FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1546

TRADE PRACTICES – admitted contravention of s 45E and s 45EA of Trade Practices Act 1974 (Cth) – statement of agreed facts – undertakings accepted – joint submissions as to relief including penalty

Evidence Act 1995 (Cth), s 191

Trade Practices Act 1974 (Cth) ss 45E, 45EA, 76(1)(a), 76(1A)(a), 87B(1)

Australian Competition and Consumer Commission (ACCC) v IPM Operation & Maintenance Loy Yang Pty Ltd (2006) 157 FCR 162 cited

Australian Competition and Consumer Commission (ACCC) v IPM Operation & Maintenance Loy Yang Pty Ltd (No 3) [2007] FCA 144, (2007) ATPR 42-151 cited

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

Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72, (2004) ATPR 41-993 followed

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 followed

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION, BOVIS LEND LEASE LIMITED ACN 000 098 162, DAVID NOONAN and LASLO LANCSAR

NSD 1611 OF 2006

GYLES J

27 SEPTEMBER 2007

SYDNEY

THE COURT ORDERS THAT:

1.                  Pursuant to s 76(1)(a) and s 76(1A)(a) of the Trade Practices Act 1974 (Cth), the second respondent, Bovis Lend Lease Limited (BLL), pay a pecuniary penalty to the Commonwealth of Australia in the sum of $100,000.00, such payment to be made on or before 18 October 2007.

2.                  BLL (by itself, its directors, employees, servants, or agents or otherwise) be restrained, for a period of four (4) years from the date of this order, from making, arriving at, or giving effect to a contract, arrangement or understanding with the first respondent, the Construction, Forestry, Mining and Energy Union (the CFMEU) (or any officer of the CFMEU, or person acting for and on behalf of the CFMEU):

a.         where that contract, arrangement or understanding contains a provision included for the purpose of preventing or hindering BLL from acquiring or continuing to acquire building and construction subcontracting services and associated goods (Construction Services) from another person (the Second Person); and

b.         where:

i.          BLL is under an obligation to acquire Construction Services from the Second Person; or

ii.         BLL had regularly acquired Construction Services from the Second Person; or

iii.        BLL had acquired Construction Services from the Second Person in the three months immediately preceding the date of the contract, arrangement or understanding referred to above;

c.         but this order shall not apply in any of the following circumstances:

i.          the Construction Services were acquired by BLL under a contract with the Second Person that required BLL to acquire the Construction Services over a period which has ended and, after the end of that period, the Second Person has refused to supply such Construction Services to BLL; or

ii.         the contract, arrangement or understanding is in writing and was made or arrived at with the written consent of the Second Person; or

iii.        the Applicant authorises the making of (or giving effect to) the contract, arrangement or understanding under s 88(7A) of the Trade Practices Act 1974 (Cth).

3.         On or before 18 October 2007, BLL pay the applicant’s costs of the proceeding between the applicant and BLL in the amount of $110,000.

AND THE COURT NOTES THAT:

4.         Pursuant to s 87B(1) of the Trade Practices Act 1974 (Cth), on 25 September 2007 the applicant accepted an undertaking from BLL in connection with the matter that is the subject of these proceedings.  A copy of this Undertaking marked Annexure A is annexed to these orders.

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

TRADE PRACTICES ACT 1974

Undertaking to the Australian Competition and Consumer Commission given

for

the purposes of section 87B

by

Bovis Lend Lease Pty Limited

ACN 000 098 162

BACKGROUND

1.         On 23 August 2006 the Australian Competition and Consumer Commission (ACCC) commenced proceedings numbered NSD 1611 of 2006 in the Federal Court of Australia against Bovis Lend Lease Pty Limited (ACN 000 098 162) (BLL) in relation to an arrangement or understanding reached between BLL and the Construction Forestry Mining and Energy Union (CFMEU) (the Arrangement) concerning the use by BLL of a subcontractor (Bemmar Projects Pty Limited (ACN 103 553 939) (Bemmar)) on the Landmark building site in the Australian Capital Territory (the Proceedings).  The ACCC alleges that the Arrangement contravened s 45E and s 45EA of the Trade Practices Act (1974) (the Act).

