FEDERAL COURT OF AUSTRALIA

Helal v McConnell Dowell Constructors (Aust) Pty Ltd (No 3) [2011] FCA 1344

THE COURT ORDERS THAT:

1.     The application be dismissed.

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

REASONS FOR JUDGMENT

1    The Building and Construction Industry Improvement Act 2005 (Cth) (“the Act”) came into force in 2005. It was intended to improve the workplace relations framework in the building and construction industry in order “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”: see s 3(1). The participants in the industry include principal contractors and sub-contractors engaged by them to do specialist work. One of the measures which was adopted by the legislature in order to further the main object of the Act was the imposition of a requirement that a head contractor must not discriminate against a sub-contractor on the ground that the sub-contractor’s employees are covered or are not covered by a particular kind of industrial instrument.

2    The applicant, who is an inspector appointed under the Act, has alleged that the respondent (“McConnell Dowell”) has discriminated against a company which supplied labour to one of its sub-contractors because those employees’ employment was not regulated by an industrial agreement.

3    The applicant sought declarations pursuant to s 49 of the Act and s 21 of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”). She also sought the imposition of a pecuniary penalty pursuant to s 49 of the Act.

4    The issues in dispute are narrowly confined. This is because most of the relevant facts are not in dispute.

THE FACTUAL BACKGROUND

5    The parties filed a statement of agreed facts pursuant to s 191 of the Evidence Act 1995 (Cth) (“the Evidence Act”).

6    The parties are agreed that:

“1.     Corio Quay, just north of the city of Geelong, Victoria, forms part of what is known as the Port of Geelong. It is owned by Ports Pty Ltd, as trustee for the Port of Geelong Unit Trust.

2.     The beneficiaries of the Port of Geelong Unit Trust are Hastings Funds Management, Asciano Pty Ltd and PREEF Asset Management.

3.     Geelong Port Pty Ltd is a subsidiary of Asciano Pty Ltd. By agreement with Ports Pty Ltd (as trustee for the Port of Geelong Unit Trust), Geelong Port Pty Ltd operates the Port of Geelong.

4.     Tenova SEMF Pty Ltd and McConnell Dowell Constructors (Aust) Pty Ltd (McConnell Dowell) were partners in a joint venture that had been engaged by Ports Pty Ltd, in or about October 2008, to design and build the Corio Quay North No 4 Ship Loader project (Project).

5.     In or about February 2009, construction works on the Project commenced at the Corio Quay site.

6.     By an agreement entered into in about December 2008, McConnell Dowell engaged Hanlon Industries Pty Ltd (Hanlons) to fabricate, paint, assemble and deliver to the Corio Quay site a network of structural steel beams that would, ultimately, form part of the extension of the Corio Quay North wharf component of the Project (Structural Steel).

7.     In March 2009, McConnell Dowell (by its Project Manager, Adam Stein) granted Hanlons permission to carry out welding work associated with the assembly of the Structural Steel, at the Corio Quay site – specifically, that work involved the creation of five steel “bays”, each consisting of twin girders with tubular bracing at each end (Welding Work).

8.     In early May 2009, Hanlons arranged for delivery of fabricated and painted, but unassembled, steel beams to the Corio Quay site (Unassembled Beams).

9.    On or about Thursday, 7 May 2009, Hanlons commenced performing the Welding Work at the Corio Quay site. Specifically, two workers attended at the Corio Quay site for the purposes of performing the Welding Work (Workers). The Workers were employees of Hanlon Labour Services Pty Ltd, which was a company related to Hanlons and who provided the latter’s labour.

10.    The Workers performed the Welding Work at the Corio Quay site on at least Thursday, 7 May, Friday, 8 May and Monday, 11 May 2009.

11.    On Tuesday, 12 May 2009, McConnell Dowell, by letter from Mr Stein, withdrew its permission for Hanlons to perform the Welding Work at the Corio Quay site. That letter was sent at the direction of McConnell Dowell’s Southern Region Manager, Civil and Marine, Mr Sam Kapetanas. Mr Kapetanas did not then know that the Workers were employed by Hanlon Labour Services Pty Ltd.

12.    By 12 May 2009, Hanlons had completed the assembly of one of the five bays and had commenced work on another.

13.     After receipt of Mr Stein’s 12 May 2009 letter, Hanlons arranged for the relocation of the Unassembled Beams that were to be used on the three remaining “bays” to its workshop in Geelong, where they were assembled and, later, delivered back to the Corio Quay site.

14.     As a consequence of having to complete the assembly of the Unassembled Beams at its Geelong workshop and to transport completed “bays” back to the Corio Quay site, Hanlons incurred some additional costs.

15.     Between 12 May and 27 May 2009, McConnell Dowell determined that some of the paintwork on the completed “bays” required additional blasting and repainting. At the insistence of McConnell Dowell, this work was performed by Action Alliance, not Hanlons’ nominated painting contractor. This additional blasting and repainting work also imposed some additional costs on Hanlons.”

