Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV

Counsel for the Respondent: Mr M Darke SC and Mr D Larish

Solicitor for the Respondent: King & Wood Mallesons

BETWEEN: FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT First Applicant

FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO) Second Applicant

AND: SPIRITS INTERNATIONAL BV (REGISTERED IN NETHERLANDS ANTILLES) COMPANY NO. 27178367 Respondent

order made by: MARKOVIC, ROFE AND JACKMAN JJ DATE OF ORDER: 21 November 2024

1. The application for leave to appeal dated 1 May 2024 is dismissed.
2. The applicants are to pay the respondent's costs of the application for extension of time and leave to appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 I agree with the reasons given by his Honour, Jackman J, and with the orders his Honour proposes. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Markovic .

ROFE J: 2 I also agree with the reasons of Jackman J and the orders proposed by him. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Rofe.

Introduction 3 This is an application for leave to appeal from the decision of the primary judge in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2024] FCA 223. In the interests of efficiency, I will not set out the salient background, the pleadings and proposed pleadings, the arguments of the parties before the primary judge or the reasoning of the primary judge. Rather, I will assume that the reader has read the reasons of the primary judge and I will proceed directly to a consideration of the proposed grounds of appeal for the purposes of assessing whether there is sufficient merit in those grounds to justify the grant of leave to appeal. I adopt the abbreviations and defined terms used by the primary judge. I note that an application for an extension of time to file the application for leave to appeal was granted by Markovic J on 6 August 2024 without opposition. 4 At the outset, it should be noted that the primary judge was concerned only with matters of pleading, and not with any question of summary judgment or summary dismissal, as the primary judge stated at [11], [14], [15] and elsewhere. 5 It is well-established that generally an applicant for leave to appeal must show that the decision to be appealed is attended with sufficient doubt to warrant its reconsideration on appeal and, if that decision is wrong, substantial injustice would result if leave were refused: Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; (1991) 33 FCR 397 at 398-9 (Sheppard, Burchett and Heerey JJ). There is a general reluctance to grant leave on matters of practice and procedure: see Nationwide News Pty Ltd v Rush [2018] FCAFC 70 at [4] (Lee J, with whom Allsop CJ and Rares J agreed). There was some debate before us as to whether the appropriate standard for appellate review is that laid down in House v The King (1936) 55 CLR 499 at 504-5 in light of the reasoning of Basten AJA (with whom Ward P agreed) in The Owners-Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301; (2023) 113 NSWLR 105 at [22]-[23]. However, as the submissions by FKP were directed to alleged errors of law, it would make no material difference whether the standard under House v The King, rather than the correctness standard under Warren v Coombes (1979) 142 CLR 531, were applied. I note that the hearing of the leave application before us was conducted concurrently with full argument on the appeal itself, on the assumption that leave to appeal may be granted.

Proposed Ground 1: The nature of the estoppel pleading in para 65 of the Defence 6 Ground 1 is directed to the original pleading of para 65 of the Defence and contends that the primary judge erred at [28], [31] and [33] in finding that Spirits sought to raise a defence of estoppel by representation in circumstances where the estoppel defences raised by Spirits were "estoppel by conduct" and "equitable promissory estoppel", and the matter had proceeded by then (including in submissions by Spirits) on the basis that the estoppel defences raised by Spirits were "estoppel by conduct" and "equitable promissory estoppel". 7 The representations pleaded in the original para 65 of Spirits' Defence concerned past events or present states of affairs, but not matters pertaining to the future. 8 The primary judge said at [28]-[29] that para 65 of the original Defence was a pleading of estoppel by representation, citing the elements of an estoppel by representation as expressed by the Hon Patrick Keane KC in Estoppel by Conduct and Election (3rd edition, 2016) at [1-006], and pointing out that the identical statement in the second edition of that text by the Hon 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] (Sackville AJA, with whom Beazley P and Barrett AJA agreed). The primary judge also said that the first of those elements referred to a representation as to facts, but that a statement of mixed fact and law is a statement of fact, citing ample authority for that proposition at [30]. In my view the primary judge was correct in treating para 65 of the original Defence as a pleading of estoppel by representation for those reasons. 9 In any event, in light of the next two pairs of proposed grounds of appeal, it is difficult to see that any point of practical significance turns on this issue of classification, in that FKP's contentions fail irrespective of whether the pleaded estoppel is treated as estoppel by representation or promissory estoppel. Further, as I have indicated above, the dispute relates only to questions of pleading. Rule 16.02(1)(d) of the Federal Court Rules 2011 (Cth) requires that a pleading must state the material facts. While r 16.02(3) provides that a pleading may raise a point of law, that is clearly permissive rather than mandatory. Paragraph 65 of the original Defence does state the material facts, and it was neither necessary nor desirable for it to have identified the particular legal categorisation of the estoppel which it asserted.

