Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (ACN 009 778 330) & Anor; Australian Competition and Consumer Commission v Construction, Forestry and Maritime Employees Union & Anor [2024] HCATrans 86 (5 December 2024)

Last Updated: 6 December 2024

[2024] HCATrans 086

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B41 of 2024

B e t w e e n -

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Appellant

and

J HUTCHINSON PTY LTD (ACN 009 778 330)

First Respondent

CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION

Second Respondent

Office of the Registry
Brisbane No B42 of 2024

B e t w e e n -

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Appellant

and

CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION

First Respondent

J HUTCHINSON PTY LTD (ACN 009 778 330)

Second Respondent

GAGELER CJ
EDELMAN J
STEWARD J
GLEESON J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 DECEMBER 2024, AT 10.00 AM

Copyright in the High Court of Australia

____________________

MR M.R. HODGE, KC: May it please the Court, I appear with MS A.R. NICHOLAS and MS S.J. CHORDIA for the appellant in both matters. (instructed by Australian Government Solicitor)

MS R.C.A. HIGGINS, SC: May it please the Court, I appear with my learned friends MR B.K. LIM and MR T.M. ROGAN for the Hutchinson respondent in each appeal. (instructed by Gadens Lawyers)

MR J.T. GLEESON, SC: May it please the Court, I appear with MS M.F. CARISTO for the Construction, Forestry and Maritime Employees Union respondent in each appeal. (instructed by Hall Payne Lawyers)

GAGELER CJ: Thank you, Mr Gleeson. Mr Hodge.

MR HODGE: Your Honours, we have divided time so that I will speak until midday, assuming a morning tea break, and then reserve about half an hour for reply, given the notice of contention.

Your Honours, as we have identified in our speaking outline, the Commission’s submission is that this case raises at least four questions about the construction of the term “understanding”, and that term, as your Honours know, is used not only in section 45E of the Competition and Consumer Act but in various other sections within Part IV of the Competition and Consumer Act.

The four questions that we have identified are first whether that term is confined or usefully to be explicated by reference to language of commitment or moral duty or obligation, which has been commonly used throughout various authorities. Second, must the existence of the understanding precede the conduct giving effect to the understanding. Third, should any different meaning or shade of meaning be given to the term when it used in section 45E as compared to other sections of Part IV. And fourth, is the question of whether there is an understanding something that is to be determined objectively or subjectively.

GLEESON J: If the language requires a commitment, do you lose?

MR HODGE: No, but it depends upon, or it may depend upon, how one construes the meaning of “commitment”.

GAGELER CJ: We are moving from one word to another.

MR HODGE: That, in a sense, is the thing that the Commission submits is the reason why this discussion about “commitment” moves one away from what is the real question, which is: what is the statutory word? The statutory word is “an understanding”. The use of “commitment” has been one of the ways in which courts have over time attempted to explain what is embodied within “an understanding”, but even those explanations themselves give rise to a question about what the significance of it is. I will come to this in due course, but one of the issues in relation to “commitment” is: does it embody the idea of a duty in morals or honour?

When one goes back to the explanation by Lord Justice Diplock in Re British Basic Slag, to which I will come, there his Lordship used an explanation of what was involved in order for an obligation in morality or honour to arise, but it was really no more than if one parties says to the other party, I will do something if you will do something, and the other party agrees to do that thing, that they have each then assumed a moral obligation or a duty and honour in order to do that thing.

In our submission, that ultimately goes no further than saying if objectively the parties have reached a common mind as to how they are going to behave in the future arising from the communications between them, whether that is explicit or tacit, then it follows that there is an understanding, and it is not necessary or appropriate to have reference to concepts like morality or honour which, of course, throws up all kinds of confusion when one is dealing with, in this case, a situation where to speak of morality or honour is a curious way on any view to describe something involving an unlawful boycott, or to speak of morality or honour in the context of a cartel arrangement where necessarily whatever it is that a person is agreeing to do is something where they are going to be agreeing to raise prices, or something akin to raising prices, to the disadvantage of consumers, and for that reason these references to morality and honour confuse rather than help or assist an understanding of the term.

GLEESON J: What about references to consensuality?

MR HODGE: The idea of consensuality is helpful, but it only takes one so far, so that the descriptor that has been used in relation to the combined expression “contract, arrangement or understanding” is that those reflect a spectrum of consensual dealings between parties, at one end with a contract being the most formal kind of consensual dealing, at the other end being an understanding which can be informal, can arise tacitly and can arise in circumstances where parties are free to withdraw from it.

GLEESON J: It has to be consensual.

MR HODGE: That is, what it is describing is a spectrum of consensual dealings, we accept that.

STEWARD J: I thought you submitted that arrangement and understanding mean the same thing here.

MR HODGE: No.

STEWARD J: No.

MR HODGE: We certainly did not intend to submit that.

STEWARD J: So, there is a graduation of informality.

MR HODGE: Yes.

STEWARD J: I see.

MR HODGE: Yes. So, if I could just pick up on that point to say there are cases where “arrangement” or “understanding” are effectively used as if they are interchangeable. That is, they refer to – as if they are referring to the same kind of dealing, but in our submission, that is not correct and each of the words of the statute has to be given a meaning. An understanding is, in our submission, something that is less formal than, and that is more informal than an arrangement, which is itself an informal dealing and, consistent with that, we would adopt the way in which it is explained by Justice O’Bryan at first instance in the BlueScope decision, again, to which I will return.

Before then moving to some factual issues, can I just finish off the answer to Justice Steward’s question and in a sense Justice Gleeson’s question about “consensual”, which is ultimately how far that goes in explaining the statutory term will probably depend upon the facts. In that sense, of course, a question that is thrown up by this case is: are you truly consenting to something if you are doing it because you are threatened with a consequence? That is, you might not wish to do it, but you do it because you are under pain of a threat. In our submission, that is still capable of being an understanding between parties. That is, they have by their communications each come to a common understanding or a common mind as to how they will act in the future.

STEWARD J: Well, I think you would probably argue that in this statutory context the sort of arrangements or understandings are bound to be unhappy ones, or reluctantly entered into.

MR HODGE: In the case of section 45E, that is right.

STEWARD J: Yes.

BEECH-JONES J: You said “capable”, in your submission.

MR HODGE: Yes.

BEECH‑JONES J: You succumb to a threat – it is “capable”. When is it and when is it not actually “an arrangement” or “an understanding”, a submission to a threat? Maybe take it on board, Mr Hodge.

MR HODGE: I can give your Honour a short answer to that question. Our short answer to that question is, certainly on these facts, there is an understanding, and in the most simple terms, if one person explicitly says to another person, do this or else I will do this – so that it is clear what the other person is to do and it is clear what the first person will refrain from doing – and then the second person succumbs to that threat by doing the thing that is demanded, then what has arisen between them is “an understanding”, they are of a common mind as to how they will both act in the future.

BEECH-JONES J: So, that is always – if you always succumb to the threat?

MR HODGE: I suppose the answer to that is, it is conceptually possible that facts could arise that would mean that, depending on the particular facts, succumbing to the threat is not itself an understanding, for some particular reason, but would depend on the facts; as distinct from what we say is the reverse proposition that emerges at least from the plurality in the Full Court, which is that succumbing to the threat could never be “an understanding”.

EDELMAN J: But implicit in that, the succumbing to the threat involves a reliance upon the threat to do the act which is demanded.

MR HODGE: That is right. Can I then turn to deal with what we have identified, at least at the beginning of our speaking outline, as what we would characterise as the two – not so much factual issues, but factual matters that need to be addressed. The first is what is the explanation for the exclusion and later termination of WPI by Hutchinson. In our submission, there is no longer any factual issue about this, or true factual issue. It is undoubtedly the case that WPI was terminated by Hutchinson because of the threat that was made by the CFMEU to Hutchinson.

Now, it is important to note that was not what the trial judge was dealing with, something where there was no doubt, that Hutchinson excluded WPI and terminated WPI because of the threat and demand from the Union. Rather, at trial, there was a factual contention that was raised – effectively, there were two factual contentions: a contention by the Union that they had not actually made the threat; and a contention by Hutchinson that there was a different explanation for why it was that WPI were excluded and terminated, which I would summarise as being that Mr Meland had just misunderstood everything that was going on, but it was more specific than that, it was about not having signed people up for funds and then what he thought was required in order for somebody to continue to be engaged.

That has been at least tentatively referred to in the submissions by Hutchinson but, in our submission, that explanation was rejected at trial and there is no room for it to have any operation any further. So, we are in a position where undoubtedly it is the case that the threat and demand was made and that the exclusion and termination was in response to that specific threat.

The plurality and also Justice Wigney below each posited an alternative inference, and they explained that in different ways, although all of them ultimately converge on the idea that there is some distinction to be made between Hutchinson succumbing to the threat made by the CFMEU and Hutchinson terminating the engagement of WPI because of an arrangement or understanding.

But can I take your Honours to some of the explanations that are given of what are the alternative inferences, and then I want to go back, I hope briefly, to the findings of the learned trial judge, and then move on to the legal issues that we identify. If your Honours could take up the judgment on appeal, could I invite your Honours to go first to paragraph 78 of the reasons of Justice Wigney, which is at page 201 of the appeal book. Could I invite your Honours to read, first, paragraph 78.

Then could I invite your Honours to go to paragraph 81 of the judgment, which is on the following page, page 202. In a sense, paragraph 81 seems to embody the distinction that is drawn at least by Justice Wigney between, on the one hand, Hutchinson deciding:

to terminate the contract for the purpose of avoiding industrial action by the CFMEU.

But, of course, that is in the context of what has preceded it in the paragraph, that is, there has been a specific demand and threat made, versus, on the other hand, the last sentence of that paragraph, which suggests that what it would have been necessary to be satisfied of was that there was, to use Justice Wigney’s term, an:

arcane arrangement or understanding with the CFMEU containing the termination provision –

I will come back to that in a moment. Could I then invite your Honours to go to paragraph 83 of Justice Wigney’s judgment, which is on page 203. I would invite your Honours to read that.

GAGELER CJ: Sorry, what paragraph?

MR HODGE: Paragraph 83, your Honour.

GAGELER CJ: Yes.

STEWARD J: Just before you move on, what are we to understand by the use of the words “unilaterally decided” in this paragraph? It certainly can be accepted that Hutchinson was free to form its own views about what it should do, but what it did was undeniably in reaction to the threat that was made. So, what does “unilaterally” mean here? It does not mean independent of the threat, does it?

MR HODGE: No. We would say, with respect, that identifies the crux of the problem with what is going on with this part of the reasoning. That is, what your Honour is identifying, in our respectful submission, is that if one is talking about alternative inferences, one is talking about alternative inferences of fact – we are not at the point of considering a question of law where legal characterisation would depend upon what the conclusion is about what the facts are. So, in that sense, it is immediately misdirection to posit the idea that one is drawing an inference between, on the one hand, an understanding and, on the other hand, not an understanding; rather, what one should be focused on is what the alternative factual ideas and the facts that have to be determined are, and then one applies the legal characterisation.

GLEESON J: But is not the idea that underpins that, that when one is deciding how to respond to a threat, ordinarily the question is just about that response, and that may or may not entail, as an option, cooperating with the person who is making the threat, but equally it might just be a question about how one acts or does not act.

MR HODGE: Yes, but that is – it would, of course, be the case that, confronted with a situation where somebody says to one, I will do X if you do not do Y, that you would then have to think about: how am I going to respond? Am I going to refuse to do Y? Am I going to do Y? Am I going to say to the other person that I will do Y, but then not do Y? Am I going to say to the other person, I will do Y but then do Y? Are you going to try to negotiate? All of those things are necessarily the case, and ultimately, those are about factual conclusions about how one behaves in response to the threat and the demand.

Then, to return to the issue that is identified by Justice Steward, it is not meaningful to say, in response to a threat and demand that, factually, one has acted unilaterally by doing the thing demanded by the other person by the threat. It could only be the case to say that you have unilaterally done the thing that has been demanded if, in fact, you have done it in response to the demand, you have just unilaterally and independently made the decision to engage in the particular conduct.

That would be the factual distinction that would arise – that it might be possible to have a fact pattern where somebody says: I demand that you do X or I will do Y; but you, for entirely independent reasons, independent of the threat or demand, do X anyway. In that situation, you have acted unilaterally or independently. But if you have listened to the threat and demand and decided that it is in your interests to do the thing that is demanded in response to the threat, you are not acting unilaterally; you are, based on the communication between you, adopting a course of conduct for the future.

EDELMAN J: There are three possibilities, though, are they not? One is the example that you are giving, which is truly coincidental conduct. The second one is where, following the threat, the conduct is engaged in, and the threat is a contributing factor but not a necessary factor for the action; the action would have happened in any event. And the third is the necessity – that but for the threat, the conduct would not have occurred.

MR HODGE: Yes. Yes, I accept that.

EDELMAN J: You draw a line, do you, between the coincidental conduct and any other conduct? Or do you accept that it has to be a necessary feature in the decision?

MR HODGE: As I apprehend the three categories that your Honour has described, in the second category, the party who has succumbed to the threat – I will put it a different way. The party who has engaged in the action demanded of them is doing so not only because of the threat and demand, but also for other reasons.

EDELMAN J: They would have sent the waterproofers off‑site anyway, but the threat was one of the reasons which factored into the decision.

MR HODGE: Yes.

EDELMAN J: Or they might have sent the waterproofers off‑site in any event, but the threat was one of the factors.

MR HODGE: There are two answers to that hypothetical. The first is that hypothetical does not arise in this case, that is, it is not suggested on the facts that there was some other reason, beyond the threat and succumbing to the demand, why the waterproofers were sent away. The more complex answer is, taking the hypothetical, that the actual legal question that we are concerned with is a question as to whether there is an understanding that has arisen as between the two parties.

Your Honour is positing a factual scenario. We would say the legal question, then, is: can it nevertheless be said that in that factual scenario, they are of a common mind as to how they will act in the future? We say the answer to that, in your Honour’s scenario, is yes, it would seem – but again, it would depend upon the particular evidence – the reason being, they have had a communication between each other, the communication has given rise to the act, even if there are also other reasons why one of the parties considers it to be in their own independent interest to engage in the act – that is, if they have decided to act on the basis of the communication between them, they nevertheless have an understanding.

GAGELER CJ: I do not want to introduce too many distinctions here, but if I am made an offer that I cannot refuse and I accept the offer, it may well be that there is even a contract that is made, although made under duress – I do not know.

MR HODGE: Yes.

GAGELER CJ: If I am just threatened and I do something to avoid the threatened conduct, I do not seem to have the same reciprocity that is inherent in the former scenario. Do you accept such a distinction?

MR HODGE: As I understand the distinction your Honour is drawing, it would be between something where a threat is made without a demand for action on the part of the other party, and then, in response to the particular threat, somebody just does something in order to avoid whatever it is that has been threatened. In that scenario, that would not – at least as I have just described it – that does not sound like an understanding. That is, it is not the case where the parties are of a common mind as to how they are each going to act in the future.

GLEESON J: It may not be necessary to have reciprocity to have an understanding, but there has to be some kind of a relationship ‑ ‑ ‑

MR HODGE: Yes.

GLEESON J: ‑ ‑ ‑ between the parties to an understanding. So, the reasons for why someone behaves in some way might shed light on the relationship, but ultimately, what we are dealing here with is the relationship between the parties to the understanding. Do you agree?

MR HODGE: Yes, I agree.

STEWARD J: But there is an exchange of value or benefit here, is there not? The Union got something it wanted, namely, removal of the subbie; and Hutchinson got something it wanted, which is industrial peace.

MR HODGE: Yes. Undoubtedly, each of the parties to what we submit was an understanding derived a benefit, and, in effect, a form of economic benefit from performing the understanding. That, we do not suggest, is – that is not the thing that determines whether there is an understanding or not. The thing that determines the understanding would depend upon the communication between the parties and whether it gives rise to a common mind as to what they are to do.

EDELMAN J: The threat that there is an adverse consequence, but if one were to change the adverse consequence into a positive consequence, one might say there is very little doubt that you have an arrangement; you might even have a contract. So, one could say, if it is a request for something to be done which, instead of being accompanied by a threat of adverse consequence, is accompanied by a promise of a benefit – if you chew the carbolic smoke ball, you will receive £100 – there seems to be no doubt in those circumstances you would have a contract.

MR HODGE: Yes.

BEECH-JONES J: If someone says to me, I will shoot you if you do not open the bank vault, and I open the bank vault, I am not a party to a conspiracy, am I?

MR HODGE: In criminal law?

BEECH-JONES J: Yes.

MR HODGE: You would presumably have at least a defence of duress, or some defence available to you.

BEECH-JONES J: Succumbing to the threat, though, does not make you a conspirator.

MR HODGE: As a general proposition? Once we get into the law of conspiracy, we may be dealing with – and can I just clarify, your Honour is talking about conspiracy, rather than joint criminal enterprise?

BEECH-JONES J: It would not matter – they are both agreements to commit a crime.

MR HODGE: I suppose that is right. Insofar as somebody agrees to do something, and their will is completely overborne, then, as I understand it – I am not a criminal lawyer – it would follow that you do not have the necessary subjective state of mind in order to be a participant in the offence. But that, in our submission, does not address or answer the question that we are concerned with here as to what the statutory meaning is of “an understanding”.

STEWARD J: That is saying that we need to read “understanding” in the context of arrangements which are, by their nature, likely to be coercive and unattractive.

MR HODGE: In the context of 45E?

STEWARD J: Yes.

MR HODGE: Yes, but also there is – I suppose I am drawing another distinction, which is that this Court has considered the meaning of “conspiracy”; it has considered the meaning of “joint criminal enterprise”, there are particular requirements in relation to the subjective state of mind, there would also be defences that are available in circumstances where your will is overborne and you are a participant for unwilling reasons. I suppose a different scenario – which, I am sorry, Justice Beech‑Jones, I cannot remember the case, but ‑ ‑ ‑

BEECH-JONES J: Just take it on board, Mr Hodge, I think. It may be as you say, well, it has nothing to do with the construction of this statute.

MR HODGE: Yes, that is our primary submission, is that the meaning of “conspiracy” and “joint criminal enterprise”, whilst they touch on concepts of subjective arrangements or understandings, at least in the case of joint criminal enterprise – I am not sure the expression is used so much in relation to conspiracy – but they do not actually inform the understanding of the statutory word here.

EDELMAN J: Why not?

MR HODGE: I beg your pardon?

EDELMAN J: Why not?

MR HODGE: Because that will depend upon the particular requirements that have developed, in the case of conspiracy, under the common law – also in the case of joint criminal enterprise – and then as modified by, depending upon the particular statutory regime, the criminal regime, in terms of what is required.

EDELMAN J: But the basic underlying question of principle is the same, is it not? It is, whether you talk about it in terms of a language of “consensus” or “agreement” or “extended agreement” or “reciprocity”, they are the same principles that are involved.

