FEDERAL COURT OF AUSTRALIA

Impiombato v BHP Billiton Limited (No 2) [2018] FCA 2045

ORDERS

THE COURT ORDERS THAT:

1. The matter be listed for a case management hearing on a date to be fixed.

2. The costs of and incidental to the Multiplicity Question be reserved.

3. There be liberty to apply.

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

ORDERS

THE COURT ORDERS THAT:

1. The proceeding be permanently stayed.

2. Subject to paragraph 3, there be no order as to costs of the proceeding (including the costs of and incidental to the Multiplicity Question).

3. If any party seeks a variation of the costs order in paragraph 2, the party may give written notice to the Court and the other party by 31 January 2019.

4. There be liberty to apply.

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

ORDERS

THE COURT ORDERS THAT:

1. Subject to further order, the proceeding be stayed until 1 September 2019.

2. The costs of and incidental to the Multiplicity Question be reserved.

3. There be liberty to apply.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1 Three representative proceedings have been commenced in this Court against BHP Billiton Limited (BHP Limited) on behalf of shareholders in relation to the collapse on 5 November 2015 of the Fundão tailings dam (the Fundão Dam) at the Germano mine in Minas Gerais, Brazil. In each proceeding it is alleged that the company engaged in misleading or deceptive conduct and/or breaches of its continuous disclosure obligations arising from a failure to inform the market of the material risk that the Fundão Dam would collapse. Each proceeding is an open class representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth).

2 The three proceedings are:

(a) Impiombato v BHP Billiton Limited, proceeding No. VID 649 of 2018 (the Impiombato proceeding). This was commenced on 31 May 2018. The solicitors for the applicant are Phi Finney McDonald. The funder is G&E KTMC Funding LLC, a global litigation funder based in the United States of America that is backed by Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check LLP, two of the largest plaintiff law firms conducting securities class actions in the world.

(b) Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) (Klemweb) v BHP Billiton Limited, proceeding No. VID 1077 of 2018 (the Klemweb proceeding). This was commenced on 31 August 2018. The solicitors for the applicant are Maurice Blackburn Lawyers (Maurice Blackburn). The law firm proposes to fund the proceeding itself.

(c) Los Angeles County Employees Retirement Association (LACERA) v BHP Billiton Limited, proceeding No. VID 1218 of 2018 (the LACERA proceeding). This was commenced on 24 September 2018. The solicitors for the applicant are Johnson Winter & Slattery. The funders are Harbour Fund IV, L.P. (Harbour) and Robbins Geller Rudman & Dowd LLP. Harbour is a global litigation funder formed in 2007. It has funded more than 80 cases in 13 jurisdictions.

3 In circumstances where there are three representative proceedings on foot concerning the same subject matter, it is necessary for the Court to consider, as a matter of case management, whether orders should be made to address the potential overlap between the proceedings. Accordingly, the proceedings were listed for a case management hearing on 29 October 2018 for the purpose of considering the consolidation or selection of proceedings or any other proposed option to deal with the potential overlap of proceedings (the Multiplicity Question). While judgment was reserved, the Full Court of this Court handed down judgment in Perera v GetSwift Limited [2018] FCAFC 202 (GetSwift). I gave the parties the opportunity to file short supplementary submissions addressing the implications, if any, of the Full Court's judgment. Each of the parties filed supplementary submissions.

4 For the reasons set out below, I consider the Impiombato proceeding to be the most appropriate proceeding to go forward as the open class proceeding. I consider that the Klemweb proceeding should be permanently stayed. In relation to the LACERA proceeding, I consider it appropriate to order that, subject to further order, the proceeding be temporarily stayed until 1 September 2019. This is to allow time for the applicant in the Impiombato proceeding to investigate and consider potential claims relating to the additional period covered by the LACERA proceeding.

The issue before the Court

5 As noted above, the proceedings were listed for a case management hearing on 29 October 2018 for the purpose of considering the consolidation or selection of proceedings or any other proposed option to deal with the potential overlap of proceedings.

6 Each of the parties filed affidavit material and outlines of submissions.

7 The positions of each of the parties are, in summary, as follows:

(a) Mr Impiombato contends that the Court should make orders permanently staying the Klemweb and LACERA proceedings.

(b) Klemweb contends that the Court should make orders permanently staying the Impiombato and LACERA proceedings. However, Klemweb also advances a number of alternatives as fall-back positions.

(c) LACERA contends that the Court should make orders permanently staying the Impiombato and Klemweb proceedings.

(d) BHP Limited contends that the Court should stay two of the proceedings. For obvious reasons, it does not seek to identify which of the proceedings should continue and which of the proceedings should be stayed.

The material before the Court

8 The parties rely on the following affidavits in connection with the Multiplicity Question:

(a) Mr Impiombato:

(i) affidavit of Timothy Finney dated 13 July 2018; and

(ii) affidavits of Benjamin Phi dated 16 October 2018 and 25 October 2018.

(b) Klemweb: affidavits of Brooke Dellavedova sworn 2 August 2018, 16 October 2018, 25 October 2018 (this has the date 16 October 2018 on the first page) and 29 October 2018.

(c) LACERA:

(i) affidavit of Paul Buitendag dated 16 October 2018;

(ii) expert report of Elizabeth Harris dated 16 October 2018;

(iii) expert report of Alex Bell dated 16 October 2018; and

(iv) expert report of Mariano Rossetto dated 26 October 2018.

(d) BHP Limited:

(i) affidavit of Jason Betts dated 24 October 2018; and

(ii) affidavit of Brendan Cullen dated 17 September 2018.

Although the expert reports were not annexed to affidavits, no objection was taken to the reports being received into evidence. There was no cross-examination.

Background facts

9 Before setting out the facts in more detail, the following table sets out some relevant matters pertaining to each proceeding. The "relevant period" in the table below refers to the period covered by the claims in the statement of claim in the proceeding.

The Impiombato proceeding

10 The Impiombato proceeding was commenced on 31 May 2018 with the filing of an originating application and statement of claim.

11 The applicant pleads, in [3] of the statement of claim, that the applicant and the persons he represents (defined as "Group Members") are persons who (subject to certain exceptions that can be put to one side for present purposes):

(a) during the period from 21 October 2013 until the close of trade on 9 November 2015 acquired an interest in:

(i) fully paid ordinary shares in BHP Limited on the Australian Securities Exchange (ASX); and/or

(ii) fully paid ordinary shares in BHP Billiton Plc (BHP Plc), a company registered in England and Wales, on the London Stock Exchange (LSE); and/or

(iii) fully paid ordinary shares in BHP Plc on the Johannesburg Stock Exchange (JSE); and

(b) are alleged to have suffered loss and damage by or resulting from the conduct of BHP Limited as alleged in the statement of claim.

12 In section B of the statement of claim, relevant aspects of Rules 3.1 and 19.12 of the ASX Listing Rules (which relate to continuous disclosure) are summarised. It is also alleged that at all material times s 674(2) of the Corporations Act 2001 (Cth) applied to BHP Limited.

13 In section C of the statement of claim, the dual listed company structure of BHP Limited and BHP Plc is set out. It is alleged that at all material times BHP Limited acted as if it were, in combination with BHP Plc, a single economic entity (BHP). It is also alleged that at all material times: BHP Billiton Brasil Ltda (BHP Brasil) was a wholly owned subsidiary of BHP; BHP's iron ore business comprised two assets, one of which was BHP's 50% interest (through BHP Brasil) in Samarco Mineração SA (Samarco), a Brazilian mining and mineral resource company; and BHP's interest in Samarco represented a significant investment by BHP and was a material asset of BHP. Further, it is alleged that during the relevant period, BHP's interest in Samarco generated a material component of BHP's total revenue and earnings. Section D of the statement of claim sets out further matters relating to Samarco and its board of directors.

14 In section E of the statement of claim, there are allegations concerning the risk of failure of the Fundão Dam. The allegations include problems encountered during the period 2009-2011 and further problems encountered during the period 2011-2014. The allegations relating to 2012 include:

(a) by about mid-2012, structural analysis indicated that the height of the tailings at the left abutment of the Fundão Dam exceeded the load capacity of the secondary gallery and seepage began to appear at the left abutment;

(b) in or around mid-2012, the left abutment of the Fundão Dam was realigned by setting it back behind the secondary gallery (Setback), which had the effect of moving the crest of the left abutment of the dam closer to the slimes;

(c) on or around 15 August 2012, Kleber Terra, Samarco's Director of Operations, stated to another manager employed by Samarco that "shareholders want to remove people from Bento in any possible way"; and

(d) in about November 2012: a sinkhole appeared in the tailings overlying the secondary gallery at the Fundão Dam; and efforts to repair the secondary gallery by using jet grouting were abandoned by Samarco.

15 The following allegations are made relating to the year 2013 up to and including 21 October 2013 (being the start of the relevant period for the purposes of the Impiombato proceeding):

(a) in about March 2013, seepage, saturation and cracking appeared at several locations at the left abutment of the Fundão Dam;

(b) in about June 2013, further seepage appeared at the left abutment of the Fundão Dam;

(c) in about September 2013, the height of the Setback rose by 3 metres, being a monthly record at that time;

(d) on or about 21 October 2013, at the request of the Public Ministry for the State of Minas Gerais, the Pristino Institute issued a report relating to the Fundão Dam (the Pristino Report), which contained statements to the effect that:

(i) the Fundão Dam would come into contact with a sterile pile from the operations of Vale SA at Uniao da Mena de Fabrica Nova in an adjoining area;

(ii) it was inappropriate for there to be such contact, due to the possibility of massive destabilisation of the pile stack and enhancement of the erosion process;

(iii) such contact risked instability and collapse;

(iv) a break analysis for the dam should be completed; and

(v) a contingency plan in the event of break should be submitted; and

(e) BHP read the Pristino Report at or about the time of its publication.

16 The following allegations are made in relation to the balance of 2013 and the year 2014 up to 27 August 2014 (the significance of this date is discussed below):

(a) in about November 2013, further seepage appeared at the left abutment of the Fundão Dam;

(b) in about December 2013, further seepage and cracking appeared at the left abutment of the Fundão Dam;

(c) by January 2014, it was apparent that the blanket drain on the surface of the sand tailings was no longer sufficient to accommodate the draining requirements of the Fundão Dam and that additional drains would be required at the left abutment;

(d) in about March 2014, pellet production for the Fourth Pellet Plant Project (P4P Project) commenced;

(e) on or about 27 August 2014, a series of cracks were discovered at the left abutment of the Fundão Dam that extended behind the dam crest, emerged at the toe of the dam, and encompassed most of the slope;

(f) the cracking discovered on about 27 August 2014 was: much more extensive than anything that had occurred in 2013; and accompanied by shallow saturation at the toe of the dam.

17 After making further allegations in relation to the balance of 2014 and the year 2015, it is alleged that "[b]y no later than about 27 August 2014, and at all material times thereafter, there was a significant risk that the Fundão Dam would fail" (defined as the "Dam Failure Risk").

18 In section F of the statement of claim, the consequences of dam failure are alleged. These include the allegation that, at all material times, it was likely that a failure of the Fundão Dam would cause: loss of life, potentially on a large scale; serious adverse impacts to land and property downstream; and serious adverse impacts to water resources downstream. Further, it was alleged that at all material times, it was likely that a failure of the Fundão Dam would cause significant adverse financial consequences for BHP (defined as the "Consequential Financial Risk") because: production at the Germano complex would be shut down or significantly reduced for a significant period of time; the value of BHP's investment in Samarco would be significantly impaired; and Samarco and/or BHP would be exposed to liability to compensate affected persons for damage caused by a dam failure and/or to liability to penalties for civil or criminal wrongs.

19 Section G of the statement of claim contains allegations relating to BHP Limited's awareness of risks relating to the Fundão Dam. In particular, it is alleged that:

(a) by no later than 27 August 2014, and throughout the relevant period (ie, 21 October 2013 to 9 November 2015), one or more directors or executive officers of BHP Limited was aware, or ought reasonably to have been aware, in the course of the performance of their duties, of the Dam Failure Risk; and

(b) by no later than 27 August 2014, and throughout the relevant period, one or more directors or executive officers of BHP Limited was aware, or ought reasonably to have been aware, in the course of the performance of their duties, of the Consequential Financial Risk.

