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

REASONS FOR JUDGMENT WILCOX J: 1 The main question in this proceeding is whether any of the respondents have contravened s 298K(2) or s 298S(2) of the Workplace Relations Act 1996 (Cth) ('the WRA') or s 45E of the Trade Practices Act 1974 (Cth) ('the TPA'). 2 The applicants are P G & L J Smith Plant Hire Pty Ltd ('Smith P/L'), Peter Glanville Smith, a director of Smith P/L, and Nigel Hadgkiss, a delegate of the Employment Advocate under s 83BE(1) of the WRA. 3 The respondents are Lanskey Constructions Pty Ltd ('Lanskey'), the Construction, Forestry, Mining and Energy Union ('the CFMEU'), Peter Primmer and Michael Lane. At material times, Mr Primmer and Mr Lane were members and employees of the CFMEU. They may also have been CFMEU officers but nothing turns on whether or not they were. 4 There is a subsidiary question whether Lanskey repudiated a contract made by it with Smith P/L. The legislative background (i) The WRA 5 Section 298K(2) of the WRA provides that a person must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following things: '(a) terminate a contract for services that he or she has entered into with an independent contractor; (b) injure the independent contractor in relation to the terms and conditions of the contract for services; (c) alter the position of the independent contractor to the independent contractor's prejudice; (d) refuse to engage another person as an independent contractor; (e) discriminate against another person in the terms or conditions on which the person offers to engage the other person as an independent contractor.' 6 Conduct is for a prohibited reason if it is carried out, amongst other reasons, because the independent contractor 'is not, or does not propose to become, a member of an industrial association': s 298L(1)(b). 7 Section 298L(1)(b) is contained in Part XA of the WRA. Section 298B(1) defines the term 'industrial association', in Part XA, to include the following entities or a branch thereof: '(a) an association of employees … that is registered or recognised as such an association (however described) under an industrial law; or (b) an association of employees … a principal purpose of which is the protection and promotion of their interests in matters concerning their employment'. It is common ground that the CFMEU falls within this definition. 8 Section 298S(2) is concerned with discriminatory action against an 'eligible person'. That term is defined in s 298S(1) to mean a person who is not an employee but who is eligible to join an industrial association, or would be eligible to join an industrial association if he or she were an employee. The term 'discriminatory action', in relation to an eligible employee, is defined in s 298S(1) as meaning: '(a) a refusal to make use of, or to agree to make use of, services offered by the eligible person; or (b) a refusal to supply, or to agree to supply, goods or services to the eligible person.' 9 Section 298S(2) is also contained in Part XA of the WRA. Accordingly, for the purpose of the claims under both s 298K(2) and s 298S(2), the term 'independent contractor' is not confined to a natural person: see s 4(1A) of the WRA. The term extends to a corporation. (ii) The TPA 10 Section 45E of the TPA covers both a 'supply situation' and an 'acquisition situation', as those terms are defined in subs (1) of that section. An 'acquisition situation' is one in which: 'a person (the "first person") has been accustomed, or is under an obligation, to acquire goods or services from another person (the "second person").' (Original highlighting) One or both of the persons must be a corporation. 11 Subsection (3) of s 45E is as follows: 'In an acquisition situation, the first person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of: (a) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person; or (b) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person, except subject to a condition: (i) that is not a condition to which the acquisition of such goods or services by the first person from the second person has previously been subject because of a provision in a contract between those persons; and (ii) that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services.' 12 Subsection (4) provides an exception to subs (3), but the exception is inapplicable to this case. The facts (i) The conversation evidence 13 Some of the facts underlying this proceeding are clear; they are either common ground or demonstrated by documents the authenticity of which are not in question. Other 'facts' depend on the Court's acceptance of a particular version of contested evidence about conversations. This is not an unusual situation. However, the degree of dispute about conversations in this case is greater than in most cases. Moreover, in respect of most conversations, there is little or no extrinsic material that enables me confidently to determine whose version is likely to be least incorrect. I put the matter in that way because I am sceptical about the ability of any of the witnesses to recall the detail of any of their unrecorded conversations. For those reasons, I propose to limit my findings about the content of conversations to those that are essential to resolution of the case. (ii) Background 14 Lanskey carries on business as a builder. It was apparently retained as the head contractor for a project ('the Northgate project') to erect a number of residential flat buildings on a site at Fairy Meadow, north of Wollongong, New South Wales ('the site'). Construction work started in about October 2002. In November 2002, Philip Neil Mackerras became site foreman. Shortly afterwards, David Rowland was appointed as site manager. 