FEDERAL COURT OF AUSTRALIA

Tyne (Trustee) v UBS AG [2016] FCA 241

ORDERS

THE COURT ORDERS THAT:

1.    Leave to appeal from the interlocutory judgment of Greenwood J delivered on 8 January 2016 be granted to the applicants, pursuant to s 24(1A) of the Federal Court of Australia Act 1976.

2.    The grounds of the application for leave stand as the grounds of appeal.

3.    The costs of and incidental to the application for leave to appeal be reserved for determination by the Full Court.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

EDELMAN J:

Introduction

1    This is an application for leave to appeal from orders of the primary judge permanently staying these Federal Court proceedings against the respondent, UBS, as an abuse of process. The first applicant is Mr Tyne in his capacity as the sole trustee of the Argot Trust. The previous trustee was ACN 074 971 109 Pty Limited (ACN 074). The second applicant is Ms Marks, the spouse of Mr Tyne. The primary judge held that Ms Marks’ claims were derived from and “entirely bound up with the claims the trustee seeks to make” (J [431]). Although that finding is disputed, it suffices to proceed on that basis for the purposes of this application.

2    The underlying facts in the Federal Court proceedings have been the subject of litigation across courts in Singapore and New South Wales as well as in this Court. The various pleaded cases involved the same underlying facts. Those pleaded facts, and the findings in Singapore, are meticulously described in the primary judge’s judgment (especially at J [26]-[155], [171]-[180], [262]-[284]). The basic allegations before the primary judge are summarised in very broad terms below. As will be apparent, the issue on this leave application is not dependent upon any particular characterisation of the facts of the claims and neither party dwelt upon them in any detail in written submissions.

3    The pleaded claim before the primary judge involved an investment account held by an entity incorporated in Jersey called Telesto Investments Limited (Telesto). Telesto held the investment account with UBS. The applicants alleged that in 2007 and 2008, UBS made representations or gave misleading or negligent advice to Mr Tyne, and breached fiduciary duties owed to the trustee of the Argot Trust, concerning Telesto’s acquisition and retention of Kazakhstan bank bonds. UBS was alleged to have made numerous different representations. These included “expertise representations”, representations concerning bond and market parameters, representations concerning Kazakhstan’s financial regulatory regime, creditworthiness and attractiveness of those institutions, and representations concerning financial ratios. Some of these representations concerned future matters, which were governed by a regime in the Trade Practices Act 1974 (Cth) which is not present in Singapore. The applicants plead that the trustee of the Argot Trust acted in reliance upon the representations. They also plead that the estate of the Argot Trust was “diminished and the beneficiaries suffered loss and damage”. Ms Marks also suffered loss as a result of a call upon a guarantee that she gave.

4    The first of the proceedings were commenced by UBS in Singapore including against Mr Tyne (as guarantor), ACN 074 (as trustee of the Argot Trust) and Telesto. Mr Tyne and the other defendants unsuccessfully sought a stay of the proceedings. They unsuccessfully appealed. They unsuccessfully sought further leave to appeal. Then they terminated their solicitors’ retainer and elected not to contest the proceedings in Singapore. The proceedings in Singapore were decided against them.

5    The second of the proceedings were commenced in the Supreme Court of New South Wales by Mr Tyne, ACN 074 (as trustee of the Argot Trust) and Telesto. Those proceedings were stayed pending the decision of the High Court of Singapore. The Singaporean court had concluded that there were “no differences of sufficient materiality between the laws of Australia and Singapore on the issues in dispute” and that there was “no legitimate reason for the defendants to pursue the Australian Proceedings” (J [219]). After the temporary stay, Mr Tyne and ACN 074 (as trustee of the Argot Trust) discontinued their proceedings in the Supreme Court of New South Wales, leaving only Telesto as plaintiff. After the decision of the High Court of Singapore, the New South Wales proceedings were permanently stayed.

6    Subsequently, this proceeding was commenced in the Federal Court. It is common ground that this Federal Court proceeding sought to litigate the same or substantially the same cause of action as ventilated in the New South Wales proceeding. The primary judge held that the commencement of the Federal Court proceeding by Mr Tyne, as trustee of the Argot Trust, was an abuse of process. His Honour held that the trustee of the Argot Trust (then ACN 074) could have, and should have, ventilated the issues in the Supreme Court of New South Wales rather than discontinuing that proceeding.

7    The essence of the grounds upon which Mr Tyne (as trustee for the Argot Trust) and Ms Marks seek leave to appeal concern the sufficiency for a finding of an abuse of process that the trustee discontinued the New South Wales proceeding. This was at least a dominant factor in the primary judge’s finding of abuse of process. In the circumstances of this application for leave, I am satisfied that the decision is attended by sufficient doubt to warrant reconsideration by the Full Court and that substantial injustice would result from a refusal of leave to appeal. That assessment, and the notion of “sufficiency”, is one which is made in all of the circumstances. In particular, different interlocutory decisions have different effects. In this case, although this matter is interlocutory, the consequence of a finding of an abuse of process is that the proceeding is effectively at an end.

Background

The Singapore proceedings

8    On 15 October 2010, UBS commenced proceedings in the High Court of the Republic of Singapore against Telesto (as principal debtor) and Mr Tyne (as guarantor) (J [157], [383]). These proceedings, number 801 of 2010, were described as the Singapore 801 proceedings.

9    During the course of the Singapore 801 proceedings, Chong J held that the natural forum for the entire dispute was Singapore, largely because (J [210]-[213]):

(1)    UBS’s claims were made pursuant to contractual documents;

(2)    the account was “booked in Singapore” and serviced by officers of UBS in Singapore;

(3)    by the contractual terms and conditions the account facilities are governed by and construed in accordance with the law of the country in which the account was booked (Singapore);

(4)    Telesto irrevocably and unconditionally submitted to the non-exclusive jurisdiction of the Courts of Singapore;

(5)    by the contractual terms and conditions of the guarantee given by Mr Tyne, the guarantee is governed by the laws of Singapore and Mr Tyne submitted to the non-exclusive jurisdiction of the Singapore Courts;

(6)    Mr Tyne acted upon the representations by communicating instructions to officers of UBS in Singapore, which meant that the place of the tort for the contended misrepresentations was Singapore; and

(7)    a Letter of Undertaking given by the trustee of the Argot Trust was governed by Singapore law and provided for Singapore to be the exclusive place of jurisdiction for any dispute arising out of and in connection with the Letter of Undertaking.

10    On 21 February 2011, the High Court of Singapore dismissed applications by Telesto and Mr Tyne that the Singapore 801 proceedings should be stayed for forum non conveniens. The stay order restrained Telesto and Mr Tyne from (J [198]):

commencing or continuing any further or other proceedings of any nature in Australia or anywhere else in the world against UBS arising from, relating to, or in connection with: Account No. 116731, the account agreements as pleaded by UBS, the Credit Services Notification Letter dated 12 December 2007, Mr Tyne’s guarantee dated 26 September 2008, Telesto’s utilisation of the facilities made available by UBS to purchase the investments, the collateral provided by Telesto in support of the facilities, the conduct of the account, margin calls, the Standstill Agreement and obligations under it, the Letter of Undertaking executed by the trustee of the trust on 28 January 2010, any alleged breaches of fiduciary duties on the part of UBS in relation to “the crisis in Kazakhstan banks”, any and all claims or defences the defendants may have in relation to the investments and the total liabilities due by Telesto to UBS including the acquisition or management of the investments and, finally, the assignment of all litigation proceeds receivable by the trustee of the trust to UBS in the form of a deed of assignment dated 31 December 2009, otherwise than in the High Court of Singapore.

11    Telesto and Mr Tyne appealed from that decision.

12    The High Court of Singapore also granted an anti-suit injunction restraining Telesto, Mr Tyne, and ACN 074 (as trustee of the Argot Trust) from prosecuting, or continuing to prosecute, proceedings with the same subject matter in Australia (J [196]-[201], [401]-[402]). Each of Telesto, Mr Tyne, and ACN 074 appealed from this decision.

13    On 14 July 2011, Chong J (after a hearing de novo) dismissed the appeals from the refusal to stay the Singapore 801 proceedings and the grant of the anti-suit injunction (J [204]-[219]). His Honour described the applications by Telesto, Mr Tyne, and ACN 074 (as trustee of the Argot Trust) as an attempt at “forum shopping” (J [214]). Costs were ordered on an indemnity basis (J [205]). Counsel for Telesto, Mr Tyne and ACN 074 (as trustee of the Argot Trust) conceded before Chong J that the claims based on deceptive or negligent misrepresentation in the Australian proceedings “could essentially be mounted as a defence to [UBS’s] claim in Singapore” and that “the Singapore proceedings mirror the Australian proceedings” (J [207]). The defendants had argued that their reliance upon Australian legislation enhanced their prospects of success in Australia (J [207]). However, Chong J concluded that “there are no differences of sufficient materiality between the laws of Australia and Singapore on the issues in dispute” and that there was “no legitimate reason for the defendants to pursue the Australian Proceedings” (J [219]).

14    Telesto, Mr Tyne, and ACN 074 (as trustee of the Argot Trust) applied for leave to appeal to the Court of Appeal from the decision of Chong J. Prior to the application for leave, the solicitors for each applicant ceased to act. The applicants did not appear at the leave hearing. The application for leave was dismissed.

15    On 27 July 2012, the final hearing of the Singapore 801 proceedings was held on the merits. Telesto and Mr Tyne elected not to appear. The trial judge made orders including the following declaration (J [252]):

[Telesto and Mr Tyne] are estopped from asserting, and/or have compromised, any claims or defences they may have arising out of, or in relation to, the Investments and/or Total Liabilities due and owing to the Plaintiffs [UBS], including but not limited to, the acquisition or management of the Investments and/or the Total Liabilities.

The New South Wales proceedings

16    On 2 November 2010, Mr Tyne, Telesto, and ACN 074 (as trustee of the Argot Trust) commenced proceedings in the Supreme Court of New South Wales against UBS (J [170]).

17    The New South Wales proceedings involved the same underlying facts as the Singapore 801 proceedings. Indeed, during the course of the Singapore 801 proceedings, counsel for the defendants accepted that the defendants could raise the issues in the Australian proceedings as a defence and counter-claim in the Singapore 801 proceedings (J [214]).

18    On 24 October 2011, UBS sought a permanent stay of the New South Wales proceedings. Justice Ward granted a temporary stay of the New South Wales proceedings pending the outcome of the Singapore proceedings. The findings of her Honour relevant to abuse of process, upon which the primary judge relied, were as follows (J [231], emphasis in original):

(iii)    it would be an abuse of process for the Telesto parties to seek to re-litigate in this Court the forum non conveniens issues which have already been determined in Singapore, subject to the qualification that where matters have subsequently come to light which may affect the conclusions that would be reached in relation to that issue then there is no such abuse of process; further, where there is at this stage only the prospect that the same issues will be required to be determined in the substantive proceedings in each jurisdiction I am not satisfied that there is an abuse of process in the maintenance of the present proceedings (in contrast with the position that would apply if the present proceedings were seeking in substance to re-litigate issues already decided in the Singapore proceedings); and

(iv)    having considered the factors to be taken into account on a forum non conveniens application in this jurisdiction, if the Singapore proceedings will involve the determination of the issues raised in these proceedings in relation to the alleged misleading and deceptive conduct or misrepresentation in relation to the acquisition of investments for the Telesto account (and related issues) then the continuation of these proceedings would be vexatious and oppressive having regard to the controversy as a whole; however, I am not satisfied that there will necessarily be such an overlap any longer in circumstances where the Singapore proceedings are now confined to the claims for declaratory relief and indemnity costs (and whether there is such an overlap will largely be dependent on the course that the Telesto parties now take in relation to their defence of the Singapore proceedings).

19    Justice Ward also permitted Mr Tyne, Telesto, and ACN 074 (as trustee of the Argot Trust) to amend their pleading (J [234]). By this time, UBS had realised the collateral securing Telesto’s liability. Telesto no longer owed any debt to UBS. The only claims remaining in the Singapore 801 proceedings were for declarations and costs.

20    Justice Ward subsequently gave leave for a discontinuance of the proceedings by Mr Tyne and ACN 074 (as trustee of the Argot Trust). UBS did not object to the discontinuance of the proceedings against it by Mr Tyne and ACN 074. Senior counsel for UBS did not seek to impose any terms upon the discontinuance.

21    Before the primary judge in these proceedings, UBS submitted that ACN 074 (as trustee of the Argot Trust) by its discontinuance had elected to abandon its claims in the New South Wales proceedings. The primary judge did not accept this submission. He concluded that Mr Tyne and ACN 074 withdrew from the proceedings on the basis that no liability arose on their part under any of the relevant instruments namely, the Tyne guarantee, the Mortgage and the Letter of Undertaking (J [236]).

22    On 9 May 2013, Sackar J permanently stayed the New South Wales proceedings by Telesco. His Honour held that the Singapore and the New South Wales proceedings, as a matter of substance, concerned the same causes of action and that the judgment of Lai J in Singapore created a res judicata.

The Federal Court proceedings and the Federal Court stay application

23    On 9 January 2014, Mr Tyne was appointed trustee of the Argot Trust (J [5]). On 13 January 2014, Mr Tyne (in his capacity as trustee) and Ms Marks commenced the proceedings in the Federal Court.

24    Mr Tyne and Ms Marks claimed the following substantive relief:

(1)    damages for the infringement of s 12DA, Australian Securities and Investments Act 2001 (Cth);

(2)    damages for the infringement of s 1041H, Corporations Act 2001 (Cth);

(3)    damages for the infringement of s 42, Fair Trading Act 1987 (NSW) (as in force at the relevant time);

(4)    damages for the infringement of s 38, Fair Trading Act 1989 (Qld) (as in force at the relevant time); and

(5)    such other orders as the Court sees fit.

25    In addition, Mr Tyne also claimed the following:

(6)    damages pursuant to the common law of negligence; and

(7)    equitable compensation for breach of fiduciary duty.

26    As Mr Tyne and Ms Marks accept, the Federal Court proceedings sought to “litigate the same or substantially the same cause of action” as ventilated in the New South Wales proceeding. The primary judge made findings to that effect at J [156], [185], [417].

27    UBS sought to have the proceedings dismissed or permanently stayed on four alternative grounds: abuse of process (either pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) or pursuant to the Court’s inherent or implied powers); Anshun estoppel; res judicata; and issue estoppel (J [2]). The primary judge rejected the submissions on the basis of each of Anshun estoppel, res judicata, and issue estoppel. His Honour held that “the answer to these three forms of estoppel is that the trustee of the Argot Trust is not Telesto and nor is the trustee privy in interest with Telesto” (J [412], emphasis in original). However, the primary judge permanently stayed the proceedings on the ground of abuse of process pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth).

The decision of the primary judge concerning abuse of process

28    The primary judge relied upon the following matters in reaching his conclusion that the proceedings were an abuse of process:

(1)    Mr Tyne was the controlling mind of ACN 074 as trustee of the Argot Trust, and Mr Tyne then became trustee. Mr Tyne made the decision to cause the trustee to discontinue its participation as a plaintiff in the New South Wales proceedings, and the decision not to agitate the causes of action asserted by the trustee for and on behalf of the trust in the Federal Court proceedings. The trustee chose not to bring, agitate or maintain those claims when it “could have done so and should have done so” and in circumstances where “there is no proper explanation why it did not do so” (J [414]-[416], [421]);

(2)    ACN 074 (as trustee of the Argot Trust) and Mr Tyne had, prior to the discontinuance, asserted claims in the New South Wales proceedings that arose out of a common substratum of fact. The formulation of the proceedings in the Federal Court is very substantially in the same terms as the factual contentions asserted in the New South Wales proceedings. If Mr Tyne had caused ACN 074 as trustee of the Argot Trustto bring its claim based on the common substratum of fact then that claim could have proceeded in the Supreme Court of New South Wales. ACN 074 as trustee could have applied to “re-join” the Supreme Court of New South Wales proceedings having earlier elected, without objection from UBS, to discontinue its participation in those proceedings (J [417]-[419]);

(3)    The conduct of the New South Wales proceedings seems to suggest that a claim which the trustee could and should have brought was held back on the footing that such a claim might be brought in another court if Telesto’s claim were stayed in the New South Wales proceedings ([422]);

(4)    By Mr Tyne (as trustee) bringing the proceedings in the Federal Court, he relitigated substantial complex questions of fact and law with which UBS had been vexed before (J [424]); and

(5)    Mr Tyne submitted that the losses about which the trustee complains were losses brought about by UBS whose conduct is at the centre of the proceedings and UBS ought not to be allowed to profit from its own contended misadventure by securing a stay preventing the trustee from having a hearing on the merits of its claims ([420]).

29    One matter upon which his Honour did not place weight was his conclusion that Mr Tyne as the controlling mind of ACN 074 could have also caused the trustee to join the Singapore 801 proceedings as a cross-claimant and to assert the factual matrix now asserted in the Federal Court proceedings. His Honour’s reasons reveal that there would be two curiosities which would arise if weight had been placed on that factor:

(1)    The trustee was not a party to the Singapore 801 proceedings. Yet, UBS sought and obtained the anti-suit injunction against the trustee in respect of its separate legal interests in the New South Wales proceedings. His Honour observed that by reason of those Singapore orders, UBS had submitted that “the trustee of the Argot Trust is to be forever deprived of the opportunity to make its claim, assert its legal interests, and have a hearing on the merits before a court of competent jurisdiction in Australia” (J [407]). His Honour was not satisfied that the circumstances of the anti-suit injunction “ought operate to deprive the trustee of an opportunity to commence and prosecute a claim properly engaging the jurisdiction of a relevant Australian Court if it is proper to do so” (J [409]).

(2)    The primary judge accepted that “there is some force in the proposition” that if Mr Tyne and Telesto had engaged in the Singapore 801 proceedings they would have suffered at least some degree of juridical disadvantage compared with the range of available remedial orders in Australia (J [395]). This is a reference to the finding in the New South Wales proceedings by Sackar J that Telesto and Mr Tyne had a “material highly significant juridical disadvantage” in Singapore (J [418]).

30    As for Ms Marks’ proceeding, the primary judge held that the claim by Ms Marks is reliant upon the misrepresentations said to have been made by UBS to Mr Tyne (J [426]). The primary judge observed that Ms Marks’ claims could and should have been brought along with the claim by the trustee in the New South Wales proceedings (J [427]). Ms Marks’ claims were stayed for essentially the same reasons as Mr Tyne’s claims (as trustee).

Principles concerning leave to appeal

31    An order permanently staying a proceeding as an abuse of process is interlocutory: Re Luck [2003] HCA 70; (2003) 78 ALJR 177, 178-179 [6]-[9] (the Court). Hence, leave to appeal is required.

32    The principles concerning leave to appeal are well-established. Whether leave should be granted is dependent upon two considerations: (i) whether in all the circumstances the decision is attended by sufficient doubt to warrant reconsideration by the Full Court; and (ii) whether substantial injustice would result from a refusal of leave to appeal: Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225, 231 [29] (the Court); Samsung Electronics v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238, 248 [26] (the Court).

33    However, although these two criteria must be satisfied, they do not represent a “hard and fast rule”: Samsung Electronics v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238, 249 [29] (the Court). Each case must be considered on its merits. In particular, the reference to “sufficient doubt” must mean a doubt that is sufficient in the circumstances. In this regard, in Samsung the Full Court of the Federal Court quoted from Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564, 584 [43]-[44] where French J (with whom Beaumont and Finkelstein JJ agreed) said:

Interlocutory orders cover a spectrum from those concerned solely with the mechanics of case management and pre-trial preparation to those which may, for one reason or another, have a significant impact upon the scope and outcome of the proceedings. If the order, the subject of the application for leave to appeal, is concerned with the mechanics of the pre-trial process then the scales are likely to be weighted against the grant of leave. However if while interlocutory in legal effect it has the practical operation of finally determining the rights of the parties “a prima facie case exists for granting leave to appeal” … If a proceeding is dismissed because it is frivolous or vexatious or because no reasonable cause of action is disclosed the decision is treated as interlocutory. However leave will usually be granted in such a case if there is any doubt about the decision at first instance.

34    In this case, it cannot be disputed that the order permanently staying the proceeding, whilst interlocutory, has a significant effect on the proceedings. It effectively brings them to an end.

The grounds of the application for leave to appeal

35    On 19 January 2016, Mr Tyne and Ms Marks sought leave to appeal on four grounds. They are as follows:

1.    His Honour Justice Greenwood made an error in the exercise of his discretion in that His Honour acted upon a wrong principle in dismissing the proceeding numbered QUD 10/2014 as an abuse of the Federal Court of Australia.

2.    In particular, His Honour erred by:

a)    Failing to recognise there is no bar to a plaintiff commencing a later proceeding asserting the same or substantially the same cause of action as was pleaded in an earlier proceeding that was discontinued with the unconditional leave of the court and the consent of the defendant.

b)    Finding that an abuse of process had occurred through initiation of such a later proceeding in circumstances where the earlier proceeding was terminated without being heard and determined on the merits.

c)    Failing to require the Respondent meet the onus of proof necessary to establish an abuse of process.

d)    Failing to apply the correct test in determining whether an abuse of process had occurred.

Whether there is sufficient doubt to warrant reconsideration

36    The essence of the grounds upon which applicants seek leave is that it is insufficient for the finding of an abuse of process that a person has discontinued the same, or substantially the same, proceeding. The applicants rely upon the decision of Palmer J in Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431 [33] (see also Re Peat Resources of Australia Pty Ltd; Ex Parte Pollock [2004] WASCA 122; (2004) 181 FLR 454, 468-469 [65] (Malcolm CJ)) that:

It is not an abuse of process for a plaintiff to discontinue a proceeding merely in order to be able to bring the same proceeding later in circumstances in which the plaintiff believes there will be a greater prospect of success or a more substantial recovery: see e.g. Castanho v Brown & Root (UK) Ltd [1981] AC 557, at 576. These circumstances may legitimately include the possibility of a subsequent increase in the limit of recoverable damages due to legislative amendment (see Brown v Parker [1961] WAR 194) and the enhanced prospect of enforcing a verdict by commencing proceedings in another jurisdiction (e.g. Castanho v Brown & Root (UK) Ltd (supra)). I would include amongst such circumstances the prospect of the plaintiff being able to conduct the second proceedings more effectively than the first by reason of an improvement in the plaintiff's financial position enabling the plaintiff to procure expert evidence which would have been prohibitively expensive at the time of the first proceedings. A fortiori is this so when the plaintiff's financial inability to conduct the first proceedings effectively is the result of the defendant's own act or omission, whether or not that act or omission ultimately proves to be legitimate.

37    Although the applicants have other grounds of appeal, they are all related to this central theme. For instance, I do not understand the applicants to suggest that the primary judge otherwise misapplied the principles concerning the test for an abuse of process. The primary judge conducted a very careful exposition of those principles, including the discussion of abuse of process in the High Court in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750.

38    The same point can be made about the allegation that the primary judge failed “to require the Respondent meet the onus of proof necessary to establish an abuse of process”. The onus of proof in matters concerning abuse of process was described in Willliams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 529 (Mason CJ, Dawson, Toohey and McHugh JJ):

It is, of course, well established that the onus of satisfying the court that there is an abuse of process lies upon the party alleging it. The onus is "a heavy one", to use the words of Scarman LJ. In Goldsmith v. Sperrings Ltd. and the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances… (footnotes omitted).

39    The primary judge, at [370], quoted a passage from Johnson v Gore Wood & Co [2002] 2 AC 1, 30-31 where Lord Bingham said:

The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all.

40    The applicants’ point in relation to the onus of proof again appears to be related to the question of whether the circumstances of the discontinuance were sufficient for the commencement of the Federal Court litigation to be an abuse of process. At [421] the primary judge observed that there was “no proper explanation” before the Court as to why the trustee of the Argot Trust chose not to bring its claims in the New South Wales proceedings. The applicants assert that there was no obligation on the trustee to explain its discontinuance. In any event, the applicants submit that the discontinuance was unconditional. It was not alleged by senior counsel for UBS at the time of discontinuance that any advantage to UBS was lost which would have required terms such as an undertaking not to recommence litigation: see further Covell Matthews and Partners v French Wools Ltd [1977] 1 WLR 876; [1977] 2 All ER 591, 593-594 (Graham J), affirmed in Covell Matthews and Partners v French Wools Ltd [1978] 1 WLR 1477; [1978] 2 All ER 800; SCI Operations Pty Ltd v Trade Practices Commission [1984] FCA 52; (1984) 2 FCR 113, 182 (Sheppard J). The applicants also say that an inference could be drawn that because the debt owed to Telsto had been extinguished by the time of discontinuance, the reason for discontinuance was to simplify the litigation and to deny UBS “a case thesis properly referable to Telesto only”.

41    In contrast, UBS submits that the primary judge’s observation that there was “no proper explanation” was merely a statement concerning the state of the evidence. There was little focus in the submissions on the point at [28(3)] above.

42    The decision to stay proceedings as an abuse of process is a discretionary decision, requiring evaluative judgment based on all the circumstances. I accept the submission of UBS that a discontinuance on unconditional terms might be one circumstance which, combined with others, contributes to a conclusion that later proceedings are an abuse of process: see SZFOG v Minister for Immigration and Multicultural Affairs [2006] FCA 1170 [26]-[27] (Cowdroy J). That is not to say that a discontinuance on unconditional terms will necessarily always have weight in the exercise of the discretion to stay proceedings for an abuse of process, rather than being a matter of context.

43    It is neither necessary nor appropriate to attempt to resolve these related submissions concerning the application of the test for abuse of process in this case. It suffices to say that in the circumstances of this case, particularly the consequences of the interlocutory decision on the litigation, I am satisfied that the decision is attended by sufficient doubt to warrant reconsideration by the Full Court. In particular, UBS pointed to no decision in which a dominant consideration in the finding of an abuse of process was a previous unconditional discontinuance of the same, or substantially the same, litigation. It is at least arguable that this was the dominant consideration in the exercise of the primary judge’s discretion. In particular, although UBS refers throughout its written submissions to the abuse of process involving litigation being commenced concerning a matter which had already been decided in Singapore, the primary judge observed on a number of occasions that the trustee of the Argot Trust was not a party to the proceedings in Singapore, and his findings concerning the extension of the anti-suit injunction to the trustee has been referred to above at [29].

Whether substantial injustice would result from a refusal of leave to appeal

44    In the usual run of applications for leave to appeal there would often be substantial injustice in the refusal of leave to appeal involving a case where there is sufficient doubt concerning the result, and where the interlocutory decision has the effect of bringing the litigation to an end. However, UBS submitted that there would be no injustice in this case because (i) Mr Tyne chose not to cause the trustee to take part in Singapore 801 proceedings, (ii) Mr Tyne caused the trustee to withdraw from the New South Wales proceedings, (iii) Mr Tyne did not appeal the decision of Ward J granting the temporary stay, and (iv) Mr Tyne did not seek to re-join the New South Wales proceedings. These submissions reiterate facts which have already been considered in the assessment of the exercise of the primary judge’s discretion to stay the proceedings. Nevertheless, the issues of “sufficient doubt” and “substantial injustice” are not wholly independent. These matters can also be taken into account in assessing whether any substantial injustice would arise if leave were not granted.

45    As to the extent to which UBS would be vexed by the grant of leave, UBS referred to evidence that it has incurred costs and disbursements in the proceedings before the primary judge of $348,000. In addition, UBS points to six other unsatisfied costs orders that it holds against Mr Tyne and related entities. These are also relevant matters to consider, especially in the context described in the conclusion to these reasons which might raise doubt about whether any of these amounts will be paid. Mr Tyne, however, submitted that these costs would not cause the same degree of prejudice to UBS as they might to, for example, an individual. He referred to evidence on this application that the gross assets of UBS in Australian dollars are more than $1,272 billion.

46    I am satisfied that there would be substantial injustice if leave to appeal were not granted.

Conclusion and conditions upon the grant of leave

47    For the reasons I have explained, the applicants should be granted leave to appeal.

48    UBS submitted that if leave to appeal were granted it should be on the condition that security for costs in the amount of $75,000 is provided under s 56 of the Federal Court of Australia Act 1976 (Cth) and r 36.09 of the Federal Court Rules 2011 (Cth).

49    UBS sought security for costs on the basis of evidence that it will incur costs of $81,105 in defending an appeal, of which $75,000 would be recoverable if the appeal were dismissed with indemnity costs. Security for costs was sought for $75,000, to provide full recovery for these potential indemnity costs.

50    UBS did not make reference to any of the many other factors usually considered on an application for security for costs. One of those matters, which Mr Tyne stressed, was that a meritorious claim should not be stifled. It is common ground that (i) the Argot Trust has a deficiency in net assets, (ii) Mr Tyne is an undischarged bankrupt, and (iii) Ms Marks has no financial resources to satisfy an adverse costs order. Because the issue of security for costs was only raised in UBS’s responsive submissions, there was no evidence of any capacity of Mr Tyne, Ms Marks or the Argot Trust to pay any costs. But it was common ground that they had no capacity. Indeed when an application for security for costs was heard by the primary judge, his Honour concluded that the Argot Trust “has no assets which might be made the subject of an order for security for costs in support of the trustee’s right of indemnity” (Tyne v UBS AG (No 2) [2014] FCA 1228 [10]). In an earlier judgment on security for costs, his Honour also concluded that the beneficiaries of the Argot Trust also have no capacity to pay costs. Those beneficiaries are Mr Tyne, his 12 year old son and his nine year old daughter: Tyne v UBS AG [2014] FCA 1228 [144].

51    UBS’ written submissions sought the security for costs condition upon leave very briefly. Apart from the capacity issues that I have mentioned, no reference was made to other potential matters including whether an order for security for costs would be oppressive; or whether the cause of the applicants’ impecuniosity is arguably the conduct of UBS. This is not said by way of any criticism. UBS understandably took the view that if the need for security for costs was not immediately apparent then no purpose would be served in making lengthy submissions, many of which might just repeat matters already heard by the primary judge who refused the earlier security for costs application after canvassing in detail the many issues raised by the parties on that application.

52    On the evidence on this application I am not satisfied that the grant of leave to appeal should be made subject to an order requiring the posting of security for costs.

Associate:    

Dated:    1 April 2016