Tyne v UBS AG (No 3)

Case [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…

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AGLC
Tyne v UBS AG (No 3) [2016] FCA 5
Case
[2016] FCA 5
Decision Date

CaseChat Overview and Summary

In Tyne v UBS AG (No 3), the applicants, led by Mr Scott Francis Tyne as trustee for the Argot Trust, sought to challenge the stay of proceedings in the Federal Court of Australia. The case involved claims against UBS AG for alleged misleading and deceptive conduct and breach of contract in relation to the sale and subsequent purchase of Eurobonds issued by Kazakhstan banks. The Federal Court was asked to determine whether it should stay the proceedings based on res judicata, issue estoppel, Anshun estoppel, and the doctrine of abuse of process, considering prior judgments in Singapore and New South Wales.

The legal issues before the court were multifaceted. They involved the application of res judicata, issue estoppel, and Anshun estoppel, as well as the doctrine of abuse of process. The court also had to consider whether the trustee of the Argot Trust was privy in interest with the relevant parties from the Singapore and New South Wales proceedings. The overarching issue was whether the Federal Court proceedings should be stayed due to these preclusive doctrines and principles of abuse of process.

The court began by examining the principles governing res judicata, issue estoppel, Anshun estoppel, and abuse of process, referencing the High Court's decision in Tomlinson v Ramsey Food Processing Pty Ltd. It concluded that the Federal Court proceedings should be stayed because they were precluded by prior judgments. The Singapore proceedings, which resulted in a final judgment on the merits, and the New South Wales judgment, both played critical roles in this determination. The court found that the trustee for the Argot Trust was privy in interest with the relevant parties in the Singapore and New South Wales proceedings, further justifying the stay.

Ultimately, the court ordered that the proceedings be permanently stayed, with the applicants to pay the costs of the respondent on an indemnity basis. This decision underscored the importance of preclusive doctrines in preventing multiplicity of proceedings and ensuring finality in litigation.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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.