15 Mr Smith, through Smith P/L, carries out excavation work on building sites. In December 2002, Mr Rowland terminated the engagement of the original excavation subcontractor for the Northgate project. A replacement was needed. 16 Mr Mackerras had worked with Mr Smith on an earlier project. With Mr Rowland's approval, he contacted Mr Smith and arranged for him to commence work at the site on 4 January 2003. 17 The evidence establishes that an excavation subcontractor on a building site is normally expected to produce to the head contractor what the witnesses called 'the paperwork'. This constitutes certificates of registration; evidence of insurance of vehicles; an occupational health and safety 'green card'; a certificate as to the operator's competence to operate the particular excavation equipment; evidence of superannuation payments; and a certificate of currency for public liability and workers compensation insurance policies. Ordinarily, these documents are produced to the head contractor before or at the subcontractor's commencement of work. 18 Mr Smith commenced work at the site on 4 January 2003, but he did not produce the paperwork to any Lanskey representative. There is confusion in the evidence about the details, but it seems there were several conversations between Mr Mackerras and Mr Smith, on that day and on later days, during which Mr Smith promised to bring in his paperwork. It is not clear what paperwork, if any, Mr Smith brought in before an incident that occurred on 22 January 2003. If Mr Smith produced some documents, they apparently did not include his green card or evidence of a current workers compensation insurance policy. 19 It is common ground that, on 22 January 2003, Mr Primmer and Mr Lane visited the site. They did so in their capacity as CFMEU officers or employees. It is also common ground that, during the visit, Mr Primmer expressed concern about the condition of a sling that Mr Smith was using to lift a steel reinforcing cage. Mr Smith was being assisted by a Lanskey labourer, Matthew Reynolds, who had previously been nominated by the union as its site representative. The sling was owned by Mr Smith. Mr Primmer formed the opinion that it was in an unsafe condition. He remonstrated with Mr Smith and/or Mr Reynolds about its use. 20 There is a three-way dispute between Mr Primmer, Mr Smith and Mr Reynolds as to what Mr Primmer said that day. The dispute extends to the question whether he expressed his concern directly to Mr Smith or only to Mr Reynolds. It is not necessary for me to resolve that dispute. It is enough to say that both Mr Smith and Mr Reynolds became aware of Mr Primmer's view about the sling. He expressed that view in a forceful manner. Whether or not Mr Primmer's view was justified (a matter I need not determine), the incident must have coloured the subsequent relationship between Mr Primmer and Mr Smith. 21 Mr Mackerras was not involved in the altercation about the sling, but he quickly became aware of it. The altercation, and perhaps some inquiries made of him that day by Mr Primmer, reminded Mr Mackerras about the outstanding paperwork. Mr Mackerras spoke to Mr Rowland about that matter. According to Mr Rowland, he then had a conversation with Mr Smith in which he asked him to get rid of the sling and to fix up his paperwork. Mr Rowland also became aware of uncertainty as to the contractual arrangements operating between Lanskey and Smith P/L. Mr Rowland and Mr Smith agreed what hourly rates should apply and Mr Rowland caused the issue of a purchase order, dated that day, recording those rates. 22 Mr Smith had once been a member of the Federated Engine Drivers and Firemens' Association of Australasia ('FEDFA'), one of the unions that amalgamated to form the CFMEU. Mr Smith never formally resigned his membership of FEDFA but he ceased to pay dues to, or to regard himself as a member of, that union. He had never regarded himself as a member of the CFMEU. He did not wish to join the CFMEU. 23 Mr Reynolds gave evidence in this case on behalf of the applicants. He claimed that, on 22 January 2003, he heard Mr Primmer say to Mr Rowland words to the following effect: 'This bloke Smith is no good, he is not going to toe the line, not be unionised, and his insurances are not accurate. All of his paperwork is not right. I can find you any number of other bob cat operators right now that are all legit and hunky dory, right now to get shot of this bloke. I can replace him like that, basically.' 24 I think Mr Reynolds gave his evidence honestly, in the sense that he did not attempt to mislead the Court. However, in his case, I am particularly sceptical about his ability accurately to recall the January 2003 conversations. Mr Reynolds said in evidence he had become ill shortly after that date. He admitted to having memory problems, at least in relation to dates. 