FEDERAL COURT OF AUSTRALIA

Helal v McConnell Dowell Constructors (Aust) Pty Ltd [2010] FCA 1462

THE COURT ORDERS THAT:

1.    The respondent’s motion on notice dated 9 September 2010 be dismissed.

2.    The applicant’s costs of and incidental to the said motion be that applicant’s costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    There is before the Court a motion on notice filed on 9 September 2010 on behalf of the respondent, McConnell Dowell Constructors (Aust) Pty Ltd (“MDC”), in proceedings commenced in the Victorian Registry of the Court on 29 July 2010 by the applicant Linda Helal (“Helal”), an Australian Building and Construction Commission (“ABCC”) inspector appointed pursuant to s 57 of the Building Industry Improvement Act 2005 (Cth) (“BCII Act”). In the proceedings Helal alleges a contravention by MDC of s 45(1) of the BCII Act. MDC seeks an order for summary dismissal pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”) on the basis that Helal has no reasonable prospect of successfully prosecuting the proceedings.

2    In support of the motion it is contended that a contravention by MDC of s 45(1) of the BCII Act cannot be made out because the alleged act of discrimination was against a third party with whom MDC had no contract and of whose existence it had no knowledge. MDC submits that, in order to enliven s 45(1) of the BCII Act, the alleged act of discrimination must be against an entity targeted by the alleged discriminator and a contravention is not made out if a non-targeted entity is indirectly affected.

3    The question raised by the motion is purely one of statutory construction. As no evidence has been adduced on either side there is no occasion at this stage, to make findings of fact; cp Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920. The following summary is sufficient for an understanding of how the question now falling for determination has arisen.

Background

4    On 29 July 2010, Helal filed an application in the Victorian Registry of the Court, for a declaration pursuant to s 49 of the BCII Act and s 21 of the Federal Court Act, and for a declaration and pecuniary penalty pursuant to s 49 of the BCII Act, in respect of alleged contraventions by MDC of s 45(1) of the BCII Act. Section 45(1) of the BCII Act relevantly provides that;

(1)    A person (the first person) must not discriminate against another person (the second person) on the ground that:

(a)    the employment of the second person’s building employees is covered, or is not covered, by:

    (i)    a particular kind of industrial instrument; or

    (ii)    an industrial instrument made with a particular person; or

(iii)    a particular preserved Australian Pay and Classification Scale; …

5    The Statement of Claim (“SOC”) sets out the alleged facts. As MDC’s motion has been pending, it has not yet filed a defence to the SOC. Accordingly, MDC has not admitted or denied any of the alleged facts which are taken from the SOC and are set out below by way of background only.

6    According to paragraph 3 of the SOC, between approximately December 2008 and May 2009, MDC;

(a)    …

(b)    was the principal contractor in charge of the engineering construction project known as the Corio Quay North Number 4 Ship Loader project (“the Project”), which was located at Geelong Port, Corio Quay Road, North Geelong, Victoria (“the Site”);

(c)    pursuant to a contract entered into on or around 22 December 2008, engaged Hanlon Industries Pty Ltd (hereafter, “Hanlon”), to perform steel fabrication, supply and assembly works in connection with the Project (“the Works”).

7    Both of “the Project” and “the Works” involved the performance of building work within the meaning of s 5 of the BCII Act (SOC 4 and 5) and;

6    At all material times, Hanlon engaged Hanlon Services Pty Ltd (“Services”) to provide labour in connection with the Works (“the Building Employees”).

7    At all material times, Services was not party to any industrial instrument (within the meaning attributed to that phrase by sec. 4(1) of the BCII Act) that covered the employment of the Building Employees (hereafter, a “Workplace Agreement”).

8    In or about March 2009, Hanlon and [MDC] agreed, or otherwise arranged for, the Assembly Component of the Works to be carried out at the Site (“the Assembly Approval”).

9    By letter dated 12 May 2009, [MDC] revoked the Assembly Approval (“the Revocation”).

10    In contravention of sec. 45(1) of the BCII Act, [MDC] effected the Revocation because Services was not party to a Workplace Agreement.