2          The ACCC also commenced proceedings against the CFMEU and a number of officials employed by the CFMEU in relation to the Arrangement.

3          In its proceedings, the ACCC has alleged that under the Arrangement, BLL would stop using the services of Bemmar on the Landmark building bite and BLL and the CFMEU would continue their negotiations in relation to an agreement (the JDA V Agreement) that would apply to the conditions on which CFMEU members would be prepared to work for BLL on building sites around Australia (except Western Australia) managed by BLL.

4.         The ACCC has alleged that officials of the CFMEU made it a condition of the negotiation of the JDA V Agreement that BLL ceased using the services of Bemmar on the Landmark building site and that the Arrangement was given effect to by BLL when BLL ceased acquiring services from Bemmar on the Landmark building site.

5.         BLL has filed a defence in the Proceedings admitting that:

a.         the Arrangement contained a provision that BLL and the CFMEU would continue the JDA V negotiations on condition that BLL would no longer use the services of Bemmar on the Landmark building site;

b.         the Arrangement contravenes s 45E of the Act; and

c.         BLL gave effect to the provision of the Arrangement set out in 5a above, in contravention of s 45EA of the Act, by ceasing to acquire services from Bemmar.

6.         BLL and the ACCC have reached agreement in relation to the resolution of the Proceedings as they relate to BLL.

7.         BLL has agreed to review and, if necessary, improve its trade practices compliance programme insofar as it addresses conduct proscribed by s 45E of the Act and each of the secondary boycott provisions of the Act.

8          Additionally, the ACCC notes that BLL has paid Bemmar $50,000 as compensation for any loss that might have been suffered by Bemmar.

8A.      The ACCC is prepared to accept this Undertaking to supplement the orders it has sought in the Proceedings relating to BLL.  The ACCC notes that the conduct the subject of the Proceedings is not ongoing.

COMMENCEMENT

9.         This Undertaking comes into effect when the:

a.         Undertaking is executed by BLL; and

b.         Chairman of the ACCC accepts the Undertaking.

UNDERTAKINGS

10.       BLL will at its own expense, within two months of the commencement of this undertaking, appoint an independent compliance professional with expertise in trade practices law compliance to undertake a review of BLL’s:

a.         trade practices compliance program to ensure it effectively addresses s 45E of the Act and other secondary boycott risks;

b.         existing industrial relations training and compliance measures, to ensure they incorporate material relating to trade practices compliance risks arising under s 45E of the Act and each of the secondary boycott provisions of the Act; and

c.         procedures for the termination of subcontractors, with a view to minimising the risk of any contravention of s 45EA of the Act and each of the secondary boycott provisions of the Act,

to be completed within four months of the commencement of this Undertaking, with a report of the review being provided to the ACCC (the Review) promptly upon its completion.  BLL will use its best endeavours to ensure that its existing trade practices compliance program, industrial relations program, compliance measures and subcontract termination procedures are amended in accordance with any recommendations of the Review within six months of the commencement of this undertaking.

ACKNOWLEDGMENTS

11.       BLL acknowledges that

a.           the ACCC will make this undertaking available for public inspection;

b.          the ACCC will from time to time publicly refer to this undertaking; and

c.           this undertaking in no way derogates from the rights and remedies available to any other person arising from the alleged conduct.

REASONS FOR JUDGMENT

1                     This is a proceeding by the Australian Competition and Consumer Commission (the ACCC) against four respondents, the Construction, Forestry, Mining and Energy Union (the CFMEU), Bovis Lend Lease Limited, David Noonan and Laslo Lancsar, alleging contraventions of s 45E and s 45EA of the Trade Practices Act 1974 (Cth) (the Act).  The critical circumstance is that on 4 April 2003 Bovis Lend Lease terminated a subcontract that it had entered into in relation to a project being constructed by it in the Australian Capital Territory, known as the Landmark Development.  In short, the allegation is that Bovis Lend Lease succumbed to pressure from the CFMEU exerted by, at least, Noonan and Lancsar, in its decision to terminate that subcontract. 

2                     At an early stage of the proceeding it was indicated on behalf of Bovis Lend Lease that it would make admissions of contravention on the pleadings.  The other respondents made no such concession and, in the events which have happened, a decision was made that the case against Bovis Lend Lease would be dealt with on its admissions independently of the conduct of the contested proceeding against the other respondents.  The contested hearing has been completed before another judge of the Court, although judgment has been reserved. 