MR HODGE: That is right to a certain point, but then when one gets to the question of whether your will is overborne and you have agreed to a cause of action only because your will is overborne, which I understood to be the fundamental point made by Justice Beech-Jones – that is, somebody says to you, open the bank vault or I will shoot you in the head, and, presumably, opening the bank vault is itself a criminal offense – then, in that situation, there would be a different approach that will be taken and likely defences that would be raised.

I had taken your Honours to some of the explanations of what the alternative inference was given by Justice Wigney. Can I then take your Honours to some of the ways in which it was explained by the plurality. If your Honours go to paragraph 172 of the judgment, which is on page 245 of the appeal book.

STEWARD J: Sorry, what was the paragraph again?

MR HODGE: Paragraph 172.

STEWARD J: Thank you.

MR HODGE: Can I invite your Honours to read that. Then, if your Honours come over two pages, to page 247, and can I invite you to read paragraphs 176 and 177.

GAGELER CJ: They are long paragraphs.

MR HODGE: Perhaps, could I invite your Honours to read all of paragraph 176 and just the first sentence of paragraph 177.

GAGELER CJ: They are all variations on the theme, are they not?

MR HODGE: That is, all of them – and it continues when one comes to paragraph 187 of the judgment, which is on page 252 and is the conclusion in relation to it – is that there was some factual difference to be drawn between, on the one hand, succumbing to the threat and demand and, on the other hand, whatever facts would be sufficient for there to be an understanding.

Your Honours will see, in the last sentence of paragraph 187, the characterisation of the facts as being “unilateral parallel action”. I have addressed that already, but we would repeat, this is something where it simply makes no sense to speak of this as “unilateral parallel action” because, in fact, it is action that is not unilateral and is only said to have arisen by virtue of the communications that have occurred between the parties.

GLEESON J: But the way that the ACCC put its case was not an arrangement that involved reciprocity. It was not an arrangement, for example, that said the Union will refrain from disrupting the site if WPI is kept off the site; the alleged understanding is one that was only that Hutchinson will terminate the WPI contract. That is right, is it not?

MR HODGE: In our submission, not quite, your Honour. So, I do not recall that either at first instance or on appeal there was an issue about reciprocity ‑ ‑ ‑

GLEESON J: Well, I am basing that on the amended concise statement.

MR HODGE: The framing of the amended concise statement reflects what is necessary for the statutory contravention. So, the statutory contravention requires that there be an understanding between the parties that contains at least one, I will say, boycott provision; a provision within the meaning of section 45E. So, the framing of the concise statement is to identify the facts that give rise to satisfaction of the statutory requirement. That is, there is an understanding and it contains a boycott provision.

I do not recall that there was ever any suggestion that the understanding was not – it would not be right to call it mutual, but that there was not reciprocity in the sense that each party was giving something. That is, the threat was – or the making of the threat and therefore the willingness to not engage in the threatened behaviour so long as what is demanded is complied with is reciprocity.

GLEESON J: I struggle with that, having regard to the way that the concise statement is framed, and it seems, to my mind, that that creates a difficulty for you, because if you have an arrangement or an understanding which involves an element of reciprocity it might be much more easy to understand why there was a meeting of minds as to what Hutchinson would do. But where the ACCC did not go so far as to say that there was an element of reciprocity in the understanding, then you are required to prove a provision that is not in the context of that – a broader form of arrangement or understanding.

MR HODGE: I will have, perhaps even, the submissions at first instance checked in relation to this, but factually and in terms of how the case was conducted, I do not recall at any stage there being an issue. I may be wrong, but I do not recall there being an issue about reciprocity because the essence of the Commission’s case is one that involves reciprocity. That is, the threat and the demand are reciprocal. That is, the threat is to do something if the demand is not complied with, with the corollary that the thing will not be done if the demand is complied with.

So, I understand your Honour’s concern and I will have some of the first instance documents checked, but I do not believe that this has been an issue through the conduct of the case. In any event, we would say – certainly, the Commission has never contended that this is an understanding which is premised on only one party having engaged in, or engaging in, any action, it is an understanding that is about both party’s future conduct.

The submission that we make is that, as a matter of fact, it is possible to conceive of a meaningful alternative inference to explain the behaviour, and so, for example, it might be the case that there are facts from which it can be inferred that a party has ceased supplying or acquiring services for reasons that are independent of the threat and demand, but that inference is not available here and it is not in fact the inference that is being drawn by the Full Court.

It seems to be that their inference is, in our submission, not truly a fact inference, it is more about the idea that on the one hand you could have succumbing to the threat – and that could just be succumbing to the threat – and on the other hand you could have succumbing to the threat and with some additional thing that could then somehow constitute an arrangement or understanding. But if that was the alternative inference, one would need to be able to identify with specificity why it is that there are some alternative facts. In our submission, it has been done because there is no other explanation here or in front of the Full Court for why they were terminated. There was at trial, but that was dealt with.

STEWARD J: Is it your concern, or your client’s concern, that you can circumvent this provision by a person who has been threatened, the company, simply saying nothing to anyone and then doing it, and you would avoid this provision on every occasion?

MR HODGE: It may not be every occasion because then it may be ‑ ‑ ‑

STEWARD J: All right. I will not be as extreme as that, but there is a real problem about how this provision is to be enforced if parties are wise enough to just say nothing.

MR HODGE: As a matter of policy, that might well be the case. Our argument was that is a reason to be practically concerned for my client’s perspective. It does not ‑ ‑ ‑

STEWARD J: When one goes back to the quote from the explanatory memorandum in your submissions, that policy objective would be imperilled if people simply decided that, to avoid this provision I will say nothing, I will put nothing in writing, but I will act on the threat in order to avoid on this occasion industrial turmoil.

MR HODGE: Yes. I accept that. Can I add a further submission that picks up a submission made by the CFMEU. One could ask the question, what is it that is additionally required in this case on the CFMEU’s construction in order for there to be an understanding? The implication seems to be that if Hutchinson had explicitly communicated to the CFMEU, we will comply with the threat, and then complied with the threat by doing what was demanded, that that would be sufficient for an understanding as between them, but that merely complying with the threat is not sufficient for there to be an understanding – and so that the premise of it seems to be that it requires the explicit communication of assent occur, and occur before the conduct is engaged in.

We would say two things about that. The first is why, as a matter of statutory construction, would one impose that kind of requirement on an understanding, given that it is accepted that understandings can arise tacitly, and it is accepted that understandings are informal dealing between parties. The second point is, in any event in this case, it is, in our submission, apparent from the facts that the Union understands that the threat and demand is being complied with. That is, they are monitoring the site, they are on the site, they know that WPI does not return.

Can I then move to deal with what we submit is the first substantive legal issue, and that is whether the meaning of “understanding” should be confined by the concept of commitment. This is a submission that is effectively primarily made by Hutchinson, it is not a submission that seems to be how the CFMEU puts its case. Can I start by taking your Honours to the decision of Justice O’Bryan at first instance in ACCC v BlueScope Steel Limited (No 5) [2002] FCA 1475. Can I invite your Honours to go to paragraph 108 of Justice O’Bryan’s decision, which I will bring up, and could I invite your Honours to read paragraph 108.

GAGELER CJ: Well, again, it is a very long paragraph. What is it that you want us to take from it?

MR HODGE: The essential point, Chief Justice, that we ask you to take from it is that the explanation that his Honour gives in paragraph 108 and paragraph 106 is correct, that the word “understanding” has to be understood as something distinct from an arrangement, and that in relation to an understanding the use of terms like “commitment” or “moral obligation” or “moral duty” are of limited, if any, utility and not apt to describe something that is supposed to be informal and can arise tacitly between parties.

GAGELER CJ: So, what is your positive submission as to what is required for an understanding?

MR HODGE: Our positive submission is that what must be found as a matter of fact is that the parties are of a common mind as to their future conduct based on communications between them, and those communications can be express or tacit.

EDELMAN J: Involving some element of reciprocity?

MR HODGE: In our case it does, but that is still not settled in Australian law whether there needs to be reciprocity.

GAGELER CJ: Well, there is no time like the present.

MR HODGE: I understand, and from the – there is no reason in this case why one would conclude that something other than reciprocity is required. That is, if one accepts that the consensual – I withdraw that. If one accepts that the communications between the parties as to their future dealings is the thing that gives rise informally to the common state of mind, one would expect that that is going to involve communications about both parties’ conduct in the future, and that it is unlikely – I cannot immediately think of a scenario where it could be said that there is an understanding that has arisen between the parties without any reciprocity in terms of how both parties are going to act.

BEECH-JONES J: When was the understanding reached? When do you say it was reached?

MR HODGE: I will have to give your Honour the same answer that I have given at first instance and on appeal, which is, our submission is the understanding has to be inferred, and it is to be inferred that it arose at some time in June up until 19 July. That is, within that period of time is when the parties came to be of a common mind.

BEECH-JONES J: Did you say up to but not on the date of the exclusion?

MR HODGE: Not necessarily. That is, it arose at some point during that period.

BEECH-JONES J: But did the date of the exclusion complete the understanding on your case? I thought it did.

MR HODGE: We would say, yes, it completed the understanding, but even if one was to find that it did not complete the understanding, it had completed by 19 July when the letter to terminate was sent.

GLEESON J: Can I make sure that I understand what you mean by a “common mind”? If A tells B, you should do X, and B subsequently decides, I should do X, is that sufficient for a common mind on your case?

MR HODGE: Sorry, could your Honour say that again? If A tells B ‑ ‑ ‑

GLEESON J: A says to B, you should do X, you should terminate WPI’s contract; B subsequently decides, I should do X. Is that an example of what you are calling a common mind?

MR HODGE: No.

GLEESON J: You need something more – and what is the something more?

MR HODGE: The something more is – at least in the simplified facts that your Honour had posited, it is not the communications between the parties that is the thing that leads to the future conduct. That is, one person expresses an opinion to another person about what they think; the other person reaches a view about what they are going to do, but they have not communicated with each other as to how each of them are going to act on the basis of those communications, and act within the future.

GLEESON J: So, they would need to have those communications?

MR HODGE: Yes.

BEECH-JONES J: Mr Hodge, I have no difficulty with the proposition that says, I tell someone, do this or else, or do this and I will give you a benefit, and they later do it. Inferring from their act in doing it, that at some stage, prior to them doing it, an agreement was reached. That is not your case, though, is it?

MR HODGE: That is our case, but it depends upon whether one takes the act as the exclusion or the termination. Our case is, on any view, they succumb to the threat, and the succumbing to the threat is the thing that means there is an arrangement or understanding.

BEECH-JONES J: Right. But does it mean it in an evidentiary sense, in the sense, we infer that, prior to succumbing, they had agreed to do it, or is it the act itself of succumbing that constitutes their participation in the understanding?

MR HODGE: At least as we are now, it is the act itself of succumbing.

BEECH-JONES J: I understand.

MR HODGE: Perhaps unsurprisingly at trial, we left ourselves with a wider field to play in.

EDELMAN J: You would have to, on any view, go further than that. You would have to at least say it is the act of succumbing, (a), in reliance upon the threat and in the expectation of the consequence that the threat will not be followed through; and (b), for the proscribed purpose.

MR HODGE: I accept all of those things. I have not meant to depart from any of that in answering Justice Beech-Jones’ question.

GLEESON J: What does it mean to say “reliance on a threat”?

MR HODGE: It means that if somebody says to you, if you do not do this, we will sit the job down, then you are effectively relying upon the negative. That is, you are relying that they will not sit the job down so long as you do the thing that is demanded of you.

I was dealing, in terms of the speaking outline, with ACCC v BlueScope. The submission that we make is that the use of terms like “commitment” and “moral duty” or “moral obligation” are things that are not of assistance, or not of great utility, in trying to determine whether there is an understanding, and that instead they confuse the analytical question because, as in this case, it said, well, has the communications given rise to a commitment, or a moral duty, on the part of Hutchinson, or is it merely that the communications have led to Hutchinson because of the communications about how they are going to act engaging in the conduct, and that is, in our submission, not a meaningful distinction.

Unless your Honours would like to engage or deal with that further, I might move to then the next point, which is must the existence of the understanding precede the giving effect to the understanding. If your Honours take up the Full Court judgment and go to paragraph 112 ‑ ‑ ‑

BEECH‑JONES J: Was it 112 or 212?

MR HODGE: Paragraph 112, your Honour.

BEECH‑JONES J: Thank you.

GLEESON J: They are not talking about preceding in time, they are just talking about preceding in logic, are they not?

MR HODGE: Well, they use the word “logically” but the “precedes” is temporal. That is, if one looks at paragraph 112, they say the making – or the succumbing to a threat could not itself be giving effect to the understanding because the making has to logically precede and that must mean temporally precede the giving effect. That is the submission that was also made at first instance – I beg your pardon – on appeal by Hutchinson.

If your Honours go through to paragraph 158, which is on page 240 of the appeal book – so, our submission is the way in which the plurality has framed it, in any event, is to say that it is necessary to have the understanding be formed first before the conduct that can give effect to the understanding, and as we apprehend it, each of Hutchinson and the CFMEU say that is not how paragraph 112 ought to be understood.

If so, they seem to be agreeing with us, which is there is not a reason why your conduct of giving effect to the arrangement or understanding could not itself complete the arrangement or understanding and insofar – I shall withdraw that. So, that is our submission, that the legal error – or a legal error – that is made by the Full Court is to proceed on the basis that they need to have a complete arrangement or understanding first, and then the conduct giving effect to it, which would mean that you cannot simultaneously succumb to the threat and exclude the other party whilst at the same time be making the arrangement or understanding.

Can I then turn to what is the next question that arises, and that is should a different meaning or shade of meaning be given to “understanding” when it appears in section 45E. As the ACCC has said in its written submissions, it does not contend that “understanding” should have a different meaning in 45E compared to other provisions of Part IV. As we understand the submission made, at least by Hutchinson, it is that that is the effect of our submission; that is, we are giving a different meaning to section 45E.

Our submission, though, is a different one, and that is when one looks at the explanatory memorandum to section 45E and sees what it is that was intended to be captured by the use of the term “arrangement or understanding” in relation to 45E, it is not that that means that the term has a different meaning in 45E; rather, it elucidates the breadth of the term as it is used throughout the statute. So, regardless of where it is used, it captures the thing that we have articulated, which is that if there are communications between the parties as to their future conduct and they are then, as a result of those communications, of a common mind as to their future conduct, that that is an understanding.

We say, to come back to a question that has been asked earlier, that, whilst it can be accepted that capitulating to a threat is not something which might be ordinarily described as a consensual arrangement, nevertheless what is happening in this particular factual scenario is something that can be described by the ordinary understanding of the term “understanding”. That is, there is an understanding as between the CFMEU and Hutchinson as to how each of them will behave in the future.

STEWARD J: And why is there that difference between the two words here – “arrangement” and “understanding”?

MR HODGE: In our submission, there is always a difference between the two words. That is, contract, arrangement or understanding are intended to cover a spectrum of dealings as between parties.

STEWARD J: And what is the difference between an arrangement and an understanding here?

MR HODGE: Well, here, what the Commission contends is that there is an understanding. An arrangement, in our submission, is something that is more formal than an understanding, and one reason to construe it in that way is your Honours will see in the statute that the statute refers to a contract or arrangement being made and understanding being arrived at, which suggests that the formality of the engagement between parties that gives rise to a contract on the one hand, along with an arrangement, is something different and more significant than the level of engagement or formality that is involved for an understanding.

STEWARD J: I do not understand that submission, I am sorry. In the case of an arrangement as well as an understanding, we are in the world of inference and inferring from what is said and what is done.

MR HODGE: Yes.

STEWARD J: And there will be none of the formality of a contract in either case. So, what is the difference in formality?

MR HODGE: I understand your Honour’s question.

STEWARD J: You can take it on board.

MR HODGE: I am not sure I ultimately can give your Honour any better answer than there is not going to be a bright line that divides what is an arrangement and what is an understanding. There will be a bright line that divides what is a contract from every other kind of dealing, because the bright line in relation to a contract is that there has to be a binding legal obligation that arises in relation to a contract. But neither an arrangement nor an understanding is going to involve a binding legal obligation. The question as between those two terms is they capture different spectrums of dealing as between parties.

BEECH‑JONES J: The difference between “make” and “arrive” might be just one of grammar because it is a bit hard to say you “make an understanding” – you “make a contract” and you can “make an arrangement”, but it is kind of hard to “make an understanding” – you “arrive at” one. Is that not what we are talking about?

MR HODGE: It is a matter of grammar, but the grammar reflects the fact that we all understand that the meaning of “understanding” is not something that can be “made” in that sense that a contract or an arrangement can be made.

BEECH‑JONES J: I mean, none of these contracts are enforceable too, so it is a bit surreal to talk about enforceable contracts when none of them could be enforced because they are all illegal.

MR HODGE: That is true. But for the relevant provision of the statute, the idea of the contract is that it creates a legal obligation.

GAGELER CJ: While we are talking about words, you say an understanding involves parties being of a common mind as to future conduct ‑ ‑ ‑

MR HODGE: Yes.

GAGELER CJ: ‑ ‑ ‑ but then you say – and I have written it down – that that can be non‑consensual. I do not understand that. Consensus, to me, means a meeting of minds.

MR HODGE: “Non‑consensual” in the sense that a party can be of a common mind as to how they are going to act in the future notwithstanding they would prefer not to be doing that, they would like to be something else, and they are doing it under pain of a threat. I do not mean “non‑consensual” in the sense that they have no free will. It may depend on the particular meaning that one gives to “consensual”.

STEWARD J: It goes back to what I have said earlier – an unhappy understanding.

MR HODGE: Yes.

STEWARD J: At least from one party’s perspective.

MR HODGE: That is right.

GAGELER CJ: “Non‑consenting” rather than lack of consensus.

MR HODGE: Yes. Ultimately, of course, in some sense they consent, that is, they could choose not to do it – they are free to choose to continue to use WPI – that is Hutchinson – that would just be under the risk the consequence of choosing to do that would be the CFMEU would do the thing that it has threatened to do, which is to sit the job down. Really, when we are talking about the line of consent in this case, we are only talking about something where one party is saying, I will cause harm to you if you do not do it, and then they have to make a choice as to whether they want to avoid the harm or not. But it is still consensual in the sense that they still have free will, they can still choose whether they do it or do not do it, for the purposes of the understanding.

This idea that we are discussing which is, could there be an understanding where it is a threat, and therefore you are under pain of harm, that is not the thing that has caused the Full Court to say that this is not an arrangement or understanding. They are positing something else and something different. Can I then move to the next question, which is at the top of page 4 of our speaking outline, which is, should the existence of the understanding ‑ ‑ ‑

GAGELER CJ: I do not think we get to page 4.

MR HODGE: I am sorry, page 3, your Honour. Should the existence of the understanding in the CCA be determined objectively or subjectively? Ultimately, we would say, in this case, it will not make a difference. That is, we are either right or wrong about succumbing to a threat being sufficient to give rise to an understanding. But it is a point that arises, because of the question as to whether, in determining whether there is an understanding, what a court should be concerned with is the same kind of analytical process that is engaged in in relation to a contract of seeking to look at the objective facts and make an assessment of the common intention of the parties based on objective facts, or whether it is something where it is necessary to be satisfied as to the subjective state of mind of each of the parties before there can be an understanding.

