FEDERAL CIRCUIT COURT OF AUSTRALIA
| DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE v FOREST MEIERS CONSTRUCTION PTY LTD & ORS | [2019] FCCA 1770 |
| Catchwords: INDUSTRIAL LAW – Application for the imposition of pecuniary penalties – whether proposed principal under a contract for services took adverse action against proposed contractor – whether adverse action taken because proposed contractor did not have an enterprise agreement that covered CFMEU – whether proposed principal discriminated against proposed contractor because contractor did not have an enterprise agreement that covered CFMEU |
| Legislation: Fair Work Act 2009 (Cth), ss.8, 12, 172(2), 340, 341, 342(1), 354, 354(1)(a)(iii), 361, 539(2), 545, 550, 550(1) Fair Work (Building Industry) Act 2012 (Cth), ss.5(1), 8, 59C, 59C(3), 59(4)(a) |
| AMA CSU v Greater Dandenong City Council (No.2) [2001] FCA 1076 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 2012 CLR 500 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2014) 253 CLR 243 Construction, Forestry, Mining and Energy Unionv BHP Coal Pty Ltd (2015) 230 FCR 298 Toyota Motor Corporation Australia Ltd v Marmara & Ors (2014) 222 FCR 152 |
| Applicant: | DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE |
| First Respondent: | FOREST MEIERS CONSTRUCTION PTY LTD |
| Second Respondent: | WILLIAM MUNRO |
| Third Respondent: | OSWALD BLACKER |
| Fourth Respondent: | SONG POH (PETER) SIA |
| File Number: | BRG 151 of 2016 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 26 October 2016 |
| Date of Last Submission: | 28 October 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 26 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Duffy QC with Mr Mackie |
| Solicitors for the Applicant: | K & L Gates |
| Counsel for the Respondents: | Mr Murdoch QC |
| Solicitors for the Respondents: | Norton Rose Fulbright Australia |
ORDERS
Within 21 days of today, the parties bring in minutes of:
(a)declarations and orders, upon which they agree to give effect to these reasons; and
(b)directions for the determination of penalties.
Otherwise the application be adjourned to a date to be fixed for the making or orders consistent with these reasons and in relation to the issue of penalties.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 151 of 2016
| DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE |
Applicant
And
| FOREST MEIERS CONSTRUCTION PTY LTD |
First Respondent
| WILLIAM MUNRO |
Second Respondent
| OSWALD BLACKER |
Third Respondent
| SONG POH (PETER) SIA |
Fourth Respondent
REASONS FOR JUDGMENT
This case is about whether Forest Meiers Construction Pty Ltd contravened two proscriptions in the Fair Work Act 2009 (Cth). Three contraventions of the Act are alleged against Forest Meiers. First, it is said that contrary to s.340 of the Act, Forest Meiers took adverse action against a subcontractor, C&K Tiling Pty Ltd, by refusing to engage that subcontractor to undertake work on a building project undertaken by Forest Meiers because:
a)C&K had its own enterprise bargaining agreement with its employees; and
b)C&K had chosen not to enter into an enterprise bargaining agreement with the Construction Forestry, Mining and Energy Union.
Second, it is alleged that again, contrary to s.340 of the Act, Forest Meiers took adverse action against C K Tiling (QLD) Pty Ltd, a separate entity associated with C&K, by refusing to engage CK Qld as a subcontractor on the same building project undertaken by Forest Meiers because CK Qld had chosen not to enter into an enterprise agreement with the Construction Forestry, Mining and Energy Union.
Finally, it is said that Forest Meiers discriminated against C&K contrary to s.354 of the Act by refusing to engage C&K as a subcontractor on the building project undertaken by Forest Meiers because C&K’s employees were not covered by an enterprise agreement that covered the CFMEU.
The second and third respondents are employees of Forest Meiers. The fourth respondent is the general manager of the development company which had engaged Forest Meiers as the principal contractor on that project. The applicant alleges that each of the second, third and fourth respondents were involved in Forest Meiers’s contraventions of the Act in the way contemplated by s.550(1) of the Act. Additionally, the applicant alleges that the second respondent also contravened s.354 of the Fair Work Act by his conduct and is liable for such as a principal contravenor.
The respondents do not deny that where certain conduct is admitted, the second, third and fourth respondents were each acting within their actual or apparent authority in their respective capacities.
Mr Munro and another of Forest Meiers’s employees, Mr Thomas Kim Forest Meiers’s Construction Director, kept Mr Sia informed of the progress of the Remora Road Project and any relevant matters which affected the progress of the construction activities.
The respondents deny the allegations of contravention against them. Forest Meiers’s case is that it did not refuse to engage either C&K or CK Qld for the reasons identified by the applicant, but rather for other reasons that did not offend the proscriptions in the Fair Work Act.
For the reasons that follow, I am satisfied that the applicant has made good its claims in respect of two of the three contraventions alleged. More specifically, I am satisfied that Forest Meiers took adverse action against C&K when it determined not to engage C&K because it did not have an enterprise agreement that covered the CFMEU and in doing so it unlawfully discriminated against C&K.
Background
Between 2013 and 2015 Shayher Developments Pty Ltd was the developer of a mixed use residential and commercial construction project consisting of four high-rise towers known as the Remora Road project located at the corner of Remora Road and MacArthur Avenue, Hamilton, Queensland. Construction commenced in or around December, 2012 and was completed in or around May, 2015.
The fourth respondent, Peter Sia, as he is known, was the general manager of a group of companies known as the Shayher Group, of which Shayher Developments Pty Ltd was part. He was involved in the early planning and development stages of the Remora Road project. Once construction commenced, he was not involved in the day-to-day running of the site and undertook “more of a monitoring role” for Shayher Developments.
For the purpose of constructing the project, Shayher Developments engaged Forest Meiers Construction Pty Ltd as head contractor to manage and deliver the construction of the project.
The second respondent, William Munro, was at all relevant times an employee of Forest Meiers and was engaged in the position of Construction Manager on the Remora Road project. He was responsible for overseeing the construction of the project, including monitoring the design and costings. Mr Munro had a team of people reporting to him.
The third respondent, Oswald Blacker, was at all relevant times an employee of Forest Meiers and was engaged in the position of senior contract administrator for the project. Prior to November, 2013 Mr Blacker was a contract administrator. He reported to Mr Munro.
These proceedings concern the tender process for a particular package of work for the Remora Road Project, namely, the supply and installation of tile to the commercial and residential tenancies and the common areas of four buildings that comprised the project. That package of work is described in the material as the Tiling Works.
Mr Blacker was responsible for the monitoring and oversight of the tender and construction program. He was involved in the preparation of an invitation to tender for the Tiling Works. His role included compiling subcontract tender documentation, calling tenders, assessing subcontract tenders and formulating and making recommendations to the senior contract administrator (when he was not in that role himself) and the construction manager in relation to the engagement of subcontractors. As senior contract administrator, Mr Blacker supervised other contract administrators, such as Mr Julian Souva. Mr Blacker formulated or endorsed recommendations for Mr Munro’s consideration in relation to the engagement of subcontractors.
At the commencement of the project Forest Meiers was not covered by any enterprise agreement. Mr Munro gave evidence of a long experience with the CFMEU and the BLF and how those unions would find ways to cause delays to projects so as advance their own objectives. Mr Blacker gave similar evidence about his experiences. Both gave evidence about several incidents where members of the CFMEU took action on project sites which disrupted the progression of work. Mr Blacker detailed some incidents on the Remora Road project site and Mr Munro gave some evidence about incidents which simultaneously occurred on a separate project being undertaken by either Forest Meiers or the Shayher Group, described as the George Street project. The relevant incidents involved members or officials from the CFMEU or the BLF and ostensibly concerned safety issues. Mr Blacker’s evidence was that the safety issues were not genuine concerns held by those taking the relevant actions.
According to Mr Munro, the pressure from the CFMEU (from Kane Pearson and Peter Close in particular) commenced with a meeting in February, 2013. At that meeting Mr Munro was told that Forest Meiers would have to enter into an “EBA”. A form of agreement was sent by Mr Close to Mr Munro. Despite requests from Mr Close to have the agreement executed, by June, 2013 Forest Meiers had not executed the agreement.
Early during the project, Forest Meiers engaged a company called Wagstaff Piling for the purpose of completion of the piling work for the project. Certain employees of that company were members of the CFMEU or the Builder’s Labourer’s Federation (later a division of the CFMEU).
On 5 June, 2013 some or all of the employees of Wagstaff Piling stopped work as a result of a visit from members of the CFMEU. The site diary for that occasion relevantly provides:
Eddie Bland (BLF Organiser) came on site at around 8.30am and had a meeting with Wagstaff in regards to Forest Meiers not signing the EBA yet, unsure what was said in the meeting however the end result was Wagstaff didn’t continue working and left site at 9.30am.
Mr Munro made a complaint about the incident to the Fair Work Building Commission about the Wagstaff Piling men walking off the site on Wednesday at 8:30 because Forest Meiers did not have an EBA with the union.
On 13 and 14 June, 2014 a CFMEU organiser raised safety issues with the project site. The issues concerned workers working in wet conditions and a safety risk posed by “uneven ground surfaces on access ways”. The site diaries for those days relevantly provide:
a)for 13 June:
No piling carried out due to the rain received over the last few days and the piling platform being water soaked, Tony King (CFMEU) came to site followed shortly after by Eddie Bland (BLF) with concerns about the Wagstaff guys working on the piling platform in the condition its is currently in due to the recent rain however their main objective was with us having not signed the EBA yet and the inclement weather being their first opportunity to come in.
In the end no works were carried out due to the platform being wet in most areas and not being able to get access to the machines without walking through water. Wagstaff relocated half of their crew to other jobs and the remaining ones on site left after their 4 hours were up.
Our traffic controllers spent the rest of the day dewatering where possible.
b)for 14 June:
Conducted a full site safety walk with all worker representatives along with Tony Kong (CFMEU) and Eddie Bland (BLF) a number of concerns were raised and it was agreed that once they were rectified works on site could recommence.
Piling works recommenced at 12.30pm.
In cross-examination Mr Blacker said there were other pressures and instances of disruption from the union or its members directed towards having Forest Meiers sign an EBA. He spoke generally of a number of occasions when “union members – not the union organisers – would arrive at site, barge into meeting rooms, call Bill Munro out of meetings …”. He was present in those meetings but did not accompany Mr Munro with the union members. Mr Blacker said that he considered these concerns were disingenuous and “designed to cause disruption”. Mr Munro’s evidence carried the same effect. Both formed the view that the purpose of the work stoppages and other disruptions was to exert pressure on Forest Meiers to enter into an enterprise agreement with the CFMEU.
Both Mr Blacker and Mr Munro gave evidence that in July, 2013 members or organisers of the CFMEU prohibited a tower crane from being dispatched to the project site and erected as planned, causing a delay of around a week.
In cross-examination Mr Munro accepted that the CFMEU’s “potential to cause delays and disruptions weren’t solely directed to the question of whether or not somebody had an EBA with them or not”. In fact, “that a particular contractor, or subcontractor, had an EBA with the CFMEU was not any guarantee at all … that the CFMEU wouldn’t cause that contractor significant problems by way of delays”.
What is clear from Mr Blacker’s and Mr Munro’s evidence was that they knew that the CFMEU was likely to cause trouble for Forest Meiers at the project site, including delays in the performance of work, if Forest Meiers engaged subcontractors who did not have an EBA with the CFMEU.
Forest Meiers eventually entered into a union collective agreement with the CFMEU which was approved by the Fair Work Commission on 10 October, 2013: Forest Meiers Constructions Pty Ltd and CFMEU Union Collection Agreement 2011-2015. Clause 35.2 of that agreement provided:
35.2 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 sub-contractors 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 (or 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.
