J Hutchinson Pty Ltd v Australian Competition and Consumer Commission

[2024] FCAFC 18

FEDERAL COURT OF AUSTRALIA

J Hutchinson Pty Ltd v Australian Competition and Consumer Commission [2024] FCAFC 18

Appeals from:

Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2022] FCA 98

Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (No 2) [2022] FCA 1007

File numbers:

QUD 335 of 2022
QUD 340 of 2022

Judgment of:

WIGNEY, BROMWICH AND ANDERSON JJ

Date of judgment:

29 February 2024

Catchwords:

COMPETITION LAW – industrial law – appeals from orders made as to liability and penalty for making, and giving effect to, an arrangement, or arriving at an understanding, containing a provision preventing or hindering the appellant from acquiring services from a subcontractor, contravening ss 45E(3) and 45EA of the Competition and Consumer Act 2010 (Cth) – where primary judge found that there was an arrangement or understanding containing a provision preventing or hindering the appellant from acquiring services from a subcontractor – whether it was open to the primary judge to infer that the appellants made an arrangement, or arrived at an understanding, which contained a provision preventing or hindering the appellant from acquiring services from a subcontractor – where the facts as found also equally supported the inference that the appellant’s decision to cancel the subcontract was a unilateral commercial decision to avoid an industrial dispute – whether it was open to the primary judge to conclude that the making of an arrangement, or arriving an understanding, was the more probable inference – whether challenging the admission of certain evidence and key findings of fact and credit vitiate the conclusions reached by the primary judge because of removing part of the primary factual substratum for inferring the existence of the arrangement or understanding – appeals allowed

Legislation:

Competition and Consumer Act 2010 (Cth) ss 45E, 45EA, 76

Evidence Act 1995 (Cth) s 140(2)

Fair Work Act 2009 (Cth) s 50

Cases cited:

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450

Australian Competition and Consumer Commission v Air New Zealand Ltd [2014] FCA 1157; 319 ALR 388

Australian Competition and Consumer Commission v Baxter Healthcare [2008] FCAFC 141; 170 FCR 16

Australian Competition and Consumer Commission v Bluescope Steel Limited (No 5) [2022] FCA 1475

Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (No 8) [1999] FCA 954; 92 FCR 375

Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 4) [2017] FCA 1450; 353 ALR 460

Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2022] FCA 98; 404 ALR 553

Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (No 2) [2022] FCA 1007

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; 160 FCR 321

Australian Competition and Consumer Commission v Olex Australia Pty Ltd [2017] FCA 222; ATPR 42-540

Australian Competition and Consumer Commission v Pfizer [2018] FCAFC 78; 356 ALR 582

Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 262 FCR 243

Australian Competition and Consumer Commission v Yazaki Corporation (No 2) [2015] FCA 1304; 332 ALR 396

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1

Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336

Commercial Union Assurance Company of Australia Ltd v Ferracom Pty Ltd (1991) 22 NSWLR 389

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; 162 FCR 466

Fox v Percy [2003] HCA 22; 214 CLR 118

Keith Russel Simplicity Funerals Pty Ltd v Cremation Society of Australia (ACT) Ltd (1982) 40 ALR 125

Lee v Lee [2019] HCA 28; 266 CLR 129

Luxton v Vines (1952) 85 CLR 352

Norcast S.ár.L v Bradken (No 2) [2013] FCA 235; 219 FCR 14

R v Associated Northern Collieries [1911] HCA 73; 14 CLR 387

Seven Network v News Ltd [2007] FCA 1489; 244 ALR 374

Tabcorp Holdings Ltd v Victoria [2016] HCA 4; 328 ALR 375

Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286

Trade Practices Commission v Email Ltd (1980) 43 FLR 383

Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206

Warren v Coombes [1979] HCA 9; 142 CLR 531

Workpac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536

Division:

General Division

Registry:

Queensland

National Practice Area:

Commercial and Corporations

Sub-area:

Economic Regulator, Competition and Access

Number of paragraphs:

209

Date of last submission:

31 May 2023

Dates of hearing:

25 – 26 May 2023

Counsel for the Appellant in QUD 335 of 2022 and for the Second Respondent in QUD 340 of 2022:

Dr R Higgins SC, Mr Michael Trim and Mr T Rogan

Solicitor for the Appellant QUD 335 of 2022 and for the Second Respondent in QUD 340 of 2022:

Gadens Lawyers

Counsel for the Appellant in QUD 340 of 2022 and for the Second Respondent in QUD 335 of 2022:

Mr C Dowling SC and Mr C Massy

Solicitor for the Appellant in QUD 340 of 2022 and for the Second Respondent in QUD 335 of 2022:

Hall Payne Lawyers

Counsel for the First Respondent in both proceedings:

Mr M Hodge KC, Ms A Nicholas and Ms S M Derrington

Solicitor for the First Respondent in both proceedings:

Australian Government Solicitor

ORDERS

QUD 335 of 2022

BETWEEN:

J HUTCHINSON PTY LTD (ACN 009 778 330)

Appellant

AND:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION

Second Respondent

QUD 340 of 2022

BETWEEN:

CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION

Appellant

AND:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

J HUTCHINSON PTY LTD (ACN 009 778 330)

Second Respondent

ORDER MADE BY:	WIGNEY, BROMWICH AND ANDERSON JJ
DATE OF ORDER:	29 FEBRUARY 2024

THE COURT ORDERS THAT:

1.The name of the Second Respondent in QUD 335 of 2022 be changed to “Construction, Forestry and Maritime Employees Union”.

2.The name of the Appellant in QUD 340 of 2022 be changed to “Construction, Forestry and Maritime Employees Union”.

3.The appeals be allowed.

4.Declarations 1 to 4 made on 14 February 2022, and orders 1 to 4 made on 30 August 2022, be set aside, and in lieu thereof it be ordered that:

(a)the originating application dated 3 December 2020 be dismissed;

(b)the applicant pay the costs of the first and second respondents in the first instance proceedings.

5.The first respondent in both QUD 335 of 2022 and QUD 340 of 2022 pay the costs of the appellant in QUD 335 of 2022 (the second respondent in QUD 340 of 2022) and the appellant in QUD 340 of 2022 (the second respondent in QUD 335 of 2022).

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

REASONS FOR JUDGMENT

WIGNEY J:

1. A construction company retains a subcontractor to perform work on a construction site.  It does not consult with the union that represented many of the workers on the construction site as it was required to do under its enterprise agreement with that union.  The subcontractor does not have an enterprise agreement with the union and the union also does not look favourably upon the subcontractor or the way it treats its workers.  Upon learning of the retention of the subcontractor, a union delegate tells the construction company’s project manager that the union will engage in industrial action if the contractor comes on the site again.  The subcontractor performs no further work on the site and some weeks later the construction company terminates its contract with the subcontractor.

2. Are those facts capable of supporting, on the balance of probabilities, an inference that the construction company and the union “ma[d]e a[n] … arrangement, or arrive[d] at an understanding” that contained a “provision included for the purpose, or for purposes including the purpose” of “preventing or hindering the [construction company] from acquiring or continuing to acquire” services from the subcontractor?  Or is an equally probable, if not more probable, available inference that the construction company simply decided to terminate the subcontract for commercial reasons given the likelihood of industrial action by the union if it continued to use that subcontractor?

3. In civil penalty proceedings commenced by the Australian Competition and Consumer Commission (ACCC) which involved such a fact scenario, the primary judge found, in essence, that the more probable inference was that the construction company had made an arrangement, or arrived at an understanding, with the union which contained a provision to the effect that the construction company would no longer acquire services from the subcontractor and the subcontract would be terminated. Her Honour also inferred that the provision was included in the arrangement or understanding for the purpose of having the construction company terminate the subcontract and cease acquiring services from the subcontractor. Those findings led her Honour to find that the construction company contravened s 45E(3) and s 45EA of the Competition and Consumer Act 2010 (Cth) (C&C Act) and that the union induced and was knowingly concerned in those contraventions: Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2022] FCA 98 (liability judgment or LJ). 

4. The issue that lies at the centre of this appeal is whether it was open to the primary judge to so find.

5. I have read in draft the reasons for judgment to be published by Bromwich and Anderson JJ.  Their Honours have concluded that the primary judge’s finding cannot stand, essentially because the facts as found by the primary judge could not support an inference, to the requisite standard, that the construction company and the union had made. or arrived at. the alleged arrangement or understanding.  The competing or conflicting inference that the construction company unilaterally succumbed to the unions threat of industrial action was at the very least equally probable.  I respectfully agree with their Honours.  Subject to what follows, largely by way of elaboration or further explication, I also generally agree with their Honours’ reasons for so concluding.  Subject to some brief additional observations, I also generally agree with the way their Honour’s have dealt with all of the other grounds of appeal and contentions.  I do, however, wish to add something very briefly in respect of the penalty appeal. 

   RELEVANT FACTS

6. I gratefully adopt the comprehensive analysis of the facts in the judgment of Bromwich and Anderson JJ.  That allows me to focus on the key factual findings made by the primary judge from which the critical inference concerning the existence of an arrangement or understanding was drawn.  Many of the primary judge’s factual findings were challenged by the appellants, however, the following summary assumes their correctness.   

7. The construction company in the simplified factual scenario referred to in the introductory paragraphs was J Hutchinson Pty Limited.  Hutchinson was the head contractor of a large construction project in Brisbane called the Southpoint project.  The union which represented many workers on the Southpoint project at the time was the Construction, Forestry, Mining and Energy Union (CFMEU).  The CFMEU had an enterprise bargaining agreement (EBA) with Hutchinson.

8. The subcontractor in the simplified factual scenario was Waterproofing Industries Qld Pty Ltd (WPI).  As its name suggested, WPI provided waterproofing services.  It did not have an EBA with the CFMEU.  One possible impediment to WPI entering an EBA with the CFMEU was that it was not registered with certain superannuation funds.  The CFMEU also did not have a favourable view of WPI, or the way it treated its workers.  It was, among other things, aware of past complaints that WPI had not paid its employees their superannuation entitlements.

9. In March 2016, Hutchinson entered into a contract with WPI for the provision of waterproofing services at the Southpoint project.  It did so without first consulting the CFMEU as it was required to do pursuant to the terms of their EBA.  The employee of Hutchinson who was primarily responsible for retaining WPI and managing subcontractors generally was Mr Peter Meland.  He was Hutchinson’s project manager at the Southpoint project.     

10. WPI did some minimal waterproofing work at the Southpoint project in the early stages of the project.  The CFMEU subsequently learnt of the waterproofing contract between Hutchinson and WPI. 

11. On 11 June 2016, a Hutchinson employee who was a CFMEU delegate on the Southpoint project, Mr Damon Clarke, had a conversation with Mr Meland.  During that conversation Mr Clarke told Mr Meland that he had been instructed by a CFMEU organiser, Mr Justin Steele, to “sit the job down if WPI come on site”.  In an email sent two days later, Mr Meland conveyed Mr Clarke’s message to his team leader, Mr John Berlese.  In that email, Mr Meland indicated that he believed that the CFMEU’s “main problem” with WPI was that it was not registered with certain superannuation funds and that while it maintained that position it was “never going to get an EBA”.      

12. I interpolate here that the conversation between Mr Meland and Mr Clarke on 11 June 2016 appears to have been critical to the primary judge’s finding that Hutchinson and the CFMEU had made, or arrived at, the impugned arrangement or understanding.  Indeed, while it is somewhat unclear, it seems that the primary judge found that the arrangement was made, or the understanding was arrived at, around the time of that conversation.  It is difficult to read or understand her Honour’s reasons in any other way. 

13. I will return to that issue later.  It suffices at this point to note the following.  First, despite the apparent finding that the arrangement was made, or understanding was arrived at, around the time of the conversation between Mr Meland and Mr Clarke, the primary judge found that Mr Meland, who was the Hutchinson representative who had retained WPI and who mainly dealt with the CFMEU, was not aware of any arrangement or understanding with the CFMEU.  Second, nothing was said or done by Mr Meland during his conversation with Mr Clarke which conveyed, or was capable of conveying, that Hutchinson would terminate its contract with WPI, or would no longer acquire waterproofing services from WPI, or had agreed to do either of those things.  Third, nothing in Mr Meland’s email to Mr Berlese which reported on the conversation suggested that Mr Meland had conveyed any such thing to Mr Clarke.

14. WPI did not provide any waterproofing services at the Southpoint project after 11 June 2016.  That is not to say that it was excluded from the project on or from that day.  Indeed, the evidence suggested that there was no need for any waterproofing work to be performed until later in July 2016. 

15. Following the conversation between Mr Meland and Mr Clarke on 11 June 2016, Mr Meland took steps to assist WPI to obtain an EBA.  That was because he believed that the CFMEU’s problem with WPI would be resolved if it obtained an EBA.  Mr Meland also referred the issue concerning WPI to Hutchinson’s “industrial relations team” in late June 2016, again with a view to having the issue resolved. 

16. I interpolate here that the fact that Mr Meland took those steps would appear to be entirely inconsistent with him knowing or believing that there was an extant arrangement or understanding between Hutchinson and the CFMEU that Hutchinson would terminate its contract with WPI or would no longer acquire waterproofing services from WPI. 

17. At some point, it is unclear when, other than that it was before 21 June 2016, Mr Clarke told Mr Raymond Hadfield, a director of WPI, that he would have to contact someone called Scott Vink at the CFMEU to “get a go ahead with work”.  Mr Hadfield endeavoured to contact Mr Vink but was apparently told that Mr Vink was not available due to other commitments.  Mr Clarke subsequently instructed Mr Hadfield to contact Mr Steele to get a “confirmation to work” from him.  Mr Hadfield was also unable to get in contact with Mr Steele.  Mr Clarke’s statements are consistent with him believing that it was still possible at that point for WPI to perform waterproofing work at the Southpoint project.   

18. At some point, it is again unclear when, Mr Meland had a conversation with Mr Steele.  During that conversation Mr Steele said something along the lines that WPI would not be doing Hutchinson’s waterproofing because it, WPI, did not pay its workers properly and wouldn’t be able to get an EBA.  Mr Steele also said something like “[w]hy don’t you [Hutchinson] use someone like Spanos [another provider of waterproofing services], they’ve got an EBA, they look after their boys”.   

19. On 13 July 2016, Spanos was “inducted” onto the Southpoint project and performed waterproofing services.  On the same day, Mr Hadfield sent an email to the CFMEU which said that he had made numerous unsuccessful attempts to contact Mr Vink and Mr Steele concerning the fact that WPI had been “forced to stop work”.  He claimed in that email that he had been “pushed aside from department to department”. 

20. On or around 19 July 2019, Mr Meland had a conversation with Mr Berlese about WPI.  Mr Berlese told Mr Meland to “deal with it”.  A week or so later, Hutchinson gave a letter to WPI, signed by Mr Meland, which advised that Hutchinson had terminated its contract with WPI.

21. There were, of course, some other surrounding facts and circumstances.  The primary facts just summarised, however, were essentially those from which the primary judge drew the critical inference concerning the existence of the impugned arrangement or understanding between Hutchinson and the CFMEU: see LJ [340].

    THE ACCC’S CASE

22. The ACCC commenced civil penalty proceedings in this Court against Hutchinson and the CFMEU. It alleged that Hutchinson had contravened s 45E(3) and s 45EA of the C&C Act and that the CFMEU was both knowingly concerned in and had induced those contraventions.

23. Section 45E(3) of the C&C Act relevantly provides that where a person (the first person) “has been accustomed, or is under an obligation, to acquire goods or services from another person” (the second person), the first person “must not make a contract or arrangement, or arrive at an understanding” with an organisation of employees if “the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose”, of “preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person”.

24. Section 45EA(a) of the C&C Act relevantly provides that a “person must not give effect to a provision of a contract, arrangement or understanding if, because of the provision, the making of the contract or arrangement, or the arriving at the understanding, by the person” contravened s 45E(3).

25. The arguments which dominated the appeal concerned the primary judge’s finding that Hutchinson contravened s 45E(3) of the C&C Act as alleged by the ACCC. To prove that Hutchinson contravened s 45E(3), the ACCC was required to prove, on the balance of probabilities, three elements.

26. First, Hutchinson had been accustomed, or was under an obligation, to acquire services from WPI.  That element was largely uncontroversial.  Hutchinson had a contract with WPI in respect of the provision of waterproofing services.

27. Second, Hutchinson made an arrangement, or arrived at an understanding, with the CFMEU as alleged by the ACCC.  That element was controversial.    Both Hutchinson and the CFMEU denied that they had ever made any such arrangement or arrived at any understanding.    

1. Third, the arrangement made, or understanding arrived at, between Hutchinson and the CFMEU contained a provision which was included for the purpose (or for purposes including the purpose) of preventing or hindering Hutchinson from acquiring or continuing to acquire waterproofing services from WPI.  That element was also controversial. 

2. The ACCC alleged that the arrangement which had been made, or the understanding that had been arrived at, by Hutchinson and the CFMEU contained a provision “to the effect that Hutchinson would terminate [its contract with WPI] and further, or alternatively, would no longer acquire waterproofing services from WPI at the Southpoint Project”: Amended Concise Statement dated 22 September 2021 at [5]. I will, to keep things simple, refer to that alleged provision as the ‘termination provision’.  The ACCC’s Concise Statement did not directly allege that the termination provision was included in the alleged arrangement or understanding for the purpose of preventing or hindering Hutchinson from acquiring or continuing to waterproofing services from WPI.  It was, nevertheless, clearly necessary for the ACCC to prove that the termination provision was included for that purpose.  I will, again to keep things simple, refer to that purpose as the ‘proscribed purpose’.  

   THE PRIMARY JUDGE’S FINDINGS AND REASONING

3. The focus, at this point, is on the primary judge’s finding that Hutchinson contravened s 45E(3) of the C&C Act.

4. The primary judge found that the evidence, considered as a whole, established that “Hutchinson and the CFMEU arrived an arrangement or understanding containing a provision to the effect that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and, further, that the [contract between Hutchinson and WPI] would be terminated”: LJ [335].

5. Apparently drawing from or adapting the reasoning of Issacs J in R v Associated Northern Collieries (1911) 14 CLR 387; [1911] HCA 73 at 400, the primary judge reasoned that the “facts and circumstances below” had such a “‘concurrence of time, character, direction and result as naturally to lead to the inference that [their] separate acts were [the] manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge’, namely, that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and, further, that the WPI subcontract would be terminated”: LJ [336].

6. In other words, the primary judge inferred the existence of the arrangement or understanding from the surrounding facts and circumstances, which, according to her Honour, indicated “mutual consent” on the part of Hutchinson and the CFMEU to carry out the “common purpose” of terminating the contract with WPI. Her Honour’s reference to the “facts and circumstances below” was undoubtedly a reference to the facts and circumstances set out in some detail at paragraph 340 of the liability judgment. Those facts and circumstances were summarised earlier in these reasons. The primary judge similarly concluded that the “most probable explanation for the series of facts which occurred is that there was such an arrangement or understanding”: LJ [337].

7. The facts and circumstances were also said by the primary judge to have evidenced “parallel conduct by Hutchinson and the CFMEU by which they each took steps to exclude WPI from the site and then either prevented, or took no positive steps to allow, WPI to return to the site with the end result that Hutchinson ceased to acquire waterproofing services from WPI and terminated the WPI subcontract”: LJ [338]. The evidence was also said to demonstrate that a “consensus was reached between Hutchinson and the CFMEU pursuant to which they committed to a particular course of action, namely that WPI would not be allowed back on to the Southpoint site with the result that Hutchinson would cease to acquire waterproofing services from WPI and, further, that Hutchinson would terminate the WPI subcontract”: LJ [339].

8. As for whether the purpose, or one of the purposes, for including the termination provision in the arrangement or understanding was to prevent or hinder Hutchinson from continuing to acquire waterproofing services from WPI, the primary judge found that that was “the effect of the provision of the arrangement or understanding between Hutchinson and the CFMEU” and was also “their [Hutchinson and the CFMEU’s] subjective purpose of including that provision”: LJ [347]. Her Honour also inferred from the factual findings that the “practices” of Hutchinson and the CFMEU were part of a “wider strategy, the purpose of which was to seek to cause Hutchinson to engage subcontractors which had an EBA on the Southpoint site”: LJ [348].

9. The primary judge’s reasoning concerning the drawing of the critical inference was expressed at a high level of generality.  Her Honour did not identify who at Hutchinson was said to have been responsible for making the arrangement, or arriving at the understanding, with the CFMEU, or who at Hutchinson was said to have had the relevant subjective purpose for including the impugned provision.  The most that can be said is that it was not Mr Meland, because her Honour found that “Mr Meland was not himself aware of the arrangement or understanding between Hutchinson and the CFMEU and was attempting to assist WPI to return to the site”: LJ [340(33)].  That effectively left Mr Berlese, who appeared to have been the only other Hutchinson officer or employee who had any involvement in the relevant events or who had communicated with the CFMEU concerning WPI. 

10. Likewise, the primary judge did not clearly identify who, at the CFMEU, was said to have been responsible for making the arrangement, or arriving at the understanding, with Hutchinson, or who had the relevant subjective purpose for including the impugned provision.  Her Honour’s reasoning suggests that it must have been Mr Steele as no other CFMEU official appears to have been involved in any of the relevant communications or events concerning WPI.  Her Honour’s reasons suggest that she also considered that Mr Clarke was aware of the arrangement or understanding, though Mr Clarke was only a CFMEU delegate on the site.  

11. Her Honour’s reasons are similarly opaque as to when, where, and how, the arrangement was made, or the understanding arrived at.  Her Honour indicated that there was a strong indication that there was already an arrangement or understanding by the time Mr Steele told Mr Meland that WPI would not be doing the waterproofing and would not be able to get an EBA, though the timing of that conversation was unclear: LJ [340(24)].  The circumstances in which the arrangement was said to have been made, or the understanding arrived at, before that conversation also remained unclear.     

    APPEAL GROUNDS AND CONTENTIONS

12. Hutchinson pursued nine grounds of appeal.  In general terms, the first five grounds challenged the primary judge’s finding that the most probable inference, on the facts as found, was that Hutchinson had made an arrangement, or arrived at an understanding, which contained the termination provision as alleged by the ACCC.  Hutchinson’s submissions tended to address those five grounds compendiously, though a slightly separate issue was raised in relation to ground 2.  I do not propose to address that separate issue other than to indicate that I agree with the conclusions reached by Bromwich and Anderson JJ in respect of it.

13. The main thrust of Hutchinson’s challenge to the primary judge’s finding was that it was not open to her Honour to infer, from the primary facts as found, that there was any “meeting of minds” or consensus between Hutchinson and the CFMEU concerning the termination of the contract with WPI.  The primary judge’s finding that Mr Meland was not aware of any arrangement or understanding between Hutchinson and the CFMEU meant that he could not have been the Hutchinson representative who had a meeting of minds with the CFMEU concerning the termination of the contract with WPI.  That left Mr Berlese.  Hutchinson submitted that the facts as found by the primary judge could not support any inference that Mr Berlese knew about any arrangement or understanding with the CFMEU concerning the termination of the contract with WPI, or any inference that Mr Berlese communicated, by words or conduct, Hutchinson’s assent to any arrangement or understanding concerning the termination of the contract with WPI.  The facts found by the primary judge did not include any communication between Mr Berlese and any CFMEU representative which could support an inference that Mr Berlese had, on behalf of Hutchinson, made an arrangement, or arrived at an understanding, with the CFMEU, or knew of the existence of any such arrangement or understanding.   

14. The remaining four grounds of Hutchinson’s notice of appeal also challenged the primary judge’s inference concerning the existence of the alleged arrangement or understanding, but on the basis that her Honour had erred in admitting certain evidence, or erred in making certain factual findings, upon which the critical inference was based.  Hutchinson contended that the primary judge made up to 39 separate erroneous factual findings, each of which undermined the inference which her Honour drew concerning the existence of the arrangement or understanding.  Like Bromwich and Anderson JJ, I consider it unnecessary and undesirable to address Hutchinson’s contentions concerning those 39 factual findings, or the appeal grounds based on them, given the conclusion I have reached in relation to appeal grounds 1 to 5.  I do, however, tend to agree with Bromwich and Anderson JJ that it is unlikely that Hutchinson would have been able to successfully dislodge enough of those findings for its appeal to succeed if it does not otherwise succeed in respect of appeal grounds 1 to 5.      

15. The CFMEU pursued four grounds of appeal concerning liability.  I propose to address only one of them, that being the ground (ground 4) which challenged the primary judge’s finding that there was an arrangement or understanding between Hutchinson and the CFMEU which contained a provision as alleged by the ACCC.  That ground of appeal may conveniently be considered together with Hutchinson’s grounds that mounted essentially the same challenge. 

16. As for the CFMEU’s remaining grounds of appeal in relation to liability, I agree with what Bromwich and Anderson JJ have concluded in relation to them.  I also agree with their Honours’ reasons.  I have nothing of substance to add.  I do, however, propose to say something briefly in respect of the CFMEU’s fifth ground of appeal, which relates to the pecuniary penalty imposed on the CFMEU.

17. The ACCC filed notices of contention which challenged the primary judge’s finding that Mr Meland was not aware of the alleged arrangement or understanding between Hutchinson and the CFMEU.  I agree with Bromwich and Anderson JJ, for the reasons given by them, that the ACCC’s contention that the primary judge erred in finding that Mr Meland was unaware of any arrangement or understanding between Hutchinson and the CFMEU has no merit and must be rejected.  I would only add that the primary judge’s finding is all the more explicable given that the ACCC called Mr Meland as its witness and yet made no attempt whatsoever to adduce evidence from him to the effect that he knew, believed or understood that Hutchinson had given the CFMEU any promise, commitment, assurance or undertaking that it would terminate WPI’s contract or no longer acquire waterproofing services from it, or that he understood or believed that Hutchinson was in any way obliged, bound or under any sort of duty to take that action: see Australian Competition and Consumer Commission v  Colgate-Palmolive Pty Ltd (No 4) (2017) 353 ALR 460; [2017] FCA 1590 at [430]-[431]; Commercial Union Assurance Company of Australia Ltd v Ferracom Pty Ltd (1991) 22 NSWLR 389 at 418-419.

    UNDERSTANDINGS AND ARRANGEMENTS – RELEVANT PRINCIPLES

18. The principles concerning the meaning and essential elements of arrangements and understandings in the context of, or for the purposes of, provisions of Pt IV of the C&C Act have been the subject of voluminous jurisprudence and much learned discourse. The reasons of Bromwich and Anderson JJ deal at length with the applicable principles and the many authorities that have discussed them. It is both unnecessary for me to provide yet another dissertation and undesirable for me to come up with yet another form of words to describe those somewhat elusive concepts or their essential elements. The principles of particular relevance to this case are well-settled and were not really in dispute, either before the primary judge or in the appeal. They may be shortly summarised without the need to again refer to the authorities that establish them.

19. The words “contract, arrangement or understanding” embrace a spectrum of consensual dealings between two or more parties.  A contract, which lies at one end of the spectrum, generally involves a degree of formality and gives rise to legally enforceable obligations or duties.  An arrangement is generally less formal and less clearly defined and generally does not give rise to any legally enforceable obligations or duties.  An understanding, which lies at the other end of the spectrum to a contract, may be even less formal than an arrangement and may be arrived at tacitly.  Like an arrangement, an understanding does not give rise to any legally enforceable obligations.

20. A core element of both an arrangement and an understanding is that there must be a “meeting of minds” between those who are said to be party to the arrangement or understanding, or some consensus between them, as to what is to be done or not to be done.  If there is no meeting of minds or consensus as to what is to be done, or not to be done, there is no arrangement or understanding. 

21. A mere hope or expectation by one party that the other will act in a particular way is insufficient and will not itself amount to either an arrangement or understanding.  What is required is that at least one of the parties is understood by the other party, and intends to be so understood, as being obliged, or under some form of duty, to act in a particular way.  Usually there is a reciprocity of obligations in that regard, meaning that the other party also is understood, and intends to be understood, as also being obliged to act in a particular way, but that is not always the case.

22. The requirement that there be a meeting of minds or a consensus about how the parties will conduct themselves almost invariably means that there must be some form of communication between the parties which conveys their assent in that respect.  That communication need not be verbal or express.  The assent may be conveyed by conduct and may be tacit.  The proverbial ‘wink and a nod’ is an example of tacit conduct which may convey assent or consensus between the parties. 

23. The existence of an arrangement or understanding can, of course, be established circumstantially.  The requisite meeting of the minds or consensus, and the communication of assent can, for example, be inferred from the way the parties have conducted themselves.  In some cases, the existence of an arrangement or understanding can be inferred from so-called “parallel conduct”, which essentially means similar conduct engaged in two or more people, usually competitors, which can only rationally be explained on the basis that they have an arrangement or understanding to act in that way.   

24. It is not, however, sufficient for the circumstances to give rise to conflicting inferences of equal degrees of probability where one of those inferences does not involve the existence of any arrangement or understanding. The inference that an arrangement or understanding has been made or arrived at must be the more probable inference. Moreover, in determining whether the existence of an unlawful arrangement or understanding can be inferred on the balance of probabilities, it is necessary to take into account the gravity of the allegation: s 140(2)(c) of the Evidence Act 1995 (Cth). The Court must be reasonably satisfied that the inference can and should be drawn. Reasonable satisfaction, in that context, “should not be produced by inexact proofs, indefinite testimony, or indirect inferences”: Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 at 362 (Dixon J).

    THE MORE PROBABLE INFERENCE?     

25. The critical question is whether it was open to the primary judge to infer, from the facts as found, that Hutchinson had made an arrangement, or arrived at an understanding, with the CFMEU that contained the termination provision, and that the termination provision was included in the arrangement or understanding for the proscribed purpose, or for purposes which included the proscribed purpose.  If that inference was open to be drawn, the next question is whether it was open to the primary judge to be satisfied, on the balance of probabilities, that that inference should be drawn to the exclusion of other equally probable or plausible inferences.  Was there at least one other inference which was equally available, if not more probable - that inference being that Hutchinson, aware of the likelihood of industrial action by the CFMEU if it continued to have WPI provide waterproofing services at the Southpoint project, unilaterally terminated WPI’s contract so as to avoid that industrial action?

26. It may be accepted that appellant restraint should be exercised with respect to interference with a trial judge’s factual findings where those findings are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence: Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (Bell, Gageler, Nettle and Edelman JJ); Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [25] (Gleeson CJ, Gummow and Kirby JJ). That said, “in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge”: Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 at 551 (Gibbs A-CJ, Jacobs and Murphy JJ); Lee v Lee at [55]. The question under consideration here falls into the latter category. This Court is in as good a position as the trial judge to determine the proper inference to be drawn from the facts as found by her Honour.

27. For the primary judge to find that Hutchinson had made an arrangement, or arrived at an understanding, with the CFMEU that contained the termination provision, and that the termination provision had been included in the arrangement or understanding for the proscribed purpose, or for purposes which included the proscribed purpose, it was necessary for there to be evidence capable of establishing, to the requisite standard, that there had been a meeting of minds or consensus between Hutchinson and the CFMEU that Hutchinson would terminate its contract with WPI and no longer acquire waterproofing services from it.  Evidence which established no more than a mere expectation that Hutchinson would terminate the contract in the face of the CFMEU’s threat of industrial action would not suffice.   There also effectively had to be some evidence capable of establishing that there had been some form of communication between Hutchinson and the CFMEU which conveyed their consensus or assent in respect of that course of action, and evidence capable of establishing that Hutchinson considered itself obliged or duty-bound in some way to terminate its contract with WPI.

28. There was no direct evidence in respect of any of those matters. That much was common ground. It was therefore necessary for the primary judge to infer the requisite meeting of the minds or consensus, infer that a communication of assent of some sort had occurred, and infer that Hutchinson considered itself obliged or duty-bound to terminate the WPI contract. The primary judge drew those inferences, it appears, from what her Honour considered to be the “parallel conduct” of Hutchinson and the CFMEU. The parallel conduct was said to be the steps taken by each of them to “exclude WPI from the site” and “prevent” or take no “positive steps to allow” WPI’s return to the site: LJ [338].

1. But what exactly was done by Hutchinson and the CFMEU to exclude WPI from the site, or prevent its return?  More importantly, why did that supposedly parallel conduct support the required inferences?

2. When the primary judge’s reasons are closely analysed, the so-called parallel conduct supposedly comprised: first, the statement by Mr Clarke to Mr Meland on 11 June 2016 that he had instructions from Mr Steele to “sit the job down if WPI come on site”; second, the statement by Mr Steele to Mr Meland, at some indeterminate time, that “Ray … won’t be doing your [Hutchinson’s] waterproofing, he won’t be able to get an EBA”; third, the fact that Mr Clarke had told Mr Hadfield to contact Mr Vink and Mr Steele at the CFMEU to “get a go ahead with work”, but that, at least according to Mr Hadfield, his attempts to contact either of those men were unsuccessful; fourth, the fact that, on 19 July 2016, Mr Berlese told Mr Meland to “deal with it” and Mr Meland subsequently signed a letter to WPI advising that the contract had been cancelled; and fifth, the fact that WPI did not perform any further work on the site after 11 June 2016. 

3. If there was any other relevant “parallel conduct” by Hutchinson and the CFMEU, it was not included in her Honour’s summary of the facts and circumstances from which she drew the inference in paragraph 340 of the liability judgment.  Nor was the Court taken to any evidence of any other conduct which was said to be parallel conduct.  In particular, the Court was not taken to any evidence of any “steps” taken by Hutchinson or the CFMEU to either exclude WPI from the site or prevent it from returning.  Nor did there appear to be any such evidence in the material reproduced in the appeal books. 

4. I respectfully do not agree or accept that the facts and circumstances identified by the primary judge can accurately be characterised as parallel conduct as that expression is ordinarily understood.  More importantly, in my view the facts and circumstances identified by the primary judge are incapable of supporting, to the requisite standard, the inference or inferences drawn by her Honour.  While the facts and circumstances must be considered together when considering their evidentiary force, it is useful to consider each fact in turn. 

5. The conversation between Mr Clarke and Mr Meland on 11 June 2016 provides no support for any inference of a meeting of minds or consensus, or an inference that there had been any communication of assent on Hutchinson’s part, or an inference that Hutchinson considered that it was somehow obliged or duty-bound to terminate WPI’s contract.  The primary judge found that Mr Meland was not aware of any arrangement or understanding.  As has already been noted, there is no basis to disturb that finding.  If Mr Meland was not aware of any arrangement or understanding, there could have been no meeting of the minds or consensus between Mr Clarke and Mr Meland on 11 June 2016 concerning the termination of the contract with Hutchinson. 

6. Even putting that to one side, it is abundantly clear that Mr Meland said nothing and did nothing during his conversation with Mr Clarke to suggest that Hutchinson would terminate WPI’s contract, or that Hutchinson considered itself bound in some way to terminate WPI’s contract.  There was no consensus or meeting of minds during that conversation.  Mr Clarke’s statement was simply a unilateral statement of what the CFMEU would do if WPI returned to the site.  Mr Meland’s conduct after his conversation with Mr Clarke was also entirely inconsistent with him having reached any sort of consensus or meeting of minds with Mr Clarke concerning the termination of the contract with WPI.

7. Much the same can be said about the conversation between Mr Steele and Mr Meland.  Considered in its proper context, Mr Steele’s statement that WPI would not be doing Hutchinson’s waterproofing because it would not be able to get an EBA amounted to nothing more than a statement or reiteration of the CFMEU’s stance that it would take industrial action and effectively shut the site down if Hutchinson continued to use WPI to provide waterproofing services at the project.  Mr Steele may well have expected that Hutchinson would not continue to acquire waterproofing services from WPI in the face of the threatened industrial action, but nothing said or done by Mr Meland in response to that statement by Mr Steele could be construed as amounting to any assent or indication by Mr Meland, on behalf of Hutchinson, that Hutchinson assented and considered itself duty-bound in some way to terminate WPI’s contract.  There was no consensus or meeting of minds between Mr Steele and Mr Meland.

8. The primary judge reasoned that Mr Steele’s statement that WPI would not be doing Hutchinson’s waterproofing was “a strong indication that there was already an arrangement or understanding” between the CFMEU and Hutchinson: LJ [340(24)].  It is, with respect, entirely unclear why that is so.  As the primary judge found, Mr Meland did not know anything about any arrangement or understanding at this time.  Putting Mr Meland to one side, there was no evidence that Mr Steele, Mr Clarke, or any other CFMEU representative had communicated with anyone else at Hutchinson about WPI’s position at that time.  The primary judge did not identify who, at Hutchinson, was said to have been involved in making the arrangement or arriving at the understanding by the time of this conversation between Mr Steele and Mr Meland.  It is also difficult to see why, if there was already an arrangement or understanding that Hutchinson would terminate WPI’s contract, that had not already occurred by the time of the conversation between Mr Steele and Mr Meland?  Moreover, if, as the primary judge found, Mr Meland knew nothing about any arrangement or understanding, Mr Meland plainly did not interpret Mr Steele’s statement as a strong indication of the existence of such an arrangement or understanding.  He surely would have questioned or challenged Mr Steele’s statement if he had interpreted it as suggesting that Hutchinson and the CFMEU had already made an arrangement, or arrived at an understanding, that WPI’s contract was to be terminated.  He also would have ceased his efforts to assist WPI to get an EBA.  In all the circumstances, I am unable to agree with the primary judge’s characterisation of the conversation between Mr Steele and Mr Meland. 

9. I also cannot agree with the primary judge’s conclusion that Mr Steele’s statement was a “manifestation of mutual consent to carry out a common purpose”: LJ [340(25)].  For the reasons already given, Mr Steele’s statement, considered in its proper context, amounted to nothing more than a reiteration of the CFMEU’s threat of industrial action and Mr Steele’s expectation that Hutchinson was unlikely to continue to acquire waterproofing services from WPI in the face of that threat.  Mr Steele’s expectation in that regard was not an expectation that arose from the existence of any arrangement or understanding between Hutchinson and the CFMEU.  At the very least, that is an equally likely explanation of Mr Steele’s statement. 

10. The difficulties are even more stark when it comes to the primary judge’s reliance on the fact that Mr Clarke had told Mr Hadfield to contact Mr Vink and Mr Steele to “get a go ahead with work”, but that he had been unable to get into contact with either of those men.  The evidence of the communication between Mr Clarke and Mr Hadfield was to be found solely in an email authored by Mr Hadfield’s son, who also worked at WPI.  Mr Hadfield also repeated his complaint that he had been unable to contact Mr Vink and Mr Steele in a later email.  Neither Mr Hadfield nor his son were called as witnesses. 

11. It is impossible to see how the fact that Mr Clarke had told Mr Hadfield to contact Mr Vink and Mr Steele at the CFMEU, and that Mr Hadfield had been unable to contact those officers, could be said to be a “manifestation of mutual consent” between the CFMEU and Hutchinson, as the primary judge concluded: LJ [340(27) and (32)].  The communication did not involve any officer of Hutchinson.  Mr Clarke was plainly communicating with Mr Hadfield in his capacity as a CFMEU delegate.  He had no actual or apparent authority to speak on Hutchinson’s behalf.  Considered in context, Mr Clarke’s communication amounted to nothing more than an invitation to Mr Hadfield to contact CFMEU officers to discuss the CFMEU’s difficulties with WPI.  The fact that Mr Hadfield was supposedly unable to contact those officers of the CFMEU rose no higher than evidence of the fact that the CFMEU may have been firm or unwavering in its opposition to WPI.  It is, however, questionable that the evidence even rose that high.  

12. In the circumstances, the fact that Mr Clarke told Mr Hadfield to contact Mr Vink and Mr Steele at the CFMEU, but that those officers may have been unable or unwilling to talk to Mr Hadfield, provides no support for an inference that there had been a meeting of minds or consensus between Hutchinson and the CFMEU about the termination of WPI’s contract.  Indeed, if anything Mr Clarke’s communication suggests that, as at 21 June 2016, Mr Clarke considered that there was still a possibility that WPI could sort out the issues that had troubled the CFMEU and “get a go ahead with work”.  That is inconsistent with Mr Clarke being aware of the existence of any arrangement or understanding between Hutchinson and the CFMEU at that time.

13. The fact that Mr Berlese told Mr Meland to “deal with it” and that Mr Meland subsequently sent a letter to WPI terminating the waterproofing contract also provides no support for the inference of an arrangement between Hutchinson and the CFMEU.  Even accepting, as the primary judge did, that Mr Berlese offered “no resistance” to the termination of the contract and intended that Mr Meland should cancel it (LJ [340(33)]), that provides no support for the proposition that Mr Berlese’s knew about, or had any involvement in, Hutchinson having an arrangement or understanding with the CFMEU.  It is at least equally consistent with the proposition that Hutchinson acted unilaterally to terminate WPI’s contract in the face of the CFMEU’s threat of industrial action. 

14. Indeed, that is the more probable inference in all the circumstances.  According to the primary judge, the arrangement or understanding between Hutchinson and the CFMEU had been made or arrived at by around 11 June 2016, more than a month prior to the discussion between Mr Meland and Mr Berlese.  It is difficult to see why it took over a month for Mr Berlese to tell Mr Meland that he should cancel the contract with WPI, if in fact that was what was intended to be conveyed by the words “deal with it”.  The primary judge reasoned that the delay was explicable because Mr Meland was not aware of the arrangement or understanding and was attempting to assist WPI to return to the site: LJ [340(33)].  That does not, however, explain why Mr Berlese, or anyone else at Hutchinson who was supposedly involved in, or knew of, the arrangement or understanding, took over a month to tell Mr Meland that he should terminate the contract, particularly in circumstances where the project was supposedly being delayed because no waterproofing work was being done.  Nor does it explain why, if there had been a meeting of minds of Hutchinson and the CFMEU from as early as 11 June 2016, the CFMEU did not follow up with Mr Meland or anyone else at Hutchinson over the following month to confirm that the contract had been cancelled.   

15. It should also be noted that, while the primary judge made no clear finding that Mr Berlese knew about, or had been involved in the making or the arrangement or understanding, that appeared to be the implication of her Honour’s finding that Mr Meland’s termination of the contract with WPI, a week after his meeting with Mr Berlese, was a “manifestation of mutual consent to carry out a common purpose”: LJ [340(33)].  On the primary judge’s findings, however, there was only one communication between Mr Berlese and a CFMEU representative.  That meeting was said to have occurred in either late May 2016 or June 2016 and involved no more than a complaint by Mr Steele that the CFMEU had not been consulted about WPI’s involvement: LJ [340(16)].  There was no discussion concerning the termination of WPI’s contract.  It was also never put to Mr Berlese in cross-examination that he was involved in, or knew about, any arrangement or understanding with the CFMEU concerning the termination of WPI’s contract, or that he considered that Hutchinson was obliged or somehow duty-bound to terminate the contract in accordance with any such arrangement or understanding.          

16. That leaves the fact that WPI did not perform any work at the Southpoint project after 11 June 2016.  There was no dispute that WPI did not perform any waterproofing at the Southpoint project after 11 June 2016.  There was, however, little or no direct evidence concerning WPI’s exclusion from the site.  There was no evidence concerning how, or by whom, that supposed exclusion was effected.  Mr Meland’s evidence was simply that WPI had done “minimal” waterproofing work during the early stages of the project and that he did not believe that it completed any more work after 11 June 2016.  That is not to say, however, that WPI was excluded from the site from around 11 June 2016.  Indeed, the evidence tended to suggest that no waterproofing work was required on the site until sometime in July 2016.  Another Hutchinson employee, Mr Henk Thone, simply asserted that at some stage he found out that the CFMEU had an issue with WPI and would not allow the company’s workers on site.  That hearsay assertion was deserving of little if any weight.  Given the paucity of evidence, it is not surprising that the primary judge made no definitive or specific findings about how WPI was supposedly excluded from the site, or who was responsible for excluding it, or when that exclusion occurred.  To the extent that the primary judge’s reasoning hinged on the proposition that Hutchinson and the CFMEU “each took steps to exclude WPI from the site” (LJ [338]), that proposition plainly overstated the evidence and is not reflected in her Honour’s summary of the key factual findings in paragraph 340 of the liability judgment. 

17. In any event, the fact that WPI did not do any further waterproofing on the Southpoint project was equally explicable on the basis that the CFMEU had threatened industrial action if WPI performed any further work on the project.  The available inference is that Hutchinson did not ask WPI to perform any further work on the project because it wanted to avoid that industrial action.  That inference is at least equally available, if not more probable, than the competing or conflicting inference that Hutchinson and the CFMEU had made an arrangement, or arrived at an understanding, concerning the termination of WPI’s contract.  The fact that Mr Meland, the very officer or employee of Hutchinson who retained WPI, who dealt with the CFMEU concerning its difficulties with WPI, who dealt with WPI concerning those issues, and who was responsible for terminating WPI’s contract, was not involved with and knew nothing about any arrangement or understanding between Hutchinson and the CFMEU, tells strongly against the availability of the inference drawn by the primary judge. 

18. It was not, in all the circumstances, open to the primary judge to infer, from the primary facts as found, that Hutchinson made an arrangement, or arrived at an understanding, with the CFMEU which contained the termination provision.  There was, in short, insufficient evidence to support an inference that there had been any relevant meeting of minds or consensus between Hutchinson and the CFMEU, and insufficient evidence that Hutchinson had communicated its assent that it would terminate the WPI contract, or that it considered that it was under any obligation or duty to terminate the contract as a result of its dealings with the CFMEU.

19. I should add that in its submissions the ACCC appeared at times to contend that the relevant meeting of minds or consensus, and the relevant communication of assent as to the course of action to be followed, occurred at or about the time that Mr Meland, on behalf of Hutchinson, terminated the contract with WPI, or perhaps at the time Mr Berlese told Mr Meland to “deal with it”.  The submission appeared to be that, by succumbing to the CFMEU’s threats and terminating the contract, Hutchinson both reached a consensus with the CFMEU and communicated its asset in that regard. 

20. That submission must be rejected for several reasons, not the least of which being that it is entirely inconsistent with the primary judge’s findings.  As has already been noted, the primary judge concluded that the arrangement or understanding was in existence at around the time Mr Clarke told Mr Meland that the CFMEU would “sit the job down”.  The ACCC did not contest or dispute that finding.  According to the primary judge’s findings, there must have been a meeting of minds at about that point in time.  That conversation occurred more than a month before the contract with WPI was terminated.  The contract was also terminated by Mr Meland, who on the primary judge’s findings was unaware of any arrangement or understanding with the CFMEU. 

21. I would in any event reject the submission that the arrangement between Hutchinson and the CFMEU was made, or the understanding was arrived at, merely by virtue of Hutchinson succumbing to the CFMEU’s threat of industrial action and terminating the contract with WPI.  The evidence was incapable of supporting any inference that there was any meeting of minds or any communication of any assent or consensus, between Hutchinson and the CFMEU, either at the time Mr Berlese told Mr Meland to “deal with it”, or when Mr Meland terminated the contract.  There was no evidence that anyone at Hutchinson ever told anyone at the CFMEU that it was about to terminate the contract, or even that it had terminated the contract.    

22. Even if it was possible to infer that Hutchinson and the CFMEU made an arrangement, or arrived at an understanding, the primary judge also had to be satisfied, on the balance of probabilities, that both Hutchinson and the CFMEU included the termination provision in that arrangement or understanding for the proscribed purpose.  The primary judge inferred, from the primary facts referred to earlier, that both Hutchinson and the CFMEU had that subjective purpose.  Presumably that subjective purpose was held at the time the arrangement was made, or the understanding arrived at, which according to her Honour’s reasons was at or around the time of the conversation between Mr Meland and Mr Clarke on 11 June 2016.  Her Honour did not, however, identify any officer or officers of either Hutchinson or the CFMEU who had that subjective purpose at that time, or indeed at any time.      

23. For the reasons already given, I am again unable to accept that it was open to the primary judge to find that the inference that Hutchinson and the CFMEU included the termination provision for the proscribed purposes was more probable than the competing or conflicting inference that Hutchinson, though Mr Meland, unilaterally decided to terminate its contract with WPI in the face of the CFMEU’s threat.  Put simply, the equally, if not more probable, inference was that Hutchinson’s purpose in terminating the contract was simply to avoid any, or any ongoing, industrial action by the CFMEU.

24. The primary judge appears to have drawn the inference that Hutchinson and the CFMEU had the proscribed purpose from the same primary facts from which she drew the inference as to the existence of the arrangement or understanding.  It is unnecessary to repeat what has already been said concerning those primary facts and the difficulties involved in inferring from them that there had been a meeting of minds, or consensus, between any officers or representatives of Hutchinson and the CFMEU, that Hutchinson would terminate its contract with WPI and stop acquiring services from it.  The same issues and difficulties arise in relation to the drawing of an inference that any officers or representatives of Hutchinson and the CFMEU included the termination provision for the proscribed purpose. 

1. In Hutchinson’s case, Mr Meland could not have held the proscribed purpose because, as the primary judge found, he was not aware of any arrangement or understanding.  That effectively left Mr Berlese.  It was never put to Mr Berlese in cross-examination that he had the proscribed purpose.  His involvement in the events in question was also extremely limited.  He told Mr Meland to “deal with it”, but that occurred, on the primary judge’s findings, well over a month after the arrangement had supposedly been made, or the understanding arrived at.  In the CFMEU’s case, it was again never put to either Mr Steele or Mr Clarke that they had the proscribed purpose, and the primary judge did not expressly or clearly find that either of them did.  Nor was there any finding that anyone else at the CFMEU who had had any involvement in the events in question had that purpose.

2. At the end of the day, one is left with the abiding impression that the primary judge inferred that at some unspecified point some unspecified officers or representatives of Hutchinson and the CFMEU had the proscribed purpose because Mr Clarke and Mr Steele had made it clear that the CFMEU would engage in industrial action if Hutchinson continued to use WPI, and sometime later Hutchinson terminated its contract with WPI.  The fundamental problem with that is that the equal, if not more probable, inference which was available from the primary facts was that Hutchinson simply decided to terminate the contract for the purpose of avoiding industrial action by the CFMEU.  It was not the product of any arcane arrangement or understanding with the CFMEU containing the termination provision which was included for the proscribed purpose.

3. I should finally add that while the primary judge adverted to s 140(2) of the Evidence Act and the need for the Court to take into account the gravity of the matters alleged when deciding if it is satisfied on the balance of probabilities (LJ [113]), it is not readily apparent that her Honour gave sufficient attention to that consideration or the principles in Briginshaw. The matters alleged against Hutchinson and the CFMEU were serious and the consequences which were likely to flow from a finding that they had contravened s 45E of the C&C Act were grave, yet the primary judge’s “reasonable satisfaction” could fairly be said to have been “produced by inexact proofs, indefinite testimony, or indirect inferences”: Briginshaw at 362 (Dixon J).

   CONCLUSION – INFERENCE UNAVAILABLE OR NOT MOST PROBABLE

4. Even if it was open to the primary judge to infer the existence of an arrangement or understanding between Hutchinson and the CFMEU which contained the termination provision, there was an equally available, if not more probable, inference which explained the events which had occurred.  That equally available, if not more probable, inference was that Hutchinson unilaterally decided to terminate WPI’s contract in the face of the CFMEU’s threat of industrial action.  Put simply, Hutchinson made a commercial decision to terminate WPI’s contract and retain the services of another company to avoid potentially costly and inconvenient industrial action by the CFMEU at the Southpoint project.  The availability of that inference from the primary facts also fundamentally undermines the primary judge’s inference that Hutchinson and the CFMEU included the termination provision for the proscribed purpose.   

5. Whatever one may think of the propriety of the CFMEU’s conduct in threatening to “sit the job down” if WPI performed waterproofing work at the Southpoint project, the ACCC’s attempt to shoehorn that conduct into the arcane and awkward terms of s 45E of the C&C Act was unsuccessful. A corporation which merely succumbs to threats of industrial action by a union by, relevantly, unilaterally terminating a subcontract, does not by that action alone contravene s 45E of the C&C Act. A corporation which succumbs to threats of industrial action by a union only contravenes s 45E if it succumbs to the threats and makes a contract or arrangement, or arrives at an understanding, with the union which contains a provision included for the purpose of, relevantly, terminating the subcontract and thereby preventing or hindering itself from acquiring the services of the subcontractor: cf Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466; [2007] FCAFC 132 at [194]. The evidence which was before the primary judge was not capable of establishing, to the requisite standard, that Hutchinson made any such arrangement, or arrived at any such understanding, with the CFMEU. Nor was it capable of establishing, to the requisite standard, that both Hutchinson and the CFMEU had the proscribed purpose.

6. It follows that Hutchinson has successfully made out grounds one to five of its notice of appeal and the CFMEU has successfully made out ground four of its notice of appeal. The finding that Hutchinson contravened s 45E(3) and s 45AE of the C&C Act must accordingly be set aside, as must the finding that the CFMEU was knowingly concerned in, or party to, those contraventions and the finding that the CFMEU induced those contraventions.

7. As I have already indicated, I agree with what Bromwich and Anderson JJ have said concerning the other grounds of appeal.  I do, however, wish to say something briefly concerning the CFMEU’s appeal in respect of the pecuniary penalties imposed by the primary judge.

   THE PENALTY APPEAL

8. I agree with Bromwich and Anderson JJ that, because the findings and declarations that Hutchinson contravened s 45E(3) and s 45AE of the C&C Act, and that the CFMEU induced, and was knowingly concerned in, or a party to, those contraventions must be set aside, the orders imposing pecuniary penalties on both Hutchinson and the CFMEU in respect of those contraventions must also be set aside. It follows that it is strictly unnecessary to consider the CFMEU’s appeal concerning the penalties imposed on it.

9. Had it been necessary for me to consider the CFMEU’s appeal against the penalty imposed on it, however, I would have been inclined to allow that appeal.

10. The primary judge imposed the maximum penalty of $750,000 on the CFMEU for being knowingly concerned in Hutchinson’s contraventions and the maximum penalty of $750,000 for having induced those contraventions: Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (No 2) [2022] FCA 1007 (PJ). 

11. The imposition on the CFMEU of pecuniary penalties totalling $1.5 million bespeaks error. I am unable to see how it could reasonably be concluded that the object of deterrence justified the imposition of the maximum penalty on the CFMEU for both inducing and being knowingly concerned in or party to Hutchinson’s contraventions in circumstances where: the CFMEU’s conduct in inducing Hutchinson’s contraventions was identical to the conduct by which the CFMEU was said to be knowingly concerned in, or party to, those contraventions; neither Mr Steele nor Mr Clarke were members of the senior management of the CFMEU (PJ [80]) and there was otherwise no evidence that any senior managers or officials of the union were involved in, or even knew about, the contraventions; the contraventions were not covert, or particularly sophisticated; there was no evidence that WPI suffered any loss or damage as a result of the termination of its contract; the CFMEU had only been found to have engaged in similar conduct in contravention of Pt IV of the C&C Act on one earlier occasion (PJ [75]) and had never previously been found to have contravened, or to have been involved in the contravention of, s 45E of the C&C Act; there had been no repetition of conduct similar to the contravening conduct in the six years between the date of the contraventions and the date of the penalty hearing; and penalties of only $300,000 were imposed on Hutchinson, the principal contravenor.

12. In all the circumstances, the penalties imposed on the CFMEU were oppressive, in the sense that they were greater than was necessary to achieve the object of deterrence and did not strike a reasonable balance between deterrence and oppressive severity: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [40]-[41]. I am respectfully unable to accept the primary judge’s assertion that no lesser penalty would have been an effective deterrent against future contraventions by the CFMEU or others: PJ [90].

13. It appears to me that the primary judge’s error in imposing oppressive penalties was the product of her Honour giving excessive and unjustifiable weight to the fact that the CFMEU had in the past been found to have contravened industrial legislation: PJ [76]-[77]. It is difficult to see how the primary judge could have concluded that the CFMEU’s past history of contravening industrial legislation indicated that its conduct in this matter was yet another instance of its “pursuit of a strategy of deliberate recalcitrance in order to have its way” (see PJ [78], citing Pattinson at [46]), particularly in circumstances where no senior management had been involved in the conduct. There was insufficient evidence to suggest that Mr Steele, who the primary judge appears to have considered was the union officer responsible for the contraventions, had had anything to do with, or even knew about all of the CFMEU’s past contraventions of industrial laws, or knew that what he did was contrary to the law, let alone that he was pursuing a strategy of deliberate recalcitrance.

14. It also appears that the primary judge failed to have regard to the principles concerning course of conduct and totality as “analytical tools”: Pattinson at [45]. Plainly the CFMEU’s conduct in being knowingly concerned in Hutchinson’s contraventions, and its conduct in inducing the contraventions, were part of the same course of conduct, yet her Honour failed to take that into account and failed to consider whether, in those circumstances, the total penalty of $1.5 million was reasonably necessary to deter future contraventions. It is also difficult to accept that any different degrees of culpability or different circumstances can reasonably explain the marked disparity between the total penalties imposed on Hutchinson ($600,000), as principal contravenor, and the total penalties imposed on the CFMEU ($1.5 million) for inducing or aiding Hutchinson’s contraventions: cf PJ [89].

    DISPOSITION

15. The appeals by both Hutchinson and the CFMEU should be allowed.  Declarations 1 to 4 made by the primary judge on 14 February 2022 should be set aside, as should orders 1 to 4 made on 30 August 2022.  In lieu thereof, the ACCC’s originating application filed on 3 December 2020 should be dismissed with costs.  The ACCC should also pay Hutchinson’s and the CFMEU’s costs of the appeal.

I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.

Associate:

Dated:       29 February 2024

REASONS FOR JUDGMENT

BROMWICH AND ANDERSON JJ:

INTRODUCTION

1. These are appeals from orders made by a judge of this Court following judgment against both respondents, now appellants, as to liability and penalty for proscribed anti-competitive conduct.  The proceedings were brought by the Australian Competition and Consumer Commission (ACCC), now respondent to these appeals.  Her Honour:

   (a)for reasons given in Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2022] FCA 98; 404 ALR 553 (Liability Judgment or LJ), declared that J Hutchinson Pty Ltd and the Construction, Forestry and Maritime Employees Union (then known as the Construction, Forestry, Maritime, Mining and Energy Union) (CFMEU) contravened, as principal and accessory respectively, secondary boycott provisions of the Competition and Consumer Act 2010 (Cth) (CCA); and

   (b)for reasons given in Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (No 2) [2022] FCA 1007, ordered Hutchinson and the CFMEU to pay pecuniary penalties with respect to those contraventions.

2. Both Hutchinson and the CFMEU appeal against the liability findings.  The CFMEU also appeals against the penalties imposed.  The ACCC relies upon a notice of contention.

   BEFORE THE PRIMARY JUDGE

   Background

3. The primary judge provided the following concise summary of the proceeding by way of an introduction to the Liability Judgment:

   [2]       The first respondent (Hutchinson) is a large, privately owned construction company, delivering projects with an estimated value of $2.5 billion annually.  Hutchinson was the head contractor for the Southpoint A construction project located at 269 Grey Street, South Brisbane in Queensland (the Southpoint project).  The Southpoint project was the design and construction of a residential apartment tower.

   [3]       The second respondent (the CFMEU) is a trade union organisation. In 2016, the CFMEU was an organisation for the purposes of s 27 of the Fair Work (Registered Organisations) Act 2009 (Cth). On 27 March 2018, the CFMEU amalgamated with the Maritime Union of Australia and the Textile, Clothing and Footwear Union of Australia to become the CFMMEU. However, in these reasons, it will be referred to as the CFMEU as it was known in 2016 and as it was referred to by the parties and the witnesses at the trial.

   [4]       Hutchinson was covered by a CFMEU enterprise bargaining agreement which was approved in 2012 (2012 EBA) which was replaced by another enterprise bargaining agreement in November 2015 (2015 EBA). 

   [5]       Relevantly, pursuant to clause 35.2 of the 2015 EBA, Hutchinson was obliged to consult with its employees and the CFMEU about the appointment of subcontractors in certain circumstances where the use of those subcontractors may potentially affect the job security of those employees.  Clause 35.2 also provided to the effect that, if, after consultation, a subcontractor was engaged by Hutchinson, the subcontractor and its employees will receive terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees under the 2015 EBA performing the same work.

   [6]       The parties and the witnesses used the expression “EBA” to describe a CFMEU enterprise bargaining agreement entered into by a contractor or subcontractor.  They also used the expression “non-EBA” to describe a situation where a contractor or subcontractor did not have an “EBA”, being one covered by the CFMEU.  The evidence shows that such terms were used in 2016, and were understood to have these meanings at that time.  I will adopt these expressions in these reasons.

   [7]       Waterproofing Industries Qld Pty Ltd (WPI) is a company which entered into a subcontract with Hutchinson on 22 March 2016 to perform certain waterproofing works at the Southpoint project. 

   [8]       WPI did not have an EBA and the CFMEU complained that it was not consulted prior to its engagement. 

   [9]       Shortly after this, the CFMEU threatened to engage in industrial action if Hutchinson allowed WPI to continue working on the Southpoint project.

   [10]     WPI was excluded from the site from 11 June 2016 and its subcontract was terminated by letter dated 26 July 2016.

   [11]     The Australian Competition and Consumer Commission (ACCC) alleges that Hutchinson contravened ss 45E(3) and 45EA of the Competition and Consumer Act 2010 (Cth) by making, and giving effect to, an arrangement or arriving at an understanding with the CFMEU or one of its officers, described as the boycott arrangement, containing the boycott provision.  The boycott provision is said to have this content: that Hutchinson would terminate a subcontract with, or otherwise cease to acquire services from, WPI at the Southpoint project in 2016. 

   [12] The ACCC also alleges that the CFMEU has accessorial liability with respect to Hutchinson’s contraventions. The ACCC alleges that the CFMEU induced Hutchinson’s contraventions of ss 45E(3) and 45EA of the Act by threatening or implying that there would be conflict with, or industrial action by, the CFMEU if Hutchinson did not cease using WPI. The ACCC also alleges that the CFMEU was, by the same conduct and by being party to the boycott arrangement, knowingly concerned in, or party to, those contraventions for the purposes of s 76 of the Act.

   [13]     A key defence which is raised by the respondents was to the effect that the exclusion of WPI from the site and the termination of the WPI subcontract arose as a result of the unilateral and erroneous belief of Mr Meland, the project manager, that WPI required an EBA by reason of the terms of the 2015 EBA, rather than any unlawful arrangement or understanding between the CFMEU and Hutchinson. 

4. The primary judge found that there was a proscribed agreement or understanding containing a boycott provision.  A central issue at trial, maintained on appeal, was whether the primary judge was correct in making that finding. 

5. In these reasons, consistently with the approach taken by the primary judge, a reference to an enterprise bargaining agreement (EBA) is a reference to a CFMEU EBA, such that references to WPI not having an EBA is a reference to it not having a CFMEU EBA.

   Relevant provisions of the CCA

6. The primary judge succinctly extracted or summarised the key relevant provisions of the CCA as follows, there being no suggestion of error in that regard:

   [278] Section 45E of the Act is directed at situations where a person capitulates in order to avoid loss or damage as a result of threatened industrial action against the target: Explanatory Memorandum to the Workplace Relations and Other Legislation Amendment Bill 1996 (Cth) at [18.30].  It relevantly prohibits a corporation from making an arrangement or arriving at an understanding with an organisation of employees (or an officer or other person acting on behalf of the organisation) if:

   (a)the corporation has, in the past three months acquired services from a person; and

   (b)the arrangement or understanding contains a provision that has the purpose of preventing or hindering the corporation from acquiring or continuing to acquire services from that person.

   [279] Relevantly, s 45E of the Act provides as follows:

   Situations to which section applies

   (1)  This section applies in the following situations:

   …

   (b)an acquisition situation—in this situation, a person (the first person) has been accustomed, or is under an obligation, to acquire goods or services from another person (the second person).

   Despite paragraphs (a) and (b), this section does not apply unless the first or second person is a corporation or both of them are corporations.

   Note:For the meanings of accustomed to supply and accustomed to acquire, see subsections (5) and (7).

   …

   Prohibition in an acquisition situation

   (3)In an acquisition situation, the first person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:

   (a)preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person; or

   (b)preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person, except subject to a condition:

   (i)that is not a condition to which the acquisition of such goods or services by the first person from the second person has previously been subject because of a provision in a contract between those persons; and

   (ii)that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services.

   …

   Meaning of accustomed to acquire

   (7)In this section, a reference to a person who has been accustomed to acquire goods or services from a second person includes (subject to subsection (8)):

   (a)a regular acquirer of such goods or services from the second person;      or

   (b)a person who, when last acquiring such goods or services, acquired them from the second person; or

   (c)a person who, at any time during the immediately preceding 3 months, acquired such goods or services from the second person.

   [280] Subsection 45EA[1](a) of the Act provides that a person must not give effect to a provision of a contract, arrangement or understanding if, because of the provision, the making of the contract or arrangement, or the arriving at the understanding, by the person, contravened s 45E(3).

1. A central problem with the primary judge’s reasoning is the absence of an isolation of a sufficient basis for an inference of assent that went beyond succumbing to the ongoing demands and even threats of the CFMEU, including practical impediments to WPI working on the site, sufficient to rise to the level of the more probable explanation being that the expectation was exceeded, and an agreement or understanding encompassing the proscribed provision being made or reached.  Absent that, the alternative benign explanation of Hutchinson merely succumbing could not be displaced as being at least equally likely.  There is no getting around the perennial problem for secondary boycott allegations of showing that what has occurred is more than the simple explanation of industrial muscle prevailing (for which there may or may not be remedies in industrial law).  A tolerably clear case is needed to show that this line has been crossed, even though the necessary ultimate adverse conclusion can, in principle, be substantially or even entirely based on inferences drawn in a circumstantial case.  In practice, however, excluding an equally probable benign explanation which is still based on malign conduct can be insurmountably difficult.  The ACCC’s evidentiary case ultimately rose no higher than demonstrating that the evidence supported this as a possible and plausible explanation for what had taken place, rather than being the most probable.  The primary judge’s efforts to find this to be the more probable explanation for what had occurred regrettably fell short of what was required.

2. The reasons for reaching this conclusion can be succinctly stated as follows, largely (but not entirely) accepting the arguments advanced by the appellants as detailed above as to inadequacy of the substratum findings of the primary judge in the 33 subparagraphs of LJ[340] as a basis for inferring that the indispensable state of mind requirement of assent for the existence of an arrangement or understanding had been met, and largely (but not entirely) rejecting the arguments of the ACCC as to the sufficiency of those substratum findings for that state of mind aspect.

3. Consideration of the 33 subparagraphs of LJ[340] in light of the need for the conclusion of an arrangement or understanding being the more probable inference to draw gives rise to the following assessment:

   (a)Subparagraphs (1) to (11) are findings directed to the background of the subcontract tender process, including that process itself and the awarding of the subcontract to WPI.  As such they provide context to what followed and are part of the factual matrix by which the later conduct falls to be understand and assessed.  But they do not themselves amount to any basis for finding that there was the necessary conduct or state of mind for the bringing into existence of any arrangement or understanding.

   (b)Subparagraphs (12) to (16) are findings as to WPI performing some work under the subcontract, and Mr Steele and Mr Clarke becoming aware of WPI being engaged with the knowledge that WPI did not have an EBA (that is, a CFMEU EBA).  The findings also address concerns raised about WPI as to a lack of consultation by Hutchinson with CFMEU as required by cl 35.2 of the EBA between Hutchinson and the CFMEU, and WPI not being registered with industry funds for the payment of worker entitlements. 

   (c)Subparagraph (17) records the primary judge’s inference, by reason of the matters in subparagraphs (2)-(4), (6), (10) and (16), that the subcontract with WPI would not have been entered into had the required consultation with the CFMEU taken place.  This inference does not of itself contribute to the conclusion that an arrangement or understanding had come into existence, but is again a contextual matter relevant to the facts as found as a whole.

   (d)Subparagraph (18) contains the finding that on 11 June 2016, a Saturday, Mr Clarke had approached Mr Meland and said that he had strict instructions from Mr Steele to “sit the job down” if WPI came on the site, which the primary judge characterised as a threat to engage in industrial action if Hutchinson allowed WPI to come back on to the site.  Subparagraph (19) contains the further finding that during the same conversation, the two men discussed the reason that WPI was not to be allowed back on the site was because it did not have an EBA. 

   (e)Subparagraphs (18) and (19) are of singular importance to the primary judge’s inferential reasoning, because they contain the CFMEU’s demand and supporting threat, which is at the centre of the arrangement or understanding alleged by the ACCC and found by the primary judge to have been brought into existence by that day, 11 June 2016. 

   (f)All of the findings by the primary judge after subparagraph (19) are about events that post-date 11 June 2016, being the date by which the primary judge found that the arrangement or understanding had come into existence.  As such, the most that subparagraph (20) and following can do in supporting an inference of the existence of that arrangement or understanding is to reflect or be consistent with that having already taken place, described by her Honour at subparagraphs (25) (in relation to the findings at (24)), (27), (32) (in relation to the findings at (31)) and (33) as each being a later “manifestation of mutual consent to carry out a common purpose”.  Each event is therefore not itself evidence of the state of mind necessary at the point of formation of the arrangement or understanding, but rather at most the basis for finding an ex post facto manifestation that this is the state of mind that existed when that had earlier occurred. 

4. Great care must be taken with drawing inferences about the state of mind attaching to what has taken place at a particular point of time from conduct that has taken place later, especially as it carries the danger identified by Hutchinson of circular reasoning in supporting a conclusion already reached which involves assuming that the prior conclusion is correct.  As such, each event characterised by the primary judge as a manifestation of consent and thus the necessary state of mind, requires close consideration and assessment of its evidentiary capacity and weight.  That is because the necessary state of mind cannot be acquired after the arrangement or understanding is found to have come into existence, because it is an indispensable part of what must be present for that to exist.

5. The primary judge:

   (a)at LJ[336], in paraphrasing Associated Northern Collieries at 400; and

   (b)at LJ[340] at subparagraphs (25), (27), (32) and (33) in using the phase “manifestation of mutual consent to carry out a common purpose” sourced from both the original quote from Associated Northern Collieries and her Honour’s paraphrasing of that quote,

   relied on conduct by words and by actions of officers of the CFMEU in relation to WPI’s attempts to obtain an EBA and to work on the site as evidence of the CFMEU’s assent to the arrangement or understanding, or upon a conversation between Mr Berlese and Mr Meland about terminating the WPI subcontract (and subsequently doing so).  The thrust of Hutchinson’s argument, and also the CFMEU’s argument although not quite stated as such, is that each of these later manifestations were equally explicable as reflecting the CFMEU’s unilateral demand that Hutchinson cease using WPI to provide waterproofing services, and its determination that this use of WPI would not take place, as they were of reflecting any meeting of the minds as to an arrangement or understanding.  That argument applies the formation of the requisite arrangement or understanding by 11 June 2016, being both that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project, and that the WPI contract would be terminated.  Hutchinson submits that her Honour’s reasoning assumes the existence of the arrangement or understanding in order to give the malign interpretation of what was said or done by the CFMEU to manifest consent to the exclusion of WPI from the site and termination of its contract.  For the following reasons that characterisation should be accepted.

6. As to the later manifestations of the arrangement or understanding found by the primary judge, subparagraph (24) contains findings by her Honour about Mr Meland’s attempts to find a way to enable WPI to come back on site, by endeavouring to assist WPI to obtain an EBA.  Those attempts included Mr Meland speaking to Mr Steele about why WPI could not get an EBA.  The primary judge found that Mr Steele said that Mr Ray Hadfield (in context meaning WPI) would not be doing the waterproofing at the site because he would not be able to get an EBA, and suggested that Hutchinson instead use another subcontractor, Spanos, who did have an EBA.  Her Honour found that these words uttered by Mr Steele were a strong indication that there was already an arrangement or understanding between Hutchinson and the CFMEU and that Hutchinson would no longer acquire waterproofing services from WPI at the site and, in the circumstances where it was known that there was already a subcontract, that this would be terminated.  At subparagraph (25), her Honour found that Mr Steele’s statements were a “manifestation of mutual consent to carry out a common purpose”, being the state of mind applicable to the content of the arrangement or understanding. 

7. There are two problems with this reasoning.  First and foremost, this analysis and finding does not of itself amount to a finding that there was assent, but rather is at most some measure of corroboration for such a finding already independently reached.  To regard it as going further than this involves unavoidable reasoning of assuming something has occurred in order to prove that it has taken place.  A confirmatory manifestation of this kind does not of itself support the drawing of an inference that the necessary state of mind was present when the arrangement or understanding was said to have been reached at an earlier point in time, being the time of formation.  Secondly, this manifestation is equally consistent with unilateral action on the part of Hutchinson to exclude WPI from the site.  Properly viewed, it is intractably neutral, and affords no sound independent basis for a finding that the arrangement or understanding had been earlier brought into existence with the necessary state of mind.

8. As to the second later manifestation found by the primary judge, subparagraph (27) refers to WPI being informed by Mr Clarke on or about 21 June 2016 that it needed to call a CFMEU representative, Mr Scott Vink, to “get a go ahead with work”.  As Mr Vink was not able to be contacted until 4 July 2016, Mr Clarke told WPI to speak to Mr Steele, who could not be contacted despite repeated calls.  Mr Meland was informed of these facts by email, which is considered below in relation to the third later manifestation found by the primary judge.  Her Honour found that requiring WPI to contact Mr Vink and then Mr Steele to enable it to resume work at the site, and not returning the calls, was a further “manifestation of mutual consent to carry out a common purpose”, being the state of mind applicable to the content of the arrangement or understanding.  While it is not altogether clear how this conduct is a later manifestation of any prior state of mind, this finding in any event suffers from the same weakness as the first manifestation found, in that again it does not of itself support an inference that the necessary state of mind was present when the arrangement or understanding was said to have been reached at an earlier point in time.  While it may not be equally consistent with unilateral action on the part of Hutchinson to exclude WPI from the site because encouragement is being given to taking the issue up with the CFMEU rather than Hutchinson, it remains evidence that is neutral in its effect because it suggests that a return to the site was thought possible contrary to an arrangement or understanding that this would not take place.  Properly viewed, it too affords no independent basis or even any real contributory basis for a finding that the arrangement or understanding had earlier been brought into existence with the necessary state of mind.

9. As to the third later manifestation found by the primary judge, subparagraph (31) reproduces the email sent by Mr Ray Hadfield to Mr Meland on 13 July 2016 about the attempts to get in contact with Mr Vink and Mr Steele in relation to WPI being forced to stop work at the site and seeking his assistance.  This email in substance is a written version of the second later manifestation, and accordingly the same conclusions apply.

10. As to the fourth and final later manifestation found by the primary judge, subparagraph (33) contains findings about the conversation between Mr Berlese and Mr Meland about terminating the WPI subcontract, culminating in Mr Berlese telling Mr Meland to “deal with it”.  Her Honour found that this conversation, including there being no resistance by Mr Berlese to terminating the subcontract, and her Honour’s inference that this was what Mr Berlese intended Mr Meland to do, when coupled with that termination taking place a week or so later on 26 July 2016, was itself a “manifestation of mutual consent to carry out a common purpose”, again being the state of mind applicable to the content of the arrangement or understanding.  There are two problems with this conclusion.  First, this is directed only to Hutchinson and accordingly does not take things further than unilateral conduct to terminate the WPI subcontract, and it is intractably neutral as to whether it is reflective of an arrangement or understanding or of parallel conduct.  Secondly, it adds nothing to the more critical issue of assent by the CFMEU. 

11. Taken as a whole, all four manifestations of mutual consent to carry out a common purpose as the state of mind applicable to the content of the arrangement or understanding relied upon by the primary judge do not advance in any material way the conversation between Mr Clarke and Mr Meland on 11 June 2016 as a basis for finding that the requisite state of mind existed to take what occurred beyond Hutchinson merely succumbing to threats by the CFMEU.  This conversation on its own does not establish any more than unilateral parallel action by Hutchinson in response to the threats made by the CFMEU.  The conclusion that must therefore be reached is that the primary judge erred in finding that the meeting of minds, or the equivalent, necessary for an arrangement or understanding was proven.

12. It follows that the finding by the primary judge that the ACCC proved the existence of the alleged arrangement or understanding between Hutchinson and the CFMEU cannot stand.  The appeal grounds to that effect must succeed, noting the rejection of the ACCC’s notices of contention below.  

    The ACCC notices of contention

13. The ACCC’s notices of contention in each appeal, cast in substantially identical terms, assert that the primary judge erred in finding at LJ[340(33)] that Mr Meland was “not himself aware of the arrangement or understanding between Hutchinson and the CFMEU and was attempting to assist WPI to return to the site” upon the basis that this finding was not available to her Honour on the available evidence.  The ACCC therefore contend that her Honour ought to have found that Mr Meland was aware of the arrangement or understanding between Hutchinson and the CFMEU and, even if reluctantly, entered into it and gave effect to it on behalf of Hutchinson. 

14. On any view, a challenge to a trial judge finding an absence of knowledge or awareness on the part of a witness and participant in events the subject of litigation faces a steep hurdle.  It is not enough to point to evidence that could have supported a contrary finding.  That contrary finding must be shown to be compelled by the evidence such as to amount to an error in not making it.

