Federal Court of Australia

Impiombato v BHP Group Limited (No 2) [2020] FCA 1720

ORDERS

THE COURT ORDERS THAT:

1.    The applicants’ application, made by email dated 25 November 2020, for leave to refer the Court to a recent judgment of the High Court of Justice in England, be refused.

2.    The respondent’s interlocutory application dated 12 May 2020 be dismissed.

3.    Within 14 days, each party file a written submission (of no more than two pages) on the costs of the interlocutory application.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    These reasons deal with an interlocutory application filed by the respondent, BHP Group Limited (BHP Ltd), formerly BHP Billiton Limited, dated 12 May 2020. Before outlining BHP Ltd’s contentions and the relief sought, the following background matters are noted.

2    The proceeding is a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth). Following the consolidation of the proceeding with another proceeding, the joint applicants are: Mr Vince Impiombato; and Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund). A new pleading – the consolidated statement of claim – was prepared following the consolidation of the two proceedings. At the hearing of BHP Ltd’s interlocutory application, the applicants applied for leave to amend the pleading to make some adjustments to address points raised by BHP Ltd. The application for leave to amend was not opposed, and leave to amend was granted. The amended pleading is the amended consolidated statement of claim (the statement of claim).

3    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    At all material times, BHP Ltd and BHP Plc had a dual listed company structure pursuant to which they operated as if they were a single unified economic entity pursuant to a dual listed company structure agreement. At the material times, this was the DLC Structure Sharing Agreement dated 29 June 2001 (the DLC Structure Sharing Agreement). In the statement of claim, the expression “BHP” is used to refer to the notional single unified economic entity comprising BHP Ltd and BHP Plc. The expression “BHP” will be used in the same way in these reasons.

5    At all material times, BHP Ltd and BHP Plc (or BHP Ltd alone – see further below), 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, a company registered in Brazil. At all material times, Samarco owned and operated the Germano complex in the state of Minas Gerais, 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    The applicants allege that those contraventions caused them loss. In relation to the BHP ASX Shares, it is alleged that, during the Relevant Period, the contraventions caused the price at which BHP ASX Shares traded on the ASX to be higher than their true value and/or the market price that would have prevailed but for the contraventions. Further or in the alternative, it is alleged that the applicants and some of the Group Members who acquired BHP ASX Shares during the Relevant Period would not have acquired those shares if the contraventions had not occurred.

9    In relation to the BHP LSE Shares, the causal path is more complicated. It is alleged that:

(a)    during the Relevant Period, the market for BHP LSE Shares was a market in which the price at which BHP LSE Shares traded on the LSE was, and was reasonably expected to have been, influenced by material information concerning BHP that became publicly available to the market for BHP LSE Shares;

(b)    during the Relevant Period, material information concerning BHP disclosed by BHP Ltd to the ASX became publicly available to the market for BHP LSE Shares;

(c)    further or in the alternative, during the Relevant Period, the market for BHP LSE Shares was a market in which the price at which BHP LSE Shares traded was influenced by the price and/or movements in the price of BHP ASX Shares; and

(d)    by reason of these matters, during the Relevant Period, the contraventions caused the price at which BHP LSE Shares traded on the LSE to be higher than their true value and/or the market price that would have prevailed but for the contraventions.

10    Further or in the alternative, it is alleged that some of the Group Members who acquired BHP LSE Shares during the Relevant Period would not have acquired those shares if the contraventions had not occurred.

11    Comparable allegations are made in relation to the BHP JSE Shares.

12    By its interlocutory application dated 12 May 2020, BHP Ltd advances three main contentions and seeks associated relief:

(a)    First, BHP Ltd contends that, on its proper construction, Pt IVA of the Federal Court of Australia Act does not apply to the claims brought by the applicants on behalf of shareholders of BHP Ltd and/or BHP Plc who are not residents of Australia (non-resident Group Members). BHP Ltd seeks a declaration to this effect and an order that the non-resident Group Members be excluded from the class of persons defined as Group Members in the proceeding. BHP relies on the presumption that legislation is not intended to operate extraterritorially and submits that that presumption is engaged in relation to Pt IVA and has not been displaced.

(b)    Secondly, if the Court does not accept its first contention, BHP Ltd contends that, as a matter of discretion, pursuant to s 23 or 33ZF of the Federal Court of Australia Act, the Court should exclude certain categories of Group Members from the proceeding. BHP Ltd seeks the exclusion of either:

(iv)    all non-resident Group Members; alternatively all shareholders of BHP Plc who are not residents of Australia (non-resident shareholders of BHP Plc); or

(v)    all non-resident Group Members who do not register to participate in the proceeding.

BHP Ltd submits that the Court should make such an order to ameliorate the prejudice faced by BHP Ltd and BHP Plc by virtue of non-resident Group Members having claims prosecuted on their behalf in this proceeding without the concomitant extinguishment of rights over the same subject-matter in the jurisdictions in which BHP Plc’s shares are traded, noting that the vast majority of non-resident Group Members are holders of shares in BHP Plc rather than BHP Ltd.

(c)    Thirdly, and independently of the first and second contentions, BHP Ltd contends that the causes of action pleaded on behalf of Group Members who acquired shares in BHP Plc (as distinct from BHP Ltd) are not viable and ought to be struck out. BHP Ltd submits that the alleged contraventions by BHP Ltd, even if established, cannot have caused loss to persons acquiring shares in a different, foreign company (BHP Plc) on a foreign stock exchange.

13    For the reasons that follow, in my view, the application should be dismissed. In brief summary:

(a)    I do not accept the contention that Pt IVA of the Federal Court of Australia Act cannot apply to claims brought on behalf of persons who are not resident in Australia.

(b)    Assuming there is power to do so, I do not consider it appropriate to make an order, in the exercise of the discretion, excluding all non-resident Group Members, or all non-resident shareholders of BHP Plc, from the represented group in this proceeding. Further, I do not consider it appropriate, at least at this stage (before a defence has even been filed), to exclude non-resident Group Members who do not register to participate in the proceeding.

(c)    In my view, the pleaded facts, at least arguably, establish a causal link for the purposes of the relevant statutory provisions between BHP Ltd’s alleged contraventions and the losses claimed to have been suffered by shareholders of BHP Plc. Beyond this, I do not consider it appropriate to determine, at a preliminary stage, and without a full factual context, whether the losses claimed to have been suffered by the shareholders of BHP Plc are within the contemplation of the relevant statutory provisions, which is a complex and novel question of statutory construction.

BHP Ltd’s interlocutory application

14    In support of its interlocutory application, BHP Ltd relies on the following affidavit and expert reports:

(a)    an affidavit of Jason Betts, a partner of Herbert Smith Freehills, the solicitors for BHP Ltd, dated 4 September 2020, relating to the composition of shareholders of BHP Ltd and BHP Plc;

(b)    an expert report dated 25 June 2020 and a reply expert report dated 3 September 2020 prepared by Alexander Layton QC, relating to English law;

(c)    an expert report dated 26 June 2020 of Monye Anyadike-Danes QC, relating to Northern Ireland law;

(d)    an expert report dated 26 June 2020 of Dr Kirsty Hood QC, relating to Scots law; and

(e)    an expert report dated 1 July 2020 and a reply expert report filed on 4 September 2020 of Frank Snyckers SC, relating to South African law.

15    In response, the applicants rely on the following affidavits and expert reports:

(a)    affidavits of Brett Spiegel, a principal lawyer in the firm, Phi Finney McDonald, the solicitors (together with Maurice Blackburn) for the applicants, dated 14 August 2020 and 4 September 2020 – the first affidavit annexed a copy of the DLC Structure Sharing Agreement; the second affidavit related to the application for leave to amend the pleading, which was dealt with at the hearing;

(b)    an expert report dated 13 August 2020 of Hugh Mercer QC, relating to English law; and

(c)    an expert report dated 13 August 2020 (signed on 31 August 2020) of Paul Farlam SC, relating to South African law.

16    There was no cross-examination.

17    The hearing took place using Microsoft Teams video-conferencing software due to the restrictions in place during the COVID-19 pandemic. Mr Spiegel adopted his affidavit, which had been provided in unsworn form (consistently with the Court’s practice guidelines during the pandemic), during the hearing. Detailed outlines of submissions were provided by the parties in advance of the hearing.

18    On 25 November 2020, while judgment on BHP Ltd’s interlocutory application was reserved, the applicants sent an email to my associate seeking leave to refer the Court to a recent judgment of the High Court of Justice in England. The email stated that the judgment related to an application by BHP Plc and BHP Ltd in that jurisdiction to strike out proceedings brought in England on behalf of Brazilian applicants. The email stated that the applicants sought leave to refer to the judgment, in particular to the abuse of process principles set out in the judgment. The email noted that BHP Ltd objected to the judgment being provided to the Court because it constituted, BHP Ltd submitted, an attempt by the applicants to adduce fresh evidence, after the hearing of the application and while judgment was reserved. In my view, in circumstances where the content of English law is a question of fact, the applicants are in substance seeking to re-open their case to adduce further evidence. I do not consider it appropriate to permit the applicants to do so. Both sides have adduced extensive evidence on the relevant principles of English law. In that context, it is not shown that I would be assisted by receiving this further judgment. In particular, I would be receiving it without the benefit of any analysis about it by the experts on English law who have already given evidence in connection with the present interlocutory application. Accordingly, I refuse the applicants’ application for leave to refer the Court to the judgment.

The statement of claim

19    In this section of these reasons, I provide an overview of the pleading, and set out the particular paragraphs of the statement of claim that are the subject of BHP Ltd’s strike-out application. In setting out extracts from the statement of claim, the amendments for which leave was granted at the hearing have been incorporated without mark up.

20    Paragraph 3 of the statement of claim contains the description of the Group Members. It states (omitting the particulars and the exclusion of certain categories of persons in paragraph (b)):

3.    The Joint Applicants and the persons they represent (the Group Members) are all persons who or which:

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

(i)    the Respondent, formerly BHP Billiton Limited (BHP Ltd), on the Australian Securities Exchange (ASX), a financial market operated by ASX Limited (the BHP ASX Shares);

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

(iii)    BHP Plc on the Johannesburg Stock Exchange (JSE), a financial market operated by the Johannesburg Stock Exchange Limited (the BHP JSE Shares);

(b)    were not … ; and

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

21    In paragraph 7 of the statement of claim, it is alleged 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.

22    Paragraph 8 of the statement of claim relates to BHP Plc and is in the following terms:

8.    At all material times, BHP Plc has had on issue:

(a)    BHP LSE Shares which were and are:

(i)    traded on the LSE under the designation “BLT”; and

(ii)    able to be acquired and sold by investors and potential investors in BHP LSE Shares on the LSE (BHP LSE Share Market); and

(b)    BHP JSE Shares which were and are:

(i)    traded on the JSE under the designation “BIL”; and

(ii)    able to be acquired and sold by investors and potential investors in BHP JSE Shares on the JSE (BHP JSE Share Market).

23    Paragraphs 9 and 10 of the statement of claim relate to the dual listed company structure:

9.    At all material times, BHP Ltd and BHP Plc had a dual listed company structure (DLC Structure).

Particulars

DLC Structure Sharing Agreement, recital A and cl 2.

10.    Pursuant to the DLC Structure, BHP Ltd and BHP Plc operated as if they were a single unified economic entity (BHP) through:

(a)    identical boards of directors which comprised the same individuals; and

Particulars

DLC Structure Sharing Agreement, cl 2(b).

(b)    a single unified management team; including a single Group Management Committee, being BHP’s most senior executive body (BHP GMC);

Particulars

BHP annual report for the 2011 financial year (FY) (being the period between 1 July 2010 and 30 June 2011), page 127; BHP FY2012 annual report, page 131; BHP FY2013 annual report, page 151; BHP FY2014 annual report, page 172; BHP FY2015 annual report, page 160.

At all material times, the purpose of the GMC was inter alia to: (i) assist the Chief Executive Officer in pursuing BHP’s corporate purpose; (ii) provide leadership to the BHP Group, determine its priorities and guide its operations; and (iii) provide a forum to debate high-level matters [and] ensure consistent development of the BHP Group’s strategy.

(c)    the economic and voting interests in BHP resulting from holding one share in BHP Ltd were equivalent to the economic and voting interests resulting from holding one share in BHP Plc.

Particulars

DLC Structure Sharing Agreement, cl 3.

24    Paragraphs 11 to 18 of the statement of claim identify the relevant officers of BHP Ltd and allege that any information of which any of those officers became aware or which ought reasonably have come into their possession, in the course of carrying out their duties, was information of which BHP Ltd was aware within the meaning of Rule 3.1 and Rule 19.12 of the ASX Listing Rules.

25    Paragraphs 19 to 30 of the statement of claim contain pleadings about Samarco, including, at paragraph 26, the composition of its board of directors.

26    The statement of claim sets out, at paragraphs 31-39, allegations regarding the design, location and construction of the Fundão Dam. The statement of claim then sets out, at paragraphs 40-43, allegations concerning problems with the Fundão Dam at various times 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 at the various times:

(a)    the August 2012 Information;

(b)    the September 2012 Information;

(c)    the Pre-August 2014 Information; and

(d)    the Post-August 2014 Information.

27    The statement of claim also contains allegations concerning the likely consequences of a failure of the Fundão Dam, defined as the “General Consequential Risks” (paragraph 44). Certain alleged, more specific consequences are defined as the “BHP Consequential Risks” (paragraph 45).

28    The allegations concerning contraventions of continuous disclosure obligations are set out in Section H (paragraphs 46-53) of the statement of claim.

29    It is alleged, at paragraph 48, that BHP Ltd 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)    by no later than in the period from 30 September 2012, until around 27 August 2014, of the Pre-August 2014 Information;

(d)    at all material times from no later than 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.

30    It is alleged, at paragraph 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 paragraphs 50-53, that BHP Ltd failed to make continuous disclosure of the relevant information and thus contravened s 674(2) of the Corporations Act.

31    The next section of the statement of claim (Section I, comprising paragraphs 54-63) 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 paragraph 59 that BHP Ltd 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).

32    It is alleged, at paragraph 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. It is alleged (in paragraph 63) that BHP Ltd contravened s 12DA(1) of the ASIC Act and s 1041H(1) of the Corporations Act.