THE MOTION

8    In MDC’s outline of submissions in support of the motion, it is contended that, even if it be assumed that all the facts pleaded in the SOC were true, Helal’s claim that MDC contravened s 45(1) of the BCII Act must fail if that section of the BCII Act is properly construed. On MDC’s argument, in order to contravene s 45(1) of the BCII Act, MDC had to have discriminated against an employer of a “building employee”, an expression defined in s 4 of the BCII Act as meaning:

(a)    a person whose employment consists of, or includes, building work; or

(b)    a person who accepts an offer of engagement as an employee for work that consists of, or includes, building work.

However, MDC claims, the only relevant employer of “building employees” pleaded by Helal is Services. Thus, as the only act of discrimination alleged is the Revocation that could not have constituted discrimination against Services, but, rather, could only be discrimination against Hanlon. MDC further submits that, on the facts pleaded in the SOC, the “first person” referred to in s 45(1) of the BCII Act is MDC, and the “second person” must be Services because Services is the only entity which is an employer of “building employees” whose employment was capable of being covered by an industrial instrument.

9    As the alleged act of discrimination is the Revocation of the Assembly Approval, which had been granted by MDC to Hanlon to perform “the Works” in connection with “the Project”, if the Revocation amounted at all to an act of discrimination within the meaning of s 45(1) of the BCII Act, it was an act of discrimination against Hanlon as a party to the Assembly Approval and not against Services.

10    Therefore, on MDC’s argument, for Helal to make out a cause of action under s 45(1) of the BCII Act, it is Services, as the employer of the relevant “building employees”, which must have been the “specific identifiable target” of the discrimination. MDC submits that “indirect discrimination” is not caught by s 45(1) of the BCII Act and, accordingly, any discrimination directed at Hanlon by virtue of its having been a party to the Assembly Approval cannot amount to discrimination against a third party such as Services within the meaning of that section of the BCII Act. Therefore MDC contends that, in the absence of any contractual or other relationship between it and Services, MDC could not have discriminated against Services within the meaning of s 45(1) of the BCII Act. It therefore follows that SOC does not disclose a cause of action and the proceeding is apt for summary dismissal under s 31A(2) of the Federal Court Act.

SUMMARY JUDGMENT UNDER S 31A

11    Section 31A relevantly provides:

(1)    …

(2)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)    For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)    hopeless; or

(b)    bound to fail;

for it to have no reasonable prospect of success.

12    The operation of s 31A of the Federal Court Act has been canvassed in several recent authorities in this Court. Most recently, in Deputy Commissioner of Taxation v Southgate Investments Funds Limited [2010] FCA 1298, Kenny J confirmed at [22] that the following observations of Sundberg J in Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 at [37], accurately recite how s 31A is to be applied;

The principles governing the operation of s 31A of the Act were canvassed in detail by Lindgren J in White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 (White Industries) and Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 (Boston). In White Industries 160 FCR at [59], Lindgren J considered that a claim requires “real” as opposed to “fanciful” or “merely arguable” prospects in order for it to have reasonable prospects of success as required by s 31A. Justice Rares in Boston 236 ALR at [45] was of the view that, unless there are no real issues of fact – such that “only one conclusion can be said to be reasonable” – summary judgment (or dismissal) ought not be given pursuant to s 31A. The Full Court has recently considered the summary judgment standard in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 (Finkelstein, Rares and Gordon JJ) (Jefferson Ford). Although different views were taken as to the precise operation of s 31A, the following principles appear to have been endorsed:

    In applying s 31A, the court does not conduct fact finding but must assess the strength of the allegations made by reference to the pleadings, affidavits and any other evidence adduced, in order to determine whether the claim is sufficiently strong to warrant a trial: see Jefferson Ford 167 FCR at [23] (Finkelstein J), [74] (Rares J) and [130] (Gordon J); see also Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2008] FCA 1257 at [28] (Emmett J); Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920 at [6] (Finkelstein J). Ultimately, the court must consider whether there are any real, as opposed to fanciful, issues of fact or law that require proper determination at a trial.

