FEDERAL COURT OF AUSTRALIA

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

TRADE PRACTICES — restrictive trade practices — appeal against finding that union was liable as an accessory under s 76(1) of Trade Practices Act 1974 (Cth) to company’s contraventions of ss 45E and 45EA — whether primary judge erred in finding contract, arrangement or understanding between company and union contravened s 45E — whether primary judge erred in drawing certain inferences — whether primary judge erred in finding alternative case of Australian Competition and Consumer Commission made out — whether primary judge erred in finding union had knowledge of all elements required by s 45E(3)

TRADE PRACTICES — restrictive trade practices — proper construction of s 45E(3) of Trade Practices Act — whether ‘purpose’ for the inclusion of a provision is objective or subjective — whether ‘purpose’ to be common intention of parties — whether ‘purpose’ must be the only purpose or an operative purpose —  whether union can be liable as an accessory to a corporation’s contravention of s 45E(3) — whether ‘second person’ must be a particular identified person — whether sufficient to identify a class of persons

TRADE PRACTICES — appeal against pecuniary penalty imposed on union for accessorial liability — whether pecuniary penalty excessive — standard of proof for pecuniary penalties under s 76

WORDS AND PHRASES — ‘purpose’

Acts Interpretation Act 1901 (Cth) ss 15AA, 15AB(1), 15AB(2)(f)

Evidence Act 1995 (Cth) ss 140, 140(2)

Federal Court of Australia Act 1976 (Cth) ss 24, 24(1), 27, 28, 28(1)(b), 28(1)(f),

Trade Practices Act 1974 (Cth) ss 4F, 4F(1), 4F(2), 45E, 45E(3) 45EA, 76, 76(1), 76(2), 88(7A)

Adler v Australian Securities and Investments Commission (2003) 179 FLR 1 discussed

Ahern v The Queen (1988) 165 CLR 87discussed

ASX Operations Pty Ltd v Pont Data Pty Ltd (No 1) (1990) 27 FCR 460discussed

Atcheson v Everitt (1776) 1 Cowp 382 [98 ER 1142] discussed

Australian Competition and Consumer Commission v IPM Operation and Management Loy Yang Pty Ltd (2006) 157 FCR 162 affirmed

Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007]FCA 11 affirmed

Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214discussed

Briginshaw v Briginshaw (1938) 60 CLR 336 considered

Bullock v Federated Furnishing Trades Society of Australasia (1984) 58 ALR 364 discussed

Bullock v Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464discussed

Chamberlain v The Queen (No 2) (1984) 153 CLR 521 discussed

Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 216 CLR 161discussed

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

Cooper v Slade (1858) 6 HLC 746 at 747 [10 ER 1488]discussed

Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 discussed

Doney v The Queen (1990) 171 CLR 207 discussed

Federal Commissioner of Taxation v Investments Pty Limited (1978) 140 CLR 434discussed

Gibbins v Australasian Meat Industry Employees’ Union (1986) 12 FCR 450 discussed

Hamilton v Whitehead (1988) 166 CLR 121 discussed

Jones v Dunkel (1958) 101 CLR 298 considered

Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 21 CLR 181discussed

Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 discussed

Murray v Murray (1960) 33 ALJR 521 discussed

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 discussed

News Ltd v South Sydney District Rugby League Football Club (2003) 215 CLR 563discussed

R v Hillier (2007) 233 ALR 634 discussed

Reg v Sharmpal Singh [1962] AC 188 discussed

Rejfek v McElroy (1965) 112 CLR 517 discussed

Rich v Australian Securities and Investments Commission (2004) 220 CLR 129discussed

Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 discussed

Stead v State Government Insurance Commission (1986) 161 CLR 141 considered

The King and The Attorney-General of the Commonwealth v Associated Northern Collieries (1911) 14 CLR 387 discussed

Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331 discussed

Tripodi v The Queen (1961) 104 CLR 1discussed

United States v Regan 232 US 37 (1914) discussed

Water Board v Moustakas (1988) 180 CLR 491discussed

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

VID 68 OF 2007

WEINBERG, BENNETT AND RARES JJ

17 August 2007

MELBOURNE

REASONS FOR JUDGMENT

ISSUES IN THE APPEAL...................................................................................................... [10]

THE RELEVANT PROVISIONS OF s 45E........................................................................... [11]

THE NATURE OF PROCEEDINGS UNDER s 76 OF THE TRADE PRACTICES ACT 1974[19]

STANDARD OF PROOF....................................................................................................... [29]

THE FACTS........................................................................................................................... [40]

THE EVENTS OF 9 AUGUST 2001...................................................................................... [44]

THE EVENTS OF 10 AUGUST 2001.................................................................................... [52]

THE EVENTS OF 12 AUGUST 2001.................................................................................... [57]

THE 13 AUGUST MEETING WITH MR NABULSI............................................................. [59]

THE 13 AUGUST LETTER FROM MR SUTHERLAND TO MR MIGHELL....................... [63]

THE MEMORANDUM OF UNDERSTANDING DATED 15 AUGUST 2001..................... [90]

THE 16 AUGUST EDISON TEAM LEADERS’ MEETING................................................ [114]

THE PREPARATION OF HEADS OF AGREEMENT BETWEEN EDISON AND THE CEPU[115]

THE FINALISATION OF THE HEADS OF AGREEMENT ON 23 AUGUST 2001.......... [121]

THE HEADS OF AGREEMENT.......................................................................................... [125]

LATER EVENTS.................................................................................................................. [129]

THE ROLE OF THE HEADS OF AGREEMENT................................................................. [133]

THE ACCC’s ALTERNATIVE CASE.................................................................................. [168]

THE PROPER CONSTRUCTION OF s 45e(3)................................................................... [175]

(A)............. Is the purpose for including the provision subjective or objective?..............[175]

(B)......... Can the CEPU be liable under s 45E or s 76?...............................................[183]

(C).......... Is the purpose the only or an operative purpose?..........................................[192]

(D)............ Must the ‘second person’ be identified as a particular person?....................[199]

WAS THE CEPU LIABLE?.................................................................................................. [211]

WAS THERE ANY ERROR IN THE IMPOSITION OF THE PENALTY?......................... [225]

CONCLUSION.................................................................................................................... [236]

WEINBERG, BENNETT AND RARES JJ

1                     In August 2001 Edison Mission Operation and Maintenance Loy Yang Pty Limited and its related companies were involved in developing and constructing a new gas fired electricity generation plant, known as a peaker plant, in the Latrobe Valley for the State Government of Victoria.  The Edison group already operated the existing Loy Yang B power station in the Latrobe Valley.  A related company of Edison, Valley Power Pty Limited, had agreed to acquire land from the State on which the new plant was to be built.  The Edison group’s agreements with the State required the new plant to be completed and operating by early 2002, failing which Valley Power would lose its interest in the land and the Edison group’s overall investment in the peaker plant would also be at risk.

2                     By early August 2001 a number of key unions, including the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (‘the CEPU’), had not finalised a site agreement with Simon Engineering Pty Ltd, Edison’s head contractor for the construction of the plant.  On 9 August 2001 a meeting of those involved was called by Industrial Relations Victoria.  There, Dean Mighell, the State Secretary of the Electrical Trades Union (‘the ETU’), a division of the CEPU, put its demands as conditions which had to be met before the CEPU would sign the site agreement.  One demand was that Edison had to agree that electrical contractors who performed work at the Loy Yang B site, which included the peaker plant site, must have an enterprise bargaining agreement or EBA with the CEPU.  The next day Edison made a decision to agree to that demand.  It did a number of things to give effect to the decision. 

3                     DJN Electrical and Instrumentation Pty Limited (‘DJN’) was an electrical contractor which had worked for Edison at the Loy Yang B site on a regular basis.  Before August 2001 Edison had a policy of not interfering with relations between contractors in DJN’s position at Loy Yang B and any union.  DJN had never had a certified agreement or enterprise bargaining agreement with the CEPU.  On 13 August 2001 DJN’s sole director, David Nabulsi, was told by one of Edison’s employees, Wayne Buckley, that Edison would no longer be utilising DJN’s services since DJN had declined to enter into a certified agreement with the CEPU under Div 4 of Pt VIB of the Workplace Relations Act 1996 (Cth) in its then form.  (At the trial and on appeal the expressions ‘certified agreement’, ‘enterprise bargaining agreement’ and ‘EBA’ were used interchangeably as synonyms.  For the purposes of these proceedings nothing turns on the accuracy of that usage and we have also used the expressions as synonyms.)  Mr Buckley held the position of maintenance coordinator at Loy Yang B. Mr Buckley also told Mr Nabulsi that Edison had a verbal agreement with the CEPU.

4                     The primary judge found that Colin Sutherland, a senior executive of Edison, sent a letter to Mr Mighell on 13 August 2001 expressly agreeing to the union’s demand.  That finding is a major issue in this appeal for, apart from this letter, there was no direct evidence of any communication by Edison to the CEPU agreeing to the terms of Mr Mighell’s demand.  But there was substantial circumstantial evidence that an arrangement or understanding existed between Edison and the CEPU to that effect.

5                     On 23 August 2001 Edison and the CEPU agreed to enter into heads of agreement that provide that Edison would ‘request’ that electrical contractors at Loy Yang B have, among other things, an EBA with the CEPU.

6                     Until the Australian Competition and Consumer Commission (‘the ACCC’) wrote to Edison in October 2003 suggesting that a contravention of s 45E of the Trade Practices Act 1974 (Cth) had occurred, Edison had never sought to have DJN perform any further work for it.  After that, Edison again engaged DJN to perform electrical contracting services at Loy Yang B.

7                     The primary judge found that Edison and the CEPU had entered into a ‘contract, arrangement or understanding’ that required each electrical contractor engaged by Edison to have an enterprise bargaining agreement with the CEPU.  He concluded that this amounted to a contravention of s 45E(3) by Edison, to which the CEPU was an accessory pursuant to s 76(1) of the Act.  He held that this occurred in the week of 13 August 2001;  that is prior to the making of the heads of agreement on 23 August 2001 (Australian Competition and Consumer Commission v IPM Operation and Management Loy Yang Pty Ltd (2006) 157 FCR 162).  He based the finding of the earlier contract, arrangement or understanding on a memorandum of understanding which the CEPU had signed with Simon Engineering on 15 August 2001.  However, the ACCC never pleaded or particularised such a case and neither party had referred at any time to the memorandum of understanding.  The CEPU complains that his Honour denied it natural justice in the way in which he used the evidence of the memorandum of understanding made on 15 August 2001.  Neither counsel had referred to that document in addresses nor was it referred to in any pleading or particulars.  A principal question in the appeal is whether the primary judge was correct in that finding of an earlier contract, arrangement or understanding.

8                     The primary judge also found that the heads of agreement on their proper construction gave effect to the CEPU’s demand.  The CEPU also challenges that finding.  It was common ground that the contract, arrangement or understanding between Edison and the CEPU found by the primary judge had the effect that Edison was hindered or prevented from acquiring services from DJN until Edison’s change of practice in late 2003.  There was, however a dispute as to whether that consequence was sufficient to establish a contravention of s 45E either by Edison as a principal or the CEPU as an accessory pursuant to s 76(1) of the Act.

9                     Thus the primary judge found such a contravention occurred in two ways, one of which was claimed on appeal to have been outside the pleadings.  In a later judgment he imposed a pecuniary penalty of $125,000 on the CEPU and granted an injunction restraining any future conduct of this kind for three years (Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007]FCA 11 (‘penalty judgment’)).  The CEPU has appealed against his Honour’s findings on liability and, if that be unsuccessful, on penalty. 

ISSUES IN THE APPEAL

10                  The CEPU originally raised 51 grounds of appeal, narrowing these to only 46, excluding multiple subparagraphs, during the course of argument.  The following issues arise on the grounds of appeal pressed at the hearing:

1.         Was it open, on the ACCC’s pleaded and particularised case, to his Honour to find, as he did, that the contract, arrangement or understanding contravened s 45E of the Act?  In particular, did he err in using the memorandum of understanding as he did?  This issue also involves considering both the strength of the evidence and the relevance of the events leading up to Edison’s acceptance of the final version of the written heads of agreement with the CEPU on 23 August 2001.

2.         Did his Honour err in finding that the alternative case of the ACCC had been established?  This construed cl 4.1 of the heads of agreement as a contractual term with the same effect as the contract arrangement or understanding which he had found to exist.

3.         What is the proper construction of s 45E(3)?  This involves determining whether:

(a)        in relation to cl 4.1, when s 45E(3) refers to the inclusion of a provision for a ‘purpose’ that purpose is an objective or a common subjective intention of both parties or just Edison’s purpose;

(b)        the purpose identified in answer to (a) is the only purpose, or just an operative purpose which the party or parties had for the inclusion of cl 4.1;

(c)        ss 45E(3) and 76 evince a legislative intention that a union cannot be liable as an accessory to a corporation’s contravention of s 45E(3); and

(d)        the second person (or target) referred to in s 45E must be a particular identified person or whether it is sufficient to identify a class of persons.

4.         If the CEPU is capable of being found to be an accessory of Edison in entering into the contract, arrangement or understanding, did it have knowledge of all the material ingredients of the contravention of s 45E(3) by Edison?  This involves an issue as to the sufficiency of the evidence led at the trial to show that the CEPU knew that  Edison had been accustomed to acquire services of electrical contractors from either DJN or a class of persons of which DJN was a member within the meaning of s 45E(3) and (7).

5.         Was the decision of the primary judge to impose a pecuniary penalty on the CEPU of $125,000 affected by any error?

THE RELEVANT PROVISIONS OF s 45E

11                  The pertinent provisions of s 45E are:

‘(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.

...

(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.

(4)        Subsections (2) and (3) do not apply to a contract, arrangement or understanding if it is in writing and was made or arrived at with the written consent of the second person.

...

(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.

(8)       If:

(a)        goods or services have been acquired by a person from a second person under a contract between them that required the first person to acquire such goods or services over a period; and

            (b)        the period has ended; and

(c)        after the end of the period, the second person has refused to supply such goods or services to the first person;

then, for the purposes of the application of this section in relation to anything done after the second person has refused to supply goods or services as mentioned in paragraph (c), the first person is not to be taken to be a person who has been accustomed to acquire such goods or services from the second person.’

12                  Here, in August 2001, Edison and DJN were in an acquisition situation as defined in s 45E(1) because each was a corporation and over the preceding two years Edison had been accustomed to acquire DJN’s services as an electrical contractor at the Loy Yang B site.

13                  In approaching the construction of s 45E it is important to bear in mind the following:

·                    The deeming provisions of s 4F do not apply for the purposes of s 45E(3) to establish whether a provision of the contract, arrangement or understanding has any particular purpose.  This is by force of the exception in s 4F(2).

·                    It is possible for persons who would otherwise contravene s 45E to obtain from the ACCC an authorisation to engage in the conduct concerned:  s 88(7A).

·                    The concepts in s 45E are not defined.  Those concepts bear similarities with other provisions of the Act, so in construing the section it is appropriate to have regard to the ordinary principles of statutory construction, informed, but not governed, by decisions on other provisions in the Act which employ similar concepts.  This is reinforced by, for example, the exclusion of the deemed operation of s 4F(1) which would otherwise have provided assistance in ascertaining the proper construction of the ‘purpose’ or ‘purposes’ referred to in s 45E(3).

14                  After an extensive review of the authorities, the primary judge concluded (at [112]) that the composite phrase ‘contract, arrangement or understanding’ in ss 45E and 45EA should be read in a similar way to that phrase as used in s 45 of the Act.  He followed the decisions of Heerey, Hely and Gyles JJ in Apco Service Station Pty Limited v ACCC (2005) ATPR ¶42-078 at 43,234-43,235 and Sackville J in Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 at 359-360 [75].

15                  The primary judge said that ‘an arrangement’ or ‘understanding’ for the purposes of ss 45E and 45EA had to be proved by evidence of a consensus or meeting of minds between Edison and the CEPU under which one party or both parties committed to a particular course of action.  It was not sufficient that there was a mere expectation that a party or parties would act in a certain way.  The CEPU did not challenge that finding.

16                  During the course of argument, reference was made to Federal Commissioner of Taxation v Investments Pty Limited (1978) 140 CLR 434 at 443-444 where Gibbs and Mason JJ, with whom Murphy J agreed, discussed the similar phrase ‘agreement or arrangement’ in the then provisions of s 44(2D) of the Income Tax Assessment Act 1936 (Cth).  There, the legislation expressly referred to ‘an agreement or arrangement, whether oral or in writing … that had the purpose, or purposes that included the purpose …’.  Obviously, the statutory language is different to that used in the Trade Practices Act.  However, their Honours said that the qualification ‘whether oral or in writing’ did not imply that the agreement or arrangement must be wholly one or the other, thereby excluding one which was partly oral and partly written.  They said that no rational purpose would be served by such an exclusion and then continued:

‘But what of an arrangement which is implied or inferred from the circumstances or conduct of the parties?  Is it excluded?  We do not think so.  Counsel for the [taxpayer] conceded that one can infer an agreement or arrangement so long as it is written or oral.  We would go further and say that the words are words of extension, not of limitation.  They were so regarded in Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 at 8;  [1958] AC 450 at 465.

In the context of s 260 an arrangement is something less than a binding contract or agreement, something in the nature of an understanding which may or not be enforceable at law … It is, however, necessary that an arrangement should be consensual, and that there should be some adoption of it.  But in our view it is not essential that the parties are committed to it or are bound to support it.  An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.’  (emphasis added)

17                  The primary judge noted (at [106]) that their Honours’ formulation in Lutovi 140 CLR at 434 has been applied in the context of ‘arrangement or understanding’ in s 45 of the Trade Practices Act.  Similarly, that concept has been applied to the definition of a ‘relevant agreement’ (defined in s 9 of the Corporations Act 2001 (Cth) and its predecessor, the Corporations Law, as ‘an agreement, arrangement or understanding’) in Edensor Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2002) 120 FCR 78 at 88 [16], 95 [31] per Hill, Sundberg and Mansfield JJ upholding Merkel J (Australian Securities and Investments Commission v Yandal Gold Pty Limited (1999) 32 ACSR 317 at 333-334 [69]).

18                  In Lutovi 140 CLR at 444-445 Gibbs and Mason JJ found that when directors of a company passed a resolution approving a proposal for the consolidation and reduction of its capital, the making of a bonus issue and directing the convening of an extraordinary general meeting to consider and, if thought fit, pass those resolutions, they entered into an arrangement.  The directors, or a majority of them, had assented to a plan involving a series of steps.  Gibbs and Mason JJ said that neither the fact that the resolution was a decision of the board, as an organ of the company, nor the circumstances that they were then acting in their capacity as directors having fiduciary responsibilities, altered the circumstance that the proposal put to the directors was adopted by them.  Their Honours held that the legislation applied to any arrangement of the kind which had the purpose described.

THE NATURE OF PROCEEDINGS UNDER s 76 OF THE TRADE PRACTICES ACT 1974

19                  If the executive branch of government brings proceedings to recover pecuniary penalties imposed by legislation, the matter will often involve consequences which are analogous to those in criminal proceedings.  After all, the imposition of a fine for conduct which contravenes legislation has all the characteristics of a punishment.  Likewise a civil penalty, imposed for a contravention of a law, can be seen to have similar characteristics.  Nonetheless, the Parliament deliberately distinguished between the procedures by which civil penalties might be recovered under the Act as compared with the way in which fines may be recovered on conviction for the commission of a criminal offence. 

20                  The use of civil proceedings in which the executive may recover pecuniary penalties has been a legislative device adopted to facilitate, among other things, the proof of what is necessary in order to be able to establish the liability of the alleged contravener.  This mixture of legislative purposes requires the Court to strike a balance between the application of the less rigorous civil standard of proof on the balance of probabilities and the forensic consequence of successfully prosecuted civil penalty proceedings.  That consequence is that the defendant or respondent may be found liable to pay a pecuniary penalty to the Commonwealth or government agency administering the legislation which has imposed it. 

21                  There is something less than a bright line that divides the terms ‘civil’ and ‘criminal’ in relation to the nature of proceedings or the process by which persons are brought before courts (Dalton v New South Wales Crime Commission (2006) 226 ALR 570 at 577 [27] per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ).  Indeed as Gummow J pointed out in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 216 CLR 161 at 172-173 [29] (and see too per Hayne J at 195 [107]) there is danger in utilising a system of classification containing only the two classes, civil and criminal.  He referred to what Frankfurter J had said in United States ex rel Marcus v Hess 317 US 537 (1943) at 554:

‘Punitive ends may be pursued in civil proceedings, and, conversely, the criminal process is frequently employed to attain remedial rather than punitive ends.’

22                  Likewise in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at 146 [35], Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ observed that just as a law may bear several characters, a proceeding may seek relief which, if granted, would protect the public, but would also penalise the person against whom it is granted.  The fact that a proceeding may bear several characters does not deny that it bears each of those characters.  And, they cautioned that ‘those who seek the “essential character” of statutory provisions do not proffer explanations of that process of distillation’, relying on what Hayne J had said in Labrador Liquor 216 CLR at 205-206 [136].

23                  Recently, Finkelstein J observed that ‘the reasonably clear line between the civil and criminal law has been collapsing’ (Australian Securities and Investments Commission v Petuas (2005) 23 ACLC 269 at [1]).  However, as Isaacs J said in The King v Associated Northern Collieries (1910) 11 CLR 738 at 742:  ‘An action is none the less civil merely because it is penal’.  He referred to Atcheson v Everitt (1776) 1 Cowp 382 at 391 [98 ER 1142].  There, Lord Mansfield CJ, delivering the judgment of the Court of King’s Bench, said:

‘Now there is no distinction better known, than the distinction between civil and criminal law;  or between criminal prosecutions and civil actions. 

Mr Justice Blackstone, and all modern and ancient writers upon the subject distinguish between them.  Penal actions were never yet put under the head of criminal law, or crimes.’  (emphasis in original)

24                  Lord Mansfield described the action, which was for debt on a statutory cause of action for bribery, as ‘not only given to recover a penalty, but it is attended likewise with disabilities’, (the latter being seemingly the rights to imprison for debt and the loss of the right to vote:  see 1 Cowp at 382, 383, 387).  He noted that this made the proceedings similar to a criminal cause.  The subject matter (bribery) was also an indictable offence at common law (see 1 Cowp at 384).  Lord Mansfield held that an action to recover a penalty was as much a civil action as an action for money had and received.  He observed that it had never been held that a penal action was a criminal case (Atcheson 1 Cowp at 391, 392).  In Wilson v Rastall (1792) 4 TR 753 at 758 Lord Kenyon CJ also held that an action to recover penalties under a statute for bribing voters was a civil action.  In Cooper v Slade (1858) 6 HLC 746 at 747 [10 ER 1488 at 1489] the House of Lords dealt with an action to recover penalties on the basis that it was a civil proceeding notwithstanding that the statute under which it was brought also created a criminal offence for the same conduct.

25                  Indeed, in Cooper 6 HLC at 772-773; 10 ER at 1499 Willes J advised the House of Lords that in a case to recover a penalty for election bribery the jury may found their verdict upon that which appeared to be most probable.  Lord Cranworth put the issue as whether ‘… there was evidence from which the jury might reasonably infer, if not contradicted …’ that the defendant (a Mr Slade QC) had authorised the bribe (6 HLC at 787; 10 ER at 1504 and see too at 6 HLC 792-794;  10 ER at 1506-1507 per Lord Wensleydale).

26                  An action to recover a civil penalty attracts the privilege against exposure to penalties (Rich (2004) 220 CLR 129).  This is an incident of the inherent character of a class of civil proceedings which Isaacs J described in Associated Northern Collieries 11 CLR at 742 as involving the infliction of a penalty, in contrast to the class of civil proceedings which involve preventing or redressing a civil injury (see too Rich 220 CLR at 143 [26] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

27                  The Supreme Court of the United States has maintained a clear distinction between the protections for an accused in a criminal trial contained in the Bill of Rights to the Constitution of the United States, including a trial at which the accused may be found liable to criminal pecuniary penalties, and those protections that obtain in proceedings to recover civil penalties.  An action to recover customs penalties was held to be a civil action in Stockwell v United States 13 Wall 531; 80 US 531 (1871) at 543.  In United States v Regan 232 US 37 (1914) at 43-45 van Devanter J, delivering the opinion of the Court, referred with apparent approval to Atcheson 1 Cowp 382 and Ratsall 4 TR 753.  Van Devanter J said that the Congress could authorise the enforcement of a penalty by either a criminal prosecution or a civil action and that there the Congress had chosen to create the latter.  In the absence of any statutory requirement to the contrary, the Supreme Court held that the action was to be conducted and determined according to the same rules and with the same incidents as attached to other civil actions (Regan 232 US at 46-47).  In United States v Ward 448 US 242 (1980) at 253, Rehnquist J, giving the opinion of the Court, said that Regan 232 US 37 was authority for the proposition that in a civil penalty case the government did not have to prove the case beyond a reasonable doubt (see too:  Wigmore on Evidence Vol 1 §7.2 n 22 at pp 529-530).

28                  Here, the Parliament was entitled to select the method of trial by which a penalty could be imposed on a person who contravened s 45E of the Act.  The Parliament chose to create a pecuniary penalty under s 76 as one means of vindicating the observance of the statutory proscription in s 45E.  It did this by providing in s 78 that criminal proceedings do not lie against a person by reason only that the person has contravened a provision of Part IV (including s 45E) or been an accessory to such a contravention or party to a conspiracy to contravene it.  And, s 77(1) created a cause of action in the ACCC to institute proceedings for the recovery, on behalf of the Commonwealth, of a pecuniary penalty under s 76.  As Pincus J with the concurrence of Lockhart and Wilcox JJ said, in The Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 160 (see too at 154), ‘…the Act clearly characterises proceedings under s 76 as civil’ so that the civil standard of proof applies. 

STANDARD OF PROOF

29                  It follows that proceedings for recovery of pecuniary penalties under the Act are civil proceedings.  Accordingly, s 140 of the Evidence Act 1995 (Cth) requires the Court in such proceedings to apply the civil standard of proof on the balance of probabilities.  In arriving at a conclusion of satisfaction that a case has been proved on the balance of probabilities, s 140(2) of the Evidence Act provides:

‘(2)      Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:

            (a)        the nature of the cause of action or defence;  and

            (b)        the nature of the subject-matter of the proceeding;  and

            (c)        the gravity of the matters alleged.’

30                  The mandatory considerations which s 140(2) specifies reflect a legislative intention that a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence.  Ordinarily, the more serious the consequences of what is contested in the litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion.

31                  Even though he spoke of the common law position, Dixon J’s classic discussion in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-363 of how the civil standard of proof operates appositely expresses the considerations which s 140(2) of the Evidence Act now requires a court to take into account.  Dixon J emphasised that when the law requires proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found.  He pointed out that a mere mechanical comparison of probabilities independent of any belief in its reality, cannot justify the finding of a fact.  But he recognised that:

‘No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency.’  (Briginshaw 60 CLR at 361-362)

32                  Dixon J also pointed out that the standard of persuasion, whether one is applying the relevant standard of proof on the balance of probabilities or beyond reasonable doubt, is always whether the affirmative of the allegation has been made out to the reasonable satisfaction of the tribunal.  He said that the nature of the issue necessarily affected the process by which reasonable satisfaction was attained.  And, so, he concluded that in a civil proceeding, when a question arose whether a crime had been committed, the standard of persuasion was the same as upon other civil issues.  But he added, weight must be given to the presumption of innocence and exactness of proof must be expected (Briginshaw 60 CLR at 362-363).

33                  In Rejfek v McElroy (1965) 112 CLR 517 at 520, Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ held that the criminal standard of proof was inappropriate to the determination of any fact in any civil action tried in any court in Australia where there are no statutory provisions to the contrary.  They followed Helton v Allen (1940) 63 CLR 691.  They said that the ‘clarity’ of the proof required, where a serious matter such as fraud was to be found, was an acknowledgement that the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved (Rejfek 112 CLR at 521).  The Court held that it was an error of law for the trial judge to have applied the criminal standard of proof in a civil case.  They continued:

‘The difference between the criminal standard of proof and the civil standard of proof is no mere matter of words:  it is a matter of critical substance.  No matter how grave the fact which is to be found in a civil case, the mind has only to be reasonably satisfied and has not with respect to any matter in issue in such a proceeding to attain that degree of certainty which is indispensable to the support of a conviction on a criminal charge.’

(Rejfek 112 CLR at 521-522)

34                  An illustration of the application of the principle occurred a few years earlier in Murray v Murray (1960) 33 ALJR 521.  In that case Dixon CJ had further explained what he had said in Briginshaw 60 CLR 336.  He said that the civil standard of proof required that the tribunal of fact should be ‘satisfied’ or ‘reasonably satisfied’, both expressions meaning the same thing.  He said of the adjective ‘reasonably’ in the latter expression:

‘However, its use as a qualifying adjective seems to relieve lawyers of a fear that too much unyielding logic may be employed.  But the point is that the tribunal must be satisfied of the affirmative of the issue.  The law goes on to say that he [ie the judge] is at liberty to be satisfied upon a balance of probabilities.  It does not say that he is to balance probabilities and say which way they incline.  If in the end he has no opinion as to what happened, well it is unfortunate but he is not “satisfied” and his speculative reactions to the imaginary behaviour of the metaphorical scales will not enable him to find the issue mechanically.’    (Murray 33 ALJR at 524)

35                  What is more, Dixon CJ recognised in Murray 33 ALJR at 525, that the proof of what was then a serious allegation of adultery did not require direct evidence from ‘occular witnesses’.  In that case, a number of unsuccessful attempts had been made to catch the respondent and co-respondent in compromising circumstances.  In the end, the High Court reversed the trial judge and found that the nature of their relationship justified the inference that adultery had taken place.  This was because ‘… the circumstances [were] such as would lead the guarded discretion of a reasonable and just man to the conclusion’ (Murray 33 ALJR at 525 per Dixon CJ, and at 526 per Menzies J both citing Sir William Scott in Lovenden v Lovenden (1810) 2 Hag Con 1 at 2; [161 ER 648] (Taylor J agreed with Dixon CJ and Menzies J)).

36                  Mason CJ, Brennan, Deane and Gaudron JJ said in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 450 the strength of the evidence necessary to establish a fact or facts on the balance of probabilities at common law may vary according to the nature of that which is sought to be proved.  They pointed out that statements in the cases requiring clear, cogent or strict proof as being necessary where a serious matter, such as fraud, is to be found were not to be understood as directed to the standard of proof.  They said, rather, those statements should be understood as merely reflecting a conventional perception that members of our society

‘… do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct’. (Neat Holdings 110 ALR at 450, footnotes omitted). 

Their Honours also said that there were circumstances in which generalisations about the need for clear and cogent evidence to prove matters of the gravity of fraud or crime can be unhelpful or misleading (Neat Holdings 110 ALR at 450).

37                  In approaching our assessment of the evidence we have borne these principles in mind and have taken into account the matters specified in s 140 of the Evidence Act.  The trial judge did so too.  Counsel for the CEPU, properly, reminded us of the seriousness of the consequences of a finding that ss 45E(3) and 76(1) of the Trade Practices Act 1974 (Cth) had been contravened, the imposition of a pecuniary penalty and the grant of other forms of relief provided by the Act.  We have taken this into account in assessing the evidence and making our findings.

38                  Ultimately, because this is a civil, not criminal, proceeding the civil standard of proof applies.  Thus, the ACCC had to establish that the circumstances appearing in the evidence gave rise to a reasonable and definite inference, not merely to conflicting inferences of equal degrees of probability, that Edison and the CEPU had made a contract or arrangement or arrived at an understanding within the meaning of s 45E(3) (Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 224 ALR 280 at 288 [34] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; see too Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 per Dixon, Williams, Webb, Fullagar and Kitto JJ).

39                  We are reasonably satisfied on the balance of probabilities, having regard to these matters, of each of the findings of fact which we have made in these reasons.

FACTS

40                  The trial judge made detailed findings of fact, many of which were uncontroversial in the appeal.  In doing so, he made findings about some unsatisfactory oral evidence given by Mr Sutherland, who was one of the witnesses called by the ACCC.  He was a general manager of Edison Mission Energy Australia Pty Ltd (‘EME’), and a director of Edison Mission Operation & Maintenance Loy Yang Pty Ltd and certain of its related entities including Valley Power.  The CEPU called no witnesses and tendered no evidence at the close of the ACCC’s case.  The following account is largely taken from his Honour’s findings.

41                  The operating company of the existing plant at Loy Yang B was EME.  The primary judge found (at [4]) that nothing in the case turned on any distinctions between the various corporate entities within the Edison group and he simply referred to them generically, as will we, as ‘Edison’.

42                  DJN had been providing electrical contracting services to Edison at Loy Yang B under agreements made for terms of 12 months ending respectively on 21 July 2000 and 2001.  On 19 June 2001 Edison had written to DJN advising it that the service agreement was due to expire on 21 July 2001 and seeking DJN’s assent, subject to agreement on price, to a further term of three years.  However, the documents were never signed. 

43                  On 8 August 2001, Mr Sutherland drafted a media release which, in the event, was not released.  It referred to the threat to the peaker plant project caused by the delay of the ETU (which, as already indicated, was a division of the CEPU) and the Australian Manufacturers Workers Union (‘the AMWU’) in finalising a site agreement for the plant’s construction.  The draft release recorded that the leaders of the ETU and the AMWU were refusing to sign the site agreement which had been negotiated by local union officials.  The parties accepted that the draft release set out the background against which later events took place.

THE EVENTS OF 9 AUGUST 2001

44                  As indicated above, on 9 August 2001 Industrial Relations Victoria convened a meeting to attempt to resolve the impasse to the unions’ signing of that site agreement.  Two representatives from Industrial Relations Victoria together with a representative of the State Treasurer attended that meeting.  Mr Sutherland and Paul Burns attended as representatives of Edison.  Mr Burns was the manager of community and employee relations of Edison and was stationed at Loy Yang B.  Mr Mighell, the State Secretary of the ETU’s Victorian Branch, attended as a representative of the CEPU.  Only Mr Sutherland and Mr Burns gave evidence about the meeting, Mr Burns being assisted by his own handwritten notes of the meeting.

45                  The primary judge accepted Mr Burns’ evidence that Mr Sutherland had spoken first at the meeting and then Mr Mighell had raised issues upon which the CEPU wanted an agreement.  He found that Mr Mighell said that Edison was aware of the problems as the issues had been raised before.  Mr Mighell then said that the CEPU wanted:

·                    access to the Loy Yang B site for the purposes of interviewing its members working there; and

·                    EBAs with the CEPU to be in place for contractors at the Loy Yang B site who were engaged in ongoing electrical works as well as planned outages.  (An ‘outage’ is a period when a power generating plant is not working.  So it is critical that it be repaired or the maintenance be done as quickly as possible in order to minimise any chance of disruption to power supplies, eg if another plant breaks down during the outage.)

46                  Mr Sutherland said that Edison would consider the site access issue and the electrical contractors issue internally and that he, Mr Sutherland, would respond to Mr Mighell on the electrical contractors issue and Mr Burns would respond on the site access issue. 

47                  Significantly, his Honour found that Mr Sutherland’s evidence generally tended to be vague and somewhat obfuscatory in relation to key events (at [26]) and that at times was far from satisfactory (at [46]).  In the end, his Honour placed no reliance on Mr Sutherland’s evidence generally.  On appeal, neither side challenged his Honour’s assessment that Mr Sutherland’s evidence was unsatisfactory, sometimes unlikely and unreliable.  We have reviewed the transcript and are satisfied that his Honour’s assessment was not only open to him, but correct.

48                  Later, on 9 August 2001, Mr Burns dictated a clause which he understood amounted to the gist of what Mr Mighell had requested at the meeting about electrical contractors.  The draft clause was as follows:

‘All Contractors performing work at (insert Company name) under the scope of the Electrical, Communications Contracting Industry Award, shall have a current certified Agreement with the CEPU Electrical Division, Victorian Branch prior to commencing work at (insert Company name).’

49                  Mr Burns observed, in his email conveying his draft, that the correct title of the award might be ‘National Electrical, Electronic and Communications Contracting Industry Award 1998’.  Mr Sutherland received Mr Burns’ email with that clause later on 9 August and did not raise any objection to it.

50                  A telephone conference also took place later that afternoon between several Edison personnel to discuss the group’s response to the issues raised by Mr Mighell earlier that day.  The participants were Mr Sutherland, Mr Burns, Barry Warrillow, Mark Pearson and Mr Buckley.  Mr Warrillow was the Loy Yang B plant manager.  Mr Pearson was the maintenance manager there.  Mr Buckley reported directly to Mr Pearson.  During the teleconference Mr Burns advised the others that Edison was negotiating with Mr Mighell to try to resolve issues relating to the construction of the peaker plant and the finalisation of the site agreement.  He said that one of the issues related to Edison’s practice of engaging electrical contractors who did not have a certified agreement (or EBA) with the CEPU.

51                  Either during the teleconference, or immediately afterwards, Mr Pearson and Mr Buckley were instructed to look at the implications of Edison entering into any agreement with the CEPU and to identify which contractors were likely to be affected by such an agreement if it were made.  Shortly after 4.00pm on 9 August, Mr Pearson sent an email to Messrs Warrillow, Burns and Buckley.  That email reviewed which contractors did and did not have EBAs.  It identified DJN as a contractor without an EBA who carried out smaller electrical works on site under the National Electrical, Electronic and Communications Contracting Industry Award 1998.

THE EVENTS OF 10 AUGUST 2001

52                  Around 2.00pm on 10 August, another teleconference was held within Edison to discuss the CEPU situation.  Messrs Warrillow, Pearson, Buckley and Burns were in Mr Warrillow’s office at Loy Yang B.  Mr Sutherland was in the Melbourne office.  Robert Driscoll, the vice president of Edison in California and Joseph Bacchi, its regional operations manager in the Asia Pacific region, also participated from elsewhere.  Mr Burns again took a file note.  Mr Sutherland outlined what had happened at the 9 August meeting called by Industrial Relations Victoria and proposed that the issues be settled.  A general discussion occurred about the two issues which the CEPU had asked Edison to address (viz:  site access and EBAs).

53                  The primary judge found (at [44]) that the discussion was to the effect that Edison would agree with the CEPU’s demand that it would only engage electrical contractors who had a certified EBA in place with the union to perform work at the Loy Yang B site.  Critically, he found that Mr Driscoll instructed Mr Sutherland, Mr Burns and others to ensure that such an agreement was made as quickly as possible.  There was no discussion about what steps would be taken to give effect to any agreement with the CEPU.  It was agreed that DJN was the only contractor that seemed to be affected.  DJN would be allowed to continue and finish the work which it already had been commissioned to do.  Mr Burns’ file note referred to this by the words ‘Grandfather existing contracts’.  The decision to permit DJN to finalise its existing contracts as found by his Honour and as recorded in Mr Burns’ note is explicable only on the basis of Mr Driscoll’s instruction to Mr Sutherland, Mr Burns and the others to ensure that Edison agree to the CEPU’s demands at once.

54                  The primary judge found that the discussion during the teleconference on 10 August made it very clear that the reason for proposing an agreement with the CEPU of the kind discussed was to get the site agreement signed, thus enabling the construction of the peaker plant to proceed without further delay.  His Honour’s findings about this teleconference were not challenged.  We agree with them.

55                  Immediately after the teleconference concluded, Mr Sutherland arranged an urgent meeting with Mr Mighell at the CEPU’s offices in Carlton, Melbourne.  They met at 3.00pm.  The primary judge found that Mr Sutherland’s evidence about this meeting was unsatisfactory.  So do we.  But the consequence, as his Honour found, was that there was no direct evidence that at their 10 August meeting Mr Sutherland had told Mr Mighell that Edison intended, or at least was disposed, to enter into an agreement with the CEPU to the effect that it would not engage electrical contractors to carry out work at the Loy Yang B site if they had not entered into an EBA with the CEPU.  No findings based on direct evidence can be made about what was said on that occasion.

56                  Also, later on 10 August, emails circulated among Messrs Warrillow, Burns, Buckley and Pearson containing a financial analysis of the rates paid to certain contractors, including DJN.  The analysis assessed the financial impact if Edison increased pay rates to the level prescribed in EBAs which had been signed by electrical contractors with the CEPU.  The emails identified DJN as the only electrical contractor concerned.

THE EVENTS OF 12 AUGUST 2001

57                  On Sunday, 12 August, Mr Burns sent a number of emails to other Edison staff in relation to the site access issue.  He prepared a draft letter to Mr Mighell dealing with that issue.  He suggested that it be sent first thing on Monday, 13 August and noted that he had left a signed version of the letter under Mr Warrillow’s door in case he and Mr Sutherland agreed that it should be sent to the CEPU.  He also said that, if the others agreed, he would arrange a meeting with Peter Mooney of the CEPU to agree on a protocol for site access which could take place on Tuesday morning.  Mr Mooney was a State organiser of the CEPU with duties that included organising in the Latrobe Valley on behalf of the ETU.  Later that day Mr Burns sent another email to Messrs Sutherland and Warrillow with a slightly revised draft of the letter to Mr Mighell in relation to site access.  Mr Burns’ draft letter was addressed to Mr Mighell as secretary of the CEPU at 139-155 Queensberry Street, Carlton South, which he believed was the CEPU’s address.

58                  The primary judge made no finding as to whether any final version of Mr Burns’ letter was sent or received and this question played no part in the arguments put on the appeal.  However, another letter, similarly addressed but dealing with the EBA issue, assumed central importance at the trial and on the appeal.  Before turning to it, we will consider another significant event which occurred on 13 August.

THE 13 AUGUST MEETING WITH MR NABULSI

59                  On 13 August 2001 Mr Nabulsi of DJN met with Mr Buckley at Loy Yang B.  Mr Buckley had arranged the meeting.  He recalled that after the teleconference of 10 August, he had been directed by someone, within Edison, to contact Mr Nabulsi.  Mr Buckley knew that Mr Nabulsi had determined previously not to enter an EBA or certified agreement with the CEPU.  The two had discussed the issue on an earlier occasion.  On 13 August, Mr Buckley asked Mr Nabulsi whether DJN still intended not to enter into a certified agreement with the CEPU.  Mr Nabulsi reiterated DJN’s position that it would not sign an EBA with the CEPU.  Mr Buckley then told him that DJN’s services would no longer be utilised because Edison had been asked by the CEPU not to engage the services of contractors who did not have an EBA with the CEPU.  Mr Buckley also told Mr Nabulsi that he understood that Edison had a verbal agreement with the CEPU although, in evidence, he could not recall what led him to believe that. 

60                  The CEPU challenged the primary judge’s findings in relation to this meeting between Mr Nabulsi and Mr Buckley.  In our opinion, his Honour’s findings were open to him.  We agree with those findings.  His Honour had the advantage of oral evidence from both Mr Buckley and Mr Nabulsi.  The CEPU argued that Mr Buckley’s evidence was too vague and uncertain.  However, in our opinion it is likely that Mr Buckley’s communication of Edison’s stance on 13 August occurred since it reinforced the urgency with which Edison was then acting.  In cross-examination he said that, although he could not recall why, he understood that Edison and the CEPU had a verbal agreement in place on 13 August before he spoke with Mr Nabulsi.  This accorded with the decision taken by Mr Driscoll at the teleconference on 10 August and his instructions to implement it.  Moreover, the action of Mr Buckley in telling Mr Nabulsi that DJN’s services would no longer be utilised by Edison, coupled with the explanation he gave Mr Nabulsi, provide cogent evidence that by then Edison had adopted the CEPU’s demand communicated by Mr Mighell on 9 August.

61                  At their meeting Mr Buckley was neither secretive nor tentative with Mr Nabulsi about Edison’s position.  And, as Mr Nabulsi said in his evidence, when ‘you get news like that on site, everyone has a yack about it’.  Mr Nabulsi said that he could not recall to whom he spoke but he probably spoke to a lot of people about it.

62                  The CEPU also argued that the primary judge’s finding about Mr Buckley’s evidence of this meeting was inconsistent with his finding that, later, on 16 August, Mr Buckley and Mr Pearson identified DJN to Edison’s team leaders at Loy Yang B ‘as the contractor likely to be excluded by the arrangement’.  This argument has no substance.  Both Mr Buckley and Mr Pearson gave evidence that they said DJN would be excluded.  Mr Buckley also gave evidence that he had told Mr Nabulsi it was unlikely DJN would be engaged again as a consequence of DJN not having an EBA with the CEPU.  In this context the word ‘unlikely’ did not suggest any real uncertainty.  His Honour’s use of the word ‘likely’ in this part of his reasons, when read with the reasons and evidence as a whole, did not indicate a rejection of their evidence, or a qualified finding about it.

THE 13 AUGUST LETTER FROM MR SUTHERLAND TO MR MIGHELL

63                  The CEPU argued that the primary judge erred in making a critical finding that Edison had sent, and the CEPU had received, a letter dated 13 August.  A copy of the letter was in evidence.  It was signed by Mr Sutherland.  He did so, as the letter records, apparently on behalf of Mr Burns, whose typed name and title appeared at the foot of the letter.  The letter was typed on EME letterhead and read as follows:

‘Mr D Mighell

Secretary

CEPU

139-155 Queensbury [sic] Street

CARLTON SOUTH VIC 3053

Dear Mr Mighell

CONTRACTORS AT LOY YANG B POWER STATION

Further to our discussions last week, I am able to confirm the proposal concerning contract work being undertaken at Loy Yang B Power Station.

We propose the parties (EME and CEPU) agree to the following position.

All Contractors performing work at Loy Yang B power station under the scope of the Electrical, Communications Contracting Industry Award, shall have a current certified Agreement with the CEPU Electrical Division, Victorian Branch prior to commencing work for their respective contractor at the site.

Please indicate your acceptance of this position on behalf of the CEPU

Yours sincerely

[Mr Sutherland’s signature]

for

……………………………                                           …………………………

Paul Burns                                                              Dean Mighell

Manager of Community/Employee Relations        Secretary, CEPU Victoria’

64                  The CEPU accepted before his Honour and us that on its face this letter amounted to a complete acceptance of Mr Mighell’s demand at the 9 August meeting in relation to EBAs.  Hence, the CEPU sought to persuade his Honour and us that no finding should be made that the letter was sent or, if it were, that it was received by Mr Mighell.

65                  There was little direct evidence as to how the 13 August letter was created or despatched.  His Honour found that Mr Sutherland created the letter by cutting and pasting sections of its text from two documents which had been provided to him by Mr Burns.  The first source was the draft clause Mr Burns had emailed to him on 9 August.  The second was Mr Burns’ draft letter concerning site access which he had emailed on 12 August.  The address of the CEPU at the top of each of the letters is substantially the same.  The signature block at the end of Mr Burns’ draft letter on site access was replicated at the bottom of the 13 August letter signed by Mr Sutherland – hence Mr Sutherland signing ‘for’ Mr Burns.  The original of the letter was not tendered in evidence.  There was no evidence from any employee of the CEPU that the letter had not been received.  Mr Sutherland’s evidence, which on this issue was accepted by his Honour (and is clearly commonsense), was that, in the ordinary course, a letter signed by him would be posted by his secretary.

66                  The CEPU called in aid the principles explained by Dixon J in Briginshaw 60 CLR 361-363.  It submitted that on the civil onus of proof, in a case in which the CEPU was at risk of being found liable to pay pecuniary penalties under s 76(1) of the Act, the Court should proceed to make findings against it only if the evidence was clear.  The CEPU argued that the Court should be wary of drawing inferences against it where the ACCC’s witnesses had left gaps in their oral evidence.

67                  In its approach to criticising the findings of the primary judge, the CEPU examined each of his Honour's major findings of fact as if it had to be arrived at independently from the findings about other facts.  The CEPU argued that his Honour had erred in basing his findings that the 13 August letter had been both sent to and received by Mr Mighell upon inferences drawn from other evidence.  It then argued that such inferences were not available.  This was because, it said, the evidence which his Honour took into account gave rise to no more than conflicting inferences of equal degrees of probability, so that the choice between the two was mere conjecture, relying on what Dixon CJ had said in Jones v Dunkel  (1958) 101 CLR 298 at 304-305.

68                  The CEPU argued that his Honour erred because he criticised Mr Sutherland's evidence even though he had not been cross-examined on it.  His Honour said it was improbable that nothing happened on 10 August when Mr Sutherland met with Mr Mighell at an urgently convened meeting other than, as Mr Sutherland sought to suggest in his evidence, that he asked Mr Mighell to repeat the demands the latter had made at the 9 August meeting.  His Honour did not accept Mr Sutherland's evidence but made no findings as to what occurred at the meeting.  He accepted (at [156]) that Mr Sutherland's evidence left open the possibility that other discussions occurred with him and Mr Mighell between 9 and 13 August.  It was for his Honour to determine whether or not he found Mr Sutherland’s evidence reliable.  The primary judge gave reasons why he found it was unreliable.  Those reasons were open to him and no error has been shown in his findings.  Indeed, we agree with them, having ourselves considered Mr Sutherland's evidence in the transcript, without the advantage his Honour had of seeing and hearing him.

69                  The CEPU submitted that his Honour wrongly applied Jones v Dunkel 101 CLR 298.  We see no error in his Honour's approach.  He did say that the absence of evidence from the CEPU allowed him to conclude, more confidently, that by 15 August Edison had communicated to the CEPU the fact that it had acceded to the demands.

70                  It is not an error, even in proceedings in which the criminal standard of proof applies, for a judge to draw inferences from events and circumstances of the case in the absence of any countervailing evidence that might have been given by the respondent.  Thus, if a respondent to a charge of contempt of a court order fails to give evidence that he or she did not know of orders made on his or her own application, the absence of that evidence is a fact that a judge could hardly ignore.  A judge is entitled to point to the fact that the evidence upon which he or she has to decide the case was adduced by the applicant and then ask what the inference to be drawn was in that state of affairs (Mead v Mead [2007] HCA 25 at [13] per Gleeson CJ, with whom Hayne, Callinan, Heydon and Crennan JJ agreed). 

71                  As Windeyer J observed in Jones v Dunkel 101 CLR at 319, it is important not to confuse mere conjecture by a tribunal of fact with reasoned conclusion.  In that case, after two trucks collided, one driver died and the other, the defendant’s employee, did not give evidence.  The majority (Kitto, Menzies and Windeyer JJ) held that there were sufficient primary facts on which the jury could have drawn the inference that the collision occurred on the defendant’s truck’s incorrect side of the road.  Therefore, it was open to the jury to infer that the collision was a result of negligent driving by the defendant’s employee (Jones v Dunkel 101 CLR at 306, 310, 320).

72                  In that state of affairs, the jury should have been instructed that any inference favourable to the plaintiff for which there was ground in the evidence might more confidently be drawn when a person, presumably able to put a true complexion on the facts relied on as the grounds for the inference, has not been called as a witness by the defendant and the evidence provides no sufficient explanation of the witness’ absence (Jones v Dunkel 101 CLR at 308 per Kitto J, 312 per Menzies J).  Windeyer J relied on the well-known authority of R v Burdett (1820) 4 B & Ald 95 at 122 and 161 to support the capacity of the jury to draw an inference that an unexplained failure of a party to call evidence may lead rationally to an inference that the evidence would not help the party’s case (Jones v Dunkel 101 CLR at 321).

73                  Of course, it is seldom, if ever, reasonable to conclude that an accused in a criminal trial would be expected to give evidence (RPS v The Queen (2000) 199 CLR 620 at 632-633 [26]-[28]; Dyers v The Queen (2002) 210 CLR 285 at 292 [9]).  This is because in an accusatorial trial, an accused is not required to explain or contradict matters which are already the subject of evidence at the trial.  Those matters must be assessed by the jury against the requisite standard of proof without regard to the fact that the accused did not give evidence, as Gaudron, Gummow, Kirby and Hayne JJ explained in Azzopardi v The Queen (2001) 205 CLR 50 at 74 [64].  But, as the learned author of Cross on Evidence (7^th Aust ed) at 48 [1220] observed, the modern High Court authorities regulate what the jury may be told but do not appear to regulate how a jury, trial judge or an appellate court may reason.  The learned author said that therefore the following reasoning of the Privy Councilin Reg v Sharmpal Singh [1962] AC 188 at 198 (an appeal in a case involving a trial before a judge and three assessors), per Lord Devlin, appears open in appropriate cases: 

‘How did he come to squeeze his wife’s throat?  When the prisoner, who is given the right to answer this question, chooses not to do so, the court must not be deterred by incompleteness of the tale from drawing the inferences that properly flow from the evidence it has got nor dissuaded from reaching a firm conclusion by speculating upon what the accused might have said if he had testified.’

74                  In Adler v Australian Securities and Investments Commission (2003) 179 FLR 1 at 146-149 [655]-[658]; [2003] NSWCA 131, Giles JA with whom Mason P and Beasley JA agreed, held that a Jones v Dunkel 101 CLR 298 inference was available in civil penalty proceedings under the Corporations Act 2001 (Cth).  Giles JA pointed out that it was necessary to focus on the statutory regime, rather than some general class of civil penalty proceedings (Adler 179 FLR at 147 [659]).  And he said that, more importantly, civil penalty proceedings under the Corporations Act were expressly to be maintained by civil law processes, not by a criminal trial with its fundamental features.

75                  Nonetheless, the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or conduct attracting liability to civil penalties should prove it without being able to require the defendant or respondent to provide evidence against himself or herself.  That privilege is not now available to corporations (Daniels Corporation v Australian Consumer and Competition Commission (2002) 213 CLR 543 at 559 [31] per Gleeson CJ, Gaudron, Gummow and Hayne JJ).

76                  Adler 179 FLR 1 was decided before Rich 220 CLR 129 at 147 [37] held that the element of protection of the public which was engaged in proceedings under the Corporations Act was also a penalty.  Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said that the fact that the penalty was not exacted in the form of a money payment did not deny that conclusion.  Rich 220 CLR 129 at 148 [39] also decided that an order for discovery which, of course, is only available in civil proceedings, should have been refused because the proceedings exposed the defendant to a penalty.  However, there is no reason in civil proceedings for pecuniary penalties to deny the applicability of the principles in Jones v Dunkel 101 CLR 298, provided that in doing so the court proceeds in accordance with the principles we have discussed above in relation to s 140 of the Evidence Act .

77                  Mr Mighell was the State Secretary of the ETU whose office was located at 516-520 Swanston Street, Carlton South.  He was also an officer of the CEPU.  His Honour found (at [62]) that the CEPU and ETU office was at the corner of Queensberry and Swanston Streets in Carlton South and that the entrance to the part of the office occupied by the ETU was in Swanston Street.  He said that there was no reason to suppose that a letter, correctly addressed to the CEPU at 139-159 Queensberry Street, would not reach Mr Mighell in his capacity as State Secretary of the ETU.

78                  The CEPU submitted to his Honour and on appeal that it was not a reasonable conclusion to think that the letter, being, so it said, incorrectly addressed to Mr Mighell at the CEPU, would actually reach him.  In our opinion the submission has no substance.  Given that the ETU was a division of the CEPU and that they shared the same office building, albeit with different street frontages, it is improbable that a letter addressed to the State Secretary of the ETU would not have reached him, whether it was addressed to the CEPU’s side of the building or the ETU’s. 

79                  The CEPU went so far as to argue that because the letter did not have Mr Mighell’s exact address and title, he would not have received it.  Given his position as State Secretary of the ETU and as an officer of the CEPU itself, the submission has an air of unreality.  Employees of the CEPU at its office would be likely to recognise the name of a senior official of one of its divisions, such as Mr Mighell.  Given that the CEPU and ETU offices were in the same building, in the absence of evidence that mail went astray which was addressed in the way Mr Sutherland’s letter was, it is very probable that Mr Mighell received it.

80                  His Honour rejected the CEPU’s argument, repeated before us, that because of the subsequent conduct of the parties it would not be possible or correct to infer that the letter was sent.  In particular, the CEPU asserted that the communication which the letter, if sent, would have conveyed was inconsistent with Edison instructing Corrs Chambers Westgarth (‘Corrs’), solicitors, around 13 August 2001, to prepare a draft agreement with the CEPU.

81                  The primary judge found that Mr Sutherland decided to instruct Corrs to act on Edison’s behalf shortly after 13 August and that thereafter he alone dealt with the solicitors.  His Honour rejected Mr Sutherland’s attempt to assert that Mr Burns had made the initial contact with Corrs albeit that he, Mr Sutherland, was also involved in the initial meeting.  He accepted (at [160]) Mr Burns’ evidence that he had no involvement in giving instructions to Corrs.  No challenge was made to those findings.

82                  The first version of Corrs’ draft heads of agreement between Edison and the CEPU was only communicated to the CEPU by Mr Sutherland on 20 August 2001.  However, it is significant that on 13 August Mr Buckley had carried out his instruction to meet with Mr Nabulsi and, in effect, to ensure that Edison had complied with the CEPU’s demand.

83                  The CEPU argued that in cross-examination Mr Sutherland had agreed that:

·                    the 13 August letter would be a strange letter to send to Mr Mighell if Mr Sutherland had just determined on the preceding working day that he was going to get solicitors to prepare something else for him; and

·                    he did not know whether the 13 August letter had actually been sent.

84                  This argument founders on the finding that Mr Sutherland only instructed Corrs after the date of the 13 August letter.  And, as his Honour noted, there were several matters not addressed in evidence.  One of these was that Mr Sutherland was not asked in chief or otherwise about the statement in the first sentence of the letter that he was ‘…able to confirm the proposal concerning contract work being undertaken at Loy Yang B power station’.  Since no proposal had been put on 9 August, that left open the question as to whether one had been put on 10 August when Mr Sutherland met Mr Mighell, following the instructions given by Mr Driscoll to accept the CEPU’s demands and fix the problem as quickly as possible.  However, Mr Sutherland’s account of that meeting was not accepted by his Honour. 

85                  Of more significance, as the primary judge noted, there was no evidence that Mr Sutherland’s instructions from Mr Driscoll changed after the teleconference of 10 August.  Those instructions were unequivocal.  They were to ensure that Edison agreed with the CEPU’s demands as quickly as possible.  The terms of the letter of 13 August gave effect to those instructions, as one would expect.  The commercial urgency was reflected not only in Mr Driscoll’s instructions, but also in the contemporaneous activities of other Edison employees.  Mr Burns worked on his task to do with site access on Sunday, 12 August.  Mr Buckley implemented the instructions on 13 August when he told Mr Nabulsi of DJN that its refusal to sign an EBA with the CEPU had the result that its services would no longer be utilised.  And, Mr Sutherland signed the letter of 13 August himself.  He had no reason to do so, if, as he asserted, he had decided previously to seek legal advice from Corrs before proceeding.  The contemporaneous actions of other Edison staff, subordinate to Mr Sutherland, in implementing Mr Driscoll’s instructions immediately were consistent with the very terms of the 13 August letter.  Mr Sutherland took the trouble to create the letter on 13 August mainly by cutting and pasting from Mr Burns’ emails of 9 and 12 August.

86                  Moreover, the letter opens with a reference to the discussions of the previous week and immediately says:

 ‘I am able to confirm the proposal concerning contract work being undertaken at Loy Yang B Power Station.’  (emphasis added)

The reference to confirmation which we have emphasised suggests that after Mr Driscoll gave instructions to his subordinates, including Mr Sutherland, to agree to the CEPU’s demands on 10 August, Mr Sutherland did just that at his meeting with Mighell which followed.  Although Mr Sutherland’s evidence of the meeting was quite unsatisfactory, the letter he drafted and signed on 13 August 2001 is evidence that he told Mr Mighell before writing it that Edison had accepted the CEPU’s demands.  He had no reason to ‘confirm’ anything which he had not already told Mr Mighell.  We find that Mr Sutherland had told Mr Mighell on or before 13 August that Edison would agree to the CEPU’s demands.  That, however, fell short of any precise agreed position because Mr Sutherland still had to provide a form of wording to the CEPU, hence the letter.

87                  We are comfortably satisfied that it is reasonable to infer that the letter was prepared by Mr Sutherland, signed by him and despatched to the CEPU.  We find that Mr Sutherland acted urgently on Mr Driscoll’s instructions and caused the 13 August letter to be sent on that day to Mr Mighell.  And there is no reason to suppose that it was not received by its addressee in the ordinary course of the post at the CEPU and ETU offices.  We find that the 13 August letter signed by Mr Sutherland was received by Mr Mighell in the ordinary course of the post by 15 August.

88                  Next the CEPU argued that his Honour should not have rejected its arguments about the 13 August letter because his conclusion was at odds with the pleaded case of the ACCC, which alleged only that a contract or arrangement had been made or an understanding arrived at on or about 24 August 2001, not a week earlier.  The primary judge reasoned (at [164]-[168]) that some agreement or arrangement or understanding existed between Edison and the CEPU in the week commencing 13 August.  The CEPU had argued before his Honour, and before us, that if this were so it meant that the heads of agreement entered into on 23 August were a sham.  The CEPU drew support from the wording of the heads of agreement both in its 20 and 23 August versions because that wording did not reflect fully the demands which Mr Mighell had made or the steps which Edison had already taken to give effect to the demand.

89                  We do not agree.  The objective facts (without having any regard to the memorandum of understanding of 15 August) point to the adoption during the week of 13 August by both Edison and the CEPU of the arrangement proposed by the CEPU’s demands.  Mr Sutherland composed and signed the letter of 13 August.  The letter was received by Mr Mighell.  On the same day, Mr Buckley communicated to Mr Nabulsi of DJN the same position as in that letter.  That position represented a change in Edison’s previous policy.  Three days later, Edison's team leaders were told the same thing.  Each of these steps conformed to Mr Driscoll’s instruction to agree to the CEPU’s demands.  At the same time, there was no evidence that the CEPU’s demands remained an issue halting progress on the signing of the site agreement.  These objective facts all point to the conclusion that Edison had adopted the CEPU’s demands.  The wording of the heads of agreement is not inconsistent with Edison having adopted the CEPU’s demand.  Indeed, one natural and ordinary meaning of ‘request’ can include insistence, such as when an unwelcome visitor is ‘requested’ to leave the premises.  Context may show that such a ‘request’ is, in fact, a demand.  As it appears in the heads of agreement, if one were ignorant of the context, the word ‘request’ would not convey the meaning of ‘demand’.  We will return to the issue of construction later in these reasons. 

THE MEMORANDUM OF UNDERSTANDING DATED 15 AUGUST 2001

90                  An important issue in the appeal was his Honour’s use of the memorandum of understanding dated 15 August 2001 between Simon Engineering and four unions, including the CEPU and AMWU.  The memorandum of understanding had been signed by Mr Mooney on behalf of the CEPU.  It was attached as the final page of a bundle of documents, tendered at the trial, which were filed with the Australian Industrial Relations Commission (‘the AIRC’) consisting of a statutory declaration by Mr Mighell of 23 August 2001, the site agreement and its certification on 12 December 2001 by Vice President Ross, of the AIRC.

91                  The memorandum of understanding had not been referred to in the pleadings or the particulars.  Nor had any mention of it been made during the trial.  The first time that the CEPU became aware that it had any relevance to the issues in the proceedings below was when it appeared in his Honour’s reasons for judgment.

92                  The memorandum of understanding confirmed that at a meeting on 15 August the parties had reached agreement on the site agreement.  It noted that they all agreed that there were no further issues or claims and that the words of the site agreement, together with the wages and conditions in it, were the final understanding of what they had agreed.  The memorandum went on to provide that the unions undertook to forward the site agreement to their respective secretaries with ‘… a recommendation for Signature’.  Simon Engineering undertook to arrange for statutory declarations to be made and then lodgement of the site agreement with the AIRC so that it could be certified. 

93                  His Honour said that, although it was in evidence, counsel for the parties had not referred to the memorandum of understanding at the hearing.  He took the view that the document was a business record which evidenced that a meeting took place on 15 August 2001 at which Simon Engineering, together with the CEPU, reached agreement on the site agreement for the construction of the peaker plant.  The primary judge then drew the inference from the whole of the evidence that the CEPU would not have entered into that memorandum of understanding unless it had first been notified by Edison that Edison had agreed to its demand that electrical contractors performing work at Loy Yang B power station had to have an EBA with the CEPU prior to commencing work at the site.  And so, he held, that this was an arrangement or understanding between Edison and the CEPU which was in place by 15 August.

94                  Mr Mighell’s statutory declaration of 23 August 2001 verified that the site agreement had been entered into by Simon Engineering and each of the four unions, including the CEPU.  As the primary judge pointed out, the copy of the site agreement attached to the statutory declaration is undated but bears a print date of 15 August 2001.  He inferred that Simon Engineering, the CEPU and the other three unions must have signed the site agreement between 15 and 23 August, when Mr Mighell made the statutory declaration.  The primary judge said that was consistent with Edison having communicated its agreement to accede to the CEPU’s demands prior to 15 August.

95                  The primary judge found on the balance of probabilities, and having regard to the seriousness of the allegations (Briginshaw 160 CLR at 361-363), that the 13 August letter was sent.  However, he said (at [63]) that his findings about that letter were interrelated with his findings about the parties’ later conduct, and the scope of their contract, arrangement or understanding.  We are of the opinion that his Honour was referring to basing his findings on circumstantial evidence.

96                  As will appear, we have come to the same view as his Honour but have done so without regard to the memorandum of understanding of 15 August.  There is nothing in the later conduct of the parties or the primary judge’s other findings which causes us to consider that the 13 August letter signed by Mr Sutherland was not sent to Mr Mighell at the CEPU or that Mr Mighell did not receive it.  Having regard to the matters referred to in s 140(2) of the Evidence Act and the principles set out above we are comfortably satisfied that the letter was sent to and received by Mr Mighell.

97                  The CEPU claimed that by using the memorandum of understanding in this way his Honour denied it natural justice.  In essence, the CEPU said that the document and the events which it evidenced formed no part of the ACCC’s pleaded or particularised case and was not a matter to which the CEPU had been alerted for the purposes of the conduct of the hearing.  In particular, the CEPU pointed to the draft press release of 8 August 2001.  There Mr Sutherland had referred to leaders of the ETU and the AMWU refusing to sign site agreements that had been negotiated by local union officials.  The CEPU asserted that there was a congruence between the agreement of the local union officials recorded in the memorandum of understanding, who only undertook to recommend that their union’s respective secretaries sign the site agreement, and the failure, at that time, of Mr Mighell to have signed the site agreement.  The CEPU pointed to the apparent urgency with which Edison was seeking a signature on the site agreement by all relevant parties.  It argued that had it been alerted at the trial to the use his Honour made of the memorandum of understanding, it would have wished to ask questions of witnesses and make submissions about such a use.  And, the CEPU complained that his Honour drew upon the whole of the evidence to make inferences which led to his ultimate findings concerning the arrangement or understanding between Edison and CEPU.  It said that his use of the inference which he drew from the memorandum of understanding was an important part of the case against it:  namely, that Edison and the CEPU were parties to an arrangement or understanding that electrical contractors at the Loy Yang B site had to have an EBA with the CEPU on or before 15 August.

98                  The primary judge concluded (at [168]) that the CEPU’s signature on the memorandum of understanding clearly indicated that an arrangement in the terms set out in the 13 August letter had been made between the union and Edison before 15 August.  His Honour also rejected the CEPU’s argument that a finding that a contract or arrangement had been made in the week of 13 August would render the subsequent heads of agreement of 23 or 24 August a sham.  He relied on what Smithers J had said in Gibbins v Australasian Meat Industry Employees’ Union (1986) 12 FCR 450 at 470 in holding that a conciliation agreement made to settle an industrial dispute between an abattoir company and a union had given rise to an understanding of a slightly wider nature.  There, the conciliation agreement had been made under the Conciliation and Arbitration Act 1904 (Cth).  But Smithers J found that it also operated as an arrangement or understanding in contravention of s 45E of the Trade Practices Act by having the effect of excluding carriers whom the union had blacklisted from being able to deliver livestock to the abattoir or to unload their cargo there.  The conciliation agreement had been made as part of a settlement of the company’s earlier proceedings under s 45D of the Trade Practices Act, which had sought to enjoin the union from, in effect, enforcing its black ban on those carriers whom it designated as someone with whom the abattoir company should not deal.  Smithers J held (Gibbins 12 FCR at 472) that arising out of the conciliation agreement and in connection with its implementation, there was an additional understanding between the abattoir company and the union.  This was that, in the management of the abattoir, if a carrier or a truck was designated by the union as subject to a union ban, the ban would be recognised by the company as valid and the trucks would not be allowed to deliver or unload cargo at the abattoir.

99                  The primary judge applied Smithers J’s reasoning to conclude (at [170]) that the heads of agreement of 23 or 24 August 2001 were intended to be controlled by, and operate in accordance with, the arrangement that had been agreed upon by the parties and put in place in the week of 13 August.  The problem with this reasoning is that it was not part of a case that had been pleaded or particularised.  The pleadings and particulars had gone no further than to suggest that Mr Nabulsi had been told that Edison was unlikely to be able to engage DJN because it proposed entering into an agreement with the CEPU which would prevent contractors which did not have an EBA with the CEPU from working at Loy Yang B.  The oral evidence at the trial showed, as his Honour and we have found, that Edison by 13 August had gone further than simply proposing to agree to the union’s demands.

100               Significantly, all that evidence was admitted without objection from the CEPU, as was the tender of the material which included the memorandum of understanding.  This evidence was admissible, in any event, as part of the matrix of facts in which the heads of agreement came to be made.  The evidence could also be used as an aid to the construction or operation of the heads of agreement.  It was also of assistance in ascertaining how the relationship between Edison and the CEPU was truly to be seen from the date particularised in the pleadings, namely on or about 24 August 2001.  Moreover, as the trial unfolded, the CEPU was alive to the use that could be made of the oral evidence as to when discussions occurred and steps were taken.

101               The ACCC had provided the CEPU with particulars of its case that the agreement, arrangement or understanding had been made on or about 24 August 2001.  These gave particulars of the meeting of 13 August between Mr Buckley and Mr Nabulsi. However the particulars alleged that Mr Buckley advised Mr Nabulsi that it was unlikely that Edison would be able to engage DJN because Edison

‘… proposed entering into an agreement with the [CEPU] which would prevent [Edison] from engaging any electrical contractor to provide services at the Loy Yang B power station who did not have a certified agreement with the [CEPU]’.  (emphasis added)

102               Thus the particulars did not allege the facts which later emerged in evidence, namely that Mr Buckley had told Mr Nabulsi that Edison had already entered into an agreement with the CEPU.  And, the statement of claim pleaded that the letter of 13 August had been sent by Mr Sutherland to Mr Mighell and contained the substance of what had been proposed by the CEPU.

103               Counsel for the CEPU at the trial were well aware of the considerable body of evidence that pointed towards the existence of an arrangement or understanding which was in place earlier than the pleaded date of about 24 August 2001.  Indeed, a crucial issue at the trial concerned the 13 August letter and whether it was sent and received.  In the conduct of the trial, the letter of 13 August had assumed a greater significance than suggested in the pleaded case.  This was because, as senior counsel for the CEPU submitted to the primary judge, on its face the letter would seem to be a complete acceptance of the demand which Mr Mighell had made on 9 August.  Senior counsel for the CEPU invited the primary judge therefore to infer that the letter had not been sent.  The parties had fought the case on the evidence and had joined issue on the consequence which would flow from a finding that the letter of 13 August had been received by the CEPU.  So the CEPU was on notice that if the primary judge found the 13 August letter had been sent and received, a finding that an agreement or arrangement had been made, or understanding arrived at, was then obviously open, even though this had not been pleaded.  His Honour found the 13 August letter had been sent and received.  We have come to the same conclusion, independently of any reliance on the memorandum of understanding.

104               However, none of these matters introduced the memorandum of 15 August, let alone suggested that it might be relied on as the document was used by the primary judge.  If his Honour thought, as recorded in the judgment, that counsel for both parties had overlooked that document, then he should have afforded them an opportunity to address submissions as to any use that might be made of it.  We see force in the submission of the CEPU that it may have wished to examine witnesses or lead evidence about how the memorandum of understanding came to be made as it was.  His Honour was correct to say that it was a business record recording the matters with which it dealt.  But its use as evidence that, therefore, the CEPU had an arrangement with Edison, was something which had never been articulated as part of the issues for his Honour’s determination.  The memorandum of understanding formed no part of the case against the CEPU until it appeared in his Honour’s reasons for judgment.

105               During the course of submissions before the primary judge counsel for each of the parties addressed the evidence about the meetings of 13 and 16 August.  Senior counsel for the CEPU submitted to his Honour that he would:

‘… expect that if the [CEPU] had been told that the company [Edison] had conceded the demands which had been made on the evidence, in return for the signing of the Simon Engineering [site] agreement, that Mr Mighell’s statutory declaration would have been signed on the 13^th or the 14^th or the 15^th [August]’. 

He submitted however, it was not signed on any of those dates but only on 23 August.  Accordingly, senior counsel argued to the primary judge, if one looked ‘… at the objective indicators, not the speculation, that point to the date when an agreement was reached, the only date that comes up is 23 August and the only agreement – the only contract’ was the heads of agreement.

106               Because both parties in their final addresses to the primary judge referred to the evidence of the meetings of 13 and 16 August as suggesting that by or at that time Edison had agreed to the CEPU’s demands, they were aware of the disconformity between the evidence at the trial and the pleadings and particulars.  Such a disconformity does not necessarily disentitle a party to a verdict based upon the evidence even though there has been no departure during the trial from the pleaded cause of action (Dare v Pulham (1982) 148 CLR 658 at 664 per Murphy, Wilson, Brennan, Deane and Dawson JJ).  Particulars can be amended in a trial after the evidence has closed.  But, a failure to amend particulars to accord precisely with the facts which have emerged in the course of evidence does not necessarily preclude a plaintiff from relying on that evidence in seeking a verdict on the original cause of action alleged (Dare 148 CLR at 664).  And, in Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 227-228 Aickin J (with whom Barwick CJ, Gibbs, Mason, Jacobs JJ agreed) held that the Commissioner could be required to give particulars of an arrangement or understanding on which he relied in defending a challenge to a notice of assessment.  Aickin J continued (Bailey 136 CLR at 228):

‘It is no doubt possible that in the course of the evidence facts may emerge which were not previously known to the Commissioner and which suggest that there was some contract, agreement or arrangement other than that which he had previously supposed existed and which would support the actual assessment, but that is a situation which can readily be cured by amendment and it cannot be doubted that the Commissioner would in those circumstances be permitted to amend his particulars even though he would again have to specify the details of the arrangement which he was then alleging.’

107               In deciding whether or not a point was raised at trial, no narrow or technical view should be taken, as Mason CJ, Wilson, Brennan and Dawson JJ said in Water Board v Moustakas (1988) 180 CLR 491 at 497.  They said that ordinarily the pleadings would be of assistance because it was one of their functions to define the issues so that each party knew the case which that party had to meet.  But they added that the particulars may not be decisive if the evidence had been allowed to travel beyond them, although where that happened and fresh issues were raised, the particulars should be amended to reflect the actual conduct of the proceedings.  Again, their Honours emphasised that a failure to amend will not necessarily preclude a verdict upon the facts that have emerged (Moustakas 180 CLR at 497).

108               The exercise of this Court’s appellate jurisdiction is by way of rehearing pursuant to s 27 of the Federal Court of Australia Act 1976 (Cth) (Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 533 [75] per Gleeson CJ and Gummow J, 547 [128] per Kirby J, 561 [176] per Hayne J;  Fox v Percy (2002) 214 CLR 118;  CSR Ltd v Della Maddalena (2006) 224 ALR 1 esp at 7 per Kirby J, with whom Gleeson CJ agreed;  Draper v Official Trustee in Bankruptcy (2006) 156 FCR 53 at 59 [14] per Mansfield J, 72 [76] per Rares J).  When exercising its appellate jurisdiction, the Court has power to allow an appeal on any ground upon which it is appropriate to grant a new trial:  s 28(1)(f) of the Federal Court of Australia Act 1976 (Cth).  The exercise of the appellate jurisdiction under s 28(1) of the Federal Court of Australia Act enlivens a wide range of powers.  These include a power to give such judgment or make such order as, in all the circumstances, the Court thinks fit (s 28(1)(b)).  In exercising those powers, the Court must always have regard to the interests of justice, including the correction of error or injustice, the need of the parties for finality in the matter, the public interest in finality of litigation and the fair and open administration of justice, and the requirement in s 24(1) to hear and determine the appeal.  Where no miscarriage of justice has occurred as a result of an error at the trial, a new trial may be refused (Conway v The Queen (2002) 209 CLR 203 at 219-220 [36]-[38] per Gaudron ACJ, McHugh, Hayne and Callinan JJ).

109               Not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial, but where the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact the position may be different (Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145 per Mason, Wilson, Byrne, Deane and Dawson JJ).  Their Honours said that this was especially so when the issue was whether the evidence of a particular witness should be accepted because it would be more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference.

110               The memorandum of understanding was part of the evidence before the primary judge and he was entitled to treat it as a business record recording the facts which it described.  Those facts were not the source of the CEPU’s complaint.  Rather, it criticised his Honour’s use of them to draw the inference that it would not have signed the memorandum of understanding unless it had already been notified by Edison of its agreement with the demands and that an arrangement or understanding was in place between the CEPU and Edison by 15 August.  For the reasons we have given, we are of the opinion that his Honour erred in using the memorandum of understanding before him in the way he did.  Before using it as he did, the primary judge should have drawn attention to the memorandum of understanding and invited the parties to make submissions as to its possible use. 

111               It is possible to determine the appeal in the exercise of our duty to rehear the proceedings without resort to any such inferences drawn from the memorandum of understanding and to proceed simply upon the other evidence, the pleadings and particulars in the case.  In our opinion, no miscarriage of justice was occasioned by his Honour’s failure to accord the CEPU an opportunity to address on, or call evidence on, the memorandum of understanding.  The other evidence before his Honour on which we have made our findings clearly supported his ultimate conclusion that there was an arrangement or understanding in place by about 24 August 2001 as pleaded. 

112               We were invited on the rehearing on appeal to exercise our powers to find the terms of any agreement or arrangement which was made or understanding which was arrived at without using the memorandum of understanding outside the pleaded and particularised case.  In this way, we can avoid the error that his Honour made. 

113               We are satisfied that his Honour would have come to the same ultimate conclusion as he did regarding the existence of the arrangement or understanding that he found was in place if he had ignored the memorandum of understanding.  And, we have reviewed the evidence for ourselves, without having any regard to the memorandum of understanding.  We are comfortably satisfied that the arrangement or understanding pleaded was established on the evidence.  Accordingly, the principle in Stead 161 CLR at 145 does not require that there be a new trial because compliance with the requirements of natural justice at the trial in relation to the memorandum of understanding could have made no difference to the result.

THE 16 AUGUST EDISON TEAM LEADERS’ MEETING

114               Next, on 16 August a meeting of Edison’s maintenance staff team leaders took place at Loy Yang B.  There, Mr Pearson and Mr Buckley informed the team leaders that Edison had entered into, or was entering into, an arrangement with the CEPU so that from then on it would only be using electrical contractors who had a certified agreement with the union.  At the meeting DJN was identified as the contractor likely to be excluded by the arrangement.  As previously indicated, Mr Pearson said that towards the end or immediately after the teleconference on 10 August, Mr Warrillow had given Mr Buckley and him an instruction to pass on this information. 

THE PREPARATION OF HEADS OF AGREEMENT BETWEEN EDISON AND THE CEPU

115               There was no direct evidence as to what, if any, negotiations took place between Edison and Corrs (following Mr Sutherland giving them instructions shortly after 13 August) on the one hand, and the CEPU on the other hand, with a view to progressing matters to achieve finalisation of the CEPU’s entry into the site agreement during the week of 13 August 2001.  On Monday 20 August 2001 Mr Sutherland sent an email to Mr Mighell late in the afternoon which read:

‘Subject:  Contract Labour Agreement: EME/ETU

Dean - Attached is thedraft agreement as prepared by our solicitors.  Please call me on Tuesday, if you can.

Regards

Col’ 

(emphasis added: His Honour’s judgment has a typographical error (at [72]) in the reproduction of this email using the word ‘a’ instead of the word ‘the’ which we have corrected and emphasised.)

116               Clause 4.1 of the draft heads of agreement attached to Mr Sutherland’s email to Mr Mighell of 20 August provided:

‘4        THE COMPANY SHALL

4.1       The Company [Edison] shall request that companies that:

(a)          are contracted to work for the Company at the Site; and

(b)          who employ people whose employment is governed by the National Electrical, Electronic and Communications Contracting Industry Award 1998;

have acceptable industrial arrangements in place before work is commenced.’  (emphasis added)

117               Mr Burns gave evidence that he was told by Mr Sutherland that those draft heads of agreement ‘… didn’t give the union anything’.  That was an accurate assessment if the document were read in isolation.  The wording of cl 4.1 of the draft heads of agreement could not then be seen as an acceptable response to Mr Mighell’s 9 August requirement that EBAs with the CEPU be in place for all electrical contractors who performed work at the Loy Yang B site.  Mr Mighell had not sought that Edison merely ‘request’ its electrical contractors to have ‘acceptable industrial arrangements in place’, as cl 4.1 of the draft provided.  The draft cl 4.1 was, on its face, vacuous.  Most significantly, it did not appear to reflect Mr Driscoll’s instructions to agree to the CEPU’s demand as quickly as possible.  Nor did it reflect the conduct of Edison in implementing those instructions on site in the preceding days.  This draft clause emerged on 20 August after an unexplained delay of 10 days in circumstances where on the previous Monday (13 August), Edison’s Mr Buckley had unequivocally told Mr Nabulsi of DJN, as the only electrical contractor affected by the proposal, that it was no longer going to be engaged because of its refusal to sign an EBA with the CEPU.  And, on Thursday 16 August, Mr Buckley and Mr Pearson had told Edison’s team leaders at Loy Yang B the same thing.

118               The CEPU pointed to the absence of direct evidence of communication between Mr Sutherland or anyone else on Edison’s part and Mr Mighell or anyone on the CEPU’s part during the 10 days following 10 August.  It argued that that absence in a case of this seriousness should lead to a finding that the Court was not satisfied that a contract, arrangement or understanding had been entered into concerning EBAs for electrical contractors at the Loy Yang B site.  The email of 20 August 2001 was the first actual evidence that communication had occurred between Mr Sutherland and Mr Mighell since their meeting in the afternoon of 10 August.  Like his Honour, we find it improbable that the two had not spoken or communicated in the interim.  The word ‘the’ in the email, which we have emphasised, suggests that the two had spoken about the draft agreement referred to in it.  So does the phrasing of the reference to the involvement of the solicitors, whom Mr Sutherland decided to instruct only after 13 August. 

119               In our opinion, the terms of the 20 August email, and the apparently leisurely pace in which the first solicitors’ draft was provided, lead to the inference that something had happened to remove the urgency for Edison to placate the CEPU in order to progress the execution by it of the site agreement, despite the absence of direct evidence of any communication between the Edison side and the CEPU side.  This, in turn, reinforces the findings we have made that the 13 August letter had been received by Mr Mighell by 15 August.  After that, the CEPU would have known that its demand had been met.  The urgency of preparing any formal document would not have been as great.

120               Mr Sutherland was not examined about whether he spoke to Mr Mighell on Tuesday 21 August, as foreshadowed in his email, although he did give evidence that it was his intention to do so.

THE FINALISATION OF THE HEADS OF AGREEMENT ON 23 AUGUST 2001

121               The next direct evidence of any communication between the CEPU and Edison was an email sent at 3.49pm on 23 August 2001 by a CEPU officer, Jesse Maddison, to Mr Sutherland in the following terms:

‘Col,

Please find attached document as discussed.

Peter’

‘Peter’ was Mr Mooney.  The attachment was a marked up version of the 20 August draft heads of agreement.  Significantly cl 4.1 now read as follows: 

‘4        THE COMPANY SHALL

4.1       The Company shall request that companies that:

(a)          are contracted to work for the Company at the Site; and

(b)          who employ people whose employment is governed by the National Electrical, Electronic and Communications Contracting Industry Award 1998;

have acceptable industrial arrangements in place before work is commenced.  What constitutes acceptable industrial arrangements includes having a current certified agreement with the union.’

122               Mr Sutherland was not asked any questions about the discussions referred to in Mr Mooney’s email.  The only change of any real consequence to the 20 August version of the heads of agreement was that which was made to cl 4.1.

123               On receipt of the CEPU email, Mr Burns and Mr Sutherland immediately discussed Edison’s proposed response.  They agreed that the CEPU’s proposed changes should be accepted and the CEPU informed urgently.  Mr Sutherland dictated a reply whilst he was standing beside Mr Burns.  The reply which was sent half an hour after they had received Mr Mooney’s email said: 

‘Urgent Attention: Dean Mighell, Peter Mooney

This note is to confirm Edison Mission Energy’s acceptance of your attached document (no changes made by EME) as the text of our Agreement pertaining to contract labour on the proviso that the Simon Engineering Valley Power Site Agreement is appropriately signed today.  Our signed copy of the Contract Labour Agreement will be delivered to your office tomorrow morning in exchange for a copy of the signed Simon Engineering EBA.

Regards,

Col Sutherland\Paul Burns.’

124               After Mr Sutherland dictated the email he directed Mr Burns to sign the heads of agreement.  Mr Burns expressed some reluctance but accepted the instruction and signed it.  Mr Sutherland then took the signed heads of agreement and departed from Melbourne in somewhat of a hurry.  Mr Burns had not dated the final, signed heads of agreement.  On the final document, Mr Sutherland had written in the date.

THE HEADS OF AGREEMENT

125               The heads of agreement recited that they set out the industrial arrangements agreed between Edison and the CEPU for contractors to be engaged to work at the Loy Yang B power station.  They noted that the union would endeavour to engender a culture of harmonious and productive workforce relations to encourage the resolution of disputes through agreed resolution procedures and to comply with the Workplace Relations Act.  The parties agreed that any dispute which arose relating to the engagement of contractors at the Loy Yang B power station site which could not be resolved in accordance with the relevant certified agreement, or otherwise, would be referred to the AIRC.

126               The CEPU conceded before us that the AIRC had no direct jurisdiction to deal with a dispute between it and Edison as referred to in cl 6 of the heads of agreement.  This was because Edison did not and would not employ workers who might be affected.  Thus, the heads of agreement would not in the future attract the AIRC’s jurisdiction.  Edison could only intervene in proceedings in the AIRC as a person affected by a dispute at the Loy Yang B site.  Thus, if Edison breached cl 4.1, the CEPU could not take proceedings in the AIRC directly against it to resolve any dispute arising between them, and vice versa.

127               The amendment to cl 4.1 gave some content to what was ‘acceptable’ by identifying an EBA with the CEPU.  But, this did not change the position that Edison’s only obligation was merely to ‘request’ contractors to have such arrangements.  However, this, on its face, was far from what Mr Mighell had required on 9 August:  namely, that Edison ensure this were the case as part of the price for the CEPU agreeing to sign the site agreement.

128               On 24 August Mr Sutherland hand delivered the signed heads of agreement to Mr Mighell at the CEPU offices.  He said that the meeting lasted a few minutes and that Mr Mighell did not provide him with a copy of the signed site agreement, but assured Mr Sutherland that it would be signed on behalf of the CEPU.

LATER EVENTS

129               The heads of agreement were not made available to managers at Loy Yang B for some months after August 2001.  Mr Buckley said that he first saw a copy in late 2001.  Mr Pearson said that he did not see the heads of agreement until late 2003, after Edison had received the letter dated 27 October 2003 from the ACCC which first put it on notice of the investigation leading to the commencement of these proceedings.

130               DJN was not offered any new contracting work at the Loy Yang B site between August 2001 and about January 2004.  DJN was permitted to complete its pre-existing work there, which it did on about 20 September 2001.  As his Honour found, that was consistent with Edison’s decision at the 10 August teleconference to ‘grandfather’ DJN’s existing contractual commitments.

131               After receiving the ACCC’s October 2003 letter, Edison decided that it would no longer comply with the heads of agreement.  It also immediately ceased its practice of requiring all electrical contractors to have a current certified agreement with the CEPU before they would be allowed to commence work at the Loy Yang B site.  Following that change in practice, in early 2004 DJN was invited to tender once again for work at Loy Yang B and it resumed work as an electrical contractor at that site from early March 2004.

THE ROLE OF THE HEADS OF AGREEMENT

132               A central controversy in the appeal, as before the primary judge, was the role of the heads of agreement.  The CEPU argued that the heads of agreement were to be treated as a stand alone contract which superseded all prior negotiations, arrangements and understandings. 

133               The CEPU argued that his Honour should not have drawn the adverse inferences which he did in reaching a conclusion that there was an arrangement or understanding in place at the time the heads of agreement were signed on 23 August 2001 (or handed over by Mr Sutherland and Mr Mighell on 24 August 2001) which reflected the terms of the letter of 13 August 2001.  That submission has an air of unreality having regard to the factual matrix in which the heads of agreement were made.  It overlooks that the CEPU’s demands, as made by Mr Mighell on 9 August, were acceded to and implemented by Edison as a matter of fact by 13 August 2001. 

134               There are clear indications that the conduct of Edison and the CEPU was governed by a relationship which was broader than that expressed literally in the signed heads of agreement.  That is not to say that the heads of agreement themselves must have then been a sham, as the CEPU argued on the appeal and before his Honour.  They merely represented part of the arrangement or understanding which the parties had reached concerning the need for electrical contractors at the Loy Yang B site to have EBAs with the CEPU.

135               A ‘sham’ is a reference to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences (Equuscorp Pty Ltd v Glengallan Investments Pty Ltd  (2004) 218 CLR 471 at 486 [46] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ).  Here, the heads of agreement were intended to have their apparent consequences, but with the addition that Edison’s ‘request’ would be an iron fist in a velvet glove.

136               Contractual assent may be inferred from conduct (cf:  Halloran v Minister Administering the National Parks and Wildlife Act 1974 (2006) 224 ALR 79 at 93 [56] per Gleeson CJ, Gummow, Kirby and Hayne JJ).  The adoption or consensual nature of an arrangement or understanding can also be inferred from conduct (Lutovi 140 CLR at 444-445).  The activities which the Parliament proscribed in s 45E are often likely to be proved by circumstantial rather than direct evidence, given the nature of proceedings where such conduct is in issue.  That is so even though s 76(2) excludes individuals from being liable to pecuniary penalties.  As is often the case in proceedings where a contract, arrangement or understanding (made or arrived at in contravention of a legislative proscription) must be proved, circumstantial evidence is sometimes the only evidence available.

137               Even in criminal law, many offences are proved, and indeed can only be proved, by circumstantial evidence.  So, in a case of conspiracy, community of purpose may be proved by independent facts or otherwise.  If one defendant is shown to be committing other acts, tending to the same end, then even:

‘… though primarily each set of acts is attributable to the person whose acts they are, and to that person alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves 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’. 

(The King and The Attorney-General of the Commonwealth v Associated Northern Collieries (1911) 14 CLR 387 at 400 per Isaacs J approved in Ahern v The Queen (1988) 165 CLR 87 at 94 per Mason CJ, Wilson, Deane, Dawson and Toohey JJ.)

138               Of course, conspiracy is the agreement of two or more persons to do an unlawful act or to do a lawful act by unlawful means.  It is the fact of the agreement, or combination, to engage in a common enterprise which is the nub of the offence.  As the High Court said in Ahern 165 CLR at 93:

‘This fact can seldom be proved by direct evidence of the making of an agreement and must in almost all cases be proved as a matter of inference from other facts, that is to say, by circumstantial evidence.  For this purpose, evidence may be led which includes the acts or declarations of one alleged conspirator made outside the presence of the others provided such evidence is not led to prove against the others the truth of any assertion or implied assertion made by the actor or the maker of the statement.  It may take the form of evidence of separate acts or utterances from which the fact of combination might be inferred.  Led in that way, it is not hearsay and is not dependent upon some circumstance to take it outside the hearsay rule, such as an implied authority making the acts and words of one the acts and words of the other.

Thus it was said in Tripodi ((1961) 104 CLR at 6) that proof of the crime of conspiracy “may well consist in evidence of the separate acts of the individuals charged which, although separate acts, yet point to a common design and when considered in combination justify the conclusion that there must have been a combination such as that alleged in the indictment”.’

139               In Ahern 165 CLR at 104 the Court pointed out that in a case of conspiracy, it is often difficult, if not impossible, to segregate evidence so as to enable a ruling to be given in advance of the leading of other evidence for the purposes of establishing whether or not a conspiracy has been proved.  Thus, a judge must consider this question, usually, when all the evidence is in to see whether there is enough in the independent evidence of participation of an individual to enable a case to go to the jury.  Such a position is to be distinguished from the proof of an arrangement or understanding, which need not amount to an agreement or combination.  The deliberate choice of the concepts of ‘arrangement or understanding’ as criteria, in addition to ‘agreement’, which are proscribed by s 45E, evinces a legislative choice to broaden, rather than narrow, the reach of the section.

140               The approach of the CEPU, both before the primary judge and in the appeal, has been to, in effect, dissect each individual piece of evidence for its claimed inadequacy and then to assert that it must be put to one side and not considered in the context of the other pieces of evidence.  In our opinion this is erroneous.  It would be an incorrect approach to dealing with a criminal charge of conspiracy.  There, it is the fact of agreement or combination that must be proved beyond reasonable doubt, as opposed to the looser concepts of arrangement or understanding which are included within s 45E.  Moreover, the Parliament has deliberately chosen to apply the civil standard of proof to the establishment of a contravention of s 45E.  That is not to lose sight of the requirements of s 140(2) of the Evidence Act or the common law as to the necessity of the court attaining, in arriving at a finding of contravention, the degree of satisfaction to which we have referred in these reasons.

141               If, as in the case of the proof of a criminal charge of conspiracy, there is material to evidence an agreement, arrangement or understanding, the combination so evidenced (whether a formal agreement or the looser concepts of arrangement or understanding) implies an authority in each of the participants to act or speak on behalf of the others (Tripodi v The Queen (1961) 104 CLR 1 at 7; Ahern 165 CLR at 95).  Thus, anything said or done by one of the participants in pursuit of the common object may be treated as having been said or done on behalf of another of the participants.  Once participation in the agreement, arrangement or understanding has been established, such evidence may prove the nature and extent of the participation, as the Court explained in Ahern 165 CLR at 95.  Mason CJ, Wilson, Deane, Dawson and Toohey JJ said that the principle lying behind that rule was one of agency and that the closest analogy was with partners in a partnership business.  There is no reason not to apply, in considering s 45E(3), such a concept to an arrangement or understanding, in addition to an agreement.  Indeed, since the arrangement or understanding need not be contractual or enforceable and each party is entitled to withdraw from it or act inconsistently with it notwithstanding the adoption of it, it would be inappropriate to impose a higher standard of proving such an arrangement or understanding than the law of conspiracy requires for the proof of the agreement or combination (cf:  Lutovi 140 CLR 443-444).

142               The Parliament was alive to the fact that the conduct proscribed by s 45E is often likely to be of a kind insusceptible of proof by an applicant through direct evidence from one or more participants, but is more likely to be established by circumstantial evidence and inferences to be drawn from it.  As Dixon CJ, Fullager and Windeyer JJ said in Tripodi 104 CLR at 7-8:

‘But often enough in an ordinary case where there is no confederation or preconcert, directions, instructions and the like although spoken in the absence of the prisoner may, according to the circumstances of the case, be admissible as res gestae or relevant facts. It is easy to understand therefore that preconcert confederacy or combination may make such directions and the like admissible when they are given by one of several acting in preconcert with the prisoner and are given in furtherance of the common design. In the present case the things said and done when the prisoner was not present or within earshot are for the most part of this character and are admissible as part of what was done in furtherance of the common criminal purpose.’

143               We reject the CEPU’s approach of dissecting each piece of evidence in isolation from other evidence.  That approach distorts unacceptably the function of the tribunal of fact.  The court can consider the whole of the evidence in arriving at a decision on any fact or facts.  A circumstantial case can be proved if the tribunal of fact considers that the evidentiary mosaic coheres into a clear design.  But a circumstantial case may fail if, at the end of the day, it remains a collection of disparate and not necessarily connected matter.

144               In R v Hillier (2007) 233 ALR 634 at 646-647 Gummow, Hayne and Crennan JJ referred with approval to what Gibbs CJ and Mason J had said in Chamberlain v The Queen (No 2) (1984) 153 CLR 521 at 535-536, namely:

‘At the end of the trial the jury must consider all the evidence, and in doing so they may find that one piece of evidence resolves their doubts as to another.  For example, the jury, considering the evidence of one witness by itself, may doubt whether it is truthful, but other evidence may provide corroboration, and when the jury considers the evidence as a whole they may decide that the witness should be believed.  Again, the quality of evidence of identification may be poor, but other evidence may support its correctness; in such a case the jury should not be told to look at the evidence of each witness “separately in, so to speak, a hermetically sealed compartment”;  they should consider the accumulation of the evidence:  cf. Weeder v The Queen ((1980) 74 CR. App. R. 228 at p 231).

Similarly, in a case depending on circumstantial evidence, the jury should not reject one circumstance because, considered alone, no inference of guilt can be drawn from it.  It is well established that the jury must consider “the weight which is to be given to the united force of all the circumstances put together”: per Lord Cairns, in Belhaven and Stenton Peerage((1875) 1 App. Cas. 278 at p 279), cited in Reg v Van Beelen((1973) 4 S.A.S.R. 353 at p 373);  and see Thomas v. The Queen([1974] N.Z.L.R. 34 at pp 37, 38, 40) and cases there cited.  In Plomp v The Queen ((1963) 110 C.L.R. 234)it was argued that the motives of the accused could not be considered until it was shown by evidence that in some physical way his actions were responsible for his wife’s death. The Court rejected this argument.  Dixon CJ said ((1963) 110 C.L.R. at p 242):

“All the circumstances of the case must be weighed in judging whether there is evidence upon which a jury may reasonably be satisfied beyond reasonable doubt of the commission of the crime charged. There may be many cases where it is extremely dangerous to rely heavily on the existence of a motive, where an unexplained death or disappearance of a person is not otherwise proved to be attributable to the accused; but all such considerations must be dealt with on the facts of the particular case. I cannot think, however, that in a case where the prosecution is based on circumstantial evidence any part of the circumstances can be put on one side as relating to motive only and therefore not to be weighed as part of the proofs of what was done.”

It follows from what we have said that the jury should decide whether they accept the evidence of a particular fact, not by considering the evidence directly relating to that fact in isolation, but in the light of the whole evidence, and that they can draw an inference of guilt from a combination of facts, none of which viewed alone would support that inference.  Nevertheless the jury cannot view a fact as a basis for an inference of guilt unless at the end of the day they are satisfied of the existence of that fact beyond reasonable doubt.  When the evidence is circumstantial, the jury, whether in a civil or in a criminal case, are required to draw an inference from the circumstances of the case; in a civil case the circumstances must raise a more probable inference in favour of what is alleged, and in a criminal case the circumstances must exclude any reasonable hypothesis consistent with innocence.’    (emphasis added)

145               Brennan J said in the same case that an inference of guilt can safely be drawn if it is based upon primary facts which are found beyond reasonable doubt and if it is the only inference which is reasonably open upon the whole of the body of primary facts (Chamberlain (No 2) 153 CLR at 599).  He said that the insufficiency of a piece of evidence to support an inference of guilt does not by itself warrant setting aside a verdict of guilty if that piece of evidence, however important, is but a part of the whole body of evidence available to support the inference.

146               In this case we have proceeded to evaluate the evidence for ourselves, although we have accepted as correct his Honour’s findings as to the reliability of the evidence of the witnesses.  It was not argued that his Honour misused his advantage in doing so or that those findings were themselves incorrect.  We have also applied the civil onus of proof but had regard to the elements required by s 140(2) of the Evidence Act and the considerations to which we have referred stemming from the decision in Briginshaw 60 CLR 336.

147               We are of the opinion that the evidence amply demonstrates that by 23 August 2001, there was an arrangement or understanding of the kind pleaded and as found by his Honour (although we have not had any regard to the 15 August memorandum of understanding to come to the same conclusion).  The events and circumstances in evidence establish that Edison saw itself, as reflected in Mr Driscoll’s instruction of 10 August 2001, as having no choice but to accept the CEPU’s demands.  There was no evidence of any change in Edison’s position for over two years until it received the ACCC’s letter in October 2003.  Edison acted immediately to implement Mr Driscoll’s 10 August instruction.  Thus, on the following Monday Mr Nabulsi of DJN was told that because DJN would not enter into an EBA with the CEPU, Edison would not deal with DJN in the future.  This was an adoption by Edison of the CEPU’s demand.  It is highly likely, and we find, that by 23 August 2001, and probably before then, the CEPU was aware that Edison was so acting.  No event in evidence, other than the communications of 20 and 23 August, suggested that the CEPU had any reason to relax or had relaxed its demand.  Those communications referred to discussions between Mr Sutherland and officials of the CEPU.  There was an absence of any countervailing evidence.  Such evidence might have been given by the CEPU and, as Gleeson CJ pointed out in Mead [2007] HCA 25 at [13], that is a fact we can hardly ignore.

148               The inference to be drawn in this state of affairs, namely the absence of a countervailing explanation, is that the CEPU had not watered down its demands.  Rather, the CEPU understood from the clear and definite actions of Edison, including the despatch and its receipt of the 13 August letter, during the week commencing on that day, that its demands had been accepted by Edison and that the heads of agreement were to be read in the light of that arrangement or understanding.  The only witness called by the ACCC who could give evidence of the discussion was Mr Sutherland. Once he had given the implausible evidence of his meeting with Mr Mighell on 10 August, he plainly was not going to give his Honour an account that was reliable.

149               If the discussions of 20 and 23 August had involved a back-down by the union so that it was prepared to accept the literal meaning of the language in cl 4.1 of the final version of the heads of agreement, then Edison could have invited DJN to continue to provide services at Loy Yang B.  It did not do so until two years later when the ACCC raised the suspicion of a contravention of s 45E.  Nor was there any evidence that the team leaders were told after 16 August 2001 that the instruction of that day had been modified or withdrawn.  In that situation the CEPU argues that the Court would be engaging in an exercise of conjecture to think that there was an arrangement or understanding reflective of the position which it had demanded on 9 August 2001 and which Edison had implemented on 13 August and 16 August.

150               In our opinion, common sense suggests that Edison wrote the letter of 13 August, acted as it did towards DJN and instructed its team leaders, in order to obtain the result it wanted – namely the CEPU’s signature on the site agreement.  The CEPU signed because it was aware that Edison had adopted its demand as repeated on 9 August.  The CEPU thus knew that Edison would not just request, but would require, electrical contractors to have EBAs with the CEPU.  Edison had also demonstrated that it would so act in the meeting with DJN and its instructions to its team leaders in the week of 13 August.  We are satisfied that there was a meeting of minds between Edison and the CEPU on 23 or 24 August in the sense explained by Lindgren J in Australian Competition and Consumer Commission v CC (New South Wales) Pty Ltd (1999) 92 FCR 375 at 407-409 [137]-[141] adopting Smithers J in Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286 at 291.  That occurred when Mr Sutherland agreed to sign or handed over the heads of agreement.  That is enough to constitute an arrangement or understanding.  We are satisfied that is the position clearly established by the evidence.

151               In a case like the present the applicant has only to discharge the civil onus of proof.  Thus, it must follow that it would be incorrect to accept the CEPU’s invitation to condition the drawing of an inference establishing an applicant’s case only where no inference consistent with innocence (from liability of the respondent) is open on the evidence.  Rather, the drawing of such an inference can occur after the consideration of the matters which s 140(2) of the Evidence Act and the test in Briginshaw 60 CLR 361 at 363 require.  As Deane, Dawson, Toohey, Gaudron and McHugh JJ said in Doney v The Queen (1990) 171 CLR 207 at 211, if the criminal standard of proof does not apply, the existence of other reasonable hypotheses is simply a matter to be taken into account in determining whether the fact in issue should be inferred from the facts proved (see too Peacock v The King (1911) 13 CLR 619 at 638 per Griffith CJ and Palmer v Dolman [2005] NSWCA 361 at [33]-[47] per Ipp JA with whom Tobias and Basten JJA agreed).

152               The question is whether on the whole of the evidence it is open to us to infer on the balance of probabilities that (as alleged in the pleaded case) Edison and the CEPU had entered into a contract or arrangement or arrived at an understanding as at 23 or 24 August 2001 that Edison would require all electrical contractors at the Loy Yang B site to have the EBAs with the CEPU.

153               In our opinion we should draw the inference that there was an arrangement or understanding in place between Edison and the CEPU when the heads of agreement were signed on 23 August 2001 (or delivered on the next day) which involved DJN, in particular, being prevented from supplying services to Edison.  Such an inference was correctly found by the primary judge.  The behaviour of both Edison and the CEPU strongly suggested that such an arrangement or understanding was in place and that it consisted of more than the mere words of the heads of agreement.  We see no error in the ultimate finding of fact made by the primary judge.  That finding was not dependent only upon his use of the memorandum of understanding, even though he had said that, on the whole, the evidence supported the clearest of inferences that by 15 August Edison had communicated its acceptance of the CEPU’s requirement that electrical contractors not be permitted to perform work at the Loy Yang site unless they had a current certified agreement with the CEPU.  The finding is amply justified by the whole of the evidence other than the memorandum of understanding.  The primary judge continued (at [167]):

‘The critical thing is that Edison communicated its acceptance of this requirement to the CEPU and that this communication resulted in an arrangement between Edison and the CEPU.  The existence of such an arrangement is not inconsistent with the proposition that the parties then proceeded to record their arrangement in a document prepared by Corrs.’

On the findings we have made, that the 13 August letter was sent to and received by the CEPU, Edison had communicated its acceptance of the CEPU’s demand by or soon after 13 August.

154               In our opinion, when agreement was reached on the heads of agreement and Mr Mighell assured Mr Sutherland that the site agreement would be signed by the CEPU on 23 or 24 August, an arrangement was made or an understanding arrived at in contravention of s 45E(3) as pleaded.  The communication of the acceptance by Edison can be inferred on the balance of probabilities and having regard to the factors required to be considered by s 140(2) of the Evidence Act and the principles in Briginshaw 60 CLR 336 and related authorities to which we have referred.  The objective facts are compelling namely:

·                    Mr Driscoll's instruction to his subordinates to agree to the CEPU’s requirements on 10 August;

·                    the circumstances of the creation of the letter of 13 August and its signature by Mr Sutherland;

·                    the likelihood (and our finding) that the letter was sent to and received by Mr Mighell;

·                    Edison’s instructions to Mr Buckley which he carried out in his discussions with Mr Nabulsi, of DJN, on 13 August;

·                    Edison’s instructions to team leaders on 16 August which reflected that Edison was carrying out the CEPU’s demand;

·                    the circumstances of urgency affecting Edison's desire for a rapid solution to the impediments to having the site agreement signed;

·                    the change in Edison’s previous practice of not interfering in its contractor’s labour relations which was implemented until October 2003;

·                    the CEPU’s signing the site agreement on 23 August without any evidence that it had changed its demand about EBAs.

155               The only contractor identified by Edison as affected by the CEPU’s demand, namely DJN, was told that the consequence of its refusal to sign an EBA with the CEPU was that Edison would give it no more work at the Loy Yang B site.  There is no reason why Mr Sutherland would not have sent the 13 August letter.  Mr Sutherland’s unsatisfactory evidence did not explain what he did or what passed between him and the CEPU’s Messrs Mighell and Mooney.  The evidence of other witnesses from Edison explained that not only were Mr Driscoll’s instructions to agree to the CEPU’s demands, but also they had been met in a practical way and Edison’s staff were informed that that was what was happening.

156               The communication to Mr Nabulsi on 13 August meant that he knew that Edison was doing what the CEPU wanted.  That conduct was out in the open.  Mr Nabulsi said people on sites talked about such encounters as he had had.  Three days later Edison’s site managers were told much the same.  There was no secrecy in Edison’s conduct.  There was no evidence suggesting why Mr Sutherland would not have sent the 13 August letter yet not have stopped the 13 and 16 August actions of his subordinates in giving effect to its contents.  Nor was there any evidence that Corrs had been instructed about the 13 and 16 August communications when they came to draft the more circumspect heads of agreement.

157               Given that Mr Sutherland's evidence as to his conversations and conduct was rejected by the primary judge, the case against the CEPU became largely circumstantial.  The actions of Edison referred to above demonstrate both its intent and conduct to perform in accordance with the CEPUs demand. 

158               None of the actions of Edison's employees suggest that there was some change of heart after 13 August such as would suggest that the letter of that date had not been sent by Mr Sutherland to the CEPU.  And the memorandum of understanding of 15 August was also some evidence that the CEPU would be likely to sign the site agreement on or shortly after 15 August. 

159               The CEPU argued that Mr Sutherland's decision to instruct solicitors, Corrs, to prepare heads of agreement was inconsistent with the inference which we see as correct, namely that Edison had taken a decision and communicated it.  We agree with the primary judge's finding that it is not uncommon for those charged with finding a solution to a commercial problem to arrange the solution and then seek legal advice in relation to its documentation, especially when the matter is urgent.

160               The emails of 20 and 23 August suggested Mr Sutherland was having discussions with officers of the CEPU.  It is not possible to infer what the content of those discussions was.  The CEPU argued that an inference ought be drawn consistent with it being exonerated from liability:  that Edison and the union had agreed to the literal words of cl 4.1 of the heads of agreement as the full extent of their arrangement in relation to the issue of EBAs for electrical contractors at the Loy Yang site. 

161               In our opinion such an inference is improbable and we reject it.  The contemporaneous actions of Edison did not accord to this far more anodyne position.  By 13 August, Edison had made a request to DJN, which DJN in turn rejected.  If the true position understood between Edison and the CEPU were that a simple request would have been sufficient, then there was no reason for Edison to take the next step.  That conduct, which was to refuse to engage DJN and to persist in the position which Mr Buckley had communicated on 13 August to Mr Nabulsi that DJN’s services would be no longer utilised, was conformable with the clear position put by Mr Mighell on 9 August, the letter signed by Mr Sutherland on 13 August and the position communicated to Edison’s site managers on 16 August.  Nor was there any evidence that Mr Driscoll had withdrawn his instructions of 10 August or countenanced that they could be watered down by his subordinates.

162               Actions can speak louder than words in a circumstantial case.  In these ways, Edison demonstrated that it was committed to complying with the CEPU’s demands.  And, in return, the CEPU signed the site agreement.

163               The CEPU did not advance any argument to explain why each of Edison and the CEPU could be found to have changed its mind after Mr Driscoll gave his instructions on 10 August or why Edison would have carried out those instructions without changing its actions at some point before the heads of agreement were signed or exchanged.  And the reason is not far to seek.  The CEPU’s argument, while open on the isolated evidence of the literal wording of the heads of agreement, does not accord with common sense in light of Edison's determination to secure the execution of the site agreement and its conduct to meet the CEPU’s demands.  And while there is no evidence of direct communication, other than the 13 August letter, between Edison and the CEPU of the acceptance of Mr Mighell’s 9 August demands, it is implausible that the CEPU did not learn of Edison's acceptance by 23 August.  The CEPU had no reason to accept the vacuous wording of cl 4.1 of the heads of agreement unless it understood that Edison had accepted, indeed had already acted on, its original demand. 

164               In the construction of a contract, the court places itself in the commercial matrix in which the parties were at the time that the contract was made.  This is so that the court can construe correctly both the express terms used by the parties and those which are included by implication in order to give effect to their presumed intention.  In Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at 293 [10]; 76 ALJR 436 at 439, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said that it was appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question in a contract were used and, from those circumstances, to discern the objective which the parties had in view.  They applied what Lord Wilberforce had said, namely that an appreciation of the commercial purpose of the contract ‘… presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating’ (Reardon Smith Line v Yunvar Hansen-Tangen [1976] 1 WLR 989 at 995-996).

165               And, in Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 21 CLR 181 at 188 [11] approving Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912, Gleeson CJ, Gummow and Hayne JJ said that interpretation of a written contract involved 

‘… the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract’.

166               These principles apply both to the construction of the heads of agreement themselves and to ascertaining what any arrangement or understanding may have been between the parties at the time the heads of agreement were made.

167               Thus, we find that Edison and the CEPU intended that the heads of agreement should be controlled by, and operate in accordance with, a wider arrangement which had been agreed upon by them and was reflected in Edison’s conduct during the week of 13 August and the CEPU’s signing of the site agreement on 23 August.

THE ACCC’s ALTERNATIVE CASE

168               The ACCC put its case in another way.  It argued, as an alternative, that the heads of agreement constituted the only relevant contract, arrangement or understanding between Edison and the CEPU.  In that scenario, the ACCC argued that, on its proper construction, cl 4.1 contemplated that Edison would require a contractor to comply with any ‘requests’ Edison made before Edison would permit the contractor to work at the Loy Yang B site.  The CEPU’s answer to this argument was that cl 4.1 merely obliged Edison to make a request of the electrical contractor that it have acceptable industrial arrangements and that a current certified agreement with the CEPU was one, but not the only, way that the contractor could demonstrate such acceptable industrial arrangements.

169               As the primary judge said (at [187]), the latter was a possible construction of cl 4.1 but ‘… it is not the only way in which the clause can be read and it does not make much sense commercially or industrially’.  We agree.  He found that it was unlikely that Edison and the CEPU contemplated that it was entirely optional for a contractor performing electrical work at the Loy Yang B site to have a current certified agreement with the CEPU.  His Honour construed the last sentence of cl 4.1 as stipulating that a current certified agreement or EBA with the union was an essential component of a set of acceptable industrial arrangements.  He held that the words ‘includes having’ in cl 4.1 required, but were not limited to, the contractor to have a current certified agreement with the CEPU.  And he held that for the purposes of cl 4.1, a current certified agreement with the CEPU was an essential component of any acceptable industrial arrangements and it was implicit that Edison would insist that contractors complied with its ‘request’ to that effect.

170               The CEPU argued that the primary judge’s construction of cl 4.1 in the alternative case put by the ACCC was made without evidence, was contrary to the evidence or against the weight of the evidence.  These submissions are without foundation.  His Honour construed a commercial document using orthodox principles.

171               In construing a contract, the question for a court is what each party by words and conduct would have led a reasonable person in the position of the other party to believe were their rights and obligations.  In that way the court ascertains the common intention of the parties to the contract by reference to what a reasonable person, in the position of the parties, would understand was the meaning of the language in which they expressed their agreement.  This includes, in the usual case, consideration not only of the text, but also of the surrounding circumstances known to the parties and the purpose and object of the transaction (Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 179 [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).  As we have said above, the same principles should be applied to the heads of agreement whether they are a contract or an arrangement or understanding within the meaning of s 45E.

172               Here, both parties knew Edison’s objective of ensuring that the CEPU sign the site agreement so that construction of the peaker plant could proceed.  The surrounding circumstances, also known to the parties, were that at the meeting on 9 August 2001 Mr Mighell had repeated the CEPU’s prior demands which Edison had to meet before the CEPU would sign the site agreement.

173               The CEPU’s argument on the construction of cl 4.1 is contrary to both commercial and industrial commonsense.  It ignores the background of mutually known facts and the objective aim and genesis of the transaction.  The commercial imperative for Edison was to achieve the CEPU’s signature on the site agreement so that it could commence the construction of the peaker plant and remove the threat of the potential loss of its investment then looming over it.  The objective of the CEPU was to have Edison’s commitment to ensuring that electrical contractors at Loy Yang B would have EBAs with the union.

174               An agreement should be construed so as to avoid making it commercial nonsense or working commercial inconvenience (Australasian Performing Right Association Ltd v Monster Communications Pty Ltd (2006) 71 IPR 212 at 235-237 [103]-[108] per Rares J).  Here, cl 4.1 would have been understood by a reasonable person in the position of the parties as requiring Edison to insist that any electrical contractor waiting to perform work at its Loy Yang B site, including in the construction of the peaker plant had an EBA with the CEPU.  The reasonable person would reject the self serving construction now urged by the CEPU as not reflecting the parties’ intention in light of the objective matrix of facts.  The CEPU’s construction of cl 4.1 should be rejected.

THE PROPER CONSTRUCTION OF s 45e(3)

(a)       Is the purpose for including the provision subjective or objective?

175               The CEPU accepted that for a contract, arrangement or understanding to be found, there had to be evidence of a consensus or meeting of the minds between Edison and the CEPU under which one or both of them committed to a particular cause of action.  It accepted that his Honour had applied the correct test in this respect, noting that it was not sufficient that there was a mere expectation that one or more parties would act in a particular way.

176               The CEPU argued that the primary judge erred in considering that the purpose to which s 45E(3) refers is the subjective purpose of the parties.  It said that his Honour should not have followed decisions on other sections, in particular ss 4D and 45, in arriving at that conclusion.

177               As the primary judge pointed out (at [114]) both ss 45D(1) and 45E(3) are excluded from the operation of s 4F which, in other situations, deems the parties to have had a particular purpose.  He construed (at [113]) the word ‘purpose’ in s 45E as referring to the subjective purpose of the parties.  The CEPU argued that his Honour erred in this construction because, it said, s 45E(3) only imposed a prohibition on the first person (Edison) and not on the union (the CEPU).  It also argued that there was no, or insufficient, evidence with which to find any purpose.  And, it argued that the heads of agreement themselves were evidence of Edison’s or the parties’ purpose.  This purpose, it argued, was to provide a means of satisfying the requirements in cl 4.1 which, however, was subject to the power of the AIRC, under cl 6, to intervene.  The CEPU said that Edison’s sole purpose was to get the site agreement signed, as opposed to it having any purpose which had any impact on DJN.

178               In our opinion s 45E must be construed according to its own terms (Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 10 [24] per Gleeson CJ, McHugh, Gummow and Hayne JJ).  It may be appropriate in considering the operation of the section to have regard to other provisions of the Trade Practices Act which have similar, but not identical wording, in order to ensure that the construction given to s 45E is consistent with the language and purpose of all of the provisions of the Act, to the extent that they are capable of reconciliation (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71] per McHugh, Gummow, Kirby and Hayne JJ).  The context in which s 45E appears in the Trade Practices Act is Pt IV, which deals with restrictive trade practices.  The section is one of a number that seek to regulate the behaviour of persons (including corporations) engaging in certain practices, including some which are calculated to inhibit the acquisition or supply of goods and services in a commercial environment.  Each of the principal sections in Pt IV of the Act deals with particular situations, and variants of those situations, and identifies, with precision, the relevant conduct which is regulated by the provision.

179               While s 76(2) exempts an individual from being found liable to pay a pecuniary penalty as principal or accessory, an individual is not otherwise exempted by that section from the other remedies provided in Pt VI of the Act in respect of contraventions of Pt IV.  Thus an individual who engages in conduct which contravenes a provision of Pt IV, in general, is still liable to pay damages under s 82, or to be made the subject of either or both an injunction under s 80 or orders made under s 87.  And so, an organisation of employees, or an officer of such an organisation, can become an accessory to a contravention of s 45E(3) by force of s 75B in making a contract or arrangement, or arriving at an understanding, with some other person in circumstances where the contract, arrangement or understanding includes a provision for the purpose, or purposes including the purpose, of preventing or hindering the non-union party from acquiring or continuing to acquire goods or services from someone else.  Thus, apart from the special provisions in s 76 in proceedings to recover a pecuniary penalty, the Act provides a range of remedies in respect of a contravention of s 45E.  These include remedies in circumstances where a union combines with another person for the purpose of preventing or hindering that person from acquiring or continuing to acquire goods or services from someone else.

180               In News Ltd v South Sydney District Rugby League Football Club (2003) 215 CLR 563 at 572-573 [17] Gleeson CJ observed that while it may have been a convenient method of analysis to address each element in the application of s 4D of the Trade Practices Act, ‘… it is to be remembered that what is involved is a compound concept …’.  Here, the compound concept in s 45E(3) is, relevantly, Edison making a contract or arrangement, or arriving at an understanding, with the CEPU which contains a provision included for the purpose (or purposes including the purpose) of preventing or hindering Edison from acquiring services from the second person, DJN, or, subject to what is said below, a class which includes DJN.

181               The Chief Justice said that in the context of competition law it is necessary to identify purpose by describing what is sought to be achieved by reference to what is relevant in market terms.  ‘Purpose’ in this context is ‘… the end sought to be accomplished … as distinct from the reason for seeking that end (motive) …’ (South Sydney 215 CLR at 573 [18]; approved in Rural Press Ltd v Australian Competition and Consumer Competition (2003) 216 CLR 53 at 82-83 [66] per Gummow, Hayne and Heydon JJ;  Gleeson CJ and Callinan J agreeing at 60-61 [3] and see per Kirby J at 97 [112]).  And, Gleeson CJ noted that the manifest effect of a provision in a contract may be the clearest indication of its purpose.  The court has to determine the end the parties had in view:  that is, their subjective intentions (South Sydney 215 CLR at 573 [18]).  Gleeson CJ said of ss 4D and 45 that the particularity of the person or class which was the object of the purpose defined in the statute was essential to the concept it created (South Sydney 215 CLR at 574 [20]).  In applying s 4D the court must ascertain the subjective purpose of the parties for the inclusion of the critical provision (South Sydney 215 CLR at 573 [18] per Gleeson CJ, 580 [43] per McHugh J, 586-587 [63] per Gummow J, 636-637 [212] per Callinan J:  Rural Press 216 CLR at 78 [57] per Gummow, Hayne and Heydon JJ; Gleeson CJ and Callinan J agreeing at 60-61 [3]).

182               In our opinion s 45E(3) requires each party to the contract, arrangement or understanding to have had the subjective purpose, which the section proscribes, for including the impugned provision.  The opening words of s 45E(3) prohibit the ‘first person’ from making a contract or arrangement or arriving at an understanding of the kind which the section then specifies.  But the specification depends upon the bilateral conduct of the parties to include the provision.  And because this conduct is bilateral, the subjective purpose with which each of the parties included it must be one they both had.  The section is intended to prohibit a combination between the first person and the union (or its officer) who include a provision in a contract, arrangement or understanding with a common purpose of achieving an end of hindering or preventing the first person acquiring services from the second person.

 (b)      Can the CEPU be liable under s 45E or s 76?

183               The wording of s 45E(3) evinces an intention that the first person is prohibited from making the contract or arrangement or arriving at the understanding which is proscribed.  The section is curiously framed.  It enjoins conduct by only one of two parties to a bilateral engagement.  There cannot be a contract, arrangement or understanding within the meaning of s 45E(3) unless there is at least a ‘first person’ and an organisation of employees or one of its officers acting for and on its behalf.  Yet only the first person, and not the union or its officer, is prohibited from making the contract or arrangement or arriving at the understanding.  And s 45EA(a) prohibits the first person from giving effect to the offending provision.

184               But, s 76(1)(c)-(f) creates accessorial liability in respect of a contravention of s 45E for the purposes of imposing a pecuniary penalty.  In addition s 75B creates accessorial liability, relevantly, in respect of other civil contraventions of Pt IV so as to engage the remedies provided in, among others, ss 80, 82 and 87 of the Trade Practices Act.  Because s 76(1) specifically provides its own regime for imposing primary and accessorial liability in respect of pecuniary penalties for contravention of s 45E, the general provisions of s 75B do not apply (Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 per Gavan Duffy CJ and Dixon J;  David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276 per Gummow J with whom Brennan CJ, Dawson, Gaudron and McHugh JJ agreed).

185               Moreover, s 76(2) expressly excludes the liability of an individual for a contravention of s 45E.  Thus, an officer of a union cannot be liable under s 76(1) as an accessory to a contravention of s 45E(3) by the union or the ‘first person’, even though he or she is identified in terms in s 45E(3) as a person with whom the ‘first person’ is prohibited from making the proscribed contract or arrangement or arriving at the proscribed understanding.

186               The CEPU argued that s 45E(3) is concerned with only the subjective purpose of the ‘first person’, here Edison, rather than being also concerned with the subjective purpose of the union since the conduct of the union is not expressly prohibited by s 45E(3).  If s 76(1) is the only provision which addresses the union’s state of mind, then, as an accessory, it is proscribed from aiding and abetting Edison in achieving its (Edison’s) proscribed purpose.  But even if the union had to have the, or a, purpose congruent with the ‘first person’s’ purpose under s 45E(3), s 76(1)(c)-(f) requires that the union must also know of and intend that the first person’s purpose be effected.

187               In addition, for a union to be liable as an accessory under s 76(1)(c)-(f) it must know of, and share, the end the first person sought to accomplish (i.e. the purpose:  South Sydney 215 CLR at 573 [18]) by the inclusion of that provision. 

188               The CEPU’s argument that s 76(1)(c)-(f) cannot create an accessorial liability in a union should be rejected.  In its natural and ordinary meaning s 76(1) does create such a liability in a union.  Moreover, such a result is consistent with the general operation of s 75B in respect of other civil remedies provided in Pt VI.  In addition, s 76(2) does not include a union within the field of exemption afforded to individuals.  In our opinion the Parliament has been careful to provide for accessorial liability of unions in respect of contraventions of s 45E.  Their conduct may attract pecuniary penalties under s 76.  The Parliament specifically excluded individuals, including union officers, from any such liability.  The legislative scheme appears to safeguard a union from liability unless it is proved that it acted with knowledge of the essential matters which went to make up the contravention by the ‘first person’ whether or not the union knew that those matters amounted to a contravention of s 45E(3) (Yorke v Lucas (1985) 158 CLR 661 at 667 per Mason ACJ, Wilson, Deane and Dawson JJ).

189               The CEPU argued that because it could not be a principal in a contravention of s 45E(3), the accessorial liability imposed by s 76(1)(c)-(f) was equally inapplicable to it.  It sought to draw comfort from a line of authority commencing with Dixon J’s judgment in Mallan v Lee (1949) 80 CLR 198.  However, as Mason CJ, Wilson and Toohey JJ said in Hamilton v Whitehead (1988) 166 CLR 121 at 126, the former decision was instructive because it underlined the importance of properly characterising the respective liabilities imposed by a statute on each person to whom a relevant statutory provision applies.  And, as their Honours said, the analogue to s 76(1)(c)-(f) which they were considering played a vital role in the whole scheme of the legislation.  They said that the words of that analogue were crystal clear and that there was no warrant for reading them down.  They continued (Hamilton166 CLR at 129):

‘Indeed, the fundamental purpose of the companies and securities legislation – to ensure the protection of the public – would be seriously undermined if the hands and brains of the company were not answerable personally for breaches of the Code which they themselves have perpetrated.’

190               Mason CJ, Wilson and Toohey JJ went on to consider the effect of ss 75B and 82 of the Trade Practices Act which had been discussed in the joint judgment in Yorke 158 CLR at 671.  They said that the liability created by s 75B was that of a true accessory since the offence committed by the principal was not the consequence of a vicarious liability for the actions of its servants carried out on its behalf.  Rather the offence was, they said, the consequence of actions undertaken directly by the corporate principal through a natural person who was, in so acting, the embodiment of the corporation (Hamilton166 CLR at 129-130).

191               The accessorial liability created by s 76(1)(c)-(f) is analogous to that in s 75B.  But s 76(1) specifically creates accessorial liability in respect of a contravention of s 45E while s 76(2) excludes individuals (including officers of unions) from the reach of that liability.  So, what other legal person could be an accessory to a ‘first person’ corporation’s contravention of s 45E(3) except a union or organisation of employees?  No plausible construction of the operation of s 76(1)(c)-(f) was suggested by the CEPU and its own construction, to exclude unions or organisations of employees from its reach, effectively leaves the provisions with no work to do.  That provides good reason to prefer the literal meaning (Australian Securities and Investments Commission v DB Management Pty Ltd (2000) 199 CLR 321 at 338 [34]-[35]).  Here, s 45E(3) prohibits only the corporation or first person, as a principal, from participating in the making of a contract or arrangement or the arriving at an understanding.  A union or its officer can only be an accessory to the contravention of the first person.  There is no reason for reading down the words of s 76(1)(c)-(f) for the reasons given in Hamilton 166 CLR at 128-130.  Indeed, it is clear that the Parliament considered the accessorial liability which s 76(1)(c)-(f) creates as a vital part of the scheme of protection from abuses of power of which s 45E is a part.  We reject the argument of the CEPU on this point.

 (c)      Is the purpose the only or an operative purpose?

192               Next the CEPU argued that the purpose in s 45E(3) must be the operative purpose of each party.  However that characterisation would deprive of content the words of extension in the provision, ‘or for purposes including the purpose’.  Those words recognise that a variety of purposes can, and often do, exist in the minds of persons who agree to a provision being included in, for example, a contract.  A purpose will suffice to enliven the operation of s 45E(3) if it is a cause of the inclusion of the provision.  Although Deane J said in Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331 at 348 that an analogous expression in s 45D(1) should be construed to require the purpose to be an ‘operative purpose’, Bowen CJ, with whom Evatt J agreed, said that it may be only one of the purposes and need not necessarily be the dominant one (Tillmanns 42 FLR at 338).  Deane J applied a gloss on the statutory language.  He based his view on what Viscount Simon LC had said of the element of purpose in the tort of conspiracy.  Citing his speech in Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 at 444-445, Deane J identified this as requiring a finding of ‘… the real reason or reasons for, or the real purpose or purposes of’ (Tillmanns 42 FLR at 349).  To the extent that the two tests of Bowen CJ and Deane J differ, we consider that of Bowen CJ to be correct.  It reflects the statutory language.  Viscount Simon LC went on to say that in the tort of conspiracy ‘… if there is more than one purpose actuating a combination, liability must depend on ascertaining the predominant purpose’ (Crofter [1942] AC at 445).  Since s 45E(3) recognises that a proscribed provision may be included ‘for the purpose, or for purposes including the purpose’, it evinces a clear intention to catch more than a dominant purpose.  So long as the relevant purpose proscribed by s 45E(3) was an end which each of the parties sought to accomplish, the statutory requirement has been satisfied.  If that purpose is an end each person seeks, the fact that one or both persons may have other ends in mind as well is beside the point.  The end which the person seeks to accomplish must be a real, not fanciful or contrived, end.

193               In the late 19^th and last centuries, the common law tort of conspiracy developed having regard to actions of trade unions and trade competitors which had an effect of injuring a plaintiff.  The tort of conspiracy had to accommodate the conflicting interests of trade unionists whose predominant wish was to advance their own conditions of employment, but who had to achieve that by causing some economic impact upon their employer or the employer of others.  Likewise, trade competitors might combine for the purpose of advancing their own economic interest, but with a by-product of injuring another’s economic interest.  This provided a justification that the law would regard a predominant purpose of injuring a person as going beyond the legitimate purposes which a combination might pursue.  The ascertainment of a predominant purpose and its proof was not always easy.  For these reasons the presence of the expression ‘or for purposes including the purpose’ in s 45E(3) can be seen to negate, rather than advance, a construction of the section which would give particular weight to any one purpose.

194               The Parliament has identified the purpose in the context of s 45E(3) as operating in the same way as the common law of causation operates (cf:  March v E & M H Stramare Pty Ltd (1991) 171 CLR 506).  If, as a matter of commonsense, one of the purposes for which a provision is included is proscribed by the section, even if it is not dominant or substantial, it enlivens the operation of the section.  This construction is fortified by s 4F(2), which expressly excludes from the operation of ss 45D(1), 45DA(1), 45DB(1), 45E(2) and 45E(3) the requirement otherwise effected by s 4F(1) that the purpose for which a provision is included in a contract, arrangement or understanding elsewhere in the Act be a substantial purpose.  The behaviour at which s 45E(3) typically strikes will be where the ‘first person’ succumbs to an abuse of power by an organisation of employees and includes a proscribed provision not wanting to bring about the result, but appreciating that that is the end that will be achieved by doing so. 

195               Nonetheless, as a matter of common sense, a purpose of including the provision will be to achieve that which the union wishes to have achieved, however reluctantly the first person may be acting.  A construction of the section which required that the ‘first person’ have an ‘operative’ subjective purpose adds a requirement which the legislation, on its face, does not contain.  There is no need for the purpose to be a dominant one.  It is sufficient that a purpose exists and it is to achieve one of the ends which the ‘first person’ and the union or its official seeks.

196               Often one party to a contract understands a term would operate in a way which is denied by, or different to, its proper construction.  But that subjective understanding is not the yardstick by which a court ascertains the proper construction of the term.  The objective theory of contract has been adopted in Australia to prevent each party relying on their subjective understandings.  Instead, the court construes a contract by reference to its commercial purpose - the purpose of reasonable persons in the position of the parties (Zhu v Treasurer of NSW (2004) 218 CLR 530 at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ;  Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

197               This explains why the Parliament identified the subjective purposes of each party in agreeing to include the impugned provision as crucial to the operation of s 45E(3).  The end or ends which a party seeks to accomplish by agreeing to the inclusion of a provision, even after detailed negotiation over its wording, can be, and often is, different from what the court later determines is the end which the provision, on its proper construction, actually accomplishes (cf:  Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588).  Likewise, Parliamentary purpose, as reflected in a second reading speech, is sometimes confounded by the construction which the court places on the words actually used (cf: Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518 per Mason CJ, Wilson and Dawson JJ).

198               The CEPU said that Edison’s sole operative purpose was to get the site agreement signed.  However, this argument confuses motive with purpose.  The, or an, end Edison sought to achieve by agreeing to the CEPU’s demand was to exclude from the Loy Yang B site any electrical contractor performing work, and in particular DJN, if it did not have an EBA with the CEPU.  The reason or motive Edison had that end inmind was so that the CEPU would be appeased by its demand being met, and the union would then sign the site agreement.  Thus Edison’s purpose in agreeing to the demand was to accomplish the end of requiring electrical contractors to have EBAs with the CEPU.  In other words the purpose of the provision was to ensure Edison would engage or allow only electrical contractors with EBAs to perform work at Loy Yang B, and thus to hinder or prevent it acquiring services from DJN.

(d)       Must the ‘second person’ be identified as a particular person?

199               The CEPU also argued that the ‘second person’ to whom s 45E(3) is directed must be a specifically identified target.  It argued that the specific attributes of the ‘second person’ are elements of the prohibition in the section and that such a construction was supported by the second reading speech for the Trade Practices (Boycotts) Amendment Bill 1980 (Cth) delivered on 13 May 1980.  The minister said:

‘In the first place the proposed amendments to the Trade Practices Act extend the operation of s 45D to prohibit secondary boycotts of non-corporate persons, that is, private individuals.  The major amendment proposed is the insertion of a new section, 45E, which prohibits a person from agreeing with a union to cease to continue to deal with an individual or an individual company, or to continue to deal with an individual or individual company only on new conditions restricting that person’s freedom to trade. Existing provisions of the Act already prohibit agreements between competitors to boycott particular persons and to impose restrictions on freedom to trade.  Events have demonstrated that trade unions also possess sufficient economic power to engage in this type of undesirable conduct.  The Government believes, and it must be accepted by reasonable people, that it would be clearly inappropriate for the Trade Practices Act, which restricts abuses of power by companies, to allow the possibility of similar abuses by unions.’

200               The CEPU emphasised that the minister referred to dealings ‘with an individual or an individual company’ as supporting its argument that a specific target had to be identified as the ‘second person’ the subject of the proscribed contract, arrangement or understanding.  It submitted that a significant element of the operation of s 45E is that the target of the prohibited conduct be specifically identified.

201               In addition, the CEPU relied upon the decision of Gray J in Bullock v Federated Furnishing Trades Society of Australasia (1984) 58 ALR 364 at 370-371.  His Honour there refused to continue an interim injunction on the ground that it was extremely unlikely that at the trial the applicant would make out a case based on s 45E against the respondents.  In reaching that conclusion he said that an examination of the section as a whole made it clear that it was ‘… directed to agreements which exclude second persons whose identity is known or is capable of being ascertained’ (Bullock  58 ALR at 371).  However, an appeal was allowed from his Honour’s decision (Bullock v Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464).  Smithers J, with whom Sweeney J agreed, said that the purpose for which the provision had been included in the contracts was to prevent corporations which, in the past, had acquired services from carpet layers as independent contractors or subcontractors from being further engaged by them unless they performed their services in the capacity of employees.   He said  (Bullock (No 1) 5 FCR at 469):

‘Once the purpose was identified the carpet layers who were excluded from engagement except subject to the condition referred to were immediately identifiable and were, of course, at all times known to the corporate respondents.’

He found that the appellant’s case based on s 45E exhibited good prospects of success.  Woodward J said that the view Gray J had taken about s 45E would be open to serious debate at the trial on the basis that it could be argued that (Bullock (No 1) 5 FCR at 474):

‘… the true effect and intent of the [union’s] arrangements was, in each case, to exclude from the supply of carpet laying services all those persons who had been accustomed to provide them (who could of course be identified) and everyone like them.’

202               In our opinion it is not necessary to identify specifically the ‘second person’ in a contract, arrangement or understanding which contravenes s 45E(3).  To require specific identification of individuals as a condition of establishing a contravention would be calculated to defeat the practical operation of the legislation in some common situations to which it was directed.  The provision should be given a purposive construction to restrict abuses of economic power by companies or unions, as the minister described in the passage set out above from the second reading speech (see ss 15AA and 15AB(1), (2)(f) of the Acts Interpretation Act 1901 (Cth);  CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ).

203               There will be cases where the ‘first person’ acquires services from a large group of persons who would meet the description of ‘second person’ in the section but who cannot conveniently be identified by name.  That is, the ‘first person’ and the union may describe the ‘second person’ by a generic or class description which could include not just persons with whom the ‘first person’ is accustomed to deal, but also others who are outside the definition in s 45E of a ‘second person’.  For example, a taxi fleet operator might agree with a union that it would not allow independent contractors who were non-union members to contract to drive its taxis.  That arrangement might affect a large number of non-union contractors from whom the fleet operator had been accustomed to acquire services.  But the arrangement would also affect other drivers who only applied for the first time to drive taxis for the fleet operator after the arrangement was made.  It would be an odd result, if s 45E(3) had no effect in those circumstances because the targets of the arrangement were a class.  Yet, if the CEPU’s argument were correct, a case such as that presented in Bullock (No 1) 5 FCR 464 could not be mounted because the impugned provision may be expressed generally and it may not be possible or practical to name every single person or independent contractor from whom the ‘first person’ carpet laying companies had been accustomed to acquire carpet laying services and who was intended as a target.

204               It is important to analyse how s 45E(3) is expressed.  It catches a provision if one of the purposes for which it is included is to hinder or prevent the ‘first person’ acquiring services from a ‘second person’ who may not be named but described so as to fall within a class.  The fact that others, unnamed, also fall within or outside the class of ‘second persons’ would not detract from the existence of the very purpose, even if it is only one of the purposes, for which the provision was included.

205               Thus, in the present case, s 45E(3) will be contravened if one of the purposes for which Edison and the CEPU included the provision was to hinder or prevent Edison from acquiring services from DJN.  The fact that the provision was expressed generally about electrical contractors could not save it.  It would be bad not just in respect of DJN, but generally, even though it affected others who were not capable of being ‘second persons’, because of the absence of any prior relationship between them and Edison.  After all, once the intended target is hit by the proscribed provision, the abuse of power by the union to which s 45E(3) is directed will be fortified.  Others from whom the ‘first person’ must now seek to acquire the services which the target is prevented or hindered from providing will have to conform to the anticompetitive requirement or they, too, will not have their services acquired by the ‘first person’.  A provision may catch a ‘second person’ because it is expressed generally, if one of the purposes for which it was included was to catch that second person.  If the CEPU’s construction were correct, that provision would be valid because it was expressed in general terms even though one of the purposes for which it was included was proscribed by the section.  We do not accept that this is correct.