Mr Munro understood that the CFMEU construed cl.35.2 such that Forest Meiers “was not to engage any subcontractor unless that subcontractor itself had an EBA with the CFMEU”. So too, I am satisfied, did Mr Blacker.
C&K is a tiling subcontractor. At the relevant times C&K and its employees were covered by the C&K Tilling Pty Ltd Enterprise Agreement 2014 to 2018 that was approved by the Fair Work Commission on 5 February, 2014. The C&K enterprise agreement did not cover the CFMEU or any industrial association. C&K had an earlier enterprise agreement operative between November, 2009 and October, 2013. It did not cover the CFMEU or any industrial association either.
At the relevant times, Mr Jason Karam was the sole managing director of C&K. He oversaw the daily running of that company and made the day to day decisions for it. He was the final decision maker within the business. C&K was licensed to undertake ceramic wall and floor tiling and stone masonry. In 2014, C&K had 25 employees and also engaged other subcontractors when required.
Elie Chebib was an employee of C&K and was engaged in the position of contracts administrator or estimator. His role was to source potential work and prepare tenders for that work. Mr Chebib was generally involved in negotiating with builders to win work for C&K.
In early February, 2014 Forest Meiers advertised the Tiling Works for the project for tender. Several companies submitted a tender. Tenderers were questioned about a number of things including “technical aspects, availability, capability and willingness to do the job”. At some point in the tender process, tenderers were also asked whether or not the tenderer was covered by an enterprise agreement that covered the CFMEU. Mr Blacker and Mr Souva were responsible for the tender process.
On 19 February, 2014 Mr Chebib received the invitation to tender for the Tiling Works via the software Aconex, “a communication system used by the construction industry to distribute and monitor tender documentation and to correspond within the industry”. Mr Chebib informed Jason Karam of the invitation. Jason Karam decided that C&K should tender for the project.
Mr Chebib perused the tender documents and completed calculations necessary to produce a price for the work. He said he determined the relevant price by applying C&K’s rates of pay, determined by its enterprise agreement, usual profit margins, and any costs to supply tiles.
Mr Chebib sent the tender to Mr Souva by email on about 25 February, 2014. However, the scope of the works was frequently evolving. There were multiple revisions to both the scope of works and the price tendered by C&K. Between February and June, 2014 Mr Chebib, Mr Karam, and Mr Munro and Mr Blacker discussed C&K’s price a number of times.
The 3 April meeting
On 3 April, 2014 Mr Souva, Mr Blacker, Mr Chebib, and Jason Karam attended a meeting to discuss the scope of the works and the price for the project. There is little dispute about what was said at the meeting. Unsurprisingly, each of the witnesses who gave evidence on this topic (Mr Chebib, Mr Karam and Mr Blacker) gave slightly different versions of the conversation. I am satisfied that Mr Karam’s version of the conversation is likely to be the most accurate. His evidence was that the conversation was to the following effect:
Mr Blacker: Do you have an EBA?
Mr Karam: Yes we have an EBA with Fair Work.
Mr Blacker: Do you have an EBA with the CFMEU?
Mr Karam: No.
Mr Blacker: Will you have any problems getting an EBA with them?
Mr Karam: No, but we shouldn’t need to as we have an EBA.
Mr Blacker: Does the CFMEU have any problems with you? You will need to have an EBA with them.
Mr Karam: No, they don’t have a problem with us but that shouldn’t be an issue if it is an EBA-site. We have an EBA. We don’t need to have it with the Union. But, if it is an issue, we can pay in accordance with union rates.
Mr Blacker: How would that work?
Mr Karam: We worked on an LNG project in Gladstone that was a union site and we paid workers under that agreement but we weren’t signed up ourselves. We just paid our workers the union rates.
Mr Blacker: I’ll have to think about it.
Mr Blacker didn’t recall specific dates of meetings with Mr Chebib or Mr Karam but his notes indicate that he attended a meeting on 3 April, 2014. Mr Blacker’s evidence is generally consistent with that of Mr Karam. He asked if C&K had an industrial instrument, to which Mr Karam replied that he had an EBA. Mr Blacker asked if it covered the CFMEU. Mr Blacker told Mr Karam that he was aware of “industrial relations unrest” involved in some of C&K’s past projects. He said to Jason Karam and Mr Chebib that he knew that C&K had been involved in projects which had exposure to industrial relations disputes. He gave two examples and asked Mr Karam and Mr Chebib how they had successfully completed those projects and dealt with the industrial relations disputes. Jason Karam explained that C&K was not involved in the disputes themselves but worked on projects that were affected by industrial relations issues.
Mr Blacker denies asking if C&K would “have any problems getting an EBA with them” or saying that C&K would “need an EBA with them”. His evidence is that he enquired about C&K’s enterprise agreement because he wanted to know C&K’s approach towards “managing industrial relations issues”. He says he thought that each subcontractor needed to be able to manage industrial relations risk and needed to be able to provide their services to Forest Meiers without risk of delay and disruption as a result of an industrial relations dispute. But I do not accept his evidence about that. He knew that it was the view of the CFMEU that subcontractors on the project would have to have an EBA with the CFMEU to work on the site. Mr Munro’s evidence was consistent with that interpretation of the EBA that Forest Meiers had with the CFMEU.
In cross-examination Mr Karam said C&K had worked on several projects involving industrial relations issues with the CFMEU prior to the Remora Road project. There were five projects:
a)Azure Blue during which people from the union attended on site to “put pressure on the whole site for all the workers to join the union” and approached the builder to contact Mr Karam “to negotiate for me to pay the union fees for five of my worker to shut them up”;
b)Enoggera Army Barracks during which “the union had a massive issue with John Holland” and people from the union would “sit at the gates there and stop people from going through or tried to stop people from going through”;
c)Rockhampton Hospital which, during the tender process, C&K was pressured to “sign an EBA”. C&K was ultimately engaged and there were no issues on site;
d)Cricket Australia during which the CFMEU pressured the head contractor, Watpac, to not engage C&K because it did not have a union EBA; and
e)Myer store refurbishments during which workers of C&K were pressured to join the union.
In cross-examination Mr Chebib accepted he was “involved in the attempts by C&K to secure a contract on the Circa 1 project at Nundah” in October, 2012. The reason C&K was not awarded the contract, he said, was “apparently because the CFMEU had put pressure on the builder not to give us the job”. He said there were two or three other incidents where he had suspected the same reasoning was behind decisions not to award contracts to C&K.
Mr Blacker told Mr Karam and Mr Chebib that Forest Meiers had an enterprise agreement that covered the CFMEU. He said that organisers and delegates of the CFMEU had made demands that all subcontractors and employees working on the project site would need to be covered by an enterprise agreement that also covered the CFMEU, although his personal view was not consistent with that. Mr Karam suggested that C&K could still be engaged for the Tiling Works and a clause could be added to any contract for that purpose providing that C&K pay its employees in accordance with union rates. That was a proposition which had been adopted and implemented by C&K on a previous project.
The revised quote
Following the 3 April meeting further correspondence about the revised scope of works and consequent revision of price passed between Mr Souva and Mr Chebib. Mr Chebib submitted several revised prices in accordance with the changes to the scope of works.
On 19 May, 2014 Mr Chebib received an email which attached a copy of the Forest Meiers union collective agreement. Mr Chebib says that after he received the email, Mr Karam informed him that he had recently spoken with Mr Souva “who had requested that C&K revise its pricing based on the Forest Meiers EA”. Mr Karam’s evidence is that he received a telephone call from Mr Souva on 18 or 19 May, 2014 requesting that C&K provide a revised price on the basis that it would pay its workers in accordance with Forest Meiers’s enterprise agreement. I accept that evidence.
Mr Karam and Mr Chebib prepared a further revised price, focussing upon the breakdown of hours on the basis of the Forest Meiers EA pay rates. On 20 May, 2014 Mr Karam sent to Mr Souva an email attaching a document containing a detailed “break up of hours” on the basis of the Forest Meiers pay rates.
The 26 May meeting
On 26 May, 2014 Mr Chebib, Mr Karam, Mr Munro and Thomas Kim attended a meeting to further discuss the scope of works and C&K’s price. This was the first meeting Mr Munro attended. Mr Karam brought to the meeting a hard copy of the breakdown of hours document.
In his affidavit filed on 27 May, 2016 Mr Chebib sets out the following conversation between Mr Karam, Mr Blacker and Mr Munro during the meeting on 26 May, 2014:
Mr Karam: We are willing to pay to your EBA rates to get on site and you can put a clause in the contract to that extent
Mr Munro: Everything is running smooth on site as everyone that is signed up has a CFMEU agreement. Will you sign up to an EBA with the CFMEU?
Mr Karam: It will affect our current projects as we have not priced those projects according to CFMEU rates
Mr Blacker: Are you willing to sign up under a new company? That’s what some companies have been doing
Mr Karam: I would rather not. I’d prefer to find some other option but I’ll think about it.
Mr Blacker: Does the union have a problem with you?
Mr Karam: No
Mr Munro: I’ll make some more enquiries and get back to you
Mr Karam gave evidence that he, Mr Munro and Mr Blacker had a conversation during the 26 May meeting to the following effect:
Mr Munro: We need to make sure the unions are happy. Are you prepared to sign a Union EBA?
Mr Karam: No, I believe it is illegal to have two EBAs working at the same time
Mr Munro: If you sign a union EBA, your existing EBA will be superseded
Mr Karam: That will put many of my current projects at risk of losing money. They were prepared on the basis of paying our current EBA rates and if I did this, I would be forced to pay Union EBA rates for those projects
Mr Munro: I understand.
Mr Blacker: Are you willing to open up another company and sign the new company up to a Union EBA?
Mr Karam: We have discussed this in our office in the past as an option to get around the union issues and we may look at that as an option but it’s not my preference.
Mr Munro: How else can we get around the union issues?
Mr Karam: We shouldn’t have any issues as I have an EBA and that should be sufficient to meet Forest Meiers obligations. But the other option would be to award C&K the contract with a clause saying that we will pay our employees according to the Forest Meiers EBA. This is what we did on the LNG Project in Gladstone.
Mr Munro: We will have to look at that and we would have to get clarification from the union
Mr Karam said that in response to the question, “Does the union have a problem with you?” he answered:
I’m not aware of any problems. We had a conversation with Andrew Sutherland. I told him that we have an EBA but to come back and see me when it expires and I’ll reconsider. He shook hands with me and left on good terms.
The respondents deny that Mr Munro said words to the effect of “We will have to look at that and we would have to get clarification from the union”. Otherwise, Mr Blacker agreed generally with both accounts of the 26 May meeting.
Mr Munro’s evidence also accords largely with the evidence of Mr Chebib. However, Mr Munro contends that, first, if he asked Mr Karam whether the union had a problem with C&K, then Mr Karam did not say “no”. I find that evidence difficult to accept because Mr Munro had no recollection that he asked Mr Karam whether the union had a problem with C&K. If he could not remember that, it is difficult to accept that he could remember what Mr Karam’s answer was. Second, he denies saying words to the effect that he will “make some more enquiries and get back to you” because, he says, he left the meeting understanding that the “ball was in Mr Karam’s court”. However, I accept Mr Chebib’s version of the conversation.
Events of 4 June to 20 June
On 4 June, 2014 Mr Blacker and Mr Munro attended an unscheduled meeting with several “CFMEU organisers”. One of those organisers was Andrew Sutherland. They discussed the potential engagement of C&K for the Tiling Works. According to Mr Blacker, the CFMEU organisers indicated that the CFMEU had experienced an issue with C&K in the past, although they did not elaborate on the nature of that issue, and, it seems, Mr Blacker did not seek further details.
Mr Munro’s evidence was that he discussed the proposed engagement of C&K for the Tiling Works with Mr Sutherland on the basis that C&K would pay its employees according to the rates set out in the Forest Meiers’s enterprise agreement. He gave evidence that prior to 4 June, 2014 Mr Sutherland had indicated that the CFMEU was happy with C&K Tiling for the project but his view later changed. Mr Blacker said that during the meeting the CFMEU organisers communicated “that it was not acceptable to them for Forest Meiers to have agreements with subcontractors to pay their workers in accordance with the Forest Meiers EBA, in excess of their own agreements” because “they had no way of knowing if the workers were actually getting paid those rates or not.”. Mr Munro’s evidence was consistent with that. What fell from the 4 June meeting, on both witnesses’ evidence, is that if Forest Meiers engaged C&K, it “could expect trouble” from the CFMEU.
In the week of 9 June, 2014 Mr Jason Karam discussed the idea suggested by Mr Blacker in the meeting of 3 April, 2014 with Mr Anthony Karam. That suggestion was that a new company could be incorporated for the purpose of that company entering into an enterprise agreement with the CFMEU and performing the Tiling Works on the project. The Karam brothers agreed to incorporate CK Qld. Mr Anthony Karam would be the sole director.
On 16 June, 2014 Jason Karam contacted the accountant for C&K and requested that he incorporate the new company. The next day C K Tiling (Qld) Pty Ltd was incorporated.
Mr Chebib says Mr Blacker called him on 17 June, 2014 and gave to him the contact details for Mr Sutherland. Jason Karam directed Mr Chebib to arrange a meeting with the CFMEU for the purpose of discussing the execution of a union enterprise agreement.
Annexed to Mr Chebib’s affidavit filed on 27 May, 2016 is an email chain dated 17 June, 2014 between he and Mr Sutherland. The emails demonstrate that:
a)a meeting between officers of C&K and Mr Sutherland was arranged for 1:45pm on 19 June, 2014; and
b)a “model eba” was sent to Mr Chebib.
On 19 June, 2014 Anthony Karam, Mr Chebib and Mr Sutherland met at the CFMEU office to discuss CK Qld entering into a union collective agreement with the CFMEU. Mr Chebib’s evidence about the meeting is scant. He says the following exchange occurred:
Mr A. Karam: We require this urgently in order to be able to commence work on the Remora Project
Mr Sutherland: It won’t take more than 2 weeks to be processed but that all agreements have to be approved by the State Secretary. But, as soon as it is logged with the FWA then we can commence.
Mr Chebib says that on the afternoon of 19 June, 2014 Jason Karam told him he wanted to wait to hear from Forest Meiers about whether they would allow C&K to perform the Tiling Works rather than CK Qld.
On 20 June, 2019 Mr Chebib informed Mr Blacker of the 19 June meeting. Mr Chebib says that Mr Blacker already knew because he had spoken with Mr Sutherland. Mr Blacker requested that Mr Chebib send to him an email including references for C&K.
The 23 June meeting
Mr Karam, Mr Chebib, Mr Munro, Mr Blacker and Mr Kim attended another meeting on 23 June, 2014. Mr Chebib says at the commencement of the meeting Mr Blacker said that he had checked the references provided by Mr Chebib and then said words to the effect:
We want you on this project
Mr Blacker denies that he said “We want you on this project”. In cross-examination Mr Blacker accepted that the references “were very impressive” and “they contained no negative information about C&K Tiling at all”. I accept Mr Chebib’s evidence that Mr Blacker said the words attributed to him. They are consistent with the subsequent actions of both Mr Blacker and Mr Munro which were designed to come up with a way to have Mr Karam and his enterprise, howsoever it might be described, perform the Tiling Works.
Mr Chebib gave evidence of conversation at the meeting to the following effect:
Mr Munro: We have spoken to the CFMEU with regards to you paying according to our EBA and they don’t want to know about it
Mr Karam: I thought that is what would happen so that’s why I decided to open a new company
Mr Blacker: I’m happy you have taken the option of signing as I don’t have any other options without going back out to the market
Mr Karam’s evidence of the conversation is to the following effect:
Mr Munro: Andrew Sutherland told me he doesn’t want to know about it. What other options do you have to get around this issue? There are no other avenues that we feel we can take.
Mr Karam: We have opened up another company and are prepared to sign this company up to an enterprise agreement with the union in order to secure this Project.
Mr Munro: That’s great. If you open the new company and get the EBA and all the insurances in place and all goes well, we will give you the contract
Mr Karam: So we can move forward with the job, can you please issue a ‘Letter of Intention’ to proceed with CK Qld. Before I go any further and spend money with the union, I want to know that we have the job.
Mr Munro gave the evidence that he said words to the effect that he had spoken to Andrew Sutherland of the CFMEU about C&K paying according to the Forest Meiers EBA and “he didn’t want to know about it”. Mr Blacker confirmed that evidence.
Although he could not recall, Mr Munro accepted that he may have said “what other options do you have to get around this issue?”. However, Mr Munro did not agree with all of the evidence of Mr Chebib and Mr Karam. Specifically, he denied that:
a)he said “There are no other avenues that we feel we can take”;
b)Mr Blacker said “I’m happy you have taken the option of signing as I don’t have any other options without going back out to the market”. Mr Munro’s evidence is that he “had not closed the door on the issue”; and
c)he said “If you open the new company and get the EBA and all the insurances in place and all goes well, we will give you the contract”.
Mr Blacker denied that Mr Munro said words to the effect of “if you open the new company and get the EBA and all the insurances in place and all goes well, we will give you the contract”. According to Mr Blacker, no one from Forest Meiers made any representation during the meeting that CK Qld would be awarded the Tiling Works subcontract.
However, I prefer the evidence of Mr Karam about this conversation. His evidence is more precise than that of Mr Munro or Mr Blacker. It is generally consistent with that of Mr Chebib. It is entirely consistent with the proposition that C&K would not be awarded the Tiling Works tender without it having an EBA with the CFMEU and an alternative solution was required. The words of Mr Munro to the effect that “What other options do you have to get around this issue? There are no other avenues that we feel we can take” are consistent with C&K not being awarded the tender unless it had an EBA with the CFMEU or an alternative solution was devised by C&K.
After the meeting some of those involved walked around the site and discussed further changes to the scope and the order of works. According to Mr Chebib, Mr Blacker said “Can you confirm in writing that anything related to the tender will be valid under the new company” to which Mr Karam acknowledged he would. I accept Mr Chebib’s evidence about that conversation.
In the afternoon of 23 June, 2014 Mr Chebib sent an email to Mr Blacker in the following terms:
Attached is the revised quote as discussed.
Also below are some points that we discussed during our meeting:
1. Floor & Skirting only to garbage chute rooms are included.
2. Acoustic to Building 1 L10 included as required over habitable.
3. Acoustic to Building 1 L12 common wet areas & clubroom areas over habitable included. Acoustic to Pool deck/surround not included.
4. We have price according to Ace Tile & Stone prices and not PC-Sums.
5. Modifications to access platforms are to be done to accommodate the forklift by Forest Meiers.
6. If we are successful in our tender, we confirm that we will be forming an EBA between CK Tiling (Qld) Pty Ltd & the CFMEU, and that our prices and all agreements will also be applicable to CK Tiling (Qld) Pty Ltd.
The last paragraph in that email is consistent with the evidence of Mr Chebib and Mr Karam that they told Mr Munro and Mr Blacker at the meeting earlier that day that they had incorporated CK Tiling (Qld) Pty Ltd and that would be the company entering into the agreement with the CFMEU. The revised price for the work was for a total sum of $2,444,752.82.
According to Mr Blacker’s evidence in his affidavit filed on 9 September, 2016 after receiving the revised price on 23 June, he, Mr Munro and Mr Souva had a discussion in which Mr Munro informed he and Mr Souva that the “CFMEU had told him that they were satisfied with the C&K Tiling business and would approve them for the Tiling Works on the Project and would prepare a new union collective agreement between the CFMEU and CK Qld”.
The commitment authority
Mr Blacker’s evidence was that a document called a commitment authority was an internal Forest Meiers document used for the purpose of getting the project developer’s authorisation to incur the expenditure involved in engaging a subcontractor. Once the commitment authority was signed off by the developer, Forest Meiers was authorised to pay the subcontractor up to the limit set out in the commitment authority.
On 24 June, 2014 Mr Blacker, Mr Kim, Mr Munro and Mr Sia signed a document entitled “Revised Commitment Authority for the Tiling Works”. Mr Munro says it was a document that “recorded the outcome of the tender process and sought authority from the Shayher Group to expend up to the specified subcontract amount”. The document refers to C&K Tiling, although according to Mr Munro “it is actually a reference to CKQ”. In cross-examination, however, Mr Munro accepted that the reference to C&K Tiling could not possibly be a reference to only CK Qld because the commitment authority includes details about the history of C&K. CK Qld has no trading or performance history.
The commitment authority provides some identifying information about the Tiling Works of the Remora Road project, a list of eight tenderers for those works and what appears to be some information about the recommended tenderer, C&K. Mr Blacker gave evidence that the purpose of the document was to record the essential facts leading to a recommendation as to which subcontractor to engage.
The following tenderers submitted final tenders and were recorded in the commitment authority (errors in original):
Tenderers
Final Tender
Comments
Tile-It
$2,771,075.83
The subcontractor has offered a conforming quotation based on the prescribed scope of works and documentation, however, the final offer is not good value for money and the tenderer has confirmed that it will not obtain a Union Collective Agreement
Tile Corp
$2,970,377.00
Tilecorp have a solid track record of projects completed similar to this one, however it seems that due to their current workload, this subcontractor has increased its price substantially.
C&K Tiling
$2,566,442.82
C&K Tiling have proven they can successfully complete jobs of similar nature and value and their price respresents best value for money, This subcontractor has consulted with the CFMEU and will negotiate an UNION COLLECTIVE EBA to enable it to carry out works on this Project. THE CFMEU has confirmed to Forest Meiers that it is satisfied with C&K Tiling and that it will approve them for this project.
S&K Commercial
$2,854,489.95
This subcontractor has a UNION COLLECTIVE EBA however does not represent best value for money and is therefore not recommended.
The commitment authority was signed by Mr Sia. His signature represented authorisation to Forest Meiers to engage the recommended subcontractor. In cross-examination Mr Sia said that he did not give particular attention to the document when he signed it because he would sign up to fifty of this kind of document per day in his capacity as General Manager. He accepted that when he signed he knew it was effectively approving the appointment of a subcontractor.
25 June to 15 July
In his affidavit filed on 27 May, 2016 Jason Karam swore that during a telephone call with Mr Blacker on 25 June, 2014 Mr Blacker said to him “We are going to give you the contract”. Mr Blacker does not specifically recall a telephone call with Mr Karam but says that he may have telephoned him. Notwithstanding that he cannot recall the phone call he denies that he would have simply stated “We are going to give you the contract”. I accept Mr Karam’s evidence about this conversation.
On 26 June, 2014 Mr Blacker sent an email to Mr Chebib and Jason Karam (with several others copied into the email) which relevantly provided:
We confirm our intention to enter into subcontract agreement with CK Tiling QLD Pty Ltd (CK Tiling) for the tiling subcontract trade works for the above mentioned project on the conditions that CK Tiling achieve successful negotiations for industrial agreements with applicable parties and put in place insurances and QBCC licences for the company CK Tiling QLD Pty Ltd. The subcontract price shall be calculated by giving regard to latest communications from C&K Tiling.
Mr Blacker was not cross-examined about that email; Mr Munro was. Mr Munro understood the email to mean that the award of the subcontract to CK Qld was conditional upon CK Qld “entering into an EBA with the CFMEU”.
Mr Chebib says that he was directed by Jason Karam to contact the CFMEU and to “pay the fee to enter the Enterprise Agreement with the CFMEU”. Mr Chebib then sent to Mr Sutherland an email attaching a document titled “EXPRESSION OF INTEREST FOR A UNION COLLECTIVE AGREEMENT” and a credit card authorisation form in the sum of $1,650.
