Plaintiff v Defendants

PRACTICE AND PROCEDURE - Judgment in default of appearance - Allegations contained in the statement of claim treated as admissions - Whether relief sought in the statement of claim can be granted - Foris GFS Australia Pty Ltd v Manivel [2022] VSC 482 - Macquarie Bank Ltd v Seagle (2005) 146 FCR 400 - Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 21.04.

1 On 15 September 2022, the plaintiff obtained judgment in default of the defendants' appearance. This determination concerns the relief consequential to the judgment in default.

2 The plaintiff, namely the Labour Hire Licensing Authority ('the Authority'), seeks declaratory and pecuniary relief against the first defendant, UNG Services Pty Ltd ('UNG') and the second defendant, Nico Keat ('Keat').[1]

3 I will declare that UNG and Keat have contravened the Labour Hire Licensing Act 2018 (Vic) (the 'Act'). I will make orders that UNG and Keat pay civil penalties according to the Act. The civil penalties to be imposed on UNG and Keat, respectively, are $386,742.72 and $96,685.68.

4 The Authority relies upon the affidavits of service of Emma Harper, legal assistant, affirmed on 9 August 2022 and 14 September 2022 (the 'first Harper affidavit' and the 'second Harper affidavit' respectively) and the affidavit of service of Peter John Lowe, process server, sworn on 14 September 2022 (the 'Lowe affidavit').

5 The Authority filed written submissions on 14 September 2022 and, at the Court's request, filed a Supplementary Note on 29 September 2022.

6 Neither defendant filed any affidavit material or written submissions.

7 The Supreme Court of Victoria has jurisdiction to make orders for pecuniary penalties or any other order it considers appropriate pursuant to s 93(2) of the Act. The effect of s 93(6) of the Act is that an application for a civil penalty provision exceeding 500 penalty units for a natural person, or 2500 penalty units for a body corporate, must be made to the Supreme Court of Victoria. Otherwise, an application may be made to the Magistrates' Court of Victoria. Here, one of the civil penalty provisions relied upon is s 44 of the Act. The maximum number of penalty units levied for contravention of s 44 of the Act are 800 for a natural person and 3200 for a body corporate. Accordingly, the Authority properly commenced this proceeding in the Supreme Court of Victoria.

8 This judgment does not concern a criminal offence. Section 101 of the Act provides that a contravention of a civil penalty provision is not an offence.

9 As an Associate Justice of this Court, I can make the orders sought by the Authority as this concerns a default judgment. I generally refer to s 17(1A) of the Supreme Court Act 1986 (Vic) and Order 77 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the 'Rules').

10 The Authority is established by s 50 of the Act. Section 50(2) of the Act provides that the Authority is to be constituted by the Commissioner. Section 50(3)(c) of the Act provides that the Authority may sue and be sued in its corporate name.

11 Section 51 of the Act states the powers and functions of the Authority, including to enforce compliance with the Act and regulations:

51 Functions and powers of Authority

(1) The Authority has the following functions―

(a) to administer the scheme for granting licences under this Act and related matters;

(b) to promote, monitor and enforce compliance with this Act and the regulations;

(c) to investigate compliance with this Act and the regulations;

(d) to maintain the Register;

(e) to develop and publish Codes of Practice in relation to this Act;

(f) to provide advice and to report to the Minister on a Code of Practice or any other matter referred to the Authority by the Minister (within the time specified by the Minister);

(g) to engage in, promote and coordinate the sharing of information with other government agencies and bodies, including agencies and bodies of the government of the Commonwealth or another State or a Territory, to achieve the objects of this Act;

(h) to conduct, procure and support research into the labour hire industry;

(i) to disseminate information about the duties, rights and obligations of persons under this Act and the regulations;

(j) to establish advisory committees to provide advice or information to the Authority regarding the performance of its functions;

(k) any other function conferred on the Authority by this or any other Act.

(2) The Authority has all the powers that are necessary or convenient to perform its functions under this or any other Act.

12 Section 93(1) of the Act provides that the Authority may apply to a court for a civil penalty. Section 94(2) of the Act provides that the Authority may apply to a court for an order concerning a contravention by a natural person or a body corporate of a civil penalty provision under the Act (such provisions referred to in a table in that section).

13 The Authority seeks the following relief against UNG:

(a) a declaration that UNG contravened s 43 of the Act;

(b) an order, pursuant to s 93(2) of the Act, that UNG pay a pecuniary penalty because it contravened s 43 of the Act;

(c) a declaration that UNG contravened s 44(1) of the Act; and

(d) an order, pursuant to s 93(2) of the Act, that UNG pay a pecuniary penalty because it contravened s 44(1) of the Act.

14 The Authority seeks the following relief against Keat:

(a) a declaration that Keat contravened s 95(1) of the Act in that he aided, abetted, counselled, or procured, a contravention by UNG of s 43 of the Act;

(b) in the alternative, a declaration that Keat contravened s 95(1) of the Act in that he was in any way directly or indirectly knowingly concerned in, or party to, a contravention by UNG of s 43 of the Act;

(c) a declaration that Keat contravened s 95(1) of the Act in that he aided, abetted, counselled, or procured, a contravention by UNG of s 44(1) of the Act;

(d) in the alternative, a declaration that Keat contravened s 95(1) of the Act in that he was in any way directly or indirectly knowingly concerned in, or party to, a contravention by UNG of s 44(1) of the Act; and

(e) an order, pursuant to s 93(2) of the Act, that Keat pay a pecuniary penalty because he contravened s 95(1) of the Act.

15 Section 93(7) of the Act provides that an application under s 93 must be made within six years of the contravention. The proceeding is within time. The alleged contraventions occurred approximately one year ago.

16 I adopt the following principles outlined by Elliot J in Foris GFS Australia Pty Ltd v Manivel ('Foris v Manivel'):[2]

...

(2) The effect of not filing an appearance is that the allegations in the statement of claim are taken to be admitted

(3) The particulars referred to and served with the statement of claim are part of the statement of claim for this purpose

...[3]

17 The following sections summarise the facts alleged in the Authority's statement of claim. Due to the defendants' default, the allegations are treated as admissions.

The Authority's refusal to grant Amatak a licence

18 On or about 9 August 2019, Amatak Labour Services Pty Ltd ('Amatak') lodged with the Authority an application for a licence authorising Amatak to provide labour hire services (the 'Amatak application').[4]

19 Keat was a director of Amatak at the time it lodged its application.[5]

20 On or about 11 September 2020, whilst the Amatak application was still being considered by the Authority, Keat pleaded guilty to trafficking a drug of dependence. He was convicted and sentenced to six months' imprisonment, with a Community Correction Order for 18 months.[6]

21 On or about 22 January 2021, the Authority issued to Keat a 'Notice of intention to refuse to grant a licence' (the 'first notice') under the Act.[7] The first notice stated that the Authority had received a certified extract from the Magistrates' Court of Victoria, which contained information about Keat's conviction. On this basis, the Authority did not consider Keat to be a fit and proper person.[8] The first notice further stated that the Authority was not satisfied that it was appropriate to grant a licence to Amatak.[9] The first notice invited Keat to provide any information to the Authority that he considered relevant to the Authority's final decision.[10]

22 On or about 1 March 2021, Keat responded to the first notice as follows:

To whom in charge of my application,

I have been informed that my application will be rejected due to my stupidity during the early stage of COVID-19 back in April 2020. I would really appreciate it if you could find it in your heart to reconsider before making your final decision, as the decision I've made in the past wasn't always right but while I was doing my time I realized that it wasn't just my life and future that is going to be ruined, but my family, friends, colleagues my 3 years old daughter and all the workers that had their trusts on me and the company are also badly affected by an individual actioned. I don't know how to convince you to believe me that I am a better person a better friend a better father and a better director now than I have ever before, I'm building a new life towards my goal and a new relationship between my colleagues. I know it will be hard to earn their trusts but I'm trying little by little step by step and hopefully you can be apart of that as well. I haven't got much left as you can already imagine. Well past is the past I know I cannot change that but I want to change the future for myself, my colleagues and my daughter. I know it's not an easy decision for you to make as well because you have to follow the rules, procedures and outlines of your work and I will always respect your final decision weather I am worth enough for a second chance.

Thank you so much for reading this,

Nico Keat

Director/Ex-con

Amatak Labour Services Pty Ltd[11]

23 On or about 17 August 2021, the Authority issued to Keat a notice which refused the Amatak application (the 'refusal notice').[12] The refusal notice stated that because Keat was not a fit and proper person, the Amatak application did not meet the requirements of s 24 of the Act.[13] The refusal notice further stated the following:

Providing labour hire services without a current licence is a breach of s 13 [of] the [Labour Hire Licensing Act 2018 (Vic)] and can attract significant financial penalties. Accordingly, if you are currently operating a labour hire business, you must cease doing so immediately.[14]

UNG is granted a labour hire licence by the Authority

24 On or about 8 February 2020, UNG was registered.[15]

25 On or about 28 October 2020, UNG lodged with the Authority an application for a licence authorising UNG to provide labour hire services (the 'UNG application').[16]

26 Chung Heang Ung ('Chung') was a director of UNG at the time the UNG application was lodged.[17]

27 On 15 April 2021, UNG was granted licence number VICLHL05999 by the Authority under the Act.[18]

28 On or about 17 November 2021, Chung ceased to be a director and secretary of UNG. Keat became a director and secretary of UNG.[19]

29 On 18 November 2021, Keat became UNG's sole director, secretary and shareholder.[20]

30 To determine whether to grant the relief sought by the Authority, I must be satisfied that the statement of claim properly grounds that relief. I must assess whether the statement of claim adequately pleads the elements necessary to establish the alleged contraventions of the Act. I will outline the applicable legal principles before undertaking the assessment.

31 Rule 21.04 of the Rules is applicable. It applies to a claim other than for recovery of a debt, damages or any property. If the plaintiff is entitled to a default judgment, r 21.04 of the Rules provides that "the Court may give judgment for the plaintiff upon the statement of claim."

32 In Macquarie Bank Ltd v Seagle, Conti J of the Federal Court considered whether an applicant could obtain declarations and other relief against the respondent.[21] The applicant was entitled to judgment in default. The applicable Federal Court rule gave the Court power to "give judgment against the respondent for relief that: the applicant appears entitled to on the statement of claim; and the Court is satisfied it has power to grant".[22] The applicant sought declaratory and other relief. The applicant submitted that the Court could grant the relief "so long as each element of the relevant civil wrong involved is properly and discretely pleaded in the statement of claim".[23] Conti J accepted this submission in light of the objective of the applicable rule for default judgment "in providing for a ready and expedient means to dispose of uncontested litigation".[24] The principle was recently applied in this jurisdiction by Elliot J in Foris v Manivel.[25]

How should reg 24 of the Labour Hire Licensing Regulations 2018 (Vic) be construed?

33 The Authority raised an issue as to the interpretation of reg 24 of the Labour Hire Licensing Regulations 2018 (Vic) (the ' Regulations'). It is useful to briefly address that issue now.

24 Significant changes that must be notified by licence holder

For the purposes of section 44(1) of the Act, the prescribed changes are that to the licensee's knowledge -

(a) a relevant person is no longer a fit and proper person as required by section 22 of the Act; or

(b) a relevant person is no longer compliant with legal obligations required by section 23 of the Act.

35 The Authority refers to two possible ways in which reg 24 can be construed.

Construction 1: "where a particular relevant person (A) was at one time a fit and proper person, but A ceases to be a fit and proper person, that is a prescribed change".[26]

Construction 2: "where it was once the fact that all relevant people in regard to a licence were fit and proper people, but that ceases to be the fact, that is a prescribed change".[27]

36 I accept that reg 24 should be construed in the manner submitted by the Authority ('Construction 2') rather than the alternative ('Construction 1'). I do so for the following reasons.

37 Section 44 of the Act is the source of the obligation to notify of certain changes prescribed by the Regulations.

44 Licence holder to notify of prescribed changes

(1) The holder of a licence must notify the Authority of any changes prescribed by the regulations within 30 days of the change.

Note

Section 94 provides that this subsection is a civil penalty provision. Part 6 deals with civil penalty provisions.

(2) A change prescribed by the regulations for the purposes of subsection (1) must be a change of such significance that notification of the change to the Authority would constitute grounds for the cancellation of a licence.

39 Regulation 24 of the Regulations is the only regulation that deals with s 44 of the Act.

40 Section 3 of the Act defines 'relevant person' as follows:

relevant person, in relation to an application for or in respect of a licence, or in relation to a licence that is in force, as the case requires, means the following persons -

(a) the applicant, or the holder of the licence, as the case requires;

(b) if the applicant, or the holder of the licence, is a body corporate, each officer of the body corporate;

(c) if the applicant, or the holder of the licence, is a natural person, each person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business conducted by the natural person that provides or is to provide labour hire services;

(d) each proposed nominated officer, or nominated officer, for the licence.

41 Section 22 of the Act relevantly clarifies when a person is a 'fit and proper person':

A person is a fit and proper person, at a particular time, unless any of the following apply to the person at that time―

(a) within the preceding 10 years, the person or a body corporate of which the person was an officer, has been found guilty of―

(i) an indictable offence against the person, or an offence involving fraud, dishonesty or drug trafficking that was punishable by a term of imprisonment of 3 months or more at the time the person was found guilty; or

(ii) an offence that, if committed in Victoria, would constitute an offence referred to in subparagraph (i);

...

(g) any other prescribed circumstances.

42 The Regulations use but do not define the terms 'relevant person' and 'fit and proper person'. These terms are, however, defined in ss 3 and 22 of the Act respectively, as illustrated above. Given that these terms as contained in reg 24 appear to refer to their use in the context of the Act, it is appropriate to have regard to the definitions of those terms in the Act to properly construe reg 24.

43 To my mind, the only relevant differences between Constructions 1 and 2 as advanced by the Authority are that:

(a) Construction 1 starts from the premise that there is one relevant person who ceases to be a fit and proper person, whereas Construction 2 contemplates that there may be multiple such persons; and

(b) Construction 2 relates specifically to the licensing context ('in regard to a licence'), whereas Construction 1 is not so expressed.

44 Construction 2 adheres most closely to the text of reg 24, and more particularly, the ways in which the relevant terms deployed in reg 24 are defined in the Act (as outlined above). To read reg 24 in a contrary way would run counter to the broader surrounding context within which reg 24 is to be construed.

45 In summary, the Authority alleges the following in its statement of claim:

(a) UNG contravened s 43 of the Act, in that it failed to notify the Authority that Keat had become a director and secretary of UNG, and that Chung had ceased to be a director and secretary of UNG, within 30 days of that change occurring;

(b) UNG contravened s 44(1) of the Act, in that it failed to notify the Authority of a change prescribed by reg 24 of the Regulations within 30 days of that change occurring;

(c) Keat contravened s 95(1) of the Act, in that he aided, abetted, counselled or procured UNG's contravention of s 43 of the Act, or alternatively, engaged in conduct implicating or involving him in that contravention such that there was a practical connection between his and UNG's conduct, and thereby Keat was directly or indirectly knowingly concerned in, or party to, UNG's contravention of s 43 of the Act; and

(d) Keat contravened s 95(1) of the Act, in that he aided, abetted, counselled or procured UNG's contravention of s 44(1) of the Act, or alternatively, engaged in conduct implicating or involving him in that contravention such that there was a practical connection between his and UNG's conduct, and thereby Keat was directly or indirectly knowingly concerned in, or party to, UNG's contravention of s 44(1) of the Act.

Is there a basis for granting declaratory relief?

46 Sections 43 and 44(1) of the Act are civil penalty provisions. The statement of claim alleges causes of action based on contraventions of ss 43, 44(1) and 95(1) of the Act.

47 I refer to and reiterate the background facts cited above.

48 I am satisfied that the statement of claim filed in this matter - and upon which the Authority relies - complies with the rules of pleading, and more particularly, adequately pleads causes of action that support the granting of the relevant relief sought. Specifically, I am satisfied that the facts alleged in the statement of claim establish that:

(a) UNG contravened ss 43 and 44(1) of the Act; and

(b) Keat contravened s 95(1) of the Act, in that he was in any way directly or indirectly knowingly concerned in, or party to, contraventions of ss 43 and 44(1) of the Act by UNG.

49 I will now address the contraventions of UNG and Keat in turn.

50 The Authority pleads the essential elements required to make out the necessary basis for a declaration that UNG contravened s 43 of the Act, namely:

(a) Chung provided the relevant (original) information to the Authority in his licence application form;[28]

(b) the change in officeholders of UNG from Chung to Keat (only) caused a change in that information;[29]

(c) section 43 of the Act required UNG to notify the Authority within 30 days of that change;[30]

(d) UNG did not notify the Authority within 30 days of that change;[31] and

(e) UNG therefore contravened s 43 of the Act.[32]

51 A similar analysis applies in respect of UNG's contravention of s 44(1) of the Act:

(a) Keat's conviction for drug trafficking is particularised, among other things, in the first notice issued by the Authority.[33] The first notice stated that the Authority had received a certified extract from the Magistrates' Court of Victoria confirming Keat's offence and conviction, and that it was the Authority's view that Keat was not a fit and proper person at that time.[34] The subsequent refusal notice issued by the Authority formally notified Keat that he was not, in the Authority's view, a fit and proper person for the purposes of the Act;[35]

(b) until on or about 17 November 2021, Chung was the 'guiding mind' of UNG and its sole secretary, director and shareholder. In UNG's application for a licence, it was stated, among other things, that Chung (as UNG's only relevant person) had not been found guilty of drug trafficking offences and was, to his knowledge, a fit and proper person;[36]

(c) this position changed on or about 17 November 2021 when Chung retired his functions as an officer of UNG and Keat became the sole 'guiding mind' of UNG as its sole secretary, director and shareholder;[37]

(d) to UNG's knowledge, Chung was, at all times prior to and including on or about 17 November 2021, a fit and proper person;[38]

(e) to UNG's knowledge, Keat was, at all times from about 17 November 2021, not a fit and proper person;[39]

(f) section 44 of the Act required UNG to notify the Authority within 30 days of that change;[40]

(g) UNG did not notify the Authority within 30 days of that change;[41] and

(h) UNG therefore contravened s 44(1) of the Act.[42]

52 In respect of Keat, the Authority sought alternative declarations. As I will explain, the statement of claim supports one alternative, but not the other.

53 I will first address the alternative that is not supported. I am not satisfied that the Authority has pleaded the necessary elements to ground a basis for declaratory relief that Keat did aid, abet, counsel or procure UNG's breach of s 43 of the Act pursuant to s 95(1)(a) of the Act. "Aid, abet, counsel or procure" are not defined in the Act. In Fair Work Ombudsman v Devine Marine Group Pty Ltd, White J analysed s 550(2)(a) of the Fair Work Act 2009 (Cth), which contains the same phrase.[43] I gratefully adopt White J's analysis:

Although the general principles relating to accessorial liability are settled, their application in a case such as the present is not without difficulty. In order to aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention: Yorke v Lucas [1985] HCA 65; (1984) 158 CLR 661 at 667. In order to have the requisite intention, the person must have knowledge of "the essential matters" which go to make up the events, whether or not the person knows that those matters amount to a crime: Yorke v Lucas at 667. Although it is necessary for the person to be an intentional participant and to have knowledge of the matters or things constituting the contravention, it is not necessary for the person to know those matters or things do constitute a contravention: Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 ... at [159]-[160]. That is to say, it is not necessary that the accessory should appreciate that the conduct in question is unlawful. The Full Court in Rafferty v Madgwicks [2012] FCAFC 37 ... summarised the position in this respect at [254]:

[W]hile the identification of the elements of a contravention requires careful legal analysis, "[i]n order to know the essential facts, and thus satisfy s 75B(1) ... and like provisions, it is not necessary to know those facts are capable of characterisation in the language of the statute" ... This is another aspect of the longstanding principle that it is not necessary for a person to "recognise" the contravention as such, or explicitly to think about the relevant legislation that their actions may contravene ...

Actual, rather than imputed, knowledge is required. So much was made clear in Giorgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473 at 506-7 by Wilson, Deane and Dawson JJ:

... [Offences of aiding and abetting and counselling and procuring] require intentional participation in a crime by lending assistance or encouragement. They do not, of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under the law. The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it. It is not sufficient if his knowledge or belief extends only to the possibility or even probability that the acts which he is assisting or encouraging are such, whether he realizes it or not, as to constitute the factual ingredients of a crime. If that were sufficient, a person might be guilty of aiding, abetting, counselling or procuring the commission of an offence which formed no part of his design. Intent is required and it is an intent which must be based upon knowledge or belief of the necessary facts. ...[44]

54 Here, the Authority suggests that I draw an inference regarding Keat's intentional participation in UNG's breach of s 43 of the Act. I decline to draw that inference. The facts alleged in the statement of claim do not support the characterisation of Keat 'intentionally participating' in UNG's contravention of s 43 of the Act 'with knowledge of the essential matters going to make up the contravention'.[45]

55 I will now address the alternative declaration that is supported by the statement of claim. I am satisfied the Authority has pleaded the necessary elements to ground a basis for declaratory relief that Keat was in any way directly or indirectly knowingly concerned in, or party to UNG's contravention of s 43 of the Act pursuant to s 95(1)(c) of the Act. I am satisfied this was conduct which 'implicated him [Keat] or involved him [Keat]' such that there was a 'practical connection' between Keat and UNG's conduct.[46] The Authority pleads the essential integers required to make out the necessary basis for a declaration that Keat contravened s 95(1)(c) of the Act, namely:

(a) Keat knew the information previously provided to the Authority by UNG in its licence application nominated a person(s) other than him (i.e. Chung);[47]

(b) Keat was a 'relevant person' with respect to UNG when he replaced Chung as its sole secretary, director and shareholder on and from 17 November 2021;[48]

(c) a change in the information previously provided to the Authority had thus occurred;[49]

(d) Keat had not caused UNG to notify the Authority of the change;[50] and

(e) no other person at UNG could do so, because Keat was now its sole secretary, director and shareholder.[51]

56 A similar analysis applies to the declarations sought in respect of Keat's alleged intentional participation in UNG's contravention of s 44 of the Act. For the reasons already stated, I decline to draw the inference that Keat intentionally participated in UNG's contravention of s 44 of the Act. I am however satisfied that the Authority has pleaded the necessary elements to ground a basis for declaratory relief that Keat was in any way directly or indirectly knowingly concerned in, or party to, UNG's contravention of s 44 of the Act pursuant to s 95(1)(c) of the Act, namely:

(a) Keat knew that he was not a fit and proper person;[52]

(b) Keat knew the Authority had refused the Amatak application because he was not a fit and proper person;[53]

(c) the Authority considered it inappropriate that entities held licences where relevant persons were not fit and proper;[54]

(d) Chung had, before 17 November 2021, been a relevant person in regard to UNG, and that if he had not been a fit and proper person, the Authority would not have granted a licence or would have cancelled it;[55]

(e) UNG held a licence that had not been cancelled, and thus, to UNG's knowledge, Chung was a fit and proper person;[56]

(f) from and after 17 November 2021, Keat was the only relevant person regarding UNG;[57]

(g) to UNG's knowledge, it was now no longer the fact that all relevant person(s) in relation to it were fit and proper;[58]

(h) Keat had not caused UNG to notify the Authority of the change in circumstances where it was no longer the fact that all relevant person(s) regarding it were fit and proper;[59] and

(i) no other person had caused UNG to notify the Authority to this effect, or indeed could do so, given that Keat was sole director, secretary and shareholder.[60]

57 I have found that UNG and Keat have contravened various provisions of the Act, providing a basis for declaratory relief. The question is whether declarations ought to be made.

58 The Court has a broad discretion to make declarations, both inherently and pursuant to statute.[61] There is no longer a requirement for a 'proper contradictor' before a Court may grant declaratory relief. I gratefully adopt the following principles given by Gordon J in ACCC v Yellow Page Marketing (No 2):[62]

... It is now established that refusals by the Courts in the past to make declarations in cases of default and deemed admissions were based on a practice, not a rule of law ...

Consistent with that line of authority, it is necessary to identify considerations relevant to the exercise of the discretion to grant or not grant declarations in a case such as the present. Considerations include:

1. whether the declaration will have any utility;

2. whether the proceeding involves a matter of public interest;

1. whether the circumstances call for the making of the Court's disapproval of the contravening conduct.

59 The principles given by Gibbs J in Forster v Jododex Pty Limited[63] also remain applicable:

The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.[64]

60 I am satisfied that the Authority has a real interest in pursuing the declarations because of its statutory role.

61 The declarations will have utility. They will identify contravening conduct and how it breaches the Act and Regulations. It is in the public interest to make the declarations. The declarations will have an educative purpose for those involved in the labour hire industry. As the Authority submits, this is particularly important in the present case as it is the first proceeding under the Act alleging contraventions of ss 43 and 44. Participants in the labour hire industry ought to be aware of the importance of the notification provisions in the legislation. Further, the circumstances here call for the Court's disapproval of individuals and corporations who contravene the provisions. The particular circumstances are that Keat was knowingly concerned in or party to UNG's contraventions.

62 The declarations will reflect the circumstances here, namely that there is a judgment in default of appearance. I gratefully adopt the following analysis by Judge Symons in Fair Work Ombudsman v Jenny Global Pty Ltd:[65]

... in exercising appropriate caution when considering declaratory relief, the particular characteristics of an application for default judgment should be borne in mind. In particular, default judgment is given on the basis of the claim as pleaded by the applicant and in the absence of a defence or contradictory evidence. Accordingly, it is appropriate to make clear, as the [applicant] has proposed, that there has been no adjudication on the merits of the applicant's claims by including wording in the declaration to the effect that the declarations are made "upon admissions which the respondent in question is taken to have made consequent upon its non-compliance with the requirements of the rules of Court", as suggested by Kiefel J, as her Honour then was, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427 at [59].[66]

(a) upon admissions which UNG and Keat are taken to have made consequent to their non-compliance with the requirements of the Rules of the Court: UNG contravened s 43 of the Act. It failed to notify the Authority within 30 days of the following changes in the information it provided to the Authority regarding the identity of its office holders: that Keat had become a director and secretary of UNG, and that Chung had ceased to be a director and secretary of UNG;

(b) upon admissions which UNG and Keat are taken to have made consequent to their non-compliance with the requirements of the Rules of the Court: UNG contravened s 44(1) of the Act. It failed to notify the Authority within 30 days of the following change, being a change of the kind prescribed by reg 24 of the Regulations: to UNG's knowledge, from 17 November 2021, when Keat became a director and secretary of UNG, it was no longer the fact that each office holder of UNG was a 'fit and proper person' within the meaning of s 22 of the Act;

(c) upon admissions which UNG and Keat are taken to have made consequent to their non-compliance with the requirements of the Rules of the Court: Keat contravened s 95(1) of the Act in that he was in any way directly or indirectly knowingly concerned in, or party to, a contravention by UNG of s 43 of the Act. UNG contravened s 43 of the Act by failing to notify the Authority within 30 days of the following changes in the information it provided to the Authority regarding the identity of relevant persons under Part 3 of the Act: that Keat had become a director and secretary of UNG, and that Chung had ceased to be a director and secretary of UNG; and

(d) upon admissions which UNG and Keat are taken to have made consequent to their non-compliance with the requirements of the Rules of the Court: Keat contravened s 95(1) of the Act in that he was in any way directly or indirectly knowingly concerned in, or party to, a contravention by UNG of s 44(1) of the Act. UNG contravened s 44(1) the Act by failing to notify the Authority within 30 days of the following change, being a change of the kind prescribed by reg 24 of the Regulations: to UNG's knowledge, from 17 November 2021, when Keat became a director and secretary of UNG, it was no longer the fact that each office holder of UNG was a 'fit and proper person' within the meaning of s 22 of the Act.

64 Section 93 of the Act empowers the Court to impose a pecuniary penalty for contravention of a civil penalty provision.[67] That section relevantly provides as follows:

(2) The court may make one or more of the following orders in relation to a person who has contravened a civil penalty provision -

(a) an order that the person pay a pecuniary penalty of not more than the amount set out in the table in section 94(2) in relation to the provision;

(5) For the purposes of determining the amount of a pecuniary penalty under this section the court must have regard to -

(a) the nature and extent of the contravention; and

(b) the nature and extent of any loss or damage suffered as a result of the contravention; and

(c) the circumstances in which the contravention took place.

65 As at the writing date, s 93 of the Act has not been the subject of judicial consideration.[68]

66 Outside Victoria, there is labour hire licensing legislation in the Australian Capital Territory,[69] Queensland,[70] and South Australia.[71] This position has been correctly reflected in the Authority's Supplementary Note provided to the Court. Each such statute appears to be in its separate form, without direct relationship to the others (or, indeed, to the Victorian legislation).[72] Importantly, no other such statute, or its subordinate regulations[73], appears to contain analogous provisions to the terms of s 93(5) of the Act, which dictate the factors a court must (or may) have regard to in determining the amount of a pecuniary penalty under the statute. This difference limits the immediate utility of such cognate legislation for distilling principles applicable in determining an appropriate penalty under the Act. It underlines the need to have regard to decisions considering other analogous legislation (or articulating general principles of broader application), as the Authority's submissions have sought to do.

