FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commission [2012] FCAFC 44

THE COURT ORDERS THAT:

1.    The appeal be dismissed and that the CFMEU pay the ABCC’s costs of the appeal to be taxed if not earlier agreed.

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

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1        In June 2009 the appellant, the Construction, Forestry, Mining and Energy Union (the CFMEU), engaged in unlawful industrial action in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act). The unlawful action occurred over five days at a construction site where Diploma Constructions (WA) Pty Ltd (Diploma) was engaged in a building project.

2        The respondent, the Australian Building and Construction Commissioner (the ABCC) applied for an order for civil penalties and for an order that the CFMEU pay damages to Diploma as compensation pursuant to s 49(1)(b) of the BCII Act.

3        At trial, liability for the contravention was conceded by the CFMEU and the primary judge ordered that the CFMEU and two of its officers pay agreed civil penalties totalling $150,000. In addition, the CFMEU was ordered to pay to Diploma compensation in the sum of $97,695.41.

4        The CFMEU appeals to this Court only from the orders of the primary judge in relation to the payment of compensation to Diploma. The CFMEU’s principal contention is that there was no basis for awarding compensation to Diploma because the element of causation of damage required by s 49(1)(b) of the BCII Act had not been established.

5        We propose now to set out the factual and legislative background to the proceedings. We will then refer to the relevant aspects of the primary judge’s reasons for judgment (Reasons) before turning to address the arguments agitated on appeal.

THE FACTS

6        On 1 July 2008, Diploma entered into a contract with Knoxville Group Limited to construct a 14-level commercial office tower project located at 915 Hay Street, Perth (the project).

7        Clause 35.8 of the contract provided relevantly:

If the Date of Practical Completion is earlier than the Date for Practical Completion the principal shall pay the Contractor the bonus stated in the Annexure for every day after the Date of Practical Completion to and including the Date for Practical Completion.

…

8        The Annexure to the contract provided:

Bonus per day for Early Practical Completion        $9,000 per day

Limit of Bonus                        Not applicable

9        The “Date of Practical Completion” was defined under the contract as:

[T]he date certified by the Superintendent in a Certificate of Practical Completion issued pursuant to clause 42.5, to be the date upon which Practical Completion was reached.

10        Clause 42.5 provided that the Superintendent must give a Certificate of Practical Completion certifying the Date of Practical Completion to the Contractor and to the Principal.

11        Under the terms of the contract, the original date for Practical Completion was 29 April 2011. On 29 June 2010, the Superintendent issued his Certificate of Practical Completion, certifying that the date of Practical Completion was 15 April 2010. As a result, Diploma was entitled, under cl 35.8 of the Contract, to an early completion bonus of $9,000 for every day in the period from 15 April 2010 to 29 April 2011.

12        At trial the ABCC submitted that, as a result of the five days of unlawful industrial action, the date of Practical Completion was delayed by five days.

13        Extensions of time for practical completion were not available to Diploma for the industrial action in question. Under cl 35.5 of the contract, Diploma bore all risk of delay other than for specified exceptions. The only exception specified in relation to industrial action was:

a strike…which concurrently affects the Site and the building industry on a State-wide or nationwide basis and which is not specific to the Contractor, the Contractor's associates or the Site…

14        It is common ground that the industrial action on 5, 6, 8, 24 and 25 June 2009 at the Hay Street site was not a strike of the kind described in cl 35.5 of the contract. It was an agreed fact at the trial that each of the strikes caused a delay of progress in construction of the building.

15        The CFMEU admitted having contravened s 38 of the BCII Act by being involved in unlawful industrial action at the project site on 5, 6, 8, 24 and 25 June 2009. The industrial action involved employees of Diploma who were members of the CFMEU either failing to perform work or failing to attend for work on each of the five days. It is also common ground that the industrial action disrupted work on the project.

16        The parties reached agreement on the liability of the CFMEU and Messrs McDonald and Buchan, the second and third respondents. The parties also agreed that the imposition of civil pecuniary penalties under the BCII Act was appropriate. The parties failed to reach agreement on the issue of compensation, and as has been seen, that issue was resolved in favour of the ABCC.

THE LEGISLATION

17        Section 49(1)(b) of the BCII Act provides relevantly as follows:

(1)    An appropriate court, on application by an eligible person, may make one or more of the following orders in relation to a person (the defendant) who has contravened a civil penalty provision:

    (a)    …

(b)    an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the other person as a result of the contravention.

18        By s 49(6) of the BCII Act, the ABCC is an “eligible person”.

19        The main object the BCII Act is set out in s 3 of the BCII Act. It is in the following terms:

(1)    The main object of this Act is to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole.

(2)    This Act aims to achieve its main object by the following means:

…

(b)    promoting respect for the rule of law;

(c)    ensuring respect for the rights of building industry participants;

(d)    ensuring that building industry participants are accountable for their unlawful conduct;

(e)    providing effective means for investigation and enforcement of relevant laws;

        …

(h)    providing assistance and advice to building industry participants in connection with their rights and obligations under relevant industrial laws.

REASONS OF THE PRIMARY JUDGE

20        The primary judge accepted that s 82 of the Trade Practices Act 1974 (Cth) (the TPA) is analogous to s 49(1)(b) of the BCII Act (Reasons at [134]). In this regard, s 82(1) of the TPA provided:

Subject to subsection (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of [a] Part ... may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

21        The primary judge said (Reasons at [136]-[137]):

136    The statutory enquiry is as to actual damages suffered “by conduct of another person” (TPA s 82) or “as a result of the contravention” (BCII Act s 49). As to s 82 TPA common law and equitable remedies to compensate for damages suffered whether in tort, contract or otherwise, whilst they may be helpful are not determinative: Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494. This too, in my opinion, is apt in respect to the BCII Act s 49.

137    Accordingly, the applicant here [is] requires[sic] to establish actual damage suffered by Diploma caused by the contraventions by the Respondents. The applicant has to prove that the damage suffered was a result of the contraventions on the balance of probabilities: Imperial Chemical Industries of Australia and New Zealand Ltd v Murphy (1973) 47 ALJR 122.

22        In assessing the quantum of compensation payable to Diploma, the primary judge considered the main objects of the BCII Act. His Honour said (Reasons at [149]-[150]):

149    In terms of the main object in s 3(1) of the BCII Act, Diploma is a building industry participant which is entitled to have its building work carried out fairly, efficiently and productively, free from unlawful industrial action. If it suffers damage as the result of a contravention, it should be compensated for that damage. Section 3(2)(b), (c) and (d) of the BCII Act are relevant here:

(2)     This Act aims to achieve its main object by the following means:

(b)    promoting respect for the rule of law;

(c)    ensuring respect for the rights of building industry             participants;

(d)    ensuring that building industry participants are accountable for their unlawful conduct.

150    If Diploma had brought its own separate proceedings seeking compensation, it would have been no answer for the respondents to say that they had already been ordered to pay penalties to the Commonwealth.

23        Loss of an amount of the early completion bonus as a result of the industrial action was the major component of the ABCC’s claim. The primary judge accepted at Reasons [171] the evidence of Mr Schober, a senior employee of Diploma, that on the five days in question some of the subcontractors on the site were required to perform “critical path” work being the sequence of activities that had to be completed on schedule for the entire project to be completed on schedule. Each task on the “critical path” was critical to the timing of the completion of the project. If a task on the “critical path” was delayed, then the entire project would be delayed by at least the same amount of time.

24        The primary judge also made the following findings at Reasons [172]-[173]:

172    Moreover, Mr Paul Day, Diploma’s Project Manager who had day to day responsibilities for the Project at the Site, gave evidence to the same effect, at least concerning D&Z and Wards, when cross-examined during the interlocutory hearing on 17 July 2009. It was part of his job to deliver the Project on time. He said that there is no allowance in the construction timetable for "critical path" work to be delayed and that as a result, if "critical path" work is delayed by 1 day, the completion of the Project will be delayed by 1 day.

173    Significantly Mr Buchan agreed that these 3 sub-contractors performed critical path work on the Site and that their workers had taken industrial action.

25        Mr Buchan’s evidence was “significant” because he was an officer of the CFMEU who gave evidence on its behalf. Indeed, he was himself a respondent to the ABCC’s claim for penalties.

26        The primary judge dealt with the CFMEU’s contention that Mr Schober’s evidence was merely “theoretical” at Reasons [174-[176]:

174    The respondents point to the evidence of Mr Schober in cross-examination which, they contend, is to the effect that the asserted delay of 5 days was “theoretical”. The evidence was as follows:

MS VERNON: So is that five days after 15 April?---No, not five days after 15 April, between 10 and 15 April, when the project, theoretically, could have bee[sic] finished, without five days delay.

So it’s the cost of them for five days between 10 and 15 April 2010, that you say is the add-on cost; is that right?---Well, the costs – those costs were incurred on those particular days, on 5, 6 and 8 and 24 and 25 June.

Yes, but the evidence you just gave us is that you needed to have those people for another five days between 10 and 15 April 2010, to make up for the five days worth of industrial action - - -?---Correct.

- - - previously. But, of course, those people had worked on those five days, so you’re talking about, now, some cost at the end; is that right?---Correct.

Well, the invoices that you have attached to your affidavit, though, Mr Schover[sic], they’re not for the period from 10 to 15 April 2010, are they?---No.

They are actually their costs for the days that they were scheduled to work?---Correct.

So how can you actually say that they were required for another five days, between 10 and 15 April?---Because if there wasn’t a five day delay on the job, the job would have been finished on the 10th and they were still working there on the 15th.

How do you know that? How do you know the job would have finished on the 10th?---Only by the – by reviewing, possibly, the program, which if you’ve got a five day delay in the middle of the job, unless it’s – unless that time is made up you’re going to incur that delay at the end.

So are you saying that in this case the time was never made up?---Correct.

175    The applicant submits, and I accept, that the effect of this evidence is that, but for the delay, the Project would have finished 5 days earlier. There is nothing “theoretical” about this statement. It is only “theoretical” in the sense that it was based on an hypothesis – what would have happened if there had been no industrial action.

176    The applicant’s case assumes, favourably to the respondents, that the workers from the 3 sub-contractors performing critical path work were able to “pick up where they left off” immediately upon their return to work.

27        His Honour held that, because work on the “critical path” could not be performed on any of the five days of the industrial action, the project was completed five days later than it would otherwise have been completed: Reasons at [182]. That delay of five days caused Diploma to suffer actual damage by reason of the reduction in the value of its contractual entitlement to be paid a bonus of $9,000 per day for every day that the project was completed before 29 April 2010. It was irrelevant that the project was in fact finished ahead of the contractual date for Practical Completion, save for the enlivening of the possibility of the early completion bonus. But for the industrial action, Diploma would have achieved Practical Completion of the project five days earlier than it did. Accordingly, his Honour was satisfied that Diploma suffered damage of $45,000 under this head of compensation.

28        The primary judge then addressed a claim for the extra cost of Diploma staff. This claim was for the costs of employing staff for a period of five days longer on the project at the Diploma project site than would have been the case but for the admitted contravention. The total claimed was $7,991.96.

29        His Honour allowed the extra cost of employing site-manager Mr Davis, OHS Representative, Ms Sherrell, and site clerk, Mr Newbound. His Honour declined to award compensation for the cost of employing Mr Day. In this regard, his Honour said (Reasons at [189]):

189    Mr Day left the employ of Diploma more than three months before the completion of the Project. I am not prepared, absent other evidence, to infer that there was another Project manager employed on Site during those five days at the end of the Project. It follows that I would award compensation only in respect to the other three in the sum of $4,608.36 calculated as follows:

                     $

Site Manager: L Davis            1446.22

OHS Rep : L Sherrell            1993.52

Site Clerk: M. Newbound        1168.62

                    4608.36

30        Compensation was also claimed for extra payments to Hays Recruitment for the provision of casual labour (additional to Diploma’s subcontractors and direct employees) for work on the last five days of the Diploma project. This work involved:

(a)    site cleaning;

(b)    safety compliance rectification;

(c)    traffic management;

(d)    Alimak operation; site logistic activities; and

(e)    general housekeeping.

31        His Honour accepted the evidence of invoices from Hays Recruitment totalling $16,865.49 (Reasons [191]) and allowed this claim in full, saying at Reasons [193]:

193    For reasons I have already stated, I do not regard this evidence as based upon his “theory” that the Project was delayed by 5 days. [Mr Schober’s] evidence as to this was as to matters of fact within his knowledge. I consider it reasonable to infer that the daily cost of recruiting this staff for the additional five days was not less than during the five days of the industrial action. I would allow this claim in full.

32        The material handling and scaffolding costs consisted of the cost of a tower crane, two Alimak hoists and a forklift which were on site on the days of the industrial action, together with scaffolding. The invoices for the five days totalled $9,707.51. The primary judge accepted that, but for the five days lost, each of these items of equipment would have been returned to the owner five days earlier. Accordingly, these costs were also allowed at Reasons [196].

33        The next claim by the ABCC was that, as a result of the industrial action, Diploma was required to engage the services of Deacons, a firm of lawyers, to provide advice relating to the CFMEU’s industrial action and to assist the ABCC in the prosecution of its claim against the CFMEU. This claim was for $21,514.05.

34        The primary judge allowed this aspect of the claim. His Honour said at Reasons [204]-[206]:

204    There will ordinarily be a question as to whether the legal costs were reasonably incurred. I consider that Diploma acted reasonably in obtaining the legal advice and assistance which it did from Deacons. I am satisfied that, but for the contraventions by the respondents, there would have been no necessity for that to have occurred. In my view, Diploma was entitled to obtain that advice in relation to its rights and remedies and in particular to assist the applicant in the claim, in effect made on behalf of Diploma in these proceedings, for compensation. I accept the submission of the applicant that to the extent that the work done by Deacons assisted these proceedings, as I find that it did, then the costs of the applicant have, to a considerable extent, been reduced. The applicant will not be entitled in its claim for costs in these proceedings to claim for costs for work done by Deacons. Diploma, on the other hand, is not a party to the proceedings and is accordingly unable to obtain a costs order in its favour in respect of them. I find that the work done by Deacons was reasonably incurred by Diploma in assisting the applicant both to prove the contraventions of the civil penalty provisions in order to establish statutory liability against the respondents to pay compensation under s 49(1)(b) of the BCII Act.

205    The costs incurred by Diploma with Deacons are properly characterised as damages. The fact that Diploma, “chose” to get that legal advice does not, contrary to the respondents’ submission, break the chain of causation. Indeed that very choice I regard as a quite reasonable decision on the part of Diploma to assist the applicant who was running an action for both civil penalties as well as for compensation which would be payable to Diploma. That course seems to me to have been quite a sensible approach in combining the claims in one action rather than in separate actions which could have occurred. Indeed had that alternative course been followed it may well have resulted in greater costs to the respondents having to confront two separate actions. This would likely also have occasioned greater cost to the Court.

206    The statutory entitlement for compensation under s 49(1)(b) of the BCII Act can only be realised if the person which suffers damage is able to put together the evidence to support its claim, both in terms of establishing the contravention and the resulting damage. It is, in effect, a means of achieving the statutory object under s 3(1) of the BCII Act to facilitate such claims: s 3(2)(b), (d) and (3)[sic]. Diploma’s legal costs are damage suffered as a result of the contraventions the subject of the proceeding and are in my opinion compensable under s 49(1)(b).

35        The primary judge rejected a submission by the CFMEU that Diploma had failed to take steps necessary to mitigate its losses by pursuing claims for recompense from the sub-contractors whose employees had taken the industrial action which disrupted the project.

36        In summary, his Honour ordered that compensation be paid to Diploma in the amount of $97,695.41 consisting of:

    $45,000 – loss of early completion bonus;

    $4,608.36 – extra wages of Diploma employees;

    $16,865.49 – extra hire costs of Hays Recruitment temporary personnel;

    $9,707.51 – extra hire cost of equipment;

    $21,514.05 – legal costs paid by Diploma to Deacons.

GROUNDS OF APPEAL

37        The CFMEU appeals to this Court contending that the primary judge erred in:

1)    finding that Diploma would have completed the project five days earlier than it did but for the unlawful industrial action;

2)    finding that Diploma suffered actual damage caused by the contraventions of the CFMEU pursuant to s 49(1)(b) of the BCII Act comprising costs incurred by Diploma from 10 to 15 April 2010 associated with the loss of the early completion bonus, wages of Diploma employees, hiring Hays Recruitment temporary personnel, and the hiring of equipment when there was no evidence that such costs were incurred as a result of the industrial action in June 2009;

3)    finding that Diploma suffered actual damage caused by the contraventions of the CFMEU pursuant to the BCII Act comprising legal costs paid by Diploma to its solicitors when such legal costs were not actual damage as a result of the contraventions;

4)    finding that the quantum of damage suffered by Diploma totalled $97,695.41 when there was no or no sufficient evidence to support the finding;

5)    failing to find that Diploma failed to mitigate it losses when Diploma:

a)    completed the construction project almost 13 months ahead of the original date for Practical Completion of 29 April 2011, and six weeks ahead of the certified date for Practical Completion of 20 May 2010 and received an early completion bonus accordingly;

b)    was contractually entitled to recover monetary losses occasioned by unlawful industrial action from the subcontractors whose employees took such unlawful industrial action; and

c)    issued notices to its subcontractors whose employees took such unlawful industrial action advising that Diploma would be deducting penalties from their payments for each day of unlawful industrial action but in the event failed to do so.

38        We propose to consider, in turn, the arguments advanced in relation to these grounds.

CONSIDERATION

Ground 1: delay in completion of the project

39        The CFMEU argues that s 49(1)(b) of the BCII Act requires a causal connection between the actual damage suffered by Diploma and the contraventions by ABCC. It contends that the primary judge erred in finding that Diploma would have completed the project five days earlier than it did had the industrial action not occurred. It is common ground that whether conduct is a cause of damage is a question of fact to be resolved by a value judgement involving ordinary notions of language and commonsense: March v E & HM Stramare Pty Ltd (1991) 171 CLR 506.

40        The ABCC contends that this question of fact is to be approached bearing in mind the statutory purpose of s 49(1)(b) of the BCII Act. In light of the main statutory objects of the BCII Act contained in s 3(2), it contends that the Court should favour an application of s 49(1)(b) which “ensur[es] that building industry participants are accountable for their unlawful conduct”.

41        The CFMEU argues that the primary judge’s conclusion as to delay to the completion of the project was based on the “theoretical” evidence of Mr Schober unsupported by facts. In response, the ABCC contends that Mr Schober’s opinion was based on his professional experience and knowledge of the project including Diploma’s documents such as work diaries. It is also supported by the evidence of Mr Day and Mr Buchan. The CFMEU argues that it was unclear from their evidence which workers on the site were performing “critical path” works on the days of the industrial action or which “critical path” works were delayed.

42        The ABCC responds that it is sufficient to sustain his Honour’s findings that only some of the workers who took industrial action were doing “critical path” works; that it was unnecessary to reconstruct the project by identifying the specific tasks involved in the “critical path” and which of those tasks caused further delay; and that the quality of the ABCC’s evidence was a question of weight for the primary judge.

43        The CFMEU continues to urge the point that the project finished twelve months earlier than the initial date for practical completion and 35 days earlier than even the varied date for practical completion. The ABCC contends, in response, that this submission is misconceived; the fact that Diploma finished early does not meet the point that the project could have finished an additional five days earlier but for the industrial action. In this regard, the CFMEU argues that the only way to know whether the project would have finished five days earlier but for the industrial action was to review the construction program and ascertain whether time was, or could have been, made up.

44        In the course of argument, counsel for the CFMEU accepted that there was evidence of disruption to critical path work. She agreed with the proposition put to her that, on her argument, the real issue was whether there was evidence to support the primary judge’s finding that the delay caused to the work program was of an equivalent duration to the five days industrial action, rather than some lesser period. The difficulty for the CFMEU is that there was clear evidence of disruption to critical path work, and, in light of the manner in which the CFMEU chose to run its case before the primary judge, the evidence as to the duration of the delay in completion was largely one way.

45        The evidence on which the ABCC relied was sufficient to establish its case of delay. The CFMEU called no evidence to contradict Mr Schober, Mr Day or Mr Buchan. Further, the CFMEU made no attempt to undermine that case by cross-examining Mr Schober or Mr Day by reference to Diploma’s construction program or project diaries. The cross-examination of Mr Schober showed that he had no specific recollection of the particular tasks which were delayed by the industrial action, but his lack of specific recollection was only to be expected and unlikely to undermine his evidence much less that of Mr Day or Mr Buchan. To the extent that Mr Schober’s evidence was based on Diploma’s documents, including the project diaries, no attempt was made to show that his evidence of the extent of disruption was not consistent with those documents.

46        Mr Schober’s evidence was that the lost time was not made up. Mr Schober said that the accelerated completion of the project was the result of a change in the methodology of construction after the five day delay had been incurred. Mr Schober was not cross-examined as to whether this evidence was inconsistent with the evidence that there was little float in the construction program at the time of the industrial action. That being so, it is not for this Court to speculate on a possibility not raised at trial.

47        It may be helpful to set out specific aspects of the CFMEU’s complaints and the reasons why each complaint is without substance:

1.    Mr Schober did not know when certain work ought to have occurred or finished or how long it took to be completed after days of industrial action. That is hardly surprising given that he was not referred to Diploma’s project diaries. Subjecting Mr Schober to a memory test in cross-examination was not apt to cast doubt on his evidence. The CFMEU made no attempt to undermine Mr Schober’s evidence by taking him to any contemporaneous documents or oral testimony from other witnesses which contradicted his evidence. And in any event this complaint does not detract from the evidence of Mr Day and Mr Buchan.

2.    Mr Schober agreed with the proposition that if certain “critical path” work was scheduled to take place over five days which did not start until Day 2 yet was completed within five days, there would be no delay to “critical path” work. There was no evidence that this had actually occurred.

3.    If one “critical path” activity doesn’t get competed on a particular day but others do, that does not necessarily result in an entire day’s delay to the project. This was not the case here; rather the evidence was that there was delay in all “critical path” works on each day of industrial action.

4.    The project finished 379 days ahead of the original contractual date for practical completion. Mr Schober’s evidence was that the methodology of the construction was subsequently changed. His evidence in this regard was not challenged. On this basis the five days that were lost before the change remained lost in the sense that with the changed methodology, the project would still have been completed five days earlier had the industrial action not occurred.

5.    Work scheduled to occur on 5, 6 and 8 June 2009 was not all “critical path” work. Of the 9 subcontractors working on the project in June 2009, only 3 were actually doing “critical path” work. It was not necessary for the ABCC to prove that all workers who took industrial action should be engaged in “critical path” work; it was sufficient that some of the workers who took industrial action were engaged in “critical path” works and that this caused delay. That was the combined effect of the evidence of Mr Day and Mr Buchan.

6.    There were steps that could have been taken to make up for lost time including for some “critical path” activities. The only evidence that steps were taken to make up the lost time was from Mr Buchan whose evidence on this point the primary judge was entitled not to accept. It must be borne in mind that Mr Buchan was an officer of the CFMEU and a respondent to the ABCC’s application. The primary judge was entitled to accord the self-serving parts of Mr Buchan’s evidence less weight than his admissions against interest.

7.    Despite claiming, allegedly in reliance on Mr Day, that on 24 June 2009, workers from seven subcontractors failed to work, Mr Schober was unable to explain why Mr Day said that workers from only four subcontractors failed to work. Further, despite claiming that workers from six subcontractors failed to work on 25 June 2009, in reliance on Mr Day for that information, Mr Schober could not explain why Mr Day said that workers from only five subcontractors failed to work on 25 June 2009. Once again, Mr Schober’s inability to pass memory tests or to reconcile his evidence with that of Mr Day without recourse to contemporaneous documents does not detract from the force of Mr Day’s unchallenged evidence and Mr Buchan’s admission.

8.    Despite claiming that pouring concrete was one of the “critical path” tasks scheduled for 24 and 25 June 2009, Mr Schober conceded that since Mr Day said no concrete pour was scheduled for 24 June 2009, and Mr Day’s records were correct, there would be no delay from the non-performance of that task on 24 June 2009. The concrete pour was not the only “critical path” activity scheduled. Formwork, tension and installation of façade and steel fixing were critical tasks which were required to be performed. Once again, Mr Day’s evidence was unchallenged, and was materially supported by the evidence of Mr Buchan.

48        In the upshot, the CFMEU has not shown that the primary judge’s finding of fact was erroneous. Accordingly, we would reject the first ground of appeal.