15. The ACCC submits that the evidence and circumstances which supported a finding that Mr Meland was aware of an arrangement or understanding which had been reached between Hutchinson and the CFMEU was as follows:

    (a)Mr Meland knew about the CFMEU’s threats and of the decision to suspend WPI in response;

    (b)it is unlikely that Mr Meland would have terminated the WPI subcontract without running it past Mr Berlese who was his supervisor and did not arrive at his decision to do so without exhausting attempts to get an EBA for WPI before realising this was futile, relying upon the primary judge’s findings to that effect at LJ[273];

    (c)a belief on the part of Mr Meland that he was duty-bound to adhere to the wishes of Hutchinson to terminate the WPI subcontract is able to be derived from his statement to Mr Thone, the site manager, that the issue concerning WPI was “out of [his] hands” in response to Mr Thone saying to him that there was no law saying it had to be an EBA subcontractor, relying upon her Honour’s reasons at LJ[244]-[248];

    (d)Mr Meland gave evidence that he had conversations with Mr Berlese about WPI prior to their last conversation on this topic on or about 19 July 2016;

    (e)Mr Meland’s evidence was that the only reason he terminated the WPI subcontract by the 26 July 2016 letter using a “termination for convenience” clause was to avoid the risk of an industrial dispute with the CFMEU, with the use of such a clause being unusual and unorthodox;

    (f)the above facts support an inference that Mr Meland ultimately accepted that he had no choice but to terminate the WPI subcontract, however reluctantly, and the primary judge therefore ought to have found that he was aware of the arrangement or understanding and reluctantly participated in making and giving effect to it.

16. The compelling argument advanced by Hutchinson to the contrary is essentially one arising from the logic and sequence of events.  Hutchinson notes that the ACCC does not identify a finding by the primary judge that Mr Meland knew about the threats made by the CFMEU, but he plainly knew about the exclusion of WPI from the site because of the steps that he took to overcome this.  The main point advanced by Hutchinson (and therefore also the CFMEU) is that it does not make any sense for Mr Meland to have any awareness that an arrangement or understanding had been reached by 11 June 2016 to culminate in the end of contractual relations with WPI, and then try for over a month after that to get an EBA for WPI which would be contrary to any such arrangement or understanding, before giving up and terminating the subcontract.  The primary judge’s finding of a lack of such awareness on the part of Mr Meland is the only thing that makes sense of these continued endeavours.  This conclusion is reinforced by the ACCC failing to identify any evidence that Mr Meland knew about the threats made by the CFMEU about continuing to use WPI.  No error on the part of the primary judge has been demonstrated. 

17. Both notices of contention must therefore be dismissed.

    Whether it was open to the primary judge to find that the real issue between Hutchinson and the CFMEU was that WPI did not have an EBA

18. The primary judge found that the CFMEU did not only have an issue with WPI not registering with funds into which benefits were required to be paid in the construction industry covering superannuation, income protection and welfare benefits, but that the “real issue” for the union giving rise to the demands that were made was that WPI did not have an EBA, being a CFMEU EBA: see LJ[340] at (24), (25), (27) and (32), in the context of (18)-(22) addressing the meeting on Saturday, 11 June 2016 and the email sent by Mr Meland the following Monday, 13 June 2016; including the related references to the “true issue” and the “real reason”. 

19. Hutchinson advances this ground of appeal in support of the preceding successful grounds, largely to undercut the primary judge’s reasoning leading to the finding of contravention by proffering an alternative explanation for what took place which was inconsistent with there being any arrangement or understanding as alleged.  If successful, this would bolster the conclusion reached above that the primary judge erred in finding that there was an arrangement or understanding.

1. Hutchinson contends that the real issue, as a factual question on the evidence before the primary judge, was compliance with pay parity obligations in cl 35.2 of the EBA, mainly by way of registration with, and payment into, the industry funds consistently with those paid to other employees on the site.  The CFMEU’s appeal ground is wider, turning on broader analysis of the terms of cl 35.2 which was unsuccessful before the primary judge, but also encompassing aspects of Hutchinson’s argument directed to the evidence.  In light of conclusions already reached as to the finding of contravention being vitiated by error, each of these appeal grounds requires only relatively confined consideration. 

2. The argument advanced by Hutchinson can be dealt with quite concisely.  The real issue is whether error has been established on the part of the primary judge in finding that one motive standing behind the demands, supported by threats, made by the CFMEU should be found to have been more important than the other or even to the exclusion of the other.  That is, was the CFMEU more concerned with WPI not being registered with the funds (which was rectified) and with payments being made to those funds (which did not occur before WPI was excluded from the site), or more concerned with WPI not having an EBA?  The evidence principally relied upon by Hutchinson as to the former turned on the email sent by Mr Meland to Mr Berlese, copied to Mr Thone, on Monday, 13 June 2016 about the meeting two days earlier between Mr Meland and Mr Clarke, documentary evidence referring to the pay parity issues rather than EBA issues, and Mr Berlese’s evidence (which was not accepted by the primary judge) that he considered the real issue to be pay parity.  However, this binary approach did not find favour with her Honour.  The email cast the pay parity issue as being an impediment to getting an EBA, rather than a separate or standalone issue, as her Honour correctly identified at LJ[340](21).  In cross-examination, Mr Meland made it clear that the conversation was “squarely and clearly about the fact that there was no EBA”, being evidence from a participant to the conversation whose evidence her Honour accepted and was entitled to accept, even if the documentary evidence might have tilted in a different direction or emphasis. 

3. It is not to the point that Mr Meland’s understanding was apparently partly based on an incorrect understanding of what was taking place as to pay parity, and an incorrect belief as to the existence of a requirement that WPI have an EBA.  Nor it is to the point that the evidence sought to be impugned by Hutchinson, as against other evidence, might have led to a different conclusion being reached.  This is a situation where the primary judge enjoyed evaluative advantages, especially as to both oral evidence and its interplay with other evidence, which is not fully shared or able to be replicated by this Court.

4. Even allowing for flaws in the detail of Mr Meland’s understanding of what had happened in relation to pay parity identified by Hutchinson, it has not been demonstrated that the primary judge erred in nonetheless concluding that the real issue was WPI not having an EBA, noting that Mr Meland moved to termination of the WPI subcontract upon realising that his protracted attempts to get it an EBA had proved futile.  Her Honour was entitled to give weight to the underlying reality of the CFMEU’s determination not to have WPI on the site, especially as reflected in what Mr Meland was told by Mr Clarke at the 11 June 2016 meeting, rather than giving weight to aspects of the written form in which that concern manifested, including in Hutchinson’s records.  Moreover, as the ACCC correctly point out, it is difficult to see how a finding of error would really have helped Hutchinson in any event, because that would be to confuse motive with purpose when it came to the arrangement or understanding.  Whatever the motive, the purpose of the arrangement or understanding, had it been able to be proven to exist, was the exclusion of WPI from the site and the termination of its subcontract.

5. Hutchinson’s appeal on the “real issue” point must therefore fail.

   Whether an “acquisition situation” was precluded by breaches of industrial law

6. The argument advanced by the CFMEU that there was no contravention at all turns on the interpretation of cl 35.2 of the EBA between Hutchinson and the CFMEU.  The point taken is to do with the interface between industrial law and competition law.  In this case, the secondary boycott contravention alleged in part turned upon there being an “acquisition situation” because Hutchinson had a contractual obligation under the subcontract to acquire goods or services from WPI, so as to fall within s 45E(1)(b) of the CCA. However, if Hutchinson breached cl 35.2 of the EBA and thereby contravened s 50 of the Fair Work Act 2009 (Cth), that contravention takes the acquisition of goods or services from WPI outside the definition of “acquisition situation”, so as to exclude the operation of the secondary boycott provisions.  Hutchinson’s and the CFMEU’s conduct then becomes a question of industrial law, rather than competition law. 

7. The primary breach of cl 35.2 alleged by the CFMEU and rejected by the primary judge was a failure to comply with the obligation imposed upon Hutchinson, before employing a contractor and its employees, to consult in good faith with potentially affected existing employees and their union.  A consequential breach of not paying entitlements was also alleged.  The primary judge found that the primary breach was not established and that as a consequence, the question of a secondary breach did not arise.

8. Clause 35 (excluding cl 35.3) of the EBA was as follows:

   [35.1]  The Employer recognises that in certain circumstances the use of contractors and labour hire may affect the job security of Employees covered by this Agreement.

   [35.2]  Use of Contractors

   If the Employer wishes to engage contractors and their Employees to perform work in the classifications covered by this Agreement, the Employer 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 Employer 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 sub-contracting arrangements is a breach of this Agreement.

   (emphasis added)

9. The dispute and its resolution turned on the meaning of “potentially affected Employees” in cl 35.2.  The dispute maintained on appeal is highly fact specific and turns on the meaning of a provision of an industrial instrument, so does not warrant detailed summary or reproduction of either the arguments or the primary judge’s reasons.  In short, the CFMEU sought to give that phrase a very wide meaning, so as to require consultation with at least directly employed employees who could do the work, untrained employees who could be trained to do the work, and those likely to work side by side with the contractors or rectify their work.  Hutchinson (being the principal contradictor at trial, and therefore supporting the ACCC on this issue) submitted that cl 35.2 had to be read in the context of cl 35.1 and the evident purpose of preserving job security of those directly affected, so that the phrase meant employees who could be affected by the retaining of a particular subcontractor, which in this case was confined to qualified water proofers, with there being no evidence that Hutchinson employed any qualified water proofers. 

10. Hutchinson’s argument was accepted by the primary judge, such that there were no employees who were required to be consulted.  No error on the part of her Honour has been demonstrated.  Any other interpretation would be incoherent.  Her Honour was also correct to find that the second paragraph of cl 35.2 is only engaged when the obligation to consult is engaged, both because that is the clearly correct way to read the clause with the reference in the second paragraph to “after consultation”; and because to find otherwise would be to depart from the longstanding principle that industrial instruments are to be interpreted with a practical bent of mind: Workpac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 at [197].

11. The CFMEU’s appeal ground as to there being no acquisition situation so as to exclude the operation of the secondary boycott provisions must therefore fail.

    Whether the primary judge erred in making findings of fact and credit which were inconsistent with or against the weight of the documentary evidence

12. As the appellants have succeeded, having vitiated the primary judge’s findings of an arrangement or understanding upon the basis of accepting her Honour’s factual findings, it is not sought and not necessary for this Court to determine whether there is any error in making findings of fact and credit, noting that it is unlikely that there would have been a sufficient measure of success on the arguments advanced for this to have been a sufficient basis for the appeals to succeed.  As already noted, her Honour was meticulous in the analysis and evaluation of the evidence, with little in the way of substantial error being apparent as to primary fact-finding. 

    Whether the primary judge’s decision on penalty was infected by error

13. As the liability appeals have been successful, the penalty aspect of the appeal by the CFMEU does not fall for consideration. 

    CONCLUSION

14. The appeals succeed and the finding of liability must be set aside.  As a consequence, the penalties imposed must also be set aside.  The ACCC must pay the appellants’ costs, including in relation to the notices of contention.

I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Bromwich and Anderson.

Associate:

Dated:       29 February 2024