BEECH-JONES J: In concluding that Hutchinson acted in reliance on the threat, that must have involved a state of mind finding about somebody, did it not?

MR HODGE: At least, the way in which the primary judge deals with it, is to attribute it to Hutchinson without being specific about which individual holds the state of mind.

BEECH-JONES J: But a finding that somebody of a requisite authority, if unknown within Hutchinson, took this issue because of the threat.

MR HODGE: Because of the threat – yes. That must follow if that is right.

BEECH-JONES J: To that extent, in your case, there is some degree of subjectivity, is there not?

MR HODGE: Yes.

EDELMAN J: But that is the law of contract as well. The reason there was no unilateral contract in R v Clarke was because there was no subjective reliance upon the offer of a reward.

MR HODGE: Yes, the distinction we draw – and which may, ultimately – as I say in this case, is absolute distinction without a difference, but does arise at various times in relation to the meeting of understanding. Do you approach it analytically in the same way that you approach a contract? That is, somebody cannot come along, and say, this was what was in my mind. So, depending upon the evidence of a particular witness, and whether that is accepted or not accepted, would determine the question of whether or not there is an understanding. Instead, would you just ‑ ‑ ‑

EDELMAN J: It does not fit in context particularly well where you are talking about a proscribed purpose that, I think on any view, has to be a subjective purpose.

MR HODGE: Yes. I understand the point your Honour makes, but there is a distinction in the Act between the arriving and an understanding and the purpose of the provision. So, in relation to 45E, one of the reasons it ultimately does not really matter in this case is because both parties have to have the proscribed purpose, but in relation to other sections of the Act you can have an understanding that contains a provision, the provision can have a purpose, but at least on the current state of the authorities it is not necessarily the case that both parties need to share the same purpose in relation to that provision, so that it is possible that only one party – that is, the moving party who proposes the inclusion of the provision – has the purpose of substantially lessening competition – that is the section 45 situation.

Nevertheless, then, you have a provision with the relevant purpose and it has formed part of a contract, arrangement or understanding that is made between two parties, even though one of them does not have the particular purpose. But what your Honour has picked up on is, in this case, this is why it is not likely to – it is not going to factually make a difference, whatever way this Court goes, in relation to objective or subjective in relation to understanding, we would still satisfy, we would say.

GAGELER CJ: But does the question really arise for determination, then, in your appeal?

MR HODGE: Well, I suppose I identify it – and your Honours may decide that this is not the case to answer it – the same point would apply in relation to reciprocity and the need for reciprocity will not arise in relation to this case. But we flag it because it is an obvious question, which is: if one is going about assessing is there an understanding between two parties, does one seek to determine what is the subjective state of mind of each of those parties and do they match? Which would be the kind of analysis that would be done – again, as I understand it – in relation to, say, joint criminal enterprise. Do they have the same purpose, or does one simply step back from the subjective question and focus on the objective facts, what is actually communicated between the parties, and does one then come to a view about whatever is the necessary common state of mind based on what is communicated between the parties only?

GLEESON J: Is there an error in the Full Court’s judgment that you are pointing to in dealing with this problem?

MR HODGE: The Full Court appears to treat it as something where they are dealing with it subjectively rather than objectively. That is, they are concerned with focusing on the state of mind of the particular participants. But that is not an error – if that is an error, it is not an error that is going to affect the outcome – or will affect the outcome on the other issues that I have addressed. Can I identify, though, to the extent that it assists, what the two – or at least two competing layers of thinking about this are.

On the one hand, the use of the expression “meeting of minds” is one that is used in relation to contracts and it is accepted and well‑understood that, whilst we talk about a meeting of minds in relation to contract, we are not concerned with what is in fact the subjective state of mind of the parties, of looking inside their heads and seeing what they are in fact thinking. We are instead concerned with what they objectively communicate as between them.

So, on the one hand, as soon as we talk about a “meeting of minds” or “common mind” in circumstances where you have this expression “contract, arrangement or understanding”, that would suggest that we would apply the same type of framework of analysis and objective framework to whether it is a contract, whether it is an arrangement, whether it is an understanding. But, on the other hand, against that is that the Act seems to raise the idea of some further kind of dealing, a less formal kind of dealing, and uses the term “understanding” which points potentially closer to what is the subjective state of mind of each of the parties. So, then one would ask: is the subjective state of mind of each of the parties one that is found to be common? That is, they both have a common understanding of how they are to act in the future. In this case, it may, as I say – in fact, it almost certainly is a distinction without a difference.

GAGELER CJ: So, we are looking for a meeting of minds that are not actually minds. It is an objective inquiry.

MR HODGE: And that is the case in relation to contract.

EDELMAN J: But we are talking about penalties here.

MR HODGE: Yes. There still needs to be – because it is 45E, there still needs to be a subjective state of mind because the subjective state of mind is required in relation to purpose. So, there will, in any event, be that issue. But your Honour Justice Edelman is right to say we are talking about penalties. That does not necessarily ultimately determine whether in coming to a conclusion about whether there is an arrangement or understanding there needs to be a subjective view about an understanding.

So, again, to take that example under section 45, as the law currently is, you could have a situation where two parties reach an agreement which contains a provision. One of the parties is the one who has proposed the provision and has the purpose or substantial purpose of substantially lessening competition, but the other one nevertheless contravenes the Act by having made that arrangement or understanding. Ultimately, the fact that it is – or it leads to a pecuniary penalty, whilst that is informative, it does not, in our submission, take the analysis of whether the arrangement or understanding is objective or subjective very far.

STEWARD J: I do not want to put you off your case there. Is a meeting of minds really what is captured in this provision for understandings and arrangements? It seemed to me that Lord Justice Diplock in the British Basic Slag Case, his concern was acting in accordance with, in whole or in part, an inducement, and then, here, proscribed inducement – namely, the threat of industrial action. And it is this idea of acting because of the inducement that captures what is a possible arrangement or an understanding.

MR HODGE: Yes, we adopt the explanation that Lord Justice Diplock gives. Your Honour is right to say Lord Justice Diplock talks about the idea of, if one party induces another to act in a particular way, and the other party so acts, that that gives rise to – the Lord Justice is talking about an arrangement in that case, not an understanding, but the same conceptual analysis would apply. It is in that case that Lord Justice Diplock uses the expression – refers to a “moral duty” or a “moral obligation”, and ultimately, we would say the utility of that kind of language is limited, but just in ‑ ‑ ‑

STEWARD J: In this statutory context that would not make sense.

MR HODGE: It is just an attempt to capture the idea, though, which is, it is the dealings between the parties and the communications between the parties that lead to their future conduct. Can I then move to, again in our speaking outline – I am sorry, what time did your Honour propose to take ‑ ‑ ‑

GAGELER CJ: It depends how much longer you propose to be.

MR HODGE: I will definitely finish before midday. I will be content to take the morning adjournment now.

GAGELER CJ: We will do that now.

MR HODGE: Thank you.

AT 11.14 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.28 AM:

MR HODGE: Justice Gleeson, in answer to the question you asked earlier about reciprocity, could I just give you at least one reference, which is in the appellant’s supplementary book of further materials where the closing submissions for trial are contained, at page 51 of the supplementary bundle, at paragraph 208 of the closing submissions. There is the heading, “The making of the arrangement or understanding”. Your Honour will see in paragraph 207 there is a description or a reference to the “sit the job down” conversation, and then at paragraph 208, it is explained what that means in the context of Lord Justice Diplock’s language from British Basic Slag. That is, it is framed explicitly as, this is a conditional threat that was made by the CFMEU, and it is a representation:

as to the CFMEU’s future conduct which –

was:

intended to induce Hutchinson to act in a particular way.

Then, in answer to – I am sorry, Justice Edelman, did you ‑ ‑ ‑

EDELMAN J: I am just breathing loudly.

MR HODGE: I apologise. Then, Justice Beech‑Jones, in answer to a question that you asked, I said “up to 19 July” but it should have been up to 26 July, 26 July being the date of termination, not 19 July.

BEECH‑JONES J: Up to but not including?

MR HODGE: Up to and including 26 July.

BEECH‑JONES J: Up to and including.

MR HODGE: That is, that is the actual date of termination.

BEECH‑JONES J: I understand. That is the point of my asking.

MR HODGE: Yes. Then, to return to what is effectively the second‑last point that I was going to address, that is, even if the way in which the assessment of whether there is an arrangement or understanding is to be approached is to be done subjectively rather than objectively – or even if it is just for an understanding that it is to be approached subjectively rather than objectively – the facts of this case are sufficient to satisfy the necessary requirement, both because at a specific level, Mr Meland said that he understood he had no choice as a result of the threat but to go about and bring to an end the relationship with WPI, but also because at a more general level, the way in which the primary judge reasoned – and we say correctly – was to say, based on the facts, the only inference available is that the reason that Hutchinson has decided to terminate – first to cease acquiring and then terminate the contract with WPI – is because of the threat that has been made by the CFMEU, and therefore that is a finding as to the subjective state of mind of Hutchinson, even if it is not specifically linked to any particular person – and that is sufficient. Then the last point ‑ ‑ ‑

STEWARD J: Subjective state of mind of the controlling – those who control Hutchinson?

MR HODGE: Yes.

STEWARD J: Yes.

MR HODGE: But obviously the company – ultimately, whatever is the mind of the company is the mind of the individuals, it is not always the case that it is possible to identify the specific individuals. Then, in relation to the last point, which is the date at which the understanding arose – we have addressed this in writing – ultimately, in our submission, it is not significant to the point of law. That is, whether the understanding arose on or about 11 June or it arose in late June or early July or it arose up till 26 July, at all points in time the understanding is arising because that is the point of time at which Hutchinson is succumbing to the threat that has been made by the CFMEU.

The way in which the different judgments below proceeded was that Justice Wigney reached different factual conclusions, it would seem, from the primary judge, at least as to the date of exclusion. As we understand it, there is a notice of contention that is premised on accepting the reasoning of Justice Wigney, and I will deal with that in reply. The reasoning of the plurality was premised on accepting the findings of the learned primary judge. The way in which they construed the findings of the learned primary judge was that she was finding that the arrangement or understanding had arisen on 11 June, or in fact I think at one point the plurality says no later than 11 June.

That does not seem to in fact be the language that is used by her Honour. She is unsurprisingly not specific about time because she knows there is a period of time over which the arrangement or understanding is alleged to have arisen and, on the ACCC’s case, must have arisen, but it does not affect the conclusion as to at what point over that period of six weeks the understanding arose. That is our submission as to ultimately why nothing turns on this.

Your Honour, that brings me to the end of what I was intending to say in my primary submissions, so unless there are any questions, I will sit down.

GAGELER CJ: Thank you.

MR HODGE: Thank you.

GAGELER CJ: Ms Higgins.

MS HIGGINS: Your Honours, I will develop three propositions. First, acquiescence to a threat without more will not contravene section 45E of the Act. For such a contravention to occur, the acquiescent party must expressly or tacitly, by words or action, communicate its assent to the threatening party that it will adopt the conduct subject of the threat. To succeed in this appeal, the Commission’s contentions require an expansion of the current law, which this Court ought not entertain.

The second proposition, which is found in our outline at paragraph 9, is that on the facts as found below, and not challenged in this Court, there cannot be the requisite consensus. The third proposition, at paragraph 17 of the outline, is that even if by an objective approach or otherwise, the ACCC could found an inference of an understanding, it separately requires a finding of proscribed purpose which the facts cannot supply.

The first proposition, your Honours, is addressed in the outline of paragraphs 1 to 8. In order to develop it, I will first address the Act and then the authorities. The Act as at 30 June 2016 is in the authorities at volume 1, tab 3. Can I begin by situating section 45E and its wider statutory context to support the proposition that the Act deals separately, and differently, with contracts, arrangements and understandings on the one hand, and unilateral conduct or concerted practices falling short of contracts, arrangements or understandings on the other hand.

We emphasise that statutory demarcation in aid of our submissions that this Court should adhere to the established need for a meeting of the minds as an essential integer of any arrangement or understanding, and that it should not expand those concepts in a manner for which the ACCC contends.

GLEESON J: The ACCC ultimately did accept that there must be a meeting of the minds; they say that at paragraph 10 of their outline.

MS HIGGINS: Yes, your Honour, and the difference may be this – which was adverted to by the Chief Justice’s observation that it is a meeting of the minds without minds being involved. It seems to be a meeting of the minds that is determined, on one view, wholly objectively and without any subjective component. We will come in argument as to why that is not a better way to approach section 45E.

Section 45E sits within Division 2 of Part IV, and if your Honours turn through to page 75 of the bundle, your Honours see that, by reason of section 45EB, section 45E does not affect the operation of any other provision of the Part.

BEECH-JONES J: Was that EB?

MS HIGGINS: Yes, your Honour, 45EB. Those unaffected provisions include section 45, which your Honours find at page 54 of the book – that, as the Court is aware, contained the Act’s general proscriptions of anti‑competitive contracts, arrangements or understandings. While some provisions in Part IV operate by reference to the most central notions of contract, arrangement or understanding, other provisions within Part IV proscribe conduct that does not involve the making of, or giving effect to, such bargains.

At the relevant time and prior to the amendments in 2017 following the recommendations of the Harper review, section 45B, which your Honours find on page 57, dealt with covenants affecting competition. Turning over to page 58 of the book, that section proscribes certain unilateral Acts, including by section 45B(2)(a), requiring:

the giving of a covenant –

By section 45B(2)(b), threatening:

to engage in particular conduct if a person . . . does not comply with the terms of the covenant –

By section 45B(3)(a), inviting:

another person into a contract containing a covenant –

And by subsection (c), making it:

known that the person will not enter into a contract . . . unless the contract contains a covenant –

Those provisions indicate that the Act dealt with unilateral conduct separately from provisions governing contracts, arrangements and understandings. Similarly, as the Court would be aware, the current form of section 45 of the Act proscribes, by section 45(1)(c), concerted practices that have the purpose and effect of substantially lessening competition.

The Harper review in 2017 recommended that extension of section 45 specifically to deal with the issue of anti‑competitive price signalling. Can I ask your Honours to take up the extract of the Harper report that we provided in the joint book at volume 10, tab 61, page 2945. If your Honours have that, in the penultimate paragraph on page 2954, it is apparent that the panel regarded the inclusion of concerted practices as an expansion of section 45, and it specifically recommends against expanding the cartel conduct provisions to include concerted practices because it was preferable that those criminal provisions retain the narrower concept of “contract, arrangement, or understanding”. Your Honours see that in the first paragraph on page 2955 – sorry, the second paragraph.

The panel did not expressly address section 45E in that context. However, it was not in fact expanded, and Parliament must be taken to have acted upon the narrower concept of “contract, arrangement or understanding” when determining to expand section 45. Can I come then, your Honours, to the boycott provisions – of which section 45E is just one – and ask your Honours to return in the bundle to volume 1, tab 3. The primary boycott provisions are sections 45D and DA which commence in the book at page 63.

Section 45D prohibits a person from engaging in concert with a second person in conduct that hinders or prevents a third person from supplying goods or services to or acquiring goods or services from a fourth person and:

that is engaged in for the purpose, and would have or be likely to have the effect, of causing substantial loss or damage to the business of the fourth person.

Section 45DA on page 64 prohibits a person from engaging in concert with a second person in conduct that hinders or prevents a third person from supplying goods or services to, or acquiring goods or services from a fourth person, and again:

that is engaged in for the purpose, and would have or be likely to have the effect, of causing a substantial lessening competition in any market in which the fourth person supplies or acquires goods or services.

Section 45DB on pages 65 to 66 then prohibits certain other conduct in concert. Sections 45DC and DD, between pages 66 to 71, make clear that the focus of the boycott provisions is concerted conduct by unions and their members.

Can I ask your Honours, in that connection, to take up the explanatory memorandum to the Workplace Relations and Other Legislation Amendment Bill 1996, and that is found in the authorities at volume 10, tab 54, page 2903.

GAGELER CJ: Is there any definition of “in concert”?

MS HIGGINS: In the Act? I do not think there is, your Honour. I can confirm that. No, your Honour, there is not, not at the time. If your Honours then take up volume 10, tab 54, at page 2903, which introduced the current form of section 45E, looking at paragraph 18.30, it indicates that:

section 45E prohibits a person making an agreement with a union for the purposes of preventing or hindering trade between that person and another person (the target).

It continues:

New section 45E is directed at situations where a person capitulates in order to avoid loss or damage as a result of threatened industrial action against the target.

Importantly, it states:

It complements sections 45D and 45DA, ensuring that the prohibition on secondary boycott action is not weakened by collusion between firms and unions.

Dropping down to 18.33, it states, as is the case, the requirement that there be a making of a “contract, arrangement or understanding”.

STEWARD J: Just pausing at 18.30 in the second sentence, what the object of the section is, you have made it clear that having the threat and succumbing to the threat is insufficient. In order to fit within the prohibition, what extra do you say you would need? What would Hutchinson have needed to do to say, I agree with your threat, or, I will succumb to your threat or – what, in your view?

MS HIGGINS: What we say, your Honour, is what is stated at paragraph 1 of our outline in the second sentence, and that is that to contravene, an acquiescent party must, expressly or tacitly, by words or action, communicate assent to the threatening party that it will adopt the course of conduct.

STEWARD J: Then what do you say about the proposition that if parties are wise enough and say nothing, but nonetheless succumb to the threat, do you see that as a problem of policy in terms of this provision?

MS HIGGINS: Your Honour, we say that this provision, correctly construed at all times, did not capture conduct that fell short of a contract, arrangement or understanding. We say that from a policy perspective, other provisions, including the Commonwealth law, may capture conduct of this kind, including section 355 of the Fair Work Act. When understood in context within the Competition Act, the mischief that was sought to be addressed was the circumstance in which through collusion – that is, by making a contract, arrangement or understanding – a union and a private company circumvented the secondary boycott provisions in section 45D and DA.

STEWARD J: Well, can I ask you this question. Do you accept that an arrangement or an understanding can exist by inference from the conduct of the parties without more?

MS HIGGINS: Yes.

STEWARD J: As a matter of just evidence and inference?

MS HIGGINS: That would be classically the circumstance of a nod and a wink where someone without express variable communication confirms ‑ ‑ ‑

STEWARD J: Going back to your paragraph 1:

by words or action, communicate assent –

What do you say about the proposition that assent was communicated here by the action of terminating WPI?

MS HIGGINS: We say several things, your Honour, and I will come to these in our argument. We set out ‑ ‑ ‑

STEWARD J: If I am taking you out of turn you can do it later.

MS HIGGINS: No, I will answer it directly. We say that was not the case run below. We say it is not the case that was run with the cooperation of all parties in the Full Federal Court which accepted the finding of the primary judge that the arrangement or understanding was forged on or around 11 June 2016. We say there are not any findings of fact in the primary judgment, or in the Full Court, as to why Mr Meland terminated the contract. My learned friend has gone to evidence – I will take your Honours to that this afternoon – but there are no findings of fact on the basis of that evidence. We say that all of the conduct between 11 June and the circumstance of termination, almost all of that conduct militates against the existence of an arrangement or understanding.