    In assessing whether there are reasonable prospects of success, the court should draw all reasonable inferences (but only reasonable inferences) in favour of the non-moving party: see Jefferson Ford 167 FCR at [132] (Gordon J). Moreover, where the evidence on a summary judgment application is of an ambivalent character, there will be a real issue of fact and therefore reasonable prospects of success for the purposes of s 31A: see Boston 236 ALR at [45]; Jefferson Ford 167 FCR at [73] (Rares J) and [130] (Gordon J).

    The moving party bears the onus of persuading the court that its opponent has no reasonable prospects of success: see Jefferson Ford 167 FCR at [127] (Gordon J); Boston 236 ALR at [45]. However, where the moving party establishes a prima facie case for summary judgment, the opposing party must be able to point to “specific factual or evidentiary disputes that make a trial necessary”: see Jefferson Ford 167 FCR at [127] (Gordon J).

    As s 31A requires in effect a prediction as to the outcome of a claim, the court should be more reluctant to summarily dismiss a claim where real questions of fact and credit arise. In those cases, the court will not have all material evidence before it until trial, the credit of important witnesses will not have been tested and it will as a consequence be very difficult if not impossible to fairly assess the prospects of the claim: see Jefferson Ford 167 FCR at [20] (Finkelstein J); Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [6] (Gilmour J).

13    Accordingly, taking into account the principles outlined at [12] above, if I am persuaded that, on a proper construction of s 45(1) of the BCII Act, MDC could not have discriminated against Services because of the absence of any contractual relationship with that entity, then I must summarily dismiss Helal’s claim on the basis that there is no reasonable prospect of the proceeding being successfully prosecuted against MDC. As already noted, the task for the Court on the present motion is solely one of statutory construction.

STATUTORY CONSTRUCTION

14    In relation to the proper construction of s 45(1) of the BCII Act, MDC’s written submissions were developed as follows;

There are five reasons why MDC’s construction of s 45(1) of the BCII Act should be preferred, namely:

(i)    the limited assistance from the extrinsic material supports it;

(ii)    it is consistent with the construction placed on similar provisions in s.792 (and s.298K) of the Workplace Relations Act 1996 (Cth) (WR Act) ;

(iii)    it is consistent with the construction placed on “discriminatory action” as it applies in the same factual circumstances, under s.298S of the WR Act;

(iv)    the alternative construction leads to a strange result; and

(v)    it is consistent with the statutory context within which s.45(1) of the BCII Act operates.

15    I shall examine in order each of these five reasons and Helal’s respective submissions in response.

Extrinsic material

16    In relation to the extrinsic material, namely Clause 8.13 of the Supplementary Explanatory Memorandum to the Building and Construction Industry Improvement Bill 2005 (the “EM”), it is submitted by MDC that the examples set out in the EM of the types of conduct against which s 45(1) of the BCII Act is directed are all predicated on the action of the “first person” being taken directly against the “second person”, “because of the status of the ‘second person’s’ employees or agreement coverage”. Accordingly, so the argument goes, it should be inferred from these examples in the EM that s 45(1) of the BCII Act was intended to have a narrow application only to discrimination by the “first person” which is directly against the “second person”, on the basis of the “second person’s employees or agreement coverage”. The examples of the type of conduct the clause is intended to prohibit set out in the EM are as follows:

    a head contractor refusing to give work to a subcontractor because the subcontractor’s employees are covered by a non-union agreement;

    a head contractor refusing to give work to a subcontractor on the basis that the subcontractor’s agreement is or is not made with a particular organisation of employees;

    a union disrupting the operations of an employer (other than through protected action) on the basis that the employer’s employees are covered by a State rather than a Federal agreement.

17    As conceded by MDC, the examples provided in the EM are of little assistance in this matter. The purpose of the examples in the EM is, in my view, to demonstrate the type of discriminatory conduct which the clause is intended to prohibit, rather than to exemplify the types of relationship in which such discrimination might occur. Accordingly, I have not derived any assistance from the extrinsic material in arriving at the proper construction of s 45(1) of the BCII Act.