33    Paragraph 64 of the statement of claim describes the failure of the Fundão Dam on 5 November 2015.

34    Paragraphs 65 to 67 of the statement of claim describe the disclosure of information following the failure of the Fundão Dam and the share price impacts:

65.    On 6 November 2015, BHP Ltd made an announcement on the ASX that there had been a serious incident at Samarco (the 6 November 2015 Announcement).

Particulars

BHP ASX release entitled “INCIDENT AT SAMARCO” dated 6 November 2015.

66.    On 9 November 2015, BHP Ltd made an announcement on the ASX about the failure of the Fundão Dam and some of the consequences of that failure (the 9 November 2015 Announcement).

Particulars

BHP ASX release entitled “UPDATE: INCIDENT AT SAMARCO” dated 9 November 2015.

67.    Following the 6 November 2015 Announcement and/or the 9 November 2015 Announcement, the price of:

(a)    the BHP ASX Shares;

(b)    the BHP LSE Shares; and/or

(c)    the BHP JSE Shares,

declined significantly.

Particulars

The price of the BHP ASX Shares declined from a closing price of $23.28 on 5 November 2015 to a closing price of $18.09 on 30 November 2015.

The price of the BHP LSE Shares declined from a closing price of GBP 10.34 on 5 November 2015 to a closing price of GBP 7.96 on 30 November 2015.

The price of the BHP JSE Shares declined from a closing price of ZAR 221.59 on 5 November 2015 to a closing price of ZAR 170.30 on 30 November 2015.

It is convenient to note at this point that the particulars to paragraph 67 indicate a comparable percentage decline in the price of BHP Ltd shares and BHP Plc shares.

35    The next section of the statement of claim (Section L, comprising paragraphs 68-80) deals with causation of loss. First, at paragraphs 68-70, there are allegations relating to the BHP ASX Shares. Secondly, at paragraphs 71-75, allegations concerning the BHP LSE Shares are set out. Thirdly, allegations concerning the BHP JSE Shares are set out at paragraphs 76-80. By its strike-out application, BHP Ltd seeks to strike out paragraphs 71-80. Although the strike-out application does not challenge paragraphs 68-70, I set out those paragraphs (as well as paragraphs 71-80) in order to provide context. I note also that paragraphs 71-80 of the statement of claim were the subject of a number of the amendments in respect of which leave to amend was granted at the hearing of BHP Ltd’s interlocutory application. Those amendments, which are incorporated but not marked up in the extract below, sought to address some of the points made by BHP Ltd in its written submissions. Section L of the statement of claim is in the following terms:

L.    CONTRAVENTIONS CAUSED LOSS

L.1    BHP ASX Shares

68.    During the Relevant Period, the BHP ASX Share Market was a market:

(a)    regulated by, inter alia, ss 674(2) and 1041H of the Corporations Act, Rule 3.1 of the Listing Rules and s 12DA of the ASIC Act;

(b)    in which the price at which BHP ASX Shares traded on the ASX was, and was reasonably expected to have been, influenced by the material information concerning BHP that was published on the ASX or that otherwise became publicly available;

(c)    in which material information, namely the August 2012 Information, September 2012 Information, Pre-August 2014 Information, Post-August 2014 Information, General Consequential Risks and BHP Consequential Risks, had not been disclosed, which a reasonable person would expect, had it been disclosed, would have had a material adverse effect on the price or value of the BHP ASX Shares; and

(d)    in which misleading or deceptive conduct, namely the Representations, had occurred, which a reasonable person would expect to have a material effect on the price or value of BHP ASX Shares.

69.    During the Relevant Period:

(a)    the Continuous Disclosure Contraventions; and

(b)    the Misrepresentations Contraventions,

(collectively, the Contraventions) caused the price at which BHP ASX Shares traded on the ASX to be higher than their true value and/or the market price that would have prevailed but for the Contraventions (or any of them).

Particulars

This is to be inferred from paragraphs 64-67 above and the particulars subjoined thereto.

Particulars of the extent to which the Contraventions caused the price at which BHP ASX Shares traded on the ASX to be higher than their true value and/or the market price that would have prevailed but for the Contraventions (or any of them) will be provided after the filing of expert reports.

70.    Further or in the alternative to paragraphs 68 and 69 above, the Joint Applicants and some of the Group Members who acquired an interest in BHP ASX Shares during the Relevant Period would not have acquired an interest in the BHP ASX Shares if the Contraventions that had occurred at the time of their acquisition (or any of them) had not occurred.

Particulars

The Joint Applicants and some Group Members acquired an interest in the BHP ASX Shares in reliance upon the Representations.

The Joint Applicants would not have acquired an interest in the BHP ASX Shares had the information the subject of the Required Disclosures (or any of them) been disclosed, or had the Representations been retracted, corrected or qualified prior to such acquisition.

The identities of all those Group Members which or who would not have acquired an interest in BHP ASX Shares had information the subject of the Required Disclosures (or any of them) been disclosed or had the Representations been retracted, corrected or qualified prior to such acquisition, will be obtained and provided following opt out, the determination of the Joint Applicants’ claims and identified common issues at an initial trial and if, and when, it is necessary for a determination to be made of the individual claims of those Group Members.

L.2    BHP LSE Shares

71.    During the Relevant Period, the BHP LSE Share Market was a market in which the price at which BHP LSE Shares traded on the LSE was, and was reasonably expected to have been, influenced by material information concerning BHP that became publicly available to the BHP LSE Share Market.

72.    During the Relevant Period, material information concerning BHP disclosed by BHP Ltd to the ASX became publicly available to the BHP LSE Share Market.

Particulars

Material information concerning BHP disclosed by BHP Ltd to the ASX became publicly available to the BHP LSE Share Market by reason of the fact that company announcements disclosed to the ASX became publicly available on the ASX website www.asx.com.au

Further particulars may be provided after discovery.

73.    Further and in the alternative to paragraphs 71 and/or 72 above, during the Relevant Period, the BHP LSE Share Market was a market in which the price at which BHP LSE Shares traded on the LSE was influenced by the price and/or movements in the price of BHP ASX Shares.

Particulars

This is to be inferred from paragraphs 9, 10 and/or 67 above and the particulars subjoined thereto.

Further particulars will be provided after the filing of expert reports.

74.    By reason of the matters pleaded at paragraphs 71, 72 and/or 73 above, during the Relevant Period, the Contraventions caused the price at which BHP LSE Shares traded on the LSE to be higher than their true value and/or the market price that would have prevailed but for the Contraventions (or any of them).

Particulars

This is to be inferred from paragraphs 9, 10, 65, 66, 67, 71, 72 and/or 73 above [and] the particulars subjoined thereto.

Particulars of the extent to which the Contraventions caused the price at which BHP LSE Shares traded on the LSE to be higher than their true value and/or the market price that would have prevailed but for the Contraventions (or any of them) will be provided following service of expert quantum evidence.

75.    Further or in the alternative to paragraph 74 above, some of the Group Members who acquired an interest in BHP LSE Shares during the Relevant Period would not have acquired an interest in the BHP LSE Shares if the Contraventions that had occurred at the time of their acquisition (or any of them) had not occurred.

Particulars

The identities of all those Group Members which or who would not have acquired an interest in BHP LSE Shares had the Required Disclosures (or any of them) been disclosed or had the Representations been retracted, corrected or qualified prior to such acquisition, will be obtained and provided following opt out, the determination of the Joint Applicants’ claims and identified common issues at an initial trial and if, and when, it is necessary for a determination to be made of the individual claims of those Group Members.

L.3    BHP JSE Shares

76.    During the Relevant Period, the BHP JSE Share Market was a market in which the price at which BHP JSE Shares traded on the JSE was, and was reasonably expected to have been, influenced by material information concerning BHP that became publicly available to the BHP JSE Share Market.

77.    During the Relevant Period, material information disclosed by BHP Ltd to the ASX became publicly available to the BHP JSE Share Market.

Particulars

Material information concerning BHP disclosed by BHP Ltd to the ASX became publicly available to the BHP JSE Share Market by reason of the fact that company announcements disclosed to the ASX became publicly available on the ASX website www.asx.com.au

Further particulars may be provided after discovery.

78.    Further or in the alternative to paragraphs 76 and/or 77 above, during the Relevant Period, the BHP JSE Share Market was a market in which the price at which BHP JSE Shares traded on the JSE was influenced by the price and/or movements in the price of BHP ASX Shares.

Particulars

This is to be inferred from paragraphs 9, 10 and/or 67 above and the particulars subjoined thereto.

Further particulars will be provided upon service of the Joint Applicants’ expert quantum evidence.

79.    By reason of the matters pleaded at paragraphs 76, 77 and/or 78 above, during the Relevant Period, the Contraventions caused the price at which BHP JSE Shares traded on the JSE to be higher than their true value and/or the market price that would have prevailed but for the Contraventions (or any of them).

Particulars

This is to be inferred from the matters set out at paragraphs 9, 10, 65, 66, 67, 76, 77 and/or 78 above the particulars subjoined thereto.

Particulars of the extent to which the Contraventions caused the price at which BHP JSE Shares traded on the JSE to be higher than their true value and/or the market price that would have prevailed but for the Contraventions (or any of them) will be provided after the filing of expert reports.

80.    Further or in the alternative to paragraph 79 above, some of the Group Members who acquired an interest in BHP JSE Shares during the Relevant Period would not have acquired an interest in the BHP JSE Shares if the Contraventions that had occurred at the time of their acquisition (or any of them) had not occurred.

Particulars

The identities of all those Group Members which or who would not have acquired an interest in BHP JSE Shares had the Required Disclosures (or any of them) been disclosed or had the Representations been retracted, corrected or qualified prior to such acquisition, will be obtained and provided following opt out, the determination of the Joint Applicants’ claim and identified common issues at an initial trial and if, and when, it is necessary for a determination to be made of the individual claims of those Group Members.

36    The final section of the pleading (Section M, comprising paragraphs 81-83) contains allegations concerning loss and damage. Paragraph 81 alleges that the applicants suffered loss and/or damage in relation to their interests in BHP ASX Shares by and resulting from the contraventions. Paragraph 82 (omitting particulars) states:

82.    Group Members who acquired an interest in:

(a)    BHP ASX Shares;

(b)    BHP LSE Shares; and/or

(c)    BHP JSE Shares,

during the Relevant Period have suffered loss and/or damage in relation to their interests in those shares by and resulting from the Contraventions (or any one or combination of the Contraventions).

Factual material before the Court

37    The parties have placed a limited amount of factual material before the Court for the purposes of resolving BHP Ltd’s interlocutory application. I now set out a summary of that material.

Material concerning the shareholdings in BHP Ltd and BHP Plc

38    In Mr Betts’s affidavit he stated that: BHP Ltd and BHP Plc operate as a dual listed company; the two entities exist as separate companies; both companies have a unified Board of Directors comprising the same individuals; and the companies are run by a unified management team and operate as if they were a single economic entity (referred to as “BHP” in these reasons). He stated that BHP Ltd’s shares are listed on the ASX and BHP Plc’s shares are listed on the LSE and the JSE.

39    Mr Betts stated that he caused a solicitor to examine data in respect of the volume of shares traded in BHP Ltd and BHP Plc during the Relevant Period. That data showed that the number of shares traded during the Relevant Period was:

(a)    in BHP Ltd on the ASX – approximately 6.3 billion;

(b)    in BHP Plc on the LSE – approximately 6.1 billion; and

(c)    in BHP Plc on the JSE – approximately 2.1 billion.

40    It follows from that trading data that:

(a)    a total of approximately 14.5 billion shares in BHP Ltd and BHP Plc were traded during the Relevant Period;

(b)    approximately 43.4% of the total volume of shares traded were traded in BHP Ltd; and

(c)    approximately 56.6% of the total volume of shares traded were traded in BHP Plc.

41    Mr Betts referred in his affidavit to information in the annual reports published by BHP during the Relevant Period regarding the geographical distribution of shareholders. Based on that information, Mr Betts observed that:

(a)    about 97.8% of the registered shareholders in BHP Ltd, and less than 0.1% of registered shareholders in BHP Plc, appeared to be resident in Australia; and

(b)    about 2.2% of registered shareholders in BHP Ltd, and more than 99.9% of registered shareholders in BHP Plc, appeared to be resident outside Australia.

42    Mr Betts also provided information concerning the top 20 shareholders (by shareholdings) in BHP Ltd and BHP Plc during the Relevant Period.

43    Mr Betts stated that he was informed by Andrew Gunn, Practice Lead, Investor Relations at BHP, and believed that:

(a)    many of the largest legal registered shareholders of BHP Ltd and BHP Plc (by number of shares held) are nominees or custodians, who typically hold shares on behalf of others;

(b)    approximately 51 of the 65 shareholders in BHP Ltd and BHP Plc listed in paragraph 12 of his affidavit (i.e. the largest shareholders during the years comprising the Relevant Period) are nominees or custodians holding shares on behalf of others;

(c)    BHP has some information regarding:

(i)    beneficial owners of shares held by registered legal holders; and

(ii)    the investment managers or persons who make decisions to buy and sell those shares (decision makers),

as a result of responses to tracing notices issued under ss 672A and 672B of the Corporations Act (and analogous mechanisms in foreign jurisdictions);

(d)    BHP has partial point-in-time information from August 2012, August 2013, August 2014 and August 2015 (in other words, around the time BHP published its annual reports for each of the 2012, 2013, 2014 and 2015 financial years), as to the geographical location of certain beneficial owners of (and decision makers in respect of) shares held by:

(iii)    the top 200 registered shareholders of BHP Ltd;

(iv)    the top 200 registered shareholders of BHP Plc shares listed on the JSE; and

(v)    the registered shareholders of BHP Plc shares listed on the LSE with more than 500,000 shares,

(the Analysed Registered Shareholders);

(e)    the shares held by the Analysed Registered Shareholders represent 62-64% of the shares issued by BHP Ltd and 92-93% of the shares issued by BHP Plc;

(f)    the information BHP has about the decision makers and beneficial owners referrable to the Analysed Registered Shareholders extends to name, country, and in some instances city, but not address;

(g)    of the shares held by the Analysed Registered Shareholders, the geographical split of the decision makers in respect of those shares was as follows:

(h)    of the shares held by the Analysed Registered Shareholders in around August 2014 and August 2015 (in other words, around the time BHP published its annual reports for each of the 2014 and 2015 financial years), the geographical split of beneficial owners was as follows:

(i)    BHP Ltd does not hold comparable information to that set out at paragraphs (g) and (h) above in respect of shareholders other than the Analysed Registered Shareholders;

(j)    there may be additional persons with interests in BHP’s shares sitting behind the beneficial owners referred to in paragraph (h) above; in other words, the beneficial owners referred to in paragraph (h) above may be holding the shares on behalf of others; where that is the case, it is not possible for BHP to identify the ultimate beneficial owners of its shares;

(k)    given that information in respect of the Analysed Registered Shareholders above covers only part of BHP’s share registers, depending on the year:

(vi)    between about 36% and 38% of BHP Ltd’s shares were not analysed;

(vii)    between about 7% and 8% of BHP Plc’s shares were not analysed; and

(l)    of the shares in BHP Ltd that were not analysed, a large number of these are likely to be Australian retail investors because of the small size of their holdings; for example, in BHP’s annual reports for each of the 2012, 2013, 2014 and 2015 financial years, more than 21% of shares were held by shareholders with 10,000 or fewer shares.

