BHP Group Limited v Impiombato & Anor

[2022] HCATrans 13

[2022] HCATrans 013

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M42 of 2021

B e t w e e n -

BHP GROUP LIMITED

Applicant

and

VINCE IMPIOMBATO

First Respondent

KLEMWEB NOMINEES PTY LTD (AS TRUSTEE FOR THE KLEMWEB SUPERANNUATION FUND)

Second Respondent

Application for special leave to appeal

KIEFEL CJ
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION TO BRISBANE

ON FRIDAY, 18 FEBRUARY 2022, AT 11.09 AM

Copyright in the High Court of Australia

KIEFEL CJ:   I will announce the appearances of the parties.

MS W.A. HARRIS, QC appears with MR K.A. LOXLEY and MS J.E. D’SOUZA for the applicant.  (instructed by Herbert Smith Freehills)

MR J.T. GLEESON, SC appears with MS E. LEVINE for the respondents.  (instructed by Maurice Blackburn Lawyers).

KIEFEL CJ:   Yes, Ms Harris.

MS HARRIS:   Thank you, your Honours.  If the Court pleases.  Your Honours, every Commonwealth statute falls to be construed against constructional norms which are embedded in statute and well‑entrenched in the common law. These statutory and common law presumptions against extraterritorial application of legislation are just one example of these constructional norms, and as this Court has repeatedly made clear, and section 2 of the Acts Interpretation Act tells us in terms, the presumption applies unless a contrary intention appears. 

Now, your Honours, it follows that it was not for BHP to establish that in legislating Part IVA of the Federal Court of Australia Act, Parliament signalled an intention to exclude persons and things outside Australia from its operation.  By force of those well‑established constructional norms which each formed part of the statutory and common law backdrop to the passage of Part IVA, it must be presumed that Parliament was intending to legislate only with respect to persons and things within the Commonwealth, and not to legislate with respect to persons and things outside the Commonwealth, unless it made that contrary intention clear.

And herein lies the error in the Full Court’s reasoning which, with respect, likewise infects the contentions advanced by our learned friends.  The Court proceeded on the erroneous footing that the constructional task was to discern a legislative intention that the general language of Part IVA did not apply to persons and things outside the jurisdiction, a failing which that general language must be taken to apply extraterritorially, and that error on the part of the Full Court emerges clearly at paragraphs 42 to 44 of the judgment which is at application book 94, and in these paragraphs the Court discusses the gateway provision to the Part ‑ section 33C, and section 33C, for the Court’s reference, appears at application book 142. 

Now, true it is, as the Court observed at paragraph 43, that provision, section 33C, is directed to when a particular form of proceeding may be initiated in the Federal Court, and the manner of the Court’s exercised jurisdiction is, as the Court points out, not a matter within the province of a foreign sovereign, but so to observe, we say, misses the point.

Section 33, as your Honours will no doubt be more than familiar with, refers to persons and group members.  Proceedings of the kind referred to in the section may be commenced on behalf of group members as defined.  Upon any judgment in the proceeding, those group members will be bound by the statutory estoppel embedded in section 33ZB, which appears at page 153, and their rights will thereby be affected.

The question not addressed by the Full Court was how the constructional presumption operated with respect to those perfectly general terms.  Instead the Full Court asserted – your Honours see this in the last sentence of paragraph 44:

The presumption has no work to do in the search for meaning of a statutory provision of this character.

With respect, that was a clear error on the authority of this Court, and the Acts Interpretation Act, which applies to all Acts.  The common law assumption – well‑established by the authority of the High Court – applies to any and all legislative expressions of general application which are in terms capable of application to persons and things outside the territory.

Now their Honours proceeded, at paragraph 51 – which your Honours will find at page 96, down the bottom of the page – to examine the extrinsic materials.  Their observation that the extrinsic materials did not suggest Part IVA could not be used to advance non‑resident claims was telling, but not for the reason relied upon by the Full Court.

The extrinsic materials are indeed silent on the question of exterritorial application.  Contrary to the reasoning of the Full Court, the absence of any such reference is relevant to whether the presumption has been displaced by necessary implication and suggests that it has not.  In other words ‑ ‑ ‑

KIEFEL CJ:   Ms Harris, I think it is put against you that section 33C(1) refers to persons who have claims, and the claims are necessarily where the Federal Court has subject matter jurisdiction under Australian law.

MS HARRIS:   Your Honour, that would not suffice to displace the presumption.  All that does, your Honour, is beg the question:  who are group members upon whose behalf claims may be advanced under this representative proceeding?  Now, bearing in mind that section 33C cannot be construed in a vacuum, it must be construed as part of the part, and that part allows such claims to be advanced without necessarily any group members becoming aware of the advance of those claims on their behalf, and in circumstances where upon a determination in the proceeding those passive group members – not parties to the litigation – will become bound by it.

