been transferred to VAO-SPI from those dates. It is alleged at §35 that each of these matters was false and at §35A that VAO-SPI knew or ought to have known that each of these matters was false. The particulars to this latter allegation refer back to §14A. It is then alleged at §36 that this Court made orders on 18 September 1995 to remove Caldbeck as the registered owner and to record instead VAO-SPI as the registered owner, and that the Registrar of Trade Marks acted on these orders on 18 October 1995.
116 It follows that the allegation of fraud, false suggestion or misrepresentation alleged at §55 took place no later than 18 September 1995 when this Court ordered the rectification of the Register.
117 It is true that §66 of the Defence does not allege when the Government of the Russian Federation became aware of the events of 28 September 1992 or 18 September 1995. However, as with the constructive trust claim, I do not see that Spirits was bound to plead this. It is arguably inequitable for the Government of the Russian Federation to seek to rely on a claim for rectification on the basis of fraud, false suggestion or misrepresentation under s 88(2)(b) when it could have brought a claim for rectification under s 88(2)(a) on the basis that VAO-SPI was not the owner of the marks. It is alleged to have had knowledge of that fact since 1992. For the reasons I have given in relation to the constructive trust claim I do not think that it is essential for Spirits to have pleaded that the Government of the Russian Federation knew of the fraud, false suggestion or misrepresentation.
Point (b): no proper pleading of acquiescence
118 Since Spirits does not rely upon the reference to acquiescence in §§66(b) and (c) as doing any more than constituting a plea of knowledge this question need not be addressed.
Point (c): party seeking equity must do equity
119 FKP submitted that a party pleading laches must be willing to do equity. This meant that the outcome sought to be achieved by the plea of laches could not exceed the unconscionable prejudice caused to that party by the delay. By §66(k) the effect claimed by Spirits for the defence of laches is that FKP should not be granted any relief.
120 I do not regard FKP’s submission as a pleading point. It may be that at trial FKP will succeed in demonstrating that the successful invocation of the laches defence ought to be subject to conditions such as the payment to FKP of the value of the marks at the time at which the Russian Federation should have sought recovery of them. However, I do not think that Spirits is bound as a matter of pleading only to claim as the fruit of its laches defence the detriment it has suffered by reason of the unconscionable delay.
Point (d): if successful, the plea of laches would have the effect of achieving the transformation of VVO into VAO-SPI which was prohibited by Russian law
121 I reject this submission because this is not what a successful plea of laches would achieve. The refusal of relief to FKP would not have the effect of transforming VVO into VAO-SPI.
Point (e): the plea of laches is contrary to factual findings by the Dutch courts about the conduct and knowledge of Mr Shefler
122 This is not a pleading point. The significance of the decisions of the Dutch courts is to be determined at the hearing of the summary judgment application.
Point (g): laches not a defence to a claim for rectification under s 88(1)
123 This is a different question to whether the defence of laches which has been pleaded is adequate (which I have dealt with above). Although this argument was advanced in written submissions (FKP’s submissions dated 17 February 2023 at §18) Ms Cochrane for FKP said at T13.34-37 that it was common ground that equitable defences were available to a claim for rectification under s 88(1). I propose to assume this was a slip. Mr Darke had met the submission orally and no prejudice is occasioned by proceeding in this way.
124 The factual matters in the laches defence in §66 are explicitly picked up and repeated in the first particular to the defence to the rectification claim under s 88(1) at §67 (noting that the reference to §67 in the current form of the Defence is clearly an error and should be a reference to §66). On this basis, Spirits submitted that whether laches was available as a defence to the rectification claim in §67 was an arid question because the same factual allegations were picked up by §66. I respectfully do not agree. The choice in s 88(1) for this Court is between rectifying the register and not rectifying it, and the Act confers no power to refuse rectification subject to conditions. On the other hand, at least theoretically, equity might impose some condition on a defendant’s successful invocation of a laches defence. For example, equity might allow the laches defence but on the condition that Spirits pay compensation to FKP for the value of the marks at the time at which the Government of the Russian Federation should have asserted its rights. The question of whether laches may be pleaded in answer to a statutory claim for rectification under s 88(1) is therefore potentially a relevant one.
125 In strict analysis, a claim for rectification under s 88(1) is a claim in law. FKP relies in this regard on the observation of Deane J in Orr v Ford at 340 that ‘[l]aches is an equitable defence and is not available in answer to a legal claim’.
126 Spirits makes two points. First, there are examples of statutory remedies which reflect former equitable remedies where the defence of laches has been accepted. Secondly, in the area of intellectual property statutes it has been accepted that equitable defences are available.
