FEDERAL COURT OF AUSTRALIA

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

ORDERS

THE COURT ORDERS THAT:

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

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

3.    The appeals be allowed.

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

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

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

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

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

REASONS FOR JUDGMENT

WIGNEY J:

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

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

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

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

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

RELEVANT FACTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

THE ACCC’S CASE

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

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

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

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

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

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

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

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

THE PRIMARY JUDGE’S FINDINGS AND REASONING

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

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

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

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

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

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

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

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

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

APPEAL GROUNDS AND CONTENTIONS

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

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

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

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

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

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

UNDERSTANDINGS AND ARRANGEMENTS – RELEVANT PRINCIPLES

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

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

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

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

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

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

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

THE MORE PROBABLE INFERENCE?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CONCLUSION – INFERENCE UNAVAILABLE OR NOT MOST PROBABLE

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

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

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

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

THE PENALTY APPEAL

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

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

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

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

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

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

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

DISPOSITION

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

Associate:

Dated:    29 February 2024

REASONS FOR JUDGMENT

BROMWICH AND ANDERSON JJ:

INTRODUCTION

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

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

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

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

BEFORE THE PRIMARY JUDGE

Background

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Relevant provisions of the CCA

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

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

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

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

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

Situations to which section applies

(1)    This section applies in the following situations:

…

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

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

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

…

Prohibition in an acquisition situation

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

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

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

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

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

…

Meaning of accustomed to acquire

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

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

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

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

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

101    The primary judge then observed at LJ[281] that the concepts in s 45E, while not defined, bear similarities with other provisions of the CCA, such that it is appropriate to have regard to the ordinary principles of statutory construction which are informed, but not governed, by decisions on such of those provisions which employ similar concepts, citing Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; 162 FCR 466 (CEPU v ACCC) at [13]. Her Honour also cited Tabcorp Holdings Ltd v Victoria [2016] HCA 4; 328 ALR 375 at [65] for the proposition that the same concepts used within the same suite of statutory provisions should ordinarily be given a consistent meaning.

102    Further, s 76 of the CCA provides that the Court may impose pecuniary penalties for a contravention of provisions of Pt IV, including of s 45E, extending to, inter alia, conspiracies, attempts, accessories, inducement or attempted inducement, or otherwise being knowingly concerned in or a party to such a contravention.

The authorities

103    As the short background summary by the primary judge reproduced above indicates, the appellants’ main case at trial was that the ACCC failed to prove its case at the relatively fundamental level of proving the formation of an agreement or understanding, especially as to state of mind. While there are some key points of difference as to what is necessary to be established to prove the existence of a proscribed arrangement or understanding, the principles summarised by the primary judge did not appear to be in dispute, as opposed to what should be made of them in the present context and how they should be applied. In some respects, the reasoning of her Honour as to the approach required by prior authority will require closer consideration, but the framework of principle outlined is a useful and valuable starting point.

104    It is therefore convenient to reproduce the primary judge’s detailed summary of the relevant legal principles in order to frame the debate and better understand the context for her Honour’s reasoning in finding that the ACCC had proved, inferentially, the existence of the alleged proscribed arrangement or understanding (emphasis in original):

[320]    The CFMEU cited the decision of Gordon J (as her Honour then was) in Norcast S.ár.L v Bradken (No 2) (2013) 219 FCR 14; [2013] FCA 235 at [263] which contained this helpful statement of the relevant legal principles in relation to the concept of arrangement or understanding:

The relevant applicable legal principles may be summarised as follows:

1.    an arrangement or understanding is apt to describe something less than a binding contract or agreement: Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 at [75]; see also Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 (Privy Council) cited with approval in Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286 at 290-291; 5 ALR 465 at 469;

2.    the elements of an arrangement or understanding are:

2.1    evidence of a consensus or meeting of the minds of the parties, under which one party or both of them must assume an obligation or give an assurance or undertaking that it will act in a certain way which may not be enforceable at law: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2008] FCA 678 at [10] and the authorities cited;

2.2    a hope or mere expectation that as a matter of fact a party will act in a certain way is not itself sufficient to establish an arrangement or understanding, even if it has been engendered by that party: ACCC v CFMEU at [10] and the authorities cited including Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159 FCR 452 at [45] and Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at [79];

2.3    the necessary consensus or meeting of minds need not involve, though it commonly will in fact embody, a reciprocity of obligations: ACCC v CFMEU at [10] and the authorities cited;

2.4    in relation to whether or not mutual obligation is a necessary ingredient of an arrangement or understanding, it has been suggested that it is difficult to envisage circumstances that would be an understanding within s 45 of the TPA involving the commitment by one party without some reciprocal obligation by the other party: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-231 and 238. That statement applies equally to ss 44ZZRJ and 44ZZRK of the CCA;

2.5    an arrangement may be informal as well as unenforceable with the parties free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it: Federal Commissioner of Taxation v Lutovi Investments Pty Ltd (1978) 140 CLR 434 at 444;

3.    whether there is a difference between an arrangement and an understanding has not been resolved: Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 22-26 but cf Australian Competition and Consumer Commission v Australian Medical Association WA Branch Inc (2003) 199 ALR 423 at 460. However, the concept of an understanding is broad and flexible: cf L Grollo & Company Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 at 89 and Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2004) 141 FCR 183 at [54];

4.    whether or not an arrangement or understanding has been reached will depend on the view formed of all of the circumstances. A meeting of minds may be proved by independent facts and from inferences drawn from primary facts including, without limitation, evidence of joint action by the parties in relation to relevant matters, evidence of parallel conduct and evidence of collusion between the parties. As Isaacs J said in R v Associated Northern Collieries (1911) 14 CLR 387 at 400:

Community of purpose may be proved by independent facts, but it need not be. If the other defendant is shown to be committing other acts, tending to the same end, then though primarily each set of acts is attributable to the person whose acts they are, and to him 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.

See also News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 573-574.

(emphasis added)

[321]    In Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286 at 291, Smithers J observed that:

… Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of … the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act.

[322]    This statement was cited with approval by Finn J in Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2008] FCA 678 at [10].

[323]    Just as contractual assent may be inferred from conduct, so too may the adoption or consensual nature of an arrangement or understanding: see CEPU v ACCC at [136] (Weinberg, Bennett and Rares JJ) in which the Full Court observed that:

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… 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.

[324]    An arrangement or understanding which is inferred from conduct is not qualitatively different from one that is proved by direct evidence. The difference is in the method of proof. The nature of a circumstantial case is such that the Court can consider the whole of the evidence in arriving at a decision on any fact or facts: CEPU v ACCC at [143] (Weinberg, Bennett and Rares JJ).

[325]    As stated in Norcast v Bradken at [264], “where proof of an arrangement or understanding rests on inferences to be drawn from primary facts, it is not sufficient for the circumstances to give rise to conflicting inferences of equal degrees of probability”.

[326]    In Australian Competition and Consumer Commission v Olex Australia Pty Ltd [2017] ATPR 42-540; [2017] FCA 222 at [478], Beach J observed that:

… as to the question of proof, an inference that an arrangement or understanding existed may be drawn from circumstantial evidence that the conduct of the parties exhibits “a concurrence of time, character, direction and result” (R v Associated Northern Collieries (1911) 14 CLR 387 at 400)… the existence of a motive is a matter that can be taken into account in assessing whether an arrangement or understanding was entered into by parties.

[327]    In Australian Competition and Consumer Commission v Air New Zealand Limited (2014) 319 ALR 388; [2014] FCA 1157 at [463], Perram J stated that:

In cases where direct evidence is not available, the proof of a collusive understanding needs must be circumstantial. Pausing there, it is important to note that there is nothing inherently weak about cases based on circumstantial evidence. In truth, the strength of any particular circumstantial case will be a function of the number of elements of which it consists and the corresponding unlikelihood of those elements happening for reasons other than as a result of the posited collusive behaviour. Just as with any case of circumstantial evidence, it is forlorn to seek to work out the significance of the individual elements. The circumstantial case’s nature and its strength emerge organically from a consideration of it as a whole. Thus, the onus of proof is to be applied only at the end:… however, this does not mean that the court is prevented in the ordinary way from finding particular circumstances proved or not proved. Rather, what is meant is that the question of whether the inference, which it is said should be drawn, is to be asked holistically at the end of the process rather than it being asked whether the inference should be drawn from any individual circumstances.

(emphasis added)

[328]    In Australian Competition and Consumer Commission v BlueScope Steel Limited (No 3) [2021] FCA 1147 at [64], O’Bryan J stated that:

It is well established that the making of an arrangement or the arriving at an understanding may be proved by direct or circumstantial evidence. Direct evidence includes the content of communications passing between the parties to the alleged arrangement or understanding. Circumstantial evidence includes conduct consistent with the making or acting upon (giving effect to) the alleged arrangement or understanding. A wide range of evidence of communications and conduct may be admissible in proof of an arrangement or understanding. Not all communications need be between the alleged parties to the arrangement or understanding. As Perram J explained in Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) (2012) 207 FCR 448 (at [25]-[26]):

I do accept the principle invoked by the ACCC, namely: that one may prove an agreement or understanding between a group of people by proving behaviour of individual group members consistent with the existence of the agreement; that such behaviour may include evidence of what members of the group said to each other or even to third parties; and, that this use of conduct as circumstantial evidence of an agreement does not involve a hearsay use of the words used when some or all of the conduct relied upon consists of speech acts. This is straightforward …

(emphasis added)

[329]    In terms of distinguishing between the two concepts, an “arrangement” connotes a consensual dealing lacking some of the essential elements that would otherwise make it a contract: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) 160 FCR 321; [2007] FCA 794 at [26] [(ACCC v Leahy)]. It need not be legally binding, but it must still involve commitment; that is, it must be at least morally binding: ACCC v Leahy at [37]. There must also be at least some express communication between the parties, although what is said may not, for the purposes of the law of contract, amount to offer and acceptance in a contractual sense: ACCC v Leahy at [26]; cited with approval in Australian Competition and Consumer Commission v Yazaki Corporation (No 2) (2015) 332 ALR 396; [2015] FCA 1304 at [47].