Under ordinary circumstances, the Federal Court could not exercise jurisdictional power with respect to those claims.  It is Part IVA that provides that jurisdictional bridge.  So, we return to the central question which is posed by the presumption:  in respect of whom does it provide that bridge?  In respect of whom does it facilitate the advancement of claims? 

KIEFEL CJ:   I thought that the point made against you was that the presumption concerns ‑ claims which are the concern of a foreign sovereign and Part IVA is not concerned with that, so it just does not have operation. 

MS HARRIS:   Your Honour, that could not, with respect, be correct.  To take such a view – and that view is certainly manifest in what fell from the Full Court at paragraph 43 – that would denude the presumption of any operation altogether.  If one had to look at the provision and say, this provision is concerned with matters which are within the province of a foreign sovereign and only at that point the presumption became enlivened, then it is difficult to see how it could ever have any work to do and it certainly would have had work to do in the cases in which this Court has held it to have effect and Meyer Heine is a good example of that.

The focus on claims was expedient because it deflected attention from the central question.  Section 33ZB does not apply to claims, it applies to persons.  The judgment binds all persons.  So, it binds them in respect of claims which they would be free to advance elsewhere but for this judgment.  The operation of section 33ZB in respect of persons inside the territory makes perfect sense because, according to well‑established rules of private international law, this Court, and the Federal Court of Australia, may exercise jurisdiction with respect to such people.

But when we come to the enforcement of judgment against persons outside the territory, those same rules of private international law dictate that unless persons outside the territory have submitted to judgment within Australia or have somehow participated in a proceeding made themselves the subject of the Court’s jurisdiction, then they will not be bound by that when they seek to take proceedings elsewhere and the learned trial judge so accepted.  There was expert evidence to that effect and the learned trial judge so accepted.  

Now, so to say is not to invite this Court, like the court below, to invert the presumption, because the presumption applies with respect to those perfectly general terms, persons and group members.  But when we reflect on the operation of section 33ZB, that fortifies the non‑displacement of the presumption in the present case because it is unlikely to be effective to prevent persons outside the jurisdiction from bringing claims on their own behalf in their home courts.

This brings me, perhaps, to another way in which the Full Court sought to sidestep the application of the presumption by focusing on the defendant’s presence in the jurisdiction, which a focus of the submissions put by the respondent below.  True it is that the defendant’s presence in the jurisdiction can serve as a jurisdictional anchor for the bringing of claims against the respondent, but that does not tell us anything about a person upon whose behalf such claims might be advanced.  It does not, of itself, afford the Court a personal jurisdiction to determine the claims of group members; as I say, that question – that work is done by Part IVA.

So, that drives us back to the central question, which does not arise with respect to claims, it arises with respect to the persons who may be named as being bound and therefore the subject of an alteration of their rights under section 33ZB, and that question is:  who may be included as a group member, anyone in the world or only persons within the territory?

Now, the respondents say, well, these questions have already been determined by this Court in Mobil Oil – they have not, with respect – that case concerned whether the Victorian legislature had the constitutional power to pass the equivalent – the Victorian equivalent of Part IVA – and the Court there held that there was a relevant territorial nexus established by the service of the defendant within the jurisdiction.

Now, that demonstrated that the legislation was constitutional, but it does not go any way to answering the question in the present case regarding the extent of the Federal Court’s jurisdiction, and the powers that are conferred under this statute with respect to altering the rights of persons outside the territory.

We can accept for present purposes that the Commonwealth has the power to pass legislation of that kind.  The question not answered here is, did it do so?  And in answering that question, it was not simply open to the Full Court to assert that these constructional norms…..on them pursuant to statute and well‑established in the common law, had no work to do.

It was to corrupt the application with respect to those constructional norms to search within a single provision – section 33C – for subject matter that was the province of a foreign sovereign.  As I said, if that was the constructional task, then the presumption would never have any work to do because it would be immediately displaced by such an expression of

legislative intent.  Rather, Part IVA needed to be looked at as a whole.  The question about to whom it applied needed to be dealt with against those constructional norms.  The question whether persons and group members meant anyone in the world or persons within the territory needed to be grappled with.

There was commentary by the Full Court at paragraph 53 that the enactment of Part IVA was intended to improve access to the courts.  That might be accepted but there is no indication whatever that Parliament intended to improve access to the Federal Court on behalf of those outside Australia who may never know that proceedings are being brought in their name and their rights affected.  One might ask the question, why would it be necessary for Parliament to take on that burden.  If it wished to do so, it could have expressed itself with clarity, and it still might.