CONSTRUCTION OF SUB-SECTION 45(1)

7    The applicant alleges that McConnell Dowell has contravened s 45(1) of the Act. Relevantly this sub-section 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;

…”

McConnell Dowell did not dispute that it and Hanlon Labour Services Pty Ltd (“HLS”) were both constitutional corporations: see s 45(4)(b) and (c). It also accepted that the relevant employees of HLS were “building employees” as defined in s 4 of the Act. One issue in dispute between the parties centred on the undefined words “discriminate against”.

8    The applicant contended that McConnell Dowell (the first person) discriminated against HLS (the second person) by withdrawing its permission for Hanlon Industries Pty Ltd (“Hanlons”) to perform the welding work on site.

9    At an early stage of the proceeding McConnell Dowell sought an order for summary dismissal pursuant to s 31A(2) of the Federal Court Act on the ground that the applicant had no reasonable prospect of successfully prosecuting the proceeding. This was because, so it was contended, a contravention of s 45(1) of the Act cannot be established when the alleged discriminatory act was taken against a third party with which the first person had no contractual relationship and the existence of which it was unaware.

10    The summary judgment application was heard by Ryan J. He rejected it: see Helal v McConnell Dowell Constructors (Aust) Pty Ltd (2010) 193 FCR 213 (“Helal (No 1)”). His Honour was concerned only with a question of statutory construction, namely, whether the first person, comprehended by s 45(1) could discriminate against a party (the second person) with whom it had no contractual relationship.

11    One of the arguments advanced by McConnell Dowell in support of a narrow construction of s 45(1) was that the first person could not discriminate against the second person unless the latter was a “specific identifiable person.” In rejecting this argument his Honour had regard to the definition of the verb “discriminate” appearing in the Oxford English Dictionary (2nd ed). That definition was:

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

12    This, he held, was the word’s “full and ordinary meaning”: see at 220-1 [24].

13    His Honour went on to hold that s 45 erected an objective test:

“… which requires one to ask whether a reasonable person in the building industry to whom [these Acts apply], 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 [McConnell Dowell], acting reasonably, should have known that the cancellation of the [agreement with Hanlon Industries] on the ground, eg, that [HLS’] employees were not, or would not be, covered by a Workplace Agreement, would have a discriminatory impact on [HLS] or its employees.

…

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).”

See at 223 [30]-[31].

14    McConnell Dowell did not seek to reagitate the arguments which it had advanced unsuccessfully before Ryan J. Both the applicant and McConnell Dowell accepted that the phrase “discriminate against” should be construed and applied in the manner which found favour with Ryan J.

THE ISSUES IN DISPUTE

15    As a result there were only two contentious issues which remained. They were:

    whether the applicant had adduced any or any sufficient evidence to support the claim that McConnell Dowell had “discriminated against” HLS; and

    if so, whether such discriminatory action was taken “on the ground that” the employment of HLS’ employees was not covered by a particular kind of industrial instrument.

THE APPLICANT’S EVIDENCE

16    The only witness called by the applicant was Mr Anthony Bradford. Mr Bradford had, at relevant times, been the General Manager of Hanlons. He confirmed that Hanlons had been engaged by McConnell Dowell to fabricate, paint, assemble and deliver structural steel beams for the project.

17    The original arrangement had been that all work would be conducted off-site and that the steel beams would be delivered to the project ready for incorporation in the extension of the wharf.

18    In about early March Mr Bradford had approached Mr Stein and proposed that some of the assembly work might take place near to where the fabricated beams were to be installed. He had discussed with Mr Stein the possibility of this work being carried out in one of the sheds on the site but sufficient space was not available. They agreed that the work could be undertaken outdoors on one of the piers.

19    Mr Stein confirmed the revised arrangements in an email which he sent to Mr Bradford on 26 March 2009. That e-mail (formal parts omitted) read:

“With respect to welding bracing to WBs in Shed 3 on site, we advise that a few conditions will need to be met as follows:

•    Safe work method statements to be submitted and approved for welding, blasting     and painting activites (sic) to ensure work can be carried out safely and all     involved personnel will be required to sign on to these procedures

•    Suitable protection screens will need to be erected

•    Attendance by your personnel will be required at the brief daily start up meetings     (7am) and fortnightly toolbox meetings

•    Any plant or machinery required for the work will need to arrive with records of     risk assessments completed

•    Site personnel will need to complete both GeelongPort (sic) Induction and     McConnekll (sic) Dowell inductions prior to work commencing (this can be done     at any time prior to the work if required)

•    Site personnel will require the industry Red Card

•    Requirements of attached Site Agreement need to be allowed for

Permission to carry out the activities on site is granted on the basis that compliance with the above does not constitute a variation under your existing Purchase Order contract.”

