FEDERAL COURT OF AUSTRALIA

Impiombato v BHP Group Limited [2020] FCA 350

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s interlocutory application filed on 27 July 2018 be dismissed.

2.    Subject to paragraph 3, the costs of the respondent’s interlocutory application be reserved.

3.    If either party seeks a different costs order at this stage, that party give notice in writing to the Court and the other party within seven days. Directions will then be made for the determination of the issue of costs on the papers.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    The issue to be considered in these reasons is whether the present proceeding should be stayed pending the determination of criminal proceedings in Brazil relating to the same subject-matter, namely the failure of the Fundão tailings dam in Brazil (the Fundão Dam) in November 2015.

2    The present proceeding (No. VID 649 of 2018) is a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth). The proceeding was commenced on 31 May 2018, with the filing of an originating application and statement of claim. As originally constituted, the sole applicant was Vince Impiombato. The respondent to the proceeding was BHP Billiton Limited, now named BHP Group Limited (BHP Ltd), an Australian public company. Following the judgment of the Full Court in Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group Limited (2019) 369 ALR 583, the proceeding known as Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group Ltd (No. VID 1077 of 2018) was consolidated with the present proceeding. The consolidated proceeding is known as Vince Impiombato, and Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group Ltd and is identified as No. VID 649 of 2018.

3    Since the consolidation of the two proceedings, Mr Impiombato and Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) (the applicants) have filed a consolidated originating application dated 16 August 2019 (the originating application) and a consolidated statement of claim dated 16 August 2019 (the statement of claim). The applicants and the persons they represent (the Group Members) are all persons who or which:

(a)    during the period from 8 August 2012 to the close of trade on 9 November 2015 inclusive (the Relevant Period) entered into a contract to acquire an interest in fully paid up ordinary shares in:

(i)    BHP Ltd on the Australian Securities Exchange (ASX) (the BHP ASX Shares);

(ii)    BHP Group Plc, formerly named BHP Billiton Plc (BHP Plc), a company registered in England and Wales, on the London Stock Exchange (LSE) (the BHP LSE Shares); and/or

(iii)    BHP Plc on the Johannesburg Stock Exchange (JSE) (the BHP JSE Shares);

(b)    do not fall within certain exclusions or exceptions (which need not be set out); and

(c)    are alleged to have suffered loss or damage by, or which resulted from, the conduct of BHP Ltd as pleaded in the statement of claim.

4    BHP Ltd and BHP Plc (collectively, BHP) have a dual listed company structure pursuant to which they operate as if they were a single unified economic entity.

5    At all material times BHP, through a wholly-owned subsidiary BHP Billiton Brasil Ltda (BHP Brasil), a company registered in Brazil, held a 50% interest in Samarco Mineração SA (Samarco), a company registered in Brazil. The other 50% of the shares in Samarco was held by Vale SA (Vale), a company registered in Brazil. At all material times, Samarco owned and operated the Germano complex in the state of Minas Gervais, Brazil, comprising an iron ore mine, several concentrators and the Fundão Dam (the Germano Complex). At all material times, Samarco had a board of directors that was comprised of representatives appointed by Vale and BHP Brasil respectively.

6    At around 3.30 pm on 5 November 2015 in Brazil (around 4.30 am AEST on 6 November 2015 in Australia), the Fundão Dam failed, releasing a significant volume of tailings, and resulting in loss of life and other consequences. It is alleged in the statement of claim that these included: the shutdown of the Germano Complex; BHP’s future iron ore production capabilities being revised downwards; BHP’s iron ore cash flow and/or earnings generated by Samarco mining operations being lost or significantly reduced for a substantial period of time; and BHP being exposed to substantial remediation costs and significant reputational damage. On 6 November 2015, BHP Ltd made an announcement on the ASX that there had been a serious incident at Samarco. On 9 November 2015, BHP Ltd made a further announcement, referring to the failure of the Fundão Dam and some of the consequences of that failure. Following those announcements, the price of the BHP ASX Shares, the BHP LSE Shares and the BHP JSE Shares declined significantly.

7    In broad terms, the applicants allege that in the period August 2012 to November 2015 BHP Ltd was aware of certain information and risks relating to the Fundão Dam, and was obliged by Rule 3.1 of the ASX Listing Rules and s 674(2) of the Corporations Act 2001 (Cth) to immediately inform the ASX of that information and those risks. It is alleged that BHP Ltd did not inform the ASX of those matters at any time prior to 9 November 2015, and thereby contravened Rule 3.1 of the ASX Listing Rules and s 674(2) of the Corporations Act. The applicants also allege that BHP Ltd engaged in conduct that was misleading or deceptive in contravention of s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and s 1041H(1) of the Corporations Act by making certain alleged representations concerning the safety of its people, and the safety and sustainability of the environment and the communities in which BHP, and its subsidiaries, carried on business.

8    In October 2016, criminal proceedings were commenced in Brazil against Samarco, BHP Brasil and certain individuals in relation to the failure of the Fundão Dam. The individual defendants to those proceedings include representatives of BHP Brasil on the Samarco board and on certain technical committees and sub-committees advising the Samarco board. The charges against all of the relevant individual defendants have been dismissed, but (in all but one case) the decisions to dismiss the charges are the subject of appeal by the prosecution.

9    In addition, civil proceedings have been commenced in Brazil, the United States of America and the United Kingdom in relation to the Fundão Dam failure. In particular, in February 2016 a complaint was filed in the United States District Court for the Southern District of New York on behalf of Jackson County Employees’ Retirement System and a putative class of purchasers of American Depositary Receipts (ADRs) of BHP Ltd and of BHP Plc between 25 September 2014 and 30 November 2015 alleging claims under the Securities Exchange Act of 1934 and US Securities & Exchange Commission Rule 10b-5 against BHP Ltd, BHP Plc and certain officers of those companies (the ADR Action). In March and April 2016, similar complaints were filed by other plaintiffs. Subsequently, the complaints were consolidated, and a consolidated complaint (the Complaint) was filed. In October 2017, BHP Ltd and BHP Plc filed an Answer to the Complaint. In 2018, BHP Ltd and BHP Plc made discovery in the ADR Action. The ADR Action was settled in principle at a mediation in August 2018.

10    By interlocutory application filed on 27 July 2018, BHP Ltd seeks an order that the present proceeding be stayed until further order. In essence, BHP Ltd submits that it would suffer clear prejudice if the application is refused and it is required to defend the proceeding in light of the criminal proceedings in Brazil. BHP Ltd submits that the applicants can point to no equivalent prejudice in the event that a stay is granted, and that the interests of justice require that the proceeding be stayed until further order.

11    For the reasons that follow, in my view the application should be dismissed. In summary, while the matters raised by BHP Ltd have some force as regards the trial of the proceeding, and may also have some force regarding certain of the interlocutory steps, I am not persuaded that the interests of justice require a stay of all interlocutory steps. In my view, the preferable approach in the circumstances of this case is to consider, in the course of managing the proceeding, whether particular interlocutory steps should be ordered, and the appropriate form of any such orders, having regard to the matters raised by BHP Ltd in connection with this application.

BHP Ltd’s application for a stay

12    In support of its application for a stay of the proceeding, BHP Ltd relies on a large number of affidavits and one expert report. BHP Ltd relies on the following affidavits:

(a)    affidavits of Alberto Zacharias Toron, a partner of the law firm Toron, Torihara e Szafir Advogados, the solicitors for BHP Brasil in the Brazilian criminal proceedings, dated 18 September 2018, 17 April 2019, 30 May 2019, 4 October 2019 and 22 November 2019;

(b)    affidavits of Laurence Urgenson, a partner of the law firm Mayer Brown LLP, the attorney for several of the non-Brazilian individual defendants to the Brazilian criminal proceedings, dated 18 September 2018, 15 April 2019, 7 October 2019 and 18 February 2020 (the last of these affidavits was filed with leave after the hearing of the stay application);

(c)    affidavits of Flávia Rahal Bresser Pereira (Ms Rahal), a partner of the law firm Rahal Carnelós Vargas do Amaral Advogados, the attorney for several of the Brazilian individual defendants to the Brazilian criminal proceedings, dated 18 September 2018, 17 April 2019 and 9 October 2019;

(d)    affidavits of Anna Sutherland, a partner of Herbert Smith Freehills, the solicitors for BHP Ltd, dated 20 September 2018 and 15 October 2019;

(e)    an affidavit of Christine Yun Tran, a senior associate at Herbert Smith Freehills, dated 19 October 2018;

(f)    affidavits of Pedro Oliveira da Costa, a partner of the law firm Barbosa, Müssnich, Aragão Advogados, the lawyers for BHP Brasil in respect of certain commercial claims in Brazil arising out of the Fundão Dam failure, dated 19 September 2018, 16 April 2019, 27 May 2019 and 4 October 2019;

(g)    an affidavit of André Vivan de Souza, a partner of the law firm Pinheiro Neto Advogados, who is acting for BHP Brasil in respect of certain civil collective lawsuits in Brazil relating to the Fundão Dam failure, dated 17 September 2018;

(h)    affidavits of Alexandre Outeda Jorge, a partner of the law firm Pinheiro Neto Advogados, who is acting for BHP Brasil in respect of certain small claims in Brazil in relation to the Fundão Dam failure, dated 17 September 2018 and 21 November 2018;

(i)    affidavits of Brendan Peter Cullen, a partner of the law firm Sullivan & Cromwell LLP, the firm that acted for BHP Ltd and BHP Plc in the ADR Action, and that is acting for BHP Ltd, BHP Plc and BHP Brasil in an action captioned Banco Safra, S.A. – Cayman Islands Branch v Samarco Mineração S.A. et al, Civil Action No. 1-16-cv-08800-RMB in the United States District Court for the Southern District of New York (the Bondholder Action), dated 17 September 2018, 11 April 2019, 23 May 2019 and 4 October 2019; and

(j)    affidavits of Efstathios Michael, a partner of the law firm Slaughter and May, the solicitors for BHP Plc, BHP Ltd and certain other defendants in relation to claims issued in the English High Court of Justice arising out of the Fundão Dam failure, dated 15 April 2019, 30 May 2019 and 4 October 2019.

13    In addition, BHP Ltd relies on an expert report of Professor Geraldo Prado, an Associate Professor at the Federal University of Rio de Janeiro, dated 19 September 2018. This report relates to the legal concept and the scope of the “right to silence” and the “guarantee against self-incrimination” in Brazilian criminal proceedings.

14    In response, the applicants rely on several affidavits and an expert report. The affidavits relied on by the applicants are as follows:

(a)    an affidavit of Gustavo de Alvarenga Batista, a partner of the law firm Alvarenga & Gomes Advogados, which has been retained by Phi Finney McDonald, one of the law firms acting for the applicants, to provide assistance in relation to the present proceeding, dated 10 October 2018;

(b)    an affidavit of Timothy Michael Luke Finney, a Director and Principal of Phi Finney McDonald, dated 11 October 2018; and

(c)    affidavits of Brett Spiegel, a Principal of Phi Finney McDonald, dated 6 March 2019, 10 May 2019, 22 October 2019 and 8 November 2019.