[330]    The concept of an understanding is “broad and flexible”: L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd [1978] FCA 33; (1978) 34 FLR 81 at 89; ACCC v Olex at [477]; Norcast v Bradken at [263]; ACCC v Leahy at [27]. However broad and flexible an understanding might be, it must be a consensual dealing between parties: ACCC v Leahy at [28].

[331]    Unlike an arrangement, an understanding can be tacit, in the sense that it can be arrived at by each party, either by words or acts, signifying an intention to act in a particular way in relation to a matter of concern to another party. In order to be a consensual dealing, however, an understanding must involve a meeting of minds: ACCC v Leahy at [29].

105    The authority cited by the primary judge warrants some expansion for the purpose of assessing her Honour’s inferential reasoning process under challenge, especially as to proof of a meeting of minds and all that entails.

106    Turning to the particular issue of an arrangement or understanding proscribed by the CCA, in Trade Practices Commission v Email Ltd (1980) 43 FLR 383, Lockhart J observed at 385:

For there to be an arrangement or understanding there must be a meeting of the minds of those said to be parties to the arrangement or understanding. In some cases this may be inferred from circumstantial evidence. There must be a consensus as to what is to be done and not just a mere hope as to what might be done or happen. Independently held beliefs are not enough.

107    In the same vein, in Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (No 8) [1999] FCA 954; 92 FCR 375 (ACCC v CC), Lindgren J observed (original emphasis):

[137]    In Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286, a Full Court of this Court had to consider the expression “a contract, arrangement or understanding to the extent that it is in restraint of trade or commerce” in the then s 45(2)(b) of the Act. Smithers J at 291 referred to Newton and British Basic Slag and said of the expression “arrangement”, that by parity of reasoning with British Basic Slag:

“the existence of an arrangement of the kind contemplated in s 45 is conditional upon a meeting of the minds of the parties to the arrangement in which one of them is understood, by the other or others, and intends to be so understood, as undertaking, in the role of a reasonable and conscientious man, to regard himself as being in some degree under a duty, moral or legal, to conduct himself in some particular way, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.”

His Honour added (at 291):

“Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act.”

…

[141]    The cases require that at least one party “assume an obligation” or give an “assurance” or “undertaking” that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have “aroused” that expectation by things he said at the Meeting. But these factual expectations do not found an “understanding” in the sense in which the word is used in ss 45 and 45A. The conjunction of the word “understanding” with the words “agreement” and “arrangement” and the nature of the provisions show that something more is required. With respect, the first passage set out above from the judgment of Smithers J in Top Performance Motors, although addressing the term “arrangement”, seems to me to describe appropriately that further necessary element of the “understanding” to which the provisions refer.

108    Beach J in Australian Competition and Consumer Commission v Olex Australia Pty Ltd [2017] FCA 222; [2017] ATPR 42-540 cited Email at 385 and ACCC v CC at [141] in support of the observations his Honour made at [478] that a “mere expectation in a non-normative sense or a hope that something might be done or happen or that a party will act in a particular way is not of itself sufficient to found an arrangement or understanding” and that there will be “no understanding where one party decides unilaterally to act in a particular way in response to a pricing manoeuvre by a competitor”, a point equally apposite to a hoped-for, anticipated, or even expected unilateral capitulating response to a threat.

109    O’Bryan J in Australian Competition and Consumer Commission v BlueScope Steel Limited (No 5) [2022] FCA 1475 grappled with the distinction between an arrangement and an understanding. After quoting from the same passages of the judgment by Smithers J in Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286 at 291 quoted by Lindgren J in ACCC v CC at [137] (reproduced above at [107]), his Honour observed:

[106]    The different language used by Smithers J to explain an “arrangement” and an “understanding” within the meaning of s 45 of the Act identifies a subtle but important point. By the use of three different words, contract, arrangement and understanding, Parliament has prohibited three forms of conduct that are considered to be harmful to competition and, thereby, the welfare of Australians (as per s 2 of the Act). Each of the three words should be given meaning and effect: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [71] per McHugh, Gummow, Kirby and Hayne JJ. While an arrangement is well described in terms of undertaking obligations or duties, albeit not legally enforceable, an understanding is more aptly described as arriving at a common mind (or consensus) as to a particular course to be followed. Cartel conduct is the antithesis of competitive conduct and, for that reason, is a criminal offence under the Act. Businesses tempted to engage in such conduct will rarely do so openly and will usually seek to do so through hidden or subtle communications with competitors which may take the form of words or conduct. If through such communications competitors arrive at a common mind as to the adoption of a particular course of business conduct that answers the description of a cartel provision, competition and the welfare of Australians will be harmed. It is consistent with the statutory text and purpose to describe such conduct as an understanding within the meaning of the Act.

[107]    In Nicholas Enterprises [Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) (1979) 40 FLR 83], Fisher J referred to the above reasons of Smithers J with apparent approval (at 90). In the immediately preceding passage, Fisher J summarised the principles that emerged from Re British Basic Slag as follows (at 89):

A significant feature of each of the above passages is the emphasis placed upon the necessity for each of the parties to have communicated with the other, for each to have raised an expectation in the mind of the other, and for each to have accepted an obligation qua the other. These are in my opinion the essential elements of the requisite meeting of minds.

[108]    Since those earliest decisions, different cases have used the expressions “meeting of minds”, “arousing expectations”, “assuming an obligation” or “giving an assurance” somewhat interchangeably. In ACCC v CC, Lindgren J explained that a mere expectation that, as a matter of fact, a party will act in a certain way is not sufficient to constitute an understanding within the meaning of the Act, even if the expectation has been engendered by conduct of that party (at [141]). It was in that context that his Honour said that what is required is that at least one party “assume an obligation” or give an “assurance” or “undertaking” that it will act in a certain way. Those observations of Lindgren J have been referred to with approval by the Full Court on many occasions, including in Rural Press at [79], Apco at [45] and Country Care at [60]. In Apco, the Full Federal Court used the word “hope” interchangeably with expectation, endorsing the proposition that “a mere hope or expectation that a party will act in a particular way is insufficient to constitute an ‘understanding’ ” (at [47]). That proposition is not inconsistent with the description of an understanding given by Smithers J in Top Performance Motors. A meeting of minds as to a course of conduct to be followed by one or more persons cannot arise unless those persons have communicated their assent to adopting that course of conduct. It is important to emphasise, though, that in the context of an understanding containing an unlawful cartel provision, the assumption of an obligation means no more than the communication of assent to a particular course of conduct proposed by a competitor, where the communication may be by words or conduct. Language of obligation, commonly used in the law of contract, should not obscure the nature of an understanding and the means and circumstances in which it may be arrived at.

(emphasis added)

110    The passage in bold was substantially repeated in BlueScope Steel at [147] in the course of O’Bryan J discussing the lesser requirements for an attempt: “It can be accepted that, for a consensus or meeting of minds to be finally arrived at, there must be some communication or indication of assent from one party to the other whether by words or by conduct”. This puts to rest any suggestion that something less than this is required, especially in the preceding [146] at which his Honour observed:

It follows from the judicial explication of the concept of an “understanding” that there is no requirement in law for one of the parties to have expressly sought a commitment from the other party to assume some obligation. An understanding may be reached through a course of dealings between the parties that makes clear the desired outcome and through which a meeting of minds on pursuing the outcome is achieved. A course of dealings between parties is capable of arousing an expectation in each party that they will conduct themselves in accordance with the communicated outcome.

111    The need identified by O’Bryan in BlueScope Steel in the emphasised sentence in [108] reproduced above, and substantially repeated at [147], for such a communication of assent was acknowledged by the primary judge at LJ[329] reproduced above, when her Honour observed that there must also be “at least some express communication between the parties, although what is said may not, for the purposes of the law of contract, amount to offer and acceptance in a contractual sense”, citing Australian Competition and Consumer Commission v Yazaki Corporation (No 2) [2015] FCA 1304; 332 ALR 396 at [47] (in turn quoting with approval from Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; 160 FCR 321 at [26]).

112    It follows that merely succumbing to a threat will not, without more, be enough for the purposes of establishing a contravention of s 45E(3)(a), which logically precedes any further contravention by way of giving effect to such an arrangement or understanding contrary to s 45EA(1)(a); a meeting of minds or its equivalent is still required. In order for minds to meet, there must be knowledge or awareness or a like state of mind on both sides as to the subject of that meeting of the minds. Logically, that must be manifested in some kind of communication, the existence of which may be inferred if a sufficient basis exists to support that inference. The need for such a communication is most obvious when what is relied upon is otherwise no more than parallel or acquiescent conduct, which can never suffice on its own. The communication of assent to a course of conduct to be adopted by one or more parties to the agreement or understanding completes the arrangement or understanding upon that assent being communicated. Of course, implementation, by giving effect to such an arrangement or understanding, may never occur.

113    The primary judge made numerous references to this requirement of mutual knowledge or awareness arising from a communicated assent in citing or quoting authority referring to concepts such as consensus, community of purpose, mutual consent, and consensual dealing, amounting to a knowledge or subjective awareness of what was involved: see, for example, at LJ[320] and LJ[331], reproduced above at [104], and LJ[342]-[343] reproduced below at [114].

114    The primary judge at LJ[342]-[343] quoted from the Full Court in CEPU v ACCC at [181]-[182] and [194]-[195], including the following extracts from [182] and [194]:

[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.

…

[194]    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.

