FEDERAL COURT OF AUSTRALIA

PG & LJ Smith Plant Hire Pty Ltd v Lanskey Constructions Pty Ltd

[2004] FCA 1618

INDUSTRIAL LAW – Freedom of association – Alleged termination of contract with independent contractor, or prejudicial alteration of position of independent contractor, for a prohibited reason – Alleged prohibited reason that independent contractor is not, or does not propose to become, a union member – Whether that reason is established in fact – Application of that reason to corporate independent contractor – Alleged discriminatory conduct in relation to eligible person – Whether there was such conduct – Application of that provision to corporate independent contractor.

TRADE PRACTICES – Alleged arrangement or understanding to prevent acquisition of services – Whether there was such an arrangement or understanding.

Workplace Relations Act 1996 (Cth) ss 298K(2), 298L(1)(b), 298S(2)

Trade Practices Act 1974 (Cth) s 45E

P G & L J SMITH PLANT HIRE PTY LTD, PETER GLANVILLE SMITH, NIGEL HADGKISS v LANSKEY CONSTRUCTIONS PTY LTD, CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION, PETER PRIMMER, MICHAEL LANE

NSD 330 of 2004

WILCOX J

17 DECEMBER 2004

SYDNEY

THE COURT ORDERS THAT:

1.         The proceeding be dismissed.

2.         The costs of the proceeding be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

WILCOX J:

1                     The main question in this proceeding is whether any of the respondents have contravened s 298K(2) or s 298S(2) of the Workplace Relations Act 1996 (Cth) (‘the WRA’) or s 45E of the Trade Practices Act 1974 (Cth) (‘the TPA’).

2                     The applicants are P G & L J Smith Plant Hire Pty Ltd (‘Smith P/L’), Peter Glanville Smith, a director of Smith P/L, and Nigel Hadgkiss, a delegate of the Employment Advocate under s 83BE(1) of the WRA.

3                     The respondents are Lanskey Constructions Pty Ltd (‘Lanskey’), the Construction, Forestry, Mining and Energy Union (‘the CFMEU’), Peter Primmer and Michael Lane.  At material times, Mr Primmer and Mr Lane were members and employees of the CFMEU.  They may also have been CFMEU officers but nothing turns on whether or not they were.

4                     There is a subsidiary question whether Lanskey repudiated a contract made by it with Smith P/L.

The legislative background

(i)         The WRA

5                     Section 298K(2) of the WRA provides that a person must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following things:

‘(a)      terminate a contract for services that he or she has entered into with an independent contractor;

(b)               injure the independent contractor in relation to the terms and conditions of the contract for services;

(c)               alter the position of the independent contractor to the independent contractor’s prejudice;

(d)               refuse to engage another person as an independent contractor;

(e)               discriminate against another person in the terms or conditions on which the person offers to engage the other person as an independent contractor.’

6                     Conduct is for a prohibited reason if it is carried out, amongst other reasons, because the independent contractor ‘is not, or does not propose to become, a member of an industrial association’: s 298L(1)(b).

7                     Section 298L(1)(b) is contained in Part XA of the WRA.  Section 298B(1) defines the term ‘industrial association’, in Part XA, to include the following entities or a branch thereof:

‘(a)      an association of employees … that is registered or recognised as such an association (however described) under an industrial law; or

(b)              an association of employees … a principal purpose of which is the protection and promotion of their interests in matters concerning their employment’.

It is common ground that the CFMEU falls within this definition.

8                     Section 298S(2) is concerned with discriminatory action against an ‘eligible person’.  That term is defined in s 298S(1) to mean a person who is not an employee but who is eligible to join an industrial association, or would be eligible to join an industrial association if he or she were an employee.  The term ‘discriminatory action’, in relation to an eligible employee, is defined in s 298S(1) as meaning:

‘(a)      a refusal to make use of, or to agree to make use of, services offered by the eligible person; or

(b)              a refusal to supply, or to agree to supply, goods or services to the eligible person.’

9                     Section 298S(2) is also contained in Part XA of the WRA.  Accordingly, for the purpose of the claims under both s 298K(2) and s 298S(2), the term ‘independent contractor’ is not confined to a natural person: see s 4(1A) of the WRA.  The term extends to a corporation.

(ii)        The TPA

10                  Section 45E of the TPA covers both a ‘supply situation’ and an ‘acquisition situation’, as those terms are defined in subs (1) of that section.  An ‘acquisition situation’ is one in which:

‘a person (the “first person”) has been accustomed, or is under an obligation, to acquire goods or services from another person (the “second person”).’  (Original highlighting)

One or both of the persons must be a corporation.

11                  Subsection (3) of s 45E is as follows:

‘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.’

12                  Subsection (4) provides an exception to subs (3), but the exception is inapplicable to this case.

The facts

(i)         The conversation evidence

13                  Some of the facts underlying this proceeding are clear; they are either common ground or demonstrated by documents the authenticity of which are not in question.  Other ‘facts’ depend on the Court’s acceptance of a particular version of contested evidence about conversations.  This is not an unusual situation.  However, the degree of dispute about conversations in this case is greater than in most cases.  Moreover, in respect of most conversations, there is little or no extrinsic material that enables me confidently to determine whose version is likely to be least incorrect.  I put the matter in that way because I am sceptical about the ability of any of the witnesses to recall the detail of any of their unrecorded conversations.  For those reasons, I propose to limit my findings about the content of conversations to those that are essential to resolution of the case.