67 The general principles on civil pecuniary penalties given by the High Court in Australian Building and Construction Commissioner v Pattinson ('Pattinson')[74] are applicable here. In Australian Competition and Consumer Commission v Mercedes-Benz Australia/Pacific Pty Ltd,[75] Middleton J applied those principles in the Australian Consumer Law ('ACL') context. I gratefully adopt Middleton J's summary of the Pattinson principles:

The scope of the power to impose civil pecuniary penalties was recently considered by the High Court of Australia in Australian Building and Construction Commissioner v Pattinson ... [2022] HCA 13; (2022) 399 ALR 599 ('Pattinson') and the Full Court of the Federal Court of Australia in viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87 (Yates, Abraham and Cheeseman JJ).

Certain principles (derived from the reasons of the plurality in Pattinson) are apposite to the approach required to be taken to the imposition of the pecuniary penalties in this proceeding:

• the purpose of a civil penalty in this statutory scheme is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the ACL by the deterrence of further contraventions of the ACL;

• there is no place for a "notion of proportionality" in a civil penalty regime, being a notion drawn from the criminal law, but what is required is that there be some reasonable relationship between the theoretical maximum and the final penalty imposed which will be established where the penalty does not exceed what is reasonably necessary to deter future contraventions of a like kind by the contravenor and others;

- civil penalties must be fixed with a view to ensuring that the penalty is not such as to be regarded by the offender or others as an acceptable cost of doing business;

• the factors identified by French J (as his Honour then was) in Trade Practices Commission v CSR Ltd [1990] FCA 521 are possible relevant considerations which inform the assessment of a penalty's appropriate deterrent value, although these should not be considered as a "legal checklist" and the court's task remains to determine what is an "appropriate" penalty in the circumstances of the particular case. (However, s 224(2) of the ACL lists considerations which must be taken into account);

• another relevant factor is the maximum penalty which might be imposed, albeit it must be balanced with all other relevant factors;

- the power to impose a penalty is to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the ACL;

• concepts such as totality, parity and course of conduct may still assist in the assessment of what may be considered reasonably necessary to deter further contraventions of the ACL.

As to the course of conduct concept, separate contraventions arising from separate acts ordinarily attract separate penalties. However, where separate acts, giving rise to separate contraventions, are inextricably interrelated, they should be viewed as a single 'course of conduct': Australian Competition and Consumer Commission v Yazaki Corporation ... [2018] FCAFC 73; (2018) 262 FCR 243 at [234] (Allsop CJ, Middleton and Robertson JJ).

Considerations of whether the acts of the contravenor should be viewed as a single 'course of conduct' may assist in the assessment of what may be considered reasonably necessary to deter further contraventions of the ACL: see Pattinson at [45]. It is a useful tool of analysis that can help avoid double punishment: see Australian Securities and Investments Commission v Wooldridge [2019] FCAFC 172 ('Wooldridge') at [25] (Greenwood, Middleton and Foster JJ).

As to the totality principle, where multiple separate penalties are to be imposed upon a particular wrongdoer, the totality principle is applied as a "final check" to ensure that, overall, the penalty is appropriate and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved: Wooldridge at [26].

It has been described as an analytical tool which is applied as to ensure that the overall penalty is not oppressive or disproportionate in the sense that it is greater than necessary to achieve the object of deterrence: Pattinson at [41]. [76]

68 In the very recent case of Australian Securities and Investments Commission v Dixon Advisory & Superannuation Services Ltd,[77] McEvoy J said the following:

The Court should have regard to the prescribed maximum penalty, however it should not start with the maximum penalty and then proceed by way of making proportional deductions from this amount: Markarian v The Queen (2005) 228 CLR 359 ... at 372 [31] (Gleeson CJ, Gummow, Hayne and Callinan JJ). Rather, consideration of the maximum penalty allows the Court to make comparison between the worst possible case and the case that it is being asked to address: Australian Securities and Investments Commission v Westpac Securities Administration Limited [2021] FCA 1008; (2021) 156 ACSR 614 ... at 619 [24] (O'Bryan J), citing Markarian at 372 [31]. As the plurality emphasised in Pattinson at 603 [10], citing Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at 63 [156], the maximum penalty is not reserved only for the most serious examples of offending conduct. What is required is that there be "some reasonable relationship between the theoretical maximum and the final penalty imposed". The requisite relationship will be established where the maximum penalty does not exceed what is reasonably necessary to deter future contraventions of a like kind by the contravener, and by others: Pattinson at 603 [10].[78]

69 I will now apply the Pattinson principles in the context of the Act.

Application of s 93(5) of the Act

70 Sections 43 and 44 of the Act are civil penalty provisions. UNG and Keat have contravened them and the question is what penalty is appropriate.

71 As indicated, s 93(5) of the Act sets out the following considerations to which the Court must have regard in determining the amount of a pecuniary penalty:

93 Civil action for contraventions

...

(5) For the purposes of determining the amount of a pecuniary penalty under this section the court must have regard to-

(a) the nature and extent of the contravention; and

(b) the nature and extent of any loss or damage suffered as a result of the contravention; and

(c) the circumstances in which the contravention took place.

72 UNG and Keat knowingly contravened the Act. Keat attempted, and failed, to obtain a labour hire licence through Amatak. As outlined above, he wrote to the Authority saying he would respect its final decision. Despite being aware that the Authority did not consider him to be a fit and proper person within the meaning of s 22 of the Act, he knowingly became a director of a body corporate that already held a labour hire licence, namely UNG .[79] UNG and Keat failed to notify the Authority of the change in directorship. Had they done so, UNG could not have maintained its labour hire licence. Having had the Amatak licence refused, Keat must have been aware of this consequence.

