Construction, Forestry, Mining and Energy Union v McCorkell Constructions Pty Ltd (No 2)
[2013] FCA 446
FEDERAL COURT OF AUSTRALIA
Construction, Forestry, Mining and Energy Union v McCorkell Constructions Pty Ltd (No 2) [2013] FCA 446
Citation: Construction, Forestry, Mining and Energy Union v McCorkell Constructions Pty Ltd (No 2) [2013] FCA 446 Parties: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v MCCORKELL CONSTRUCTIONS PTY LTD (ACN 094 764 584) and STATE OF VICTORIA File number: VID 10 of 2013 Judge: BROMBERG J Date of judgment: 17 May 2013 Catchwords: INDUSTRIAL LAW – s 340(1) of the Fair Work Act 2009 (Cth) – whether respondent took adverse action against employees of independent contractor because those employees had a workplace right – whether the employer of the employees was an “independent contractor” with whom the respondent was “proposing to enter into a contract for services” within the meaning of Item 4 of s 342(1) – meaning of “independent contractor”, “proposing to enter” and “contract for services” – whether respondent took adverse action by threatening to refuse to engage independent contractor or make use of its services – meaning of “refuse to engage” – whether adverse action taken because the employees were entitled to the benefit of a workplace instrument – meaning of “entitled to the benefit” of a workplace instrument – consideration of s 361 and onus of proof.
Section 343(1) of the Fair Work Act 2009 (Cth) – whether action taken by respondent with intent to coerce a contractor or its employees to exercise their workplace rights to vary an enterprise agreement – meaning of “intent to coerce” – consideration of s 361 and onus of proof – whether conduct illegitimate by reason of an interference with free bargaining – s 550(1) of the FW Act – whether s 361 is applicable to reverse the onus of proof – whether in establishing a contravention by an accessory it is necessary to establish that the accessory had knowledge of the elements of the contravention by the primary contravener.
Legislation: Acts Interpretation Act 1901 (Cth) ss 2C(1), 15AA
Conciliation and Arbitration Act 1904 (Cth) ss 5, 9(1), 132(4), 132A
Fair Work Act 2009 (Cth) s 12, 23, Pt 2-4 ss 171, 172(1), 186(2)(a), 194, 201(2), 207, 207(1), 207(3), 208, 208(1), 209, 210, 211, 211(1)(a), 228, 229, 230, 231, 232, 233 Pt 3-1 ss 336, 340, 340(1), 340(1)(a)(i), 341, 341(1), 341(1)(a), 341(1)(b), 341(1)(c)(ii), 341(2), 342, 342(1), 342(2), 343, 343(1), 343(1)(a), 346, 357, 358, 359, 360, 361, 361(1), Pt 3-2, Pt 4-1 ss 550, 550(1), 550(2)
Fair Work (Registered Organisations) Act 2009 (Cth)
Independent Contractors Act 2006 (Cth) ss 4, 11
Industrial Relations Act 1988 (Cth) ss 4(1A), 127A, 127A(1), 127B, 127B(1), 127C, 195(1A), 334, 334(2), 334(7A), 336
Industrial Relations Legislation Amendment Act 1992 (Cth)
Project Development and Construction Management Act 1994 (Vic) s 3
Trade Practices Act 1974 (Cth) s 75B
Workplace Relations Act 1996 (Cth) s 4(1A), 4(2), 170NC, 170NC(1) Part XA ss 298K, 298K(1), 298K(2), 298L, 298L(1), 298L(1)(c)(i), 298L(1)(m), 298B(5), s356, 400 Pt 10 ss 515(g), 515(h) Pt 16 ss 792, 792(1), 792(5), 793
Workplace Relations Amendment (Work Choices) Act 2005 (Cth)
Workplace Relations and Other Legislation Amendment Act 1996 (Cth)
Workplace Relations and Other Legislation Amendment Act 1997 (Cth)
Workplace Relations Regulations 2006 (Cth)Cases cited: Construction, Forestry, Mining and Energy Union v State of Victoria [2013] FCA 445
Informax International Pty Ltd v Clarius Group Ltd (2012) 207 FCR 298
AB v Western Australia (2011) 244 CLR 390
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390
Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212
Kelly v Construction, Forestry, Mining and Energy Union (No.3) (1995) 63 IR 119
Australian Municipal, Administrative, Clerical and Services Union v Greater Dandenong City Council (2000) 101 IR 143
National Union of Workers v Qenos Pty Ltd (2001) 108 FCR 90
Construction, Forestry, Mining and Energy Union v Pilbara Iron Co (Services) Pty Ltd (No 3) [2012] FCA 697
Waugh v Kippen (1986) 160 CLR 156
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419
On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366
Ready Mixed Concrete (South East) Limited v Minister for Pensions and National Insurance [1968] 2 QB 497
Queensland Stations Pty Limited v Federal Commissioner of Taxation (1945) 70 CLR 539
Quarman v Burnett (1840) 6 M & W 499 [151 ER 509]
Scott v Davies (2000) 204 CLR 333
Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22
Roads and Traffic Authority v Scroop (1998) 28 MVR 233
Kondis v State Transport Authority (1984) 154 CLR 672
Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520
Murphy v Brentwood District Council [1991] 1 AC 398
S v Secretary, Department of Immigration and Multicultural and Indigenous Affairs (2005) 143 FCR 217
Moore v Doyle (1969) 15 FLR 59
ATS (Asia Pacific) Pty Ltd v Dun Oir Investments Pty Ltd [2012] FCA 1004
Employment Advocate v Williamson (2001) 111 FCR 20
Maritime Union of Australia v Burnie Port Corporation Pty Ltd (2000) 101 IR 435
Fletcher v Fraser Corporation Australia Limited (1996) 70 IR 117
Burnie Port Corporation Pty Ltd v Maritime Union of Australia (2000) 104 FCR 440
Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union (2001) 112 FCR 232
Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 86 ALJR 1044
General Motors-Holden’s Pty Ltd v Bowling (1976) 51 ALJR 235
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1
David’s Distribution Pty Ltd v National Union of Workers [1999] FCA 1108
National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451
R v Hush; Ex parte Davanny (1932) 48 CLR 487
Construction, Forestry, Mining and Energy Union v Eco Recyclers Pty Ltd [2013] FCA 24
Liquor, Hospitality and Miscellaneous Union v Arnotts Biscuits Ltd (2010) 188 FCR 221
National Tertiary Education Union v Commonwealth of Australia (2002) 117 FCR 114
Seven Network (Operations) Limited v Communications, Electrical, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2001) 109 FCR 378
Construction, Forestry, Mining and Energy Union (NSW Branch) v Alfred (2011) 203 IR 78
Hanley v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) 100 FCR 530
Construction, Forestry, Mining and Energy Union v Clarke (2007) 164 IR 299
Yorke v Lucas (1985) 158 CLR 661Date of hearing: 19, 20, 26 and 27 March 2013 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 293 Counsel for the Applicant: Ms R Doyle SC with Mr M Harding Solicitor for the Applicant: Slater & Gordon Lawyers Counsel for the First Respondent: Mr P Wheelahan Solicitor for the First Respondent: McCluskys Lawyers Counsel for the Second Respondent: Mr M Wheelahan SC with Mr P Willis and Mr P O’Grady Solicitor for the Second Respondent: Ashurst Australia
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION
VID 10 of 2013
BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
ApplicantAND: MCCORKELL CONSTRUCTIONS PTY LTD (ACN 094 764 584)
First RespondentSTATE OF VICTORIA
Second Respondent
JUDGE:
BROMBERG J
DATE OF ORDER:
17 May 2013
WHERE MADE:
MELBOURNE
THE COURT DECLARES THAT:
1.In contravention of s 340(1)(a)(i) of the Fair Work Act 2009 (Cth), the first respondent took adverse action against employees of Eco Recyclers Pty Ltd (“Eco”) by refusing to engage or make use of the services of Eco in relation to demolition works for the new Circus Oz premises, because the employees were entitled to the benefit of the Eco Recyclers P/L T/AS Eco Group and the CFMEU Demolition Enterprise Agreement 2011-2015 (“the Eco Agreement”).
2.In contravention of s 343(1)(a) of the Fair Work Act 2009 (Cth), the second respondent took action against Eco with intent to coerce Eco and its employees to exercise their workplace rights to vary the Eco Agreement.
AND THE COURT ORDERS THAT:
3.On or before 24 May 2013 the parties consult and file with the Court minutes of proposed orders addressing the filing and service of outlines of submissions in relation to the applicant’s claims for the imposition of penalties upon the respondents.
4. The matter be listed for further hearing on a date to be fixed.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION
VID 10 of 2013
BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
ApplicantAND: MCCORKELL CONSTRUCTIONS PTY LTD (ACN 094 764 584)
First RespondentSTATE OF VICTORIA
Second Respondent
JUDGE:
BROMBERG J
DATE:
17 may 2013
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Part 2-4 of the Fair Work Act 2009 (Cth) (“the FW Act”) provides a scheme by which employees may collectively bargain with their employer for collective industrial agreements known as enterprise agreements. Once made, enterprise agreements that are approved by the Fair Work Commission (“the FWC”) are given legal effect by the FW Act. Part 3-1 of the FW Act includes s 340 which, broadly speaking, prohibits the taking of, or threatening of, adverse action by one person because another person has a workplace right. One of the workplace rights protected is the entitlement of a person (such as an employee) to the benefit of an enterprise agreement made under the FW Act. Part 3-1 also includes s 343 which, broadly speaking, prohibits a person from taking action against another with intent to coerce (meaning with intent to negate that person’s choice) to exercise, propose to exercise or not exercise a workplace right. One of the workplace rights protected is the right of an employer and of employees to vary an enterprise agreement made between them.
The CFMEU is an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth). The CFMEU has members who are employed by Eco Recyclers Pty Ltd (“Eco”) and is entitled to represent their industrial interests. The CFMEU’s standing to bring these proceedings was not in issue at trial. Eco and its employees are covered by an enterprise agreement known as the “Eco Recyclers P/L T/As Eco Group and the CFMEU Demolition Enterprise Agreement 2011-2015” (“the Eco Agreement”).
Eco operates a demolition business and is also involved in the recycling of building materials. One of its regular clients is the first respondent, McCorkell Constructions Pty Ltd (“McCorkell”). McCorkell is a medium sized construction company which in mid 2012 tendered for a contract offered by the State of Victoria (“the State”) to carry out refurbishment of a building including the demolition of existing buildings. McCorkell put the demolition work out to tender and Eco was an unsuccessful bidder in that tender process. The reason or reasons that Eco was unsuccessful in its bid is at the heart of this proceeding.
The claims made by the CFMEU arise from the alleged application by the State upon Eco and Eco’s employees of industrial relations policies adopted by the State. Those policies are contained in the Victorian Code of Practice for the Building and Construction Industry (“the Code”) and the Implementation Guidelines to the Victorian Code of Practice for the Building and Construction Industry (“the Guidelines”). The Guidelines include provisions which proscribe the inclusion in industrial agreements of provisions dealing with specified matters including provisions dealing with some employee entitlements. The State assessed the Eco Agreement as non-compliant with the Code and Guidelines because it contains provisions dealing with subject matter proscribed by the Guidelines. In its capacity as a purchaser of building and construction services, the State has sought compliance with the requirements of Code and Guidelines from persons tendering and contracting for State Government building and construction work.
The CFMEU claims that following the State’s assessment that the Eco Agreement was not compliant with the Code and Guidelines, McCorkell excluded Eco from tendering for the demolition work. Relevantly, the CFMEU says that McCorkell refused to engage or make use of the services of Eco on the demolition work because the employees of Eco were entitled to benefit of the Eco Agreement.
For the reasons that follow, I have concluded that the CFMEU has established a contravention of s 340(1)(a)(i) of the FW Act by McCorkell. In arriving at that conclusion I have determined that:
(i)Eco is an “independent contractor” within the meaning of Item 4 of s 342(1) of the FW Act;
(ii)McCorkell and Eco were “proposing to enter into a contract for services” within the meaning of Item 4 of s 342(1) of the FW Act;
(iii)McCorkell refused to engage or make use of the services of Eco; and
(iv)that refusal occurred including because the employees of Eco were entitled to the benefit of the Eco Agreement.
In relation to the s 343 claim made by the CFMEU against the State, the CFMEU relies upon communications between the State and Eco as action taken by the State with intent to coerce Eco and its employees to vary the Eco Agreement so that its terms would comply with the Code and Guidelines. A similar claim is made by the CFMEU against McCorkell on the basis of communications between McCorkell and Eco. Both those claims turn on the reason for the taking of the impugned action and the nature of the intent with which it was taken. For the reasons which follow, I have concluded that the CFMEU has established that the State contravened s 343(1) but has failed to establish a contravention of that provision by McCorkell.
Lastly, the CFMEU claimed, but has failed to establish, that the State was an accessory to McCorkell’s contravention of s 340(1)(a)(i) of the FW Act.
This proceeding was listed for hearing as an expedited trial and heard in conjunction with another proceeding which raised similar issues. My judgment in that proceeding has also been published today as Construction, Forestry, Mining and Energy Union v State of Victoria [2013] FCA 445. Evidence in each matter was received separately. Some of the submissions received addressed legal issues relevant to the determination of both matters. These reasons for judgment have been crafted so that they stand alone and need not be read with the reasons for judgment in the other matter.
THE FACTS
The Code and Guidelines
In 1997, the Commonwealth Government, in conjunction with State and Territory Governments, established the National Code of Practice for the Construction Industry (“the National Code”). The National Code was intended to set down general principles that businesses must meet to be eligible for Commonwealth Government funded building and construction work. The National Code expressly sets out “the principles which Commonwealth, State and Territory Governments agree should underpin the future development of the construction industry in Australia”.
The National Code acknowledges that the State and Territory Governments will develop their own codes and that the National Code will constitute a set of “core principles” which establish a minimum level of compliance to guide practices and initiatives in each jurisdiction. It was envisaged that State and Territory codes would supplement, but remain consistent with, the core principles set out in the National Code.
Relevantly, the industrial relations core principles set down in the National Code include the following:
Awards and Legal obligations relating to employment
All parties must comply with the provisions of applicable:
•awards and workplace arrangements which have been certified, registered or otherwise approved under the relevant industrial relations legislation; and
• legislative requirements.
Workplace Arrangements
Workplace arrangements which reflect the needs of the enterprise are important elements in achieving continuous improvement and best practice.
The content of the workplace arrangements are a matter for the parties to those arrangements, subject to them meeting legislative requirements. However they may encompass:
• improved OHS and rehabilitation practices;
• training and skill formation strategies;
• multi skilling; and• flexible work practices, for example in relation to working time.
A party must not, directly or indirectly, pressure or coerce another party to enter into, or to vary or to terminate a workplace arrangement. Nor may they pressure or coerce them about the parties to and/or the contents or the form of their workplace arrangements. This does not prevent action sanctioned by relevant industrial relations legislation.
As envisaged by the terms of the National Code, in about March 1999, the State of Victoria established the Code. The Code specifically incorporates the National Code and supplements its terms with provisions relating to processes for initiating projects, selecting contractors and consultants, contract administration and enforcement of the Code. On the issue of industrial relations, the Code states only that:
The Industrial Relations elements of the National Code shall apply to all Victorian and Commonwealth Government construction projects.
The Code, which has remained in force since 1999 without amendment, applies to all parties involved in “public construction” as defined in s 3 of the Project Development and Construction Management Act 1994 (Vic).
Neither the National Code nor the Code are legislative instruments. Both documents set out a range of policies, standards and expectations which the respective governments have adopted.
In April 2012 the Code was supplemented by the Guidelines. The Guidelines have no legislative foundation. The Guidelines state that they apply to all public building and construction work that is the subject of an expression of interest or request for tender on or after 1 July 2012. The Guidelines were amended in December 2012. The Guidelines incorporate a range of very specific provisions regulating industrial practices of parties engaged in building and construction activities. In many respects those provisions travel well beyond what was envisaged by the National Code or the Code and, although said to be complimentary, some of the Guidelines’ provisions arguably conflict with the respective codes. In particular, it is difficult to reconcile the aspirations of the National Code and the Code that parties should be free to make their own workplace arrangements with the provisions of the Guidelines which seek to dictate what may or may not be included in such arrangements.
In the introduction page, the Guidelines state:
[The Guidelines] have been developed to further assist in the achievement of the objectives of the [Code] and in particular, the industrial relations, OHS&R and workforce reform elements as adopted from the National Code.
These Guidelines reflect the Victorian Government’s commitment to greater flexibility and productivity within the State’s building and construction industry and to ensure that the Victorian Government maximises value for money on its spending on infrastructure projects.
The contents of the Guidelines identify that they have been formulated in furtherance of workplace and other industry reform objectives being pursued by the State. Whilst many of the provisions of the Guidelines may be intended to provide value to the State as a purchaser of building and construction services, the stated objectives have a wider purpose. In that respect, the Guidelines may be fairly characterised as a policy initiative of the State to exert influence through capital investment in building and construction to promote conduct by building and construction industry participants consistent with State policies, in particular industrial relations policies.
A number of clauses in the Guidelines identify non-compliance with the Code and Guidelines by reference to the content of industrial instruments including enterprise agreements. Some clauses in the Guidelines do so directly by listing subject matters that if included in an industrial agreement, render the agreement non-compliant with the Code and Guidelines. Examples of this can be found in cl 4.4 which prohibits terms that constrain the use of independent contractors and cl 5.5 which prohibits terms considered to restrict the efficient performance of work or productivity improvements. Further, a number of other clauses either require or restrict particular practices. The inclusion in an agreement of provisions permitting prohibited practices or the omission from an agreement of required practices, also results in non-compliance. In these respects, an evident purpose of the Guidelines is to regulate the content of industrial agreements applicable to the building and construction industry in Victoria.
The Guidelines are broad in their application. They are said to apply to any party that responds to an invitation for expressions of interest for public building and construction work in Victoria, from the date they first express interest in, or tender for a contract to perform the work. Further, a party required to comply with the Guidelines for public work will also be required to do so in relation to privately funded work, as will the related entities of such a party. “Privately funded building and construction work” is defined in the Guidelines to mean “building and construction work in Victoria that is not public building and construction work”. The term “related entity” is also broadly defined so that the application of the Code and Guidelines extends to any entity “connected with the tenderer” (a term defined to include an entity with the capacity to materially influence a tenderer’s activities).
The Guidelines further require that a party to whom the Guidelines apply must “actively ensure compliance… by any party with whom it contracts, or enters into an arrangement, to undertake public building and construction work”.
In order to monitor and enforce compliance with the Code and Guidelines, the State has established the Construction Code Compliance Unit (“CCCU”) within the Victorian Department of Treasury and Finance. While the Minister for Finance has overall responsibility for the implementation of the Guidelines, the CCCU is tasked with a range of monitoring and compliance functions including site visits, site inspections and audits.
Sanctions for non-compliance with the Guidelines applicable to entities not associated with the State (ie non-governmental entities) include but are not limited to:
• a formal warning that a further breach will lead to severe sanctions;
•referral of a complaint to the relevant industry organisation for assessment against its own professional code of conduct and appropriate action;
•reduction in tendering opportunities at either agency or government-wide level, for example, by exclusion of the breaching party from tendering for government work above a certain value or for a specified period (this sanction may only be imposed by the Minister for Finance in consultation with the responsible Minister);
• reporting of the breach to an appropriate statutory body; and
• publicising the breach and the identity of the party.The legal basis which the State relies upon to require and enforce compliance with the Code and Guidelines is contractual. To that end, the Department of Treasury and Finance has published model clauses and contract documentation (including model tender documents) which require parties to comply with the Code and Guidelines and to undertake to ensure their related entities and subcontractors also comply with the Code and Guidelines (“the Model Clauses”). Certain Model Clauses must be included in tender and contract documentation for building and construction work to which the Code and Guidelines apply. Aspects of these Model Clauses were included in the construction contract between McCorkell and the State for the Circus Oz project. These are described at [48] below.
In addition to requiring tendering parties to agree to contractual terms mandating compliance with the Code and Guidelines, the State has made clear through a number of public announcements, that parties that fail to comply with the Code and Guidelines, will be excluded from tendering for State Government funded work. Upon the introduction of the first iteration of the Guidelines in April 2012, the then Premier of Victoria Ted Baillieu stated at a press conference:
[T]he bottom line for the construction industry is that if contractors wish to contract and tender into State Government projects in Victoria, they will have to comply with these guidelines. If contractors don’t comply with these guidelines, then they won’t be working on State Government projects, and we believe that that’s an important step – these guidelines will restore the balance.
At that same press conference, the Treasurer for the State of Victoria Robert Clark reiterated the Premier’s comments. After referring to the abolition of the Australian Building and Construction Commissioner and the need to “fill the gap that’s been created by the failures of the Commonwealth Government”, Mr Clark went on to say:
[The Guidelines] are using the Victorian Government’s power and purchasing strength as a major acquirer of building and construction work here in Victoria, to make clear, as the Premier has indicated, that companies that wish to tender to undertake public construction work here in Victoria, have to commit to comply with those Guidelines. And, ultimately, if firms fail to do that, they face the sanction of being restricted or, indeed, ultimately totally excluded from future Victorian Government and public sector construction work.
The role and general activities of the CCCU
The role that the CCCU plays in monitoring and enforcing compliance with the Code and Guidelines is central to this case and was the subject of evidence from Ms Cato, the Assistant Director of the CCCU. It was also exemplified by the way in which the CCCU dealt with McCorkell and Eco in relation to the Circuz Oz project as well as the way it dealt with Lend Lease Project Management & Construction (Australia) Pty Limited (“Lend Lease”) in relation to the New Bendigo Hospital project, which was also the subject of some evidence in this proceeding. As to McCorkell and Eco, the evidence is outlined at paragraphs [39]-[43] and [176]-[192] respectively. As to Lend Lease, the evidence was that the CCCU:
·undertook a review of Lend Lease’s enterprise agreement made with the CFMEU in September 2013 and identified clauses in the agreement which did not comply with the Code and Guidelines;
·informed Lend Lease that it’s enterprise agreement was “seriously non-compliant with the Guidelines” and referred to the statements made by the Premier of Victoria that it was required to comply with the Code and Guidelines if it wished to tender for State Government work;
·engaged in consultations with Lend Lease to explain the nature of Lend Lease’s non-compliance with the Code and Guidelines and to discuss possible changes to Lend Lease’s enterprise agreement which may render it compliant;
·insisted that any assessment made as to compliance be transparent, clear and consistent with the Guidelines and that the giving of an undertaking as to how non-compliant provisions identified in assessments would be applied was not acceptable to the CCCU as a means of addressing non-compliance; and
·communicated to Lend Lease that irrespective of the difficulties involved, if Lend Lease wanted to do State Government work it needed to change its enterprise agreement or enter into a new agreement.
It is plain from the evidence of the role of the CCCU that it takes an active part in procuring compliance with what it understands to be the requirements of the Code and Guidelines. It does that through:
·the promulgation and dissemination of Model Clauses (including a Compliance Schedule) for inclusion in tender documents issued by the State, which require contracting parties to comply with the Code and Guidelines, to grant rights to the State to monitor and enforce compliance with the Code and Guidelines and to undertake to ensure all subcontractors comply with the Code and Guidelines;
·reviewing and amending tender documentation issued by the State to ensure tendering parties are required to comply with the Code and Guidelines;
·meeting with prospective contractors for State Government work to advise them of their obligations under the Code and Guidelines;
·reviewing draft contracts provided to the CCCU to ensure suppliers of building services to the State are contractually obliged to comply with the Code and Guidelines;
·the promulgation and dissemination of a Model Workplace Relations Management Plan for use by parties submitting tenders for State Government work;
·reviewing Workplace Relations Management Plans submitted by tendering parties and recommending changes where considered necessary to ensure compliance with the Code and Guidelines;
·reviewing workplace agreements of tendering parties to monitor compliance with the Code and Guidelines;
·investigating whether non-compliance with the Code and Guidelines has occurred;
·recommending sanctions to the Minister for Finance where non-compliance with the Code and Guidelines is identified; and
·liaising with key industry stakeholders such as the Master Builders Association of Victoria and State Government departments and agencies to ensure they promote compliance with the Code and Guidelines amongst industry participants.
Eco Recyclers
Eco operates a business with two divisions, a demolition and a recycling division. The demolition division is involved in the demolition of buildings including the partial demolition of buildings being refurbished. The recycling division recycles materials obtained from the demolition work engaged in by the demolition division. Eco promotes itself as Australia’s first green demolisher. Whilst a standard demolisher would facilitate the recycling of approximately 75% of a demolished building, Eco recycles through its recycling division some 97% of that material. As at 2012, Eco employed approximately 12 labourers in demolition work including several drivers, as well as about a further 8 recyclers. It also employs a small number of administrative staff.
In carrying out its demolition work Eco uses its own equipment comprising excavators, skid steer loaders and trucks. From time to time Eco engages owner/drivers to provide trucks and transport services.
As at 2012, Eco mainly dealt with small scale builders and had seven or eight major clients. Eco also dealt with smaller scale residential builders. It had about 20 regular clients in that category.
McCorkell has been a regular client of Eco for many years. Mr Sail has worked with McCorkell on many occasions, either through Eco or through a previous wrecking business in which he was a partner. Mr Sail was unable to say with any precision how much of Eco’s demolition work in 2012 was derived from contracts with McCorkell. He described the proportion as “less than half” of Eco’s demolition work for that year. Read in context, Mr Sail’s rather loose description suggests that work provided by McCorkell was significant but not dominant. He described the proportion of Eco’s demolition work in 2012 derived from State Government work or contracts as “more than half” of the demolition work performed. A lot of that work involved work at schools.
McCorkell
McCorkell is a medium sized construction company that undertakes construction work on small to medium building sites and often at heritage listed sites. Edward Wilson is a Project Manager with McCorkell. His task is to oversee construction projects for McCorkell. He has delegated authority to enter into contracts on behalf of McCorkell.
The Circus Oz tender process and other facts
In mid 2012, McCorkell began preparing its tender for a contract involving the refurbishment of a building intended to become the new premises for Circus Oz (“the Circus Oz project”). The tender for that project was being conducted by the State of Victoria through a firm appointed for that purpose. Part of the work for which McCorkell intended to tender involved the demolition of existing buildings (“the demolition work”). That was work that McCorkell intended to subcontract to a demolition contractor.
As part of preparing its own tender, on 6 July 2012 McCorkell sent a request for tender in relation to the demolition work to Eco and other demolition contractors. The request for tender enclosed a large bundle of documentation including drawings and building specifications. The documentation also included an assessment in relation to the type and extent of asbestos and hazardous materials at the Circus Oz project site. The request for tender requested a quotation.
On 30 July 2012, Eco provided McCorkell with its quotation. The quoted price for the demolition works for the Circus Oz project was $162,171 ex. GST and $178,388 inc. GST. The quotation identified the scope of the proposed works and included asbestos removal. The quotation also dealt with two other matters, the relevance of which I will later address. The first matter is that the quotation stated that all salvageable items would become the property of Eco. Secondly, the quotation stated that it was valid for a period of 60 days from 30 July 2012.
On 1 and 2 August 2012, McCorkell received quotations from other demolition contractors, which are summarised as follows:
·Demolition Tech - $188,600 ex. GST [$207,460 inc. GST]. The scope of works did not include removing hazardous material.
·De Construct Group - $147,980 ex GST; $162,778 inc. GST. The quotation did not include removal of hazardous material.
Quotations from other contractors were sought and received at a later time. I shall return to deal with those. In the meantime, on 2 August 2012, McCorkell submitted its tender for the Circus Oz project.
By letter dated 3 October 2012 from the then Premier of Victoria and Minister for the Arts, McCorkell was advised that it was successful in tendering for the works associated with the Circus Oz project. The letter foreshadowed the execution of a contract and stated that the contract would be contingent upon McCorkell providing a Workplace Relations Management Plan (“WRMP”) that “has been fully accepted by the Construction Code Compliance Unit (CCCU)”.
The evidence shows that the CCCU was involved in assessing the WRMP that McCorkell was required to submit as part of its bid. On 17 October 2012, Mr Wilson attended a meeting with representatives of the CCCU for the purpose of addressing McCorkell’s WRMP. The meeting was attended by Ms Catherine Cato of the CCCU, who gave evidence at the trial. There was discussion about Code compliance at the meeting. Ms Cato’s evidence was that at a meeting with a prospective contractor like McCorkell, the CCCU would take the prospective contractor through the Guidelines. That occurred with McCorkell and Mr Wilson’s understanding as a result of being “walked through” the Guidelines and from his own reading of the Guidelines, was that Code compliance was significantly related to the content of the workplace agreement of the particular contractor. As a result of his meeting with the CCCU, Mr Wilson formed the view that any workplace agreement made before 1 July 2012 was compliant with the Code. Mr Wilson considered that only agreements made after that time could be non-Code compliant.
Mr Wilson’s view was based on what he had been told by the CCCU. The CCCU, according to Ms Cato, would have explained to Mr Wilson that agreements entered into prior to 1 July 2012 were deemed to be compliant with the Code and Guidelines. That is the practice of the CCCU, although the basis for it is not clear. The Guidelines themselves do not support the practice. As I have indicated already, by their terms, the Guidelines state that they apply to all public building and construction work that is subject to an expression of interest or request for tender on or after 1 July 2012. Ms Cato suggested that the practice was based on “government policy”. The existence of the practice and Mr Wilson’s understanding of it explain some of the subsequent conduct of McCorkell including the differential treatment of Eco as compared to other contractors.
In the meeting of 17 October 2012, McCorkell’s WRMP was discussed. As a result of that meeting and subsequent communications occurring up until 24 October 2012, McCorkell adjusted terms of the WRMP to deal with shortcomings identified by the CCCU. The shortcomings identified included the way McCorkell proposed to deal with its subcontractors. That matter was discussed with McCorkell in detail, with considerable attention being given to the means of ensuring that subcontractors were Code compliant. As a result of drawing up and then revising the WRMP, and also by reason of the terms of the contract signed by McCorkell, Mr Wilson understood that McCorkell had to be Code compliant and that McCorkell was obligated to ensure that its subcontractors were Code compliant.
The WRMP that McCorkell ultimately submitted and which the CCCU approved, noted that the vast majority of the work contracted for would be performed by subcontractors and that McCorkell had strict protocols with regard to the assessment and selection of appropriate subcontractors. It went on to state that subcontractors will be assessed against criteria there specified. One aspect of that criteria was that the current industrial instrument of the contractor complies with the Guidelines. In that respect, McCorkell’s Project Manager was to review the industrial instrument against Appendix 2 of the Model Workplace Relations Management Plan. That Appendix comprises a checklist headed “Industrial Instrument Assessment”. By reference to various clauses in the Guidelines, the checklist identifies some 13 subject matter issues for assessment and in relation to each gives a summary of the requirement created by the Guidelines. Many of the subject matters in relation to which the content of an industrial instrument is to be assessed, deal with what would be readily recognised as employee entitlements such as over award payments, overtime, selection for redundancy, all-in payments, site allowances and dispute settlement processes.
On the same day that Mr Wilson met with the CCCU, he also met Mr Sail and another employee of Eco at the Circus Oz project site. Mr Sail was interested to know about Eco’s likelihood of being awarded the demolition work. He was advised by Mr Wilson that McCorkell was yet to consider all the quotes and that it would discuss Eco’s quote after Mr Wilson had considered all quotes. Mr Wilson did not say that Eco’s quote was the cheapest or that Eco was the preferred contractor for the job. However, Mr Sail and Mr Wilson had a “walk through the job”. Mr Sail’s understanding was that Eco had been short-listed for the job. He held that understanding because a walk through is a standard procedure that occurs when a contractor is short-listed for a job. Mr Wilson confirmed that McCorkell did regard Eco as being on the shortlist of tenderers. In his mind, that was because Eco had provided a quote at the time that McCorkell had to submit its tender for the Circus Oz project, Mr Wilson knew that Eco had an understanding of the scope of the works for the demolition subcontract and that Eco was familiar with the project and what it entailed. Furthermore, he had worked with Eco before on previous projects. It was for those reasons that he invited Eco to visit the site and discuss the quote with him. Mr Sail says, and I accept, that he was told that Eco would need to negotiate further on price but that it was in the running for the work. Mr Sail told Mr Wilson that he would have to go back and have a look and see what he could do in relation to price.
On 18 October 2012, Mr Sail telephoned Mr Wilson and said that Eco could come down on price. He was told that Mr Wilson wanted to gather all the quotes before discussing another quote from Eco. I am satisfied that at that point in time, Eco was effectively one of McCorkell’s preferred tenderers and a short-listed contender for the demolition work. At that time, both Mr Wilson and Mr Sail expected that Eco would have a further opportunity to quote.
On 19 October 2012, McCorkell received two further quotes in relation to the demolition work on the Circus Oz project as follows:
·PK Demolition - $138,700 ex GST; $152,570 inc GST. The quotation excluded removal of asbestos/contaminated material.
·Rafferty the Wrecker - $147,500 ex GST; [$162,250 inc GST]. The quotation excluded the removal of hazardous materials.
On 26 October 2012, the Eco Agreement was approved by the FWC. The approval noted that the Agreement covers the CFMEU in accordance with s 201(2) of the FW Act. By its terms, the Eco Agreement applied to Eco and to Eco’s employees including those engaged in building and construction work in the State of Victoria. The Agreement came into operation on 2 November 2012 and has a nominal expiry date of 31 March 2015.
Also on 2 November 2012, McCorkell and the State contracted for McCorkell to construct the works for the Circus Oz project. Clause 57 of the contract specified that McCorkell must comply with and meet any obligations imposed by the Code and Guidelines. It also specified that in relation to McCorkell’s engagement of any building subcontractor or consultant, McCorkell “must ensure” that any contract with such a person “imposes” equivalent obligations to those in cl 57, “including that the subcontractor or consultant must comply with, and meet any obligation imposed by, the Victorian Code and the Victorian Guidelines”. The clause went on to oblige McCorkell to maintain adequate records of compliance with the Code and Guidelines and permit the State (including the CCCU) various access and inspection rights, for the purpose of monitoring and investigating compliance with the Code and Guidelines by McCorkell, its subcontractors, consultants and related entities. McCorkell warranted that at the time of entering the contract neither it nor any of its related entities were the subject of any sanctions in connection with the Code and Guidelines and that if McCorkell did not comply with, or failed to meet its obligations under the Code or Guidelines, a sanction may be imposed against it.
On 9 November 2012, Mr Sail rang Mr Wilson. Both Mr Wilson and Mr Sail gave evidence of the conversation. To the extent that their evidence of the conversation differed, I prefer Mr Wilson’s evidence as he had a better recollection of the conversation.
Mr Wilson told Mr Sail that if Eco were to be successful in the tender, Eco had to be Code compliant. Mr Sail did not know what that meant. Mr Wilson explained that it had to do with Eco’s workplace agreement with its employees. Mr Sail then told Mr Wilson that Eco had recently signed “the union EBA” and asked Mr Wilson whether he knew if the union EBA was Code compliant or not. Mr Wilson did not know and indicated to Mr Sail that his understanding was that any agreement that had been entered into after 1 July 2012 needed to be checked with the CCCU to see whether it was Code compliant. In his evidence-in-chief, Mr Sail said that in his discussion with Mr Wilson, Mr Wilson mentioned to him that the EBA was not Code compliant and that Eco was unable to tender for the Circus Oz project. He could not remember the specific date on which Mr Wilson told him that. It is probable that this statement was made in the conversation between Mr Sail and Mr Wilson of 12 November 2012 (to which I will shortly turn) and not the 9 November conversation.
There is also some ambiguity raised by an answer given in cross-examination by Mr Wilson about his intent when he informed Mr Sail that the Eco Agreement was not Code compliant. That answer is later set out at [273]. That answer also suggests that Mr Wilson told Mr Sail on 9 November 2012 that the Eco Agreement was not Code compliant. There is a tension between that answer and Mr Wilson’s other evidence, which I have accepted, that he did not hold that view during the 9 November 2012 conversation. The answer given by Mr Wilson in relation to his intent is probably not as precise as was intended. It is likely that Mr Wilson did not hold or communicate a view in the conversation on 9 November 2012 that the Eco Agreement was not Code Compliant. I accept Mr Wilson’s evidence that he did not know at that time whether or not the Eco Agreement was Code compliant. There is no suggestion in the evidence that he had seen the Eco Agreement at that time. I find that in the 9 November conversation, Mr Wilson referred to the possibility of the Eco Agreement not being Code compliant because it was an agreement made after 1 July 2012 and told Mr Sail words to the effect that if Eco were to be successful in the tender Eco had to be Code compliant.
At 10.29 am on 9 November 2012 and after the conversation between Mr Sail and Mr Wilson, Ms Westhead of Eco emailed Mr Wilson and provided him with the decision of the FWC approving the Eco Agreement and also a copy of the Code. Ms Westhead asked him to explain to Eco the relevant sections which pertain to Eco “being excluded, or ineligible to tender”.
At 12.12 pm on 9 November 2012, Mr Wilson emailed Ms Drennan of the CCCU. The email was in the following terms:
We are the Head Contractor for Circus Oz Project and were wondering if you could advise us on whether this recent agreement between the CFMEU and Eco Group (attached) is compliant with the Victorian Code of Practice for the Building and Construction industry before continuing negotiation with them over our demolition package of works. Can you please help us with this?
(Emphasis added.)At 4.48 pm on that day, Ms Drennan of the CCCU emailed Mr Wilson to advise that the CCCU had considered the content of the Eco Agreement. She advised that it was the CCCU’s view that the Agreement was not compliant with the Code and Guidelines. Ms Drennan further advised that Eco should contact the CCCU if it wanted to discuss the matter further.
The 9th of November 2012 was a Friday. On the morning of Monday 12 November 2012, Mr Wilson forwarded to Eco the email provided to him by the CCCU and suggested that Eco contact the CCCU to find out the reasons why its agreement was not compliant.
On 12 November 2012 and after Mr Wilson had forwarded to Eco the advice provided by the CCCU, Mr Wilson and Mr Sail spoke by phone. They had a fairly brief conversation in which Mr Wilson told Mr Sail that because the email from the CCCU stated that the Eco Agreement was non-compliant, Eco could not continue to tender for the demolition works for the Circus Oz project or Eco could not, at least, be awarded the contract if it was non-compliant.
As to Mr Wilson’s intent in relation to what he said to Mr Sail on 12 November 2012, the following evidence was given in Mr Wilson’s examination-in-chief:
All right. And finally, the allegations made against McCorkell that you, as the project manager, excluded or threatened to exclude Eco from the tender process because it was not code compliant. What’s you response to that? --- No, I didn’t threaten to exclude them. That conversation that I had with Toby Sail on 12 November was the last time I spoke to him but it was simply to inform him that if he wasn’t code compliant, then he couldn’t be awarded the project.
Mr Wilson was cross-examined in relation to the 12 November 2012 conversation with Mr Sail. The evidence he gave is instructive both as to the question of his intention and also in relation to other matters to which I will shortly turn. Relevantly, the evidence was as follows:
All right. Now, pausing there for a moment. I will take you back to the questions your counsel asked you. He asked you also about a conversation you had with Mr Sail on 12 November, and in evidence you said that you told Mr Sail on that occasion, because of the advice that Eco could not be awarded – because of the advice about non-compliance, Eco could not be awarded the tender. Can I suggest to you that it was also the case that because of the advice you had received from the CCCU, Eco could not continue to bid any further in your tender? --- No, I don’t accept that. I simply informed him that that was the advice we could see written in the email from the CCCU that he was not compliant. I knew that even if he provided another price to me, I wasn’t allowed to contract him to do the work if he was still not compliant. But we didn’t discuss whether he was going to continue to quote the project or not. We just left it unspoken.
Can I put it another way, then, Mr Wilson. Do you accept that it was pointless for Mr Sail to provide a cheaper bid unless he could demonstrate himself to be code-compliant? --- He certainly would have had to have demonstrated that he was code-compliant before I could accept another quote from him, yes.
And can I put two hypotheticals to you arising from that. PK Demolition, you say, provided you with the lowest quote, but if they had not been code-compliant, I take it from the answers you gave earlier you could not and would not have accepted their bid, even if they – even though it was lowest? --- That’s correct. This was, in fact, the first subcontract I was going to award for the project, and I was very conscious of our contractual obligations not to be in breach of the code.
Just to tease that out a little further, if PK Demolition’s quotation, much as it in fact was, was the lowest and therefore represented good value for money, but
nevertheless they had been adjudged non-code-compliant, you would not have accepted it because of your contractual obligations? --- Yes, that’s correct. And it’s obviously a complete hypothetical, but that’s correct.Can I turn the hypothetical around the other way. If Eco was code-compliant and demonstrated that to you in November, would you have invited them to take up the opportunity to resubmit their bid? --- Yes.
On 12 November 2012, Eco requested a meeting with the CCCU and a meeting was held on 13 November 2012. Further communications occurred between Eco and the CCCU and Eco and the CFMEU, the content of which it is not necessary for me to address at present, although the relevant facts will be referred to when I deal with the s 343 claims made by the CFMEU against McCorkell and against the State.
It appears Mr Sail contacted the CFMEU to see if the CFMEU could liaise with the CCCU and resolve issues in relation to the non-compliance of the Eco Agreement. It is likely that communication occurred on 13 November 2012.
It is sufficient for present purposes to record that I am satisfied that by reason of the position taken by the CCCU that the Eco Agreement was non-compliant and Eco’s understanding that non-compliance meant that it would be excluded from State Government work upon which it heavily relied, Eco sought to address that non-compliance by obtaining the approval of its employees to make a variation to the Eco Agreement and to have it approved by the FWC. This course was pursued so as to remove or amend those clauses in the Agreement which the CCCU regarded as non-compliant.
On 21 November 2012, McCorkell informed PK Demolitions that it was the successful tenderer for the demolition work on the Circus Oz project. Prior to that decision being made, a number of further quotes had been received by McCorkell. On 14 November 2012, McCorkell received a quotation from Whelan The Wrecker. The quote was for $119,800 ex GST [$131,780 inc GST]. The quote did not include the removal of hazardous material. A revised quotation was received on 19 November 2012 from PK Demolition. That quote was for $115,000 ext GST and $126,500 inc GST. Removal of asbestos/contaminated material was excluded. On 20 November 2012, another revised quote was received from Rafferty the Wrecker. The quote was for $134,500 ex GST [$147,950 inc GST]. The quote excluded the removal of hazardous materials.
Of the six contractors who quoted, four included in their quotations a statement that the quotation remained valid for a period of time, either 60 or 90 days. Mr Sail’s evidence was that a statement to that effect made in quotations was a standard industry practice designed to address the possibility of costs increasing.
THE ADVERSE ACTION CLAIM AGAINST MCCORKELL
Relevant statutory provisions
The provisions of the FW Act relevant to the allegation of adverse action made against McCorkell are contained in Pt 3-1, which is entitled “General Protections”.
The objects of Pt 3-1 are set out in s 336 which is in the following terms:
336 Objects of this Part
(1) The objects of this Part are as follows:
(a) to protect workplace rights;
(b) to protect freedom of association by ensuring that persons are:(i) free to become, or not become, members of industrial associations; and
(ii) free to be represented, or not represented, by industrial associations; and
(iii) free to participate, or not participate, in lawful industrial activities;
(c) to provide protection from workplace discrimination;
(d) to provide effective relief for persons who have been discriminated against, victimised or otherwise adversely affected as a result of contraventions of this Part.
(2) The protections referred to in subsection (1) are provided to a person (whether an employee, an employer or otherwise).
The CFMEU alleges that McCorkell has contravened s 340. That section is as follows:
340 Protection
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2)A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.
Note: This subsection is a civil remedy provision (see Part 4-1).
Pursuant to s 340, the CFMEU claims that “adverse action” was taken by McCorkell against members of the CFMEU employed by Eco because they have a “workplace right”, namely an entitlement to the benefit of a workplace instrument, being the Eco Agreement.
A “workplace right” is defined in s 341(1) as follows:
Meaning of workplace right
(1) A person has a workplace right if the person:
(a)is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b)is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:
(i)to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii) if the person is an employee—in relation to his or her employment.
The dictionary in s 12 of the FW Act contains definitions of “workplace instrument” and “workplace law”. The FW Act itself is a workplace law. An instrument made under or recognised by a workplace law, and concerning the relationships between employers and employees, is a workplace instrument. The parties to these proceedings do not dispute that the Eco Agreement is such an instrument and I find that it is.
Section 342(1) contains a table setting out circumstances in which a person takes adverse action against another person for the purposes of s 340. The adverse action relied upon by the CFMEU is that set out in Item 4 of the table as amplified by s 342(2), namely, that McCorkell is a person proposing to enter into a contract for services with
Eco, that has refused to engage or make use of the services of Eco or has threatened to refuse to engage or make use of the services of Eco. While this case primarily concerns Item 4, the entire table is extracted below because the interpretation of Item 4 is assisted by a consideration of its terms in their context.
Meaning of adverse action Item Column 1
Adverse action is taken by ...Column 2
if ...1 an employer against an employee the employer:
(a) dismisses the employee; or(b) injures the employee in his or her employment; or
(c) alters the position of the employee to the employee’s prejudice; or
(d) discriminates between the employee and other employees of the employer.
2 a prospective employer against a prospective employee the prospective employer:
(a) refuses to employ the prospective employee; or
(b) discriminates against the prospective employee in the terms or conditions on which the prospective employer offers to employ the prospective employee.
3 a person (the principal) who has entered into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor the principal:
(a) terminates the contract; or(b) injures the independent contractor in relation to the terms and conditions of the contract; or
(c) alters the position of the independent contractor to the independent contractor’s prejudice; or
(d) refuses to make use of, or agree to make use of, services offered by the independent contractor; or
(e) refuses to supply, or agree to supply, goods or services to the independent contractor.
4 a person (the principal) proposing to enter into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor the principal:
(a) refuses to engage the independent contractor; or
(b) discriminates against the independent contractor in the terms or conditions on which the principal offers to engage the independent contractor; or
(c) refuses to make use of, or agree to make use of, services offered by the independent contractor; or
(d) refuses to supply, or agree to supply, goods or services to the independent contractor.
5 an employee against his or her employer the employee:
(a) ceases work in the service of the employer; or
(b) takes industrial action against the employer.
6 an independent contractor against a person who has entered into a contract for services with the independent contractor the independent contractor:
(a) ceases work under the contract; or
(b) takes industrial action against the person.7 an industrial association, or an officer or member of an industrial association, against a person the industrial association, or the officer or member of the industrial association:
(a) organises or takes industrial action against the person; or
(b) takes action that has the effect, directly or indirectly, of prejudicing the person in the person’s employment or prospective employment; or
(c) if the person is an independent contractor—takes action that has the effect, directly or indirectly, of prejudicing the independent contractor in relation to a contract for services; or
(d) if the person is a member of the association—imposes a penalty, forfeiture or disability of any kind on the member (other than in relation to money legally owed to the association by the member).
Section 342(2) provides:
(2) Adverse action includes:
(a) threatening to take action covered by the table in subsection (1); and
(b) organising such action.The meaning of the terms “independent contractor” and “proposing to enter into a contract for services” as used in Column 1 of Item 4 of the table, are the subject of considerable discussion below.
The definition of “adverse action” in the dictionary in s 12 of the FW Act refers to s 342, thereby making it clear that the meaning given in s 342 is applicable to the term “adverse action” when it is used in s 340.
Sections 360 and 361 are also important provisions for the operation of Pt 3-1. So far as is relevant, they provide:
360 Multiple reasons for action
For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason.361 Reason for action to be presumed unless proved otherwise
(1) If:(a)in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b) taking that action for that reason or with that intent would constitute a contravention of this Part;
it is presumed, in proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.
ISSUES OF STATUTORY CONSTRUCTION
Much of the battleground over which this case was fought involved the construction of key words or phrases found in s 342(1) of the FW Act.
The task of statutory construction must focus on the text of the provisions in question, but the meaning of that text requires consideration of the purpose and policy of the provision in the context of the legislation as a whole: Informax International Pty Ltd v Clarius Group Ltd (2012) 207 FCR 298 at [162] (Besanko, Jagot and Bromberg JJ). As French CJ, Gummow, Hayne, Kiefel and Bell JJ said in AB v Western Australia (2011) 244 CLR 390 at [10] (by reference to the observations of Dixon CJ in Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397), the context, general purpose, policy and fairness of a statutory provision are guides to its meaning. Their Honours continued:
The modern approach to statutory interpretation uses "context" in its widest sense, to include the existing state of the law and the mischief to which the legislation is addressed. Judicial decisions which preceded the Act may be relevant in this sense, but the task remains one of the construction of the Act.
[Footnotes omitted.]The objects of Pt 3-1 reveal that the FW Act seeks to protect the rights conferred by the Part and to provide to persons on whom those rights are conferred effective relief from being discriminated against, victimised or otherwise adversely affected by reason of the holding or exercising of those rights. The rights protected under Pt 3-1 are:
·the workplace rights conferred by Div 3 (the “workplace rights”);
·the rights of association and participation in the industrial activities conferred by Div 4 (the “industrial activities rights”); and
·anti-discrimination rights and other protections conferred by Divs 5 and 6.
In interpreting a legislative provision, the Court is required to prefer a construction that “would best achieve the purpose or object of the Act” (whether or not that purpose or object is expressly stated in the Act): s 15AA of the Acts Interpretation Act 1901 (Cth).
Provisions of the kind contained in Pt 3-1, and in particular those in Div 3 and Div 4, have long been regarded as remedial and beneficial in nature despite their penal aspect: Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at [14]-[17] (Gray and Bromberg JJ); Kelly v Construction, Forestry, Mining and Energy Union (No.3) (1995) 63 IR 119 at 130 (Moore J); Australian Municipal, Administrative, Clerical and Services Union v Greater Dandenong City Council (2000) 101 IR 143 (“Australian Municipal, Administrative, Clerical and Services Union”) at [75] (Madgwick J); National Union of Workers v Qenos Pty Ltd (2001) 108 FCR 90 at [48] (Weinberg J); Construction, Forestry, Mining and Energy Union v Pilbara Iron Co (Services) Pty Ltd (No 3) [2012] FCA 697 at [35] (Katzmann J); and see Waugh v Kippen (1986) 160 CLR 156 at 164–5 (Gibbs CJ, Mason, Wilson and Dawson JJ).
Accordingly, the terms of the legislative provisions in question should be given “a fair and liberal interpretation in order that they achieve the Act’s beneficial purposes”: AB v Western Australia at [38] (the Court). The approach that should be taken to the construction questions is one that gives effect to the evident purpose of the legislation and is consistent with its terms: AB v Western Australia at [23] (the Court).
Is Eco an “independent contractor”?
McCorkell adopted the submissions of the State both on the question of whether Eco is an “independent contractor” and whether McCorkell was “proposing to enter into a contract for services” with Eco, which is set out in the following section. The State made these submissions in response to the allegation that it was involved in adverse action taken by McCorkell within the meaning of s 550 of the FW Act.
The State claims that Eco and its employees do not attract the protection of Item 4 in s 342(1) as Eco is not an “independent contractor” within the meaning of that section. The State contended that the term “independent contractor” has historically been used in contra-distinction to “employee” so as to mean the functional equivalent of an employee in that he, she or it provides services in the form of labour which would otherwise be performed by an employee. For ease of reference I will refer to the meaning contended for by the State as “the confined meaning”. In support of the confined meaning being applied to the term as used in Item 4 of s 342(1), the State relied upon the textual support said to be found in the structure of the table in s 342(1) and in the use of the phrase in other provisions of the FW Act. The State also relied upon the definition of the term “independent contractor” in s 4 of the Independent Contractors Act 2006 (Cth) (“the IC Act”).
The CFMEU contended that the term “independent contractor” as used in s 342(1) is not limited to an entity that is the functional equivalent of an employee and extends to a person carrying on the business of a contractor that provides services, irrespective of its scale. It accepted that the term is used in different ways throughout the FW Act and contended that the term takes its meaning from the particular context in which it is employed. The CFMEU submitted that the more confined use of “independent contractor” in the IC Act is mandated by the specific terms of that Act and has nothing to say about the meaning of the term in s 342(1) of the FW Act.
To determine whether Eco is an “independent contractor”, it is best to commence by considering the words utilised in the provisions in question. The starting point is s 340 of the FW Act, where the phrase “adverse action” (later amplified by s 342(1)) is used. Section 340 is found in a division headed “Workplace Rights” and bears the heading “Protection”. Section 340(1) prohibits “a person” taking adverse action against “another person” because of the prohibited reasons there identified. The nature or character of the person subjected to the adverse action is unrestricted by any qualifying criteria expressed by s 340. A “person” includes “a body politic or corporate as well as an individual”: s 2C(1) Acts Interpretation Act 1901 (Cth).
The term “adverse action” is included in the s 12 dictionary, but the definition merely refers the reader to s 342. Section 342 provides the meaning of “adverse action” in relation to the workplace rights protections dealt with in s 340 and also the industrial activities protections specified by s 346.
The expressed purpose of s 342(1) is to set out the “circumstances in which a person takes adverse action against another person”. That is done in a table with two columns. The heading of each column is intended to be read as the introductory words to the text in the column for each of the seven circumstances numbered as Items 1 to 7. For each of the Items, the text of the first column identifies the kind of person adverse action may be taken by (“the first person”) and the kind of person or persons adverse action may be taken against (“the second person or persons”). The second column identifies the kind of action taken by the first person which falls within the description “adverse action”.
It is apparent then that the meaning given to “adverse action” serves to confine the application of s 340, including by imposing qualifications upon the kind of person who falls within the protective scope of that section.
There is also a further restriction imposed on the kind of person who can take the protective benefit of s 340. Each of the prohibited reasons identified in s 340 depend upon the person against whom adverse action is taken having a “workplace right” as defined by s 341(1). In each case, the workplace right identified by s 341(1) is sourced in a workplace law or workplace instrument, other than for the case referred to in s 341(1)(c)(ii), where the right is sourced in a person’s employment. Only a person who has a workplace right specified by s 341(1) and is a second person referred to in s 342(1), will fall within the protective scope of s 340.
The CFMEU alleges McCorkell took adverse action within the meaning of Item 4 of s 342(1). That Item identifies the first person as “a person (the principal)” and the second person as an “independent contractor” or “a person employed or engaged by the independent contractor”. It also identifies the nature of the nexus between the first person and the independent contractor by identifying that there must be a transaction in prospect between them in the nature of a “contract for services”. The first matter which is apparent and is made so by the use of the phrase “contract for services” rather than “contract of services”, is that the relationship in prospect between the first person and the independent contractor is not an employment relationship. That makes it clear that neither the first person nor the independent contractor is an employee and that the relationship in prospect is a commercial relationship in which the independent contractor operates a business.
The nature or scale of the business of the independent contractor is not directly addressed but there are some indications given. The reference to a contract for services is suggestive of a business that supplies services rather than a merchant selling goods. That is reinforced in paragraph (c) of Column 2 by the reference to “services offered by the independent contractor”. The business referred to is also a business that may employ or engage others to carry out its activities. That much is apparent from the description of the other second persons whose workplace rights and industrial activities rights fall to be protected, namely, persons employed or engaged by the independent contractor.
There is no limit suggested as to the number of persons such a business may employ. The word “engage” when used disjunctively with “employed” suggests that the business of the independent contractor may engage other contractors. That conclusion is supported by the terms of Item 6 of s 342(1), which expressly contemplate that an “independent contractor” is the kind of person who may engage other “independent contractors”.
So far, the characteristics of the independent contractor which s 342(1) expressly contemplates, do not sit well with the notion that the independent contractor envisaged by Item 4 is limited to the functional equivalent of an employee. Nor is the State’s characterisation assisted when it is recognised that the s 12 definition of “independent contractor” identifies that the kind of independent contractor contemplated includes a corporate entity.
One of the hallmarks of an employee is the personal performance by that individual of the services which the employee has been contracted to provide: Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24-26 (Mason J) and 38 (Wilson and Dawson JJ); Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419 at 425 and 428 (the Court). A limited or an occasional delegation of work to another person may not disqualify the existence of an employment relationship: On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 at [283] (Bromberg J); Ready Mixed Concrete (South East) Limited v Minister for Pensions and National Insurance [1968] 2 QB 497 at 515 (MacKenna J). However, a person substantially providing personal services to another through the use of employees or contractors is not an employee of the other person in relation to the provision of those services. Such a person is not the “functional equivalent” of an employee. Such a person may well be providing services which could be provided directly by employees of the recipient of the services. However, the persons who fit within that description extend to many entities providing the efforts of their employees or contractors, including corporations which hire labour and a wide range of contractors who provide maintenance, cleaning, engineering, building trades, professional and other services. The confined meaning contended for by the State is not given textual support by the characteristics of an “independent contractor” which s 342(1) itself identifies.
If the State’s contention is correct, much must turn on the phrase “independent contractor” itself and any particular meaning attached to it in the context of the industrial relations subject matter dealt with by the legislation. For that purpose, and also for the purpose of assisting to identify the mischief to which Item 4 is addressed, it is necessary to turn to and consider the legislative predecessors of s 340 and Pt 3-1.
Before doing so, I should say something about the words that constitute the phrase. Whilst a “contractor” can simply mean a person who contracts, in the world of work and commerce, a contractor is likely to be thought of as a person who contracts to furnish supplies or perform work at a certain price or rate: Macquarie Dictionary (5th ed, Macquarie Dictionary Publishers, 2009) p 371. A contractor is not generally thought of as an employee. The term contractor by itself and without any assistance from the word “independent”, sufficiently identifies that the entity in question is not an employee. Nor does contractor necessarily connote something akin to an employee. The operations of a contractor may be small or vast. The labour or other services provided by a contractor may be provided by a single owner/operator or alternatively by many tens if not hundreds of employees. The size or scale of a contractor’s operations is in many contexts suggested by prefixes such as “principal”, “head” or “sub”.
I presume that the word “independent” came to be connected with the word “contractor” for the purpose of assisting to draw a legal distinction between a person providing services to another as the other’s servant or agent and a person providing services under an “independent contract”. An example of the use of the term “independent contract” is found in the judgment of Dixon J in Queensland Stations Pty Limited v Federal Commissioner of Taxation (1945) 70 CLR 539 at 552. The phrase “independent contractor” is commonly used in the case law. It is likely that it originates from cases dealing with vicarious liability. At common law, a person is not generally liable for the negligence of an independent contractor: Stevens v Brodribb at 43 (Wilson and Dawson JJ). That proposition can probably be traced back to Quarman v Burnett (1840) 6 M & W 499 [151 ER 509], as McHugh J observed in Scott v Davies (2000) 204 CLR 333 at [37]. As his Honour identified in that passage, although the nomenclature was different at the time Quarman was decided, the defendants in that case were not liable for the acts of “what we now call an independent contractor”.
In the discourse about vicarious liability, an independent contractor may be a
self-employed individual providing personal services. Alternatively, an independent contractor may also be a substantial corporate entity carrying out work under a contract comprising labour and the provision of materials. There are many examples in the cases in which the term “independent contractor” has been used to refer to entities of that kind: Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22 (a construction company engaged to undertake footpath reconstruction works); Roads and Traffic Authority v Scroop (1998) 28 MVR 233 (a company engaged to resurface a portion of a major highway); Kondis v State Transport Authority (1984) 154 CLR 672 (a company that rented out mobile cranes for use in construction work); Australian Municipal, Administrative, Clerical and Services Union (a company engaged to provide home and community care services involving upwards of 70 employees); Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 (a company engaged to install additional refrigeration at cold storage facilities owned by a port authority); Murphy v Brentwood District Council [1991] 1 AC 398 (a firm of consulting engineers retained to check the designs and calculations for the construction of 160 homes on a sloping site); S v Secretary, Department of Immigration and Multicultural and Indigenous Affairs (2005) 143 FCR 217 (a company contracted to provide general services at an immigration detention centre).
The term independent contractor, in its broad conception, connotes an entity that furnishes supplies or performs work under a contract that does not create a relationship of principal and agent as between the contractor and the person who contracts for the benefit of the services supplied. The word independent serves to emphasise the contractor’s independence from the person for whom the contractor’s services are provided.
However, when a term receives constant attention in a particular context it can take on a particular connotation. The term independent contractor seems most often to have been used in the cases, whether dealing with negligence, taxation law, employment or industrial law, to identify a distinction between an employee at common law and a person who is not an employee. Those cases generally involved questions of characterisation, made upon facts involving persons performing roles that are at the juncture between what the common law recognises as an employee on the one hand and an independent contractor on the other. That context called for comparisons to be made between an employee and something closely akin to an employee, but not recognised as such by the common law.
The connotation for the term independent contractor which that context encouraged, has entered into common parlance, including because of the increasing trend over the past half century towards self-employment and the need to distinguish the status of the self-employed contractor from that of an employee.
It does not matter for current purposes whether the trend to self employment was the consequence of employers seeking to escape obligations imposed by the law in relation to the employment of employees, or whether the trend was the result of genuine decisions made by individuals to provide their labour as self-employed persons. The fact is that the trend became the subject of industrial concern which was ultimately, to some extent, reflected in industrial laws. The loss of the status of an employee for an individual regarded as self-employed, resulted in the loss of access to legislative industrial protections as well as ineligibility to join and be represented by industrial organisations of employees. It is not necessary to chart the history in any great detail. It is sufficient to observe that the industrial contest over the status of individuals who provided labour but who were not recognised as employees by the common law, led to the adoption of deeming provisions in the industrial legislation of some States. Those provisions resulted in the inclusion of a range of persons not recognised by the common law to be employees, within the protective scope of industrial regulation, including by providing such a persons the capacity to join and be represented by unions.
The regime for collective bargaining and the making of enterprise agreements found in the FW Act is not significantly different to the regime referred to by the Full Court in Hanley. The scheme is somewhat more protective of free bargaining than was the scheme of the WR Act because it encourages bargaining in good faith (s 171 and s 228-233) and that agreements including variations to agreements be “genuinely agreed to” by employees (s 186(2)(a) and s 211(1)(a)). The requirement for the genuine agreement of employees could not be satisfied where an agreement or a variation to an agreement involved duress or coercion.
Although, as I have earlier said, the scope of protections provided by s 343(1) is wider than was the case in relation to s 170NC(1), which dealt specifically with agreement making, s 343(1) includes the same ground formerly covered by s 170NC(1). It follows, that given the close resemblance between the bargaining regime considered by the Full Court in Hanley and that which is provided by the FW Act, the plain purpose of s 343(1) when applied in relation to workplace rights associated with the making, varying or termination of enterprise agreements, is that of proscribing conduct which might result in an agreement which is not the product of free bargaining. Conduct of that kind is capable of being characterised as illegitimate.
It cannot be the case that any conduct of a third party which imposes pressure on the agreement making of parties to the agreement will be illegitimate as an interference with free bargaining. In my view, the purpose of the impugned conduct and its effect upon the scheme the FW Act prescribes, will be an important consideration. As Merkel J said in Seven Network (Operations) Limited at [41], whether the pressure is illegitimate needs to be considered in the context of the scheme of the Act. Conduct driven by a purpose which is not consonant with or which serves to undermine the purposes of the FW Act is likely to be illegitimate conduct insofar as that conduct serves to defeat the workplace rights sought to be protected by s 343(1).
The FW Act permits parties to decide for themselves the content of the enterprise agreements they make within the parameters dictated by the Act. In that respect, the FW Act identifies “permitted matters” (s 172(1)), “unlawful terms” (s 194) and “mandatory terms” (Div 5 of Pt 2-4). Conduct which seeks to dictate different parameters within which industrial parties may agree for themselves the content of their enterprise agreements, serves to undermine the purposes of the FW Act.
The Guidelines impose parameters for the allowable content of enterprise agreements different to those provided for by the FW Act. In many respects the differences are stark. The exertion of economic pressure upon industrial parties for the purpose of limiting or restricting their freedom to bargain within the parameters established by the FW Act is, in my view, illegitimate because it serves to defeat the scheme for agreement making prescribed by FW Act.
The impugned conduct of the State in this case involved the application of economic pressure on parties to an enterprise agreement and was driven by parameters for bargaining and agreement making contained in the Guidelines. It therefore involved a purpose and effect which served to undermine the scheme of the FW Act. For that reason, it seems to me that the conduct was illegitimate conduct and that the second element required to prove an “intent to coerce” is established.
In the light of those findings I am satisfied that in contravention of s 343(1) of the FW Act, the State took action with intent to coerce Eco and its employees to exercise their workplace rights to vary the Eco Agreement.
Did McCorkell act with intent to coerce or threaten to coerce Eco
The case alleged against McCorkell
By its Amended Statement of Claim, the CFMEU pleaded that “in or about November 2012”, Eco was informed by McCorkell that McCorkell could not engage Eco, unless the Eco Agreement was made compliant with the Code and Guidelines. That communication was subsequently characterised in the pleading as the making of a “demand” by McCorkell upon Eco that Eco comply with the Code and Guidelines, including by procuring a variation to the Eco Agreement, as a condition of tendering for and obtaining building and construction work on the Circus Oz project. The communications were also characterised as a “threat” made by McCorkell to Eco that unless Eco complied with the Code and Guidelines, including by procuring a variation of the Eco Agreement, Eco would not be eligible to tender for or obtain the work on the Circus Oz project.
The making of that “demand” and that “threat” was then pleaded as the “action” taken by McCorkell which contravened s 343 of the FW Act, because it was action that was unlawful or illegitimate action taken, threatened or organised to be taken by McCorkell with the intention of coercing Eco and the employees of Eco to exercise their workplace right to vary the Eco Agreement so as to make it compliant with the Code and Guidelines.
It will be apparent that the pleading against McCorkell was structured in a similar way to the s 343 pleading made by the CFMEU against the State. Counsel for McCorkell also sought to rely upon a contention that the only conduct alleged against McCorkell was that McCorkell had “informed” Eco that it could not engage Eco on the Circus Oz project unless the Eco Agreement was made compliant with the Code and Guidelines.
For substantially the same reasons as those earlier given, I reject McCorkell’s contention that the only conduct alleged against it was that of “informing”. The CFMEU’s pleading relied upon the content of the message conveyed and not simply upon its delivery. For the same reasons as earlier given the conduct alleged by the CFMEU was that as a condition of tendering for and obtaining the demolition work McCorkell required Eco to vary the Eco Agreement.
By its Defence, McCorkell denied that it took any action or made any threat to Eco with the intention of coercing Eco or its employees to exercise their workplace right to vary the Eco Agreement so as to make it compliant with the Code and Guidelines.
The CFMEU’s claim that McCorkell threatened to take action with the intention of coercing Eco or its employees was not the subject of submissions. I have treated that claim as not having been pressed at trial
Did McCorkell require compliance with the Code and Guidelines as a condition of Eco tendering for and obtaining demolition work?
The CFMEU bears the onus of establishing the “action” taken by McCorkell which it alleges contravened s 343(1) of the FW Act. Given the nature of the action pleaded by the CFMEU, it was necessary for the CFMEU to establish that by McCorkell’s communications to Eco, McCorkell required that, as a condition of tendering for or obtaining the demolition work, Eco had to comply with the Code and Guidelines by procuring a variation to the Eco Agreement.
I am satisfied that the CFMEU has established that McCorkell took the action alleged. Mr Wilson was resolute in his understanding that by reason of his contract with the State, he could not engage a non-compliant subcontractor. He told Mr Sail that Eco could not be engaged if its agreement was not Code compliant. Mr Wilson accepted that what he told Mr Sail amounted to saying that unless Eco varied its Agreement it could not succeed in the tender.
Did McCorkell act with the prohibited intent and for the prohibited reason?
On the basis of the authorities earlier referred to and adopting the same analysis, the first question on this issue is whether McCorkell intended that pressure be exerted which in a practical sense would negate a relevant choice for Eco. The relevant choice is the same as that identified in the earlier analysis. In the context of the allegation and my finding that as a condition of Eco being eligible to be contracted to perform the demolition work, McCorkell required that Eco take steps to vary the Eco Agreement, the relevant question is whether, in a practical sense, Eco had no choice but to take those steps.
The CFMEU has the advantage of the presumption made by s 361 of the FW Act. On the facts and allegations relevant to McCorkell, s 361 imposes on McCorkell an obligation to negate:
(i)that a substantial and operative reason for the action it took was that Eco should take steps to vary the Eco Agreement; and
(ii)that any such motivation was pursued with intent to negate the choice of Eco not to take those steps.
On the question of intent and reason, McCorkell sought to discharge its onus through the evidence of Mr Wilson. There was no issue that Mr Wilson was capable of discharging the onus.
McCorkell submitted that the claim made under s 343(1) by the CFMEU was based on Mr Wilson’s communication to Mr Sail on 9 November 2012. Each of the questions put to Mr Wilson by his Counsel in relation to Mr Wilson’s state of mind were framed in terms of Mr Wilson’s intent in that conversation. As is apparent, there were two relevant conversations between Mr Wilson and Mr Sail. It is not clear to me why McCorkell’s submission and its questioning of Mr Wilson was premised upon the basis that the “action” being asserted against it was limited to the conversation on 9 November 2012. The relevant pleading alleged that “in or about November 2012”, Mr Sail was informed by a person representing McCorkell that McCorkell could not engage Eco unless the Eco Agreement was made compliant with the Code and Guidelines. If further particulars were provided so as to limit this allegation to the conversation of 9 November 2012, the Court was not informed and I cannot assume that to be the case.
It might be said that McCorkell has failed to discharge the onus upon it because Mr Wilson gave no evidence as to his reason or the nature of his intent in relation to the 12 November 2012 conversation. However, I do not consider that it would be appropriate to proceed on that basis. What Mr Wilson said on 9 November 2012 was essentially repeated on 12 November 2012, but on the latter occasion done on an affirmative rather than a prospective basis given that by the 12 November conversation Mr Wilson understood that the Eco Agreement was not compliant with the Code and Guidelines. Additionally, the answers given by Mr Wilson as to his state of mind contain some confusion as to which of the two conversations Mr Wilson was addressing. It seems to me that Mr Wilson’s state of mind was likely to be the same across both conversations and his evidence of his state of mind should be understood as applicable to both.
As to Mr Wilson’s state of mind, McCorkell relied upon the following evidence:
Can I just return to your conversation with Mr Sail on the 9th. What was your intention behind what you said to him in that conversation on the 9 November? --- My intention was to inform him of our contractual obligations, that is, not to enter into a subcontract with any subcontractor that’s not code-compliant. So I needed to inform him of that, and that was my intention for telling him.
All right. I’m going to put to you what’s alleged in this proceeding for your response. What do you say about the allegation that, by virtue of that conversation that you’ve just given evidence about with Mr Sail on 9 November, which included the statement that Eco had to be code-compliant to win the tender, that you intended to coerce Eco to vary their agreement to make it code-compliant? --- Yes, it’s absolutely false. I didn’t coerce – coerce them to vary their agreement at all.
Did you have that intention? --- No, no intention whatsoever.
The CFMEU relied upon the following evidence:
Now, Mr Wheelahan your counsel also put to you further matters arising from the 9 November conversation, and he asked you about intention arising from that. He asked you whether your intention was to coerce Mr Sail and, through him, Eco to seek to vary its agreement and you said no. But can I put this to you, Mr Wilson. You told Mr Sail in that conversation that the advice was he wasn’t code-compliant and that he needed to be code-compliant to be awarded the work. You agree with that much? --- Yes, I agree that he couldn’t have been awarded the work if he wasn’t code-compliant.
And you agree that you told him it had something to do with his workplace relations agreement? --- Yes.
Can I suggest to you, Mr Wilson, that that amounts to you saying to Mr Sail that, “Unless you vary your agreement, you cannot succeed in the tender”? --- Yes.
The answer given in examination-in-chief tends to suffer from some of the same difficulties as that which attended Ms Cato’s evidence. The question was put in terms of the language of the statute. However the question in this instance was more simple and clear, and it identified the conduct alleged to have been carried out with a coercive intent.
The answer Mr Wilson gave does not negate as a reason for his conduct that he was motivated by a desire to have Eco take steps to vary the Eco Agreement. For him to have said that he did not intend to coerce Eco to vary its Agreement does not exclude the existence of a desire that a variation should occur. The answer speaks to the nature of the intent and not necessarily to the reason for the conduct.
Mr Wilson regarded Eco as a short-listed tenderer and thus a contractor that he may wish to contract with. He said he would have given Eco an opportunity to resubmit its bid if it could demonstrate it was Code compliant. That evidence sufficiently raises the prospect that Mr Wilson would have liked to have seen the Eco Agreement varied so that Eco could remain a prospective contractor. In the absence of a denial, McCorkell has not established that its conduct was not in whole or in part motivated by a desire to see Eco vary the Eco Agreement.
However, I come to a different conclusion as to the nature of Mr Wilson’s intent. It is one thing for Mr Wilson to want to see Eco take steps to vary its agreement but quite another for him to hold an intention to negate Eco’s capacity not to take such steps. Whilst the evidence suggests that Mr Wilson may have desired that Eco take steps to give itself the opportunity to be awarded the demolition work, there is no evidence at all which suggests that to maintain that opportunity, Mr Wilson intended to apply pressure upon Eco. The evidence does not suggest that Mr Wilson wanted to force Eco to do anything at all. Mr Wilson had other options and the level of his interest in seeing the Eco Agreement varied so that it was Code compliant was unlikely to generate any intent to apply pressure on Eco.
In that context, Mr Wilson’s evidence that he had no intention whatsoever to coerce Eco to vary its agreement may be understood as a denial of any intent to pressure Eco at all. Whilst I hold some reservation about the manner in which Mr Wilson addressed the fact that I need to decide, I am satisfied that the answer given (in the context of the other available evidence) sufficiently discharged the onus upon McCorkell on the question of whether it held an intent to coerce. For those reasons, I have concluded that McCorkell did not contravene s 343(1) of the FW Act.
WAS THE STATE INVOLVED IN ANY CONTRAVENTION OF SECTION 340 BY MCCORKELL?
Section 550(1) of the FW Act provides that a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision. Section 550 is in the following terms:
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
The CFMEU alleged that the State was involved in the contravention by McCorkell of s 340. If that is so, then by reason of s 550(1) the State itself has contravened that provision.
The State denied that the CFMEU had established any such contravention. The State contended and the CFMEU accepted, that in establishing a contravention of s 550, an applicant was not assisted by the reversal of onus provided by s 361. Section 361 operates in respect of a contravention of Part 3-1 but only where, in relation to such a contravention, it is alleged that the contravening action was or is being taken (or was threatened) for a particular reason or with the particular intent. While s 550(1) requires intentional conduct, it does not specify a particular reason or intent that must accompany the conduct and therefore s 361 can be of no assistance to an applicant seeking to establish its breach.
In relation to its allegation that the State was an accessory to McCorkell’s contravention of s 340, the CFMEU relied upon each of the paragraphs of s 550(2) which define the term “involved in” found in s 550(1).
The nature of the liability imposed by s 550(1) (in the context of the meaning of “involved in” set out in s 550(2)), was explained by Tamberlin, Gyles and Gilmour JJ in Construction, Forestry, Mining and Energy Union v Clarke (2007) 164 IR 299 at [26] as follows:
Regardless of the precise words of the accessorial provision, such liability depends upon the accessory associating himself or herself with the contravening conduct - the accessory should be linked in purpose with the perpetrators (per Gibbs CJ in Giorgianni v The Queen (1985) 156 CLR 473 at 479-480; see also Mason J at 493 and Wilson, Deane and Dawson JJ at 500). The words “party to, or concerned in” reflect that concept. The accessory must be implicated or involved in the contravention (Ashbury v Reid [1961] WAR 49 at 51; R v Tannous (1987) 10 NSWLR 303 per Lee J at 307E-308D (agreed with by Street CJ at 304 and Finlay J at 310)) or, as put by Kenny J in Emwest Products Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2002) 117 FCR 588 at [34], must participate in, or assent to, the contravention.
In Yorke v Lucas (1985) 158 CLR 661, the High Court considered the requirements of what was then s 75B of the Trade Practices Act 1974 (Cth). The terms of the former s 75B are the same as those found in s 550(2) of the FW Act. There are a wide range of elements identified by the four sub-paragraphs of s 550(2). Each of those elements were considered by the majority in Yorke, although some only in passing. The majority held that all of the elements required intentional participation by an accessory in the primary contravention and that it was necessary to prove that the accessory had knowledge of the essential elements of the primary contravention (see at 667 and 670).
Relying on Yorke, the State contended that proof of intent requires proof of knowledge of the elements of the contravention. The State contended that the evidence did not support findings that the State knew:
·that McCorkell was proposing to enter into a contract for services with Eco; or
·that McCorkell had refused to engage Eco or refused to make use of, or agree to make use of the services of Eco; or
·that McCorkell had threatened to refuse to engage or make use of the services of Eco; or
·that McCorkell refused or threatened to refuse to engage Eco because of the existence of a workplace right.
I agree that the CFMEU has failed to establish that the State knew that McCorkell refused or threatened to refuse to engage Eco because of the existence of a workplace right. However, I disagree as to the first three matters relied upon by the State. The contents of the email forwarded to the State by Mr Wilson of 9 November 2012, the State’s assessment of the Eco Agreement and its communication to McCorkell that the Agreement was non-compliant, together with the State’s knowledge of McCorkell’s contractual obligations to not engage a non-compliant subcontractor, are sufficient to establish that the State had knowledge of each of the first three matters identified.
As for McCorkell’s reason for taking the action it took, the State contended and I accept that an essential element of any contravention of s 340 is that the adverse action be taken for a prohibited reason. In this case, I have found that a reason for McCorkell’s refusal to engage or use the services of Eco was the entitlement of Eco’s employees to the benefit of the Eco Agreement. The State contended and I accept that the CFMEU has failed to establish that the State knew that McCorkell’s conduct was motivated by that prohibited reason.
The CFMEU contended that whilst it is necessary to prove that the accessory knew what the principal contravener was doing, an accessory cannot know what the other person is feeling or thinking. It argued that whilst it was necessary for an accessory to have knowledge of the essential elements of a contravention, it was not necessary for an accessory to have knowledge of the principal contravener’s motive for the contravention.
That submission must be wrong where a particular motive is a necessary element of the contravention. For instance, a person who assisted in the dismissal of an employee carried out by a contravener because of the employee’s race, could not be an accessory to the discriminatory conduct in the absence of having assisted knowing that the contravener’s conduct was motivated by race. Without that knowledge, it could not be said that the alleged accessory is “linked in purpose with the perpetrators”.
An accessory will often know the principal perpetrator’s motive because the perpetrator will have revealed it. Alternatively, an accessory may know the perpetrator’s motive because their conduct is so intertwined, that the motive of one will be the obvious motive of the other.
It may well have been possible in this case, to impute to the State knowledge of McCorkell’s motive by reason of the close association between its conduct and that of McCorkell. However, the difficulty for the CFMEU is that neither its pleadings nor the case it ran, engaged with the need to establish that the State had knowledge of McCorkell’s prohibited reason. The CFMEU must therefore fail in its allegation that the State was an accessory to McCorkell’s breach of s 340.
RELIEF
In light of the findings I have made, I will make a declaration that in contravention of s 340(1)(a)(i) of the FW Act, McCorkell took adverse action against employees of Eco by refusing to engage or make use of the services of Eco because those employees were entitled to the benefit of the Eco Agreement. I will also make a declaration that the State has contravened s 343(1)(a) of the FW Act by taking action against Eco with intent to coerce Eco and its employees to exercise their workplace right to vary the Eco Agreement.
That leaves for further hearing and determination the orders sought by the CFMEU that penalties be imposed in relation to the contraventions which have been established. To facilitate the penalty hearing, I will direct the parties to consult and file with the Court minutes of proposed orders which address the filing and service of written submissions in advance of that hearing.
I certify that the preceding two hundred and ninety-three (293) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg. Associate:
Dated: 17 May 2013
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