Australian Building and Construction Commissioner v McConnell Dowell Constructors

Place: Sydney (Via Video Link to Melbourne)

Counsel for the Appellant: Mr J L Bourke SC with Mr J Snaden

Solicitor for the Appellant: Australian Government Solicitor

Counsel for the Respondent: Mr S Wood SC with Mr M Follett

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1453 of 2011

BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

AND: MCCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD (ACN 002 929 017)

JUDGES: BUCHANAN, FLICK AND KATZMANN JJ DATE OF ORDER: 29 JUNE 2012 WHERE MADE: SYDNEY (VIA VIDEO LINK TO MELBOURNE)

1. The appeal is dismissed. 2. The Appellant is to pay the costs of the Respondent. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1453 of 2011

BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

AND: MCCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD (ACN 002 929 017)

JUDGES: BUCHANAN, FLICK AND KATZMANN JJ DATE: 29 JUNE 2012 PLACE: SYDNEY (VIA VIDEO LINK TO MELBOURNE)

Buchanan J: 1 This is an appeal against a judgment of Tracey J dismissing an application for a declaration that the respondent had contravened s 45 of the Building and Construction Industry Improvement Act 2005 (Cth) ("the Act") and for the imposition of a pecuniary penalty with respect to the alleged contravention (Helal v McConnell Dowell Constructors (Aust) Pty Ltd (No 3) [2011] FCA 1344). So far as is relevant to the present appeal, s 45 of the Act provided: (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; … 2 The respondent had engaged Hanlon Industries Pty Ltd ("Hanlons") to fabricate, paint, assemble and deliver a network of structural steel beams. The work was principally welding work. Hanlons was initially given permission by a project manager employed by the respondent to carry out welding work on site at the Port of Geelong, rather than at its own workshop. That was convenient to Hanlons. The two employees who attended to perform the work were not employees of Hanlons, but were employees of Hanlon Labour Services Pty Ltd ("HLS"). HLS was "related to Hanlons" and provided labour to Hanlons, but the details of the relationship and the arrangements pursuant to which labour was provided were not placed in evidence before the trial judge. The respondent subsequently withdrew permission for Hanlons to carry out work on site. That step caused some inconvenience to Hanlons. 3 The respondent made the decision to withdraw permission for Hanlons (and consequentially HLS) to perform welding work on site because the two employees were not covered by an industrial agreement with a union. The trial judge was satisfied that deciding to withdraw the earlier permission that work be performed on site for this reason was to take action on a ground proscribed by s 45(1)(a)(i) set out earlier. 4 Had Hanlons been the employer of the two employees then, on the findings made by the trial judge, the application would have succeeded as s 45 of the Act would have been breached. However the consequences for HLS were simply unknown. All that may be said is that employees of HLS ceased to perform work at the site. The trial judge had evidence suggesting that there was no reason why the directors of HLS could not give evidence. The trial judge had evidence that it was likely that the pay arrangements for the employees would appear from the records of HLS. No such material was placed before the trial judge. 5 Many statutes now provide that a person must not "discriminate against" another for many and different reasons. Often the statute will provide a catalogue of identified conduct which satisfies the description of conduct that "discriminates against" another, thereby breaching the statutory prohibition. The Act under consideration in the present case does not follow that model. For that reason it is necessary to assign a meaning to the phrase "discriminate against" in the statutory context in which it appears. 6 In an interlocutory judgment in the present proceedings Ryan J was required to consider the meaning to be assigned to the phrase "discriminate against" when dealing with an application made by the present respondent for summary judgment (Helal v McConnell Dowell Constructors (Aust) Pty Ltd (2010) 193 FCR 213). His Honour examined extrinsic material but found it to be of no assistance. His Honour examined authorities concerning s 298K of the Workplace Relations Act 1996 (Cth) (which also contained the phrase "discriminate against") which had been cited by the parties (BHP Iron Ore Pty Ltd v Australian Workers' Union (2000) 102 FCR 97 and Community and Public Sector Union v Telstra Corporation Ltd (2001) 107 FCR 93) but found them to be of no assistance either. His Honour referred to and adopted the meaning of the phrase "to discriminate against" given in connection with the definition of the verb "discriminate" in the Oxford English Dictionary (2nd ed) which was as follows: to discriminate against: to make an adverse distinction with regard to; to distinguish unfavourably from others. Immediately after referring to this definition, Ryan J noted (at [24]): 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. 7 The trial judge recorded (at [14]) that at the trial: 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. 8 The case for the appellant before the trial judge was that withdrawal of the ability for HLS employees to work on site was "inherently adverse" to HLS. The trial judge was unpersuaded by that submission in the absence of any relevant evidence. On the appeal the appellant broadened its position to submit that the respondent's decision to withdraw permission for Hanlons to perform welding work on site, which resulted in HLS being unable to carry out work on site through the continued presence of its employees, discriminated against HLS because that decision was taken for a proscribed reason. On this approach, proof of a proscribed ground referred to in s 45 was said to suffice to meet the requirement that conduct "discriminate against" an employer, whatever its impact or consequence. 9 This argument moves away from the position which the appellant accepted before the trial judge. It is not necessary to be delayed by that because the respondent did not claim any prejudice or inability to meet the argument. However, I do not accept a construction of s 45 which proceeds in that way. In my view it is clear that s 45 requires two elements to be satisfied. First, a ground for the impugned conduct must be identified amongst those set out in s 45. Secondly, the impugned conduct must represent conduct which discriminates against a relevant employer. I do not accept the contention that satisfaction of the first limb may suffice to satisfy the second requirement also. 10 The phrase "discriminate against" is not used only in discourse concerning prohibitions on discrimination on the grounds of race, sex, disability, family status etc. Long before the phrase was used in that context, it was an ingredient in legal analysis concerning the meaning and operation of the Constitution. For example, in the Melbourne Corporation Case (1947) 74 CLR 31 the High Court discussed when a Commonwealth law might "discriminate against" the States in relation to the provision of banking services. Latham CJ said (at 60): Laws "discriminate" against the States if they single out the States for taxation or some other form of control … Dixon J similarly characterised laws which "discriminate against" States as being laws which singled them out and subjected them to "special burdens". 11 Another example is Queensland Electricity Commission v The Commonwealth (1985) 159 CLR 192 where Gibbs CJ said (at 206): A Commonwealth law will also be invalid if it discriminates against the States in the sense that it imposes some special burden or disability on them. His Honour went on (at 207): The laws forbidden by this principle are those which discriminate against all the States or any one of them by subjecting them or it to a burden or disability which is not imposed on persons generally, a law whose very object is to restrict, burden or control an activity of the States or of one of them. 12 Mason J (at 217) identified the relevant constitutional principle as including: the prohibition against discrimination which involves the placing on the States of special burdens or disabilities… 13 Wilson J said (at 226-7): …discrimination in the relevant sense involves not merely different treatment but burden or disadvantage. 14 Brennan J said (at 233): To determine whether a discriminatory law is valid or invalid, it is necessary to identify the particular burden or disability that is placed on the States or State by the law and then to determine whether any legislative power granted to the Commonwealth authorises the imposition of that discriminatory burden or disability. 15 Deane J also (at 247) identified the relevant principle as one which precluded: …discriminatory treatment of the States in the sense of the use or exercise by the Commonwealth of such powers to single out the States to place upon them "special burdens or disabilities". 16 Dawson J (at 261) also referred to interference with the manner in which the States may exercise their governmental or constitutional functions being indicated if: …the law discriminates against the States by singling them out and subjecting them to special treatment… 17 In another field of constitutional discourse, the High Court in Cole v Whitfield (1988) 165 CLR 360 said (at 399): A law will discriminate against interstate trade or commerce if the law on its face subjects that trade or commerce to a disability or disadvantage or if the factual operation of the law produces such a result. 18 In Street v Queensland Bar Association (1989) 168 CLR 461 the High Court dealt with the protection given by s 117 of the Constitution against a resident of a State being subject to any disability or discrimination in another State. Brennan J (at 506) identified distinctions between the terms "disability" and "discrimination". His Honour said: …discrimination extends beyond the discriminatory imposition of a legal incapacity or liability to the discriminatory withholding of any benefit (including any right, power or privilege) and to the discriminatory imposition of any burden (including any liability to suffer a diminution of legal rights or an increase in legal liabilities). The specific identification of discrimination in this context as extending to the withholding of a benefit and the imposition of a burden is, in my respectful opinion, compelling in a context where notions of protection are involved as they are in relation to s 45 of the Act. 19 Toohey J said (at 554): "Discrimination" ordinarily suggests a detriment to a person not borne by other members of the relevant community or group… 20 Gaudron J said (at 570-71): Although in its primary sense "discrimination" refers to the process of differentiating between persons or things possessing different properties, in legal usage it signifies the process by which different treatment is accorded to persons or things by reference to considerations which are irrelevant to the object to be attained. The primary sense of the word is "discrimination between"; the legal sense is "discrimination against". Her Honour's inclusion of the term "against" emphasises the concept of adversity inherent in use of the term "discrimination" as a foundation for a legal prohibition. 21 Another example of use of the phrase "discriminate against" may be found in R v Shrestha (1991) 173 CLR 48. The question was whether a non-citizen convicted of a serious crime could be eligible for parole. Deane, Dawson and Toohey JJ responded to a submission that parole was inappropriate in such a case by observing (at 71): This country has a direct and significant interest in the well-being and rehabilitation of all who are detained within its gaols, whether or not their origins, ties or future prospects lie in this or in some other country. It also has a responsibility, both moral and under international treaty, to treat all who are subjected to criminal proceedings in its courts or imprisonment in its gaols humanely and without discrimination based on national or ethnic origins. To deny foreign offenders of the kind in question the opportunity for the amelioration of their situation and the incentive for reform and rehabilitation which the parole system offers is not to differentiate by reference to degrees of criminality or prospects of rehabilitation. It is to discriminate against prisoners of that class because of their origins, their place of residence and their family ties. (Emphasis added) 22 In Austin v The Commonwealth (2003) 215 CLR 185 (at [23]) Gleeson CJ when discussing the "concept of discrimination" as developed by Brennan J and Deane J in Queensland Electricity Commission v The Commonwealth noted that, in that constitutional context, discrimination involved some singling out "for the imposition of special and disadvantageous treatment". 23 In Bayside City Council v Telstra Corporation Limited (2004) 216 CLR 595, the High Court dealt with the effect and operation of cl 44(1)(a) of Schedule 3 to the Telecommunications Act 1997 (Cth). Clause 44 provided that a law of a State or Territory had no effect to the extent to which the law discriminated, or would have the effect (whether direct or indirect) of discriminating, against a particular telecommunications carrier, against a particular class of carriers, or against carriers generally. The majority judgment recorded (at [40]): 40 Discrimination is a concept that arises for consideration in a variety of constitutional and legislative contexts. It involves a comparison, and, where a certain kind of differential treatment is put forward as the basis of a claim of discrimination, it may require an examination of the relevance, appropriateness, or permissibility of some distinction by reference to which such treatment occurs, or by reference to which it is sought to be explained or justified. In the selection of comparable cases, and in forming a view as to the relevance, appropriateness, or permissibility of a distinction, a judgment may be influenced strongly by the particular context in which the issue arises. Questions of degree may be involved. and (at [42]): 42 Clause 44 does not, in terms, identify the kind of comparison that is appropriate for the purpose of considering whether a State law discriminates against carriers generally. (The comparison involved in deciding whether a State law discriminates against a particular carrier, or a particular class of carriers, is more straightforward.) 24 In that statutory context, which is broadly the same in that respect as the Act presently in question, the majority judgment observed (at [43]): 43 In relation to aerial cabling, which appears to be what primarily attracted the attention of the local authorities, the facilities installed by electricity authorities constitute an obvious basis of comparison. The fact that they are singled out in the Explanatory Memorandum confirms that the kind of discrimination with which cl 44 is concerned, in its reference to discrimination against carriers generally, is the subjection of carriers, in that capacity, to a burden of a kind to which others in a similar situation are generally not subject, and that a similar situation includes the use of public space for the installation and maintenance of facilities such as cables, pipes, ducts and conduits. (Emphasis added) and (at [45]): 45 … Clause 44 refers to laws that discriminate, or have the effect of discriminating against carriers. Those are the laws that are of no effect. The laws that confer favourable treatment upon others are not declared by cl 44 to be ineffective. Their existence may give to the laws pursuant to which the charges and rates in issue are imposed or levied the character of being discriminatory, but they do not themselves discriminate, or have the effect of discriminating, against carriers under the Telco Act. (Emphasis added) 25 This analysis is a clear example of the need to identify a relevant burden or adversity which might satisfy the notion of "discriminate against". 26 The examples I have given are obviously drawn from different areas of the law, and are neither comprehensive nor exhaustive. However, they are unified by one feature: the notion of "discriminate against" requires identification and consideration of burden or adversity and its consequences. 27 In the light of these various indications in judgments of the High Court over a long period of time about what is involved in the notion of conduct which "discriminates against" an entity or person, and in the absence of any legislative statement in the Act about what will constitute such conduct for the purposes of the Act, in my view the conclusion should be drawn that some adversity must be identified in order to establish that the prohibition in s 45 of the Act has been infringed. That is clearly the view which was taken by the trial judge. In my respectful opinion that approach was the correct one. 28 With those matters in mind the relevant factual findings of the trial judge may be identified. None of the factual findings are challenged. The trial judge said (at [55]-[59]): 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. (Original emphasis) 29 Although the trial judge went on to find that the conduct of the respondent occurred "on the ground" of matters rendered impermissible by the Act, in the final analysis the appellant simply failed to prove a factual matter which was necessary for its case. That was whether the respondent had discriminated against HLS, as the employer of the two employees, rather than against Hanlons. 30 In my respectful view, the approach of the trial judge to the questions of law before him is beyond criticism. So is his approach to the factual elements which the appellant was required to prove in order to succeed. I can see no error which would warrant the appeal being upheld. In my view the appeal should be dismissed with costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.