127 The underlying question of whether laches is available as a defence to a claim for rectification under s 88(1) is a difficult one. The remedy of rectification has been in trade marks legislation since the Trade Marks Registration Act 1875 (UK) (‘the 1875 Act’). In that sense, it differs from the statutory remedies of injunction and account of profits which now appear in s 126. Since there was no register of trade marks before 1875 there is no antecedent jurisprudence about the relationship between the remedy of rectification in equity and such a register. In this sense rectification differs from the other remedies because whilst both law and equity enforced unregistered trade marks before the 1875 Act, neither had anything to say about a register which did not then exist.
128 Understandably, neither party sought to plumb these depths. As to Mr Darke’s first contention that laches has been accepted as being able to be pleaded as a defence to statutory versions of what were formerly equitable claims, I accept the submission. Thus laches continues to be a defence in an oppression suit notwithstanding that the claims are now statutory: see Falkingham v Peninsula Kingswood Country Golf Club Ltd [2015] VSCA 16; 318 ALR 140 at [80]-[88]; Re Jermyn Street Turkish Baths Ltd [1970] 1 WLR 1194 at 1208-1210 per Pennycuick J. And the New South Wales Court of Appeal’s consideration of the laches defence in Crawley was undertaken in the context of what was a statutory oppression suit.
129 To this may be added the fact that in a claim for rectification of a share register under s 212 of the then Corporations Law, equitable defences were available: Savage v Lunn at 24. In that case the plaintiff had deliberately sought to rely on the statutory power of rectification to outflank the availability of the defence of laches but this was rejected. It may be that the circumstances of a share register turn out to be different to those attending the Register of Trade Marks. In particular, it is the duty of the officers of a company to keep the share register accurately so that ‘the power of a court of equity to order rectification is … part of its general jurisdiction to “act in personam” in aid of a legal right’: Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51-2 per Fullagar J; Savage v Lunn at 24-25. That analysis does not accord with the situation of a claim under s 88(1). Even so, for the purposes of a pleading debate I am not prepared to hold that equitable defences are not available under s 88(1).
130 I also accept Mr Darke’s second submission that in this Court it has been accepted that equitable defences are at least available in relation to statutory claims for relief which are analogous to claims in equity: Autocaps (Aust) Pty Ltd v Pro-Kit Pty Ltd [1999] FCA 1315; 46 IPR 339 at [56]-[57].
131 I therefore accept that it is arguable that laches is available to claims under the Act which are analogous to equitable claims (such as injunction and an account of profits) and that it is arguable that a claim for rectification may be analogous in that sense. I therefore do not accept at the level of a pleading debate that the plea of laches is bad for this reason.
Other matters
132 In reply Ms Cochrane submitted that the laches defence should not be permitted because Spirits was not coming to equity with clean hands. This was not advanced in chief and so should not be entertained. In any event, it is not a pleading point.
Conclusion on paragraph 66
133 Paragraph 66 should not be struck out.
Laches and acquiescence: amendment application
134 By its amended amendment application, Spirits seeks to amend §66 of the Defence by adding a new §66(c1) and a substantial set of new particulars to §66(k) (together with some minor irrelevant typographical matters). As amended, §§66(c1) and (k) would read (with proposed amendments indicated by underlining):
66 In further answer to the whole of the Third Further Amended Cross-Claim, the Cross-Respondent says that:
…
(c1) VAO-SPI, ZAO and the Cross-Respondent have used and registered the trade marks referred to in sub-paragraphs (d) and (e) below in Australia and throughout the world, or alternatively have authorised the use and registration of those trade marks in Australia and 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;
…
(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
As to the inequity in granting the Cross-Claimants the relief sought, in addition to the matters in sub-paragraphs (a)-(j) above, the Cross-Respondent refers to the Government of the Russian Federation’s motivations in bringing and maintaining these proceedings through the Cross-Claimants, including the benefit or windfall that would be obtained from VAO-SPI, ZAO and the Cross-Respondent having used, authorised the use of and registered the trade marks referred to in sub-paragraphs (d) and (e) above in Australia and throughout the world.
