- Abuse of process and the overarching purpose of civil practice and procedure.
On 17 October 2018 a complex multi-party and jurisdiction dispute came to an end in a High Court decision permanently staying a Federal Court proceeding. The decision suggests that the overarching purpose of resolving civil disputes quickly, inexpensively and efficiently, for both private and public interest reasons, can now trump traditional private entitlements of parties to make forensic decisions on the conduct of litigation, even when otherwise compliant with all court rules and not falling foul of estoppel or res judicata doctrines.
But only just. The Federal Court was tied 2-all after extra time, with the High Court then determining the matter 4-3 in the following judgments:
- Tyne v UBS AG (No 3) (2016) 236 FCR 1;  FCA 5 (Greenwood J permanently staying proceedings);
- Tyne v UBS AG (No 2) (2017) 250 FCR 341;  FCAFC 5 (Appeal from Greenwood J allowed by Jagot and Farrell JJ reversing stay, with Dowsett J in dissent);
- UBS AG v Tyne  HCA 45 (Appeal from Jagot and Farrell JJ allowed by Keifel CJ, Bell, Keane and Gageler JJ reinstating permanent stay, with Nettle, Edelman and Gordon JJ in dissent).
The litigation arose out of an investment company, Telesto, entering into facilities with UBS subject to Singaporean jurisdiction in 2007. Mr Tyne controlled a trust and related entities including Telesto. Their Kazakhstani investments proved to be worthless, and UBS took enforcement proceedings in the High Court in Singapore in October 2010. Two weeks later Telesto, Mr Tyne personally and a corporate trustee brought NSW Supreme Court proceedings claiming damages and equitable compensation arising out of advice and representations of UBS.
After a series of anti-suit injunction and stay applications and appeals, Mr Tyne and the trustee discontinued their involvement in the NSW proceedings without objection from UBS. Telesto’s remaining claims proceeded, but they were then were permanently stayed in mid-2013 on the basis that Telesto was seeking to re-litigate causes of action which had been determined in the Singaporean proceedings, and which had given rise to a res judicata estoppel.
Mr Tyne became trustee and with his wife commenced Federal Court proceedings in early 2014. They claimed losses arising out of the same factual substratum as the discontinued claims in the Supreme Court. UBS applied to have the Federal Court proceedings stayed on grounds of abuse of process, Anshun and issue estoppel and res judicata. Because of the discontinuance and different parties involved, estoppel and res judicata grounds failed.
The question remaining for determination was whether the Federal Court proceedings were an abuse of process. The primary judge held that the trust could, and should, have brought its claims in the NSW proceedings and failed to give a proper explanation of why it had not done so, and permanently stayed the proceedings.
On appeal, a majority of the Full Federal Court held that the proceedings were not an abuse of process, primarily on the basis that the trust's claims had not been decided on their merits. The minority judge inferred that Mr Tyne had identified a forensic advantage in discontinuing the trust's claims in the NSW proceedings with a view to renewing them if Telesto’s claim was unsuccessful, delaying resolution of the dispute and increasing the costs incurred by UBS. That was an abuse of process, as to allow the proceedings to remain on foot would inflict manifest unfairness on UBS and bring the administration of justice into disrepute.
The majority judgments in the High Court (Keifel CJ, Bell and Keane JJ at - and Gageler J at -) arrived at the same conclusion as the minority in the Full Federal Court. The permanent stay was reinstated, notably based on the "overarching purpose" of the conduct of civil litigation in the Federal Court, to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible, and the public as well as private interests involved in achieving that purpose.
Reciprocally, the minority judgments in the High Court (Nettle and Edelman JJ at -, and Gordon J at -) were conformable with the majority in the Full Court. There was no abuse of process and no stay was justified, given in particular the trust’s right under the court rules to discontinue the NSW proceedings without prejudice to its right to commence fresh proceedings for the same cause of action, the absence of excessive delay by it and the different relief claimed in the different proceedings.
Legal practitioners have generally now for some years been careful to consider what related claims should properly be brought together to avoid being prevented from bringing them separately later by Anshun estoppel ( Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589;  HCA 45.
Equally it is recognised that abuse of process is inherently broader and more flexible than Anshun or issue estoppel, and available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel (Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507;  HCA 28 at ).
What has not been widely appreciated or agreed is the weight which should be given to the overarching purpose requirements of the Federal Court (and near identical requirements in all other superior courts), when considering whether proceedings amount to an abuse of process.
The outcome in USB v Tyne suggests that even greater caution is now required at the outset and throughout the conduct of litigation to ensure that forensic decisions taken are not only conformable with court rules and principles of estoppel and res judicata. They also need to be justified and justifiable as compliant with the overarching purpose, so that extra cost and or delay to a party and/or to the Court administering justice cannot be used to stay proceedings without any determination on the merits.
One final piece of irrelevant trivia from the world of data analytics. Overall in USB v Tyne:
- 40% of the (5) female judges considering the matter found abuse of process, while 60% did not.
- 66% of the (6) male judges considering the matter found abuse of process, while 34% did not.