Does Pt IVA of the Federal Court of Australia Act 1976 (Cth) permit representative proceedings to be brought on behalf of group members who are not resident in Australia?

BHP Group Limited v Impiombato [2022] HCA 33 (12 October 2022)

Intro:-

The question in this appeal is whether Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the Act") permits representative proceedings to be brought in the Federal Court of Australia on behalf of group members who are not resident in Australia. The question is entirely one of statutory construction.

Facts:-

The question has arisen at an interlocutory stage of a representative proceeding brought by the respondents against the appellant, BHP Group Ltd ("BHP"). The proceeding is brought on behalf of group members identified as persons who purchased shares in BHP or in BHP Group Plc during a defined period and who are alleged to have suffered loss resulting from conduct of BHP in contravention of ss 674(2) and 1041H(1) of the Corporations Act 2001 (Cth) and s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth). The proceeding is within the original jurisdiction conferred on the Federal Court by s 1337B(1) of the Corporations Act and by s 39B(1A)(c) of the Judiciary Act 1903 (Cth).

The primary judge (Moshinsky J) and, on appeal by leave, the Full Court of the Federal Court (Middleton, McKerracher and Lee JJ) rejected an argument by BHP that Pt IVA of the Act does not permit group members to include persons who are not resident in Australia.

Having been granted special leave to appeal to this Court[3], BHP repeats in the appeal its argument unanimously rejected in the Federal Court. For reasons which follow, the argument must again be rejected, and the appeal must fail.

The procedures which Pt IVA creates, and the powers which it gives to the Federal Court, do not stand alone. Part IVA is framed on the assumption that it will operate concurrently with the procedures and powers of the Federal Court which relate generally to the exercise of jurisdiction conferred on it. Important amongst the procedures assumed by Pt IVA are rules of practice and procedure which make provision for a proceeding to commence by an applicant filing an originating application and for the service of that originating application on a respondent. Those rules of practice and procedure are in turn framed against the background of certain precepts of the common law. One of those precepts is that (enemy aliens apart) any person who has standing to assert a claim within the jurisdiction of a court has a right to commence a proceeding in the court by filing an initiating process, irrespective of that person's nationality or place of residence. Another is that (voluntary submission apart) service of initiating process on a person against whom the claim is asserted is a necessary foundation for the exercise of jurisdiction by the court to determine that claim against that person.

Pivotal to the operation of Pt IVA is s 33C of the Act, which is headed "Commencement of proceeding". Section 33C(1) provides:

"Subject to this Part, where:

(a) 7 or more persons have claims against the same person; and

(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c) the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them."

In that provision, and throughout the Act, the word "person" includes a body politic or corporate as well as an individual and the word "persons" needs to be read correspondingly.

Section 33D complements the permissive concluding words of s 33C(1). By operation of s 33D, a "person" referred to in s 33C(1)(a) who has a sufficient interest to have standing to commence a proceeding on that person's own behalf against "another person" is taken to have a sufficient interest to commence a representative proceeding against "that other person" on behalf of "other persons" referred to in s 33C(1)(a).

Section 33A sets out definitions which can only be understood having regard to ss 33C(1) and 33D. Section 33A defines "representative party" to mean "a person who commences a representative proceeding". Importantly to BHP's argument, it defines "group member" to mean "a member of a group of persons on whose behalf a representative proceeding has been commenced".

Section 33E specifies that (exceptional cases aside) a representative party need not have the consent of a group member in order to commence a representative proceeding on that group member's behalf.

Section 33J confers on each group member a right to opt out of the representative proceeding by giving written notice within a time fixed by the Federal Court. Section 33X ordinarily requires notice to be given to group members both of the commencement of the proceeding and of their right to opt out. Section 33Y indicates that the notice need not be given to group members personally and might well be given by means of a press advertisement or a radio or television broadcast. There is accordingly a "real possibility" that a group member will be unaware of the proceeding and of their right to opt out. The reality of that possibility is specifically acknowledged in s 33Y(8), which provides that failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.

Notwithstanding the possibility of a group member remaining unaware either of the proceeding or of their right to opt out, s 33Z empowers the Federal Court, in determining a matter in a representative proceeding, to give a judgment which, by force of s 33ZB, "binds" all group members which the judgment identifies as affected by it, other than group members who have exercised their right to opt out.

To the extent that a judgment given by the Federal Court in a representative proceeding binds group members by force of s 33ZB, Pt IVA has been said to create "its own kind of statutory estoppel". Needless to say, the statutory estoppel is operative as, and only as, part of the domestic law of Australia. Whether, when, and for what purposes, a judgment given by the Federal Court in a representative proceeding might be taken to determine the existence, or preclude the exercise, of legal rights under the domestic law of another country is a matter to be determined under the domestic law of that country. That is a topic on which Pt IVA has nothing to say.

BHP's argument and the ultimate answer to it

This Court said in Wong v Silkfield Pty Ltd that "[l]ike other provisions conferring jurisdiction upon or granting powers to a court, Pt IVA is not to be read by making implications or imposing limitations not found in the words used".

BHP does not dispute that proposition. It does not seek to limit the scope of the references to "7 or more persons" or "the same person" in s 33C(1)(a), or to a "person", "another person" or "that other person" in s 33D. It does not seek to read down the reference to "a person" in the definition of "representative party" in s 33A. It does not deny that a representative proceeding can be commenced and maintained irrespective of the place of residence of the representative party and (subject to the ordinary rules as to service) irrespective of the place of residence of the respondent.

BHP argues that the reference to "persons" in the definition of "group member" in s 33A, and presumably likewise the reference to "other persons" in s 33D, must nevertheless be read down to exclude persons who are not "resident" in Australia. Quite apart from the inherent imprecision of the concept of residence on which it hinges, BHP's argument encounters an immediate logical hurdle. The concluding words of s 33C(1) make clear that a representative party and group members are all to come from within the common pool of "7 or more persons" who have claims of the nature s 33C(1) describes. Those words equally make clear that any person from within the pool who becomes a group member could have chosen to be a representative party. If a person in the pool can become a representative party irrespective of their place of residence, as BHP accepts, why can a person in the pool become a group member only if resident in Australia?

The reason why the reference to "persons" in the definition of "group member" in s 33A, and presumably to "other persons" in s 33D, must be construed to exclude persons who are not resident in Australia, according to BHP, arises primarily from the potential for a judgment of the Federal Court given in a representative proceeding to affect rights of unknowing and unconsenting group members by force of s 33ZB. BHP says that the existence of that potential means that a construction which excludes non-residents from group membership is necessary to give effect to a "presumption against extraterritorial operation". BHP says that presumption arises both at common law and by force of s 21(1)(b) of the Acts Interpretation Act 1901 (Cth).

The ultimate answer to BHP's argument about construction is to the same effect as the answer to the argument about legislative power in Mobil Oil. To the extent that one or other of the common law and statutory presumptions on which BHP relies bears on the construction of Pt IVA, the presumption provides no reason for adopting a territorially restricted reading of the definition of "group member" in s 33A or "other persons" in s 33D. Enough to satisfy both presumptions is the circumstance that Pt IVA as a whole is concerned with the exercise of jurisdiction by the Federal Court. That is the bottom line.

Issue:-

Where Pt IVA did not contain any express geographic or territorial restriction on the identity of persons who could be group members, does Pt IVA allow claims to be brought on behalf of group members not resident in Australia?

Consideration:-

The common law presumption

BHP seeks to label the common law presumption on which it relies a "presumption against extraterritorial operation". For reasons to be explained, the presumption of the common law of Australia is more accurately labelled a "presumption in favour of international comity".

For its preferred formulation of the common law presumption, BHP points to the statement made by Isaacs J in Morgan v White that "the persons, property, and events in respect of which Parliament has legislated are presumed to be limited to those in the territory over which it has jurisdiction and for the welfare of which it exercises that jurisdiction". The precise formulation of that statement, and of a similar statement made by Barton J, can be seen in the context of Morgan v White to have been influenced by nineteenth and early twentieth century notions of territorial restrictions on legislative power. Those notions ceased to have any relevance to Commonwealth legislative power by the time of the commencement of the Statute of Westminster Adoption Act 1942 (Cth).

Nevertheless, in Meyer Heine Pty Ltd v China Navigation Co Ltd, Taylor J referred to the statement made by Isaacs J in Morgan v White as one of a number of expressions of the common law presumption appropriate to be applied to a Commonwealth statute penalising the entering into of a contract in restraint of trade. Windeyer J expressed the presumption in language similarly tailored to the statute in issue when he framed the question for decision in Meyer Heine as "whether the prima facie presumption, that the Act does not extend to penalize acts done outside Australia, by foreigners, has been displaced"[.

The statement made by Isaacs J in Morgan v White was and remains an adequate reflection of the common law presumption in many statutory contexts. But as a generalisation it is too broad.

Exposition of the common law presumption in play in Morgan v White and in Meyer Heine can be traced in Australia to Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association. There O'Connor J said[:

"Most Statutes, if their general words were to be taken literally in their widest sense, would apply to the whole world, but they are always read as being prima facie restricted in their operation within territorial limits. Under the same general presumption every Statute is to be so interpretated and applied as far as its language admits as not to be inconsistent with the comity of nations or with the established rules of international law: Maxwell on Statutes, 3rd ed, p 200."

Plainly, O'Connor J did not see the implied restriction on the territorial operation of a statute to which he referred in the first sentence as freestanding but rather as a reflection of the "general presumption" which he expressed in the second sentence with reference to Maxwell on Statutes. There, the presumption appeared in the precise terms adopted by O'Connor J under the heading "Presumption against a Violation of International Law".

In Barcelo v Electrolytic Zinc Co of Australasia Ltd, Dixon J expressed the presumption in the same language drawn from Maxwell on Statutes as had been adopted by O'Connor J in Jumbunna. His Honour did so interchangeably with language drawn from nineteenth century English authority to the effect that "[i]t is always to be understood and implied that the legislature of a country is not intending to deal with persons or matters over which, according to the comity of nations, the jurisdiction properly belongs to some other sovereign or State".

Dixon J returned to the presumption in Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society. The "well settled rule of construction", his Honour there explained, is that "an enactment describing acts, matters or things in general words, so that, if restrained by no consideration lying outside its expressed meaning, its intended application would be universal, is to be read as confined to what, according to the rules of international law administered or recognized in our Courts, it is within the province of our law to affect or control".

In R v Foster; Ex parte Eastern and Australian Steamship Co Ltd, Dixon CJ expressed the presumption yet again. He did so, more pithily, in terms which he said were appropriate to be applied to a Commonwealth statute after the Statute of Westminster Adoption Act. He described it as "a presumption which assumes that the legislature is expressing itself only with respect to things which internationally considered are subject to its own sovereign powers".

Understood in the more complete terms consistently so explained in Barcelo, Wanganui-Rangitikei and R v Foster, the common law presumption on which BHP relies provides no basis for reading down the general references to "group member" in s 33A or "other persons" in s 33D. For s 33ZB to bind a non-consenting group member who is not resident in Australia to a judgment of the Federal Court determining a matter in which the Federal Court has jurisdiction in a representative proceeding would be to infringe no principle of international law or international comity. BHP does not argue to the contrary.

The statutory presumption

Section 21(1)(b) of the Acts Interpretation Act provides that, in any Commonwealth Act, "references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth". That language has remained unaltered since the enactment of the Acts Interpretation Act in 1901. As a marginal note to the section then indicated, it was modelled on s 17 of the Interpretation Act 1897 (NSW). The origins of that section have been traced to s 8 of the Acts Shortening Act 1852 (NSW). Provisions in corresponding terms have been replicated in interpretation legislation in each Territory and most States.

No differently from other provisions of the Acts Interpretation Act, application of s 21(1)(b) to a particular Commonwealth Act is "subject to a contrary intention". However, no search for a contrary intention is needed in order to reject BHP's argument that the provision requires that the references to "group member" in s 33A and "other persons" in s 33D of the Act be construed to exclude non-residents. The argument is founded on a misapprehension of what application of the provision involves.

Section 21(1)(b) of the Acts Interpretation Act says nothing in terms about how statutory references to "persons" are to be understood. It is not concerned with the meaning of any particular statutory expression.

There are statutory contexts in which discerning a connection of the kind required by s 21(1)(b) of the Acts Interpretation Act can give rise to issues of some complexity. This is not one of them. The Act establishes the Federal Court – an institution for the administration of justice in and for the Commonwealth – and provides for the Federal Court to have such jurisdiction as is vested in it under other Commonwealth laws. Part IVA is concerned with procedures and powers of the Federal Court relating to the exercise of jurisdiction so vested. No further or more specific territorial connection is required for Pt IVA in its totality to be characterised as referring to jurisdictions, matters and things in and of the Commonwealth. Section 21(1)(b) of the Acts Interpretation Act therefore provides no basis to construe Pt IVA of the Act as being restricted in the manner which BHP contends.

Disposition:-

The appeal is to be dismissed with costs.