Associate: Dated: 29 June 2012 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1453 of 2011

BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

AND: MCCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD (ACN 002 929 017)

JUDGES: BUCHANAN, FLICK AND KATZMANN JJ DATE: 29 JUNE 2012 PLACE: SYDNEY (Via VIDEO LINK TO MELBOURNE)

Flick J 31 Ms Linda Helal was an inspector appointed under the Building and Construction Industry Improvement Act 2005 (Cth). 32 By way of an Application filed on 29 July 2010 she sought a declaration that the Respondent, McConnell Dowell Constructors (Aust) Pty Ltd ("McConnell Dowell"), had contravened s 45(1) of the Building and Construction Industry Improvement Act. A pecuniary penalty was also sought. 33 McConnell Dowell in December 2008 had entered into an agreement with Hanlon Industries Pty Ltd ("Hanlon Industries") for the fabrication, painting, assembly and delivery of structural steel beams to Corio Quay. Corio Quay is a part of what is known as the Port of Geelong. In March 2009 Hanlon Industries was granted permission to carry out welding work at site on the Corio Quay North Wharf. Workers then commenced welding operations on or about 7 May 2009. The workers were employees of Hanlon Labour Services Pty Ltd ("Hanlon Labour Services"), a company related to Hanlon Industries. 34 On 12 May 2009 McConnell Dowell withdrew permission for the work to be carried out on site. 35 The question for the primary Judge was whether McConnell Dowell could "discriminate against" Hanlon Labour Services by withdrawing its permission for Hanlon Industries to perform welding work on site. McConnell Dowell had no contractual relationship with Hanlon Labour Services. At the time the letter withdrawing permission was sent at the direction of a regional manager of McConnell Dowell (Mr Kapetanas), that manager did not then know that the workers were employed by Hanlon Labour Services. 36 McConnell Dowell applied at the outset of the proceeding for an order for summary dismissal pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth). That application was unsuccessful: Helal v McConnell Dowell Constructors (Aust) Pty Ltd [2010] FCA 1462, 193 FCR 213 ('Helal No 1'). In dismissing the summary judgment application, Ryan J rejected an argument that a person could not discriminate against another unless the latter was a "specific identifiable person": [2010] FCA 1462 at [24], 193 FCR at 220-221. His Honour concluded that the term "discriminate" was to be given its "full and ordinary meaning": [2010] FCA 1462 at [28], 193 FCR at 222. 37 The Application thereafter proceeded to hearing. It was dismissed: Helal v McConnell Dowell Constructors (Aust) Pty Ltd (No 3) [2011] FCA 1344, 285 ALR 281. The primary Judge identified the two remaining contentions to be resolved as: • "whether the applicant had adduced any or any sufficient evidence to support the claim that McConnell Dowell had "discriminated against" Hanlon Labour Services; 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." [[2011] FCA 1344 at [15], 285 ALR at 285] The primary Judge concluded that there was an absence of evidence that McConnell Dowell had "discriminated against" Hanlon Labour Services: [2011] FCA 1344 at [59], 285 ALR at 292. Although it was "strictly unnecessary" to deal with the second issue, his Honour went on to conclude that Mr Kapetanas' decision "… was properly to be characterised as being taken on the ground that [Hanlon Industries Pty Ltd] and [Hanlon Labour Services] did not have an industrial agreement covering the work being undertaken by the [Hanlon Labour Services] employees at the construction site": [2011] FCA 1344 at [81], 285 ALR at 296. 38 Ms Helal filed a Notice of Appeal on 14 December 2011. At the commencement of the hearing of the appeal on 27 May 2012, the Australian Building and Construction Commissioner was substituted as the Appellant. Ms Helal had left the employment of the Commission. 39 The first Ground of Appeal contends that the primary Judge erred "… by introducing an element into s. 45 … that is not required under the section, namely - that in order for a person (the First Person) to discriminate against another person (the Second Person), there must be proof of an adverse impact of the First Person's conduct on the Second Person … (Judgment at [59])". The second and third Grounds of Appeal proceed upon the basis that if proof of an "adverse impact" is required, the primary Judge further "erred in law in setting too high a threshold for the Proof of Adverse Impact …" and in failing to find that Hanlon Labour Services did suffer an adverse impact. 40 The appeal should be dismissed.