20 In section H of the statement of claim, it is alleged that in contravention of Rule 3.1 of the ASX Listing Rules, BHP Limited did not inform the ASX of the Dam Failure Risk or the Consequential Financial Risk at any time prior to 9 November 2015. Accordingly, it is alleged that BHP Limited contravened s 674(2) of the Corporations Act.

21 In section I of the statement of claim, it is alleged that BHP represented, from prior to and throughout the relevant period (ie, 21 October 2013 to 9 November 2015) that: a primary consideration in every aspect of BHP's business was the safety of its people and the safety and suitability of the environment and the communities in which it worked; and it had systems in place to identify and effectively manage risks to the safety of its people and the safety and sustainability of the environment and the communities in which it worked (defined as the "Representations"). It is alleged that, by no later than 21 October 2013, alternatively 31 January 2014, alternatively 27 August 2014, and at all material times thereafter until the end of the relevant period, BHP: did not make the safety of people working at the Germano complex, the safety and sustainability of the environment affected by the Germano complex and the communities affected by the Germano complex a primary consideration; and did not have effective processes and controls in place to identify and effectively manage risks to the safety of people working at the Germano complex, the safety and sustainability of the environment affected by the Germano complex and the communities affected by the Germano complex. It is then alleged that by making each of the Representations and/or failing to correct the Representations, BHP Limited engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 1041H of the Corporations Act, further or alternatively s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act).

22 Section J of the statement of claim contains allegations about the failure of the Fundão Dam (on 5 November 2015) and its consequences. There are also allegations about the disclosures that were made in relation to the dam failure.

23 Section K of the statement of claim contains allegations concerning: the market for BHP Limited securities; the effect during the relevant period of the alleged misleading or deceptive conduct on the traded price for BHP Limited securities; the effect during the period from 27 August 2014 to the end of the relevant period of the alleged continuous disclosure contraventions on the traded price for BHP Limited securities; and reliance and change of position. Section L contains allegations concerning BHP Plc securities acquired on the LSE. Section M contains allegations concerning BHP Plc securities acquired on the JSE. In section N it is alleged that, by reason of BHP Limited's contravening conduct, the applicant and each of the Group Members have suffered loss and damage. Compensation is claimed pursuant to certain provisions of the Corporations Act and the ASIC Act.

24 The solicitors for the applicant in the Impiombato proceeding are Phi Finney McDonald. Mr Phi is the Managing Director and a Principal of the firm. In his first affidavit, Mr Phi stated that the firm was founded in April 2017 to specialise in class actions on behalf of plaintiffs. Mr Phi was previously employed by Slater and Gordon, a firm of solicitors, in the following roles:

(a) from 2010, as Practice Group Leader for the Class Actions practice based in Melbourne, Victoria;

(b) from 2013, as National Practice Group Leader for Class Actions across Australia; and

(c) from 2016, as head of Class Actions and Group Litigation – Australia and UK, based in London.

25 Mr Phi has had primary carriage or management supervision of numerous shareholder class action proceedings issued in this Court and funded by litigation funders, as detailed in [10] of his first affidavit. He also has substantial experience conducting, or assisting in the conduct of, other complex, non-shareholder class actions and group litigation, as described in [11] of that affidavit. The relevant experience of other practitioners at Phi Finney McDonald is also considerable: see Mr Phi's first affidavit at [62]-[66]. Similarly, counsel retained on behalf of Mr Impiombato have substantial experience in the conduct of securities class actions. (I proceed on the basis that the same can be said of counsel retained in the Klemweb proceeding and the LACERA proceeding.)

26 The background to the commencement of the Impiombato proceeding is described at [16]-[44] of Mr Phi's first affidavit. On about 3 November 2017, Mr Phi and his staff began to investigate a potential claim against BHP for continuous disclosure breaches and misleading or deceptive conduct in relation to the collapse of the Fundão Dam. While the investigations were initially focussed upon potential claims on behalf of investors who had acquired shares in BHP Limited on the ASX, they subsequently expanded (from about January 2018) to include potential claims against BHP Limited on behalf of investors who had acquired shares in BHP Plc on the LSE. Since early November 2017, Mr Impiombato, Phi Finney McDonald and the funder have invested a great deal of time and resources into investigating the claims now advanced on behalf of group members.

27 By early January 2018, Mr Phi and his colleagues commenced confidential discussions with institutional investors in BHP Limited and BHP Plc. The purpose of initiating these discussions was to determine their potential interest in participating in a securities class action against BHP Limited in relation to the claims that Phi Finney McDonald had been investigating "and to stress test [the firm's] preliminary assessments of the potential quantum of damages" (Phi first affidavit, [23]). At about the same time, Mr Phi entered into confidential discussions with Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check LLP to determine their interest in funding the proposed claim. Mr Phi stated in his first affidavit that Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check LLP are reputed to be pre-eminent law firms representing shareholders in securities class actions with extensive experience in representing shareholders in such actions and achieving substantial awards for shareholders.

28 Mr Phi stated in this first affidavit that between January and late March 2018, he worked with Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check LLP on funding terms that he believed were novel in the Australian market, and that he believed would be in the best interests of potential group members. In particular, Mr Phi sought to:

(a) ensure that any litigation funding agreement embedded the terms on which a common fund order would be sought in the proceeding;

(b) ensure that any litigation funding agreement, and all supporting documentation, made clear that, under any common fund order, only a maximum commission would be specified, and that the final amount of that commission would be reserved for determination by the Court in its sole discretion; and

(c) ensure that the terms of the proposed common fund order contained in the litigation funding agreement specified that the maximum commission would include all of the legal costs and disbursements to be incurred in presenting the claim.

29 Mr Phi explained the rationale of the funding model that he sought to achieve at [28]-[30] of his first affidavit:

28. In the course of negotiating the above terms, I was aware from my experience in dealing with group members in previous securities class actions, and in particular institutional investor group members, that group members are frequently concerned about the lack of clarity around what their ultimate net return (as a proportion of their gross settlement entitlement) is likely to be given the impact of legal costs and funding commission costs.

29. I was also aware, on the same basis, that group members are concerned by the frequently substantial legal costs incurred in securities class action proceedings, and the impact this has on the return to group members, including the potential for the amount of legal costs ultimately approved by the Court as able to be recovered from any resolution sum to be materially greater than the initial estimates by the applicant's legal representatives of legal costs likely to be incurred (this, notwithstanding that securities class actions in Australia typically settle prior to the conclusion of the trial of the common issues and the claim of the applicant). Under funding models that have been adopted to date, prior to this Proceeding, where the amount of approved legal costs is greater than the amount a group member had previously expected, the result is to reduce the proportion of the resolution sum that the group member ultimately receives "in hand".

30. I suggested the all-inclusive structure set out … above on the basis that it would address both sets of concerns. It would ensure that any increases in costs would not affect the minimum percentage return to group members in the event of a successful resolution of the Proceeding and thereby providing clarity to group members at the outset as to the minimum percentage return. I considered that an additional benefit of the proposed funding structure was that it would incentivise the litigation funder to monitor legal costs and disbursements closely, given that those amounts would ultimately be paid from the litigation funder's commission entitlement.

30 In January 2018, Mr Phi briefed senior counsel to advise on the matter and in March 2018 Mr Phi engaged junior counsel to assist in drafting a statement of claim.

31 On 20 March 2018, Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check LLP agreed to fund the proceeding on the terms that were ultimately recorded in the litigation funding agreement offered to prospective clients. It was determined to fund the proceeding through a special purpose company, G&E KTMC Funding LLC, which is supported by Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check LLP.

32 In late March 2018, the funder commenced discussions with institutional investors about the proposed claim. Consequently, from about late March 2018, there was likely to have been widespread awareness among the institutional investor community that Phi Finney McDonald was preparing a securities class action against BHP Limited that would be funded by the funder.

33 On 16 May 2018, Phi Finney McDonald issued a press release confirming that it was preparing a shareholder class action on behalf of security holders in both BHP Limited and BHP Plc alleging that BHP Limited engaged in misleading or deceptive conduct and had breached its continuous disclosure obligations.

34 On 31 May 2018, the Impiombato proceeding was commenced.

35 On 6 July 2018, at the first case management hearing, the Court made orders listing the hearing of an application by Mr Impiombato for a common fund order, and timetabling orders for that application.

36 On 27 July 2018, BHP Limited filed an interlocutory application for a temporary stay of the proceeding. That application has not yet been heard or determined. (A comparable application has also been filed in the Klemweb proceeding and the LACERA proceeding.)

37 On 3 August 2018, at a case management hearing, the Court made orders for a common fund in the proceeding as sought by Mr Impiombato: Impiombato v BHP Billiton Limited [2018] FCA 1272 (the August 2018 Reasons). In broad terms, the effect of a common fund order is to require every group member to pay a pro rata share of the legal costs and litigation funding charges from any settlement or judgment sum, regardless of whether they have entered into a funding agreement with the funder: see the description of a common fund order in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at [3]. The orders sought by Mr Impiombato and made by the Court incorporate certain "funding terms", which set out the respective rights and obligations of the funder and group members under the common fund. The funding terms provide that the funder is entitled to a commission of "an amount less than 18% of the Gross Recovery" in consideration for funding the proceeding. The commission is inclusive of expenses paid by the funder in the course of funding the litigation, including legal costs and disbursements.

38 At the time of the hearing of the application for a common fund order, the Klemweb proceeding had not been commenced, but it appeared likely that Klemweb would commence a shareholder class action relating to the same subject matter as the Impiombato proceeding: see the August 2018 Reasons at [39]. I proceeded to deal with the application for a common fund order notwithstanding the possibility that another proceeding might be commenced on the basis that, if appropriate, the interlocutory order for a common fund in the Impiombato proceeding could be varied or vacated. Accordingly, for the purposes of considering the Multiplicity Question, I do not place any weight on the fact that a common fund order has been made in the Impiombato proceeding whereas such an order has not been made in the Klemweb proceeding or the LACERA proceeding. (In each of the Klemweb proceeding and the LACERA proceeding, the applicant seeks the making of a common fund order.) However, it is relevant to have regard to the terms of the common fund order that has been made in the Impiombato proceeding and the terms of the common fund orders proposed in the Klemweb and LACERA proceedings.

39 As part of its investigation and conduct of the Impiombato proceeding, Phi Finney McDonald has retained the services of two law firms in Brazil. As many of the materials relevant to the proceeding are in the Portuguese language, Phi Finney McDonald has retained the services of a certified Portuguese translator.

40 Further details of the preparation undertaken by Phi Finney McDonald are set out at [72]-[84] of Mr Phi's first affidavit. Mr Phi stated in that affidavit that Mr Impiombato, Phi Finney McDonald and the funder have invested considerable time and resources into the investigation and conduct of the proceeding. As at 30 September 2018, approximately 3,850 professional fee hours had been expended on the matter. After setting out a description of the work undertaken, Mr Phi stated at [79] of his first affidavit that the detailed investigations undertaken by Phi Finney McDonald "were necessary to prepare the allegations now advanced against BHP Ltd in the Statement of Claim, including to determine the appropriate claim period and to prepare the claims brought in respect of purchase of shares in BHP Plc on the LSE and JSE".

41 Mr Phi also referred in his first affidavit to the retention of experts. The experts so far retained are located in Brazil, the United States, Canada, the United Kingdom and Australia. Separate experts have been retained for the purpose of providing evidence in the following fields of expertise:

(a) geotechnical and geo-environmental engineering;

(b) civil engineering;

(c) tailings dam engineering and risk assessment;

(d) environmental policy;

(e) investor materiality;

(f) forensic economics;

(g) forensic accounting; and

(h) mining and mining asset valuation.