15    The applicants also rely on an expert report of Dr Pierpaolo Cruz Bottini filed on 22 October 2019. The report relates to limitation periods in relation to Brazilian criminal proceedings.

16    There was no cross-examination.

Background facts

17    In addition to the facts set out above, the following background facts and matters are relevant to the stay application.

BHP

18    BHP is a global resources company with four business units: Petroleum and Potash; Copper; Coal; and Iron Ore. At the relevant times, BHP’s iron ore unit consisted of interests in mines in Western Australia and its indirect shareholding (through BHP Brasil) in Samarco.

Samarco

19    Samarco is a Brazilian company headquartered in Belo Horizonte, with substantial assets in Minas Gerais and Espírito Santo. At the relevant times, Samarco’s board of directors comprised four active and four alternate directors, with two of each appointed by each of Vale and BHP Brasil.

The present proceeding

20    Some of the procedural background to the present proceeding has been set out above. In the following paragraphs I will summarise the key allegations in the statement of claim.

21    It is alleged, at [7] of the statement of claim, that at all material times, BHP Ltd was obliged by s 111AP(1) and/or s 674(2) of the Corporations Act and/or Rule 3.1 of the ASX Listing Rules, once it became aware of any information concerning BHP Ltd that a reasonable person would expect to have a material effect on the price or value of BHP ASX Shares, to tell the ASX that information immediately, unless any of the exceptions in Rule 3.1A of the ASX Listing Rules applied. It is also alleged that:

(a)    from the start of the relevant period until 30 April 2013, pursuant to Rule 19.12 of the ASX Listing Rules, BHP Ltd was taken to become aware of information if a director or executive officer of BHP Ltd had, or ought reasonably to have, come into the possession of the information in the course of the performance of their duties as a director or executive officer of BHP Ltd; and

(b)    from 1 May 2013 to the end of the relevant period, pursuant to Rule 19.12 of the ASX Listing Rules, BHP Ltd was taken to become aware of information if, and as soon as, an officer of BHP Ltd had, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as an officer of BHP Ltd.

22    At [11]-[16], it is alleged that each of the following individuals was an executive officer or an officer of BHP Ltd: Marcus Randolph, Ian Ashby, Jimmy Wilson, Jeffrey Zweig, Margaret Beck, and Sérgio Consoli Fernandes. It is alleged, at [18], that by reason of the preceding paragraphs, any information of which those persons became aware or which ought reasonably to have come into their possession, including in the course of carrying out their duties, was information of which BHP Ltd was aware within the meaning of Rules 3.1 and 19.12 of the ASX Listing Rules.

23    It is alleged in [26] of the statement of claim that Samarco’s board of directors included the following individuals at various relevant times:

(a)    Mr Randolph, as a serving member of the board at all material times until about May 2013, including as Chairman between about 2009 and May 2013;

(b)    Mr Ashby, as a serving member of the board at all material times until about 2012;

(c)    Mr Wilson, as a serving member of the board at all material times from about 2012, including as Chairman of the board during 2014 and Vice (or Deputy) Chairman of the board during the latter half of 2013 and during 2015;

(d)    Mr Zweig, as an alternate member of the board from about 2011 or 2012 until 2013 and as a serving member of the board from about 2013 until about late 2014;

(e)    Ms Beck, as an alternate member of the board in or about 2014; and

(f)    Mr Fernandes, as an alternate member of the board from at least about 2012.

It appears to be alleged that these individuals were representatives of BHP. It may be that they were representatives of BHP Brasil rather than BHP. For present purposes, nothing turns on whether they were representatives of BHP or BHP Brasil.

24    It is alleged in [29] of the statement of claim that from at least 2011, BHP was represented on Samarco’s Operations Committee by Guilherme Campos Ferreira.

25    Further, it is alleged in [30] of the statement of claim that, from at least December 2013, BHP was represented on the following Samarco committees:

(a)    on the Operations Committee by Mr Fernandes;

(b)    on the F&S Committee by Mr Fernandes and Andre Cardoso;

(c)    on the P4P Project Committee by Mr Fernandes and Mr Ferreira (until the committee was disbanded in 2014); and

(d)    on the Remuneration Committee by Mr Wilson.

26    In many of the affidavits filed by BHP Ltd in connection with the stay application, the expression “Named Individuals” is used to refer to the following seven individuals, who are named in the statement of claim: Mr Randolph, Mr Wilson, Mr Zweig, Ms Beck, Mr Fernandes, Mr Ferreira and Mr Cardoso. I will use the expression in the same sense in these reasons. Although Mr Ashby is also named in the statement of claim, he is not included within the expression “Named Individuals”, reflecting the fact that he is not one of the defendants to the Brazilian criminal proceedings.

27    The statement of claim sets out, at [31]-[39], allegations regarding the design, location and construction of the Fundão Dam, making reference to the original design having been created by Joaquim Pimenta de Ávila (Mr Pimenta).

28    The statement of claim then sets out, under a series of sub-headings, allegations concerning problems with the Fundão Dam in various periods between August 2012 and November 2015. The statement of claim uses the following expressions to define the information concerning the problems with the Fundão Dam in the various periods:

(a)    the August 2012 Information;

(b)    the September 2012 Information;

(c)    the Pre-August 2014 Information; and

(d)    the Post-August 2014 Information.

29    The statement of claim also contains allegations concerning the likely consequences of a failure of the Fundão Dam, defined as the “General Consequential Risks”. Certain alleged, more specific consequences are defined as the “BHP Consequential Risks”.

30    It is alleged, at [46], that at all material times from at least 2012 onwards, BHP’s representatives on Samarco’s board of directors: regularly attended meetings of Samarco’s board of directors; and, by reason of their position as members or alternative members of Samarco’s board of directors, read or ought to have read the minutes of any meetings which they did not attend. It is alleged, at [47], that between 2009 and 2015, matters relating to the August 2012 Information, the September 2012 Information, the Pre-August 2014 Information, the Post-August 2014 Information and the General Consequential Risks were discussed at meetings of Samarco’s board of directors and at meetings of various Samarco committees, which committees reported to Samarco’s board of directors.

31    It is alleged, at [48], that BHP was aware (within the meaning of Rule 19.12 of the ASX Listing Rules):

(a)    by no later than 8 August 2012, of the August 2012 Information;

(b)    by no later than 30 September 2012, of the September 2012 Information;

(c)    in the period from 30 September 2012 until around 27 August 2014, of the Pre-August 2014 Information;

(d)    at all material times from around 27 August 2014 until 5 October 2015 (Brazilian time), of the Post-August 2014 Information; and

(e)    at all material times, of the General Consequential Risks and the BHP Consequential Risks.

32    In the particulars to that paragraph it is alleged that one or more of the executive officers or officers of BHP had, or ought reasonably to have, come into possession of each of the above items of information in the course of the performance of their duties as a director or executive officer of BHP, having regard to various matters. It may be accepted that, by reason of these pleadings, the knowledge of the Named Individuals is raised as an issue by the statement of claim.

33    It is alleged, at [49], that by reason of these matters, BHP Ltd was aware, for the purposes of Rule 3.1 of the ASX Listing Rules and s 674(2) of the Corporations Act, of the information and risks referred to above, at the respective times set out above. It is alleged, at [50]-[53], that BHP Ltd failed to make continuous disclosure of the relevant information and thus contravened s 674(2) of the Corporations Act.

34    The next section of the statement of claim contains allegations based on the misleading or deceptive conduct provisions of the ASIC Act and the Corporations Act. On the basis of statements contained in BHP’s annual reports for the 2011, 2012, 2013, 2014 and 2015 financial years, it is alleged at [59] that BHP represented, from and throughout the Relevant Period, that:

(a)    the primary consideration in every aspect of BHP’s business was the safety of its people and the safety and sustainability of the environment and the communities in which it, and its subsidiaries, carried on business; and

(b)    it had effective systems and processes 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, and its subsidiaries, carried on business, including the Samarco mining operation,

(defined as the “Representations” in the statement of claim).

35    It is alleged, at [62], that by no later than 8 August 2012 and at all times thereafter until the end of the Relevant Period, the Representations were misleading or deceptive or likely to mislead or deceive. By reason of these matters, it is alleged that BHP Ltd contravened s 12DA(1) of the ASIC Act and s 1041H(1) of the Corporations Act.

36    After referring to the failure of the Fundão Dam and the share price impacts, it is alleged that the pleaded contraventions caused loss, and that the applicants and Group Members suffered loss or damage.

37    BHP Ltd has foreshadowed a strike out application in the present proceeding. In a letter from Herbert Smith Freehills to Phi Finney McDonald dated 4 July 2018, in the context of the then pleading in the proceeding, it was stated that BHP Ltd was considering an application to strike out or dismiss the claims of group members who did not acquire shares in BHP Ltd, or any shares on the ASX, during the relevant period. I note that the earlier pleading adopted a similar structure in defining group members as does the current statement of claim (albeit for a different period of time).

38    In his affidavit dated 10 May 2019, Mr Spiegel referred to the health status of Mr Pimenta, who is mentioned in the statement of claim. Mr Spiegel noted that orders had been made in the Brazilian criminal proceedings for the separate listing and video and audio recording of Mr Pimenta’s evidence, apparently due to his health. Mr Spiegel expressed the opinion that, given the nature of the allegations in the then pleading, Mr Impiombato would likely seek to call evidence from Mr Pimenta at the trial of the present proceeding. Mr Spiegel expressed concern that Mr Pimenta’s health may mean that he would be unavailable to give evidence at trial, should there be any significant delay in progressing the matter through the interlocutory stages.

The Brazilian criminal proceedings

39    On 20 October 2016, the Federal prosecutors in the States of Minas Gerais and Espírito Santo (the Prosecutors) filed an indictment in relation to the failure of the Fundão Dam on 5 November 2015 (the Indictment). The Indictment was filed in the First Federal Court of the Judicial Subsection of Ponte Nova (the Ponte Nova Federal Court).

40    The Federal Court of Appeal of the 1st Region (TRF1) has appellate jurisdiction over the Ponte Nova Federal Court in matters of law and fact. In turn, the Superior Court of Justice has appellate jurisdiction over TRF1 in matters of law; and the Supreme Federal Court has appellate jurisdiction over the Superior Court of Justice in matters of law.

41    The Indictment was filed against 26 defendants, including:

(a)    Samarco;

(b)    BHP Brasil;

(c)    Mr Randolph;

(d)    Mr Wilson;

(e)    Mr Zweig;

(f)    Ms Beck;

(g)    Antonio Ottaviano;

(h)    Mr Fernandes;

(i)    Mr Ferreira; and

(j)    Mr Cardoso.