The DLC Structure Sharing Agreement

44    A copy of the DLC Structure Sharing Agreement was in evidence, annexed to Mr Spiegel’s affidavit dated 14 August 2020. Also annexed to that affidavit was a copy of a later version of that agreement, which had effect from 23 November 2015. That version can be put to one side for present purposes.

45    The DLC Structure Sharing Agreement is an agreement between BHP Ltd (then named BHP Limited) and BHP Plc (then named Billiton Plc) dated 29 June 2001.

46    The Recital to the agreement stated that BHP Ltd and BHP Plc had agreed to establish a dual listed companies structure for the purposes of the future conduct of their combined businesses. It was stated that, accordingly, the implementation, management and operation of their combined businesses and affairs would be undertaken in accordance with the terms of the agreement and, in particular, the “DLC Equalisation Principles” and the “DLC Structure Principles” as defined later in the agreement.

47    The DLC Structure Principles were set out in clause 2, which was in the following terms:

2.    DLC Structure Principles

[BHP Ltd] and [BHP Plc] agree that the following principles are essential to the implementation, management and operation of the DLC Structure:

(a)    [BHP Ltd] and [BHP Plc] must operate as if they were a single unified economic entity, through boards of directors which comprise the same individuals and a unified senior executive management;

(b)    the directors of [BHP Ltd] and [BHP Plc] shall, in addition to their duties to the company concerned, have regard to the interests of the holders of [BHP Ltd] Ordinary Shares and the holders of [BHP Plc] Ordinary Shares as if the two companies were a single unified economic entity and for that purpose the directors of each company shall take into account in the exercise of their powers the interests of the shareholders of the other; and

(c)    the DLC Equalisation Principles must be observed,

and [BHP Ltd] and [BHP Plc] agree to pursue, and agree to procure (to the extent that it is appropriate to do so) that each member of its respective Group and BHP Billiton Executive Services Company will pursue, the DLC Structure Principles.

48    The expression “DLC Structure”, which was used in clause 2, was defined in clause 1.1 to mean “the arrangement whereby, inter alia, [BHP Ltd] and [BHP Plc] have a unified management structure and the business of both [BHP Ltd] and [BHP Plc] are managed on a unified basis in accordance with the provisions of this Agreement”.

49    The DLC Equalisation Principles were set out in clause 3. It is sufficient for present purposes to set out clause 3.1:

3.1    DLC Equalisation Principles

Subject to Clause 3.2, the following principles shall be observed in relation to the rights of the [BHP Ltd] Ordinary Shares and the [BHP Plc] Ordinary Shares:

(a)    the Equalisation Ratio shall govern the economic rights of one [BHP Ltd] Ordinary Share relative to one [BHP Plc] Ordinary Share (and vice versa) and the relative voting rights of one [BHP Ltd] Ordinary Share and one [BHP Plc] Ordinary Share on Joint Electorate Actions so that, where the Equalisation Ratio is 1:1, a holder of one [BHP Ltd] Ordinary Share and a holder of one [BHP Plc] Ordinary Share shall, as far as practicable:

(i)    receive equivalent economic returns; and

(ii)    enjoy equivalent rights as to voting in relation to Joint Electorate Actions,

and otherwise such returns and rights as between a [BHP Ltd] Ordinary Share and a [BHP Plc] Ordinary Share will be in proportion to the then prevailing Equalisation Ratio;

(b)    where an Action by [BHP Ltd] or [BHP Plc] is proposed such that the Action would result in the ratio of the economic returns on, or voting rights (in relation to Joint Electorate Actions) of, a [BHP Ltd] Ordinary Share to a [BHP Plc] Ordinary Share not being the same as the then prevailing Equalisation Ratio, or which would benefit the holders of Ordinary Shares in one party relative to the holders of Ordinary Shares in the other party, then:

(i)    unless the Boards of [BHP Ltd] and [BHP Plc] determine that it is not appropriate or practicable, a Matching Action shall be undertaken; or

(ii)    if no Matching Action is to be undertaken, an appropriate adjustment to the Equalisation Ratio shall be made,

in order to ensure that there is equitable treatment (having regard to the then prevailing Equalisation Ratio) as between the holder of one [BHP Ltd] Ordinary Share and the holder of one [BHP Plc] Ordinary Share. However, if the Boards of [BHP Ltd] and [BHP Plc] determine that it is not appropriate or practicable to undertake a Matching Action and that an adjustment to the Equalisation Ratio would not be appropriate or practicable in relation to an Action, then such Action may be undertaken provided it has been approved as a Class Rights Action.

50    The expression “Equalisation Ratio” was defined in clause 1.1 as follows:

Equalisation Ratio means the ratio for the time being of (a) the dividend, capital and (in relation to Joint Electorate Actions) voting rights per [BHP Ltd] Ordinary Share to (b) the dividend, capital and (in relation to Joint Electorate Actions) voting rights per [BHP Plc] Ordinary Share in the Combined Group (which shall initially be 1:1).

51    The expression “Action” was defined as:

Action means any distribution or any action affecting the amount or nature of issued share capital, including any dividend, distribution in specie, offer by way of rights, bonus issue, repayment of capital, sub-division or consolidation, buy-back or amendment of the rights of any shares or a series of one or more of such actions.

52    The expression “Matching Action” was defined as:

Matching Action means any Action in relation to either the holders of [BHP Ltd] Ordinary Shares or the holders of [BHP Plc] Ordinary Shares whose overall effect is such that, when taken together with an Action taken or to be taken in relation to the holders of [BHP Plc] Ordinary Shares or of [BHP Ltd] Ordinary Shares (as the case may be), is such as to ensure that the economic returns and voting rights of a [BHP Ltd] Ordinary Share and of a [BHP Plc] Ordinary Share are maintained in proportion to the Equalisation Ratio.

Ownership of shares in BHP Brasil

53    I note for completeness that, at the hearing, I sought clarification from the parties as to whether BHP Brasil was a wholly-owned subsidiary of both BHP Ltd and BHP Plc or of BHP Ltd alone. The statement of claim refers to BHP Brasil as a wholly-owned subsidiary of “BHP”, that is, the notional single unified economic entity (see the particulars to paragraph 21 and the definition of “BHP” in paragraph 10). This does not make the position clear. In oral submissions, senior counsel for the applicants stated that he was instructed that the relevant assets were jointly owned by BHP Plc and BHP Ltd. Senior counsel for BHP Ltd submitted that the interest in BHP Brasil was held by BHP Ltd alone, referring to paragraph 9 of an affidavit of Anna Sutherland, a partner of Herbert Smith Freehills, dated 20 September 2018 (filed in connection with an earlier interlocutory application). In that paragraph, Ms Sutherland stated: “At all material times, Samarco was a 50/50 contractual joint venture between a subsidiary of the Respondent, BHP Billiton Brasil Ltda (BHP Brasil), and a Brazilian company, Companhia Vale do Rio Dace S.A. (Vale).” It is not necessary for present purposes to resolve this factual point.

Findings relating to foreign law

54    In this section of these reasons, I set out my findings (of fact) in relation to foreign law, based on the expert evidence filed by the parties. These findings are made for the purposes of resolving BHP Ltd’s interlocutory application; if it is necessary to deal with the same or similar issues of foreign law on a subsequent occasion (eg, at trial), the material before the Court may be different and the findings may not be the same.

55    There is a large measure of agreement between the foreign law experts. To the extent that there are areas of disagreement, in the absence of cross-examination I have made findings based on my assessment of the reasoning expressed in the expert reports. Ultimately, however, I do not consider any of the points of disagreement to be determinative of BHP Ltd’s interlocutory application.

English law

56    In relation to English law, BHP Ltd relies on the first report and the reply report of Mr Layton QC, and the applicants rely on the report of Mr Mercer QC.

57    In his first report, Mr Layton addressed four questions, each of which related to a scenario in which a new proceeding raising the same issues is commenced in the courts of England and Wales following the conclusion of the present proceeding. Questions 1, 2 and 3 related to a new proceeding against BHP Ltd, while question 4 related to a new proceeding against BHP Plc. The issue to which Mr Layton’s report was directed was whether a judgment or order of this Court in the present proceeding would be recognised by a court of England and Wales if such a new proceeding were commenced. Questions 1, 2 and 3 related to three different types of judgment or order in the present proceeding, namely (i) a judgment addressing the common questions on liability, (ii) an order for damages in favour of all Group Members, and (iii) an order approving a settlement. Ultimately, Mr Layton’s opinions did not differ depending on the type of judgment or order. Thus, the distinction between the three different types of judgment or order can be put to one side for present purposes.

58    At paragraphs 11-18 of his first report, Mr Layton set out the principles of English law concerning the recognition and enforcement of Australian judgments in England. Mr Mercer agreed with that exposition of the principles (see paragraph 13 of his report). I therefore accept those paragraphs of Mr Layton’s first report.

59    At paragraphs 19-28 of his report, Mr Layton set out the principles relating to res judicata, issue estoppel and preclusive effect in the particular context of foreign judgments. There does not appear to be any substantive disagreement regarding those principles (see Mr Mercer’s report at paragraphs 29, 32) and I accept Mr Layton’s statement of these principles. It is unnecessary to resolve the differences of view highlighted in paragraphs 15 and 16 of Mr Layton’s reply report.

60    At paragraphs 39-41 of his first report, Mr Layton discussed jurisdiction based on presence. Mr Mercer indicated his agreement at paragraph 13 of his report. I accept that description of the principles relating to jurisdiction based on presence in Mr Layton’s report.

61    Although their reasoning differed, both Mr Layton and Mr Mercer agreed that if a new proceeding were commenced against BHP Ltd by (i) the applicants or (ii) a Group Member who registered to participate in a settlement of the present proceeding (following the distribution of notices with respect to the same) and who did not subsequently opt out of the present proceeding, the court of England and Wales would recognise the judgment of this Court in the present proceeding: see Mr Layton’s first report at paragraphs 10, 31-38, 54; and Mr Mercer’s report at paragraphs 14, 34-52. I accept that conclusion, which is common ground between the experts.

62    The experts differed, however, regarding the other questions addressed in Mr Layton’s first report.

63    In relation to a new proceeding against BHP Ltd brought by (i) a Group Member who did not register to participate in a settlement of the present proceeding and did not opt out of the present proceeding (following the receipt of notices with respect to the same), or (ii) a Group Member who did not register and did not opt out and who did not receive notices with respect to participation in any settlement, Mr Layton’s view was that, while it is not possible to be categoric, the court of England and Wales would not recognise the judgment of this Court in the present proceeding: see Mr Mercer’s first report, paragraphs 10, 44-47, 54. Contrastingly, Mr Mercer’s opinion was that Mr Layton was too firm in his conclusions with respect to these Group Members: see Mr Mercer’s report, paragraph 15. In Mr Mercer’s view it was “arguable” that an English court “could well” reach the opposite conclusion in relation to a Group Member who received notices but did not opt out of the present proceeding or register to participate in a settlement. In addition, in Mr Mercer’s view, there were grounds to consider that an English court would reach the same conclusion in relation to Group Members who did not receive notice, although he considered this to be more difficult. In his reply report at paragraph 6, Mr Layton stated that he does not agree with Mr Mercer’s views on these matters and stated:

As is apparent from both my original Opinion and Mr Mercer’s Opinion, this is largely uncharted territory in English law and the questions have to be considered by extrapolation from existing law and principles. So, while I can agree that it is “arguable” that an English court “could” (not “could well”) recognise a judgment as against such a group member, I do not consider that it would do so. This would be a big departure from existing law and precedent, and the Supreme Court has shown itself to be cautious in this sort of area.

(Footnote omitted.)

64    On the basis of the reports, I find that there is considerable uncertainty as to whether or not a court of England and Wales would recognise a judgment of this Court in this proceeding if a new proceeding were commenced against BHP Ltd by a Group Member who did not register to participate in a settlement of the present proceeding and did not opt out of the present proceeding (following the receipt of notices with respect to the same). There is both uncertainty as to the applicable principles of English law, as well as uncertainty pertaining to the factual context in which any such issue may arise. I find that there is, at least, some risk that the court would not recognise a judgment of this Court in such circumstances. As to whether or not a court of England and Wales would recognise a judgment of this Court in this proceeding if a new proceeding were commenced against BHP Ltd by a Group Member who did not register and did not opt out and who did not receive notices with respect to participation in any settlement, I find that there is a higher risk that the court would not recognise a judgment of this Court in such circumstances.