Similar provisions

(a)    Section 298K of the WR Act

18    MDC submits that s 45(1) of the BCII Act “is in key respects similar to s 792 of the WR Act, and its predecessor s.298K, and the construction of these provisions supports [MDC’s] contention” that s 45(1) should be construed in a similar way. Relevantly, s 298K(1) of the WR Act was in the following terms;

An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:

…

(e)    discriminate against another person in the terms or conditions on which the employer offers to employ the other person.

19    Both parties cited authorities which discuss the construction of s 298K(1) of the WR Act, namely BHP Iron Ore Pty Ltd v AWU (2000) 102 FCR 97 (“BHP”) and CPSU v Telstra Corporation Ltd (2001) 107 FCR 93 (“Telstra”). In BHP, the Court said at [35] that;

It has to be borne in mind, in construing s 298K, that it proscribes conduct by "an employer" directed to "an employee" or "other person" (emphasis added). That use of the singular suggests that the alleged injury or alteration of position has to be examined in the light of the circumstances of each individual employee. (It is not the point that in the interpretation of statutes, the singular ordinarily includes the plural; here we are concerned with the indications of legislative intention to be discerned from the actual language used.) It is also significant that the conduct struck at by each paragraph of s 298K is expressed by an active verb: "dismiss", "injure", "alter the position", "refuse to employ", and "discriminate". That implies that the proscription is essentially against an intentional act of the employer directed to an individual employee or prospective employee.

20    Helal noted that the position in BHP should be considered in light of the later decision in Telstra, where the Full Court noted that the observation in relation to the above passage from BHP;

…holds true where the act is intentionally directed at a number of unidentified employees…[L]iability arises where the conduct is directed at a number of ascertainable employees as well as against a particular employee.

21    It is submitted by MDC that, on the basis of the passage in BHP cited at [19] of these reasons, s 45(1) of the BCII Act should be construed in the same way as s 298K(1) of the WR Act so far as it proscribes conduct by way of an active verb ie, “discriminate” against an identified person, which in this case is Services (being the employer of “building employees”). Accordingly, on this argument, if s 45(1) of the BCII Act is to be construed similarly to s 298K of the WR Act, MDC could not have discriminated against Services because it was not the target of the alleged discriminatory conduct. If any discriminatory conduct did occur, MDC says that its sole target was Hanlon as it was only Hanlon with which it had a contractual relationship capable of being affected by the Revocation which is the alleged act of discrimination.

22    In the written submissions filed on behalf of Helal it was contended, in response to this argument of MDC, that the language of s 45 of the BCII Act should not be construed in the same manner as s 298K of the WR Act;

It is by no means clear that the principles applicable to what was sec. 298K(1) of the Workplace Relations Act should apply equally to sec. 45 of the BCII Act. The former statute, of course, was in force at the time the BCII Act first took effect. The latter statute aimed to “provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently, and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole [Sec 3(1) BCII Act]. On face value, the parliamentary intention underpinning the BCII Act was to supplement existing provisions, rather than replicate them. Differences in textual structure of sec. 45 and superficially similar provisions in the earlier legislation should be regarded as deliberate, rather than coincidental.

Helal further submits that although s 298K(1) of the WR Act may correctly be viewed as prohibiting a specific person, ie, an employer, from discriminating against another specific person, ie, an employee, in specific circumstances and for prescribed reasons, the same cannot be said of s 45(1) of the BCII Act. It is noted that, following the words “discriminate against another person” the inclusion of the qualifying words “in the terms or conditions on which the employer offers to employ the other person” makes it difficult to envisage circumstances in which the prohibited actionable discriminatory conduct could be inflicted “indirectly” upon employees. Accordingly, it is submitted, s 45(1) of the BCII Act has a much less restricted operation than s 298K(1) of the WR Act, as all that s 45(1) requires is that a person “must not discriminate” against another person on one of a catalogue of specified “grounds”. It follows, on this argument, that there is no reason why the word “discriminate” in s 45(1) should be interpreted narrowly so as to include only conduct directed towards a particular identifiable person and, therefore, does not proscribe discriminatory conduct for one of the specified “grounds” which impinges on a third person who has no contractual relationship with the presumptive discrimination.