42 Mr Phi noted in his first affidavit that the funder is obliged to indemnify Mr Impiombato in relation to all adverse cost risks that might arise. Mr Impiombato has obtained security under an after the event (ATE) insurance policy with AmTrust Europe Limited, a division of AmTrust International. Details of the policy (some aspects of which are confidential) are provided in Mr Phi's first affidavit.

43 Mr Phi's first affidavit included an estimate of the costs to take the matter to mediation and trial. The costs estimate (which is confidential) was an annexure to the retainer agreement (p 145 of Mr Phi's first affidavit). Mr Phi stated in his first affidavit that, in his view the costs estimate was reasonable, but noted that it was drafted without reference to any competing proceeding or any process to resolve a multiplicity of proceedings.

44 Mr Phi stated in his first affidavit that if Mr Impiombato were to be permitted to continue to conduct the proceeding, it was proposed to form a steering committee to provide a mechanism for consultation with group members. Mr Phi described the proposed membership structure for the steering committee. The purpose of the proposed steering committee membership structure would be to ensure that:

(a) group members with the largest financial interest in the proceeding will monitor, and be heard in respect of, the conduct of the proceeding; and

(b) that opportunity is not limited to those who have obtained funding from the funder, or who have retained Phi Finney McDonald, but is available to group members who have taken neither step, and whose interests the Court traditionally has been keen to ensure are protected.

45 As at the date of Mr Phi's second affidavit (25 October 2018), 29,610 shareholders had retained Phi Finney McDonald and obtained funding from the funder. This comprised 29,391 retail investors and 219 institutional investors. Mr Phi caused calculations to be performed regarding the number of retained shares, applying both the first in / first out (FIFO) and the last in / first out (LIFO) methods. Mr Phi provided the following details, based on the relevant period in the Impiombato proceeding (ie, 21 October 2013 to 9 November 2015):

46 Mr Phi also caused calculations to be undertaken for Phi Finney McDonald's clients using the relevant period in the Klemweb proceeding (ie, 27 August 2014 to 9 November 2015). He provided the following details:

The Klemweb proceeding

47 The Klemweb proceeding was commenced on 31 August 2018 with the filing of an originating application and statement of claim.

48 As noted above, the relevant period for the purposes of the Klemweb proceeding is 27 August 2014 to 9 November 2015, a shorter period than that covered by the Impiombato proceeding. As set out in the statement of claim at [1], the proceeding has been commenced by the applicant on its own behalf and on behalf of all persons who or which (subject to certain exceptions that can be put to one side for present purposes):

(a) during the relevant period entered into a contract to acquire an interest in ordinary shares in:

(i) BHP Limited on the ASX;

(ii) BHP Plc on the LSE; and/or

(iii) BHP Plc on the JSE; and

(b) suffered loss or damage by, or which resulted from, the conduct of BHP Limited as pleaded in the statement of claim.

49 Section B of the statement of claim contains details regarding BHP Limited and BHP Plc. Also referred to are Rules 3.1 and 19.12 of the ASX Listing Rules and ss 111AP(1) and 674(2) of the Corporations Act. The dual listed company structure is described. As with the statement of claim in the Impiombato proceeding, the expression "BHP" is used to refer collectively to BHP Limited and BHP Plc.

50 In section D of the statement of claim, BHP's Samarco assets are described.

51 In section E of the statement of claim, allegations are made concerning non-disclosure. It is alleged that, by 27 August 2014 and/or at all material times thereafter during the relevant period, there was a material risk of failure of the Fundão Dam (defined as the "Dam Failure Risk"). It is also alleged that by 27 August 2014 and/or at all material times thereafter during the relevant period, BHP's systems for assessing, monitoring and/or managing the Dam Failure Risk were deficient (defined as the "Risk Systems Deficiency"). It is further alleged that by 27 August 2014 and/or at all material times thereafter during the relevant period, there was a material risk that: the Samarco mining operation would need to be shut down for a substantial period of time; BHP's future iron ore production capabilities would have to be revised downwards; BHP's iron ore cash flow and/or earnings generated by the Samarco mining operation would be lost or significantly reduced for a substantial period of time; and BHP would be exposed to substantial remediation costs and significant reputational damage (defined as the "Consequential Risks").

52 Section F of the statement of claim deals with BHP Limited's awareness from 27 August 2014 of certain information, namely the Dam Failure Risk, the Risk Systems Deficiency and the Consequential Risks.

53 Section G sets out certain statements made by BHP prior to 9 November 2015.

54 Section H describes the failure of the Fundão Dam on 5 November 2015. Section I deals with announcements made by BHP following the dam failure and the share price impact.

55 In section J of the statement of claim, allegations are made concerning contravention by BHP Limited of the continuous disclosure provisions, namely Rule 3.1 of the ASX Listing Rules and s 674(2) of the Corporations Act.

56 In section K of the statement of claim, it is alleged that BHP Limited engaged in conduct that was misleading or deceptive or likely to mislead or deceive contrary to s 12DA(1) of the ASIC Act and/or s 1041H(1) of the Corporations Act.

57 In section L of the statement of claim, it is alleged that the contraventions caused loss. This section contains separate allegations concerning the shares in BHP Limited listed on the ASX, the shares in BHP Plc listed on the LSE, and the shares in BHP Plc listed on the JSE. In each case, the market is described and allegations are made concerning the circumstances in which shares were acquired.

58 In section M of the statement of claim, allegations are made concerning loss and damage suffered by Klemweb and Group Members (as defined).

59 Apart from the fact that the Klemweb proceeding adopts a shorter relevant period, there is substantial overlap between the claims made in the Impiombato proceeding and those made in the Klemweb proceeding.

60 The first affidavit of Ms Dellavedova, dated 2 August 2018, was prepared for the purpose of the case management hearing on 3 August 2018 in the Impiombato proceeding. The affidavit indicated that it was likely that a proceeding would be commenced on behalf of Klemweb. In the affidavit, Ms Dellavedova (a Principal in the firm Maurice Blackburn) stated that since 30 May 2018, the firm had been instructed by certain shareholders of BHP Limited to investigate a potential representative proceeding against BHP Limited and potentially BHP Plc following the failure of the Fundão Dam.

61 In Ms Dellavedova's first affidavit, she stated that: in or around mid-November 2015, a week after the failure of the Fundão Dam, Maurice Blackburn began investigating a potential representative proceeding against BHP Limited; Maurice Blackburn decided to take no further action for the purposes of commencing a representative proceeding; and in April 2018, in response to inquiries by shareholders of BHP Limited, Maurice Blackburn commenced a review and analysis of a large volume of information that was now available in the public domain with respect to the failure of the dam. I note that Maurice Blackburn's renewed investigation into the possibility of commencing a representative proceeding occurred after the time (late March 2018) when there was likely to have been widespread awareness among the institutional investor community that Phi Finney McDonald was preparing a securities class action against BHP Limited.

62 In Ms Dellavedova's affidavit of 2 August 2018 she stated that Maurice Blackburn had secured an in-principle agreement from International Litigation Funder Partners Pte Ltd to fund the proposed action, and set out key terms of the funding arrangement. However, it is apparent from Ms Dellavedova's later affidavits that Maurice Blackburn now proposes to conduct the proceeding without the assistance of a commercial litigation funder.

63 On 30 August 2018, Klemweb retained Maurice Blackburn. A copy of the retainer agreement is annexure "BWD-5" to the affidavit of Ms Dellavedova dated 16 October 2018. Subject to the making of a common fund order (discussed below), Maurice Blackburn: has agreed to conduct the Klemweb proceeding on a no-win / no-fee basis, with a 25% uplift on 25% of the fees; will defer seeking payment of all fees and disbursements incurred in conducting the class action until there is a successful outcome and no costs will be sought if this does not occur; and has agreed to indemnify Klemweb in respect of any adverse costs order in the proceeding and to provide any security ordered to be provided in respect of those costs, in whatever form is ordered.

64 Maurice Blackburn has been instructed to apply for a common fund order (see annexure "BWD-1" to Ms Dellavedova's 16 October 2018 affidavit). The terms of the proposed common fund order provide for payment of a litigation services fee (the Litigation Services Fee) calculated as a percentage of any settlement or judgment as follows:

65 If the Litigation Services Fee is approved: Maurice Blackburn would not be entitled to any payment beyond that fee, which would replace Maurice Blackburn's entitlement to any costs under the retainer; and the amount that Maurice Blackburn would be paid would be subject to the approval orders, which would supersede the retainer to the extent of any inconsistency. The retainer puts clients that have retained Maurice Blackburn on notice that Maurice Blackburn intends to apply to the Court for approval of the Litigation Services Fee. As at the date of Ms Dellavedova's second affidavit (16 October 2018), none of the clients who had entered into the retainer had raised any concern with Maurice Blackburn about the proposed Litigation Services Fee.

66 Ms Dellavedova stated in her 16 October 2018 affidavit that if the Court declined to approve the Litigation Services Fee, Maurice Blackburn was instructed to apply for a common fund order on the basis of the terms set out in the retainer (subject to Court approval) rather than on the basis of the Litigation Services Fee. As indicated above, this is a no-win / no-fee model, with a 25% uplift on 25% of the fees.

67 In Ms Dellavedova's 16 October 2018 affidavit, she provides details of Maurice Blackburn's expertise and capacity. Maurice Blackburn's class action practice includes approximately 59 lawyers across offices in Melbourne, Sydney and Brisbane. Maurice Blackburn has successfully settled 15 securities class actions (or proposed class actions) since 2003, as set out in [42] of Ms Dellavedova's affidavit. Seven of these securities class actions were settled for amounts in excess of $100 million. Ms Dellavedova stated in her affidavit that no other law firm in Australia has acted in a class action involving listed securities where the claims of the group members it represented settled for more than $100 million. Maurice Blackburn is also presently conducting a further five securities class actions, in addition to a number of other class actions.

68 Ms Dellavedova stated in her 16 October 2018 affidavit that the conduct of the proceeding is likely to involve preparing and adducing substantial, complex, technical scientific evidence regarding the operation and collapse of the Fundão Dam, and Maurice Blackburn has unparalleled expertise in conducting such matters. Details of this expertise are provided in the affidavit.

69 Two Principals of Maurice Blackburn – Ms Dellavedova and Mr Andrew Watson – have the care and conduct of the Klemweb proceeding on behalf of Klemweb. Ms Dellavedova was admitted to practice in 2000 and has been a Principal of Maurice Blackburn since 2010. Since her admission, she has practised in the area of representative proceedings. She has conducted, assisted in or supervised at least 11 representative proceedings on behalf of plaintiffs or applicants. Mr Watson is a Principal and director of Maurice Blackburn and head of Maurice Blackburn's Class Actions department. Since November 2004, Mr Watson's principal area of practice has been representative proceedings. He has conducted, assisted in or supervised more than 37 representative proceedings on behalf of plaintiffs or applicants in this Court or the Supreme Court of Victoria. Many of the proceedings in which Mr Watson has been involved are or were shareholder class actions involving an allegation that a company failed to comply with its continuous disclosure obligations.

70 In her affidavit of 16 October 2018, Ms Dellavedova provided details of Maurice Blackburn's financial capacity to fund the litigation and provide security. A copy of Maurice Blackburn's financial statements and reports for the year ended 30 June 2017 was annexed to the affidavit. Whether or not Maurice Blackburn obtains ATE insurance in respect of the litigation, it will not charge to claimants any premium for any such insurance if the Litigation Services Fee is approved.

71 Ms Dellavedova provided details of Maurice Blackburn's state of preparation at [74]-[81] of her 16 October 2018 affidavit and at [77]-[86] of her affidavit sworn on 25 October 2018. Maurice Blackburn has reviewed a significant number of documents that arose before, at the time of, or after the collapse of the Fundão Dam, as set out in [79] of the 25 October 2018 affidavit. In the course of reviewing these documents, Maurice Blackburn identified a number of matters that may be important to furthering the proceeding. Maurice Blackburn has identified and retained experts in relation to some of those matters. In particular, Maurice Blackburn has: retained several experts for the purposes of considering and furthering the issues arising from loss; interviewed several geotechnical experts with an intention of retaining such an expert or experts in the near future; and consulted with experts on questions of Brazilian law. Further, Maurice Blackburn has: been using the services of a NAATI-certified translator since June 2018 to translate documents from Portuguese to English; and retained a law firm based in Sao Paolo to assist with the conduct of the proceeding, including by obtaining documents in any proceeding in Brazil arising from the collapse of the Fundão Dam.