Discriminate & Discrimination - Commonly Employed Phrases 41 A variety of statutory terms and phrases are employed by both State and Commonwealth legislatures in legislation enacted to prohibit discriminatory conduct. 42 Sometimes a parliamentary draftsman employs the term "discrimination" and thereafter defines that conduct which constitutes "discrimination". Sometimes there is a legislative specification of those criteria which are "irrelevant" to any assessment as to whether or not there has been "discrimination". On other occasions, the parliamentary draftsman will employ phrases such as "discrimination between" or "discriminate against". Whether there is any difference in the ambit of the conduct that comes within the particular statutory phrase in issue will obviously depend upon the statutory context in which the phrase is used. 43 The statutory phrase of present relevance is "discriminate against" as used in s 45 of the Building and Construction Industry Improvement Act. 44 The phrase "discriminate against" is a phrase frequently employed in what may loosely be described as "human rights" legislation: eg, Disability Discrimination Act 1992 (Cth) ss 22(1), 23; Age Discrimination Act 2004 (Cth) ss 21, 22; Sex Discrimination Act 1984 (Cth) s 25. See: Walker v State of Victoria [2012] FCAFC 38. Such legislation frequently seeks to prohibit both "direct" and "indirect" discrimination. Such legislation thus frequently provides (for example) that "[a] person discriminates against another person (the aggrieved person) on the ground of his sex if, on the ground of the aggrieved person's sex, … the perpetrator treats the aggrieved person less favourably than in the same circumstances … the perpetrator treats or would treat a person of the opposite sex …": Anti-Discrimination Act 1977 (NSW) s 24(1). See: Tullamore Bowling & Citizens Club Ltd v Lander [1984] 2 NSWLR 32. In the context of such "human rights" legislation it has been recognised that a construction of the legislation which gives effect to the objects and purposes of the legislation assumes "particular significance": Waters v Public Transport Corporation (1991) 173 CLR 349 at 359 per Mason CJ and Gaudron J. Section 17(1) of the Equal Opportunity Act 1984 (Vic) there provided (in relevant part) that a person "discriminates against another person … if on the ground of the status or by reason of the private life of the other person the first-mentioned person treates the other person less favourably than the first-mentioned person treats or would treat a person of a different status or with a different private life". In rejecting an argument that such language required consideration of a person's intention or motive, Mason CJ and Gaudron J observed: There is some force in the suggestion that the expressions "on the ground of the status" and "by reason of the private life" in s. 17(1) look to an intention or motive on the part of the alleged discriminator that is related to the status or private life of the other person. However, the principle that requires that the particular provisions of the Act must be read in the light of the statutory objects is of particular significance in the case of legislation which protects or enforces human rights. In construing such legislation the courts have a special responsibility to take account of and give effect to the statutory purpose. In the present case, the statutory objects, which are stated in the long title to the Act, include, among other things, "to render unlawful certain Kinds of Discrimination, to promote Equality of Opportunity between persons of different status". It would, in our view, significantly impede or hinder the attainment of the objects of the Act if s. 17(1) were to be interpreted as requiring an intention or motive on the part of the alleged discriminator that is related to the status or private life of the person less favourably treated. It is enough that the material difference in treatment is based on the status or private life of that person, notwithstanding an absence of intention or motive on the part of the alleged discriminator relating to either of those considerations. A material difference in treatment that is so based sufficiently satisfies the notions of "on the ground of" and "by reason of" … [(1991) 173 CLR at 359] See also: Gaze, 'Context and Interpretation in Anti-Discrimination Law' (2002) 26 Melbourne University Law Review 325 at 331-333. Their Honours also thereafter observed: The purpose of the Act is to eliminate discrimination on the ground of status or by reason of personal life in those areas in which the Act operates. The discrimination with which the Act is concerned is discrimination against, rather than discrimination between, persons with different characteristics. The notion of "discrimination against" involves differentiating by reason of an irrelevant or impermissible consideration. Anti-discrimination legislation operates on the basis that certain characteristics or conditions are declared to be irrelevant or impermissible. Thus, subject to the exceptions set out in the Act, the effect of s. 17(1) is to declare that status and personal life are not to be taken into consideration in those areas in which the Act operates. The notion of "discrimination between" involves differentiating on the basis of a genuine distinction, which, in the context of anti-discrimination legislation, must be a characteristic that has not been declared an irrelevant or impermissible consideration. It is this consideration which suggests that the function of s. 17(5)(c) is to identify those cases in which a requirement or condition serves to effect a genuine distinction or, more precisely, a distinction which is not rendered impermissible by the Act. [(1991) 173 CLR at 362-363] See also: Australian Iron & Steel Proprietary Limited v Banovic (1989) 168 CLR 165 at 176 per Deane and Gaudron JJ. When addressing s 17(5) and "indirect discretion" in Waters - or what McHugh J there also described as "adverse effect discrimination" - his Honour observed: … [I]n s. 17(5) "discrimination" is defined in an artificial sense and is dealing with situations where a requirement or condition is imposed equally but has an adverse or more adverse effect on persons of a particular status or with a different private life. … See also: Lindisfarne R & S L A Sub-branch and Citizen's Club Inc v Buchanan [2004] TASSC 73 at [12], 80 ALD 122 at 129 per Evans J. 45 It is also a phrase which has been employed in what may also be described as "industrial" legislation: Fair Work (Registered Organisations) Act 2009 (Cth) s 21; Fair Work Act 2009 (Cth) s 354. Sometimes in that context the Legislature has also sought to define that which does not constitute "discriminat[ion] against" a person: eg, Fair Work Act s 195(2). 46 It is also a phrase which is used in a variety of statutory provisions seeking to protect "public servants" from discriminatory treatment: eg. Defence Reserve Service (Protection) Act 2001 (Cth) s 16. It is also the phrase which is employed in that legislation which seeks to protect "whistleblowers": Parliamentary Service Act 1999 (Cth) s 16. 47 The phrase has also been employed in a commercial context where, for example, a legislative provision seeks to ensure that a term of an insurance policy does not "discriminate against" a person: Private Health Insurance Act 2007 (Cth) s 66-1(1)(b). See also: Corporations Act 2001 (Cth) s 232. 48 The terms "discriminate" and "discrimination" are also terms employed in the Commonwealth of Australia Constitution Act. Section 51(ii) refers to taxation "but so as not to discriminate between States or parts of States". Sections 102 and 117 both employ the term "discrimination". Section 117 provides as follows: Rights of residents in States A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State. In Street v Queensland Bar Association (1989) 168 CLR 461 Brennan J, when giving meaning to the term "discrimination", compared the difference in meaning between the term "disability" and "discrimination" as follows: … The term "discrimination" is to be distinguished from "disability" in three relevant respects: discrimination connotes a comparison …, but disability does not; discrimination imports a ground for differentiating between the persons compared, but disability is not concerned with the reason why it is imposed; and discrimination extends beyond the discriminatory imposition of a legal incapacity or liability to the discriminatory withholding of any benefit (including any right, power or privilege) and to the discriminatory imposition of any burden (including any liability to suffer a diminution of legal rights or an increase in legal liabilities). Discrimination is a broader term than disability but the two terms are not mutually exclusive: a discriminatory imposition of a disability is comprehended by both … [(1989) 168 CLR at 506] His Honour thereafter referred to the terms of s 117 as follows: … A difference in treatment on the ground of out-of-State residence alone is needed to attract the operation of s. 117. Section 117 does not place out-of-State residents in a position of privilege over in-State residents. What s. 117 is designed to avoid is the treatment of protected persons unequally and disadvantageously on the ground of out-of-State residence [(1989) 168 CLR at 509] Gaudron J there said of the word "discrimination": Although in its primary sense "discrimination" refers to the process of differentiating between persons or things possessing different properties, in legal usage it signifies the process by which different treatment is accorded to persons or things by reference to considerations which are irrelevant to the object to be attained. The primary sense of the word is "discrimination between"; the legal sense is "discrimination against". Where protection is given by anti-discrimination legislation, the legislation usually proceeds by reference to an unexpressed declaration that certain characteristics are irrelevant within the areas in which discrimination is proscribed. Even so, the legislation frequently allows for an exception in cases where the characteristic has a relevant bearing on the matter in issue. Thus, for example, the Anti-Discrimination Act 1977 (N.S.W.), whilst proscribing discrimination in employment on the grounds of race and sex, allows in ss. 14 and 31 that discrimination is not unlawful if sex or race is a genuine occupational qualification. The framework of anti-discrimination legislation has, to a considerable extent, shaped our understanding of what is involved in discrimination. Because most anti-discrimination legislation tends to proceed by reference to an unexpressed declaration that a particular characteristic is irrelevant it is largely unnecessary to note that discrimination is confined to different treatment that is not appropriate to a relevant difference. It is often equally unnecessary to note that, if there is a relevant difference, a failure to accord different treatment appropriate to that difference also constitutes discrimination. [(1989) 168 CLR at 570-571] 49 If attention for present purposes is confined to the terms "discriminate" or "discrimination", and if any particular meaning of the phrase "discriminate against" is left to one side, some of the common themes that can be distilled from the cases to date is that the terms "discriminate" or "discrimination" are terms employed by a variety of legislative draftsmen to: identify conduct which treats people differently; and are terms which: seek to promote the object or purpose of the legislation in question; and generally do not require any examination of the reason or motive for such different treatment. Caution must necessarily be exercised, however, in seeking to transpose the considerable learning that has been accumulated in discrimination law as it applies to human rights legislation into the realm of industrial law. 50 Although the same phrase may thus be used in a number of discrete Commonwealth statutory provisions and (indeed) in the Constitution itself, the meaning of any particular phrase must be discerned by reference to the statute in which the phrase is employed. The duty of the Court is to construe and apply statutory language in the context in which it appears. It is no part of the function of the Court to construe the statutory language in order to achieve what it perceives to be the desirable outcome or to avoid a "draconian" outcome: cf. Purvis v State of New South Wales (Department of Education and Training) [2003] HCA 62 at [19], 217 CLR 92 at 103-104 per McHugh and Kirby JJ.

Section 45 51 The present meaning of the phrase "discriminate against" is thus to be discerned by reference to the Building and Construction Industry Improvement Act. 52 Section 3 sets forth the "main object" of that Act as follows: (1) The main object of this Act 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. (2) This Act aims to achieve its main object by the following means: (a) improving the bargaining framework so as to further encourage genuine bargaining at the workplace level; (b) promoting respect for the rule of law; (c) ensuring respect for the rights of building industry participants; (d) ensuring that building industry participants are accountable for their unlawful conduct; (e) providing effective means for investigation and enforcement of relevant laws; (f) improving occupational health and safety in building work; (g) encouraging the pursuit of high levels of employment in the building industry; (h) providing assistance and advice to building industry participants in connection with their rights and obligations under relevant industrial laws. 53 Within that Act, s 45 appears in Chapter 6. That Chapter is titled "Discrimination, coercion and unfair contracts". Section 43 provides that a person must not take action "… with intent to coerce another person" to do one or other of a number of things thereafter specified. Section 44 is similarly directed to conduct that is, inter alia, pursued "with intent to coerce another person…". Section 46 is directed to coercion in relation to superannuation. 54 Neither s 43 nor s 44 employs the terms "discrimination" or "discriminate against". Nor does any other provision of the Building and Construction Industry Improvement Act employ those or similar terms. 55 It is s 45(1) which employs the phrase "discriminate against". For present purposes that sub-section provides as follows: Discrimination against employer in relation to industrial instruments 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: … (ii) an industrial instrument made with a particular person; or … Unlike other legislative provisions, such as those commonly found in the human rights legislation, the concept of discrimination is not further addressed or defined for the purposes of the Building and Construction Industry Improvement Act.

A Claim Founded Upon the Need to Show an Adverse Impact 56 The case before the primary Judge proceeded upon an acceptance by the parties that a person could not "discriminate against" another for the purposes of s 45 in the absence of demonstrating some "adverse impact" upon the person said to have been subjected to the discriminatory conduct. 57 The manner in which the case has so far proceeded may be traced back to the application for summary judgment which was resolved by Ryan J in Helal No 1. His Honour on that occasion refused to give the term "discriminate" a narrow construction, his Honour said: [24] The "discriminate" is relevantly defined in the Oxford English Dictionary (2nd ed) 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. His Honour concluded as follows: [39] … 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. 58 It was the adoption by Ryan J of the Oxford English Dictionary definition of the term "discriminate" and the reference to "an adverse distinction" that was later adopted by the primary Judge in the decision now appealed from. 59 The primary Judge's reasoning which led to his conclusion that the Application should be dismissed was as follows: [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's 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. 60 As recognised by the primary Judge, had Hanlon Industries been the employer of those persons who left the site, there would in all probability have been a contravention of s 45. But the case mounted by Ms Helal, and a case mounted solely on an agreed statement of facts, was that there was discriminatory conduct taken "against" Hanlon Labour Services. The "effect" - be it adverse or otherwise - upon Hanlon Labour Services was said by the primary Judge to be simply not the subject of any evidence. 61 The decision of Ryan J, it should be noted, has since been applied by Gray J in Cozadinos v Construction, Forestry, Mining and Energy Union [2012] FCA 46. His Honour there considered whether it was "… possible to discriminate against a person, within the meaning of [s 45(1)], by uttering of words that are incapable of producing any effect": [2012] FCA 46 at [90]. In rejecting this proposition, and after having referred to dictionary definitions, his Honour concluded: [93] In an appropriate context, "discriminate" can mean no more than to distinguish one thing from another, or to express a preference for one thing over another. I discriminate between types of music, or types of food, when I say that I prefer one to the other. If s 45(1) of the BCII Act were to make discrimination of this kind subject to a penalty, it would be a gross derogation of the right of free speech. Any person ought to be able to express an opinion that the employment of building employees ought to be on terms and conditions derived from a particular kind of instrument or other source. Only if s 45(1) could not reasonably be construed without such an intrusion into freedom of speech should it be construed as comprehending that intrusion. Section 15AA of the Acts Interpretation Act 1901 (Cth) requires the court to prefer a construction that would promote the purpose or object underlying an Act to a construction that would not promote that purpose or object. The purpose or object underlying the BCII Act has much more to do with protecting people from suffering harm by way of discrimination than with preventing advocacy of particular forms of the regulation of the terms and conditions of employment of employees in the Building and Construction Industry. There is plenty of scope for the operation of s 45(1) of the BCII Act if "discriminate against" is construed as referring to actions that inflict consequences upon the protected person. It is unnecessary and undesirable to extend the operation of the provision to words that are not capable of producing any consequence. The decision of Ryan J has also been followed by Tracey J in Shop, Distributive and Allied Employees Association v National Retail Association (No 2) [2012] FCA 480 at [53].

Discrimination -v- Discriminate Against? 62 The first Ground of Appeal maintains that the "trial judge erred by introducing an element into s.45 … that is not required under the section, namely - that in order for a person (the First Person) to discriminate against another person (the Second Person), there must be proof of an adverse impact …". 63 Senior Counsel on behalf of the Appellant unashamedly accepted that this argument was a departure from the manner in which the case proceeded before the primary Judge. How the primary Judge could have erred in not accepting or resolving an argument not previously advanced was not explained. 64 The argument, however, was that the terms of s 45 are satisfied if the "Second Person" is treated differently by reason of (for example) "the employment of the second person's building employees is covered, or is not covered, by … a particular kind of industrial instrument…". Gone is any necessity, on the argument now advanced for the Appellant, to make out any "adverse impact". The mere difference in treatment, exposed by the fact that Hanlon Labour Services had to withdraw its employees from the site, it is now said, is sufficient to demonstrate "discrimination against" Hanlon Labour Services. 65 Senior Counsel on behalf of the Respondent, however, quite properly accepted that he suffered no prejudice if an argument not advanced at first instance is now advanced for the first time on appeal. The facts going to the resolution of this new argument, it was accepted, had already been the subject of agreement. 66 To now permit the new argument to be raised necessarily has the consequence that this Court is deprived of the not inconsiderable benefit of the reasoning of the primary Judge. But the new argument was the subject of detailed submissions and, notwithstanding considerable reservation, should now be resolved. 67 The argument should nevertheless be rejected. 68 There are a number of reasons for concluding that the manner in which the case was presented for resolution before the primary Judge and the manner in which his Honour applied the phrase "discriminate against" is correct. 69 First, it is considered that the natural and ordinary meaning of the phrase "discriminate against" is that an "adverse distinction" is made between persons. Such was the conclusion of Ryan J in Helal No 1 and the conclusion of Tracey J in National Retail Association. It is also a conclusion consistent with the decision of Gray J in Cozadinos where his Honour referred to a person "… suffering harm by way of discrimination". It is a conclusion which is supported by both the terms of s 45 and the heading to that section which reinforces the constraint that the section is confined to "discrimination against [an] employer…". It is said to be "… an elementary and fundamental principle that the object of the court, in interpreting a statute, 'is to see what is the intention expressed by the words used' … It is only by considering the meaning of the words used by the legislature that the court can ascertain its intention": Cooper Brookes (Wollongong) Proprietary Limited v Commissioner of Taxation (1981) 147 CLR 297 at 304 per Gibbs CJ. The Chief Justice there went on to observe that "… it is not unduly pedantic to begin with the assumption that the words mean what they say …". 70 Second, it is a meaning which serves to promote the object of the Act, particularly the objects set forth in s 3(2)(a), (b) and (c). An interpretation of any statutory provision which "… would best achieve the purpose or object of the Act … is to be preferred to each other interpretation": Acts Interpretation Act 1901 (Cth) s 15AA. 71 Within the context of s 45(1)(a), it may readily be accepted (for example) that employers may be treated "more favourably" if their employees are "… covered … by … a particular kind of industrial instrument"; it may also be readily accepted that an employer may be treated less favourably if their employees are "not covered, by … a particular kind of industrial instrument …". Notwithstanding the width of language otherwise embraced by s 45(1)(a), it is concluded that the phrase "discriminate against" only identifies that conduct which is taken "against" an employer and which operates adversely to his interest. It is the prohibition upon such conduct which it is considered best ensures "… respect for the rights of building industry participants …" for the purposes of s 3(2)(c). Although s 3 is expressed in sufficiently wide terms to embrace more favourable treatment for employers, it is the combination of the phrase "discriminate against" in s 45(1) and the objectives in s 3(2) which together confine s 45(1) to discriminatory conduct which is "adverse" to the interests of the employer. 72 Third, a requirement that confines "discrimination against" an employer to conduct which imposes an "adverse distinction" upon an employer, it is further considered, sits more comfortably within the confines of Chapter 6 of the Building and Construction Industry Improvement Act. Sections 43, 44 and 46 employ the language of "coercion" - a term which itself does not readily embrace favourable (as opposed to adverse) treatment. "Coercion" is defined in the Macquarie Dictionary (3rd ed, 2002) as meaning: … the act or power of coercing; forcible constraint… The heading to a Chapter of an Act forms part of the Act: Acts Interpretation Act s 13(2)(d). Such a construction of s 45(1) also sits more comfortably with s 45(3) which excludes the prohibition in s 45 from operating where the conduct is taken for the purpose of "… encouraging [a person] to have particular eligible conditions in an industrial agreement". 73 Fourth, the phrase "discriminate against" is a phrase which has been used in a variety of contexts as requiring an element akin to "adverse" action. In Street v Queensland Bar Association (supra) at 117 Brennan J spoke in terms of a persons being treated "unequally and disadvantageously". More generally expressed, it is recognised that "[a] Commonwealth law will also be invalid if it discriminates against the States in the sense that it imposes some special burden or disability on them": Queensland Electricity Commission v Commonwealth (1985) 159 CLR 192 at 206 per Gibbs CJ. See also: State Chamber of Commerce and Industry v Commonwealth (1987) 163 CLR 329 at 355-356 per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ; State of Western Australia v Commonwealth (1995) 183 CLR 373 at 476 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ. Notwithstanding these observations, other decisions refer to "discrimination" as simply treating "… equally things that are unequal": Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 478 per Gaudron and McHugh JJ. See also: IW v City of Perth (1997) 191 CLR 1 at 37 per Gummow J. Each of the conclusions reached is obviously dictated by the legislative context in which the terms in question were employed. 74 Ultimately, the construction of s 45(1) and the phrase "discriminate against" is a question to be resolved by reference to the terms of s 45(1) itself and more broadly by reference to the Building and Construction Industry Improvement Act. The interpretation of the same phrase or like phrases in different legislative contexts provides guidance - albeit limited guidance - as to the interpretation of s 45. Such guidance as may be gleaned the authorities does nevertheless tend to support the conclusion now reached. 75 The first Ground of Appeal should be rejected.