65    In relation to a new proceeding against BHP Plc, Mr Layton’s view was that a court of England in Wales would not recognise the judgment of this Court in the present proceeding, whether the new proceeding was commenced by (i) the applicants, (ii) a Group Member who registered to participate in any settlement of the present proceeding and who did not opt out of the proceeding, (iii) a Group Member who did not register to participate in any settlement of the present proceeding and did not opt out of the proceeding (following the receipt of notices with respect to the same), or (iv) a Group Member who did not register and did not opt out, and who did not receive notices regarding participation in any settlement of the present proceeding: see Mr Layton’s first report, paragraphs 10, 48-53, 54. Mr Mercer agreed with Mr Layton’s analysis in connection with piercing the corporate veil at paragraphs 50-51 of Mr Layton’s first report: see Mr Mercer’s report, paragraph 16. I therefore accept those paragraphs of Mr Layton’s first report as correctly stating the applicable principles of English law. However, Mr Mercer did not agree with Mr Layton’s discussion of the principles of privity at paragraphs 52-53 of his first report: see Mr Mercer’s report, paragraphs 35-39. Further, Mr Mercer stated that there is a body of English case law that does not require privity of interest before precluding proceedings, namely the doctrine of abuse of process where there is a collateral attack on the decision of a court of competent jurisdiction: see Mr Mercer’s report, 14, 47-52. In his reply report, Mr Layton stated that he did not agree with Mr Mercer’s opinion on the application of the doctrines of privity or abuse of process. However, I do not understand the reply report to indicate any clear disagreement as regards Mr Mercer’s statements of the applicable principles. Insofar as Mr Mercer set out the principles relating to privity (in paragraphs 35-39 of his report), I accept those statements as accurate statements of English law. However, it is difficult to predict how those principles would be applied to a hypothetical new proceeding against BHP Plc, and I find the application of those principles to such a proceeding to be quite uncertain. Insofar as Mr Mercer set out principles relating to abuse of process (in paragraphs 47-52 of his report), I accept those statements as accurate statements of English law. However, again, it is difficult to predict how those principles would be applied to a hypothetical new proceeding against BHP Plc, and I find the application of those principles to such a proceeding to be quite uncertain. I find that there is, at least, some risk that a new proceeding against BHP Plc would not be precluded by a judgment of this Court in this proceeding.

66    In paragraphs 20-25 of Mr Mercer’s report, he described the principles relating to representative actions in England and Wales. In his reply report at paragraph 8, Mr Layton stated that, subject to two points of clarification, he agreed with that description. I accept Mr Mercer’s description of the principles relating to representative actions in England and Wales, subject to the two points of clarification raised by Mr Layton.

67    Mr Mercer discussed principles relating to limitation of actions in his report. A paragraph 27.2 he stated that ss 90 and 90A of the Financial Services and Markets Act 2000 (UK) (the FSMA) are the primary mechanisms available to shareholders to bring claims against issuers for untrue or misleading statements or omissions in England, and are the closest equivalent to the claims brought by the applicants under Australian law in the present proceeding. He stated that the relevant time limit for breach of the statutory provisions is governed by the tort provisions in the Limitation Act 1980 (UK), s 2, which provides: “An action founded on a tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.” Mr Mercer stated that he understood that the events that gave rise to the present proceeding took place in or before 2015, and therefore there would appear in his view to be a substantial chance that proceedings commenced after the conclusion of the present proceeding (which he understood to be at an early stage) would be time-barred. In his reply report, Mr Layton stated at paragraph 11 that, while he agreed that a claim brought under s 90 and/or s 90A of the FSMA would be subject to a six-year limitation period under s 2 of the Limitation Act, a comparable claim would most probably be available for negligent misstatement, which would attract the provisions of ss 14A and 14B of the Limitation Act. Mr Layton stated that s 14A provides an extended time limit for negligence actions (except for personal injury or death) where facts relevant to the cause of action were not known to the claimant at the date of accrual of the cause of action. In such a case, time expires after either six years from the date of accrual of the cause of action, or after three years from the date of “the knowledge required for bringing an action for damages in respect of the relevant damage”, whichever is later. I accept the statements of principle relating to limitation of actions in Mr Mercer’s report and Mr Layton’s reply report. Having regard to the matters stated in Mr Layton’s reply report, I find that there is some risk that a limitation defence will not be available with respect to a new proceeding against BHP Ltd or BHP Plc.

Scots law and Northern Ireland law

68    It is not necessary for present purposes to refer in detail to the reports of Dr Hood QC (relating to Scots law) and Ms Anyadike-Danes QC (relating to Northern Ireland law). In each case, the expert was asked to address substantially the same questions as Mr Layton. While the principles of law were not the same as those of English law, each expert reached conclusions that were broadly the same as those reached by Mr Layton. The applicants did not file any responding evidence relating to Scots law or Northern Ireland law. In his report, Mr Mercer stated at paragraph 17 that he did not profess to have the requisite specialist knowledge of Scots law or Northern Ireland law to address the reports of Dr Hood and Ms Anyadike-Danes. In the absence of any responding evidence, I accept the opinions of Dr Hood and Mr Anyadike-Danes.

69    Mr Mercer, in paragraph 18 of his report, addressed the practical question whether he would expect a class action against a London listed entity such as BHP Plc to occur in Northern Ireland or Scotland as opposed to London. He stated that, in his experience, if there were to be a UK group action against BHP Plc, notwithstanding Australian proceedings, it is overwhelmingly likely that there would only be a single group action and that it would take place in London. See also paragraph 19 of Mr Mercer’s report. BHP Ltd did not file any reply evidence in relation to those paragraphs. In the absence of any reply evidence, I accept those paragraphs of Mr Mercer’s report.

South African law

70    Mr Snyckers SC was instructed to answer four questions that were substantially the same as the four questions addressed in Mr Layton’s report. Each of the questions related to a scenario in which a new proceeding raising the same issues is commenced in a court in the Republic of South Africa following the conclusion of the present proceeding. Questions 1, 2 and 3 related to a new proceeding against BHP Ltd, while question 4 related to a new proceeding against BHP Plc. The issue to which the report was directed was whether a judgment or order of this Court in the present proceeding would be recognised by a court of South Africa if such a new proceeding were commenced. Questions 1, 2 and 3 related to three different types of judgment or order in the present proceeding, namely (i) a judgment addressing the common questions on liability, (ii) an order for damages in favour of all Group Members, and (iii) an order approving a settlement. Ultimately, Mr Snyckers’s opinions did not differ depending on the type of judgment or order. It follows that the distinction between the three different types of judgment or order can be put to one side.

71    The expert report of Mr Farlam did not express any clear disagreement with the contents of Mr Snyckers’s report. In these circumstances, I accept the statements of principle and the opinions expressed in Mr Snyckers’s first report as an accurate statement of South African law in relation to the questions addressed in the report.

72    Mr Snyckers’s first report proceeded on the assumption that the South African court has assumed both subject-matter and personal jurisdiction over BHP Ltd (see paragraph 24.5). In paragraph 26 of his first report, Mr Snyckers stated there are two main ways in which the present proceeding outcomes could preclude or restrain the contemplated plaintiffs’ actions in South Africa, namely by the court upholding a defence of res iudicata (or issue estoppel) raised against the action, or by the court entertaining the claim but still recognising the present proceeding outcomes (by taking into account any benefit received by such plaintiff as a result of the present proceeding and deducting it from any benefit awarded in South Africa). Mr Snyckers discussed the principles of res iudicata at paragraphs 29 to 35 of his first report.

73    Mr Snyckers considered the potential applicability of the Protection of Businesses Act 99 of 1978 (SA) (the PBA) at paragraphs 36-66 of his first report. Section 1F of the PBA (set out at paragraph 38 of the report) deals with a foreign judgment constituting res iudicata. Mr Snyckers stated at paragraph 66:

I therefore conclude that –

1.    Section 1F of the PBA would apply to the same cause of action advanced in South Africa by the Applicants as against BHP Ltd, but would not apply in any proceedings brought by any Group Member, whether against BHP Ltd or BHP Plc; and

2.    Section 1F would not preclude the application of the common law principles of res iudicata to claims brought by Group Members, whether against BHP Ltd or against BHP Plc, and these fall to be considered as to when and how they would apply to such claims.

74    Mr Snyckers considered the application of the South African common law doctrine of res iudicata (and extensions to that doctrine) at paragraphs 67 to 84 of his first report.

75    Mr Snyckers considered the principles relating to submission to jurisdiction at paragraphs 85 to 93 of his first report.

76    In relation to a new proceeding brought by the applicants against BHP Ltd, Mr Snyckers concluded that, if the cause of action is the same as that advanced in the present proceeding, then s 1F of the PBA would preclude the applicants from advancing that same cause of action in South Africa, and this would be so probably even if the relief sought in South Africa differed from the relief sought in the present proceeding. However, if and to the extent that the cause of action is not the same, the common law principles would apply: see paragraph 98 of Mr Snyckers’s first report.

77    Mr Snyckers then considered a new proceeding against BHP Ltd commenced by Group Members who register to participate in a settlement of this proceeding following distribution of notices with respect to the same, and who do not subsequently opt out (referred to in the report as the “registered group”). Mr Snyckers expressed the view at paragraph 107 that the Group Members’ position is akin to that of a defendant who is not the initiating party but is joined to legal proceedings by the initiating party and ends up bound to the outcome of the proceedings. Mr Snyckers expressed the view at paragraph 108 that a South African court would find that, by not opting out of the present proceeding and by taking the positive step of registering their interest to participate in any settlement, after receipt of a notice explaining the consequences of registration and not opting out, considered objectively the members of the registered group manifested an intention to be bound by the outcome of the present proceeding, which would be sufficient to conclude that the registered group subjected themselves to the jurisdiction of the Federal Court of Australia in the present proceeding. Mr Snyckers concluded in relation to the registered group at paragraph 113 as follows:

Accordingly, in my view, it should be accepted that the members of the registered group would be precluded from bringing the same action against BHP Ltd in South Africa, or be precluded from adjudicating issues that were essential to the outcome in the Question 1 judgment, save that there might be some limited potential for declining to do so on equitable grounds where the relief sought in South Africa was materially different from that sought in the AU action.

78    Mr Snyckers next considered a new proceeding against BHP Ltd commenced by Group Members who do not register to participate in a settlement of the present proceeding and who do not opt out, following the receipt of notices with respect to the same (referred to in the report as the “first no-opt out group”). As noted in paragraph 114 of the report, the question was whether, given the judgment, a South African court would preclude or restrain a member of the first no-opt out group from bringing in the South African court the same or similar subject-matter claim to that brought by the applicants in the present proceeding. This required consideration of whether objectively (i.e. adjudged from the perspective of a reasonable person) the conduct of the first no-opt out group was consistent only with the conclusion, on the balance of probabilities, that they intended to be bound by the outcome of the present proceeding (see paragraph 118 of the report). Mr Snyckers’s view, expressed at paragraph 119, was that, on the assumption that it can be demonstrated on the balance of probabilities that the member in question received and read the notice, and was in a position to understand its import, a failure to opt out or to register an interest to participate would be held as supporting a conclusion of submission. Mr Snyckers expressed the view at paragraph 133 that, as long as a court (of South Africa) was satisfied of submission, there would, save for the case where the relief sought was materially different, be no reason to decline to uphold a defence of res iudicata in relation to issues that were tried in, or essential to the outcome of, the judgment in the present proceeding, against members of the first no-opt out group. I note that, in respect of this category of Group Members, Mr Snyckers’s conclusion in relation to South African law differs from the conclusion of Mr Layton in relation to English law.

79    Mr Snyckers then considered a new proceeding against BHP Ltd commenced by Group Members who did not receive any notice relating to opting out of or registering an interest to participate in any settlement in the present proceeding, and who did not register to participate in a settlement of the present proceeding and did not opt out (referred to in the report as the “second no-opt out group”). Mr Snyckers’s view, as stated in paragraph 140, was that, in the absence of special facts suggesting that members of the second no-opt out group became sufficiently aware of the contents of the notice or at least of the consequences of inaction, despite not receiving the notice, to warrant the inference that they must have submitted to jurisdiction, a South African court would not find there to have been submission, and would accordingly not apply the principle of res iudicata to preclude a claim by any such member against BHP Ltd in South Africa.

80    In relation to a new proceeding against BHP Plc, after careful and considered discussion of the issues, Mr Snyckers concluded at paragraph 172:

On balance, although this is a difficult question on which to reach a firm conclusion, I believe a South African court would allow an action against BHP Plc to proceed in South Africa, even if the issues and facts were substantially identical to those in the [present proceeding] against BHP Ltd that yielded a judgment or settlement, yet subject to the fact that it would be wary of allowing overcompensation of the relevant plaintiffs. Should a defendant be able to demonstrate that the only relief sought was in fact already fully compensated in the [present proceeding] as flowing from the same wrong (albeit committed by another party, or partly by another party), that may be sufficient to cause the court not to allow the action to proceed.

81    In the last section of his report, Mr Snyckers noted and discussed the different considerations that may apply when the action being brought in South Africa is a class action, and the question arises whether members who were Group Members in the present proceeding should be included in a class certified in an action against BHP Ltd or BHP Plc in South Africa.

82    I turn now to consider the matters discussed in Mr Farlam’s report and the reply report of Mr Snyckers.

83    Mr Farlam was instructed to consider two questions relating to extinctive prescription (or limitation of actions) under South African law, with reference to a hypothetical claim brought in South Africa under South African law, arising from disclosure and misrepresentation contraventions, against BHP Ltd and/or BHP Plc (referred to in the report as the “South African BHP claim”). Mr Farlam was instructed to assume that the South African claim was a delictual claim based on misrepresentation (as posited in Mr Snyckers’s report). Mr Farlam was asked to advise on the following questions:

(a)    What, if any, limitation period(s) would be applicable to such a claim in South Africa?

(b)    What is the effect of any applicable limitation period expiring on a claimant’s ability to litigate such a claim in South Africa?

84    In his reply report, Mr Snyckers stated at paragraph 10 that he considered Mr Farlam’s report to be an accurate, well-reasoned and reliable report on the issues on which it expresses views. In these circumstances, I accept the statements of principle and opinions expressed in Mr Farlam’s report as an accurate statement of South African law in relation to the questions addressed in the report. Although Mr Snyckers made some additional observations in his reply report, these do not affect the substance of the opinions expressed in Mr Farlam’s report.

85    In relation to the first question, Mr Farlam stated at paragraph 32 that prescription is generally governed by the Prescription Act, 68 of 1969 (SA). Sections 11 and 12 of that Act were particularly germane to the present question. He stated at paragraph 35 that a delictual claim is a claim in respect of an “other debt” as referred to in s 11(d) of that Act. Accordingly, a limitation period of three years would apply to the South African BHP claim. Mr Farlam stated that, under s 12, subject to exceptions, prescription runs as soon as the debt is due. As set out in paragraph 39 of the report, under s 12(3) of the Act, a debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises; provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care. Mr Farlam then discussed the case law regarding that test, including in the context of a claim reliant on a delictual cause of action involving negligent misstatement. Mr Farlam noted, at paragraph 50, that the completion of the three-year limitation period can be delayed or interrupted, pursuant to s 13 or 14 of the Prescription Act. This had potential application to BHP Ltd (as distinct from BHP Plc) as it was not registered as an external company in South Africa (see paragraph 57 of the report).

86    In relation to the second question, Mr Farlam stated at paragraph 59 that this issue was directly addressed by s 10(1) of the Prescription Act, which provides that “a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of the prescription of such debt”. Mr Farlam explained that this meant the debt was nullified and not merely rendered unenforceable.

87    In his reply report, Mr Snyckers discussed some additional matters, in particular choice-of-law issues that may arise. I accept Mr Snyckers’s reply report as accurately stating the principles of South African law relating to choice-of-law issues.

The first contention

88    BHP Ltd contends that, on its proper construction, Pt IVA of the Federal Court of Australia Act does not apply to the claims brought by the applicants on behalf of shareholders of BHP Ltd and/or BHP Plc who are not residents of Australia. BHP Ltd seeks a declaration to this effect and an order that the non-resident Group Members be excluded from the class of persons defined as Group Members in the proceeding. BHP relies on the presumption that legislation is not intended to operate extraterritorially and submits that that presumption is engaged in relation to Pt IVA and has not been displaced.

89    In its interlocutory application, BHP Ltd sought a declaration in the following terms:

1.    A declaration that Part IVA of the Federal Court of Australia Act 1976 (Cth) (the Act) does not apply to the claims brought by the Joint Applicants on behalf of shareholders of BHP Group Limited and/or BHP Group plc who are not residents of Australia and who:

a.    are not an applicant in proceedings brought under that Part; or

b.    have not otherwise submitted to the jurisdiction of the Court for the purpose of such proceedings.

90    However, in the course of oral submissions, senior counsel for BHP Ltd focussed on the proposition that, on its proper construction, Pt IVA does not apply to claims brought on behalf of persons who are not residents of Australia, without the qualifications expressed in sub-paragraphs (a) and (b) of paragraph 1 of the interlocutory application. Consistently with the way the argument was presented orally, senior counsel for BHP Ltd then indicated that BHP Ltd did not press sub-paragraphs (a) and (b) of the declaration sought in paragraph 1 of the interlocutory application. Thus, BHP Ltd’s contention is that Pt IVA does not apply to the claims brought by the applicants on behalf of shareholders of BHP Ltd and/or BHP Plc who are not residents of Australia.

91    BHP Ltd submits that, as a matter of statutory construction, the provisions of Pt IVA do not apply extraterritorially. It is submitted that the terms of the legislation do not evince an intention to operate extraterritorially so as to rebut the presumption that the legislature intended that the regime operate only within the territorial limits of Australia. To the contrary, BHP Ltd submits, the text suggests that the Part is intended to operate within those limits.

92    BHP Ltd relies, in particular, on s 33ZB of the Federal Court of Australia Act, which provides as follows:

33ZB    Effect of judgment

A judgment given in a representative proceeding:

(a)    must describe or otherwise identify the group members who will be affected by it; and

(b)    binds all such persons other than any person who has opted out of the proceeding under section 33J.

93    BHP Ltd submits that, properly construed, s 33ZB does not bind persons outside of the jurisdiction. It is submitted that, because of the integral role that s 33ZB plays in the scheme of Pt IVA (see Dyczynski v Gibson [2020] FCAFC 120 at [338] per Lee J), together with the general jurisdictional intent evinced by the text of the Act, the Part does not contemplate the bringing of proceedings on behalf of group members who are not residents of Australia.

94    BHP Ltd submits that there is a well-entrenched common law presumption, which may be displaced, against the extraterritorial operation of legislation; it is presumed that the Australian Parliament does not intend to deal with persons or matter over which, according to the comity of nations, jurisdiction belongs to some other sovereign or state: Barcelo v Electrolytic Zinc Co of Australasia Limited (1932) 48 CLR 391 at 423-424; Meyer Heine Pty Limited v China Navigation Co Limited (1966) 115 CLR 10 at 22-23, 30-32, 43; Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581 at 600-601; Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc (2003) 214 CLR 397 at 416.

95    BHP Ltd submits that: the legislature’s intent that a statute is to have extraterritorial operation must be provided for by express words or arise by necessary implication; the presumption is fortified by s 21 of the Acts Interpretation Act 1901 (Cth), which provides that references to localities, jurisdictions and other matters and things are references to those matters in the enacting jurisdiction (see Pearce & Geddes, Statutory Interpretation in Australia (8th ed) at [5.09]).

96    BHP Ltd submits that, in the absence of express words, the legislature’s intent that Pt IVA would have extraterritorial application must arise by necessary implication. But, it is submitted, that intent cannot be implied from the legislation, read in context, having regard to the legislative purpose and construing the statute as a whole: see Kumagai Gumi Co Limited v Commissioner of Taxation (1999) 90 FCR 274 at [43].

97    BHP Ltd submits that the Federal Court of Australia Act as a whole is not expressed in a general way to have extraterritorial effect (see, in particular, ss 3 and 18 and the limited use of the expression “foreign country”).

98    BHP Ltd submits that none of the provisions of Pt IVA directly supports the conclusion that s 33ZB specifically, or the Part generally, has extraterritorial operation; rather, they tend in favour of the opposite conclusion. BHP Ltd submits, by way of example:

(a)    No consent is required for a person to be made a group member (s 33E) and they do not become parties to the proceeding (see also s 33ZC, regarding appeals). This is relevant because an Australian court can only obtain in personam jurisdiction over someone resident overseas via valid service of process or through submission to the jurisdiction (see Davies et al, Nygh’s Conflict of Laws in Australia (10th ed), [3.4] and the authorities there cited). There is no difficulty presented by these requirements in ordinary inter partes litigation; the Court can obtain jurisdiction over a foreign person who is a plaintiff because in bringing the action that person will have invoked the Court’s jurisdiction, and over a foreign person who is a defendant via valid service (under Div 10.4 of the Federal Court Rules 2011 (Cth)) or voluntary submission. However, group members are not parties to Pt IVA proceedings; their consent is not required to be a group member (s 33E); and there is no opt-in mechanism provided for in Pt IVA – on the contrary, the only persons excluded from the group are those who notify the Court that they wish to opt out. Persons may be group members in a Pt IVA proceeding and be unaware of the litigation and its implications. Jurisdictionally, this presents no difficulty where group members are resident in Australia. But there is no provision under which the Court would obtain in personam jurisdiction over foreign group members.

(b)    A representative proceeding cannot be commenced if it would be concerned only with claims over which the Court has jurisdiction solely because of the cross-vesting legislation: s 33G.

(c)    Notwithstanding that they are not parties, the Court may give directions to group members, including with respect to the manner in which they are to establish their entitlement to a share in damages awarded by the Court (s 33Z(4)) or the manner in which they are to make a claim for payment out of a fund established for distribution to group members (s 33ZA(3)(b)). Again, such directions could validly be made in respect of non-parties who are resident within the jurisdiction, but in the absence of in personam jurisdiction, there is no apparent basis for making these orders in respect of foreign persons.

(d)    Section 33ZE provides for the suspension of any limitation period that applies to the claims of a group member upon the commencement of the representative proceeding. However, at common law, the application of limitation periods is customarily governed by the law of the forum (see John Pfeiffer Pty Limited v Rogerson (2000) 203 CLR 503 at [100] and [102]); that is, an action brought by a BHP Plc member in the United Kingdom or in South Africa would, at common law, be governed by the law of the forum. How could an Australian statute purport to suspend the operation of such a law? It certainly could not do so in the absence of express words.

(e)    Section 33X requires that notice be given to group members with regard to many matters affecting their rights. Notice regimes of this kind are important to the operation of Pt IVA. It is much harder for the Court to be certain that foreign group members have received adequate notice relevant to their rights and entitlements and obligations than is the case with Australian residents (see Lam v Rolls Royce Plc (No 3) [2015] NSWSC 83 (Lam)). Practical difficulties of identification and communication, language barriers, and unfamiliarity with the Australian group action provisions all combine to make it inherently unlikely that the legislature would adopt a generic notice regime without making appropriate provision for notices to be communicated to persons outside Australia.

99    BHP Ltd submits that s 33ZB is at the core of the legislative scheme governing representative proceedings. It is submitted that s 33ZB is not capable of binding non-resident group members. BHP Ltd submits that, at common law, both in England and Australia, a foreign judgment is enforceable against a person only if the person comes within one of the four cases in “Dicey’s Rule 36”, namely: (i) the person was present in the foreign country when the proceedings were instituted; (ii) the person was claimant or counterclaimed in the foreign proceeding; (iii) the person submitted to the jurisdiction of the foreign court by voluntarily appearing in the foreign proceeding; or (iv) the person had agreed prior to commencement of the foreign proceeding to submit to the jurisdiction of the foreign court in respect of the subject matter of the proceeding: see Rubin v Eurofinance SA [2013] 1 AC 236; [2012] UKSC 46 at [7]; see also Akers v Deputy Commissioner of Taxation (2014) 223 FCR 8 at [161]-[164]; Quarter Enterprises Pty Limited v Allardyce Lumber Co Limited (2014) 85 NSWLR 404 at [53], [145]. BHP Ltd submits that there is no textual or contextual indication that Parliament intended this provision to apply to persons beyond the jurisdiction of this Court; the explanatory materials for the legislation which introduced Pt IVA do not refer explicitly to the scheme contemplating claims on behalf of non-residents. BHP Ltd submits that: given the effect that s 33ZB has on the rights of persons affected by it, clear words would be required to extend the operation of the provision to persons outside the jurisdiction; no such words have been used; accordingly, the provision – which is central to the Pt IVA regime – does not have extraterritorial effect; this underscores the difficulty in overcoming the constructional presumption and attributing to the legislature an intention that the Part operate beyond Australia’s territorial boundaries.

100    BHP Ltd acknowledges that there is a substantial history of shareholder class actions that have advanced claims on behalf of foreign residents, but submits that the extraterritorial effect of Pt IVA has not been considered, as far as BHP Ltd can ascertain, in any previous class action or proceeding; the closest a court has come to considering whether s 33ZB (or Pt IVA as a whole), or its analogues in other jurisdictions, operates with extraterritorial effect is Lam: see Lam at [29], [30].

101    In my view, BHP Ltd’s contention that, on its proper construction, Pt IVA of the Federal Court of Australia Act does not apply to the claims brought by the applicants on behalf of non-resident Group Members should be rejected.

102    First, I doubt whether the presumption against the extraterritorial operation of legislation is the correct starting place. Part IVA of the Federal Court of Australia Act does not itself confer jurisdiction on the Court. Rather, Pt IVA establishes a scheme of powers and procedures by which the Court can exercise the jurisdiction that it otherwise possesses to hear and determine, in a single proceeding, the “claims” of seven or more persons having the characteristics described in s 33C: see Wong v Silkfield Pty Limited (1999) 199 CLR 255 at [1]; see also Mobil Oil Australia Pty Limited v Victoria (2002) 211 CLR 1 at [10] (in relation to Pt 4A of the Supreme Court Act 1986 (Vic)). The territorial reach of the Court’s powers under Pt IVA is therefore necessarily as extensive as the substantive laws which confer jurisdiction on the Court in relation to particular claims. For this proceeding, this means the substantive provisions of the Corporations Act and the ASIC Act upon which the claims are founded (together with s 39B(1A)(c) of the Judiciary Act 1903 (Cth) and/or s 1337B(1) of the Corporations Act). Assuming that those substantive provisions apply to claims for loss and damage by foreign residents, the Court’s powers under Pt IVA are capable of exercise in relation to such persons unless there is, in Pt IVA, some express or necessarily implied restriction inhibiting the availability of its procedures to foreign residents.

103    Secondly, nothing in Pt IVA expressly limits its provisions to residents of Australia. In particular, s 33C(1) simply refers to a representative proceeding being commenced on behalf of “7 or more persons” whose claims satisfy the prescribed statutory criteria.

104    Thirdly, BHP Ltd’s submission that s 33ZB does not apply extraterritorially, so as to bind persons outside the territorial jurisdiction of the Court, focuses on the wrong enquiry. The relevant question is whether, from the perspective of Australian law, Pt IVA in general, and s 33ZB in particular, operates to bind foreign-resident group members. Undoubtedly, it does. After the Court gives judgment in a representative proceeding, the effect of s 33ZB is that the judgment will bind foreign-resident group members (other than those who opted out) in the sense that it will operate as a form of “statutory estoppel” (see Timbercorp Finance Pty Limited (in liq) v Collins (2016) 259 CLR 212 at [52] per French CJ, Kiefel, Keane and Nettle JJ) barring any such person bringing subsequent proceedings in this Court (or any other Australian court) raising the same issues. Whether this Court’s judgment could be enforced in another jurisdiction or would bind foreign-resident group members in the sense that it would bar them from bringing proceedings raising the same or similar issues in a foreign court raises quite separate questions, the answer to which turns on the laws of the foreign jurisdiction relating to enforcement, issue estoppel, abuse of process and like principles, as discussed above.

105    Fourthly, contrary to BHP Ltd’s submissions, it is not to the point that, pursuant to s 33E, consent is not required to be a group member. Given that group members are not parties to a representative proceeding, the question whether the Court has personal jurisdiction with respect to them simply does not arise. Relevantly, what is required is that the Court have personal jurisdiction over the respondent, and subject-matter jurisdiction over the claims. In this case, each of these requirements is satisfied.

106    Fifthly, BHP Ltd’s submissions conflate the giving of directions pursuant to particular provisions of Pt IVA with respect to group members, with the assertion of jurisdiction over those group members.

107    Section 33Z(4), referred to in BHP Ltd’s submissions, provides:

(4)    Where the Court has made an order for the award of damages, the Court may give such directions (if any) as it thinks just in relation to:

(a)    the manner in which a group member is to establish his or her entitlement to share in the damages; and

(b)    the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined.