BEECH-JONES J: Just in terms of the act of succumbing, which is the withdrawing, you say that was not the case that was run, but you do not deny that in a particular case that could be enough?

MS HIGGINS: It may be ‑ ‑ ‑

BEECH‑JONES J: Not as a basis to infer an earlier agreement, but as the basis to constitute the agreement.

MS HIGGINS: In the barest circumstance of the making and the giving effect to coinciding as perfectly as possible and no variable communication, one can imagine a circumstance where the union representative says, get that man off the site or I will sit down the job, and employs a private company, gives them a nod, or says something to the effect, promise you will not sit down the job, and then physically removes the person from the site.

BEECH-JONES J: Forgot the nod, just the act of physically removing, in the sense, that – maybe I am going back to early law school; I remember Carbolic Smoke Ball – the act of acceptance was the act of doing whatever that poster required you to do.

MS HIGGINS: The answer to your Honour’s question in that barest circumstance is it would be difficult to the requisite standard of proof to infer an understanding or arrangement. If those were the only facts, and if an equally available hypothesis was that the person was acting in order to avoid the commercial cost and disruption of industrial action, it may be impossible to infer an arrangement or understanding.

STEWARD J: Can I just ask you, are you now saying that Hutchinson did not succumb – that that is not accepted?

MS HIGGINS: No, your Honour, that is what the Full Court and those are the findings. But the reason for the succumbing ‑ ‑ ‑

STEWARD J: Okay. I am sorry.

MS HIGGINS: There was not a finding of fact, was my submission.

STEWARD J: Did Hutchinson put up a reason for succumbing as part of your case?

GLEESON J: It was just rational, was it not?

MS HIGGINS: Yes. Your Honour, we deny the contract, arrangement or understanding entirely, and we propounded a competing hypothesis, which was the historical failure of WPI to sign up to the superannuation funds, and the fact that it had not in these circumstances, was the reason that there was a concern.

STEWARD J: I thought we were told that was rejected as an independent reason.

MS HIGGINS: It was, your Honour. I was answering your Honour’s question as to what we ran below.

STEWARD J: So, we should infer that Hutchinson succumbed because it wanted industrial peace?

MS HIGGINS: Yes.

STEWARD J: I see.

MS HIGGINS: Those are the findings of the Full Court ‑ ‑ ‑

STEWARD J: Thank you very much.

MS HIGGINGS: ‑ ‑ ‑ which we do not seek to disturb in this Court. Now, our learned friends have submitted that section 45E was originally introduced to address the facts arising in Leon Laidely. That may be so, having regard to the Hansard materials, but again if your Honours take them up – and that is volume 10 of the bundle, tab 59, page 2948 – if your Honours look at the penultimate two paragraphs, your Honours see the passage our learned friends emphasised:

Unfortunately, events have shown that the effectiveness of the Act’s prohibition of secondary boycott activity may be threatened by collusion between companies and unions.

We again emphasise “collusion”. And then there is a discussion in the final paragraph of the new then section 45E, which again turned on the notion of a contract, arrangement or understanding. We say that at this earlier stage 2 the emphasis was on prohibiting collusive arrangements reached to circumvent the operation of section 45D.

Your Honours, can I then turn to section 45E itself. That is volume 1, tab 3, page 71. The first matter to notice is the statutory criterion of a contract, arrangement or understanding which appears in each of subsections (2) and (3). In subsection (1), the “supply situation” and the “acquisition situation” can be seen to reflect the situations of the third and fourth persons in section 45D and 45DA. That is, whereas sections 45D and 45DA apply to a first and second persons acting in concert to hinder the supply or acquisition in those situations, section 45E is directed to a situation where the union and a third person boycott the fourth person.

Relevantly in section 45E, acting in concert is not enough. The statutory text in subsections (2) and (3) is intractable in requiring the making of a contract, or an arrangement, or the arriving at of an understanding.

GAGELER CJ: You said there is no definition – I accept that – but what does it mean to act in concert and how is that different from having an understanding?

BEECH‑JONES J: Do you say “in concert” means coordinated action, and agreement and understanding mean meeting of minds?

MS HIGGINS: That is broadly what we say. Necessarily for “in concert” there will be a degree of coordinated action. There might be no verbal express communication of any kind, there may be no tacit communication of assent, but there would be a coincidence of event and concurrence in time that is sufficient to say it is acting in concert.

We say that, established in the authorities, the meeting of the minds required – a contract, arrangement or understanding does require the communication of assent, tacitly or explicitly, and thereby the assumption of some kind of commitment or obligation, such that if someone were not to do that which they said they would do, it could be said to them, we had an agreement, we had a deal.

The second matter to note within the context of section 45E is the need for consensus as an integer of the contract, arrangement or understanding. The statutory verb in relation to “understanding” is “arrive at”. Section 4, which is on page 41 of the book, defines “arrive at”:

in relation to an understanding, includes reach or enter into.

That is, for an understanding to be reached or entered into, it requires at least two parties, and it is more than just common interest. It is also, we submit, more than each party understanding, in some epistemic sense, what some common interest is. At the end of the process of making or arriving, what will exist is one of these forms of consensual dealing. That falls not only from the language of “arrive at”, it also emerges from the statutory contemplation in subsections (2) and (3) of section 45E, which is back on page 72 of the book, that an understanding is something that contains a provision which was included for a purpose. That is, it must be possible to identify something in which a provision has been included.

That, we say, has two implications. First, it points to a mutual state of mind involving an element of assent – a provision has been communicated, and in order to be included in an understanding, has been assented to – and second, an arrangement or understanding must be substantial enough to contain at least one provision.

GAGELER CJ: Mr Hodge’s case is that there is no difference between this collocation of words in section 45E and its use elsewhere in the Act. Do you agree with that?

MS HIGGINS: Yes.

GAGELER CJ: So, you are illustrating its general meaning by reference to the precise language of section 45E?

MS HIGGINS: Yes, your Honour. The answer to your Honour’s question is, yes, subject to this. Section 4F(2) disapplies the purpose provision to these sections, and they are separate law, as to the quality of the subjective purpose that is required. So, that is a difference in this provision. But otherwise, as to the consensus required, we say the law is the same; the subjective purpose is different.

GAGELER CJ: It is very odd that you would have a definition of “arrive at” in relation to an understanding, but no definition of “understanding”, just as a matter of drafting.

MS HIGGINS: Yes, your Honour. The second point is that there must be sufficient substance to whatever is the result of the formation of an understanding for it to contain a provision of the required kind. The need for consensus, or assent, is borne out in the cases from which we say the following propositions emerge. Can I ask your Honours to take up CEPU v ACCC [2007] FCAFC 132; (2007) 162 FCR 466, which your Honours find in the joint bundle at volume 8, tab 38, page 2276.

Your Honours will recall that the facts of this case were that the Union demanded the exclusion of a specific subcontractor and threatened that it would not sign a site agreement of some commercial importance to the plant operator, Edison, if that demand was not complied with. Turning through to paragraph 15 on page 2286, the Full Court sets out the primary judge’s unchallenged statement of the law, requiring:

“an arrangement” or “understanding” . . . had to be proved by evidence of a consensus or meeting of minds between Edison and the CEPU under which one party or both parties committed to a particular course of action.

The findings throughout the – sorry, your Honour.

STEWARD J: Just before you go on – I am sorry – the issue of commitment, which I think formed part of some of your submissions – one of the cases that was not referred to below is that of Lutovi [1978] HCA 55; (1978) 140 CLR 434, where the plurality, which comprised Justices Gibbs and Mason, when dealing with the word “arrangement”, albeit in a different context, make it clear that:

An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.

So, do you say that you need commitment to have an arrangement or an understanding?

MS HIGGINS: We do, your Honour. Lukovic was not referred to, I believe, below but it is referred ‑ ‑ ‑

STEWARD J: Lutovi, L-u-t-o-v-i. Sorry.

MS HIGGINS: Sorry, your Honour, it may be the accent. It is referred to throughout the Part IV jurisprudence and it is referred to in a number of the cases which are in the authorities, and we say that the proposition your Honour just articulated is part of the jurisprudence in respect of Part IV. But we say that a commitment is required, even though one might renege on that commitment. There has to be some undertaking that you will do X but, it not being binding in law, a party may ultimately withdraw.

STEWARD J: But they say in the preceding sentence:

But in our view it is not essential that the parties are committed to it or are bound to support it.

So, what are we to do with Lutovi?

MS HIGGINS: We say, your Honour, within the context of the Part IV jurisprudence, that has been assimilated but in the sense that I identified, which is that there will be some undertaking of obligation, but there is not commitment per se, because a party can renege.

STEWARD J: Okay.

MS HIGGINS: One is not bound. I will, over the luncheon adjournment, identify some of the cases in which that authority is referred to because it is picked up in the jurisprudence, your Honour.

STEWARD J: Thank you very much.

MS HIGGINS: The factual findings in CEPU v ACCC confirm on several occasions that Edison had adopted and become committed to complying with the Union’s demands. Can I just identify the paragraphs for your Honours without taking the Court to them. That is identified at paragraph 60 in the final sentence, paragraph 89 in the second sentence, paragraph 147 and paragraph 162 in the second sentence.

Staying on the meeting of minds and consensus, if your Honours turn through to paragraph 148 on page 2316. Before coming to 148, your Honours see at 147, around the middle, one of the references to which I just adverted:

This was an adoption by Edison of the CEPU’s demand.

But dropping down then to 148, there was a meeting of the minds such that:

CEPU understood . . . that its demands had been accepted by Edison –

Including, if your Honours turn over to paragraph 150 on 2317, in the third‑final sentence ‑ ‑ ‑

BEECH-JONES J: What paragraph was that again, Ms Higgins?

MS HIGGINS: Paragraph 150, your Honour, the third‑final sentence. The adoption was either by reason of Mr Sutherland agreeing to sign or by handing over the heads of agreement on 23 or 24 August. So, critically in the facts of this case, there had been a communication of assent, and that is then reflected at paragraph 153 in the extracted passage from the primary judge’s reasons at 167, where his Honour had observed:

The critical thing is that Edison communicated its acceptance of this requirement to the CEPU and that this communication resulted in an arrangement between Edison and the CEPU.

And the Full Court in CEPU at 154 then sets out the concatenation of matters from which it infers acceptance by Edison. The second proposition we say emerges from the authorities is that a mere expectation or hope as a matter of fact that something might be done or happen or that a party will act in a particular way is not enough to constitute an arrangement or understanding, even if that expectation or hope has been engendered by that party.

So, for instance, in the petrol pricing cases, expectations as to what rivals would do with prices even if aroused or engendered by those persons furnishing lists of the prices they would apply, did not constitute an arrangement or understanding in the absence of an assurance that the rivals would act in any particular way. An example of that, to which I will refer without going, is Apco Service Stations Pty Ltd v ACCC [2005] FCAFC 161; (2005) 159 FCR 452 at paragraphs 45 to 47.

In the joint judgment below, one sees the language of engendering, and that is in judgment 172 in the appeal book at page 245.

STEWARD J: Sorry, which paragraph is that on?

MS HIGGINS: Paragraph 172, your Honour.

STEWARD J: Thank you.

MS HIGGINS: Where their Honours observe that:

the dispute of most significance . . . is whether the factual findings made . . . were sufficient to support the inference that her Honour drew that what had taken place went beyond Hutchinson succumbing to threats made by the CFMEU, engendering no more than an expectation that the subcontract with WPI would be terminated, and as a result its services not being used.

Now, we do not know in the present case whether Mr Clarke or Mr Steele of the Union expected Hutchinson to comply with their demands because neither Mr Steele nor Mr Clarke was cross‑examined on that topic. In any event, if that had been established in the authorities it would not be enough.

I should observe in that connection, your Honours, that in the Full Court at paragraph 62, his Honour Justice Wigney refers to the possibility that Mr Steele expected something. He does so at paragraph 64 also. The joint judgment at 152 then observes that:

even if the CFMEU expected –

that would not be enough, but we do not even know if that expectation was held. But our short submission is that an explicit or tacit communication of assurance or assent is necessary, and that is what the joint judgment conveys by framing the inquiry as whether what took place:

went beyond Hutchinson succumbing to threats made –

and that is in paragraph 172, to which I just took the Court.

The third proposition for which we contend on the authorities is that in order to be a party to an arrangement or understanding, a person must regard himself as being in some degree under a duty, whether moral or legal, to conduct himself in a particular way. That emerges from the British Basic Slag Case, but it was adopted and approved by the Full Court in CEPU v ACCC at paragraph 150.

Can I briefly address my learned friend Mr Hodge’s submissions about the anomaly of speaking of moral obligation or honour in this context. Those words are a proxy for a circumstance in which one cannot speak of legal obligation. It is meaningless for reasons your Honour Justice Beech‑Jones observed to speak of that in circumstances where the provision would be invalid or void as illegal. What is in contemplation is something akin to the notion of honour amongst thieves, or even a law that which is committed to is improper, there is a shared commitment that that is what is to occur, such that a person could say upon default, but we had an agreement, we had a deal.

Can I then turn to the ACCC’s expansion of section 45E. The Commission submits that it is not expanding section 45E or contending for a different construction of “understanding” in section 45E than in other sections. But when the totality of the submissions are considered, we say that must be rejected. The Commission’s submissions in reply at paragraph 3 illustrate the problem, if your Honours have that available. The Commission there submits:

Where parties’ actions are co-ordinated through direct or indirect communications, the parties are not engaged in unilateral action; they have an understanding.

And a similar difficulty affects the submission‑in‑chief at paragraph 38 that:

Hutchinson could not have been acting “unilaterally” because it was not acting for any independent reason.

We submit that “unilateral” in this statutory context is to be contrasted with “bilateral”. That is, pursuant to a contravening arrangement. Hutchinson acted unilaterally because it was not acting for a reason communicated to the Union by words or action as involving it adopting the course of conduct suggested by the threat. There is no circularity in that submission, it is the statutory criterion as developed in the authorities.

So, the passage in the ACCC v Olex Pty Ltd [2017] ATPR 42‑540 – which your Honours conveniently find in the Full Federal Court’s reasons at paragraph 108, page 216 – the plurality there extracts a passage from Olex. Focusing on the second italicised portion:

there will be “no understanding where one party decides unilaterally to act in a particular way in response to a pricing manoeuvre by a competitor” –

STEWARD J: Can I ask you this. How do we reconcile, on the one hand, your proposition that Hutchinson acted unilaterally with the acceptance that Hutchinson acted because it succumbed to the threat?

MS HIGGINS: For the reason I just sought to articulate, your Honour, was that “unilateral” in this context must be contrasted with “bilateral”, and “bilateral”, for the purpose of the Act criterially involves acting for a reason communicated to the Union by words or action – that is, Hutchinson adopting the course of conduct suggested by the threat.

STEWARD J: Why does the act of communicating – why does that matter, on this issue?

MS HIGGINS: Because that is what is required for the meeting of the minds, your Honour. That is what is required for there to be the statutory conception of a contract, arrangement or understanding.

Even if it were accepted, contrary to our submission, that in the present case the parties are not engaged in unilateral action, it also does not follow that they have an understanding. The Harper review, on which Parliament acted in amending section 45(1)(c) and not amending section 45E, recognised concerted practices as a potential category of conduct that was not strictly unilateral and was deserving of proscription but which fell short of being “an understanding”.

The ACCC appears to submit that “understanding” should be given a broad and flexible construction that allows it to reach farther than section 45E than it reaches in cartel or other section 45 contexts. We submit that that is so unclear as to be destabilising of the law. There are sound reasons of policy to adhere to the settled meaning of “understanding”. First, the legislative history reveals discrete instances of Parliament extending and decidedly not extending, the cascading notions of “contract”, “arrangement” and “understanding”. This Court should not intervene in that systematic policy development.

Second, as I adverted to earlier in responding to a question from your Honour Justice Steward, the phenomenon of industrial muscle is also addressed through the industrial law. Existing provisions do so, including section 355 of the Fair Work Act 2009. Section 45E is engaged by the wrongful act of a private firm agreeing with or committing to the union about the boycott of a disfavoured supplier.

Your Honours, can I then turn to our second proposition. This is addressed in the outline at paragraphs 9 to 16, and it is that on the facts there can be no finding of the requisite consensus. Can I address this proposition by identifying seven features of the facts which cumulatively are fatal to the Commission’s case.

GLEESON J: Can we just clarify, is “the requisite consensus” that something would be done?

MS HIGGINS: It is a meeting of the minds by the communication of assent that something would be done, yes, your Honour.

GLEESON J: Being the termination of the contract?

MS HIGGINS: Yes, your Honour. Or of removal from the site. The first fact is that at no point does Hutchinson, though Mr Meland or Mr Berlese, verbally communicate assurance or assent to the Union that it will terminate WPI’s contract or cease to require services from it. On around 11 June 2016, Mr Clarke of the Union made or passed onto Mr Meland of Hutchinson a threat that if WPI came back onto the Southpoint A site, the Union would sit down the job. Your Honours find that in the liability judgment at subparagraph 340(18), at appeal book page 87.

Now, it is not in dispute that this was a threat to take industrial action, but Mr Meland did not see or do anything to suggest that Hutchinson agreed that it would boycott WPI. So, at the time the threat was made, WPI did not assent. That is an intractable feature of the findings and evidence, and Justice Wigney observed that in the Full Court at paragraphs 13 and 61.

As your Honours appreciate, Mr Meland reported the threat to his superior, Mr Berlese – the relevant email is reproduced in the liability judgment at paragraph 187 on page 49. Nothing in the email records that Mr Meland had given any assurance that Hutchinson would not continue to use WPI. Mr Meland did not give affidavit or oral evidence to suggest that he had. Justice Wigney again observed – and we see this in the Full Court at paragraphs 13 and 61 – to the contrary, the email, in the final sentence recorded on page 49 of the appeal book, in saying:

Hopefully it will be better for –

WPI, “having registered” with the funds, contemplated Hutchinson continuing to use WPI. And at no point thereafter does any representative of Hutchinson verbally communicate assent to the Union – I will come separately to the question of conduct – and the ACCC cannot, and does not, suggest otherwise.

The second factual feature is that, instead of conveying “assent”, Hutchinson either rebuffs the Union or tries to coordinate with the Union to restore WPI to the site. The primary judge finds at liability judgment subparagraph 340(23), which is appeal book 88 to 89, that in the period between 11 June and around 13 July 2016:

Mr Meland took steps to assist WPI to obtain an EBA because he believed that, if one was obtained, WPI would be allowed back on site.

Then, at some point after Mr Clarke had made the threat to Mr Meland, Mr Steele told Mr Meland:

“Ray –

Hadfield, of WPI:

won’t be doing your waterproofing, he won’t be able to get an EBA”.

Your Honours will find that in the liability judgment at 340(24). The primary judge did not find precisely when that conversation took place, but the primary judge treated that conversation as an indication that there was already an arrangement or understanding in place at the time of that conversation, and your Honours see that in subparagraph (24) on page 89 of the book.