Ground 2: Whether losses incurred by Diploma were caused by the CFMEU’s contraventions

49        The CFMEU contends that the primary judge erred in finding that Diploma suffered actual damage comprising the cost allegedly incurred by Diploma in the absence of evidence that these costs were attributable to the industrial action. It relies on its submissions relating to the first ground of appeal. The ABCC repeats its arguments in respect of ground 1.

50        For the same reasons as we have given in relation to ground 1, this ground of appeal must also be rejected.

Ground 3: legal costs paid by Diploma

51        The CFMEU submits that there was no causal link between the industrial action and the costs incurred by Diploma in retaining Deacons. It contends that there was no evidence of Diploma having instructed Deacons in consequence of the industrial action. Further, the CFMEU contends that no evidence was adduced as to what instructions Diploma had given Norton Rose (formerly, Deacons). The ABCC responds that there was sufficient evidence to sustain the finding of a causal link by reason of Mr Schober’s evidence and the primary judge’s examination of the work done by the solicitors in having regard to the content of the invoices.

52        The primary judge reached his conclusions on the basis of the tax invoices issued to Mr Day by Deacons. The entries in the tax invoices demonstrate that Diploma’s solicitors were attending to litigation which included assisting the ABCC in obtaining an injunction to stop the contravention of the BCII Act, and in prosecuting the ABCC’s claim for penalties and compensatory orders.

53        In our respectful opinion, it was reasonably open to the primary judge to find that Diploma engaged Deacons to advise it in relation to the exigencies of the situation created by the unlawful action taken by the CFMEU in order to reduce the damage being inflicted upon it. The invoices which were before his Honour were a near contemporary record of the work performed, and their contents were uncontradicted.

54        This ground of appeal should be rejected.

Ground 4: quantum of damage suffered by Diploma

55        The CFMEU contends that the quantum of damages awarded by the primary judge was not supported by the evidence. As we have noted above, the five individual components of the claim are: the loss of early completion bonus, the wages of diploma employees, Hays’ recruitment personnel costs, hire cost of certain site equipment and legal costs. These will be considered in turn.

56        In relation to the first component, the CFMEU submits, as it did in ground 1, that there was no evidence so as to entitle Diploma to claim a larger early completion bonus. This argument should be rejected for the same reasons as we have given in relation to ground 1.

57        With respect to the second and third components of the claim, the CFMEU argues that the losses incurred by Diploma in relation to wages paid to employees and costs of engaging Hays Recruitment staff were not to compensate for the wages and costs paid when the industrial action occurred. Rather, it is argued, the expenditure reflected the wages and costs Diploma had to pay to these staff for working the extra five days between 10 and 15 April 2010, and it cannot be said that this would not have been necessary but for the five days of industrial action. This argument is misconceived. The evidence given by Mr Schober was that both Diploma’s employees and the Hays Recruitment staff were required to work an additional five days on the project while the project was on foot. This complaint by the CFMEU must be rejected.

58        In relation to the fourth component, the CFMEU submits that the evidence did not disclose a causal link between the industrial action and the additional hire costs of the equipment. It is argued that the fact that the equipment was on site for the whole month, including days when no work took place on site, such as Sunday and Public Holidays, means that it was essentially a fixed overhead of the project. Moreover, the equipment could have been kept on site for much longer than anticipated for a number of reasons. As the equipment was required in any event, the CFMEU submits that the cost of Diploma’s hire of the equipment in June 2009 was not an effect of the industrial action.

59        The evidence given by Mr Schober was that Diploma would have returned the relevant hired equipment five days earlier were it not for the industrial action. The primary judge accepted his evidence. It was open to his Honour to do so. This complaint by the CFMEU must be rejected.

60        With respect to the fifth component of the claim, the CFMEU contends that the damage allegedly sustained by Diploma in incurring legal costs to Deacons arose from the decision made by an unknown officer of Diploma to obtain its own legal advice and not as a result of the contravention of the BCII Act by the ABCC. The CFMEU submits that the evidence in the form of narrations on Deacons’ tax invoices reveals that Deacons were not running an action on behalf of Diploma but rather monitoring the ABCC action on Diploma’s behalf.