108    Section 33ZA(3)(b), also referred to in BHP Ltd’s submissions, provides:

(3)    Where the Court orders the constitution of a fund mentioned in subsection (1), the order must: …

(b)    specify the manner in which a group member is to make a claim for payment out of the fund and establish his or her entitlement to the payment; …

109    It is not apparent why the Court could not give a direction which specified the manner in which group members (whether resident or non-resident) are to establish their entitlement to share in the damages; the manner in which any dispute regarding a group member’s damages entitlement is to be determined; or the manner in which a group member is to make a claim for payment. It is then a matter for those group members (to whom the necessary notices would have been issued pursuant to s 33X) to decide whether to take steps in the manner directed by the Court if they seek to share in the damages, resolve a dispute regarding their entitlement to share in the damages, or make a claim for payment out of the fund for distribution.

110    Sixthly, insofar as BHP Ltd relies on s 33ZE, which operates to suspend “the running of any limitation period that applies to the claim of a group member to which the proceeding relates”, the section evinces the legislature’s concern that an individual group member’s claim in an Australian proceeding should not be prejudiced by the proceeding having been commenced as a representative proceeding: see Bright v Femcare Limited [2002] FCA 11 at [8] per Stone J. It may be accepted that s 33ZE does not regulate the operation, or suspension, of limitation periods applicable to claims in a foreign jurisdiction under the law of that jurisdiction. That is because the operation of such limitation periods is a matter for the law of that foreign jurisdiction, including the applicable rules of private international law. However, that does not support a view that Pt IVA excludes claims by foreign-resident group members. Insofar as those foreign-resident group members have an individual claim within this Court’s jurisdiction to which the representative proceeding relates, the running of that limitation period will be suspended by operation of s 33ZE.

111    Seventhly, the notice requirements in s 33X contain no suggestion of any kind of geographic limitation. It cannot be said that any additional difficulty with giving notice to foreign-resident group members necessarily inheres in all representative proceedings; all the more so in shareholder class actions where the share register is the usual notice mechanism. Practical difficulties that might arise in particular cases are not a sufficient reason for construing the statute so as to exclude foreign-resident group members in all cases.

112    Eighthly, Lam, which is referred to in BHP Ltd’s submissions, does not constrain the operation of s 33ZB with respect to foreign-resident group members. The relevant issue in Lam was simply whether, in making class closure orders, the Court should exclude from the group those foreign-resident group members who did not register to participate in the proceeding in order to protect the interests of those group members in the circumstances of that case.

113    Ninthly, BHP Ltd’s contention finds no support in the legislative history or context of Pt IVA. As Kiefel CJ, Bell and Keane JJ stated in BMW Australia Limited v Brewster (2019) 374 ALR 627 (BMW v Brewster) at [82]:

The objectives of Pt IVA of the FCA were identified by the Australian Law Reform Commission (“the ALRC”) prior to its enactment. They were two-fold: first, to enhance access to justice for claimants by allowing for the collectivisation of claims that might not be economically viable as individual claims; and secondly, to increase the efficiency of the administration of justice by allowing a common binding decision to be made in one proceeding rather than multiple suits. Part IVA of the FCA, and later Pt 10 of the [Civil Procedure Act 2005 (NSW)], which emulated Pt IVA, pursued these objectives through the regime for representative proceedings tailored to address these defects in the law.

(Footnote omitted.)

114    BHP Ltd did not point to any extrinsic materials suggesting that these objectives were confined to claims on behalf of persons resident in Australia. Indeed, it would run counter to the principal objectives of Pt IVA, as outlined above, if claims on behalf of non-residents (against a respondent amenable to the Court’s jurisdiction) could not be included in a representative proceeding under the Part (with the result that each non-resident who wished to bring a claim would be required to commence a separate proceeding).

115    I note for completeness that BHP Ltd’s submission that, at common law, the application of limitation periods is customarily governed by the law of the forum, does not accurately reflect the case cited, namely John Pfeiffer Pty Limited v Rogerson at [100] and [102].

116    For these reasons I conclude that Pt IVA evinces an intention to encompass and, by operation of s 33ZB, to bind, all group members irrespective of their place of residence, unless they opt out of the proceeding. I therefore reject BHP Ltd’s first contention.

The second contention

117    In the alternative to its first contention, BHP Ltd contends that, as a matter of discretion, pursuant to s 23 or s 33ZF of the Federal Court of Australia Act, the Court should exclude certain categories of Group members from the proceeding. BHP Ltd seeks a number of different orders in the alternative. These are set out in paragraphs 2-4 of its interlocutory application:

2.    An order pursuant to s 23 and/or s 33ZF of the Act that:

a.    shareholders of BHP Group Limited and/or BHP Group plc who are not residents of Australia be excluded from the class of persons defined as Group Members in this proceeding nunc pro tunc; alternatively

b.    the proceeding be stayed pending an amendment by the Joint Applicants to paragraph 3 of the Consolidated Statement of Claim dated 16 August 2019 to limit the definition of Group Members to shareholders of BHP Group Limited and/or BHP Group plc who are residents of Australia.

3.    Alternatively to order 2, an order pursuant to s 23 and/or s 33ZF of the Act that:

a.    shareholders of BHP Group plc who are not residents of Australia be excluded from the class of persons defined as Group Members in this proceeding nunc pro tunc; alternatively

b.    that the proceeding be stayed pending an amendment by the Joint Applicants to paragraph 3 of the Consolidated Statement of Claim dated 16 August 2019 to limit the definition of Group Members to:

i.    shareholders of BHP Group Limited; and

ii.    those shareholders of BHP Group plc who are residents of Australia.

4.    Alternatively to orders 2 and 3, an order pursuant to s 23 and/or s 33ZF of the Act that any shareholders of BHP Group Limited and/or BHP Group plc who are not residents of Australia and who do not submit to the jurisdiction of the Court by registering their interest to participate in the proceeding within [eight weeks of the date of these orders] are excluded from the class of persons defined as Group Members in this proceeding.

118    While paragraph 2 seeks the exclusion of shareholders of BHP Ltd and/or BHP Plc who are not residents of Australia, paragraph 3 seeks the exclusion of shareholders of BHP Plc who are not residents of Australia. Paragraph 4 seeks the exclusion of shareholders of either company who are not residents of Australia and who do not register to participate in the proceeding. In summary, BHP Ltd seeks the exclusion of either:

(a)    all shareholders of BHP Ltd and/or BHP Plc who are not residents of Australia; alternatively all shareholders of BHP Plc who are not residents of Australia; or

(b)    all non-resident Group Members who do not register to participate in the proceeding.

119    Section 23 of the Federal Court of Australia Act provides:

23    Making of orders and issue of writs

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.

120    Section 33ZF provides:

33ZF    General power of Court to make orders

(1)    In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

(2)    Subsection (1) does not limit the operation of section 22.

121    BHP Ltd submits that: the Court has power, under s 23 or 33ZF of the Federal Court of Australia Act or under its incidental power to control its own proceeding, to make discretionary orders of the kind sought; the High Court’s decision in BMW v Brewster does not affect the Court’s ability to make the orders sought by BHP Ltd in this case; BHP Ltd’s application does not concern whether the action should proceed at all; it is directed at how the action proceeds, that is, the composition of the representative group on whose behalf the action proceeds. BHP Ltd also submits that, given the evidence that a judgment would not finally quell the controversy between BHP Plc shareholders and BHP Plc, or between ‘passive’ non-resident Group Members and BHP Ltd, an order excluding non-resident Group Members, or at least those who remain passive by not registering their interest by a prescribed date, is appropriate and necessary to ensure the proceeding is brought fairly and effectively to a just outcome, and thus within power in s 33ZF. BHP Ltd submits that, if (contrary to its submissions) s 33ZF does not confer power, s 23 provides sufficient power to make the order sought: see Evans v Davantage Group Pty Limited (No 2) [2020] FCA 473 (Evans) at [5] per Beach J.

122    BHP Ltd submits that: the relief in sub-paragraph (a) of [118] above is appropriate and necessary in light of the evidence from each of the experts in the United Kingdom and the expert in South Africa to the effect that, notwithstanding the dual listing, BHP Plc would not (or would at least be very unlikely to) take the benefit of the res judicata estoppel that would accrue to BHP Ltd upon judgment being delivered in this proceeding. Therefore, BHP Ltd submits, no matter what happens in relation to the claims of BHP Plc group members in this proceeding, they will retain separate rights of action against BHP Plc in the jurisdictions in which that company’s shares are exchanged. BHP Ltd relies on the expert evidence of Mr Layton, Dr Hood, Ms Anyadike-Danes and Mr Snyckers regarding the prospect of a new proceeding raising the same issues being commenced following the conclusion of the present proceeding.

123    BHP Ltd submits that if non-resident shareholders, particularly those non-resident shareholders of BHP Plc, are permitted to remain in the group, and potentially benefit from any judgment or settlement in this proceeding, without BHP Plc being recognised as having any rights under a judgment capable of enforcement in a subsequent similar subject-matter claim in the United Kingdom or South Africa, then substantial prejudice will be occasioned to both BHP Ltd and BHP Plc.

124    BHP Ltd submits that: in the event the Court is not inclined to exclude all non-resident Group Members, or exclude those non-resident Group Members who are shareholders of BHP Plc, then at a minimum an order should be made requiring Group Members to register and, failing registration, non-resident Group Members should be excluded from the proceeding; without foreign Group Members taking the positive step of agreeing to be bound by a judgment or order in this proceeding that affects their rights (i.e. agreeing to be bound as a group member for the purposes of s 33ZB), there is a real risk that a judgment in this proceeding will not be recognised as operating to preclude the bringing of subsequent proceedings against BHP Ltd (as well as BHP Plc) in respect of the same subject-matter. BHP Ltd relies on the expert evidence of Mr Layton, Dr Hood, Ms Anyadike-Danes and Mr Snyckers regarding the likely preclusive effect of a judgment of this Court in the event that a new proceeding raising the same issues were commenced by a non-resident Group Members who registered to participate in any settlement of this proceeding.

125    BHP Ltd submits that the non-preclusive effect of a judgment of this Court if a new proceeding were commenced against BHP Plc, or a new proceeding were commenced against BHP Ltd by a Group Member who did not register to participate, works real unfairness to each BHP entity. BHP Ltd submits that: it would ordinarily conduct its defence of this proceeding on the basis that the litigation will finally determine the claims of all Group Members aside from those who have opted out; that is, the Court’s orders disposing of the proceeding would ordinarily deliver to the respondent the benefit of finality in relation to the claims of Group Members who are bound by the judgment of the Court; the evidence reveals that that is not likely to be the case in relation to the shareholders of BHP Plc, who will have their right of action preserved against that particular entity, or in respect of any non-residents who do not take the step of registering to participate in this proceeding (that being so in the United Kingdom and possibly in South Africa, depending on the group member’s individual circumstances). BHP Ltd relies on the principle of the finality of litigation, referring to Johnson v Gore Wood and Co [2002] 2 AC 1 at 31.

126    BHP Ltd submits that, by excluding from the group those foreign residents who are likely to retain a right of action against BHP Ltd notwithstanding the exercise of judicial power in this proceeding, the Court would be ameliorating a substantial unfairness: the denial of the benefit of a res judicata estoppel. BHP Ltd submits that the size of the non-resident cohort within the class represented by the applicants, as set out in Mr Betts’s affidavit, strengthens the case for excising those Group Members who are likely to retain their right of action against BHP Plc and, in the case of non-registered Group Members, BHP Ltd, notwithstanding a judgment being delivered in this proceeding.

127    BHP Ltd submits that: against this prejudice to the respondent is the question of what, if any, prejudice is sustained by those non-resident Group Members who are excluded from the proceeding; if an order is made excluding all non-resident Group Members, or those who are shareholders of BHP Plc, then it may be accepted that they lose their right of action against BHP Ltd in Australia (at least insofar as this proceeding is concerned); but for the reasons developed in support of BHP Ltd’s third contention, there is real doubt that any of the causes of action pleaded on behalf of shareholders of BHP Plc are viable. BHP Ltd submits that: in the event the Court is only prepared to exclude those non-resident Group Members who fail to register to participate, then there is no prejudice to Group Members at all; those Group Members who, having received notice, wish to avail themselves of the opportunity to participate, can hardly be said to have been prejudiced by being required to take a positive step to submit to the Court’s jurisdiction at an early stage. BHP Ltd submits that, in contrast with the orders that were held to be invalid in Haselhurst v Toyota Motor Corp Australia Limited t/as Toyota Australia (2020) 101 NSWLR 890 (Haselhurst), the registration order BHP Ltd seeks effects no extinguishment, contingent or otherwise, of the rights of those non-residents who fail to register; rather, their rights are preserved in the same way as the rights of Group Members who exercise an opt-out right are preserved – they will not be bound by any settlement or judgment.

128    In my view, there is a real question whether the Court has the power, under s 33ZF or 23 of the Federal Court of Australia Act or otherwise, to make an order excluding from the represented group all non-resident Group Members (or all non-resident shareholders of BHP Plc) on the grounds relied on by BHP Ltd, namely the risk of re-agitation of the same issues in a new proceeding in another country against BHP Plc or BHP Ltd. Section 33ZF(1) allows the Court to “make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding”. The reference to “the proceeding” is, of course, to the present proceeding. While the power conferred by s 33ZF is broad, it is essentially a supplementary or gap-filling power: see BMW v Brewster at [46], [70] per Kiefel CJ, Bell and Keane JJ, [145] per Gordon J. The sole ground on which BHP Ltd seeks the exercise of the Court’s discretion to exclude all non-resident Group Members (or all non-resident shareholders of BHP Plc) is the potential for prejudice to BHP Ltd or BHP Plc by reason of the risk of re-agitation of the same issues in potential foreign proceedings. That is, at least arguably, not a purpose related to ensuring “that justice is done in the proceeding as between the parties to it” (BMW v Brewster at [50]) or “to advance the effective determination by the court of the issues between the parties to the proceeding” (BMW v Brewster at [50]). This concern is clearer insofar the risk of a new proceeding against BHP Plc is relied upon, given that BHP Plc is not a party to this proceeding. However, whether the risk relates to a new proceeding against BHP Ltd or BHP Plc, the application is largely, if not entirely, directed to a potential future proceeding rather than to the present proceeding. Thus there is a real question whether the Court has power under s 33ZF to exclude all non-resident Group Members (or all non-resident shareholders of BHP Plc) from the proceeding on the ground relied on by BHP Ltd. Further, if s 33ZF does not empower the Court to make the orders sought by BHP Ltd, it is at least doubtful that it is open to BHP Ltd to rely on the more general power in s 23: see Leon Fink Holdings Pty Limited v Australian Film Commission (1979) 141 CLR 672 at 678 per Mason J (and the cases there cited); Blairgowrie Trading Limited v Allco Finance Group Limited (recs and mgrs apptd) (in liq) (2015) 325 ALR 539 at [105]-[106] per Wigney J; Perera v GetSwift Limited (2018) 263 FCR 1 at [143] per Lee J. Logic would suggest that the same applies to the Court’s incidental power to control its own proceedings.

129    However, I do not consider it necessary to determine whether or not there is power to make an order of the kind described in sub-paragraph (a) of [118] above because, in any event, I do not consider it appropriate to make such an order.

130    As already discussed, the sole ground upon which BHP Ltd seeks the exclusion of all non-resident Group Members (or all non-resident shareholders of BHP Plc) is the risk of re-agitation of the same issues in a new proceeding in another country against BHP Plc or BHP Ltd. While I accept there to be, at least, some risk of this occurring, I do not consider it appropriate, on balance, to make such an order pursuant to s 33ZF or s 23 or the Court’s incidental power (assuming there is power to do so). The order sought by BHP Ltd would see the exclusion from the represented group of a large number of persons who (it is to be assumed for present purposes) have arguable claims against BHP Ltd. I do not consider the exclusion of either cohort (that is, all non-resident Group Members or all non-resident shareholders of BHP Plc) to be in the interests of justice because it would deprive the relevant Group Members of the ability to pursue their claims within the framework of this representative proceeding. Further, the exclusion of either cohort may well be productive of inefficiency and wasted costs, as the excluded Group Members would then need to commence separate proceedings against BHP Ltd in this Court (or another Australian court), if they wished to pursue the claims.

131    To the extent that BHP Ltd submits that s 33ZB will not operate to bind non-resident Group Members because they will be able to commence a new proceeding raising the same issues in the courts of the United Kingdom or South Africa, this submission misconceives the terms and effect of s 33ZB. Any judgment in this proceeding will bind Group Members (other than those who opt out) as a matter of Australian law. Thus, s 33ZB will operate in accordance with its terms. If a subsequent proceeding is commenced in a foreign country, the effect (if any) of the judgment in this proceeding will be a matter to be determined by the law (including rules of private international law) of that country.

132    For these reasons, on balance, I do not consider it to be in the interests of justice in this proceeding to make an order excluding all non-resident Group Members or all non-resident shareholders in BHP Plc.

133    Insofar as BHP Ltd seeks, in the alternative, an order excluding all non-resident Group Members who do not register to participate in this proceeding, I accept that the Court has power under s 33ZF of the Federal Court of Australia Act to make such an order (at least) to facilitate settlement discussions between the parties. Orders providing for a process of registration have been made by the courts on numerous occasions: see Melbourne City Investments Pty Limited v Treasury Wine Estates Limited (2017) 252 FCR 1 at [74]. While the NSW Court of Appeal held in Haselhurst that the registration and class closure orders made by the trial judge in that case were beyond the power conferred by s 183 of the Civil Procedure Act 2005 (NSW), which is the cognate to s 33ZF of the Federal Court of Australia Act, the purpose and effect of the relevant order was to effect a contingent extinguishment of unregistered group members’ rights of action against the defendant. In contrast, the order sought by BHP Ltd in the present case would not extinguish, contingently or otherwise, the rights of non-resident Group Members who did not register.

134    However, I do not consider it appropriate, at least at this stage, to make an order excluding all non-resident Group Members who do not register to participate in the proceeding. While a process of registration may well be appropriate at some stage, I consider it premature to make orders providing for such a process at the present stage of the proceeding. A defence has not yet been filed and discovery has not yet taken place. The issues in the proceeding have not yet been defined. In these circumstances, the information available to non-resident Group Members upon which to make a decision whether or not to register would be very limited. I note also that this is not a situation where a mediation of the proceeding is imminent. Further, if and to the extent that a process of registration may ameliorate the risk of a new proceeding raising the same issues being commenced against BHP Ltd after the conclusion of this proceeding, this effect would be achieved by a registration process that takes place later in the course of this proceeding.

135    For these reasons, I do not consider it appropriate to make any of the orders sought by BHP Ltd in paragraphs 2-4 of its interlocutory application.

The third contention

136    Independently of its first and second contentions, BHP Ltd contends that the causes of action pleaded on behalf of Group Members who acquired shares in BHP Plc (as distinct from BHP Ltd) are not viable and ought to be struck out. By paragraph 5 of its interlocutory application, BHP Ltd seeks:

An order pursuant to r 16.21 of the Federal Court Rules 2011 (Cth) that paragraphs 3(a)(ii), 3(a)(iii), 8, 71 to 80, 82(b) and 82(c) of the Consolidated Statement of Claim be struck out.

137    In its outline of submissions, BHP Ltd puts its argument solely on the basis that the pleading “fails to disclose a reasonable cause of action” (see r 16.21(1)(e) of the Federal Court Rules).

138    BHP Ltd submits, in summary, that the alleged contraventions by BHP Ltd, even if established, cannot have caused loss to persons acquiring shares in a different, foreign company (BHP Plc) on a foreign stock exchange.

139    The principles applicable to an application to strike-out a pleading or part of a pleading were considered by Kenny J in Polar Aviation Pty Limited v Civil Aviation Safety Authority (No 4) (2011) 203 FCR 293 (Polar Aviation) at [7]-[12] (in the context of the predecessor rule under the previous Rules of the Court). At [8], Kenny J stated that, in essence, the rule relates to the sufficiency of pleadings. Her Honour quoted the following passage from the judgment of the Full Court in Wride v Schulze [2004] FCAFC 216 (Wride) at [25]:

[T]he pleadings must disclose a reasonable cause of action against the party against whom the cause of action is brought and must state all material facts necessary to establish that cause of action and the relief sought. A “reasonable cause of action” for this purpose means one which has some chance of success if regard is had only to the allegations and the pleadings relied on by the applicant.

140    In Polar Aviation at [9], Kenny J set out a summary of principles, endorsed by the Full Court in Wride, drawn from the judgment of Beaumont J in Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (unreported, Federal Court of Australia, 13 September 1994). These principles included:

(5)    Where a point of law has to be decided, and the judge is satisfied that this can be done by him appropriately, thereby avoiding the necessity of, and expense in going to trial, he is entitled to determine the point: cf Williams & Humbert v W & H Trade Marks [1986] AC 368.

141    Having set out those principles, Kenny J stated at [10] that it is generally accepted that the power to strike out a pleading under the relevant rule “must be exercised with caution and should only be exercised in the plain and obvious case”. Her Honour also stated at [12]:

Notwithstanding the need for caution, where in a strike-out application, a point of law arises, which can appropriately be decided at the interlocutory stage, the judge is entitled to determine the point, thereby avoiding the need for and expense of a lengthy trial. For the reasons set out below, this is a case in which certain points of law should be decided at this stage, since their disposition does not depend on further evidence and findings of fact, and their resolution will limit any future trial.

142    The applicable principles were recently considered by the Victorian Court of Appeal in Uber Australia Pty Limited v Andrianakis [2020] VSCA 186. In the context of an application by the parties referred to as the Australian Uber entities for an order under r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) that the statement of claim be struck out as either not disclosing a cause of action or being embarrassing, the Victorian Court of Appeal (Niall, Hargrave and Emerton JJA) stated at [35]:

Uber’s contentions on ground 1 fail to grapple with the high hurdle it must cross, and the low bar confronting the plaintiff. When a defendant contends that a statement of claim should be struck out because it does not disclose a cause of action it is necessary for a defendant in the position of Uber to establish that it would be futile to allow the statement of claim to go forward, because it raises a claim that has no real prospect of success in the sense of being ‘fanciful’. It follows that, where there is a contentious or debatable point of law which arises on a pleading, it is usually inappropriate for a trial judge or the Court of Appeal to determine the issue on a strike-out application, particularly where the answer may depend upon the factual context.

143    To similar effect, in the context of an application for leave to amend a statement of claim, and in circumstances where there was no authority on the point and the construction for which the respondent (plaintiff) contended was at least arguable, Nettle JA stated in RSD Chartered Accountants v Bolitho (2014) 102 ACSR 528 at [17]-[18]:

[17]    In those circumstances, the submission advanced by senior counsel for the applicant, that it was incumbent on the judge below, and now incumbent on this court on appeal, to determine the issue forthwith, is tantamount to saying that a court should be prepared on a strike out application to make a final decision on a debatable and contentious point of law on which there is as yet no authority.

[18]    As appears from judgment of Williams J in Healey v Bank of New South Wales, which was recently referred to with approval by Croft J in Clarke v Great Southern Finance Pty Ltd, it would be wrong to do so. In cases where what is in issue is a seriously arguably novel point of law, and particularly where, as here, the answer may well depend upon the factual context, it is not the task of a judge at first instance or this court on appeal to undertake an exercise of that kind at this very early stage of the proceeding.

(Footnotes omitted.)

144    In the section of these reasons headed “The statement of claim”, I have provided an outline of the statement of claim and have set out the paragraphs that are the subject of the strike-out application.

145    I now summarise BHP Ltd’s submissions in support of the proposition that the claims made on behalf of shareholders of BHP Plc are not viable. In doing so, I omit the submissions (contained in BHP Ltd’s written submissions) that have been overtaken by the amendments to the statement of claim made at the hearing.

146    BHP Ltd makes clear in its submissions that, for the purposes of the strike-out application (and for this purpose only) it assumes the correctness of all factual allegations in the pleading.

147    BHP Ltd deals separately with the claims based on s 674 of the Corporations Act and the misleading or deceptive conduct claims (s 1041H of the Corporations Act and s 12DA of the ASIC Act). BHP Ltd’s submissions in relation to s 674 of the Corporations Act may be summarised as follows:

(a)    Section 674 of the Corporations Act was introduced in order to enhance the efficiency and integrity of capital markets: see Grant-Taylor v Babcock & Brown Pty Limited (in liq) (2016) 245 FCR 402 at [92] per Allsop CJ, Gilmour and Beach JJ. The capital markets being spoken of are, self-evidently, Australia’s capital markets. The purpose of s 674 is not to regulate or promote efficiency in capital markets in general; in particular, its purpose is not to regulate conduct in, or affecting, foreign financial markets. It is intended to operate to protect investors in Australian capital markets who trade in the securities of the disclosing entity.

(b)    For there to be compensable loss suffered as a result of a breach by BHP Ltd of s 674, it must be loss that was within the contemplation of the statute: see Henville v Walker (2001) 206 CLR 459 at [101]-[102] per McHugh J.

(c)    Attention must be directed to the legal framework in which the alleged cause of action arises. As Beach J stated in TPT Patrol Pty Limited as Trustee for Amies Superannuation Fund v Myer Holdings Limited (2019) 140 ACSR 38 (Myer) at [1640], any normative causation analysis with respect to continuous disclosure must start and finish with the statutory text of ss 674, 1317HA and 1325 considered in context and in the light of legislative purpose. That is, what legal responsibility does the statute seek to impose on a company for an investor’s loss and damage flowing from a breach of the continuous disclosure provisions?

(d)    Section 1317HA of the Corporations Act, which provides for compensation orders to be made for contravention of financial services penalty provisions (including s 674), is clearly directed to compensating investors in the disclosing entity in the financial markets to which disclosure is mandated by force of s 674. So too is the ancillary relief provision in s 1325 insofar as it applies to the continuous disclosure provisions in Chapter 6A of the Corporations Act. The statute is directed at ensuring that investors in these prescribed financial markets, who trade in shares in the disclosing entity (BHP Ltd), do not suffer loss by virtue of a breach of the ASX listing rules. The statute does not contemplate, on its terms, the recovery of damages for breach of s 674 by an investor who acquired shares in a different entity to the disclosing entity on a foreign capital market.

(e)    The applicants’ causation pleading on behalf of investors in BHP Plc shares, particularly the repeated use of the words “influenced by”, invokes the principle of indirect causation, but at a step removed from the usual way in which the principle is invoked in s 674 cases. The principle of indirect causation, as recognised by Beach J in Myer in relation to continuous disclosure, does not avail investors who acquired shares in BHP Plc on the LSE or JSE. In Myer, Beach J’s analysis on causation proceeded on the assumption that the protection offered by s 674 is directed to ensuring “a well-informed market in a particular company’s securities” (at [1649]; see also [1650]). He also cited, in his discussion of market based causation (see [1605]-[1608], [1665]), the dicta of McHugh J in Henville v Walker at [101]-[103], observing that McHugh J’s “first category” of case “is not a bad analogy to the context I am considering” (at [1608]). That “first category” of case is where the defendant’s act or omission sets in train a series of physical events which result in loss or damage. But, as McHugh J notes, “[e]xceptionally, however, the policy or rationale of the legal norm that has been breached will require the court to disregard the physical connection and to make a finding of no causal connection”. McHugh J then refers, at [102], to Gorris v Scott (1874) LR 9 Ex 125. In other words, where an investor in a disclosing entity on the ASX suffers loss by reason of a share price fall set in train by the entity’s failure to disclose material information to the ASX, that loss may be seen as falling within the first category of case. But investors in a non-disclosing entity on a foreign and different financial market fall within the exception; namely, where the damage is not contemplated by the legislation which gives rise to the cause of action.

(f)    Further, and critically for present purposes, Beach J did not determine whether passive indirect causation sufficed to establish the necessary causal link; nor did he consider whether causation could be established where investors in a foreign market reacted to news released in the Australian market or to movements in the price of securities in the Australian market.

(g)    The consequences of accepting that shareholders in an entity other than the disclosing entity – in particular, shareholders in entities trading on completely separate financial markets – can sue for damages for a breach of s 674 are significant. If the premise upon which the applicants seek to recover damages on behalf of the BHP Plc investors is accepted, there is no obvious limiting principle upon which the court can restrict its application to companies with a dual listing.

