Textile Clothing & Footwear Union of Australia v Lotus Cove Pty Ltd

REASONS FOR JUDGMENT 1 The Textile Clothing and Footwear Union of Australia ("the TCFUA") commenced a proceeding in the Court for declaratory relief and for the imposition of penalties for breaches by the respondent, Lotus Cove Pty Ltd t/a Yambla Fashions ("Lotus Cove"), of terms of the Clothing Trades Award 1999 ("the award") between early 2000 and 5 February 2001 ("the relevant period"). As a result of the repeated failure by Lotus Cove to comply with interlocutory orders of the Court, the TCFUA seeks a default or summary judgment in the proceeding. The respondent has not appeared or placed any submissions before the Court in respect of the TCFUA's application. 2 The TCFUA alleges that Lotus Cove breached the award by having work performed away from its workshop or factory during the relevant period: (i) when it was not registered to do so and had not made application for registration to do so; (ii) without maintaining or giving out any or adequate written records ("work records") in relation to the work given out; (iii) without entering into written contracts or arrangements when arranging for work to be carried out away from its premises; (iv) without keeping lists in relation to the work given out and providing copies of them to the Industrial Registrar and the TCFUA; (v) in circumstances where the work was to be done by an outworker, but without providing the outworker with the information contained in Schedule B of the award. 3 The proceeding was commenced on 24 September 2002. On 11 November 2002 Lotus Cove filed its Defence to the TCFUA's Statement of Claim. On 19 December 2002 consent orders were made requiring, inter alia, that Lotus Cove file and serve further and better particulars of its defence and an affidavit of documents by 31 January 2003. This did not occur and on 21 March 2003 the Court ordered that Lotus Cove file further and better particulars by 28 March 2003 and an affidavit of documents by 11 April 2003. These orders were not complied with. On 14 November 2003 the TCFUA filed and served a notice of motion requesting default or summary judgment in its favour. 4 Under O 10 r 7 of the Federal Court Rules the Court may give a default judgment where the respondent in a proceeding has failed to comply with an order of the Court directing the respondent to take a step in that proceeding. Default judgment may also be obtained under O 15 r 16 as there has been a failure to comply with a rule or order relating to discovery. 5 The power to give default judgment was considered by the Full Court in Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388. At 395-396 Wilcox and Gummow JJ stated: "It is to be noted that the power given by this rule is conditioned on one circumstance only: the failure of a party to comply with an order of the Court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the Court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion conferred by the rule." 6 While in that case the Court was concerned with default by an applicant, there is no reason why the same principles would not apply to cases of default by a respondent (see Australian Securities Commission v Macleod (1994) 54 FCR 309 ("Macleod") at 313. The precondition which enlivens the power to grant default judgment is a failure to comply with an order of the Court. Thereafter, the relief (if any) that is to be granted is a matter for the Court's discretion, taking into account all the circumstances of the case. There does not appear to be any reason why the default procedure should not be available in a case where the relief is for the imposition of civil penalties. 7 The TCFUA accepts, correctly in my view, that its motion must be supported by affidavits establishing the facts necessary to: (i) persuade the Court that the circumstances warrant the grant of the discretionary remedies sought by the TCFUA; (ii) establish the Court's jurisdiction to grant those remedies; and (iii) establish the applicant's entitlement to those remedies. (See Macleod at 314.) 8 The alternative course open to, and sought by, the TCFUA is summary judgment under O 20 r 1. However, if the preconditions for default judgment are satisfied it is not necessary to consider whether this is a case where no arguable defence has been disclosed and as a consequence it would be appropriate to grant summary judgment. 9 The TCFUA has filed extensive affidavit material, which sets out admissions by a director of the respondent, and a detailed and comprehensive written submission summarising the evidence and outlining the conduct giving rise to the breaches upon which it relies. 10 The respondent has breached consent orders requiring the production of further and better particulars of its defence and an affidavit of documents. It has breached a further order requiring production of those documents. The breaches have not been remedied. I am prepared to infer that the respondent has demonstrated a determination not to co-operate in the preparation of the matter for trial and I am satisfied that the default judgment procedure is appropriate in the present case (see Macleod at 313). 11 The TCFUA seeks orders imposing penalties as well as declaratory relief. Section 178(1) of the Workplace Relations Act 1996 (Cth) ("the Act") confers on the Court the power to impose penalties where an organisation or person bound by an award breaches the terms of that award. The Court has jurisdiction to grant declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth). 12 In order to establish its entitlement to the relief sought, the applicant must demonstrate that Lotus Cove was bound by, and breached, the award. It is then a matter for the Court as to the penalties that are appropriate in the circumstances. 13 I am satisfied that Lotus Cove became a respondent to the Clothing Trades Award 1982 in 1990 by becoming a party to the Clothing Trades (Roping-in No.3) Award 1990. The award in its current form came into existence by the variation of the Clothing Trades Award 1982 in 1999. I am satisfied that Lotus Cove is a respondent to it. 14 Lotus Cove alleges breaches of numerous terms of the award, all of which relate to "giving work out." Accordingly, the TCFUA must prove that Lotus Cove did, during the period in question, "give work out." "Work" is defined in cl 45 as meaning: "hand or machine work which relates to the construction or finishing of a garment or product, or part of a garment or product, when such work is performed outside a workshop or factory." 15 I am satisfied that the evidence establishes that the respondent gave out hand or machine work relating to the construction or finishing of a garment or product, or part thereof, to be performed outside the workshop or factory of Lotus Cove. A director of Lotus Cove, Mr Dimitriou, admitted that Lotus Cove "had work performed outside its workshop or factory premises" and that "work was given out by Lotus Cove for contractors to make various products according to its specifications and design." The precise times at which work was given out by the respondent are unclear but it appears that work was given out by Lotus Cove throughout the relevant period. 16 It then remains to consider whether the TCFUA has established by its evidence each of the breaches which it alleges. Although numerous terms of the award were said to have been breached, it is convenient to group the alleged breaches into the five categories referred to in [2] above. 17 The first category is that Lotus Cove gave out work when it was not registered to do so and had not made application for registration to do so. The TCFUA claims that, as a consequence, Lotus Cove breached cl 48.1 and cl 46.1.3 of the award. 18 Clause 48.1 requires that an employer must be registered before having any work performed away from his or her own workshop or factory. Records establish that Lotus Cove's last registration for this purpose expired in March 1997. I am satisfied that Lotus Cove was in breach of cl 48.1 when it gave out work during the relevant period. 19 Clause 46.1.3 requires that an employer, "when desirous of giving work out" to a non-respondent to the award, must make application for registration in accordance with cl 48.1. The applicant's evidence establishes that on 5 February 2001 Mr Dimitriou admitted that the respondent gave out work to four persons. None of those persons are identified in Schedule A as respondents to the award. Neither are they members of either of the two employer associations bound by the award. I am therefore also satisfied that Lotus Cove gave out work to non-respondents to the award. It can be also inferred that Lotus Cove was "desirous of giving out work" to a non-respondent to the award. No application for registration was found in the Australian Industrial Registry records. I therefore find that Lotus Cove was in breach of cl 46.1.3 during the relevant period. 20 Second, Lotus Cove gave out work and did not maintain any or adequate written "work records" in relation to the work given out. The TCFUA claims that Lotus Cove breached cll 46.2.1, 46.2.6 and 46.2.3(b), (e), (f), (j), (k) and (l) of the award. Clause 46.2.1 requires that an employer must make a written work record whenever giving out work. The applicant's evidence is that Mr Dimitriou admitted on 5 February 2001 that in many cases when giving out work no work record was created. This evidence is sufficient to demonstrate a breach of cl 46.2.1. 21 However it is also the TCFUA's evidence that in some cases Lotus Cove did maintain some written records of work it had given out, in the form of invoices for particular jobs. The TCFUA inspected these invoices and has given evidence as to their form and contents. 22 Clause 46.2.6 requires that a copy of the work record must be given to the person doing the work given out in every case. Clearly where no work record was created, none was given out and this clause has been breached in those cases. 23 The applicant's evidence establishes that in cases where invoices were created and provided to persons doing the work given out, the information contained in those invoices varied, but that consistently the invoices did not include the following information: · the employer's registration number (presumably because Lotus Cove was not registered); · the address(es) where the work was to be performed; · the date by which the work was to be completed; · the working time allowed for each item or for the complete job; · the price to be paid for each garment or article completed; or · the total amount to be paid (relevant in cases where the work is performed by an "outworker"). This evidence is sufficient to establish breaches of cl 46.2.3(b), (e), (f), (j), (k) and (l) respectively. 24 I therefore conclude that during the relevant period, the respondent on a number of occasions breached cl 46.2.1 and 46.2.6 by failing to keep work records and give out copies of work records to workers. On the occasions when the respondent did create records and gave copies out to workers, I find that it breached cl 46.2.3(b), (e), (f), (j), (k) and (l) by including insufficient information in those records. 25 Third, Lotus Cove gave out work but did not enter into written contracts or arrangements when arranging for work to be done away from its premises. The TCFUA claims that Lotus Cove breached cl 46.4.1 and cl 46.4.2 of the award. 26 Clause 46.4.1 provides that "An employer who gives work out to a respondent or non-respondent as provided in clause 46.1.1(e) must contract to provide, and must provide, terms and conditions no less favourable than those provided for outworkers in clause 47." 27 Despite the reference to giving work out to a respondent, it appears that this obligation is intended to arise where work is given out to the type of person described in clause 46.1.1(e), namely a "non-respondent who will personally perform all the work." Although this description does not align precisely with that in clause 45 for the term "outworker" ("a person who performs work as herein defined for an employer outside the employer's workshop or factory under a contract of service"), it seems likely that in practice the persons described by these two clauses will often be the same.