UBS AG v Tyne

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Bell,Keane JJ.,Gageler J.,Nettle,Edelman JJ.,Gordon J.
• Judgment Date: 17 October 2018
• Neutral Citation: [2018] HCA 45
• Docket Number: B54/2017
• Court: High Court
• Date: 17 October 2018

[2018] HCA 45

HIGH COURT OF AUSTRALIA

Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon AND Edelman JJ

B54/2017

UBS AG

Appellant

and

Scott Francis Tyne as Trustee of the Argot Trust

Respondent

Representation

J Stoljar SC with L T Livingston for the appellant (instructed by King & Wood Mallesons)

G O'L Reynolds SC with D P Hume for the respondent (instructed by Russells)

Federal Court of Australia Act 1976 (Cth), ss 23, 37M, 37N.

Federal Court Rules 2011 (Cth), r 26.14.

Uniform Civil Procedure Rules 2005 (NSW), rr 12.3(1), 12.4.

Practice and procedure — Permanent stay of proceedings — Abuse of process — Where respondent (in personal capacity) was controlling mind of former trustee and related company — Where respondent (in personal capacity), former trustee and related company commenced proceedings in Supreme Court of New South Wales — Where respondent (in personal capacity) and former trustee discontinued as parties in Supreme Court proceedings — Where Supreme Court proceedings permanently stayed — Where respondent (as trustee) pursued substantially same claims in Federal Court of Australia — Where primary judge permanently stayed proceedings for abuse of process — Whether on appeal Full Court erred in finding no abuse of process and setting aside permanent stay — Whether Full Court failed to consider overarching purpose of conduct of civil litigation.

Words and phrases — “abuse of process”, “administration of justice”, “conduct of civil litigation”, “discontinue”, “final determination”, “just resolution”, “overarching purpose of the conduct of civil litigation”, “permanent stay”, “related parties”, “unconditional discontinuance”, “unjustifiably oppressive”.

1 Kiefel CJ, Bell AND Keane JJ. This appeal is concerned with the power to permanently stay proceedings as an abuse of the process of the court. The varied circumstances in which the use of the court's processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court's procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute 1. The issue in this appeal is whether one or both of those conditions is met in circumstances in which the factual merits of the underlying claim have not been determined and any delay in prosecuting the claim has not made its fair trial impossible.

Procedural history

2 Scott Francis Tyne, in his capacity as trustee of the Argot Trust (“the Trust”), and his wife, Clare Marks 2, commenced proceedings against UBS AG (“UBS”) in the Federal Court of Australia (“the Federal Court”), claiming damages and equitable compensation arising out of advice and representations made by UBS to Mr Tyne and, “through him”, to certain “Tyne Related Entities”. The latter include the former trustee of the Trust, ACN 074 971 109 Pty Limited (“ACN 074”), and an investment company incorporated in Jersey, Telesto Investments Limited (“Telesto”). At all material times, Mr Tyne was the controlling mind of ACN 074 (in its capacity as trustee of the Trust) and Telesto. The Trust is a family trust of which Mr Tyne, his wife and their children are the sole beneficiaries. The Trust's claimed loss arises in connection with the pledge of its assets to secure Telesto's liabilities under credit facilities extended by UBS.

3 ACN 074 (in its capacity as trustee of the Trust), Telesto and Mr Tyne, in his personal capacity, had earlier brought proceedings in the Equity Division of the Supreme Court of New South Wales (“the SCNSW proceedings”) arising out of the same facts and making essentially the same claims as are made on behalf

of the Trust in these proceedings. Mr Tyne and the Trust discontinued their claims in the SCNSW proceedings, leaving Telesto as the sole plaintiff. The SCNSW proceedings were permanently stayed on the ground that Telesto was seeking to re-litigate causes of action which in substance had been determined in proceedings in the High Court of Singapore, and which had given rise to a res judicata estoppel.

4 UBS applied to have the present proceedings stayed on grounds which include that they are an abuse of the process of the Federal Court. The primary judge held that the Trust could, and should, have brought its claims in the SCNSW proceedings and that it had failed to give a proper explanation of why it had not done so 3. His Honour permanently stayed the proceedings under s 23 of the Federal Court of Australia Act 1976 (Cth) (“the FCA”).

