Non-residents allowed to join BHP class action in landmark decision

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This appeal arose out of a class action on behalf of class members who purchased shares in BHP Group Ltd (BHP) between 8 August 2012 and 9 November 2015. The applicants in the class action (respondents on appeal) allege that class members suffered losses due to the share price fall following the collapse of the Fundão dam in Brazil in 2015 and that BHP:

• breached its continuous disclosure obligations (ASX Listing Rules and s 674(2) of the Corporations Act 2001 (Cth) (CA)); and
• engaged in misleading or deceptive conduct (s 1041H(1) of the CA and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth)).

The primary judge (Moshinsky J) and the Full Court of the Federal Court (Middleton, McKerracher and Lee JJ) rejected BHP’s submission that Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCAA) does not permit claims to be brought on behalf of class members who are not residents of Australia. BHP was subsequently granted special leave to appeal to the High Court of Australia.

The issue for determination in this appeal was whether Part IVA of the FCAA enabled class actions to be pursued in the Federal Court of Australia on behalf of class members who were not residents of Australia.

BHP argued that the references to “persons” in the definition of “group member” in s 33A of the FCAA (and presumably the reference to "other persons” in s 33D) must be construed to exclude persons who are not resident in Australia.

The Common Law Presumption

BHP argued that there is a common law presumption against the extraterritorial operation of Australian statutes. In support of this, BHP cited Isaacs J in Morgan v White (1912) 15 CLR 1 who stated that (at [13]):

… the persons, property, and events in respect of which Parliament has legislated are presumed to be limited to those in the territory over which it has jurisdiction and for the welfare of which it exercises that jurisdiction.

Chief Justice Kiefel and Gageler J held that the common law presumption was more appropriately construed as being in favour of international comity as opposed to being against extraterritorial operation. Their Honours cited Dixon CJ in R v Foster; Ex parte Eastern and Australian Steamship Co Ltd (1959) 103 CLR 256 who described the presumption as (at [13]):

… a presumption which assumes that the legislature is expressing itself only with respect to things which internationally considered are subject to its own sovereign powers.

Their Honours held that the common law presumption provided no basis for reading down s 33A and s 33D of the FCAA to exclude non-residents.

The Statutory Presumption

In support of their argument that references to “persons” and “other persons” in s 33A and s 33D of the FCAA should be read down to exclude non-residents, BHP cited s 21(1)(b) of the Acts Interpretation Act 1901 (Cth) (AIA). In relation to any Commonwealth Act and subject to any contrary intention, s 21(1)(b) of the AIA provides that:

… references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth.

Chief Justice Kiefel and Gageler J held that this provision provided no guidance as to how “persons” in s 33A and "other persons” in s 33D were to be interpreted. Their Honours (at [36]) held that s 21(1)(b) of the AIA requires that the relevant statute:

… be construed to ensure that a connection exists between the subject matter to which the statute refers, on the one hand, and the Commonwealth of Australia understood compositely as a geographically bounded polity.

The exact type of connection is unspecified and is left for determination when the specific statute is being construed. Their Honours concluded (at [39]) that:

Part IVA is concerned with procedures and powers of the Federal Court relating to the exercise of jurisdiction so vested. No further or more specific territorial connection is required for Pt IVA in its totality to be characterised as referring to jurisdictions, matters and things in and of the Commonwealth.

Section 33ZB

BHP relied heavily on s 33ZB of the FCAA which provides that a judgment given in a class action binds all class members affected by it other than those who have opted out of the proceeding. BHP argued that there is a presumption that s 33ZB would not apply to persons outside the territory and that there is no intention expressed to the contrary. BHP contended that s 33ZB was necessary to ensure that respondents were not exposed to multiple proceedings from the same persons in relation to the same dispute. The Court rejected this contention, holding that s 33ZB only binds persons under Australian law and does not impact persons rights under foreign law in relation to equivalent or comparable subject matter.

Text

Justices Gordon, Edelman and Steward noted that BHP’s construction of s 33C of the FCAA would result in differing interpretations of “person”. According to BHP, the meaning of “person” in relation to class members refers to persons resident in Australia. However, the meaning of “person” with respect to the respondent and the representative party was not suggested to be limited by residence. Their Honours held that this would be an unlikely interpretation as it is generally assumed that words repeated in legislation have the same meaning.

Their Honours further noted the inconsistency of BHP’s construction with respect to the text of s 33C. Section 33C allows proceedings to be commenced by any one of the 7 or more persons with a common claim. If, however, the representative party does not have to be a resident of Australia, then as a matter of textual logic, it makes no sense why the class members would be required to be residents of Australia.

History

Justices Gordon, Edelman and Steward noted that Part IVA of the FCAA was implemented to provide a more comprehensive regime relative to the rules that were previously in place for representative proceedings.

Their Honours (at [73]) agreed with the respondents’ submissions that:

[i]t would be incongruous to construe s 33C(1) as, on the one hand, expanding the class of persons on whose behalf a representative proceeding could be commenced by reference to the commonality of their claims but, on the other hand, narrowing the class of persons by reference to their residence.

Purpose

Justices Gordon, Edelman and Steward further stated that BHP’s construction would undermine the purpose of Part IVA of the FCAA, which is to create a more expansive mechanism for resolving similar claims. Preventing non-residents from being considered class members would inevitably limit this mechanism and could result in a myriad of parallel proceedings. Their Honours held that would directly contravene the purpose of Part IVA.

Practical Difficulties with BHP’s Construction

Finally, Gordon, Edelman and Steward JJ also noted that even if BHP’s construction was accepted, it would be impractical. Difficulties would arise with respect to how residence is determined and when a person is required to be resident in relation to the proceeding and associated claims.

Orders

Accordingly, their Honours ordered that the appeal be dismissed with costs.

BHP Group Ltd v Impiombato [2022] HCA 33

High Court of Australia, Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ,
14 October 2022

Appellant’s Solicitors: Herbert Smith Freehills
Respondents’ Solicitors: Phi Finney McDonald and Maurice Blackburn Lawyers
Respondents’ Funder: G&E KTMC Funding LLC
Austlii Link: Available here

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