The Threshold for Proof of Adverse Impact 76 The second and third Grounds of Appeal proceed upon the basis that the first Ground of Appeal has been rejected. These remaining two Grounds contend that the primary Judge "… erred in law in setting too high a threshold for the Proof of Adverse Impact …" (Ground 2) and in failing to find that Hanlon Labour Services did suffer an adverse impact (Ground 3). 77 The error referred to in the second ground, the Appellant contends, is exposed by the primary Judge requiring a claimant to "… establish a net adverse impact …" or a "… need to establish that HLS had suffered adverse financial consequences …". 78 In advancing this Ground of Appeal, the written Outline of Submissions filed on behalf of the Appellant maintains that it was not "… necessary for the Appellant to establish the net adverse impact of the Revocation upon HLS, equally, it was not necessary for the Appellant to establish that it was adverse in a net sense, having regard to the financial implications for HLS". Particular reference is made to paragraph [56] of the reasons for decision of the primary Judge and his Honour's reference to the absence of evidence "… to suggest that the withdrawal of the workers from the project site had any financial implications for HLS". 79 Construed in context, it is not considered that the primary Judge was requiring the Appellant to make out any "net impact" or any "financial" detriment. When paragraph [56] is read in context, it is manifestly clear that the primary Judge was merely referring to the absence of any "financial implications" as but an instance of any evidence as to "any impact, adverse or otherwise". That paragraph also makes clear that the primary Judge was not referring to any necessity to make out any "net" impact. 80 The second Ground of Appeal should be rejected. 81 The third Ground of Appeal contends that the primary Judge erred "… in failing to find that HLS did suffer an adverse impact …". That impact, it is contended, is made out (inter alia) by Hanlon Labour Services being "denied access to the construction site" and by its inability "… to continue to perform the assembly work at the preferred work location …". 82 This final Ground of Appeal should also be rejected. Given the conclusion that the phrase "discriminate against" requires the Appellant to make out some "adverse impact", the absence of any evidence as to any impact being "adverse" is necessarily fatal. The primary Judge may, with respect, have overstated his conclusion (at para [56]) that there was an absence of evidence of any impact "adverse or otherwise". His Honour was certainly correct, however, in concluding that there was an absence of evidence as to any impact being "adverse".

Conclusions 83 The conclusion that the appeal is to be dismissed is, perhaps, unsatisfactory. 84 The primary Judge accepted, and it was not challenged on appeal, that Mr Kapetanas' decision "… was properly to be characterised as being taken on the ground that [Hanlon Industries Pty Ltd] and [Hanlon Labour Services] did not have an industrial agreement covering the work being undertaken by the [Hanlon Labour Services] employees at the construction site": [2011] FCA 1344 at [81], 285 ALR at 296. 85 Conduct which has been taken for a proscribed reason thus escapes the reach of s 45 simply because there was no evidence - or no sufficient evidence - of any "adverse" effect upon Hanlon Labour Services. But that conclusion is dictated by the manner in which the case was conducted before the primary Judge. If those bringing a complaint of unlawful discrimination fail to adduce evidence to support that complaint, that is a deficiency as to the conduct of the case rather than any deficiency in the legislation. Why further evidence of the impact upon Hanlon Labour Services was not adduced in unknown. Nor is it relevant for present purposes to speculate. Whatever the reason, concurrence is expressed with the conclusion of the primary Judge. 86 The appeal should be dismissed with costs. No error is exposed in the manner in which his Honour interpreted and applied s 45. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

Associate: Dated: 29 June 2012 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1453 of 2011

BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

AND: MCCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD (ACN 002 929 017)

JUDGES: BUCHANAN, FLICK & KATZMANN JJ DATE: 29 JUNE 2012 PLACE: SYDNEY (VIA VIDEO LINK TO MELBOURNE)

Katzmann J 87 Section 45 of the Building and Construction Industry Improvement Act 2005 (Cth) ("the BCII Act") prohibits discrimination by one person against another on the ground that the employment of the second person's building employees is, or is not, covered by an industrial agreement. The central question in this appeal is whether, to establish that a person has been discriminated against for the purpose of s 45, it is necessary to prove that the discrimination had any adverse impact or effect on that person.