23    I do not regard the reasoning of this Court in BHP or Telstra as casting any useful light on the operation of s 45(1) of the BCII Act. Those cases turned on an analysis of the specific language and purpose of s 298K(1) of the WR Act and, cannot, in my view, be called in aid in interpreting s 45(1) of the BCII Act. Section 298K is framed to prohibit an employer from discriminating against another person who stands in a specified relationship (of employee or prospective employee) to the employer by altering that relationship or refusing to bring it into existence either at all, or unless it is subject to discriminatory terms and conditions. On the other hand, s 45(1) can apply, I consider, to a broader range of circumstances. I am not persuaded that the comparison with s 298K(1) of the WR Act provides any support for construing “discriminate”, which is not a defined term in the BCII Act, in the narrow way suggested by MDC.

24    The verb “discriminate” is relevantly defined in the Oxford English Dictionary (2nd  Edn) as follows;

To discriminate against or to make an adverse distinction with regard to; to distinguish unfavourably from others.

In the particular context of s 45(1) of the BCII Act, there is nothing to suggest that the term “discriminate” should not be afforded its full and ordinary meaning. Accordingly, I reject the argument put forward by MDC which would restrict the scope of the term “discriminate” to conduct which is targeted against a specific identifiable person.

(b)    “Discriminatory action” under s 298S of the WR Act

25    MDC submits that, although it is a different part of speech, the verb “discriminate” in s 45(1) of the BCII Act should be interpreted consistently with the meaning attributed to “discriminatory action” in s 298S of the WR Act. The phrase “discriminatory action” in that Act meant, relevantly, “a refusal to make use of, or agree to make use of, services offered by the eligible person”; and “eligible person” was defined to mean “a person who is not an employee, but who: (a) is eligible to join an industrial association; or (b) would be eligible to join an industrial association if he or she were an employee”. There is no definition of “discriminate” or “discriminatory action” in the BCII Act.

26    In support of this contention, Counsel for MDC, in their written submissions, invoked two authorities (PG & LJ Smith Plant Hire Pty Ltd v Lanskey Constructions Pty Ltd (2004) 137 IR 98 at [85]-[86]; and Hadgkiss v CFMEU (2008) 166 FCR 376 at [82]) which determined that the term “discriminatory action”, in the context of s 298S of the WR Act, was concerned with the contractual relationship between the discriminator and discriminatee. Adopting that interpretation of “discriminatory action”, as synonymous with “discriminate”, MDC contends that it can only be held to have discriminated against a person with whom it has contracted; in the present case the only such person is Hanlon. Accordingly, as there is no contractual relationship between itself and Services, there can have been no discrimination against Services or its employees for the purposes of s 45 of the BCII Act, despite the fact that the work stipulated by MDC’s contract with Hanlon was actually to be performed by Services.

27    MDC acknowledged that the force of its argument is somewhat diminished by the conclusion of another Full Court of this Court in Australian Building Construction Employees and Builder’s Labourers’ Federation and Another v Employment Advocate (2001) 114 FCR 22 (“BLF”) regarding the effect of s 298S(2)(c) of the WR Act. In BLF, the Full Court identified that the main question before it as;

whether it can properly be said for s 298S(2)(c) purposes that the industrial action found by the trial judge to be threatened was to be taken “against” the three independent contractors. The appellants submit that as the threatened industrial action was a withdrawal of labour, it could only be taken against Leighton [the head contractor] as the employers of that labour. They contend, in consequence, that the trial judge confused the target of the intention to coerce (that is, the independent contractors) with the target of the industrial action (that is, Leighton).

In answering the main question for consideration in that appeal, the Full Court observed, at pp 32-33;

37    It does no violence to ordinary usage to say that, insofar as the threat of industrial action (a) was caused by the failure of the three independent contractors to join the CFMEU; (b) was communicated directly to Poppi; (c) was aimed at securing their membership of the union; and (d) involved such action as was within the power of Hanna and could be used against the three to secure Hanna's end, that industrial action was to be taken against the three.

