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

FEDERAL COURT OF AUSTRALIA
Tyne v UBS AG (No 3) [2016] FCA 5

File number(s): QUD 10 of 2014

Judge(s): GREENWOOD J

Date of judgment: 8 January 2016

Catchwords:
HIGH COURT AND FEDERAL COURT – consideration of an application to stay proceedings in the Federal Court of Australia on the footing that the proceedings were commenced and maintained by the applicants in circumstances where they were precluded from doing so by reason of res judicata, an issue estoppel, an Anshun estoppel and the doctrine of abuse of process, having regard to earlier proceedings in which a final judgment on the merits was given against particular parties by the High Court of the Republic of Singapore (called the “Singapore 801 proceedings”); other proceedings in the High Court of Singapore (called the “Anti‑Suit Injunction proceedings”) and final judgment against a particular party in proceedings commenced in the Supreme Court of New South Wales (being proceeding 363808 of 2010)

HIGH COURT AND FEDERAL COURT – consideration of the principles governing the three forms of estoppel recognised by the High Court of Australia, namely, res judicata, issue estoppel and Anshun estoppel – consideration of the principles applicable to abuse of process – consideration of the principles to be applied in determining whether a party is privy in interest with another having regard to the principle stated and applied in Ramsay v Pigram (1968) 118 CLR 271 – consideration of the restatement by the High Court of the principles relating to res judicata, issue estoppel, Anshun estoppel, the doctrine of abuse of process, the relationship between the three classes of estoppel and abuse of process and the principles governing when a party is privy in interest with another discussed in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750

ESTOPPEL – consideration of the discussion by the High Court of Australia in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 concerning the three recognised categories of estoppel according to Australian law, namely, res judicata, issue estoppel and Anshun estoppel – consideration of the relationship between these three categories of estoppel, the preclusive effect of the operation and their relationship with the doctrine of abuse – consideration of the principles governing whether a party is privy in interest with another according to the principle stated and applied in Ramsay v Pigram (1968) 118 CLR 271 – consideration of whether an order for a stay of the Federal Court proceedings ought to be made having regard to those principles

PRACTICE AND PROCEDURE – consideration of whether an order for a stay of Federal Court proceedings ought to be made having regard to whether res judicata, an issue estoppel or an Anshun estoppel arises precluding the applicants from commencing and maintaining the proceedings by reason of prior proceedings in the High Court of the Republic of Singapore between particular parties and prior proceedings in the Supreme Court of New South Wales between particular parties – consideration of whether the trustee of the relevant trust as a party to the Federal Court proceedings, is or was privy in interest with the relevant party to the Singapore proceedings and the proceedings in the Supreme Court of New South Wales

Legislation:
Federal Court of Australia Act 1976 (Cth), ss 23, 31A and 43

Federal Court Rules 2011, rr 16.21, 26.01

Australian Securities and Investments Act 2001 (Cth) – ss 12BAB, 12DA

Corporations Act 2001 (Cth), ss 1041H, 66A, 766B, 767C and 766D

Fair Trading Act 1987 (NSW), s 42

Fair Trading Act 1989 (Qld), s 38

Cases cited:
UBS AG v Telesto Investments Limited, Scott Francis Tyne and ACN 074 971 109 Pty Ltd as Trustee of the Argot Unit Trust [2011] SGHC 170 – cited and quoted

Spilada Maritime Corporation v Cansulex Ltd [1987] AC 460 - cited

CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 - cited

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 - cited

Henry v Henry (1996) 185 CLR 571 - cited

Puttick v Tenon Ltd (2008) 238 CLR 265 - cited

Telesto Investments Limited v UBS AG [2013] NSWSC 503 – cited and quoted

Telesto Investments Ltd & Ors v UBS AG [2012] NSWSC 44 – cited and quoted

Blair v Curran (1939) 62 CLR 464 – cited and quoted

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 – cited and quoted

Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 – cited and quoted

Ramsay v Pigram (1968) 118 CLR 271 – cited and quoted

Fencott v Muller (1983) 152 CLR 570 - cited

Administration of Papua New Guinea v Daera Guba (1973) 130 CLR 353 – cited and quoted

Jackson v Goldsmith (1950) 81 CLR 446 – cited and quoted

Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 – cited

Henderson v Henderson (1843) 3 Hare 100 – cited

Carl Zeiss Stifung v Rayner and Keeler Ltd (No 2) [1967] 1 A.C. 853 – cited

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 – cited and quoted

O’Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698 – cited and quoted

Reichel v Magrath (1889) 14 App Cas 665 – cited and quoted

Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160 – cited and quoted

Johnson v Gore Wood & Co [2002] 2 AC 1 – cited and quoted

D’Orta‑Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 – cited and quoted

Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 – cited

Rogers v The Queen (1994) 181 CLR 251 – cited and quoted

R v O’Halloran (2000) 159 FLR 260 – cited and quoted

Walton v Gardiner (1993) 177 CLR 378 – cited

Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (In liq) (1993) 43 FCR 510 – cited and discussed

Trawl Industries of Australia Pty Ltd (In liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 – cited and discussed

Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 108 ALR 353 – cited and discussed

Date of hearing: 8 May 2015

Date of last submissions: 1 July 2015

Registry: Queensland

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Category: Catchwords

Number of paragraphs: 434

Counsel for the Applicants: The applicant appeared in person

Counsel for the Respondent: Mr J Stoljar SC

Solicitor for the Respondent: Mr S Burnett, King & Wood Mallesons

ORDERS

QUD 10 of 2014

BETWEEN:
SCOTT FRANCIS TYNE AS TRUSTEE OF THE ARGOT TRUST
First Applicant

CLARE ELIZABETH MARKS
Second Applicant

AND:
UBS AG
Respondent

JUDGE:

GREENWOOD J

DATE OF ORDER:

8 JANUARY 2016

THE COURT ORDERS THAT:
1.Pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth), these proceedings are permanently stayed.
2.Mr Scott Francis Tyne as trustee of the Argot Trust pay the costs of the respondent of and incidental to the proceedings including the costs of and incidental to the stay application, on an indemnity basis.

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

REASONS FOR JUDGMENT
GREENWOOD J:
Background

This proceeding concerns an interlocutory application made by UBS AG (“UBS”), the respondent in the principal proceeding, by which it seeks a permanent stay or dismissal of the principal proceeding.
It does so either pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) or in the exercise of the Court’s inherent or implied power to control its own process and procedure on four grounds: abuse of process; Anshun estoppel; res judicata; or, issue estoppel, arising from the claims advanced and orders made in proceedings in the High Court of Singapore (in proceeding 801 of 2010 – the “Singapore 801 proceedings” and proceeding 1160 of 2010 – the “Singapore anti‑suit proceedings”) and, or alternatively, proceedings in the Supreme Court of New South Wales (in proceeding 2010/363808 – the “SCNSW proceedings”).
Alternatively, UBS seeks summary dismissal of the principal proceeding, in whole or in part, pursuant to s 31A of the Federal Court of Australia Act in conjunction with r 26.01 of the Federal Court Rules 2011 (Cth) on the ground that the proceeding has no reasonable prospect of success or is an abuse of process.
In the further alternative, UBS seeks orders that the statement of claim filed on 13 January 2014 and the subsequent amended statement of claim filed 24 March 2014 be struck out, in whole or in part, pursuant to r 16.21 in respect of the claims pleaded by the applicants or by either of them on the ground that the pleading fails to disclose a reasonable cause of action or other case appropriate to the nature of the pleading; or, the pleading is otherwise an abuse of process of the Court.
The first applicant in the principal proceeding is Mr Scott Tyne. He sues solely in his capacity as the sole trustee of the Argot Trust. Mr Tyne was appointed trustee of the Argot Trust on 9 January 2014, four days before the commencement of the principal proceeding. The Trust is governed by a settlement and Deed of Trust dated 26 February 1997.
The second applicant is Ms Clare Elizabeth Marks. Ms Marks is the spouse of Mr Tyne.
In the originating application filed on 13 January 2014, the applicants claim the following relief. As to the first applicant:
1.Damages for the infringement of section 12DA, Australian Securities and Investments Act 2001 (Cth).
2.Damages for the infringement of section 1041H, Corporations Act 2001 (Cth).
3.Damages for the infringement of section 42, Fair Trading Act 1987 (NSW) (as in force at the relevant time).
4.Damages for the infringement of section 38, Fair Trading Act 1989 (Qld) (as in force at the relevant time).
5.        Damages pursuant to the common law of negligence.
6.        Equitable compensation for breach of fiduciary duty.
7.        Such other order as the Court sees fit.
As to the second applicant, the claims are these:
8.Damages for the infringement of section 12DA, Australian Securities and Investments Act 2001 (Cth).
9.Damages for the infringement of section 1041H, Corporations Act 2001 (Cth).
10.Damages for the infringement of section 42 Fair Trading Act 1987 (NSW) (as in force at the relevant time)
11.Damages for the infringement of section 38, Fair Trading Act 1989 (Qld) (as in force at the relevant time).
12. Such other order as the Court sees fit.
Some aspects of the statutory provisions relied upon by the applicants
Section 12DA falls within Div 2 of Pt 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (the “ASIC Act”) and provides that a person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. For the purposes of Div 2 of Pt 2 of the ASIC Act, financial service has the meaning given by s 12BAB, and in other provisions of the ASIC Act, it has the same meaning as it has in Ch 7 of the Corporations Act 2001 (the “Corporations Act”).
Section 1041H(1) of the Corporations Act falls within Ch 7 of that Act and provides that a person must not, in this jurisdiction, engage in conduct in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. Conduct for the purposes of s 1041H(1) includes the 10 classes of conduct set out at s 1041H(2). The terms financial product and financial service have the meanings attributed to them by Ch 7 of the Corporations Act.
At para 5(e) of the amended statement of claim filed on 24 March 2014, the applicants plead that UBS, was at all material times, and remains, a provider of financial services within the meaning of s 12BAB of the ASIC Act. The applicants also plead that in respect of the series of representations pleaded and relied upon, those representations were “made in relation to ‘financial services’ within the meaning of section 12BAB [of that Act] and section 766A [of the Corporations Act]”. The applicants probably intended to convey, by that pleading, an assertion that each of the various representations relied upon were made in relation to the provision of a financial service by UBS in the pleaded circumstances.
By s 12BAB(1) of the ASIC Act, a person provides a financial service, for the purposes of Div 2 of Pt 2 of that Act if they: (a) provide financial product advice; (b) deal in a financial product; (c) make a market for a financial product. Then, five other categories of conduct are identified: see s 12BAB(1)(a), (b) and (c) of the ASIC Act as to the first three categories, and s 12BAB(1)(d) to (h) as to the remaining categories. Each of s 12BAB(1)(a), (b) and (c) are the subject of statutory meaning according to s 12BAB(5), (7) and (11) respectively, of that Act.
Although the precise content of the pleading in relation to s 12BAB of the ASIC Act and s 766A of the Corporations Act is not identified, the applicants presumably contend, having regard to the totality of the pleading, that UBS was, relevantly, engaged in the provision of a financial service for the purposes of each Act because it was providing financial product advice to Mr Tyne, in the manner pleaded.
Section 766A(1) of the Corporations Act adopts the same formulation reflected in s 12BAB(1) and as to s 766A(1)(a), (b) and (c), each category of conduct has a statutory meaning attributed to it set out at ss 766B, 767C and 766D respectively in the same terms as s 12BAB(5), (7) and (11) respectively.
Having regard to the formulation of the relief in the originating application and the matters pleaded in the amended statement of claim, I proceed on the assumption (as the matter is not precisely pleaded) that (apart from any other causes of action asserted in the pleading), the applicants contend, as to the statutory matters, that UBS was, in the relevant circumstances of the pleading, engaged in the provision of financial services to Mr Tyne (in the capacity and circumstances pleaded) as UBS was providing financial product advice to him because it was, relevantly, making (in terms of s 12BAB(5) of the ASIC Act):
… a recommendation or statement of opinion, or a report of either of those things, that:
(a)is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
(b)could reasonably be regarded as being intended to have such an influence;
…
Section 38 of the Fair Trading Act 1989 (Qld) was in the following terms at the date of the events pleaded in the statement of claim filed 13 January 2014 and the amended statement of claim filed 24 March 2014:
38 Misleading or deceptive conduct – TPA s 52
(1)A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in this division shall be taken as limiting by implication the generality of subsection (1).
Section 42 of the Fair Trading Act 1987 (NSW), at the date of the relevant events, contained the same proscription in the same terms as s 38 of the Fair Trading Act 1989 (Qld).
UBS’s contentions
The essence of UBS’s position is this.
First, UBS says that both applicants are seeking, in substance, to re‑litigate issues which have been finally determined in the Singapore 801 proceedings and the SCNSW proceedings and which (so far as Mr Tyne as trustee of the Argot Trust is concerned) breach the terms of the anti‑suit injunction granted by the High Court of Singapore in the Singapore anti‑suit proceedings. UBS says that, as a result, the Federal Court principal proceeding constitutes an abuse of process. UBS says that making good this ground does not require any conclusion that the present applicants are “privies” of the parties to the Singapore 801 proceedings, the Singapore anti‑suit proceedings or the SCNSW proceedings (that is to say, privies of Mr Tyne in his personal capacity, or an entity called Telesto Investments Limited (“Telesto”)), for the purposes of Anshun estoppel, res judicata or issue estoppel.
Second, UBS says that both applicants in the present Federal Court proceeding acted unreasonably in failing to bring the claims made in the Federal Court proceeding in either or both the Singapore 801 proceedings or the SCNSW proceedings with the result that, consequent upon the final determination of those earlier proceedings, an Anshun estoppel has arisen which prevents the applicants from prosecuting the Federal Court proceedings.
Third, UBS says that just as Sackar J in the SCNSW proceedings concluded that a res judicata had arisen, a res judicata has arisen so far as the Federal Court proceedings are concerned. UBS says that the causes of action advanced in the Federal Court proceedings were the subject of final judicial determinations in the Singapore 801 proceedings and in the SCNSW proceedings. UBS says that those final determinations bind both applicants as privies of parties to the earlier actions.
Fourth, UBS says that the issue of the entitlement to raise the present claims was fully heard and determined in the Singapore 801 proceedings thus giving rise to an issue estoppel which was recognised and enforced in the SCNSW proceedings. UBS says that both applicants, as privies of parties to the earlier actions, are likewise precluded by an issue estoppel from contending in the Federal Court proceedings that they are entitled to pursue the present claims.
Fifth, UBS says that if any one of the four grounds is made good, it follows that the Federal Court proceeding should be dismissed or permanently stayed. UBS says that if none of the four grounds are made good, then UBS nonetheless contends that the Federal Court proceeding should be summarily dismissed or the applicants’ pleadings struck out (both pleadings), in whole or in part, on the footing that the statement of claim and the amended statement of claim fail to disclose a reasonable cause of action or that the proceeding is otherwise an abuse of process of the Federal Court of Australia. UBS relies upon r 16.21(1) and s 31A of the Federal Court of Australia Act.
In dealing with the merits of these contentions which, if made good, will result in the foreclosure of the applicants’ proceedings, the whole of the relevant circumstances must be considered. The starting point is to identify the case pleaded against UBS in the Federal Court proceeding.
The Federal Court proceeding
Since UBS frames its application having regard to both the statement of claim filed on 13 January 2014 and the amended statement of claim filed on 24 March 2014, I propose to have regard to the amended statement of claim (which I call “the pleading”) as the extant final pleading framing the case the applicants seek to litigate by invoking the Court’s jurisdiction.
The participants to the pleaded events
As already mentioned, the applicants to the proceeding are Mr Scott Francis Tyne in his capacity as trustee of the Argot Trust (and in no other capacity) and Ms Marks in her individual capacity.
The pleaded factual contentions (and asserted matters of law) are these.
At all material times, Mr Tyne was and remains an Australian citizen; is presently resident in Australia; was a director of two companies incorporated in Australia, Pole Star Investments Limited (“Pole Star”) and ACN 074 971 109 Pty Limited (“ACN 074”); and, by reason of an Investment Management Deed made between ACN 074 as trustee of the Argot Trust and Mr Tyne dated 13 April 2000, Mr Tyne was and remains engaged by the Argot Trust to manage the Argot Trust’s investment portfolio pursuant to the terms of the Deed: para 3.