72 In Ms Dellavedova's 25 October 2018 affidavit, she provided confidential evidence as to Maurice Blackburn's estimate of its legal costs in the Klemweb proceeding. Based on her experience in conducting large and complex class actions for plaintiffs that have achieved very significant settlements over a number of years, Ms Dellavedova expressed the view that the estimate was reasonable.

73 In Ms Dellavedova's 25 October 2018 affidavit, she provided details of the number of clients who or which have retained Maurice Blackburn. She provided the following details:

74 In her 25 October 2018 affidavit, Ms Dellavedova referred to the steering committee proposed by Phi Finney McDonald in connection with the Impiombato proceeding and stated that, likewise, Maurice Blackburn would be prepared to convene a litigation committee to assist in the conduct of the Klemweb proceeding.

The LACERA proceeding

75 The LACERA proceeding was commenced on 24 September 2018 with the filing of an originating application and statement of claim.

76 As set out in the statement of claim at [3], LACERA has commenced the proceeding on its own behalf and on behalf of persons who or which (subject to certain exceptions that can be put to one side):

(a) at any time during the period from 8 August 2012 and prior to the time trading opened on the ASX on 9 November 2015 (the relevant period for the purposes of this proceeding) acquired or committed to acquire a legal or beneficial interest in ordinary shares in BHP Limited or in BHP Plc on any one or more of:

(i) the ASX;

(ii) the LSE; or

(iii) the JSE; and

(b) at the time trading opened on the ASX on 9 November 2015, still held interests in BHP Limited and/or BHP Plc acquired during the relevant period.

77 In section A.2 of the statement of claim there is a description of BHP Limited. As with the statements of claim in the Impiombato proceeding and the Klemweb proceeding, the expression "BHP" is used to refer collectively to BHP Limited and BHP Plc.

78 In section A.2.1 of the statement of claim, reference is made to Rules 3.1 and 19.12 of the ASX Listing Rules.

79 In section A.3, allegations are made concerning certain assumptions that were made by investors and potential investors in BHP Limited securities or BHP Plc securities.

80 In section A.4, a description of BHP's single economic entity structure is provided.

81 In section A.4.1, it is alleged that at all material times during the relevant period, BHP represented to the BHP securities markets that BHP was committed to "putting first" the health and safety of its employees and the communities in which BHP operated and to being environmentally responsible.

82 Section B of the statement of claim deals with Samarco. In section B.1, allegations are made concerning Samarco's ownership and governance. It is alleged that, at all times during the relevant period, BHP's interest in Samarco: was a significant investment by BHP; and was material to the assessment of the price or value of BHP securities by persons who commonly invest in securities on the BHP securities markets. It is further alleged that, during the relevant period, BHP's earnings from Samarco were a material component of BHP's total revenue and earnings. Samarco's operations are described in section B.2 of the statement of claim. In section B.3, allegations are made concerning an expansion of the Germano complex, referred to as the "Expansion Project". It is alleged that, for the purposes of storing tailings following completion of the Expansion Project, Samarco between about 2006 and 2008: commissioned the design of a new tailings dam across the Fundão Valley within or near the Germano complex (ie, the Fundão Dam); approved a Fundão Dam design (referred to as the "Original Design") under which certain things would be constructed; and upon completion of the Fundão Dam and associated works in about 2008, authorised or permitted the deposition of sands and slimes into the Fundão Dam. It is alleged that, at all material times from the approval of the Original Design, it was important for the safe operation of the Fundão Dam that certain things occur, referred to as the "Fundão Safety Requirements". It is further alleged that, at all material times from not later than the commencement of tailings deposition in the Fundão Dam (being in or about 2008), there was a material risk that, if Samarco was unable to continue to deposit tailings in the Fundão Dam at a level commensurate with its production forecasts: Samarco would not be able to maintain production; Samarco would fall materially short of its forecasts for production and revenues; and Samarco would fall materially short of BHP's forecasts for Samarco contributions to BHP earnings, referred to as the "Dam (Earnings) Risk".

83 In section C of the statement of claim, allegations are made concerning problems with the Fundão Dam before 2012. Also included in this section are allegations concerning the expansion project for the Germano complex referred to as the P4P Project.

84 In section D of the statement of claim, allegations are made concerning alleged disclosure failures in August 2012. It is alleged as follows at [33] and [34]:

33. Between about July 2010 and early August 2012:

(a) 'vortices' of sand tailings and water had developed at the Fundão Dam's right abutment above the main gallery;

(b) similar vortices had developed at the left abutment, above the second gallery;

(c) structural analyses received by Samarco indicated that the height of the tailings at the left abutment of the Fundão Dam exceeded the load capacity of the secondary gallery;

(d) seepage began to appear at the left abutment of the Fundão Dam;

(e) Samarco implemented a programme of "jet grouting" to repair the said galleries and return them to service;

(f) the jet grouting programme was determined by Samarco to have been unsuccessful and the programme was abandoned;

(g) Samarco caused both galleries to be plugged with concrete, from their outlets back to a point beneath the projected future crest of the dam; and

(h) despite the works described in (a) to (g) above, there had been further "seeps" occurring at various locations along the left abutment.

34. Further, by not later than 8 August 2012:

(a) Samarco had been warned by independent safety auditors that Samarco's emergency action plan (EAP) in respect of the Fundão Dam did not conform to international rules of safety;

(b) the Samarco Board had recommended that Samarco prioritise efforts to resettle the communities living down-valley of the Fundão Dam, including Bento Rodrigues;

(c) Samarco had not resettled the communities living down-valley of the Fundão Dam;

(d) despite (a) to (c) above, and despite further incidents of 'seeps' occurring at various locations along the left abutment of the Fundão Dam, Samarco had continued to deposit or permit the depositing of tailings in the Fundão Dam,

(together with the matters pleaded in paragraph 33, the August 2012 Information).

(Particulars omitted.)

85 On the basis of these allegations, it is alleged that on and from 9 August 2012 BHP Limited was obliged to disclose the August 2012 Information to the ASX, relying on s 674(2) of the Corporations Act and Rule 3.1 of the ASX Listing Rules. It is alleged that BHP Limited: did not disclose to the ASX the August 2012 Information on 9 August 2012 or at any time prior to the time trading opened on the ASX on 9 November 2015; in the premises, contravened Rule 3.1 of the ASX Listing Rules; and, in the premises, contravened s 674(2) of the Corporations Act.

86 In section E of the statement of claim, allegations are made concerning disclosure failures in September 2012. It is alleged that BHP Limited made certain representations in September 2012 in connection with the release of its 2012 Annual Report, referred to as the "September 2012 Representations". It is alleged at [40]:

In the premises set out in paragraphs 22 to 30, and 32 to 34 inclusive above, at the time BHP Ltd made the September 2012 Representations, it was the case that:

 (a) the matters the subject of the August 2012 Information were continuing;

(b) Samarco's ability to achieve BHP's forecasts for its contribution to BHP earnings depended on the continuing use of the Fundão Dam to store the tailings resulting from Samarco's iron ore beneficiation processes;

(c) Samarco had made modifications to the Fundão Dam (and in particular, its drainage systems) that:

(i) were contrary to the Original Design; and

(ii) negated important Fundão Safety Requirements incorporated in the Original Design;

(d) subsequent to the said modifications, there had been repeated incidents symptomatic of structural problems with the Fundão Dam, including cracking in the secondary gallery supporting the left abutment;

(e) Samarco had continued to use, allow the use of, and increase the height and storage capacity of the Fundão Dam despite not having confirmed that remediation works attempted since the modifications referred to in (c) had prevented further symptoms of the kinds described in (d);

(f) by reason of the matters in (a) to (e), there was an increased risk that:

(i) the structural integrity of the Fundão Dam would become further compromised;

(ii) Samarco would suffer an interruption to its ability to use the Fundão Dam, either while a risk of dam failure was remediated or because the dam failed and became unavailable to Samarco;

(iii) failure of the Fundão Dam itself would result in further losses for BHP, including:

 (1) impairment of BHP's interests in Samarco; and

 (2) liability of Samarco and BHP for damages caused to persons and property affected by a dam failure;

(g) Samarco had received the advice referred to in paragraph 34 above but had not implemented or fully implemented the safety recommendations in the advice;

(h) Samarco and/or BHP had recommended that the resettlement of communities, including Bento Rodrigues, near the Fundão Dam be prioritised; and

(i) communities living down-valley of the Fundão Dam had not been resettled,

(together and severally, 2012 Samarco Risks Information).

87 It is alleged that on and from 21 September 2012, BHP Limited was obliged to disclose to the ASX the 2012 Samarco Risks Information. It is alleged that BHP Limited: did not disclose to the ASX the 2012 Samarco Risks Information on 21 September 2012 or at any time prior to the time trading opened on the ASX on 9 November 2015; in the premises, contravened Rule 3.1 of the ASX Listing Rules; and, in the premises, contravened s 674(2) of the Corporations Act. It is also alleged that the September 2012 Representations: were materially misleading; and were statements that were, or information that was likely to, induce persons to acquire or dispose of BHP securities and/or have the effect of increasing, maintaining or stabilising the price of trading in BHP securities. It is alleged that by making the September 2012 Representations, BHP Limited contravened:

(a) s 1041E(1) of the Corporations Act;

(b) s 12DB(1)(a) of the ASIC Act; and/or

(c) s 29(1)(b) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law).

88 It is also alleged that BHP Limited, in making the September 2012 Representations, or alternatively not correcting the September 2012 Representations, engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 1041H(1) of the Corporations Act, s 12DA(1) of the ASIC Act, and/or s 18 of the Australian Consumer Law.

89 In section F of the statement of claim there are allegations concerning disclosure failures in September 2013. It is alleged that BHP Limited made certain representations in September 2013 in connection with the release of its 2013 Annual Report, referred to as the "September 2013 Representations". It is alleged that there were problems at the Fundão Dam by early 2013. It is alleged at [54] as follows:

In the premises set out in paragraphs 51 and 52 above, by not later than 25 September 2013, it was the case that:

(a) the matters the subject of the 2012 Samarco Risks Information were continuing;

(b) Samarco had responded to continuing problems along the left abutment by implementing the setback;

(c) the setback:

(i) involved constructing a section of the Fundão Dam wall on past tailings that were not appropriate foundations (and thereafter relying upon the structural integrity of that section);

(ii) was intended as a temporary measure, in part because it was built on tailings that were not appropriate foundations;

(iii) although intended as a temporary measure, was likely to remain in place until at least early 2015; and

(d) despite the matters in (c), Samarco continued to use (and permit other miners to use) the Fundão Dam to receive tailings,

(September 2013 Samarco Risks Information).

90 It is alleged that BHP Limited on and from 25 September 2013 was obliged immediately to disclose to the ASX the September 2013 Risks Information. It is alleged that BHP Limited: did not disclose to the ASX the September 2013 Samarco Risks Information on 25 September 2013 or at any time prior to the time trading opened on the ASX on 9 November 2015; in the premises, contravened Rule 3.1 of the ASX Listing Rules; and, in the premises, contravened s 674(2) of the Corporations Act. Allegations are also made concerning misleading conduct, relying on the same provisions as relied on in section E of the statement of claim.

91 Section G of the statement of claim contains allegations concerning disclosure failures in February 2014. These allegations follow a broadly similar structure to the allegations in sections E and F of the statement of claim.

92 Section H of the statement of claim concerns alleged disclosure failures in September 2014. Again, a broadly similar structure is adopted.

93 Section I of the statement of claim concerns alleged disclosure failures in September 2015. This section also adopts a broadly similar structure.