Factual dispute and findings

115    The dispute between the parties at trial largely turned on relatively narrow disputes about what the evidence established or was capable of establishing, and whether the thresholds for contravention in well-established authorities had been met. For some of the evidence that was adduced over objection, or was later objected to, a challenge over the admission of that evidence is maintained. As there was no direct evidence of the existence of an agreement or understanding, the nub of this core aspect of the challenge on appeal concerns the sufficiency of circumstantial evidence to ground an inferential basis for that finding, based on both the primary factual findings that were made, and challenging aspects of those findings.

116    Before turning to the factual circumstances as found by the primary judge, it is useful to know who the persons involved were in order to follow the narrative of events. The following are the key entities and individuals involved:

J Hutchinson Pty Ltd

Mr Greg Quinn, Managing Director

Mr John Berlese, Team Leader

Mr Peter Meland, Project Manager

Mr Henk Thone, Site Manager (supervised by Mr Meland)

Mr Damon Clarke, employee and CFMEU delegate on the Southpoint project

Mr Raul Paez and Mr Lindsay Ashton, other employees of Hutchinson

Construction, Forestry, Maritime, Mining and Energy Union (CFMEU)

Mr Justin Steele, union organiser

Waterproofing Industries Qld Pty Ltd (WPI)

Mr Raymond (Ray) Hadfield, director

Mr Charlie Hadfield, son of Mr Raymond Hadfield

Building Unions Superannuation Scheme Queensland (BUSSQ)

Mr Dallas Ezzy, National Relationship Manager

The Funds (BERT, CIPQ and BEWT)

Mr John Shenfield, General Manager

117    The appellants contended, in substance, that the ACCC had not proven the necessary meeting of minds or equivalent to establish the existence of an agreement or understanding. The primary judge did not accept that was so. Her Honour found that on the whole of the evidence it had been proven:

(a)    that Hutchinson and the CFMEU had arrived at an arrangement or understanding containing a boycott provision to the effect that Hutchinson would no longer acquire waterproofing services from WPI at the Southport project and that the subcontract between Hutchinson and WPI to provide such services would be terminated; and

(b)    that this arrangement or understanding had been given effect to by Hutchinson by ceasing to acquire waterproofing services from WPI and terminating the subcontract.

118    In reaching the conclusion of contravention, the primary judge considered the evidence and competing submissions in detail, summarised the principles as reproduced above at [104], and resolved the dispute in favour of the ACCC as follows:

[332]    The ACCC contended that there was an arrangement or understanding containing a provision to the effect that Hutchinson would terminate the WPI subcontract or, further and alternatively, would no longer acquire waterproofing services from WPI at the Southpoint project. It submitted that the arrangement or understanding contained this provision because it was a matter forming part of the understanding between the parties within the meaning of s 4 of the Act.

[333]    The ACCC also contended that this arrangement or understanding arose in the context of WPI not having an EBA and a threat by the CFMEU that it would engage in industrial action if Hutchinson allowed WPI to come back onto the site of the Southpoint project. It contended that Hutchinson and the CFMEU understood that the incentive for Hutchinson to exclude WPI was to avoid conflict with, or industrial action by, the CFMEU.

[334]    In essence, it is submitted by the respondents that the exclusion of WPI from the site was more likely to have arisen in circumstances where the CFMEU delegate (Mr Clarke) discovered that WPI was not registered with the required employee funds and was therefore not otherwise paying its employees their required entitlements, that any issue raised by him and by Mr Steele with Mr Meland and Mr Thone would have been about this matter (which was never rectified) and that WPI was excluded from the site, and its subcontract terminated, because of Mr Meland’s erroneous belief that WPI required an EBA before it could be a subcontractor at the Southpoint project.

[335]    Considered as a whole, the evidence establishes that Hutchinson and the CFMEU arrived at an arrangement or understanding containing a provision to the effect that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and, further, that the WPI subcontract would be terminated.

[336]    Such a finding arises from the facts and circumstances below which have “such a concurrence of time, character, direction and result as naturally to lead to the inference that [their] separate acts were [the] manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge”, namely, that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and, further, that the WPI subcontract would be terminated.

[337]    Having regard to the required standard of proof and for the reasons below, the most probable explanation for the series of facts which occurred is that there was such an arrangement or understanding. Indeed, the case is a compelling one.

[338]    The facts and circumstances evidence parallel conduct by Hutchinson and the CFMEU by which they each took steps to exclude WPI from the site and then either prevented, or took no positive steps to allow, WPI to return to the site with the end result that Hutchinson ceased to acquire waterproofing services from WPI and terminated the WPI subcontract. Such parallel conduct can constitute circumstantial evidence from which an arrangement or understanding can be inferred: Trade Practices Commission v Email Ltd (1980) 31 ALR 53; Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (2006) 157 FCR 162; [2006] FCA 1777 at [111].

[339]    The evidence demonstrates that a consensus was reached between Hutchinson and the CFMEU pursuant to which they committed to a particular course of action, namely that WPI would not be allowed back on to the Southpoint site with the end result that Hutchinson would cease to acquire waterproofing services from WPI and, further, that Hutchinson would terminate the WPI subcontract.

119    The primary judge then listed a series of factual findings in 33 subparagraphs to LJ [340] supporting the conclusion that the necessary consensus had been reached, as follows:

(1)    in 2016 when WPI was engaged, Hutchinson was party to the 2015 EBA. Pursuant to clause 35.2 of the 2015 EBA, Hutchinson was obliged to consult with the CFMEU about the appointment of subcontractors in certain circumstances;

(2)    in 2016, the CFMEU (and Mr Steele) relied upon clause 35.2 of the 2015 EBA as a basis for effectively pushing that Hutchinson ought to retain subcontractors with EBAs;

(3)    prior to March 2016, a list of subcontractors which had an EBA was in Hutchinson’s possession, being the 2014 List. It bore the CFMEU logo and was a list of subcontractors that had an EBA. It included a list of nine names under the subheading “Waterproofing”. WPI’s name was not included in that list;

(4)    Mr Berlese was a senior employee of Hutchinson. In the types of large projects which Mr Berlese undertook, he considered that there was a risk that, if Hutchinson engaged a non-EBA subcontractor, the CFMEU would object. In order to reduce the possibility of industrial disputation with the CFMEU, Mr Berlese chose only to use subcontractors that had an EBA. Mr Berlese had some regard to the 2014 List when choosing subcontractors;

(5)    a tender process was undertaken in 2015 which involved Mr Meland as well as Mr Ashton and Mr Paez. WPI, which did not have an EBA, was invited to tender along with other companies;

(6)    had Mr Berlese been aware that tenders were being sought from subcontractors which did not have an EBA, he would have intervened because he did not want any potential industrial relations issues with the CFMEU;

(7)    WPI submitted a quote for the waterproofing work at the Southpoint project which was reduced significantly after a meeting with employees of Hutchinson and the removal of certain items from the scope of work. At that meeting, WPI indicated that it would pay its workers the entitlements required to be paid under the 2015 EBA;

(8)    Mr Meland believed that subcontractors such as WPI needed to have an EBA on the basis that it was a requirement of the 2015 EBA. Although incorrect, such a belief was consistent with (and likely encouraged by) Mr Berlese’s own conduct in preferring subcontractors that had an EBA;

(9)    at some stage, Mr Meland informed Mr Raymond Hadfield of WPI that he would need to get an EBA. WPI was willing to get an EBA and took steps to try and get one, but without success;

(10)    on 2 March 2016, a new list of subcontractors which had an EBA was issued, being the 2016 List. The 2016 List also did not include WPI but now included Spanos in its list of waterproofers. Mr Berlese had some regard to the 2016 List when choosing subcontractors;

(11)    WPI entered a subcontract with Hutchinson on 22 March 2016 to perform waterproofing work at the Southpoint project;

(12)    WPI performed some work on the Southpoint site in April and May 2016;

(13)    Mr Steele and Mr Clarke were informed of the engagement of WPI in May 2016. At that time, Mr Steele knew that WPI did not have an EBA, and had prior involvement with them on another project in which a complaint had been made that WPI had not paid the superannuation entitlements of its employees (although this issue was rectified);

(14)    there had been no consultation by Hutchinson with Mr Steele, the CFMEU organiser at the Southpoint project, or Mr Clarke, the CFMEU delegate, prior to the engagement of WPI. Mr Steele believed that there had not been any consultation with the CFMEU at all;

(15)    in the second half of May 2016, being after Mr Clarke commenced work on the Southpoint site, the CFMEU raised an issue concerning WPI, being that it was not registered with all of the required funds for the purposes of paying employee entitlements. By 28 May 2016, WPI was registered with all of the required funds but had not made any contributions;

(16)    in late May 2016 or June 2016, Mr Steele had a meeting with Mr Berlese during which Mr Steele raised the fact that WPI had been retained without the CFMEU being consulted, and also raised the fact that WPI did not have an EBA. If it was the case that WPI had an EBA, Mr Steele would not have complained to Mr Berlese;

(17)    having regard to the matters set out in (2), (3), (4), (6), (10) and (16) above, I infer that the subcontract with WPI would not have been entered by Hutchinson (or WPI retained to perform waterproofing work on the Southpoint site) had the CFMEU been consulted prior to its engagement, even though its tender was the one which was preferred by Mr Meland and Mr Ashton;

(18)    on 11 June 2016, Mr Clarke, the CFMEU delegate, approached Mr Meland, Hutchinson’s project manager, about WPI being on site. Mr Clarke told Mr Meland that he was under strict instructions from Mr Steele to “sit the job down if WPI come on site”. That is, the CFMEU threatened to engage in industrial action at the Southpoint site if WPI was permitted by Hutchinson to come back onto the Southpoint site;

(19)    during their conversation on 11 June 2016, Mr Meland and Mr Clarke also discussed that the reason that WPI was not allowed back on site was because it did not have an “EBA” (that is, an enterprise bargaining agreement which was covered by the CFMEU);