Further or in the alternative, the Cross-Respondent relies on the Government of the Russian Federation, and further or in the alternative, the Second Cross-Claimant (in the event the matter pleaded in the Third Further Amended Cross-Claim at paragraph 4(g) is correct, which the Cross-Respondent otherwise denies), having, before 2000 or otherwise 2004, had knowledge, the availability of the means of knowledge and/or having been put on suspicion of one or more of the matters pleaded in the Third Further Amended Cross-Claim at paragraph 14 (if any of those matters is correct, which the Cross-Respondent otherwise denies), including by reason of:
(i) the Moscow Registration Chamber (on behalf of the Russian Federation) having registered VAO-SPI on 20 January 1992 based on the application for foundation of VAO-SPI, being a matter found by the Presidium of the Supreme Court of Arbitration of the Russian Federation in the decision referred to in the Third Further Amended Cross-Claim at paragraph 14 particulars (ii);
(ii) Sojuzplodoimport having been a founding incorporator and shareholder of VAO-SPI. This was known (or otherwise it may be inferred that it was known) to:
(A) the Government of the Russian Federation, including because:
1 the Prefecture of the Central Administrative District of Moscow (on behalf of the Russian Federation) was also a founding shareholder of VAO-SPI and had a representative, V.V. Usov, on VAO-SPI’s Board;
2 the Russian Federation’s Deputy Minister of Agriculture A.S. Semin was part of VAO-SPI’s Board;
3 in around October 1991, the Articles of Association of VAO-SPI were endorsed by the USSR Ministry of Foreign Economic Relations;
4 (i) above is repeated;
5 in around September 1992, the Ministry of External Economic Affairs sought to become a 51% shareholder in VAO-SPI; and
6 in around November 1992 VAO-SPI’s Charter was published in a magazine of the Ministry of Foreign Economic Relations; and
(B) Sojuzplodoimport, including because it had representatives on VAOSPI’s Board, namely, L.P. Batov, J.B. Bazanov, V.V. Gorbunov, V.V. Moskovtsev, E.F. Sorochkin (being Sojuzplodoimport’s Chairman) and V.N. Strokov.
(iii) In around 1991 and 1992, Sojuzplodoimport’s Head of Legal Department, S. Surguchova advised other representatives of Sojuzplodoimport, including E.F. Sorochkin, that VAO-SPI was not the legal successor to Sojuzplodoimport.
(iv) The involvement in around 1992-1994 of the Government of the Russian Federation, including the President of the Government of the Russian Federation, Chairman and Deputy Chairmen of the Government of the Russian Federation, Department of the Legal Support of the Office of the Government of the Russian Federation, the Ministry of Foreign Economic Relations, the Ministry of Foreign Relations and the Ministry of Agriculture, in investigating the restoration of the rights of VAO-SPI to trade mark registrations in Russia, including in respect of “Stolichnaya” and “Moskovskaya”.
(v) The Financial Matters litigation in around 1992 and 1993 in the United States (as defined in paragraph 67 to the affidavit of Alexey Victorovick Oliynik affirmed 1 December 2015), in which the plaintiffs in that litigation challenged the transformation of Sojuzplodoimport to VAO-SPI as invalid and in which officials from the Government of the Russian Federation provided PepsiCo with statements to rebut the plaintiffs’ claims.
(vi) The involvement in around 1996 of the Government of the Russian Federation, including the Chairman of the Government of the Russian Federation, the Ministry of Agriculture, the Ministry of Economy, the Ministry of Foreign Economic Relations, the Ministry of Justice, the State Committee for Antimonopoly Policy of Russia and Rospatent, in investigating the proposal of Moscow Distillery “Cristall” for the transfer to the State of the trade mark rights of VAO-SPI, including in respect of “Stolichnaya” and “Moskovskaya”.
(vii) The documents discovered in this proceeding as FKP.90082.7407-11 andFKP.90082.7414-7416.
(viii) In around 1996, a representative of the Moscow Registration Chamber, J.N. Orlova, formed the view that VAO-SPI was not the legal successor to Sojuzplodoimport, and raised this matter with other representatives of the Moscow Registration Chamber, including S.S. Dukanov.
(ix) For the period from 1999 – 2004, the document discovered in this proceeding as SPI.01432.0099 and the decisions referred to in the Third Further Amended Cross-Claim at paragraph 14, particulars (i) and (ii).
Legal viability
135 The amendments resolve some of the issues raised by FKP on its strike out application. In particular, they provide an explicit reason why it would be inequitable for FKP now to seek to enforce the constructive trust and rectification claims. FKP repeated the submission it made in relation to the estoppel claim that the motivations of the Government of the Russian Federation were irrelevant. Again, I do not agree. The motivation of attempting to obtain the windfall alleged may well bear on the suggestion that it would now be inequitable for FKP to enforce its rights after the long delay. I would reach that conclusion unassisted by authority but, in any event, useful comparison may be made to the windfall gain that would have been made by Mrs Fysh in Fysh v Page (1956) 96 CLR 233.
