Permanent Stay as Abuse of Process: UBS AG v Tyne [2018] HCA 45

Thursday 18 October 2018 @ 11.06 a.m. | Judiciary, Legal Profession & Procedure | Legal Research

In UBS AG v Scott Francis Tyne as Trustee of the Argot Trust [2018] HCA 45 (17 October 2018) the High Court of Australia has, in a majority decision, allowed an appeal from a decision of the Full Court of the Federal Court of Australia dealing with the power to permanently stay proceedings as an abuse of the processes of the court.

Background

The case involves a dispute that was litigated, in broadly similar terms, before the Federal Court of Australia (“the FCA proceedings”), the High Court of Singapore (“the Singapore proceedings”) and the New South Wales Supreme Court (“the NSW proceedings”). The case involves what is alleged to be negligent advice given by UBS AG (“UBS”) in 2007 and 2008 to Mr Scott Tyne, the sole trustee of the Argot Trust. The advice in question allegedly caused losses to the Argot Trust and also allegedly caused losses as guarantor to Ms Clare Marks (Mr Tyne’s wife). Mr Tyne's wife was never a party to either the Singapore or the NSW proceedings, while the previous trustee of the Argot Trust, Telesto, was a party to both the Singapore and NSW proceedings, but not the Federal Court proceedings. The Singapore proceedings were ultimately decided against the interests of Mr Tyne, and the New South Wales litigation was permanently stayed and never decided on its merits.

On 8 January 2016, Justice Greenwood [see Tyne v UBS AG (No 3) [2016] FCA 5] held that the FCA proceedings were to be permanently stayed as an "abuse of process". However, on 20 January 2017 [see Tyne (Trustee) v UBS AG (No 2) [2017] FCAFC 5], the Full Federal Court of Australia in a majority decision ((Jagot and Farrell JJ) Dowsett J dissenting) allowed the Tyne interests’ appeal. In their decision the majority held that an original plaintiff (or someone closely related, such as Mr Tyne's wife, Ms Marks) could relitigate the same issues against the same parties, taking into account the particular litigation history of the case. They further found this could be done without causing either unfairness to those parties or by bringing the administration of justice into disrepute.

In his dissenting opinion, Justice Dowsett held that the combined effect of delay, the increase in costs, vexation and the waste of public resources associated with the duplication of proceedings may be sufficient to give rise to manifest unfairness to UBS or to bring the administration of justice into disrepute. In His Honour's view, this was having regard to the public interest in the finality of litigation and the overarching purpose stated in the Federal Court of Australia Act 1976 (Cth) section 37M [see [2016] FCA 5 at par 20] .

"The focus in some of the cases upon the “right” of a litigant to discontinue, and later commence fresh proceedings is inconsistent with modern views as to case management. The courts are now more inclined to infer prejudice to one party where conduct by the other has unnecessarily extended the time taken to resolve a dispute, or necessitated the duplication of process. Section 37M of the Federal Court of Australia Act 1976 (Cth) (the “Federal Court Act”) now requires that disputes be resolved as quickly, inexpensively and efficiently as possible. To allow a party to discontinue, and then recommence proceedings will not generally be conducive to the achievement of that goal. The older cases must be seen in light of that provision."

Key Ground of Appeal to the High Court

The grounds of appeal by UBS included that:

"The majority of the Full Court (Jagot & Farrell JJ) in [2017] FCAFC 5 erred at paras [107] to [108] in failing to recognise, or to take account of, 

  1. the manifest unfairness to UBS and
  2. the effect of the proceedings in bringing the administration of justice into disrepute, which were constituted by those matters identified by Dowsett J at pars [23], [28] and [32] in [2017] FCAFC 5, namely the significant delay in resolution of the dispute for a period of three or more years, the additional costs incurred or to be incurred by UBS, the vexation of UBS and the waste of public resources associated with the duplication of proceedings."

By consent, an order removing Ms Marks (the then Second Respondent) as a party to the appeal was made on 15 December 2017

The High Court's Decision

A majority of the High Court allowed the appeal. The majority held that the timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. It also found that hiving off the Trust's claim from the NSW proceedings, with a view to bringing it in another court after the determination of those proceedings, was the antithesis of the discharge of the duty imposed on parties to civil litigation in the Supreme Court and in the Federal Court. Further, for the Federal Court to lend its procedures to the staged conduct of what was factually one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation was rightly assessed by the primary judge to amount to an abuse of the processes of the court, warranting a permanent stay of proceedings - see par [55]. 

"Mr Tyne perceived a forensic advantage to the Tyne-related parties in holding back the Trust's claim. This was a decision that, were Telesto's claim to be stayed, would lead to duplication of resources and increased cost, and would delay the resolution of the dispute between the Tyne-related parties and UBS. Hiving off the Trust's claim, with a view to bringing it in another court after the determination of the SCNSW proceedings, was the antithesis of the discharge of the duty imposed on parties to civil litigation in the Supreme Court of New South Wales and in the Federal Court . That duty is to conduct the proceedings in a way that is consistent with the overriding/overarching purpose."


and at par [124] :

"The majority of the Full Court of the Federal Court was right to hold that it was not an abuse of process for the Trustee to institute the Federal Court proceedings after the previous trustee had discontinued its participation in the Supreme Court proceedings. The appeal to this Court should be dismissed with costs."

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Sources:

UBS AG v Tyne [2018] HCA 45 (17 October 2018) and supporting summaries and decision notes.

Tyne (Trustee) v UBS AG (No 2) [2017] FCAFC 5 (20 January 2017)

Tyne v UBS AG (No 3) [2016] FCA 5 (8 January 2016)

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