In his capacity as a director of ACN 074, Mr Tyne was empowered to do the things ACN 074 did as pleaded throughout the amended statement of claim. In his capacity as a director of Pole Star, Mr Tyne was empowered to cause Telesto to do the things Telesto did as pleaded. By reason of cl 3.1 of the Trust Deed, Mr Tyne was empowered to cause the Argot Trust to do the things the Argot Trust did as pleaded: paras 3A, 3B, 3C and 3D.
In the pleading, the applicants use the phrase “Tyne Related Entities” and that term is defined to mean a “collective reference” to Mr Tyne, ACN 074 in its capacity as trustee of the Argot Trust, Pole Star and, through Pole Star, Telesto: para 1.
Ms Marks is an Australian citizen; resident in Australia; the spouse of Mr Tyne; and, as regards all things to do with the construction of a dwelling on particular land, Ms Marks was the principal of Mr Tyne, including as to such matters as the funding of the construction of the dwelling. A reference in the pleading to Ms Marks being induced to act through Mr Tyne is a reference to Mr Tyne taking action for and on behalf of Ms Marks in Mr Tyne’s capacity as agent of his principal, Ms Marks: paras 4 and 4A.
At all material times, UBS was (and remains) a corporation incorporated in Switzerland operating through offices in Zurich, Sydney and Singapore; a corporation engaged in trade or commerce; and, a provider of financial services within the meaning of s 12BAB of the ASIC Act: para 5.
Prior to the appointment of Mr Tyne as trustee of the Argot Trust, the sole trustee of that trust was ACN 074: para 8.
At all times material to the events set out in the pleading, Telesto was an investment company incorporated in Jersey: para 9.
At all such material times, Pole Star was exclusively engaged by Telesto to manage Telesto’s investment portfolio pursuant to the terms of an Investment Management Deed made between Telesto, Pole Star and others dated 9 October 2006: para 10. However, it should be noted that the deed dated 9 October 2006 in evidence for the purposes of the application is a deed made between Telesto, Chiltern Trust Company (Jersey) Limited as trustee of “The Dog Star Trust” created by the “Dog Star Trust Deed” (a trust which is recited as being the owner of all the issued shares in Telesto), Malba Limited, a Cayman Islands incorporated entity, as the “Enforcer” of the trust obligations, and Pole Star Funds Management Pty Limited (“PSFM”), an Australian incorporated company, recited as appointed to act as the discretionary investment manager for Telesto in accordance with the obligations set out in cl 2.2 of the Investment Management Deed.
The pleaded entity, Pole Star, is not the investment manager appointed under the Investment Management Deed. Nor is PSFM one of the “Tyne Related Entities”.
At all such material times, each of Mr Steven Betsalel and Mr Edward Farrell was a representative of UBS for the purposes of s 910A of the Corporations Act as that term is understood for the purposes of Pt 7.6 of that Act. Mr Betsalel and Mr Farrell had the actual or ostensible authority of UBS to act on its behalf in its dealings with Mr Tyne: para 11.
At all such material times, Mr Tyne, and through him Pole Star and the Argot Trust were in Australia and all pleaded telephone conversations were conducted with Mr Tyne whilst he was in Australia. In all its dealings with Mr Tyne and through him the Tyne Related Entities, UBS was engaged in trade or commerce between Australia and places outside Australia: paras 6 and 7.
Mr Tyne and through him the Tyne Related Entities, reasonably and in good faith relied upon, the conduct of Mr Betsalel and Mr Farrell as pleaded (in relation to the provision of the financial service) within the meaning of s 917A of the Corporations Act. The conduct of Mr Betsalel and Mr Farrell gave rise to loss or damage for the purposes of s 917E of the Corporations Act (suffered by the Argot Trust and Ms Marks and other Tyne Related Entities) giving rise to a contended obligation to compensate Mr Tyne as trustee of the Argot Trust for that loss as contemplated by s 917F(1) of the Corporations Act.
Prior to 2007, ACN 074, as trustee of the Argot Trust (through Mr Tyne as director) and Telesto (through the activities of Pole Star) had been clients of the Wealth Management Division of the Zurich branch of UBS. Prior to 2007, Mr Tyne was resident in the United Kingdom: para 13.
In the first quarter of 2007, Mr Tyne moved to Australia. He retained UBS Wealth Management Australia Limited (“UBS Australia”), a wholly owned subsidiary of UBS, for the purpose of obtaining investment advice. Mr Betsalel, based in Australia, was UBS Australia’s client adviser to Mr Tyne. Mr Betsalel in 2007 (sometime after April 2007) relocated from Australia to Singapore retaining his position with UBS and continued to provide financial advice to both Mr Tyne and Telesto, on behalf of UBS: paras 14 and 15.
Investments and equity markets
At August 2007, consistent with Mr Tyne’s investment preferences and experience, the Telesto portfolio of investments was principally invested in equities and managed funds. Telesto’s investments included securities the subject of an Initial Securities Lending Arrangement (the “ISLA”) made between Telesto and ACN 074 as trustee of the Argot Trust (made between those entities through Mr Tyne with Mr Tyne acting on behalf of both Telesto (through Pole Star) and the trustee of the Argot Trust). It also included securities acquired by Telesto in accordance with the ISLA or securities acquired by Telesto as particularised at para 16(c): para 16.
The Telesto portfolio of investments included securities lent to Telesto by ACN 074 as trustee of the Argot Trust pursuant to the ISLA. Mr Tyne told Mr Betsalel and Ms McCreery (of UBS Singapore) in a meeting in Singapore in August 2007 that the Telesto portfolio included securities lent to Telesto by the trustee of the Trust and also told Mr Gretener, an employee of the Zurich branch of UBS, at a meeting in London, the same information: para 17.
Throughout mid to late 2007, Mr Tyne and Mr Betsalel had a number of telephone conversations regarding the prevailing state of global equity markets and the exposure of Telesto’s portfolio to investments in equities: para 18. In these conversations, Mr Betsalel recommended that Telesto reconfigure its portfolio to include bonds recommended by UBS in order to reduce the risk in Telesto’s portfolio investments: para 19. In mid‑2007, Mr Betsalel suggested that Mr Tyne speak to Mr Farrell for the purpose of UBS providing Telesto with advice in connection with the possible investment by Telesto in emerging market debt securities: para 19.
UBS, through Mr Betsalel and Mr Farrell (and otherwise), held itself out as having specialist knowledge and expertise in the analysis of debt capital markets including the debt capital markets of emerging countries: para 21.
The Expertise Representations – the para 21 representations
At para 21, thirteen particular representations are pleaded as having been made by UBS through Mr Betsalel and Mr Farrell (and otherwise) to Mr Tyne concerning UBS’s specialist knowledge and expertise. They include (among others) that UBS was a leading underwriter and arranger in relation to debt capital markets of emerging countries; Mr Farrell (and others of UBS in Singapore) were expert and experienced in the debt capital markets of emerging countries; Mr Farrell was particularly knowledgeable about the debt capital markets of Russia and the Commonwealth of Independent States including Kazakhstan; UBS had people on the ground in Almaty providing the benefits of local knowledge and connections; UBS was one of the most active traders of relevantly corporate bonds of Kazakh companies; UBS had a close relationship with Kazakhstan; Mr Farrell had traded Russian debt throughout the Russian debt crisis; and, Mr Farrell kept abreast of developments in Russia and the Commonwealth of Independent States, including Kazakhstan, both from a debt capital markets perspective and as regards current and political affairs. These representations are described in the pleading as the Expertise Representations. As to the time when those representations were said to have been made, see [49] below, although the pleading is imprecise in this regard.
Mr Tyne, and through him, the Tyne Related Entities, relied upon the para 21 Expertise Representations in all subsequent dealings with UBS: para 24. Each of the para 21 Expertise Representations was made in relation to financial services within the meaning of s 12BAB of the ASIC Act and s 766A of the Corporations Act.
By reason of a document called UBS Client Profile and Acceptance Checklist dated 20 November 2007 and an email from Mr Tyne to Mr Farrell dated 21 November 2007, UBS was aware (prior to the opening by Telesto of an account with UBS Singapore described later in the pleading) that Mr Tyne “would rely upon financial and investment advice and recommendations proffered by UBS to him”: para 20.
Bonds and market parameters – the paras 25 and 26 representations
As a result of telephone conversations between “mid to late 2007” (see particulars to para 21) and a particular telephone conversation between Mr Tyne and Mr Betsalel (with no date pleaded – see para 25(b)(i)) together with an email from Ms Chan (an employee of UBS and a colleague of Mr Farrell) dated 2 November 2007 to Mr Tyne, UBS and Pole Star (on behalf of Telesto) agreed to reconfigure the Telesto portfolio to include bonds selected by UBS having regard to two particular parameters (the “para 25 criteria”). First, the bonds were to be limited to those issued by financial institutions that were “important” in the context of their country of residence. Second, such countries were to have the “liquidity and motivation” to support those financial institutions: para 25.
In a number of telephone calls made in the period mid to late 2007, representations were made by Mr Betsalel and Mr Farrell to Mr Tyne (and through him to other Tyne Related Entities) that bonds issued by select Kazakhstan financial institutions met the para 25 criteria, as: the nation of Kazakhstan had little or no external debt; Kazakhstan had tens of billions of dollars of liquid assets due to its national oil and gas revenues; Kazakhstan had repaid International Monetary Fund loans early and in full; and Kazakhstan was ruled by President Nazarbayev who aspired for Kazakhstan to be the banking and financial centre of central Asia: para 26.
