(a) Can the ACCC rely upon O 35A to obtain default judgment for the declaratory relief it has sought?
17 Order 35A r 3(2)(c) provides:
(2) If a respondent is in default, the Court may:
…
(c) if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings - give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; …
18 Order 35A r 2 defines the conduct that constitutes default as follows:
…
(2) For this Order, a respondent is in default if the respondent has not satisfied the applicant's claim and:
(a) the time for the respondent to enter an appearance has expired and the respondent has failed to enter an appearance; or
(b) the time for the respondent to file a defence has expired and the respondent has failed to file a defence; or
(c) the respondent fails to attend a directions hearing; or
(d) the respondent fails to comply with an order of the Court in the proceeding; or
(e) the respondent fails to file and serve a pleading as required by Order 11; or
(f) the respondent fails to serve a list of documents or an affidavit or other document, or does not produce a document as required by Order 15; or
(g) the respondent fails to do any act required to be done by these Rules; or
(h) the respondent fails to defend the proceeding with due diligence.
19 As is already adverted to above, these proceedings were commenced on application supported by a statement of claim. Thus, they meet the procedural requirements of O 35A r 3(2)(c) above. The defaults the ACCC has relied upon to found its application are EDirect's failure to enter an appearance (O 35A r 2(2)(a) above), its failure to attend the first directions hearing (O 35A r 2(2)(c) above) and its failure to deliver a defence (O 35A r 2(2)(b) above). Based on the evidence of Mr Sutherland (see at [10] above), and the contents of the Court file, I find that each of these defaults has occurred.
20 The question posed by 13 above about the operation of O 35A, particularly where the relief sought includes declaratory relief, was considered by Kiefel J in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2007) 236 ALR 665; [2006] FCA 1427 (Dataline). During a comprehensive examination of the apposite authorities (Dataline at [35]-[59]), her Honour concluded, among other things, that:
(a) O 35A deems a respondent to have admitted the facts alleged in the applicant's statement of claim, but not to have conceded the entitlement to the relief sought therein: see Dataline at [44]. See also the subsequent decision of Bank of Kuwait and the Middle East v The Ship MV "Mawashi Al Gasseem" (No 2) (2007) 240 ALR 120; [2007] FCA 815 (Bank of Kuwait) at [8] and [13] per Mansfield J;
(b) regard may be had to the deemed admitted facts as alleged in the statement of claim to determine whether the relief is made out: Dataline at [45]. See also Bank of Kuwait at [13] and two decisions to similar effect: Hadgkiss v Aldin (No 2) (2007) 169 IR 76; [2007] FCA 2069 (Hadgkiss) at [9] and [21]-[22] per Gilmour J and Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 (Speedo) at [23] per Flick J; and
(c) not only is no evidence required to support the application, it is not permitted to supplement or support the facts as pleaded in the statement of claim, nor to alter the case as pleaded therein: see Dataline at [48]-[51] and also Bank of Kuwait at [14].
21 However, as Kiefel J went on to note (Dataline at [54]-[56]), when it comes to declaratory orders, these conclusions confront the views expressed by courts in the last millennium in England and by Young J in the New South Wales Supreme Court to the effect that: "… a declaration was a judicial act and ought not to be made on admissions of the parties, or on consent, but only if the Court is satisfied by evidence": see Wallersteiner v Moir (No 1) [1974] 1 WLR 991 (Wallersteiner) at 1029. In Dataline, having noted these views Kiefel J proceeded to observe (at [58]) that they were "based upon a practice, not a rule of law". About this practice, her Honour observed (Dataline at [58]):
… [It] 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. 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).
22 Kiefel J then concluded at [59]:
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 contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. 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'.
(Emphasis added)
23 This Dataline approach, viz proceeding on agreed or deemed admitted facts and without requiring any supporting evidence, has been followed, albeit on some occasions with expressions of caution, in: Bank of Kuwait at [15] per Mansfield J; Hadgkiss at [21]-[23] per Gilmour J; Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at [75]-[79] per Flick J; Australian Competition and Consumer Commission v AMV Holding Ltd [2009] FCA 605 at [8]-[9] per Moore J; Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 2) [2009] FCA 887 at [21] per Logan J; Australian Competition and Consumer Commission v Alvaton Holdings Pty Ltd [2010] FCA 760 at [35] per Gilmour J; Australian Building & Construction Commissioner v Abbott (No 3) [2011] FCA 340 at [14]-[16] per Gilmour J; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1; [2011] FCA 352 (Yellow Page Marketing) at [66] per Gordon J; and my own decisions in Australian Competition and Consumer Commission v EDirect [2008] FCA 65 (EDirect 2008) at [24] and Australian Competition and Consumer Commission v Grove & Edgar Pty Limited (2008) ATPR 42-269; [2008] FCA 1956 (Grove & Edgar) at [18]. But not every judge of this Court has agreed with the Dataline approach. In Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd [2009] FCA 960 (Allergy Pathway) (at [10]-[19]), Finkelstein J strongly supported what he described as the established or usual rule, based upon Wallersteiner and other decisions to similar effect, a position which his Honour later confirmed in Australian Competition and Consumer Commission v Bridgestone Corporation (2010) 186 FCR 214; [2010] FCA 584 (Bridgestone) at [12].
24 In Allergy Pathway, the ACCC sought to rely upon consent orders to obtain, among other things, declarations that various statements the respondent had made about allergy testing and treatment was misleading or deceptive in breach of various provisions of the TPA. The ACCC also sought to tender evidence by Professor Douglass expressing opinions as to why the statements the respondent had made about allergy testing and treatment were misleading or deceptive. The respondent objected to that evidence being tendered and the ACCC then elected to rely solely upon the consent orders and not pursue the tender. After his Honour indicated that he was not prepared to make the declaratory orders based solely upon the consent orders, the respondent withdrew its objections to the tender of Professor Douglass' evidence. His Honour then proceeded to make the declarations sought. However, in his reasons Finkelstein J outlined why he would not have made the declarations without the evidence of Professor Douglass (Allergy Pathway at [10]-[19]). In essence, his Honour proceeded on the basis of the views stated in Wallersteiner (see Allergy Pathway at [10]) and similar statements in other English decisions (see Allergy Pathway at [12]-[14]). His Honour also referred to the Full Court decision of BMI Ltd v Federated Clerks Union of Australia (1983) 51 ALR 401 (BMI) (Allergy Pathway at [15]) and particularly the statement in the joint judgment of Keely and Beaumont JJ (at 413-4) as follows:
[W]e think that it is generally undesirable that the court should grant relief by way of declaratory orders … in the absence of any contest on the question. If the matter were merely one of private right between particular parties, for example, a question as to the respective rights of parties under a contract, it may well be appropriate for a court to make a declaration as to those rights by consent. In such a case, the public and other parties cannot be affected, let alone bound, by such a declaration.
But different considerations apply in a case such as the present. If a declaration were made, even in the terms sought, its practical operation may well extend beyond the activities of the first applicant.
(Citations omitted)
25 His Honour also referred to a number of New South Wales Supreme Court decisions that had taken a different approach (see Allergy Pathway at [16]-[17]), but he was not persuaded that they justified a departure from the established or usual rule. Accordingly, his Honour concluded (Allergy Pathway at [18]-[19]) as follows:
The declaration cases, however, require proof by way of evidence. An assurance by parties (whether by admission or agreed statement) that asserted facts are true will not suffice. Moreover, the House of Lords did not think a departure from this rule was justified because of administrative expediency.
For the time being, at least until a Full Court holds otherwise, it is, in my view, incumbent upon a single judge of the Federal Court to follow BMI and therefore not grant a declaration involving a public right in the absence of evidence that supports the declaration.
26 Two things may be noted about this decision. First, Finkelstein J did not mention the observations of Kiefel J in Dataline which were directly on point. Secondly, the circumstances were quite extreme. The materials upon which Finkelstein J was being asked to make the declaratory orders were of the barest kind. In the absence of Professor Douglass' evidence, all his Honour had before him were the consent orders proffered by the parties. He did not, for example, have any agreed facts under s 191 of the Evidence Act 1995 (Cth) (Evidence Act), nor any deemed admitted facts in a statement of claim under O 35A of the Rules. However, both of these matters were addressed, at least to some extent, in his Honour's subsequent decision of Bridgestone. In Bridgestone, Finkelstein J was provided with a statement of agreed facts under s 191 of the Evidence Act and his Honour confirmed the position he had taken in Allergy Pathway that "generally speaking it was necessary before a declaration of contravention could be made that evidence had to be tendered that justified the relief" (see Bridgestone at [12]).
27 As well as confirming his earlier position, Finkelstein J concluded that s 191 of the Evidence Act did not alter the common law position that evidence was necessary to justify the declarations of contravention sought (see Bridgestone at [16]). On this aspect, his Honour rejected as "plainly incorrect" an earlier decision of Australian Competition and Consumer Commission v Skins Compression Garments Pty Ltd [2009] FCA 710 (Skins Compression Garments), where Besanko J held (at [13]) that, while "in the ordinary case, a Court will not make a declaration by consent unless it is satisfied by evidence that it should do so", by reason of s 191 of the Evidence Act "evidence is not required to prove the existence of the agreed facts". Finkelstein J appears to have concluded that Besanko J thought s 191 "altered the common law in that evidence was no longer required to obtain a declaration affecting public rights": see Bridgestone at [12]. It was the view of Finkelstein J that s 191 did: "no more than apply [the rules of pleadings] to an agreed statement of facts. That is, the section gives to agreed facts the status of a pleading. There is nothing in s 191 which suggests that it is intended to have a wider operation": see Bridgestone at [16]. It is not necessary for present purposes to decide how s 191 of the Evidence Act operates. What is clear for present purposes is that Besanko J considered that declaratory relief could be granted based on a set of facts agreed under s 191 of the Evidence Act and Finkelstein J considered that the usual or established rule applied to prevent that approach. It should be noted that Besanko J did not mention Dataline in coming to his conclusion.
28 But on this occasion, Finkelstein J did mention Dataline, at least peripherally. His Honour did that in the course of mentioning two possible exceptions to the established or usual rule. The first exception was where the grant of declaratory relief on an agreed statement of facts was necessary "to do justice between the parties" (see Bridgestone at [17]). The second, relying upon Dataline (at [59]), was that the granting of a declaration on admissions was "in the public interest". In such circumstances, his Honour noted at [18] that Kiefel J had observed that: "if a declaration was to be made, it should be made clear that it was made upon facts admitted by the defendant" (the full quotation is set out at [22] above). His Honour also noted (Bridgestone at [18]) that the Full Court had endorsed this approach in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (in liquidation) (2007) 161 FCR 513; [2007] FCAFC 146 (Dataline FC) at [92]. Curiously, his Honour did not address the underlying reasoning Kiefel J had advanced for this departure from the established rule or practice (see Dataline at [58]-[59] summarised and partly quoted at [21]-[22] above). Having mentioned the appeal in Dataline, it is appropriate to interpolate that the operation of O 35A was not part of that appeal and that matter was therefore not considered in that decision (see Dataline FC at [90]).
29 There can be little doubt from a combination of the decisions in Allergy Pathway and Bridgestone that Finkelstein J considered he was bound by BMI to follow the usual or established view. However, it is significant for present purposes to note that neither of these decisions has been followed by any other judge of this Court. To the contrary, they have either been distinguished or expressly rejected. I will briefly turn to consider some of those decisions. The first, which in turn refers to two others, is Minister for Environment, Heritage and the Arts v PGP Developments Pty Ltd (2010) 183 FCR 10; [2010] FCA 58 (PGP Developments). In that matter, Stone J dealt with an application for declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth) in relation to contraventions of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). The parties put before the Court a set of proposed consent orders, the pleadings they had exchanged, an agreed statement of facts under s 191 of the Evidence Act and joint written submissions. In the course of considering whether to grant the declaratory relief, her Honour referred to and summarised the decision of Finkelstein J in Allergy Pathway (see PGP Developments at [24]-[28]). Having done so, her Honour noted (PGP Developments at [29]) that, in Australian Competition and Consumer Commission v Cosic Holdings Pty Ltd (2009) ATPR 42-304; [2009] FCA 1579 (Cosic Holdings) and Australian Competition and Consumer Commission v Wilson Parking 1992 Pty Ltd [2009] FCA 1580, Barker J was persuaded to follow the New South Wales Supreme Court cases that Finkelstein J declined to follow (see Allergy Pathway at [16]-[17] mentioned at [25] above). It should be noted that in taking this approach Barker J (Cosic Holdings at [51]) expressly disagreed with Allergy Pathway where Finkelstein J had eschewed the New South Wales Supreme Court approach. Stone J then observed (PGP Developments at [30]) that none of these decisions (those of Barker J, or Finkelstein J) mentioned s 191 of the Evidence Act and turned to consider the effect of that section. It should be noted that PGP Developments was delivered about four months before Finkelstein J delivered his decision in Bridgestone, where, as I have already noted (see at [27] above), his Honour did consider the effect of s 191 of the Evidence Act. In her consideration of s 191 of the Evidence Act, Stone J referred to the decision of Besanko J in Skins Compression Garments (see PGP Developments at [33]-[34]). It will be recalled that in Bridgestone Finkelstein J subsequently rejected the conclusion that Besanko J had reached in that case, saying it was "plainly incorrect": see at [27] above. Stone J set out her view of s 191 of the Evidence Act (PGP Developments at [35]) that:
The effect of s 191 is to admit the agreed facts as evidence. It still remains for the Court to determine whether the facts are to be accepted as true and to determine what weight to attribute to that evidence. Whether the Court accepts the agreed facts, in whole or in part, may depend, among other things, on the coherence of the narrative created by the facts or their inherent credibility. If, for example, a statement contained mutually inconsistent facts the Court would be obliged to take account of the inconsistency. In attempting to resolve the problem it would not be entitled to require evidence although, as provided in s 191(2), it might give leave to the parties to adduce evidence to resolve the inconsistency. In the absence of further evidence, and taking the context provided by other evidence including other agreed facts, it might possibly accept one or other of those facts. Clearly, however, it could not accept both of the facts in question as true.
(Emphasis in original)
30 Ultimately, Stone J considered she could proceed with, among other materials, the assistance of s 191 of the Evidence Act to make the declarations sought in that case (see PGP Developments at [36]). But it is important to record two things. First, Stone J did not expressly mention the observations of Kiefel J in Dataline. And secondly, her Honour declined to follow the decision of Finkelstein J in Allergy Pathway, saying it was "entirely obiter". Her Honour said (PGP Developments at [37]):
I am conscious of the view expressed by Finkelstein J in ACCC v Allergy Pathway Pty Ltd however, with the greatest respect, his Honour's statement is entirely obiter. Despite the initial objections of the respondent, the evidence of Professor Douglass was admitted and his Honour was able to make the declarations sought. Moreover the circumstances before his Honour were entirely different from those here. The parties' consent to the declarations in ACCC v Allergy Pathway Pty Ltd, even if it had been in the form required by s 191(3), did not provide an evidentiary basis for the declarations. Their agreement that the declarations were appropriate was a joint opinion not an agreement as to fact. Professor Douglass' report contained expert opinion which was admissible as an exception to the opinion evidence rule under s 79 of the Evidence Act. For that reason his Honour was entitled to admit the opinion evidence and base his declarations on that opinion not on the agreement of the parties.
31 The second, and most recent, decision I wish to consider on this issue is that of Perram J in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609; [2011] FCA 382 (MSY Technology). In that decision, Perram J expressly disagreed with the decision of Finkelstein J in Allergy Pathway. His Honour did so in the following terms (MSY Technology at [25]):
After reviewing a number of authorities, including Wallersteiner, [Finkelstein J] concluded that BMI bound a judge of this Court "not [to] grant a declaration involving a public right in the absence of evidence that supports the declaration.": at [19]. For the reasons already given, BMI is not, with respect, authority for that proposition.
32 Earlier in his reasons, Perram J reviewed the decision of Wallersteiner and the primary decision relied upon therein of Williams v Powell [1894] WN 141 (Williams v Powell). His Honour pointed out (see MSY Technology at [16]) that in Williams v Powell, Kekewich J was "content to make declarations on the basis of having been told by the chief clerk that he was satisfied of the correctness of the factual matter upon which the parties agreed". Based on this, his Honour observed (MSY Technology at [17]) that:
Contrary to Buckley LJ's statement [in Wallersteiner], the passage in question suggests that a declaration can be made where the parties proceed on admissions if a subordinate officer of the court satisfies himself as to the facts. I cannot see how it can be objectionable for a judge to do the same thing. In my opinion, Williams is simply not authority for the proposition for which Buckley LJ cited it.
33 Perram J then concluded (MSY Technology at [19]) as follows:
In those circumstances, I do not accept that Williams requires the conclusion that declarations should not be made except on evidence; it is certainly not what Kekewich J did in that case. Insofar as Wallersteiner is concerned this aspect of its reasoning is, with respect, based on a misreading of Williams together with a reason which is altogether tenuous.
34 Having made some similar observations about the reliance placed on both Wallersteiner and Williams v Powell in the second edition of Young's Declaratory Orders (Butterworths, 1984) (see MSY Technology at [20]), Perram J then turned to consider the Full Court decision in BMI. He noted (at [22]) that in the joint decision of Keely and Beaumont JJ, their Honours referred to Wallersteiner and said:
For the reasons advanced by Buckley LJ and Scarman J, supra, we think that it is generally undesirable that the court should grant relief by way of declaratory orders under s 108 in the absence of any contest on the question: see Forster v Jododex Aust Pty Ltd, supra, at CLR 437-8; ALR 1311-12 …
(Emphasis in the extract appearing in MSY Technology)
35 His Honour then observed (MSY Technology at [23]) that:
The reference to Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; [1972-73] ALR 1303 (Forster) is important. For reasons I return to below the passage cited does not stand for the proposition that there must be a "contest" but for the different, and more subtle, proposition that there must be a contradictor. More importantly, it is clear that Keely and Beaumont JJ did not say anything about whether declarations could, or could not, be made on agreed facts. Indeed it will be noted that the Court's conclusion was not that it could only act on evidence but rather that there needed to be contest. A reading of the full report of BMI shows why: the parties were not asking the court to act on agreed facts or admissions. To the contrary, the court had affidavit evidence before it, as the reference to Mr McKimm's affidavit of 30 November 1982 in the judgment of Keely and Beaumont JJ at ALR 414; IR 426 inevitably shows. The dissenting reasons of Northrop J also disclose the substantial affidavit evidence which was before the court: at 418. Once that is appreciated it becomes plain that their Honours could not have been speaking of the practice discussed in Wallersteiner. It is also just as plain that it cannot be authority for the proposition for which it is cited in P W Young QC's Declaratory Orders, 2nd ed, Butterworths, Sydney, 1984.
(Bold emphasis added)
36 The references at the beginning of this paragraph to Forster and the "reasons I return to below" appear to be, at least in part, a reference to the following paragraph from Perram J's consideration of the other question he considered in MSY Technology, viz whether there must be a proper contradictor before declaratory orders could be made. In that context, his Honour returned to BMI and said (at [32]):
… In that case, as I have already indicated, the apparent basis of the decision was the absence of "contest" (not the absence of evidence). All parties were before the court and were consenting; it was the absence of opposition, in that case, which was fatal. It is clear, however, that Keely and Beaumont JJ thought that the need for a contradictor required there to be a party arguing against the granting of the relief and that this could not be satisfied where the matter proceeded by consent.
37 Perram J set out a summary of his conclusions at [43]. For present purposes, viz whether a declaratory order can only be made where the Court is satisfied by evidence, the following parts of that summary are relevant:
(a) The suggested [principle] that declaration[s] should only be made on evidence is dubious in origin, insubstantial in its persuasive content and is not required either by Forster or BMI.
(b) To the extent that Allergy Pathway suggests that BMI propounds such a rule it is, with respect, plainly wrong because it overlooks the fact that the court in BMI had evidence before it and did not decline the declarations on the basis suggested.
(c) In any event, the rule, even if it exists, is overcome by s 191 of the Evidence Act in the present case.
38 It should be noted that, ultimately, in MSY Technology Perram J decided he was bound by the decision in BMI to refuse the declarations sought by the ACCC. His Honour reached this conclusion because, based on what was said in BMI, there was no proper contradictor before the Court. That aspect of the matter was successfully appealed to the Full Court: Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56 (MSY Technology FC). However, that appeal did not apply to any of the conclusions his Honour had reached about the necessity for evidence to support the making of declaratory orders.
39 The reasoning of Perram J in MSY Technology is, in my view, and with respect, compelling. It means that, even as a practice, the so-called established rule is of dubious origins. That being so, there would appear to be even more reason to adopt the approach outlined by Kiefel J in Dataline (see at [22] above), which takes account of the modern approach to litigation, current case management practices and developments in areas of the law that have come to be described as public interest litigation. That obviously includes the litigation pursued as a part of the regulatory functions of the ACCC directed to the consumer protection provisions of the TPA. In a very different context, but still involving litigation with a significant public interest component, consent determinations of native title under s 87 of the Native Title Act 1993 (Cth) also readily come to mind. It follows that I consider declaratory orders of the kind sought here may be made on the admissions of the parties, whether deemed admissions, or agreed facts under s 191 of the Evidence Act, or otherwise, and the Court is not required to be satisfied by evidence before making such declaratory orders. Of course, when making declaratory orders that have an effect beyond the parties to the proceedings, the Court must still proceed with the caution mentioned in the various authorities I have referred to above, including Dataline and the decisions that have applied it (see at [23] above). It is also necessary to bear in mind that declaratory relief is discretionary in nature and a court must therefore have regard to any pertinent discretionary factors, including those identified below: the need for a proper contradictor and the question whether the issue at stake has become academic (see at [49]-[50]); whether it is appropriate to make a declaration against a respondent that is in liquidation (see at [52]-[54]) and the other more general principles identified (see at [55]). However, that does not, in my view, mean that the Court is constrained by the so-called established rule, nor is it bound to that course by the Full Court decision in BMI.
40 Returning to the particular question under consideration here (that set out at 13 above), since it has duly served its statement of claim on EDirect and, subsequently, a copy of the Confidential Schedule A, and since the Receivers and Managers of EDirect have specifically stated that they do not intend to defend these proceedings, the decisions to which I have referred above (with the exceptions of Allergy Pathway and possibly Bridgestone) mean that the ACCC may rely upon the facts pleaded in its statement of claim which are deemed to be admitted under O 35A r 3(2)(c) to seek the declaratory relief described in its originating application. Whether or not those deemed admitted facts are sufficient to support that relief is something I will come to later in these reasons.