94 Section J of the statement of claim contains allegations relating to the collapse of the Fundão Dam, the subsequent disclosures and the market reaction. It is alleged that on 5 November 2015 the Fundão Dam suffered a structural failure, commencing in the area of the left abutment. I note that the left abutment is referred to in [33] of the statement of claim, quoted above.

95 Section K of the statement of claim contains allegations concerning causation, loss and damage.

96 The material filed by LACERA in relation to the Multiplicity Question comprises: an affidavit of Mr Buitendag, a partner of Johnson Winter & Slattery; an expert report of Elizabeth Harris, a costs lawyer, concerning quantification of costs; an expert report of Alex Bell of Grant Thornton, accountants, concerning the number of shares acquired by investors in BHP Limited and/or BHP Plc during a certain period; and an expert report of Mariano Rossetto, a forensic accountant, providing calculations of the commissions payable in respect of each of the proceedings and the percentage return to class members.

97 Neither Johnson Winter & Slattery nor the funders in relation to the LACERA proceeding have undertaken a 'book build'.

98 LACERA purchased 1.2 million shares during the relevant period for this proceeding (ie, 8 August 2012 to 9 November 2015) and still held those shares at the time trading opened on the ASX on 9 November 2015. LACERA is an independent governmental entity that administers and manages the retirement fund for the County of Los Angeles. It has provided retirement, disability and death benefits to eligible Los Angeles County employees, retirees and their beneficiaries since 1938. LACERA has over 168,000 members with US$52.7 billion under management.

99 Three partners of Johnson Winter & Slattery have the care and conduct of this matter – Mr Buitendag, Paul Reidy and Joseph Scarcella. Mr Buitendag is the Practice Group Head for Dispute Resolution at Johnson Winter & Slattery. Before joining Johnson Winter & Slattery in March 2014, Mr Buitendag was a partner of Cornwall Stodart Lawyers in Melbourne where he worked for six years and became Practice Group Leader of Commercial Litigation and Head of Reconstruction and Insolvency. Prior to that time, he was managing partner of a law firm in Pretoria, South Africa, for over 14 years. In the course of his career, he has led a large number of complex disputes, including those set out at [25] of his affidavit.

100 Mr Reidy is the leader of Johnson Winter & Slattery's Commercial Dispute Resolution Specialist Group. He has been a partner for 19 years, commencing as a partner of Gilbert + Tobin and later joining Johnson Winter & Slattery. He has been involved in a diverse range of complex commercial disputes, including those set out at [28] of Mr Buitendag's affidavit.

101 Mr Scarcella joined Johnson Winter & Slattery in 2017. Before that, he was a partner of Ashurst Australia from 2007. He is the leader of Johnson Winter & Slattery's Finance and Restructuring Specialist Group. Mr Scarcella has acted in a number of large scale disputes, including those set out at [32] of Mr Buitendag's affidavit. Mr Scarcella also advises litigation funders on proposed claims and carriage of claims including class action proceedings.

102 Johnson Winter & Slattery is a national law firm with 62 partners and 200 lawyers. The firm has acted and is acting in a number of class actions, including those set out at [23] of Mr Buitendag's affidavit. I note that some of these examples are securities class actions and others are not.

103 In relation to the funders, Mr Buitendag's affidavit contains the following information. Robbins Geller Rudman & Dowd LLP is a law firm based in the United States with approximately 200 lawyers across ten offices specialising in securities class actions. The firm has conducted a number of successful class action recoveries. A print-out from its website, listing prominent cases and precedent-setting decisions in which the firm has acted, is annexed to Mr Buitendag's affidavit. Harbour is a litigation funder that was formed in 2007 and operates globally. It has funds that total more than £760 million and has funded more than 80 cases in 13 jurisdictions. Investments made by the funder represent an aggregate claim value in excess of £5.4 billion. It is a founding member of the Association of Litigation Funders and was a driving force on the working party responsible for drafting and implementing its Code of Conduct. The Code of Conduct requires that all funders maintain adequate financial resources at all times in order to meet their obligations to fund all of the disputes they have agreed to fund and to cover aggregate funding liabilities under all of their funding agreements for a minimum period of 36 months.

104 LACERA seeks to have a common fund order made in the proceeding (see annexure "PJB-4" to Mr Buitendag's affidavit). Under the proposed common fund order, subject to certain exceptions, LACERA retains control of the proceeding, all decision-making, and day-to-day instructions to Johnson Winter & Slattery, including in relation to settlement decisions (clause 5.2 of the funding terms, which are annexed to the proposed common fund order). The funding terms provide that any amounts recovered by LACERA in the proceeding will first be applied to reimburse the funders for certain expenses relating to the proceeding, including legal costs, disbursements and any ATE insurance premium. The funders are also entitled to a commission, which is said to align the interests of LACERA and the funders in achieving the best possible settlement for the class. The commission payable to the funders is set out in Schedule 1 to the funding terms. The schedule is in the following terms:

105 The material filed on behalf of LACERA does not describe the preparation that has been undertaken by Johnson Winter & Slattery in connection with the LACERA proceeding.

106 Mr Buitendag, Mr Reidy and Mr Scarcella have caused to be prepared a budget for the proceeding. Mr Buitendag stated in his affidavit that he considered it to be a realistic estimate of the legal costs involved in conducting the proceeding through to trial. The budget (which is confidential) is annexed to Mr Buitendag's affidavit. In her report, Ms Harris expressed the view that the budget was realistic and reflected the likely actual fees to be incurred. In her opinion, the budget was fair and reasonable.

107 Mr Bell was instructed to provide a report that determined (or, if he could not determine, estimated) the number of shares acquired by investors in BHP Limited and/or BHP Plc during the period 8 August 2012 to 20 October 2013 being shares that were still held as at 9 November 2015. I note that the period 8 August 2012 to 20 October 2013 is the period that is covered by the LACERA proceeding but is not covered by the Impiombato proceeding or the Klemweb proceeding. The summary of Mr Bell's calculations was set out at [2.10] of his report. The calculations relate to shares in BHP Limited and BHP Plc purchased during the period 1 October 2012 to 30 September 2013. Mr Bell estimated the number of such shares still held as at 30 September 2015. It is sufficient to state that the numbers of such shares were substantial.

Applicable principles

108 The applicable principles relating to a potential overlap between representative proceedings were recently considered by the Full Court (Middleton, Murphy and Beach JJ) in GetSwift. The following summary of the principles is drawn largely from the judgment of the Full Court.

109 As set out in GetSwift at [44], the following realistic options are available to deal with the potential overlap between competing class proceedings:

(a) the relevant proceedings could be consolidated;

(b) an order could be made under s 33N(1) of the Federal Court of Australia Act 1976 (Cth) in respect of one or more of the proceedings, colloquially known as a declassing order;

(c) there could be a joint trial of all proceedings with each left as they are presently constituted as open class proceedings – ie, a 'wait and see' approach;

(d) there could be a permanent stay of one or more of the proceedings;

(e) an order could be made closing the classes in one or more of the proceedings but leaving one of the proceedings as an open class proceeding, with a joint trial of them all.

110 In relation to the 'wait and see' approach, the Full Court in GetSwift observed at [66] that while in some contexts such an approach may be appropriate, where there are multiple open class proceedings, numerous group members signed up in each of the proceedings to different funding arrangements, and the prospect of a common fund application being made in each of the proceedings, it may be desirable that clarity be injected sooner rather than later as to the proceedings to go forward and their constitution. As the Full Court stated, this is likely to be in the interests of the respondent, who should not be vexed or oppressed by duplicate classes prosecuting duplicate claims.

111 In the context of discussing the power to order a stay, the Full Court in GetSwift endorsed (at [119]) the observations of Allsop CJ (with whom Middleton and Beach JJ agreed) in Wileypark Pty Ltd v AMP Ltd (2018) 359 ALR 43 at [2] that "the running of multiple actions by different lawyers, with different funders was, in principle, potentially inimical to the administration of justice and, in particular, potentially inimical to the interests of group members, and potentially oppressive to [the respondent]". His Honour's observation was particularly emphasised with respect to open class actions.

112 In GetSwift at [121], the Full Court stated that, faced as the Court is with such risks to the proper administration of justice, it was considered to be "plain that the Court has power to order a permanent stay of one or more competing class actions whether in the exercise of its inherent power, or its express and implied powers to manage the cases before it in the interests of justice and the parties and consonant with the requirement under s 37M [of the Federal Court of Australia Act], or in its equitable jurisdiction".

113 The Full Court agreed (at [122]) with the primary judge that allowing the continuance of three competing class actions was likely to be more expensive for the parties and group members and less efficient than staying two of the cases and allowing only one to proceed. The Full Court stated:

In our view three class actions brought primarily against the same respondent, in respect of substantially the same claims, and on behalf of the same group members, are likely to: (a) involve increased use of judicial and Court resources; (b) move more slowly and less efficiently through the interlocutory stages; (c) incur increased legal costs on the applicants' side which (if the cases are successful) will ultimately be paid by group members out of the same pool of available settlement or judgment monies; and (d) incur increased legal costs on the respondent's side through the requirement to defend three proceedings rather than one, including by addressing different case theories, different expert evidence and different tactical approaches. Such increased costs may mean costs become disproportionate to the importance and complexity of the matters in dispute.

114 Having concluded that the primary judge had power to grant a permanent stay or at least a temporary stay of two of the competing proceedings, the Full Court turned to address the primary judge's exercise of that power. In the course of this discussion, the Full Court referred to the judgment of Beach J in McKay Super Solutions Pty Ltd (Trustee) v Bellamy's Australia Ltd [2017] FCA 947 (Bellamy's). I note that in that case Beach J stated at [40] that the primary consideration in determining how to constitute the proceedings is the interests of group members, although the interests of the respondent also need to be considered. The Full Court in Getswift implicitly endorsed that approach: see, eg, [182]. The Full Court stated at [162]-[163]:

162 Where, as in the present case, there is no agreement between the competing funders and solicitors the Court must decide the best way to deal with the case management difficulties that are thrown up. That decision must be made in the particular circumstances of the case and commonly involves weighing up what may be incommensurable and sometimes conflicting considerations. There can be no one right answer to such questions and different judges may weigh the relevant considerations differently. That this is so can be seen in the variable approaches taken by different judges of the Court, including:

(a) in Bellamy's Beach J was faced with two competing open shareholder class actions concerning the same subject matter and causes of action but with different applicants, solicitors and funders. In the circumstance that in each case a large number of group members had signed a funding agreement with a particular funder and a retainer with a particular law firm, his Honour decided not to permanently stay either of the actions and made orders to close the class in one proceeding, to allow the other proceeding to remain as an open class proceeding, and to have a joint trial of both proceedings. His Honour also made directions to minimise any duplication of work and expense by the law firms acting for the applicants in the two cases;

(b) in Cantor Foster J was faced with five competing open class actions brought by two different law firms alleging that Volkswagen, Audi and Skoda engaged in misleading and deceptive conduct and made false and misleading representations about the emissions of affected diesel motor vehicles. His Honour did not accept the respondent's submission that allowing the continuation of two groups of class actions would, for the time being, unduly oppress the respondents nor that it was productive of undue costs, confusion or delay, and decided to adopt a 'wait and see' approach; and

(c) in the present case the primary judge was faced with three competing open shareholder class actions with different applicants, solicitors and funders. His Honour decided that in the circumstances of the case the best option was to stay two of the proceedings, and after conducting a comparative assessment his Honour made orders for the Perera and McTaggart Proceedings to be stayed and for the Webb Proceeding to go forward.

163 In our view the decisions in Bellamy's and Cantor were clearly within the proper exercise of discretion. We take the same view in relation to the primary judge's decision to permanently stay two proceedings and allow one to go forward. Although there are aspects of his Honour's reasoning that we do not fully endorse, we can discern no material House v The King error that would warrant setting aside his Honour's decision. Moreover, even if contrary to our view the primary judge did fall into error, if we were exercising the discretion for ourselves we would also have concluded that it was appropriate to stay two of the three competing proceedings.