The First Oral Kazakhstan Representations – the para 27 representations
In a number of telephone calls made in mid to late 2007 to Mr Tyne, Mr Betsalel and Mr Farrell made 11 representations pleaded at para 27(a) to (k). At para 27(a) to (c), the representations were that Kazakh financial institutions were audited by “Big 4 accounting firms”; Kazakhstan had a “best practice” financial regulatory regime; and President Nazarbayev and his family held interests in Kazakh financial institutions and, in particular, Bank Turan‑Alem (“BTA”) and Astana Finance (“Astana”).
Paragraph 27(d) concerns a future matter, namely, that the government of Kazakhstan would support its banking and finance sector and especially financial institutions in which President Nazarbayev’s family held an interest.
Paragraph 27(e), (j) and (k) plead opinions to this effect: in the opinion of UBS, BTA was “too big to fail” and would be supported by the government of Kazakhstan; in UBS’s opinion, BTA and Astana could count on support from the government of Kazakhstan; and, in UBS’s opinion, BTA and Astana Eurobonds were “good buying” at the prices prevailing in late 2007.
Two other opinions are pleaded at 27(h) and (i), namely, the concerns expressed by ratings agencies as to the exposure of Kazakh banks to the retail estate sector had been exaggerated; and, Kazakhstan had the best banking system in Eastern Europe and Central Asia including Russia.
These para 27 representations are described in the pleading as the “First Oral Kazakhstan Representations” and to the extent that any of the representations are a statement of opinion, those opinions were made, it is said, without any reasonable basis for making them having regard to particular matters pleaded at paras 74 to 77 of the pleading.
The First Written Kazakhstan Representations – the para 32 representations
At para 32, the applicants plead that UBS made further “statements” concerning the creditworthiness of Kazakh financial institutions and the attractiveness of investing in Eurobonds issued by those institutions. These statements were made to Mr Tyne (and through him to the other Tyne Related Entities) between mid‑October 2007 to April 2008.
Paragraph 32 pleads 22 such statements.
It is not necessary in these reasons to set out all of these statements. The representations can be illustrated by these pleaded statements: “We do not currently observe any signs of deterioration in the fundamentals of Kazakh banks under coverage [which include BTA and Astana]”; “The imminent risk for the banking sector is a decline in real estate prices, which would cause a deterioration of asset quality and collateral valuation and may lead to rising NPL levels … We see the leading Kazakh banks as well protected from this risk. The banks are well provisioned …”; “… we believe there is no threat to banks being unable to service their external debt in the mid term”; “S&P (and UBS) do not have concerns with KZ banks liquidity”; “We are no longer concerned about banks’ [including BTA’s and Astana’s] ability to repay international debt. It is now a question of whether there will be further growth in the banks’ franchises”; and “Emerging market bonds become a safe haven”.
The 22 statements pleaded at para 32 are said to be drawn, variously, from a document published by UBS entitled UBS Investment Research – Kazakhstan Banks” dated 11 October 2007 and emailed by Mr Betsalel to Mr Tyne on 17 October 2007 and by Ms Chan to Mr Tyne on 2 November 2007; an email written by Mr Viacheslav Shilin of UBS dated 1 October 2007 and emailed by Mr Betsalel to Mr Tyne on 17 October 2007 and by Ms Chan to Mr Tyne on 2 November 2007; a UBS document entitled UBS Analyst Comments on SP’s Kazakh Downgrade emailed by Mr Betsalel to Mr Tyne on 13 December 2007; a UBS document entitled UBS Investment Research – Notes from our trip to Almaty dated 13 February 2008 and emailed to Mr Tyne by Mr Farrell and/or Mr Betsalel by early April 2008; and a paper prepared by Mr Farrell entitled Emerging Markets High Yield Bonds provided to Mr Tyne by Mr Betsalel by email on 1 April 2008.
These 22 statements at para 32 are described in the pleading as the “First Written Kazakhstan Representations”.
The applicants say that five of the para 32 statements are representations as to future matters within the meaning of s 12BB of the ASIC Act, s 769C of the Corporations Act, s 37 of the Fair Trading Act (Qld) and s 41 of the Fair Trading Act (NSW) and to the extent that any of the statements amount to an expression of an opinion, that opinion was expressed without any reasonable basis for it having regard to the matters pleaded at paras 74 to 77.
The Ratio Representations – the para 37 representations
On 17 October 2007, Mr Betsalel sent an email to Mr Tyne (which was also sent by Ms Chan to Mr Tyne on 2 November 2007) attaching a UBS document entitled UBS Investment Research – Kazakhstan Banks dated 11 October 2007 which contained projections concerning five “key balance sheet and profit and loss ratios for BTA”. The applicants say that to the extent the representations are a statement of opinion, they were made without a reasonable basis having regard to the paras 74 to 77 matters: para 37.
The para 37 representations are described in the pleading as the “Ratio Representations”.
The UBS Representations – the para 41 representations
At para 41, the applicants plead that, by making the Expertise Representations (mid to late 2007); the First Oral Kazakhstan Representations (mid to late 2007), the First Written Kazakhstan Representations (17 October 2007 to 1 April 2008) and the Ratio Representations (17 October 2008), and by “subsequently advising Telesto to purchase and retain Eurobonds issued by banks in Kazakhstan”, UBS made eight pleaded representations collectively described as the “UBS Representations”: para 41.
The para 41 UBS Representations are these:
·UBS had sufficient expertise to advise in respect of proposed investments in Eurobonds issued by Kazakhstan banks;
·UBS had conducted a reasonable amount of research into the viability of investments in Eurobonds issued by Kazakhstan banks;
·there was no information reasonably available to UBS or to investors and professional investment advisers generally that cast material doubt over the correctness of the statements and opinions expressed by UBS that had not been communicated to Mr Tyne by UBS;
·to the extent that information became reasonably available to UBS or to investors and professional investment advisers generally that would cast material doubt over the correctness of any of the statements and opinions expressed by UBS to Mr Tyne, that information would be communicated to Mr Tyne by UBS;
·BTA and Astana were the subject of appropriate financial regulation to justify an investment in bonds issued by them;
·in the opinion of UBS, the Kazakhstan government would support BTA and Astana should they otherwise be at risk of defaulting on their loans;
·in the opinion of UBS, the purchase of a substantial amount of bonds issued by BTA and Astana would be a sound investment decision having regard to the circumstances and the information reasonably available to UBS; and
·in the opinion of UBS, there was no reason to be concerned about BTA’s and Astana’s ability to repay international debt, it now being a question whether there would be further growth in the balance sheets of those entities.
The applicants plead that to the extent that these representations constitute the expression of opinion, there was no reasonable basis for it having regard to the paras 74 to 77 factors.
Reliance steps
The applicants plead that in the period from August 2007 to February 2008, in reliance upon: (a) the First Oral Kazakhstan Representations; (b) the UBS Representations (which, in turn, are pleaded as deriving from the paras 25, 27, 32 and 37 representations – see [49], [51], [56] and [62] of these reasons); and, (c) the First Written Kazakhstan Representations (qualified, by the phrase, “to the extent that they had then been made”), Mr Tyne did five things: para 45. These representations are later described as the representations referred to in the preamble to para 45.
Those five things were these.
First, he arranged for the Zurich branch of UBS to provide an inter‑branch “guarantee” of any account opened by Telesto with UBS Singapore (called the “Inter‑Branch Arrangement”).
Second, he arranged for ACN 074 as trustee of the Argot Trust to acquiesce in the pledge by Telesto of nominated securities “lent” to Telesto under the ISLA, as security for the Inter‑Branch Arrangement: see Table 1 to the pleading as to the securities lent prior to 6 September 2007.
Third, he arranged for ACN 074 as trustee of the Argot Trust to lend to Telesto other nominated securities pursuant to the ISLA as collateral security for the Inter‑Branch Arrangement: see Table 2 to the pleading as to the securities lent to Telesto on 6 September 2007.
Fourth, he arranged for Telesto to open an account with UBS Singapore including a credit facility secured by a mortgage called the “Lombard Loan”.
Fifth, he arranged for Pole Star, as agent for Telesto, “to call upon the Inter‑Branch Arrangement as security for the Lombard Loan” which enabled Telesto to acquire bonds recommended by Mr Farrell as described in Table 3 to the pleading: bonds issued by BTA on 14 January 2008, 16 January 2008, 17 January 2008, 11 March 2008 and 17 March 2008 (being six bond issues in all) and 10 bond issues in all by Astana on 14 January 2008, 15 January 2008, 16 January 2008, 18 January 2008 and 5 February 2008. Thus, 16 bonds were taken up by Telesto. Some were issued in Pounds Sterling. Others were issued in Euros and others in United States Dollars. The subscription price for three of the bonds issued in Pounds Sterling was £2,166,031.25. The subscription price for seven of the bonds issued in Euros was €12,179,552.21. The subscription price for six of the bonds issued in United States Dollars was USD$7,362,937.50.