(ii)        Background

14                  Lanskey carries on business as a builder.  It was apparently retained as the head contractor for a project (‘the Northgate project’) to erect a number of residential flat buildings on a site at Fairy Meadow, north of Wollongong, New South Wales (‘the site’).  Construction work started in about October 2002.  In November 2002, Philip Neil Mackerras became site foreman.  Shortly afterwards, David Rowland was appointed as site manager.

15                  Mr Smith, through Smith P/L, carries out excavation work on building sites.  In December 2002, Mr Rowland terminated the engagement of the original excavation subcontractor for the Northgate project.  A replacement was needed.

16                  Mr Mackerras had worked with Mr Smith on an earlier project.  With Mr Rowland’s approval, he contacted Mr Smith and arranged for him to commence work at the site on 4 January 2003.

17                  The evidence establishes that an excavation subcontractor on a building site is normally expected to produce to the head contractor what the witnesses called ‘the paperwork’.  This constitutes certificates of registration; evidence of insurance of vehicles; an occupational health and safety ‘green card’; a certificate as to the operator’s competence to operate the particular excavation equipment; evidence of superannuation payments; and a certificate of currency for public liability and workers compensation insurance policies.  Ordinarily, these documents are produced to the head contractor before or at the subcontractor’s commencement of work.

18                  Mr Smith commenced work at the site on 4 January 2003, but he did not produce the paperwork to any Lanskey representative.  There is confusion in the evidence about the details, but it seems there were several conversations between Mr Mackerras and Mr Smith, on that day and on later days, during which Mr Smith promised to bring in his paperwork.  It is not clear what paperwork, if any, Mr Smith brought in before an incident that occurred on 22 January 2003.  If Mr Smith produced some documents, they apparently did not include his green card or evidence of a current workers compensation insurance policy.

19                  It is common ground that, on 22 January 2003, Mr Primmer and Mr Lane visited the site.  They did so in their capacity as CFMEU officers or employees.  It is also common ground that, during the visit, Mr Primmer expressed concern about the condition of a sling that Mr Smith was using to lift a steel reinforcing cage.  Mr Smith was being assisted by a Lanskey labourer, Matthew Reynolds, who had previously been nominated by the union as its site representative.  The sling was owned by Mr Smith.  Mr Primmer formed the opinion that it was in an unsafe condition.  He remonstrated with Mr Smith and/or Mr Reynolds about its use. 

20                  There is a three-way dispute between Mr Primmer, Mr Smith and Mr Reynolds as to what Mr Primmer said that day.  The dispute extends to the question whether he expressed his concern directly to Mr Smith or only to Mr Reynolds.  It is not necessary for me to resolve that dispute.  It is enough to say that both Mr Smith and Mr Reynolds became aware of Mr Primmer’s view about the sling.  He expressed that view in a forceful manner.  Whether or not Mr Primmer’s view was justified (a matter I need not determine), the incident must have coloured the subsequent relationship between Mr Primmer and Mr Smith.

21                  Mr Mackerras was not involved in the altercation about the sling, but he quickly became aware of it.  The altercation, and perhaps some inquiries made of him that day by Mr Primmer, reminded Mr Mackerras about the outstanding paperwork.  Mr Mackerras spoke to Mr Rowland about that matter.  According to Mr Rowland, he then had a conversation with Mr Smith in which he asked him to get rid of the sling and to fix up his paperwork.  Mr Rowland also became aware of uncertainty as to the contractual arrangements operating between Lanskey and Smith P/L.  Mr Rowland and Mr Smith agreed what hourly rates should apply and Mr Rowland caused the issue of a purchase order, dated that day, recording those rates.

22                  Mr Smith had once been a member of the Federated Engine Drivers and Firemens’ Association of Australasia (‘FEDFA’), one of the unions that amalgamated to form the CFMEU.  Mr Smith never formally resigned his membership of FEDFA but he ceased to pay dues to, or to regard himself as a member of, that union.  He had never regarded himself as a member of the CFMEU.  He did not wish to join the CFMEU.

23                  Mr Reynolds gave evidence in this case on behalf of the applicants.  He claimed that, on 22 January 2003, he heard Mr Primmer say to Mr Rowland words to the following effect:

‘This bloke Smith is no good, he is not going to toe the line, not be unionised, and his insurances are not accurate.  All of his paperwork is not right.  I can find you any number of other bob cat operators right now that are all legit and hunky dory, right now to get shot of this bloke.  I can replace him like that, basically.’

24                  I think Mr Reynolds gave his evidence honestly, in the sense that he did not attempt to mislead the Court.  However, in his case, I am particularly sceptical about his ability accurately to recall the January 2003 conversations.  Mr Reynolds said in evidence he had become ill shortly after that date.  He admitted to having memory problems, at least in relation to dates.

25                  Mr Rowland agreed that Mr Primmer spoke to him on 22 January 2003 about Mr Smith.  However, on his version, Mr Primmer only complained, although in strong terms, about the condition of the sling.  He had no recollection of Mr Primmer saying that Mr Smith was not going to be unionised.

26                  It is common ground that, on this same day, Mr Smith and Mr Reynolds had a conversation concerning union membership.  This conversation almost certainly arose out of something said by Mr Primmer to Mr Reynolds on that subject.  There is dispute about what was said between Mr Smith and Mr Reynolds.

