Is it appropriate to depart from the "default position"?
215 I am satisfied that, in the particular circumstances of this case, it is appropriate to depart from the "default position" expressed in Ethicon Sàrl.
216 First, this case is not on all fours with Ethicon Sàrl. In that decision and the first instance decisions following it in which the "default position" was adopted, the application was for an amendment to introduce persons into the class who were entirely new to the proceeding. In Ethicon Sàrl the applicants sought amendments to augment the class by introducing all of those women who had undergone Implant surgery in Australia since the last amendment to the group definition. Similarly, the application in Bill was to reconstitute an extant inter partes proceeding as a class action, in part to avoid limitation periods that would apply to the proposed group members' claims. In Uber the application was to introduce an additional category of group members not contemplated at the outset of the proceedings. In Capic the applicants sought to add group members by widening the date range that limited the group member definition. In each of those cases there was no reason why the proposed new group members should be treated more favourably than if they had sought to be added as new parties to the proceeding. If their claims were otherwise statute-barred it was consistent with the rules applicable to the addition of new parties that the respondent should not have been deprived of a limitations defence merely by augmentation of the class.
217 Here, unlike those cases, the applicants are not seeking amendments to augment the class by introducing persons who are entirely new to the proceeding; instead, the applicants seek amendments to introduce persons into the class whom the applicants had always intended to include in the class when they commenced the proceeding but had failed to do so because of a lawyers' drafting error. The applicants seek leave for the Group Definition Amendments to relate back to the commencement of the proceeding in order to correct that drafting error, so as to carry out their instructions to bring the proceeding on behalf of all persons who acquired BHP Shares during the Relevant Period. Allowing the amendments to relate back to the commencement of the proceeding will put the class action back on the footing which the applicants always intended.
218 Further, in Ethicon Sàrl certainty as to group composition was the central concern of the Court. Here the applicants do not propose an amendment to the group definition, being the final amendment in a series, to alter the composition of the group in an ambulatory way. Rather, they seek an amendment to correct a lawyer's drafting mistake in a group definition, on the basis that doing so is in the interests of justice. There will be no ambulatory effect in the change to the group. Instead, the composition of the group will be restored to that which the applicants always intended.
219 Here, unlike in Ethicon Sàrl, permitting the Group Definition Amendments to relate back to the commencement of the proceeding cannot properly be said to be an "odd" result, when the represented class will be that which the applicants and their solicitors always intended when commencing the proceeding, and BHP will be in no worse position than if the lawyer's drafting error had not been made in the first place. Nor can the result properly be described as "odd" when the amendments are permitted to relate back because the Court is satisfied that allowing that is in in the interests of justice in the proceeding and consistent with the overarching purpose in s 37M. Here, to refuse the application would be to allow technicality to prevail over merit, which the Court should strive to avoid: Jammal at 7 (Kirby P).
220 Here, the remarks as to "the vice of potentially resuscitating the claims of persons that have never sought to agitate them" have limited application. It is not apt to describe the Excluded Shareholders' claims as claims that were never sought to be agitated. Here, the applicants always intended to bring the class action on behalf of all persons who acquired an interest in BHP Shares during the Relevant Period, including the Excluded Shareholders.
221 Second, BHP's argument as to the importance of certainty in relation to the composition of the group cuts both ways. In Dyczynski v Gibson [2020] FCAFC 120; 280 FCR 583 at [170]-[171], Colvin J and I said the following in relation to the requirement for a group definition under s 33H(1):
[170] This provision supports s 33C(1) because it facilitates an assessment by the Court about whether the specified threshold requirements have been satisfied: Bright at [126] (Kiefel J); Ethicon Sàrl v Gill [2018] FCAFC 137; (2018) 264 FCR 394 (Ethicon Sàrl) at [7] (Allsop CJ, Murphy and Lee JJ). It also serves the purpose of enabling each class member to ascertain whether he or she is a member of the class, and to decide whether or not to opt out of the class action pursuant to s 33J: Petrusevki v Bulldogs Rugby League Ltd [2003] FCA 61 at [20]-[22] (Sackville J).
[171] Through the description of the class in the originating application or the statement of claim it must be possible to identify with certainty the members of the class (although it is not necessary to name them or specify their number). As the Full Court said in Ethicon Sàrl at [37]:
Certainty of composition allows the Court to deal with the class when necessary for the purposes of the Part. For example, s 33J (affording the right to opt out); s 33L (identifying where there are less than seven group members); s 33Q (making orders as to the determination of issues where not all issues are common); s 33R (making orders as to individual issues); s 33S (making directions relating to the commencement of further proceedings by group members); s 33T (considering applications by group members as to adequacy of representation); s 33X (giving notice to group members of certain matters); and s 33ZB (making orders binding group members).
222 In Petrusevki, which was cited with approval in Dyczynski , Sackville J said (at [23]):
Clearly enough, not every description or identification of the represented group will satisfy the requirements of s 33H(1)(a) of the Federal Court Act. A useful, although not necessarily exhaustive test, is whether the description is such as to enable a person, with the assistance of a legal adviser if necessary, to ascertain whether he or she is a group member….If a person cannot reasonably be expected to do this, the definition is unlikely to satisfy the requirements of s 33H(1)(a).
223 It is unnecessary to decide whether the group definition as presently pleaded meets the requirements of s 33H, but in my view it suffers from the serious shortcoming that many existing group members are likely to be required to undertake factually intensive, time-consuming, and (in aggregate) costly enquiries to establish whether they are, in fact, group members, and for many such persons that will be impossible to establish. It is antithetical to the Pt IVA regime that the group definition gives rise to such difficulties for group members in ascertaining whether they fall within the class.
224 Another purpose of the group definition is for use in the necessary s 33ZB order at the conclusion of the proceeding. Section 33ZB provides that a judgment in a class proceeding, whether following trial or settlement approval, "must describe or otherwise identify the group members who will be affected by it" and "binds all such persons" other than those who have opted out under s 33J. An order under s 33ZB order creates "its own kind of statutory estoppel" (Timbercorp Finance Pty Ltd v Collins [2016] HCA 44; 259 CLR 212 at [52] (French CJ, Kiefel, Keane and Nettle JJ)) by binding the group members who meet the description in the order. Having regard to the current group definition, unless the proposed amendments are permitted to relate back to the commencement the proceeding, many group members will have real difficulties in ascertaining whether they are bound by the 33ZB order, and for, and for many group members it will be impossible to establish that. Again, that is antithetical to the Pt IVA regime.
225 Third, the authorities show that the ordinary rule is that an amendment to correct a mistake in the name or identity of a party relates back to the commencement of the proceeding. Of course, this is not such a case. Here, the application is for leave to amend to correct a mistake in the group definition. But BHP places too much weight on the difference between the cases.
226 According to BHP, even if the broadest possible interpretation is given to the remedial rules of the Court, they do not accommodate the present situation where the definition of the class was expressly tied to particular trading platforms. BHP submits there are good reasons why an amendment to correct a "mistake" in the description of group members in a class action should operate differently to the position under the Rules regarding an amendment to correct a mistake in the description of a party. It contends cases such as Bridge Shipping, Evans v Charrington, Nikolay Malakov, Environinvest and Wallace involve the substitution of "like-for-like" while the present application introduces persons into the class who are presently excluded to expand - perhaps very substantially - BHP's potential liability. BHP says that in cases involving a mistake in the name or identity of a party the correction of the mistake is "truly remedial" and that there is "scant, if any, prejudice involved in making the correction" whereas in this case BHP will suffer material prejudice by the expansion of the class. And it says that it is not an odd outcome if the exercise of the Court's discretion to amend a group definition is held to operate more restrictively than it does in respect of an amendment to correct a description of a party; that is just a function of the fact that the applicants have belatedly sought to bring into the group persons who were never part of the class, which will substantially expand the breadth of the class. Rather, BHP says that outcome makes perfect sense where, as explained in Ethicon Sàrl, the augmentation of a group affects substantive rights.
227 I accept that the fact that the Group Definition Amendments will operate to augment the class is a relevant difference between this case and those cases, but BHP overstates the differences:
(a) in Environinvest the applicant intended to sue a party that it identified by a particular description (the auditor) but made a mistake as to the name of the person or persons who answered that description. The application to correctly identify the partnership as the defendants succeeded because the claimant had intended to sue its auditor and was mistaken in this belief that its auditor was the named company. Here, the applicants intended to sue on behalf of all persons who acquired an interest in BHP Shares during the Relevant Period and were mistaken in their belief that the group definition accomplished that; and
(b) in Wallace the Liquidators had in mind that the company had a claim against the defendants which they intended to pursue on the company's behalf, but the lawyers made a mistake by bringing the proceeding in the name of the Liquidators as liquidators, rather than as representing the company. Greenwood J said at [63] that "the solicitors made a mistake in the sense that they believed that the action was properly constituted by adopting the textual language as appears on the document". Here, the applicants intended to sue on behalf of all persons who acquired an interest in BHP Shares during the Relevant Period, and the solicitors made a mistake in the sense that they believed that the textual language of the group definition reflected the applicants' intention (and their own intention) regarding the group to be represented.
228 In both cases:
(a) the applicants seek to substitute or add persons to the proceeding, either as parties or as group members, who were not previously parties or group members, which treats them as, in effect, having advanced such a claim since the commencement of the proceeding;
(b) the orders sought are remedial in the sense that an exercise of the Court's power to grant leave to correct a mistake is sought; and
(c) the respondent may lose a limitation defence (i.e. "substantive rights") that might otherwise have been available to it as a result of the mistake. This aspect of prejudice is the same.
229 Similarly, BHP overstates the sui generis nature of an amendment to correct a group definition that augments the class. The rules applicable to the correction of a mistake in the name or identity of a party are not restricted to circumstances where there is a "like-for-like" substitution, and they do not depend upon the number of parties added or removed. For example, in Brando, the plaintiff had sued one of the defendants in the mistaken belief that he could be sued as the representative of 71 other persons, who were the intended defendants. Under a rule analogous to r 8.21 Rees J ordered the joinder of the 71 other persons with effect from the commencement the proceeding in order to correct a mistake in the name of the party, even though that order substantially changed the composition of the parties to the litigation.
230 Nor do BHP's submissions adequately explain why or how the Pt IVA regime displaces the ordinary principles applicable in inter partes litigation in respect of the correction of a mistake, or why the ordinary principles otherwise would not apply in the present circumstances. There is no authority for BHP's proposition that the principles in relation to amendment to correct a mistake should be confined to cases outside of Part IVA. As Kiefel CJ and Gageler J observed in Impiombato (HC) at [7]:
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.
And authorities such as McGraw-Hill show that that the circumstances in which the Court may permit an amendment to relate back are not confined to those identified in r 8.21(2), and that the discretion to do so must be exercised having regard to the interests of justice in the proceeding and the overarching purpose of the civil practice and procedure provisions under s 37M.
231 Other than concerns in relation to certainty of group composition (which in the circumstances of this case are not central) there is nothing in the purpose and objects of Part IVA to justify treating a mistake concerning the group definition in class proceedings less beneficially than a mistake concerning a party. It would be strange if a mistake in the name of an applicant in a class proceeding could be readily corrected with relation back to the commencement of the proceeding (as it can), whereas a mistake in the description of the group members represented by the applicant in the proceeding could never be. In my view it must depend on the circumstances, and where the interests of justice lie.
232 Fourth, and importantly, departure from the default position is appropriate in this case because, unless the amendments are permitted to relate back to the commencement of the proceeding, the lawyer's mistake in drafting the group definition is: (a) likely to significantly prejudice the interests of existing group members; (b) will not be in the interests of justice in the proceeding; (c) is likely to mean that the proceeding will not be conducted consistently with the overarching purpose under s 37M; and (d) gives rise to results which are antithetical to the proper operation of the regime. BHP's submissions can be distilled to the proposition that any difficulties that arise are caused by the drafting adopted by the applicants' lawyers, and that the applicants are appropriately the party prejudiced. That proposition fails to engage with the Court's supervisory and protective role in relation to group members' interests, nor does it engage with the overarching purpose of the civil practice and procedure provisions under s 37M.
233 A huge number of relevant share transactions were engaged in by or on behalf of existing group members during the Relevant Period - during that period 14.5 billion BHP Shares were traded on the ASX, LSE or JSE. Many group members are unlikely to have records in relation to the exchange or trading platform upon which relevant share trades were undertaken by them or on their behalf, and unless leave is granted for the Group Definition Amendments to relate back to the commencement of the proceeding:
(a) many existing group members are likely to suffer a significant burden through enquiries of brokers in an effort to establish that they are, in fact, group members, and for many persons who are, in fact, group members it is likely to be impossible to establish that; and
(b) there is likely to be significantly added complexity in the proceeding in relation to opt out, any group member registration process and class closure, which in turn is likely to lead to further cost and further delay in the proceeding.
234 Many persons who are, in fact, group members are likely to suffer significant prejudice as a result. Those who are unable to establish the exchange or trading platform on which BHP Shares were acquired on their behalf during the Relevant Period will be unable to establish that they are group members, and will be unable to share in any favourable settlement or judgment. Such an outcome would not be "just" nor would it be appropriate to ensure justice is done in the proceeding.
235 The interests of justice in the proceeding cannot, of course, be determined only by reference to the interests of group members. The criterion "justice is done" involves consideration of the position of all parties: McMullin v ICI Australia Operations Pty Ltd [1998] FCA 658; 84 FCR 1 at 4 (Wilcox J). But in my view the prejudice that is likely to be suffered by existing group members if the Group Definition Amendments are not permitted to relate back is greater than and weighs more heavily in the balance than that likely to be suffered by BHP.
236 Fifth, as explained Caason (at [19]-[20]), the power of the Court to grant or refuse leave to amend:
(a) must be exercised in the way that best promotes the Court's overarching purpose under s 37M to facilitate the just determination of disputes according to law as quickly, inexpensively and efficiently as possible. Having regard to the matters described above, absent a grant of leave for the amendments to relate back, the class action is likely to proceed substantially more slowly, more expensively and less efficiently. That would be inconsistent with the overarching purpose; and
(b) has the remedial objective of ensuring that any defect is cured and that the real issues in the dispute are properly agitated: Caason at [20]. Here, the defect is the result of a lawyer's drafting error which, unless the amendments are permitted to relate back, will mean that many group members are likely to face substantial difficulty in establishing that they are, in fact, group members, and many will find it impossible to do so. Contrary to the thrust of BHP's submissions, the object of the Court in considering whether to grant leave to amend is not to punish parties for mistakes made in the conduct of their case, but to correct errors: Caason at [20].
237 Sixth, in relation to the first species of asserted prejudice upon which BHP relies, I accept that permitting the Excluded Shareholders' claims to relate back to the commencement the proceeding is likely to increase BHP's potential aggregate liability in the proceeding, and that BHP will suffer prejudice as a result. However, for the reasons I have explained I am not persuaded that the increase in BHP's potential aggregate liability will be as substantial as BHP suggests. Nor does the evidence establish that the inclusion of Excluded Shareholders' claims will be material having regard to the very large claims already made in the proceeding.
238 In relation to the second series of asserted prejudice upon which BHP relies, I accept that permitting the Excluded Shareholders' claims to relate back means that BHP may lose the benefit of available limitations defences in relation to those claims, but I do not give that much weight. I can see no good reason why BHP should be permitted to rely upon a limitations defence available to it only because of the mistake by the applicants' lawyers, when the Court has the means to correct the mistake and BHP's position as a result of the correction will be no worse than if the mistake had not been made in the first place: Nikolay Malakov at 395 (Sheller JA). Such a result would be to allow technicality to prevail over merit.
239 In my view the prejudice likely to be suffered by existing group members outweighs the prejudice likely to be suffered by BHP.
240 Seventh, although this is not central to my decision, if leave is not granted for the amendments to relate back, the Excluded Shareholders will suffer the disadvantage of being omitted from the class through a lawyer's error. Contrary to BHP's submissions I see this as a relevant prejudice but I do not give it much weight in the balance.
241 Having regard to the above, I am satisfied that it is "just" to make orders pursuant to s 33K of the FCA Act, and appropriate to ensure justice is done in the proceeding to make orders pursuant to s 33ZF, to grant leave for the Group Definition Amendments to relate back to the commencement the proceeding. Such orders are also appropriate because doing so is consistent with the overarching purpose under s 37M to ensure the just determination of the proceeding, as quickly, inexpensively and efficiently as possible.