In BHP Group Limited v Impiombato [2022] HCA 33, the High Court has confirmed that class actions commenced under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) can encompass both resident and non-resident group members.
Background
The High Court’s decision arises out of an appeal brought by BHP Group Limited, the respondent to a shareholder class action commenced under Pt IVA of the FCA Act.
The shareholder class action relates to the failure of the Fundão Dam in Brazil in 2015.
In the appeal to the High Court (which was heard and determined at an interlocutory stage of the shareholder proceeding), BHP challenged an earlier judgment of the Full Court of the Federal Court, where Middleton, McKerracher and Lee JJ held that Pt IVA permits representative proceedings to be brought on behalf of non-resident group members.
BHP contended on appeal to the High Court that the term “persons” in s 33A (and in other provisions of Pt IVA) of the FCA Act must be construed to exclude non-resident group members. In so contending, BHP invoked the common law and statutory[1] presumptions against extra-territoriality.
The appeal was unanimously dismissed by the High Court, with separate reasons for judgment by Kiefel CJ and Gageler J, and by Gordon, Edelman and Steward JJ.
High Court Decision
Kiefel CJ and Gageler J
The joint judgment of Kiefel CJ and Gageler J made the following key points:
- BHP's argument faced an “immediate logical hurdle” because s 33C(1) of the FCA Act made clear that a representative party and group members are all drawn from the same pool of “7 or more persons”; and if a representative party from that pool could be a non-resident (as BHP accepted), then why could a person from the same pool only be a group member if resident in Australia?[2]
- The presumption against extra-territoriality does not provide a reason for adopting a territorially restricted reading of the definition of “group member” in s 33A or “other persons” in s 33D. It suffices for the purposes of the presumption, in its common law and statutory forms, that Pt IVA as a whole is concerned with the exercise of jurisdiction by the Federal Court.[3]
Gordon, Edelman and Steward JJ
The joint judgment of Gordon, Edelman and Steward JJ made the following key points:
- Given the clear territorial connection to Australia of the Federal Court’s jurisdiction, the determination of the group members’ claims, as a matter of Australian law, does not have any effect or execution outside Australia, and the presumption against extra-territoriality is not engaged.[4]
- Pt IVA operates by allowing the grouping of “claims” where each group member has at least one claim under one of the laws which have vested jurisdiction in the Federal Court.[5]
- BHP’s proposed construction would lead to the consequence that the word “persons” in s 33C would be construed differently when concerned with a group member as opposed to a respondent or a representative party (which were not said to be confined by any residence requirement). To the contrary, if the representative party may be a non-resident, then, as a textual matter, necessarily so too may the group members.[6]
- Pt IVA was enacted to supplement and improve, rather than to narrow, the existing procedures for representative proceedings (which procedures, historically, have encompassed represented persons who were not necessarily residents of the local territory).[7]
- BHP’s construction would undermine the purpose of Pt IVA by not allowing non-residents to be group members in representative proceedings, creating a risk of a multitude of parallel proceedings.[8]
- BHP’s construction would also create practical difficulties associated with the need to determine the question of residence.[9]
[1] See s 21(1)(b) of the Acts Interpretation Act 1901 (Cth).
[2] [2022] HCA 33 at [17].
[3] [2022] HCA 33 at [21].
[4] [2022] HCA 33 at [66].
[5] [2022] HCA 33 at [66].
[6] [2022] HCA 33 at [72].
[7] [2022] HCA 33 at [73], referring to Mobil Oil (2002) 211 CLR 1 at 22 [6].
[8] [2022] HCA 33 at [74].
[9] [2022] HCA 33 at [75].