73 The penalties to be fixed must take into account the knowing nature of the contraventions.

74 The penalties to be fixed must also take into account the extent of the contravention, which was confined. That is, the contraventions revolve around the failure to notify the Authority of Keat's directorship of UNG, and the failure to notify the Authority of the change in circumstances where it was no longer the fact all relevant person(s) regarding UNG were fit and proper to hold a labour licence. In other words, the penalties to be fixed must reflect the knowing nature of the failure to notify. Had there been a more systematic and ongoing pattern of operating a labour hire business without a licence, however, the relevant penalties to be imposed would likely have been greater.

Nature and extent of any loss or damage suffered as a result of the contravention

75 For the reasons given above and earlier in this judgment, this factor is not applicable here.

Circumstances in which the contravention took place

76 The knowing nature of the contraventions by UNG and Keat and their potential to undermine the Authority's discharge of its protective and regulatory function, place them at the serious end of the behavioural spectrum.

77 As the Authority submits, the contraventions strike at the heart of the protective purpose of the Act. The only types of notification required are those that would constitute grounds for cancellation of a labour hire licence. This is illustrated most vividly with reference to s 44(1) of the Act, whereby the maximum statutory penalties which may be imposed for a failure to notify of changes prescribed by the Regulations are the same as those leviable for providing labour hire services without a licence.[80] As the Authority submits, the purpose of s 44 of the Act emerges from s 44(2): it requires information to be given to the Authority that would constitute a ground for cancellation of a licence. The Act's Explanatory Memorandum confirms that purpose:[81]

Clause 44(1) is a civil penalty provision, and attracts the highest civil penalty level under the Bill, equivalent to providing labour hire services without a licence. This is to ensure that a licensee who fails to provide information to the Authority which would constitute grounds for cancellation of a licence, as described in clause 44(2), is treated no more favourably under the scheme than a person who provides labour hire services without a licence.[82]

78 The object of the imposition of a penalty is deterrence.[83] The maximum penalties are set out in s 94 of the Act. They are summarised as follows (with dollar figures inserted based on the amount for a penalty unit being, in the financial year ending 30 June 2022, $181.74):[84]

79 The Authority submits that penalties in the following amounts are appropriate and consistent with principle:

80 In brief compass, the Authority submits the following:

(a) the object of s 43 of the Act aligns with the object of s 17 of the Act: to ensure that the Authority has information relevant to whether a given entity should have a licence to provide labour hire; and

(b) the Act was enacted in the light of 'significant evidence of exploitation of workers in the labour hire industry,' and to address that mischief.[85] The Inquiry Report which led to the Act summarised these findings on page 25, as follows:[86]

The evidence provided to the Inquiry shows that there is a problem with the presence of 'rogue' labour hire operators in Victoria. While it is difficult to be precise about the extent of this problem, rogue operators are particularly evident in the horticultural industry (including the picking and packing of fresh fruit and vegetables), and the meat and cleaning industries. In many instances, the activities of rogue operators have led to exploitation of vulnerable workers including underpayment of award wages, non-payment of superannuation, provision of sub-standard accommodation and non-observance of statutory health and safety requirements.

This problem stems in large part from the ease of access, or absence of barriers to entry, for persons/organisations wishing to provide labour hire services in this state. In addition, the problem stems from the lack of visibility of these rogue operators, who operate in the informal economy and outside the reach of existing regulators.

The problem requires a regulatory solution which addresses each of these underlying causes: as the submissions of those advocating increased regulation demonstrate, there is a wide range of options available. In my view, a sector specific licensing scheme for labour hire operators is the best of those options.[87]

81 I accept that the Act was enacted following the Inquiry and in response to the exploitation of workers. The Act's Explanatory Memorandum states the following:

The key object of this Bill is to protect vulnerable labour hire workers from exploitation by the providers of labour hire services and hosts. A related object of the Bill is to improve the transparency and integrity of the labour hire industry and therefore to improve commercial conditions for law abiding businesses.[88]

82 The Act has a protective purpose. In considering the penalties for contravention, it is necessary to do so in the context of the Act's purpose, objects and operation.

83 The purpose and objects of the Act include the following:

The purposes of this Act are -

(a) to establish a licensing system to regulate the provision of labour hire services; and

(b) to impose civil penalties upon providers and users of labour hire services who obtain those services from anyone other than licensed providers of labour hire services; and

The objects of this Act are -

(a) to protect workers from being exploited by providers of labour hire services and hosts; and

(b) to improve the transparency and integrity of the labour hire industry.

84 Section 7(1) of the Act clarifies when a person provides labour hire services:

7 Meaning of provides labour hire services - general definition

(1) A person (a provider) provides labour hire services if -

(a) in the course of conducting a business, the provider supplies one or more individuals to another person (a host) to perform work in and as part of a business or undertaking of the host; and

(b) the individuals are workers for the provider, within the meaning of section 9(1).

85 Sections 8(1) and (2) of the Act provide further clarity:

1. Meaning of provides labour hire services - certain recruitment and placement services and contractor management services

(1) A person (a provider) provides labour hire services if -

(a) in the course of conducting a business of providing recruitment or placement services, the provider recruits one or more individuals for, or places one or more individuals with, another person (a host) to perform work in and as part of a business or undertaking of the host; and

(b) the provider also procures or provides accommodation for the individuals for some or all of the period during which the individuals perform the work; and

(c) the individuals are workers for the provider, within the meaning of section 9(2)(a).

(2) A person (a provider) provides labour hire services if -

(a) in the course of conducting a business of providing contractor management services, the provider recruits one or more individuals for, or places one or more individuals with another person (a host) to perform work in and as part of a business or undertaking of the host; and

(b) the individuals are workers for the provider, within the meaning of section 9(2)(b).

86 Section 13 of the Act is the headline prohibition on providing labour hire services whilst unlicensed:

13 Licence required to provide labour hire services

A person must not provide labour hire services unless the person is the holder of a licence that is in force.

