Impiombato v BHP Group Limited (No 5)

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FEDERAL COURT OF AUSTRALIA

Impiombato v BHP Group Limited (No 5) [2024] FCA 591

File number(s): VID 649 of 2018
Judgment of: MURPHY J
Date of judgment: 6 June 2024
Catchwords:

REPRESENTATIVE PROCEEDINGS – Practice and Procedure – application to amend group definition to expand the class, and for amendments to relate back to commencement of proceeding – application to amend to bring new claims for relief and for amendments to relate back to commencement of proceeding – relevant principles regarding such amendments and to correct a mistake – leave granted for amendments and for amendments to relate back.
Legislation:

Australian Securities and Investments Commission Act 2001 (Cth) s 12DA

Corporations Act 2001 (Cth) ss 674, 1041H, 1041I, 1317HA, 1317K, 1322, and 1325

Federal Court of Australia Act 1976 (Cth) ss 33K, 33M, 33ZE, 33ZF, and 59(2B)

Federal Court Rules 2011 (Cth) rr 1.32, 1.33, 1.34 and 1.35, 8.21, and 16.53

Law and Justice Legislation Amendment Bill 1994 (Cth)

Rules of the Supreme Court 1965 (UK) O 20 r 5

Supreme Court (General Civil Procedure) Rules (Vic)

Supreme Court Rules1970 (NSW) Pt 20 R 4

Supreme Court Rules 1986 (Vic) r 36.01
Cases cited:

Alinta 2000 Pty Ltd v Petkov [2012] WASCA 258

Andrianakis v Uber Technologies (Ruling No 2) [2020] VSC 152

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175

Ashby v Slipper [2014] FCAFC 15; 219 FCR 322

Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (No 2) [2013] FCA 409; 213 FCR 289

Austructures Pty Ltd v Makin [2014] VSC 544; 290 FLR 153

Baldry v Jackson [1976] 2 NSWLR 415

BHP Group Limited v Impiombato [2021] FCAFC 93

BHP Group Limited v Impiombato in [2022] HCA 33; 405 ALR 402

Bill v Northern Land Council [2018] FCA 1823

Binqld Finances Pty Ltd (in liq) v Binetter [2024] FCA 361

Brando Aus Holdo Pty Ltd v Shayne as representative of the persons identified in Schedule 1 [2021] NSWSC 998

Bray v F Hoffman-La Roche Ltd [2003] FCA 1505

Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231

Brightwell v RFB Holdings [2003] NSWSC 7; 171 FLR 464

Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [2014] VSCA 165; (2014) 48 VR 558

Brown v Jammal [1995] NSWCA 62

Browne v Dunn (1893) 6 R 67

Caason Investments Pty Ltd v Cao [2015] FCAFC 94; 236 FCR 322

Capic v Ford Motor Co of Australia Ltd (No 7) [2018] FCA 1631

Clough v Frog (1974) 4 ALR 615

Cropper v Smith (1884) 26 Ch D 700

Davies v Elsby Bros Ltd [1961] 1 WLR 170; [1960] 3 All ER 672

Dyczynski v Gibson [2020] FCAFC 120; 280 FCR 583

Environinvest Ltd (in liq) v Former Partnership of Webster, White, Gridley, Nairn, Newman, Peters and Miller [2012] FCA 1307; 208 FCR 376

Ethicon Sàrlv Gill [2018] FCAFC 137; 264…

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Details
Case
[2024] FCA 591
Decision Date

CaseChat Overview and Summary

In Impiombato v BHP Group Limited (No 5), the applicants, Mr Vince Impiombato and Klemweb Nominees Pty Ltd, sought leave to amend their group definition to expand the class of group members and to bring new claims for relief in their securities class action against BHP Group Limited. The applicants also sought for the amendments to relate back to the commencement of the proceeding. The court was required to determine whether the amendments were appropriate in the interests of justice and whether they should relate back to the commencement of the proceeding. The central issue before the court was whether leave should be granted for the proposed amendments and for the amendments to take effect from the commencement of the proceeding. The court considered the principles relevant to amendments of pleadings, including the need to balance the interests of justice with the need to ensure a fair trial. The court also considered the need for the amendments to relate back to the commencement of the proceeding to avoid prejudice to the respondent.

The court found that it was appropriate in the interests of justice to grant leave for the proposed amendments and for the amendments to take effect from the commencement of the proceeding. The court noted that the applicants had demonstrated a good faith basis for the amendments and that the respondent had not opposed the form of the amendments. The court also found that the amendments were necessary to correct a mistake in the group definition and to bring new claims that were within the scope of the original proceeding. The court further found that it was appropriate for the amendments to relate back to the commencement of the proceeding to avoid prejudice to the respondent. The court ordered that the applicants have leave to file an amended consolidated originating application and an amended consolidated statement of claim, that the amendments take effect from the commencement of the proceeding, and that each party file written submissions on the question of the costs of and incidental to the interlocutory application.

Orders

Orders of the court

1. The Applicants have leave to file an amended consolidated originating application and an amended consolidated statement of claim in substantially the form of the draft documents annexed to the affidavit of Cameron Peter Myers dated 5 December 2023.

2. The amended consolidated originating application and further amended consolidated statement of claim take effect on and from 31 May 2018.

3. By 20 June 2024, each party file any written submissions (no more than three pages) on the question of the costs of and incidental to the interlocutory application, and costs thrown away. The Court will determine the issue of costs on the papers.

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

Background

Background to the litigation

BHP notes that the second and third Myers’ affidavits were filed and served, without notice, after the due date by which the applicants were required to file and serve any further evidence on the amendment application, but it did not argue that the affidavits should not be accepted. I considered it appropriated to admit all of the affidavits into evidence. None of the deponents were cross-examined.THE FACTS The competing class actions Between May and September 2018 three securities class actions were commenced against BHP by three separate law firms, with different funding arrangements. Each proceeding alleged breach of the continuous disclosure obligation and/or misleading or deceptive conduct arising from BHP’s alleged failure to immediately inform the market of the material risk that the Fundão Dam would collapse. The three class actions were:(a)this proceeding, Impiombato v BHP Billiton Limited (VID 649 of 2018) (the Impiombato Proceeding), in which PFM were the solicitors for the applicant, which was commenced by originating application and statement of claim on 31 May 2018;(b)Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Billiton Limited (VID 1077 of 2018) (the Klemweb Proceeding), in which MB were the solicitors for the applicant, which was commenced by originating application and statement of claim on 31 August 2018; and(c)Los Angeles County Employees Retirement Association v BHP Billiton Limited (VID 1218 of 2018) (the LACERA Proceeding), in which Johnson Winter & Slattery were the solicitors for the applicant, which was commenced by originating application and statement of claim on 24 September 2018. Following a hearing to resolve the multiplicity issue, Moshinsky J made orders on 18 December 2018 for the Impiombato Proceeding to continue as a representative proceeding on behalf of the group members, for the Klemweb Proceeding to be permanently stayed and for the LACERA proceeding to be stayed to permit the applicant in the Impiombato Proceeding to investigate extending the claim period to the same period as in the LACERA Proceeding: Impiombato v BHP Billiton Ltd (No 2) [2018] FCA 2045; 364 ALR 162. Following an appeal of that decision the Full Court made orders on 28 May 2019 to set aside the stay of the Klemweb proceeding and to consolidate the Klemweb proceeding with this proceeding: Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group Limited [2019] FCAFC 107; 369 ALR 583 (Middleton, Beach and Lee JJ). On 16 August 2019 the joint applicants in the consolidated proceeding filed the COA and a Consolidated Statement of Claim. On 7 September 2020, the applicants filed the ACSOC. The COA and the ACSOC are the current pleadings. As I have said, the group definition appears, in different forms but to the same effect, in both the COA and the ACSOC. BHP’s listing on the ASX, LSE and JSE, and the availability of other trading platforms Ms Tran stated in her first affidavit, and I accept, that during the Relevant Period: (a)BHP operated under a dual listed company structure with two parent companies, BHP Ltd incorporated in Australia and BHP Plc incorporated in the UK;(b)BHP Ltd had a primary listing on the ASX in Australia and its ordinary shares were admitted for quotation and trading on the ASX; (c)BHP Plc had: (i)a premium listing on the UK Listing Authority’s Official List and its ordinary shares were admitted to trading on the LSE in the United Kingdom; and (ii)a secondary listing on the JSE in South Africa; (d)BHP Ltd was admitted to the official list on the ASX and its ordinary shares were available for trading on the ASX and on other exchanges;(e)BHP Plc was admitted to the official lists on the LSE and JSE and its ordinary shares were available for trading on the LSE and JSE respectively, and on other exchanges;(f)ordinary shares in BHP Ltd:(i)were (or had been) issued by BHP Ltd and were maintained by BHP Ltd on a share register that records the identity of the registered shareholders and buy/sell trading activities of those shareholders;(ii)could be and were traded on the ASX, being the primary trading platform or exchange;(iii)could be and were traded on other trading platforms or exchanges, sometimes referred to as secondary trading platforms, such as the exchange operated by Cboe Australia Pty Ltd (formerly known as Chi-X Australia);(g)ordinary shares in BHP Plc:(i)were (or had been) issued by BHP Plc and were maintained by BHP Plc on a share register (separate from the share register of BHP Ltd) that records the identity of the registered shareholders and buy/sell trading activities of those shareholders;(ii)could be and were traded on the LSE, being the primary trading platform or exchange;(iii)could be and were traded on the JSE, being the secondary trading platform or exchange;(iv)could be and were traded on other trading platforms or exchanges, such as the exchanges operated by BATS Chi-X Europe;(h)there was also a separate (secondary) register for trades in BHP Plc that occurred on the JSE, and those trades were reflected on the (South African) share register of BHP Plc; and(i)trades in ordinary shares in BHP Ltd and BHP Plc were reflected on the respective share registers, but (other than as set out in paragraph (h) above) the share registers do not record the platform upon which the trades occurred.

Evidence

Evidence Before The Court

The Court has power to make the orders the applicants seek, there is no opposition to the form of the amendments, and BHP’s opposition is to the amendments relating back to the commencement of the proceeding. For the reasons I explain, in the particular circumstances of the case, I consider it to be appropriate in the interests of justice in the proceeding to grant leave for the proposed amendments and for the amendments to take effect from the commencement of the proceeding.THE EVIDENCE The applicants rely upon the following affidavits and their annexures:(a)three affidavits of Mr Cameron Myers, a principal lawyer with Phi Finney McDonald (PFM), one of the two firms of solicitors for the joint applicants, sworn 5 December 2023, 26 February 2024 and 29 February 2024 (first, second and third Myers’ affidavits). The annexures to Mr Myers’ affidavits include the following affidavits filed in the proceeding:(i)an affidavit of Mr Timothy Finney, a partner of PFM, affirmed 13 July 2018;(ii)an affidavit of Mr Benjamin Phi, a partner of PFM, affirmed 16 October 2018;(iii)an unsworn affidavit of Mr Jason Betts, a partner of Herbert Smith Freehills (HSF), the solicitors for BHP, dated 26 June 2020. I assume this was filed unsworn pursuant to Court protocols adopted during the COVID-19;(iv)an affidavit of Ms Christine Tran, a partner of HSF, affirmed 11 December 2020 (the first Tran affidavit);(v)two affidavits of Mr Andrew Watson (as his Honour then was), then a partner of Maurice Blackburn Lawyers (MB), the other firm of solicitors for the joint applicants, sworn 15 October 2023 and 27 October 2023 (the first and second Watson affidavits); and(b)an affidavit of Ms Irina Lubomirska, Special Counsel with MB, affirmed 29 February 2024 BHP relies on an affidavit of Ms Tran affirmed 2 February 2024 (the second Tran affidavits). BHP notes that the second and third Myers’ affidavits were filed and served, without notice, after the due date by which the applicants were required to file and serve any further evidence on the amendment application, but it did not argue that the affidavits should not be accepted. I considered it appropriated to admit all of the affidavits into evidence. None of the deponents were cross-examined.THE FACTS The competing class actions Between May and September 2018 three securities class actions were commenced against BHP by three separate law firms, with different funding arrangements. Each proceeding alleged breach of the continuous disclosure obligation and/or misleading or deceptive conduct arising from BHP’s alleged failure to immediately inform the market of the material risk that the Fundão Dam would collapse. The three class actions were:(a)this proceeding, Impiombato v BHP Billiton Limited (VID 649 of 2018) (the Impiombato Proceeding), in which PFM were the solicitors for the applicant, which was commenced by originating application and statement of claim on 31 May 2018;(b)Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Billiton Limited (VID 1077 of 2018) (the Klemweb Proceeding), in which MB were the solicitors for the applicant, which was commenced by originating application and statement of claim on 31 August 2018; and(c)Los Angeles County Employees Retirement Association v BHP Billiton Limited (VID 1218 of 2018) (the LACERA Proceeding), in which Johnson Winter & Slattery were the solicitors for the applicant, which was commenced by originating application and statement of claim on 24 September 2018.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

This proceeding is a securities class action by the applicants, Mr Vince Impiombato and Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund), brought on their own behalf and on behalf of the group members, against the respondent, BHP Group Limited (BHP). The applicants allege that BHP breached its continuous disclosure obligations under s 674 of the Corporations Act 2001 (Cth) (Corporations Act), and/or engaged in misleading or deceptive conduct in contravention of s 1041H of the Corporations Act and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) by failing to immediately disclose to the ASX the material risk that the Fundão tailings dam at the Germano mine in Brazil (which is 50% owned by a BHP subsidiary) would collapse and BHP would thereby suffer significant financial losses. The Fundão Dam in fact collapsed on 5 November 2015 leading to a significant decline in BHP’s share price. These reasons concern the applicants’ interlocutory application dated 5 December 2023 seeking leave to amend the group definition and the loss and causation plea in the current pleadings, the Consolidated Originating Application (COA) and the Amended Consolidated Statement of Claim (ACSOC), and for the amendments to relate back to the commencement of the proceeding. The group definition appears in both the originating application and the statement of claim. The group definition in the COA provides:The Group Members to whom this proceeding relates are all persons who or which:1.during the Relevant Period entered into a contract (whether themselves or by an agent or trustee) to acquire an interest in:(a) BHP ASX Shares; and/or(b) BHP LSE Shares; and/or(c) BHP JSE Shares;2.are not within the classes of excluded persons referred to in paragraph 3(b) of the consolidated statement of claim; and3.are alleged to have suffered loss or damage by, or which resulted from, the conduct of BHP Ltd as pleaded in the consolidated statement of claim.The COA states that capitalised terms in that document have the same meaning as in the ACSOC. The group definition in the ACSOC is worded differently but is to the same effect. It relevantly provides:The Joint Applicants and the persons they represent (the Group Members), are all persons who or which:(a)during the period from 8 August 2012 to the close of trade on 9 November 2015 (Relevant Period) entered into a contract (whether themselves or by an agent or trustee) to acquire an interest in fully paid up ordinary shares in shares in:(i)the Respondent, formerly BHP Billiton Limited (BHP Ltd), on the Australian Securities Change (ASX), a financial market operated by the Australian Change ASX Limited (the BHP ASX Shares); (ii)BHP Group plc, formerly BHP Billiton Limited (BHP Plc), a company registered in England and Wales, on the London Stock Change (LSE), a financial market operated by the London Stock Exchange Group Plc (the BHP LSE Shares); and/or(iii)BHP Plc on the Johannesburg Stock Exchange (JSE), a financial market operated by the Johannesburg Stock Exchange Ltd (the BHP JSE Shares);(b)…; and(c)are alleged to have suffered loss or damage by, or which resulted from, the conduct of BHP Ltd as pleaded in this statement of claim.