115 At [165], the Full Court stated that "the remedial response in a particular context of dealing with competing class actions depends on its own circumstances, with different cases and facts calling for different responses".

116 The Full Court, at [168]-[169], discussed the approach taken by Beach J in Bellamy's. In that case, Beach J said that there were only two realistic options available, namely: a permanent stay of one of the proceedings; or closing the class in one of the proceedings and allowing one open class and one closed class proceeding to go forward side-by-side. Beach J adopted the second option because in one proceeding there were over 1,500 group members who had entered into a funding agreement with the relevant funder and signed retainers with the relevant solicitors, and in the other proceeding over 1,000 group members had entered into such agreements. As the Full Court noted, but for that circumstance, Beach J said that he would have ordered a permanent stay of one of the proceedings. The Full Court also noted that Bellamy's was the first occasion when such an approach was taken and Beach J observed (at [97]) that his reliance on the number of group members who had signed up in each case "should not be seen as an incentive to sign up group members before issue". The Full Court had no doubt that this was what the funders and/or solicitors had done in the Perera and McTaggart proceedings, and observed that they had sought to sign up as many group members as they could despite it being the intention to seek a common fund order and "in our view that was unnecessary."

117 In the context of considering (and rejecting) submissions to the effect that the primary judge had not considered the fact that funding agreements and retainers had been entered into, the Full Court noted, at [177], that both the Perera and McTaggart applicants intended to seek a common fund order that would largely supersede any funding agreements in any event. The Full Court stated: "As such, the number of group members who had signed a funding agreement or retainer was not a significant matter to the exercise of his Honour's discretion." The Full Court stated, at [178], that "it was appropriate for his Honour to treat the number of group members who signed up to funding agreements (or retainers) as a relevant but not significant consideration", in light of the matters discussed by the Full Court in that paragraph.

118 The Full Court also addressed the primary judge's choice of the Webb proceeding as the class action to go forward in preference to the Perera proceeding or the McTaggart proceeding (at [198]-[282]). In the course of considering this issue, the Full Court again referred to Bellamy's. The Full Court noted, at [264], that the numbers of group members that had signed up to the McTaggart proceeding (just over 200) and the Perera proceeding (just over 100) were modest, both when compared with the more than 2,500 that had signed up in the two Bellamy's class actions (see Bellamy's at [2], [3], [96], [97] and [98]), and when compared with the total number of group members likely to participate in the proceeding. The Full Court noted, at [265], that in Bellamy's not only was there a significant number of funded group members but the relevant group included sophisticated institutions, investment managers, global asset managers, sovereign wealth funds and superannuation funds, including investors with large claims by value, investors with repeat experience in participating in funded securities class actions, and investors with sufficient knowledge, sophistication and leverage to properly negotiate the terms of the funding agreements they entered into and to make informed choices between competing funding agreements on offer. The Full Court contrasted that with the case it was considering, where there was no evidence that the group members that had signed funding agreements with the funders of the Perera proceeding or the McTaggart proceeding shared those characteristics.

119 The Full Court made the following observations regarding the selection process at [274]-[282]:

274 It is though worth reiterating, as the primary judge recognised, that there is no one right answer to the case management questions that arise when dealing with competing class actions. There cannot be a 'one size fits all' and different judges will take a different view of some of the incommensurable and conflicting considerations that may arise. It should also be kept in mind that there is no 'silver bullet' solution to the case management problems of competing class actions and each of the 'solutions' can be said to have some or other problem. For example:

(a) even when the parties agree to consolidation of the competing proceedings, depending on the agreement reached, there may be wastage of costs and inefficiency. The most efficient outcome is where the competing funders agree to a percentage division of the funding expenses and any funding commission that becomes payable and there is only one set of applicant's solicitors and counsel running the case. Where the agreement provides for joint solicitors under a joint-venture agreement there can be serious inefficiencies and wastage of costs as solicitors from different firms, often with no love lost between them, incur costs by checking each other's work and arguing about the many forensic decisions that are involved in large and complex litigation;

(b) without adopting this criticism, the 'wait and see' approach in Cantor might be said to give too little weight to the fact that respondents are vexed with the injustice and cost of two sets of class actions, and to the fact that (if the case is successful) group members will ultimately bear the costs of having two sets of applicant's solicitors and counsel drawing fees from the same pool of settlement or judgment monies; and

(c) without adopting this criticism, notwithstanding the case management orders made to minimise the duplication of costs, the approach taken in Bellamy's has been criticised for giving diminished weight to the increased costs suffered by the respondent and the increased transaction costs ultimately suffered by the group members of having two sets of applicant's solicitors, and also for giving too much weight to the contractual arrangements made with a particular lawyer or funder by group members.

275 Similarly depending upon how it is done, a selection process like that used in the present case may give rise to some or other problem, and the Court should be astute to avoid them where possible.

276 First, where the other relevant considerations are essentially equivalent as in the present case, the decisive consideration of which proceeding should be stayed may be argued to be the lower legal costs and funding charges that apply in one proceeding as compared with the other competing proceedings. As desirable as lower costs and funding charges are, one of the real benefits of litigation funding has been the levelling of the playing field for claimants engaged in expensive class action litigation against large, well-resourced and determined respondents (as the primary judge recognised at [230]). The Court should not give an undue focus to lower costs and funding charges as doing so is likely to promote a "rush to the bottom" by funders and solicitors keen to win the tender. In our view there are already signs of this in the market.

277 While not without deficiencies, a good level of Court supervision of costs and funding charges is already available through the settlement approval process under s 33V, pursuant to which the Court only approves costs and funding charges in a quantum which it considers reasonable. Having regard to that protection the Court should focus less on achieving the lowest possible costs and funding charges in any selection process, and more on selecting the proceeding with a funding and costs models likely to best motivate the applicant's solicitor and funder to work assiduously to achieve the best outcome for the applicant and group members and to take responsible risks in that regard.

278 Second, the single most important determinant of the net recovery achieved by group members is not the quantum of legal costs but the amount of the settlement or judgment achieved, and where the settlement or judgment is large the legal costs are usually not material to net recovery. The Court should be astute to select the proceeding with the legal team that is most likely to achieve the largest settlement or judgment, i.e. the most experienced and capable. We accept that differentiating between legal firms or solicitors will often be difficult but the Court should not dodge that question if there is a basis for differentiation.

279 Third, recently a number of securities class actions have been issued very speedily following a share price collapse. Wileypark is a good example of this. The Court must strongly discourage a rush to the Court in large and complex class proceedings, carrying as it does the consequent risks of insufficient due diligence and the commencement of unmeritorious, or at least weak, cases. Unless the hasty filing of such cases is effectively discouraged even those solicitors or funders who wish to take an appropriately cautious approach are likely to be dragged into the same practice. That is so because the first action filed is likely to obtain a 'first mover' advantage in terms of book building and, once one action is filed, other solicitors or funders are pressed to speedily follow or they may not be included in the mix when the Court considers the competing proceedings.

280 It may be time for the Court to consider a procedure, in relation to securities class actions at least, such that upon the filing of the first proceeding the Court orders a standstill in that proceeding for, say, 90 days to allow a reasonable time for other solicitors or funders to undertake a proper due diligence. In order to reduce the incentive to rush to the Court, and to reduce any incentive to speedily follow another party that does so, any book building that occurs during the standstill period should be given no weight by the Court. We note that a 90 day standstill period is imposed under s 77z-1 of the Private Securities Litigation Reform Act 1995 in the USA.

281 Fourth, a selection process such as that used in the present case is conducted in full view of the respondent and it is likely the respondent will obtain a reasonable understanding of the approximate size of the "war chest" available for the case against it. As the primary judge recognised, experience teaches that respondents sometimes engage in trial by attrition and endeavour to use up an applicant's resources to obtain an advantage. Respondents are also likely to understand that the applicant's solicitors may be less inclined to undertake the necessary work if they are approaching or have exceeded the amount allowed for costs, and/or to understand that the funder may put pressure on the applicant to settle in such circumstances. The Court should be careful to avoid the interests of the applicant and group members being damaged in this regard.

282 Fifth, a selection process such as that in the present case is expensive. It seems likely that the costs for the present three applicants for case investigation and preparation, book building, drafting the pleadings, and opposing the stay application will be in the order of $300,000 to $500,000 each. For the unsuccessful funder (or solicitor if the work was done on a conditional basis) such amounts will be lost upon their case being stayed. Losses of that magnitude are likely to prove unsustainable over the medium to long term and some funders or solicitors may withdraw from the market thereby reducing competition. That is undesirable when competition between funders is perhaps the single most important matter giving rise to the lower funding charges recently seen in the market, and competition between solicitors is giving rise to reduced costs. Alternatively, funders or solicitors are likely to build the losses suffered into their charges in other class actions, which is also undesirable.

120 Having set out the applicable principles, I now turn to consider, as a matter of case management, how best to resolve the potential overlap between the competing class actions that are before the Court.

Consideration

121 There are three open class representative proceedings before the Court against the same respondent, relating to the same subject matter and relying to a large extent on the same causes of action. As is accepted by all parties, the circumstances give rise to potential overlap between the proceedings such that it is appropriate for the Court, as a matter of case management, to consider options such as those outlined in [109] above to address the situation.

122 There is no issue that the Court has the power to permanently stay one or two of the proceedings. Each party accepted this at the hearing before me. Indeed, the primary position of each party was that two of the three proceedings should be permanently stayed. The Full Court's judgment in GetSwift has confirmed that the Court has the power, in circumstances such as this, to permanently stay one or two of the proceedings: at [121].

123 Of the five options outlined in [109] above, the first three options can be put to one side. Consolidation of proceedings would not be appropriate given that there is no agreement between the parties in the competing class actions as to consolidation, and there are different lawyers and funders in relation to each proceeding. An order under s 33N(1) of the Federal Court of Australia Act has not been sought by any party. The considerations discussed in GetSwift at [59]-[63] do not suggest that an order under s 33N(1) would be apt in the present circumstances. Subject to the issue discussed below regarding the additional period covered by the LACERA proceeding, the 'wait and see' approach does not seem attractive in the circumstances of this case. It would be productive of inefficiency and increased expense to defer determination of the issues raised by the overlap between the proceedings. In my view, the factors referred to in GetSwift at [122], quoted above at [113], tend against the adoption of such an approach, at least in the circumstances of this case.

124 The remaining two options referred to in [109] above are: a permanent stay of one or more of the proceedings; and an order closing the class in one or more of the proceedings but leaving one of the proceedings as an open class proceeding, with a joint trial of them all. There may be other options in addition to these, but these would appear to be the main options to be considered.

125 The primary position of the applicant in each proceeding and the position of BHP Limited is that two of the proceedings should be permanently stayed. The applicant in each proceeding contends, as his or its primary position, that the other two proceedings should be stayed. BHP Limited contends that two of the proceedings should be stayed but does not specify which two.

126 Klemweb advances a number of alternatives by way of fall-back positions. In oral submissions, Klemweb put forward the following alternatives:

(a) the Klemweb proceeding would go forward as an open class proceeding for its relevant period (27 August 2014 to 9 November 2015); and the Impiombato and LACERA proceedings would be stayed in relation to the overlapping period, but otherwise could be permitted to continue; or

(b) the Klemweb proceeding would go forward as an open class proceeding; and the Impiombato and LACERA proceedings would continue as closed class proceedings.

127 In its supplementary submissions filed after GetSwift was handed down, Klemweb put forward a further alternative, namely that as a fall-back position Klemweb would be prepared to advance the proceeding on a closed class basis and would seek the opportunity to put on evidence as to the viability of this option should it be necessary to do so.

128 In light of the positions of the parties, and accepting (at least for present purposes) that only one of the proceedings should go forward on an open class basis, it will be convenient to consider, first, which proceeding should go forward as the open class proceeding and then to consider whether any other proceeding should go forward (eg, on a closed class basis).

129 In considering which proceeding should go forward as the open class proceeding, I do not place weight on the order in which the proceedings were commenced. The Full Court in GetSwift emphasised that the Court "must strongly discourage a rush to the Court in large and complex class proceedings, carrying as it does the consequent risks of insufficient due diligence and the commencement of unmeritorious, or at least weak, cases" (at [279], set out above). Further, as stated above, the primary consideration in determining how to constitute the proceedings is the interests of group members. It would be inconsistent with this to give weight to the order in which the proceedings were commenced. However, it should be noted that in the present case there is no suggestion that the first proceeding (the Impiombato proceeding) was commenced in haste. To the contrary, as the affidavit material described above demonstrates, the proceeding was commenced after a thorough investigation and proper consideration of the potential claims. While this may bear upon other factors (eg, the state of preparation and the experience and capability of the legal team), as stated above, I do not place weight on the order in which the proceedings were commenced.

130 Subject to the issue concerning the relevant period (discussed below), there is substantial overlap between the claims made in the three proceedings. In particular, I note the following matters:

(a) Each proceeding is brought on behalf of persons who or which acquired an interest in ordinary shares in BHP Limited on the ASX, in BHP Plc on the LSE, or in BHP Plc on the JSE.

(b) The claims that each applicant advances for contravention of s 674 of the Corporations Act are premised, in substance, on alleged knowledge by BHP Limited that there was a significant or material risk that the Fundão Dam would fail with a consequential financial risk to BHP in the event that the risk of dam failure materialised. While the proceedings adopt different definitional approaches to labelling these risks, there is little, if any, substantive difference between the alleged material information underpinning the continuous disclosure claims brought in each proceeding.

(c) This is also true of the way in which BHP Limited's awareness of the alleged material information is said to arise. In each proceeding, knowledge of the material information is sought to be imputed to BHP Limited by reason of information that certain representatives of BHP Limited had or ought to have had. Each statement of claim identifies at least the same five individuals as BHP Limited's human agents in this regard.

(d) The claims brought in each proceeding for contravention of the prohibition against misleading or deceptive conduct contained in s 1041H of the Corporations Act and/or s 12DA(1) of the ASIC Act share a common substratum of alleged facts. Each claim proceeds on the basis that BHP Limited made representations regarding the existence and efficacy of its safety and risk management systems and those representations were misleading or deceptive.

(e) It is true that the LACERA proceeding also pleads parallel contraventions of s 18 of the Australian Consumer Law, and that misleading statements were made in contravention of s 1041E(1) of the Corporations Act, s 12DB(1)(a) of the ASIC Act and/or s 29(1)(b) of the Australian Consumer Law. But the factual foundation of these allegations is largely the same as that of the alleged contraventions of s 1041H.

(f) I note also that the LACERA proceeding includes, as additional bases for its misleading or deceptive conduct claims, alleged representations regarding the operational and financial performance of Samarco (including the absence of any "unusual risks" relevant to the future financial performance of Samarco and BHP). However, the safety and risk management aspect of the misleading or deceptive conduct claims is common across all three proceedings.

(g) The form of relief sought on behalf of group members is relevantly identical across all three proceedings.

(h) The causal theory as to how the group members suffered loss is common across all three proceedings: each involves the concept of market-based causation and alleges that, but for the alleged contraventions by BHP Limited, each group member would have acquired their shares in BHP Limited or BHP Plc at a lower price or would not have acquired the shares at all.

131 In light of the substantial overlap as described above, and subject to the issue concerning the relevant period (discussed below), I do not consider the nature and extent of the allegations in the statements of claim to provide a basis to prefer one proceeding over the others.

132 A material difference between the three proceedings concerns the funding arrangements. In summary:

(a) In the Impiombato proceeding, a common fund order has been made incorporating certain "funding terms", which set out the respective rights and obligations of the funder and group members under the common fund. The funding terms provide that the funder is entitled to a commission of "an amount less than 18% of the Gross Recovery" in consideration for funding the proceeding. The commission is inclusive of expenses paid by the funder in the course of funding the litigation, including legal costs and disbursements.

(b) In the Klemweb proceeding, it is proposed that a common fund order be made incorporating the Litigation Services Fee, being a commission payable to Maurice Blackburn of not more than 15% (for amounts recovered up to and including $150 million) and not more than 10% (for amounts recovered in excess of $150 million). The Litigation Services Fee would be inclusive of legal costs and disbursements.

(c) In the LACERA proceeding, it is proposed that a common fund order be made incorporating funding terms that include a commission payable to the funders as set out in Schedule 1 to the funding terms (see [104] above). No commission is payable in respect of a recovery of up to and including $50 million. If there is a recovery of more than $50 million, a commission is payable comprising a Base Commission and (in respect of bands 3, 4 and 5) an additional percentage. The Base Commission is "an amount equal to 15% of the Total Recovery minus $50,000,000", subject to a cap if the Successful Conclusion Date is before the date falling 3 years after the Start Date. The commission payable to the funders is capped at 21.5% of the Total Recovery. The commission is in addition to the reimbursement of legal costs and disbursements paid by the funders.

133 One of the issues that arises is whether the funding arrangement proposed by Klemweb, which involves the payment of a commission to solicitors, is likely to be approved or accepted by the Court as part of the making of a common fund order. The issue arises because the legislation regulating the legal profession in Victoria prohibits a law practice from entering into a costs agreement providing for a contingency fee. Section 183(1) of the Legal Profession Uniform Law, which is set out in Sch 1 to the Legal Profession Uniform Law Application Act 2014 (Vic), provides that a "law practice must not enter into a costs agreement under which the amount payable to the law practice, or any part of that amount, is calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceedings to which the agreement relates". The civil penalty for contravention of this provision is 100 penalty units. A contravention of s 183(1) by a law practice is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention: s 183(3). Klemweb submits that as the proposed funding arrangement would be incorporated in a common fund order rather than a costs agreement, there would not be a contravention of s 183(1), relying on observations made by the Victorian Law Reform Commission in its report, Access to Justice – Litigation Funding and Group Proceedings (March 2018) at [3.96]. However, even if there would be no contravention of s 183(1), it is unlikely that the Court would make a common fund order incorporating the payment to a law firm of a commission on a settlement sum or judgment in circumstances where the clear legislative policy evinced by s 183(1) is against the payment of such a commission. Accordingly, I consider it unlikely that the Court would make a common fund order as proposed in respect of the Klemweb proceeding.

134 As an alternative to the Litigation Services Fee, Ms Dellavedova stated in her 16 October 2018 affidavit that Maurice Blackburn was instructed to apply for a common fund order on the basis of the terms set out in the retainer (subject to Court approval). This is a no-win / no-fee model, with a 25% uplift on 25% of the fees. The effect of this arrangement would be that Maurice Blackburn would fund the disbursements incurred in the course of the proceeding. In the event of a recovery, Maurice Blackburn would be reimbursed for these disbursements and be paid its fees (with a 25% uplift on 25% of the fees). There is no reason, in principle, why the Court would not approve a common fund order incorporating such an arrangement. I will therefore proceed on the basis that this is the proposed arrangement with respect to the Klemweb proceeding.

135 The funding arrangements in respect of the Impiombato proceeding are, in my view, attractive from the perspective of group members. The common fund order provides a maximum percentage commission that is inclusive of all costs. It offers group members the certainty of a minimum net percentage recovery from any settlement or judgment sum, insulates them from potential costs overruns, and incentivizes the funder to keep costs low. The Court retains full discretion as to the appropriate fee: see the August 2018 Reasons, [28]-[29].

136 Klemweb and LACERA each rely upon financial models that seek to compare the funding terms proposed in each of the three proceedings. In particular:

(a) LACERA relies upon the expert report of Mr Rossetto;

(b) Klemweb relies upon a "Funding Summary Model" set out at annexure "BWD-18" to the affidavit of Ms Dellavedova sworn on 25 October 2018; and

(c) Klemweb also relies upon a "Funding Summary Model" set out at annexure "BWD-24" to the affidavit of Ms Dellavedova sworn on 29 October 2018.

137 The expert report of Mr Rossetto seeks to compare the total costs of funding and the total return to group members under the common fund orders made or sought in the LACERA proceeding, the Impiombato proceeding and the Klemweb proceeding (on the basis of the Litigation Services Fee proposed by Maurice Blackburn). The report considers a number of hypothetical scenarios based upon the following variables: the amount of any settlement sum; the amount of legal costs incurred in the proceeding; and the time between the commencement of the proceeding and the date of settlement. In each scenario, the report calculates the percentage of the gross settlement sum payable to the funder or law firm and the percentage of the gross sum that would be available for distribution to group members under each of the three funding models.

138 The "Funding Summary Model" set out at annexure "BWD-18" is a one-page document prepared by Maurice Blackburn that seeks to compare the total costs of funding and return to group members under the common fund orders sought or made in the Klemweb proceeding (on the basis of the proposed Litigation Services Fee), the Impiombato proceeding and the LACERA proceeding. This document considers five scenarios based upon different hypothetical settlement amounts. In each scenario, the document calculates the total amount available for distribution to group members (expressed as a total and a percentage of the gross settlement amount) and the percentage of the gross settlement amount payable to the funders or law firm under each funding model. For the purposes of the LACERA proceeding, the document assumes that the proceeding will settle three and a half years after commencement, that the legal costs will be consistent with a litigation budget prepared by Johnson Winter & Slattery, and that the funder will incur certain costs in respect of an ATE insurance premium.

139 The "Funding Summary Model" set out at annexure "BWD-24" is a three-page document prepared by Maurice Blackburn. It is generally similar to, and considers the same five hypothetical settlement scenarios as, the document set out at annexure "BWD-18". However, it includes analysis of the no-win / no-fee model proposed by Maurice Blackburn as an alternative in the Klemweb proceeding. Further, the document includes analysis of three different time periods: a settlement at nine months; a settlement at two years, and a settlement at three and a half years after commencement of proceedings.

140 Although there may appear to be some differences in the figures set out in the report of Mr Rossetto and the models prepared by Maurice Blackburn, the documents are not in fact inconsistent. The differences in the documents are largely a result of the different variables considered and assumptions made by the authors. For example, the Maurice Blackburn analysis of the LACERA funding model assumes that the amount of legal fees and disbursements incurred will be consistent with a litigation budget prepared by Johnson Winter & Slattery and also includes provision for an ATE insurance premium to be paid by the funder. By contrast, the Rossetto report considers four different hypothetical scenarios for LACERA's legal fees and disbursements. These assumptions have a significant impact upon the analysis.

141 I note that there are certain limitations to the type of analysis set out in the financial models relied upon by Klemweb and LACERA. Each of the models assumes that the funding arrangement in respect of the Impiombato proceeding is a commission of 18%, but in fact the amount payable for commission for that proceeding is up to 18%, with the amount to be determined by the Court. Further, the outcomes are dependent on a range of variables, including the total amount of any settlement or judgment, the time between the commencement of proceedings and settlement or judgment, and the amount of the legal fees and disbursements. In order to place significant weight on such analysis, assumptions would need to be made about the likely course and outcome of the proceedings. This is difficult given that the proceedings are at an early stage.

142 I draw the following conclusions from the financial models described above:

(a) The question of which funding arrangement is most advantageous to group members is dependent upon a range of factors that cannot be determined with precision at this stage of the proceedings.

(b) The funding arrangement in the Impiombato proceeding, based upon a maximum percentage commission inclusive of costs and expenses, means that the Court can be reasonably certain about the minimum amount (as a percentage) of any settlement or judgment sum that would be available for distribution to group members, regardless of the amount of legal fees and expenses ultimately incurred.

(c) On a range of realistic scenarios, the LACERA funding arrangement is likely to result in a higher total amount being paid in respect of commission and costs and, consequently, a lower percentage of any settlement or judgment sum being available for distribution to group members.

(d) In many scenarios, the no-win / no-fee arrangement in the Klemweb proceeding is likely to result in a higher percentage of any settlement or judgment sum being available for distribution to group members, as the arrangement does not require a commission to be paid to a funder.