(h)    For these reasons, even if one accepts, for the purposes of the application, that all of the facts alleged in the statement of claim are proved at trial, the s 674 claims of the LSE and JSE shareholders would fail in limine because the provisions they rely upon simply do not provide them with a cause of action.

148    BHP Ltd’s submissions in relation to s 1041H of the Corporations Act and s 12DA of the ASIC Act can be summarised as follows:

(a)    Section 1041H proscribes conduct “in this jurisdiction”, “in relation to a financial product or a financial service”, that is misleading and deceptive or likely to mislead or deceive. While the words “in this jurisdiction” do not mean that all of the relevant conduct must occur in this jurisdiction, it is significant that authority suggests that misleading and deceptive conduct is taken to have occurred where the relevant representation is received.

(b)    The applicants appear to allege that the BHP Ltd’s conduct occurred in this jurisdiction and was responded to in this jurisdiction by the Australian share market, which in turn influenced the share price of BHP LSE Shares and BHP JSE Shares. The difficulty with this claim is that foreign BHP Plc group members must have suffered loss and damage by reacting, not to the misleading conduct of BHP Ltd, but to the conduct of Australian share market investors. That is, it was the reaction of Australian share market investors to conduct by BHP Ltd in Australia which impacted the price of BHP LSE Shares and BHP JSE Shares on those foreign exchanges. This causal theory goes beyond the limits of market-based causation currently recognised under Australian law. Both first instance decisions in which market-based causation has been accepted in this country – Re HIH Insurance Limited (in liq) (2016) 335 ALR 320 (HIH Insurance) and Myer – involved the purchase of shares on the ASX only. In each case, it was accepted that the requirements of causation for a contravention of s 1041H could be established if group members acquired shares in the defendant/respondent, on the ASX, at a market price that was artificially inflated by reason of the disclosing company’s misleading conduct. In HIH Insurance, Brereton J justified his conclusion that causation was established by drawing an analogy between the facts before him and the first class of case identified by McHugh J in Henville v Walker at [101].

(c)    The only way in which BHP Plc shareholders could establish the requisite connection on the causal theory referred to in paragraph (b) above is under this first class of case referred to by McHugh J, because the second – where a person acts to his or detriment following conduct by the defendant – is not in play (given there is no allegation that a BHP Plc shareholder acted in a particular way). But while BHP Ltd shareholders may be in a similar position to the shareholders in HIH Insurance and Myer for the purposes of relying on physical event causation, the BHP Plc shareholders run into difficulty with the two limitations expressly identified by McHugh J in Henville v Walker: remoteness and whether the policy or rationale of the legal norm breached requires a disregarding of the physical connection.

(d)    The question is whether, if factual causation can be established by BHP Plc shareholders for a breach of s 1041H, it is nevertheless open to the Court to impose legal responsibility on BHP Ltd for a breach of that provision where the investors claiming loss acquired shares on a foreign exchange allegedly influenced by price movements on the ASX. In answering that question attention again must be directed to Gorris v Scott and the proposition that there will be no relevant causal connection in circumstances where damage was outside the contemplation of the statute.

(e)    The proscription in s 1041H applies to conduct in relation to a “financial product” (defined in s 763A) or a “financial service” (defined in s 766A). Financial products include securities, and statements to investors in a market for a company’s securities can be conduct in relation to financial products. In publishing information on the ASX, BHP Ltd engaged in conduct in relation to its own securities listed on the ASX. In making those disclosures on the ASX it cannot have engaged in, and did not engage in, any conduct “in relation to” BHP Plc securities listed on the LSE or JSE.

(f)    While it is accepted that persons overseas can suffer loss caused “by” a company or person engaging in misleading or deceptive within Australia (eg, by publishing misleading financial statements on the ASX), that is in circumstances where there is a sufficient cause or reason linking the conduct in Australia with the recoverable loss or damage. But that sufficient cause or reason is absent insofar as the BHP Plc shareholders are concerned in this proceeding. The loss and damage allegedly suffered by reason of BHP Ltd’s publication of misleading statements on the ASX was not suffered because BHP Ltd engaged in misleading or deceptive conduct “in relation to” BHP Plc shares; rather, the loss was allegedly suffered because the BHP Ltd share price fell, which in turn caused the BHP Plc share price to fall. That is not loss and damage suffered “by” the misleading or deceptive conduct of BHP Ltd in Australia.

(g)    It is notable that the objects of the Ch 7 of the Corporations Act (which contains s 1041H) are relevantly identified in s 760A in terms of the promotion of confident and informed decision making by consumers of financial products and fair, orderly and transparent markets for financial products (plainly, a reference to markets within Australia subject to the Act’s regulation).

(h)    The foregoing analysis applies mutatis mutandis to the claim under s 12DA of the ASIC Act. The ASIC Act is expressly confined in its application to Australia. Accordingly, the proscription on misleading conduct in relation to “financial services” in s 12DA must be taken to be financial services provided within Australia (and does not extend to securities listed on a foreign stock exchange). Moreover, the compensatory provision in s 12GF imports the same causal test as s 1041I, namely “by conduct of another person”.

(i)    The claims brought by the applicants on behalf of the BHP Plc shareholders in misleading or deceptive conduct are novel claims. BHP Ltd is not aware of any previous action in which investors who acquired shares on a foreign exchange in a different entity to the defendant has sought, much less recovered, damages for misleading or deceptive conduct. While novelty in and of itself is not sufficient to ground a strike-out, even if the facts alleged in the statement of claim are proved at trial, on their proper construction ss 1041H and 1041I of the Corporations Act (or ss 12DA and 12GF of the ASIC Act) do not extend to confer a cause of action on investors in the position of the BHP Plc shareholders.

149    BHP Ltd’s strike-out application faces a substantial hurdle in that it seeks to have the Court determine, at a preliminary stage, and without a full factual context, a complex and novel question of statutory construction, namely whether the losses claimed to have been suffered by the shareholders of BHP Plc are within the contemplation of the relevant statutory provisions. The thrust of the authorities on strike-out applications, discussed above, is against the determination of such issues on a strike-out application. I will make some observations about whether the claims are at least arguable, and then return to this point.

150    The claims made on behalf of BHP Plc shareholders arise in the unusual factual context of BHP Ltd and BHP Plc operating as a single economic entity in accordance with their dual listed company structure. Some features of that structure are pleaded in the statement of claim.

151    Relevantly, in paragraphs 9 and 10 it is pleaded that at all material times BHP Ltd and BHP Plc had a dual listed company structure pursuant to which they operated as if they were a single unified economic entity (referred to as “BHP” in the statement of claim). In particular, it is alleged in paragraph 10 that BHP Ltd and BHP Plc operated through identical boards of directors which comprised the same individuals, and a single unified management team, including a single Group Management Committee, being BHP’s most senior executive body. It is also alleged that the economic and voting interests in BHP resulting from holding one share in BHP Ltd were equivalent to the economic and voting interests resulting from holding one share in BHP Plc. The particulars to paragraphs 10(a) and 10(c) refer to specific provisions of the DLC Structure Sharing Agreement. Further detail as to the dual listed company structure is provided by the DLC Structure Sharing Agreement, a copy of which is in evidence. The relevant provisions of that agreement have been summarised earlier in these reasons.

152    The causal chain between the alleged non-disclosures and misleading or deceptive representations made by BHP Ltd and the loss and damage suffered by BHP Plc shareholders is pleaded in sections L.2 and L.3 of the statement of claim. The applicants allege that the causal chain in respect of Group Members who purchased BHP Plc shares on the LSE was that:

(a)    the BHP LSE Share Market was a market in which the price at which BHP LSE Shares traded on the LSE was (and was reasonably expected to have been) influenced by material information concerning BHP that became publicly available to the BHP LSE Share Market (and material information concerning BHP disclosed by BHP Ltd to the ASX became publicly available to the BHP LSE Share Market) (paragraphs 71 and 72); and

(b)    further and alternatively, that the BHP LSE Share Market was a market in which the price at which BHP LSE Shares traded on the LSE was influenced by the price and/or movements in the price of BHP ASX Shares (paragraph 73).

153    By reason of these matters, it is said that BHP Ltd’s contraventions of the relevant statutory provisions caused the price at which BHP LSE Shares traded on the LSE to be higher than their true value and/or the market price that would have prevailed but for the contraventions (or any of them) (paragraph 74). Alternatively, it is alleged that some of the Group Members would not have acquired an interest in the BHP LSE Shares if the contraventions that had occurred at the time of their acquisition (or any of them) had not occurred (paragraph 75).

154    Analogous allegations with respect to the way in which Group Members who acquired an interest in BHP Plc shares on the JSE suffered loss or damage as a consequence of BHP Ltd’s contraventions of the relevant statutory provisions are pleaded at paragraphs 76-80 of the statement of claim.

155    Thus, a claim of causation is pleaded between the conduct of BHP Ltd in this jurisdiction and the impact on the price of BHP Plc securities listed on the LSE and the JSE, such that (it is alleged) BHP Plc shareholders suffered loss.

156    The question is whether the pleaded facts, at least arguably, establish a causal link for the purposes of the relevant statutory provisions between BHP Ltd’s alleged contraventions and the losses claimed to have been suffered by BHP Plc shareholders who purchased their securities on the LSE or the JSE.

157    Textually, the words of the relevant provisions requiring a causal connection are expressed in general terms, making it difficult for BHP Ltd to establish, on a strike-out application, that the pleaded causal link is not even arguable:

(a)    Insofar as contraventions of s 674 of the Corporations Act are relied upon, s 1317HA(1) provides that the Court may order compensation if the liable person has contravened a financial services civil penalty provision (which includes s 674) and the damage “resulted from” the contravention. Further, s 1325 provides for compensation for loss and damage suffered “because of” conduct engaged in in contravention of s 674. These provisions do not contain words of limitation with respect to the class of persons who may recover compensation for loss or damage which “resulted from” or was suffered “because of” a disclosing entity’s contraventions. They are not in terms restricted to loss or damage suffered by reason of investing in shares acquired on the ASX. Indeed, there is nothing in the text that requires the loss or damage to relate to a person’s share trading at all.

(b)    Insofar as contraventions of s 1041H of the Corporations Act are relied upon, s 1041I provides that damages may be recovered by a person who suffers loss or damage “by conduct” of another person that was engaged in in contravention of (relevantly) s 1041H. Likewise, insofar as contraventions of s 12DA of the ASIC Act are relied upon, s 12GF provides that damages may be recovered by a person who suffers loss or damage “by conduct” of another person that was engaged in in contravention of (relevantly) s 12DA. In Marks v GIO Australia Holdings Limited (1998) 196 CLR 494, McHugh, Hayne and Callinan JJ observed (at [38]) that s 82 of the Trade Practices Act 1974 (Cth), which referred to recovery of loss or damage suffered “by conduct of another person” in contravention of relevant provisions of the Act, required the identification of a causal connection between the loss or damage alleged to have been suffered and the contravening conduct, but that it should not be limited by drawing some analogy with the law of contract, tort or equitable remedies. Nothing in the text of s 1041I (read with s 1041H) or of s 12GF (read with s 12DA) precludes the recovery of loss or damage by BHP Plc shareholders on the basis alleged in the statement of claim. The provisions do not in terms require the aggrieved party to have suffered loss as a result of their investment in the financial product in relation to which the contravention occurred. All that is required on the face of the provisions is that the aggrieved party demonstrate a causal relationship between the misconduct and the loss.

158    BHP Ltd’s submissions draw a distinction between factual causation and legal causation. It does not appear to be disputed (for the purposes of the present interlocutory application) that the pleaded facts are sufficient to establish factual causation. But it is submitted that they are insufficient to establish legal causation because the damage alleged was “outside the contemplation of the statute” (Henville v Walker at [102] per McHugh J). This is not a question that can be decided in the abstract as a matter of statutory construction alone. It requires consideration of the subject-matter, scope and purpose of the relevant statutory provision as related to the circumstances of the particular case: see Travel Compensation Fund v Tambree (2005) 224 CLR 627 at [30] per Gleeson CJ, at [45] per Gummow and Hayne JJ. The circumstances here include the dual listed company structure under which BHP Ltd and BHP Plc operated (as pleaded in paragraphs 9 and 10 of the statement of claim, as supplemented by the DLC Structure Sharing Agreement), the fact that the markets for BHP LSE Shares and BHP JSE Shares were, and were reasonably expected to be, influenced by material information concerning BHP that became publicly available (as pleaded in paragraphs 71 and 76), the fact that material information concerning BHP disclosed by BHP Ltd to the ASX became publicly available to the markets for BHP LSE Shares and BHP JSE Shares (as pleaded in paragraphs 72 and 77), and the fact that the markets for BHP LSE Shares and BHP JSE Shares were markets in which the price at which BHP LSE Shares and BHP JSE Shares traded was influenced by the price and/or movements in the price of BHP ASX Shares (as pleaded in paragraphs 73 and 78). The dual listed company structure presents an unusual circumstance; the position of a shareholder of BHP Plc (vis-à-vis BHP Ltd) is arguably quite different from the position of a shareholder of a third party company. Significantly, as alleged in paragraph 10 of the statement of claim, BHP Ltd and BHP Plc operated “as if they were a single unified economic entity”. In light of these matters, I consider it to be at least arguable that the pleaded facts establish a causal link for the purposes of the relevant statutory provisions between BHP Ltd’s alleged contraventions and the losses claimed to have been suffered by shareholders of BHP Plc.

159    Beyond this, I do not consider it appropriate to determine, at this stage, whether the losses claimed to have been suffered by the shareholders of BHP Plc are within the contemplation of the relevant statutory provisions. I consider it appropriate for the issue of causation to be decided at trial, in a full factual context, rather than on a strike-out application, on the basis of the bare facts in the pleading. This is not to say that the points raised by BHP Ltd do not have considerable force; it is rather to say that the nature of the issues is such that they are appropriately dealt with at trial rather than on a strike-out application.

160    For these reasons, I reject BHP Ltd’s strike-out application.

Conclusion

161    It follows that BHP Ltd’s interlocutory application is to be dismissed. I will give the parties the opportunity to file brief written submissions on costs, and propose to determine the issue of costs on the papers.

Associate:

Dated:    27 November 2020