5 On appeal to the Full Court of the Federal Court, the majority (Jagot and Farrell JJ) held that it had not been open to the primary judge to find that the proceedings are an abuse of process 4. The conclusion took into account that the Trust's claims have not been decided on their merits 5. Dowsett J, in dissent, did not consider that circumstance to be determinative. His Honour inferred that Mr Tyne had identified some forensic advantage to himself and/or the Trust in discontinuing the Trust's claims in the SCNSW proceedings with a view to renewing them in the event the Telesto claim was unsuccessful. The effect of that decision, his Honour said, was to delay the resolution of the dispute between the Trust and UBS by a significant period of time, to increase the costs incurred by UBS, and otherwise to vex UBS. In the circumstances, Dowsett J considered that to allow the proceedings to remain on foot would inflict manifest unfairness on UBS and bring the administration of justice into disrepute 6.

6 On 15 September 2017, Bell and Keane JJ granted UBS special leave to appeal. By its first ground, UBS contends the Full Court majority erred essentially for the reasons given by Dowsett J. Those reasons call in aid the “overarching purpose” of the conduct of civil litigation in the Federal Court 7: to facilitate the just resolution of disputes according to law as quickly,

inexpensively and efficiently as possible. UBS submits that this purpose is not given effect by allowing one or more of a number of plaintiffs, controlled by the same individual, to discontinue proceedings, stand back and allow those proceedings to continue to final determination, then, depending on the outcome of the earlier proceedings and without proper explanation, to commence fresh proceedings raising the same substratum of facts and, in substance, the same claims against the same defendant.

7 Whether conduct of this description rises to the level of an abuse of the processes of the court is a determination that requires consideration of all the circumstances. As Lord Bingham of Cornhill explained, that consideration requires the court to make 8:

“a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.”

8 For the reasons to be given, taking into account the public and private interests involved, the primary judge was correct to stay this proceeding as an abuse of the processes of the Federal Court. The conclusion makes it unnecessary to address UBS's second ground of appeal. The appeal must be allowed and, in place of the Full Court's order, the appeal to that Court must be dismissed.

The factual background

9 In about 2007, Telesto opened an investment account with UBS, through which certain credit facilities were extended to it. Under the terms and conditions of the account the facilities were governed by the law of the country in which the account was booked. Telesto's account was “booked in Singapore” and Telesto unconditionally submitted to the non-exclusive jurisdiction of the courts of Singapore.

10 The Trust's claims in the SCNSW proceedings and in these proceedings are founded on allegations that UBS gave negligent advice and/or that UBS engaged in misleading or deceptive conduct (or conduct that was likely to

mislead or deceive), in relation to financial services, in the representations made by its officers to Mr Tyne, and, through Mr Tyne, to Telesto and ACN 074 (in its capacity as trustee of the Trust) (“the Trust's TPA claims”). The representations are alleged to have induced Telesto to acquire and retain bonds issued by financial institutions in Kazakhstan, the Bank Turan-Alem and Astana Finance (“the Bonds”), which ultimately proved to be worthless.

11 In September 2008, the value of collateral provided by Telesto under the facilities declined. UBS issued a margin call requiring Telesto to provide additional collateral or to reduce the amount owed under the facilities. At Telesto's and Mr Tyne's request, UBS agreed not to sell the collateral and not to make further margin calls on terms that were contained in a letter dated 14 December 2009. The letter was counter-signed by Telesto on 31 December 2009 (“the Standstill Agreement”). Under the Standstill Agreement, Telesto undertook to have ACN 074 (in its capacity as trustee of the Trust) enter into a letter of undertaking in favour of UBS. On 28 January 2010, ACN 074 (in its capacity as trustee of the Trust) executed the letter of undertaking.

12 On 15 October 2010, UBS purported to terminate the Standstill Agreement. On the same day, UBS commenced proceedings 801 of 2010 in the High Court of Singapore (“the Singapore 801 proceedings”) against Telesto, as principal debtor, and Mr Tyne, who had personally guaranteed...