FEDERAL COURT OF AUSTRALIA
Impiombato v BHP Group Limited (No 3) [2023] FCA 1104
File number: VID 649 of 2018 Judgment of: MOSHINSKY J Date of judgment: 14 September 2023 Catchwords: PRACTICE AND PROCEDURE – discovery – representative proceeding – shareholder class action – whether to order non-standard discovery (as sought by the applicants) – whether categories of discovery proposed by the applicants appropriate – where class action relating to the same events on foot in the UK – where overlap of issues between the UK proceeding and the present proceeding – where orders for disclosure made in the UK proceeding Legislation: Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth), s 674
Federal Court of Australia Act 1976 (Cth), s 37M
Federal Court Rules 2011, rr 20.14, 20.15
Cases cited: Davis v Quintis Ltd (Subject to Deed of Company Arrangement) [2022] FCA 553
Municipio de Mariana v BHP Group (UK) Ltd (formerly BHP Group plc) and BHP Group Ltd [2023] EWHC 1134 (TCC)
Reilly v Australia and New Zealand Banking Group Ltd (No 3) [2020] FCA 1609
Sabre Corporation Pty Ltd v Russ Kalvin’s Hair Care Co (1993) 46 FCR 428
SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 2) [2006] FCA 931; 155 FCR 150
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 33 Date of hearing: 13 September 2023 Counsel for the Applicants: Mr AD Pound SC with Ms E Levine and Mr EL Olivier Solicitor for the Applicants: Phi Finney McDonald and Maurice Blackburn Lawyers Counsel for the Respondent: Ms WA Harris KC with Mr K Loxley and Mr B Cameron Solicitor for the Respondent: Herbert Smith Freehills ORDERS
VID 649 of 2018 BETWEEN: VINCE IMPIOMBATO
First Applicant
KLEMWEB NOMINEES PTY LTD (AS TRUSTEE FOR THE KLEMWEB SUPERANNUATION FUND)
Second Applicant
AND: BHP GROUP LIMITED (ACN 004 028 077)
Respondent
ORDER MADE BY:
MOSHINSKY J
DATE OF ORDER:
14 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.The applicants have leave to amend their interlocutory application dated 5 July 2023 to the form of the further amended interlocutory application annexed as “CM-2” to the affidavit of Cameron Myers sworn 4 September 2023.
2.The interlocutory application be treated as so amended.
3.The applicants file the further amended interlocutory application as soon as reasonably practicable.
4.The respondent (BHP Ltd) give non-standard discovery pursuant to r 20.15 of the Federal Court Rules 2011 (the Rules) of:
(a)all documents disclosed by the defendants in Municipio de Mariana & Others v BHP Group (UK) Ltd (formerly BHP Group plc) & BHP Group Limited (HT‑2022-000304) (the UK Proceeding) at or about the same time as disclosure is made in the UK Proceeding;
(b)all documents in its control that fall in the categories set out in the Annexure to these orders, by making reasonable searches as described in r 20.14(1)(b) and (3) of the Rules, such discovery to be made by a date (or…
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- Case
- [2023] FCA 1104
- Decision Date
CaseChat Overview and Summary
The court concluded that while the default position under the Rules is standard discovery, there may be circumstances where it is appropriate to order non-standard discovery, particularly in large and complex cases. The judge referred to observations made by other judges in similar cases and emphasised that the decision should be guided by the particular circumstances of the case and the overarching purpose of the civil procedure rules. The court found that several contextual matters supported the applicants' request for non-standard discovery. These included the significant number of documents already discovered, the incomplete discovery in the related ADR proceeding in the USA, and the overlap of issues with the UK proceeding. The court was satisfied that the proposed categories of discovery were appropriate and that ordering non-standard discovery would be in the interests of justice. Consequently, the court ordered BHP Ltd to provide non-standard discovery in accordance with the specified categories and timelines.
The final orders included granting leave to amend the interlocutory application, ordering BHP Ltd to provide non-standard discovery of certain documents, setting out specific timelines and protocols for discovery, and reserving costs. The court also noted that BHP Ltd could apply to obtain documents from Samarco Mineração S.A Brazil if certain documents were not in its control. This decision highlights the court's willingness to consider non-standard discovery in complex cases with significant document discovery needs and overlapping international proceedings.
Orders
Orders of the court
1. The applicants have leave to amend their interlocutory application dated 5 July 2023 to the form of the further amended interlocutory application annexed as “CM-2” to the affidavit of Cameron Myers sworn 4 September 2023.
2. The interlocutory application be treated as so amended.
3. The applicants file the further amended interlocutory application as soon as reasonably practicable.
4. The respondent (BHP Ltd) give non-standard discovery pursuant to r 20.15 of the Federal Court Rules 2011 (the Rules) of:
(a) all documents disclosed by the defendants in Municipio de Mariana & Others v BHP Group (UK) Ltd (formerly BHP Group plc) & BHP Group Limited (HT‑2022-000304) (the UK Proceeding) at or about the same time as disclosure is made in the UK Proceeding;
(b) all documents in its control that fall in the categories set out in the Annexure to these orders, by making reasonable searches as described in r 20.14(1)(b) and (3) of the Rules, such discovery to be made by a date (or in tranches by dates) agreed between the parties (alternatively, by further order).
5. Discovery is to be provided electronically in accordance with the electronic discovery protocol agreed between the parties.