38    The workers' employer as well had to endure the industrial action. Their employment relationship with Leighton provided the vehicle for the CFMEU being able to take action against the independent contractors. Leighton was, in consequence, necessarily implicated in the matter. In one sense the action was directed against Leighton in that it sought to coerce Leighton to take action against Hedley by threatening to dispense with its services, but that action against Leighton also provided the means of taking action against Poppi and the others in that it was designed to have them join the union if they wished to continue to work on the Leighton site instead of supplying services to Hedley at some other site.

39    The sole question to be answered is whether the language of s 298S(2)(c) in its statutory setting precludes it being construed in accordance with its ordinary and natural meaning. The provisions of Pt XA clearly contemplate circumstances in which an industrial association, officer or member will be guilty of a contravention of the action by taking action (including industrial action) against B for the purpose or object of securing an effect upon, or consequence for, C. The following are directly illustrative of this (omitting references to threatened action): (a) "organise or take ... industrial action against an employer with the intent to coerce the employer [to take specified action against C]": s 298P(3) and (4); "take ... action having the effect, directly or indirectly, of prejudicing a person in the person's employment": s 298Q; "advise [etc] a person (whether an employer or not) to take discriminatory action against [C]": s 298S(2)(b). These types of provision acknowledge explicitly that, to secure a particular result, indirect rather than direct action against a person may be, or may be necessary to be, taken. But to the extent that they are premised upon a factual situation in which A takes action against B for the purpose of coercing — or inducing (s 298S(2)(a)) — B to take action against C (s 298P(3) and (4) and s 298S(2)(b)), they do not assist in any way in the construction of s 298S(2)(c) as they are concerned with cumulative action involving distinct actors. For its part, s 298Q is likewise unhelpful as its concern (for present purposes) is with the effect of action and not with its having been taken "against" any particular person.

40    One is, in consequence, left to construe the bare words of s 298S(2)(c) — "threaten to take industrial action against an eligible person with intent to coerce the person ... " — unaided and unaffected by what might be suggested by other substantive provisions of Pt XA. Having regard in particular to the objects of Pt XA stated in s 298A, there is no reason for not giving the words of the subsection their ordinary and natural meaning which, in the present context, means industrial action directed at or towards an eligible person. So construed the subsection encompasses the industrial action found by the trial judge in this matter. Accordingly the appellants' submissions must be rejected.

28    For reasons similar to those explained at [23]-[24] above, I am not persuaded that the definition of “discriminatory action” in s 298S(1) of the WR Act illuminates to any useful degree the meaning of the verb “discriminate” in s 45 of the BCII Act. There is nothing in the language of s 45 which requires that there be a contractual relationship between “the first person” and “the second person” in order for one to “discriminate” against the other. As outlined at [24] of these reasons, the word “discriminate”, as used in s 45(1), should be afforded its full and ordinary meaning. I can discern no warrant in the four corners of the BCII Act for confining its connotation to that of “discriminatory action” in s 298S of the WR Act.

Strange result

29    The strange result which MDC considers would occur if s 45 of the BCII Act were to allow “indirect discrimination” (that is, against an entity such as Services with which the presumptive discriminator has no contractual relationship) is that it could be exposed to a pecuniary penalty of up to $110,000 for “discriminating against someone that it did not know existed and with whom they had no contractual or other relationship”. MDC therefore contends that, in the absence of clear words, the Court should not readily interpret the range of conduct involved in discriminating against the “second person” as extending to inflicting an adverse impact in circumstances in which it must be described as “indirect.”

30    In my view, the suggested dichotomy between “direct” and “indirect” discrimination, is erected on an unwarrantably narrow construction of s 45 of the BCII Act which requires the application of a subjective test rather than a objective one. The main object of the BCII Act as articulated in s 3(1) is to;

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

The presence in the BCII Act of that main object tends, I consider, in favour of the view that s 45 erects an objective test which requires one to ask whether a reasonable person in the building industry to whom the BCII Act applies, would have foreseen that an action against another person is likely to discriminate against a third person or any number of other persons. Thus, in this case, the question would be whether MDC, acting reasonably, should have known that the cancellation of the Assembly Agreement with Hanlon on the ground, eg, that Services’ employees were not, or would not be, covered by a Workplace Agreement, would have a discriminatory impact on Services or its employees.