Proposed Grounds 2 and 4: Was it necessary for the estoppel defence as originally pleaded in para 65 to identify a pre-existing or postulated relationship between the parties? 10 Ground 2 contends that the primary judge erred at [31], [32] and [33] in finding in relation to the defence advanced at para 65 of the original Defence that it was not necessary to identify a pre-existing or postulated relationship between the parties, and that the paragraph should have been struck out in circumstances where it failed to identify such a relationship between the parties. 11 FKP submits that the pleading of para 65 in the original Defence is defective because it does not allege that the representations were made "to Spirits", and Spirits was not alleged to be in a legal relationship with, or sufficiently proximate in law to, the alleged representor (being FKP or the Government of the Russian Federation (GRF)), relying on statements of Dixon J in Thompson v Palmer (1933) 49 CLR 507 at 545-7 (a case of a direct representation) and Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 414-5. 12 However, Spirits submits, and I accept, that there is no requirement for a pleading of an estoppel by representation to identify a pre-existing or postulated relationship. The elements of an estoppel by representation as set out by the Hon Patrick Keane KC in Estoppel by Conduct and Election, and as approved by the New South Wales Court of Appeal in Carbone, which were set out by the primary judge at [28]-[29], do not mandate any pre-existing or postulated relationship between the parties. On the contrary, as Spirits submits, one of the recognised main categories of representee entitled to the benefit of an estoppel is a member of the public. As the primary judge said at [41], a communication made generally may be made to any member of the public who receives it: 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; (2008) 21 VR 351 at [200], [203]-[204] (Buchanan, Nettle and Dodds-Streeton JJA). While the facts in Argot concerned an equitable estoppel, the passages of Argot to which the primary judge referred on this point are not confined to that form of estoppel, but indicate that as a matter of general principle members of the public (or of a class of the public) who are as yet unidentified may be representees or promisees for the purposes of an estoppel. The same conclusion was reached by McLelland J in relation to an estoppel by representation concerning a matter of mixed fact and law in Comalco Aluminium Ltd v Ohtsu Tyre & Rubber Company (Aust) Pty Ltd (1983) 8 ACLR 330 at 332. See generally the Hon Patrick Keane KC, Estoppel by Conduct and Election at [6-002], especially the cases cited in footnote 13. 13 FKP also submits that para 65 of the original Defence can only sensibly be interpreted as asserting derivative reliance through a chain of title comprising three links spanning almost a decade. Spirits submits, and I accept, that this is a mischaracterisation of the pleading. Sub-paragraph 65(a) pleads that the representations were made continuously from 1992 to 2000, and sub-paras 65(b) and (c) plead that Spirits itself acted in reliance on the representations. The Defence pleads that Spirits acquired title to the trade marks during that period, namely in April 1999. Accordingly, the pleading alleges direct reliance by Spirits on representations made by the GRF.