20    Hanlons commenced on site work pursuant to these arrangements on about 7 May 2009. Two employees of HLS attended and performed welding work on that and subsequent days.

21    Mr Bradford attended the site once or twice on each day on which work was being performed.

22    At no time did Mr Stein or any other McConnell Dowell employee complain to Mr Bradford about the way in which the HLS employees were performing their work.

23    Mr Bradford was, as a result, surprised to receive a letter from Mr Stein dated 12 May 2009 in which Mr Stein effectively rescinded the arrangement for the performance of work on site. The letter (formal parts omitted) read:

“Re: On Site Welding

We refer to the terms of the your (sic) Purchase Order relating to steel fabrication, coating and delivery of access bridge and ship loader platform structural steel. The original requirement of the purchase order was to deliver all steel complete and inclusive of all freight charges to site.

Whilst we have agreed to allow site welding of bracing to girder beams on site, our management has reviewed the decision following your request to complete your scope of works on site due to the handling difficulties in your workshop of the large braced girder bays. Please be advised thus:

“You have advised us that you do not possess any current industrial instrument which covers your workforce in the execution of any site work. You have been engaged by MCD to supply only fabricated steelwork to the Corio project, but not for work to be carried out on site. Accordingly, we will not require your workforce on-site until further notice.”

We will complete this work direct on site and advise costs to complete to your account

We thank-you for your understanding in this matter.”

24    The consequences of the decision were that the remaining welding work and other work on the beams which were already on site was performed by another contractor which subsequently invoiced Hanlons for the cost of its work. The beams, which had not yet been assembled, were fabricated in Hanlons’ workshop and then transported to the quay.

25    Mr Bradford said that, once the beams had been fabricated into “bays”, they were much more difficult to transport. The loading and unloading of the bays on and from trucks involved more difficult loading and unloading work for the workers involved.

26    Mr Bradford also gave evidence that he performed the duties of General Manager of HLS. He did not, however, have any knowledge of the commercial arrangement under which employees of HLS performed work for Hanlons. He did not know whether or on what basis HLS charged Hanlons for the provision of labour. He had no knowledge of how the labour costs were accounted for in the books of either HLS or Hanlons.

27    Mr Bradford said that he had never met or spoken to Mr Sam Kapetanas who was Mr Stein’s immediate supervisor and who had directed that the HLS employees should cease working on the site.

NO CASE SUBMISSION

28    After Mr Bradford had given evidence, counsel for the applicant closed her case. Counsel for McConnell Dowell sought to make a no case submission without being put to election.

29    I heard argument in support of the no case submission before determining whether or not to put McConnell Dowell to its election. cf Protean (Holdings) Limited v American Home Assurance Company [1985] VR 187 at 237; Cahill v Construction, Forestry, Mining and Energy Union (No 2) (2008) 170 FCR 357 at 365-6.

30    Having heard argument I determined that McConnell Dowell should be required to elect before any ruling on its no case submission was given. At the time of making this ruling I provided short reasons and advised counsel that I would elaborate on those reasons when giving judgment.

31    The general rule is that “a decision will not be given on a submission of no case to answer unless the moving party elects to call no evidence”: see Rasomen Pty Ltd v Shell Company of Australia Limited (1997) 75 FCR 216 at 223. This general rule may be departed from in circumstances in which the interests of justice or convenience so require: see Protean (Holdings) at 238.

32    As Kenny J said in Cahill (at 368), there must, generally speaking, “be some unusual circumstance to justify the respondents making a no-case submission without being required to elect to call no evidence.” Such circumstances have been found to exist where allegations of fraud or dishonesty have been made against a respondent (see, for example, Tru Floor Service Pty Ltd v Jenkins(No 2) (2006) 232 ALR 532 at 540-1), where the applicant’s case appears to be weak and where there is a likelihood that significant savings of hearing time will be achieved if the no-case submission were to be successful (see, for example, Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at 7-9).

33    McConnell Dowell supported its application principally on the basis that none of the evidence led by the applicant supported the allegation that it had discriminated against HLS. The result was, it submitted, that its defence was “unanswerable”.

34    I rejected this submission. The evidence led from Mr Bradford could have supported an inference that McConnell Dowell had contravened s 45(1) of the Act. The only explanation which Mr Bradford was given for the requirement that the two employees of HLS should be withdrawn from the project site was that contained in the letter of 12 May 2009. It was terse in its tone, lacking in detail and open to competing interpretations. The letter was written at a time at which McConnell Dowell was unaware that the persons undertaking the welding and related work were employees of HLS. One of the reasons assigned by McConnell Dowell, in its letter, for its decision, was that Hanlons did “not possess any current industrial instrument which covers your workforce in the execution of any site work.” Elaboration was called for and could be provided by the decision-maker without significantly adding to the length of the trial: cf Trade Practices Commission v George Weston Foods Limited (No 2) (1980) 43 FLR 55 at 60-2; Cahill at 368-9.

35    In these circumstances I did not consider that any basis for departure from the general rule had been established.

36    Once this ruling was given counsel for McConnell Dowell announced that it proposed to call evidence from one witness.

MCCONNELL DOWELL’S EVIDENCE

37    The only witness called by McConnell Dowell was Mr Sam Kapetanas. Mr Kapetanas was Mr Stein’s immediate supervisor.

38    Mr Kapetanas said that he visited the project site on average between once a fortnight and once a month. He attended the site on either 7, 8 or 9 May 2009. He observed the steel fabrication work going on on the wharf. He observed what he said were safety concerns such as inadequate shielding of the welding allowing debris to travel up to 20 metres away from where the work was being done. He also said that he observed garnet pieces blowing into the water thereby causing pollution.

39    Mr Kapetanas did not speak to the HLS workers. He went immediately to the site office. There he told Mr Stein what he had observed. Mr Kapetanas said that he also questioned Mr Stein about who the workers were, how they were being paid and their conditions of employment. He said that he did not receive any satisfactory answers to these questions from Mr Stein. He was angry that the work was being conducted on site because he had earlier directed Mr Stein not to allow Hanlons to perform the fabricating work on the quay. He told Mr Stein to rescind his approval and direct Hanlons to undertake further work in its warehouse.

40    On his return to Melbourne Mr Kapetanas sought advice from a number of McConnell Dowell managers. He also sought advice from a consultant, Mr Rod Kelly.

41    On 11 May 2009 Mr Kelly sent “a suggested form of action” to Mr Kapetanas. The memorandum of advice was divided into three sections. It was in the following form:

“To be advised to Hanlons:

You have advised us that you do not possess any current industrial instrument which covers your workforce in the carriage of work.

You have been engaged by us to fabricate work for supply to the Corio project but not for work to be carried out on-site.

Accordingly we shall not require you to provide any of your workforce on-site until further notice (Italics in original)

____________________________________________________________________

In these circumstances, it is most inadvisable to stray from conveying the above advice to this company.

Furthermore,

Our position at all material times should be to ensure that all engaged sub-contractors are able to provide to us at time of receipt of an interest to tender, of the following.

1.    A copy of each and every Industrial Instrument which each applicant sub-contractor possesses.

2.    A copy of each certificate issued by DEEWR’s Department of Code Compliance.

3.    Each of the above documents must be scrutinised to ensure that we are protected for the life of each project from issues such as code compliance and protected action against any of the sub-contractors with which we do business.

============================================================

CONFIDENTIAL

Sam,

Can you give me a call before we progress on this. If protected action is taken against this sub-contractor, as I am advised is expected in the immediate future, it will have the experience of seriously impeded (sic) our progress on this project and have serious implications for the conduct of our operations elsewhere.

Regards,

Rod”

42    The “code” referred to in Mr Kelly’s advice was also referred to on many occasions by Mr Kapetanas in the course of his oral evidence. He understood the “code” to be rules promulgated by the Commonwealth government with which principal contractors were required to comply in order to obtain work funded by the government. Mr Kapetanas said that he had never read the code but had been advised about its requirements in the course of a seminar which he had attended and which had been conducted by the employer organisation of which McConnell Dowell was a member. His understanding was that it was a requirement of the code that principal contractors, such as McConnell Dowell, ensure that workers engaged on their sites (including those employed by sub-contractors) were paid the entitlements prescribed by the relevant award.

43    Having received Mr Kelly’s advice Mr Kapetanas embarked on a series of e-mail exchanges with Mr Stein. He directed Mr Stein to write to Hanlons in substantially the same terms as proposed by Mr Kelly and to take various other steps to ensure what he referred to as “code compliance”. Mr Stein sought to persuade Mr Kapetanas that the HLS workers should not be removed from the site. Ultimately Mr Stein was unsuccessful in this endeavour.

44    The exchanges occurred over a two hour period on the afternoon of 11 May 2009. On a number of the e-mails Mr Kapetanas inserted his response to propositions advanced by Mr Stein by writing his views adjacent to Mr Stein’s text. Mr Kapetanas’ responses are represented in the following e-mails in bold print. “Sam” is Mr Kapetanas. “Adam” is Mr Stein.

45    The first exchange occurred at about 3:03 pm on 11 May 2009. It read:

“Sam,

These are the facts regarding works to be completed on site by Hanlon:

The intent of the original supply order was to fabricate all steelwork off site and deliver ready for installation.

We agreed to allow Hanlon to weld bracing and blast and paint the welds on site as the frame was too large for them to handle at their workshop and deliver as wide load GeelongPort had no problem with this. We have no contractual arrangement with them for this and if things go pear shape MCD is not covered. They should have known this at tender time that they could not deliver in one piece, as this was the basis of the RFT.

There are 5 bays to be welded (twin girders with tubular bracing between at each end). One is complete, and approximately 4 days of welder time remains to complete.

We need to weld them, then paint them so we need about 2 days between welds.

The MWU do not like Hanlon as they will not sign a local Geelong area agreement binding them to a 36 hour week and higher pay rates

Hanlon claim they pay the award rates and offer a 38hr week. This is not an industrial instrument, does not prove code compliance and exposes them to protected action.

Hanlon have no legal obligation to sign the MWU agreement

Hanlon have signed the Corio Quay site agreement requested by MWU and intend to pay their workers in accordance with this agreement for the time they work on this site It needs to be signed by both parties for it to be an agreement.

To remove their requirement to complete the site welding will mean Macdow will need to find in a hurry, welders prequalified to the procedure to continue the welding potentially delaying the installation by KVJ ($??) and causing additional cost to the project for welding and painting (around $7000-$8000). Do not expect a reduction in cost to be passed on by Hanlon for taking this work off them. We are not taking work off them. They are the ones that are changing the intent of the purchase order. These costs will be borne by Hanlons. They should also provide the savings to us for not delivering the steelwork in one piece. (transport cots (sic), escorts, wide loads etc)

Bowing to union pressure and cancelling Hanlon from completing their remaining work is not code compliant and you should expect as a result a visit to the site by the ABCC. This would in turn threaten our involvement in jobs with Federal Government funding. We are actually protecting ourselves from losing Federal work and ensuring that they are code compliant. If as they have suggested thay (sic) pay in accordance to (sic) the award, they would not have anyone working for them.

I think your boys in SA should harden up and call a spade a spade – a small time Geelong Fabricator with 5 days work on our site should not cause issues just because the MWU want to puff out their chests.

Any industrial action taken whilst negotiating an agreement on the De-sal job would only be protected action if it was in relation to claims about entitlements of employees.

A secondary boycott is not protected action.

Who should I bill the extra costs to if you want me to organise other welders – the Union or Adelaide Desal? Hanlons because they are not honouring their supply order.

Adam.”

46    The second exchange commenced at 4:45 pm on that afternoon. It read:

“Adam

Based on the advice you have given me, the following should be advised to Hanlon in writing,

‘You have advised us that you do not possess any current industrial instrument which covers your workforce in the execution of any site work. You have been engaged by MCD to supply only fabricated steelwork to the Corio project, but not for work to be carried on site. Accordingly, we shall not require your workforce on-site until further notice.’

This needs to be done today.

Furthermore,

Our position at all times should be to ensure that all engaged sub-contractors are able to provide to us at time of receipt of an interest to tender, of the following:

1.    A copy of each and every Industrial Instrument which each applicant sub-contractor possesses.

2.    A copy of each certificate issued by DEEWR’s Department of Code Compliance.

3.    Each of the above documents must be scrutinised to ensure that we are protected for the life of each project from issues such as code compliance and protected action against any of the sub-contractors with which we do business.

Regards

Sam Kapetanas”

47        Mr Stein responded:

“Sam,

This is not helpful enough.

1. They work to the Award – still legal in Australia as I understand it, and they have have (sic) signed the site agreement as advised previously They do not have an industrial agreement, which does not protect them from protective (sic) action, which in turn will affect us all. They do not have a signed site agreement. (Not signed by all parties or certified)

2. We allowed them to do site work (minimal) – how can we justify a backflip like that after 2 days of work on site already? Well we should not have. 2 wrongs do not make a right …

3. They have/do perform site work for Abby Group and local organisations like Shell etc. Not sure what they do on other sites.

4. How do you envisage handling the issue of getting the rest of their work done by others ie. cost Get it done and backcharge.

It is pretty hard to react efficiently when things are already in place for completion and how do you expect to convince Hanlon that this has been done (given our agreement for site work up to now) for any reason other than the union one.”

48    Mr Stein complied with Mr Kapetanas’ direction on the following day. He did so by preparing and sending the letter set out above at [23]. Although McConnell Dowell expressed its decision as one not requiring the Hanlon workforce on site until further notice, both sides understood it as being a directive that Hanlons remove the workers who were undertaking the fabricating of the bays from the site.

49    Hanlons complied with the instructions in the letter and withdrew the HLS employees from the site. It also arranged for the unassembled beams to be removed from the site. They were taken to its warehouse where the assembly work for the last three bays was carried out. Once completed the bays were taken back to the site.

50    The partly assembled bay which was on site was completed by another contractor at McConnell Dowell’s direction but at Hanlons’ expense.

THE FIRST issue – WAS HLS ‘DISCRIMINATED AGAINST’?

51    The first of the issues in dispute between the parties is whether the applicant had adduced any or any sufficient evidence to support the claim that McConnell Dowell had “discriminated against” HLS.

52    I have already recorded that, in Helal (No 1), Ryan J had adopted and applied the Oxford English Dictionary definition of the verb “discriminate” in construing s 45(1) of the Act. That definition, insofar as it involved discrimination against another party, suggested that this would occur when the actor makes “an adverse distinction” or distinguishes unfavourably to the detriment of the alleged victim of the discrimination.

53    Counsel for the applicant also drew attention to the decision of a Full Court in O’Brien Glass Industries Limited v Cool & Sons Pty Ltd (1983) 48 ALR 625 at 635 where Fox J (with whom Sheppard J agreed) held that the word “discriminate”, appearing in s 49 of the Trade Practices Act 1974 (Cth), meant “treat differently those who are alike in a relevant sense”.

54    The applicant stressed that a person might be discriminated against in ways that did not give rise to legal or compensable injury. Support for this proposition was said to be found in the decision of the High Court in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 where (at 18) the plurality, in dealing with the phrase “alter the position of an employee to the employee’s prejudice” in s 298K(1) of the Workplace Relations Act 1996 (Cth), said that the phrase covered “not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question.”

55    Had Hanlons been the employer of the relevant employees, there can be little doubt that the applicant could have made out that part of her case relating to discriminatory conduct. The effect of the direction, given by McConnell Dowell on 12 May 2009, was clearly prejudicial to Hanlons. It was no longer able to perform the assembly work at the location which was most convenient to it. It had to incur the expense of returning the beams to its workshop and of transporting them in assembled form to the quay. It was required to pay another contractor to complete the assembly work on-site.

56    HLS did not suffer any of these consequences. Its two employees were withdrawn from the construction site. Although there was no direct evidence of where they were subsequently deployed, it may be inferred that they continued to perform the work for which they were engaged at Hanlons’ workshop. There was, however, no evidence that this change had any impact, adverse or otherwise, on HLS. There was no evidence about the contractual arrangements between Hanlons and HLS under which Hanlons secured the services of the HLS employees. In particular there was no evidence to suggest that the withdrawal of the workers from the project site had any financial implications for HLS.

57    The applicant submitted that the direction caused specific prejudice to HLS in that the work was no longer to be performed in the most convenient place and that additional loading and unloading of trucks became necessary. As already noted, these were consequences that fell on Hanlons not on HLS.

58    Ultimately, the applicant was forced to submit that the withdrawal of the facility for HLS employees to work on-site “was inherently adverse, in the sense that it left [HLS] without that which it had previously had.” That is, HLS lost the ability to have its employees perform their work at the quay. How this could be said to be detrimental to HLS was not explained.

59    In order for A to discriminate against B there must be some evidence of an adverse impact of A’s conduct on B. In the absence of any evidence as to the impact on HLS of the requirement that its employees be withdrawn from the site I am unable to conclude that it was discriminated against by McConnell Dowell.

THE SECOND ISSUE - “ON THE GROUND THAT”

60    My finding on the first issue makes it strictly unnecessary for me to deal with the second issue. That issue was, however, fully argued and I will, therefore, say something shortly about it.

61    McConnell Dowell could only have been held to contravene s 45(1) of the Act if the applicant established that the discrimination against HLS occurred “on the ground that” HLS’s building employees were not covered by a particular kind of industrial instrument.

62    McConnell Dowell contended that the decision requiring Hanlons to cease construction work at the quay was motivated by, and only by, lawful reasons. It wished to avoid any disruption to work on the project. Such disruption would occur if protected industrial action was taken against HLS or Hanlons should a union attempt to secure an industrial agreement or agreements with them.

63    In final submissions McConnell Dowell sought to draw a distinction between what it described as the “mere fact” that Hanlons did not have a current industrial agreement with any union and what it said was the “true reason” for its action. That true reason was said to be the giving effect to its policy or practice of requiring sub-contractors to have a current industrial agreement. The purpose of the policy, in turn, was to protect McConnell Dowell from the business risk associated with exposure to the effects of protected industrial action and the possible loss of government work because of its failure to comply with code requirements.

64    There was substantial agreement between the parties as to the construction of s 45(1) and the legal principles which should govern its application.

65    The phrase “on the ground that” requires that an applicant establish that the proscribed reason which the applicant seeks to attribute to the respondent was a “substantial and operative reason” for it taking prejudicial action. The reason need not, however, be the sole or predominant reason why the respondent acted: see General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605 at 616; Wood v City of Melbourne Corporation (1979) 26 ALR 430 at 434; Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 at 68-9.

66    Where, as is presently the case, the respondent is a corporation the relevant ground or grounds will be those which actuated the decision-maker who acted on behalf of the corporation: see Bowling at 612; Seymour v Saint-Gobain Abrasives Pty Ltd (2006) 161 IR 9 at 14.

67    Ultimately, the inquiry is directed to identifying the “true” or “real” reason or reasons for the taking of the prejudicial action: see Bowling at 617; Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 220-1 (per Gray and Bromberg JJ).

68    In cases in which the evidence suggests that there may be more than one substantial and operative reason for the respondent’s action issues may arise as to whether one reason was the more immediate cause of the impugned conduct than was another or others. Issues of characterisation and judgment may also be involved: see Geraldton Port Authority at 83-4.

69    One such case, on which McConnell Dowell placed particular reliance, was Wood. The council had stood down and then dismissed one of its employees. The employee had been a union member and joined other members on strike. The strike became protracted. The employee resigned from his union and returned to work. His union and other unions placed black bans on areas where the employee worked. The result was that garbage was not collected. This, in turn, gave rise to a risk to public health. Section 5(1)(aa) of the Conciliation and Arbitration Act 1904 (Cth) made it an offence for an employer to dismiss an employee “by reason of the circumstance that the employee … has refused or failed to join in industrial action …” The council was charged with offences under s 5(1)(aa). Smithers J dismissed the charges. In doing so he examined the motivation of the council officers who were responsible for the decision to dismiss the employee. His Honour said (at 447-8) that:

“The section does not make it an offence to dismiss an employee who has broken or attempted to break a strike, or defied his fellow employees, or a union decision to engage in a strike or other industrial action. An offence is only committed when the state of mind of the employer is such that the fact that the employee has refused or failed to join in the strike was itself a substantial and operative reason for dismissing or otherwise injuring the employee. It would be apparent that in the case of an employer whose state of mind was that the fact that the employee had resisted the strike disposed him rather to advantage the employee in his employment, but who nevertheless, in his own interests, was influenced by or indeed forced to dismiss him by circumstances created by other persons. He would not act by reason of the circumstance that the employee was a strike-breaker. Similarly no offence is committed by any employer where that latter circumstance is not a substantial and operative factor influencing him to dismiss the employee.”

70    The distinction, drawn in Wood, between the relative immediacy of reasons for impugned conduct has been drawn in many cases. It is not necessary to review them all because that exercise was undertaken by Finkelstein J in Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union (2001) 112 FCR 232 at 282-287. This review led his Honour to conclude (at 287) that:

“Thus, there has been an unbroken line of State and federal authority in favour of the proposition that, for the purpose of deciding whether there has been an unlawful dismissal for the reason that an employee is entitled to the benefit of an award or certified agreement, it is necessary to draw a distinction between the ‘reason’ or motive behind the dismissal and what produced that motive.” (Emphasis added).

71    In applying these principles his Honour said (at 289) that:

“At this point, it is sufficient to note that the trial judge may not have drawn a sufficient distinction between the immediate reason (motive or purpose) for the dismissals or the acceptance of the tender, and the proximate reason (cause) which explained why that action was undertaken …”

72    The distinction was not one which trial judges always found easy to draw. In Maritime Union of Australia v CSL Australia Pty Ltd (2002) 113 IR 326 at 342, Branson J, for example, observed that the “distinction may in many cases be easier to articulate than to draw, especially in respect of a statutory provision that recognises the possibility of a number of reasons having a causal connection with conduct …”.

73    More recently, the authority of this line of cases (which includes Wood) has been called into question by the decision of the High Court in Purvis v The State of New South Wales (2003) 217 CLR 92. The Court there dealt with the construction of s 5(1) of the Disability Discrimination Act 1992 (Cth). This sub-section provided that “a person discriminates against another person on the ground of a disability of the aggrieved person if, because of the disability” the actor did certain things. In their joint judgment Gummow, Hayne and Heydon JJ made certain observations about the issue of whether the appellant had been treated less favourably “because of” his disability. Their Honours said (at 163) that:

“The arguments about this aspect of s 5(1) sought to draw distinctions between the motive of the discriminator, the purpose of the conduct and the effect of the conduct, and between objective and subjective criteria of operation. Attention was directed to the drafter’s use of the expression ‘by reason of’ in the equivalent provisions of the Sex Discrimination Act … rather than the expression ‘because of’ used in s 5(1) and other provisions of the Act … Reference was made to s 10 of the Act and its provision that if an act is done for two or more reasons and one of those is the disability of a person ‘whether or not it is the dominant or substantial reason for doing the act’ then for the purposes of the Act ‘the act is taken to be done for that reason’.

…

For present purposes, it is enough to say that we doubt that distinctions between motive, purpose or effect will greatly assist the resolution of any problem about whether treatment occurred or was proposed ‘because of’ disability. Rather, the central question will always be - why was the aggrieved person treated as he or she was? If the aggrieved person was treated less favourably was it ‘because of’, ‘by reason of’, that person’s disability? Motive, purpose, effect may all bear on that question. But it would be a mistake to treat those words as substitutes for the statutory expression ‘because of’. (Emphasis in original).

