Director, Fair Work Building Industry Inspectorate v ADCO Constructions Pty Ltd (No 2)

[2016] FCA 1463

FEDERAL COURT OF AUSTRALIA

Director, Fair Work Building Industry Inspectorate v ADCO Constructions Pty Ltd (No 2) [2016] FCA 1463

File number:

QUD 525 of 2015

Judge:

COLLIER J

Date of judgment:

7 December 2016

Catchwords:

INDUSTRIAL LAW – s 354(1) Fair Work Act 2009 (Cth) (FW Act) – principal contractor ADCO terminated engagement and cancelled further engagement of subcontractor Surf City Cranes Pty Ltd (SCC) – whether ADCO contravened s 354(1) – reversal of onus of proof – whether termination and cancellation of SCC for prohibited reason – subcontractor workers covered by non-union enterprise agreement – substantive and operative reason for termination and engagement – pressure on ADCO from union to remove SCC – prospect of union disruption to ADCO projects – ADCO under pressure to finish projects within time and budget – SCC dispensable to ADCO – SCC replaced with another subcontractor without union enterprise agreement – lack of union enterprise agreement to which workers and union were party was not substantial or operative factor in termination and cancellation – whether ADCO manager contravened s 354(1) – whether manager refused to further engage SCC – whether alleged refusal based on reasons prohibited by s 354(1) – SCC subsequently engaged on other ADCO projects

INDUSTRIAL LAW – whether SCC “employer” for purposes of s 354(1) FW Act – Crane Hire Pty Ltd (Crane Hire) labour hire company in group – whether Crane Hire was “employer” of workers in group business – intention of group directors – employees aware that Crane Hire was employer – rational explanation for group business structure – business structure no sham – SCC “public face” of corporate group – corporate documentation recorded Crane Hire as employer – SCC not employer

Legislation:

Building and Construction Industry Improvement Act 2005 (Cth) s 45(1)(a)(i)

Corporations Act 2001 (Cth) s 433(3)(c)

Fair Work Act 2009 (Cth) ss 354(1), 354(1)(a), 361, 793, 793(1)

Workplace Relations Act 1996 (Cth)

WorkCover Corporation Act 1984 (SA) s 54

Cases cited:

Australian Building and Construction Commissioner v McConnell Dowell Constructors (Aust) Pty Ltd (2012) 203 FCR 345

Board of Bendigo Technical and Further Education v Barclay (2012) 248 CLR 500

Building Workers’ Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 253 CLR 243

Damevski v Giudice (2003) 133 FCR 438

Director, Fair Work Building Inspectorate v ADCO Constructions Pty Ltd [2016] FCA 602

Fair Work Ombudsman v Eastern Colour Pty Ltd (No 2) [2014] FCA 55

Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174

Golden Plains Fodder Australia Pty Ltd v Millard (2007) 99 SASR 461

Gothard, in the matter of AFG (Receivers and Managers Appointed) (in Liq) v Davey [2010] FCA 1163

Jacinta Arcadia v Accenture Australia (2008) 170 IR 288

Scott v Commissioner of Taxation (Cth) (No 2) (1966) 40 ALJR 265

Sharrment Pty Ltd v Official Trustee (1988) 18 FCR 449

Snook v London & West Riding Investments Ltd [1967] 2 QB 786

Date of hearing:

6 June; 16, 17, 18, 19 August; 2 September 2016

Registry:

Queensland

Division:

Fair Work Division

National Practice Area:

Employment & Industrial Relations

Category:

Catchwords

Number of paragraphs:

188

Counsel for the Applicant:

Mr CJ Murdoch

Solicitor for the Applicant:

MinterEllison

Solicitor for the Respondent:

Mr R Dalton

Solicitor for the Respondent:

Norton Rose Fulbright

ORDERS

QUD 525 of 2015

BETWEEN:

DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE

Applicant

AND:

ADCO CONSTRUCTIONS PTY LTD (ACN 001 044 391)

Respondent

JUDGE:	COLLIER J
DATE OF ORDER:	7 DECEMBER 2016

THE COURT ORDERS THAT:

The originating application filed 1 July 2015 be dismissed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BACKGROUND FACTS	[3]
Entities controlled by Mr and Mrs Morrish	[7]
Employment arrangements	[12]
Enterprise agreement between ADCO and the CFMEU	[17]
Events at Bond University	[18]
Events at the Robina Project	[33]
Meeting with Mr Colin Kitto	[36]
GCC and the CFMEU	[37]
FURTHER AMENDED STATEMENT OF CLAIM	[38]
RELEVANT LEGISLATION	[41]
RELEVANT ISSUES	[44]
1. FIRST ISSUE: WAS SCC “AN EMPLOYER” FOR THE PURPOSES OF S 354(1) OF THE FW ACT?	[54]
Submissions of the parties	[54]
Relevant authorities	[56]
Damevski	[57]
Eastern Colour (No 2)	[65]
Ramsey	[68]
Golden Plains Fodder	[76]
Gothard	[84]
Application of relevant principles to this case	[86]
2. SECOND ISSUE: DID ADCO REMOVE SCC FROM THE BOND UNIVERSITY PROJECT, REFUSE TO ENGAGE SCC FURTHER IN RESPECT OF THE BOND UNIVERSITY PROJECT, AND REFUSE TO ENGAGE SCC IN RESPECT OF THE ROBINA PROJECT, FOR REASONS WHICH CONTRAVENED S 354 OF THE FW ACT?	[98]
(a)     Direct evidence of ADCO witnesses as to their motivations in relation to Bond University and Robina projects	[109]
Bond University project	[114]
Mr Hawkins	[115]
Mr Duckett	[126]
Mr Tanner	[135]
Robina project	[141]
Mr Hawkins	[141]
Mr Duckett	[142]
Mr Tanner	[144]
Mr Zidar	[148]
(b)     Evidence of ADCO staff in respect of SCC’s enterprise agreement	[153]
(c)     Evidence of Mr Morrish, Mrs Morrish and Mr Dawson	[155]
Working relationship with ADCO	[157]
Confrontation with CFMEU officials	[159]
(d)     Issues relevant to GCC	[165]
(e)     Continued use of SCC by ADCO	[167]
3.     THIRD ISSUE: CONTRAVENTIONS ALLEGED BY PARAGRAPHS 45 AND 46 OF THE FURTHER AMENDED STATEMENT OF CLAIM – “THE KITTO AMENDMENTS”	[170]
Relevant evidence	[172]
Did Mr Kitto refuse to further engage SCC for the reasons alleged by the Director?	[180]
CONCLUSION	[185]

COLLIER J:

1. The Director, Fair Work Building Industry Inspectorate (the Director) seeks orders under the Fair Work Act 2009 (Cth) (the FW Act) against a principal contractor, ADCO Constructions Pty Ltd (ADCO) in respect of ADCO’s conduct on two building sites in south-east Queensland. In essence, the Director claims that ADCO discriminated against a particular subcontractor whose workers were not party to an enterprise agreement which also covered the Construction, Forestry, Mining and Energy Union (CFMEU), in contravention of s 354(1) of the FW Act. Specific orders sought by the Director are:

   1.Declarations pursuant to section 21 of the Federal Court of Australia Act 1976 (Cth) that the Respondent is taken to have contravened section 354 of the Fair Work Act 2009 (Cth) (FW Act) as alleged in the statement of claim;

   2.An order pursuant to section 546 of the FW Act that the Respondent pay penalties pursuant to part 3-1 item 11 of the table in section 539(2) of the FW Act for breaches of section 354(1) of the FW Act;

   3.An order pursuant to section 546(3) of the FW Act that each of the penalties imposed on the Respondent are to be paid within 28 days to the Consolidated Revenue Fund of the Commonwealth;

   4.An order pursuant to section 545(2)(b) of the FW Act awarding compensation for the loss suffered by Surf City Cranes Pty Ltd;

   5.An order pursuant to section 547 of the FW Act that the Respondent pay interest;

   6.        Such further order as the Court sees fit.

2. Before turning in more detail to the claims of the Director it is useful to outline the background facts, many of which have been agreed by the parties in a Statement of Agreed Facts filed on 1 September 2016.

   BACKGROUND FACTS

3. ADCO is a national construction company which was involved in the delivery of projects across Australia in 2012 and 2013. Three such projects were at Bond University (the Bond University project), Robina Town Central (the Robina project) and Pindara Hospital on the Gold Coast. Although events at Pindara Hospital were initially the subject of the Director’s claims against the respondent, that aspect of the claim is no longer pressed.

4. The Bond University project related to the $18 million construction of the Abedian School of Architecture at Bond University’s Gold Coast campus. This project commenced around September 2011 and was completed around October 2013.

5. The Robina project related to the $14 million construction of a single storey car park at the Robina Shopping Centre for Queensland Investment Corporation. This project commenced around July 2013 and was completed around March 2014.

6. In both of these projects ADCO required crane hire services. Surf City Cranes Pty Ltd (SCC) is a crane hire company. SCC is the subcontractor to which I referred earlier in this judgment.

   Entities controlled by Mr and Mrs Morrish

7. It is convenient at this stage to examine the features of business entities controlled by Mr Jonathan Morrish and Mrs Sharon Morrish.

8. Mr and Mrs Morrish had the control and beneficial ownership of a number of entities, namely SCC, Crane Hire Pty Ltd (Crane Hire) and Morrish Investments Pty Ltd (Morrish Investments). At material times Mr Morrish was the sole director of both SCC and Crane Hire.

9. Crane Hire was registered in 2011. Mr Morrish and the operations manager of SCC, Mr James Dawson, focussed on winning crane hire work, whereas Mrs Morrish and a book-keeper, Ms Mel Chittick (with the assistance of external accountants) focussed on the administrative side of the business.

10. At all material times Morrish Investments was the trustee for the Morrish Family Trust. Morrish Investments owned all assets, including the cranes and the crane yard, and the trading name “Surf City Cranes”. Mrs Morrish was the director and sole shareholder of Morrish Investments. Mr and Mrs Morrish and SCC         were beneficiaries of the trust.

11. In the first half of 2012 Mr and Mrs Morrish decided to restructure their business such that SCC was the provider of crane hire services to the industry, and Crane Hire was the employer of crane operators, riggers and doggers and the supplier of labour to SCC. It is common ground that this structure was adopted for two reasons:

    1.Mr and Mrs Morrish accepted their accountant’s advice that it was in their financial interests, from a financial risk perspective, to separate the employer from the companies that held the assets in their business structure; and

    2.The intention of Mr and Mrs Morrish at the time was to position Crane Hire as a labour hire operation, not only for the SCC business, but potentially in future for others in the industry.

    Employment arrangements

12. Also in the first half of 2012 Mr and Mrs Morrish engaged an industrial relations consulting firm, Drayton’s Workplace Consulting Pty Ltd (Draytons) to assist them in the negotiation of an enterprise agreement with workers who were crane operators, riggers and doggers. In May 2012 Mr and Mrs Morrish instructed Draytons to change the name of the employer in a proposed draft enterprise agreement from SCC to Crane Hire. Mr and Mrs Morrish also instructed Draytons to undertake an analysis of industry wage rates, because they wanted to offer competitive rates of pay to employees in the enterprise agreement.

13. On 22 June 2012 a meeting of employees of the Morrish business took place at which a copy of the proposed enterprise agreement was provided, and terms thereof explained, including that Crane Hire would be the employer of workers in the business thenceforth. Employees voted on the agreement on 2 July 2012 and it was approved by a valid majority of employees.

14. Following the lodgement of the enterprise agreement for approval, there was at least one meeting with employees at which the agreement and its terms and conditions were discussed with employees. With the assistance of Draytons, Mrs Morrish prepared a one-page summary document setting out the applicable “Crane Hire” pay rates in the enterprise agreement. This document was made available to existing employees and used in the recruitment of new employees.