There is no incongruity, contrary to what fell from the Full Court, in saying that such persons may not be group members in a proceeding of this kind.  If they wish to invoke the jurisdiction of the Federal Court, then they are at perfect liberty to do so.  But they do so in the conventional fashion by initiating proceedings and submitting, or signalling ‑ participating in proceedings and, thereby, signalling that they submit to the jurisdiction.

Against the background of the private international law rules which find their expression in Dicey’s Rule 36, if Parliament had intended to ensure that non‑parties outside the jurisdiction were bound by the adjudication of claims in an Australian court of which they may not be aware, then against the background of these presumptions it behove Parliament to do so in express terms.

KIEFEL CJ:   Ms Harris, I see the principal reason you say that the matter is appropriate for the grant of special leave is that, as the Full Court itself observed, the point about whether or not Part IVA operates extraterritorially is one of some importance which has not directly been considered by an appellate court in Australia, including this Court, of course.

MS HARRIS:   Yes, your Honour.  With respect, the Full Court was perfectly right about that.  It does not require a lot of evidence from the Bar table to demonstrate that this is an important question that has genuine application across many cases currently pending in the Federal Court of Australia. 

KIEFEL CJ:   At that point, Ms Harris, we might hear from Mr Gleeson.

MS HARRIS:   If your Honour pleases.

MR GLEESON:   Thank you, your Honours.  This is a case where BHP, an Australian company, is sued and served within Australia in respect to alleged wrongs done under Australian law, by misleading the Australian stock exchange, causing alleged damage to shareholders wherever located.  It is accepted that the Federal Court has personal jurisdiction over BHP by reason of service within the jurisdiction.  It is accepted that the Court has subject matter jurisdiction over BHP under the Corporations Act and like provisions.  It is also accepted that any shareholder, wherever they may be found, could exercise that jurisdiction of the Court by a conventional direct action. 

It is also accepted that under the old representative action in equity, which is now Part 9, rule 21 of the Federal Court Rules, this could be done on a group basis.  The only question that is raised is whether Part IVA as a procedural reform intended to improve efficiency somehow is less efficacious than these other provisions and, indeed, its predecessor.

Your starting point for the presumption against extraterritoriality, taking up your Honour the Chief Justice’s question, can be found at pages 120 to 121 of the book in the authorities cited between paragraphs 15 and 16 including, of course, Niboyet in 1878.  What is critical is to ascertain whether a statute has a territorial operation beyond the confines of the country in question which, under the comity of nations, or rules of international law, prima facie is to usurp the jurisdiction which another sovereign state properly has.

One of the stark features of BHP’s application is they have never identified which sovereign or sovereigns have a better claim under international law to exercise the jurisdiction over persons who may be outside Australia – I will come back to what is meant by that – in a case where one is enforcing Australian norms in respect to alleged wrongs done in Australia.  Unless BHP can identify, under international law, a sovereign which has a better claim to determine those matters of Australian law, the presumption has no work to do. 

Your Honours, the next point concerns exactly how the presumption intersects with section 33C.  Again, taking up your Honour the Chief Justice’s question with respect to the text at page 142 of 33C and the definitions in 33A, it is apparent that the word “person” or “persons” is used with perfect generality throughout the entirety of Part IVA.  It is used of the representative applicant.  It is used of the group members.  Indeed, it is used of the respondent.  It is unclear whether BHP seeks to read down that term only in respect to the group members or also in respect to the representative and/or the respondent.  It is also wholly unclear what is the reading down that is proposed.  In the proposed grounds of appeal – which are found at page 117 – the suggested reading down – to comply with the presumption – is to exclude non‑residents of Australia. 

You do not see a word in this statute as to how “residents” is to be determined, which, of course, is a factually intensive inquiry by reference to a range of different standards.  In tax law, it could range between domicile, place of incorporation, central management and control for a corporation, carrying on business, and so on.  So what BHP is seeking to do is to read into – through this reading‑down process – the simplicity and generality of the word “persons” some completely unspecified test of residence which would undermine the entire workability of the scheme.

If your Honours would go to the next page, 118, when the special leave question is proposed in paragraph 4, the reading down has changed.  It is now a reading down to limit the Court so it cannot determine claims of group members who are outside the territory, which was the way Ms Harris put it this morning.  That seems to be a different question – are you, at some date – the date is not specified – physically outside the territory, which is a different matter, one might think, to residence.

In the reply submissions at the top of page 174, the reading down is different again.  It is a reading down so that “persons” does not include non‑nationals of Australia – perhaps, by reference to the Citizenship Act or the application of the aliens power, and so on.  That is just a little guide that when Parliament chose that word, “persons”, in Part IVA – coming back to page 142 – it meant what it said, that term is simply to be used with all the generality it bears.  The reason Parliament could safely do that without infringing international law is that, as your Honour’s question points out, it is the claims in section 33C that provide the territorial link to Australia.