206               In addition, the definition of ‘accustomed to acquire’ in s 45E(7) is framed as an inclusive one, not as a delimiting one.  It will be a question of fact whether someone who is alleged to be a ‘second person’ is a person from whom the ‘first person’ had been accustomed to acquire the relevant goods or services the subject of the alleged contract, arrangement or understanding.  A person who, at any time during the immediately preceding three months, has acquired the relevant goods or services from the ‘second person’ is included by s 45E(7)(c) among the class of second persons from whom the first person has been accustomed to acquire such goods or services.  This also indicates that the Parliament intended that the ‘second person’ could be a member of a relatively large class.

207               In our opinion a ‘second person’ will be sufficiently identified for the purposes of s 45E if a reasonable person in the position of the parties to the contract, arrangement or understanding, having regard to its objective aim and genesis as well as the relevant matrix of fact in which it was made or arrived at, would understand him, her or it to be a person within the meaning of the expression ‘the second person’.  Applying this test to the present case, a reasonable person in the position of Edison and the CEPU would identify DJN (even though it was unnamed in the letter of 13 August and the heads of agreement) as an electrical contractor from which Edison had been accustomed to acquire services at Loy Yang B to which the arrangement applied.  This would be so even if DJN had not been named in any communication between them in which the arrangement was made.

208               The primary judge reasoned that, following the decision of the Full Court in ASX Operations Pty Ltd v Pont Data Pty Ltd (No 1) (1990) 27 FCR 460 at 488, the ‘second person’ could be particularly or specifically identified by use of a negative or exclusionary formula.  The Full Court pointed out that previously, in Bullock (No 1) 5 FCR 464, the then definition in s 4D referred to ‘particular persons’, but a subsequent amendment to the Trade Practices Act in 1986 had broadened the definition to include the words ‘or classes of persons’ after ‘particular persons’ in the section.  Lockhart, Gummow and von Doussa JJ then said that the word ‘particular’ could be conceded to require identification of either the persons or classes, but they continued:

‘… they are identified, in the present case, by the characteristic that they may not be supplied with the information in question, unless they accept and became bound by the restraints imposed by [an agreement] … They ordinarily would be treated as constituting a particular class, even though at any one time the identity of all the members of the class might not be readily be ascertainable.  What distinguishes the class and makes it particular is that the members are objects of an anti-competitive purpose, with which s 4D is concerned.’   (ASX 27 FCR at 488)

(See also the comments made in Rural Press 216 CLR at 90 [88] per Gummow, Hayne and Heydon JJ and also at 62 [7] per Gleeson CJ and Callinan J.)

209               Similarly, a publication can be defamatory of a person even if it does not name him or her.  Where a plaintiff is not named in a publication the common law test is to ask whether publication was made in circumstances in which it could reasonably lead persons acquainted with the plaintiff to believe that he or she was the person referred to (David Syme & Co v Canavan (1918) 25 CLR 234 at 238 per Isaacs J;  Knupffer v London Express Newspaper Limited [1944] AC 116 at 122 per Lord Atkin, 124 per Lord Porter;  Consolidated Trust Co Ltd v Browne (1949) 49 SR (NSW) 86).

210               The words of s 45E are different to both versions of s 4D discussed in ASX 27 FCR 470.  The description ‘the second person’ comes from s 45E(1), where, relevantly, an acquisition situation is defined.  There, the first person has to fall within the description that it ‘… has been accustomed, or is under an obligation, to acquire goods or services from another person (the “second person”)’.  The concept introduced by this definition of ‘an acquisition situation’ contemplates that the ‘first person’ will have had some relationship in the past with another person in which the latter has supplied goods or services.  Then, s 45E(7) identifies some characteristics of ‘accustomed to acquire’ in the concept introduced in s 45E(1)(b).  The text and structure of s 45E do not suggest that a contract, arrangement or understanding must in terms identify a particular person as the ‘second person’.  Although we do not need to decide the position (because here DJN was a known target), there is much to be said for the view that it is sufficient that the ‘second person’ is capable of being ascertained as a person reasonably contemplated to fall within the class, even if one or both of the parties to the contract, arrangement or understanding did not know of the existence of that person as an individual or corporation.  The section is concerned with striking down contracts, arrangements or understandings in which the ‘first person’ is prevented or hindered from acquiring goods or services from anyone who falls within the description of  ‘the second person’.

WAS THE CEPU LIABLE?

211               The primary judge concluded (at [126]) that there was no relevant disparity between the subjective purposes of each of the CEPU and Edison in including the impugned provision.  He found (at [180]) that the CEPU was aware that DJN performed work at Loy Yang B, that it did not have an EBA with the CEPU, and that the provision would exclude DJN from working at Loy Yang B if it did not enter into an EBA with the CEPU.  We agree with these findings. 

212               There was no ambiguity about the end which the provision sought to accomplish.  By the time of the teleconference of 10 August, Edison knew that if it agreed to the CEPU’s demand, it would be prevented from acquiring services in the future from DJN, its existing contractors.  And, Edison’s practice prior to August 2001 had been not to insist that contractors, such as DJN, have a certified agreement or EBA with a union.

213               DJN had been performing electrical contracting work for Edison at the Loy Yang B site for over two years prior to August 2001, without an EBA.  Mr Nabulsi had had two discussions with Mr Mooney, the CEPU’s Latrobe Valley region (which included the Loy Yang B site) organiser about DJN entering into an EBA with the CEPU.  The first discussion was in about 1998 or 1999 and, in the end, DJN chose not to sign an EBA.  The second discussion was one or two years later (ie around 2000 or 2001).  Mr Nabulsi enquired whether the CEPU’s EBA had changed or if it were prepared to negotiate amendments with DJN.  Mr Mooney said that the ETU was not prepared to sign any agreement with DJN outside its pattern agreement.  Mr Nabulsi said DJN would not sign on those terms.

214               Over the years preceding August 2001 Edison’s Mr Burns had had a number of meetings with Mr Mooney and other local union officials concerning contractors at the Loy Yang B site having EBAs with the unions.  The occasion for these meetings was when Edison was planning for work to be done during an ‘outage’.  During those meetings, Mr Burns explained how Edison planned to run the ‘outage’, the processes it had in place for safe work practices and, significantly, he nominated the contractors which were going to be employed on the ‘outage’.

215               Although he could not recall any precise conversations, Mr Burns gave this evidence of those meetings:

‘Did Mr Mooney ever raise with you the question whether contractors did or did not [have] EBAs with the union?--- Yes, in the context of - we were always, at the time of an outage, very keen to ensure that the outage would be able to proceed appropriately and that should a dispute arise that there were appropriate mechanisms for dispute settlement.  So in that context, yes, we would have had conversations about the contractors that we proposed to use;  whether they had EBAs or not.’

216               The primary judge also found (at [180]) that Mr Mooney was in close discussion with Mr Sutherland and Mr Burns during the period between 13 and 23 August 2001.

217               Based on this evidence we find that in August 2001 Mr Mooney knew that:

·                    Edison had been accustomed to acquire electrical contracting services from DJN at Loy Yang B for some years past;

·                    DJN did not have, and did not want to have, an EBA with the ETU or CEPU;

·                    Edison had a policy of not requiring contractors, including DJN, to have an EBA with a union before engaging them to provide services at Loy Yang B;

·                    the CEPU, or Mr Mighell on its behalf, was not prepared to sign the site agreement unless Edison agreed to require electrical contractors engaged at Loy Yang B to have EBAs with the CEPU;

·                    if Edison agreed to the CEPU’s position on EBAs for electrical contractors at the Loy Yang B site, which Mr Mooney’s superior, Mr Mighell, had repeated at the 9 August meeting, Edison would be prevented or hindered from acquiring services from DJN;

·                    DJN was an electrical contractor which would be affected if the CEPU’s demand was met by Edison and DJN continued to refuse to sign an EBA (based on Edison’s investigations on 9 and 10 August 2001 and the fact that Mr Burns and Mr Mooney had previously identified the electrical contractors who worked at Loy Yang B and did not have an EBA with the ETU or CEPU).

218               It follows that the end which each of Edison and the CEPU sought to achieve by including the provision in their contract, arrangement or understanding was to prevent or hinder Edison from acquiring electrical contracting services from DJN.

219               The CEPU said that despite the judge’s finding that the parties knew that DJN, in particular, would be prevented from supplying services to Edison under the arrangement, none of the witnesses had been asked directly about any communication or facts to show that Mr Mooney had been aware of DJN’s presence at the site at the relevant time.  Moreover the CEPU argued that the evidence showed DJN continuing to work at the site after 23 August 2001 without any objection being raised by the CEPU.  This, it argued, showed that there was no or insufficient evidence on which to draw the inference, relying on Chamberlain (No 2) 153 CLR 521.

220               In our opinion these arguments should be rejected.  As we have pointed out in the passages cited above from Chamberlain (No 2) 153 CLR at 535-536 and Hillier 223 ALR at 646-647, in a civil case the circumstances must raise a more probable inference in favour of what is alleged (per Gibbs CJ and Mason J in Chamberlain (No 2) 153 CLR at 536).  But, it is not necessary to exclude any hypothesis consistent with innocence, even though the issue to be determined is whether a pecuniary or civil penalty should be imposed on the CEPU under s 76 of the Act (Doney 171 CLR at 211).  And, as the High Court noted, in a criminal case corroborative evidence, standing alone, need not establish any proposition beyond reasonable doubt.  Corroborative evidence can strengthen other evidence by confirming or tending to confirm the matter for which it is tendered.  The Court said that the essence of corroborative evidence is that it confirms, supports or strengthens other evidence in the sense that it renders that other evidence more probable (Doney 171 CLR at 211).

221               And, as Mr Burns explained, he could not recall specific conversations when giving evidence over five years after the events in question took place.  Nonetheless, his evidence as to Edison’s practice of negotiating with the relevant unions about the contractors who would be engaged on any ‘outage’ was significant.  His evidence also showed that on those occasions there were regular discussions about Edison’s policy in relation to whether the contractors to be used in the outage work had an EBA.   That topic was evidently one of recurrent interest for Edison and the unions.  This evidence supported the inference which his Honour drew, and which we have also, and separately, drawn, that Mr Mooney and thus the CEPU was aware that DJN would be affected by the arrangement.

222               In our opinion, the arrangement or understanding reflected in the letter of 13 August 2001, Edison’s conduct at the meetings of 13 and 16 August and, on our construction, the heads of agreement, was included for the purpose of, or purposes including, preventing or hindering Edison from acquiring or continuing to acquire services from DJN itself (because of the inferences we have drawn as to the knowledge of the parties about DJN’s particular position) as well as the class of electrical contractors who did not have EBAs with the CEPU, of which class DJN was a member (whether or not either or both of the parties intended it to be affected by the making of the arrangement or the arriving at the understanding).  And, it follows that Edison was prevented or hindered from acquiring services from DJN in the future because DJN did not have and was not prepared to have an EBA with the CEPU.

223               Nor does it matter that Edison allowed DJN to continue to fulfil the contract which it was performing in August 2001.  The evidence of Edison’s witnesses showed that Edison wished that to occur.  It is the nature of arrangements and understandings that they are not legally binding and that the parties can allow for exceptions or derogations from them while maintaining their general effect.

224               Given that the CEPU had achieved substantially what it had set out to gain, it is not inconsistent with the adoption of the arrangement or understanding that it accepted that DJN should be permitted to fulfil its remaining contractual obligations.  After all, what the CEPU was seeking was an arrangement or understanding about the future engagement of electrical contractors at the Loy Yang B site, rather than interfering with the current works.  We are of the opinion that there is nothing inconsistent in DJN being allowed to finish the work it was performing in August 2001 and the making of the arrangement or understanding which we have found.

WAS THERE ANY ERROR IN THE IMPOSITION OF THE PENALTY?

225               In approaching the question whether his Honour’s discretion miscarried in imposing the penalty, the principles in House v The King (1936) 55 CLR 499 at 504-505 apply.  There Dixon, Evatt and McTiernan JJ pointed out that when a judicial discretion is exercised to impose a penalty, established principles govern the capacity of a court on appeal to interfere with that exercise of the discretion.  They noted, in a passage too famous for repetition, that it is not enough that the appellate court considers that if they had been in the position of the primary judge they would have taken a different course.  It is necessary that some error appears in the making of the decision to exercise the discretion in a particular way.  The question for us is whether the primary judge acted upon a wrong principle, took into account extraneous relevant matters, mistook the facts or failed to take into account a relevant consideration.

226               After giving the parties an opportunity to consider his findings on liability and address him on penalty, the primary judge imposed a pecuniary penalty of $125,000. The CEPU argued that his Honour’s decision to do so was affected by error.  It pointed to his Honour’s finding, in the penalty judgment, that the provision had the potential to prevent any electrical contractor from performing work at Loy Yang B if they did not have an EBA.  The CEPU argued that this was erroneous and caused the discretion to miscarry.

227               His Honour was correct to find that the impact of the arrangement was as wide as he described.  However, he did not address in this regard the impact of the contravention, as opposed to the arrangement.  The contravention as found only applied to electrical contractors from whom Edison, as at August 2001, had been accustomed to acquire services within the meaning of s 45E.  A potential for further harm existed because, as at August 2001, there were three other Edison contractors which fell within the description of ‘second person’ and which had EBAs with the CEPU.  There was no certainty that those EBAs would continue indefinitely in place.  If for any reason any of those contractors had ceased to have an EBA with the CEPU, the arrangement would then apply to it.  The potential harm was that the arrangement would then have prevented Edison from acquiring services from that contractor to the extent that Edison had adhered to it.  We see no error in his Honour’s approach.

228               His Honour noted (at penalty judgment [53]) that it was accepted by the ACCC that there was no evidence that any other electrical contractor had been adversely affected by the contravening conduct. We were informed that s 170LX of the Workplace Relations Act 1996 (Cth), as in force prior to March 2006, provided that once an EBA had been entered into, it continued in force until terminated by the AIRC or was replaced by a new one.  Even so, knowledge of the existence of the arrangement or understanding which Edison had reached with the CEPU could affect a decision by a contractor to apply to the AIRC to terminate its EBA.  It was open to his Honour to have regard, as he did, to the potential for the arrangement to have a wider impact than beyond the relationship between Edison and DJN. 

229               The CEPU then submitted that the primary judge erred in accepting the ACCC’s submission that Edison’s actions giving effect to the provision must have caused some loss or damage to DJN although that could not be quantified.  He noted the CEPU’s submission that this was mere speculation and unhelpful, but he disagreed.  He inferred that DJN suffered some loss or damage by reason of its exclusion from work at Loy Yang B between August 2001 and November 2003.  However, his Honour said (at penalty judgment [52]) that in the absence of evidence he was not prepared to make the assumption that the loss or damage that DJN suffered was substantial.

230               The CEPU noted that Mr Nabulsi was called as a witness and could have given evidence if DJN had suffered any loss or damage.  He was not asked about this topic.  His Honour found Mr Nabulsi to be a frank and direct witness.  In those circumstances there was no reason why Mr Nabulsi could not have been expected to give evidence, if there were any, to establish any actual loss or damage suffered by DJN.  In Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E Handley JA said that the Court should not draw inferences favourable to an insured where it was claiming on its insurer but had made no attempt to prove particular matters by direct evidence.  He said this should be the position when no relevant questions had been asked of a witness who was called and could have given that evidence.  Handley JA held that the principles in Jones v Dunkel 101 CLR 298 should be extended to apply when a party by failing to examine a witness in chief on some topic, ‘… indicates “as the most natural inference that the party fears to do so”’.  This fear is then ‘some evidence’ that such examination in chief ‘would have exposed facts unfavourable to the party’ (Ferrcom 22 NSWLR at 418F-G; see too: Braverus Maritime Inc v Port Kembla Coal Terminal Ltd (2005) 148 FCR 68 at 112 [159]-[160] per Tamberlin, Mansfield and Allsop JJ; Puels v Excelerate Funding Pty Ltd [2005] FCAFC 38 at [38] per Lander J with whom Weinberg and Jacobson JJ agreed).

231               Proceedings for a pecuniary penalty in a case like the present could raise potentially quite difficult questions about the approach to quantifying any loss a person in the position of DJN may have suffered.  One ‘loss’ DJN clearly suffered was of the right to be considered by Edison for work during the period in which the arrangement or understanding with the CEPU remained on foot.  On the evidence, or lack of it, we infer that Mr Nabulsi and DJN were unable to prove that DJN suffered any economic loss.  In that context, his Honour was correct to say that whatever loss or damage DJN suffered could not be regarded as substantial.  Nonetheless, the arrangement or understanding was unlawful.  It was a contravention of s 45E which directly affected DJN.  There is no doubt that DJN was prepared to work for Edison, both before and after the arrangement was in force.  It was only prevented from doing so during the period in which the arrangement was in force because of its impact. 

232               It was in this context that his Honour made reference to inferring some loss or damage by reason of DJN’s exclusion from new work at Loy Yang B during the period between August 2001 and November 2003.  We do not see any error in that approach.  The primary judge could have regard to the fact that although DJN did not have a legal right to require Edison to engage it, nonetheless there was some, but not substantial, loss or damage suffered by it through a contravention of the Trade Practices Act directly affecting it.

233               Had DJN wanted to assert its rights, it would have had to take the expensive and uncertain step of commencing its own proceedings seeking relief under the Act.  Had it done so and established what the primary judge and we have found in these proceedings, DJN could have sought relief under s 87(1) of the Act in addition to relief by way of injunction under s 80.  The concept of loss or damage in Pt VI of the Act cannot be given any narrow meaning, as Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ observed in Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 at 407 [45].  They said that loss or damage spoken of in ss 82 and 87 of the Act is not confined to economic loss and the ascertainment of detriment may raise further difficult questions.  And as the Court said in Murphy 216 CLR at 408 [47]:

‘Section 87 invites attention to whether any of a wide range of orders might be made to compensate, in whole or in part, for the loss or damage or to prevent or reduce the loss or damage.’

Ultimately the primary judge granted injunctions under s 80 prohibiting the CEPU from engaging in similar conduct with other persons who may be accustomed to acquire services from electrical contractors (which included, as a member of the class, DJN).

234               In our opinion the way in which his Honour reasoned was simply a matter of common sense, namely that the arrangement or understanding he found was a contravention of the Act that affected DJN, but that it did not cause it substantial damage.  Nonetheless, DJN was a target of the contravening conduct and it suffered in the sense that it got no work from Edison for over two years, albeit that that did not translate into a definite or substantive amount of loss or damage.  There was an infraction of DJN’s legal rights so that it was open to infer that it suffered some damage, albeit in this case not substantial damage.  The absence of any evidence of substantial or other loss or damage serves to justify the approach his Honour took of noting DJN’s rights but finding that it had not suffered substantial loss.  Mere difficulty in estimating damages does not deny a party with a right to an award from having them assessed (see for an example RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164 at 179 per Beaumont and Spender JJ, with whom Davies J agreed:  see too The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, 119 per Deane J and 138 per Toohey J).

235               The CEPU also argued that the penalty was manifestly excessive.  In our opinion this submission is without substance.  Indeed, had the matter been open to us to review because of error by the primary judge, we would observe the penalty was at the lower end of the range for behaviour of the kind in which the CEPU engaged in relation to Edison and DJN at and after the meeting of 9 August 2001.  The CEPU was threatening to delay or imperil a very substantial project unless Edison complied with its demands to require electrical contractors, in particular DJN, engaged by Edison to have EBAs.  That conduct constituted a serious contravention of s 45E(3).  In our view, the contravention involved the CEPU engaging in anti-competitive conduct by coercing Edison into a position to exclude DJN, and others in its position, from undertaking further work for Edison.  The maximum penalty under the Trade Practices Act for such a contravention is $750,000.  Conduct of the nature engaged by Edison and the CEPU should be deterred by the imposition of appropriately substantial penalties when contraventions have been established.

CONCLUSION

236               For the above reasons, the appeal should be dismissed with costs.

Associate:

Dated:         17 August 2007