The facts 88 The facts were largely agreed. McConnell Dowell Constructors (Aust) Pty Ltd ("McConnell Dowell") was one party to a joint venture engaged in about October 2008 to design and build the Corio Quay North No 4 Ship Loader project at the port of Geelong. Building work began on the project in about February 2009. McConnell Dowell subcontracted some of it to Hanlon Industries Pty Ltd ("Hanlon"). The work subcontracted to Hanlon involved the fabricating, painting, assembly and delivery to the Corio Quay site of a network of structural steel beams that would ultimately form part of the extension of the North wharf component of the project. In March 2009 McConnell Dowell granted permission to Hanlon to carry out welding associated with the assembly of the structural steel at the site. The fabricated and painted but unassembled steel beams were delivered to the site in early May 2009 and on or about 7 May 2009 two workers came on the site to do the welding. They were employees of Hanlon Labour Services Pty Ltd ("HLS"), a company related to Hanlon and which provided Hanlon's labour. They welded on the site on at least 7, 8 and 11 May 2009. But on 12 May 2009, by which time Hanlon had completed the assembly of one of the five bays and started work on another, McConnell Dowell wrote to Hanlon withdrawing its permission to do the welding on site. 89 The letter 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. 90 The letter was sent at the direction of McConnell Dowell's Southern Region Manager, Civil and Marine, Sam Kapetanas, who did not then know that the workers were employed by HLS, rather than by Hanlon. 91 After receiving the letter and as a result of it, Hanlon 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. This caused Hanlon to incur some additional expenses in the form of transport, crane and labour costs. In the proceeding below, Anthony Bradford, General Manager of Hanlon, was called to give evidence for the applicant. He was, indeed, the only witness the applicant called. Amongst other things, Mr Bradford testified that once the beams had been fabricated into bays they were much more difficult to transport, specifically to load and unload. 92 The task of completing the assembly of the second bay was assigned to another contractor, Agfab Engineering.

The legislation 93 The BCII Act was introduced in the wake of the Royal Commission into the Building and Construction Industry and was described in the Explanatory Memorandum to the Bill as encapsulating the Government's response to the workplace relations recommendations made by the Royal Commission. 94 Section 45 of the BCII Act relevantly provides: 45 Discrimination against employer in relation to industrial instruments (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; … (2) … (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. (4) Subsection (1) does not apply unless: (a) the industrial instrument refereed to in that section is an award, transitional award, workplace agreement, pre-reform certified agreement, pre-reform AWA or fair work instrument; or (b) the first person is an organisation or a constitutional corporation; or (c) the second person is a constitutional corporation; or (d) the conduct occurs in a Territory or Commonwealth place. 95 "Industrial instrument" is defined in s 4 to mean: an award or agreement, however designated, that: (a) is made under or recognised by an industrial law; and (b) deals with the relationship between employers and employees, concerns the relationship between an employer and the employer's employees, or provides for the prevention or settlement of a dispute between an employer and the employer's employees.

The litigation 96 The appellant is the Australian Building and Construction Commissioner. The Commissioner was substituted by consent for Linda Helal, the inspector appointed under the BCII Act who initiated the proceeding below. She alleged that McConnell Dowell discriminated against HLS because its employees' employment was not covered by an industrial agreement. She sought declarations under s 49 of the BCII Act and s 21 of the Federal Court of Australia Act 1976 (Cth) and a pecuniary penalty for which provision is also made in s 49 of the BCII Act. A claim for compensation was not pressed. 97 In 2010 McConnell Dowell applied for summary dismissal. It contended that s 45 only prohibited direct discrimination. Its argument was that the section was not intended to proscribe conduct affecting a party with whom the alleged discriminator has no direct and immediate contractual relationship. The application failed: Helal v McConnell Dowell Constructors (Aust) Pty Ltd (2010) 193 FCR 213 ("Helal No 1"). Ultimately, however, McConnell Dowell prevailed. It persuaded the primary judge that, absent proof that its conduct had had an adverse impact on HLS, the application could not succeed. His Honour found that there was no such impact: Helal v McConnell Dowell Constructors (Aust) Pty Ltd (No 3) (2011) 285 ALR 281. 98 It was common ground that the employees of HLS were building employees and that both McConnell Dowell and HLS were constitutional corporations. It was also common ground that the building employees of HLS were not covered by an industrial agreement within the meaning of s 4. The primary judge identified the only contentious issues as: 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 decision of the primary judge 99 His Honour resolved the first issue against the applicant. At [55] he observed that if Hanlon had been the employer of the relevant employees, then there could be little doubt that the conduct was discriminatory because the effect of the direction was clearly prejudicial to Hanlon. It was no longer able to perform the assembly work at the location most convenient to it and 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 also required to pay another contractor to finish the assembly work there. At [56], however, his Honour observed: 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. (Emphasis added.) 100 And at [59] his Honour held that in order for one person to discriminate against another there must be some evidence that the first person's conduct had an adverse impact on the conduct of the second person. He then said that in the absence of evidence as to the impact on HLS of the requirement that its employees be withdrawn from the site, he was "unable to conclude that it was discriminated against by McConnell Dowell". It was the finding that there was no evidence that McConnell Dowell's decision had any adverse impact on HLS (repeated at [83]) that proved to be fatal to the success of the application. That was because his Honour resolved the second question in the applicant's favour.

The issues on the appeal 101 No notice of contention having been filed, the finding in [56], repeated at [83], gives rise to the two issues on the appeal: 1. Did the primary judge impose the wrong test? Or, put differently, does s 45 of the BCII Act require proof that the discriminatory conduct have an adverse impact? 2. If so, was there any evidence to show that the direction to Hanlon had an adverse impact on HLS? If not, was there evidence to show that the direction to Hanlon discriminated against HLS. 102 Although the appeal is in the nature of a rehearing, error must be shown: Branir Pty Ltd v Owston Nominees (No. 2) Pty Ltd (2001) 117 FCR 424 at [25]. Respect and weight must be given to the decision of the primary judge in deciding what inferences should be drawn from the evidence: Warren v Coombes (1979) 142 CLR 531.