Discretion
136 As in the case of the proposed amendments to the estoppel defence, I accept that the proposed amendments to §66 are made in response to the strike out and permanent stay applications and that in that sense there is an explanation for the delay in the amendments being sought. It remains necessary to assess the prejudice to which they give rise.
137 In its current form, §66(c1) causes prejudice to FKP. In §66(c), Spirits alleges that the Government of the Russian Federation knew that VAO-SPI and its successors had held themselves out as the owners of the marks. The new allegation in §66(c1) that this occurred by those entities using the marks throughout the world including by seeking their registration may be seen merely as a clearer articulation or a fleshing out of that earlier allegation. Here the thinking would be that if the Government of the Russian Federation knew that VAO-SPI and its successors had held themselves out as the owners of the marks it is likely that it knew this in part because it knew that VAO-SPI were using the marks on a worldwide basis. Nevertheless, these allegations are not the same and the allegations of knowledge in §66(c1) are new. For the reasons I have given above, fresh allegations of knowledge pose real issues of prejudice in this case. I would therefore refuse leave to amend §66(c1) in its current form but would in principle grant leave to amend in that form if accompanied by a particular limiting it to the particulars to §66(c).
138 On the other hand, I would not permit the amendments to §66(k) which raise new allegations about the motivations and knowledge of the Government of the Russian Federation for the same reasons I have given in relation to the analogous amendments to the estoppel defence.
Result
139 Leave should be granted to amend §66 to add a new §66(c1) with a particular identifying it as relying on the particulars to §66(c) but the balance of the amendment application in relation to §66 should be refused.
The discretion under s 88(1) of the Act
140 The pleading contained in §67 of the Defence is as follows:
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 may be provided following discovery.
141 This pleading invokes s 88(1) of the Act which provides:
88 Amendment or cancellation—other specified grounds
(1) Subject to subsection (2) and section 89, a prescribed court may, on the application of an aggrieved person or the Registrar, order that the Register be rectified by:
(a) cancelling the registration of a trade mark; or
(b) removing or amending an entry wrongly made or remaining on the Register; or
(c) entering any condition or limitation affecting the registration of a trade mark that ought to be entered.
142 FKP makes three broad submissions about the pleading at §67:
(a) the defence under s 88(1) is a plea of reasonable defence so Spirits must identify sufficient or good reason for the Court to permit Spirits to maintain the registration of the marks when it is not their true owner;
(b) in assessing whether sufficient or good reason has been shown the Court must consider the purity of the Register as paramount; and
(c) the Court comes to the question of whether Spirits has reasonable prospects of succeeding in this defence necessarily upon an assumed state of affairs in which it has been found that Spirits obtained its registration of the trade marks by fraud, false suggestion or misrepresentation.
Relevant principles
143 The discretion conferred by s 88(1) is at large unless s 89 is engaged: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2018] FCAFC 6; 259 FCR 514 (‘Anchorage’) at [146] (per Nicholas, Yates and Beach JJ). In this case, it is not suggested that s 89 is engaged and it may be put to one side. The proper approach to s 88(1) is that if the power has been engaged, the entry of the mark should be expunged, or the mark should be removed, unless sufficient reason appears for leaving it there: Anchorage at [147]-[148], citing McLelland J in Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 221. In the ordinary course of events, it will be for the party that resists cancellation of the registered mark to persuade the Court that there is sufficient reason not to order its cancellation: Anchorage at [158]. Relevant to the exercise of the discretion conferred by s 88(1) is the public interest in ensuring that trade mark registrations only be made in favour of applicants who are entitled to obtain them: Anchorage at [163]. The Act offers various facilities for ‘ensuring that the Register is pure in the sense that no mark is to be registered unless valid, and no registration of a mark is to continue if it is not valid’: Health World Ltd v Shin-Sun Australia Pty Ltd (2010) 240 CLR 590 (‘Shin-Sun’) at [27] (per French CJ, Gummow, Heydon and Bell JJ); Anchorage at [163]. In Anchorage the trial judge found that the appellant never was the owner of the ANCHORAGE and ANCHORAGE CAPITAL marks and they should never have been registered in the appellant’s name: Anchorage at [165]. The Full Court held at [181] that the ‘primary concern’ was whether the appellant should be permitted to maintain registrations for trade marks of which it was not the true owner.
144 Ms Cochrane did not go so far in her oral submissions as to suggest that the only considerations relevant to the exercise of the discretion under s 88(1) were those relating to the public interest but FKP did appear to go this far in its written submissions. I reject the submission as a matter of principle and of authority.