An interior understanding could only have been reached at and by reason of the 11 June 2016 discussion between Mr Clarke and Mr Meland. The whole of the conversation between Mr Meland and Mr Steele, as deposed to in Mr Meland’s affidavit, is extracted in the liability judgment at paragraph 216, which your Honours find on page 57. That account finds Mr Meland seeking to fight in WPI’s corner. That sits ill with the proposition that an arrangement or understanding that Hutchinson would not continue to use WPI was in place at that time.

Justice Wigney addresses this in the joint judgment at paragraphs 62 to 64. The joint judgment does so at paragraphs 182 to 183, and our learned friends for the Commission do not address it at all. Thereafter, on 21 June 2016, Charlie Hadfield of WPI sent an email to Mr Meland reporting that Mr Clarke had told Mr Hadfield to call a Mr Scott Vink, who was a union organiser, and that was “to get a go ahead with work” on the site. Your Honours, that episode is addressed in the liability judgment at paragraphs 226 to 232.

But as Justice Wigney observed in the Full Court at paragraphs 66 to 67 at appeal book 197, that again does not readily support any inference of a meeting of minds between Hutchinson and the Union as to WPI’s exclusion. On its face, it suggests that as at 21 June 2016, Mr Clarke considered that WPI may in fact return to the site.

The third feature of the facts is that there was little to no direct evidence concerning – I apologise for the feedback, your Honours, I am doing everything I can ‑ ‑ ‑

GAGELER CJ: No, we should be apologising to you.

MS HIGGINS: ‑ ‑ ‑ to stand away from it and save your Honours the pain. The third feature of the facts is that there was little to no direct evidence concerning WPI’s exclusion from the site. That is observed in the judgment of Justice Wigney at paragraph 71 in the Full Court. Our learned friends for the Union will develop that issue.

The fourth factual feature is that on 26 July 2016, some six weeks after the 11 June conversation between Mr Meland and Mr Clarke, Hutchinson terminated the subcontract with WPI. The primary judge makes no express findings as to why that termination occurred. Your Honours see the treatment of that in the liability judgment at paragraphs 275 to 276 at page 70 of the appeal book and summarised also at paragraph 340(33).

STEWARD J: But do we not know the reason? You have accepted they succumbed to the threat.

MS HIGGINS: Yes, your Honour.

STEWARD J: Was that not the reason for terminating the contract?

MS HIGGINS: Yes, your Honour.

STEWARD J: All right.

MS HIGGINS: But no more than that.

STEWARD J: I see, yes.

BEECH‑JONES J: You mean, in contradistinction to saying giving effect to an earlier agreement where they succumbed to the threat?

MS HIGGINS: Precisely, your Honour.

BEECH‑JONES J: All right. I see.

MS HIGGINS: Yes. The fifth feature of the facts is that the primary judge found as a fact that Mr Meland was not aware of any arrangement or understanding that WPI should be excluded from the site. As your Honours are aware, that is in the liability judgment at paragraph 340(33) on appeal book page 91.

The primary judge appeared to – this is providing an explanation for the delay between the original date of WPI’s exclusion from the site and the notification of the termination. That is apparent in subparagraph (33) itself. But that finding was thrust upon the primary judge in circumstances where the evidence was that Mr Meland continued to attempt to secure WPI’s return to the Southpoint site up to the point of its termination. It was also inevitable in circumstances where the ACCC did not lead evidence from its witness, Mr Meland, about whether he was aware of any understanding having been arrived at to exclude WPI from the site, by threat and response or otherwise.

STEWARD J: There may not be enough factual findings to support this, but is there any necessary inconsistency between the understanding that Mr Hodge postulates and Hutchinson in the meantime hedging its bets by trying to get WPI onto the site in a way which would be acceptable to the CFMEU?

MS HIGGINS: We say, yes, your Honour. The first difficulty is that the arrangement or understanding was said to have been reached on 11 June – that is the implicit finding in her Honour’s reasons.

STEWARD J: Well, the ACCC put their case differently now.

MS HIGGINS: But we say that that is not available to them in light of the manner in which they conducted the appeal before the Full Court.

STEWARD J: And why is that? Because you would have led evidence about different evidence or – is that how it is put?

MS HIGGINS: In terms of the unfairness that would prevent them from raising the point now, your Honour?

STEWARD J: Yes.

MS HIGGINS: We say various things about this, and I understand my learned friend Mr Gleeson will also address the issue.

STEWARD J: I can wait for Mr Gleeson.

MS HIGGINS: No, I can also address it, your Honour. As we understand the ACCC’s case as we stand here now, there is a very belated formulation of the principle as threat plus acquiescence equals understanding, unless there is evidence of an independent purpose. Now, how one would meet a case put on that footing could depend on when it was alleged the arrangement or understanding arose. It matters whether it was reached on 11 June or in late July.

The principle confers a kind of onus on the respondents to explain themselves, and precisely what is it that needs to be explained? Is it not having WPI back on the site after 11 June? Is it inducting Spanos? Is it Spanos doing work? Is it terminating WPI? Each of those matters would be important in that context. We also say that civil penalty proceedings should not be run on this kind of elastic basis.

BEECH-JONES J: Ms Higgins, I understood that in its narrowest form, the ACCC’s case is taking the alternative inference that the members of the Full Court identified, which was just an act succumbing to the threat, which I think must have been 26 July.

MS HIGGINS: Yes.

BEECH-JONES J: But that is the doctrinal equivalent of an understanding to a unilateral contract. If that is my understanding of their narrow case, there could only be an understanding reached, I think, on 26 July.

MS HIGGINS: Yes, your Honour, we respectfully agree.

BEECH-JONES J: And you say, one, that timing is not the case pleaded or run?

MS HIGGINS: Yes.

BEECH-JONES J: That that is one. And then you say conceptually that does not work otherwise. Is that right?

MS HIGGINS: That is correct, because the acquiescent party must expressly or tacitly, by words or action, communicate its assent, and I will come shortly ‑ ‑ ‑

GAGELER CJ: When you say “assent”, you really mean “assurance” or “commitment” or something like that?

MS HIGGINS: Any of those words suffice, your Honour. Some assurance that it will engage ‑ ‑ ‑

GAGELER CJ: It is an agreement to do something.

MS HIGGINS: Yes.

GLEESON J: It also does not work because a unilateral contract involves accepting an offer, and here there is no acceptance of an offer. There is a submission to a threat, and why on Earth would that create an understanding when succumbing to a threat is a rational behaviour in the absence of any acceptance of ‑ ‑ ‑

MS HIGGINS: We respectfully agree, your Honour. To complete my answer to your Honour Justice Steward’s question, a further difficulty arising from the inconsistent conduct is if the arrangement was reached on 11 June, all of the action contrary to it in the month thereafter, including action engaged in with Mr Clarke of the Union, one would suspect might well have caused the Union to say, what about our arrangement? Or, are you trying to get WPI back on site? So, the facts as found confound the conclusion that an arrangement or agreement was reached on 11 June.

Coming back to the finding at paragraph 340(33) of the liability judgment, the finding that Mr Meland was oblivious to any arrangement or understanding, we submit, defeats the primary judge’s inference of an understanding. Our learned friends submit in writing and reply that:

There was no –

principled reason:

for excluding Mr Meland from holding the proscribed purpose simply because he was unaware that acceding to a threat and demand may be an “arrangement or understanding”.

Now, that is wrong. The statutory proscribed purpose is one directed to including a provision within an understanding. That will not require an apprehension of the precise legal characterisation of the provision and the understanding, but it will require a real commercial apprehension that a deal has been done which includes a provision to achieve a particular end.

If a person is, as Mr Meland was found to be, not aware that there is any such understanding, he simply cannot have a subjective purpose directed at one of its provisions, and so it is wrong for the Commission to submit in‑chief at 59:

that it is irrelevant what subjective state of mind was held by Mr Meland.

His subjective state of mind, as the main actor in the piece, is critical.

BEECH‑JONES J: Ms Higgins, do you say it had to be demonstrated Mr Meland had some, look, I have to deal with the Union to do this, our deal with the Union requires me to get rid of WPI?

MS HIGGINS: Some apprehension of that, and that the provision of that understanding was that Hutchinson had to get rid of WPI. Now, the Commission tried but failed to overturn this finding in the Full Court, by notice of contention. Your Honours see that addressed in the joint judgment at 189 to 193. In the Full Court, the Commission accepted that to rely upon Mr Meland for the making of any understanding, it had to succeed on the notice of contention. Your Honours see that in the joint judgment at paragraph 150(c), which is 237 to 238 of the book. There is no appeal from that failure in this Court, although there does appear to be some faint attempt again to rely on Mr Meland.

The sixth and penultimate factual feature is, as I have already alluded to, that the primary judge by implication found that the arrangement or understanding had been reached on or about 11 June 2016. And as the Full Court observed, the parties, including the ACCC, conducted the appeal to the Full Court on that basis. Your Honours find that in the Full Court at paragraphs 75, 134 and 179(e).

That means the only person left for present purposes is Mr Berlese. The only findings of fact made by the primary judge of any discussion between representatives of Hutchinson and the Union, other than those involving Mr Meland, concerned the discussion between Mr Steele and Mr Berlese in either late May or June 2016 – which is the subject of her Honour’s findings at first instance at paragraphs 153 to 166, which is appeal book 44 to 46. That conversation takes place before the threat is made, so, plainly enough, cannot contribute to any understanding.

Mr Berlese’s only other conduct was to tell Mr Meland in an conversation in or around 19 July 2016 to “deal with” the WPI situation. Even if that conduct were a response to the Union’s demand, it could not be or contribute to the making of an arrangement or understanding that has been found to have been formed on 11 June 2016.

BEECH-JONES J: So, when we read the Full Court’s findings about no meeting of minds, they were addressing the finding below of a meeting of minds on 11 June.

MS HIGGINS: Yes. Mr Berlese clearly was aware that the Union had made the threat on 11 June 2016. We know that because it was communicated to him by Mr Meland by email on 30 June. But, as I addressed earlier, that email in itself is inconsistent with Mr Meland or Hutchinson having given any assurance to the Union that the demand articulated by the threat would be met. To the contrary, it concludes:

Hopefully it will be better for him –

Once they are registered with the funds. Now, no response of any kind by Mr Berlese to the news of his threat was evident in the material before the court until five weeks after the threat was made in the 19 July conversation. The Commission did not in cross-examination put to Mr Berlese that he or Hutchinson were privy to any arrangement or understanding with the Union as to WPI; that Mr Berlese had given any commitment to the Union; or assented or agreed to conform to their demand, or in any way adopted to their demand; and he was not cross-examined that he acted in response to the Union’s threat.

To the extent that Mr Berlese took steps to avoid the risk of industrial conflict, that was – to pick up an observation of your Honour Justice Gleeson – commercially rational conduct. It is also consistent with parallel conduct that fall short of a contravention. Again, the Commission did not suggest otherwise to Mr Berlese. In light of those findings concerning Mr Meland and Mr Berlese, the ACCC, we submit, is left with a fatal impediment to any finding of contravention by Hutchinson. The Commission cannot fix any human agent of Hutchinson with subjective cognisance of any commitment, assent, adoption of demand, arrangement or otherwise having been given to the Union.

GAGELER CJ: I do not think it is putting its case as requiring any of that – I may be wrong.

MS HIGGINS: If that is so, your Honour, we say it as wholly heterodox and not consistent with the current law.

BEECH-JONES J: You accept there could be a person unknown, you can prove it – intent – relevant mind of a company without necessarily nominating it as long as you are satisfied it was someone with requisite authority. Do you accept that or not?

MS HIGGINS: I think not, your Honour.

BEECH‑JONES J: Or not in this case, at least, you say.

MS HIGGINS: Certainly not in this case. There is the double layer in this kind of analysis of . . . . . of the minds for the purposes of the consensus that predicates the contract, arrangement or understanding, and then identifying the subjective purpose which here must be shared for including a provision within that contract, arrangement or understanding. So, we say there is the possibility of a dual subjective lens in this inquiry.

Now, the ACCC deployed several expedients to try to overcome this problem of the lack of a mind. First, it makes assertions about Hutchinson’s conduct, unsupported by any findings of the primary judge or the Full Court or in fact by any evidence. In its submissions‑in‑chief, the Commission refers to WPI’s continuing exclusion from the site where the ACCC is unable to say who performed that or how they went about it and my learned friend Mr Gleeson, will address that.

Similarly, at paragraph 41 in‑chief, our learned friends say the evidence is clear that Hutchinson was specifically acting in response to a threat with no finding specified and no indication of when, how or through whom Hutchinson was acting.

GAGELER CJ: But you accept that Hutchinson ‑ ‑ ‑

MS HIGGINS: Succumbed to a threat.

GAGELER CJ: ‑ ‑ ‑ succumbed to a threat?

MS HIGGINS: Yes, we accept that.

GAGELER CJ: That is said by the ACCC in combination with the prior demand to be sufficient to give rise to the statutory term “understanding”. I think that is the entire case against you.

MS HIGGINS: I think it is, your Honour, and we say if that is the case, it is heterodox and ignores requirements that are long‑established in the context of this provision and this part of the Act, and which are made strikingly apparent when considered in context with the other kinds of conduct that can contravene Part IV of the Act. That is why our learned friends do need an expansion of the law. Whether confined to section 45E or otherwise, they do require an expansion of the law.

BEECH-JONES J: When you were talking about exclusion a minute ago, are you talking about the fact that WPI were not on site ‑ ‑ ‑

MS HIGGINS: Yes.

BEECH-JONES J: ‑ ‑ ‑ in the period up to 26 July?

MS HIGGINS: That is so, your Honour.

BEECH-JONES J: And you say, well, there is no evidence that anything – their absence on site up to that time was anything to do with responding to a threat from the CFMEU?

MS HIGGINS: Yes, your Honour, or anything to do with Hutchinson, because the evidence, such that it is, indicates that Hutchinson was taking all the steps it could through Mr Meland to restore WPI to the site.

GLEESON J: But the primary judge did find that at paragraph 340(23) that:

WPI was being excluded from the site by the concurrent actions of Hutchinson and the CFMEU.

MS HIGGINS: She did, your Honour. And a point that his Honour Justice Wigney makes in the Full Court is that there is a paucity of evidence to support that conclusion, and his Honour expresses a different view about on the basis of the facts available to the primary judge, and Mr Gleeson will take up that point.

GLEESON J: So, this is the basis of the notice of contention?

MS HIGGINS: Not the notice of contention, your Honour. The notice of contention has a very proscribed purpose in this Court. But the Full Court reached a different conclusion as to what the congruence of facts supported.

GLEESON J: How do you get to challenge that finding of fact?

MS HIGGINS: We are not challenging that finding of fact, your Honour. We challenge that as a conclusion as to what had occurred, based upon the primary factual findings. In its written reply at paragraph 3, the Commission submits that:

Hutchinson understood that the CFMEU had undertaken to Hutchinson that it would conduct itself in a certain way (refrain from industrial action) so long as Hutchinson ceased acquiring waterproofing services from WPI.

But, again, there are no findings to substantiate that assertion, and no cross‑examination occurred with the relevant witnesses to allow that submission to be made.

The expedient the ACCC employs in this Court is to submit that there is no subjective element in an arrangement or understanding under section 45E. We submit, for reasons that we developed in writing, that the objective theory of contract cannot be carried over into the concepts of “arrangement” or “understanding” unmodified, but we also say that the ACCC difficulties are insuperable, whether the ascertainment of the existence of an arrangement or understanding is approached subjectively or objectively.

That Mr Meland and Mr Berlese had no subjective intention is part of the ACCC’s problem, but it is not all of it. If one looks at the objective position alone, the ACCC is no closer to establishing contravention because nothing Mr Meland or Mr Berlese does can be objectively characterised as manifesting the requisite cognisance of commitment to act in a particular way.

Your Honours, there is one final seventh feature of the facts I was going to draw attention to, which I propose to finish before the Court adjourns, if that is convenient.

GAGELER CJ: Yes.

MS HIGGINS: The seventh and final feature of the facts is that there is no finding that the Union, or Mr Berlese, followed up with Mr Meland to confirm whether WPI had been terminated and there was no finding that Mr Meland ever communicated WPI’s termination either to the Union or to Mr Berlese. That is, on the evidence, it was never apparent to the Union – on the findings, rather, it was never apparent to the Union that Hutchinson would or in fact did act in accordance with its threat. There is no finding that the Union became aware of this, or that Mr Berlese did.

That can be starkly contrasted with the circumstances in CEPU v ACCC. That critical evidentiary gap explains the hopeful submission‑in‑chief by the Commission at paragraph 45 that:

In circumstances where the same conduct is sufficient for both acceptance and performance, the fact of the conduct need not be communicated to the offeror so long as it is knowable to them.

By this point in the ACCC’s argument, we have the forlorn suggestion that Hutchinson assented by acquiescent conduct but did not know that that acquiescence was pursuant to a proscribed provision in an understanding, and where the acquiescence is knowable but not known to the threatening party. That, we submit, cannot be fitted into any picture of reaching an understanding.

Your Honours, is that a convenient time?

GAGELER CJ: Yes, it is, thank you. We will take the luncheon adjournment.

AT 12.43 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.13 PM:

MS HIGGINS: Thank you, your Honours. I propose first to address a matter concerning the seventh factual feature from this morning and then to answer two questions that fell this morning from Justice Steward and Justice Gleeson. Then I will finally address the notice of contention point in respect of purpose.

The seventh matter I had adverted to earlier was that there was no finding that the Union or Mr Berlese followed up with Mr Meland to confirm whether WPI had been terminated, and no finding that Mr Meland ever communicated WPI’s termination to the Union or Mr Berlese. There is no finding to that effect. In the Full Court, and supported by a notice of contention, the ACCC sought to place reliance on some cross‑examination of Mr Steele and Mr Clarke. Your Honours find that in the joint judgment at paragraphs 166 to 168, which at appeal book 243 to 244.

GAGELER CJ: I am just trying to relate this to the ground of appeal.

MS HIGGINS: I missed that, your Honour.

GAGELER CJ: I am having difficulty relating this to the ground of appeal – this level of detail of the evidence.

MS HIGGINS: We say, your Honour, in short, as your Honour understands, that consensus is required, and consensus of the character that we have identified. On the facts that simply cannot be supported, and it is necessary, ultimately, to look to the facts to see whether there was any communication of assent and meeting of minds as required by the law. Once the facts are properly analysed, those premises are not supplied. But I merely wanted to draw your Honours’ attention to those paragraphs in the joint judgment, and that can be the end of that.

GAGELER CJ: You can give us a reference if you like to the evidence, but this case is not going to turn on cross‑examination.

MS HIGGINS: Yes, it is 166 to 168. Yes, your Honour, yes. Those are the submissions that we wish to make on the facts, which we say do not support the orthodox legal view.

