The risks of discontinuing: a look at the High Court’s decision in UBS v Tyne

The recent High Court decision of UBS v Tyne [2018] HCA 45 concerned circumstances where an original trustee of a trust discontinued proceedings in the Supreme Court of New South Wales, then almost 2 years later a subsequently-appointed trustee of the same trust commenced fresh proceedings in the Federal Court raising, in substance, the same claims against the same defendant. The question for the High Court to consider: did this amount to an abuse of process?

The civil procedure rules that govern litigation in Australian courts all state, in effect, that the discontinuance of proceedings does not prevent a plaintiff from claiming the same relief in fresh proceedings (subject to any conditions that might be imposed when leave is granted to discontinue).[1]

The recent High Court decision of UBS v Tyne [2] concerned circumstances where related plaintiffs [3] sought to do exactly that. Namely, the original trustee of a trust discontinued proceedings in the Supreme Court of New South Wales, then almost 2 years later a subsequently-appointed trustee of the same trust commenced fresh proceedings in the Federal Court raising, in substance, the same claims against the same defendant.

The issue before the Court was: did this amount to an abuse of process?

Background

1. In 2007, Telesto Investments Limited (Telesto) opened an investment account with UBS, which was subject to Singaporean jurisdiction. Scott Tyne (Tyne) guaranteed the facility and a related party, ACN 074 971 109 Pty Limited as trustee for the Argot Trust (Trustee Company), provided additional security.
2. By October 2010, Telesto’s account with UBS was in default and UBS commenced enforcement proceedings in Singapore against Telesto and Tyne, but not the Trustee Company.
3. In November 2010, the Trustee Company, Telesto and Tyne commenced proceedings against UBS in the Supreme Court of New South Wales (SCNSW proceedings) relating to allegedly negligent advice given by UBS about acquiring Kazakhstani bonds.
4. The SCNSW proceedings were temporarily stayed pending the outcome of the Singapore proceedings.
5. In March 2012, the Trustee Company and Tyne discontinued their claims against UBS in the SCNSW proceedings, and Telesto pressed on as the sole plaintiff.
6. In July 2012, the Singapore proceedings were decided in UBS’ favour.
7. In May 2013, the SCNSW proceedings were permanently stayed, as it was held that the Singapore proceedings “covered” the causes of action in the SCNSW proceedings.[4]
8. On 13 January 2014, Tyne as trustee for the Trust[5] commenced proceedings against UBS in the Federal Court (FCA proceedings).

Federal Court decisions 

After the FCA proceedings were filed, UBS applied for a permanent stay on the ground that the proceedings were an abuse of process.

At first instance, Justice Greenwood determined that the Trust should have agitated its claims in the SCNSW proceedings. His Honour noted it was Tyne, the director and guiding mind of the Trustee Company, who made the decision to cause the Trustee Company to discontinue as plaintiff in the SCNSW proceedings. Accordingly, he ordered that the FCA proceedings be permanently stayed.[6]

On appeal to the Full Federal Court, the majority held that the FCA proceedings were not an abuse of process because, amongst other things, the Trust’s claims had not been resolved on the merits and in their view the commencement of the FCA proceedings did not result in any unfairness.

They asked (rhetorically): “In circumstances where the Argot Trust, without objection from UBS, obtained unconditional leave from the Supreme Court of New South Wales to discontinue its claims against UBS, what unfairness to or oppression of UBS is involved in the trust bringing of the present proceeding in this Court?”[7]

On the other hand, Justice Dowsett (dissenting) noted that the Trust’s discontinuance of the SCNSW proceedings and later commencement of the FCA proceedings resulted in delay, increased costs and vexation. His Honour noted that to allow the FCA proceedings to remain on foot would inflict manifest unfairness upon UBS and waste public resources, which would likely bring the administration of justice into disrepute. He inferred that Tyne identified a forensic advantage in discontinuing claims in the SCNSW proceedings and remarked that the “right” of a litigant to discontinue and later commence fresh proceedings is inconsistent with modern views as to case management.

Appeal to the High Court

Just as the Federal Court judges were in disagreement about whether the Trust’s claims in the FCA proceedings amounted to an abuse of process,[8] so too were the High Court judges. Ultimately, the majority of the High Court found it did in fact amount to an abuse of process.

In the leading decision, Chief Justice Kiefel, together with Justices Bell and Keane, gave significant consideration to the overarching purpose of the civil practice and procedure provisions under the Federal Court of Australia Act, which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.[9] They agreed with Justices Greenwood and Dowsett that the time to have the trial of the Trust’s claims was in the SCNSW proceedings.[10] As such, they concluded that:

“For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation … is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys.”[11]

In dissent, Justices Nettle and Edelman iterated the points raised by Justices Jagot and Farrell that:

• The court rules expressly provide that discontinuing proceedings does not prevent a plaintiff from claiming the same relief in fresh proceedings; and
• UBS neither objected to the discontinuance of the SCNSW proceedings, nor sought any condition on the grant of leave to discontinue.

Accordingly, they asked (again, rhetorically), in those circumstances, “why should the Trustee’s subsequent commencement of the Federal Court proceedings be seen as unjustifiably oppressive to UBS or as bringing the administration of justice into disrepute?”

Key takeaway

UBS v Tyne builds from Aon v ANU[12] in emphasising the importance of expediency in modern case management. It is also a reminder to litigants to think carefully before discontinuing proceedings if there is any prospect future proceedings may need to be commenced dealing with the same subject matter.[13]

[1] This is of course subject to any conditions that might be imposed by the relevant court when the plaintiff is granted leave to discontinue or withdraw. See for example r. 310(1) of the Qld UCPR; r. 12.3 of the NSW UCPR; r. 25.06 of the Vic Civil Procedure Rules; r. 26.14 of the Federal Court Rules.

[2] UBS AG v Tyne [2018] HCA 45.

[3] The trustees of the same Trust.

[4] Telesto Investments Ltd v UBS AG (2013) 94 ACSR 29.

[5] Having been appointed as new trustee on 9 January 2014.

[6] Tyne v UBS AG (No 3) [2016] FCA 5.

[7] Tyne v UBS AG (No 2) [2017] FCAFC 5 at [107].

[8] I.e. with Greenwood J (at first instance) and Dowsett J (on appeal) believing it was an abuse of process and with Jagot and Farrell JJ believing it was not.

[9] Section 37M of the Federal Court of Australia Act.

[10] UBS AG v Tyne [2018] HCA 45 at [57].

[11] UBS AG v Tyne [2018] HCA 45 at [59].

[12] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.

[13] Albeit the majority did suggest their decision may have been different had the SCNSW proceeding been discontinued by all parties (i.e. if Telesto did not prosecute those proceedings to a final determination): UBS AG v Tyne [2018] HCA 45 at [52].

Authored by: 
Guy Edgecombe, Partner
Mitchell Byram, Associate