145 As to principle, the discretion in s 88(1) is informed by the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40 per Mason J. The scheme of the Act recognises a balance between various commercial and public interests: Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 97 ALJR 388 at [41] and [46] per the Court; JT International at [68] per Gummow J. Confining the discretion in s 88(1) so that only public interest considerations are relevant to its exercise would therefore be inconsistent with the balancing of interests which the Act seeks to achieve.
146 As to authority, Anchorage holds that the discretion in s 88 is at large, constrained only by the general scope and objects of the Act: [146]. At first instance in that matter the trial judge concluded that the parties’ respective contributions to the state of the Register were also a relevant consideration for the purposes of s 88(1) together with the antiquity of the mark: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 3) [2015] FCA 1436; 116 IPR 159 at [11] and [13]. I do not apprehend the Full Court to have held that this conclusion was wrong.
147 I therefore reject FKP’s submission that the contribution of the parties is irrelevant to the exercise of the discretion under s 88(1).
The pleading
148 There are three particulars provided to §67 of Spirits’ Defence which put forward three reasons why the discretion to cancel Spirits’ registration as owner of the marks should not be exercised.
The first particular
149 The first particular is that FKP (and by extension, the Russian Federation) have been guilty of gross delay in bringing their application for rectification. It identifies §§15-51 and 67 of the Defence as providing the bases for this allegation. The reference to §67 is an editing error and should be a reference to §66; that is to say, to the pleading of laches and acquiescence. Spirits pleads at §§15-51, in effect, its version of how the trade marks came to be in its hands. Those pleadings contain no allegation touching on any delay by the Russian Federation or FKP in bringing the claim for rectification. The only gross delay identified in §67 is therefore the laches defence pleaded in §66.
150 The repetition of the laches defence as a particular of the discretion defence is viable for the same reasons that the laches defence itself is viable.
The second particular
151 The second particular is that the Russian Federation represented to VAO-SPI and Spirits (and another entity, ZAO) that VAO-SPI was the owner of the marks between 1992 and 2000. The pleading identifies §§4(f), 4(h), 14, 24, 35, 54-58 and 66(a) as the bases for this.
152 The reference to §66(a) is another editing error and should be a reference to §65(a); that is to say, to the pleading of the estoppel and, more precisely, to the pleading of the representations grounding that estoppel. At §§4(f) and (h) it is alleged that the transformation of VVO into VAO-SPI did occur. At §§14, 24 and 35 it is correspondingly denied that the transformation did not occur. Finally §§54 to 58 deny that the registration of the marks was occasioned by fraud, false suggestion or misrepresentation.
153 Apart from §65(a), all of these references are necessarily misconceived in the context of the discretion defence. If one gets to the question of whether the registrations should be cancelled under s 88(1) it will have already been found that the transformation did not occur and that the registrations were procured by fraud, false suggestion or misrepresentation. Therefore §§4(f), 4(h), 14, 24, 35 and 54-58 will all have failed by this point. The references to those paragraphs in the second particular to §67 can have no relevance and should be struck out.
154 The position in relation to §65(a) is more complex. Whilst it is also true that one could only arrive at the question of how the discretion in s 88(1) is to be exercised if the estoppel defence pleaded in §65 had failed, its failure does not necessarily entail that the allegation that the representations were made in §65(a) has also failed. It is possible that the estoppel defence had failed for reasons other than that the representations were not made. For example, as I have already noted, it is evident that FKP intends to meet the estoppel defence at §65 at least in part with the proposition that an issue estoppel binds Spirits in a way which prevents it relying upon the estoppel.
155 Thus, on analysis, the only potentially viable part of the second particular provided for resisting cancellation is the representations pleaded in §65(a). The second particular does not invoke the allegations at §§65(b)-(d). The short effect of these allegations is that VAO-SPI and Spirits (and ZAO) relied on the representations to assume that VAO-SPI (and hence Spirits) owned the marks and that because of that assumption Spirits used and registered the trade marks throughout the world.
156 FKP submitted that the pleading does not link the making of the representations by the Russian Federation pleaded at §65(a) with any sufficient reason for leaving the Register in an incorrect state. I accept this submission because the second particular does not seek to rely upon §§65(b) and (d); that is to say, it does not allege that the representations induced VAO-SPI and Spirits to assume that VAO-SPI owned the marks and that acting on that assumption Spirits then proceeded to use the marks and seek their registration around the world. As such, the second particular does not provide any reason not to cancel the registration of the marks. It is a bare allegation of the making by the Russian Federation of certain statements without any attempt to connect them to the position of Spirits.