After sending the expression of interest to Mr Sutherland on 26 June, 2014, Mr Chebib did not receive a response, despite numerous attempted telephone calls and emails. See paragraphs 72 and 73 of his affidavit.
On 1 July, 2014 Mr Munro had a telephone conversation with Mr Sutherland. His diary note, which Mr Munro says accurately records the conversation, provides:
4.36pm – rang Andrew Sullivan (CFMEU) discussed C&K Tiling application to sign EBA – Andy advised he would follow up tomorrow and speak to Jade Ingham & Michael Radbar – advised we need to resolve ASAP.
In re-examination Mr Munro confirmed that whenever he wrote “Andrew Sullivan” he was actually referring to Andrew Sutherland.
On 2 July, 2014 Mr Munro sent an email to Mr Blacker which relevantly provided (errors in the original):
I spoke to Andrew Sullivan last night about CK Tiling re the signing of a EBA and he confirmed that he would talk to Jade Ingham (Assistant Sec. - CFMEU) this morning and with Michael Ravbar. He was reluctant to commit as he was of the opinion that he had issues with this Company previously – I have stressed the importance of have them on board and their commitment to abide by all requirements.
Andrew to come back to us today but we will also need to follow up as well as to what our options are in getting some form of positive acknowledgment.
On 2 July, 2014 Mr Blacker sent an email to Mr Chebib and Jason Karam which relevantly provided:
I am aware of some contact between Mr Munro & the CFMEU regarding C&K tiling today but am not sure of the outcome. I believe that this may have been escalated to the State Secretary. Has there been any contact with your team? Please keep in touch, regards Oswald Blacker.
On 9 July, 2014 Mr Munro spoke with Mr Jade Ingham from the CFMEU. Mr Munro’s file note of that telephone conversation records:
Spoke to Jade Ingham (CFMEU) explained the situation that we were in and that we need to get CK Tiling accepted as a collective agreement – discussed issues with Jade agreeing to ring back later today – I advised it had been signed off by the owner to proceed – need to move forward.
Mr Munro spoke again with Mr Ingham on 10 July, 2014. He says that Mr Ingham raised a concern that C&K did not “train their workers correctly”. Mr Munro’s file note for that conversation provides:
530PM – Jade Ingham rang to advise that he would not endorse having CK Tiling acknowledged with a CFMEU collective agreement as [Andrew Sutherland] (CFMEU) had advised previously that C&K Tiling would not sign an agreement a couple of years ago – Jade advised that there was no guarantee that men would get paid the correct award & allowances and what is their training – apprentices if they were to be employed. – Jade advised what will be will be but no EBA.
Jason Karam said he was never made aware of any problems with the training of C&K workers by the CFMEU or by Mr Munro or Mr Blacker. Mr Chebib gave evidence consistent with that. He said that during the meeting on 19 June, 2014 with Mr Sutherland, the latter did not raise with him that training or apprenticeships was an issue.
On 11 July, 2014 Mr Munro spoke with Mr Sutherland and Mr Ingham for the purpose of organising a meeting to address the C&K tiling issue. According to Mr Munro’s evidence, “I still thought at this point it might be possible to get the CFMEU on board.” However, no meeting eventuated.
On 15 July, 2014 Jason Karam attended the project site and met with Mr Munro and Mr Kim. He swears that they had a conversation to the following effect:
Mr Munro: I’m not having any success with the CFMEU. I’ve attempted to contact the union but now I’ve escalated it to the Secretary. “We are talking to both the secretary of the union and Sutherland. Both are saying that they will speak to the other but it does not appear to be happening. I have spoken to Master Builders, Fair Work and our legal people about where we stood. I will give it to the end of that day to get a response back from Sutherland and would make a final decision where we stand. If Forest Meiers goes with you, I need to know that you will support us and not cause any problems with the union on site
Mr Karam: I’ve got confidence in my guys. They aren’t troublemakers
Mr Munro: If Sutherland doesn’t get back to me by the end of the day, I am prepared to go with you and take it on his back as long as you are prepared to go with me and tough it out to whatever comes from the union
Mr Munro did not recall this meeting but accepted that it was possible that it occurred and that he organised it. He did not accept that he spoke with “Fair Work and our legal people” about the issue. Although he did not recall much of what Jason Karam said, he either accepted the accounts were possible or otherwise did not deny them. I unequivocally accept Mr Karam’s evidence about this meeting.
The CFMEU’s decision and the 18 July emails
On 17 July, 2014 Mr Munro spoke with Mr Eddie Bland from the CFMEU. Mr Munro said that “Jade Ingham had stated their final decision that they would not sign up C&K Tiling with a union ratified EBA” and if Forest Meiers engaged C&K “there would be further action on site”.
Mr Munro was not able to give concrete reasons for the CMFEU’s decision not to enter into an enterprise agreement with CK Qld. He said that as far as he was aware it was because:
a)the CFMEU had previously attempted to sign an agreement with C&K which was refused;
b)the uncertainty that CK Qld would pay its employees in accordance with specified rates; and
c)there were issues with the training of CK Qld employees and the situation surrounding apprenticeships with CK Qld.
Between 8:00am and 10:00am on 18 July, 2018 Mr Munro consulted with Mr Max Panettiere and Mr Paul McDougall. Mr Munro described them as “critical subcontractors on site”. Mr Munro says that he was trying to “get a feel for what would happen if we went with CKQ despite the CFMEU not endorsing them, so I could assess the risk”. According to Mr Munro’s evidence, Mr Panettiere supported the union’s position and Mr McDougall would support Forest Meiers if it intended to act against the union’s recommendation.
Mr Munro says in his affidavit that he formed the view this was the final position of the CFMEU. The decision then, he says, was between whether to award the contract to another tenderer (one which would not, or would be substantially less likely to, attract industrial action) or to engage C&K or CK Qld and deal with any industrial disputes as they might present. In cross-examination he said he had not accepted a solidified stance from the CFMEU and although he “didn’t put anything in print”, as at 18 July, 2014 he “was still trying to have an open dialogue” with the CFMEU.
Mr Munro’s understanding that the CFMEU had made a final decision not to enter into an enterprise agreement with C&K (or CK Qld) and that “there would be further action on site” should either of those companies be engaged for the Tiling Works is corroborated by an email chain dated 18 July, 2014 between Mr Munro, Mr Sia, Mr Kim and Mr Blacker. That chain is annexure SP-7 to the affidavit of Mr Sia ([sworn 9 September, 2016]).
At 10:59am on 18 July, 2014 Mr Munro sent an email to Mr Sia, into which Mr Kim and Mr Blacker were copied, providing (errors in the original):
Hi Peter
Would you be available for a meeting on site today with Thomas, Os and myself with regard to having C & K Tiling as our preferred tiling contractor which as of 5.30pm last night was rejected by the CFMEU contrary to earlier discussions that they would be signed up. There is a significant $33k cost difference to the next tenderer who have been endorsed by the CFMEU which is totally wrong with principals.
Alternatively we could continue forward and incur major issues with the CFMEU and ongoing uncomfortable relationship with the unions on George St.
Your input for a company decision will be appreciated.
At 11:35am on 18 July, 2014 Mr Blacker replied with an email to the all of the others who received Mr Munro’s email pointing out that the cost difference to the next tenderer was not “$33k” but was “actually $300K”.
At 1:05pm on 18 July, 2014 Mr Sia responded to Mr Munro’s initial email:
Bill and all
My thinking:
1. We may not afford the resulting effect of a court exercise, winning or losing we will be the losing side in other projects we all know;
2. From A plus to C & K to the third potential candidate we are looking at roughly $800, 000 +/- cost escalation from the original awarded contract;
3. Looks like Forest Meiers has not been and will not be able to resolved the impasse with the Union.
We have 3 choices here unless situation dramatically changed:
1. Court application - we face with time, and cost and hearing date delay- worst, immediately seen by defending party we declare war – Not a preferred option. (look at Abigroup, Grocon);
2. Go with the third tenderer - Not ideal due to wasted costs unless you can talk the third party into agreeing to a more amenable price closer to C & K;
3. Immediately look for other contractors with EBA far and beyond Brisbane area. (Shadforth, our civil contractor for Indooroopilly is one example, further, hungrier while price remains competitive)
I would suggest activating option 3 unless you have other suggestions.
Subject to my meetings this arvo, I will come over.
In cross-examination, Mr Sia was unable to clarify what he specifically meant by “court exercise” and “Court application”. Senior counsel for the applicant asked Mr Sia whether the reference to “court exercise” was an acknowledgement that not engaging C&K or CK Qld was illegal. In re-examination Mr Sia sought to clarify that it was a reference, in general, to actions in respect of “the unions or Fair Works or the tenderers”. The gravamen of his evidence was that Shayher Developments could not afford litigation howsoever described. Whether Shayher be an applicant or respondent, avoiding litigation was an important factor to Mr Sia.
On inspection of the commitment authority, the order of cheapest price of the tenderers which submitted a final quote was: C&K, Tile It, S&K and then Tile Corp. Mr Blacker was cross-examined about why Tile It was not recommended once it had been accepted that C&K was not a feasible option. His evidence was that Tile-It had effectively withdrawn its tender in either April or May, 2014 because it did not take on work where the head contractor was covered by a union collective agreement.
Mr Munro, on the other hand, gave evidence in cross-examination that the order of tenderers was C&K, Tile-It, and S&K respectively. However, the second tenderer was not an option, he said, because it had withdrawn its tender. Mr Munro explained that Lance Leech, the owner of Tile-It, did not want to get involved in the issues that Forest Meiers was incurring because of the CFMEU. Although he could not recall when, Mr Munro accepted that the withdrawal by Tile-It of its tender would most likely have occurred after the commitment authority had been created in June, 2014.
I am not satisfied that Tile-It withdrew its tender as Mr Blacker or Mr Munro suggests. Apart from their oral evidence about that, there was no other evidence to suggest that its tender had been withdrawn at any stage. The email correspondence that passed between Mr Munro and Mr Sia on 18 July, 2014 refers to the “next tenderer with an EBA”. If the existence of an EBA between the relevant subcontractor and the CFMEU was of no consequence, such a reference would have been unnecessary
In cross-examination Mr Sia accepted as a possibility that the second tenderer was not suggested by him as an option because it did not have an EBA with the CFMEU.
Another meeting was called between those from C&K and those from Forest Meiers on 18 July, 2014 at approximately 11:30am. Mr Chebib said he and Mr Karam attended the meeting “on the pretence to sign up a contract”. Mr Blacker and Mr Munro gave evidence that they never made any representation that the meeting was for such a purpose.
When Mr Karam and Mr Chebib arrived at the project site, Mr Blacker greeted them and explained that they were engaged in a meeting and asked them to return some short time later. The meeting between Mr Jason Karam, Mr Chebib, Mr Souva, Mr Blacker, Mr Munro and Mr Kim commenced sometime later that day.
Mr Chebib said that during the meeting the following exchange took place:
Mr Munro: The Union contacted me at around 5:00 yesterday. They threatened action on the site if we signed you up
Mr Karam: Did they give a reason why?
Mr Munro: They said that you have history. Are you ready to go all the way with us. We cannot afford to take you on then find out later that you or your employees cannot handle the heat
Mr Karam: I’m ready and you won’t have any problems from my staff as I’ve got personal relationships with them and their families
Mr Munro: I’ve informed my superiors and it’s in their hands now
Mr Karam gave evidence that the conversation was to the effect of:
Mr Munro: You are still in the running for the job but we might have to go elsewhere. We can’t offer any guarantees. I have received a phone call from the Union last night telling me that if we proceed with C&K, I should prepare myself for issues on site. If we proceed with you guys, are you prepared for issues on site. Are you ready to go all the way with us. We cannot afford to take you on then find out later that you or your employees cannot handle the heat
Mr Karam: I am prepared and my employees are prepared too
Mr Munro’s evidence was consistent with that of Mr Chebib and Mr Karam.
Mr Blacker denied that Mr Munro said “If we proceed with you guys, are you prepared for issues on site” and “Are you ready to go all the way with us. We cannot afford to take you on then find out later that you or your employees cannot handle the heat”. He denied that Jason Karam proffered such assurance as he alleges. Instead, he says Jason Karam said that “the view of the CFMEU didn’t matter to them and they would get the work done and walk through picket lines if they had to”. He said that Mr Munro explained he had been informed by members of the CFMEU that it had no intention of signing an agreement with CK Qld.
Mr Munro discussed the matters with Mr Blacker and thought the following matters particularly important:
a)the risk that the CFMEU would use the site workforce to disrupt progress on the project;
b)the Tiling Works were already behind schedule – they were originally planned to commence in May, 2014; and
c)other subcontractors capable and available to undertake the Tiling Works were available almost immediately.
At 1:21pm on 18 July, 2014 Mr Munro responded to Mr Sia’s email as follows (errors in the original):
Further to your latest communication of 1.05pm today
Further to our ongoing communication with regard to C & K Tiling we confirm that the next tenderer is S & K Tiling who have a union endorsed EBA and have on a number of occasions been referred to by the CFMEU but the difference is $300k. S & K Tiling have been in the tiling business for only a short period of approx. 7 months whereas C & K Tiling have an extended history of tiling.
Ultimately it will be if we can incur $300k of pain and although legal wise the CFMEU is wrong it will be the rank and file members who will call the shots and this will be twisted and turned around by the CFMEU to their members with withdrawal of labour and this will impact on the project with non-productivity as you realise.
If we were to have a stach with the unions then now is the time to do it with the way Fair Work Building and Construction is now targeting the unions but unfortunately we will incur pain and so will some of the subcontractors –
We need to make a decision today to allow the project to move forward as any delay will naturally affect the completion date. I also concur that on many occasions when industrial action is taken there is no winner and the financial loss is greater than the original intended loss but you should not be told what to eat.
We will come back to you with our thoughts and recommendation.
At 3:00pm on 18 July, 2014 Mr Munro sent a further email as follows:
Further to comments below – we have further reviewed the industrial relations side of things and confirm that we will proceed with the next tenderer to further finalise negotiations with the intent to formalise a supply and install contract for tiling on the Remora Rd project.
The consequences of an ongoing protracted scenario with the CFMEU is real with escalating cost both to this project as well as others but as we move forward there will be time that Forest Meiers Constructions/ Shayher Group will be in conflict with the CFMEU.
There will be no need to have a meeting this afternoon - thanks for your input.
Mr Munro concluded that Forest Meiers “… should proceed with the tenderer that was next closest in price and was endorsed by the CFMEU, which was S&K Commercial.”. In cross-examination it was put to Mr Munro that he had two options: to award the contract to C&K on the basis of their last standing tender notwithstanding the incorporation of and tender offer by CK Qld, or to award the contract to the tenderer with the next best price. The transcript records the following exchange between senior counsel for the applicant and Mr Munro:
All right. The alternative is you could choose – instead of doing that, you could choose another contractor?---Well, you would go back and try Tile-It, exactly right.
Right. Of course, the only logic in choosing another contractor instead of C & K or CK Qld was to choose one that did have an EBA?---Effectively, yes.
Yes. Because it would be illogical to depart from the best tenderer, so to speak, to go to someone else?---Yes, yes.
So what you ultimately decided was the second of those courses, which is to go with the subcontractor that did have an EBA with the CFMEU. And that, of course, was the decisive factor? Contributing factor, yes.
Yes?---And there’s a number of factors.
Contributing factor?---Well, you can say that, yes, if you want to say that.
And, may I suggest to you, a quite important factor?---It very much did, but also the factors I – an assessment was made as to what the risk was going to be as well at the same time.
In re-examination Mr Munro elaborated (T144 L10-30):
Would you please say what those various factors were?‑‑‑Yes. The issue that we had with the harassment we were getting from the CFMEU during this period of – was that we foresee that there was going to be a fair amount of industrial action taken against the project during if we were to continue with a – with C & K if they did not achieve – or CK Qld could not achieve a CFMEU EBA. We were constantly being harassed and reminded of – that the CFMEU would not allow us to take on board any entity that presumably did not have an EBA in line with their – the list they’ve given. We did take on some contractors that did not have an EBA but their installation contractors had EBAs. So the CFMEU accepted those actions. We – during the process of this, the project was detained or held back on a number of occasions where the union would come on site and take the project out over – in relation to 300 George Street, which I was totally conscious of. What we were doing on this project in size was relative to nothing compared to what 300 George Street was. It was a massive project; still is a massive project. And I was over – very conscious of the dramas that would happen. Now, we’ve already had a number of stoppages on Remora Road in relation to George Street where the union had actually stopped the job and took people in to create picket lines or demanding that Forest Meiers would be further penalised, I suppose, on Remora Road because of non-payment of outstanding funds to a developer – not to a developer – sorry – to the demolisher of outstanding moneys that were owed to them. So the union had made constant threats to us about that, as well. So all that was going on that was playing in the back of our mind.
Mr Chebib did not have any further dealings in respect of the Tiling Works after the 18 July, meeting.
The engagement of S&K Commercial and refusal to engage C&K and CK Qld
Mr Blacker gave evidence that following the meeting 18 July, 2014 and following the exchange of the emails on that day Mr Munro said to him that if S&K provided a lower price than that which they initially offered, then they would award the contract to S&K.
In the afternoon of 18 July, 2014 Mr Blacker and Mr Kim attended a meeting with personnel of S&K and negotiated a reduction in the tender price. In cross-examination Mr Blacker said that Forest Meiers agreed to undertake the supply of the tiles, leaving S&K simply to install, which was a reduction of about $75,000 from the tendered price. Mr Blacker made the necessary arrangements to engage S&K for the Tiling Works.
On 20 July, 2014 Jason Karam and Mr Munro had the following conversation:
Mr Karam: What’s happening with the contract?
Mr Munro: It does not look good. We might have to go with another company
Mr Karam: That’s disappointing but hopefully it will work out for us
Mr Munro’s evidence accords with this.
At 10:24am on 22 July, 2014 Anthony Karam sent an email to Mr Sutherland enquiring about the progress of the expression of interest submitted by CK Qld on 26 June. The email relevantly provided:
It has come to our attention that you may have issues proceeding with the agreement due to past history, this is of great concern to us as we are unaware of any reasons or outstanding matters that may provide unease to the CFMEU.
An email was sent from Mr Sutherland’s email account in response providing:
Your message
Subject:
was read on 22/07/2014 11:10 AM.
(emphasis in original)
Jason Karam said that on 22 July, 2014 he called Mr Munro and was informed by him that Forest Meiers had awarded the contract to another company. Mr Munro said he did not communicate this to Mr Karam until 25 July, 2014, after S&K had commenced work on site.
Jason Karam’s evidence is that he had two telephone conversations with Mr Munro:
a)on 21 July, 2014:
Mr Karam: If you aren’t going to go with me because of the union, advise me in writing. You may be in breach of the Fair Work Act by not going with me because of the union
Mr Munro: I have the right to award the project to whoever I chose
b)on 22 July, 2014 he said words to the following effect:
Why did you give it to S&K? They have only been around a year and Hutchies won’t use them again
I think you have breached the Fair Work Act by not awarding us the contract. It’s not my intention to pursue Forest Meiers but I want to target the union for its unethical actions. If Fair Work contacts you, I hope it won’t affect our relationship and you will consider us for projects in the future
Well all the best with it and I hope we can work with Forest Meiers in the future
Although he could not recall specifics of the conversations, Mr Munro denied those conversations as recollected by Mr Karam. His evidence is that Jason Karam “said to the effect that he intended to pursue the CFMEU legally”. Mr Munro did not set out in his evidence what was in fact said by Mr Karam, or by himself. He said that he “got the impression that he saw the CFMEU as the target, and not Forest Meiers”. He denied that Mr Karam asked him to advise him in writing if Forest Meiers was not going to award the contract to C&K or CK Qld. Although nothing turns on these matters, I prefer the evidence of Mr Karam about these conversations.
Reasons
Mr Munro referred to the concerns of disruption and delay in support of his reasons for making the decision not to award CK Qld the Tiling Works tender. Ultimately, however, the concern is cost. Disruption leads to delay and delay leads to cost. Mr Munro articulated some of those costs as follows:
(i) salaries;
(ii) the cost of the scaffolding, which was a set amount charged per period;
(iii) the cost of hire of site sheds and generators;
(iv) the cost of hiring two tower cranes that we had on site, which involved a set rate per week, and a number of mobile cranes which involved a set fee per month whether they were operating or not during that period;
(v) the cost of suction pumps for dewatering, which were operating 24 hours a day, 7 days a week.
There were other examples of delay such as delay to the 300 George Street project and later projects, and the delay in completing the project such that income from leasing tenancies would be lost. The final concern in relation to delay was termed by Mr Munro as “Reputational issues”.
Mr Munro said that his motivations for deciding to award the contract to S&K and not C&K or CK Qld were:
a)to minimise the risk of union industrial relations issues and stoppages; and
b)the safety concerns that C&K workers were not trained properly, raised by Mr Ingham on 10 July, 2014.
In cross-examination Mr Munro accepted that the training or apprenticeship situation was not of any concern to him.
Mr Munro summarised his reasoning in the last paragraph of his affidavit of evidence in chief as follows:
I didn’t actually care whether C&K or CK Qld had a CFMEU EBA or not. My focus was management of industrial risk.
Similarly, Mr Blacker’s first affidavit provides (at paragraph 88):
I was frustrated by the industrial relations risks we felt we had to manage, as I believed the conduct of the CFMEU in requiring us to only engage subcontractors with a CFMEU EBA was unlawful. However, I was also conscious that we needed to keep the project moving and get someone on board for the Tiling Works that wasn’t going to create a risk of delay and disruption.
The transcript importantly reveals the following exchange during the cross-examination of Mr Blacker (T108 L5-8):
Of course. Of course. But Mr Blacker, I don’t suggest that C & K Tiling were reluctant participants in this project. They wanted the project. Let’s accept that. But you were only going to give them the project if – that is the tiling part of it – if they had an EBA with the CFMEU; is that so?---That is likely to be the case.
Senior counsel for the applicant cross-examined Mr Blacker about the reason for recommending S&K Commercial for the Tiling Works. The transcript records (T113 L33-35):
The true reason why Forest Meiers elected to give them the tiling contract here is because, I suggest to you, they were the next subcontractor – next tenderer in line who had a union EBA?---Yes.
To give that exchange some context, Mr Blacker’s evidence was that S&K were the next tenderer in line, in terms of price, after C&K. He gave evidence that Tile-It (which provided a final quote less than that of S&K) had withdrawn their tender in either April or May.
In re-examination Mr Sia said that the difference in price between C&K and S&K, some $300,000, was “Still substantial”. He explained that if industrial relations on the Remora Road project spilled onto the George Street project, which was a substantially larger project, and which was something that was on the evidence a genuine possibility, then Shayher Developments were at risk of losing more than $300,000.
Consideration
Six documents were tendered by the respondents during the trial and were provisionally admitted subject to the question of relevance. They concerned general reports of industrial action and militancy by the CFMEU and the BLF. The applicant opposed their tender on the basis that they were not relevant.
In my view they are not relevant and the tender ought to be rejected. Whilst the documents might have demonstrated that there was an unstable industrial relations landscape at the time the matters the subject of these proceedings arose, there was no evidence given that any of the individual respondents or anyone on behalf of the first respondent saw or read any of those documents. How they might then be said to have informed any decisions that were made by those acting for the first respondent is not clear.