143 In my view, the interests of group members would be best served by the Impiombato funding arrangement. As noted above, the common fund order provides a maximum percentage commission that is inclusive of costs and expenses and offers group members the certainty of a minimum net percentage recovery from any settlement or judgment sum. The Court retains full discretion as to the appropriate fee. The LACERA model, on a range of realistic scenarios, is likely to result in a higher total amount being paid in respect of commission and costs. I do not accept the submission that, because the commission proposed in the LACERA proceeding is subject to Court approval, it is in effect merely a maximum amount in the same way as the 18% in the Impiombato proceeding is a maximum. The funding terms in the LACERA proceeding contain detailed provisions regarding the commission, including different rates for different bands of recovery, as well as time-based caps. This suggests that the commission is not merely a maximum but rather is the proposed return to the funders, while remaining subject to Court approval. The no-win / no-fee model proposed in the Klemweb proceeding, while likely to result in a higher percentage of any settlement or judgment sum being available for distribution, is not the preferred model put forward by Klemweb and Maurice Blackburn and may in some respects be less attractive than an arrangement involving a litigation funder. As the Full Court in GetSwift stated at [277] (quoted above), the Court "should focus less on achieving the lowest possible costs and funding charges in any selection process, and more on selecting the proceeding with a funding and costs models likely to best motivate the applicant's solicitor and funder to work assiduously to achieve the best outcome for the applicant and group members and to take responsible risks in that regard". It is important in the interests of group members that the proceeding be properly resourced so that there is a 'level playing field' between the applicant and group members on the one hand and BHP Limited on the other. I consider the Impiombato funding arrangement to better achieve this than the Klemweb no-win / no-fee arrangement.

144 I turn now to refer to some other considerations. One of the matters to which regard should be had is the legal representation in each proceeding. The affidavit material described above demonstrates that in each of the three proceedings the firm of solicitors acting for the applicant has considerable class action experience and the capability to manage the proceeding to a high standard. I do not consider this factor to provide a basis to differentiate between the three proceedings.

145 Another matter to which regard may be had is the number of group members who or which have entered into funding agreements: Getswift at [178]. As set out in the table at [9] above, there are 29,610 signed up group members in respect of the Impiombato proceeding (including 219 institutional investors) and 197 signed up group members in respect of the Klemweb proceeding (including 68 institutional investors). Details of the numbers of shares held by the signed up group members have been set out above. The solicitors and funders in the LACERA proceeding have not undertaken a 'book building' process, consistently with judicial statements regarding the inutility of book building where a common fund order is to be sought. In circumstances where a common fund order has been made or is sought to be made in all three of the proceedings, I do not place much weight on the number of group members who or which have entered into funding agreements. To the extent that regard is had to this factor, it favours the Impiombato proceeding. The Impiombato signed up group members include a large number of institutional investors (who may be taken to be sophisticated investors). Although many signed up at a time when there was only one proceeding proposed or on foot (and thus no choice between alternative proceedings), it is relevant to note that they received clear information that Mr Impiombato intended to seek a common fund order and the exact terms of the order.

146 The state of preparation of each proceeding is a potential consideration. The affidavit material described above demonstrates that the Impiombato proceeding is the most advanced in terms of preparation. A considerable amount of work has been undertaken by the solicitors, including retaining a significant number of experts. While some work has been done in the Klemweb proceeding, it does not appear to be as far advanced. LACERA has not filed material concerning its state of preparation, apparently on the basis that it does not wish to disclose such matters to the respondent. (I note that in respect of other issues, material has been filed on a confidential basis.) Given the early stage of the proceeding, it is unlikely to matter very much whether one proceeding is more or less advanced in its preparation. Nevertheless, the work that has been undertaken by Phi Finney McDonald, as described in detail in the affidavit material, does give me confidence in the quality of the legal representation of the applicant and group members.

147 Submissions were made regarding the arrangements for and the capability to provide security for costs. I do not consider this to provide a basis to differentiate between the proceedings. The evidence suggests that in each proceeding there would be an ability to provide security for costs.

148 The applicants in each proceeding provided (confidential) estimates of the legal costs to take the matter to trial. Although there are differences between the estimates, I do not consider this to provide a basis to differentiate between the proceedings. The estimates are not binding and the ultimate figure may well differ significantly from the estimate.

149 In relation to the Impiombato proceeding, a steering committee is to be established to provide a mechanism for consultation with group members. This would appear to be a sensible proposal. Likewise, a litigation committee is proposed in relation to the Klemweb proceeding. Conversely, LACERA emphasises its experience as an investor and suggests that a steering committee is not necessary, as it would be providing instructions to its lawyers.

150 In light of the matters discussed above, and putting to one side the difference in the relevant periods in each proceeding, in my view the Impiombato proceeding is the most appropriate proceeding to go forward as the open class proceeding. In particular, I consider the funding arrangement for that proceeding to best serve the interests of group members. The other factors that have been discussed are either neutral or favour the Impiombato proceeding. The Klemweb proceeding's relevant period is wholly subsumed within the Impiombato relevant period. Therefore, this does not provide a reason not to choose the Impiombato proceeding as the open class proceeding. However, the relevant period in the LACERA period is longer than the relevant period in the Impiombato proceeding. The LACERA proceeding covers the period 8 August 2012 to 9 November 2015, compared with the Impiombato proceeding's period of 21 October 2013 to 9 November 2015. This raises a question whether the LACERA proceeding should, essentially for this reason, be chosen as the open class proceeding.

151 While the statement of claim in the LACERA proceeding (which was prepared by counsel and has been certified by a solicitor) indicates a basis upon which to contend for the longer period, the affidavit material filed by Johnson Winter & Slattery does not describe any investigations or preparation that led to the adoption of the longer period. In the circumstances, it is not possible for the Court to assess at this stage whether there is substantive merit in the additional period covered by the LACERA proceeding. While the longer claim period is a factor weighing in favour of the LACERA proceeding, on balance I am not inclined to depart from my view that the Impiombato proceeding is the most appropriate proceeding to go forward as the open class proceeding. Rather, I consider it preferable to give the applicant in the Impiombato proceeding a period of time in which to investigate and consider potential claims in relation to the additional period covered by the LACERA proceeding (ie, the period from 8 August 2012 to 20 October 2013) and to temporarily stay the LACERA proceeding for a period of time while this occurs. If, after a period of investigation and consideration, the applicant in the Impiombato proceeding seeks leave to amend his statement of claim to include claims relating to the additional period, and such leave is granted, it is likely that I would then permanently stay the LACERA proceeding. If, after a period of investigation and consideration, the applicant in the Impiombato proceeding does not wish to amend, this may have a bearing on whether the LACERA proceeding should be permanently stayed or some other course adopted. Accordingly, I do not consider the fact that the LACERA proceeding has a longer relevant period to provide a sufficient reason in the circumstances of this case to depart from my view that the Impiombato proceeding is the most appropriate open class proceeding.

152 Having regard to the matters discussed above, in my view the Impiombato proceeding is the most appropriate proceeding to go forward as the open class proceeding.

153 I turn now to consider the orders that should be made in relation to the other two proceedings. It is unnecessary to consider the alternatives put forward by Klemweb as set out at [126] above as these are predicated upon the Klemweb proceeding going forward as the open class proceeding.

154 As noted above, in its supplementary submissions following the GetSwift judgment, Klemweb stated that, as a fall-back position, it would be prepared to advance the proceeding on a closed class basis and would seek the opportunity to put on evidence as to the viability of this option should it be necessary to do so. I am not inclined to permit further evidence to be adduced. The Multiplicity Question was set down for hearing on 29 October 2018 and timetabling orders were made for the filing and service of evidence in relation to that question. If Klemweb had wanted to file evidence on this point, it should have been filed in accordance with that timetable. Nevertheless, I will proceed on the basis that, if this alternative is being put forward by Klemweb and Maurice Blackburn, it is a viable alternative.

155 In the circumstances of this case, I do not consider it appropriate for the Klemweb proceeding to proceed on a closed class basis alongside the Impiombato proceeding. The claims of the group members in the Klemweb proceeding are (subject to opting out) covered by the Impiombato proceeding. To have both proceedings continue side-by-side would be likely to result in considerable duplication in legal work and thus increase the overall costs of the proceeding. While this would benefit the lawyers, it is unlikely to benefit the group members. Additional legal costs are likely to deplete any amount that is recovered by way of settlement or judgment. Further, having both proceedings continue side-by-side is likely to make the conduct of the proceedings less efficient than would otherwise be the case.

156 I note that in Bellamy's an option along the lines proposed by Klemweb was adopted. However, as the Full Court in GetSwift emphasised, each case turns on its own facts and circumstances and determining how the proceedings should be constituted commonly involves weighing up what may be incommensurable and sometimes conflicting considerations. In GetSwift, the Full Court held that no error had been shown in the primary judge's exercise of discretion (which was to stay two of the three proceedings). The Full Court also stated that, had error been shown, and the Full Court been called upon to exercise the discretion, it too would have stayed two of the three proceedings: at [163].

157 I am mindful of the fact that a substantial number of group members in the Klemweb proceeding have entered into a retainer with Maurice Blackburn, and that a permanent stay of the Klemweb proceeding would cut across those contractual arrangements. The retainer signed by those group members provides for the proceeding to be conducted on a no-win / no-fee basis, which is likely to be less expensive than the funding arrangement in the Impiombato proceeding. While the Court must be cautious about cutting across these contractual arrangements, in my view, the cost and inefficiency of having both the Impiombato proceeding and the Klemweb proceeding go forward side-by-side outweigh that consideration. The advantages in having only one of these proceedings go forward are considerable. I think this course is the preferable one in the interests of group members of both proceedings. Accordingly, I reject the option that the Klemweb proceeding continue on a closed class basis, and will permanently stay that proceeding. I will reserve liberty to apply in case there are any issues arising in relation to the permanent stay. For example, I note that the Klemweb retainer agreement contains a clause to the effect that the claimant instructs Maurice Blackburn to file an opt out notice on the claimant's behalf in the event that the claimant is identified as a class member in a competing class action (clause 4.1(i)). If an issue arises in relation to this clause, it could be raised pursuant to the liberty to apply order.

158 In relation to the LACERA proceeding, it is unnecessary to consider whether the proceeding should continue on a closed class basis in circumstances where, apart from LACERA, there are no signed up group members. Further, LACERA did not make a submission that its proceeding should, as an alternative, continue on a closed class basis. (I put to one side whether LACERA may wish to, in effect, convert its proceeding into a proceeding solely on its own behalf. The proceeding is presently constituted as a representative proceeding. LACERA did not indicate that if unsuccessful in relation to the Multiplicity Question it would wish to pursue the proceeding on its own behalf. I will, however, reserve liberty to apply, and it would be open to LACERA to raise this matter.)

159 As indicated above, I consider it appropriate to temporarily stay the LACERA proceeding for a period of time to enable the applicant in the Impiombato proceeding to investigate and consider potential claims based on the additional period. I propose to order that, subject to further order, the LACERA proceeding be stayed until 1 September 2019. This date can be revisited in due course if appropriate. I note that it would be inconsistent with the thrust of these reasons (as well as the approach adopted to date by LACERA) for LACERA (or its lawyers or funders) to undertake a book building exercise while the proceeding is stayed.

Conclusion

160 For the reasons set out above, I will make orders to the following effect:

(a) In the Impiombato proceeding:

(i) The matter be listed for a case management hearing on a date to be fixed.

(ii) The costs of and incidental to the Multiplicity Question be reserved.

(iii) There be liberty to apply.

(b) In the Klemweb proceeding:

(i) The proceeding be permanently stayed.

(ii) Subject to paragraph (iii), there be no order as to costs of the proceeding (including the costs of and incidental to the Multiplicity Question).

(iii) If any party seeks a variation of the costs order in paragraph (ii), the party may give written notice to the Court and the other party by 31 January 2019.

(iv) There be liberty to apply.

(c) In the LACERA proceeding:

(i) Subject to further order, the proceeding be stayed until 1 September 2019.

(ii) The costs of and incidental to the Multiplicity Question be reserved.

(iii) There be liberty to apply.

Associate:

Dated: 18 December 2018