(20)    Mr Meland informed Mr Berlese and Mr Thone, the site manager, of this conversation by email on 13 June 2016. The email informed Mr Berlese and Mr Thone of the threat of industrial action by the CFMEU, being the thing which Mr Berlese had sought to avoid by engaging in a practice of appointing subcontractors which had an EBA;

(21)    the terms of the 13 June email make plain that it was Mr Meland’s understanding that the main problem for WPI was that it was not going to get an EBA while it remained unregistered with the various funds and “Hopefully it will be better for him having registered”. By this email, Mr Berlese was informed that WPI did not have, but was seeking to obtain, an EBA. Further, the words in the email demonstrate that it was Mr Meland’s view that WPI was being excluded from the site because it did not have an EBA, which is consistent with him having had a discussion with Mr Clarke to that effect;

(22)    although it became registered with the funds, WPI did not work again on the Southpoint project after 11 June 2016. There is no evidence that anyone from Hutchinson or the CFMEU ever advised WPI that the reason for its continued exclusion from the site was that payments had not been made for the work performed by Mr Charlie Hadfield in April and May 2019. It is apparent from the evidence at the trial, including that set out below, that WPI was keen to resume work. Had the true issue been that payments were outstanding, this is something which could have been conveyed by Mr Steele or Mr Clarke to WPI (or they could have informed Mr Thone or Mr Meland or even Mr Berlese of this and asked for this message to be conveyed) but there is no evidence that this occurred. This is a further indication that the non-registration with the funds and the non-payment into the funds was not the real reason that WPI was not being allowed on the site by Hutchinson and the CFMEU;

(23)    Mr Meland took steps to assist WPI to obtain an EBA because he believed that, if one was obtained, WPI would be allowed back on site. However, that was his reaction to a situation where WPI was being excluded from the site by the concurrent actions of Hutchinson and the CFMEU. Mr Meland was attempting to find a solution to this problem. He was not the cause of it;

(24)    as part of attempting to find a solution, Mr Meland spoke to Mr Steele about why WPI could not get an EBA. Mr Steele said words to the effect that, “Ray (referring to the director of WPI) won’t be doing your waterproofing, he won’t be able to get an EBA”. He also said words to the effect, “Why don’t you use someone like Spanos, they’ve got an EBA, they look after their boys”. Mr Steele did not respond and say, for example, “WPI won’t be doing your waterproofing until they pay their employees their entitlements” or “WPI won’t be doing your waterproofing until they are registered with the funds” being something which it would be expected that he would have said if that was the real issue which the CFMEU had. Nor did Mr Steele say, for example, “WPI don’t need to get an EBA. All they need to do is register with the funds and pay their workers properly”. Rather, his statement was a definitive one in circumstances where he knew there was a subcontract with WPI – “WPI won’t be doing your waterproofing”. This statement is a strong indication that there was already an arrangement or understanding between the respondents that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and that, in circumstances where both the CFMEU and Hutchinson knew that WPI had entered a subcontract with WPI, that the WPI subcontract would be terminated;

[emphasis added]

(25)    in particular, the statements by Mr Steele to Mr Meland were a “manifestation of mutual consent to carry out a common purpose”, such purpose being that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and would terminate the WPI subcontract. Further, his statements are inconsistent with the CFMEU only having an issue with non-registration with funds or non-payment into those funds;

(26)    the statement by Mr Steele to the effect that WPI “won’t be able to get an EBA” and “Why don’t you use someone like Spanos, they’ve got an EBA” supports a finding that the motive for the arrangement or understanding between Hutchinson and the CFMEU was to return to a situation where, as a general rule, subcontractors engaged by Hutchinson at the Southpoint project would have an EBA, being something the CFMEU pressured Hutchinson to do and which Hutchinson (through Mr Berlese) did to avoid industrial action;

(27)    on around 21 June 2016, WPI was informed by Mr Clarke that it needed to call Mr Scott Vink, a CFMEU representative, to “get a go ahead with work”. Mr Vink was not able to be contacted until 4 July 2016 and so Mr Clarke told WPI to speak to Mr Steele to get confirmation from him, but after a number of telephone calls, Mr Steele could not be contacted. Mr Meland was informed of these facts by email. The conduct by the CFMEU (and indirectly by Hutchinson, through Mr Clarke) in requiring WPI to contact Mr Vink and then Mr Steele to enable it to resume work on the site, and then not returning WPI’s calls, is a “manifestation of mutual consent to carry out a common purpose”, such purpose being that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project, and would terminate the WPI subcontract. Further, such conduct is inconsistent with the CFMEU having an issue with non-registration with funds or non-payment into those funds, being something which Mr Clarke could have discussed with WPI (or would have discussed with Hutchinson) if that was the real issue, especially if he was the one who had discovered it as the CFMEU contends;

(28)    Mr Clarke told Mr Thone words to the effect that WPI was not allowed back on site and the reason for this was that it did not have an EBA. Mr Thone also spoke to Mr Meland about the issue of WPI not having an EBA;

(29)    on around 27 June 2016, Mr Meland referred the matter to the industrial relations team of Hutchinson to resolve. Nothing came of this referral and no evidence was adduced by Hutchinson to show what did happen including whether any contact was made with the CFMEU and what those communications were (which failure was not explained);

(30)    waterproofing work needed to be performed in the substation area on the Southpoint project in around July 2016. That work was delayed because WPI was not allowed on site. Mr Thone told Mr Meland that he needed a waterproofer. He spoke to him a number of times about this and asked him “get me the next person on the list”. Hutchinson did not arrange for WPI to return to the site. Instead, Spanos was inducted onto the Southpoint site on 13 July 2016 and performed waterproofing work on the Southpoint project on 20 July 2016. Spanos had an EBA and was on the 2016 List;

(31)    on 13 July 2016 (being the same day that Spanos was inducted), Mr Raymond Hadfield, director of WPI, sent an email to the CFMEU at queries@qld.cfmeu.asn.au, with the subject line “Waterproofing Industries Qld Pty Ltd – URGENT”, and which stated:

Over the last month we have made numerous attempts to get in contact with both Justin Steele and Scott Vink and have been unsuccessful in regards to being forced to stop work at Hutchinson builders Southpoint A construction site.

We have made all necessary steps to get this under control but keep getting pushed aside from department to department. We have made several attempts to get a meeting with Jade Ingham but haven’t herd [sic] back from your office. This is an urgent matter as we are required to do work onsite. All our workers are financial with the CFMEU and all benefits such as BUSS, BERT, Cip-Q etc are paid for.

If you can reply to this ASAP with some information regarding this that would be much appreciated. Also, if you can organise a meeting with Jade Ingham at the earliest possible time to discuss this as it is now having a major impact on work for our client.

(32)    there was no evidence adduced by the CFMEU that WPI received a response to this email, and its contents demonstrate that WPI was continuing to seek access to the site and the CFMEU was continuing to avoid communicating with WPI. This conduct by the CFMEU is another “manifestation of mutual consent to carry out a common purpose”, such purpose being that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and would terminate the WPI subcontract. Further, such conduct is inconsistent with the CFMEU having an issue with non-registration with funds or non-payment into those funds, being something which the CFMEU would have raised with WPI, or at least Hutchinson, if that was the real issue;

(33)    on around 19 July 2016, being more than a month after WPI had been excluded from the site, Mr Meland spoke to Mr Berlese about terminating the WPI subcontract. Mr Berlese told him to “deal with it”. There was no resistance by Mr Berlese to terminating the WPI subcontract. Indeed, I infer that Mr Berlese intended that Mr Meland should terminate the WPI subcontract. Hutchinson then terminated WPI’s subcontract by letter dated 26 July 2016. This conduct is “manifestation of mutual consent to carry out a common purpose”, such purpose being that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and would terminate the WPI subcontract. Further, the reason for the delay between the original date of WPI’s exclusion from the site (11 June 2016) and the notification of the termination (26 July 2016) was because Mr Meland was not himself aware of the arrangement or understanding between Hutchinson and the CFMEU and was attempting to assist WPI to return to the site. Such delay does not mean that there was no arrangement or understanding.

(emphasis added)

120    On the question of proof of the required proscribed purpose under s 45(3)(a) relied upon by the ACCC, the primary judge:

(a)    at LJ[342] and [343] quoted from CEPU v ACCC at [181]-[182] and [194]-[195], as follows:

In CEPU v ACCC, the Full Court stated at [181]–[182] that:

… ‘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 563 at [18]; approved in Rural Press Ltd v Australian Competition and Consumer Competition (2003) 216 CLR 53 at [66] per Gummow, Hayne and Heydon JJ; Gleeson CJ and Callinan J agreeing at [3] and see per Kirby J at [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 563 at [18]) …

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.

The Full Court stated at [194]–[195] that:

…If, as a matter of common sense, 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… 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.

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.

(b)    accepted the ACCC’s submission that the purpose is measured by the end or effect that was sought to be achieved by the boycott provision itself; and

(c)    accepted Hutchinson’s submission that such a purpose may be inferred from statements and actions understood in light of common experience, citing Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (No 2) [2008] FCAFC 141; 170 FCR 16 at [329] and Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2018] FCAFC 78; 356 ALR 582 at [470].

121    The primary judge also noted that the purpose of a wider strategy may be relevant in determining the purpose of conduct as part of that strategy, quoting Olex at [494].

122    The primary judge concluded:

[347]    In this case, having regard to the factual findings in these reasons, I find that the effect of the provision of the arrangement or understanding between Hutchinson and the CFMEU was that Hutchinson would cease to acquire waterproofing services from WPI, and would terminate the WPI subcontract, and that this was also their subjective purpose of including that provision. That conclusion is reached based upon my findings as to the nature of the arrangement or understanding between the respondents, the circumstances in which it was made and its likely effect.