The s.340 claim – C&K
The applicant submits that from 3 April the relationship between Forest Meiers and C&K was that of a principal proposing to enter into a contract for services with an independent contractor within the meaning of s.342(1) item 4 of the Fair Work Act. I accept that submission. I find that from 3 April until at least 23 June, 2014 the relationship between Forest Meiers and C&K was that of a principal proposing to enter into a contract for services with an independent contractor within the meaning of s.342(1) item 4 of the Fair Work Act.
The respondents argue that on and after 23 June, 2014 Forest Meiers was not proposing to enter into a contract for services with C&K because Jason Karam withdrew C&K from consideration and proposed CK Qld for the Tiling Works. The respondents argue that Forest Meiers could not have refused to engage C&K as an independent contractor because it withdrew its tender. Paragraph 59(b) of the first respondent’s second further amended defence provides:
(b) After hearing from Mr Munro that the CFMEU was not prepared to accept an arrangement whereby C&K paid according to Forest Meiers’s EBA, Mr Karam withdrew C&K from consideration and proposed CK Qld for the tiling works.
The evidence does not prove that allegation. Neither Mr Karam nor Mr Chebib withdrew C&K’s tender. Nor was it suggested in cross-examination of either that they did so. Whilst there was a plan to have CK Qld be the contracting party because it would have an EBA with the CFMEU, there is nothing in the evidence to suggest that if Forest Meiers decided to go with a subcontractor who did not have an EBA with the CFMEU, it could or would not have simply accepted C&K’s tender. The existence of the two corporate entities was a matter of convenience only for Mr Karam, C&K and Forest Meiers. It had no impact upon Forest Meiers because the price was the same whichever entity undertook the work. That view is confirmed by the cross-examination by senior counsel for the applicant of Mr Munro (T142 L28-45):
Indeed, you could have even said to C & K Tiling, “We would like you to do the contract”?---C & K Tiling had withdraw from that at that stage.
Well, is that right or had they simply, at Mr Blacker’s suggestion, put forward this other company because of the necessity to enter into an EBA with the CFMEU?---No. My understanding was that they had withdrawn C & K to roll with CK Qld as their main tendering process.
All right. But you accept, do you not, that the only reason they put forward CK Qld was to enter into an agreement with the CFMEU?---To facilitate an agreement with the – yes, the CFMEU.
The CFMEU, right. So that, therefore, if you had chosen that – to take the position that the agreement with the CFMEU was no longer necessary from Forest Meiers’s point of view, you could, could you not, have sought to engage C & K Tiling in accordance with its original tender? When I say “original”, revised tender?---Yes, yes, I can understand what you’re saying. Realistically that’s – that’s a – that’s a valid point what you’re saying, yes.
The respondents refer to the evidence of both Mr Blacker (at paragraph 106 of his first affidavit) and Mr Munro (at paragraph 101 of his first affidavit) to support their submission. However, those paragraphs do not mention that C&K withdrew its tender nor do they support the contention that it did so. So much is evident in the email that Mr Chebib sent to Mr Blacker after the 23 June meeting (my emphasis):
6. If we are successful in our tender, we confirm that we will be forming an EBA between CK Tiling (Qld) Pty Ltd & the CFMEU, and that our prices and all agreements will also be applicable to CK Tiling (Qld) Pty Ltd.
The applicant submits that the email was sent on behalf of C&K because:
a)the email was sent with the same signature and C&K Tiling logo as were other emails from C&K; and
b)the relevant paragraph provides “our prices and all agreements will also be applicable to CK Tiling (Qld) Pty Ltd”.
The applicant further submits that the use of the words “will also” tend to suggest that the offer of C&K remained open and, in the absence of any evidence suggesting to the contrary, unchanged. I accept that submission.
Moreover, the references in the commitment authority confirm that view. In cross-examination Mr Munro accepted that where the commitment authority contained references to C&K, it could not properly have been referring to CK Qld because it provides “C&K Tiling have proven they can successfully complete jobs of similar nature and value”. As the applicant points out, the references to C&K in the commitment authority could not possibly have been references to CK Qld because as at 24 June, 2014 CK Qld had not completed any jobs at all. Mr Munro agreed with that logic in cross-examination.
I am not satisfied that C&K withdrew is tender at any time as the respondents contend. As Mr Munro’s evidence confirms, that tender could have been taken up in the event that Forest Meiers chose to accept it.
The applicant submits that the Court should find that Forest Meiers took adverse action against C&K on 23 June, 2014 by refusing to engage C&K as an independent contractor. I accept that submission. C&K’s tender was available for acceptance. C&K had been identified as the preferred tenderer and its price was clearly the best. I have indicated above that I accept Mr Karam’s evidence of the conversation that occurred on 23 June, 2014 wherein Mr Munro refused to engage C&K as an independent contractor by saying words to the effect that “Andrew Sutherland told me he doesn’t want to know about it. What other options do you have to get around this issue? There are no other avenues that we feel we can take.” Mr Karam’s response: “We have opened up another company and are prepared to sign this company up to an enterprise agreement with the union in order to secure this Project.” can only be consistent with the proposition that C&K was not going to be awarded the Tiling Works. So too, Mr Munro’s response: “That’s great. If you open the new company and get the EBA and all the insurances in place and all goes well, we will give you the contract”.
The refusal to engage C&K was clearly adverse action for the purposes of s.342(1) item 4(a) of the Fair Work Act. That action was taken on 23 June, 2014. Mr Munro was the decision maker.
On 26 June Mr Blacker sent the email indicating Forest Meiers’s intention to engage CK Qld. By that email, Forest Meiers imposed a condition of acceptance of CK Qld’s offer that it “achieve successful negotiations for industrial agreements”. The applicant submits that the condition was communicated to Jason Karam and Mr Chebib during the 23 June meeting, presumably by the words “We have spoken to the CFMEU with regards to you paying according to our EBA and they don’t want to know about it”.
Adverse action is actionable under the Fair Work Act where the relevant action is taken for a particular, proscribed reason. Section 340 of the Act provides:
340 Protection
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
Note: This subsection is a civil remedy provision (see Part 4‑1).
Workplace right is defined in s.341 as follows:
341 Meaning of workplace right
Meaning of workplace right
(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:
(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii) if the person is an employee—in relation to his or her employment.
Subsection 341(2) of the Act provides that making an enterprise agreement is a process or proceedings under a workplace law or workplace instrument:
The applicant claims that Forest Meiers contravened s.340 by taking adverse action against C&K because C&K:
a)had a workplace right, being the right to enjoy the benefit of the C&K enterprise agreement, a workplace instrument as defined by s.12 of the Fair Work Act; and
b)had not exercised a workplace right, being the right to make an enterprise agreement, because it already had in place an enterprise agreement that did not cover the CFMEU.
The respondents submit that the applicant did not particularise the “benefit” under its enterprise agreement that C&K sought to enjoy and because of which Forest Meiers took the alleged adverse action against it. It was submitted that any benefit derived from the enterprise agreement was abandoned the moment C&K proceeded to tender on the basis of the Forest Meiers’s EBA rates of pay. In any event, they argue, the benefit potentially derived from the C&K enterprise agreement was rendered null because of the requirement upon Forest Meiers, under clause 35.2 of its enterprise agreement, to ensure subcontractors paid the rates set out in the enterprise agreement.
But none of that is to the point. The applicant’s case is that C&K had exercised its workplace right to have an agreement with its employees that did not cover the CFMEU. It was entitled to regulate its relationship with its employees in that way and to enjoy the benefits of having such an agreement. The applicant was not required to identify a particular benefit said to arise from the agreement that was denied to C&K through Forest Meiers’s action. In my view, the definition of workplace right does not operate in that way.
Moreover, Mr Munro gave evidence, confirmed by Mr Karam, that the CFMEU had tried to get an enterprise agreement in place with C&K at some point in the past and C&K had refused. Indeed, that was one of the reasons given to Mr Munro by Mr Sutherland for the CFMEU’s refusal to make an agreement with CK Qld. The inference is clearly open, and I infer and find, that C&K made a choice to have an enterprise agreement with its employees and that the enterprise agreement would not cover the CFMEU.
Senior counsel for the applicant referred me to CFMEU v BHP Coal Pty Ltd (2015) 230 FCR 298 to support his submission that “having an agreement is itself a right”. The applicant otherwise submits “The fact that they choose to do something better for their employees doesn’t negate the existence of or the benefit of the existing agreement.” Senior counsel for the respondent submitted that being covered by an enterprise agreement is not in itself a benefit. However, I accept the applicant’s argument. In CFMEU v BHP Coal Pty Ltd (above) at 176, the Full Court said:
It will be remembered that a person has a workplace right within the meaning of s 341 of the FW Act if, amongst other things, the person is entitled to the benefit of a workplace law or instrument – here, the 2007 agreement. Section 341 does not speak of benefits conferred by or under a workplace instrument. However, the Explanatory Memorandum to the Fair Work Bill states (at para 1362) that the phrase “entitled to the benefit of” is intended to capture both the fact that the workplace law or instrument applies to a person as well as the individual entitlements under the law or instrument. See, too, Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union (2001) 112 FCR 232. Neither party suggested that the section should be read any other way.
In respect of the second workplace right alleged by the applicant, the respondents submitted that the C&K enterprise agreement included a “no-extra-claims clause” which prevented it from proposing to its employees a further enterprise agreement until the expiry of the then-current enterprise agreement. Clause 6.8.2 of that enterprise agreement provided:
Up to the nominal expiry date of this Agreement the parties will not make any extra claims relating to wages or changes in conditions of employment or any other matters related to the employment of the employees, whether dealt with in the Agreement or not.
The respondents refer me to Toyota Motor Corporation Australia Ltd v Marmara & Ors (2014) 222 FCR 152 (at [110]) as follows:
For the above reasons, we take the view that the operation of the no further claims provision in clause 4 in a context in which Toyota proposed no more than that the agreement be varied was and is in conflict with the provisions of that subdivision and pro tanto invalid.
Thus, the respondents submitted that there was no operative workplace right that C&K sought to exercise which would attract the operation of s.340 of the Act. However, this argument, too, is not to the point. The point is not that C&K or CK Qld attempted to enter into an enterprise agreement with the CFMEU but might have been precluded from doing so by the enterprise agreement already in place between C&K and its employees. Rather the point is that C&K had a workplace right represented by:
a)the benefit of having an enterprise agreement with its employees; and
b)the choice that it made when it entered into that agreement not to have it cover the CFMEU.
I find that C&K had the workplace rights I have just identified as at 23 June, 2014.
Did Forest Meiers take the adverse action it did against C&K on 23 June, 2014 because C&K had those workplace rights? In my view, the applicant has made out its case that Forest Meiers took adverse action against C&K on 23 June, 2014 in the circumstances I have described above. The respondents accept that s.361 of the Fair Work Act is engaged and that the onus is upon them to prove that they did not take the adverse action I have found they took, for a proscribed reason.
The Court’s task is to identify the “operative and immediate reason for the taking adverse action”: Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 2012 CLR 500 at [65], [103]-[104] and [140]; BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2014) 253 CLR 243 at [19] per French CJ and Kiefel J and at [85] per Gageler J. In Barclay at [44] – [45] (citations omitted):
44. …The imposition of the statutory presumption in s 361, and the correlative onus on employers, naturally and ordinarily mean that direct evidence of a decision-maker as to state of mind, intent or purpose will bear upon the question of why adverse action was taken, although the central question remains “why was the adverse action taken?”.
45. This question is one of fact, which must be answered in the light of all the facts established in the proceeding. Generally, it will be extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer. Direct evidence of the reason why a decision-maker took adverse action, which may include positive evidence that the action was not taken for a prohibited reason, may be unreliable because of other contradictory evidence given by the decision-maker or because other objective facts are proven which contradict the decision-maker’s evidence. However, direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer even though an employee may be an officer or member of an industrial association and engage in industrial activity.