These are claims in which the Court has subject matter jurisdiction and, indeed, they must be claims in which the Court has personal jurisdiction because nothing in Part IVA expands personal jurisdiction of the Court.  So, to the extent there is a need to confine the provision to respect international law, it has happened within that very text of section 33C and, for that reason, the application has insufficient prospects of success.

Your Honours, could I deal with two other matters that were raised this morning, and they are in the written submissions.  The first concerns section 33ZB, and it is said, correctly, that on the text of that provision if there is no reading down the judgment will bind all group members if they have not opted out.  That is true as a matter of Australian law, and because the group members are the persons without any of the limitations BHP suggests, that is the correct statement of Australian law.

The effect of that, quite simply, is that in any court where Australian law governs, the judgment will have that binding and final effect, and it is intended to do so to bring finality to the claim, for the benefit of the group, and indeed for the benefit of BHP.  If there is a judgment which binds BHP, that is the finality reached in Australian law.

What effect might be given to section 33ZB in the perhaps unlikely event that in a foreign jurisdiction a group member wishes to do better than they have attained under the judgment would be a matter for the law of that foreign jurisdiction concerning the enforcement of foreign judgments.  With respect, Ms Harris was incorrect to say that Justice Moshinsky found that section 33ZB would not be enforced, as a matter of foreign law in different jurisdictions, instead his Honour said there was a debate about the matter, he did not need to finally resolve it.  So, nothing in section 33ZB adds to the argument about extraterritoriality.

Your Honours, the other matter I wanted to pick up from this morning was the proposition was advanced that somehow Part IVA is bridging a jurisdictional gap, which would otherwise exist, and for that reason one needs to find in it some express intent to apply to persons generally.  Of course, Part IVA does not breach any jurisdictional gap, the matter has been adequately dealt with by this Court in the authorities that we cite at page 167 in paragraph 24 ‑ and that is Wong v Silkfield, and Chief Justice Gleeson in Mobil Oil – that Part IVA is doing no more than creating “new procedures” and conferring “powers” on the Court:

in relation to the exercise of jurisdiction” –

that is subject matter jurisdiction:

with which it has been invested by another law made by the Parliament.

So, the jurisdiction is there, the matter is there, the matter of course being the larger controversy – has BHP engaged in misleading conduct for which it is liable to its shareholders – and this provides simply new procedures and new powers.

Your Honour, finally in relation to the question you raised about the submission that no intermediate court in Australia has previously dealt with the question, the answer to that is, that is true.  In the 30 years of the working out of these provisions in Part IVA, no one – prior to BHP – has attempted to exclude persons from the group on the ground they are non‑residents, or outside the territory, or non‑nationals, however it is framed.  The point is novel because it has never been taken.  In this case, it

has been comprehensively dealt with, with respect, by Justice Moshinsky in the Full Court and there is very little prospect that they are in error.

Could I also – just on that topic – say that, in terms of how jurisdictions around the world deal with this question, clearly some differences emerge and the Mulheron article to which you have been referred indicates those differences.  For example, the current UK provision in competition law expressly deals with the problem by excluding non‑residents, defined by reference to domicile, so there is a simple test on a date which is covered in the court order.  All of that is in the statute and that is the type of provision you would expect if this argument were to apply. 

Of the jurisdictions in the world which follow the Federal Court model – in which I include New South Wales, the United States and a number of other places – in no such jurisdiction has this argument ever been run or succeeded.  In the United States, for example, the argument was not run and did not succeed in the two key cases that have dealt with related issues – that is Morrison and the Phillips Case.  So, the argument has no support from any court dealing with a parallel provision in Australia or around the world.  In those circumstances, we would suggest the application does not have sufficient strength to warrant the Court’s attention.  Unless your Honours have questions, they are our submissions. 

KIEFEL CJ:   Thank you, Mr Gleeson.  The Court will adjourn to consider the course that it will take.

AT 11:39AM SHORT ADJOURNMENT

UPON RESUMING AT 11.42 AM:

KIEFEL CJ:   There will be a grant of special leave in this matter.  What is your time estimate, Ms Harris?

MS HARRIS:   This will be completed well within the day I expect, your Honour.

KIEFEL CJ:   Would you agree with that, Mr Gleeson?

MR GLEESON:   Yes, your Honour.

KIEFEL CJ:   Thank you.  The Court will now adjourn until 12 noon.

AT 11.43 AM THE MATTER WAS CONCLUDED