157 I reject Mr Darke’s submission that the making of the misrepresentations is contrary to the public interest and the registered owner’s interest in having certainty that the mark will not be subject to cancellation. The public interest is in having the Register accurately record who owns the mark. This is not affected by what various parties say about who owns the mark. The making of the representations does not detract from the certainty of the registered owner’s entitlement to be registered. It is either entitled to be registered or not. The registered owner’s interests are a legitimate input into s 88(1) but I fail to see how the making of the representations disconnected from any allegation that Spirits was affected by them can have this character.
The third particular
158 The third particular for resisting cancellation relies upon the allegations made at §§61, 62, 63, 64 and 65 of the Defence. These are: (a) that the claims are statute barred by s 181 of the Russian Federation Civil Code 1994 (§61); (b) that Spirits acquired its interests in the trade marks for value and without notice of FKP’s claim to the marks (§§62-63); (c) that a predecessor in title to Spirits, Diageo, was entitled to deal with VAO-SPI as the absolute owner of the trade marks by reason of s 22(1) of the Act (§64); and (d) the estoppel by representation pleaded at §65.
159 I do not accept that (a) is tenable before an Australian court applying an Australian law about Australian trade marks. It should be struck out. I accept that (b) is at least plausible in the sense that I can understand the proposition that a purchaser for value without notice may be entitled to a defence. As I explain later, the relevance of the allegation about Diageo in (c) eludes me.
160 As to (d), unlike the second particular, the invocation of §65 is not limited to §65(a). It therefore includes not only the allegation that the Russian Federation made the representations (§65(a)) but also the allegations that the Russian Federation induced VAO-SPI and Spirits to assume that VAO-SPI owned the marks (§65(b)), that on the basis of that assumption Spirits thereafter used and sought registration of the marks around the world (§65(c)), and that VAO-SPI, ZAO and Spirits thereafter used the marks around the world (§65(d)). Again, I note that it is possible for §§65(a)-(d) to survive as allegations even if the estoppel plea in §65 has failed for some other reason and, in particular, that they may survive even if FKP’s invocation of issue estoppel trumps the estoppel by representation.
The references to §§65(a)-(d)
161 On the face of it, the third particular puts the blame for the procurement of the registration of the marks by VAO-SPI by fraud, false suggestion or misrepresentation at the feet of the Russian Federation.
162 However, part of this argument cannot ever succeed. The present debate assumes that the allegation that the registration was procured by fraud, false suggestion or misrepresentation contained at §§54 and 55 of the Cross-Claim has succeeded. Those paragraphs are connected, in turn, to allegations at §§24 and 35 that the transformation had not occurred and to allegations at §§24A and 35A that:
(a) VAO-SPI knew this; or
(b) VAO-SPI ought to have known this.
163 The third particular cannot work coherently in the case of (a) for VAO-SPI. The fraud, false suggestion or misrepresentation relied upon by FKP is alleged to have crystallised by 28 September 1992 (§§22-23) and 18 September 1995 (§55). If VAO-SPI knew that the representations were false at those dates then it could not have been induced by the Russian Federation’s representations into thinking at those times that it had good title to the trade marks as pleaded at §§65(b) and (d) of the Defence since, on this hypothesis, it already knew that it did not. This aspect of the third particular cannot succeed. On the other hand, this is not a problem in the case of ZAO and Spirits who are not subject to the allegations at §§24A and 35A.
164 However, this difficulty in the case of VAO-SPI does not arise in the case of the allegation that VAO-SPI ought to have known that it did not own the marks (rather than the allegation that it did know this). It is logically possible that VAO-SPI was induced by the Russian Federation into thinking that it owned the trade marks (§§65 (b) and (d) of the Defence) whilst, at the same time, it ought to have known that this was not the case (§§24A and 35A of the Cross-Claim).
165 Once exposed, what is then put in the third particular is capable of supporting two arguments. The first relates only to ZAO and Spirits and is that registration should not be cancelled because the Russian Federation misled them into thinking that VAO-SPI owned the marks. No inconsistency arises with the necessary antecedent conclusion that VAO-SPI had procured the registrations by fraud, false suggestion or misrepresentation. The second argument is available in the circumstance where VAO-SPI ought to have known that it was not the true owner of the marks but did not know that it was not the owner. In either case, the reference in the third particular to §65 does put forward in a sufficient reason to resist cancellation. In effect, it seeks to identify the Russian Federation as the original source of the misrepresentation alleged in §§54 and 55 (although, for the reasons already given, not for the alleged fraud or false suggestion pleaded in the same paragraphs).
166 It is true that neither the third particular nor §67 itself explicitly uses the language of sufficient reason but I do not think that this is required. What is required is that §67 and the third particular articulate why Spirits says the registration should not be cancelled. They do so because, unpicked admittedly with some determination, they say that the Russian Federation induced VAO-SPI to make the misrepresentations by 28 September 1992 and 18 September 1995 which resulted in the registration of the marks.
167 I accept that what is pleaded in §67 through the third particular’s reference to §65 is a defence which can only arise in that narrow circumstance. Nevertheless, that narrow circumstance is one which is expressly alleged in the Cross-Claim through §§24A and 35A by their reference to ‘ought to have known’.
168 That brings one to the central question of whether this discloses a reasonable defence under FCR r 16.21(e). Here FKP points to the fact that it is for Spirits to establish that there is sufficient reason for the registration not to be cancelled and that in this process the accuracy of the Register is, as the Full Court observed in Anchorage, a ‘primary concern’ to which one may add that it is also a matter of public interest: [181]. To this may be added the fact that the defence can only arise where VAO-SPI did not know that it did not own the trade marks but nevertheless ought to have known this.
169 Those two matters do not lead me to conclude that the defence disclosed is not a reasonable one within the meaning of FCR r 16.21(e). It could succeed. Whether it will do so will depend on why VAO-SPI should have known that it did not own the trade marks and the circumstances which led the Russian Federation to make the representations pleaded in §65(a) in the first place. If one gets to this part of the case what will occur is an apportionment of responsibility between VAO-SPI and the Russian Federation for the fact that the Registrar of Trade Marks and this Court were told that VAO-SPI owned the marks when it did not. From the pleadings, I cannot foresee how this apportionment debate will play out.
170 But I do not accept at this stage that its outcome is irrelevant to the exercise of the discretion under s 88(1), even taking into account the purity of the Register as explained in Shin-Sun. For example, if it were to emerge at any trial that the origin of the misrepresentations was truly the Russian Federation then there might be much to be said for the view that it was the author of its own misfortune. Having misled VAO-SPI into thinking that it owned the marks as a result of which it and then Spirits used and sought registration of them on a worldwide basis, it is at least arguable that the Russian Federation ought not now have the benefit of having the Register rectified to expunge the downstream consequences of its own actions. That VAO-SPI (on this hypothesis) ought to have detected that it did not own the trade marks would no doubt be a relevant input into this inquiry but I am far from satisfied from a pleading perspective that this entails that such a defence cannot succeed.
171 Ms Cochrane also submitted on this topic that one needed to bring to account the evidence of Mr Muranov to understand that the representations alleged to have been made in §65 were mere rubber stamping exercises which did not bind the Russian Federation. I have already explained why this is a summary judgment point rather than a pleading point.
172 I would therefore not strike out the third particular to §67 insofar as it relies upon §65.
The references to §§62-63
173 Dealing next with the references to §§62-63, I have explained above that these encompass allegations that Spirits acquired its interests in the trade marks for value and without notice of FKP’s claim to the marks.
174 Ms Cochrane submitted in relation to these allegations that FKP had pleaded at §2A of the Cross-Claim that from about 1996 Mr Shefler was the directing mind of both VAO-SPI and Spirits and Mr Oliynik was also an officer of both. I accept this submission. The burden of this submission was that Spirits knew what VAO-SPI knew from 1996. I note that Spirits does not admit this allegation.
175 The allegations at §§62 and 63 of the Defence concern two assignments: an assignment of the marks from VAO-SPI to ZAO on 31 March 1998 which ZAO is said to have taken for value and without notice and an assignment from ZAO to Spirits on 12 April 1999 also for value and without notice.
176 In my view, part of §§62 and 63 cannot ever succeed and part is arguable. One arrives at this part of the case knowing that the registration of the marks resulted from the fraud, false suggestion or misrepresentation of VAO-SPI and/or Caldbeck and that this occurred by 28 September 1992 and 18 September 1995.
177 If the fraud or false suggestion allegation has been successful then VAO-SPI knew from at least those dates that it did not own the marks. The subsequent bona fide purchase by ZAO and Spirits for value without notice does nothing to avail VAO-SPI. However, the allegation does work in the case of ZAO and Spirits who are not afflicted with this difficulty since there is no allegation that either of these entities were party to the fraud or false suggestion.
178 Further, if it is the misrepresentation case which has succeeded then necessarily VAO-SPI will not have known (although it should have known) that it did not own the trade marks (see §§24A and 35A of the Cross-Claim). In that circumstance, I do not see how the fact that Mr Shefler and Mr Oliynik were officers of both VAO-SPI and Spirits from 1996 assists. In any event, §2A of the Cross-Claim is not admitted and I do not see how I can treat it as a fact in a pleading dispute.