27                  Mr Reynolds gave evidence that Mr Primmer said to him, on 22 January 2003, ‘[t]here is an issue with Smith’s documents, specifically the insurances.  Get him signed up, get him all sorted out and we will forget about it’.  He said that, later that day, he spoke to Mr Smith about union membership but Mr Smith said he did not want to join the CFMEU; however, for the sake of harmony, he would make a donation to a charity or cause supported by the CFMEU.  Mr Reynolds said he subsequently conveyed that offer to Mr Lane but heard nothing back from him.

28                  Mr Smith agrees that Mr Reynolds spoke to him about joining the CFMEU, that he indicated he did not wish to do this and that he offered a donation to a cause championed by the CFMEU.  However, he attributes to Mr Reynolds a more forthright approach, which involved Mr Reynolds saying to him:

‘You know, this is a union site, it’s a case of no ticket no start, or you will not be able to continue to work on the site’.

They have told me to join you up into the union over the next week, before the next visit, or they will get rid of you and make it hard for Lanskey, put pressure on them about it.’

29                  There is no material that assists me in determining which of the witnesses’ versions of the contested parts of this conversation is to be preferred.  It is not necessary for me to do so.  It is clear that Mr Reynolds invited Mr Smith to join the CFMEU and that he declined.  It would have been obvious to Mr Smith that the invitation was stimulated by the visit to the site that day by Mr Primmer and Mr Lane.  Whether or not the invitation took the form of a demand, it would have been obvious to Mr Smith that refusal might affect his relationship with the two CFMEU officials and possibly cause them to put pressure on Lanskey in relation to himself.

30                  Whatever he understood about the CFMEU position, Mr Smith took no action to join CFMEU.  Nor did he immediately produce his outstanding paperwork. 

31                  For reasons not explained by the evidence, Mr Smith did not work at the site on 23 or 24 January 2003.  He loaded driven pile off-cuts on Saturday, 25 January 2003.  Monday, 27 January 2003 was, no doubt, the Australia Day holiday.  Mr Smith returned to the site on Tuesday, 28 January 2003, when he worked a full eight-hour day.

(iii)       The events of 28-30 January 2003

32                  During 28 January 2003, there was a further conversation concerning Mr Smith’s paperwork.  Once again, there is dispute about its terms.  However, it is clear that Mr Rowland complained about Mr Smith’s failure to provide a certificate of currency for his workers compensation insurance policy and that Mr Smith said he would ring QBE Insurance (‘QBE’) in Wollongong and request that a certificate be faxed to the site.

33                  Mr Smith did ring QBE.  He was told he would need to complete a request form.  A form was faxed to him.  He completed it, inserting a zero in two places: the section of the form that required an updated wages estimate and the section that required disclosure of the number of employees.  He faxed the request form back to QBE.

34                  Mr Smith telephoned QBE on the following morning, 29 January 2003.  He had a conversation with a female employee of QBE who said he had incorrectly filled out the request form, because of the zeros.  Mr Smith asked what he was supposed to do, as he did not have any employees or pay any wages.  The female employee replied:

‘What we suggest to people now is that they write a nominal amount like $100 where it says wages, and “one” where it says employees.  I will send you another request form.’

35                  Shortly afterwards, another request form arrived from QBE.  Mr Smith completed it in the manner instructed and faxed it back.  Later that day, QBE faxed a certificate of currency to the site office.  As its terms are important to this case, I will set out the document in full:

‘PG & LJ SMITH PLANT HIRE P/L

“HILLVIEW” MARSHALL MOUNT,

DAPTO  NSW  2530

CERTIFICATE OF CURRENCY

The following policy of insurance covers the full amount of the employer’s liability under the Workers Compensation Act 1987.

This Certificate is valid from the Date of Issue to 29/05/03.  (Maximum period to be no more than 4 months from date of issue of certificate).

Policy Number:  GF 0016307GWC

Insured:  PG & LJ SMITH PLANT HIRE P/L

Industry(s) Covered:  EARTHMOVING PLANT HIRE WITH OPERATOR.

Tariff:  421020.

Average number of employees (including employees “deemed” to be workers) covered for current 12 month period:  1

Total wage estimated for current 12 month period:  $100.

Please note:

1.    Principals relying on this certificate should check and satisfy themselves that the above information is correct and ensure that proper workers compensation insurance is in place e.g. Compare the number of employees on site to the average number of employees estimated as above.

2.    This certificate is valid subject to all the information provided above being correct.  If the Information is not correct or complete, the insurance cover may be invalidated.

3.    The certificate covers the above number of employees and the industry noted above.  Employees other than these may not be covered by this workers compensation policy.

4.    Schedule 1 of the Workers Compensation Act 1987 defines certain individuals as being “deemed” workers.  Principals and employers should ensure that where “deemed” workers are engaged the full amount of the contract payments are included in the total estimated wages.  The Act extends the definition of workers to persons not generally considered to be employees.  These include for example, some contractors, taxi drivers, and outworkers.  Even though such people may not be employees they are “deemed” to be workers for the purposes of workers compensation insurance.  A business that engages contractors who are “deemed” to be workers is considered to be an employer even if the business has no direct employees.’

36                  Mr Smith took the certificate of currency to Mr Rowland.  It is not clear from the evidence whether he did this immediately, on 29 January 2003, or on the following morning, 30 January 2003.  Whether or not there was any conversation about the certificate on 29 January, there certainly was on the following day.

37                  The conversation of 30 January involved Mr Mackerras, as well as Mr Rowland and Mr Smith.  Once again, there is a dispute about its terms.  However, according to Mr Rowland and Mr Mackerras, they both questioned the wages figure ($100) shown on the document.  They also say Mr Rowland complained that other documents remained outstanding.  Mr Rowland said he particularly mentioned records of other insurances and superannuation payments.