The applicants plead that each representation referred to at [67] was false when made and remained false throughout the para 45 periods, namely, mid‑2007 to 1 April 2008: para 46. They plead that those representations induced ACN 074 as trustee of the Argot Trust to do the things described at [70] and [71] and but for those representations ACN 074 as trustee of the Argot Trust would not have done those things: para 48.
Margin Calls
In the first quarter of 2008, the market value of the bonds (a reference to the bonds acquired by Telesto as pleaded at para 45(e) – see [73]) declined and UBS made, and continued to make, by telephone calls, a number of “Margin Calls” upon Mr Tyne demanding a reduction in the balance of the Lombard Loan used by Telesto in the purchase of the bonds: para 49.
The Second Oral Kazakhstan Representations – the para 50 representations
The applicants pleaded that in the “context of those telephone calls” UBS, through Mr Betsalel and Mr Farrell, made further oral representations as to the “creditworthiness” of BTA and Astana and the “sensibleness” of Telesto meeting Margin Calls in order to have Telesto retain the Bonds. The representations were that BTA and Astana were fundamentally sound; BTA was “too big to fail”; Astana was a “quasi‑sovereign credit”; and the Kazakh government “would support BTA and Astana”: para 50.
These para 50 representations are described in the pleading as the “Second Oral Kazakhstan Representations”.
The Default Representation – the para 51 representation
In the second quarter of 2008, Mr Farrell represented to Mr Tyne that BTA “is not a bank that is going to default”: para 51.
This representation is described in the pleading as the “Default Representation”.
The applicants plead that to the extent that each para 50 representation and the para 51 default representation is a representation as to a future matter, they rely upon s 12BB of the ASIC Act, s 769C of the Corporations Act, s 41 of the Fair Trading Act (NSW) and s 37 of the Fair Trading Act (Qld) and to the extent that any such representation is a statement of opinion, it was made without any reasonable basis for it.
Reliance Steps
In the period February 2008 to August 2008, in reliance upon the para 45 representations now described as the “preamble representations” (described at [67]), the para 50 Second Oral Kazakhstan Representations and the para 51 Default Representation, Mr Tyne did two particular things: para 56.
First, he arranged for ACN 074 as trustee of the Argot Trust to lend to Telesto particular nominated securities pursuant to the ISLA thereby enabling Telesto to meet Margin Calls made upon it in order to retain the bonds it had acquired and, in addition, to acquire in April 2008 additional bonds.
Second, he arranged for ACN 074 as trustee of the Argot Trust to agree with Telesto (which was then acting through its agent Pole Star whose affairs were conducted by Mr Tyne), a replacement securities lending arrangement (described in the pleading as the “Second Securities Lending Arrangement”). The replacement “Securities Lending Agreement” is dated 4 August 2008 and made between ACN 074 as trustee of the Argot Trust and Pole Star.
The applicants plead that the para 45 preamble representations described at [67], the para 50 Second Oral Kazakhstan Representations and the para 51 Default Representation were false when made and remained false at all times thereafter (including the period February 2008 to August 2008) and give rise to contraventions of s 12DA of the ASIC Act, s 1041H of the Corporations Act and contraventions of the two State Fair Trading Acts.
The applicants plead that the representations described at [84] induced ACN 074 as trustee of the Argot Trust to do the things described at [82] and [83] and but for those representations ACN 074 as trustee of the Argot Trust would not have done those things.
The Second Written Kazakhstan Representations – the para 60 representations
After the first quarter of 2008, UBS made further representations by the provision of written materials to Mr Tyne as to the “creditworthiness” of BTA and Astana and the “sensibleness” of Telesto meeting Margin Calls in order that Telesto retain the bonds taken up by it: para 60. On 19 September 2008, Mr Farrell sent Mr Tyne an email concerning BTA in which Mr Farrell said the position was: “Overall: very, very positive. Usual disclaimer, mainly I don’t have a crystal ball, but this is one bank that is NOT having problems”. On 24 October 2008, Mr Farrell sent an email to Mr Tyne attaching a document entitled UBS Investment Research, Astana Finance dated 14 October 2008 which contained the following remarks:
“Total assets for Astana Finance grew 19.4% during the 1H08 to USD $2.4bn”, “NPL’s/Gross loans increased to 1.5% but are covered by 2.4x”, “Given the capital injections by shareholders, paid in share capital increased over 5x to US $248mn” and “CAR stands at a healthy 19%”.
These para 60 representations are described in the pleading as the “Second Written Kazakhstan Representations”.
The pleading adopts the usual format of asserting that the representations were made in relation to financial services within the meaning of the ASIC Act and the Corporations Act and to the extent that the representations are a statement of opinion, the opinion was made without any reasonable basis for it having regard to paras 74 to 77 of the pleading.
The Third Oral Kazakhstan Representations – the para 64 representations
After the first quarter of 2008 and before 24 September 2008, UBS made further representations, by way of oral statements made by Mr Betsalel and Mr Farrell in the course of telephone conversations with Mr Tyne, as to the “creditworthiness” of BTA and Astana and the “sensibleness” of Telesto meeting Margin Calls in order that Telesto retain the bonds taken up by it. The applicants plead statements to the effect that “the Bonds are good” and the “Bonds are money good” (sic): para 64.
These para 64 representations are described in the pleading as the “Third Oral Kazakhstan Representations”.
Reliance Steps
After August 2008, Mr Tyne, in reliance upon the para 45 preamble representations (see [67]), the para 60 Second Written Kazakhstan Representations (see [86]) and the para 64 Third Oral Kazakhstan Representations (see [89]) (again qualified by the phrase “to the extent that they had been made”), did two things: para 65.
First, he caused ACN 074 as trustee of the Argot Trust to refrain from requesting the return of the securities lent to Telesto as identified in the pleading described as the “Lent Securities”.
Second, he caused ACN 074 as trustee of the Argot Trust to agree to Telesto pledging or liquidating the Lent Securities in order to enable Telesto to meet Margin Calls and retain the bonds.
The applicants plead that the representations referred to at [91] of these reasons were false when made and false when the steps described at [92] and [93] were taken.
By reason of those matters, the applicants contend that UBS contravened s 12DA of the ASIC Act, s 1041H of the Corporations Act and the relevant provisions of the State Fair Trading Acts.
The applicants contend that but for the para 64 Third Oral Kazakhstan Representations, ACN 074 as trustee of the Argot Trust, would not have undertaken the steps described at [92] and [93] of these reasons and only took those steps in reliance upon the representations.
The Fourth Oral Kazakhstan Representations – the para 69 representations
On or about 24 September 2008, Mr Tyne met with Mr Farrell, Mr Betsalel and other UBS employees in Singapore to discuss the global financial crisis and its effect upon the bonds taken up by Telesto: para 69. The applicants plead that at this meeting Mr Farrell made at least five representations described in the pleading as the Fourth Oral Kazakhstan Representations: para 69.
The representations were: UBS was “comfortable with the Bonds”; Kazakhstan had “virtually no foreign debt and massive foreign currency reserves”; the Kazakh government “could refinance the entire banking sector if it had to”; the banking system was “well regulated with key financial institutions including BTA and Astana audited to international accounting standards”; and, the Kazakh government “will support the nation’s key financial institutions [including] BTA and Astana which were both ‘fundamentally sound’”: para 69(a) to (e).
Reliance Steps
After 24 September 2008, Mr Tyne, in reliance upon the para 45 preamble representations (see [67]), the para 60 Second Written Kazakhstan Representations (see [86]) and the para 64 Third Oral Kazakhstan Representations (again qualified by the phrase “to the extent that they had then been made” – (see [89])), did two things (although it is not pleaded that he did so in reliance upon the Fourth Oral Kazakhstan Representations): para 70.
First, he caused ACN 074 as trustee of the Argot Trust to refrain from requesting the return of the Lent Securities.
Second, he caused ACN 074 as trustee of the Argot Trust to “acquiesce” in Telesto pledging or liquidating the Lent Securities in order to meet Margin Calls so as to enable Telesto to retain the bonds.
In the way earlier described, the applicants contend that these representations (and each of the Fourth Oral Kazakhstan Representations) were false when made and remained false thereafter including after 24 September 2008: para 71; contraventions of the legislation (as earlier mentioned) arise and, but for the representations, ACN 074 as trustee for the Argot Trust would not have taken the steps described at [100] and [101] of these reasons.
Undisclosed matters of fact – the para 74 facts
At para 74, the applicants plead that “at no time” did UBS “inform” any “Tyne Related Entity” of any of 26 matters of fact each of which, they say, was “true” when each of the para 64 representations (namely, the Third Oral Kazakhstan Representations) were made (subject to two matters each of which, they say, was true at the date of a document particularised in the pleading).
It is not necessary in these reasons to set out the content of each of the 26 contended undisclosed matters of fact. It is sufficient for present purposes to note that the substance of para 74 is that from a period in 2003 to 2008 a series of reports were issued from bodies including the International Monetary Fund (“IMF”), the United Nations (“UN”), the Organisation for Economic Cooperation and Development (“OECD”), the World Bank, the Asian Development Bank and other sources, which are said to suggest that serious concerns were held about: Kazakhstan banks; the regulatory environment within Kazakhstan concerning banking institutions; ownership structures relating to Kazakhstan banks; non‑compliance by Kazakhstan with eight out of 25 core principles recited as part of the “Basel Core Principles for Effective Banking Supervision”; the insolvency of two Kazakhstan banks largely attributable to substantial fraudulent activities conducted by bank management; lack of proper risk management systems; and matters relating to BTA and Astana in particular. Other factual matters pleaded suggest that there was no reason to believe that President Nazarbayev or any member of his family ever had an interest in BTA or Astana: see para 74(a) to (z) and particulars at (a) to (z).
Two contended matters of fact at para 74 of later relevance to the pleading are these.
First, the Chairman of the Board of Directors of BTA, Mr Mukhtar Ablyazov (who also “headed” the Credit Committee of BTA) had approved “USD billions of dollars in loans to companies controlled by him, with no trading history, in remote jurisdictions and without adequate security”: para 74(v).
Second, the Chairman and Chief Financial Officer of Astana had caused Astana to enter into transactions to the value of “around USD $1.1 billion … with parties related to them on the basis of fictitious security”: para 74(w).
The applicants plead that the para 74 factual matters were matters that UBS ought to have known of, having regard to “the specialist expertise [UBS] professed to possess”, and that much of the information was ascertainable to UBS before it made the First Oral Kazakhstan Representations (mid to late‑2007) and thus before UBS recommended, first, the purchase by Telesto of the relevant bonds (being 16 bond issues, issued between 14 January 2008 and 17 March 2008 – see Table 3), and second, the subsequent retention of the bonds: para 77.
The applicants contend that the failure of UBS to ascertain and advise Mr Tyne (and through him each Tyne Related Entity) of the para 74 factual matters, or any of them, rendered each of the representations made to Mr Tyne (which must be taken to be a reference to the First Oral Kazakhstan Representations referred to in para 77(b) and cross‑referenced to para 74) misleading or deceptive, or representations likely to mislead or deceive, Mr Tyne (and through him each Tyne Related Entity) with the result that UBS contravened the relevant statutory provisions earlier mentioned: para 78.
The applicants contend that had UBS advised Mr Tyne of the para 74 undisclosed matters (or any of them – “to the extent that such things then should have been known to UBS”), Mr Tyne would not have caused ACN 074 as trustee of the Argot Trust to do the things set out in paras 45(b) and 45(c), 56, 65 and 70 of the pleading being those matters described at [70], [71], [81] to [83], [91] to [93] and [99] to [101] of these reasons.
Negligence
Apart from contentions that UBS engaged in contraventions of s 12DA of the ASIC Act, s 1041H of the Corporations Act and provisions of the two State Fair Trading Acts, the applicants rely upon a cause of action in negligence as the basis for a claim against UBS.
The applicants plead that UBS, in providing investment advice to Mr Tyne as the Investment Manager of ACN 074 as trustee of the Argot Trust and to him in his capacity as a Director of Pole Star (and thus, through him, in that role to Telesto), in relation to: the opening of the pleaded account giving rise to the funding facility; the purchase of the bonds; the meeting of Margin Calls; and the liquidation of securities to meet Margin Calls (including securities that UBS knew had been loaned by ACN 074 as trustee of the Argot Trust to Telesto), gave rise to a duty in UBS to exercise reasonable care in the provision of investment advice so as to avoid foreseeable loss being suffered by the Tyne Related Entities: para 80.
The applicants say that it was reasonably foreseeable that if UBS failed to exercise due care in the provision of investment advice in connection with those matters, Telesto would suffer loss and especially so if BTA and Astana defaulted on their obligations under the bond issues, and further, such loss could amount to a loss of the entire value of the Telesto portfolio of investments: para 80.
The applicants plead that no Tyne Related Entity had expertise as regards investments in bonds issued by Kazakhstan banks or as regards emerging market debt generally. This circumstance was known to UBS: para 80.
The applicants plead that UBS breached its duty of care by “making the representations in the circumstances pleaded above” and by failing to undertake proper due diligence and give proper advice to Mr Tyne (and through him the Tyne Related Entities) as to the likelihood of the issuer of the bonds defaulting upon obligations owing to the bond holder: para 81.
The loss suffered by Mr Tyne as trustee of the Argot Trust
At paras 81A to 86, the applicants plead the first applicant’s loss.
At para 81A, assertions are made about the transactions pleaded at para 74(v): see [106] and [107] of these reasons.
As to those para 74(v) transactions (which concern substantial loans approved by BTA’s Chairman to companies controlled by him), the applicants say that those transactions were the type of related party transactions criticised by the UN, the IMF, the OECD, the World Bank, the Asian Development Bank and others as reflected in the documents particularised at paras 74(a), (b), (c), (e), (g), (h), (i), (k), (l), (m), (r), (x), (y) and (z).
The applicants plead that the transactions were components of a long running fraud perpetrated by the Chairman of BTA by which BTA was defrauded of more than USD$6 billion.
The transactions were enabled by poor internal controls and poor risk management practices being risk factors identified by the UN, the IMF, the OECD, the World Bank and the Kazakhstan Deposit Insurance Fund in the manner described in paras 74(d), (f), (g), (k), (m), (n), (o) and (r).
The transactions ultimately motivated BTA to default upon the bonds issued by it being bonds UBS had recommended to Mr Tyne and through him the Tyne Related Entities as pleaded at paras 20 to 25 of the pleading.
The applicants also contend that BTA, in defaulting upon the bonds issued by it, acted upon the advice of UBS. The applicants plead that on 9 April 2009, UBS was engaged by BTA to advise it as regards restructuring its debt and UBS acted upon that engagement and profited from it: paras 81A and 88. These matters go to contended breaches of fiduciary duty giving rise to a claim for equitable compensation.
At para 82, assertions are made about the transactions pleaded at para 74(w): see [106] and [107] of these reasons.
As to the para 74(w) transactions (which concern allegations that the Chairman and also the Chief Financial Officer of Astana caused Astana to enter into transactions valued at approximately USD$1.1 billion with parties related to them on the basis of fictitious security), the applicants say that those transactions were the type of related party transactions criticised by the UN, the IMF, the OECD, the World Bank, the Asian Development Bank and others as reflected in the documents particularised in support of the allegations in paras 74(a), (b), (c), (e), (g), (h), (i), (k), (l), (m), (r), (x), (y) and (z).
The applicants plead that the transactions were a fraud perpetrated by the Chairman and Chief Financial Officer of Astana by which Astana was defrauded of approximately USD$1 billion.
The transactions were enabled by poor internal controls and poor risk management practices being risk factors identified by the UN, the IMF, the OECD, the World Bank and the Kazakhstan Deposit Insurance Fund in the manner described in paras 74(d), (f), (g), (k), (m), (n), (o) and (r).
The transactions ultimately caused Astana to default upon the bonds issued by it including bonds UBS had recommended to Mr Tyne and through him to the Tyne Related Entities as pleaded at paras 20 to 25 of the pleading.
The market value of the bonds substantially declined by reason of the default by BTA and Astana rendering the bonds “essentially valueless” thus rendering Telesto unable to return the Lent Securities to ACN 074 as trustee of the Argot Trust or to pay to the trustee of the Trust the “Benchmark Value” in lieu of the return of the deposited Lent Securities: para 83.
Thus, the estate of the Argot Trust was “diminished and the beneficiaries suffered loss and damage”.
The applicants plead that the contraventions by UBS of s 12DA of the ASIC Act, s 1041H of the Corporations Act and the provisions of the two State Fair Trading Acts “caused that loss”: para 85. Alternatively, the loss was caused by the negligence of UBS: para 86.
Breach of fiduciary duty
The applicants also plead that UBS owed Mr Tyne, and through him, the Tyne Related Entities (including ACN 074 as trustee of the Argot Trust), a fiduciary duty not to cause or permit any conflict of interest to arise between, on the one hand, the interests of UBS and on the other, the interests of the Tyne Related Entities, and also a duty not to prefer its own interests, on the one hand, to the interests of any beneficiary of the duty, on the other.
The applicants say that on 9 April 2009, UBS accepted an engagement to advise BTA. On 24 April 2009, BTA declared that it would cease payment of principal sums owing by it. On or about 29 April 2009, BTA defaulted on payment of coupons owed to bond holders including the payment of coupons under the bond issues taken up upon the advice of UBS. At para 91, the applicants plead that the acceptance by UBS, for reward, of advising BTA, as pleaded, put UBS in a position in which its duties to BTA on the one hand, and Mr Tyne (and through him Tyne Related Entities) on the other hand, were in actual or, alternatively, potential conflict. Thus, UBS breached its fiduciary duty, it is said, to Mr Tyne (and through him duties owed to the Tyne Related Entities).