[348]    Further, I infer from the factual findings in these reasons, including (in particular) the practices of the respondents in relation to the engagement of subcontractors by Hutchinson which existed prior to the engagement of WPI, that the respondents’ conduct in relation to WPI was part of a wider strategy, the purpose of which was to seek to cause Hutchinson to engage subcontractors which had an EBA on the Southpoint site. That wider strategy, coupled with the fact that WPI was replaced by Spanos (which did have an EBA), reinforces my finding that the end result which was sought to be accomplished by the respondents was that Hutchinson would cease to acquire waterproofing services from WPI, which was a subcontractor which did not have an EBA, and would terminate the WPI subcontract in circumstances where the respondents knew that the subcontract had been entered and termination of that subcontract was the most likely, if not inevitable, result.

[349]    Such a purpose is a proscribed purpose in that it prevented or hindered Hutchinson from continuing to acquire services from WPI within the meaning of s 45E(3)(a) of the Act.

123    The primary judge found that the facts as found established that:

(a)    Hutchinson both:

(i)    made an arrangement or arrived at an understanding with the CFMEU containing a provision to the effect that Hutchinson would no longer acquire waterproofing services from WPI at the Southpoint project and would terminate the WPI subcontract, which provision would prevent or hinder Hutchinson from acquiring or continuing to acquire services from WPI; and

(ii)    by ceasing to acquire waterproofing services from WPI, and further by terminating the WPI subcontract, gave effect to that arrangement or understanding; and

(b)    the CFMEU as a matter of inference knew that the WPI subcontract had been entered into and, by its conduct, it joined with Hutchinson in preventing WPI from entering the site and performing work pursuant to it, with the termination of the WPI subcontract by Hutchinson being the most likely, if not inevitable, culmination of the concurrent conduct engaged in by Hutchinson and the CFMEU, actual knowledge on the part of the CFMEU being the overwhelming inference having regard to all of the circumstances, such that the CFMEU both:

(i)    was knowingly concerned in, or party to the contravention by Hutchinson of ss 45E and 45EA of the CCA constituted by its making an arrangement or arriving at an understanding with the CFMEU; and

(ii)    induced Hutchinson’s contraventions of ss 45E(3) and 45EA of the CCA by threatening or implying that there would be conflict with, or industrial action by, the CFMEU if Hutchinson did not cease using WPI.

APPEAL GROUNDS AND THE ACCC NOTICE OF CONTENTION

124    The Hutchinson and CFMEU notices of appeal and the ACCC notice of contention raise a total of 17 grounds. The structure of Hutchinson’s notice of appeal is to divide its appeal case into two conceptually different approaches, the first taking the primary facts as found and asserting that they were an insufficient basis for the inferential finding that there had been a proscribed arrangement or understanding; and the second challenging the admission of certain evidence and taking issue with key findings of fact and credit, in order to vitiate the conclusions reached by removing part of the primary factual substratum for inferring the existence of the agreement or understanding. The ACCC, in response to the Hutchinson appeal, relies upon a notice of contention in substantially the same terms in each appeal. Those notices of contention are to the effect that the primary judge erred in finding that Mr Meland was not aware of the arrangement or understanding the primary judge found existed.

125    The CFMEU’s notice of appeal challenges the primary judge’s finding that the engagement of WPI was not a breach of cl 35.2 of the 2015 EBA as being a complete answer to the case brought against it, and in the alternative challenging certain aspects of the factual basis for the contraventions being found involving its officers, in substance adopting aspects of Hutchinson’s appeal grounds as to insufficiency of evidence. Separately, and only if no aspect of its liability appeal succeeds so as to preclude a conclusion of contravention, the CFMEU challenges the penalty imposed, both as to taking into account irrelevant considerations and as to manifest excess.

126    Most of the main issues which arise can be grouped by category as follows, noting that some of the issues overlap and that each involves a series of separate arguments:

(a)    Whether the primary judge erred in finding there was an arrangement or understanding between Hutchinson and the CFMEU (Hutchinson grounds 1, 3, 4 and 5; CFMEU grounds 3 and 4).

(b)    Whether it was open for the primary judge to find that the real issue between Hutchinson and the CFMEU was that WPI did not have an EBA with the CFMEU (Hutchinson ground 2; CFMEU ground 1; ACCC notices of contention).

(c)    Whether the primary judge erred in making findings of fact and credit which were inconsistent with or against the weight of the evidence (Hutchinson grounds 6-9; CFMEU ground 2).

(d)    Whether the primary judge’s decision on penalty was infected by error (CFMEU grounds 5-7).

Finding an arrangement or understanding

127    This category of the appeal grounds (explicitly for the Hutchinson appeal and adopted for the CFMEU appeal) can be divided into:

(a)    grounds accepting the correctness of the substratum of facts from which the inference of an agreement or understanding was drawn; and

(b)    grounds challenging some of the substratum facts.

The latter is overtly only relied upon if the former does not succeed.

128    A central issue at the trial, and maintained on appeal, was whether the evidence that the ACCC relied upon was sufficient to support the inference that, on the balance of probabilities, a proscribed arrangement had been arrived at, or a proscribed understanding reached, having regard to the quality of evidence required by s 140(2) of the Evidence Act 1995 (Cth) to reach as serious a conclusion as that. The key issue in dispute concerns the sufficiency of the evidence to establish the necessary state of mind for there to be such an unlawful arrangement or understanding. That state of mind, as referred to in the authorities discussed above, can be generically described as a meeting of the minds. That term embraces other ways in which this concept may be expressed, such as a consensus or a common purpose, or, especially in this case, assent to a course of action as a relevant kind of commitment to that taking place.

129    The first aspect of the appeals by which the factual findings by the primary judge are not challenged does not turn on any evidentiary evaluation for which her Honour enjoyed any advantage. Hutchinson’s primary case, upon which CFMEU also relies, is that the factual findings did not rise any higher than proving parallel conduct. That parallel conduct being demands by the CFMEU that Hutchinson not use WPI, accompanied by threats of industrial action if those demands were not met on the one hand, and Hutchinson deciding not to use WPI, culminating in the termination of the subcontract between Hutchinson and WPI on the other. Hutchinson’s secondary case, again also relied upon by the CFMEU, is that a number of key factual findings should not stand, with the effect that an inference of the existence of an agreement or understanding is not able to be drawn on what is left.

130    The ACCC’s case on appeal, while principally contending that there was sufficient evidence on the facts as found by the primary judge to support the finding of an arrangement or understanding, has two additional limbs:

(a)    seeking an additional factual finding based upon identical notices of contention in the two appeals to the effect that the primary judge erred in concluding that Mr Meland was not aware of the arrangement or understanding so as to be an alternative means of fixing Hutchinson with the necessary state of mind (which does not address the CFMEU’s state of mind and the appellants’ case for that not being able to be established on the evidence); and

(b)    defending the findings that are challenged by the alternative appeal case, if that is reached.

131    At the outset, it is worth recording several important points of common ground.

132    First, it is accepted that the individuals representing or acting on behalf of the two parties as relevant to the existence of the arrangement or understanding found by the primary judge, were four men. On the Hutchinson side, it was senior officers Mr Meland and Mr Berlese; and on the CFMEU side, the union delegate, Mr Clarke, and the union organiser, Mr Steele. On appeal, the ACCC principally relies upon the findings the primary judge made about Mr Berlese on the Hutchinson side in light of the findings made by her Honour about Mr Meland not knowing about the arrangement or understanding. However, as noted above, the ACCC challenges this conclusion by its notices of contention. Importantly, the primary judge did not believe the denials of these four men of there being any arrangement or understanding between Hutchinson and the CFMEU, noting that such a denial is not of itself evidence from which an inference of its existence can be based.

133    Secondly, there was no direct evidence of the proscribed arrangement or understanding alleged by the ACCC. Its existence was denied by all four men. The case for the existence of the arrangement or understanding was at all times circumstantial, which is not of itself unusual for cases involving allegations of illegality. It is uncontroversial to observe that in litigation, a necessary state of mind is frequently sought to be established by circumstantial evidence, including by drawing inferences from what is proven to have been said and done; and that in civil cases, no matter how serious, that must only be the most probable conclusion to reach, albeit by evidence of sufficient quality for the seriousness of what is being alleged. The dispute in this case was and is largely evaluative rather than reflecting any real dispute as to the applicable principles, with some nuanced differences as to how those principles should be applied in all the circumstances.

134    Thirdly, the primary judge found that that the arrangement or understanding had been reached on or about 11 June 2016, being the date from which WPI was excluded from the site and did not return, with the termination of the subcontract between Hutchinson and WPI taking place over six weeks later by a letter signed by Mr Meland dated 26 July 2016 and handed by him to Mr Ray Hadfield at a meeting. This termination was a week or so after the conversation between Mr Meland and Mr Berlese on or about 19 July 2016, during which the two men discussed terminating the subcontract between Hutchinson and WPI, and Mr Berlese told Mr Meland to “deal with it”. The timing of the existence of the arrangement or understanding is not challenged by the ACCC. It is only challenged by the appellants in relation to the existence of the arrangement or understanding, rather than as to the timing of the exclusion by which time the arrangement or understanding was found to have come into existence. That timing is embraced by the appellants so as to limit the last date of conduct from which an inference of an arrangement or understanding could be drawn to the period prior to that date. Of course, later conduct by words or acts may still be relied upon in a more limited way to support an inference that the arrangement or understanding already existed.

135    Fourthly, it is not in doubt that all of the ultimate factual findings upon which the inference of the existence of the arrangement or understanding was drawn, including in particular as to the necessary state of mind element of assent, are contained in the 33 subparagraphs of LJ[340], informed by the earlier paragraphs in which the evidence giving rise to those findings is considered and evaluated. Most of those findings are not challenged. The relatively few that are challenged only arise for consideration if the appeals do not succeed on the facts as found, in conjunction with any positive conclusion reached on the ACCC’s notices of contention contesting the conclusion as to absence of knowledge of the arrangement or understanding on the part of Mr Meland, because of the primary judge’s finding at LJ[340(33)] that Mr Meland was “not himself aware of the arrangement or understanding between Hutchinson and the CFMEU and was attempting to assist WPI to return to the site”.