Can I then address a question from Justice Steward this morning. Federal Commissioner of Taxation v Lutovi Investments Pty Ltd [1978] HCA 55; (1978) 140 CLR 434 at 444 is referred in the liability judgment at paragraph 320, which is appeal book 80. It is referred to in the joint judgment at 104 at appeal book 212. On both occasions, that is by way of citation from Norcast S.ár.L v Bradken (No 2) [2013] FCA 235; (2013) 219 FCR 14 at 263. Finally, in CEPU v ACCC [2007] FCAFC 132; (2007) 162 FCR 466 at paragraphs 16 to 18, there was an extended discussion of that passage in Lutovi and it identifies the way that it has been assimilated into the law.

Justice Gleeson, your Honour asked me a question earlier as to whether the characterisation of the removal of WPI from the site was a matter that picked up the notice of contention. I misapprehended your Honour’s question. It is picked up on our notice of contention to the extent that we seek to rely upon aspects of the reasons of Justice Wigney to supplement the findings of Justices Bromwich and Anderson. So, the answer to your Honour’s question is yes, in that connection.

Can I then turn to the third proposition that the factual findings cannot supply the necessary findings of subjective purpose, and I can do this in short compass. We have identified in our outline of argument, at paragraph 18, the propositions that emerge from CEPU v ACCC as to the character or quality of the purpose proscribed by section 45E(3)(a) and (b). They are purposes directed to including a provision in an arrangement, which are to be assessed subjectively, must be held by each party to the arrangement, need not be the dominant purpose, but must be a cause of including the provision in the arrangement. We have identified there the passages from which those propositions emerge.

We submit it is the wrongful subjective purpose for including a provision that matters for the statutory prohibition, not the correct objective construction of a provision. As the Full Court observes at 197, the two may diverge. Hutchinson, we submit, can only have had such a purpose through its human agents, but neither of the agents gave evidence or was asked about their purpose, and correspondingly, no finding was made.

The Commission in reply asserts that we are wrong on this point. Plainly enough, the primary judge found that Hutchinson had a purpose – that is found in liability judgment 347. Our different point, which was the point observed by Justice Wigney, is that the primary judge missed a critical step by failing to anchor that purpose in either of the company’s relevant human agents. Had her Honour taken that step, the problem would have
been apparent that Hutchinson cannot have had a purpose which neither of its human agents did, and the findings did not supply such a purpose.

That is the basis for our submission that Justice Wigney was correct at paragraph 77 to 82 of the Full Court, that even if an arrangement or understanding could be inferred, there was no finding and no basis for any finding that that arrangement or understanding contained a provision included for the purpose of excluding WPI.

Your Honours, unless there were any questions, those are our submissions.

GAGELER CJ: Thank you, Ms Higgins. Mr Gleeson.

MR GLEESON: Your Honours, we seek leave to rely upon the notice of contention, for which there is no objection.

GAGELER CJ: You have that leave.

MR GLEESON: Your Honours, the Union supports the submissions made by Hutchinson in writing and today. We will seek only to supplement, not to duplicate. Your Honours, could I commence with what is now not in issue. From what we heard this morning, it is not pressed that there was an arrangement, it is only pressed there was an understanding. For that reason, at least that part of the declarations which the Full Court set aside by the primary judge are agreed to be in error. They are the declarations found in the appeal book at page 103. So, you are only dealing with arriving at an understanding which included a provision for a proscribed purpose.

While your Honours have that page, the declarations indicate that they were two contraventions being alleged against Hutchinson as the principal contravener: the arriving at an understanding and the giving effect to that understanding. Then the Union was found to be a contravener as an accessory under declarations 3 and 4, which required relevant knowledge under Yorke v Lucas. Your Honour Justice Steward asked a question about, would it meet the policy of this provision if ‑ ‑ ‑

EDELMAN J: Sorry, just before you move on, that means all four of those declarations, you say, have to go?

MR GLEESON: Have to go in any event. They have currently gone, and they should not be reinstated in that form. We are only looking at a subset of understanding. Your Honour Justice Steward asked about purpose and policy, et cetera. It is interesting when one focuses on the different contraventions which are the arriving at the understanding, on the one hand, or the giving effect to it, that we see the classic element borrowed from the criminal law that the making of the combination is itself regarded as a wrong – a wrong worthy of punishment because of its potential to affect competition, irrespective of whether it does in fact affect competition.

The Parliament is borrowing that notion that, as with conspiracy, to enter the combination is wrong and must be appropriately punished and, to then give effect to the combination, will separately be punished. We would submit your Honour’s example poses no difficulty for the principle which Hutchinson has argued for this morning. If a threat is made, we say the law, as with conspiracy, conducts an inquiry into all of the facts to see whether the nature of the threat, the way it was responded to, the communications between the parties, and every other relevant circumstance indicates the parties have arrived at the understanding or, on the other hand, have not and therefore are not punished.

So, one will simply inquire into all of the facts of the case and, as I think Dr Higgins said, one can imagine an example where the threat is made and is carried out immediately by the other party in the presence of the first party, and there would be little difficulty in finding that to be both the making or the arriving at the understanding, as well as the implementation of it.

EDELMAN J: Even if it is not done in the presence of the first party, is your reference in 4B intended to include situations under section 45E, or are you using that to say that ordinary contract law is excluded from section 45E?

MR GLEESON: What we are submitting is that, first of all, ordinary contract law needs to be understood properly. The so‑called unilateral contract is a very unusual creature. It is one where the offeror has to have made it a term of the offer that they do not have to hear about the accepting conduct. That is the first element. The second element is that the doing of the accepting conduct, as your Honour mentioned from Clarke, has to be done in reference to, in some way, the offer.

Now, in that highly unusual category of case, you may have a contract. To the extent the ACCC is trying to leverage off that highly unusual contract case into a threat territory, while it is theoretically conceivable – you might be able to do it in a very, very unusual set of facts – in most cases it will be inapposite. In most cases, the unilateral contract analogy will be difficult to carry over into a threat because, as your Honour Justice Gleeson pointed out, a threat, in a sense, is the antithesis of an offer. It is simply saying, I want you to do X, and this is the sanction that I am threatening.

EDELMAN J: But the analogy on your second point is a threat accompanied by demand.

MR GLEESON: A threat – what you would need to have, which is not this case – none of the findings are any way near it – you would need to have a threat accompanied by a demand, accompanied by an express or implied communication that I am offering to bind myself to you, that if you do the thing I demand, I will then remove my threat and you do not even need to tell me that you have done it, you just need to present – like in the reward cases – at some later date, and tell me you have done it. Now, the chance of that being a realistic arrangement in the field we are in is vanishingly thin. But if those analogies are to be carried over, that is the sort of discipline you would need to apply to the facts.

What that highlights, your Honours – which was the second matter I wanted to say is not in issue, as we understand it – is the ACCC at trial succeeded on an Associated Collieries case only. The case that her Honour was addressing in the liability judgment from about paragraph 320 on page 80 – her Honour first cites our submission below, citing Justice Gordon in Norcast, and we would respectfully submit that what her Honour Justice Gordon said in Norcast is good law and remains good law. But relevantly, over at paragraph 4, where her Honour has bolded the material, she has told us exactly the case that she is addressing and ultimately finding:

A meeting of minds may be proved by independent facts and from inferences drawn from primary facts including, without limitation, evidence of joint action by the parties in relation to relevant matters, evidence of parallel conduct and evidence of collusion between the parties. As Isaacs J said in R v Associated Northern Collieries –

Then we have the classic passage from page 400 of Associated Collieries. In fact, her Honour was even more precise as to what she was doing because when you come to paragraph 336, which states her conclusion, she has quoted from Associated Collieries, but she has made clear that she is not picking up all of the language of Associated Collieries. What she is finding is there is:

“such a concurrence of time, character, direction and result as naturally to lead to the inference that –

the:

separate acts were –

And then pass over the next words from Associated Collieries, the:

manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge –

So, that is what her Honour told us in paragraph 336 was her conclusion. Then, in paragraph 340, with its 33 subparagraphs, are the total body of facts that her Honour relied upon for the Associated Collieries finding. And within that total body of facts, there are four places where her Honour made a specific finding of manifestation of mutual consent. They are subparagraphs (25), (27), (32) and (33).

So, the case that succeeded was not a threat plus response case that you have heard today; it was an Associated Collieries case with an inference drawn from 33 facts, of which four were given particular prominence. The Full Court, we submit, did its task properly and found error in the Associated Collieries finding, and we have heard nothing in writing or orally today to try and resuscitate the Associated Collieries case.

We have written a lot, and Hutchinson has, going through in detail, defending the way in which the Full Court found error in these 33 subparagraphs. You have not heard a word in response to that today – indeed, you have hardly been taken to a finding in the judgment; it is at such a high level of generality. We would submit, your Honours should proceed on the basis that the Full Court properly discharged its rehearing function, it found error in the Associated Collieries case, and that case is not alive before you.

That brings us to the third question, which is what is alive before you under the notice of appeal, which is at page 276. As we pointed out in writing, the single ground of appeal which the ACCC says raises a question of law has two parts to it. The first part, we submit, is a non‑issue, because the Full Court did not find in paragraph 112 or elsewhere – and we do not argue that – you can never have regard to conduct said to give effect to the arrangement in determining whether there was an arrangement or understanding in the first place. That would be contrary to principle in the criminal law and in this body of law. The Full Court did not make that error.

BEECH-JONES J: You mean the Associated Collieries case?

MR GLEESON: Yes, they would not have addressed the Associated Collieries case if they were making this error. That part of the ground of appeal which asserts error – we submit there is no error, and, in any event, there is no issue between you. In Mr Hodge’s outline, his second question of law – question 1(b), which he deals with at paragraph 7 – we say that is a non‑issue.

What is left under the grant of special leave is whether, as a rule of law, you should hold that by a person doing what is demanded of it, under sanction of threat of industrial action, is that sufficient to give rise to an understanding. The only qualification the ACCC permits of for that rule of law is found in paragraph 37 of their submissions, which is that, if the second party acts for a reason wholly independent of the threat, then there will not be an understanding; but if it acts in response to the threat, there will be an understanding, even if that is never communicated in any way to the first party.

Now, your Honours, we support the submission of Hutchinson that there is no case pointed to by the ACCC which supports their rule of law. You were taken to no case this morning to try and support their rule of law. In their written submissions, they referred to six cases which they said supported their rule of law. We analysed them in detail between paragraphs 39 and 59 of our written submissions and explained that none of them support the rule of law.

EDELMAN J: The difference may be large in one respect and very small in another. It may be large in the respect that if one is talking just about an Associated Collieries Case where the concern is manifestations of mutual consent, I think on the literal expression of the authorities, there would need to be some form of communication or exchange, obvious reciprocity between the parties, but if one is not talking about an Associated Collieries‑type case, which is at least the way I understood Mr Hodge’s submissions this morning, and one is concerned effectively with the equivalent of a unilateral contract, it may not be as exceptional as you suggest for the offeror or the threatener to dispense with communication of any acceptance of the demand.

MR GLEESON: What you would need is an inquiry into all of the facts, not a truncated version of the facts, to see exactly how the threat had been communicated and the demand had been communicated, whether that had been dispensed with – that would be a critical question in the trial – and then you would need to see whether the responsive conduct in all the circumstances was sufficient to, in effect, create a deal. It has to be some sort of deal that is occurring here.

GLEESON J: The threat cannot take the place of the offer.

MR GLEESON: No, no. Dr Higgins gave some submissions this morning as to why you should not be entertaining this new case and she said she would also leave that to me. We say you should not be entertaining it for the very practical reason that if you were trying to get yourself into that – I will call it – exceptional case, what you needed to do at trial was put that in your concise statement and when our witnesses were called, Mr Clarke and Mr Steele, you would have to put to them the relevant questions as to what they were conveying and what they understood they were conveying and what they understood Hutchinson was required back of them.

So, it would be a bizarre conversation, but if it was to be put to Mr Clarke what you were doing by the threat was telling Mr Meland they had to do this or else, and he did not need to come to you and tell you whether they had done it ‑ ‑ ‑

EDELMAN J: As soon as you saw that it had been done, that is when you would have been obliged to cease any industrial action.

MR GLEESON: Cease any industrial action. That is what you would need to match Carbolic Smoke Ball or Clarke or Australian Woollen Mills.

Now, without being too critical of Mr Hodge at this stage, one of the points that Justice Wigney made very clearly in the appeal transcript, and then it has come through in the judgment, is there were four human actors in this case. They were four gentlemen – Clarke, Steele, Meland and Berlese – and all of them gave evidence. Meland was their witness, so they had every opportunity to lead every relevant piece of evidence from him. They had section 155 examinations where they had every chance to explore every aspect of it, and they never got this case off the ground. They just did not ask the questions – whether as to conduct, as to state of mind, as to purpose – to get themselves into that type of case.

So, we would submit, when you look at that single ground of appeal, it is at such a high level of generality that it is urging the Court into error, because it is really saying to you, even though there was a trial and many facts were found about the dealings between the parties, ignore most of the findings. Ignore them. Do not look at them. Do not open them. Just look at two findings. Elevate them up into the stratosphere and then say that equals a deal; that equals a bargain.

It is by ignoring most of the findings that were made, it is by elevating to a level of high generality the two findings they like, and then putting a rule of law over it, that we submit would be an erroneous interpretation of the statute and, to the extent he is asking you to make findings that have not been made in either court below – for good reason because they were not asked for – you should not do it.

GAGELER CJ: Mr Gleeson, could I just ask you a question about these unilateral contract cases. You see in the structure of the Act, I think, that generally it is one contravention to enter into a contract, arrangement or understanding, and then it is another contravention to give effect to the arrangement. I just wonder if the statute contemplates a circumstance where the entering into and the giving effect are the same event.

MR GLEESON: It is difficult to contemplate it, because it is treating them as two separate wrongs. But the concession we were making was, in an Associated Collieries sense, you can look at things done after the date of the alleged agreement, including the overt acts ‑ ‑ ‑

GAGELER CJ: Of course, to draw the inference, yes.

MR GLEESON: To draw the inference of whether there was an agreement. But whether you could say the stipulated act of itself serves both purposes, that may be difficult with that division that is in the statute. I am putting it at least on the level of it is almost impossible to conceive of a set of facts that could do it, but your Honour is raising the more fundamental question, and there is some difficulty.

Your Honour, that might be supported by this: while most of the argument is spoken about understanding as if you just construe that word, of course, what you are in fact asked to look at is whether the first person, Hutchinson, arrived at an understanding with the Union, being an understanding which contained a provision included for a purpose – and the cases say that means the purpose of both parties. So, immediately you are looking at the arriving at an understanding with a provision, with a term – there has to be a term in it – and it has a purpose, and the purpose is, in a sense, forward‑looking.

The purpose is to prevent, to hinder, that something happens. The reason it is regarded as a wrong is because of its potential to harm competition through that future prevention or hindering. Then, separately, you have the contravention under 45EA for giving effect to – and it is interesting there that 45EA can operate upon either party to the understanding ‑ ‑ ‑

GAGELER CJ: But first, capture “understanding”.

MR GLEESON: Yes.

BEECH‑JONES J: Mr Gleeson, does the word “proposed contract” bear on this, in 45E(3)?

MR GLEESON: It assists in this way, your Honour, that ‑ ‑ ‑

BEECH‑JONES J: In a unilateral act case.

MR GLEESON: Yes. It is ‑ ‑ ‑

BEECH‑JONES J: Contract case, or whatever ‑ ‑ ‑

MR GLEESON: Yes. The prohibition descends at the point you enter the understanding if, in that proposed sense, it is going to contain the provision, which is in turn going to have a purpose of prevention or hindering. So, it does seem to look forward to that. So, whether it is ‑ ‑ ‑

BEECH‑JONES J: Are you saying – this may be putting it too high – it does envisage a contract that has the purpose – or a contract that prevented, because at the time there was the simultaneous act between making the contract and doing the hindering. Is that the kind of difficulty ‑ ‑ ‑

MR GLEESON: It is difficult to see how it matches onto that case. It is a far extreme case; it is difficult to see how it matches onto it. If it available, we would submit it is unlikely to apply in the real‑world situations absent a most extreme set of facts, and absent an inquiry which the ACCC did not advance before either court below. So, your Honours simply should not entertain the case that is now put.

Your Honour Justice Steward asked about “arrangement” as against “understanding”. There is a discussion of that topic and of the relevant authorities by Justice Besanko in ACCC v Yazaki (No 2) which is in volume 7, tab 32, at page 2035 to 2036.

STEWARD J: Does Justice Besanko talk about differing levels of formality? Is that how it is put?

MR GLEESON: It is, but he adds a subtlety to it that you were not given this morning. One of the reasons why “arrangement” is there is because you will often have something which, for all intents and purposes, looks like a contract. So, it has the basic elements of a contract but for some reason it fails to fully meet the formalities of contract law. Whereas “understanding” involves a meeting of two or more minds. In particular, he quotes from Justice Smithers in the famous Top Performance Motors Case (1975). If I could just read this out:

Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs, or the adoption of a particular course of conduct . . . there would be an understanding –

Again, that seems to have the notion of coming together with a common mind in order to do something going forward rather than perhaps the unilateral contract analogy.

GLEESON J: Mr Gleeson, it is not clear to me from the amended concise statement that the ACCC put the Associated Collieries case at first instance. I am looking at page 57 of the respondent joint book of further materials. Is there somewhere that you get that from?

MR GLEESON: Yes, in their submissions, which commenced at page 37, they said at page 50, paragraph 58, that they put their case two ways. The first way was they relied upon four conversations for an express arrangement or understanding – that is a, b, c and d – and that case did not go very far. Then in the alternative, 59, they say it:

can be inferred from these four communications together with the other matters . . . in paragraph 7 of the amended concise statement –

That is the document at page 57 to 59. So, it appeared that is what they were foreshadowing. Then in the closing submissions, which you were referred to this morning, the appellant’s joint supplementary book, they made it a little clearer because at page 16 of that book, at paragraph 31, they quoted Justice Beach from ACCC v Olex who, in turn, was citing Associated Collieries at page 400. The discussion – I mean, interestingly at that point, in paragraph 33, they were prepared to support Justice Sackville saying:

“Ordinarily, an arrangement or understanding involved communication between the parties arousing expectations in each that the other will act in a particular way –

That looks very much like the case Hutchinson and the Union were putting. Paragraph 34 quotes from the Full Court in CEPU v ACCC, and that appears to have an Associated Collieries element to it. For completeness, I will refer you to – Mr Hodge’s reference this morning was to paragraphs 207 to 209, which do appear to have an element of the case he is trying to run today.

EDELMAN J: Which page is that?

MR GLEESON: Page 51. That is where he has referred to British Basic Slag, which seems to be wholly at tension with the way the concise statement read and the way the case had been run. But one thing is clear: her Honour has not made findings based on the case at 207 to 211. That is why I say there are no findings in either court that you would need.

You see, for example, in 209 the ACCC correctly acknowledges that in the opening the Union had said you cannot have an understanding because Hutchinson never communicated its reasons for terminating to us and there was a period of weeks between the communications and the termination. Then you see some rather loose submissions in 210 and 211 about the evidence, for which there are no footnotes, where he is trying to get a finding that maybe there was some communication back to the Union of WPI being excluded, and her Honour has not made any findings to that effect, perhaps because there is no evidence cited to support them. So, what ‑ ‑ ‑

EDELMAN J: That was a notice of contention in the Full Court as well, was it not?

