Background
Background to the litigation
Diageo submits that the issues arising in the main proceeding other than the issue of ownership of the marks are quite different from those arising under the Cross-Claim. This is demonstrated, it is said, by the fact that Diageo, although a respondent to the Cross-Claim has no relief sought against it and FKP has no interest in the main proceeding once the issue of ownership of the marks is determined.BACKGROUND These proceedings were initially commenced by SPI Spirits and Spirits International against Diageo (then the sole respondent) by way of application and statement of claim filed on 7 December 2004. The relief sought by SPI Spirits and Spirits International in the application was founded on two primary claims made against Diageo, characterised in the affidavit of Kathryn Cecilia Everett, sworn 28 November 2005 and filed by Diageo in support of its notice of motion, as the Ruski Claims and the SPI Trade Mark Claims. In her affidavit, Ms Everett indicates that the Ruski Claims are founded on ss 52, 53 and 55 of the Trade Practices Act 1974 (Cth) (‘the TPA’) and concern the distribution of a ready-to-drink, low alcohol beverage distributed by Diageo in Australia under the name ‘Lemon Ruski’ (‘Ruski’). For the reasons set out in pars 5 – 37 of the Statement of Claim, SPI Spirits and Spirits International plead that the distribution by Diageo of Ruski in Australia in its current packaging constitutes misleading or deceptive conduct. The distribution is said to continue; on SPI Spirits and Spirits International’s case it continues to mislead. The SPI Trade Mark Claims concern the construction of the Distribution Agreement (as defined in Ms Everett’s affidavit). SPI Spirits and Spirits International plead that on a correct construction of this agreement, Diageo was obliged to assign certain trade marks (which include some of the Cross-Claim Trade Marks) to Spirits International upon expiry of the agreement on 4 September 2005 (or upon earlier termination of the agreement). In September 2005 Diageo assigned these trade marks to Spirits International pursuant to interlocutory orders made by consent in these proceedings in May 2005. However, Diageo continues to defend the SPI Trade Mark Claims. SPI Spirits and Spirits International have sought and been granted leave to file and serve an Amended Statement of Claim by 2 December 2005 which adds a cause of action relating to alleged further breaches by Diageo of the Distribution Agreement (breach of which is already pleaded by SPI Spirits and Spirits International in the SPI Trade Mark Claims). These claims are referred to in Ms Everett’s affidavit as the ‘New Contractual Claims’. The New Contractual Claims are only made by SPI Spirits, which is not a party to the Cross-Claim. On 14 December 2004 the Russian Entities (against whom no facts were, or are, pleaded by SPI Spirits and Spirits International and against whom no relief was, or is, claimed) filed a notice of motion in the proceedings seeking orders that they be joined as parties. SPI Spirits and SPI International opposed this motion but on 17 December 2004 Gyles J delivered an ex tempore judgment and ordered that FKP be added as the second respondent to the proceedings to enable it to file a cross-claim. FGUP VO was joined as second cross-claimant by consent of all parties in May 2005.