61        That may be so, but there was a sufficient causal nexus between the CFMEU’s industrial action and the cost of Diploma’s response to it, in that Diploma was put to expense to protect its rights under the law and to assist in enforcing a claim for compensation for the infringement of its rights. It was reasonable for Diploma to engage lawyers to act for it and advise it on its interests in relation to the unlawful industrial action by the CFMEU that had affected it. The cost to Diploma of engaging Deacons for that purpose was only incurred as a result of the CFMEU’s admitted contraventions of the Act. This component of the ABCC’s claim was not outside s 49(1)(b) of the BCII Act, bearing in mind the objects referred to in s 3(2)(b), (c), (e) and (h) of the BCII Act. This complaint by the CFMEU should be rejected.

62        The CFMEU also seeks to submit that the evidence did not establish that the legal costs were reasonable in quantum terms as there was no evidence proving the hours worked, the rate charged and the overall reasonableness of the work done.

63        The ABCC contends that there is no principle of law that requires that, in assessing damage suffered by a party as a result of a contravention of the BCII Act, the expense incurred by way of legal costs should be reasonably incurred. Rather, the issue is, what were the actual costs suffered by Diploma?

64        It is not necessary to uphold the ABCC’s contention in order to reject the CFMEU’s complaint. To the extent that these costs may be required to be reasonable in amount, this is a matter which the CFMEU could have raised as an issue of causation or mitigation, but did not. It is sufficient to observe that the reasonableness of the charges made by Deacons was never put in issue by the CFMEU. It is too late to raise it now when evidence could have been called by the ABCC on the issue had it been raised at trial: Water Board v Moustakas (1988) 180 CLR 491 at 497. This ground of appeal must be rejected.

Ground 5: mitigation of loss

65        The CFMEU submits that the primary judge erred in failing to find that Diploma had failed to mitigate its losses under the contract when Diploma had completed the construction program almost thirteen months ahead of time. Once again this submission misses the point: the fact that the project was ultimately concluded early does not have any bearing on whether Diploma failed to act reasonably by mitigating its loss caused by the delay due to the industrial action. For the reasons set out above in relation to ground 1, we consider that the CFMEU’s submission must be rejected.

66        The CFMEU also submits that the primary judge erred in failing to find that Diploma had failed to mitigate its losses under the contract when Diploma was contractually entitled to recover monetary losses occasioned by the unlawful industrial action directly from subcontractors whose employees took that action.

67        The evidence of Mr Schober was that the contractual claims initially asserted by Diploma against its subcontractors were ultimately not pursued because deducting the money was an onerous task and because Diploma had to continue to work with its subcontractors. This decision was, the primary judge held at Reasons [214], “perfectly understandable”, there being “no statutory obligation for a person suffering damage resulting from contraventions of the BCII Act to pursue potential but untested remedies with the attendant commercial risk”.

68        We respectfully agree with the primary judge. It is a strong thing to hold that an innocent party which has suffered loss by reason of the wrongful act of another has failed to act reasonably to mitigate that loss merely because that party has not pursued litigation against another innocent party. The CFMEU did not cite any authority which would justify such an extreme holding in this case.

69        The obligation of an innocent party to mitigate its loss is measured by considerations of reasonableness in a context in which the wrongdoer who inflicted the loss seeks to insist that the injured party should have acted differently. It was not unreasonable of Diploma to refrain from pursuing its subcontractors by litigation which might antagonize them and poison their commercial relationship with Diploma, especially when the BCII Act afforded a remedy against the party which was the actual cause of its loss. A party placed in a difficult position by reason of the breach of a duty owed to it by a wrongdoer, and who has acted reasonably in adopting remedial measures, will not be held disentitled to recover the cost of such measures merely because the wrongdoer can suggest other measures less burdensome to it: Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 at 506 per Lord Macmillan; King v Yurisich (2006) 153 FCR 78 at 103 [93] per Sundberg, Weinberg and Rares JJ. Further, it advances the objectives stated in s 3(2) (b) and (c) of the BCII Act to allow the remedy provided by s 49(1)(b) to be enforced against the party who caused the damage rather than to insist on the pursuit of other innocent participants in the building industry.

70        For these reasons, we reject this ground of appeal.

CONCLUSION AND ORDERS

71        The CFMEU has failed to make good any of its grounds of challenge to the decision of the primary judge.

72        We order that the appeal be dismissed and that the CFMEU pay the ABCC’s costs of the appeal to be taxed if not earlier agreed.

Associate:

Dated:    27 March 2012