25 Mr Rowland agreed that Mr Primmer spoke to him on 22 January 2003 about Mr Smith. However, on his version, Mr Primmer only complained, although in strong terms, about the condition of the sling. He had no recollection of Mr Primmer saying that Mr Smith was not going to be unionised. 26 It is common ground that, on this same day, Mr Smith and Mr Reynolds had a conversation concerning union membership. This conversation almost certainly arose out of something said by Mr Primmer to Mr Reynolds on that subject. There is dispute about what was said between Mr Smith and Mr Reynolds. 27 Mr Reynolds gave evidence that Mr Primmer said to him, on 22 January 2003, '[t]here is an issue with Smith's documents, specifically the insurances. Get him signed up, get him all sorted out and we will forget about it'. He said that, later that day, he spoke to Mr Smith about union membership but Mr Smith said he did not want to join the CFMEU; however, for the sake of harmony, he would make a donation to a charity or cause supported by the CFMEU. Mr Reynolds said he subsequently conveyed that offer to Mr Lane but heard nothing back from him. 28 Mr Smith agrees that Mr Reynolds spoke to him about joining the CFMEU, that he indicated he did not wish to do this and that he offered a donation to a cause championed by the CFMEU. However, he attributes to Mr Reynolds a more forthright approach, which involved Mr Reynolds saying to him: 'You know, this is a union site, it's a case of no ticket no start, or you will not be able to continue to work on the site'. They have told me to join you up into the union over the next week, before the next visit, or they will get rid of you and make it hard for Lanskey, put pressure on them about it.' 29 There is no material that assists me in determining which of the witnesses' versions of the contested parts of this conversation is to be preferred. It is not necessary for me to do so. It is clear that Mr Reynolds invited Mr Smith to join the CFMEU and that he declined. It would have been obvious to Mr Smith that the invitation was stimulated by the visit to the site that day by Mr Primmer and Mr Lane. Whether or not the invitation took the form of a demand, it would have been obvious to Mr Smith that refusal might affect his relationship with the two CFMEU officials and possibly cause them to put pressure on Lanskey in relation to himself. 30 Whatever he understood about the CFMEU position, Mr Smith took no action to join CFMEU. Nor did he immediately produce his outstanding paperwork. 31 For reasons not explained by the evidence, Mr Smith did not work at the site on 23 or 24 January 2003. He loaded driven pile off-cuts on Saturday, 25 January 2003. Monday, 27 January 2003 was, no doubt, the Australia Day holiday. Mr Smith returned to the site on Tuesday, 28 January 2003, when he worked a full eight-hour day. (iii) The events of 28-30 January 2003 32 During 28 January 2003, there was a further conversation concerning Mr Smith's paperwork. Once again, there is dispute about its terms. However, it is clear that Mr Rowland complained about Mr Smith's failure to provide a certificate of currency for his workers compensation insurance policy and that Mr Smith said he would ring QBE Insurance ('QBE') in Wollongong and request that a certificate be faxed to the site. 33 Mr Smith did ring QBE. He was told he would need to complete a request form. A form was faxed to him. He completed it, inserting a zero in two places: the section of the form that required an updated wages estimate and the section that required disclosure of the number of employees. He faxed the request form back to QBE. 34 Mr Smith telephoned QBE on the following morning, 29 January 2003. He had a conversation with a female employee of QBE who said he had incorrectly filled out the request form, because of the zeros. Mr Smith asked what he was supposed to do, as he did not have any employees or pay any wages. The female employee replied: 'What we suggest to people now is that they write a nominal amount like $100 where it says wages, and "one" where it says employees. I will send you another request form.' 35 Shortly afterwards, another request form arrived from QBE. Mr Smith completed it in the manner instructed and faxed it back. Later that day, QBE faxed a certificate of currency to the site office. As its terms are important to this case, I will set out the document in full: 'PG & LJ SMITH PLANT HIRE P/L "HILLVIEW" MARSHALL MOUNT, DAPTO NSW 2530 CERTIFICATE OF CURRENCY The following policy of insurance covers the full amount of the employer's liability under the Workers Compensation Act 1987. This Certificate is valid from the Date of Issue to 29/05/03. (Maximum period to be no more than 4 months from date of issue of certificate). Policy Number: GF 0016307GWC Insured: PG & LJ SMITH PLANT HIRE P/L Industry(s) Covered: EARTHMOVING PLANT HIRE WITH OPERATOR. Tariff: 421020. Average number of employees (including employees "deemed" to be workers) covered for current 12 month period: 1 Total wage estimated for current 12 month period: $100. Please note: