FEDERAL COURT OF AUSTRALIA Hadgkiss v Aldin (No 2) [2007] FCA 2069 INDUSTRIAL LAW – breaches of s 38 Building and Construction Industry Improvement Act 2005 (Cth) by unlawful industrial action – breaches of order made under s 127 (pre-reform) Workplace Relations Act 1996 (Cth) by unlawful industrial action – penalties suspended in part – whether declarations should be made by reference to deemed admissions. Building and Construction Industry Improvement Act 2005 (Cth), s 38 Workplace Relations Act 1996 (Cth), s 127 Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 discussed Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 applied Bank of Kuwait and the Middle East v The Ship MV "Mawashi Al Gasseem" (No 2) [2007] FCA 815 applied British American Tobacco Australasia Limited v The Person Identified by the Australian Customs Service as "Gory Sabar" [2007] FCA 1417 referred to Hadgkiss v Aldin [2007] FCA 2068 referred to Macquarie Bank Ltd v Seagle (2005) 146 FCR 400 cited Wu v Avin Operations Pty Ltd [2006] FCA 36 cited NIGEL HADGKISS v GORDON WILLIAM ALDIN WAD 185 OF 2006 GILMOUR J 20 DECEMBER 2007 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 185 OF 2006 BETWEEN: NIGEL HADGKISS Applicant AND: GORDON WILLIAM ALDIN Respondent JUDGE: GILMOUR J DATE OF ORDER: 20 DECEMBER 2007 WHERE MADE: PERTH UPON THE ADMISSIONS WHICH THE 2nd, 3rd, 83rd AND 92nd RESPONDENTS ARE DEEMED TO HAVE MADE CONSEQUENT UPON THEIR NON-COMPLIANCE WITH ORDERS OF THE COURT IT IS DECLARED THAT: 1. Between 24 February 2006 and 3 March 2006 (the Period), the 2nd, 3rd, 83rd and 92ndrespondents contravened s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) by engaging in unlawful industrial action (being failure to attend for building work) on 24, 25, 27, 28 February 2006, 1, 2 and 3 March 2006, in relation to the construction of the New Metro Rail City Project – Package F section of the Perth to Mandurah railway project. 2. During the Period, the 2nd and 3rd respondents breached clause 4 of the order made on 6 December 2005 under s 127 of the Workplace Relations Act 1996 (Cth) by Commissioner Gregor of the Australian Industrial Relations Commission (the s 127 order) which required them to immediately stop, and not engage in or threaten to engage in industrial action, when on the 24, 25, 27, 28 February 2006, 1, 2 and 3 March 2006 they engaged in industrial action during the construction of the New Metro Rail City Project – Package F section of the Perth to Mandurah railway project. AND THE COURT FURTHER ORDERS THAT: 3. Subject to Order 4, a penalty in the amount of $9000 be imposed on each of the 2nd, 3rd, 85th and 95th respondents for contravening s 38 of the Building and Construction Industry Improvement Act 2005 (Cth). 4. Of the amount specified in Order 3: (a) $3000 must be paid into the Consolidated Revenue Fund within 45 days; (b) $6000 must be paid into the Consolidated Revenue Fund by a respondent within 45 days of that respondent being adjudged to have breached any provision of the BCII Act or the WR Act (in so far as that breach relates to the performance of building work), provided that the contravention of the BCII Act or the WR Act was committed within six months of the date of this order. 5. Subject to Order 6, a penalty in the amount of $1000 be imposed on each of the 2nd and 3rd respondents for contravening the s 127 Order. 6. Of the amount specified in Order 5: (a) $250 must to be paid into the Consolidated Revenue Fund within 45 days; (b) $750 must to be paid into the Consolidated Revenue Fund by a respondent within 45 days of that respondent being adjudged to have breached any provision of the BCII Act or the WR Act (in so far as that breach relates to the performance of building work), provided that the contravention of the BCII Act or the WR Act was committed within six months of the date of this order. 7. Each of the 2nd, 3rd, 83rd and 92nd respondents pay costs fixed in the sum of $5000 to the applicant. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 185 OF 2006 BETWEEN: NIGEL HADGKISS Applicant AND: GORDON WILLIAM ALDIN Respondent JUDGE: GILMOUR J DATE: 20 DECEMBER 2007 PLACE: PERTH REASONS FOR JUDGMENT 1 I have earlier delivered judgment in relation to all of the other respondents in these proceedings: Hadgkiss v Aldin [2007] FCA 2068. The reasons for judgment here should be read together with those other reasons for judgment, which provide the relevant background, both factually and legally, to the disposition of the two motions before the Court. BACKGROUND AND NATURE OF ORDERS SOUGHT 2 The Notices of Motion seek orders pursuant to Order 35A of the Federal Court Rules. The Notices of Motion are in respect of Robert Peter Alivojvodic, Bruce James Allsopp, Brett Harold Andrews and Alex Ian Cromb, respectively the second, third, eighty-third and ninety-second respondents ("the defaulters"). I have had the benefit of very detailed and helpful written submissions from which I have drawn, in compiling these reasons. 3 Orders of the following kind are sought against the defaulters: (a) a declaration that each of the four defaulters engaged in unlawful industrial action in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act) during the period 24 February 2006 to 3 March 2006 inclusive (the Period); (b) an order imposing a pecuniary penalty on each of the four defaulters pursuant to s 49(1)(a) of the BCII Act for engaging in unlawful industrial action during the Period; (c) an order suspending part of the pecuniary penalty in each case pursuant to the general power under s49(1)(c) of the BCII Act; (d) an order pursuant to s 49(5) of the BCII Act that the pecuniary penalties imposed be paid to the Commonwealth; and in respect of each of the second and third respondents: (e) a declaration that each of the second and third respondents breached the order made by the Australian Industrial Relations Commission on 6 December 2005 known as the New Metro Rail City Project Leighton Kumagai Joint Venture Industrial Action Order December 2005 (s 127 Order) by engaging in industrial action during the Period (f) an order imposing pecuniary penalties on the second and third respondents under s 178 of the WR Act for breach of the s 127 Order during the Period; (g) an order pursuant to s 356 of the WR Act that the penalty imposed on the second and third respondents be paid to the Commonwealth; and in respect of each of the four defaulters: (h) an order that each of the respondents pay the applicant's costs in the sum of $5,000, in respect of costs of the Notice of Motion for default judgment against each of them. 4 The applicant relies on the following affidavits: (a) affidavit of Marcus Thomas Clarke sworn 13 November 2007; (b) two affidavits of Joseph Smeets each sworn 9 November 2007; (c) affidavit of Ian Fraser sworn 24 October 2007; (d) affidavit of Joseph Smeets sworn 14 February 2007. (e) affidavit of Mark Williams sworn 28 February 2007; and (f) affidavit of Jason Sparrowhawk sworn 14 February 2007. I have had regard to these in making the following findings of fact in respect of each of the respondents. FINDINGS OF FACT 5 The second respondent: (a) on 5 July 2006 the second respondent was served personally with the Originating Process in the application, including the Statement of Claim. (b) the time for the second respondent to file a defence has expired and the second respondent has failed to file a defence; (c) on 17 February 2007 the second respondent was personally served with the Notice of Motion for orders in default and supporting affidavit; and (d) on 4 October 2007 the second respondent was served with a letter of the applicant's solicitors informing him that the applicant's application for default judgment would be heard by the Court on 14 November 2007, by leaving a true copy of that letter with a woman who identified herself to be the grandmother of the second respondent. 6 The third respondent: (a) on 14 September 2006 the third respondent was served with the Originating Process in the application including the Statement of Claim pursuant to a substituted service order of 13 September 2006; (b) the time for the third respondent to file an appearance has expired and the third respondent has failed to file an appearance; (c) on 18 April 2007 the third respondent was served with the Notice of Motion for orders in default and supporting affidavits by serving the documents in the manner required by the order of the Court of 3 April 2007; and (d) on 4 October 2007 the third respondent was personally served with a letter of the applicant's solicitors informing the second respondent that the applicant's application for default judgment would be heard by the Court on 14 November 2007. 7 The eighty-third respondent: (a) on 3 August 2006 the Originating Process in the application including the Statement of Claim was served personally upon the eighty-third respondent; (b) the time for the eighty-third respondent to file a defence has expired and the eighty-third respondent has failed to file a defence; (c) on 16 February 2007 the eighty-third respondent was personally served with the Notice of Motion for orders in default and affidavit in support; and (d) the applicant has made reasonable attempts to notify the eighty-third respondent of the hearing on 14 November 2007, but has been unable to do so. 8 The ninety-second respondent: (a) on 14 September 2006 the ninety-second respondent was served with the Originating Process in the application in compliance with the substituted service order of 13 September 2006; (b) the time for the ninety-second respondent to file an appearance has expired and the ninety-second respondent has failed to file an appearance; (c) on 21 April 2007 the ninety second respondent was served with the Notice of Motion for orders in default and supporting affidavit by serving the documents in the manner required by the order of the Court of 3 April 2007; and (d) the applicant has made reasonable attempts to notify the ninety-second respondent of the hearing on 14 November 2007, but has been unable to do so. 9 Order 35A rule 3 (2)(c) of the Federal Court Rules is predicated upon an event of default of a kind prescribed in O 35A r 2(2), and contemplates that judgment may be given against a respondent for relief to which "the applicant appears entitled on the statement of claim" and which the Court is satisfied it has "power to grant". In determining the relief, O 35A permits regard to be had to the "face of the statement of claim"; no evidence need be adduced to prove the factual contentions; allegations of fact in the statement of claim are deemed admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 at [42]; Wu v Avin Operations Pty Ltd [2006] FCA 36 at [57]; Macquarie Bank Ltd v Seagle (2005) 146 FCR 400. The findings set out at paragraphs 4(b) and 6(b) above constitute events of default pursuant to O 35A r 2(2)(b). The findings set out at paragraphs 5(b) and 7(b) above constitute events of default pursuant to O 35A r 2(2)(a). 10 The Statement of Claim, in the case of each of these respondents, pleads all the material facts sufficient to establish the breaches of s 38 of the BCII Act and breach of the s 127 order under the WR Act and thereby rendering them liable to the imposition of penalties under s 49(1)(a) of the BCII Act and s 178 of the WR Act respectively. The pleaded facts also sustain the making of relevant declarations. WHETHER NEED FOR NOTIFICATION OF HEARING OF DEFAULT JUDGMENT 11 The eighty-third and ninety-second respondents may not have been aware of the hearing on 14 November 2007 (albeit that, in the case of the eighty-second respondent, he has been personally served with the Notice of Motion for orders in default and affidavit in support). Although it is still open to the applicant to move for default judgment in the circumstances (these two defaulters having been served with the initiating process and being relevantly in default) an issue does arise as to whether, in the Court's discretion, it is just to enter judgment in default. 12 The applicant acknowledges the general reluctance of courts to permit a party to obtain orders in circumstances where notice of the application for those orders had not been given to the other parties affected. However it is submitted by the applicant that the position is different in relation to defaulters. 13 As a matter of principle, where it can be shown that a party has been served with the originating process, and if that party thereafter declines to take any of the steps required as a result of such service (such as entering an appearance, filing a defence or attending at directions hearings), the party may (and often ought) be regarded as having waived his or her rights and as having, in effect, consented to judgment on the basis of the facts alleged in the statement of claim. 14 Indeed, if it is not possible to proceed against a defaulter under O 35A unless notice of the hearing has been given, that would enable a defaulter to avoid judgment if he or she could avoid being personally served with notice of the application for orders under O 35A, notwithstanding the clear default in complying with standard procedural steps or orders of the court. 15 In British American Tobacco Australasia Limited v The Person Identified by the Australian Customs Service as "Gory Sabar" [2007] FCA 1417, an application was made for judgment under Order 35A. It appears that this application may have been made by a notice of motion, which was made returnable instanter, and Stone J made orders 'pursuant to Order 19 rule 2(2)(d) that service of this Notice of Motion be dispensed with'. These orders were made despite the fact that neither of the respondents had filed a notice of appearance, or had appeared before the Court at any stage. 16 Stone J went on to find that the respondents were in default under O 35A r 2(2)(a) and 2(2)(c), and proceeded to enter judgment against them, notwithstanding that there was no evidence that they were aware of the hearing seeking default judgment. Notice of that hearing had not been personally served, as Order 19, r 4 would have required, if not dispensed with. 17 To similar effect, Kiefel J's analysis of the effect of Order 35A, at first instance, in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at [46], appears to assume implicitly that notice of the default judgment proceedings is not necessary unless the relief ultimately being sought is different to that expressed in the statement of claim. Her Honour indicated that the touchstone ought to be fairness in the conduct of litigation, with what is required potentially differing from case to case. 18 I have found that the eighty-third and ninety-second respondents have been served with the originating process and have made no, or no proper, effort, to respond to the Court's processes. No injustice would be occasioned by entering default judgment against them. APPROPRIATENESS OF DECLARATORY RELIEF ON DEEMED ADMITTED FACTS 19 I have in these proceedings previously made declarations in relation to the other respondents by reference to Statements of Agreed Facts: Hadgkiss v Aldin [2007] FCA 2068. 20 The defaulters are deemed to have made admissions of the facts pleaded in the Statement of Claim. Declaratory relief as against the defaulters in those circumstances is not materially different to the position of the other respondents who are signatories to the Statements of Agreed Facts. 21 Older precedent reflects a certain reluctance to grant declaratory relief in the absence of facts found on evidence. Contemporary authority in this court reflects a strong disinclination to follow those earlier decisions. In Dataline, Kiefel J, reviewed much of that earlier authority. Her Honour observed at [57]-[59]: The question is whether declarations should be made on deemed admissions, given that there has been no adjudication by the court on the facts and the declarations may give the impression that there has. The power to grant declarations (s 21 Federal Court of Australia Act 1976 (Cth)) is unconfined. Order 35A itself imposes no constraints upon the relief sought. Refusals to make declarations in cases of default are based upon a practice, not a rule of law. The practice is one of long standing and might be seen as derived from views about litigation which pre-date more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall. Views expressed in older cases may not take account of the increase in the use made of declaratory orders in developing areas of law which may involve matters of public interest (emphasis added). A caution with respect to the use of older authority is made in the White Book Service 2003 to the English Civil Procedure Rules 1998 (40.20.2). It may no longer be correct to have a practice which operates as a prohibition in every case of default and preferable to consider the circumstances pertaining to the particular case and the purpose and effect of the declaration … Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct constitutes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness (emphasis added). It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made 'upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the court'. 22 To similar effect is the judgment of Mansfield J in Bank of Kuwait and the Middle East v The Ship MV "Mawashi Al Gasseem" (No 2) [2007] FCA 815, which was, like Dataline, a case where judgment was given on the basis of deemed admissions under O 35A. Having noted the historical reluctance to base declarations on admissions, his Honour went on to approve and adopt the statements of Kiefel J in Dataline and to exercise his discretion to make declarations on the basis of those deemed admissions, at [13]-[16]. 23 Accordingly I propose to make the declarations sought, predicated by a statement that they are made on the basis of deemed admissions. APPROPRIATE PECUNIARY PENALTY FOR THE FOUR DEFAULTERS 24 I propose that, for the same reasons, the same penalties be imposed on each of the defaulters, as was imposed in relation to the main body of respondents identified in Schedule 2 to my earlier reasons: Hadgkiss v Aldin [2007] FCA 2068. 25 Accordingly I will impose the following penalties: (a) in respect of each of the defaulters, for the deemed admitted contraventions of s 38 of the BCII Act, a penalty of $9,000 of which $3,000 should be payable within 45 days and the balance of $6,000 suspended for six months, to be paid only if the respondent further contravenes the BCII Act or the WR Act during the period of the suspension; and (b) in respect of the second and third respondents for the further deemed admitted breaches of the s 127 order, an additional penalty of $1000 of which $250 should be payable within 45 days and the balance of $750 suspended for six months, upon similar terms. COSTS 26 Costs ought follow the event. Although the WR Act is a no costs jurisdiction, there is no such provision in the BCII Act. Agreement was reached with the primary group of respondents who admitted contraventions that there would be no order as to costs. No such agreement has been reached with these respondents. The defaulters have failed to either file an appearance or a defence in the proceedings and the applicant has incurred additional legal costs as a result. 27 The applicant therefore seeks an order as to costs against each defaulter. On a party/party basis, it is estimated that the costs of the applicant in respect of the defaulters, including the costs of the Notices of Motion and supporting affidavits and the hearing on 14 November 2007, will exceed $33,000. However a costs order of $5,000 is sought in respect of each defaulter, a total of $20,000, which, on my view, is a conservative figure in the circumstances. 28 I propose then to order that each defaulter pay the costs of the applicant fixed at $5,000. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 20 December 2007 Counsel for the Applicant: Mr R J H Maidment SC with Mr R L Hooker and Dr S Donaghue Solicitors for the Applicant: Lavan Legal Counsel for the 2nd, 3rd, 83rd and 92nd Respondents Mr P Rozen Solicitors for the 2nd, 3rd, 83rd and 92nd Respondents: Jeremy Noble, Barristers & Solicitors Date of Hearing: 14 November 2007 Date of Judgment: 20 December 2007