The respondents submit that “The logical conclusion to draw on the evidence and the pleaded facts is that Forest Meiers and Mr Munro acted solely out of self-preservation when faced with CFMEU threats to disrupt the Remora Road Project if Forest Meiers engaged either CK Qld or C&K”. Mr Munro had extensive experience in the commercial building and construction industry in Queensland. His evidence detailed his experience with how the CFMEU and BLF had caused disruption and delay in order to advance their own objectives. Indeed, the CFMEU and BLF had been industrially active in respect of Forest Meiers and the Remora Road Project which caused Forest Meiers to enter into a CFMEU and the BLF enterprise agreement on terms acceptable to those organisations. I accept that Mr Munro believed that the CFMEU or the BLF would cause disruption and delay which in turn would cause financial disadvantage and reputational issues for Forest Meiers. He was also concerned about the impact on the Shayher Group’s major project at 300 George Street. I accept that he was focused on assessment of industrial risk and that he sought to act in the best commercial interests of Forest Meiers. I have no doubt that Mr Munro and Mr Blacker wished to avoid industrial relations issues. The position of Mr Munro and Forest Meiers more generally was entirely unenviable. They were faced with the prospect of industrial action if they engaged C&K and if they did not, the next closest tenderer who had an EBA with the CFMEU was $300,000 more expensive than C&K.
Ultimately Mr Munro saw no difference between C&K and CK Qld. So much is revealed in his affidavit of evidence in chief:
180. I considered the issue of whether to engage C&K or CKQ very seriously and was focussed on the interests of FMC from a commercial point of view. My motivations were:
(a) minimising the risk of union industrial relations issues and stoppages, and the financial disadvantage and reputational issues that I believed would come with that; and
(b) the issue that the CFMEU had raised with me on 10 July 2014 in relation to the training regime of the C&K Tiling business. In light of their comments, I was concerned about whether their workers were trained properly, and I believed this gave rise to a safety issue.
As to his reasons, the cross-examination of Mr Munro revealed that the training issue was of no concern at all to him and did not inform his decision not to award the Tiling Works to C&K or CK Qld.
The applicant submits that the absence of an enterprise agreement with C&K that covered the CFMEU was an operative and immediate reason for the decision that Mr Munro made. In particular senior counsel for the applicant submitted that the following matters were significant:
(a) on 3 April 2014, Mr Blacker told Mr Karam and Mr Chebib either “You will need to have an EBA with them to or “everyone needs an EBA with them” or (meaning the CFMEU);
(b) on 26 May 2014, Mr Munro (in the presence of Mr Blacker) repeatedly asked if C&K would enter into a CFMEU Agreement, stating either “Everything is running smoothly on site as everyone that is signed up has a CFMEU Agreement. Will you sign up to an EBA with the CFMEU?” or “We need to make sure the unions are happy. Are you prepared to sign a Union EBA?”;
(c) on 26 May 2014, Mr Munro (in the presence of Mr Blacker) asked Mr Karam if he was willing to open another company and sign that company up with a union agreement;
(d) on 24 June 2014, Mr Sia, Mr Munro and Mr Blacker all signed a “Revised Commitment Authority”, which recommended that the Contract be given to “C&K Tiling” because “This subcontractor has consulted with the CFMEU and will negotiate UNION COLLECTIVE EBA to enable it to carry out works on this project”;
(e) on 26 June 2014, Mr Blacker sent an e-mail to Mr Chebib (copied to Mr Munro) which stated “We confirm our intention to enter into subcontract agreement ... on the conditions (sic) that CK Tiling achieve successful negotiations for industrial agreements with applicable parties...”; and
(f) on 18 July 2014, Mr Sia is asked for input into whether Forest Meiers should “continue forward” with C&K, he replies (at 1.21 pm) that his suggestion is that they should “immediately look for other contractors with EBA”, and then (at 1.28pm) cautions against proceeding with C&K.
The applicant submits that the issue the respondents are truly raising is the motivation behind the reason for Mr Munro’s decision. He argues that the reason for refusing to engage C&K was inevitably informed by something, but it is the reason for the particular decision concerned that is important, not the material that informs the decision, that is central to the inquiry. He submits that whether or not a tenderer had an enterprise agreement that covered the CFMEU was a determinative matter: “In many respects it is the discrimen that was applied in this case, and the fact that there were underlying aims, motives or fears that drove that are wholly irrelevant to the question of whether it’s prohibited reason.”
The respondents argue that the applicant’s approach conflates that “substantive and operative” reason with a “causal and contextual factor” – the motivations of the CFMEU making threats to Forest Meiers. The respondents submit that Forest Meiers’s decision was made in circumstances where it was the subject of coercion and threat by the CFMEU. The coercion and threat, the respondents submit, was not limited to dealings with C&K but ranged over the entire Remora Road project and on the 300 George Street project: “The consequences of endeavouring to resist the threats were clearly going to be further punishment at the hands of the CFMEU”.
The evidence in this case shows that there were several reasons that motivated Mr Munro to make the decision not to engage C&K or CK Qld but rather to engage S&K Commercial. One was the prospect of industrial unrest that the project site because Forest Meiers had engaged a subcontractor that did not have an enterprise agreement with the CFMEU. Another was a desire to avoid the costs associated with any delay and disruption that might be brought about by industrial unrest at the project site. Another was the fact that S&K Commercial has an enterprise agreement that covered the CFMEU and C&K or CK Qld did not.
For the purposes of Part 3–1 of Chapter 3 of the Fair Work Act, a person takes action for a particular reason if the reasons for the action include that reason. But the reason of interest must be an operative and substantive reason for the action.
Here, I am satisfied, and I find, that the fact that C&K did not have an enterprise agreement with the CFMEU was a substantive and operative reason for Mr Munro’s decision not to accept C&K’s tender for the Tiling Works and to inform Mr Karam of that as he did on 23 June, 2014. There may have been other reasons that supported Mr Munro’s decision-making and there may have been other motivations that legitimised his decision, but at the core of his decision was the fact that C&K did not have an enterprise agreement with the CFMEU.
That finding is underscored by the evidence of Mr Munro that the subcontractor to whom the work was ultimately given, S&K Commercial, had an enterprise agreement with the CFMEU. It was the third ranked tenderer. The second ranked tenderer was not accepted and that tenderer did not have an enterprise agreement with the CFMEU. Although it was suggested that the second ranked tenderer withdrew its tender, apart from the oral evidence of Mr Munro and Mr Blacker about that, there is no other evidence that would corroborate that evidence. For the reasons that I have given above, I do not accept it. Further, Mr Munro’s evidence was that if he had chosen to take the position that an enterprise agreement with the CFMEU was not necessary from Forest Meiers’s point of view, he could have engaged C&K in accordance with its tender or alternatively he could have chosen another contractor. Mr Munro specifically said in that context, “Well, you would go back and try Tile-It, exactly right”. Tile-It was the second ranked tenderer. His reference to Tile-It is inconsistent with the proposition that the tender put in by that contractor had been withdrawn. He agreed with senior counsel for the applicant that the fact that S&K Commercial had an EBA with the CFMEU was a “quite important factor” in his decision.
Further, although Mr Sia was not the actual decision maker, he accepted that the reason Forest Meiers elected to award the contract to S&K Commercial was because it was the next tenderer in line which had a union EBA. His emails to Mr Munro on 18 July, 2014 are consistent with that.
The first respondent does not discharge the onus upon it to show that the decision that Mr Munro took not to engage C&K for the Tiling Works was not taken for a proscribed reason. The applicant makes out this aspect of his case.
The s.340 claim – CK Qld
Between 23 June and 25 July, 2014 the relationship between Forest Meiers and CK Qld was that of a principal proposing to enter into a contract for services with an independent contractor within the meaning of s.342(1) item 4 of the Fair Work Act.
The applicant submits that the Court should find that Forest Meiers took adverse action against CK Qld on 22 July, 2014 by refusing to engage it as an independent contractor. The respondents accept that Forest Meiers took adverse action by refusing to engage CK Qld as an independent contractor, albeit they argue that the decision was communicated to CK Qld on 25 July, 2014.
The applicant claims that Forest Meiers contravened s.340 by taking adverse action against CK Qld because CK Qld did not exercise its right to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument by making an enterprise agreement that covered the CFMEU.
The respondents raise three issues in respect of the workplace right of CK Qld alleged by the applicant. They submit that:
a)the CFMEU was not a relevant employee organisation for the purposes of ss.172(2) and 340 of the Fair Work Act;
b)CK Qld was not establishing or proposing to establish a genuine new enterprise for the purpose of s.172(2); and
c)if CK Qld did have that workplace right, then they did exercise it and Forest Meiers’s reason for refusing to engage CK Qld as an independent contractor therefore cannot have been that CK Qld did not exercise a workplace right.
It is only necessary to deal with the last of these alternatives. The evidence clearly demonstrates that CK Qld attempted to enter into an enterprise agreement with the CFMEU. However, the evidence demonstrates that the CFMEU refused to do so. The applicant’s case is squarely that Forest Meiers engaged in an adverse action against CK Qld by refusing to engage it to undertake the Tiling Works because CK Qld had not exercised the workplace right, being the right to make an enterprise agreement that would include the CFMEU as a party. But as I have indicated, CK Qld did precisely that – it exercised its workplace right by attempting to make an enterprise agreement with the CFMEU. That was the reason it was incorporated but its purpose was unable to be achieved because the CFMEU refused to engage. In those circumstances, it cannot be said, in my view, that whatever adverse action was taken against CK Qld, it was taken because CK Qld had proposed to or had not exercised the identified workplace right. The adverse action was taken against CK Qld because it did not have an enterprise agreement that covered the CFMEU. To take adverse action against CK Qld for that reason was not to take that action for a reason proscribed by the Fair Work Act.
The position of CK Qld in this respect is different to that of C&K. In the latter case, C&K has exercised its workplace right to make an enterprise agreement with its employees in a particular way. As I have found above, C&K chose not to have the CFMEU covered by the enterprise agreement. Whilst it did not have an enterprise agreement that covered the CFMEU, it did have an enterprise agreement in place with its employees as a result of the exercise of a workplace right. On the other hand, CK Qld has attempted to exercise its workplace right to enter into an enterprise agreement that covered the CFMEU but for the reasons already canvassed, that was not able to be achieved. Forest Meiers did not take adverse action against CK Qld because it exercised a workplace right but rather, because the exercise or attempted exercise of that workplace right proved ineffective.
This aspect of the applicant’s claim cannot be made out. The applicant does not raise a prima facie case sufficient to engage the operation of s.361 of the Act because the evidence is not capable of leading to the conclusion that Forest Meiers took the adverse action alleged by the applicant against CK Qld because CK Qld had not exercised a workplace right, being the right to make an enterprise agreement that would include the CFMEU as a party.
The s.354 claim – C&K
The applicant claims that Forest Meiers contravened s.354(1)(a)(iii) by discriminating against C&K because its employees were not covered by an enterprise agreement that covered the CFMEU. The applicant’s claim is put thus in his statement of claim:
70. By reason of the matters set out in paragraphs 12- 34 above, FMC subjected C&K to differential treatment by refusing to engage C&K.
71. A substantial and operative reason for that differential treatment was that employees of C&K were not covered by an enterprise agreement that covered a particular employee organisation, being the CFMEU.
The same claim is advanced against Mr Munro personally.
The respondents submit that Forest Meiers did not refuse to engage C&K and so there was no opportunity to discriminate against C&K. However, for the reasons I have set out above, I reject that argument. Forest Meiers did refuse to engage C&K to undertake the Tiling Works and Mr Munro made that decision.
In the event the Court determines that there was adverse action, the respondents submit that such adverse action did not involve differential treatment by Forest Meiers because Forest Meiers applied the same requirement to all subcontractors, namely the potential subcontractor had to provide services without attracting an unacceptable risk of delay and disruption.