Mr Tyne as trustee of the Argot Trust seeks equitable compensation flowing from the breach of the pleaded fiduciary duty.
The claim by Ms Marks
As to Ms Marks, the applicants plead that at all material times, Ms Marks was the registered proprietor of particular land in Queensland.
On 14 October 2007, Mr Tyne and Ms Marks entered into a Building Construction Agreement with Deep North Developments Pty Limited and Mr Neil Lyford for the construction of a dwelling upon the land. An Amending Agreement dated 19 December 2008 was also entered into by those same parties: paras 93 and 94.
The applicants plead that at all times Mr Tyne acted as an agent for Ms Marks in relation to “all matters to do with the construction of the Dwelling … including the funding of such construction”. The agency arrangement as between Mr Tyne and Ms Marks is pleaded as having arisen through “written and oral agreements” and in so far as written agreements are concerned, the agreements are the two agreements mentioned at [135] of these reasons: para 95.
To enable construction of the dwelling to occur, Mr Tyne, in November 2007, arranged for “the extension of an extant debt facility between Telesto and the ANZ Bank”. The extension arrangement is contained in a letter from the ANZ Bank dated 15 November 2007. The arrangement is pleaded as the “Facility Extension”: para 96.
Pursuant to (presumably the terms of the) Facility Extension, Ms Marks executed what is pleaded as a “replacement guarantee” on or about 15 November 2007 of Telesto’s obligations under the Facility Extension and on the same date, Mr Tyne executed a guarantee of Telesto’s obligations “under that extended debt facility”. The terms and conditions of Ms Marks’s guarantee are said to be set out in an undated Guarantee document. The terms and conditions of Mr Tyne’s guarantee are set out in a Guarantee document dated 21 December 2007: para 97.
The obligations of Ms Marks under her guarantee were secured in favour of the ANZ Bank by a registered mortgage over the land upon which the dwelling was to be constructed. The First Registered Mortgage, however, is pleaded as having a date of 5 September 2006 (although the instruments of guarantee seem to be dated on or about 15 November 2007 and 21 December 2007): para 98.
Construction of the dwelling commenced in approximately February 2008 “with construction initially funded by Mr Tyne and Ms Marks as required by the terms of the Facility Extension”: para 99.
By 22 October 2008, approximately $6 million had been drawn down under the terms and conditions of the Facility Extension and expended upon construction of the dwelling: para 100(a).
By 22 October 2008, Mr Tyne believed that the Telesto portfolio of investments (which, by then, comprised almost exclusively the bonds) was not at risk from circumstances relating to the emergence of a global financial crisis, and believed that Telesto’s investments were “in all respects sound”: para 100(b).
The applicants plead that Mr Tyne held that belief in reliance upon the representations referred to in the preamble of para 70 “(to the extent that they had then been made)”. Those representations referred to in the preamble to para 70 are cross‑referred to “the representations referred to in para 56”. Paragraph 56, in turn, is cross‑referenced to para 45. The preamble to para 70 also refers to the Second Written Kazakhstan Representations and the Third Oral Kazakhstan Representations (to the extent that they had then been made – remembering that those oral representations are said to have been made between the end of the first quarter of 2008 and before 24 September 2008). The representations referred to in para 56 are the Second Oral Kazakhstan Representations and the Default Representation (to the extent that they had then been made) and also the para 45 preamble representations which are the First Oral Kazakhstan Representations, the UBS Representations and the First Written Kazakhstan Representations (again, to the extent that they had then been made).
The net effect of this style of water running uphill pleading, is that Mr Tyne and Ms Marks plead that Mr Tyne held the para 100(b) belief that Telesto’s investments were “in all respects sound” in reliance upon: the First Oral Kazakhstan Representations, the Second Oral Kazakhstan Representations, the UBS Representations, the First Written Kazakhstan Representations, the Second Written Kazakhstan Representations, the Default Representations, and the Third Oral Kazakhstan Representations: see paras 70, 56 and 45 of the pleading.
From 16 January 2009, Mr Tyne caused drawdowns to be made under the Facility Extension. The applicants plead that he did so in reliance upon “the representations referred to in the preamble of paragraph 70” which is the same formulation described at [143] and [144] and in reliance upon the para 100(b) belief which he is said to have held in reliance upon those representations: para 101.
The applicants plead that by reason of the non‑disclosure of the factual matters recited at para 74 of the pleading (all of which are said to be matters that UBS ought to have known of) each representation forming part of the representations described at [143] was false at the time it was made and false “at the times referred to in paras 94, 96, 97, 100 and 101”. Those pleaded dates, in the order of those paragraphs, are 14 October 2007, November 2007, 15 November 2007, 22 October 2008 and 16 January 2009.
The applicants then plead at para 103 that “[i]n the premises of paragraph 71”, UBS contravened s 12DA of the ASIC Act, s 1041H of the Corporations Act and the relevant provisions of the State Fair Trading Acts. The premises of para 71 are that by reason of the matters pleaded in paras 74 to 77 (being the non‑disclosure of particular matters in circumstances where UBS ought to have known of, and the truth of, those matters), each representation referred to in para 65 of the pleading (that is, the representations cross‑referenced by that paragraph to para 56 which is, in turn, cross‑referenced to the preamble representations of para 45 and also the Second Written Kazakhstan Representations and the Third Oral Kazakhstan Representations (as expressly mentioned in para 65)), was false at the time it was made and at all times thereafter including the times referred to in para 70 (that is, any time after 24 September 2008).
Each of these rolled up aggregated paragraphs of the pleading have to be deconstructed to understand precisely the factual contention the applicants are seeking to plead and rely upon.
The applicants then plead that the representations referred to in para 70 of the pleading (as to which again see the identification of those representations at [143] and [144] of these reasons) and the failure of UBS to advise Mr Tyne of any of the matters described as the undisclosed matters, induced Mr Tyne, and through him Ms Marks, to: enter into the Building Construction Agreement on 14 October 2007 and the Amending Agreement on 19 December 2008; enter into the Facility Extension with the ANZ Bank on 15 November 2007; enter into the guarantees on or about 15 November 2007 (of which Mr Tyne’s guarantee is dated 21 December 2007); draw down by 22 October 2008 $6 million under the Facility Extension; and, make further drawdowns under the Facility Extension from 16 January 2009: para 104.
The formulation of the loss suffered by Ms Marks
The applicants plead that by reason of the default by BTA and Astana (the subscription price of which is set out at [73] of these reasons), the market value of the bonds declined substantially which, in turn, caused Telesto to default upon its obligations to the ANZ Bank under the Facility Extension.
The guarantee given by Ms Marks to the ANZ Bank was called upon.
The obligations of Ms Marks under the guarantee were supported by a first ranking registered mortgage over the land of which she was the registered proprietor. The mortgagee exercised a power of sale under the mortgage and sold the property.
Ms Marks’s right of indemnity against Telesto as guarantor to the ANZ Bank was rendered worthless by Telesto’s default.
Ms Marks lost the property by reason of the mortgagee’s exercise of the power of sale and was unable to recoup the value of the loss through her right of indemnity against Telesto.
The applicants plead that the loss suffered by Ms Marks was caused by the pleaded contraventions by UBS of s 12DA of the ASIC Act, s 1041H of the Corporations Act and contraventions of the relevant provisions of the State Fair Trading Acts.
Context
The discussion from [25] to [155] of these reasons addresses all the causes of action and the factual foundation for those causes which Mr Tyne as trustee of the Argot Trust and Ms Marks seek to litigate in this Court. These are the facts the applicants would seek to make good in the proceeding. It is now necessary to identify the history and content of the earlier proceedings, the parties to those proceedings, any relevant relationship between those proceedings (in terms of parties and causes of action litigated) and these proceedings, and any legal consequences that might arise, for the applicants, having regard to orders made and steps taken in one or more of the earlier proceedings.
The commencement of the UBS proceedings in the High Court of Singapore
On 15 October 2010, UBS commenced proceedings (801/2010) in the High Court of the Republic of Singapore (the “Singapore High Court”) against Telesto and Mr Tyne individually, the Singapore 801 proceedings.
In those proceedings, UBS asserted that Telesto was an account customer of UBS (Account No. 116731 opened in Singapore in December 2007). The account was subject to terms and conditions contained in 14 pleaded documents (including “Account Terms and Conditions”, a “Charge Over Assets” document and a “Request for Subscription of Bond Linked Notes”) all collectively called the Account Agreement. Pursuant to a “Credit Services Notification Letter” (“CSNL”) dated 12 December 2007 (and CSNL letters dated 13 February 2008, 1 June 2008 and 1 August 2008), UBS made available to Telesto a short term overdraft facility limited to USD60 million, an exchange traded derivative facility and a further derivative trading facility, all subject to the terms of the CSNL.
The terms of the CSNL are pleaded and include a term that the short term advances were repayable at maturity in the currency drawn down. The overdraft was repayable on demand. Telesto was to provide collateral acceptable to UBS and UBS enjoyed an “unrestricted right” to sell or realise the collateral should Telesto not comply with a request by UBS to reduce the outstanding amount or provide additional collateral. The terms and conditions of each facility are pleaded. It is not necessary to recite the details of those matters.
UBS pleads that Mr Tyne entered into an all monies guarantee with UBS of Telesto’s obligations. The material terms of the guarantee are pleaded.
Pursuant to the CSNL, Telesto utilised the facilities to purchase various investments including bonds secured by the collateral. UBS pleads that pursuant to the CSNL terms, including the “Account Mandate” terms, Telesto admits (and is estopped from denying) the total liabilities owed by it to UBS.
In September 2008, the value of the collateral fell and UBS made a margin call upon Telesto on 28 October 2008.
UBS pleads that the margin shortfall was then USD28,159,607; Telesto failed to meet the call; and, after negotiations between UBS, Telesto and Mr Tyne, a “Standstill Agreement” (the terms of which are set out in a letter from UBS to Telesto dated 14 December 2009), was accepted by Telesto on 31 December 2009.
Under the Standstill Agreement, UBS agreed not to realise the account collateral or make further margin calls until 31 March 2011 or until an “Event of Default” occurred. Telesto agreed to apply all cashflows towards repayment of the total liabilities and provide or procure four things in favour of UBS by 31 December 2009 to support Telesto’s total liability to UBS. They were: the deposit of custody of particular shares; the assignment of particular litigation proceeds; the procuring of a particular letter of undertaking from ACN 074 as trustee of the Argot Trust; and, the provision of an overview, signed by Mr Tyne, of the assets and liabilities of Mr Tyne and entities beneficially owned by him.
As part of the Standstill Agreement, UBS also reduced the maximum available facility amount to USD13 million with effect from 31 December 2009.
UBS also pleads that in consideration of it having entered into the Standstill Agreement, Telesto and Mr Tyne “impliedly agreed” to waive or not raise any claims or defences they might have in relation to the account investments including the acquisition and management of those investments (including the bonds). UBS also pleads that by reason of the Standstill Agreement or alternatively the implied agreement, Telesto and Mr Tyne compromised (or are estopped from asserting) any claims they may have against UBS in relation to the account investments and the management of those investments (including the bonds).
Events of default were said to have occurred between 31 December 2009 and October 2010. One of those events was a contended failure by ACN 074 as trustee of the Argot Trust to comply with obligations under the letter of undertaking provision. The Standstill Agreement was terminated by UBS by notice on 15 October 2010. The total liabilities became immediately due and payable. At 14 October 2010, Telesto’s outstanding liability to UBS was USD12,617,499.56 plus a default rate of interest of 3% above the UBS cost of funds.
Demands were made upon Telesto on 15 October 2010 for payment of that amount and upon Mr Tyne, as guarantor, on 15 October 2010. In the proceedings, UBS sought an order against both defendants for payment of the sum of USD12,617,499.56 plus interest.
UBS also sought a declaration that both defendants were estopped from asserting any claims (or defences) they may have arising out of, or in relation to, the investments and/or the total liabilities including but not limited to the acquisition or management of the investments and/or those liabilities. UBS also sought a declaration that both defendants had “compromised” any such claims (or defences).
The commencement of the New South Wales Supreme Court proceedings
On 2 November 2010, Telesto, Mr Tyne and ACN 074 as trustee of the Argot Trust, commenced proceedings in the Supreme Court of New South Wales (proceedings 2010/363808 (the “SCNSW proceedings”)) against UBS.
In those proceedings, as filed, essentially two groups of issues were agitated against UBS.
First, the plaintiffs contended that as Pole Star only had limited authority to transact on behalf of Telesto (confined to particular classes of securities) and Mr Tyne had made those limitations plain to UBS with the result that UBS had assured Mr Tyne that it would obtain direct written instructions and the relevant written authorities from Telesto necessary to enable UBS to transact for the acquisition of other classes of securities described as “less than investment grade” securities, and UBS had failed to obtain the necessary direct written instructions and authorities from Telesto, it followed that UBS simply never had authority to purchase the Kazakh bonds on behalf of Telesto when it purported to so act for Telesto on instructions from Pole Star.
Second, Telesto contended that in the event that the transactions were those of Telesto, it maintained that it had suffered losses arising out of the negligence of UBS or alternatively, as a result of misleading or deceptive conduct on the part of UBS occasioned through representations made by Mr Farrell. UBS was said to have proffered to Pole Star, as disclosed agent for Telesto, certain advice in relation to transacting in the Kazakh bonds and had made a number of representations, in reliance upon which, Telesto purchased the bonds. The bonds are set out in a schedule to the commercial list statement (Table 1). The same schedule of bonds is attached to the amended statement of claim in the Federal Court proceedings. Those representations were conveyed to Pole Star through Mr Tyne whilst Mr Tyne was in Australia. The plaintiffs contended that the representations were ones to which the ASIC Act, the Fair Trading Act 1987 (NSW) and the Fair Trading Act 1989 (Qld) applied. The plaintiffs contended that UBS had contravened those Acts and that Telesto had suffered loss by reason of the contraventions.
The plaintiffs also contended that UBS had procured, for itself, an engagement by the Kazakhstan government to provide advice concerning the crisis that had arisen as a result of alleged bank frauds on the part of Kazakhstan banks. The plaintiffs contended that UBS had advised the Kazakhstan government, and through it, the banks, to default on the payment of interest under the bonds issued by Kazakh banks including the bonds taken up by Telesto. The plaintiffs contended that this separate engagement of UBS caused UBS to breach fiduciary duties owed to Telesto.
The plaintiffs also alleged that following Telesto’s investment in the bonds, and its continuing reliance on the advice and representations made by UBS, Mr Tyne and the trustee of the Argot Trust entered into certain guarantees and security instruments in support of the trading account Telesto had opened with UBS. Mr Tyne and the trustee of the Argot Trust sought orders which would have the effect of releasing them from those securities or, alternatively, an award of damages or equitable compensation to the extent of their liabilities under those securities.
On 17 December 2010, the three plaintiffs in the SCNSW proceedings filed an amended summons and amended commercial list statement.
In the amended claim, the three plaintiffs sought a declaration that the investment transactions purportedly entered into by UBS on behalf of Telesto between 14 January 2008 and 5 February 2008, were entered into by UBS without any authority to do so for Telesto and that they were not transactions done by or on behalf of Telesto. The plaintiffs sought an order that six particular instruments be declared void ab initio. They also sought damages in respect of that conduct and damages for conduct said to be in contravention of the ASIC Act and the two State Fair Trading Acts.
In the amended statement, the plaintiffs plead the lack of authority point in some detail. The plaintiffs also develop, in the amended statement, the factual contentions concerning the provision of advice by UBS said to be negligent and the making of representations said to be misleading.
As to these latter issues, the plaintiffs plead that representations were made to Mr Tyne and through him to Pole Star, Telesto and the trustee of the Argot Trust and that a duty was owed by UBS to all three plaintiffs to exercise reasonable care in the provision of the advice and a statutory duty not to engage in misleading conduct. The plaintiffs plead representations made to Mr Tyne, and through him, to Pole Star and Telesto, and also plead that UBS failed to inform all three plaintiffs of 11 particular matters. The plaintiffs say that but for UBS’s negligent and misleading or deceptive conduct, Telesto would not have purchased the bonds and the trustee of the Argot Trust would not have provided particular identified additional security. Nor would Mr Tyne have given a guarantee to UBS.
The plaintiffs say that in reliance upon the advice of UBS, Pole Star procured the trustee of the trust to provide third party security in the form of a mortgage over assets of the unit trust to UBS (the “Mortgage”). The Mortgage took the form of an old style deed of assignment dated 23 December 2009. Pole Star also procured the trustee of the trust to provide UBS with a Letter of Undertaking dated 23 December 2009. The plaintiffs plead that to the extent that the Mortgage and the Letter of Undertaking are enforceable against the trustee, loss has been suffered by the trustee of the trust. By reason of the conduct of UBS (bearing the pleaded contended character), all three plaintiffs have suffered loss.