74    Similar reservations were expressed by Gray and Bromberg JJ in Barclay where their Honours said (at 221-2) that:

“The reason must be an operative or immediate reason and need not be the sole or dominant reason … But the drawing of distinctions between proximate or immediate reasons for conduct … or between the cause of conduct and the reason for conduct … is not helpful. Those distinctions fail to give sufficient attention to whether or not the reason was operative, and they also draw distinctions between a reason and a factor in a reason. As Gray J (with whom Woodward and Jenkinson JJ agreed) said in Lewis Construction Company Pty Ltd v Martin (1986) 17 IR 122 at 125:

the Act and the authorities do not distinguish between a ‘reason’ and a ‘factor’; indeed, in Bowling, these terms are used interchangeably.

Further, that no distinction is to be drawn between the cause of conduct and the reason for conduct is supported by our earlier conclusion … as to the meaning of ‘because’ and the interchangeable use by the relevant provisions … of cause and reason.”

75    The task of the Court is, then, to determine why McConnell Dowell took the adverse action against HLS. Was the fact that HLS’ employees were not covered by an industrial agreement a substantial and operative reason for Mr Kapetanas’ decision?

76    Mr Kapetanas’ reason or reasons for requiring the removal of HLS’ employees from the site are to be characterised having regard to his own evidence and the circumstances in which he acted.

77    Mr Kapetanas claimed that he was influenced, in making the decision that HLS workers should be removed from the project site, by health and safety concerns. He complained about the lack of screening of the welding work and about debris created by the fabrication process polluting the adjacent waters. These concerns did not seem to have loomed very large in his impugned decision. He did not personally intervene to require improvement to safety standards or to prevent further pollution. Nor did he require Mr Stein or anyone else employed by McConnell Dowell to take such steps. His correspondence with Mr Stein did not touch on these issues.

78    What Mr Kapetanas was principally concerned about was the fact that neither Hanlons nor HLS was a party to an industrial agreement with a union covering the work being performed by the HLS employees. This was the issue he raised with Mr Kelly. Mr Kelly’s advice included a draft of a letter which Mr Kapetanas directed Mr Stein to send to Hanlons. The letter assigned two reasons to the requirement that staff be withdrawn. The first was that Hanlons did “not possess any current industrial instrument which covers your workforce”. The second was that the contractual arrangement between Hanlons and McConnell Dowell did not provide for fabrication work to be carried out on site.

79    Mr Kapetanas was apprehensive that a union might take protected industrial action against Hanlons in order to secure an industrial agreement and that this may disrupt work on site. In order to obviate the attendant commercial risk he gave effect to McConnell Dowell’s policy that all sub-contractors should have what he regarded as an appropriate industrial agreement. He also understood (rightly or wrongly) that the Commonwealth Government’s Code of Conduct required McConnell Dowell to ensure that all its sub-contractors had such agreements. A failure to satisfy this requirement (he thought) jeopardised McConnell Dowell’s ability to obtain government contracts.

80    I am satisfied, on the balance of probabilities, that an operative and immediate reason for McConnell Dowell’s decision to require that the HLS employees be withdrawn from the construction site was the fact that HLS did not have an industrial agreement with a union. This was one of two reasons which appeared in the letter which Mr Kapetanas directed Mr Stein to send to Hanlons on 12 May 2009. The work on one of the bays remained incomplete. Another sub-contractor (whose employees were, presumably, covered by an acceptable industrial agreement) was engaged to complete the assembly work on that bay. At the time the decision was made neither Hanlons nor HLS was under threat of industrial action. No protected or other industrial action was being taken against them. There was, therefore, no disruption or threatened disruption to the work being undertaken for McConnell Dowell. Even had such a disruption occurred it would not have had wider implications of the kind which concerned the council in Wood. The decision was therefore pre-emptive rather than reactive: the decision was not forced on McConnell Dowell by circumstances created by any third party. Mr Kapetanas’ evidence satisfies me that he was not prepared, under any circumstances, to permit work to be undertaken on a McConnell Dowell site, over which he had control, by employees whose employment was not regulated by an industrial agreement between their employer and a relevant union.

81    Mr Kapetanas’ decision was properly to be characterised as being taken on the ground that Hanlons and HLS did not have an industrial agreement covering the work being undertaken by the HLS employees at the construction site.

82    It may well be that there were other substantial and operative reasons which motivated Mr Kapetanas. These may have included the protection of McConnell Dowell’s commercial interests. It is not necessary that I make any findings about the presence or absence of any such additional reasons. Their existence would not disturb my principal finding that the impugned reason, relied on by the applicant, was an operative and immediate reason for McConnell Dowell’s action.

DISPOSITION

83    In the absence of evidence to establish that McConnell Dowell’s decision had any adverse impact on HLS, the application must be dismissed.

Associate:

Dated:    25 November 2011