Proposed Grounds 3 and 8: Was it necessary for the defence of equitable promissory estoppel in para 65 to identify a pre-existing or postulated legal relationship between the parties? 14 The primary judge referred to aspects of the proposed new para 65 as introducing a pleading of promissory estoppel based on representations about how the GRF would behave in the future: [51]. Ground 8 contends that the primary judge erred at [51] in finding in relation to those elements of the proposed amended defence in para 65 that it was not necessary to identify a pre-existing or postulated relationship between the parties. Ground 3 makes a similar contention concerning the primary judge's reasoning as to the original defence in para 65, but, as I have indicated above, the primary judge treated the original para 65 as raising estoppel by representation rather than equitable promissory estoppel. 15 There is certainly ample authority (to which FKP referred in footnote 19 of its written submissions) for the proposition that promissory estoppel operates as a restraint on the enforcement of rights, and may be contrasted in that respect with proprietary estoppel which can provide the source of a positive obligation: Saleh v Romanous [2010] NSWCA 274; (2010) 79 NSWLR 453 at [73]-[74] (Handley AJA, with whom Giles JA and Sackville AJA agreed); DHJPM Pty Ltd v Blackthorn Resources Limited [2011] NSWCA 348; (2011) 83 NSWLR 728 at [93] (Handley AJA); Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 295 at [26] (Meagher JA, with whom Basten JA and Bergin CJ in Eq agreed); Van Dyke v Sidhu [2013] NSWCA 198; (2013) 301 ALR 769 at [39] (Barrett JA, with whom Basten JA and Tobias AJA agreed); Ashton v Pratt [2015] NSWCA 12; (2015) 88 NSWLR 281 at [138] (Bathurst CJ, with whom McColl JA agreed). However, those authorities do not say that there must be an existing (or expected) legal relationship between the parties for a promissory estoppel to be established. As Ward P said in Slade v Brose [2024] NSWCA 197 at [201] (with the agreement of White and Stern JJA), it is not necessary for a plaintiff alleging an equitable estoppel to show that he or she assumed or expected that a particular legal relationship existed or would exist. Although Slade v Brose was a case concerning proprietary estoppel, Ward P's reasoning at [201] was expressed to apply generally to the doctrines of equitable estoppel, of which proprietary estoppel is one (see [199]), and promissory estoppel is another. See to similar effect the reasoning of Gleeson JA (with whom Beazley P and Leeming JA agreed) in Doueihi v Construction Technologies Australia Pty Ltd [2016] NSWCA 105; (2016) 92 NSWLR 247 at [153]-[170] in relation to equitable estoppel in general and proprietary estoppel in particular. 16 It may be thought that the supposed requirement of a pre-existing or postulated legal relationship between the parties in order for a promissory estoppel to arise is supported by the first of the six elements of equitable estoppel identified by Brennan J in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428-9, namely that "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". However, as the primary judge correctly said at [33], the reasons of Brennan J also show (at 420) that 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. The primary judge correctly said that para 65 of Spirits' defence falls within that principle (at [33]), as do the proposed new elements of the amended para 65 (at [51]). In any event, the six elements identified by Brennan J in Waltons are not to be applied in a mechanical fashion in every case: Slade v Brose at [200]. Further, the broader view reflected in the judgment of Mason CJ and Wilson J in Waltons Stores has subsequently prevailed: Slade v Brose at [201].

Proposed Grounds 5 and 9: Should the estoppel defence be permitted in the face of evidence that Spirits knew the allegations were false? 17 By Grounds 5 and 9, FKP seeks to rely on evidence that Spirits knew that the allegations in para 65 of the Defence (both in its original form and its proposed amended form) were false. 18 As the primary judge said at [25], FKP accepted in argument before the primary judge that such evidence was not relevant to a pleading debate. Accordingly, the primary judge said that it was not necessary to deal with the point as it did not bear on any of the pleading issues: [25]. That is in itself sufficient to dispose of these grounds. Moreover, that concession by FKP was well made. A strike-out application does not permit consideration of facts or evidence outside the pleadings, and the truth of the pleaded allegations is assumed: Imobilari Pty Ltd v Opes Prime Stockbroking Limited [2008] FCA 1920; (2008) 252 ALR 41 at [3]-[6] (Finkelstein J), citing Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 and 109, and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. To the extent that the primary judge did consider this evidentiary material at [70], his Honour clearly and correctly said that this is a matter for the trial (which I read as intended to refer to the "sudden death summary judgment" hearing referred to at [8]). 19 FKP advances a further argument (which does not appear to fall within the terms of Grounds 5 and 9) to the effect that Spirits' Defence involves an inconsistency which has not been pleaded in the alternative as required by r 16.06, namely: (a) paras 4, 62 and 63 of the Defence contend that Spirits has a good chain of title in the trade marks because the assets of VVO vested in VAO-SPI and subsequently in ZAO, Diageo and Spirits; whereas (b) para 65 of the Defence contends that the chain of title is a bad chain by reason of what is said to be an allegation in para 65 that the representations were false. However, para 65(e) alleges only that the allegations made by FKP are contrary to the representations such that FKP is estopped from making those allegations, not that the representations were false. Accordingly, the claimed inconsistency on the pleadings does not arise.