38                  Mr Mackerras gave evidence that, after this conversation, he had a further conversation with Mr Smith.  Mr Smith was unable to satisfy him about the legitimacy of the certificate of currency; so he told Mr Smith to finish up that day.  I have no doubt that, in doing so, Mr Mackerras believed he was acting in accordance with Mr Rowland’s wish.  The effective decision was that of Mr Rowland.

39                  Mr Smith agreed that Mr Mackerras terminated the subcontract on 30 January 2003.  Mr Smith may have returned the following day to pick up his equipment.  However, as the site records confirm, he did not carry out any excavation work after 30 January 2003.

40                  It was the practice of Mr Mackerras, at the end of each working day, to write up the site Daily Report.  The record of 30 January 2003 includes this note:

‘Mick Lane and Peter Primmer on site from 9.40am to 1.00pm spoke to the workforce together.  Have request [sic] that Peter Smith excavations finish up immediately due to workers compo financial document not up to scratch. Lanskey’s management on site have seen the document and agree with union’.

41                  In his first affidavit, Mr Smith made no reference to a meeting on 29 January; he went straight to 30 January.  He agreed that Mr Rowland and Mr Mackerras told him they did not accept the validity of the certificate of currency.  However, Mr Smith put this in the context of Mr Primmer having raised objection to the certificate.  Mr Smith said Mr Rowland and Mr Mackerras said to him: ‘The union guys have looked at this and they’ve said you’re a shonk …  And we don’t accept this certificate of currency as being valid’.  The substance of Mr Smith’s account appears from the following portion of his cross-examination by Dr J G Renwick, counsel for Lanskey:

‘You see what I want to suggest to you really, is this, Mr Smith, that you have already accepted that Lanskey’s were entitled to ask you to produce a certificate of currency for workers compensation insurance? --- Correct.

And you know that Lanskey’s say that they didn’t consider the certificate to be adequate, don’t you? --- I do, correct.

But you know that Mr Roland [sic] and Mr Mackerras say that it had nothing to do with the union, that they were raising their own queries about the adequacy of the certificate of currency, don’t you? --- I know that that’s what they’re saying but I don’t agree with it.

And you certainly agree, don’t you, that Mr Roland [sic] and Mr Mackerras told you that in their view, don’t worry about what the union had done beforehand, that in their view the certificate of currency was inadequate or invalid? --- Yes.

Right.  And they said to you, you need to fix it up, didn’t they? --- No.

No, never said that? --- No.

So, is this the position, that you get to the stage, dealing with Mr Roland [sic] and Mr Mackerras, that they say there is a problem with the certificate of currency but they never tell you it’s got to be fixed up? --- No, they didn’t. 

Never tell you that? --- No.

I see.  I mean that’s just not true, is it, Mr Smith? --- It absolutely is true.  They gave me no option whatsoever.  They said to me that the union had said to them that I was a shonk and that I had to go and that they would lean on the Transport Workers Union otherwise to ban deliveries to the site if I didn’t go and Phil Mackerras said to me, as a Lanskey foreman, my loyalties are with Lanskey and I have to do everything that I can to see that that doesn’t happen.  Primmer said, you’ve got to go, you [sic] going.

You are confusing two things, aren’t you? --- No.

You are confusing the dispute, a dispute between the CFMEU and Lanskey with your own problems with the certificate of currency, aren’t you? --- I didn’t have any problems with the certificate of currency.

Yes, but you did as far as Lanskey were concerned, didn’t you because they told you that? --- They told me they didn’t accept it but only after there had been discussion with the union.

Yes, but that’s your inference, isn’t it?  That’s what you infer.  You infer that they don’t have an independent view about the adequacy of the certificate of currency, don’t you? --- Well, I have to accept that.’

42                  It is common ground that Mr Primmer and Mr Lane were on site on 30 January 2003.  They participated in an employees’ site meeting at which the employees discussed union membership and resolved to demand a site allowance.  According to Mr Primmer, and there is no contrary evidence, the meeting participants did not discuss Mr Smith.

43                  Mr Primmer agreed he saw the facsimile copy of the certificate of currency that morning and that he commented to a Lanskey representative (whose identity he does not recall): ‘This looks like fraud, he’s underestimated his wages.  I’d suggest that you get him off the site until it’s fixed up’.  Mr Primmer denied making any threat to shut down the site or hearing anybody else make such a threat.  He said:

‘Nor did I tell anyone to remove Mr Smith from the site.  I merely suggested to Lanskey that they should ask him to leave the site until all his paperwork problems were fixed up including workers compensation, long service leave and other issues.  It was a matter for Lanskey to fix up that problem if they so chose.  At no stage did I threaten or insinuate or say that there would or might be industrial action.’

44                  Mr Primmer agreed he had told Mr Reynolds to endeavour to sign up Mr Smith as a CFMEU member, but he denied saying anything to Mr Reynolds about excluding Mr Smith from the site or suggesting that pressure should be put upon him to join the CFMEU.

45                  Under cross-examination by Mr R M Goot SC, who appeared with Mr M Heath for the applicants, Mr Primmer said that, at the time he was concerned with the adequacy of the certificate of currency, he had not heard from Mr Reynolds whether Mr Smith had joined the CFMEU.  He agreed he was ‘actively interested’ in Mr Smith having the necessary workers compensation insurance documents.