31    Similarly, and in contrast with the provisions in the WR Act discussed above at [18]-[28] of these reasons, s 45(1) of the BCII Act contemplates that the “first person” and/or “second person” may be a constitutional corporation: s 45(3). Accordingly, applying the objective test, it may be concluded that a reasonable person in the building industry would know that, by discriminating against a corporation, the person may bring about a discriminatory effect on a subsidiary of that corporation which might be the employer of the building employees. The fact that the “first person” has contracted with a head company, a subsidiary of which is the actual employer of the affected building employees, should not restrict the scope of s 45(1). Such a result would restrict the application of the section in a way which, in my view, would be inconsistent with the legislature’s intention as evinced by the main object expressed in s 3(1).

32    I consider that a strange result would be achieved if s 45 of the BCII Act was interpreted as enabling head contractors such as MDC to disregard the likely existence of subsidiaries or third party sub-contractors, such as Services, who actually employ the building employees. In so doing, a contractor could discriminate against those subsidiaries or sub-contractors and their building employees on the ground that the employees are not covered by a particular industrial instrument. In consequence, those subsidiaries or sub-contractors and their building employees would be denied the protections afforded by s 45 of the BCII Act merely because they were at one or more contractual removes from the presumptive discriminator. Given the nature of the building industry and, in particular, the way in which large building contractors, which may be corporations, frequently erect a hierarchy of sub-contracts for the performance of work on large, complex sites like the Project, it is difficulty to impute to Parliament an intention to confine s 45 of the BCII Act to “direct” discrimination between contracting parties.

33    It follows that an interpretation of s 45(1) of the BCII Act, which requires Helal to prove, on the application of an objective test, that MDC discriminated against Services, would not produce a strange result. Rather, the result would be strange if, given the context of s 45(1), the scope of that section were restricted to apply only to parties in a direct and immediate contractual relationship.

Statutory context

34    The final, and in MDC’s submission most powerful, reason why s 45 of the BCII Act should not be interpreted to allow for “indirect discrimination”, is based on a contextual argument. In their written submissions, MDC contends that s 45(3) of the BCII Act, which provides for certain exceptions to the operation of s 45(1);

… makes clear that the relevant second person can only ever be the person with whom the potential Respondent is directly engaging (that is, the person whom the conduct is directly taken against). Section 45(3) contemplates that certain “second persons” might have works performed for them by others. Nevertheless, it remains the second person to whom the conduct must be directed.

If s.45(1) were intended to extend to discrimination by a potential Respondent directly against person A that affects person B, only because person B carries out work for person A (on behalf of the Respondent), then s.45(3) would only need to refer to the carrying out of building work (and not building work arranged to be carried out).

Finally and ultimately, if the legislature wanted to make it unlawful for a potential Respondent to refuse to engage or otherwise deal with a second person because of the industrial instrument applying to a third person, it could easily have done so. It has not done so in clear terms, and s.45(1) should not be expanded beyond its apparent scope, so as to achieve an objective that was clearly achievable by alternative means not adopted.

35    Section 45(3) of the BCII Act provides:

(3)    Subsection (1) does not apply to conduct by the first person if:

(a)    the conduct occurs in relation to:

(i)    a proposed agreement between the first person and the second person under which the second person would carry out building work or arrange for building work to be carried out; or

(ii)    a proposed variation of an agreement between the first person and the second person under which the second person carries out building work or arranges for building work to be carried out; and

(b)    the conduct is engaged in solely for the purpose of encouraging the second person to have particular eligible conditions in an industrial instrument that covers employees of the second person.