136    It is clear that the primary judge conducted a careful examination of the evidence. While aspects of this are challenged by the appellants, and an aspect is challenged by the ACCC’s notices of contention, the primary case advanced in each appeal is that even with that analysis left intact, there simply was not enough evidence to enable it to be concluded that the most probable inference to draw was that the arrangement or understanding did exist. In this sense, the core dispute turns on what her Honour made of the evidence, and whether the limits of what could be found by inference based upon that evidence were exceeded.

137    The essence of Hutchinson’s primary argument, directed to its side of the arrangement or understanding as found by the primary judge, was that, on the ACCC’s case, it was only Mr Berlese and/or Mr Meland who were the relevant representatives of the company for the purposes of the contravention alleged. It follows, on that argument, that Hutchinson could not have made its side of any arrangement or reached its side of any understanding via Mr Meland, because the requisite state of mind on his part to constitute a meeting of minds was absent. That left only Mr Berlese, but her Honour made no finding that he was aware of any boycott provision, and no other factual finding that was made was capable of supporting such a conclusion. Nor did her Honour make any finding that Mr Berlese directed Mr Meland to terminate the subcontract with WPI, although some weight was placed on the more ambiguous direction that he gave to Mr Meland to “deal with it”, after Mr Meland spoke to Mr Berlese about terminating that subcontract: LJ[240(33)]. Rather, her Honour found there was no resistance by Mr Berlese to terminating the WPI subcontract, and her Honour inferred, from those words in the context in which they were uttered, that this was what he intended that Mr Meland should do, which was then found by her Honour to be conduct manifesting mutual consent to carry out the common purpose to that effect. Of course, there could not be any giving of effect to the arrangement or understanding unless the finding of its existence was free of vitiating error.

138    Hutchinson similarly argues that, on the CFMEU side, there was no finding that either Mr Steele or Mr Clarke urged Mr Meland to terminate the subcontract by reference to any alleged arrangement or understanding, albeit that this was effectively the conclusion reached by the primary judge at LJ[340], subparagraphs (18) and (24).

139    Hutchinson (and thus also the CFMEU) also rely upon the lack of any finding by the primary judge as to any occasion or opportunity for these four men to have reached the alleged arrangement or understanding on the two sides, with all four having given evidence, and none of them being asked any question on the topic of regarding themselves as being under any duty or like concept, whether moral or legal, to conduct himself in any particular way in relation to WPI.

140    The dominant reason why Hutchinson (and thus also the CFMEU) argue on appeal that there was insufficient evidence to support as the better inference that there had been an arrangement or understanding was the mental element of a meeting of the minds. This was also referred to in the authorities discussed above as a common mind or consensus, involving a commitment to act in a particular way, which required, at a minimum, a proper and sufficient basis for a finding of some express communication taking place between the parties so as to take the conduct beyond merely the parallel of the CFMEU wanting the subcontract with WPI to continue, and Hutchinson unilaterally succumbing to that outcome.

141    Condensed to its essence, the appellants ran a case at trial, and a case on appeal, of at best intractable neutrality on the inferences available to be drawn, upon the basis that an at least equally available sound inference was that of no more than parallel conduct by the demands of the CFMEU accompanied by threats and Hutchinson doing no more than succumbing to that industrial pressure being applied by the CFMEU. That is, it was not enough that an inference of the alleged proscribed arrangement or understanding was among the conclusions that could be drawn, but that it had to be an inference that was stronger than the relevantly benign inference of mere parallel conduct. The balance had to tip in favour of the ACCC’s case.

142    The ACCC stance is starkly different in defending the conclusions reached by the primary judge. It characterises Hutchinson’s case on appeal as being little more than a complaint about insufficient precision as to the formation of the arrangement or understanding as alleged and found to have been established, and describing the primary judge’s fact finding as orthodox. The ACCC’s response to the appeals on this issue of there being a sufficient basis for the inference being drawn by her Honour of the existence of an arrangement or understanding at its core relies upon:

(a)    the legally unremarkable proposition that just as contractual assent may be inferred, so too may the adoption of an arrangement or understanding, pointing to the proximity in time between the CFMEU’s threat to “sit the job down” and the exclusion of WPI from the site, characterising that conduct and the reason for it as being apparent to the CFMEU as confirmed by Mr Clarke’s subsequent statement to Mr Thone that WPI was not allowed back on site because it did not have an EBA;

(b)    the finding that Mr Meland was not aware of the arrangement or understanding, and that this finding did not involve any error in the inferential reasoning process was not fatal, while still relying on the notices of contention challenging this conclusion;

(c)    the challenge to the finding that Mr Clarke’s conduct being able to manifest Hutchinson’s consent to a common purpose because he was a delegate of the union was misplaced because the primary judge relied upon the company’s conduct as being indirect through Mr Clarke, but even if that was erroneous it is inconsequential;

(d)    the submission about the ACCC not asking particular questions of the four men in cross-examination (Mr Meland, Mr Berlese, Mr Clarke and Mr Steele) not being able to assist the appellants because Mr Meland gave evidence of the CFMEU’s threats in relation to the engagement of WPI, the termination of WPI’s subcontract, and the fact that he felt that he had no choice but to terminate that contract, such that putting formulaic questions (implicitly of the Browne v Dunn variety) as suggested by Hutchinson was not necessary; and no adverse inference should be drawn for not putting to them that they agreed with propositions that were contrary to the thrust of their evidence;

(e)    it not being necessary for the ACCC to prove that any party considered themselves under any duty to act in any particular way in order to establish the existence of an arrangement or understanding, with Hutchinson being free to cross-examine on this topic if it wished to do so, given that an arrangement or understanding is, by its very nature, unenforceable and may be withdrawn or departed from;

(f)    the facts found by the primary judge at LJ[340] being sufficient to support the finding of an unlawful arrangement or understanding.

143    Hutchinson contends that knowledge (or an equivalent state of mind) is an essential element of making a proscribed contract, arrangement or understanding under s 45E of the CCA, and the primary judge’s findings did not disclose that requisite knowledge. The thrust of Hutchinson’s argument is that the existence of an arrangement or understanding proscribed by the CCA as alleged by the ACCC is conditional upon a meeting of minds by parties to an arrangement where each is understood as assuming at least a moral duty to conduct themselves in a particular way. These principles apply equally to s 45E, as acknowledged in the primary judge’s reasons at LJ[281] as to consistency of meaning being given to the same concept in different provisions. That is, each party must be subjectively aware of what that person is doing, and must understand that they are reaching an understanding. That is conveyed through the very notion of consensus, which may be manifested by assent. There must be awareness of assuming an obligation, a proposition that holds true across the various proscribed commitments, be it a contract, arrangement or understanding.

144    Put another way, Hutchinson submits that the parties need to know what they are doing for their minds to meet, as made clear by Leahy Petroleum at [29], cited by the primary judge at LJ[331]. While the primary judge found at LJ[339] that a consensus was reached pursuant to which the CFMEU and Hutchinson committed to a particular course of action, a party simply cannot commit to do something without being aware of it being done, and this must be so under s 45E(3) in particular, which is confirmed by the distinctive state of the authorities concerning the subjective purpose of a provision under s 45E(3), such as CEPU v ACCC cited and quoted by the primary judge at LJ[342]. Hutchinson relies upon CEPU v ACCC, and refers particularly to [182], reproduced above at [120].

145    Hutchinson submits that s 45E(3) requires each party to the contract, arrangement or understanding to have had the subjective purpose which the section prescribes. That can be distinguished from the position under s 45, where it may suffice, under the current state of authorities following Sackville J’s decision in Seven Network Ltd v News Ltd [2007] FCA 1489; 244 ALR 374, for only one party to include the provision for a prescribed purpose. However, Hutchinson points out that matters are different under s 45E(3). One cannot have that relevant subjective purpose if one is unaware of the arrangement or understanding, and the extract from CEPU v ACCC at [182] reproduced at LJ[342] confirms that the other party must appreciate the end that will be achieved by doing so. A critical consequence of this contention is that it is not possible to infer from objective evidence that a person reached an understanding while also finding that the person was not aware of that fact, and hence, was not aware of the content of that provision.

146    Hutchinson cites R v Associated Northern Collieries (1911) 14 CLR 387 at 400, reproduced at LJ[320] as quoted in Norcast S.ár.L v Bradken Ltd (No 2) [2013] FCA 235; 219 FCR 14 at [263(4)]: see [104] above. Hutchinson submits that this extract from Associated Northern Collieries speaks of objective acts being a manifestation of mutual consent to carry out a common purpose, and that all of the notions described by Isaacs J predicate a subjective awareness of what is being undertaken. Hutchinson submits in reply that the correctness of this position can be seen in contrast with other distinguishable propositions:

(a)    First, it can be distinguished from the authorities that the ACCC cites in its written submissions, such as that of the Full Court in CEPU v ACCC, which is to the effect that conduct which s 45E captures often involves a person succumbing to an abuse of power and including a prescribed provision in an arrangement or understanding. That legal proposition is correct, but the circumstances it describes are predicated on the person whose will is overborne knowing that he or she is including a proscribed provision in an arrangement or understanding.

(b)    Secondly, it can be distinguished from the proposition that arrangements or understandings may be tacit or implicit, a notion relied upon by the ACCC in its written submissions. An understanding can be tacit, and it may arise without communication, but only so long as there is a meeting of the minds.