Note:

Section 94 provides that this subsection is a civil penalty provision. Part 6 deals with civil penalty provisions.

87 Similarly, s 14 of the Act requires a licence for advertising labour hire services.

88 Section 15 of the Act prohibits persons from entering into arrangements to provide labour hire services unless the proposed provider of the services is the holder of a labour hire licence.

89 Section 17 of the Act states that a person may apply for a licence and stipulates the required information. In particular, s 17(4) of the Act requires that applications by body corporates include a declaration by the officer making the application that each relevant person is a fit and proper person. As already outlined, s 22 of the Act provides that a person is a fit and proper person unless they fall within one of the criteria specified in that section. Section 24(1) of the Act provides, amongst other things, that the Authority must grant the licence if satisfied of specified criteria, including that each relevant person is a fit and proper person. Section 40 of the Act allows the Authority to cancel a licence if, amongst other things, it is no longer satisfied that each relevant person in relation to the licence is a fit and proper person. The requirements in ss 43 and 44 of the Act that the licence holder notify the Authority of changes are central to the operation of the labour hire licence scheme. If there were no such provisions, then persons ineligible for a licence would be able to subvert the scheme by becoming office holders in body corporates who have already obtained a labour hire licence.

90 There is a need for specific deterrence. The contraventions occurred only months after Amatak's licence had been refused, and Keat had been warned that a contravention of the Act could attract significant penalties.[89] A mitigating factor is that the contraventions are the first time UNG and Keat have contravened the Act.

91 The most important consideration here is the need for general deterrence. The Act has a protective purpose. A pecuniary penalty needs to be sufficiently high to not be the 'price of doing business'.

92 There is no evidence before me of the size of UNG or its capacity to pay a penalty. Nor is there any evidence of UNG's corporate culture. However, Keat is its sole secretary, director and shareholder. I presume UNG is a relatively small company led by Keat.

93 This is not a situation where the defendants have co-operated with the regulatory body. Nor is it a situation where the defendants have expressed contrition. There is, indeed, no evidence which has been put before the Court by the defendants in this proceeding, and no appearance made.

94 Correctly, the Authority acknowledges an overlap in UNG's contraventions of ss 43 and 44 of the Act, and a corollary overlap in Keat's contraventions of s 95(1) of the Act and that this should be taken into account when fixing penalties.

95 Weighing up the factors above, with the reduction for overlap, I will fix the breaches of s 43 of the Act at $8,723.00 for UNG and $2,180.88 for Keat. These figures represent 30% of the maximum penalties as set out in s 94 of the Act.

96 Weighing up the factors above, I will fix the breaches of s 44 of the Act at $378,019.20 for UNG and $94,504.80 for Keat. These figures represent 65% of the maximum penalties as set out in s 94 of the Act.

97 Applying the 'totality principle', the overall penalty must not be oppressive or higher than necessary to achieve the object of deterrence. Together, the penalties against UNG are $386,742.72, and the penalties against Keat are $96,685.68. These amounts are no higher than necessary to achieve the object of deterrence.

98 I will make declarations and impose civil penalties against UNG and Keat.

[2] [2022] VSC 482 ('Foris').

[4] Plaintiff's Statement of Claim dated 14 June 2022, [4] ('SoC').

[21] [2005] FCA 1239; (2005) 146 FCR 400.

[22] Ibid, 405 [21] (emphasis in original).

[43] [2014] FCA 1365.

[61] See, eg, CGU Insurance Ltd v Blakeley [2016] HCA 2; (2016) 259 CLR 339, 346-7 [13] (French CJ, Kiefel, Bell and Keane JJ) (citations omitted) and Supreme Court Act 1986 (Vic) s 36. See also Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 23.05, and more generally, r 59.01.

[62] [2011] FCA 352; (2011) 195 FCR 1, 22 [66]-[67] (citations omitted).

[63] [1972] HCA 61; (1972) 127 CLR 421.

[65] [2022] FedCFamC2G 472.

[67] Pursuant to s 94 of the Act, sections 43 and 44(1) are civil penalty provisions. The Plaintiff's Submissions (at [74]) also designate s 95(1) as a civil penalty provision, though this does not seem apparent on the face of the Act (or, at least, the current terms of ss 94 and 95).

[68] Indeed, as at the date of writing there are only two decisions citing the Victorian Act - being V_ictorian Building Authority v Andriotis_ [2019] HCA 22; (2019) 268 CLR 168, 221 [172] and Systems and People Pty Ltd (Migration) [2021] AATA 2458, [19] - which are irrelevant for present purposes.

[69] Labour Hire Licensing Act 2020 (ACT).

[70] Labour Hire Licensing Act 2017 (QLD).

[71] Labour Hire Licensing Act 2017 (SA).

[72] See, eg, Explanatory Statement, Labour Hire Licensing Bill 2020 (ACT) 2: 'In the absence of a national labour hire licensing scheme, various labour hire licensing schemes have commenced in Victoria ... Queensland ... and South Australia ...'

[73] See, respectively, the Labour Hire Licensing Regulation 2021 (ACT); Labour Hire Licensing Regulation 2018 (Qld); Labour Hire Licensing Regulations 2018 (SA).

[74] [2022] HCA 13; (2022) 399 ALR 599 ('Pattinson').

[75] [2022] FCA 1059.

[77] [2022] FCA 1105.

[80] Labour Hire Licensing Act 2018 (Vic), s 13.

[81] Explanatory Memorandum, Labour Hire Licensing Bill 2017 (Vic).

[84] Victoria, Victoria Government Gazette, No S 233, 20 May 2021.

[85] Explanatory Memorandum, Labour Hire Licensing Bill 2017 (Vic), 1.

[86] Victorian Inquiry into the Labour Hire Industry and Insecure Work, Final Report, 31 August 2016.

[88] Explanatory Memorandum, Labour Hire Licensing Bill 2017 (Vic), 1.