42    Mr Ottaviano was a representative of BHP or BHP Brasil on the Samarco board of directors. For the purposes of the present application, his position is similar to that of the Named Individuals. It is convenient to note at this point that the following individual defendants do not reside in Brazil: Mr Randolph, Mr Wilson, Mr Zweig, Ms Beck and Mr Ottaviano. The following individual defendants reside in Brazil: Mr Fernandes, Mr Ferreira, and Mr Cardoso.

43    In the Brazilian criminal proceedings as commenced, the Named Individuals were charged with:

(a)    alleged criminal offences under the Brazilian Criminal Code:

(i)    Article 121 Section 2 (Subsections I, III, and IV): nineteen counts of intentional homicide;

(ii)    Article 129 Section 1 (Subsections I and III) and Section 7: three counts of serious bodily injury;

(iii)    Article 254: flooding;

(iv)    Article 256: landslide;

(b)    alleged environmental crimes under Brazil’s Environmental Crimes Law:

(i)    Article 29: killing native or migratory animals;

(ii)    Article 33: causing death of water fauna species;

(iii)    Article 38: damaging forest considered as a permanent preservation area;

(iv)    Article 38-A: damaging the primary or secondary vegetation of the ‘Atlantic Forest Biome’;

(v)    Article 40: causing direct damage to ‘Conservation Units’;

(vi)    Article 49: damaging ornamental plants;

(vii)    Article 50: damaging native or planted forests;

(viii)    Article 54: causing pollution; and

(ix)    Article 62: destroying specially protected goods.

44    In the Brazilian criminal proceedings, BHP Brasil has been charged with the alleged environmental crimes under Brazil’s Environmental Crimes Law set out in [43(b)] above. Being a legal entity, it could not be charged with the other crimes in the case, which are only applicable to natural persons.

45    Each of the charges involved allegations concerning the knowledge and omissions of the Named Individuals and BHP Brasil in relation to the Fundão Dam prior to its failure.

46    Broadly, it was alleged by the Prosecutors in the Brazilian criminal proceedings as commenced as follows:

(a)    In relation to the Named Individuals, it was alleged that BHP Brasil appointed directors of Samarco and members of its technical committees and sub-committees were in positions of “guarantor” (this is a legal characterisation under Brazilian law, which makes someone criminally responsible for an omission) by virtue of: (i) statutory duties of care, protection and vigilance; and (ii) the assumption of liability arising from the duty of care outlined in Samarco’s by-laws and internal rules of board committees and sub-committees. The Prosecutors alleged that, knowing the risks, the Named Individuals failed to perform their duty to monitor Samarco’s operations and to assess technical matters related to the operation of the Fundão Dam.

(b)    In relation to BHP Brasil, it was alleged that it was in the position of “guarantor” by virtue of: (i) its statutory duties under the Brazilian corporate law of care, protection and vigilance; (ii) the assumption of responsibility arising from the construction of the Fundão Dam; and (iii) the increasingly serious risk that the Fundão Dam presented over time, of which BHP Brasil and its representatives were aware. The Prosecutors alleged that BHP Brasil directly, and by its appointees to Samarco (including the Named Individuals), perpetrated the alleged criminal conduct by failing to act to avoid the dam failure despite being aware of the heightened risk that such failure would occur.

47    The filing of the Indictment resulted in the commencement of one proceeding against all 26 defendants. However, on 13 November 2017, the first instance Judge ordered that the proceeding be bifurcated such that one proceeding concerned those defendants that resided in Brazil and another proceeding concerned those defendants who resided outside of Brazil. The bifurcation came into effect on 12 July 2018. Accordingly, the defendants to the proceeding against the foreign defendants included Mr Randolph, Mr Wilson, Mr Zweig, Ms Beck and Mr Ottaviano. The defendants to the proceeding against the Brazilian defendants included Samarco, BHP Brasil, Mr Fernandes, Mr Ferreira and Mr Cardoso.

48    In the proceeding against the Brazilian defendants, each of the defendants has filed a defence. In its defence, BHP Brasil denies the charges made against it. BHP Brasil’s defence is directed to matters of law and asserting flaws in the descriptions of the charges made by the Prosecutors. Its defence does not address the knowledge or the omissions of the individual defendants.

49    As detailed in the following paragraphs, a number of habeus corpus applications have been filed by the individual defendants to the Brazilian criminal proceedings. A habeus corpus application is a procedural mechanism that allows early intervention by an appellate court into a first instance criminal case. In addition, a number of applications to dismiss charges have been filed by the individual defendants, and dealt with by the first instance Judge.

50    On 9 October 2018, TRF1 granted a habeus corpus application filed by Mr Cardoso and summarily dismissed the charges of intentional homicide and serious bodily injury against him. This was on the basis that the facts in the Indictment were insufficient to support those changes.

51    The charges that remained against Mr Cardoso were under Articles 254, 256 and 258 of the Brazilian Criminal Code and Articles 29, 33, 38, 38-A, 40, 49, 50, 54 and 62 of Brazil’s Environmental Crimes Law. Those charges involved allegations of omissions and knowledge on the part of Mr Cardoso before the failure of the Fundão Dam. Conviction for those charges could result in a custodial sentence.

52    Further, on 9 October 2018, TRF1 granted a habeus corpus application filed by Jose Carlos Martins, a defendant who was a former Vale representative on the board of Samarco. TRF1 summarily dismissed all of the charges against Mr Martins, in part because Mr Martins left the Samarco board in April 2013, which was before the cause of the failure of the Fundão Dam occurred as alleged in the Indictment. Subsequently, Helio Cabral, another Vale individual defendant, filed a similar habeus corpus application and this was granted.

53    On 16 November 2018, Mr Fernandes and Mr Ferreira filed an application requesting that the TRF1 decision in respect of Mr Cardoso be extended to their own charges. The Prosecutors indicated that they would consent to this.

54    On 23 April 2019, TRF1 decided to extend its decision in respect of Mr Cardoso to all individual defendants to the Brazilian criminal proceedings, including the foreign individual defendants. The Prosecutors did not appeal that decision. As a result, in respect of all of the individual defendants, the charges of intentional homicide and serious bodily injury have been dismissed.

55    On or about 29 May 2019, BHP Brasil and the other defendants in the proceeding against the Brazilian defendants each filed briefs ratifying their defences, and denying the charges that were made against them, asserting flaws in the descriptions of the charges.

56    On 6 August 2019, TRF1 granted habeus corpus applications filed on behalf of Mr Randolph, Mr Zweig and Ms Beck. TRF1 summarily dismissed all of the charges against them on the basis that the Indictment lacked probable cause because it did not state: (a) the individuals’ assumption of risk; (b) their duty to act (i.e. failing to describe the actions expected from them to avoid the Fundão Dam failure); (c) their alleged omission; and (d) the causal link between their alleged omission and the failure of the Fundão Dam.

57    In respect of Mr Randolph, the Prosecutors filed a brief acknowledging the decision granting his habeus corpus application. The effect was that TRF1’s decision in respect of Mr Randolph became final and unappealable. In respect of Mr Zweig and Ms Beck, on 30 August 2019 the Prosecutors filed appeals against the decisions granting their habeus corpus applications. In his affidavit dated 4 October 2019, Mr Toron estimated that the appeals could take six months to two years to be tried. Mr Urgenson, in his affidavit dated 7 October 2019, estimates that it will take between one and three years for the appeals to be decided.

58    On 5 September 2019, Ms Beck was served with process relating to the Brazilian criminal proceedings. Mr Urgenson’s evidence is that, as the charges against Ms Beck had been dismissed, the service was not effective. The other clients of Mr Urgenson (i.e. Mr Randolph, Mr Wilson, Mr Zweig and Mr Ottaviano) have not been served with process in relation to the Brazilian criminal proceedings.

59    On 20 September 2019, the first instance Judge, having analysed the defendants’ ratification of their preliminary defences, decided to dismiss all the charges against Mr Fernandes, Mr Ferreira and Mr Cardoso (and Vale’s representatives on Samarco’s board of directors, committees and sub-committees). The dismissal was on the basis that TRF1’s decisions granting the habeus corpus applications of Mr Martins, Mr Cabral and Ms Beck should be extended to the individual defendants who were members of Samarco’s board of directors, since the description of the charges against all members of the board was similar and TRF1 had decided that the Indictment lacked probable cause for the reasons indicated above. As to the individual defendants who were members of Samarco’s committees and sub-committees, the Judge stated that, given that TRF1 had decided that Samarco board members could not be held liable as they did not have a duty to act, it followed that members of Samarco’s committees and sub-committees, who held mere advisory roles, did not have a duty to act to avoid the Fundão Dam failure.

60    On 27 September 2019, the Prosecutors appealed the decision to dismiss the charges against Mr Fernandes, Mr Ferreira and Mr Cardoso (and Vale’s representatives on Samarco’s board of directors, committees and sub-committees). In his affidavit dated 4 October 2019, Mr Toron estimated that it would take one to two years for the appeal to be decided.

61    On or about 16 December 2019, the first instance Judge in the Brazilian criminal proceedings granted petitions filed on behalf of Mr Wilson and Mr Ottaviano and dismissed all criminal charges against them. On or about 22 January 2020, the Prosecutors filed an appeal in TRF1 against that decision. Mr Urgenson, in his affidavit dated 18 February 2020, states that it may take between one and two years for the appeal to be decided.

62    Thus, as matters stand: the charges against all of the relevant individual defendants to the Brazilian criminal proceedings have been dismissed; in respect of each of those defendants other than Mr Randolph, the decision to dismiss the charges is subject to appeal; and the Brazilian criminal proceedings against BHP Brasil remain on foot. The charges against BHP Brasil involve allegations concerning the knowledge and omissions of BHP Brasil in relation to the Fundão Dam prior to its failure. Further, I will proceed on the basis that, if the charges against the relevant individuals are reinstated on appeal, they will involve allegations concerning the knowledge and omissions of those individuals in relation to the Fundão Dam prior to its failure.

63    The Brazilian criminal proceedings have attracted significant media interest in Brazil, as described in Mr Toron’s affidavit dated 18 September 2018 at [42]-[43].

64    The use of foreign material in Brazilian criminal proceedings is described in Mr Toron’s affidavit dated 18 September 2018 at [44]-[48].

65    The right to silence and the privilege against self-incrimination apply in Brazilian criminal proceedings as described in Professor Prado’s report, particularly at [37], [49], [61], [69] and [83].

Potential prejudice to BHP Brasil

66    Mr Toron provides evidence of the potential prejudice to BHP Brasil as a defendant to the Brazilian criminal proceedings if the present proceeding is not stayed. At [53]-[54] of his affidavit dated 18 September 2018, he stated:

53.    As the lawyer with conduct of BHP Brasil’s defence of the Brazilian criminal proceedings, I am concerned that it would be prejudicial to BHP Brasil’s defence in the Brazilian criminal proceedings if, before the Brazilian criminal proceedings are heard and determined:

(a)    the conduct of the Australian proceedings revealed information or material that was not known at that time to the Brazilian Courts, the Prosecutors, any jury and/or the media;

(b)    a defence was presented in the Australian proceedings that was inconsistent with the defence ultimately presented on behalf of BHP Brasil in the Brazilian criminal proceedings, and that inconsistency came to the attention of the Brazilian Courts, the Prosecutors, any jury and/or the media; or

(c)    findings or determinations were made in the Australian proceedings on issues of fact or liability that relate to issues in the Brazilian criminal proceedings, such as the knowledge of BHP Brasil or (some of) the Named Individuals about risks relating to the Fundão dam, and these findings or determinations became known to the Brazilian Courts, the Prosecutors, any jury and/or the media.