Decision
Reasons for decision
EDMONDS J
Given the complexity of the issues raised in the Cross-Claim and the fact that the Cross-Claim relates primarily to events which occurred in the Soviet Union and Russia almost fourteen years ago, SPI Spirits and Spirits International estimate that discovery and evidence in relation to the Cross-Claim are likely to consume most of 2006. In the view of SPI Spirits and Spirits International, the Cross-Claim is highly unlikely to proceed to a final hearing until at least 2007. If the Court was to defer the hearing of the claims in the Amended Statement of Claim until after determination of the Cross-Claim, the likely consequence will be that the claims in the Amended Statement of Claim will not proceed to trial until at least 2008, three or four years after SPI Spirits and Spirits International filed their Statement of Claim against Diageo. The substantial prejudice likely to be suffered by SPI Spirits and Spirits International as a consequence of this delay is a further reason to refuse the orders sought by Diageo in its notice of motion. CONCLUSION The determination of the ownership of the Cross-Claim Trade Marks, as between Spirits International on the one hand and one or other of the Russian Entities on the other, is certainly not, having regard to the claims in the main proceeding, a ‘crisp and clear demurrer point’. Moreover, I am not convinced that its determination has the potential to dispose of a significant part of the main proceeding if it is decided in favour of one or other of the Russian Entities. It would, in my view, be fair to say that resolution of the ownership of the Cross-Claim Trade Marks in favour of one or other of the Russian Entities may well promote the prospect of settlement between SPI Spirits and Diageo in the main proceeding, if only because such a resolution may adversely impact the measure of damages SPI Spirits and Spirits International might otherwise be expected to retain for themselves, if they are successful in their claims in the main proceeding. But I am not persuaded this is sufficient to warrant the making of an order pursuant to O 29 r 2(a) of the kind sought by Diageo. Nor do I think Diageo’s submission that the interests of the cross-claimants are a relevant consideration – that there is no prejudice to them if the orders are made; and that it may assist them in having their claims heard earlier. In my opinion, the only relevant interests are those of the parties in the main proceeding. It is true that FKP was joined as a second respondent in the main proceeding, but that was only to enable it to bring the Cross-Claim. FKP is, effectively, a dormant party in the main proceeding and Diageo is a dormant party in the Cross-Claim. I am also of the view that the following matters are, inter alia, relevant considerations:(1)The main proceeding, as originally pleaded, raised no issue of the ownership of any of the relevant trade marks.(2)That issue only arises by virtue of the Cross-Claim, and then only with respect to the Cross-Claim Trade Marks; and that was only facilitated by order of this Court joining FKP as second respondent.(3)This background context stands in stark contrast to the background of the authorities to which I have been referred by both sides; invariably, the issue the subject of the O 29 r 2 order has been latent in the proceeding from the outset, either from a claim made in the original pleadings, or in the defence filed in response; not, as it were, in a Cross-Claim brought by a non-party to the original proceedings from ‘left field’.(4)What I consider to be a very relevant question is: Why should SPI Spirits and Spirits International have the hearing of their claim against Diageo deferred for more than a year, perhaps longer, until the determination of the ownership claim by the Russian Entities against SPI Spirits International? I do not know that this question can be satisfactorily answered, but if it can, it is certainly not irrelevant to its answer that only Spirits International is a respondent to the Cross-Claim whereas SPI Spirits is the principal applicant in the main proceeding.(5)It is against this background, and not the background of other cases, that the general principles referred to above need to be applied.(6)I think it is fair to conclude that the issue of ownership of the relevant trade marks as pleaded in the Cross-Claim involves matters of fact and law which have little, if anything, to do with the claims brought against Diageo in the main proceeding. But that, of itself, is no basis to defer a hearing of the latter until a determination of the former.(7)As I have already indicated at [34] supra, I think it fair to conclude that if one or other of the Russian Entities were to succeed in their Cross-Claim against SPI Spirits and Spirits International on the ownership issue, this would likely promote settlement prospects in the main proceeding by SPI Spirits and Spirits International against Diageo. I have already indicated one possible reason for this but there may be others. Even if there are, one thing can be said with certainty – such a determination of ownership rights would not extinguish the basis of the claims brought in the main proceeding.(8)A number of the submissions made by Diageo as to why an order should be made in the terms sought pursuant to O 29 r 2 are predicated on the basis that if the Cross-Claim is determined in the cross-claimants’ favour, there will be savings in terms of time, cost and other matters relevant to efficient case management. In many cases, it may be possible to make an informed judgment about the prospects of success on the issue which is sought to be determined on a preliminary basis, however, in the present case the complexity of the issues involved and the lack of evidence, at least at this stage, make this an impossible call. In my considered view, the issue before me has to be determined without regard to the respective prospects of success of one or other of the Russian Entities and Spirits International on the Cross-Claim.