Does s 45 of the BCII Act require proof of an adverse impact? 103 Unlike the various statutes outlawing discrimination on the ground of sex, race, disability, sexual preference and age, there is no definition of "discriminate against" in the BCII Act. 104 In the absence of a statutory definition and anything in the scope, purpose or context of the statute to suggest otherwise, in Helal No 1 Ryan J held that the expression "discriminate against" in s 45 should be given its full and ordinary meaning, which he took from the Oxford English Dictionary (2nd edition): to make an adverse distinction with regard to; to distinguish unfavourably from others. 105 The primary judge in this case noted (at [14]) that the parties accepted that the expression "discriminate against should be construed and applied in the way Ryan J did. But that does not take the matter very far. As Gray J pointed out in Cozadinos v Construction, Forestry, Mining and Energy Union [2012] FCA 46 at [89]-[90] ("Cozadinos"), his Honour's decision was interlocutory. He said that Ryan J was not purporting to provide an exhaustive definition of the word "discriminate" as it is used in s 45(1) of the BCII Act. Indeed, his Honour was called upon to decide a discrete issue and that issue was not the meaning of "discriminate against". 106 In Cozadinos (to which neither party referred, although it is the only other judgment dealing with s 45) Gray J held that one person cannot discriminate against another without proof of (adverse) consequences. There, it was alleged that in a telephone conversation a trade union organiser threatened to take action to prevent a scaffolding firm from starting work on a building site and, relevantly, that in a series of telephone conversations the same organiser told the site supervisor that an employee of the scaffolding firm, whom he had seen on the site, would not be starting work and the head contractor must not employ him. One alleged reason for the conduct was that the scaffolding firm had not entered into a certified agreement with the union. The issue in that case was whether it is possible to discriminate against a person for the purpose of s 45(1) by uttering words that are incapable of producing any effect: [2012] FCA 46 at [90]. At [93] his Honour explained: In an appropriate context, "discriminate" can mean no more than to distinguish one thing from another, or to express a preference for one thing over another. I discriminate between types of music, or types of food, when I say that I prefer one to the other. If s 45(1) of the BCII Act were to make discrimination of this kind subject to a penalty, it would be a gross derogation of the right of free speech. Any person ought to be able to express an opinion that the employment of building employees ought to be on terms and conditions derived from a particular kind of instrument or other source. Only if s 45(1) could not reasonably be construed without such an intrusion into freedom of speech should it be construed as comprehending that intrusion. Section 15AA of the Acts Interpretation Act 1901 (Cth) requires the Court to prefer a construction that would promote the purpose or object underlying an Act to a construction that would not promote that purpose or object. The purpose or object underlying the BCII Act has much more to do with protecting people from suffering harm by way of discrimination than with preventing advocacy of particular forms of the regulation of the terms and conditions of employment of employees in the Building and Construction Industry. There is plenty of scope for the operation of s 45(1) of the BCII Act if "discriminate against" is construed as referring to actions that inflict consequences upon the protected person. It is unnecessary and undesirable to extend the operation of the provision to words that are not capable of producing any consequence. 107 His Honour did not refer to the judgment of the primary judge in this case, presumably because he was not taken to it. But his approach to the construction of the section is consistent with the approach taken by the primary judge. With respect, it is correct. 108 The Commissioner relied on a passage from the judgment of Mason CJ and Gaudron J in Waters v Public Transport Corporation (1991) 173 CLR 349 ("Waters") at 363, a case dealing with the Equal Opportunity Act 1984 (Vict.) ("Equal Opportunity Act"). Their Honours said: The discrimination with which the Act is concerned is discrimination against, rather than discrimination between, persons with different characteristics. The notion of "discrimination against" involves differentiating by reason of an irrelevant or impermissible consideration. Anti-discrimination legislation operates on the basis that certain characteristics or conditions are declared to be irrelevant or impermissible. 109 From this passage the Commissioner extrapolated that conduct will fall foul of s 45 if it differentiates on the basis of the prohibited reason. But their Honours were not purporting to define the boundaries of what is meant by the expression "discriminate against", let alone in the context of the BCII Act. "Discrimination" in s 7 of the Equal Opportunity Act is defined to mean "direct or indirect discrimination on the basis of an attribute" and discrimination in contravention of certain provisions of the Act. This is the context in which the discussion in Waters took place. The reasoning in Waters is applicable to that context. There is no sound basis to import it into an analysis of discrimination in the different context of the BCII Act where there is no statutory definition. 110 The Commissioner also argued that it was sufficient in this case to show that another subcontractor ("whose employees were, presumably, covered by an acceptable industrial agreement") was engaged to complete the assembly work on site. I disagree. Even if it were permissible to infer that those employees were covered by an industrial agreement, all this establishes is differential treatment. Differential treatment is central to the notion of discrimination. But s 45 is not merely concerned with discrimination. 111 Discrimination may be positive or negative. Section 45 is concerned with negative or adverse discrimination. Differential treatment is insufficient to establish that there has been adverse discrimination. As positive discrimination connotes conferring a favour, advantage or benefit, negative discrimination carries with it the imposition of a detriment or disadvantage: Cf. Street v Queensland Bar Association (1989) 168 CLR 461 at 506 per Brennan J. Where there is no detriment or disadvantage, or no favour or benefit has been withheld or withdrawn, there will be no adverse discrimination. In other words, there must be adverse consequences from the differential treatment. In my view, that was all the primary judge was saying. Contrary to the Commissioner's submission, his Honour did not require that damage, including financial loss, be proved. As McConnell Dowell submitted, the reference in his Honour's reasons to the absence of any financial implications for HLS was merely illustrative. 112 The question, then, is whether the Commissioner proved anything more than differential treatment for a prohibited reason. In other words, did he prove that the differential treatment had any adverse consequences for HLS?

Was there any evidence that the differential treatment had any adverse consequences for HLS? 113 The Commissioner argued that the evidence showed that the conduct of McConnell Dowell had three adverse effects on HLS: (a) It was unable to complete its work at the location preferred by its principal; (b) It lost the opportunity to complete the assembly of the second bay; and (c) It was forced to perform additional work and at a less convenient location. 114 There are several problems with this approach. There was no evidence that Hanlon's preference was HLS's preference or even that Hanlon's interests were HLS's. The Commissioner asserted but did not prove that the interests of HLS were "obviously and closely aligned with those of its principal". That may well be so but the Court was not entitled to assume it. No evidence was called about the corporate arrangements. Conduct that has the effect of undermining the interests of a principal in connection with work it assigns to a third party can, as the Commissioner submitted, adversely impact upon the third party. But the question here was not whether it can but whether it did. It is true that additional work was required and that HLS employees performed it. But the evidence was silent as to whether those circumstances disadvantaged HLS or even its employees. The change in arrangements might have spared HLS travel expenses. It might therefore have been an advantage to it. HLS employees might have had to do work that they would not have done had they been permitted to continue working on site but there is no evidence that this affected HLS itself. The location was certainly less convenient to Hanlon. Yet, again, there was no evidence about whether it was also less convenient to HLS. 115 HLS employees had formerly been allowed on the site and were no longer allowed to be there. But there is no evidence that in withdrawing permission to the employees HLS was disadvantaged. 116 As senior counsel for the Commissioner acknowledged in oral argument, the premise of his argument was that there was a benefit to HLS in being on the site. But this was no more than an assumption. 117 The difficulty for the Commissioner is there was no evidence that HLS (as opposed to Hanlon) derived any benefit from being on the site, such that withdrawing permission would also have involved withdrawing a benefit. For all we know withdrawing permission might have been a blessing for HLS. As the primary judge found, there is no evidence that HLS was even inconvenienced by the decision. 118 Nor should his Honour have drawn an inference that the discrimination against Hanlon resulted in discrimination against HLS. Mr Bradford was cross-examined about the arrangements between Hanlon and HLS. He intimated that evidence would have been available which would indicate whether HLS was adversely affected by the discrimination against Hanlon. He referred to pay records, which were not tendered, and to the availability of oral evidence from the two directors of Hanlon, who were not called. 119 An appellate court will only interfere with the decision of the primary judge on the appropriate inferences to be drawn if he or she failed to draw inferences that should have been drawn on the evidence: Sidhu v Holmes [2000] FCA 1653 at [8]. Here, the evidence was too sparse to permit any inference to be drawn about what effect McConnell Dowell's decision had on HLS. As s 45 is a civil penalty provision, satisfaction of its elements should not be obtained by "inexact proofs, indefinite testimony, or indirect inferences" (Briginshaw v Briginshaw (1938) 60 CLR 336 at 362). McConnell Dowell accepted that conduct undermining the interests of Hanlon could adversely affect HLS. But there was no evidence to show that it had. As McConnell Dowell contended, the Commissioner was required to show that its conduct had an adverse or detrimental effect on HLS. That it failed to do. It follows that the appeal must be dismissed. Costs should follow the event. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.