3                     So far as this proceeding is concerned, the parties have arrived at a comprehensive statement of agreed facts, which was made jointly by the ACCC and Bovis Lend Lease for the sole purpose of tendering under s 191 of the Evidence Act 1995 (Cth).  They have also provided me with a joint submission as to an agreed set of orders which I am invited to make.  It goes without saying that the statement of agreed facts between these two parties is of no significance in relation to the contested proceeding against the other three respondents.  It is made solely for the purposes of this hearing.  It should also be perfectly clear that the result of this hearing will have little to do with the result of the other hearing, even in the event that liability is found in that other hearing.  That will depend upon, firstly, the facts which are found by the judge who hears the case and, secondly, consideration of a number of factors different from those which are before me.

4                     I do not propose to recite the statement of agreed facts which covers some 34 pages, together with a series of annexures.  As I have said, the agreed facts are detailed and comprehensive and go beyond the bare necessity of establishing the case, that bare necessity, of course, being provided by admissions on the pleadings.  The statement of agreed facts deals not only with the circumstances of the contraventions themselves, but also the steps which have been taken since the contraventions came to light on the part of Bovis Lend Lease, including steps taken to ensure that the same thing does not happen again.  I have marked that statement of agreed facts Exhibit A in the proceeding, which ensures that it will be available for inspection by those concerned to know the facts upon which the orders are made.  One aspect of those agreed facts is confidential, but the general nature of it is disclosed in the statement of facts and that detail is not necessary to be known publicly. 

5                     The joint written submissions on the orders to be made comprehensively seek to apply the principal authorities in this area to the facts as have been agreed.  The parties have correctly identified the topics upon which I require assistance.  In the course of oral submissions this morning, I sought expansion of some of those points and I received submissions on behalf of each of the parties as to those matters of concern.  Again, I have taken the course of making the joint submission an exhibit in the proceeding so that it may be available to those concerned to understand the detail of it.

6                     I am satisfied that the proposed orders are appropriate, bearing in mind the general principles laid down in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72, (2004) ATPR 41-993, it referring with approval to NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285.  I will not set out all of the authorities referred to by counsel.  Particular reference is made to the decisions of Young J in Australian Competition and Consumer Commission (ACCC) v IPM Operation & Maintenance Loy Yang Pty Ltd (2006) 157 FCR 162, the decision of Tracey J on a separate penalty matter in Australian Competition and Consumer Commission (ACCC) v IPM Operation & Maintenance Loy Yang Pty Ltd (No 3)  [2007] FCA 144, (2007) ATPR 42-151; and of the Full Court in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (ACCC) [2007] FCAFC 132. 

7                     The orders which are proposed include a pecuniary penalty in the sum of $100,000, injunctions for a period of four years from the date of the orders and payment of costs of the ACCC in a considerable sum.  I also note that pursuant to s 87B(1) of the Act the ACCC has accepted an undertaking from Bovis Lend Lease in connection with the matter which will be annexed to the Court orders.  The undertaking relates to the steps which are being taken to ensure that the processes of Bovis Lend Lease are appropriate to prevent or deter any further contraventions along those lines.

8                     I am satisfied that the pecuniary penalty is within the appropriate range, although minds may differ as to the precise figure.  The injunctions are wide in their terms, both geographically and as to conduct.  They are limited to four years.  I have, in other cases, queried the principle behind such a limitation and raised the matter again with counsel today.  I am satisfied that there is a basis for supporting such an approach in this case.  It provides a limit to the remedy of contempt of Court for breach.  More particularly, it sets a period during which the party restrained will have a very powerful incentive to ensure that there is no further contravening conduct.  By the end of that period it is to be hoped that the procedures and, perhaps, the culture of the organisation will be such that further contravention is unlikely.  It seems to me that the undertakings which have been obtained in relation to compliance programs are appropriate for that purpose. 

9                     For those reasons I note the undertakings which have been accepted and I make orders 1, 2 and 3 in the short minutes of order that I will initial. 

Associate:

Dated:         8 October 2007