6. Without limiting paragraph 4, if and to the extent that BHP Ltd identifies that any of the documents responsive to category 16(a) in the Annexure are not in its control, but which BHP Ltd reasonably believes are or may be within the control of Samarco Mineração S.A Brazil (Samarco), BHP Ltd:
(a) Within 28 days, take all reasonable steps available to it to obtain such documents from Samarco, including by the exercise of any rights under the Samarco Shareholders Agreement to request or access information;
(b) Within 2 weeks following receipt of documents, provide discovery to the applicants of all such documents obtained from Samarco;
(c) Within 4 weeks following discovery in accordance with paragraph (b) above, or, if no documents are received from Samarco, within 4 weeks of receiving a response from Samarco, file and serve an affidavit by a responsible officer of BHP Ltd with knowledge of what steps BHP Ltd has taken to obtain the documents from Samarco, deposing to the steps made by BHP Ltd to obtain the documents or copies of the documents, including details of the exercise of any rights under the Samarco Shareholders Agreement to request or access information.
7. Within 4 weeks of completion of discovery in paragraph 4, BHP Ltd file and serve a list of documents verified by affidavit in accordance with the Rules, identifying in each case where a claim of privilege is made in whole or in part over a document, the nature of the privilege claimed and the basis for the claim of privilege.
8. The further amended interlocutory application otherwise be dismissed.
9. There be liberty to apply.
10. Costs be reserved.
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
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Ratio Decidendi
Legal Principle Established
While the default position under the Rules is standard discovery under r 20.14, there may be cases where it is appropriate, having regard to the particular circumstances, to depart from that default position and order non-standard discovery, for example, discovery by categories. In the course of submissions, I was taken to observations made by Lee J in Davis v Quintis Ltd (Subject to Deed of Company Arrangement) [2022] FCA 553 at [3], [6]-[8] and observations of O’Bryan J in Reilly v Australia and New Zealand Banking Group Ltd (No 3) [2020] FCA 1609 at [13] (as well as other cases). Ultimately, in a large and complex case such as this, much will depend on the particular circumstances of the case and an exercise of judgment having regard to, among other things, the overarching purpose of the civil procedure rules: see Federal Court of Australia Act 1976 (Cth), s 37M.Consideration In the present case, there are a number of contextual matters that, in my view, are relevant in considering whether discovery orders as sought by the applicants should be made. First, a substantial number of documents have already been discovered by BHP Ltd in this proceeding. This initial discovery is described in the First Myers Affidavit at paragraphs 14 to 41 and in the Tran Affidavit at paragraphs 9 to 25. A large part of this initial discovery comprised documents that had been discovered in a proceeding in the United States of America (the ADR Proceeding). Approximately 106,000 documents were produced by BHP Ltd, but it appears that this includes duplicates and documents without meaningful content. Mr Myers estimates that fewer than 30,000 documents were unique documents. It is also relevant that the discovery in the ADR Proceeding was incomplete as the proceeding settled before discovery was completed. Secondly, a class action proceeding is on foot in the United Kingdom, namely Municipio de Mariana & Others v BHP Group (UK) Ltd (formerly BHP Group plc) & BHP Group Limited (the UK Proceeding), arising from the same events. This proceeding is described in the Tran Affidavit at paragraphs 30 to 49. As is evident from the title to that proceeding, BHP Ltd is the second defendant to the proceeding, and the first defendant is the company formerly known as BHP Group plc. As set out in paragraph 31 of the Tran Affidavit:(a)the UK Action comprises claims by over 700,000 individuals, businesses, foundations, churches, municipalities, utility companies and indigenous people of Brazil who have allegedly suffered loss and damage as a result of the failure of the Fundão dam;(b)the claimants to the UK Action allege that BHP and BHP Group (UK) Ltd are liable under Brazilian law as a result of the failure of the Fundão dam in one or more of the following ways:i.first, as “polluters” under Articles 3(IV) and 14 of the Brazilian environmental law;ii.secondly, under standard principles of Brazilian law relating to fault-based liability; andiii.thirdly, as controlling shareholders under specific provisions of the Brazilian corporate law which the claimants say impose duties on ultimate shareholders towards the communities in which their subsidiaries operate.(c)the defendants broadly deny these allegations (on both factual and legal grounds) and raise additional matters including around the applicable statute of limitations, standing, and double recovery;(d)the issues in dispute in the UK Action include (among others):i.whether the defendants were responsible, directly or indirectly, for the activity of Samarco which resulted in the dam failure, and in particular: (A) whether the defendants exercised control over Samarco, failed to supervise the activities of Samarco, funded operations at Samarco, and/or benefitted from the activities of Samarco; and (B) whether under Brazilian law there was a sufficient causal connection between these acts and/or omissions of the defendants and the Fundão dam failure;ii.whether it was, at relevant times, self-evident that the operations of Samarco involved a risk of catastrophic damage to the environment and community in the event the Fundao dam failed;iii.whether the defendants were involved in the management of Samarco, including in relation to the operations and decisions which ultimately led to the dam failure, and/or whether the defendants had knowledge of those matters;iv.whether, at specified times, the defendants disregarded advice and warnings about the health and safety risk posed by the dam and/or failed to take sufficient or satisfactory action to address those matters;v.whether the defendants’ conduct, or one or more aspects of their conduct, caused the Fundão dam failure (under the relevant test of causation); andvi.whether the defendants permitted the Fundão dam to be constructed as an upstream dam and repeatedly increased in height.