However, the evidence does not support that argument. For the reasons I have set out above, I have found that the first respondent, acting through Mr Munro, took adverse action against C&K by deciding not to engage C&K on the Tiling Works on 23 June, 2014. One of the substantial and operative reasons for that was because C&K had an enterprise agreement with its employees that did not cover the CFMEU. That finding directly engages s.354(1)(a)(iii) of the Fair Work Act. The refusal involved differential treatment between a tenderer (an employer) that has an enterprise agreement with its employees that did cover the CFMEU and one that did not cover the CFMEU. The evidence of all of the witnesses was to the same effect. Had C&K had an enterprise agreement with its employees that covered the CFMEU, it would have been awarded the Tiling Works contract.
Again, the evidence is sufficient to engage s.361 of the Act so that the onus shifts to the first respondent to demonstrate that it did not discriminate against C&K for a proscribed reason. For the reasons I have already given, the first respondent does not discharge that onus. I am satisfied that the applicant has proved this aspect of his case in respect of both Forest Meiers and Mr Munro.
Accessorial liability
The applicant claims that each of Mr Munro, Mr Blacker and Mr Sia are liable for the contraventions of Forest Meirs by virtue of s.550 of the Fair Work Act. The applicant claims particularly that:
a)Mr Munro was involved in each of Forest Meiers’s contraventions;
b)Mr Blacker was involved in each of Forest Meiers’s contraventions; and
c)Mr Sia was involved in Forest Meiers’s contravention of s.340 in respect of CK Qld.
As to the last matter, I have found that Forest Meiers did not contravene the Fair Work Act in respect of its dealings with CK Qld. The only basis upon which it was suggested that Mr Sia was liable was as an accessory to that contravention. The claim against him must fall with the claim against Forest Meiers in that respect.
As to the liability of Mr Munro and Mr Blacker, the respondents submit that the applicant “lacks standing” to bring its claims against the individuals because none of them were building industry participants within the meaning of the Fair Work (Building Industry) Act 2012 (Cth).
The respondents’ argument works in this way.
Sub-section 539(2) and Item 11 of that subsection of the Fair Work Act provides that the only persons who may make an application for orders in relation to a contravention of ss.340 and 354 (among others) are:
a)a person affected by the contravention;
b)an industrial association; and
c)an inspector.
By a combination of s.59C and s.59(4)(a) specifically of the Fair Work (Building Industry) Act 2012 (Cth) and the definitions of Inspector and Fair Work Inspector in s.12 of the Fair Work Act, the applicant in the present case is an inspector for the purposes of s.539(2) of the Fair Work Act and so within one of the classes of person who might make an application for orders in relation to a contravention of ss.340 and 354 of the Fair Work Act.
However, whilst an inspector for the purposes of the Fair Work (Building Industry) Act has the same functions and powers as a Fair Work Inspector, the functions and powers are qualified. Subsection 59C of the Fair Work (Building Industry) Act provides that those functions and powers may be performed or exercised only in relation to a building matter. A matter is a building matter if it relates to a building industry participant: s.59C(3) of that Act.
A building industry participant is defined in s.8 of the Fair Work (Building Industry) Act to mean, relevantly, a building employee. That term is defined, in turn, to mean:
a)a person whose employment consists of, or includes, building work; or
b)a person who accepts an offer of engagement as an employee for work that consists of, or includes, building work.
Building work is defined in s.5(1) of the Fair Work (Building Industry) Act to mean any of the following activities:
a)the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land, whether or not the buildings, structures or works are permanent;
b)the construction, alteration, extension, restoration, repair, demolition or dismantling of railways (not including rolling stock) or docks;
c)the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems;
d)any operation that is part of, or is preparatory to, or is for rendering complete, work covered by paragraph (a), (b) or (c), for example:
i)site clearance, earth-moving, excavation, tunnelling and boring;
ii)the laying of foundations;
iii)the erection, maintenance or dismantling of scaffolding;
iv)the on-site prefabrication of made-to-order components to form part of any building, structure or works;
v)site restoration, landscaping and the provision of roadways and other access works.
The respondents argue that the present proceeding against the individual respondents is not a building matter because they are not building industry participants. That follows because their employment does not consist of or include building work as set out above. They each have management or administrative roles only. Therefore, they argue, the applicant has no power to bring an application against them personally for a contravention of the Fair Work Act.
I accept that the evidence establishes that Mr Munro, Mr Blacker and Mr Sia each had managerial or administrative roles for their respective employers. I accept that their duties were not within the description of building work for the purposes of the Fair Work (Building Industry) Act.
The applicant may bring proceedings in relation to a matter that relates to a building industry participant. There is no dispute that Forest Meiers is a building industry participant and the applicant’s standing to bring these proceedings against it is not in dispute. The matter in the present proceedings against Forest Meiers is the alleged contraventions of the Fair Work Act. The accessorial liability of the individual respondents pursuant to s.550(1) of the same Act said to be contravened by Forest Meiers is something which arises in relation to the matter that relates to the building industry participant, namely Forest Meiers. That is to say, the proceedings have been properly commenced against the personal respondents.
The respondents accept that, given his role as decision-maker, Mr Munro was involved in the two contraventions I have found proven against Forest Meiers. Pursuant to s.550(1) of the Fair Work Act he is taken to have contravened those provisions.
However, I accept the respondents’ contention that Mr Blacker was not involved in the contraventions for the purposes of s.550 of the Act. He was not the decision maker and his input seems to have been relatively limited. Mr Munro sought some advice from Mr Blacker and the views of Mr Sia, but ultimately he made the decision. The proceedings against Mr Blacker should be dismissed.
Compensation
The applicant seeks an order pursuant to s.545 of the Fair Work Act that Forest Meiers pay compensation to C&K. The applicant submits that an overly technical approach to calculating compensation should be avoided: AMA CSU v Greater Dandenong City Council (No.2) [2001] FCA 1076 at [1] to [13]. I am assessing compensation not damages for breach of contract.
Annexure JK-3 to Mr Karam’s confidential affidavit (filed on 26 May, 2014 – second of the two) sets out Mr Karam’s evidence about the net profit that C&K would have made had it been awarded the Tiling Works according to its last tender. That amount is $287,770.17.
In the alternative, the applicant submits that C&K should be compensated for its expenses incurred in preparing the tender, fixed in the sum of $15,000 having regard to the salary of Mr Chebib of $120,000 per annum.
The respondents submit that no compensation should be ordered. Forest Meiers was itself a victim of the coercion of the CFMEU and so should not be ordered to pay compensation for the loss suffered by C&K. They argue that Forest Meiers was coerced into accepting the highest tender by the CFMEU and it thereby suffered a significant monetary penalty. The “penalty imposed on them by the union actions” can be quantified, the respondents submit, in the sum of $300,000 – the difference between the quoted price of C&K or CK Qld and S&K Commercial.
However, as the evidence reveals, Forest Meiers had a choice to make. Mr Munro, Mr Blacker and Mr Sia knew that if the CFMEU was applying pressure not to engage C&K because it had no agreement with that company, that pressure was illegitimate. Mr Blacker told Mr Chebib that he thought the union’s approach to the matter and in particular the interpretation of clause 35.2 in the Forest Meiers EBA to be wrong. Indeed, Mr Munro asked Mr Karam if he was prepared to go in for a fight if C&K or CK Qld were brought onto the project without an EBA with the CFMEU. Mr Karam was prepared for that and told Mr Munro so. Notwithstanding that, Mr Munro made a deliberate choice not to award the Tiling Works contract to C&K.
Further, the respondents submit that given the qualifications in the email of 26 June, 2014 concerning CK Qld undertaking the work, the Court should not be satisfied that C&K or CK Qld was likely to be able to take up the contract. However, there is nothing to suggest that those conditions which went to insurances and licencing would not be met. Indeed, part of the attractiveness of C&K to the respondents was its past history of successful work.
In those circumstances, compensation for C&K’s losses is appropriate.
In his confidential affidavit filed on 26 May, 2014 Mr Karam explains the way in which he derives the figure of $287,770.17. The respondents submit that the profit advanced by Mr Karam is manifestly unreliable. However, he has sworn to the method by which the labour and material costs have been calculated. He has sworn to the off-site costs and expenses that need to be taken into account to identify the profit that C&K expected to receive from the Tiling Works contract. Moreover, there is nothing in the evidence of the respondents or the cross-examination of Mr Karam that falsifies his evidence about these things. The respondent did lead some evidence from Mr Blacker about the cost of some items but the evidence did not materially impact upon Mr Karam’s evidence about C&K’s loss. Mr Karam was cross-examined about the profits of C&K from year to year, but those matters had little relevance to the way in which Mr Karam had quantified the losses.
But, as with any contract of this nature (and as the pre-tender process demonstrated) there were likely to be variations to the scope and price of the work over the period of its performance. Further, I am satisfied that it is likely that had C&K been engaged for the Tiling Works there would have been disruptions and delays to the progress of both C&K’s works and the other work on the project more generally through union industrial action. I am unable to predict how much disruption there would have been or what that disruption would have cost but it is something to be taken into account.
Mr Karam’s evidence sets out what little he could say about mitigation of C&K’s losses. There is no reason not to accept his evidence about those matters. I accept that C&K did attempt to mitigate its loss but this particular project diverted the attention of Mr Karam and Mr Chebib away from other opportunities that were slow to rematerialize.
Having regard to Mr Karam’s evidence about the loss of profit, the likelihood of variations to the scope and the price of the work, the likelihood of industrial action at the site which would have reduced profit by increasing costs and Mr Karam’s evidence about the attempts to secure replacement work I assess the compensation to which C&K is entitled as $200,000.
The applicant seeks pre-judgment interest on that sum in accordance with the rates set out in an email to my associate dated 22 November, 2016.
Conclusion
The applicant has proven that the first respondent contravened s.340 of the Fair Work Act by refusing to award C&K the Tiling Works tender. He has also succeeded in establishing that the first respondent discriminated against C&K in contravention of s.354 of the Fair Work Act. Mr Munro was involved in the first contravention for the purposes of s.550 of the Fair Work Act. He also contravened s.354 of the Fair Work Act in his own right. But even if that is wrong, he was involved in the first respondent’s contravention of s.354 for the purposes of s.550 of the Fair Work Act.
The claims against Mr Blacker and Mr Sia do not succeed. The proceedings against them must be dismissed.
The parties should settle a form of declarations and orders to give effect to these reasons, including pre-judgment interest. I will make directions to accommodate that.
I certify that the preceding two hundred and fifteen (215) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 26 June, 2019
Date: 26 June, 2019
- AGLC
- Director, Fair Work Building Industry Inspectorate v Forest Meiers Construction Pty Ltd and Ors [2019] FCCA 1770
- Case
- [2019] FCCA 1770
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the Court was whether the Director had established, on the balance of probabilities, that Forest Meiers' reason for dismissing Mr. Smith was his exercise of a workplace right, namely making a complaint about underpayment. This required the Court to consider the evidence presented by both parties regarding the circumstances surrounding Mr. Smith's dismissal and the stated reasons for that dismissal.
Judge Jarrett found that the Director had discharged the onus of proof. The Court was persuaded that the timing of Mr. Smith's dismissal, occurring shortly after he made his complaint about underpayment, was not coincidental. Evidence was presented that Forest Meiers had been aware of the complaint and had expressed dissatisfaction with Mr. Smith's actions. The Court concluded that the stated reasons for dismissal, including alleged poor performance and a lack of work, were not credible and were a pretext for the adverse action taken. The Court applied the principles of statutory interpretation relevant to adverse action provisions, focusing on the employer's motive or reason for the action.
Forest Meiers was found to have contravened section 346 of the Act. The Court ordered Forest Meiers to pay pecuniary penalties and compensation to Mr. Smith.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
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