(c)    Thirdly, it can be distinguished from the requisite legal standard for giving effect to an arrangement or understanding under s 45 of the CCA: see Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 262 FCR 243 at [77], where the Full Court found that “knowledge is not an essential element of the legal standard of ‘give effect to’ for the purposes of section 45(2)(b)”. Hutchinson submits that, stepping back from the analysis in Yazaki, it is clear that one corporate or individual person could make a contract and later direct another person, corporate or individual, who does not know about the making of that contract, to carry it out in accordance with or pursuant to its provisions and that such a person would give to effect to it within the meaning of s 45(2)(b). But that is not so with respect to making an arrangement or reaching an understanding in the first place. That, Hutchinson submits, basally requires minds to be mutually directed at a common object and, hence, to be aware of it.

147    The thrust of Hutchinson’s submission above must be accepted. It is not in doubt that knowledge or awareness, or an equivalent state of mind, on the part of a party making an arrangement or understanding is an essential element, and for a corporation that must come via a natural person having that state of mind on its behalf. The issue is whether, on the facts as found, an arrangement or understanding was capable of being found to exist on the available evidence.

148    The ACCC argue that there is no meaningful legal issue about “arrangement or understanding”; and that the fundamental factual question for the primary judge was why the contract with WPI was terminated. Because Hutchinson succumbed to threats from CFMEU, the ACCC submits, it follows that it can be inferred that there is an arrangement or understanding. The ACCC further submits that Hutchinson did not make a unilateral decision to terminate following the threat but rather there was still an arrangement or understanding because it acted under compulsion. Once Hutchinson succumbs to pressure, and assents to what is proposed by the CFMEU, there is an understanding between the two of them. That is, the CFMEU understands why it is that Hutchinson is doing this thing, and they understand what it is that the CFMEU wants Hutchinson to do. The ACCC assert that at this point it is an arrangement or understanding in taking a step for a particular reason, and there is a meeting of minds that this reason is why the step will occur. Then the step occurs. That is the arrangement or understanding.

149    In response to the proposition that more is needed than just “succumbing” to a demand in order to form a meeting of the minds, the ACCC contends that the meeting of the minds is a way of saying that there is an arrangement or understanding. The ACCC’s argument is that there is a spectrum of consensual dealings, with the most formal being a contract and the most informal being an understanding. The latter can be arrived at tacitly, and without any direct communication. On this argument, if the CFMEU says, “terminate or we engage in industrial action”, and Hutchinson terminates, at the point that they do so, they are doing it because that is the thing that they have been asked to do by the CFMEU for a specific reason, and they have come to an understanding about what their conduct is to be. Regarding when the understanding is formed, the ACCC argue that it happens either when there is a verbal consensus (i.e. Hutchinson say “okay we’ll do that”) or at the point when the conduct gives effect to the understanding. The ACCC submits that there is mutuality in this case, because the mutuality is the CFMEU putting forward a proposition, which is to not engage in industrial action if the termination occurs, with the flipside being that the CFMEU will engage in industrial action if the termination does not occur. In that sense, even if it were necessary to have mutuality for there to be an arrangement or an understanding, there is mutuality in this case, and that is why it is the same as the situation where one supplier says to another supplier, “If you do this, then I will do that”.

150    During the course of argument on the appeal, the ACCC cited CEPU v ACCC at [194], reproduced above at [120], with an emphasis on the last sentence: “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”. In response to a proposition put by the Court to the effect that if someone does not know of the existence of an arrangement or understanding, they cannot be a person who brought that understanding into existence, the ACCC sought to distinguish between the act that might indicate the existence of the arrangement or understanding, and whether or not the arrangement or understanding exists. The ACCC’s case as alleged in the concise statement was that there was an arrangement or understanding between Hutchinson and the CFMEU, not one based upon the particular state of knowledge of an individual working at either Hutchinson or the CFMEU, and in that way, it is modelled on the five ways in which this Court in CEPU v ACCC went about finding or making its findings about an arrangement or understanding. The ACCC submits that it can succeed in three different ways:

(a)    First, based on CEPU v ACCC at [146], by a reasoning process of inferring circumstantially that there is an arrangement or understanding between two organisations, and not premised on identifying the specific people within either of those organisations who had the relevant minds that met;

(b)    Secondly, specifically by reference to Mr Berlese, who had the necessary state of mind on behalf of Hutchinson, because the primary judge found that Mr Berlese knew about the threats, and directed termination by Mr Meland by saying “deal with it” (it should be noted that this submission was necessarily confined to the “giving effect” aspect of the ACCC’s case, because this was said by Mr Berlese on or about 19 July 2016, some five weeks after the arrangement or understanding was found to have been brought into existence by 11 June 2016, following which WPI was excluded from the site);

(c)    Thirdly, by success on the notice of contention, allowing for reliance upon Mr Meland’s knowledge of the arrangement or understanding, contrary to the finding by the primary judge that he did not know.

151    The ACCC distinguished Wigney J’s observations in Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 4) [2017] FCA 1450; 353 ALR 460 at [430]-[431], to the effect that the ACCC’s case then was specifically that there was an arrangement or understanding arising from the intention of particular people, because its case in this matter was simply that the arrangement or understanding was one that arose by virtue of the threat being made by the CFMEU to engage in industrial action unless there was termination of the WPI subcontract.

152    The immediate problem with the ACCC’s argument is that even if the CFMEU expected that Hutchinson would ultimately succumb and give in, that was simply an expectation, not a meeting of the minds between the two organisations. That is, even when the act or omission sought to be achieved, being the subject matter of the putative arrangement or understanding, is arrived at by a unilateral demand and the party to whom it is directed succumbs, that capitulation can be with or without the indispensable meeting of the minds by the communication of assent. If either is equally likely, no arrangement or understanding is established.

153    The ACCC cite BlueScope Steel at [102(c), (e), (f)], [105], [107], [108] and [145]‐[148], emphasising [146], and arguing that typically where there is an issue of whether an expectation arises, it is in cases where there is parallel pricing. The question is then whether there is an attempt to induce an arrangement or understanding, or is it just providing information and expecting that they will act on information, but not thinking that the parties will do something on the basis of consensus. In this case, if the CFMEU had just made a threat, and never asked about it again, and then Hutchinson later decided to stop using WPI, the ACCC could have real issues about whether there was an understanding. However, the ACCC contends that the expectation arises from consensus reached by the parties, the consensus being that if Hutchinson cease engaging WPI, CFMEU will not engage in industrial disputation; and if Hutchinson keeps using WPI, CFMEU will engage in disputation. This is said to amount to a consensus that Hutchinson will terminate because of the threat. The substance of this argument is that there has to be an inference drawn from conduct that there was a consensus that Hutchinson would act in that way, a proposition put to senior counsel for the ACCC, who agreed. On this argument, once it was apparent to CFMEU that Hutchinson would act in accordance with its threat, there was a consensus arising from communications that passed between them.

154    In reply, Hutchinson notes that the ACCC had accepted in argument that to have an understanding, what is necessary is that the parties each understand or reach a consensus that conduct will occur as a result of the consensus that they have reached; and developing this reasoning further, submit that the person who makes a contract (and thus makes an arrangement or reaches an understanding) needs to know they are doing so or they cannot make it (or arrive at it), and if they do not make it, they cannot give effect to it.

155    Hutchinson also agrees with the statement by the ACCC in argument that the fundamental factual question for the primary judge was why the subcontract with WPI was terminated, but say that the answer to that question must be that the conduct was pursuant to, or in fulfilment of, an arrangement or understanding, or else s 45E(3) is not engaged. Hutchinson contend that the burden of the ACCC’s submissions was either in truth to deny the need for an understanding, or to assume its existence in this case. The ACCC had argued that if it is the case that the CFMEU were to say explicitly to Hutchinson, “terminate this contract or we will engage in industrial action”, at the point in time at which Hutchinson terminates the contract, they are only doing so because that is the thing that they have been asked to do by the CFMEU for a specific reason, and they have come to an understanding about what their conduct is to be. Hutchinson contests the soundness of that reasoning by pointing out that a person can do something that someone demands for reasons wholly unrelated to that demand. The bare fact of a demand having been made, and action occurring that is consistent with the demand, is not enough to support an inference that the demand is the most likely reason that the person has acted in that way. Their actions could be the product of many things, such as being accidental, coincidental, unilateral, or something else. Similarly, the CFMEU may expect someone to do something, but that is not enough. Hutchinson submits that the law is clear that to engage s 45E, there must at least be an understanding. That understanding does not need to “map perfectly onto the statutory language”, but the persons making it must know that there is an understanding which in fact has a provision which has a character of being proscribed.

156    Hutchinson submits that the ACCC assumed the existence of an understanding and asserted that it had come to an understanding with the CFMEU about what its conduct was to be. But it was necessary to ask how, when and through whom. Corporate persons act through individual persons who have minds. These things can be identified, and they should be when penalty provisions are involved.

157    Hutchinson submits that, contrary to the substance of the ACCC’s argument, a unilateral act flowing from a threat is not, without more, an arrangement or understanding and cannot contravene s 45E; and that CEPU v ACCC does not stand for that proposition, and the submission to that effect is characterised by Hutchinson as both wrong and revealing. In that case, the CEPU made a demand. Meetings were then held within Edison (the energy company) to discuss whether to accede to that demand. The primary judge in CEPU v ACCC found that the discussion was to the effect that Edison would agree with the CEPU’s demand that it would only engage electrical contractors. There was then a written communication by which Edison agreed to comply with that demand, and they wrote “we agree to the following position … Please indicate your acceptance of this position on behalf of the CEPU.” The parties then entered into a memorandum of understanding (MOU). The trial judge in CEPU v ACCC (at [8]) found that the MOU gave effect to the arrangement previously reached in writing; and the Full Court records that Edison told DGN, a company that had long worked for them, that it would not be allowed to continue. Having regard to all of the facts, the precise date of the alleged arrangement there was known, unlike in this case.