MR GLEESON: In the Full Court their one point they were trying to run was that the finding that Mr Meland did not know he was party to a contravention should be overturned, and that was rejected. So, what they did not do in the Full Court was put on any notice of contention about a threat response case. They did not complain that this late case had been wrongly rejected by her Honour, and so what they attempted to do in the Full Court, apart from the notice of contention, was defend Associated Collieries.

Your Honours, in terms of the authorities that either do not support or positively contradict the new rule of law, if I could ask your Honours to go to our written submissions – and I can do them largely through the written submissions. It is paragraphs 39 to 59. At 41 to 45, we analyse that on the facts of Leon Laidely, there was communication back from Amoco acceding to the Union’s demands, contrary to the ACCC’s submission. There has been no response to that in writing. At 46 to 49, we deal with CEPU, and Dr Higgins has shown you that in that case there was relevant communication as part of the findings of contravention.

I did want to mention at 50 Rural Press in this Court. Rural Press is found in volume 4, tab 20, at page 761. That was a threat case. The relevant passages are between 29 and 34. The Court dismissed the challenge to the findings of fact that there was an arrangement. What had happened was there was an arrangement which originated in a threat that, unless the second newspaper withdrew from a particular area, then the threatening party would move into the territory of the other party. The point of principle which this Court adopted at paragraph 34, unsurprisingly, was that all material communications throughout the relevant period have to be taken into account in assessing whether, in a threat situation, an arrangement has in fact been reached.

If I can show your Honours in volume 9, tab 47, in the courts below, at page 2739, at paragraph 84, the findings of fact were summarised, and they were exactly as you would expect. At first there was a threat. It was made in a certain expectation. Then the third finding in the bullet is critical. The second party:

responded by giving a “mild assurance” that it would withdraw –

So, there was actually an assurance given, I will accede to your threat. Then the withdrawal was carried out, and then the:

decision to withdraw was communicated –

back to the first party, and thereafter they:

did . . . withdraw and Rural Press took no further action –

That is the sort of fact pattern you would expect to see with a contravention under section 45E involving the types of assurances and communications which bring about a common mind. And it is unsurprising this Court said, you look at all the facts and, if you have that sort of fact pattern, you might have a contravention. That is Rural Press.

We then refer at paragraphs 51 to 52 to Odco v Building Workers Industrial Union. We do that because the ACCC had submitted, and we set it out – their paragraph 35:

there was no evidence that CUB . . . communicated its assent to the union’s demand –

We have explained that there was in fact a finding to that effect; we have set it out there in our paragraph 51. Just to give your Honours the reference, where you will find that finding of fact in the primary judgement is volume 9, tab 44, page 2561.

Dropping down to Keith Russell Simplicity Funerals – that is an early case but an important one – the ACCC tells you there was no evidence the union had made a demand or threat to the respondents to which they capitulated. If your Honours can go, please, to volume 8, tab 40, at page 2405. The case commences and at page 476, or 2409, in the first paragraph you have the demand and the threat, and the next paragraph:

There is no evidence that the . . . respondents have done more than give effect to an ultimatum which they received from the union . . .

It was argued for the respondents –

This is effectively the present case:

that all they had done was to make a commercial decision, not by way of making an arrangement or arriving at an understanding, but by accepting the consequences they regarded as inevitable.

In that case, they gave in because they did not want the union to prevent them being able to run their funeral business. So, it is essentially our fact pattern. Justice Franki at page 477, in the middle paragraph, had little difficulty saying:

In my opinion the respondents have simply responded in a commercial way to a union ban –

There is no evidence they:

made an arrangement or arrived at an understanding which contained a provision . . . included for a –

proscribed purpose. So, that is effectively what has happened in our case, and you received no submission from the ACCC as to why Justice Franki got it wrong 40 years ago.

For completeness, we have referred to the decision of Justice Finn in ACCC v CFMEU, which we have addressed at paragraph 50. That case is found at volume 7, tab 27. It is a case where there was a threat, but the contravention case failed, and what his Honour did, unsurprisingly, was look at all the facts; he did not just look at the threat plus the fact the demand was met. There are two critical paragraphs of his conclusions, paragraph 101 – your Honour Justice Edelman this morning asked about three categories, the highest of which was where the threat is a “but for” cause of the conduct, and Justice Finn said here:

It may well have been the case that but for the . . . conduct –

the person would not have been terminated:

I am not satisfied that the actual decision . . . was other than one which resulted from their own evaluation – albeit in pressured circumstances –

That is the pressure coming from the union:

as to what was the appropriate course to take in the circumstances having regard to –

a range of matters, including:

their expectation of likely union responses –

The last sentence:

I am satisfied that the proposed decision was not simply a response as of course to a demand which they understood was intended to, and did, leave no other choice, and in which they acquiesced.

So, his Honour is conducting an inquiry into all of the facts and he is here accepting that the threat could be a cause, indeed even potentially a “but for” cause, of the response without there being a contravention and he explains that reasoning a little further in paragraph 105, where his Honour says about the middle:

What occurred as far removed from the realm of making and accepting offers.

You see in this paragraph that this was a case where, unlike ours, the second party actually reported back to the union that it was getting rid of the person, but even that was not enough to make it an arrangement or an understanding because, if you looked at the way it was reported back, what it was reporting was it had independently made its decision to fix the problem. So, the distinction that the Full Court drew between doing something in response to a threat, making your own commercial decision, and coming to an arrangement or understanding that you would behave in that way, is one that Justice Finn was very comfortable with.

STEWARD J: Mr Gleeson, these cases, I understand why you are taking us to them, but we still have to grapple the fact of, in this case, it is accepted at the Bar table that Hutchinson succumbed to the threat ‑ ‑ ‑

MR GLEESON: I want to give your Honour my answer to that question, which is not identical to Dr Higgins’.

STEWARD J: But I was just going to say, these cases do not have findings of succumbing to the threat and no other independent reason for acting to terminate.

MR GLEESON: I have shown you Justice Finn, which is the highest it might go for the ACCC, where he is saying that the threat and the pressure from the union was one of the reasons for the commercial decision and indeed might have been a but for cause of the decision.

So, the argument that is put, which is the only escape hatch is if it is wholly independent of the threat, that cannot stand with Justice Finn or with Justice Franki. But my answer to your Honour’s earlier question is we would put it exactly as Justice Wigney has found it at paragraph 83. It is important to understand what his Honour was saying there. He does not use the language “succumb”. “Succumb” is in fact a loaded term because what it might be read as saying is it elides what actually is happening. What Justice Wigney said is:

Put simply, Hutchinson made a commercial decision to terminate WPI’s contract and retain the services of another company to avoid potentially costly and inconvenient industrial action –

Now, as a commercial decision, it has not been fully unpacked there, but what in effect that is saying is Hutchinson said, we had this threat made in early June. As Dr Higgins has shown you, there was a substantial period of time in which they tried to get WPI in a condition where it could get an EBA. So, they were not people who were simply executing the subbie.

There was a substantial period of time in which they tried that. By the middle of July, they have tolerated a little bit of delay around the building works, but it is now getting on the critical path. So, the finding is that in the middle of July, they now do need a waterproofer – that is paragraph 340(23) – and at that stage time is marching on. They decide in terms of the balance of allowing WPI to continue, as against getting the project going, as against what the Union might do – they cannot be sure what the Union would do, but they have had a threat – as against all of those matters, the commercial decision is now made by me, Hutchinson; I will now terminate them.

So, your Honour asked about the word “unilateral”. That is how we understand “unilateral”, which is Hutchinson has made those types of internal considerations. Now, the ACCC has not – they have had every chance to explore those internal communications. They did not take any of those opportunities. That is a world apart from at any point in this six‑week period Hutchinson communicating to the Union, we wish to be of a common mind with you that we will get rid of WPI. So, we would urge caution in the word “succumb” because it is really a commercial decision case, and if ‑ ‑ ‑

STEWARD J: I understand that, but in the real world, there is no way Hutchinson is going to turn around to the CFMEU, and put in writing or orally, we agree that we will act in accordance of your threat and terminate WPI.

MR GLEESON: Your Honour has raised the concern about whether our legal approach could lead to practical difficulties. Our answer is – and this was actually discussed in detail by plurality – yes, there is an onus involved here; yes, it is a civil penalty provision. They have access to the 155 process and it will be an inference from all the circumstances. It could well be, depending on all the circumstances, an inference can be drawn that you in fact had a deal, but there will need to be some precision because, as your Honour Justice Beech‑Jones asked, are you looking at the actual termination – assuming you can treat it as an act that contemplates the understanding – or are you looking it as an evidentiary piece of material from which you can infer an earlier understanding? Quite different questions.

STEWARD J: Can you tell me what you say “succumbing” means here? What is your take? I understand Hutchinson made, independently, a commercial decision that it would terminate WPI.

MR GLEESON: They made that decision, as far as we can tell on the findings, taking into account its assessment of whether WPI was going to be able to get an EBA and whether giving WPI more time would start to cause unacceptable delay to its project, and therefore need to get someone else on.

I want to add one further fact to that, when Mr Hodge politely told you this morning that this is just a succumb case – if you could look, please, at the primary judge at paragraph 48. One of the reasons the Union was being difficult, was that they were concerned that WPI did not pay its workers properly. There was evidence which her Honour accepted from Mr Ezzy, that although WPI got registered with one of the super funds, that did not happen until 29 June. So, this is evidence of them, WPI, being given a chance to do the right thing. But more importantly, for Mr Charlie Hadfield, the son of Ray:

no employer contributions have ever been made to this account by WPI.

And then:

It was an agreed fact between the parties that WPI also made no contributions to another industry superannuation funds called CBUS –

And so on. So, in terms of what would be a commercial decision, if you were sitting there as Hutchinson, you are trying to keep everyone happy if you can; you do not want to terminate the subbie, unless you have a good reason to do so. Yes, you have the Union being difficult; you have WPI being difficult because they refuse to do the right thing and pay the superannuation contributions, which is obviously part of what is annoying the Union.

Now, against all that circumstance, the commercial decision is: can I allow my project to be delayed any longer? The answer is no. That, we submit, is a world away from Hutchinson in some way communicating with the Union, we are going to be on the same team here; we are going to do a deal; we are going to make sure WPI gets executed.

STEWARD J: Is there a finding below that one of the reasons that contributed to the termination is delinquency? Can I call it that?

MR GLEESON: Hutchinson put this up and said, this is our primary reason, this is the substantial reason for doing it. Her Honour was not prepared to accept that, as Dr Higgins mentioned this morning – that is paragraph 340(22). It is perfectly clear that it would be in the parcel of matters that a commercial decision would take into account that you have a waterproofer who is not prepared to perform its basic obligations. That is partly what is annoying the Union. I am not defending the Union’s conduct. If there is industrial remedies for elsewhere – but in terms of this statute, this statute is about doing deals to prevent or hinder people supplying their services to Hutchinson, and this is a world away from that.

I did want to give your Honours a submission on the British Slag Case which was referred to this morning, which is at volume 9, tab 45. Our submission is that the purple passage of Lord Justice Diplock on page 747, at the end of the first paragraph, needs to be looked at carefully and in its context, both before and after. First of all, his Honour is dealing with the term “arrangement”. He is not dealing with a provision like ours, where it is an arrangement or understanding which includes a provision for a proscribed purpose. So, he is not looking at our precise context.

What he says at the bottom of page 746, which Mr Hodge does not like, is that there must be a “meeting of minds”, there must be “mutuality”, each would regard themselves:

in some degree under a duty, whether moral or legal, to conduct himself in a particular way . . . so long as the other party –

does. That is consistent with most of the authorities we have seen. Then, in the beginning of the next paragraph, he is referring to Justice Cross, who says:

“As I see it, all that is required . . . to constitute an arrangement not enforceable in law is that the parties to it shall have communicated with one another in some way, and that as a result of the communication each has intentionally aroused in the other an expectation that he will act in a certain way.”

Your Honours this morning asked about reciprocity. Ordinarily, you would expect reciprocity because you have to communicate that you will act in a certain way. Lord Justice Diplock then says, I will say the same thing in slightly different words, and then he utters three propositions.

We would draw attention to the fact that each of the first and second propositions expressly, and the third proposition implicitly, have an element of state of mind in them. It is not the mere making of a “representation as to” “future conduct”, you must have an “expectation” and an “intention” that it “will operate as an inducement”. There must be communication of the second party, “who has knowledge” the first party so expects and intends. Thirdly, the:

representation or . . . conduct in fulfilment of it –

must operate:

as an inducement, whether among other inducements . . . to act in that particular way.

We would understand that as being an inducement which is known to the parties to be doing that work, not just a private inquiry into the state of mind of the other party. That would appear to follow from the following paragraph about the facts, because the facts were exceptionally strong. Each member company had a nominee at the board meeting at Basic, where each of them said they were:

going to enter into a contract with Basic in the –

same terms. So, by each person saying that at the meeting, it operated as an inducement to each other person to enter into the parallel contract. So, at the heart of it is not mere, we would submit, private inquiry into what is in the state of mind of one party, it is known inducement. And if it really was a British Slag case that the ACCC was trying to run here, they really needed to put the questions to the people – the four people they had – of this kind, which they failed to do.

GLEESON J: Has this test ever been applied to a threat as a representation of future conduct?

MR GLEESON: Not to our researches, your Honours, but we should look at that further, if we can. It does appear, of course, to have more of the language of contract in it, offer and acceptance.

BEECH-JONES J: Mr Gleeson, you said these questions needed to be asked of the four people. What were they again?

MR GLEESON: Well, with our gentlemen, Mr Clarke and Mr Steele, they had to be taken specifically at the time they made any statements as to, first of all, were they making a representation as to what they would do in the future, or were they merely making a threat, which is a different thing. Did they have an expectation and intention that, by saying those words, they would operate to induce Hutchinson to act in a particular way? Then you would have to ask Mr Meland and Mr Berlese under the second step, what was their state of knowledge about the expectations and intentions which Mr Clarke and Mr Steele had. Then, at the third step, you would have to ask the Hutchinson people as to how the representations or conduct of Clarke and Steele operated as an inducement upon them, and we would say how that inducement was then made known back to Clarke and Steele. So, it just never got anywhere near a British Slag case.

Your Honours, just on that topic, I should say I think there was an answer to your Honour Justice Beech‑Jones this morning that they do not have to identify who at Hutchinson did it, and I think their principle is they do not have to identify who at the Union was a party to it; it is enough to say it was someone. We would submit that would be a very unsafe approach for the Court to take, particularly in a case where they identified in the concise statement the four gentlemen. They did not run a case of: it happened at some higher level in Hutchinson that you should infer knew X, Y and Z. They said it is these four gentlemen that are the culprits. And then for inexplicable ‑ ‑ ‑

EDELMAN J: Inferences of knowledge may not be relevant in a systems case, but this is not a systems case.

MR GLEESON: It is not a systems case, no. So, they chose to identify those four gentlemen, they had access to each of them, as I say, through the 155 or cooperation. They did not start the task of a British Slag test. Your Honours, in terms of our outline, I have covered what I want to say about the law in paragraphs 2 to 4. I think the detail of the facts at paragraphs 5 and 6 I can subsume under the submission I made that you have not heard a case of error against the Full Court in the way it dealt with the whole factual matrix. That leaves me only in paragraph 7 to say what else I want to say about the new case.

There are at least five difficulties with it, in addition to what I have already raised. The first is it is frankly totally unsatisfactory for the appellant to come to this Court and say it does not matter what the date is, it is any time between 11 June and 26 July. They went to the Full Court with the benefit of an 11 June finding, but they put on no notice of contention to seek a later date. There is no notice of appeal in this Court to see a later date and they are simply inviting your Honours, somehow, to look through this material and beneficently find some later date in that six‑week period and fix upon that as the date of the arriving at the arrangement. Your Honours would not do it.

BEECH‑JONES J: But, on their case, it must be 26 July, must it not?

MR GLEESON: No, no, Mr Hodge will not have that. He says any time between June and that date. The reason he says that is – your Honours may not have quite – your Honours probably have perceived what he is saying. His problem is this, which is the second one I am coming to. He has a problem with his finding about exclusion because her Honour used this term “exclusion”, and on one reading of her Honour, her Honour was saying WPI was excluded from 11 June. He says if that is the finding he got, and if that finding somehow survived the Full Court, then he will have an understanding on 11 June, he will take that.

But then he says if – as I can show you in a moment – Justice Wigney is correct under our notice of contention and they cannot have 11 June, then your Honours are to work out what later date they should have, and he does not assist you very much on that but he says maybe he can have the middle of July when Spanos came on and, if not, he will have termination. So, he really wants anything your Honours will beneficently confer upon him, and we submit your Honours just should not tolerate that type of activity.

Not only does it involve you and new fact‑findings, it clearly influences the way the facts are to be approached because take, for example, if his case is 26 July, Justice Beech‑Jones, if that is his case, that there was an offer on the 11th, maybe repeated two weeks later, and then six weeks pass and then 26 July the guillotine falls on poor WPI, that is his case. So, his threat response case is now an offer there, a response four to six weeks later, never communicated at the time, or apparently ever, equals the arrival at an understanding is an even weaker case than a case where you might have some coincidence in time between the two pieces of conduct.

But then when you get to purpose, if it is 26 July, if that is when it happens, he then would have had to put some question to Clarke, Steele, Meland or Berlese about what they were trying to achieve by that termination on 26 July and what the Union knew the other party was trying to achieve, so you then have a purpose inquiry at a later date.

Your Honours will have noticed, in the appellant’s outline you do not see a submission made on purpose. It is just not on their list of topics. It is as if, if you were to find for them on the understanding, you will then make the error the primary judge did and say, well, if there is an understanding, of course there is purpose. Now, the rigour of the inquiry under a civil penalty simply does not permit of that sort of approach. So that is paragraph 7(a).

Can I deal with paragraph 7(b), which is this point about the exclusion which Justice Wigney dealt with at paragraphs 71 to 72, and we rely upon these under the notice of contention. If your Honours have those paragraphs 71 and 72, his Honour says in 71, which has not been challenged, there is “little or no direct evidence concerning” their exclusion, there is “no evidence concerning how or by whom” it “was effected”, there is a “paucity of evidence”, there is no definitive findings, and the fact – this is 72 – they did not conduct work on the site “was equally explicable” on an alternative basis. Now, the only finding her Honour in fact made on the date of exclusion is found back at paragraph 340 of the primary judge.

GAGELER CJ: Mr Gleeson, we will interrupt you for a moment. We will take a five‑minute adjournment.

MR GLEESON: Thank you, your Honour.

AT 3.22 PM SHORT ADJOURNMENT

UPON RESUMING AT 3.28 PM:

GAGELER CJ: Please continue, Mr Gleeson.

MR GLEESON: Thank you, your Honours. I was on paragraph 7(b) directing your Honours to the primary judge paragraph 340(30), where the only finding as to when waterproofing needed to be done was:

in around July 2016.