15. At all material times SCC had a bank account at the ANZ Bank. A bank account with the ANZ Bank in the name of Crane Hire was opened on 23 June 2014.

16. Throughout the relevant period, Crane Hire did not provide labour to any entity apart from SCC.

    Enterprise agreement between ADCO and the CFMEU

17. On 18 October 2012 an enterprise agreement between ADCO and the CFMEU was approved by the Fair Work Commission. Clause 35.2 of that enterprise agreement provided:

    Use of Contractors

    If the company wishes to engage contractors and their employees to perform work in the classifications covered by this agreement, the company must first consult in good faith with potentially affected employees and their union. Consultation will occur prior to the engagement of subcontractors for the construction works.

    If, after consultation, the company decides to engage bona fide contractors, these contractors and their employees will receive terms and conditions of engagement (on terms no less favourable) as they would receive if they were engaged as employees under this agreement performing the same work. The use of sham subcontracting arrangements is a breach of this agreement.

    Events at Bond University

18. ADCO engaged SCC to provide crane services at the Bond University project from around April 2012 until mid-October 2012. It is common ground that ADCO also required further crane services at the site after October 2012.

19. Evidence of delays at the Bond University project was given by Mr Michael Duckett who, at all material times, was ADCO’s Project Construction Manager of the Bond University Project and Project Manager of the Robina Project. Mr Duckett was responsible for managing the delivery of both projects. In his affidavit sworn 29 March 2016 Mr Duckett deposed that:

    ·The design of the building being constructed as part of the Bond University Project was extremely complex and challenging. This design complexity contributed to delays in the construction of the building.

    ·The project also experienced substantial rain delays and inclement weather. Even when the rain had stopped, there was time required to dry the site out before construction activities could recommence.

    ·Up to and including 12 October 2012 ADCO experienced 60 days of delays as a result of inclement weather.

    ·In total, the Bond University Project experienced delays of approximately 114.5 days due to inclement weather.

20. In October 2012 CFMEU officials Mr Tim Jarvis and/or Mr Scott Vink telephoned Mr Duckett at ADCO. During that conversation Mr Jarvis and/or Mr Vink said words to the effect that they were not happy about SCC being used by ADCO because SCC did not have a “union EBA”, and “they wanted [ADCO] to get rid of SCC” and instead use another crane hire company, Gold Coast Cranes Pty Ltd (GCC). It is common ground that, at all material times, workers employed by GCC were not covered by an enterprise agreement which also covered the CFMEU.

21. On 11 and 12 October 2012 CFMEU officials attended the Bond University project site.

22. Mr Duckett deposed:

    30.On 11 October 2012, I received a telephone call from Mr Tanner who informed me that the CFMEU had been to the Bond University Project site and stopped the whole job. He told me that Scott Vink had abused him in front of the workers, had been calling ADCO “grubs’ and telling workers that “Mr ADCO didn’t give a shit about you’. I believe Mr Tanner may have also mentioned during this phone call that the CFMEU did not like SCC being on site.

    31.Mr Tanner did not often contact me specifically regarding a union visit. He did keep me up to date generally in relation to whether there were or were not any union issues. I believe he called me specifically on this occasion because it was a particularly bad incident and it had caused delay to the Bond University Project.

    32.I also recall that I was told by Mr Tanner at some stage prior to 12 October 2012 that Jonathan Morrish, who is the Director of SCC, had had confrontations with union officials in the past, that they were “out to get him”, and that he had not “made friends” with the unions on previous projects. I knew who Mr Tanner was talking about as I had met Mr Morrish briefly in person, just in passing on a project site.

23. In October 2012 Mr Richard Tanner was the site manager of the Bond University project and an employee of ADCO. He deposed that on 11 October 2012 he saw Mr Vink or Mr Jarvis at the Bond University project site, and that one of the union officials said to him, with reference to SCC:

    What are these guys doing here?

24. On or around 12 October 2012 Mr Andrew Sutherland from the CFMEU rang Mr Hawkins, the Queensland Manager of ADCO. In his affidavit sworn 1 April 2016 Mr Hawkins deposed that during the course of their conversation Mr Sutherland said words to the following effect:

    I’m the CFMEU organiser for your Green Square Project. I’m watching that job very closely. Scott Vink is the organiser at Bond Uni, and he’s not happy about you using Surf City Cranes. You need to do something about them.

25. On or around that day Mr Hawkins and Mr Duckett decided to remove SCC from the Bond University project. It is common ground that Mr Duckett instructed Mr Tanner to the effect:

    We have to finish up SCC, we can’t have them on site any more, the heat from the union is too high, we need to move them on.

26. GCC was subsequently engaged to replace SCC on the Bond University project.

27. On 12 October 2012 Mr Duckett had a telephone conversation with Mr Morrish in which Mr Duckett said words to the effect:

    We can’t tell you to get an EBA, but we have been strongly urged to use nominated contractors or some one with a ‘bona fide EBA’; and

    We are encouraged to use recognised EBAs.

28. Mr Morrish learned that SCC had been removed from the Bond University project at around the same time as learning that SCC had been removed from another site nearby. He travelled to Brisbane to speak with CFMEU officials, and met with Mr Travis O’Brien, an industrial legal officer of the union. Mr Morrish’s evidence was that Mr O’Brien agreed that CFMEU organisers would come out and speak with him (transcript 16 August 2016 p 82 ll 11-22).

29. Subsequently on or about 17 October 2012 Mr Jarvis and Mr Sutherland of the CFMEU visited SCC’s crane yard where they met with Mr Morrish, Mrs Morrish and Mr Dawson. In his affidavit sworn 8 December 2015 Mr Morrish gave evidence of the following events and conversation at that meeting:

    84.Tim arrived with Andrew Sutherland. Tim introduced me to Andrew. Sharon arrived shortly after Tim Jarvis and Andrew Sutherland arrived. James Dawson, Surf City’s Operations Manager was also present for the conversation. Carolyn Mansfield, a secretary for Surf City also joined the conversation part way through.

    85.On arriving at the Surf City yard, Tim Jarvis and Andrew Sutherland walked into the middle of the yard and Tim Jarvis said words to the following effect:

    (a)       ‘You have enough cranes in here to have an EBA, a union EBA’.

    (b)‘You have more cranes than Chris Lindores’. I understood that Tim was referring to a company run by Chris Lindores called Lindores Construction Logistics.

    (c)       ‘You guys have gone and got an EBA and it’s not a union EBA’.

    (d)‘It’s one world and it’s our world so we don’t give a hoot what’s outside, so it’s just our union world.

    (e)       ‘You’ve been contacting Fair Work and the Ombudsman’.

    (f)       ‘We’re going to watch you burn’.

    (g)‘At no point have we said that you can’t’ work on union sites but you must have a bona fide agreement’.

    86.      I asked words to the effect of, ‘What does bona fide mean?’

    87.Tim responded with words to the effect ‘It means that someone else has a union agreement, that’s who you can work with’.

    88.      I said words to the effect of:

    (a)       ‘We don’t need a union EBA because we have a Fair Work one.’

    (b)       ‘This Fair Work is under your government.’

    By this I meant that Fair Work was implemented by the Labor government.

    89.Tim repeated words to the effect of ‘That’s the one world, we don’t care about anyone else’s agreement.’ Tim further said words to the effect of ‘You guys are running around with the front page and showing customers and saying you have an agreement.’

    90.I responded with words to the effect of ‘Well obviously our front page is identical to the union one, it’s got the Fair Work stamp on it.’

    91.      Tim responded with words to the effect of ‘That’s not the case’.

    92.Sharon and I said words to the effect that we had looked at the enterprise agreement which they had emailed to us. Someone from the union, I believe either Tim or Andrew, had previously emailed this to us. Sharon and I suggested to the effect that we could review it and eliminate the clauses that did not apply to us.

    93.Tim responded to the effect of ‘Well you can make a submission. You have to pay $1200-$1500 for an application for an EBA. We might, we’re busy so we might get to it in six months, might get to it in twelve months, you know, we’re very busy’.

    94.I understood by Tim’s response that the CFMEU was not interested in negotiating an enterprise agreement with Surf City.

    95.Sharon and I then spoke about the fact that we wanted to work on ADCO sites again. Tim responded to the effect that ‘we haven’t removed you from site’. I asked to the effect how we could work on the ADCO sites again. Tim responded to the effect ‘you can pay an application fee, if we get time to look at it, we’ll consider and process it’.

    96.Tim stated to the effect that he had spoken to Richard Tanner and said that if Surf City Cranes want to work with ADCO you know what has to happen in the future and Richard had responded to the effect ‘Yeh we know that.’

1. On or about 20 October 2012 Mr and Mrs Morrish met Mr Tanner at the Bond University project site. It is common ground that during that meeting:

   ·Mr Tanner stated words to the effect that “we [the site] have been instructed by [the office] to use another company” and it was “out of his hands”;

   ·Mr Tanner confirmed to the effect that there had been no safety breach by SCC on the Bond University Project;

   ·Mr Tanner indicated that he was unhappy that SCC had been removed from the site.

2. In or about late October 2012 Mrs Morrish had a telephone conversation with Mr Hawkins. During that conversation Mr Hawkins said words to the effect that “ADCO had no choice”.

3. The Director also alleges that on or about 13 October 2012 Mr Dawson spoke with Mr Greg Radburn or Mr Tanner of ADCO to the following effect:

   1.Mr Radburn or Mr Tanner asked Mr Dawson to remove the Surf City crane from the Bond University Project;

   2.Mr Dawson asked why Surf City had been asked to cease work on the Bond University Project;

   3.Mr Radburn or Mr Tanner replied “Well you know what’s been happening. We can’t have you guys here anymore for that reason”.

   Events at the Robina Project

4. On 5 July 2013 Mr Tanner, in his capacity as ADCO’s site manager at the Robina project, booked SCC to carry out crane services work, installing site sheds into position for the commencement of project works which were due to commence on 8 July 2013.

5. On or around 6 July 2013 ADCO, through Mr Duckett, decided to cancel the booking of the SCC cranes. Mr Tanner contacted Mr Morrish to inform him of that decision.

6. On or around 11 July 2013 Mr Duckett received a copy of an email from Mr Jarvis of the CFMEU with the subject “EBA contractors” and the message “Please call before engaging any one” and attached list of contractors. Mr Duckett subsequently emailed Mr Jarvis’ list of contractors to Mr Tanner and Mr Chris Zidar (ADCO’s Contracts Administrator in respect of the Robina project).

   Meeting with Mr Colin Kitto

7. On or about 23 July 2013 Mr and Mrs Morrish met with Mr Colin Kitto, ADCO’s Gold Coast Manager responsible for oversight of the Bond University, Pindara Hospital and Robina projects. The purpose of the meeting was to discuss issues raised in an email dated 22 May 2013 sent by Mrs Morrish to Mr Bob Hill, the Chairman of ADCO. The discussion at this meeting is in dispute – indeed paragraphs 56A, 56B and 56C of the further amended statement of claim set out the Director’s allegations of further contraventions of the FW Act by ADCO referable to that discussion.

   GCC and the CFMEU

8. As I noted earlier in this judgment, at material times GCC was not party to an enterprise agreement with the CFMEU during 2012 or most of 2013. On 10 September 2013 the GCC Enterprise Agreement covering its operators, riggers and dogmen was approved by the Fair Work Commission. The CFMEU was covered by that agreement.

   FURTHER AMENDED STATEMENT OF CLAIM

9. The Director relies in this proceeding on his further amended statement of claim filed on 26 May 2016. In summary, the Director alleges:

   ·In respect of the Bond University project:

   ○it can be inferred that SCC was removed from the Bond University project because SCC employees were not covered by an enterprise agreement which covered the CFMEU;

   ○in removing SCC from the Bond University project, Messrs Hawkins, Tanner, Duckett and/or Radburn discriminated against SCC in breach of s 354(1) of the FW Act because they removed SCC on the basis that employees were not covered by an enterprise agreement which covered the CFMEU;

   ○Mr Duckett, Mr Hawkins and Mr Kitto refused to further engage SCC on the Bond University project because employees were not covered by an enterprise agreement which covered the CFMEU, and this conduct breached s 354(1) of the FW Act;

   ○Mr Kitto refused to further engage SCC unless it signed a union EBA. In so doing Mr Kitto discriminated against SCC because he refused to further engage SCC because its employees were not covered by an enterprise agreement which covered the CFMEU;

   ○ADCO is liable for those contraventions of the FW Act pursuant to s 793 of the FW Act.

   ·In respect of the Robina project:

   ○it can be inferred that the engagement of SCC on the Robina project was cancelled by ADCO because SCC employees were not covered by an enterprise agreement which covered the CFMEU;

   ○it can be inferred that the engagement of SCC on the Robina project was cancelled by Mr Tanner because SCC employees were not covered by an enterprise agreement which covered the CFMEU;

   ○cancellation of the engagement of SCC on the Robina project by Mr Tanner and ADCO was discrimination against SCC in breach of s 354(1) of the FW Act;

   ○it can be inferred that Mr Duckett refused to engage SCC on the Robina project because SCC employees were not covered by an enterprise agreement which covered the CFMEU;

   ○in refusing to further engage SCC on the Robina project Mr Duckett discriminated against SCC in breach of s 354(1) of the FW Act because SCC employees were not covered by an enterprise agreement which covered the CFMEU;

   ○pursuant to s 793 of the FW Act ADCO is liable for the contraventions of the FW Act by Mr Tanner and Mr Duckett.

   (In light of the fact that, so far as I can ascertain, Mr Radburn was involved in the Pindara Hospital project, I understand that the Director no longer presses any claim concerning Mr Radburn. Certainly no evidence of Mr Radburn was tendered, Mr Radburn was not called as a witness, and no issue in respect of this was made by the Director.)

10. Further, in respect of a meeting between Mr Kitto of ADCO and Mr and Mrs Morrish on or about 23 July 2013 at ADCO’s office in Bay Street, Southport, the Director alleges in summary that:

    ·Mr Kitto refused to further engage SCC unless SCC signed a union EBA; and

    ·accordingly – Mr Kitto discriminated against SCC in breach of s 354(1) of the FW Act because he refused to further engage SCC because employees of SCC were not covered by an enterprise agreement which covered the CFMEU.

11. Finally, the Director in the further amended statement of claim pleaded losses to SCC as a result of the allegedly contravening conduct:

    ·in respect of the Bond University project – net loss of income of approximately $45,812.98;

    ·in respect of the Robina project – net loss of income of approximately $103,206.38.

    RELEVANT LEGISLATION

12. The Director claimed breach by ADCO and its senior staff of s 354(1) of the FW Act. This section provides:

    Coverage by particular instruments

    (1)      A person must not discriminate against an employer because:

    (a)       employees of the employer are covered, or not covered, by:

    (i)        provisions of the National Employment Standards; or

    (ii a particular type of workplace instrument (including a particular kind of workplace instrument within a type of workplace instrument); or

    (iii)an enterprise agreement that does, or does not, cover an employee organisation, or a particular employee organisation; or

    (b)it is proposed that employees of the employer be covered, or not be covered, by:

    (i)a particular type of workplace instrument (including a particular kind of workplace instrument within a type of workplace instrument); or

    (ii)an enterprise agreement that does, or does not, cover an employee organisation, or a particular employee organisation.

    Note:    This subsection is a civil remedy provision (see Part 4 1).

    (2)      Subsection (1) does not apply to protected industrial action.

13. It is clearly s 354(1)(a) of the FW Act which is the subject of alleged contraventions by ADCO and its employees. The Director’s fundamental claim is that ADCO discriminated against SCC because SCC’s employees were not covered by an enterprise agreement which also covered the CFMEU. The claim is not referable to any proposal of an enterprise agreement involving SCC’s employees, the CFMEU or otherwise.

14. Insofar as the claims of the Director are referable to conduct of ADCO staff, the Director relies on s 793(1) of the FW Act which states that any conduct engaged in on behalf of a body corporate by, inter alia, an officer, employee or agent of the body within the scope of his or her actual authority is taken, for the purposes of the FW Act, to have been engaged in also by the body corporate. I understand there is no suggestion by ADCO that the ADCO employees the subject of the Director’s claim were acting otherwise than in the scope of their authority.

    RELEVANT ISSUES

15. This proceeding involved a trial over several days. Oral and affidavit evidence on behalf of the Director was received from Mr Morrish, Mrs Morrish, Mr Dawson, and Mr Ian Aldridge (a crane operator who had performed work for the SCC business over a period of approximately seven and a half years). On behalf of ADCO, oral and affidavit evidence was received from Mr Tanner, Mr Hawkins, Mr Duckett, Mr Kitto and Mr Zidar. ADCO also relied on an affidavit of Mr Jarvis Robertson, a project manager for ADCO, affirmed 24 March 2016. The Director did not seek to cross-examine Mr Robertson.

16. The picture painted by the evidence given on behalf of both the Director and ADCO is damning of those CFMEU officials identified in that evidence. It suggests a chilling, contemptuous and indeed gloating disdain on the part of those CFMEU officials for the prospect of harm – brought about by the exercise of CFMEU power – to the livelihoods of Mr and Mrs Morrish, their employees and the Morrish business entities. It also indicates capricious misuse and exploitation of union power to coerce ADCO to defer to whatever agenda the CFMEU was pressing at the time.

17. However.

18. No evidence in this proceeding was given by any member of the CFMEU to either support or contradict the claims of the Director or evidence of the witnesses of the Director and ADCO, in relation to alleged statements of CFMEU officials. Were proceedings commenced by the Director against the CFMEU the Court would almost certainly have the benefit of evidence given on behalf of the union, and be in a position to reach a more informed view of the evidence given on behalf of the Director and ADCO of the conduct of CFMEU officials.

19. This is not such a case. It is not the conduct of the CFMEU or its officials which is on trial – it is the conduct of ADCO. It follows that, for the purposes of the claims brought by the Director against ADCO, the Court can only proceed on the basis of the evidence before it in assessing whether the FW Act has been contravened by ADCO as the Director has claimed.

20. By reference to the further amended statement of claim I have already summarised the substance of the Director’s allegations against ADCO. In response, ADCO’s defence to those claims of the Director can be summarised as follows.

21. First, ADCO claims that the allegations of the Director cannot be substantiated in respect of ADCO’s interaction with SCC, because SCC employed no workers who could be covered by an enterprise agreement that also covered an employee organisation within the meaning of s 354(1) of the FW Act. Rather, all workers the Director claimed were employees of SCC were actually employed by Crane Hire, a separate company (albeit a related company also controlled by the Morrish family). Accordingly, ADCO claims that the Director’s case fails at this initial hurdle.

22. Second, even if there were discrimination by ADCO against SCC by ADCO removing SCC from the Bond University project, refusing to engage SCC both further in respect of the Bond University project, and refusing to engage SCC in respect of the Robina project, ADCO denies that its reasons for doing so contravened s 354(1) of the FW Act.

23. Third, ADCO denies that Mr Kitto “refused to engage” SCC as the Director alleges.

24. It is appropriate for me to examine these issues in turn.

    1. FIRST ISSUE: WAS SCC “AN EMPLOYER” FOR THE PURPOSES OF S 354(1) OF THE FW ACT?

    Submissions of the parties

25. In summary the Director submitted as follows:

    ·Each case must be considered on its own facts. There are, however, established principles relevant to determining the question whether an employment relationship exists, as identified in such cases as Damevski v Giudice (2003) 133 FCR 438; Gothard, in the matter of AFG (Receivers and Managers Appointed) (in Liq) v Davey [2010] FCA 1163, and Jacinta Arcadia v Accenture Australia (2008) 170 IR 288. The Director also relied heavily on my decision in Fair Work Ombudsman v Eastern Colour Pty Ltd (No 2) [2014] FCA 55.

    ·Crane Hire, SCC and Morrish Investments have the same registered address, principal place of business address and contact address.

    ·Although Crane Hire was established as a company which could in future provide labour to entities other than SCC, it never had.

    ·It is clear that, practically speaking, Mr and Mrs Morrish regarded Crane Hire and SCC as one entity.

    ·Operationally there was no distinction between Crane Hire and SCC during the relevant period.

    ·It is only after 8 July 2014 (when a written agreement was entered between Crane Hire and SCC) that Crane Hire invoiced SCC for the costs of labour supplied by Crane Hire to SCC. Notwithstanding this, no money changed hands, because Crane Hire had no bank account and all Crane Hire expenses were paid by SCC.

    ·In reality, the reference to “profit” in the books of account of Crane Hire referred to an amount yet to be paid by Crane Hire to workers.

    ·Crane Hire was dependent on SCC for all aspects of Crane Hire’s operations.

    ·Most workers were based at SCC’s crane yard at Burleigh Heads.

    ·Crane Hire had never had a telephone number or a website separate from that of SCC.

    ·Crane Hire and SCC had always used the same business equipment including printers, computers and stationery.

    ·All documents referable to SCC and Crane Hire were held and maintained at either the Morrish family home or the SCC crane yard.

    ·Although formal ownership of plant used in Morrish businesses was vested in Crane Hire, cranes operated by Crane Hire bore the SCC logo and telephone number.

    ·SCC paid maintenance and other costs in respect of cranes and trucks.

    ·Crane services were booked by contacting SCC or Mr Morrish. Crane Hire had no staff to take bookings.

    ·Advertisements for employment positions bore the SCC logo.

    ·Workers such as Mr Ian Aldridge saw no distinction between SCC and Crane Hire.

    ·Employee induction material referred to both SCC and Crane Hire.

    ·Customer dockets bore the SCC letterhead.

    ·While employees more recently had received pay slips from Crane Hire, they previously received pay slips from SCC.

    ·Crane Hire only paid for wages, superannuation, payroll tax and WorkCover payments for workers from 9 July 2014.

    ·Workers wore uniforms with the SCC logo.

    ·At material times SCC paid for uniforms and personal protective equipment of workers. Uniform shirts were provided to employees by Mr Morrish.

    ·This case is distinguishable from cases such as Golden Plains Fodder Australia Pty Ltd v Millard (2007) 99 SASR 461. The practical reality was that Crane Hire had no separate existence or operation to Surf City.

26. In response, ADCO’s submissions were, in summary:

    ·The financial statements and tax returns of SCC and Crane Hire for the 2013 and 2014 financial years reflected the structure whereby Crane Hire was the employer of employees in the Morrish businesses. Mrs Morrish checked these documents for accuracy and Mr Morrish accepted that he signed off on them as being true and correct.

    ·SCC’s Trading Account for the year ending 30 June 2014 clearly showed that SCC did not employ anyone in that financial year, but rather procured labour from Crane Hire.

    ·The figures for the year ending 30 June 2013 were consistent with other evidence showing that SCC stopped employing anyone by September 2012, and from at least that point in time procured the relevant labour.

    ·Crane Hire’s financial statements record it as incurring all relevant employment related expenses in the form of wages, superannuation and payroll tax (where applicable).

    ·Mr Dawson was employed by Crane Hire, and all cranage employees reported to him.

    ·Mr and Mrs Morrish instructed Draytons to assist in the making of the enterprise agreement, changing the employer in the draft agreement from SCC to Crane Hire.

    ·There was no evidence that Mr and Mrs Morrish sought to subvert minimum award rates.

    ·During the period prior to the approval of the enterprise agreement the employees of the Morrish business were informed at a meeting of employees that their employer was Crane Hire.

    ·Documentation produced internally and externally by SCC and Crane Hire during the relevant period recorded the employment transactions in respect of payroll, taxation and superannuation as being paid by Crane Hire as the employer.

    ·All of the Director’s witnesses confirmed their understanding that at all relevant times Crane Hire was the employer of the relevant labour. Attempts by Mr and Mrs Morrish to retreat from this position should be treated with scepticism.

    ·The use of the same yard, office facilities and IT system is a logical consequence of running a substantial family business. None of these things tells against Crane Hire being the legal employer.

    ·Although until mid-2014 there was no bank account in the name of Crane Hire, and only one bank account for SCC, this did not deprive the Morrish entities of their separate legal personality.

    ·These facts are not similar to those in such cases as Damevski 133 FCR 438; Eastern Colour (No 2) [2014] FCA 55 and Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174 – rather they are more akin to “internal organisation” cases identified in Ramsey 198 FCR 174 at [79]-[92].

    Relevant authorities

27. Both parties directed the Court’s attention to leading cases considering the identity of employers, in particular Damevski 133 FCR 438; Eastern Colour (No 2) [2014] FCA 55; Ramsey 198 FCR 174; Golden Plains Fodder 99 SASR 461, and Gothard [2010] FCA 1163. It is useful to commence consideration of this issue by examination of principles emerging from those cases.

    Damevski

28. In Damevski 133 FCR 438 the applicant was a cleaner who had previously been employed by the second respondent, Endoxos. As Marshall J explained, Mr Damevski resigned when given the choice between resigning and “contracting” his services to a company called MLC Workplace Solutions (MLC), or not being provided with any work in the future by Endoxos. It appears that at a meeting of Endoxos employees held to discuss the impending “transition to MLC”, Mr Lindsay Burke, an Endoxos manager, told the employees “nothing would change”, but at a subsequent meeting they were told that if they did not “sign with MLC they would not have any work”. Mr Damevski signed the “resignation” document, and continued working on the understanding that he was doing so as a subcontractor. From that time onwards:

    ·Endoxos was required to pay MLC for Mr Damevski’s services within 24 hours of the weekly invoice sent by MLC;

    ·Mr Damevski was paid by MLC fortnightly;

    ·MLC deducted amounts from Mr Damevski’s pay with respect to accident and public liability insurances, long service leave and superannuation;

    ·Mr Damevski continued to work at the direction of Endoxos;

    ·the only work Mr Damevski performed was work for Endoxos;

    ·when Mr Damevski was sick he notified Endoxos, not MLC;

    ·Endoxos relocated him in his work areas, without any consultation with MLC either by Endoxos or Mr Damevski.

1. Endoxos asserted that there was no evidence of a direct contractual relationship between Mr Damevski and Endoxos; Mr Damevski had resigned from Endoxos; and Mr Damevski had entered into a separate agreement to perform work for MLC.

2. Marshall J found that:

   ·Mr Damevski had had a previous relationship with Endoxos;

   ·there was no evidence of a signed contract employment between Mr Damevski and Endoxos;

   ·the evidence was that Mr Damevski worked solely for Endoxos pursuant to an arrangement where he would be paid by MLC, who would in turn look to Endoxos for reimbursement of such payments plus an administration fee;

   ·Endoxos retained the right to direct and control the performance of Mr Damevski’s work and terminate his services on its own behalf and not as agent of MLC;

   ·MLC acted as an agent for Endoxos in paying Mr Damevski, on Endoxos’ behalf. This was the only role it performed;

   ·there was no evidence of Mr Damevski providing his services as an independent contractor.

3. Endoxos sought to rely on the decision in Building Workers’ Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104. In relation to this however Marshall J observed at 450:

   60.It is apparent from the information pack that MLC was attempting to replicate the arrangement discussed in Odco. Labour hire agencies that rely on Odco to legitimise particular activities should bear in mind that the existence of a contractual relationship and employment relationship, in any given set of circumstances, is ultimately a question of law. When attempting to replicate the arrangement discussed in Odco, it is not sufficient to give lip service to it. There is no legitimacy in arrangements which merely attempt to exploit difficult areas of law and create vehicles designed, inter alia, to enable employers to avoid their award and statutory obligations.

4. At 450-451 his Honour distinguished the facts before him from those in Odco 29 FCR 104 on the following basis:

   61.… Contrary to the current case, the workers discussed in Odco were first “screened” at interviews conducted by the labour hire company, Troubleshooters Available (Troubleshooters). Inquiry was made of the worker’s reasons for wanting to be self-employed, whether they had been self-employed before, whether they were members of a relevant union and superannuation scheme, and whether they had construction industry long service leave registration.

   62.A worker was invited to sign an “Agreement to Contract”, in much the same form as the AICA Agreement to Contract, provided satisfactory answers were given at the interview. The result of this was to make the worker eligible to be offered work from time to time on some particular site for some particular builder client of Troubleshooters.

   63.In Odco, the Court dismissed many of the arguments advanced by the relevant union to show that Troubleshooters had no real control over the workers and that Troubleshooters’ role was in reality one of agent. The Court however, accepted that the maintenance of communication between a worker and Troubleshooters does not negate the existence of a contractual relationship between the worker and the builder. The Court also made it clear that payment of wages by a third party is not fatal to the existence of a contract of employment between a worker and a putative employer.

   64.The Court found, ultimately, that the evidence indicated that it was always intended that Troubleshooters would be liable to pay the worker for all work, at the rate which it had agreed with the worker, whether or not it received payment from the builder. Relevant to this was the fact that Troubleshooters was the entity that fixed and adjusted the remuneration to which the worker was entitled and the builder was not always aware of the rate paid to the worker by Troubleshooters. In the instant case, Endoxos, not MLC, determined Mr Damevski’s rate of pay.

   65.Endoxos did not establish an arrangement in the form recognised in Odco or any like arrangement.

5. On the facts of the case Marshall J was also satisfied that when Mr Damevski returned to work after his “resignation” he began working with Endoxos again, without any relevant role having been played by MLC, and it could be implied that Endoxos and Mr Damevski informally re-entered an arrangement in the nature of a contract of service on the same terms and conditions under which Mr Damevski had previously worked for Endoxos the preceding day. His Honour found that consideration was provided by Mr Damevski by performing cleaning services for Endoxos, with MLC merely performed an administrative function by providing Mr Damevski’s pay, on behalf of Endoxos (at 455-456).

6. While Endoxos relied on the requirement for an intention to create legal relations to assert that there was no evidence of a legally enforceable contract, his Honour observed at 456 that:

   95.It is an accepted principle of contract law that although a person’s apparent intention will generally represent their real intention, an objective approach should be taken in establishing intention.

   …

   96.Endoxos may have set about making arrangements for the provision of labour through a third party, but ultimately it acted in a way that showed that it in fact intended to create legal relations. The evidence indicates that Endoxos wanted to maintain control of Mr Damevski, expected him to use their equipment and clothing emblazoned with Endoxos livery and, ultimately, wanted to be able to dismiss Mr Damevski.

7. Merkel J in Damevski 133 FCR 438 similarly found the “real substance” of the Endoxos and Damevski agreements was that MLC’s role in the relationship between Endoxos and its former employees was that it acted as agent for both parties in creating privity of contract between them, because, in summary:

   ·the employees were to be employed precisely as they had been previously by Endoxos, subject to the interpolation of MLC as a conduit for payment of the new rates of pay payable to the employees;

   ·Endoxos, rather than AICA/MLC, made all of the specific arrangements relating to Damevski’s re-engagement to work as a cleaner for it as from 19 August 2001; and

   ·all of the relevant features of Damevski’s employment, save for the manner and quantum of payment, remained unchanged.

   Eastern Colour (No 2)

8. In Eastern Colour (No 2) [2014] FCA 55 Mr and Mrs Baronio were the directors of Eastern Colour Pty Ltd (Eastern Colour), a company which was the trustee of the Eastern Colour Family Trust established for the benefit of the Baronio family. Eastern Colour operated the family farm. Two sons of Mr and Mrs Baronio were the sole directors and shareholders of two companies established as labour hire companies for the supply of labour hire to the farm. An arrangement with farm employees was reached whereby they worked for the first labour hire company up to a maximum of 40 hours per week. If they wished to work more than 40 hours they would then work for the other labour hire company.

9. As trial judge I found that despite the formal labour hire arrangements, the true employer of the workers was Eastern Colour in circumstances where:

   ·all relevant employees believed that Mr and Mrs Baronio were “the bosses” who could hire and fire employees, and that this appeared to be a correct perception;

   ·the evidence of each of the relevant employees was that they believed that they were working for Eastern Colour;

   ·relevant employees had limited knowledge of the two labour hire companies, other than as entities whose names appeared on pay slips;

   ·employees on the farm wore shirts bearing the name “Eastern Colour”, on the basis that this was their employer. Similarly, the only Workplace, Health and Safety Guidelines applicable at the farm were in the name of Eastern Colour;

   ·employees performed the work in the same location (namely on the farm owned by Eastern Colour) and by packing fruit in boxes labelled as produced by Eastern Colour;

   ·there was no practical difference in the work environment or practice of an employee after an employee had worked 40 hours;

   ·employees were not aware of arrangements whereby they worked up to 40 hours for one of the labour hire companies and any hours in excess of those original 40 hours for the other labour hire companies;

   ·the directors of the labour hire companies were not involved in employing staff;

   ·the labour hire companies existed only to provide services to Eastern Colour;

   ·despite the time sheets and pay slips – there was no contract of employment between either labour hire company and relevant employees.

10. Further, as I observed at [130], the arrangements put in place in that case constituted an attempt to exploit difficult areas of law, and create vehicles designed, inter alia, to enable employers to avoid their award and statutory obligations.

    Ramsey

11. In Ramsey 198 FCR 174, Mr Ramsey had been the person in effective control of the management and operation of an abattoir through various companies, since 1998. As part of the operational arrangements decided by Mr Ramsey, separate companies were established to play the role of “employer” of staff at the abattoir. Buchanan J noted that in 2001 and 2002 there was some reorganisation of corporations within the Ramsey group insofar as was concerned employment of workers. In August 2002, Mr Ramsey decided to close the abattoir for a short time and all employees were terminated. When the abattoir reopened shortly thereafter, some employees were not employed. Following orders of the Federal Court adverse to the Ramsey companies and directing payment of compensation to affected employees, those Ramsey companies went into liquidation. Buchanan J found that:

    14.… The reality of the position is that Mr Ramsey decided, in response to the orders made by Greenwood J, to set each of those companies on a path to extinction, the orders being thought to be thereby rendered ineffective.

12. Mr Ramsey caused a letter to be sent to all employees, suggesting that they approach Tempus Holdings Pty Ltd (Tempus) for employment.

13. Ramsey Food Processing Pty Ltd (Ramsey Food Processing) put Tempus in funds to meet its liabilities associated with the supply of the labour including wages, workers compensation insurance, superannuation contributions and tax obligations. Those liabilities were handled in Tempus’s name, and through its bank account. Ramsey Food Processing agreed to provide an indemnity to Tempus in respect of any liability arising from the employment of the employees. Ramsey Food Processing, rather than Tempus, had the right to recruit and dismiss employees, and to decide what work was to be performed and by whom. As his Honour observed at 183:

    26.The result of the practices followed at the direction of Mr Ramsey was that money passed through the Tempus account only so often and to such an extent as was necessary to shortly thereafter discharge the obligations assumed by Tempus. Those were in truth nothing more than clerical arrangements. For all practical purposes the Tempus bank account was treated as an account within the Ramsey Group. I am satisfied, on the whole of the evidence, that those arrangements were adopted so as to give colour to the proposition that it was Tempus, rather than Ramsey Food Processing, which was legally liable for those payments. The effect of Mr Ramsey’s evidence was that similar practices had earlier been followed with respect to the four companies within the Ramsey Group used to employ labour at the abattoir before late 2006.

14. His Honour also observed (at 184 [28]) that on the evidence, apart from this nominal change in employer, which gave effect to the method chosen by Mr Ramsey to deal with the obligations arising from the orders made by the Federal Court on 4 October 2006, nothing changed for employees who were allowed to remain in employment.

15. In considering whether Tempus, or Ramsey Food Processing, was the employer of the relevant workers Buchanan J examined the historical development of labour hire companies and continued at 191:

    60.I accept, therefore, that arrangements whereby labour is provided by one company to another, without the recipient becoming thereby an employer, are longstanding and unremarkable. There appears no place for an assumption of illegality or illegitimate purpose from the mere fact that a “labour hire” arrangement has been put in place. The Australian cases recognise that, provided the arrangement meets certain objective criteria.

16. His Honour noted that different issues arose where labour hire services were provided by a company to a related entity, compared with the provision of such services by unrelated corporations. In relation to intra-group provision of services, Buchanan J observed at 195-196:

    76.There may be many reasons why companies, businesses or enterprises associated with each other might wish to organise their affairs in a way where one legal personality employs labour for the ultimate use and benefit of other legal personalities. Such arrangements will often not be characterised or accompanied by the apparent profitability or identified reward which might be necessary in order to regard an arm’s-length arrangement as a genuine one.

    77.In such intra-group arrangements there may be overlapping, or even common, directorships, interlocking shareholdings (either cross-ownership or through ultimate ownership) and there is frequently a system of cross-guarantees in place. Little of this may be apparent to outsiders. The details may not be discoverable through the public records system. Arrangements between or amongst companies related in this way where one company (or more) operates to engage labour while others are concerned with management, operations, marketing or sales are by no means unusual. They are certainly not illegal. Arrangements along these lines may even be indispensible for some forms of business activity, eg joint ventures. Although more than mere lip service must be paid to the separation of legal personality provided by individual incorporation, the tests applied to other labour hire arrangements, of independence and separate business, are either not relevant or are much less readily applied in such a circumstance.

    78.Nevertheless, it must be possible to identify a rational explanation for the arrangement and the explanation must be satisfactorily related to an intelligible business objective. That is so because otherwise, doctrines of agency, at least, may operate to defeat a bare claim of independence and isolated liability, supported only by a bare reference to separate incorporation. That is particularly likely to be the case when: the separate employing company is completely reliant upon a company to which it purportedly supplies labour; it has no assets and no management structure of its own; and it exists only as a corporate shell to protect another company, which does have assets, from liability to employees. In such a case a court might not hesitate long before pronouncing the arrangement ineffective or, in a more serious case, a sham.

17. His Honour observed that principles relevant to intra-group arrangements did not apply in the case before him.

18. Further, his Honour noted that the respondent relied on Golden Plains Fodder 99 SASR 461 as authority for the proposition that a change of employer from one company in a group to another may be legally effective. His Honour concluded however that Golden Plains Fodder 99 SASR 461 was distinguishable because that case involved an intra-group company (unlike the circumstances in Ramsey 198 FCR 174), but more particularly because even if the Tempus arrangements were to be evaluated as an intra-group arrangement they were ineffective to isolate employment, and employment obligations, from Ramsey Food Processing (at 199 [91]).

    Golden Plains Fodder

19. In Golden Plains Fodder 99 SASR 461 the plaintiff, Mr Millard, injured his hand while working at a plant operated by Golden Plains Fodder Australia Pty Ltd (Golden Plains). A preliminary question was whether Golden Plains was Mr Millard’s employer. Mr Millard contended that it was not – rather, a related company (Macpri Pty Ltd) was his employer. This question required decision because of the operation of s 54 of the WorkCover Corporation Act 1984 (SA) – if Golden Plains was Mr Millard’s employer his action for compensation was statute-barred. The facts indicated that from incorporation until June 1996 Golden Plains performed all of the functions of an employer, including paying workers’ wages, deducting income tax and issuing group certificates. In June 1996 the directors of Golden Plains instructed their accountant to arrange for the incorporation of Macpri, with themselves as the directors of Macpri. Golden Plains’ registration as the employer was cancelled, and Macpri became the registered employer, was assigned a registration number and began paying the workers, deducting income tax from their wages and issuing group certificates. Macpri was the registered employer when Mr Millard injured his hand.

20. At first instance the trial Judge found that only Golden Plains carried on a business, that the workers generated income for Golden Plains and, out of that income, Macpri paid the workers after Golden Plains had transferred the necessary funds from its bank account to that of Macpri. His Honour found that there was little evidence of Mr Millard’s intentions concerning the identity of his employer, however the directors of Golden Plains and Macpri intended that Macpri be the employer of Mr Millard, and the intentions of the parties were the decisive factor in identifying Macpri as the employer.

21. On appeal to the Full Court of the Supreme Court of South Australia, Golden Plains argued that the primary Judge was in error in having regard to evidence of the subjective intention of the parties in identifying the employer, on the basis that when construing a contract a court should determine what would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened (at [23]-[24]). Golden Plains also contended that the arrangements entered into between Golden Plains and Macpri, as well as those companies and Mr Millard, were a “sham”. Gray J (David J agreeing) considered whether the arrangements were a sham, and after examining a number of authorities including Snook v London & West Riding Investments Ltd [1967] 2 QB 786; Scott v Commissioner of Taxation (Cth) (No 2) (1966) 40 ALJR 265 and Sharrment Pty Ltd v Official Trustee (1988) 18 FCR 449 observed (at [29]) that it was appropriate to receive evidence directly from the parties about their intentions when directed to the topic of sham. However Gray J continued:

    32.Where there is an issue of identifying the employer of an employee when there might be two (or more) possible employers, courts have adopted the approach of resolving the issue by the application of the principles developed for determining whether a person was an employer at all.

    33.The touchstone is the practical reality of the relationship. Courts have consistently emphasised that in determining whether a relationship between parties is one of employment or independent contract, the court should focus on the practical reality of the relationship.

    34.The totality of the circumstances surrounding the relationship of the various parties, including conduct subsequent to the creation of the alleged employment relationship, is relevant.

    35.Documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of the relationship. The documentation may have been brought into existence for other purposes, for example, for tax minimisation or the reduction of insurance premiums, without reflecting the reality of the parties’ relationship. The payment of wages by a particular entity is not conclusive of the existence of an employment relationship. The beliefs of the employees as to the identity of the employer is admissible and is entitled to be given weight.

    (Footnotes omitted.)

1. After considering the facts Gray J said:

   46.It is apparent that a decision was made in 1996 to have the operation run through the two companies, with Macpri undertaking the role of employer of the labour force as indicated above and Golden Plains being the trading arm of the operation.

   47.A number of documents tendered emanating from the defendant contained the description of Golden Plains trading as Macpri. Counsel for Golden Plains disavowed any suggestion that this was correct. The business records do not support the suggestion that Golden Plains traded as Macpri. The arrangement appears to have been that Macpri would be responsible for labour requirements and would provide that labour to Golden Plains. In return it received a consulting fee that was sufficient to meet the outgoing expenses including wages, superannuation, payroll tax and WorkCover levy.

   48.There are understandable commercial reasons why the whole operation should have been structured in this way, with the responsibility for labour being with Macpri. There is no suggestion that to do so was in breach of any law or regulation or would cut across any statutory obligations in respect to workers’ compensation, payroll tax or income tax. This was the way those involved in the overall operation structured the business. It was not a sham. It was a legitimate way of doing business.

   49.Counsel for Golden Plains at times referred to the reality of the arrangement and at other times to the process as a sham or as simply the paper side of the arrangement. However advanced, this submission should be rejected.

2. Accordingly his Honour found that Macpri was Mr Millard’s employer.

3. At [69] White J set out a number of principles he considered applicable in such cases, namely:

   1.Regard is to be had to the totality of the circumstances surrounding the relationship of the parties.

   2.The circumstances may include the factors considered in determining whether a given relationship is an employment relationship at all.

   3.Events which occurred after the relevant contract was formed may also be considered.

   4.It is the reality of the contractual arrangements which is to be considered. Effect may be given to that underlying reality despite the absence of any submission that certain arrangements are a sham.

   5.Payment of wages and issuing a taxation group certificate by one entity is important but not conclusive as to the identity of the employer. It may reflect no more than financial convenience between entities within one corporate group. Nevertheless, such factors will in most cases require active consideration.

   6.Documents created by one or more of the entities describing or evidencing their relationship will be relevant, but not necessarily conclusive as to the true character of the relationship. The Court should consider the purpose for the creation of the documents. For example, certain documents may have been prepared for a purpose other than describing the contractual relationship, such as taxation minimisation or reduction of insurance premiums.

   7.Conversations and conduct at the time of the engagement of the worker are of considerable significance. The belief of the worker as to the identity of the employer is admissible and should be given due weight.

   8.When new employees are engaged to work in a business in which a number of separate corporate entities participate other than as partners, it is open to those controlling the business to select the company which is to be the employer. However, that selection must be consistent with the financial and administrative organisation of the business and not otherwise be a sham.

   (Footnotes omitted.)

4. His Honour considered that in the Golden Plains case particular regard should be had to the circumstances surrounding the commencement of Mr Millard’s employment, and that events after the employment could also be considered.

5. After examining the documentary evidence before the Court, his Honour concluded that it could not reasonably be found that the various documents did not reflect the reality of the arrangements between the parties (at [103]).

   Gothard

6. In Gothard [2010] FCA 1163, the Court was required to identify which of a group of related companies in liquidation was or were the employer of the respondents in order to determine whether they represented priority creditors of any of those companies pursuant to s 433(3)(c) of the Corporations Act 2001 (Cth). The facts were complicated by multiple respondents who were potentially employees of different companies within the group, notwithstanding that only one of the companies appeared to have a contractual liability to pay them. Edmonds J considered numerous authorities and at [60] observed:

   Aspects of the practical realities of the relationship which have been considered relevant in the cases referred to above, include a consideration of the entity which:

   (a)       had practical and legal control and direction of the employees;

   (b)      made decisions about hiring;

   (c)       made decisions about disciplinary issues;

   (d)      made decisions about the level of remuneration;

   (e)       actually paid remuneration;

   (f)       communicated with employees about leave;

   (g)       made decisions about termination of employment.

7. After a very detailed and lengthy judgment his Honour made factual findings relevant to the documentary evidence; the question whether there was a contract of employment between the companies and the workers; and whether the workers could, in the course of their employment, provide services to their employer by performing work which benefited third parties and vice versa.

   Application of relevant principles to this case

8. Examining the facts of this case in light of relevant principles it is clear that, at material times, SCC was not the employer of the workers of the Morrish businesses. Crane Hire was their employer. I have formed this view for the following reasons.

9. It is clear that SCC and Crane Hire are companies in the same corporate group. Both Mr Morrish and Mrs Morrish give evidence to that effect. In any event this conclusion must inevitably be drawn from the facts before the Court, including that at material times Crane Hire, SCC and Morrish Investments had the same sole director (Mr Morrish), as well as the same registered address, principal place of business address and contact address listed with ASIC (affidavit of Sharon Morrish sworn 8 June 2016 para 14); prior to October 2014 Mrs Morrish managed the administration and finances for both SCC and Crane Hire with the assistance of a bookkeeper, Ms Mel Chittick (affidavit of Sharon Morrish sworn 8 June 2016 para 15); and at material times SCC and Crane Hire used the same accountants (affidavit of Sharon Morrish sworn 8 June 2016 para 16).

10. As was recognised in, for example, Golden Plains Fodder 99 SASR 461 and by Buchanan J in Ramsey 198 FCR 174 at [76], in circumstances where there are a number of companies in the same group it is unremarkable for the group to be structured such that one of the companies supplies services to third parties, and another of the companies provides labour in support of group activities, either to other members of the group or to third parties. Indeed in this case it is common ground that:

    ·Mr and Mrs Morrish intended Crane Hire to be the employer of workers from the second half of 2012 following advice from their accountants to separate the employer entity in the business structure from the companies holding the assets;

    ·this was done with a view to positioning Crane Hire as a labour hire operation in the industry; and

    ·formal arrangements were put in place to give effect to this intention.

11. It is also clear that the employees knew of the arrangements which had been put in place and that they knew that Crane Hire was their employer. This can be seen from the evidence before the Court as to meetings between the Morrishs and employees of the business where employees were informed of the new role of Crane Hire as their employer under the enterprise agreement to which the employees and Crane Hire were parties. It can also be seen, for example, from the following evidence of employee Mr Aldridge during cross-examination at the hearing:

    Yes. And you all knew by that, of course, that Crane Hire Proprietary Limited was your employer?---Yes.

    And that it was the company that was making the Enterprise Agreement with you?---Yes.

    And committing to the terms and conditions that it would pay you as employees?---Yes.

    Yes. Now, when you worked for Crane Hire Proprietary Limited within the Surf City business, you filled out timesheets?---That’s correct, yes.

    And in those days, you had a timesheet that had Crane Hire Proprietary Limited on it. Do you remember that?---Yes. Well, the wife did all that, but, yes. Yes, it did have, yes.

    (Transcript 17 August 2016 p 175.)

12. Similarly, during cross-examination Mr Dawson gave the following evidence:

    Now, from September 2012, as operations manager for the Surf City Cranes business, you were employed by the company controlled by the Morrishes called Crane Hire Pty Ltd?---Yes.

    Yes. And you had some full-time employees and casual employees, who you say reported to you in the various roles of operator, riggers and dogmen?---Yes.

    And again, from around – from at least around September 2012 those employees who reported to you were also employed by that company called Crane Hire Pty Ltd?---Yes.

    (Transcript 16 August 2016 pp 56-57.)

13. In claiming that as a practical reality SCC was the employer of workers in the Morrish business, the Director relies in particular on my decision in Eastern Colour (No 2) [2014] FCA 55. There are similarities between the facts of this case and those in Eastern Colour (No 2) [2014] FCA 55 to the extent that both involved business structures where much of the corporate group activity took place through one company and labour hire was sourced from another company in that group. The facts of the case currently before me are, however, very different to those in Eastern Colour (No 2) [2014] FCA 55. In Eastern Colour (No 2) [2014] FCA 55 I found that the workers believed they were working for the operating company Eastern Colour Pty Ltd; the directors of the labour hire companies in the corporate group (who were the sons of the directors of Eastern Colour Pty Ltd) had no involvement in employing staff; the authority to hire and fire employees was in the directors of Eastern Colour Pty Ltd, and there was no contract of employment between either labour hire company and workers. I also found that the employment arrangements in Eastern Colour (No 2) [2014] FCA 55 were a sham, being a construct under which workers would be employed successively by the two labour hire companies to avoid overtime rates being payable by Eastern Colour Pty Ltd for work in excess of 40 hours in a week, and that this construct was deliberately created for that purpose in contravention of relevant provisions of the Workplace Relations Act 1996 (Cth) and certain clauses of the applicable Notional Agreement Preserving State Awards.

14. On the facts before me there was no sham in the arrangements whereby Crane Hire was the employer of workers in the Morrish business. Mr and Mrs Morrish, as the persons in control of the group, and for apparently legitimate business reasons to minimise possible future risk, put it to employees that Crane Hire would be their new employer. The employees agreed to the enterprise agreement in which Crane Hire had that role. There was, as Buchanan J identified in Ramsey 198 FCR 174 at [78], a “rational explanation for the arrangement”, and the explanation was “satisfactorily related to an intelligible business objective”.

15. The Director pointed to the manner in which Mr and Mrs Morrish regarded Crane Hire and SCC as one entity, what could be described as the “invisibility” of Crane Hire as an entity compared with SCC (whose logo for example promoted the business) and such financial circumstances as the direct payment by SCC of wages, superannuation, payroll tax and WorkCover payments until 9 July 2014.

16. ADCO submitted that the evidence of Mr and Mrs Morrish in this respect should be accorded caution because of their investment in this litigation. I accept this submission. But in any event, in circumstances where both SCC and Crane Hire appeared to be corporate alter egos of at least Mr Morrish, it is not surprising that both he and Mrs Morrish not only regarded, but treated both companies as functioning within the corporate group. I also consider it unsurprising in the circumstances that the financial and business resources of SCC, being the primary operating entity in the business, would be utilised to support the operation of Crane Hire. This does not mean, however, that Crane Hire was not the true employer of the workers in the Morrish business.

17. Further, the fact that SCC was both the public face of the Morrish business for dealing with customers, and given a prominent role in the Morrish business structure as the entity with which employees may have identified (for example, through uniforms with the SCC logo), does not mean that the practical realities of the situation pointed to SCC as the employer of the workers. The documentary evidence before the Court in form of financial accounts of SCC and Crane Hire for the financial years ending 30 June 2013 and 30 June 2014 recording Crane Hire as the employer of workers and SCC as employing no workers; employment transactions in respect of payroll, taxation and superannuation being paid by Crane Hire as the employer; and receipt by workers of pay slips recording Crane Hire as their employer, in my view represent the truth of the position so far as concerns employment of workers in the Morrish business.

18. My finding that SCC was not the employer of the workers in terms alleged in the Director’s amended statement of claim means that the application before me should be dismissed, because it is not possible that ADCO or Mr Kitto could have discriminated against SCC in contravention of s 354(1) of the FW Act.

19. In the interests of completeness however, and also in the event that I am wrong in respect of my finding that SCC was not the employer of the workers in the Morrish business, I will consider the other issues before the Court. As I explained earlier, these issues are:

    ·whether the reasons of ADCO in removing SCC from the Bond University project, and refusing to engage SCC both further in respect of the Bond University project and in respect of the Robina project, contravened s 354(1) of the FW Act; and

    ·whether Mr Kitto refused to engage SCC for reasons which contravened s 354(1) of the FW Act.

    2. SECOND ISSUE: DID ADCO REMOVE SCC FROM THE BOND UNIVERSITY PROJECT, REFUSE TO ENGAGE SCC FURTHER IN RESPECT OF THE BOND UNIVERSITY PROJECT, AND REFUSE TO ENGAGE SCC IN RESPECT OF THE ROBINA PROJECT, FOR REASONS WHICH CONTRAVENED S 354 OF THE FW ACT?

20. A threshold question in respect of this issue is whether, in taking the actions it did, ADCO discriminated against SCC.

21. The Macquarie Dictionary defines “discriminate” as, inter alia:

    to make a distinction, as in favour of or against a person or thing: to discriminate against a minority.

22. “Discrimination against” in the industrial relations context was discussed in Australian Building and Construction Commissioner v McConnell Dowell Constructors (Aust) Pty Ltd (2012) 203 FCR 345 in relation to s 45(1)(a)(i) of the Building and Construction Industry Improvement Act 2005 (Cth). The Full Court observed:

    69.First, it is considered that the natural and ordinary meaning of the phrase “discriminate against” is that an “adverse distinction” is made between persons. Such was the conclusion of Ryan J in Helal No 1 and the conclusion of Tracey J in National Retail Association. It is also a conclusion consistent with the decision of Gray J in Cozadinos where his Honour referred to a person “suffering harm by way of discrimination”. It is a conclusion which is supported by both the terms of s 45 and the heading to that section which reinforces the constraint that the section is confined to “discrimination against [an] employer”. It is said to be “an elementary and fundamental principle that the object of the court, in interpreting a statute, ‘is to see what is the intention expressed by the words used’ … It is only by considering the meaning of the words used by the legislature that the court can ascertain its intention”: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 304 per Gibbs CJ. The Chief Justice there went on to observe that “it is not unduly pedantic to begin with the assumption that the words mean what they say”.

23. ADCO submitted that the Director was required to prove that ADCO had treated SCC differently or distinctly from other subcontractors, and that this differentiation or distinction was established by reference to those in comparable circumstances save for the alleged protected attribute. The difficulty, in ADCO’s submission, was that GCC, the cranage contractor to which ADCO directed the work, had the same protected attribute as SCC – namely its employees were not covered by an enterprise agreement which also covered the CFMEU.

24. It is clear that ADCO treated SCC differently from GCC, which ADCO engaged to undertake the cranage work in respect of the Bond University and Robina projects after terminating and cancelling SCC. That there was active discrimination against SCC is evident from the undisputed evidence before the Court that in circumstances where ADCO had engaged SCC to work on at least the Bond University project, subsequently ADCO made a deliberate and conscious decision to reject SCC as a cranage operator in favour of another subcontractor.

25. I do not accept that ADCO’s conduct cannot be said to be “discrimination against” SCC within the meaning of s 354(1) of the FW Act unless the reason for the discrimination was proscribed by the FW Act.

26. I accept that, in the ordinary meaning of the word, ADCO “discriminated against” SCC by making an “adverse distinction” between it and GCC. It follows that the key issue is whether ADCO’s discrimination against SCC was for the reason set out in s 354(1) of the FW Act.

27. In this respect the reverse onus rests on ADCO pursuant to s 361 of the FW Act, such that ADCO must prove, on the balance of probabilities, that the alleged prohibited reason (namely, that SCC was an employer of employees who were not covered by an enterprise agreement which also covered the CFMEU) was not a substantive and operative reason for ADCO removing and/or refusing to engage SCC in each case: Board of Bendigo Technical and Further Education v Barclay (2012) 248 CLR 500 at 516-517, 530-531, 540-542, 545-546; Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 253 CLR 243 at 249, 257, 260, 267. Identification of the reason or reasons involves a question of fact which must be answered in the light of all the facts established in the proceeding: French CJ and Crennan J in Barclay 248 CLR 500 at 517.

28. In this case I am satisfied that ADCO has discharged this onus of proof. The reason for ADCO’s discriminatory actions against SCC in relation to the Bond University and Robina projects was because ADCO knew that the CFMEU objected to SCC’s presence on the Bond University and Robina project sites, and that SCC’s continued presence would cause the CFMEU to take action causing delays and disruption to those projects. ADCO was not motivated, as a substantive and operative reason, by the fact that employees of the Morrish business were not covered by an enterprise agreement which also covered the CFMEU.

29. I have formed this view for the reasons which relate to:

    (a)Direct evidence of their motivations for action by ADCO witnesses.

    (b)Evidence of ADCO witnesses in relation to SCC’s industrial arrangements.

    (c)Evidence of Mr Morrish, Mrs Morrish and Mr Dawson.

    (d)Issues relevant to GCC.

    (e)Continued use of SCC by ADCO.

1. Mrs Morrish also gave similar evidence to that of Mr Morrish in relation to the meeting with the CFMEU officials on 17 October 2012:

   24.I received a phone call from Jon on 17 October 2012. Jon said words to the effect that CFMEU officials were coming to the Surf City yard site to meet with us and that I should come to the yard as quickly as possible.

   25.When I arrived at the Surf City yard, Tim Jarvis, Andrew Sutherland, Jon Morrish and James Dawson were in the yard.

   26.Jon introduced me to Tim and Andrew. Tim said to me words to the effect of, ‘Oh you’re the crazy wife’.

   27.I understood that this was a reference to a telephone conversation that I had had with Joe Myles from the CFMEU some time prior to the meeting.

   28.Tim said words to the effect of ‘I never said you couldn’t work on sites because you have a non-union EBA, I would never say that because it’s illegal.’

   29.Either Jon or I responded with words to the effect of ‘Well, what’s the problem?’

   30.Tim said words to the effect of ‘You don’t have a bona fide EBA’.

   31.I said words to the effect of ‘What is the difference between a bona fide EBA and a non-union EBA. Our EBA has been recognised by Fair Work Australia, isn’t Fair Work Australia the top body?’

   32.Tim then said words to the effect of ‘We don’t recognise Fair Work Australia, there is only one world, union world’. He opened his arms wide and turned in a circle.

   33.I responded with, ‘Well what hope do we have if you don’t recognise the head body in Australia?’

   34.Jon and I said we’d been removed from ADCO sites and wanted to be able to continue to work with them.

   35.Tim responded to the effect that:

   (a)if ADCO kicked you off then you should take it up with them as it is their call.

   (b)Surf City could get a bona fide EBA and take it back to ADCO and you would probably be allowed back on site.

   (c)he had spoken to Richard Tanner and said that if Surf City Cranes want to work with ADCO you know what has to happen in the future and Richard had responded to the effect ‘Yeh we know that’.

   36.I stated to the effect that I understood Gold Coast Cranes was currently on the site and they did not have a union EBA. Andrew stated to the effect that [Gold Coast Cranes] were getting an agreement drawn up at the moment and from a safety point of view that was good.

   37.Tim also stated to the effect that we could pay the union’s fee and lodge an EBA with them for consideration but that they were very busy and any consideration of the EBA could take up to 12 months and ultimately may not be approved.

2. Mr James Dawson’s evidence in relation to the meeting with the CFMEU officials is consistent with that of Mr and Mrs Morrish. In addition however I also particularly note the following evidence of Mr Dawson in his affidavit affirmed 8 December 2015:

   44.While I do not remember the specific statements made by Jon, Sharon, Tim and Andrew, I remember that:

   (a)I was present when the CFMEU representatives came to the crane yard.

   (b)       Jon and/or Sharon:

   (i)stated to the effect that Surf City was seeking to be able to work on all of the building sites and did not think that Surf City should be excluded from any sites.

   (ii)asked the CFMEU representatives to the effect of what would Surf City have to do for the union to provide Surf City with access to this work.

   (c)Tim and/or Andrew stated to the effect that Surf City would have to have a ‘union EBA’.

   (d)Jon and/or Sharon then stated to the effect of whether Surf City could have two EBAs - a non-union EBA to cover smaller jobs and a union EBA to cover larger sites like ADCO.

   (e)       Tim and/or Andrew stated to the effect that:

   (i)        the CFMEU would not allow that to happen.

   (ii)the CFMEU would make it difficult, an extremely slow process, for Surf City to obtain a union EBA.

   Findings

3. In many ways the evidence of Mr Morrish, Mrs Morrish and Mr Dawson represented the high point of this aspect of the Director’s case against ADCO. The Director relied primarily on this evidence to support his claim that the reason for ADCO’s decision to terminate any engagement with SCC on the Bond University and Robina projects was because SCC employees were not covered by an enterprise agreement which also covered the CFMEU. Indeed, the evidence of Mr Morrish, Mrs Morrish and Mr Dawson indicates that the lack of an enterprise agreement covering their workers and the CFMEU was an issue for the CFMEU. However even if I were to substantially accept the evidence of Mr Morrish, Mrs Morrish and Mr Dawson, this evidence does not affect my finding that ADCO’s reasons for its actions were not as alleged by the Director. I take this view because:

   1.It appears from the evidence before the Court that the objections of the CFMEU officials to SCC were based on a broad antipathy to SCC and the Morrishs. That SCC had not negotiated an enterprise agreement with the CFMEU was no doubt part of the equation. Indeed on the basis of the evidence before me, it appears that the CFMEU deeply resented the fact that the Morrishs had negotiated a non-union enterprise agreement with employees of the business. It was certainly enough of an issue for the CFMEU to raise it in the discussion with Mr and Mrs Morrish on 17 October 2012. However the apparent reference to Mrs Morrish as “the crazy wife” by CFMEU officials and to SCC’s alleged contact of the Fair Work Commission and the Fair Work Ombudsman (presumably allegedly in relation to the CFMEU) suggests a wider antagonism between the Morrishs and the CFMEU. As I have already observed, this history of bad feeling between the Morrishs and the CFMEU was known to ADCO project staff.

   2.Even assuming that that the issue of the absence of an enterprise agreement covering the CFMEU and Morrish staff was part of the reason for the CFMEU’s objection to SCC, this does not equate to a finding that the state of industrial arrangements between SCC and the CFMEU was a substantial or operative factor influencing ADCO in its decisions concerning SCC. I take a similar view to the evidence that the Morrishs and the CFMEU officials discussed whether the enterprise agreement was “bona fide” or “non bona fide”.

   3.As the evidence clearly demonstrates, at material times CFMEU was not interested in negotiating an enterprise agreement with SCC. The chilling comment “We’re going to watch you burn” and the suggestion that the CFMEU might – without certainty of approval – over a period of 12 months “consider an application” by SCC to negotiate such an agreement illustrated the union’s deep hostility towards SCC.

   4.Critically, to the extent that the Morrishs claim comments were made by ADCO staff (including Mr Duckett) suggesting that SCC endeavoured to negotiate an enterprise agreement with the CFMEU, I consider the more likely interpretation is that such comments were meant to be advice to Mr Morrish to resolve his obviously poor relationship with the CFMEU, and that reaching such an agreement was an obvious way to do it. Indeed, the predominance of evidence before the Court suggests that that absence of an enterprise agreement between the Morrish entities and the CFMEU was an aspect of the real problem, namely the poor relationship between the Morrishs and the CFMEU which caused the CFMEU to object to SCC being on the ADCO sites.

   (d)      Issues relevant to GCC

4. It is common ground that ADCO replaced SCC on the Bond University project and the Robina project with GCC. It is also common ground that, at material times, like SCC, employees of GCC were not covered by an enterprise agreement with the CFMEU.

5. That ADCO replaced SCC with a cranage operator which also did not have an enterprise agreement with the CFMEU is strongly suggestive of the fact that ADCO’s termination of SCC on both project sites was not because SCC did not have an enterprise agreement with the CFMEU. The additional apparent fact that the CFMEU had no difficulty with GCC notwithstanding that its workers were not covered by an enterprise agreement which also covered the CFMEU indicates that the relationship between SCC and the CFMEU was more complicated than industrial arrangements between them (or more precisely, the lack thereof). Ultimately, however, this circumstance supports ADCO’s explanation for its termination and cancellation of arrangements with SCC – namely because the CFMEU wanted SCC off site.

   (e)       Continued use of SCC by ADCO

6. In his affidavit Mr Hawkins deposed as follows:

   68.Since the events referred to in this affidavit, SCC has continued to be engaged by ADCO on the following projects:

   (a)Greenslopes Private Hospital project, which was the $35.9 million expansion to the existing hospital including a critical care unit, labour delivery suites, neonatal critical care unit, oncology unit, consulting suites, kitchen refurbishment and medical records facility refurbishment;

   (b)the Gold Coast Airport LAGS Upgrade project, which was the $1.9 million construction of an additional exit from the Gold Coast International airport;

   (c)the Q SuperCentre project, which was the $2.1 million extension to the Woolworths shopping centre at Broadbeach;

   (d)the Southport Court House project, which was the $1.6 million refurbishment of the existing court house building;

   (e)the Merrimac State School project, which was the $3.9 million construction of a new three storey school building;

   (f)the Beach House Bar and Grill restaurant project at Browns Plains, which was the $1.9 million construction of a new restaurant;

   (g)the Banora Point Shopping Centre project, which was a $1.6 million shopping centre refurbishment;

   (h)the IGA Project at Murwillumbah, which was the $3.4 million construction of an IGA supermarket;

   (i)the Australia Fair Metro West project, which was a $7 million shopping centre refurbishment; and

   (j)the Gold Coast Cultural Precinct project, which is ongoing and is currently in the design phase and site establishment phase. This is currently estimated as a $2 million project and involves the construction of a new amphitheatre for the Gold Coast Cultural Precinct.

   69.Save for the Greenslopes Private Hospital project and the Gold Coast Cultural Precinct project, these were all small projects and it is unlikely the CFMEU would have been interested in them. The Gold Coast Cultural Precinct project is a new project which has not yet progressed to the construction phase, and my understanding is that the CFMEU has not yet shown any interest in that project.

7. This evidence demonstrates that:

   ·Mr Hawkins – and ADCO – has not objected to continued engagement of SCC, despite the ongoing absence of an enterprise agreement between SCC (or any relevant Morrish entity) and the CFMEU. Indeed, the fact that ADCO engaged SCC on these projects supports the evidence before the Court that ADCO and SCC have a good working relationship and ADCO is prepared to engage SCC where it can; and

   ·a key concern of Mr Hawkins is to avoid engaging SCC in circumstances which might attract disruption from the CFMEU.

8. Both conclusions are consistent with my earlier findings in this judgment.

   3.        THIRD ISSUE: CONTRAVENTIONS ALLEGED BY PARAGRAPHS 45 AND 46 OF THE FURTHER AMENDED STATEMENT OF CLAIM – “THE KITTO AMENDMENTS”

9. In paragraphs 45 and 46 of the further amended statement of claim the Director pleads as follows:

   45.On or about 23 July 2013, Mr Morrish and Mrs Morrish met with Colin Kitto at ADCO’s office in Bay Street, Southport.

   46.      During the meeting Mr Kitto stated to the effect:

   (a)ADCO had signed a ‘union EBA’ to assist ADCO in moving from the ‘Tier 2’ type work they were performing to ‘Tier 1’ type work.

   (b)under the ‘union EBA’ ADCO could only utilise companies with union or ‘bona fide’ EBAs.

   (c)Surf City would need to sign a union EBA to continue working for ADCO.

   (Tracked deletions omitted.)

10. Subsequently the Director claimed:

    56A.On the basis of the matters pleaded in paragraphs 45 to 46 Mr Kitto refused to further engage Surf City unless Surf City signed a union EBA.

    56B.On the basis of the matters pleaded in paragraphs 45 to 46 it can be inferred that Mr Kitto refused to further engage Surf City because employees of Surf City were not covered by an Enterprise Agreement which covered the CFMEU.

    56C.In advising Mr and Mrs Morrish that Surf City would need to sign a union EBA to continue working for ADCO. Mr Kitto discriminated against Surf City in breach of section 354(1) of the FW Act because he refused to further engage Surf City because employees of Surf City were not covered by an Enterprise Agreement which covered the CFMEU.

    Relevant evidence

11. The amendments to the further amended statement of claim in respect of Mr Kitto plead that Mr Kitto refused to further engage SCC for reasons in contravention of s 354(1) of the FW Act.

12. Mr Kitto gave evidence in an affidavit sworn 24 March 2016 and orally under cross-examination. He was the Gold Coast Manager during the period in which ADCO performed services as lead contractor at the Bond University project. Mr Kitto gave evidence of delays to the project, Mr Duckett informing him that the CFMEU did not want SCC on the site, and his regular discussions with Mr Duckett and Mr Hawkins. In particular, Mr Kitto deposed as to his belief that Mr Duckett was capable of dealing with any concerns raised by the unions.

13. Mr Kitto’s recollection of events around his meeting with Mr and Mrs Morrish was slightly vague, and he made reference to contemporaneous documents. Those documents indicated that Mrs Morrish had sought a meeting with Mr Bob Hill, the owner of ADCO, and that Mr Kitto had communicated with Mr Morrish to the effect that Mr and Mrs Morrish could come and speak with him about the issues concerning them. The meeting took place on 23 July 2013 at Mr Kitto’s office. His evidence continues:

    31.I took them into the office board room where I met with them. During the meeting:

    (a)I explained to them that it was not going to be possible for them to meet with Bob Hill. Being the owner of ADCO, Mr Hill does not get involved in the day to day running of the business and does not work in the office.

    (b)Either Mr or Mrs Morrish said to the effect “We don’t have an EBA with the CFMEU. We’ve asked them for a union agreement, but they won’t make one with us.”

    (c)       I asked Mr and Mrs Morrish to the effect of why that was.

    (d)Either Mr or Mrs Morrish responded to the effect “We’ve been having a lot of trouble with the union. They call us ‘grubs’. We went to their office one day and sat there all day and non-one would see us.”

    (e)I said something to the effect of “Well, maybe you need to keep trying.”

    32.At that point, the predicament that the Morrish’s were in was clear to me. I understood from the discussion that the union were not letting them on building sites because they didn’t have an EBA with the CFMEU and that even though they were keen to negotiate one, the CFMEU appeared not to be interested in doing that.

    33.The Morrishes were open and frank about their predicament and expressed their frustration, and I was open and frank about the predicament that ADCO was in.

    34.I believe I could have said something to the effect that ADCO could not afford to fight the CFMEU because if ADCO utilised a company that the union did not approve of, then the unions would find a way to shut the sites down.

    35.It got to the point where I said something to the effect that I understood their frustration, but in the circumstances, there was nothing that ADCO could do.

    36.I did not say anything to the effect that ADCO would not use SCC and in fact, I said there would be other opportunities for SCC on other jobs.

    37.In the course of preparing this affidavit, I have read paragraphs 39 to 40 of Mr Morrish’s affidavit dated 8 December 2015. I have also read paragraphs 19 to 22 of Mrs Morrish’s affidavit dated 8 December 2015. In response to the allegations in those paragraphs:

    (a)I deny that the meeting took place on or about 27 October 2012, for the reasons set out above;

    (b)I deny that I said to the effect that ADCO had signed a “union EBA” to assist ADC in moving from the “Tier 2” type work they were performing to “Tier 1” type work. My view at the time was that ADCO was a Tier 2 building contractor and we were not looking to move to Tier 1, so I never would have said this;

    (c)I deny that I said to the effect that under the “union EBA” ADCO could only utilise companies with union EBAs. At no stage did I say anything about our EBA requiring that, as it does not say that and I would not have said this;

    (d)I deny that I said to the effect that Surf City would need to sign a union EBA to continue working for ADCO. At no stage did I tell them that they had to get a union EBA. It was clear to me from our discussion that this was something they thought they needed to do but they could not get the union on board;

    (e)I deny that I said to the effect that I had been given or seen a list of companies issued by the CFMEU that ADCO could utilise the services of.

    38.The meeting did not last very long and although I felt sympathetic to the position that the Morrish’s were in with the CFMEU, I did not indicate that ADCO was in any position to change anything.

    39.After approximately 20 minutes, Mr and Mrs Morrish left the office. I did not have any further discussions with sec after this meeting.

14. Mr and Mrs Morrish both gave further evidence in response to Mr Kitto’s affidavit.

15. Mr Morrish swore a relevant affidavit on 15 April 2016. Examining this affidavit there appears to be substantial agreement by Mr Morrish with Mr Kitto’s evidence, subject to a number of key differences, namely:

    ·Mr Morrish did not recall Mr Kitto making a statement referred to by Mr Kitto in paragraph 31(e) of his affidavit, namely that the Morrishs would need to “keep trying”.

    ·Mr Kitto stated to the effect that ADCO had experienced “heat from the union” on sites.

    ·Mr Morrish disagreed that Mr Kitto made the statement referred to in paragraph 36 of his affidavit, namely that there would be other opportunities for SCC on other jobs. Rather, Mr Morrish recollected Mr Kitto indicated “there may be opportunities on other jobs that were not monitored by the unions”.

    ·Mr Morrish claimed Mr Kitto said words to the effect that SCC would need to sign a “union EBA” to continue working for ADCO.

16. Mrs Morrish affirmed an affidavit in this matter on 15 April 2016. Again, there was substantial agreement between the evidence of Mrs Morrish and Mr Kitto, key differences being:

    ·Mrs Morrish disagreed that Mr Kitto made the statement referred to in paragraph 36 of his affidavit, namely that there would be other opportunities for SCC on other jobs. Rather, Mrs Morrish recalled Mr Kitto saying words to the effect that when SCC had a “union EBA” then ADCO would use SCC on the ADCO union sites, and further that if ADCO was working on a non-union site they could use SCC.

    ·Mrs Morrish said that she and Mr Morrish had said words to the effect “We want you guys to stand up” and “We have been loyal”.

17. Mrs Morrish also deposed that when Mr Kitto referred to “the predicament that ADCO was in”, he meant that if ADCO did not engage subcontractors the CFMEU approved of, being subcontractors with enterprise agreements with the CFMEU, the CFMEU would shut down the relevant ADCO project.

18. Further I note that Mr Morrish deposed that Mr Kitto was careful and appeared to be considering his choice of words during their conversation. Mrs Morrish similarly thought that Mr Kitto was very careful with his wording, and that while he understood their frustrations Mr Kitto had to put ADCO first.

    Did Mr Kitto refuse to further engage SCC for the reasons alleged by the Director?

1. In my view it cannot be said that Mr Kitto refused to “further engage” SCC in respect of ADCO work.

2. First, it is not clear to me that, as at 23 July 2013, Mr Kitto had power to engage – or refuse to engage – SCC or any other cranage operator in respect of ADCO work. Certainly Mr Kitto gave evidence that he was “responsible for any projects undertaken by ADCO within the Gold Coast region”, that Mr Tanner reported to a project manager who in turn reported to Mr Kitto, that Michael Duckett reported to Mr Kitto in respect of the Bond University and Robina projects, and that Mr Kitto reported in turn to Mr Hawkins (transcript 19 August 2016 pp 375-376). On the evidence however Mr Kitto did not appear to make decisions affecting SCC on either the Bond University or Robina projects – those decisions were made by Mr Hawkins and Mr Duckett. While on the evidence Mr Kitto had “oversight” of Gold Coast projects it is unclear what this precisely means.

3. Second, I do not accept that anything said by Mr Kitto at the meeting of 23 July 2013 constituted a “refusal to engage” SCC. It is clear that Mr Kitto’s purpose in meeting Mr and Mrs Morrish was because Mrs Morrish had sought to meet with ADCO’s owner, Mr Bob Hill, and Mr Kitto sought to explain to Mr and Mrs Morrish why ADCO had terminated SCC at the Bond University site and cancelled SCC at the Robina site. There is no evidence that Mr Kitto or the Morrishs discussed any ADCO project on which SCC could have a role, or that Mr or Mrs Morrish requested work on any particular project which was refused by Mr Kitto. I consider the meeting could be properly characterised as a discussion, and an explanation by Mr Kitto that, from ADCO’s perspective, SCC was a high risk engagement because of CFMEU disapproval of SCC.

4. Third, I do not accept that Mr Kitto made the statements alleged by the Director at paragraph 46 of the further amended statement of claim. I take this view because:

   ·As both Mr and Mrs Morrish said in their evidence, Mr Kitto was clearly careful in the words he used in his discussion with them. I consider it unlikely that Mr Kitto would have said ADCO had signed a “union EBA” to assist ADCO in moving from “Tier 2” type work to “Tier 1” type work, when his evidence was that his view at the time was that ADCO was a Tier 2 building contractor and they were not looking to move to Tier 1. He was firm in respect of this evidence under cross-examination. In these circumstances I also consider it unlikely that Mr Kitto would have freely claimed that ADCO could only use companies with “bona fide EBAs” or that SCC would need to sign a “union EBA” to continue working with ADCO.

   ·My impression of Mr Kitto as a witness was that he was credible, but also somewhat indifferent to the circumstances of Mr and Mrs Morrish and SCC compared with his concern for the interests of ADCO. I consider it likely that he would, for example, have made the comment he claimed in paragraph 35 of his affidavit, namely that he understood their frustration, but in the circumstances, there was nothing that ADCO could do. I consider it likely that if he said anything at all about SCC negotiating an enterprise agreement with the CFMEU, that it would have been in the context of SCC improving its relationship with the CFMEU and becoming acceptable to the CFMEU on ADCO sites in which the CFMEU was interested.

   ·I consider it unlikely that Mr Kitto said that SCC would need to sign a “union EBA” to continue working for ADCO. This allegation is not plausible in light of subsequent engagement by ADCO of SCC on other projects. While I note Mr Morrish’s evidence in his affidavit of 15 April 2016 that these other projects were “ad hoc and minor in nature and were often performed because Surf City was already at or near the site working for another company”, it cannot be said that ADCO has “refused to engage” SCC further. I also note that, Mr Kitto in cross-examination said that 90% of the work ADCO had given SCC since the events involving the Bond University and Robina projects had been on the Gold Coast, and that he did not have any issues with SCC (transcript 19 August 2016 p 387 ll 10-14).

5. In my view the claims of the Director concerning Mr Kitto are not substantiated.

   CONCLUSION

6. The material before the Court clearly indicates that SCC was not the employer of workers in the Morrish cranage operations business. The employer was Crane Hire. This arrangement was put in place by Mr and Mrs Morrish for legitimate business reasons. The workers were aware of the identity of their employer. I do not accept that the “real” employer was SCC simply because the primary entity and public face of the Morrish business enterprise was SCC. To accept that proposition would not only require a rejection of the separate corporate identity of Crane Hire, but a rejection of the practical reality of the employment arrangements in the Morrish business as well as the corporate structure of the group.

7. Further I am satisfied that, even if SCC was the employer of the relevant workers, ADCO’s decisions to terminate SCC on the Bond University project and cancel its engagement of SCC on the Robina project were not for reasons contravening s 354(1) of the FW Act. I am also satisfied that Mr Kitto’s conversation with Mr and Mrs Morrish on 23 July 2013 did not involve a “refusal to engage” SCC for ADCO work for reasons alleged by the Director.

8. In its decision-making, ADCO and its staff were not interested in any industrial arrangements SCC had with the CFMEU or otherwise. ADCO staff were interested only in ensuring that ADCO projects remained on time and within budget. If SCC was for any reason whatsoever to jeopardise ADCO’s position in respect of its projects ADCO was prepared to end its engagement of SCC (and it did so). In this case it was the avoidance of industrial disruption and consequent delay which would have arisen because the CFMEU objected to SCC being on the sites which motivated ADCO in its decision to terminate and refuse to engage SCC, not whether SCC (or, in this case, Crane Hire) employees were covered by an enterprise agreement to which the CFMEU was also a party. This was also made clear by Mr Kitto in his meeting with Mr and Mrs Morrish, which meeting was a courtesy to Mr and Mrs Morrish rather than any exercise in decision-making by Mr Kitto.

9. Finally I note that, in Director, Fair Work Building Inspectorate v ADCO Constructions Pty Ltd [2016] FCA 602 Logan J reserved costs of the Director’s application to further amend the amended statement of claim. I will hear submissions as to whether costs should be ordered in respect of that interlocutory application.

I certify that the preceding one hundred and eighty-eight (188) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

Associate:

Dated:       5 December 2016