That left Telesto as the only party to the SCNSW proceedings.
In the Singapore 801 proceedings, UBS filed an amended statement of claim by leave on 19 January 2012. A further amended statement of claim was filed on 13 April 2012. As to the scope of the claims then advanced see [261] to [273] of these reasons.
At the time of the discontinuance by Mr Tyne and the trustee of their participation as parties asserting claims against UBS in the SCNSW proceedings, UBS contended as part of its earlier pleading in the Singapore 801 proceedings, although not an aspect of the money claim, that Telesto and Mr Tyne had waived all claims against UBS (or defences to claims of UBS) by reason of the Standstill Agreement.
Telesto and Mr Tyne chose not to contest the Singapore 801 proceedings nor cross‑claim in those proceedings to assert that rights owed to each of them had been denied or that duties or obligations owed to each of them had been breached by UBS giving rise to damages (however those damages might be measured or calculated).
Telesto was sued in Singapore as a principal debtor or obligor to UBS and Mr Tyne was sued as guarantor of Telesto.
The trustee of the Argot Trust was not a party to the Singapore 801 proceedings.
The trustee is, and was, bound to discharge its duty (or his duty as Mr Tyne is now the trustee) according to the terms of the trust deed and according to law for and on behalf of the beneficiaries of the trust estate.
Assuming for the moment that res judicata or issue estoppel arises as between UBS on the one hand and Telesto and Mr Tyne on the other by reason of a final judgment of the High Court of Singapore arising out of the decision, judgment and orders of Lai J, I do not accept that in subsequent proceedings, the trustee of the Argot Trust is bound by the terms of the final orders in the sense that any cause of action it would seek to assert for loss suffered in reliance upon contended conduct of UBS in contravention of Federal and State statutory law constituted by the making of misleading or deceptive representations, or alternatively, representations likely to mislead or deceive (or for breaches of duty by UBS at common law or breaches of fiduciary duty owed by UBS) in the way pleaded in the Federal Court proceedings, can be successfully met with a plea by UBS of res judicata.
I accept that Telesto and Mr Tyne may be successfully met with such a plea (leaving to one side for the moment the effect of the orders of Sackar J in the SCNSW proceedings) should they, for example, seek to assert rights of a similar kind having regard to the declaration made in Singapore and the findings of fact made in Singapore.
It is not necessary to consider that question as no such claim is made.
Nor do I accept that in later proceedings commenced by the trustee of the Argot Trust asserting causes of action just described, can the issue of whether Telesto and Mr Tyne have compromised, waived or abandoned (by reason of the construction and effect of the Standstill Agreement of 31 December 2009 claims they may have had against UBS), be relied upon to establish an issue estoppel precluding the trustee from making its claims on the contended ground that that issue was necessarily decided in a final sense on the merits by Lai J and that that merits‑based final finding, in the earlier proceedings, on the issue of waiver and compromise binds the trustee to an issue finally determined between other parties.
The trustee contends that it is seeking to advance legal interests of its own.
The trustee of the Argot Trust was not joined by UBS as a party to its Singapore 801 proceedings at the outset as UBS’s claims were asserted against only its principal obligor and the guarantor. UBS did not join the trustee to put in controversy, as against it, the content of the declaration which was confined to a position declaratory of matters inter se between UBS, and on the other side of the record, Telesto and Mr Tyne. Telesto and Mr Tyne could have elected to engage in and with the Singapore 801 proceedings, defend the claim to Declaration No. 2, resist the factual contentions and cross‑claim in that proceeding to assert their causes of action and claims for remedial relief, but chose not to do so.
Mr Tyne contends in submissions in these proceedings that he and Telesto (of which he is the guiding mind) elected not to engage in the Singapore 801 proceedings because they had lost their legal representation in Singapore and were thus disadvantaged and, more importantly, they suffered significant juridical disadvantage in asserting cross‑claims against UBS because in order to frame their claims concerning the contended conduct of UBS they would have had to rely upon the Singapore Misrepresentation Statute and causes of action in deceit, fraud and other causes recognised by Singapore law which were not, put simply, symmetrical with causes of action reliant upon contraventions of Federal and State legislation in Australia concerning conduct shown to be misleading or deceptive or alternatively conduct shown to be likely to mislead or deceive.
Those are matters relevant, of course, to Telesto and Mr Tyne.
I accept that had Telesto and Mr Tyne chosen to engage in the Singapore 801 proceedings, Mr Tyne as the controlling mind of ACN 074 as the trustee of the Argot Trust could have also caused the trustee of the trust to join the Singapore 801 proceedings as a cross‑claimant and assert the factual matrix now asserted in the Federal Court proceedings (out of which the claims of Telesto and Mr Tyne also emerge).
I also accept, however, that there is some force in the proposition that those parties, had they so engaged, would have suffered at least some degree of juridical disadvantage in seeking to characterise UBS’s contended conduct as relevantly contravening conduct in Singapore, as compared with the way in which it would have sought to characterise that conduct under Australian law with its range of available remedial orders.
As to the Singapore 801 proceedings more generally, I accept that the extempore reasons of Lai J are very brief and it is difficult to identify any deliberative assessment of the evidence put on by UBS (both as to the affidavit material and the oral evidence) leading to exposed reasoning, in turn, leading to particular findings of fact arising out of that material. Nevertheless, the proper inference to be drawn from the exposed extempore reasons is that the hearing judge was satisfied (notwithstanding that the evidence was uncontested and uncontradicted as the defendant chose not to engage with the proceedings) that the evidence put on by UBS supported and made out the findings in terms of paras 113 to 139 as Lai J records.
I accept that res judicata or an issue estoppel can arise in a later proceeding commenced in Australia based upon an earlier final foreign judgment on the merits (within the limits of the general principles governing the preclusive effect of those doctrines upon a party in a later proceeding). The notion that an earlier foreign judgment to which a person was a party cannot give rise to res judicata or an issue estoppel in later domestic Australian proceedings against that person as a party to the later proceeding simply because the earlier judgment is a judgment of a foreign jurisdiction, is contrary to authority. The important question is whether the principles governing the doctrines of res judicata, issue estoppel and Anshun estoppel are made good in the particular circumstances of the later proceeding by reason of relevant matters having regard to the earlier proceedings, foreign or not.
A further but separate aspect of a consideration of whether a stay should be ordered in the exercise of the Court’s discretion in circumstances where a preclusive consequence is asserted against a party to later Australian proceedings in reliance upon a final foreign judgment on the merits is the accord to be given by an Australian court to the judgment of a court of the foreign jurisdiction. An Australian court will have, and give due regard to, final orders of the High Court of the Republic of Singapore and weigh in the balance in the exercise of the discretion as to the granting or withholding of a stay, all of the relevant circumstances relating to the foreign proceeding including: the precise parties to the proceeding; the causes of action agitated; the findings of fact; the applicable law; the character of the proceedings (whether final or interlocutory); and whether a hearing on the merits or a procedural determination was reached.
In any event, I am not satisfied that the trustee of the Argot Trust is to be precluded by either res judicata or issue estoppel or an Anshun estoppel from maintaining its claims as formulated in the Federal Court proceedings by reason of a final judgment on the merits by Lai J in the proceedings commenced and prosecuted in Singapore to a final hearing against Telesto and Mr Tyne.
The trustee of the Argot Trust is not privy in interest with Telesto or Mr Tyne.
As to the anti‑suit injunction, an order was made by Assistant Registrar Ms Tan Wen Hsien on 21 February 2011 and affirmed on appeal by Chong J on 14 July 2011 directing Telesto, Mr Tyne and ACN 074 as trustee of the Argot Trust to forthwith withdraw and discontinue the SCNSW proceedings and restraining them from prosecuting those proceedings: see [196] of these reasons.
By Order 2 of the orders made on 21 February 2011, Telesto, Mr Tyne and the trustee of the Argot Trust were restrained from commencing or continuing other proceedings in Australia (or elsewhere) against UBS in relation to all those matters described at [198] of these reasons which includes the claims the trustee now makes in the Federal Court proceedings.
Thus, the trustee is acting, in Australia, in contravention of the affirmed order of the High Court of Singapore.
The Federal Court must pay due regard to the orders of the High Court of Singapore and accord proper respect to those orders in the exercise of the discretion to stay (or not) a proceeding in this Court by which a party seeks to engage an invested jurisdiction of the Court. That respect and accord might properly be called “comity” as between courts but the respect and accord so afforded to the orders of the High Court of Singapore does not mean that the order itself is determinative of that party’s right to engage the relevant jurisdiction of an Australian Court on a justiciable question within that Court’s jurisdiction; agitate a particular controversy of fact and law in that Court; and seek a remedy in resolution of a particular controversy which would quell that controversy.
Nevertheless, all of those steps, may fall within the textual terms of a prohibitive order of a foreign court. It is then necessary for the court of the forum to examine the factors described at [398] informing the making of the orders so as to determine whether the court of the forum will preclude the party from asserting its claims in the forum.
The anti‑suit injunction orders were made in Singapore in Proceeding No. 1160 of 2010V in aid of the integrity of the High Court of Singapore’s adjudicative processes in the Singapore 801 proceedings as the contended natural forum for the “dispute” in those proceedings: see the reasoning of Chong J discussed at [208] to [219] of these reasons.
The Singapore 801 proceedings did not engage the trustee of the Argot Trust as a party and, obviously enough, no relief was sought by UBS against the trustee. The “dispute” for which Singapore was ultimately found to be the natural forum was one between UBS, its debtor (Telesto) and Mr Tyne personally as guarantor. Yet, the trustee of the Argot Trust was ordered to withdraw and discontinue its own claims in respect of its separate legal interests in the SCNSW proceedings along with Telesto and Mr Tyne, and ordered not to commence any other proceeding in Australia (or elsewhere) concerning the subject matter of Order 2: see [198]. On that footing, by reason of the making of those orders, UBS says 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.
It is true that at the time the Singapore Court made the anti‑suit injunction orders, the trustee of the Argot Trust was asserting facts (and making a claim to remedial relief) in the SCNSW proceedings based essentially upon the same factual contentions relied upon by Telesto and Mr Tyne concerning aspects of UBS’s alleged conduct. Nevertheless, the trustee was asserting a different legal interest to that of Telesto and Mr Tyne, the parties to the Singapore 801 proceedings.
The decision of Chong J (on the appeal) is concerned with whether Singapore is the natural forum for the dispute as between UBS on one side and Telesto and Mr Tyne on the other. Although the Singapore Court may have thought it necessary to grant an anti‑suit injunction against the trustee, in aid of its own proceedings in the High Court of Singapore in a dispute to which the trustee was not (and never became) a party, (recognising that there is no discussion of that aspect of the matter by either the Assistant Registrar or Chong J), I am not satisfied that those circumstances 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.
As to the SCNSW proceedings and the orders of Sackar J, I accept that those orders represent a final determination of the proceedings. I am not satisfied that the trustee of the Argot Trust is privy in interest with Telesto (or Mr Tyne) and thus I am not satisfied that res judicata arises by reason of that final judgment which precludes the trustee from commencing and maintaining the causes of action it asserts in the Federal Court proceeding. Nor am I satisfied that an issue estoppel arises on the question of a compromise, waiver or abandonment of claims the trustee would seek to make, by reason of any aspect of the findings or orders made by Sackar J which precludes the trustee from asserting a claim said to be inconsistent with a determination of Sackar J that no claim can be maintained by Telesto.
Nor am I satisfied that an Anshun estoppel arises.
It seems to me 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.
The position, however, is entirely different in relation to the doctrine of abuse of process.
Although the trustee is not privy in interest with Telesto (or Mr Tyne), Mr Tyne was the controlling mind of ACN 074 as trustee of the Argot Trust throughout the period of that entity’s role as trustee and today Mr Tyne is the trustee. Mr Tyne as director and guiding mind of the trustee, throughout the period of all of the relevant events, made the decision to cause the trustee to discontinue its participation as a plaintiff in the SCNSW proceedings and not agitate, by the proposed amended proceedings as put to Sackar J, the causes of action asserted by the trustee for and on behalf of the trust in the Federal Court proceedings based upon the contended contraventions of Federal and State legislation quite apart from the common law claims and the claims of breaches of fiduciary duty.
The Supreme Court of New South Wales was invested with Federal jurisdiction in respect of all of the Federal sources of law upon which the trustee would seek to rely and it otherwise had jurisdiction under the relevant State legislation. It, of course, had jurisdiction in respect of the common law claims and the contentions of breaches by UBS of fiduciary duties it owed to the trustee.
The trustee chose not to bring, agitate or maintain those claims when it could have done so and should have done so.
Mr Tyne submits that because UBS had no money claims against the trustee of the trust or him, he caused those parties to discontinue their participation in the SCNSW proceedings. Nevertheless, the trustee of the trust and Mr Tyne (and, of course, also Telesto) had, prior to the discontinuance, asserted that UBS had contravened Federal and State legislation giving rise to causes of action in the trustee of the Argot Trust and had breached common law duties owed to the trustee and breached fiduciary duties owed to the trustee. All of those claims arose out of a common substratum of fact and the formulation of the proceedings in the Federal Court of Australia is very substantially in the same terms as the factual contentions asserted in the SCNSW proceedings.
Had Mr Tyne caused the trustee of the trust to bring its claim based on the common substratum of fact along with the participants who had also suffered the contended loss in the form of Mr Tyne personally and Telesto, the trustee would not have been met with res judicata, an issue estoppel or an Anshun estoppel having regard to the state of the law as it was and as it has been affirmed by the High Court in Tomlinson. The trustee was at no time privy in interest with either Telesto or Mr Tyne. A question might have arisen as to whether the trustee ought to have joined in the Singapore 801 proceedings as a cross‑claimant to assert its claims arising out of the common substratum of fact. Had it done so, it would have suffered the same juridical disadvantage that Telesto and Mr Tyne complain about and which Sackar J found to be a material highly significant juridical disadvantage.
However, the trustee did not suffer any juridical disadvantage by seeking to join the SCNSW proceedings to advance the claims in precisely the same terms as formulated in the Federal Court proceedings. The trustee would, of course, have had to “re‑join” those proceedings having earlier elected, without objection from UBS, to discontinue its participation in those proceedings.
Mr Tyne says that the losses the trustee complains about are losses brought about by UBS and that UBS’s conduct is at the centre of the proceedings. Mr Tyne says that 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. I weigh that matter in the balance.
There is no doubt that the trustee of the Argot Trust could and should have brought its claims in the SCNSW proceedings. It had every opportunity to do so. There is no proper explanation of why it chose not to do so.
The entire factual matrix was before the Supreme Court of New South Wales and three parties had chosen to invoke the jurisdiction of the Supreme Court to agitate claims. Ultimately, Telesto sought to continue to agitate claims by seeking to have a final hearing on all of the factual matters out of which the trustee’s also claim arose. The conduct of the SCNSW 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 the outcome of the SCNSW proceedings, having regard to the Singapore 801 proceedings, resulted in a stay of a claim by Telesto.
More fundamentally, as a matter of principle, the trustee of the Argot Trust does not have an unqualified and absolute right to a trial of its claims on the merits, regardless of any other considerations. It has, without any doubt, a right to an opportunity to have a hearing on the merits on which it can present evidence and arguments to establish the factual foundation for its claims and the legal framework within which those claims are to be made good.
The trustee had that opportunity and it chose not to exercise that opportunity, no doubt according to decisions made by the guiding mind of the trustee, Mr Tyne. I am satisfied that the claims now made by the trustee in these Federal Court proceedings should have been raised in the SCNSW proceedings if they were to be raised at all. Bringing the proceedings now, raising as they do, substantial complex questions of fact and law with which UBS has been vexed before, is an abuse of the processes of the Federal Court of Australia. I am satisfied that the proceedings commenced by the trustee should be permanently stayed.

