BHP Group Limited v Impiombato

Case [2021] FCAFC 93

FEDERAL COURT OF AUSTRALIA

BHP Group Limited v Impiombato [2021] FCAFC 93

Appeal from: Impiombato v BHP Group Limited (No 2) [2020] FCA 1720
File number: VID 789 of 2020
Judgment of: MIDDLETON, MCKERRACHER AND LEE JJ
Date of judgment: 3 June 2021
Catchwords:

REPRESENTATIVE PROCEEDINGS – shareholder class action – claims brought on behalf of non-resident shareholders – dual listed company structure – whether provisions of Pt IVA of the Federal Court of Australia Act 1976 (Cth) capable of application to group members not resident in Australia – procedure under Pt IVA – consideration of the meaning of “claim” under s 33C – question of jurisdiction better defined as whether Pt IVA permits an applicant to define group membership as including claims of non-residents – statutory presumption against extraterritorial operation of legislation – s 33C directed to when a particular form of proceeding can be commenced in an Australian court – presumption has no work to do – consideration of class action regimes in different common law jurisdictions and the issue of non-resident group members – consideration of s 33KA of the Supreme Court Act 1986 (Vic) – whether the Court should exercise its discretion to exclude non-resident group members from the proceeding – order could be fashioned if and when appropriate – strike out application – whether the claims brought on behalf of the shareholders in the United Kingdom company were viable

EQUITY – Pt IVA supplements powers Court always had and has as a court of equity to hear and determine in a single proceeding the multiple claims against a respondent – consideration of the powers the Court of Chancery had in relation to the conduct of a representative proceeding – concept of jurisdiction not based on mere presence and service, but upon a sufficient connexion being shown between the dispute and forum – purpose of Pt IVA not to narrow regimes that existed in equity’s exclusive or auxiliary jurisdiction – curious result if one could be a group member in a Chancery rule representative proceeding but not under Pt IVA procedures

PRIVATE INTERNATIONAL LAW – authority of the Court to decide personal actions of non-residents – consideration of the jurisdictional “anchor” – Mobil Oil Australia Pty Ltd v Victoria [2002] HCA 27; (2002) 211 CLR 1 – territorial nexus the capacity to exercise power over a respondent

HIGH COURT AND FEDERAL COURT – federal jurisdiction – whether Pt IVA confers jurisdiction on the Court or establishes powers and procedures by which the Court can exercise jurisdiction

Legislation:

Constitution ss 71, 77

Acts Interpretation Act 1901 (Cth) ss 9, 21(1)(b)

Australian Securities and Investments Commission Act 2001 (Cth)

Corporations Act 2001 (Cth) ss 9, 674, 1317HA, 1325

Federal Court of Australia Act 1976 (Cth) ss 5, 33A, 33C, 33D, 33E, 33J, 33K, 33V, 33ZB, 33ZF

Judiciary Act 1903 (Cth) s 39B(1A)(c)

Federal Court Rules 2011 (Cth) rr 8.01, 9.21

Supreme Court Act 1986 (Vic) s 33KA

Rules of the Supreme Court 1883 (Eng)

Explanatory Memorandum, Courts…

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AGLC
BHP Group Limited v Impiombato [2021] FCAFC 93
Case
[2021] FCAFC 93
Decision Date

CaseChat Overview and Summary

The matter of BHP Group Limited v Impiombato concerns a shareholder class action brought by Mr Vince Impiombato and Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) on behalf of non-resident shareholders of BHP Group Limited. The dispute pertains to whether provisions of Part IVA of the Federal Court of Australia Act 1976 (Cth) can be applied to group members not resident in Australia, and if the court has the authority to adjudicate claims brought by such non-resident shareholders. The Federal Court of Australia was tasked with determining the validity of the class action and the applicability of Australian law to non-resident shareholders.

The primary legal issues addressed by the court were whether the provisions of Part IVA of the Federal Court Act permit the inclusion of non-resident group members in a class action, and whether the court has the jurisdiction to adjudicate claims brought by non-residents. Additionally, the court examined whether the statutory estoppel created by section 33ZB of the Federal Court Act can apply to non-residents and if the court should exercise its discretion to exclude non-resident group members from the proceeding. The court also considered whether the claims brought on behalf of the shareholders in the United Kingdom company were viable.

The court's reasoning was grounded in the understanding that Part IVA of the Federal Court Act supplements the court's inherent equitable powers to hear and determine multiple claims against a respondent in a single proceeding. The court found that there was nothing in Part IVA that evinced an intention to exclude non-resident group members from the class action. The statutory presumption against the extraterritorial operation of legislation was deemed inapplicable, as the court's jurisdiction is triggered by service on the respondent within the territorial jurisdiction. The court also noted that the statutory estoppel under section 33ZB can affect the rights of non-resident group members if they seek to determine their individual claims under Australian law. Consequently, the court rejected BHP's arguments and upheld the primary judge's decision.

The appeal was dismissed, and leave to appeal was granted only to grounds 1 and 2 in the draft notice of appeal. The court further ordered that the appeal be dismissed with costs and the application for leave to appeal be dismissed with costs.

Orders

Orders of the court

1. Leave be granted to appeal with such leave being limited to grounds 1 and 2 in the draft notice of appeal (being exhibit CT-2 to the affidavit of Christine Tran affirmed 11 December 2020).