Proposed Grounds 6 and 10: In relation to the laches defence did the original and proposed amended Defence allege that since 1992 FKP knew that VAO-SPI or Spirits was not the successor to VVO and not the owner of the trade marks? 20 FKP accepts that in para 66 of the original Defence and amended Defence Spirits alleges that FKP and GRF knew that (i) VAO-SPI held itself out as the successor of VVO; (ii) VAO-SPI and its successors have held themselves out as owners of the relevant trade marks; and (iii) VAO-SPI, ZAO and Spirits have each used and registered the relevant trade marks. However, FKP contends that Spirits has failed to plead that FKP and GRF knew since 1992 that VAO-SPI was not the owner of the trade marks. 21 The primary judge dealt with this issue principally at [96]-[97], referring to the use by Spirits of the terms "knowledge" and "acquiescence". The primary judge accepted the submission by Spirits that the word "acquiescence" implies not only that the GRF knew that VAO-SPI had been holding itself out as the successor to VVO but that the GRF knew that this was not the case. The primary judge thus accepted that Spirits had alleged that the GRF knew from 1992 that VAO-SPI did not own the trade marks. 22 There is ample basis for the proposition that the use of the word "acquiescence" in the context of the laches defence conveys that the GRF knew that it could have challenged the holding out by VAO-SPI as the legal successor to VVO, but did not do so, that being consistent with how the word "acquiescence" is understood in the authorities in the context of a laches defence: Orr v Ford (1989) 167 CLR 316 at 337-8 (Deane J); Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at [27] (French CJ), and [133], [134] and [138] (third meaning) (Heydon and Crennan JJ). Accordingly, in my view, the use of the word "acquiescence" in para 66 sufficiently alleges knowledge on the part of the GRF of an entitlement to challenge the holding out by VAO-SPI of itself as the legal successor to VVO.

Proposed Grounds 7 and 11: Is actual knowledge of the wrong by the claimant necessary for a laches defence? 23 In light of the view which I have formed in relation to Grounds 6 and 10, this question does not arise. However, I agree with the reasoning of the primary judge at [101]-[103] that ordinarily (but not invariably) there must be knowledge of the facts giving rise to the remedy to constitute a defence of laches, but that the kind of knowledge which is necessary is that which would make it inequitable for the plaintiff now to assert the claim, and it depends on the facts of the particular case as to the level of knowledge which might give rise to inequity. A similar point was made by Young JA (with whom Allsop P and Macfarlan JA agreed) in Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at [180]. As FKP submits, in Twigg v Twigg [2022] NSWCA 68; (2022) 402 ALR 119 at [86], Brereton JA (with whom Bell CJ and Payne JA agreed) said that for laches to bar an equitable claim, the plaintiff must first possess sufficient knowledge of the facts constituting the title to relief. The use of the adjective "sufficient" leaves open the requisite degree of knowledge, which in my view is to be determined in the circumstances of the particular case. The reasoning of the primary judge is consistent with the principle that the ultimate question on a laches defence is whether it would be practically unjust to give a remedy based on the circumstances, including the lapse of time and delay since the wrong: Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 at 239-40 (Lord Selborne); Fysh v Page (1956) 96 CLR 233 at 243-4 (Dixon CJ, Webb and Kitto JJ); Orr v Ford at 341 (Deane J). Accordingly, I do not regard it as necessary for a laches defence to plead knowledge on the part of the plaintiff of the facts giving rise to the wrong. In any event, as I have indicated in relation to Grounds 6 and 10, I regard the pleading as having sufficiently alleged such knowledge by way of the allegation of "acquiescence".

Conclusion 24 For the reasons given above, in my view there are insufficient prospects of success on appeal to warrant the grant of leave to appeal. Further, it is difficult to see how substantial injustice would result from a refusal to give leave. This is no more than a dispute about pleadings which are expressed with sufficient clarity for FKP to know the case which is sought to be made in defence of FKP's allegations. 25 Finally, I would like to acknowledge the gift for laconic understatement displayed by the member of FKP's legal team who composed the following entry in their chronology: 1990 to 1992 A time of significant political, economic and legislative change for Russia

26 Accordingly, in my view the following orders should be made: (1) The application for leave to appeal dated 1 May 2024 be dismissed. (2) The applicants pay the respondent's costs of the application for extension of time and leave to appeal. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.