46                  Mr Primmer also agreed he told Mr Rowland that the site ‘will be a unionised site’.  He denied this was the same thing as ‘no ticket, no start’.  He said it meant that the workers had indicated a preference to work with other union members.  He did not know how they might exercise that preference.  Mr Primmer reiterated that he said nothing to Mr Rowland about Mr Smith not being a member of the union.

47                  Mr Goot questioned Mr Primmer about his opinion that the certificate of currency was a fraud.  It is not necessary to set out all his evidence on that subject.  The essence of Mr Primmer’s position is conveyed by the following exchanges:

‘Why was that your concern? --- I didn’t want to be a party to a subbie with $100 workers comp.  If you read clause 2 or clause 3 of [the] certificate of currency:

            This certificate will be invalidated if the above is not correct.

Yes.  I see.  Well, why? --- I didn’t want my name on that, if someone - - -

But your name? --- Excuse me.  If someone – if this company, Mr Smith, had hurt someone on site, I wasn’t being a party to someone coming back onto me and saying that Mr Primmer said it was okay.

But, Mr Primmer, if workers compensation, as you understand it, only applied to Smith Plant Hire Pty Limited, if he had – if that company had employees or persons who could be deemed workers under the Act? --- He’s an employee of his own company.

How did you know that? --- Because he was working.

How did you know he’s an employee of his own company? --- He’s an employee of his own company.  He’s working.  He’s not a boss.  He’s not – he’s an employee.

How did – you just assert that he’s an employee? --- He’s working on a machine.  He must be employed.’

48                  Mr Primmer denied he had the power to cause the Transport Workers Union to ban deliveries to the site.  His evidence went on:

‘But you were adamant that he leave the site; that’s Smith? --- No, I wasn’t adamant at all.  I’ve been in the same position as Mr Smith as an owner/operator.  I assist sub-contractors in the earthmoving game in their problems.  I suggested that he leave site until such time as all his paperwork was fixed up.  That’s all.

Yes.  And without making any attempt to assist him or to find out what the problem was or whether there was an innocent mistake? --- Yes.  If Mr Smith had told me he was a member I would have assisted him in any way.  I assist members, I get paid.  The members pay my wages.  I will assist members.’

49                  Mr Lane also gave evidence about the events of 30 January 2003.  In relation to material matters, his evidence is consistent with that of Mr Primmer.

50                  Mr Rowland was cross-examined as to his reason for considering termination of the subcontract.  He said he was concerned about the certificate of currency.  He said he saw the figure of $100, ‘and that’s what I quizzed’.  Mr Goot put to him that he understood the one employee to be a nominal employee.  He responded: ‘Well, I clearly could only understand it meant Smith, yes, or the person who was operating machines on site’.  He denied Mr Goot’s suggestion that he ‘understood that the wage that had been nominated of $100 in that certificate of currency was just fictitious, issued by the insurance company to say that the policy exists’.  Mr Rowland said that, when he first saw the document, he thought the figure of $100 was a typographical error and he had asked Mr Smith whether it was correct.

51                  Mr Rowland gave evidence about Mr Smith’s allegation that his termination was related to non-membership of the CFMEU.  In his affidavit, he relayed the following conversation, he being ‘DR’, Mr Mackerras being ‘PM’ and Mr Smith being ‘PS’.

‘PM:    “Yeah, $100 a year is not realistic.  You have to show us a realistic estimate.  That sounds shonky and I think the Union are saying the same thing.”

DR:      “Peter, I asked you for all your documents.  Our file is empty on you.  I need to have all your company records.  Insurance, super ACIRT.  Everything if you’re going to be here.  All I have now is this insurance certificate that says your living on $100.00 a year.  I need that this [sic].”

DR:      “Well the Union may want you as a member but that is not what they have complained to us about.  As far as we are concerned, we are coming from a different perspective.  I don’t care if you join the Union or not.  I just need you to give me proper company documents and a proper workers compensation currency policy.”

PS:      “Well all this has been bought about because I won’t join the Union.”

DR:      “I’m not interest [sic] in the Union membership issue.  24 hours after I asked you I still haven’t got documents from you.  You have not got a proper workers compensation policy and I am not satisfied with what you have showed me.  I don’t care whether you are a member of the Union or not.  It makes no difference to me.  If you don’t have proper insurances and company documents that’s the only issue that I am concerned about.”’

52                  Mr Rowland agreed he did not make any inquiries about the appropriateness of the certificate of currency before Mr Smith left the site.

(iv)       Mr Smith’s contractual arrangements

53                  The following facts are established beyond dispute:

(a)                Lanskey’s excavation subcontract was with Smith P/L, not Mr Smith personally;

(b)               at relevant times, the only directors of Smith P/L were Mr Smith and his wife;

(c)                at relevant times, there was no employee of Smith P/L other than Mr Smith (if he was an employee);

(d)               Lanskey made all its payments under the excavation subcontract to Smith P/L.  The payments were credited to that company’s cheque account;

(e)                Mr and Mrs Smith conducted a partnership;

(f)                 at regular intervals (usually monthly) the partnership invoiced Smith P/L for plant hire and labour hire, the amount of the invoice being, in effect, the net amount left to the company at invoice date after payment of other costs; and

(g)                upon receipt of invoices, the company paid the invoiced sum into the partnership bank account.

54                  The result of these arrangements is that the partnership was the recipient of that portion of Smith P/L’s subcontract price that represented the value of Mr Smith’s labour.

The applicants’ case

55                  The applicants accept that Mr Smith was not an employee of Lanskey.  No doubt that is why they have chosen to rely upon the second subsection of s 298K of the WRA, rather than the first subsection, which relates to employees of a person.  Section 298(K)(2) is concerned with action adverse to an independent contractor.  The respondents agree this was the relevant relationship.  However, they say the person who was in that relationship with Lanskey was Smith P/L, not Mr Smith personally.  They submit this fact poses difficulties for the applicants in bringing their case within either of the WRA provisions upon which they rely.  For the moment, I will put aside this complication.

56                  Counsel for the applicants accept that, on any basis, their WRA case depends upon the Court being satisfied that Mr Smith’s failure to join the CFMEU was a reason, if not the only reason, for Lanskey’s decision to terminate the subcontract of Smith P/L.  In relation to both s 298K(2) and s 298S(2), the applicants have the advantage of a reverse onus provision: see s 298V of the WRA.  However, if the Court is positively satisfied, on the balance of probabilities, that Mr Smith’s non-membership of the union was not a reason, or part of a reason, for termination of the subcontract then, counsel accept, the applicants’ s 298K(2) case must fail.  Similarly, if any discriminatory action against Mr Smith was unrelated to his non-membership of the CFMEU, the s 298S(2) claim must be rejected.

57                  The person who made the decision to terminate the subcontract with Smith P/L was Mr Rowland.  He made that decision in consultation with Mr Mackerras, and perhaps on a conditional basis, in the sense that the termination was not to take effect if Mr Mackerras was successful in sorting out the certificate of currency problem with Mr Smith.  He certainly left Mr Mackerras to implement the decision.  However, Mr Rowland’s was the determining mind.  Consequently, in relation to the claims under s 298K(2) and s 298S(2) of the WRA, the critical question is whether Mr Smith’s non-membership of the CFMEU played any part in Mr Rowland’s decision.

58                  In relation to s 45E(3) of the TPA, the question is whether Lanskey (‘the first person’) made an arrangement, or arrived at an understanding, with the CFMEU (or with Mr Primmer acting on behalf of the CFMEU) that included a provision for the purpose, or purposes including the purpose, of preventing or hindering Lanskey from acquiring, or continuing to acquire, excavation services from Smith P/L (‘the second person’) or that imposed a condition described in s 45E(3)(b) of the TPA.

59                  As it is not suggested that any other Lanskey employee made any relevant decision, arrangement or understanding on behalf of Lanskey, it is apparent that, once again, the critical questions are what was done by Mr Rowland and why he did this.

Factual findings

60                  Mr Primmer acknowledged that he advised Mr Rowland and Mr Mackerras to get Mr Smith off site.  However, he denied this was because he knew Mr Smith was not a member of the CFMEU.  He claimed he did not know that at the time.  Mr Primmer said that, if Mr Smith had told him he was a member of the CFMEU, he would have assisted him to get his paperwork in order.  However, he also said:

‘Member or non member I would have suggested he leave site until such time as the paperwork was fixed up.  It wasn’t just the certificate of currency, it was work matter statements, risk assessments, etcetera, etcetera.’

61                  Mr Primmer gave evidence that it was not until a few days before trial that he became aware that Mr Smith had not become a member of the CFMEU.  I have difficulty in believing that evidence.  Mr Primmer is not an unintelligent person.  I have no doubt that, when he was served with the Application in this proceeding, he read it and/or obtained advice about the basis of the applicants’ claim.  The fact that Mr Smith was not a member of the CFMEU was an essential element in the claim; Mr Primmer must have realised that.

62                  I believe that, in fact, Mr Primmer was aware of the position much earlier, in January 2003.  Mr Primmer had instructed Mr Reynolds to attempt to sign up Mr Smith to the CFMEU.  Mr Primmer impressed me as a forceful personality who would make it his business to know as much as possible about what was happening on a site at which CFMEU members were employed or where there were non-members who were eligible to join the CFMEU.  By 30 January 2003, Mr Primmer was well aware of Mr Smith’s presence on the site.  It is improbable that Mr Primmer omitted to ascertain whether Mr Smith had acceded to Mr Reynolds’ invitation to join the union.

63                  Having said that, I am satisfied that Mr Primmer, and Mr Lane who supported him, were both genuinely concerned about the contents of the certificate of currency.  I can understand their reaction.  It may occasionally be true to say that a company engaged in construction work has no employees and pays no wages.  A certificate to that effect might raise issues about its adequacy, having regard to New South Wales statutory provisions imposing workers compensation liability in respect of working directors and ‘deemed workers’, such as some contractors.  However, a statement that a particular insured employer has one employee, with an estimated total wage expenditure of only $100 for twelve months, can only be regarded as bizarre.  Except in a case where the employee performs only rare casual work, one or other of these two statements must be wrong.  If Smith P/L had one employee as stated (presumably Mr Smith himself), who was working full-time and should properly be regarded as receiving wages, it would have been evident that his wages would exceed $100 over twelve months.

64                  Officials of unions whose members are working in an inherently dangerous place, such as on a construction site, have an obligation to those members to take an interest in occupational health and safety issues and the adequacy of insurance arrangements affecting workers on the site.  Whether or not he could have gone about his task more tactfully, even more politely, Mr Primmer was entitled to be concerned about Smith P/L’s insurance arrangements.

65                  I have no doubt that Mr Primmer conveyed to Mr Rowland his opinion about the certificate of currency.  It is conceivable that, absent a complaint from Mr Primmer, Mr Rowland would not have required Mr Smith to obtain a certificate of currency.  Such a statement reflects poorly on the Lanskey site management, but its overall performance in relation to Mr Smith’s paperwork was less than impressive.  Mr Smith was allowed to start without producing any paperwork at all and to continue working whilst in repeated default in fulfilling Mr Mackerras’ requests for production of documents.

66                  However, whether or not Mr Primmer was responsible for alerting Mr Rowland to the insurance issue, and whether or not he put pressure on Mr Rowland about that matter, the question remains whether Mr Rowland was influenced, in his decision to terminate the subcontract, by the fact that Mr Smith was not a union member.  Mr Rowland insisted he was not so influenced. 

67                  Mr Rowland told Mr Goot that he did not understand the $100 to be a nominal wage.  He also said: ‘I didn’t understand it to be a wage, and that’s why I quizzed it.’  As the principal contractor’s senior site representative, Mr Rowland had a legitimate interest in the accuracy of the certificate of currency (see note 1 on the certificate quoted at para 35 above).  Note 2 stated that the insurance cover might be invalidated if the information in the certificate was not correct or complete.  Note 4 referred to a principal contractor’s potential workers compensation liability to ‘deemed’ workers.  Having the advantage of a full explanation of the financial arrangements between Smith P/L and the partnership, which Mr Rowland did not, I comment that it is far from apparent to me that Lanskey would have been free of financial risk if Mr Smith had sustained an injury whilst working on the Northgate project.

68                  In his evidence, Mr Smith agreed that he had always known that having an up-to-date certificate of currency is important on a construction job.  He also agreed that he knew that, even though he might be a contractor to the principal, ‘there are circumstances in which the principal can be liable for workers’ compensation if there’s an injury’.  He accepted that ‘therefore it was important to Lanskey that you be fully covered against any workers’ compensation claim’; the ‘you’ being Smith P/L, not himself personally.

69                  Mr Smith also acknowledged that Lanskey had cause for concern about the certificate of currency.  He agreed that a significant portion of the hourly rate charged by Smith P/L represented the value of his labour as a plant operator.  Dr Renwick then invited Mr Smith to agree ‘that it was pretty understandable that Lanskeys thought the $100 figure on the certificate of currency was inadequate’.  He did agree.

70                  In cross-examination, Mr Rowland acknowledged that Mr Primmer told him it had been decided at the site meeting that the site should be ‘a unionised site’ and had referred to it being ‘a no ticket, no start union job site’.  However, he said he responded to Mr Primmer: ‘They can say what they want.  It’s totally illegal’.  He added, to Mr Goot, ‘I took no notice of such comments’.

71                  Mr Goot cross-examined Mr Rowland at some length about the connection between the certificate of currency and Lanskey’s termination of the excavation subcontract.  Mr Rowland consistently denied he acted under union pressure and spoke of his frustration at Mr Smith’s continued failure to provide satisfactory paperwork.  Mr Rowland agreed that, after 30 January 2003, he referred Mr Smith’s certificate of currency to Lanskey’s head office for comment about its validity.  Surprisingly, he was told, a few days later, that it was acceptable. However, Mr Rowland did not tell Mr Smith about this ruling or get him back on site.  Mr Rowland’s evidence went on:

‘And the reason you didn’t tell Mr Smith the results of your inquiries with head office a few days after 30 January was that, if you had asked him to come back or even to come back but bring back some documents that you say were still outstanding, that wouldn’t solve your problem with the union because he still wouldn’t be a member of the union nor would he want to be a member of the union? --- It had nothing to do with it, being in the union or not.

Yes, the union tells you [to] get him off site immediately, you rely on the certificate of currency, well, that’s your evidence, Mr Rowland? --- No.  The union’s got nothing to do with my contractual relationship with Smith.

But you’ve said that they are the words that the union [used], Mr Primmer told you to get him off site immediately? --- But I never said I take any notice of that.

I beg your pardon? --- I took no notice of those words.  Primmer’s not the project manager.  He’s not running the project.’

72                  Mr Rowland’s evidence on this point is corroborated by Mr Mackerras.  The latter’s evidence, in turn, is substantially supported by the contemporaneous note that Mr Mackerras made in his Daily Report: see para 40 above.  I would need to attribute to Mr Mackerras considerable prescience if I were to conclude this was a false note intended to disguise the fact that the true reason, or one of the true reasons, for the termination of the excavation subcontract was Mr Smith’s non-membership of the CFMEU, rather than the unsatisfactory nature of his certificate of currency.

73                  One aspect of Mr Rowland’s evidence troubled me.  He said, more than once, that Mr Smith ‘walked off the job’; the suggestion being that Mr Smith made a voluntary decision to leave.  That statement is at odds with Mr Mackerras’ evidence that he told Mr Smith to leave.  Mr Mackerras’ version is supported by his Daily Report note and is more probable.

74                  I have considered whether this incorrect evidence of Mr Rowland should cause me to reject his evidence about the identity of the issue between him and Mr Smith on 30 January 2003.  I do not think it should.  I think Mr Rowland was simply mistaken about the mechanics of Mr Smith’s departure.  His evidence about the identity of the issue is supported by Mr Mackerras’ evidence and the Daily Report note.

75                  Mr Goot argued that Mr Rowland’s failure to recall Mr Smith to the job after he received the head office ruling about the validity of the certificate of currency contradicts his claim that concern about the validity of that document was the sole reason for termination of the subcontract.

76                  I understand the force of that argument, but I think it overlooks the context in which Mr Rowland made his decision to terminate the subcontract.  I believe that, to use the vernacular, by 30 January 2003, Mr Rowland had ‘had a gutful’ of Mr Smith.  Mr Rowland had become aware of the sling incident on 22 January 2003.  He had formed the opinion that Mr Smith was in the wrong about that; he had been using unsafe equipment.  Although he had not initially been aware of Mr Smith’s failure to produce satisfactory paperwork, by 30 January Mr Rowland was acutely aware of that failure.  Mr Rowland had become involved in the issue eight days earlier but he found that on 30 January problems remained.  By the time he received the head office comment, Mr Smith had left the job and been replaced.  I can understand why Mr Rowland did not invite him back.

77                  In summary, I make the following critical factual findings:

(a)                the determining mind of Lanskey, in connection with the termination of that company’s subcontract with Smith P/L, was that of Mr Rowland;

(b)               in making his decision, Mr Rowland was not actuated by the fact that Mr Smith was not, and did not intend to become, a member of the CFMEU.  Mr Rowland was actuated by frustration at Mr Smith’s failure to present the necessary paperwork in a timely way and, in particular, by what Mr Rowland saw as the inappropriateness of the certificate of currency that Mr Smith presented to him on 30 January 2003; and

(c)                Mr Rowland did not enter into any agreement, nor make any arrangement or reach any understanding, with the CFMEU or Mr Primmer regarding termination of the excavation subcontract.

78                  It follows from the above findings that the applicants’ statutory case lacks the factual basis necessary for its success. 

The contract claim

79                  In response to the contract claim made by Smith P/L against it, Lanskey pleaded that its subcontract with Smith P/L was subject to an implied term that Smith P/L provide proof of current valid and accurate workers’ compensation insurance, public liability insurance and superannuation arrangements.  Under cross-examination by Dr Renwick, Mr Smith agreed it was usual for an excavation subcontractor to be required to produce all this paperwork.  It is also clear that Mr Smith failed to do this, at least in the sense of producing documentation that was obviously satisfactory.  I think the defence is made good.  The contract claim must also fail.

Legal difficulties

80                  Having regard to the above, it is not strictly necessary for me to deal with the parties’ legal submissions.  However, I comment that if I had made different findings of fact, the applicants’ WRA case, at least, would have faced apparently insurmountable difficulties.

81                  Paragraphs (d) and (e) of s 298K(2) are plainly irrelevant to this case.  The applicants must rely on paras (a), (b) and (c).  These subsections each provide that a person must not do a particular specified thing in relation to a contract with an independent contractor for a prohibited reason. 

82                  There is no doubt that Lanskey took the actions described in paras (a) and (c) in relation to the contract of Smith P/L, the independent contractor.  However, it could not have done so for a ‘prohibited reason’, even on the view of the facts advanced by the applicants. 

83                  The applicants rely on para (b) of s 298L(1).  That paragraph, read with the chapeau to the subsection, makes it a prohibited reason that the ‘independent contractor … is not, or does not propose to become, a member of an industrial association’.  In this case, the independent contractor was Smith P/L.  Although, in Part XA, a corporation may be an ‘independent contractor’, Parliament could not have intended to make it a prohibited reason that a company is not, or does not propose to become, a member of an association of employees.  It is a legal impossibility for a company to be a member of such an association.  There could be no question of Smith P/L being or becoming a member of the CFMEU.  It would not be enough for Lanskey to have terminated the contract of Smith P/L because Mr Smith was not, or did not propose to become, a member of the CFMEU.  Mr Smith was not the independent contractor.

84                  The words ‘other person’ in the chapeau to s 298L(1) of the WRA are intended to refer to the person mentioned in s 298K(2)(e).  Contrary to a submission made by Mr Goot, the words are not a general reference to any person whose conduct might fall within the conduct described in s 298L(1).  It is significant, to my mind, that the chapeau uses the definite article ‘the’ to qualify, distributively, each of the terms ‘employee’, ‘independent contractor’ and ‘other person’.

85                  The applicants have a similar problem in relation to s 298S(2).  That subsection is concerned with discriminatory action against an ‘eligible person’.  However, an ‘eligible person’ is defined by s 298S(1) as a person who is not an employee but who is, or might be, eligible to join an industrial association.  In other words, the term ‘eligible person’ is confined to a natural person having the capacity to join an industrial association.  It does not include a company.  Yet, on the applicants’ case, the discriminatory action of Lanskey was directed against Smith P/L, not Mr Smith personally. 

86                  Mr Goot said there was discriminatory action against Mr Smith, who is an ‘eligible person’, because Lanskey refused to make use of the services offered by him on behalf of Smith P/L.  However, the definition of ‘discriminatory action’ concerns the contractual relationship between the discriminator and discriminatee.  There was no contractual relationship between Lanskey and Mr Smith.

87                  The applicants do not face the same difficulties in respect of their case under s 45E of the TPA.  However, that case also fails on the facts, as does the claim of Smith P/L that Lanskey wrongfully repudiated the contract between them.

Disposition

88                  The proceeding must be dismissed.  In deference to the request of counsel, I will reserve the question of costs.  I draw attention to s 347 of the WRA.  If, despite the constraints imposed by this section, any of the respondents wish to seek an order for costs, they ought to forward a written submission to my associate (with a copy to the other parties) by 28 January 2005.  Any submissions in reply should be provided by 18 February 2005.

Associate:

Dated:              17 December 2004