It is apparent from the language of this subsection of s 45 of the BCII Act that its purpose is to exclude from the range of prohibited discrimination, any conduct in relation to the negotiation of an agreement or variation of an agreement, where that conduct related to the inclusion of “eligible conditions” in an industrial instrument that covers employees of the “second person”. The defined term “eligible condition” means:

a condition relating to:

(a)    the times or days when work is to be performed; or

(b)    inclement weather procedures; or

(c)    any other matter prescribed by the regulations for the purposes of this paragraph.

36    In my view, s 45(3) of the BCII Act has been framed to create an exception to the liability for discrimination imposed by sub-section (1). The exception is cumulative in the sense that it operates by its first limb to exculpate a presumptive discrimination if the alleged discrimination occurs in relation to a preposed agreement between that person and a second person under which the second person would carry out building work or arrange for it to be carried out on behalf of the presumptive discriminator. The words to which I have added emphasis makes it clear that the exception does not apply to an existing agreement between the “first person” and the “second person” which is the description answered by the agreement in the present case between MDC and Hanlon. That view is reinforced by the second part of the first limb of the exception which is to be found in s 45(3)(a)(ii) and extends to a proposed variation of an existing agreement between the “first person” and the “second person”. It is also to be observed that if, as MDC contends, s 45(1) applies only to conduct by the “first person” against a second person who is a party to a contract with the “first person” which contemplates the employment by the “second person” of building employees, the exception made available by the words “or arrange for building work to be carried out” [scil. by a third person] would be superfluous.

37    The second way in which the exception carved out by s 45(3) has been qualified is cumulative as indicated by the conjunctive “and” at the end of s 45(3)(a)(ii). That additional requirement is that the discriminatory conduct must be engaged in solely for the purpose of encouraging the second person to have included in an industrial instrument that covers employees of the second person “eligible conditions” as defined in s 4 of the BCII Act. The arrangement of that second part of the exception makes it clear that it does not apply to conduct engaged in for the purpose of encouraging the second person to ensure that its employees be covered by an industrial instrument which extends beyond the provision of eligible conditions, or not be covered at all by an industrial instrument. If, as on the construction which I prefer, s 45(1) is capable of applying to discrimination against a second person who is not a party to a contract with the first person, the fact that a limited exception created by s 45(3) is not available to relieve from liability for that type of discrimination does not cut down the liability primarily imposed by s 45(1).

38    Accordingly, I reject the contention by MDC that s 45(3) of the BCII Act “makes it clear that the relevant second person can only ever be the person with whom the potential Respondent is directly engaging”.

CONCLUSION

39    As I have indicated at [11]-[38] of these reasons, I am not persuaded that s 45(1) of the BCII Act should be construed narrowly, with the result that the section applies only to conduct between parties to a single contract. The words of the subsection should be given their ordinary and natural meaning which, in the present context, means that the “second person” is not required to have any contractual or other relationship with the “first person”. Accordingly, to determine whether the “first person” has discriminated against the “second person”, an objective test is to be applied. As I have outlined at [30]-[32] above, the application of an objective test would oblige Helal to discharge the onus of proving that MDC, as a reasonable participant in the building industry, knew or ought to have known that either Hanlon, or a subcontractor of Hanlon such as Services, was likely to be the employer of building employees on the Project and, therefore, any discriminatory conduct, even if it is “targeted” at Hanlon as a matter of contract, would discriminate against Services as the employer of the building employees.

40    Taking into account the principles applicable to s 31A of the Federal Court Act, set out at [12] of these reasons, on the current evidence before the Court and in light of my view of the preferable interpretation of s 45(1) of the BCII Act, I cannot conclude that Helal has no reasonable prospect of successfully prosecuting the proceeding against MDC. If Helal can prove that MDC engaged in discrimination as envisaged by s 45(1) and knew, or ought reasonably to have known, that Services, as the relevant employer of building employees, would be affected by that conduct, then Helal is likely to succeed at trial. It is necessary, therefore, for the appropriate questions of fact to be determined at a hearing.

41    For the reasons which I have endeavoured to explain, MDC’s motion must be dismissed. I shall order that Helal’s costs of and incidental to the motion be her costs in the cause.

Associate:

Dated:    22 December 2010