The remaining question is that of the claim of Ms Marks.
The claim by Ms Marks is in every sense a derivative claim in that it is entirely reliant for its foundation of fact and its related reliance loss formulations upon the events which occurred by reason of the entire portfolio of misrepresentations said to have been made by UBS to Mr Tyne. All of the events upon which Ms Marks relies occurred during the period from 2007 to 2009. All of the central events are directly related to the entire conduct alleged against UBS.
Ms Marks is the partner of Mr Tyne. I am satisfied that the claims made by Ms Marks as formulated in the amended statement of claim in these proceedings is a claim which could and should have been brought along with the claim by the trustee in the SCNSW proceedings. That Court had jurisdiction to hear the claims, was seized with the proceeding and was seized with all of the foundation factual matters which were required to be ventilated and ultimately made the subject of findings in that proceeding.
I am satisfied that the claims by Ms Marks could have and should have been brought in the SCNSW proceedings.
I am satisfied that the joinder of the claims by Ms Marks in the Federal Court proceedings is an abuse of this Court’s processes and that the proceedings commenced by Ms Marks must also be stayed.
The remaining question concerns the disposition of the costs of and incidental to the application for a stay and the costs of the proceedings. As to the costs, I am satisfied that a proper exercise of the discretion conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) is that the trustee of the Argot Trust must pay the costs of the respondent of and incidental to the application for the stay. Because I have found that these proceedings commenced by the applicants are an abuse of the processes of this Court, the question that arises is whether costs ought to be ordered on an indemnity basis. Having regard to the history of the various proceedings and in particular the history of the SCNSW proceedings and the relationship between the foundation matters of fact asserted in that proceeding as compared with the matters sought to be asserted in these proceedings, and all of the other considerations I have discussed throughout these reasons, I am satisfied that a proper exercise of the discretion requires an order to be made that the trustee of the Argot Trust pay the costs of UBS of and incidental to the application on an indemnity basis.
The claims made by Ms Marks are derivative and, I suspect, have been joined with the proceedings by the trustee in order to establish an independent claim by an independent party. Nevertheless, Ms Marks’s claim is necessary entirely bound up with the claims the trustee seeks to make and I have already found that Ms Marks ought to have made her claim in the SCNSW proceedings along with the trustee of the Argot Trust.
Nevertheless, the merits of this application have been consumed with a consideration of the issues as between UBS, Telesto, Mr Tyne and the trustee of the Argot Trust.
The order as to costs which I have already made against the trustee of the Argot Trust addresses all of those matters. I make no order as to costs as against Ms Marks.
Because the proceedings have been not only maintained in circumstances of an abuse of process but were commenced in such circumstances, I further order that the trustee of the Argot Trust pay the respondent’s costs of and incidental to the action on an indemnity basis.

I certify that the preceding four hundred and thirty‑four (434) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.
Associate:
Dated: 8 January 2016

File number(s):	QUD 10 of 2014
Judge(s):	GREENWOOD J
Date of judgment:	8 January 2016
Catchwords:	HIGH COURT AND FEDERAL COURT – consideration of an application to stay proceedings in the Federal Court of Australia on the footing that the proceedings were commenced and maintained by the applicants in circumstances where they were precluded from doing so by reason of res judicata, an issue estoppel, an Anshun estoppel and the doctrine of abuse of process, having regard to earlier proceedings in which a final judgment on the merits was given against particular parties by the High Court of the Republic of Singapore (called the “Singapore 801 proceedings”); other proceedings in the High Court of Singapore (called the “Anti‑Suit Injunction proceedings”) and final judgment against a particular party in proceedings commenced in the Supreme Court of New South Wales (being proceeding 363808 of 2010) HIGH COURT AND FEDERAL COURT – consideration of the principles governing the three forms of estoppel recognised by the High Court of Australia, namely, res judicata, issue estoppel and Anshun estoppel – consideration of the principles applicable to abuse of process – consideration of the principles to be applied in determining whether a party is privy in interest with another having regard to the principle stated and applied in Ramsay v Pigram (1968) 118 CLR 271 – consideration of the restatement by the High Court of the principles relating to res judicata, issue estoppel, Anshun estoppel, the doctrine of abuse of process, the relationship between the three classes of estoppel and abuse of process and the principles governing when a party is privy in interest with another discussed in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 ESTOPPEL – consideration of the discussion by the High Court of Australia in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 concerning the three recognised categories of estoppel according to Australian law, namely, res judicata, issue estoppel and Anshun estoppel – consideration of the relationship between these three categories of estoppel, the preclusive effect of the operation and their relationship with the doctrine of abuse – consideration of the principles governing whether a party is privy in interest with another according to the principle stated and applied in Ramsay v Pigram (1968) 118 CLR 271 – consideration of whether an order for a stay of the Federal Court proceedings ought to be made having regard to those principles PRACTICE AND PROCEDURE – consideration of whether an order for a stay of Federal Court proceedings ought to be made having regard to whether res judicata, an issue estoppel or an Anshun estoppel arises precluding the applicants from commencing and maintaining the proceedings by reason of prior proceedings in the High Court of the Republic of Singapore between particular parties and prior proceedings in the Supreme Court of New South Wales between particular parties – consideration of whether the trustee of the relevant trust as a party to the Federal Court proceedings, is or was privy in interest with the relevant party to the Singapore proceedings and the proceedings in the Supreme Court of New South Wales
Legislation:	Federal Court of Australia Act 1976 (Cth), ss 23, 31A and 43 Federal Court Rules 2011, rr 16.21, 26.01 Australian Securities and Investments Act 2001 (Cth) – ss 12BAB, 12DA Corporations Act 2001 (Cth), ss 1041H, 66A, 766B, 767C and 766D Fair Trading Act 1987 (NSW), s 42 Fair Trading Act 1989 (Qld), s 38
Cases cited:	UBS AG v Telesto Investments Limited, Scott Francis Tyne and ACN 074 971 109 Pty Ltd as Trustee of the Argot Unit Trust [2011] SGHC 170 – cited and quoted Spilada Maritime Corporation v Cansulex Ltd [1987] AC 460 - cited CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 - cited Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 - cited Henry v Henry (1996) 185 CLR 571 - cited Puttick v Tenon Ltd (2008) 238 CLR 265 - cited Telesto Investments Limited v UBS AG [2013] NSWSC 503 – cited and quoted Telesto Investments Ltd & Ors v UBS AG [2012] NSWSC 44 – cited and quoted Blair v Curran (1939) 62 CLR 464 – cited and quoted Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 – cited and quoted Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 – cited and quoted Ramsay v Pigram (1968) 118 CLR 271 – cited and quoted Fencott v Muller (1983) 152 CLR 570 - cited Administration of Papua New Guinea v Daera Guba (1973) 130 CLR 353 – cited and quoted Jackson v Goldsmith (1950) 81 CLR 446 – cited and quoted Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 – cited Henderson v Henderson (1843) 3 Hare 100 – cited Carl Zeiss Stifung v Rayner and Keeler Ltd (No 2) [1967] 1 A.C. 853 – cited Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 – cited and quoted O’Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698 – cited and quoted Reichel v Magrath (1889) 14 App Cas 665 – cited and quoted Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160 – cited and quoted Johnson v Gore Wood & Co [2002] 2 AC 1 – cited and quoted D’Orta‑Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 – cited and quoted Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 – cited Rogers v The Queen (1994) 181 CLR 251 – cited and quoted R v O’Halloran (2000) 159 FLR 260 – cited and quoted Walton v Gardiner (1993) 177 CLR 378 – cited Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (In liq) (1993) 43 FCR 510 – cited and discussed Trawl Industries of Australia Pty Ltd (In liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 – cited and discussed Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 108 ALR 353 – cited and discussed
Date of hearing:	8 May 2015
Date of last submissions:	1 July 2015
Registry:	Queensland
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Category:	Catchwords
Number of paragraphs:	434
Counsel for the Applicants:	The applicant appeared in person
Counsel for the Respondent:	Mr J Stoljar SC
Solicitor for the Respondent:	Mr S Burnett, King & Wood Mallesons

JUDGE:	GREENWOOD J
DATE OF ORDER:	8 JANUARY 2016