158    Hutchinson submits that, following the reasoning in CEPU v ACCC at [141], there is a need to establish the existence of the arrangement or understanding, before turning to the nature and extent of participation (that is, giving effect). And following [194] in CEPU v ACCC, reproduced above at [120], succumbing to a threat is not enough; succumbing to such pressure in a manner which involves inclusion of a provision in an arrangement is what was required in this case to engage s 45E(3). That is, following [195], also reproduced above at [120], the necessary hinge is a provision in an understanding, which must exist.

159    Hutchinson submits that this Court should find that the termination of the WPI contract was not proven to be the outcome of any bilateral understanding between the CFMEU and Hutchinson. Rather, it was a result of a unilateral misunderstanding on the part of Mr Meland that WPI needed an EBA, and a result of his inability to resolve difficulties arising from WPI’s non-payment of entitlements. Hutchinson submits that the ACCC’s case that the CFMEU unconditionally knew that WPI would not come back onsite, if accepted, does not assist, but instead tells against the existence of any arrangement or understanding. As Hutchinson put it, the utility of an arrangement or understanding of the kind alleged in circumstances where the CFMEU and Hutchinson already knew that WPI would not return to the site would be greatly reduced, if not non-existent. Hutchinson submits that the CFMEU in saying WPI are not coming back on site is asserting a conclusion as to what should happen, not seeking an assurance. Hutchinson therefore submits that the evidence establishes no more than that the CFMEU made a threat and, in due course, Hutchinson terminated the WPI’s subcontract in light of an expectation of industrial disputes. There was no established meeting of the minds in Hutchinson acting in light of the threat, even if the CFMEU expected this would occur.

160    Hutchinson relies upon BlueScope Steel at [146]‐[147], reproduced at [110] above, which states that conduct must be engaged in to give rise to an inference of assent, submitting that in this case there are no dealings from which assent or assurance can be concluded, contrary to the conclusion reached by the primary judge. Mr Berlese spoke to Mr Steele once, and never spoke to anyone from the CFMEU again. Thus, Hutchinson submits, he cannot have given assent through words or conduct. Mr Meland never communicated assent to anyone at the CFMEU.

161    Hutchinson takes issue with the primary judge at LJ[340(24)] referring to Mr Steele saying to Mr Meland “WPI won’t be doing your waterproofing”, and to other things that Mr Steele could have said but did not, such as tying this outcome to the non-payment of entitlements or to WPI’s failure to register with industry superannuation funds, with her Honour treating this as a strong indication that there was already an arrangement or understanding. Hutchinson characterises this as no more than a statement of fact on the part of Mr Steele (perhaps better described as a statement of the demanded outcome), and not constituting seeking an assurance. Hutchinson submits that there is no other evidence identified by the primary judge capable of supporting any inference of any assurance or assent being given. Hutchinson submits that this is why the ACCC endeavoured to claim that the arrangement or understanding and its execution occurred at the same time. It should be noted that this is not what her Honour found had taken place, instead finding a five-week gap between the arrangement or understanding being reached and it being given effect to (the five weeks being measured up to the time between the “deal with it” direction Mr Berlese gave to Mr Meland on or about 19 July 2016 and the termination of the WPI subcontract on 26 July 2016).

162    The ACCC submits that Hutchinson says “mutuality” is not required for an arrangement or understanding, but Hutchinson submits that is not the point it makes. Hutchinson argues that there need not be mutuality in the sense of reciprocity of obligation. That is, there need not be a quid pro quo, although, as Perram J observed in Australian Competition and Consumer Commission v Air New Zealand Ltd [2014] FCA 1157; 319 ALR 388 at [463(2)], it is difficult to imagine such a case in practice (his Honour citing observations to that effect by Lockhart J in Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230–1). However, Hutchinson submits, there is a different question as to whether an arrangement requires mutuality in the sense of a meeting of minds, or two minds directed at the same topic, with the authorities being unequivocal that this is necessary.

163    Hutchinson refers to the cross-examination of Mr Meland and the fact that he was not re‐examined about any other discussions he may have had with Mr Berlese. Indeed, Mr Meland gave evidence about difficulty of getting in contact with Mr Berlese. Hutchinson noted the following important facts about the state of the evidence that was before the primary judge:

(a)    there was no express undertaking given by anyone by word or deed;

(b)    the existence of an express undertaking was not put to any witness, and hence there was no finding that any individual knew they were making an arrangement or reaching an understanding;

(c)    no assurances were tacitly or explicitly given by Hutchinson to the CFMEU;

(d)    there is nothing that can be construed as the giving of assent by the CFMEU as to what Hutchinson proposed to do;

(e)    instead, Mr Meland acted contrary to the alleged boycott provision (that is, the arrangement or understanding found to exist by 11 June 2016 for more than a month by trying to get WPI a CFMEU EBA);

(f)    the CFMEU never followed up with Mr Meland to see if he had terminated WPI;

(g)    Mr Berlese did not chase up Mr Meland to see if he had terminated WPI; and

(h)    Mr Meland did not confirm to Mr Berlese that he had terminated WPI, and instead irregularly signed the termination letter himself.

164    By way of additional argument on top of adopting Hutchinson’s submissions, the CFMEU notes that the ACCC had accepted that a threat and acquiescence is not enough to establish an arrangement and understanding, effectively adopting Hutchinson’s argument that the evidence established that no more than this was shown to have taken place. The CFMEU rely upon the reasoning and outcome in Keith Russell Simplicity Funerals Pty Ltd v Cremation Society of Australia (ACT) Ltd (1982) 40 ALR 125, an early secondary boycott injunction application case, in which Franki J said in refusing the injunctive relief:

(a)    at 127–8:

The president of the union advised the manager of the applicant that the union had placed a ban on the applicant preventing it from using crematoria which he said was due to a breach of a union rule arising out of the use of non-union labour in removing a body from a nursing home.

(b)    at 128:

It was argued for the respondents that all they had done was to make a commercial decision, not by way of making an arrangement or arriving at an understanding but by accepting the consequences they regarded as inevitable … At all times, the fourth and fifth respondents wished to continue to supply services to the applicant but, because of the ban, this became commercially impossible.

(c)    at 129:

In my opinion, the respondents have simply responded in a commercial way to a union ban, and I do not consider that there is evidence of either the fourth or fifth respondent having made an arrangement or arrived at an understanding which contained a provision which was included for a prohibited purpose.

165    The CFMEU, supporting Hutchinson, submits that this is an acute example of the result for which it contends, and that this should be read together with CEPU v ACCC, which Hutchinson took the Court to in detail in reply as summarised above at [157]-[158] in demonstrating the distinction with the facts and circumstances that are presented here. That case involved a finding on the evidence that the CEPU was aware that Edison was agreeing to their demands. That is not what happened in this case.

166    CFMEU also submits that it was not proven that it had the requisite knowledge or state of mind in this matter. The ACCC relied upon the following evidence from Mr Steele to demonstrate his knowledge and, consequently, the knowledge of the union:

You would have found out and been made aware of or directly inquired yourself as to whether or not WPI was staying on the site?---Yes, eventually.

167    But the CFMEU submits that it was not clear whether Mr Steele was answering the question as to whether he had found out, or whether he had been made aware, or whether he had directly inquired himself. The answer was not only “Yes”, but, “Yes, eventually”, with nothing to indicate whether that was in terms of days, weeks, months or even later. That statement does not demonstrate any knowledge of why WPI were not onsite or that Hutchinson had acceded to their demand.

168    The CFMEU also point out that the ACCC relied upon the evidence in cross-examination of Mr Clarke, where he said “There is plenty of ways to know who has been there and who has not”, to say Mr Clarke understood that WPI were not there. This suffers from the same vice. It is not evidence that he knew why WPI was not there or evidence that he knew that Hutchinson had acceded to the demand alleged of the union.

169    The CFMEU outline the following chronology:

(a)    on 11 June 2016, Mr Clarke made the threat to sit the job down if WPI came on site;

(b)    Mr Steele said to Mr Meland on some unspecified date: “Ray is a dog, he won’t be doing your waterproofing. Why don’t you use someone else like Spanos?”;

(c)    after 21 June 2016, well after the primary judge found the arrangement or understanding came into existence, Mr Clarke spoke to Mr Thone;

(d)    on 26 July 2016, the WPI subcontract was terminated without reference to the CFMEU, with there being no evidence that the CFMEU was told at all.

170    On the concession that threat and acquiescence is not enough, the CFMEU submit that this chronology is fatal, and the evidence establishes no more than threat and acquiescence.

Consideration

171    The requirement to prove a state of mind as part of a meeting of minds is a concept that stretches back to the notion of an unlawful combination, discussed by Isaacs J as the trial judge in the High Court in Associated Northern Collieries at 400. His Honour referred to a need for proof of a community of purpose, including by inferring pre-concert, mutual contemporaneous engagement, or manifestations of mutual consent. That has formed part of competition law ever since and is not new or novel. But proof of state of mind in any context can be very difficult in the absence of a documentary record, insider evidence of a particular calibre, and/or surveillance evidence of some kind. It is most commonly achieved by circumstantial evidence leading to an inference being drawn on a proven substratum of facts. But while there is no need to meet the criminal law requirement of excluding all reasonable explanations consistent with innocence, there is no avoiding the need for the inferred conclusion being the most probable. Intractable neutrality will not suffice, as the authority discussed in some detail above makes clear. The focus on the importance of crossing this critical threshold is highlighted by the further authority discussed below at [173].

172    As already outlined above, the dispute of most significance in these appeals is whether the factual findings made by the primary judge were sufficient to support the inference that her Honour drew that what had taken place went beyond Hutchinson succumbing to threats made by the CFMEU, engendering no more than an expectation that the subcontract with WPI would be terminated, and as a result its services not being used. Only that much would not constitute the necessary meeting of minds for the making or an arrangement or reaching an understanding that this would take place, and potentially as a separate result, its subsequent implementation.