2. A notice of appeal reflecting the leave granted pursuant to order 1 be filed by the appellant forthwith.

3. The appeal be dismissed with costs.

4. The application for leave to appeal dated 11 December 2020 be otherwise dismissed with costs.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The inversion (or shift in the focus of attention) in the unsuccessful argument in Mobil Oil from the defendant’s amenability to process, to the connexion of the claim or the claimants with Victoria, has obvious similarities to the present argument advanced by BHP in relation to non-resident group members. Conclusion As the High Court observed in Wong v Silkfield (at 258 [1] per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ), Pt IVA confers upon the Court “new powers in relation to the exercise of jurisdiction with which it has been invested by another law made by the Parliament”. It cannot be disputed that the provisions of the laws of the Parliament upon which jurisdiction is conferred on this Court mean that this Court has authority to adjudicate the justiciable controversy between BHP and all other relevant actors, including non-residents. The powers in Pt IVA as to the exercise of jurisdiction with which it has been invested by another law are capable of application to claims for loss and damage by non-residents. As the primary judge correctly found, there is nothing about Pt IVA evincing an intention to the contrary. On the state of the law in this country, where jurisdiction is attracted by service on the respondent within the territorial jurisdiction of the court, it is not necessary to show any other connexion with the jurisdiction. Or, put another way, as the authors of Class Actions in Australia observed, it is the defending party’s “amenability to the jurisdiction that is critical”. Two final points should be made. First, there is BHP’s submission as to the central provision of Pt IVA, s 33ZB. BHP contends there is “no textual or contextual indication that Parliament intended for this provision to apply to persons beyond the jurisdiction of this Court”. But, as the applicant correctly submits, this misapprehends the relevant inquiry. The question is whether, from the perspective of Australian law, s 33ZB can operate to create a statutory estoppel with respect to non-residents. Plainly it can. Section 33ZB could not otherwise operate so as to ensure that this Court’s judgment would bar non-resident group members from bringing proceedings raising the same issues under foreign law in a foreign court. That is a matter for the laws of the foreign jurisdiction. The statutory estoppel will, however, operate so as to affect the rights of the non-resident group member bound by the s 33ZB order if and when that non-resident group member seeks the determination of its individual claim under Australian law in this Court (or any other Australian court). Secondly, when it comes to the Extraterritorial Operation Contention, any reliance upon a distinction between the Court’s jurisdiction over the claims of the applicants and the group members by asserting that “not all group members have a valid cause of action against the respondent” is beside the point. It is necessary to deal below with BHP’s Strike Out Contention, but even if the claims made on behalf of BHP Plc shareholders for contravention of s 674(2) of the Corporations Act were misconceived, this does not mean that there is not a claim within the meaning of s 33C.

Ratio Decidendi

Legal Principle Established

BHP contends that Mr Vince Impiombato and Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund), the representative applicants, should not be “permitted to, prosecute claims on behalf of persons who do not reside in Australia” and assert that owners of the BHP LSE Shares and BHP JSE Shares do not have a viable cause of action in respect of an alleged failure by BHP to comply with Australia’s continuous disclosure laws. The primary judge rejected these assertions, however, in doing so, BHP contends that the primary judge fell into error in three ways by failing to:(1)construe the application of Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Act), such that it does not apply to the claims brought on behalf of shareholders of BHP and/or BHP Plc who are not residents of Australia (Extraterritorial Operation Contention); (2)exercise a discretion to exclude non-resident group members, by failing to take into account the interests of BHP and the structure of Pt IVA (particularly in respect of finality) in circumstances where his Honour found (at J [130]) that there was “some risk of [re-agitation of subsequent similar subject matter proceedings] occurring” (Wrongful Discretion Contention); and(3)construe the application of s 674 of the Corporations Act 2001 (Cth) (Corporations Act), such that the claims of shareholders in BHP Plc ought to be struck out because such persons do not have a cause of action against BHP under s 674, because s 674 does not contemplate loss sustained by foreign investors who purchased shares on a foreign stock exchange (Strike Out Contention). Unsurprisingly, the relevant principles informing the discretion to grant leave to appeal are not in doubt. They can be shortly stated. As was observed in Nationwide News Pty Ltd v Rush [2018] FCAFC 70 (at [2]–[6] per Lee J, Allsop CJ and Rares J agreeing):The starting point is that in exercising the power to grant leave, regard must be had to the statutory charge in s 37M(3) of the [Act] that the power must be exercised or carried out in the way that best promotes the overarching purpose, being the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Consistently with the facilitation of a just resolution, an applicant must usually show that: (a) in all the circumstances, the decision to be appealed is attended with sufficient doubt to warrant its reconsideration on appeal; and (b) supposing the decision to be wrong, substantial injustice would result if leave were refused: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 (Sheppard, Burchett and Heerey JJ). The sufficiency of the doubt in respect of the decision to be appealed and the question of substantial injustice bear upon each other so that the degree of doubt which is sufficient in one case may be different from that required in another. It has also been said that the considerations are cumulative such that leave ought not be granted unless each limb is made out: Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139; (2010) 81 ATR 36 at 38 [5] (Ryan, Stone and Jagot JJ); Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98; (2017) 252 FCR 1 at 4 [3] (Jagot, Yates and Murphy JJ).Additionally, consistent with the facilitation of a quick, inexpensive and efficient resolution is the principle which emerges from the oft-cited warning of Jordan CJ in In re the Will of F. B. Gilbert (Deceased) (1946) 46 SR (NSW) 318 at 323, that if a tight rein is not kept upon the interference with orders of judges at first instance in the exercise of discretion on a point of practice and procedure, the result will be “disastrous to the proper administration of justice”. …Even if it was reasonably arguable that the primary judge’s discretion miscarried, that would not, in and of itself, be a sufficient basis for the grant of leave.(Emphasis in original).