54.    I am also concerned that the Brazilian Courts, the Prosecutors and any jury will become aware of any developments, documents, testimony and/or findings or determinations in the Australian proceedings through the media in Brazil or the internet. That information could then be used against BHP Brasil and the Named Individuals in the Brazilian criminal proceedings.

The position of the Named Individuals

67    In Mr Urgenson’s affidavit dated 18 September 2018, he stated at [13] that each of his clients (namely, Mr Randolph, Mr Wilson, Mr Zweig, Ms Beck and Mr Ottaviano) had instructed him that, were it not for the existence of the Brazilian criminal proceedings, he or she would be willing to testify on behalf of BHP Ltd in the Australian civil actions (referring to the present proceeding as originally commenced and the proceeding commenced by Klemweb Nominees Pty Ltd) and would be willing to provide factual instructions to BHP Ltd for defence purposes. Further, Mr Urgenson stated at [14] of his affidavit:

Each of my Clients has instructed me that he or she is unwilling to testify on behalf of BHP (or to provide factual instructions to BHP for defense purposes in respect of the allegations in the Australian Civil Actions relating to my Clients), until the Brazilian Criminal Matter is finally resolved. I consider the position adopted by my Clients to be prudent, for the following reasons:

(a)    I am informed by Mr Daniel Castilho, an attorney-at-law and partner of Zanoide de Moraes, Peresi, Braun & Castilho Advogados Associados, and verily believe, that Brazil’s Constitution provides individuals both with a right against self-incrimination and a right to silence. Brazil Constitution, Article 5, LXXVIII and Pact of San Jose, Article 8, 2, g + ICCPR, 14, 3, g (Right to non self-incrimination) and Brazil Constitution, Article 5, LXIII (Right to silence). The right against self-incrimination permits individuals to refuse to produce documents or provide testimony that might incriminate them. The right to silence allows for the defendant to choose whether or not to testify, what to testify and to give answers that are either truthful or not. Because of the direct overlap between the allegations that are the subject of the Brazilian Criminal Matter and the Australian Civil Actions, testifying in the Australian Civil Actions would undermine these rights for my Clients in the Brazilian Criminal Matter.

(b)    Testimony by my Clients would provide one-sided discovery and a roadmap or insight to the MPF in respect of the matters that are the subject of the criminal charges against my Clients, because of the direct overlap between the allegations that are the subject of the Brazilian Criminal Matter and the Australian Civil Actions. I am informed by Mr Castilho, and verily believe, that under Brazilian law, discovery by an accused in criminal cases is subject to their right to silence. Testimony from my Clients in the Australian Civil Actions would have the potential to provide a roadmap or insight to the MPF of my Clients’ defense in the Brazilian Criminal Matter. Further, as testimony from my Clients in the Australian Civil Actions would likely include information not otherwise discoverable in Brazil, it would effectively circumvent the discovery limitations embodied in the Brazilian legal process.

(c)    If BHP is required to plead a fulsome response to the plaintiffs’ Statements of Claim in the Australian Civil Actions, assistance by my Clients by providing instructions on the facts for BHP’s defense in the Australian Civil Actions may provide a roadmap or insight to the MPF in respect of the matters that are the subject of the criminal charges against my clients (which it otherwise would not have), because of the direct overlap between the allegations that are the subject of the Brazilian Criminal Matter and the Australian Civil Actions.

68    In his subsequent affidavits, Mr Urgenson described further developments in the Brazilian criminal proceedings relevant to his clients. He confirmed in each affidavit that, notwithstanding those developments, his instructions remained essentially the same: see Mr Urgenson’s affidavit dated 15 April 2019 at [10]; Mr Urgenson’s affidavit dated 7 October 2019 at [19]-[23]; and Mr Urgenson’s affidavit dated 18 February 2020 at [7]-[8]. In particular, in his affidavit dated 7 October 2019, Mr Urgenson stated at [19]-[23]:

19.    I refer to paragraphs 13 to 14 of my First Affidavit and paragraph 10 of my Second Affidavit.

20.    I refer to paragraph 10 of my Second Affidavit. My instructions from Ms Beck and Mr Zweig remain the same. While charges are currently dismissed against Ms Beck and Mr Zweig, Federal Prosecutors are appealing that ruling and, if those appeals are successful, they will be reinstated as defendants in the Brazilian Criminal Matter. Because of the direct overlap between the allegations that are the subject of the Brazilian Criminal Matter and the Australian Civil Action, I continue to consider the position adopted by them and their instructions to me to be prudent for the reasons set forth in paragraph 14 of my First Affidavit.

21.    I refer to paragraph 10 of my Second Affidavit. My instructions from Mr Wilson and Mr Ottaviano remain the same. As noted in paragraph 20 above, I continue to consider the position adopted by them and their instructions to be prudent for those same reasons.

22.    My instructions from Mr Randolph remain the same while charges are pending against his former colleagues at BHP Brasil.

23.    Similarly, in the event that the appeal by Federal Prosecutors is unsuccessful, I am also instructed that Mr Zweig and Ms Beck are unwilling to assist BHP in the Australian Civil Action while charges are pending against their current and former colleagues. I am instructed that, were it not for the Brazilian Criminal Matter, Mr Zweig, Ms Beck, and Mr Randolph would be willing to assist BHP in the Australian Civil Action. However, they are concerned that assisting BHP in the Australian Civil Action may reveal the nature of the defense their current and former colleagues who remain defendants in the Brazilian Criminal Matter may choose to assert, identify facts or matters relevant to the defense of these defendants, or reveal the substance of the evidence they may provide in subsequent filings or at trial.

69    In Ms Rahal’s affidavit dated 18 September 2018, she stated at [13] that each of her clients (namely, Mr Fernandes, Mr Ferreira and Mr Cardoso) had instructed her that they are not prepared to serve as witnesses, nor provide instructions, statements or testimonies in legal proceedings that deal with the same subject matter as the Brazilian criminal proceedings, in Brazil or abroad, regarding their account of relevant events or their role, before a verdict is returned in the Brazilian criminal proceedings. Ms Rahal stated at [14]-[16] of her affidavit:

14.    There is a real risk involved in providing assistance in other proceedings where information could be disclosed by my Clients or findings made in relation to them which are prejudicial in the context of the Brazilian Criminal Action and their right to silence. Because documents and evidence from overseas proceedings can be used in Brazilian criminal proceedings, in my opinion, I consider that it is possible that any instructions, statements, or testimonies provided by my Clients in the Australian class actions could be used against them in the Brazilian Criminal Action.

15.    My Clients have instructed me that they are not willing to provide instructions, statements, or testimonies, or to assist BHP by providing BHP with their account of relevant events, in connection with the Australian class actions brought against BHP while they remain defendants in the Brazilian criminal action. Similarly, my Clients have not served as witnesses or provided instructions, statements, or testimonies regarding their account of relevant events in any of the US class actions or Brazilian civil proceedings.

16.    Consequently, my Clients have instructed me that, ordinarily they would be willing to potentially serve as witnesses and assist BHP by providing BHP with their account of relevant events in connection with the VINCE IMPIOMBATO or KLEMWEB NOMINEES class actions (or any similar class action or civil action arising out of the failure of the Fundão tailings dam), as they strongly believe they have not engaged in any wrongdoing. However, they refuse to assist due to the serious risks they are facing in Brazil by virtue of the serious charges in the Brazilian Criminal Action N. 0002725-15.2016.4.01.3822, in course before Ponte Nova/Minas Gerais Federal Court.

70    In her subsequent affidavits, Ms Rahal referred to further developments in the Brazilian criminal proceedings that affected her clients. In each affidavit, she confirmed that, notwithstanding those developments, her instructions remained the same: see Ms Rahal’s affidavit dated 17 April 2019 at [8]-[9]; and Ms Rahal’s affidavit dated 9 October 2019 at [10]. In the latter affidavit, Ms Rahal stated at [10]:

There remains a real risk to my Clients in providing assistance in other proceedings where information could be disclosed by my Clients or findings made in relation to them which are prejudicial in the context of the Brazilian Criminal Action and their right to silence. The trial Judge’s decision denying the indictment to dismiss all charges brought against FERNANDES, FEREIRA and CARDOSO does not change my views on the risks to my Clients or my Clients’ instruction outlined in paragraphs 13-16 of my First Affidavit and paragraphs 8-9 of my Second Affidavit. This is so, as the trial Judge’s decision is not final and my Clients could still face the serious charges explained in paragraphs 8-9 of my Second Affidavit if Federal Prosecutors’ appeal is granted by TRF1.

71    Ms Sutherland has provided evidence about the relevance of the evidence and assistance of the Named Individuals for the purposes of BHP Ltd defending the present proceeding. In her affidavit dated 20 September 2018, Ms Sutherland referred at [21] to the steps usually necessary in preparing a defence. Ms Sutherland referred at [22] to the affidavits of Mr Urgenson and Ms Rahal that had been sworn or affirmed at that time, and outlined the instructions they had received from their clients. Ms Sutherland stated, at [23], that in her experience, although reviewing documentary material relevant to the allegations would be necessary and would provide some factual context to the allegations, recourse to documentary material alone would not be sufficient to permit the preparation of a fully-informed, compliant defence by reference to specific instructions from relevant individuals responsive to allegations of knowledge in the pleading. Ms Sutherland stated at [24]-[26] of that affidavit:

24.    In my opinion and experience, in order properly to prepare such a defence to allegations of the kind asserted by Mr Impiombato and Klemweb, it will be necessary to obtain factual instructions and potentially evidence from the Named Individuals in relation to the matters raised in the respective Statements of Claim.

25.    I refer to the matters set out in paragraph 22 above. Based on my experience, in the absence of access to the Named Individuals who are the subject of the Brazilian criminal proceedings to assist with the provision of information for the defence and potentially to give evidence, the Respondent will be constrained in its ability properly to defend the Proceedings in accordance with the Federal Court Rules.

26.    I also refer to paragraph 14(b) of Mr Urgenson’s affidavit and to paragraphs 44-48 and 52-54 of Mr Toron’s affidavit, which refer to the potential for documents or information disclosed in these Proceedings to be made available for use by the prosecutor in the Brazilian criminal proceedings. In my opinion, to the extent the Respondent has information relevant to the allegations made in these Proceedings which may be disclosed in its Defence or in the presentation of its case at trial, or in the pleading or evidence of the Applicants following discovery by the Respondent, the disclosure of such information has the potential to prejudice the defences of the Named Individuals and BHP Brasil to the criminal charges in Brazil if it would disclose information otherwise not known or available to the prosecutors. That prejudice could be acute if inconsistencies arose between the defence pleaded by the Respondent in these Proceedings, based on such information, and the defences ultimately presented on behalf of the Named Individuals and BHP Brasil in the criminal proceedings in Brazil.