179 For completeness, no submission was made by FKP that the fact that VAO-SPI ought to have known that it did not own the trade marks meant that the bona fide purchaser for value without notice contention could not succeed.
The reference to §64
180 This paragraph alleges an assignment of some of the marks by VAO-SPI on 4 October 1996, 8 November 1996 and 12 August 1997 to Diageo. I do not understand how this paragraph fits in with the rest of the defence. To take the example of the Stolichnaya Label Mark, it is alleged in §63(a) that on 31 March 1998 VAO-SPI assigned this to ZAO which on 12 April 1999 assigned it to Spirits subject to a distribution agreement with Diageo. Yet at §64(a) it is alleged that VAO-SPI assigned the same mark to Diageo on 4 October 1996 without any allegation that the mark was assigned back to VAO-SPI in time for it to be assigned, as alleged in §63(a), to ZAO on 31 March 1998. In short, I am unable to understand what §64 does. No party sought to elucidate this matter. Since I do not understand what §64 is driving at I am unable to see how it can advance §67.
Conclusions on §67
181 All of the first particular should be struck out but Spirits should have leave to amend the particular by relying on the matters pleaded in the laches defence in §66. The second particular should be struck out. The references to §61 and §64 of the third particular should be struck out.
The application to amend §67
182 Spirits seeks to amend §67 as follows:
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 6766 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 656(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 generally and further or in the alternative to VAO-SPI, ZAO and the Cross-Respondent during the period 1992 to 2000.
The Cross-Respondent refers to the Government of the Russian Federation’s knowledge and motivations in bringing and maintaining these proceedings through the Cross-Claimants, including as to the benefit or windfall that would be obtained from VAO-SPI, ZAO and Cross-Respondent having used, authorised the use of and registered the trade marks referred to in sub-paragraphs 65(b) and (c) above in Australia and throughout the world.
The Cross-Respondent also refers to the matters pleaded and particularised in paragraphs 61 to, 62, 63, 64 and 65 66 of this Defence. The Cross-Respondent relies on the allegations and particulars in each sub-paragraph of those paragraphs, irrespective of whether all of the allegations in each paragraph are made out.
Further particulars may be provided following discovery.
183 As I have indicated I would permit the first particular to the extent that it refers to §66 but not otherwise.
184 The proposed amendments to the second particular do not solve the problem I have identified with it in its unamended form and leave to amend should be refused.
185 In relation to the new third particular, I have already explained that I would not permit amendments to raise the knowledge and motivations of the Russian Federation.
186 In relation to the fourth particular (which is an amended version of what was the third particular) I have indicated that I would only permit Spirits to rely on §§62, 63 and 65. I would permit the addition of the words ‘and particularised’ since this amendment simply reflects what is the case anyway. In relation to the proposed second sentence I see no prejudice to FKP in allowing this amendment.
187 Spirits does not seek in relation to the reference to §65 in the fourth particular the amendment it sought in relation to §65(a) in the second particular; namely, the addition of words which allege that the representations in the estoppel case were made both generally and to VAO-SPI, ZAO and Spirits in particular.
The application to add the definition of the Government of the Russian Federation
188 At present, Spirits has not defined in the Defence the expression ‘the Government of the Russian Federation’ but now seeks to do so as follows:
For the purposes of this Defence, “Government of the Russian Federation” includes the ministries, agencies, officials and bodies:
(a) referred to in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802 at [15]-[16];
(b) referred to in the affidavit of Mikhail Tsyplaov, sworn 28 February 2006 at [30]-[31];
(c) identified as the author(s) or recipient(s) of the documents referred to in the affidavit of Alexey Victorovick Oliynik affirmed 1 December 2015 at [68]-[71], [84(a)-(h)], [85(a)-(f)], [86]-[89], [90(a)-(uu)] and [91(a)-(l)] and [92]-[105] (other than VAO and VZAO); and
(d) referred to in the particulars to [65] and [66] of this Defence.
189 Since the definition has been at large until now, this amendment merely ties Spirits to what was otherwise a rather amorphous concept. FKP submitted that the amendment should not be permitted because the list was large. I accept that the list is large but that is to be expected with something as large as the Government of the Russian Federation. In any event, FKP is better off knowing what it is that Spirits alleges the Government of the Russian Federation is in advance of the trial. I therefore do not see anything prejudicial about the amendment. I reject FKP’s submission that the amendment should be rejected on the basis that Spirits has not identified how the conduct of these entities was to be attributed to the Russian Federation. That is a trial point, not a pleading point.
Result
190 The parties should bring in a short minute of order to give effect to these conclusions. Each party should bear its own costs.
I certify that the preceding one hundred and ninety (190) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram. |
Associate:
