REASONS FOR JUDGMENT
JACOBSON AND JESSUP JJ
1 This is an application for leave to appeal from a judgment of a single Judge of the Court given on 15 February 2013, in which his Honour refused leave for the cross-respondent, Spirits International B.V., to file a rejoinder to the reply of the cross-claimants, Federal Treasury Enterprise (FKP) Sojuzplodoimport and Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP VO), to the cross-respondent's defence.
2 A convenient, and uncontroversial, summary of the circumstances which led to the application before the primary Judge may be taken from the opening three paragraphs of the cross-respondent's outline of submissions on the application for leave:
1. These proceedings comprise a major piece of commercial litigation relating to the ownership of the famous STOLICHNAYA trade marks in relation to vodka. Spirits International BV ("Spirits") is the registered owner of those trade marks. FKP and FGUP (collectively, "FKP"), which are each emanations of the Russian Government, seek to cancel Spirits' registration of those trade marks and obtain registration of them in the name of FKP.
2. The primary allegation made by FKP in the proceedings is that Spirits is not the true owner of the trade marks because one of Spirit's [sic] predecessors in title, OAO Plodovaya Kompaniya ("OAO", formerly known as VAO-SPI), is not the true corporate successor of the Russian company VVO Sojuzplodoimport ("Sojuzplodoimport") which previously held the STOLICHNAYA trade marks. The allegation is related to events which occurred upon the dissolution of the USSR in the early 1990s and the consequent privatisation of State assets.
3. Spirits has denied that allegation. In reply to that denial, FKP has pleaded that there is an issue estoppel arising from a decision of the Presidium of the Supreme Arbitrazh Court of the Russian Federation given on 16 October 2001 ("Presidium Judgment") which precludes Spirits from making that denial. By way of rejoinder to that reply, Spirits wishes to contend that the Presidium Judgment should not be recognized in Australia. The basis for Spirits' contention is that the Russian Judgment [sic] was given in proceedings which involved a breach of the rules of natural justice namely that, at the time the Russian Judgment [sic] was issued, the Presidium was biased and was not impartial, and further and in the alternative, that there was a reasonable cause for a fair minded observer to apprehend that the Presidium may not bring an impartial mind to the resolution of the questions. Bias may be particular or institutional, as is recognised in a number of recent English decisions in the context of the Russian judicial system (see further below) (Footnote omitted).
3 At least relevantly to the present application for leave, paras 3, 4 and 5 lay at the core of the proposed rejoinder which the cross-claimants sought to file. The primary Judge set out those paragraphs in his reasons, and we do so below:
5 …
3 In further rejoinder to paragraphs 7A(a) to 7A(c) of the Reply, the Cross-respondent says that for the reasons pleaded in paragraph 4 below, the Presidium Decision does not have any force in, and ought not be recognised in, Australia because the Presidium Decision was given in proceedings which involved a violation of the rules of natural justice under the common law of Australia.
4 At the time at which the Presidium Decision was issued, and during the hearing of those proceedings before the Presidium, the Presidium was biased and not impartial, and further and in the alternative, there was reasonable cause for a fair minded lay observer to apprehend that the Presidium might not bring an impartial mind to the resolution of the questions arising in those proceedings.
Particulars
(i) The Cross-respondent relies upon the matters set out in, and the documents referred to in, the expert report of Professor William Bowring, Exhibit WB-3 to the affidavit of Professor Bowring sworn on 2 April 2012 and filed in this proceeding.
(ii) The Cross-respondent relies upon the matters set out in, and the documents referred to in, paragraphs 150 to 164 of the report of the expert opinion of Professor Michael Newcity filed in Case Number 214864, Civil Court of the Hague, which matters and documents will be the subject of further expert evidence in these proceedings.
(iii) The Cross-respondent relies upon the matters set out in, and the documents referred to in, paragraphs 458 to 513 of the expert report of Professor Richard Sakwa, dated 19 October 2009 and filed in Government of the Russian Federation v Yuri V Shefler, City of Westminster Magistrates' Court, which matters and documents will be the subject of further expert evidence in these proceedings.
5 In further rejoinder to paragraphs 7A(a) to 7A(c) of the Reply, the Cross-respondent says that the Presidium Decision does not have any force in, and ought not to be recognised in, Australia because recognition of the Presidium Decision in Australia would be contrary to public policy in Australia.
Particulars
(i) The Presidium Decision was issued as the result of the procedure of procuratorial protest and supervision initiated by the Deputy Prosecutor General (also known as the Deputy Procurator General, but hereafter referred to as the Deputy Prosecutor General).
(ii) The procedure of procuratorial protest and supervision is a proceeding available to the Deputy Prosecutor General, a party to the decision being protested against, but was unavailable to any private litigant such as [OAO Plodovaya Kompaniya].
(iii) The procedure of procuratorial protest is an unfair procedure which enshrines an institutional inequality between the Deputy Prosecutor General (being a government official) as litigant and a private citizen as litigant.
(iv) Australian public policy requires equality of procedural rights, including appellate rights, between a government official and a private citizen as litigants.
(v) The procedure of procuratorial protest and supervision is a procedure which has been held by the European Court of Human Rights to violate the right to "a fair hearing by an independent and impartial tribunal established by law" in Article 6 of the European Convention on Human Rights in cases involving a civil right.
(vi) The fundamental unfairness of the procedure of procuratorial protest and supervision as recognised in (v) above ought to inform the public policy of Australia in refusing to recognise the decision, whether or not the decision involves a civil right within the meaning of Article 6 of the European Convention on Human Rights.
4 Having set out the positions advanced by the parties, the primary Judge dealt with the above paragraphs of the proposed rejoinder in the following terms:
Paragraphs 3 and 4 of the Draft Rejoinder
62 As noted in [9] above, para 3 of the draft rejoinder does not stand on its own; it is "hinged" to the pleading in para 4. Apart from the bare pleading of bias on the part of the Presidium or, in the alternative, apprehension of bias on the part of the Presidium by a fair minded lay observer, no fact or circumstance going to the conduct of the Presidium, either during the hearing or in the process of reasoning it embraced in the course of reaching its decision, is relied on in support of the bare pleading. The bare pleading relies solely on evidentiary material of doubtful relevance and admissibility, namely, the three expert reports, none of which have anything to say about the instant case. The fact that the order made by the Presidium in the litigation involving OAO Plodovaya Kompaniya was signed by Mr Yakovlev, being the judge who also signed the judgment in Films by Jove (see [17] above), does nothing to support or advance Spirits' case.
63 In consequence, the pleadings in paras 3 and 4 have to be evaluated and assessed as bare pleadings without any relevant particularisation; as such they would be liable to be struck out on one, or both, of two bases: they have no reasonable prospects of success; additionally, they do not convey to FKP the case it has to meet at trial.
64 The need for the Court to efficiently and vigilantly case manage the proceeding going forward, particularly in consequence of the orders made on 26 November 2010 in Federal Treasury Enterprise (FKP [sic] Sojuzplodoimport v Spirits International BV [2010] FCA 1293, upheld on appeal [2011] FCAFC 69, and having regard to the number of years the cross-claim has already been on foot, impels the conclusion that leave for Spirits to rely on paras 3 and 4 of the draft rejoinder should be refused.
Paragraph 5 of the Draft Rejoinder
65 Leave to rely on this pleading was effectively refused in [Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 2) [2012] FCA 23], albeit on different grounds. It should again be refused. It not only has no reasonable prospect of success; in my view, it has no prospect of success. The fact that the Presidium Decision emanated from an appeal brought by or on behalf of the State in circumstances where the other party in similar circumstances, would have had no right of appeal, while it may be viewed as unfair, has nothing to do with inconsistency with public policy in Australia.
5 By reference to the draft notice of appeal upon which the cross-respondent presently relies, it may be seen that challenges are proposed to be made in relation to paras 62-64 of the primary Judge's reasons, as set out above. Neither in those draft grounds nor in the cross-respondent's submissions made on the application for leave is any attempt made to place in dispute the correctness of what his Honour said in para 65. With respect to paras 3 and 4 of the proposed rejoinder as such, para 4 is essential and, as noted by his Honour, provides a point of reference for the allegations in para 3. It is, therefore, substantially with the correctness of his Honour's rejection of para 4 that our consideration of the present application for leave should, at least in the first instance, be concerned.
6 When we sat to hear the application for leave to appeal, we made it clear to counsel for the cross-respondent that we had significant concerns with the form of the particulars to para 4 of the proposed rejoinder. A pleading should set out the material facts upon which the relevant party intends to rely. Paragraph 4 as such is no more than a high-level invocation, in relation to the Presidium, of the relevant jurisprudential principle as recognised under Australian law. Standing alone, such an allegation would never be sufficient, and would have to be particularised. It would, therefore, always be in the particulars that a reader of the rejoinder would expect to find the facts relied on, relevantly to the point, by the cross-respondent. Notwithstanding their importance in the circumstances, the particulars, in the form placed before the primary Judge, were wholly inadequate to perform the function to which we have referred. They did not identify the facts upon which the cross-respondent would rely. It is not, in our view, good enough for a pleader to send the reader off to expert reports, or even to sections of expert reports, and to leave it to him or her to join the dots. While some leeway may be allowed, in the discretion of the judge before whom the question comes, as to the way in which facts are particularised, in the present case the pleading itself (ie para 4 of the proposed rejoinder) contained a very serious allegation, and constituted, in effect, the cross-respondent's defence to the cross-claimants' plea of estoppel. In our view, what were presented as particulars to para 4 were not particulars at all, and the primary Judge was entirely within his rights to have rejected them.
7 After we had indicated to counsel for the cross-respondent that we had the concerns referred to above about the particulars to para 4, counsel took the opportunity of an overnight adjournment to withdraw those particulars, and to replace them with more conventionally expressed particulars, in the terms set out in the schedule to these reasons. From that point, the question upon which we heard argument was whether leave should be granted to file the proposed rejoinder as so amended. If that question is to be answered in the affirmative, we do not understand it to be suggested on behalf of the cross-claimants that the application for leave should not be granted or that the appeal should not be allowed. We should take the present opportunity, however, to make it clear that the cross-respondent has not succeeded in its project of demonstrating that the primary Judge was in error to have refused leave to file the rejoinder in the form in which it was placed before him.
8 On one view, it would not be appropriate for a Full Court, having found no error in the decision of the primary Judge, to consider for itself the question whether an alternative form of the pleading concerned should have the benefit of the leave sought. However, the cross-claimants do not resist the suggestion that we should proceed in this way, and there are obvious advantages in our doing so.
9 Paragraph 4 of the proposed rejoinder would make two quite distinct allegations, namely, an allegation of actual bias and an allegation of apprehended bias. Those allegations would be related by the conjunctive phrase "further and in the alternative". That would not, in our view, be a satisfactory way of making these distinct allegations. In Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427, 437-438 [33], Gummow ACJ and Hayne, Crennan and Bell JJ said:
Because the test is objective it is important to keep an inquiry about apprehension of bias distinct from any inquiry about actual bias. An inquiry about actual bias in the form of prejudgment would require assessment of the state of mind of the judge in question. No doubt that would have to be done, at least for the most part, on the basis of what the judge had said and done. But to allow an inquiry about whether the judge had in fact prejudged some issue to enter into a debate about what a fair-minded lay observer might apprehend is to introduce considerations that are irrelevant to the issue that is to be decided when a party submits that there is or was a reasonable apprehension of bias. …
A pleading which relied upon a collection of undifferentiated facts as the basis for an allegation that there had been actual bias or, in the alternative, apprehended bias would be likely to cause prejudice and embarrassment within the meaning of r 16.21(1)(d) of the Federal Court Rules 2011 and should not be permitted.
10 In the present case, as noted above, para 4 of the proposed rejoinder proceeds at a very high level, and could not be defended in the absence of particulars. No complaint was made about that circumstance as such, since particulars have been provided. To a large extent, the debate was concerned with the adequacy of those particulars. That raises an issue in itself, of course, but for the moment we are concerned with the sufficiency of the particulars in a more limited sense, namely, whether they conform with the requirement to maintain a separation as between allegations of actual and apprehended bias.
11 The maintenance of such a separation is not, of course, necessarily inconsistent with the pleader having recourse to a single particular to support allegations both of actual and of apprehended bias. In a case in which both kinds of allegations are made, there may be an area of overlap. To support an allegation of apprehended bias, the facts relied on must be such as would, objectively, justify a conclusion as to what the fair-minded lay observer might reasonably apprehend (Michael Wilson, 244 CLR at 437 [31]). To succeed on a case of actual bias, the plaintiff must show that the decision-maker was actually - ie subjectively - biased in favour of a particular outcome. Almost inevitably, that will involve a conclusion based on inference. The drawing of inferences is itself an objective exercise, notwithstanding that the matter being inferred might be the actual thoughts, motives or predeterminations of a particular mind. Thus there might well be a number of objective facts, in the case in question, which would have the potential both to justify a conclusion as to what the fair minded lay observer might reasonably apprehend and to support an inference as to actual bias in the mind of the decision-maker.
12 The present is such a case. As is apparent from the break-up given in paras 31 and 32 of the particulars to para 4 of the proposed rejoinder (as amended), of the 30 remaining paragraphs, 27 (ie 1 - 28 except 5) are employed in both arms of the cross-respondent's case. Paragraph 5 is employed only in the apprehended bias case, while paras 29 and 30 are employed only in the actual bias case. As we have indicated, conceptually, there is no objection to such an approach, it being clear to which arm or arms of the case each paragraph of the particulars relates. However, the question remains whether leave to file the rejoinder should be given with respect to either, or both, of those arms.
13 We commence with the proposed case on actual bias. An allegation of the kind proposed is a very serious one. It is, surely, about as serious an allegation as any that could be made against a judicial officer. We would associate ourselves with what was said on this subject by Cole JA in the unreported judgment of the New South Wales Court of Appeal, given on 7 April 1995, in Ramadan v New South Wales Insurance Ministerial Corporation, namely, that a finding of actual bias "involves a finding of judicial impropriety, and probably of judicial misconduct. It involves a finding of breach of the judicial oath." Making a distinction between apprehended bias and actual bias, his Honour also said:
Actual bias, in those circumstances, would involve a finding that the judicial officer did not attend properly to the evidence, but rather reached a decision determined by reference to previously expressed views. It involves a finding that the judicial officer was in fact unable to, and did not, comply with his judicial obligations.
Although ultimately a conclusion by way of inference may be involved, the facts upon which the Court will be invited to draw such an inference must, we would hold, be set out with particulars no less fulsome than would be required to support an allegation of fraud. Do the particulars contained in para 4 of the proposed rejoinder satisfy this requirement?
14 The opening paragraphs of the particulars are concerned with institutional circumstances and what is said to have been a tendency for the Russian executive to exert influence over the functioning of the judiciary, including in relation to individual cases, where the "economic, commercial or strategic interests" of the state were "in play"; and with the institutional dependence of the judiciary upon the executive. The particulars then move to the trade marks which were of importance in the proceedings in Russia upon which the cross-claimants rely: they were a matter of great commercial importance to the government, which thereby had a real interest in those proceedings. In argument before the Full Court in the present case, counsel for the cross-respondent placed special emphasis upon para 13(d) of the particulars, which concerned an order, or command, by the Russian President that steps be taken for the restoration and protection of the State's intellectual property rights in relation to vodka. Paragraphs 19 and 20 were connected to this, as it is said that the President's order was referred to in the document which initiated the appellate proceedings in the Arbitrazh Court about which the cross-respondent complains.
15 The particulars then deal with the circumstances of a different, but (it was said) related, case: that involving a copyright dispute between an American company and a Russian government agency (paras 23-25). At a consultation meeting of those representing Russian interests in that dispute, one of those present was a representative (not a judge, we would stress) of the Arbitrazh Court. He made the communication set out in para 23(c)(iv) of the proposed particulars to a judge of that court, and did so under a heading which referenced the case number of an appeal, then standing in the list of the Court, which related to the copyright dispute. The communication was placed on the court file. The appeal was, on 18 December 2001, decided favourably to the Russian agency. The presiding member of the Presidium in that appeal was Mr Yakovlev, who was also the presiding member on the appeal which led to the decision, published on 16 October 2001, upon which the cross-claimants rely in the present case.
16 Finally, the particulars refer (in paras 28-29) to a communication, made ten days after the publication of that decision, from a Minister of the State to the effect that the work of the General Director of Rospatent "had already achieved positive results". If the particulars stand, the cross-respondent will invite the Court to infer that this was a reference to the result of the case in the Presidium which involved the vodka trade marks.
17 Broadly, then, the particulars set up the following case of actual bias: the institutional setting was one in which executive interference in the work of the judiciary was commonplace in cases of, for example, commercial interest to the State; the judiciary was, in relation to such things as remuneration, promotion and provision of material benefits, dependent upon the executive; the subject-matter of the case was of considerable commercial value to the State; the President of Russia had issued an order for the protection of intellectual property rights; that order was referred to in what we would call a notice of appeal; the Arbitrazh Court had been represented at what was otherwise a meeting of executive agencies to discuss the copyright dispute and had a memorandum on file in that regard; that occurred in about the same time frame as the making of the decision in the case presently of interest; the same Judge presided in the two cases; and, after the decision in the case presently of interest, the relevant Minister of the State expressed his satisfaction with the outcome.
18 Of the facts referred to, only one relates directly to the proceeding in which the decision on which the cross-claimants rely was made: the inclusion in the notice of appeal of a reference to the President's order, or command, of 13 March 2000. Since the appeal was brought in the interests of, and with the authority of, the State, that circumstance is both unsurprising and quite benign. Nothing as to the state of mind of the members of the Presidium could possibly be inferred from it, either as such or as a contributory to a more general inferential case. And neither, in our view, is any such more general case open on the other facts and matters sought to be relied on in the proposed particulars. They say nothing about the members of the Presidium who decided the case in question (save, perhaps, for the circumstance that the same judge presided on that case and on the copyright case referred to, reliance on which would, in our view, involve the drawing of a very long bow) and nothing about the immediate circumstances surrounding the hearing of the case or the decision in it.
19 We accept that, in civil litigation, a pleader who sets up a factual case by inference is normally required to go no further than to allege sufficient facts to transfer to the other party the obligation to go into evidence. This working principle is of particular utility in a situation in which it would be the latter who had direct and immediate knowledge of the critical facts (such as, perhaps, where the allegation is one of conspiracy). But two things must be said on this aspect. First, the members of the Presidium are not parties to the present proceeding: the situation will never be reached in which their refusal to go into evidence might strengthen the cross-respondent's inferential case. And secondly, especially given the seriousness of the allegations made by the cross-respondent, the pleaded facts must be such that, if those facts were proved, the inference which it seeks would be open to be made.
20 It is at this point that, in our view, the facts set out in the particulars to para 4 of the proposed rejoinder fall well short of what is required. Even if all of the facts there set out were proved as part of the cross-respondent's case in-chief, an inference of actual bias in the proceeding which led to the Presidium's decision of 16 October 2001 would not be open. We so conclude against the reality, of course, that the court before which such serious allegations would come would find in favour of the cross-respondent only if it felt "an actual persuasion" as to the existence of bias, having regard to "[t]he seriousness of [the] allegation made": Briginshaw v Briginshaw (1938) 60 CLR 336, 361-362.
21 For the above reasons, we would not grant leave to the cross-respondent to file a rejoinder which makes the proposed allegations of actual bias against members of the Presidium.
22 Turning to the cross-respondent's proposed case on apprehended bias, ultimately, the cross-claimants made only a single submission as to why leave should not be granted for the filing of the proposed rejoinder. It was submitted that the reasonable bystander would take account (amongst other things) of the circumstance that the decision given by the Presidium on 16 October 2001 was the correct one. Before reaching the stage of apprehension referred to in the authorities, he or she would reach the obvious conclusion that the explanation for the case having been decided the way it was was, in all probability, that that was the appropriate and correct outcome. The Full Court was, in effect, being invited to find that the decision of the Presidium was correct as a matter of Russian law: indeed, to take the view that this was so self-evidently the case as to justify shutting out the cross-respondent from filing a pleading which made, or implied, allegations to the contrary.
23 In our view, the position adopted by the cross-claimants in this respect is misconceived. In their reply, they contend that an issue estoppel arises from the decision of the Presidium. The correctness or otherwise of that decision under Russian law is, it seems to us, irrelevant to the viability of that challenge. That is the whole point of an estoppel plea of the kind made by the cross-claimants: the matter in question having been determined in the earlier proceeding, the matter cannot be re-litigated in the later proceeding. This was, presumably, the principle which the cross-claimants sought to invoke in their reply.
24 The cross-respondent's proposed apprehended bias case is its answer to the cross-claimants' estoppel case. If that answer is good, the estoppel will not run, and, presumably, the questions which were decided adversely to the interests of the cross-respondent by the Presidium will be open to be, and will need to be, re-litigated. However, in circumstances where the cross-claimants themselves rely upon an issue estoppel, the correctness - even the self-evident correctness, if that be the situation - of the original decision cannot stand in the way of an otherwise legitimate collateral attack upon the legality of that decision, such as is now proposed by the cross-respondent. This line of reasoning cannot, in our view, be avoided by the somewhat unconventional course of imputing for the reasonable bystander a sufficient understanding of Russian law to be driven to the conclusion that the decision of the Presidium was most probably correct, with such a conviction as to exclude from his or her apprehensions any thought that the decision might have been attended by bias.
25 We do not understand the cross-claimants to have advanced any other serious basis upon which to resist the filing of a rejoinder which makes allegations of apprehended bias in the terms proposed by the cross-respondent. In the circumstances, and to the extent indicated above, we would grant the application for leave to appeal, allow the appeal and grant leave for the filing of a rejoinder which is limited to those allegations.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson and Jessup.