72    In her affidavit dated 15 October 2019, Ms Sutherland referred to the consolidation of the proceeding. She stated that the factual and legal allegations in the statement of claim are broadly the same as those that were alleged by Mr Impiombato and Klemweb Nominees Pty Ltd in their earlier pleadings, although the claim period has been extended. Ms Sutherland stated at [9]-[10]:

9.    I refer to paragraphs 21 and 23-26 of my First Affidavit, in which I addressed the constraints on the Respondent’s ability to defend these proceedings in the absence of assistance from the Named Individuals who are the subject of the Brazilian criminal proceedings. Given that the allegations made in the CSOC reflect, in substance, the same allegations that were made by the Applicants in the Impiombato and Klemweb Proceedings, the substance of these paragraphs of my First Affidavit apply to the Consolidated Proceeding.

10.    I have read, and refer to, the affidavit of Laurence Urgenson affirmed on 15 April 2019 and 7 October 2019 and the affidavits of Flávia Rahal sworn on 17 April 2019 and 9 October 2019. Mr Urgenson and Ms Rahal confirm that their clients remain unwilling to assist the Respondent in these proceedings at this time. I remain of the view that, in the absence of access to their clients to assist with the provision of information for the purposes of preparing the Respondent’s defence in accordance with the Federal Court Rules, and potentially giving evidence, the Respondent will be constrained in its ability to properly defend these proceedings.

The Brazilian civil proceedings

73    A number of civil proceedings have been commenced in Brazil in relation to the failure of the Fundão Dam. These can be grouped into the following categories:

(a)    high-value private claims for damages filed by legal entities and individuals against Samarco, Vale and BHP Brasil (Commercial Cases);

(b)    civil collective lawsuits; and

(c)    lawsuits filed by individuals with a very broad range of causes of action and claims (Small Claims).

74    The Commercial Cases are described in the affidavits of Mr da Costa. With one exception, the statements of claim in those proceedings did not put in issue any specific act, knowledge or omission of BHP Brasil or the Named Individuals.

75    The exception is a proceeding referred to as the Aliança Case. The defendants to this proceeding are Samarco, Vale, BHP Brasil and the Fundação Renova (the Renova Foundation). The plaintiffs’ primary cause of action is a strict liability allegation. In the alternative, the plaintiff relies on a secondary cause of action that the defendants (other than the Renova Foundation) were negligent in the operation of the Fundão Dam and in relation to the failure of the dam. Mr da Costa stated in his affidavit dated 16 April 2019 that the statement of claim in the proceeding does not allege or set out a proper factual basis for the negligence allegation. Mr da Costa stated that he did not have instructions to file a standalone petition for the suspension for the Aliança Case and indicated that to file such a petition could prejudice BHP Brasil for reasons outlined. Mr da Costa stated in that affidavit that the defence that BHP Brasil was expected to file would not prejudice the Brazilian criminal proceedings because it would not engage with factual questions regarding the conduct and/or knowledge of any of the Named Individuals. Mr da Costa also stated that, based on the statement of claim in the Aliança Case, BHP Brasil would not be required to lead any evidence from the Named Individuals. These matters were confirmed, by reference to subsequent developments, in Mr da Costa’s affidavits dated 27 May 2019 and 4 October 2019.

76    The civil collective lawsuits are described in Mr de Souza’s affidavit. “Collective lawsuits” encompass lawsuits in which the plaintiff seeks to affirm the existence of, or seeks certification, enforcement or protection of, rights owned by a group of individuals or owned by individuals collectively. After the Fundão Dam failure, several collective lawsuits addressing environmental, social, cultural, archaeological and other impacts derived from the accident were filed against Samarco and/or Vale and BHP Brasil. As at the date of Mr de Souza’s affidavit (17 September 2018), there were about 70 collective lawsuits in Brazil against Samarco. Of these, approximately 30 were also filed against BHP Brasil.

77    All of the collective lawsuits assume that any obligation on the part of Samarco or its shareholders to address the impact of the dam failure is based on environmental strict liability, as well as joint and several liability (in respect of Samarco and its shareholders). Thus, the collective lawsuits seek to demonstrate that there is a cause-effect connection between the dam failure and the damages being addressed by the claims. They involve no discussion about, or investigation into, the actions taken or matters known prior to the dam failure or what may have caused the dam failure. Negligence, fault or misconduct are not a part of the allegations in these lawsuits.

78    As a result of the environmental strict liability regime applicable to these collective lawsuits, discussions around negligence, wrongfulness, fault, knowledge, intention and misconduct are irrelevant to the alleged obligations to repair and compensate for dam failure impacts. Thus, the collective lawsuits do not require steps to be taken by, or for BHP Brasil to obtain any assistance from, the Named Individuals.

79    The Small Claims are described in the affidavits of Mr Jorge.

80    Until mid-2016, Mr Jorge’s firm, Pinheiro Neto Advogados, prepared BHP Brasil’s approach to defending the Small Claims, as well as BHP Brasil’s answers to the complaints in the Small Claims. However, due to the high volume of Small Claims, once the approach for answering those claims had been developed by Pinheiro Neto Advogados, BHP Brasil decided to engage Ferreira & Chagas, a more cost-effective law firm, to take forward most of the Small Claims. Pinheiro Neto Advogados continues to provide a second opinion on the transferred Small Claims (where sought) and advises on any new argument, strategic appeal and material petition in relation to those claims.

81    The Small Claims with Ferreira & Chagas fall into a number of categories, as detailed in Mr Jorge’s affidavit dated 17 September 2018 at [10]. In respect of each of these categories of case:

(a)    the Named Individuals are not parties to, nor referred to in, any of the cases;

(b)    the main argument of the answers presented in BHP Brasil’s defence is that BHP Brasil is not a proper defendant; it is contended that the proper defendant is Samarco, not its shareholders; and

(c)    the claims do not require examination of the knowledge or acts of the Named Individuals or BHP Brasil in relation to the Fundão Dam before its failure.

82    In addition to the above, certain Small Claims are still run by Pinheiro Neto Advogados. The categories of such claims are described in Mr Jorge’s affidavit dated 17 September 2018 at [13]. In respect of each of these categories of case:

(a)    the Named Individuals are not party to, nor referred to in, any of the cases;

(b)    except for the Municipality of Mariana cases, the main argument of the answers presented in BHP Brasil’s defence is that BHP Brasil is not a proper defendant; as with the Small Claims transferred to Ferreira & Chagas, it is contended that the proper defendant is Samarco, not its shareholders;

(c)    in the Municipality of Mariana cases, the main argument of the answers is non-observance of procedural conditions for the lawsuits; and

(d)    the claims do not require examination of the knowledge or acts of the Named Individuals or BHP Brasil in relation to the Fundão Dam before its failure.

83    In Mr Jorge’s affidavit dated 21 November 2019, he referred to a decision of the Brazilian Labour Court of the 3rd Region dated 14 October 2019 in a case referred to as the Lopes Case. This was one of the fatal victims (labour) cases referred to in Mr Jorge’s earlier affidavit. Mr Jorge confirmed the statements made in his earlier affidavit.

The United States proceedings

84    Two proceedings in relation to the failure of the Fundão Dam were commenced in the United States: the ADR Action and the Bondholder Action.

The ADR Action

85    On 24 February 2016, the law firm Robbins Geller Rudman & Dowd LLP (Robbins Geller) filed a complaint for violations of the federal securities laws on behalf of Jackson County Employees’ Retirement System and a putative class of all purchasers of ADRs of BHP Ltd and of BHP Plc between 25 September 2014 and 30 November 2015, alleging claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and US Securities & Exchange Commission Rule 10b-5 (the Securities Laws) against: (a) BHP; (b) Jac Nasser, former Chair of BHP’s board of directors; (c) Andrew Mackenzie, BHP’s Chief Executive Officer; (d) Peter Beaven, BHP’s Chief Financial Officer; and (e) Graham Kerr, BHP’s former CFO from November 2011 until 1 October 2014. The claims arose out of allegedly false and misleading statements and omissions pertaining to BHP’s focus on safety and its risk management and monitoring protocols.

86    Subsequently, on 15 March 2016, the law firm Pomerantz LLP (Pomerantz) filed a complaint for violations of the Securities Laws on behalf of Gary Katz, alleging similar claims against the defendants named in the 24 February 2016 complaint. On 25 April 2016, the City of Birmingham Retirement and Relief System and the City of Birmingham Firemen’s and Policemen’s Supplemental Pension System (together, the Funds or the Plaintiffs), and others separately moved to consolidate the pending cases and for the appointment of lead plaintiffs and lead counsel under the Private Securities Litigation Reform Act of 1995 (PSLRA). Thereafter, all but one of the competing lead plaintiff movants withdrew their applications and/or filed non-opposition to the Funds’ motion. On 14 June 2016, the Court entered an order granting the Funds’ motion and appointing them as lead plaintiffs and their counsel, Robbins Geller, as lead counsel.

87    On 15 August 2016, the Funds, together with plaintiff James A Crumpley, a purchaser of the ADRs of BHP Plc represented by Pomerantz, filed the Complaint (that is, a consolidated amended complaint for violations of the Securities Laws). The Complaint alleged claims under the Securities Laws against BHP and Messrs Nasser, Mackenzie, Beaven and Kerr (collectively, the Defendants), on behalf of all purchasers of BHP ADRs between 25 September 2014 (the date BHP filed its 2014 Form 20-F) and 30 November 2015 (the Putative ADR Class Period).

88    The Complaint alleged that the Defendants made 42 misstatements during the Putative ADR Class Period regarding the following: (a) BHP’s commitment to safety, the adequacy of its safety protocols, commitment to compliance with local laws and regulations, and commitment to issuing dividends; (b) BHP’s past safety record and production levels, and the completeness of its Securities and Exchange Commission Forms 20-F; and (c) post-accident, the toxicity of the tailings released from the Fundão Dam.

89    On 28 August 2017, the Court granted in part the Defendants’ motion to dismiss the Complaint, dismissing all but ten of the alleged misstatements. The ten remaining statements are from BHP’s 2014 and 2015 annual reports, and statements by Mr Mackenzie during shareholder meetings, investor presentations and conference calls, relating to BHP’s commitment to safety and the adequacy of its risk-management protocols.

90    The Court dismissed all of the claims against Mr Mackenzie and the other individual defendants for failure to adequately plead scienter (the requisite state of mind) under the Securities Laws and PSLRA, but held that, under the Court’s permissive collective-scienter pleading standards, the Complaint had (in respect of the ten alleged misstatements which remained on foot) adequately pleaded scienter against BHP, which remained the sole defendant. Mr Cullen stated in his 17 September 2018 affidavit that this was based on allegations that the Named Individuals, among others, had received information contradictory to the ten remaining statements prior to those statements being made. Thus, the knowledge of BHP Ltd was in issue in the ADR Action, and the allegations relied on information received by the Named Individuals.

91    On 13 October 2017, BHP filed its Answer to the Complaint. The Answer contained 355 numbered paragraphs responding to each allegation in the Complaint, by either admitting or denying it, or by stating that BHP lacked knowledge or information sufficient to admit or deny it. The admissions that were made in the Answer did not go to the alleged misconduct or knowledge of the Named Individuals or anyone else at BHP. The Answer also included 29 affirmative legal defences, including that neither the Named Individuals nor anyone else at BHP received information contradictory to the alleged misstatements prior to those statements being made. Mr Cullen stated in his 17 September 2018 affidavit that the Answer was not based on any instructions from the Named Individuals.

92    On 12 October 2017, BHP and the Plaintiffs submitted for the Court’s consideration a Joint Rule 26(f) Report, in which they each set forth their respective views, after discussions and negotiations, on the appropriate scope of discovery. On 16 October 2017, the Court issued an order approving the non-disputed portions of the Rule 26(f) Report and resolving the parties’ disputes as to the scope of discovery.

93    On 17 October 2017, the Plaintiffs served their first set of requests for the production of documents, to which BHP responded and objected in writing on 29 November 2017. On 25 October 2017, BHP served its first request for the production of documents, to which the Plaintiffs responded and objected in writing on 4 December 2017.

94    The parties negotiated a Stipulation and (proposed) Order of Confidentiality, which the Court entered on 30 October 2017 (the Confidentiality Order). Under the Confidentiality Order, BHP and the Plaintiffs could designate documents produced in the ADR Action, or any other discovery materials, as “confidential”, if the materials disclosed, for example, personal or business information. BHP designated all documents that it produced in the ADR Action as confidential except for certain documents that were already publicly available. Under the Confidentiality Order, discovery materials marked confidential in the litigation could be shown only to certain persons (such as the named parties to the litigation, counsel, and expert and fact witnesses). The Confidentiality Order also required that any confidential discovery material filed with the Court, or any pleadings, motion or other papers disclosing such material, be filed under seal and thus be made available only to the parties and the Court (and not to the general public). The Confidentiality Order also prohibited the Plaintiffs from sharing any confidential information with third parties or using the information in connection with any other litigation. The Confidentiality Order required that, at the conclusion of the litigation, the Plaintiffs either return to BHP any confidential discovery material produced by BHP or destroy such material.

95    Additionally, because some potentially relevant documents would be subject to the right against self-incrimination under Brazilian law, on 12 January 2018, BHP asked the Plaintiffs to confirm that they would not provide those documents to any Brazilian prosecutors or government authorities. The plaintiffs confirmed that the Confidentiality Order prohibited them from providing those documents to any Brazilian prosecutors or government authorities.

96    Between December 2017 and March 2018, the parties met and conferred regarding Plaintiffs’ document requests. On 16 March 2018, BHP and the Plaintiffs reached an agreement concerning the scope of discovery, including the identities of document custodians and the relevant time period for discovery. The parties agreed that BHP would search the documents of 27 document custodians from within BHP’s corporate records for the period from 1 January 2012 to 31 December 2016 using 69 search terms. The parties further agreed that the documents that hit on one or more search terms would be loaded into a review database, and that BHP would review the documents returned by those searches and produce any non-privileged documents that were responsive to the Plaintiffs’ document requests. Additionally, the parties agreed that BHP would ask BHP Brasil to request 10 categories of documents from Samarco for production in the ADR Action, pursuant to section 16.6 of the Samarco shareholder agreement, which provided certain information rights to BHP Brasil.

97    Ultimately, BHP made 23 productions of documents to the plaintiffs, comprising 55,921 documents. BHP also made two productions of documents produced by Samarco to BHP Brasil (pursuant to the request referred to above), comprising 50,461 documents. These documents were produced in accordance with the Confidentiality Order.

98    As part of its obligation to collect documents held by BHP, a document questionnaire was sent to the Named Individuals (or representatives of the Named Individuals) that asked the Named Individuals to describe their document storage practices as employees of the BHP group of companies. None of the Named Individuals provided BHP with any documents to be produced in the ADR Action; the documents that BHP produced were collected from BHP’s corporate records.

99    In June 2018, the parties agreed to engage in mediation and retained the services of the Honourable Layn Phillips, a retired judge of the US District Court for the Western District of Oklahoma. The parties attended a full-day mediation on 1 August 2018 in New York City. On 6 August 2018, the parties reached an agreement in principle to resolve the ADR Action.

100    At the time of the August mediation, the parties had not yet conducted any fact depositions and BHP had not taken steps to prepare any fact witnesses (including the Named Individuals) for a deposition. BHP was also preparing its opposition to the Plaintiffs’ motion for class certification. Mr Cullen stated in his 17 September 2018 affidavit that BHP did not move for a stay of the ADR Action before the August 2018 mediation was held, in case the parties were able to successfully resolve the matter at the mediation (and in light of the fact that securities-class actions often resolve at mediation).

101    A settlement agreement was signed on 14 September 2018.

102    On 19 September 2018, the Plaintiffs filed a motion for preliminary approval of settlement, seeking an order preliminarily approving the settlement and providing for notice of the settlement to class members.

103    On 31 October 2018, the Court entered an Order preliminarily approving the settlement (the Preliminary Approval Order). Among other requirements, the Preliminary Approval Order required the Plaintiffs to provide notice of the settlement to class members, required any requests for exclusion from the class to be filed by 15 January 2019, required any objections to the settlement to be filed by 15 January 2019, and set a hearing for final approval of the settlement on 5 March 2019 (subsequently rescheduled to 10 April 2019).

104    On 10 April 2019, the parties appeared before the Court for the final approval hearing. On the same day, the Court granted final approval of the settlement and issued a final judgment and order of dismissal with prejudice.

The Bondholder Action

105    On 14 November 2016, the Cayman Islands Branch of Banco Safra SA (Banco Safra) filed the Bondholder Action, which put forward a complaint on behalf of all purchasers of bonds issued by Samarco between 31 October 2012 and 30 November 2015 (the Putative Bondholder Class Period), against Samarco and Ricardo Vescovi de Aragão, Samarco’s former CEO. That complaint alleged that Samarco and Mr Vescovi de Aragão violated the Securities Laws.

106    On 6 March 2017, Banco Safra filed an amended complaint (the Amended Complaint) that expanded its allegations to include as defendants: (a) BHP Brasil and Vale; (b) BHP Ltd and BHP Plc; and (c) several current and former directors and officers of Samarco, including Mr Wilson, Mr Zweig, Ms Beck and Mr Fernandes. The Amended Complaint also included additional claims for fraud, aiding and abetting fraud and negligent misrepresentation under New York state law.

107    Banco Safra alleged that during the Putative Bondholder Class Period, BHP, BHP Brasil, Vale, and Samarco violated the Securities Laws by inflating the value of Samarco’s debt securities by knowingly or recklessly making materially false and misleading statements concerning: (a) Samarco’s projected iron ore production capacity and performance; (b) the corporate defendants’ tailings disposal procedures; (c) the corporate defendants’ cost and capital expenditure reductions; (d) the toxicity of the mudflows released by the failure of the Fundão Dam; (e) the adequacy of the corporate defendants’ safety, risk management and monitoring practices in relation to the Fundão Dam; (f) the corporate defendants’ commitment to health and safety; and (g) the corporate defendants’ compliance with local laws and regulations. The allegations made in the Bondholder Action sought to impute the alleged knowledge of some of the Named Individuals to BHP and BHP Brasil.

108    On 4 April 2017, Banco Safra filed a notice of voluntary dismissal, which dismissed the individual defendants from the Bondholder Action. The corporate defendants were then the only remaining defendants in the Bondholder Action.

109    On 26 June 2017, the corporate defendants filed a motion to dismiss the Amended Complaint. On 7 March 2018, the Court dismissed the Amended Complaint and granted Banco Safra permission to file a second amended complaint.

110    On 21 March 2018, Banco Safra filed a second amended complaint for violations of the Securities Laws (the Second Amended Complaint) against the corporate defendants. The allegations of the Second Amended Complaint were nearly identical to the allegations of the Amended Complaint.

111    On 21 May 2018, the corporate defendants filed a motion to dismiss the Second Amended Complaint.

112    On 18 June 2019, the Court in the Bondholder Action issued a decision and order, granting the defendants’ motion to dismiss, and dismissing the plaintiffs’ operative complaint with prejudice. On 9 July 2019, the plaintiffs in the Bondholder Action filed a motion for reconsideration of the Court’s decision and order (the Motion for Reconsideration), which asked the Court to reconsider and vacate the order, and enter a new order denying the defendants’ motion to dismiss. The parties filed memoranda in relation to that motion. As at the date of Mr Cullen’s latest affidavit (4 October 2019), judgment on the Motion for Reconsideration was reserved and pending before the Court. BHP Ltd’s outline of submissions for the present application states at [88] that on 30 October 2019, the Court denied the Motion for Reconsideration and that any appeal needed to be filed within 30 days of that decision.

The United Kingdom proceedings

113    Three proceedings, involving a large number of claimants, have been commenced in the English High Court of Justice in relation to the failure of the Fundão Dam in November 2015. The claimants are individuals, businesses and other entities who allege that they have suffered personal injury, damage and/or other loss from the collapse of the dam. The claims are all brought under Brazilian law. Although the proceedings were commenced against multiple defendants, it seems that the claims are proceeding against only BHP Plc and BHP Ltd. The Named Individuals are not defendants to the UK proceedings.

114    The claims were issued in the Liverpool District Registry of the English High Court of Justice. BHP Plc filed an application to transfer the claims in the original claim forms to the Technology and Construction Court in London. That application was heard on 17 April 2019, and the Court decided that the claims should continue in the Liverpool District Registry.

115    On 7 and 18 May 2019, the claimants served the master particulars of claim on the defendants. The master particulars of claim set out four heads of claim – all under Brazilian law – against BHP Plc and BHP Ltd. One of these claims is alleged fault based liability under Article 186 of the Brazilian Civil Code. It is alleged, in essence, that the defendants did not take action to address certain issues of which they were allegedly aware. In terms of awareness, the claimants rely upon the attendance of various people – including Mr Randolph, Mr Wilson, Mr Zweig, Ms Beck and Mr Fernandes – at Samarco board or committee meetings.

116    Mr Michael stated in his 30 May 2019 affidavit that, in light of the master particulars of claim, BHP Plc and BHP Ltd would need to consider whether and when it would be appropriate to seek a stay of the UK proceedings pending the resolution of the Brazilian criminal proceedings. He stated that this consideration would be in the context of BHP Plc and BHP Ltd considering other preliminary applications which – depending on their outcome – may make it unnecessary to seek such a stay.

117    By 19 July 2019, the claimants had served schedules of loss in relation to each claimant proceeding with its claim.

118    On 7 August 2019, the Defendants filed an application for an order that the claims against them be struck out or stayed (the Jurisdictional Application) and an application for an extension of time to file evidence in support of the Jurisdictional Application. The Jurisdictional Application is advanced on three grounds:

(a)    first, so far as concerns BHP Ltd, the UK is forum non conveniens;

(b)    secondly, so far as concerns BHP Plc, having regard to the existing proceedings before the Brazilian courts, there is a risk of irreconcilable judgments for the purposes of Article 34 of the Recast Brussels Regulation; and

(c)    thirdly, so far as concerns both defendants, the claims against them are an abuse of process and should be struck out or stayed, alternatively the claims should be stayed on case management grounds, because they are pointless, wasteful and duplicative of matters that have been, are currently, will be and/or should have been the subject of collective and individual proceedings in Brazil and/or Brazilian judgments and/or the work of the Renova Foundation (being the body responsible for administering and implementing reparation and compensation programs in areas and communities affected by the collapse of the Fundão Dam).

119    On 13 September 2019, the Court heard the application for extension of time and made timetabling orders for the Jurisdictional Application. The hearing of the Jurisdictional Application is listed for four days to commence on 9 June 2020.

120    None of the Named Individuals have assisted Slaughter and May in considering the position of the defendants in the Jurisdictional Application or the UK proceedings, and they will not be providing evidence in relation to the Jurisdictional Application.

Applicable principles

121    I recently considered the principles applicable to an application to stay a civil proceeding pending the determination of criminal proceedings relating to the same subject matter in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd (2019) 138 ACSR 42 (ASIC v ANZ) at [50]-[63]. I adopt that summary of the principles and, for ease of reference, set out the substance of that summary in the paragraphs that follow.

122    The Court has a wide jurisdiction to stay proceedings in the interests of justice: Obeid v Commissioner of Taxation [2017] FCA 1135 (Obeid) at [2] per Pagone J (and cases there cited); Websyte Corporation Pty Ltd v Alexander (No 2) [2012] FCA 562 (Websyte) at [53] per Dodds-Streeton J. The Court’s power to grant a stay is an incident of its general power to control its own proceedings for which s 23 of the Federal Court of Australia Act provides statutory support.

123    The appropriate approach in considering whether to grant a stay in the interests of justice has been considered in a number of recent decisions, including by the High Court of Australia in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46 (Zhao) and by the Full Court of this Court in Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission (2016) 242 FCR 153 (CFMEU v ACCC). Recent first instance decisions concerning applications for a stay of a civil proceeding pending a criminal proceeding include: Ransley v Commissioner of Taxation [2016] FCA 778 (Ransley); Obeid; Re Plutus Payroll Australia Pty Ltd [2017] NSWSC 1854 (Re Plutus Payroll); and McLachlan v Browne (No 9) [2019] NSWSC 10 (McLachlan v Browne). Although reference is often made in this context to the guidelines set out by Wootten J in McMahon v Gould (1982) 7 ACLR 202 at 206-207, it is important to recognise that these are merely guidelines. While they may still offer some assistance, the guidelines need to be read in light of the subsequent cases.

124    Based on the authorities identified above, the applicable principles may be summarised as follows.

125    First, courts have the power to control their proceedings and to order a stay in an appropriate case; it will be appropriate to do so where the interests of justice require such an order: Zhao at [36] per French CJ, Hayne, Kiefel, Bell and Keane JJ; CFMEU v ACCC at [22] per Dowsett, Tracey and Bromberg JJ.

126    Secondly, a plaintiff is prima facie entitled to have his, her or its civil action tried in the ordinary course and a stay therefore requires justification on proper grounds (with the applicant for a stay bearing the burden of demonstrating proper grounds): see Zhao at [39]; McMahon v Gould at 206.

127    Thirdly, a court will not grant a stay of a civil proceeding merely because related charges have been brought against an accused and criminal proceedings are pending; a stay of the civil proceeding may be warranted if it is apparent that the accused is at risk of prejudice in the conduct of his, her or its defence in the criminal trial: see Zhao at [35]; CFMEU v ACCC at [22]; see also Corporations Act, s 1331. The risk of prejudice must be real: see CFMEU v ACCC at [22]; Ransley at [22] per Jagot J. As to possible prejudice to an accused, the following have been recognised as relevant factors:

(a)    prejudice to the accused’s right to silence or privilege against self-incrimination: see Zhao at [42]-[47]; CFMEU v ACCC at [23]; Ransley at [24]-[30]; Obeid at [4]; and

(b)    the possibility of publicity that might reach and influence jurors: see CFMEU v ACCC at [44]-[46].

128    It may not be necessary for the applicant for the stay to state the specific matters of prejudice before a stay could be contemplated. As the High Court said in Zhao at [43], “to require the second respondent to do so would be to make the risk of prejudice a reality by requiring him to reveal information about his defence, the very situation which an order for a stay seeks to avoid”.

129    A number of recent decisions have emphasised that the possibility of protective orders being made (such as an order made under s 128 of the Evidence Act 1995 (Cth) or a non-publication or suppression order) is not an adequate protection against the risk of prejudice to the accused: see Zhao at [44]-[46]; CFMEU v ACCC at [24]-[25]; Ransley at [29]-[30]; Re Plutus Payroll at [38] and [42] per Brereton J; Websyte at [121].

130    Fourthly, relevant prejudice to a party in the civil proceeding may arise from the existence of the criminal proceeding even in circumstances where there is not a strict identity between the applicant for the stay of the civil proceeding and the criminal accused: see Ransley at [15]; Obeid at [7]; Re Plutus Payroll at [33], [39], [41]-[43]. There may, for example, be relevant prejudice where the criminal accused, although not a party to the civil proceeding, would be a lay witness in that proceeding. In such circumstances, the criminal accused’s invocation of the privilege against self-incrimination and the right to silence may deprive a party to the civil proceeding of assistance or evidence that is critical or very important to its claim or defence.

131    Fifthly, prejudice to an accused who is not a party to the civil proceeding, or against whom relevant allegations are not made in the civil proceeding, may be a relevant consideration: see CFMEU v ACCC at [28]-[49] (although this argument failed on the facts in that case). There was a difference between the parties to ANZ v ASIC on this point. In oral submissions in that case, ASIC submitted that the focus (in an application for a stay of a civil proceeding pending a criminal proceeding) is on the parties to the civil proceeding and whether the existence of the criminal proceeding gives rise to a risk of prejudice to a party; prejudice to a person who is not a party to the civil proceeding is not a relevant consideration. ASIC did not submit that prejudice to a non-party is completely irrelevant; however, on ASIC’s submission, prejudice to a non-party is only relevant to the extent that it impacts on the party to the civil proceeding in a relevant way. In support of these submissions, ASIC relied on Obeid at [2], [4], [6], [7]; McMahon v Gould at 206 (paragraphs (e) and (h)); Zhao at [19], [35], [37], [42], [48]; Ransley at [10], [15]; and Re Plutus Payroll at [33], [37], [41]-[43].

132    However, as pointed out by ANZ in its reply submissions in ASIC v ANZ, the cases relied upon by ASIC leave open the possibility that prejudice to an accused who is not a party to the civil proceeding may itself be a relevant consideration. In Obeid, Pagone J expressly refrained from deciding the point: at [7] (“Counsel for the applicants had also submitted … that relevant prejudice might also be caused to each of Messrs Obeid in their criminal trial if they were compelled to give evidence in the tax proceedings, but in the circumstances it is unnecessary to express a concluded view about whether that is the correct way to identify the relevant prejudice …”). In Ransley, Jagot J referred, not only to the risk of prejudice to the party to the proceeding, but also to the risk of prejudice to the accused (who was not a party to the civil proceeding): at [20] (“… I do not consider the existence of these powers [to make a non-publication or suppression order, etc.] to outweigh the potential prejudice to which the applicant will be exposed if forced to trial in the appeal without Mr Ransley’s evidence or to which Mr Ransley will be exposed if he is compelled by the applicant to give evidence in the appeal …” (emphasis added)). Indeed, the subsequent paragraphs of the judgment in Ransley focus on the position of the accused (as distinct from the party to the proceeding): see [21]-[30]. In Re Plutus Payroll, Brereton J referred, not only to the risk of prejudice to the party to the civil proceeding, but also to the risk of prejudice to the accused: at [43] (“… it seems to me that to require Synep to defend the winding up proceedings at this stage would require it to do so in circumstances where either it would be deprived of the most important source of evidence that might be adduced in its defence, or Messrs Onley and Cranston would have to forgo their right to silence in the criminal proceedings” (emphasis added)). Thus, in both Ransley and Re Plutus Payroll, the Court gave separate consideration to the risk of prejudice to a criminal accused who was not a party to the civil proceeding. In relation to Zhao, the passages relied on by ASIC reflected the particular circumstances of that case rather than supporting the general principle contended for by ASIC. In relation to McMahon v Gould, as noted above, the guidelines set out by Wootten J are just that: guidelines. Further, in CFMEU v ACCC, the Full Court considered whether there was a risk of prejudice to the individuals who were the subject of criminal charges in circumstances where the application for the stay of the civil proceeding was made by the union in respect of the claims against the union (the claims against the individuals in the civil proceeding having already been stayed): see [28]-[49]. In light of the approach taken by the Full Court in CFMEU v ACCC, and having regard to the other authorities discussed above, I consider that prejudice to an accused who is not a party to a civil proceeding may be a relevant consideration in considering whether or not to grant a stay of a civil proceeding.

133    Sixthly, the risk of prejudice identified by an applicant for a stay must be weighed against the prejudice that a stay of the civil proceeding would occasion: see Zhao at [47], [50]; CFMEU v ACCC at [22].

134    Seventhly, the principles relevant to the exercise of the discretion to grant a stay are not different in the case of a proceeding brought by a regulator, from those that apply in the case of a proceeding brought by a private plaintiff: CFMEU v ACCC at [60]-[62].

135    Eighthly, each case must be judged on its own merits; the matters that might individually, or in combination, be relevant to the exercise of the discretion are not rigid or closed; the factors identified in the authorities are not a prescriptive or an exhaustive statement of all of the considerations, or the weight to be attached to them: see Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union [2016] FCA 504 (ACCC v CFMEU (first instance)) at [51] per Middleton J (application for leave to appeal dismissed: CFMEU v ACCC).

136    In addition to the above paragraphs, which are drawn from ASIC v ANZ, I note that in McMahon v Gould, Wooten J stated at 207 that in an appropriate case, the proceeding may be allowed to proceed to a certain stage, eg setting down for trial, and then stayed (citing Beecee Group Ltd v Barton (1980) 5 ACLR 33). See also National Australia Bank Limited v Human Group Pty Ltd [2019] NSWSC 1404 at [39]. This possibility was referred to, but rejected on the facts, in ASIC v ANZ at [99].

Consideration

137    BHP Ltd contends that the interests of justice require that the present proceeding be stayed until further order. In summary, BHP Ltd points to the following five circumstances:

(a)    First, the knowledge and acts or omissions of various current and former employees is central to both the claims against BHP Ltd in the present proceeding and to BHP Ltd’s defence to those claims.

(b)    Secondly, by reason of the possible reinstatement of charges against them in the Brazilian criminal proceedings, the relevant individuals are not prepared to assist BHP Ltd in its defence of the claims in the present proceeding.

(c)    Thirdly, there is a real risk of prejudice to BHP Ltd’s wholly-owned subsidiary, BHP Brasil, in its defence of the Brazilian criminal proceedings, if this matter proceeds and information is exposed that could compromise its right to silence and its privilege against self-incrimination.

(d)    Fourthly, if the prosecutorial appeals succeed and the criminal charges proceed against the relevant individuals, there is a real risk of prejudice to the individuals from the continuation of the present proceeding.

(e)    Fifthly, no prejudice incapable of mitigation has been identified on behalf of the applicants and Group Members.

138    BHP Ltd submits that ASIC v ANZ is particularly apposite to the present application. In that case, ANZ sought a stay of a civil proceeding against it until the hearing and final determination of separate criminal proceedings against it and Richard Moscati, a senior employee. It was decided that the interests of justice required the civil proceeding to be stayed until the conclusion of the criminal proceedings or further order. BHP Ltd submits that of considerable significance for present purposes is the weight that was placed on the prejudice to ANZ, as the defendant in the civil proceeding, in being forced to conduct its defence of that proceeding without access to important sources of assistance – that is, “with one arm behind its back” (ASIC v ANZ at [71]). BHP Ltd submits that similar considerations militate in favour of the grant of a stay in the present proceeding. In this regard, BHP Ltd relies on the evidence of Mr Urgenson and Ms Rahal to the effect that their clients are not prepared to provide evidence or assistance to BHP Ltd in relation to the present proceeding while there is the possibility that the charges against their clients may be reinstated on appeal (and that they would otherwise be prepared to provide evidence and assistance): see [67]-[70] above. BHP Ltd also relies on the evidence of Ms Sutherland as to the significance of that evidence and assistance for the purposes of BHP Ltd defending the claims against it in the present proceeding: see [71]-[72] above. BHP Ltd submits that, given the nature of the allegations in the present proceeding, which turn on the knowledge and acts or omissions of the relevant individuals, it is critical for it to be able to speak with those individuals for the purposes of defending the claims.

139    BHP Ltd relies on the potential prejudice to BHP Brasil in its defence of the Brazilian criminal proceedings, if the present proceeding is not stayed. The nature of this potential prejudice was outlined in Mr Toron’s affidavit dated 18 September 2018 and has been set out at [66] above.

140    BHP Ltd also relies on the potential prejudice to the relevant individuals who were defendants to the Brazilian criminal proceedings, if the present proceeding is not stayed. In circumstances where the charges against all of the relevant individuals have been dismissed, BHP Ltd relies on the potential prejudice that would arise if the charges are reinstated. This applies in respect of the Named Individuals other than Mr Randolph. The nature of the potential prejudice was outlined in Mr Urgenson’s affidavit dated 18 September 2018: see [67] above.

141    BHP Ltd relies, in particular, on the fourth, fifth and sixth points in the summary of applicable principles in ASIC v ANZ at [58]-[61]. These points have been set out at [130]-[133] above.

142    In my view, the matters raised by BHP Ltd have some force as regards the trial of the proceeding, and may also have some force regarding certain interlocutory steps. In particular, I accept that, because of the possibility of reinstatement of the charges against them, the relevant individuals are not prepared to provide evidence or assistance to BHP Ltd in defending the present proceeding and that, without such evidence and assistance, BHP Ltd would be prejudiced if the trial of the proceeding were to proceed and may be prejudiced in relation to certain other interlocutory steps. I also accept that there may be prejudice to the relevant individuals if the trial of the present proceeding were to proceed, by way of potentially providing a ‘road map’ of their defences to the criminal charges (in the event that such charges were reinstated). I am inclined to place less weight on the potential prejudice to BHP Brasil – a company – but nothing turns on this for present purposes, as there exists the potential for prejudice to the relevant individuals in the manner I have indicated.

143    However, I am not persuaded that the interests of justice require a stay of all interlocutory steps. Rather, in my view, the preferable approach in the circumstances of this case is to consider, in the course of managing the proceeding, whether particular interlocutory steps should be ordered, and the appropriate form of any such orders, having regard to the matters raised by BHP Ltd in connection with this application.

144    First, it is not apparent that any prejudice would be suffered by BHP Ltd if its foreshadowed strike out application were to proceed. As noted above, in a letter from Herbert Smith Freehills to Phi Finney McDonald dated 4 July 2018, in the context of the then pleading in the proceeding, it was stated that BHP Ltd was considering an application to strike out or dismiss the claims of group members who did not acquire shares in BHP Ltd, or any shares on the ASX, during the relevant period. The earlier pleading adopted a similar structure in defining group members as does the current statement of claim (albeit for a different period of time). The foreshadowed application, if pursued, raises a significant threshold issue concerning the structure of the proceeding. There is no suggestion in the material that BHP Ltd requires evidence or instructions from any of the Named Individuals in order to bring such an application. At the hearing of the stay application, senior counsel for BHP Ltd accepted that the bringing of such a strike out application “doesn’t have the same spectre of prejudice, irremediable prejudice that attends the provision of discovery” (T30). It is not apparent to me that there would be any prejudice to BHP Ltd (or any other person) in BHP Ltd proceeding with its foreshadowed strike out application at this stage. Further, there are sensible reasons to proceed with such an application now rather than deferring it until after the Brazilian criminal proceedings have concluded. The parties will need some time to prepare written submissions for the hearing of the strike out application. A date for the hearing of the application will need to be found. Following the hearing, a judgment will need to be prepared. All of this could take some months. If there is an application for leave to appeal, and an appeal, that would take further time. In light of this, I consider it preferable that the foreshadowed strike out application proceed now, rather than waiting until the conclusion of the Brazilian criminal proceedings and then commencing the process of dealing with the strike out application. This reason is sufficient, of itself, to refuse the application for a stay.

145    Secondly, it may well be the case that other interlocutory steps could take place (perhaps with adjustments from the usual form of orders) without causing prejudice to BHP Ltd or any other person. In this regard, I note that in the ADR Action, in which the knowledge of BHP Ltd was in issue and the allegations relied on information received by the Named Individuals, BHP Ltd made discovery before the matter resolved at mediation: see [92]-[98] above.

146    Senior counsel for BHP Ltd referred in oral submissions to the differences between the rules relating to discovery in the United States compared with the rules applicable in this Court. It was submitted that discovery is compulsory in the United States, whereas in this Court discovery is not as of right. However, this distinction does not meet the point that BHP Ltd carried out discovery in the ADR Action without apparent prejudice.

147    Senior counsel for BHP Ltd also submitted that discovery in the present proceeding should be by reference to the issues in the proceeding and thus should not be ordered until after BHP Ltd has filed a defence. However, it is not invariably the case that discovery must wait until after a defence has been filed. In some cases, it may be appropriate for limited discovery (eg, of key documents) to take place at an earlier stage. These are issues of case management that can be addressed in the context of considering whether to make an order for discovery, the scope of any such discovery, whether any ancillary orders (eg, regarding confidentiality) should be made, and the timing of such orders. It is not necessary to resolve these issues now. It is sufficient for present purposes that I consider that it may well be appropriate for some form of discovery to take place.

148    It is not necessary for the purposes of this application to decide whether BHP Ltd should be required to file a defence and whether any such order should be tailored to the circumstances of this case (eg, relieving BHP Ltd of the requirement to fully respond to certain allegations). It is sufficient for present purposes that there are other interlocutory steps (such as discovery) that may well be appropriate. In relation to whether an order should be made for the filing of a defence, while I am mindful of the evidence of Ms Sutherland, set out above, as to the difficulties of preparing a defence without assistance from the Named Individuals, I also note that BHP Ltd and BHP Plc filed an Answer to the Complaint in the ADR Action without apparent prejudice. In any event, as I have said, I do not consider it necessary to resolve this issue now.

149    Thirdly, while I accept that (subject to one matter) the applicants and Group Members cannot point to any specific prejudice if a stay were granted, it is nevertheless the case that the stay sought by BHP Ltd would be likely to delay the present proceeding for more than a year: see ACCC v CFMEU (first instance) at [83] per Middleton J. The basis of the stay application is the Brazilian criminal proceedings, both the proceeding against BHP Brasil and the proceedings against the relevant individuals (if reinstated on appeal). In his affidavit dated 4 October 2019, Mr Toron estimated that the appeal in respect of the decisions granting Mr Zweig and Ms Beck’s habeus corpus applications may take six months to two years to be tried. Mr Toron also estimated that it would take one to two years to decide the Prosecutors’ appeal against the decision to dismiss the charges against Mr Fernandes, Mr Ferreira and Mr Cardoso. Thus, if a stay were granted, there would be a significant lapse of time between the relevant events and the trial of the proceeding.

150    The one matter of specific prejudice relied on by the applicants, concerns potential difficulties securing evidence from Mr Pimenta (see [38] above). However, the evidence in relation to this matter was not very developed and I accord it little weight. It does not appear that any steps have been taken, for example, to contact Mr Pimenta as a potential witness. Nevertheless, the evidence does illustrate the more general point that delay may cause the quality of justice to deteriorate: see R v Lawrence [1982] AC 510 at 517 per Lord Hailsham LC.

151    I consider ASIC v ANZ to be distinguishable. In that case, for the reasons given at [99], it was not considered appropriate or practical to progress the interlocutory steps in the proceeding, even if the matter was not set down for trial. In the present case, for the reasons given above, I consider it appropriate and practical for at least some interlocutory steps to take place. As noted at [135] above, each case must be judged on its own merits.

152    It is implicit in what I have said above that there may come a point in time when it would be appropriate to stay the proceeding because any further interlocutory steps would cause prejudice to BHP Ltd or another person. However, this is something that should be assessed as the matter progresses. For the reasons given above, at this stage, the interests of justice do not require that all interlocutory steps be stayed.

Conclusion

153    It follows that the application for a stay is to be dismissed. In relation to costs, my preliminary view is that it is appropriate at this stage to reserve the costs of the application. This is not to say that the costs of this application should necessarily follow the outcome of the proceeding. It is, rather, to suggest that it may be more appropriate to deal with the costs of this application at a later point in time, once further interlocutory steps have taken place. It may be, for example, that the material and submissions filed in connection with this application can then be seen to have been relevant in the ongoing case management of this matter. However, I will provide a brief period of time for the parties to indicate if they seek a different order at this stage, in which case directions will be made for the filing of short written submissions and the matter can be dealt with on the papers.

Associate:

Dated:    17 March 2020