The basis for that finding is at paragraph 252 of the primary judge. And:

Spanos was inducted . . . on 13 July –

So, Justice Wigney was correct to say that Hutchinson did not cease to acquire the services of WPI any earlier than some unknown date in July. In
fact, in the respondents’ joint book of further material at pages 127 to 128 – it is 127 line 40 to 128 line 45 – Mr Hodge repeatedly put to Mr Berlese the proposition that no waterproofing was needed in mid‑June, there was no need for WPI to be on the site, and the earliest they were needed was some time in early July. To the extent her Honour found they were excluded from 11 June, that finding was in error for the reason pointed out by Justice Wigney. The earliest date they ceased to acquire the services was some time in early July.

STEWARD J: Did the plurality agree with Justice Wigney on the exclusion of WPI?

MR GLEESON: No, they did not discuss this topic.

STEWARD J: I see.

MR GLEESON: They did not need to go to this detail. That is why for formal purposes we have put this under notice of contention that Justice Wigney is correct in paragraphs 71 and 72, and he is also correct on the purpose issue that Ms Caristo is about to come to.

Your Honours, that leaves for me only in paragraph 7(c), a point I have made; 7(d), a point I have sought to make, that how the threat could be analogised with the unilateral contract cases has never been properly explained. I did just want to conclude on 7(e) which is – if we you have the respondents’ reply at the top of page 2 – having told you that this is an appeal on the question of law, they seek here – it starts at the bottom of page 1 – a finding that:

Hutchinson understood that the CFMEU had undertaken to Hutchinson that it would conduct itself in a certain way (refrain from industrial action) so long as Hutchinson ceased acquiring waterproofing services from WPI.

They cannot have that case. That case is not the pleaded provision. It is not the case run at trial or in the court below. There are no findings to support that case and it would obviously have required putting questions about state of mind to Hutchinson as to whether they understood that CFMEU had given them such a promise. Your Honours, at that point I can hand over to Ms Caristo.

GAGELER CJ: Yes, thank you. Ms Caristo.

MS CARISTO: May it please your Honours, I will be addressing you on propositions 8 to 10 in our outline of oral submissions, and I will say something very briefly on proposition 11 at the end and about the orders. Before I do, I would just like to respond to Justice Gleeson’s question earlier as to whether there are any cases on threat that have applied British Basic Slag. In the time since you asked that question, we have done some research. We have not been able to find anything in that time available. Should we find anything we would then seek leave and correspond with the other parties to respond to that by email, if that is acceptable.

GAGELER CJ: We do not think that is necessary.

MS CARISTO: That is fine, thank you, your Honours. Moving then to proposition 8, you will see from our outline that section 45E(3) of the Act requires each party to the proposed arrangement or understanding to have had the subjective purpose, which the section proscribes, for including a provision which prevents or hinders the first person from acquiring or continuing to acquire such goods or services from the second person.

In his reasons at paragraph 28 on page 187 of the appeal book, Justice Wigney identifies this as the third element that the ACCC was required to prove, if it was to prove Hutchinson had contravened section 45E(3). The primary judge’s findings as to whether this element had been satisfied are brief; they begin at paragraph 341 on page 91 of the appeal book. Her Honour sets out the applicable law at paragraph 342 to 346 on pages 91 to 92, and her findings on “purpose” are then set out at paragraphs 347 to 348.

Nowhere in those paragraphs does her Honour identify the individuals at Hutchinson and the Union who held the subjective purpose. Her Honour refers to the factual findings in these reasons, which suggest that her Honour drew the inference that:

Hutchinson and the CFMEU had the proscribed purpose from the same primary facts from which she drew the inference –

that an arrangement or understanding had been made. We make the point at paragraph 77 of our written submissions that her Honour never identified when the proscribed provisions was included in the arrangement or understanding, or by who.

EDELMAN J: Do you accept that an arrangement or understanding can be made objectively?

MS CARISTO: You can look at objective circumstances to determine whether an arrangement or understanding has been made when looking at the second element for the ‑ ‑ ‑

EDELMAN J: But can you stop there, or do you say that you have to, for the purposes of the arrangement or understanding, then draw an inference from those circumstances as to the subjective states of mind?

MS CARISTO: I do, your Honour – we do.

GLEESON J: And as to communication.

MS CARISTO: Sorry, I did not ‑ ‑ ‑

GLEESON J: And as to communication of those states of mind.

MS CARISTO: Whether that has to be subjective as well?

GLEESON J: No, but you would say that you could infer communication, but you need to infer communication in order to have an understanding?

MS CARISTO: That is correct, your Honour. As I said, without having identified the individuals, it was not then possible for her Honour to have undertaken the proper inquiry and to have reached the conclusions that she did. Justice Wigney identified and explained that error in his Honour’s reasons at paragraphs 77 to 81, and he also explained that error at paragraphs 36 to 37 at page 189, where his Honour noted that the primary judge’s findings were:

expressed at a high level of generality.

In response to this part of our written submissions, in its reply at paragraph 6, the ACCC submits that:

Where there is an inference of the proscribed purpose being held, it is not necessary to identify when the proscribed provision was included or by whom.

The ACCC does not cite any authority to support that submission. Indeed, the submission is contrary to the very authority that the primary judge sets out at 342 to 343, and in those paragraphs her Honour reproduces paragraphs 181 to 182 and 194 to 195 of CEPU v ACCC. I will not take your Honours to those paragraphs because Dr Higgins has already taken you to them. The only thing I wish to emphasise is that in paragraph 181 you will see the words:

The court has to determine the end the parties had in view: that is, their subjective intentions.

Similarly, at the start of paragraph 182 you will also see the words:

In our opinion s 45E(3) requires each party to the contract, arrangement or understanding to have had the subjective purpose –

And again a few sentences later:

And because this conduct is bilateral, the subjective purpose with which each of the parties included it must be one they both had.

Dr Higgins has already taken you to 194 to 195 of ACCC v CEPU, so I will not take you to that again. She has also noted 196 to 197. I will not take you to that again, but what 197 contains, which is illuminating, is the policy purpose behind why it is that the Parliament has identified the need to have a subjective purpose rather than an objective purpose when looking at the very reason why the provision was included.

Now, the reference to “subjective purpose” in all of the passages that I have mentioned indicates the need to identify an individual for each party. The word “subjective” as used in those passages cannot be understood any other way. The need for a natural person to have a state of mind on behalf of a corporation or organisation, at least for the making of an arrangement or understanding, was accepted by the joint judgment at 147 at page 236, and the same must follow, we would submit, when it comes to looking for a subjective purpose. That is, you need to have an individual to look at their state of mind.

There are of course several ways that purpose has been proven, which your Honours have already discussed. The primary judge set some of them out at 345 to 346. There is also a helpful discussion of the ways intention might be proven in cases involving a proscribed provision. In Associated Northern Collieries [1911] HCA 73; (1911) 14 CLR 387, and I would ask your Honours to take that up, which is in the joint book of authorities at volume 4, tab 18. If your Honours could please turn to page 460 of the report, which is page 534 of the joint book of authorities, your Honours will see at the very bottom of the page the heading “Law as to Intent” and under that heading Justice Isaac explains that:

intent must be real and not merely imputed.

Over the page, at about point 2 down the page, his Honour explains that the:

real intent may generally be gathered from what he says as well as from what he does.

His Honour explains that intent may be proved by direct testimony or declarations or conduct. Then, at about point 8 down the page, his Honour says that in the case before him where there is no direct testimony proving intent – and that is like this case as well – proving intent:

rests upon the inferences to be drawn from –

the defendant’s:

declarations and conduct –

Using the principle: the outward acts show the internal secrets.

GAGELER CJ: This case, of course, was overturned, was it not, on appeal? This is the Vend Case, is it not? Am I right?

MS CARISTO: I did not realise this part of the case was overturned on appeal.

GAGELER CJ: I may be wrong – do not worry.

MS CARISTO: I am very sorry, but nonetheless if – assuming it was, then the principles ‑ ‑ ‑

GAGELER CJ: It does not mean that the reasoning is not worthy of study.

MS CARISTO: That is what I was about to say.

GAGELER CJ: Yes.

MS CARISTO: The principles that are set out here are the very same principles that we see applied in the cases, and the very same principles, actually, that the primary judge had identified as to apply as well. That was really the only point I was going to take from that.

GAGELER CJ: Yes, of course.

BEECH‑JONES J: If the relevant act of Hutchinson that involves making the contract is terminating WPI, it follows as night follows day they had that purpose, does it not?

MS CARISTO: When you say “they”, you would have to state ‑ ‑ ‑

BEECH‑JONES J: It. It.

MS CARISTO: ‑ ‑ ‑ that Hutchinson did, yes.

BEECH‑JONES J: Yes.

MS CARISTO: But Hutchinson – someone still had to sign that letter.

BEECH‑JONES J: Well, the hand that signed the paper, unless they did not know what they were signing, that would be enough. This may be the question as to what the act was that made the agreement.

MS CARISTO: That is quite right, but it also assumes again that the making of the act is also the one that constitutes acceptance.

BEECH‑JONES J: I understand that.

MS CARISTO: But you still have to look for this third element that Justice Wigney set out about looking for the subjective purpose. Someone would have still had to have terminated – like signed, had the authority to terminate the contract.

BEECH‑JONES J: They did, but the person that did that must have had the purpose of preventing supply from WPI, must they not? That is what you are doing. That is the very act you are doing.

MS CARISTO: Yes, that is right, you are drawing that inference. That is right, you are drawing that inference from their actions. That is quite right, yes. But you still have to – part of that inquiry would be needing to identify who that individual was before you can draw that inference. You cannot draw the inference and then go the other way. Certainly, the ACCC, with its section 155 powers, would have had the opportunity to do that investigation and to work out which of those individuals ‑ ‑ ‑

STEWARD J: Here, it was Mr Meland who terminated, was it not?

MS CARISTO: That is right.

STEWARD J: So, we know who did it.

MS CARISTO: That is right, we do, and we know also that it has been found, it is not challenged in this Court, that he did not have the proscribed purpose.

STEWARD J: Can I ask you, as a practical matter for a regulator like the ACCC, subject to issues about Browne v Dunn, a regulator might be reluctant to put questions about purpose in cross‑examination, fearing what answers they might get, they might stay their hand. It is well known that regulators do that in cross‑examination.

MS CARISTO: We all try and do that in cross‑examination sometimes, when we are all worried about our hands.

STEWARD J: Yes, that is true as well.

MS CARISTO: But the advantage that the ACCC has over, perhaps, what a commercial client, for example, has is that they have had the opportunity to ask a lot of those questions.

STEWARD J: Were there any 155 examinations here?

MS CARISTO: There were, and her Honour sets them out.

STEWARD J: And Mr Meland was one of the people ‑ ‑ ‑

MS CARISTO: He did have one.

STEWARD J: Thank you.

MS CARISTO: The next part I was going on to was to make good that there are no clear findings from the primary judge as to which officer from each respondent held the proscribed purpose, or when, or what evidence, direct or inferential, showed that each officer held the proscribed purpose.

Your Honours, I do not think I need to go through anything in detail. I think the outline of oral argument already sets out in great detail, at paragraphs 9 and 10, Mr Clarke and Mr Steele, who were both the individuals with the Union, who were the ones who had been identified in some way by the ACCC as being the key individuals at the Union. As we have already put there, not all the questions were put to either of them in cross-examination, the kinds of questions that my leader before has said were the kinds of questions you would expect to have seen if the case that the ACCC is running in this Court was the case that had been run below.

The last thing that I will say before sitting down is just to say that with proposition 11, as you can see, unless the contravention of section 45E is made good, then the CFMEU cannot be liable as an accessory – that just follows from the language of section 76.

The last thing I was going to say is on orders, and you will see this in our submissions at paragraph 9. We say that the appeal should be dismissed with costs, but in the event that the ACCC succeeds, the orders at 6 in the appeal book at page 277 overreach; the CFMEU also appealed on penalty,
only Justice Wigney made some comments on that, so, should the ACCC be successful, then the matter needs to be remitted to the Full Court to deal with the outstanding issue from the CFMEU’s notice of appeal.

BEECH-JONES J: Can I just – that last sentence of your outline, is that that the primary judge found that the CFMEU was knowingly involved ‑ ‑ ‑

MS CARISTO: She did.

BEECH‑JONES J: The Full Court did not need to address that.

MS CARISTO: That is right.

BEECH‑JONES J: There is no notice of contention – what is the position we get to, here?

MS CARISTO: So, it is covered by the notice of contention, we cover in paragraphs 30 ‑ ‑ ‑

BEECH-JONES J: Because of Justice Wigney’s reasoning?

MS CARISTO: That is right.

BEECH-JONES J: I see.

MS CARISTO: May it please.

GAGELER CJ: Thank you. Mr Hodge.

MR HODGE: Thank you, your Honours. Can I deal first with the suggestion that there is a new case that is being run before this Court. That is not correct. Can I direct you to some parts of the materials that are in front of you. To begin with, could I ask your Honours to go to the respondents’ joint book of further materials, which contains the amended concise statement that was relied upon. If your Honours go to page 57 of that book ‑ ‑ ‑

BEECH‑JONES J: This is the appellant’s, did you say?

MR HODGE: This is the respondents’ joint book of further materials.

BEECH‑JONES J: The respondents’.

MR HODGE: And you will see, if you go to page 57, paragraph 7, the allegation is:

The Boycott Arrangement was made or arrived at between about May 2016 and 26 July 2016 –

26 July 2016 being the date of the termination. And you will see the way in which the case was put in the concise statement was:

It was made or arrived at through, or alternatively is to be inferred from –

and then there is a series of subparagraphs. If your Honours come down to page 59 and subparagraph (m), you will see the final fact relied upon as either constituting or from which the existence of the arrangement or understanding can be inferred is:

Hutchinson’s conduct in ceasing to acquire waterproofing services from WPI and subsequently terminating the WPI contract –

which were then facts that were also set out in the concise statement.

EDELMAN J: And you say (m) was a standalone, separate case?

MR HODGE: We say the way the case was put was to put all of these forward as the possible – either as the facts from which the existence of the arrangement or understanding could arise, or any combination of them, or, alternatively, the facts from which the inference could be drawn that there was an arrangement or understanding.

Then when we got to our oral opening submissions, if your Honours then take up Hutchinson’s supplementary book of further materials – and Hutchinson’s supplementary book of further materials contains an extract of the oral opening submissions and oral closing submissions. If your Honours go to page 5 of that book, this is the extract from the oral opening submissions. Your Honours will see, beginning at line 14 – this is me, opening:

And ultimately, again, that will be a factual issue for your Honour to determine.

Then you will see:

But the consequence of it, the Commission says, is that ultimately Hutchinson acceded to the pressure from the union and never brought WPI back on site and terminated the contract with WPI. And in acceding to that pressure, in effect, that is both the culmination of the reaching of the arrangement or the understanding and also the giving effect to that arrangement or understanding.

And then, on appeal, if your Honours ‑ ‑ ‑

BEECH‑JONES J: But do you accept the primary judge did not accept that case? The primary judge did not accept what I think we are all calling a unilateral contract case. The primary judge did a more traditional, I will infer the existence of an agreement at some point from the objective facts.

MR HODGE: I am going to come to the primary judge’s reasons, but there is a slight – there is an ambiguity, but in the end, I accept that the way in which it is framed most closely resembles an Associated Collieries case in which what is happening is there is an inference being drawn from the facts of what does occur that there is some kind of antecedent arrangement or understanding.

But there is a different way to understand the findings, as we will come to, because what her Honour also adopts is the language from Justice Isaacs, where his Honour framed up the possibility that acts could either be acts from which it evidences an antecedent understanding – in fact, it is antecedent coordination – or, alternatively, the acts:

were themselves the manifestations of mutual consent –

As Mr Gleeson has identified, her Honour identifies particular facts which she says are themselves the “manifestation of mutual consent”, and one of those facts is the termination on 26 July, as I will come to in a moment. So, the answer to your Honour’s question is, I think I would have to say, there is an ambiguity in the way paragraph 340 of her Honour’s reasons is expressed as to which frame of reasoning she is going down, but it does not appear anywhere that she rejects the conceptual point that we are putting.

Can I then ask your Honours to take up – I am sorry, I have jumped you around – the respondents’ further book of materials. If your Honours go through to page 236, this is part of the oral submissions made in the appeal. Your Honours will see, beginning at line 29, I make what I describe as “a procedural fairness concession”. It is a long passage.

I will summarise it, rather than asking you to read it, but, relevantly, it goes from lines 29 down to about line 20 on the following page. What I summarise there is that there are two competing legal possibilities that had arisen at that point in time in the appeal. One possibility was that if there was:

a conditional threat made by the union and the succumbing of the contractor to that threat, would that be sufficient to constitute an arrangement or understanding?

That is at lines 33 to 35:

And then a second constructional possibility is if there was the conditional threat –

and then there was:

knowledge on the part of the union of the succumbing –

that that is what is:

sufficient to constitute an arrangement or understanding?

And the proposition, as I note, being put, from about line 41, the proposition being put by Hutchinson on appeal was that only the second is sufficient, and not the first. And then our position on appeal, as is recognised by Justice Bromwich, is that we say either is sufficient, but also we satisfy, in any event, the second proposition. That is, that there was awareness.

Then the last point I wanted to note was it has been suggested, I think, that we accepted on appeal that the arrangement or understanding arose on 11 June. Justice Wigney really identifies in his judgment that that was not the case, but can I direct you specifically to a part of the transcript where the question was asked. If your Honours take up the appellant’s supplementary book of further materials and your Honours go through to page 63, you will see the start of a very short extract from day one of the appeal. Then on page 64 is part of the oral submissions, and your Honours will see at line 6 Justice Wigney asks:

And I know what your answer to this question is going to be, but when do you say there was a meeting of the minds between CFMEU and Hutchinson?

And my response is:

Well, the answer is, it being a circumstantial case, the meeting of the minds must have been reached at some time between June and about 19 July 2016.

That does seem to potentially have made the same error I made the first time I answered Justice Beech‑Jones’ question this morning, which was to say 19 July rather than 26 July. In any event, there can be no doubt that we did not accept that the case was confined in some way to 11 June.

BEECH-JONES J: It kind of reads as though you are addressing an Associated Collieries case, because if you were just doing a unilateral contract case you would say the contract was made on day X when the act was done.

MR HODGE: I agree. And it may be, I mean, I cannot – to be honest, trying to remember exactly what I was thinking when I answered this question is next to impossible, but what you can see from the part of the transcript that I have already taken you to in the other part of the discussion is that we were clearly framing up both possibilities which had been alive since the very start of the case.

Can I then take you to the primary judgement. One of the submissions that is being made – and ultimately this seems to go primarily to purpose – is to suggest that there is some issue of failure to adequately cross‑examine Mr Clarke, Mr Steele and Mr Berlese and adduce evidence from Mr Meland as to what they intended, or what their purpose was.

I want to show you what the evidence was that was given by Mr Meland, which was set out by her Honour and then accepted in relation to termination, but also to identify the oddity of the submission that Mr Clarke, Mr Steele and Mr Berlese should have been cross‑examined as to why it is that the threat was made or the termination occurred is that all three of those men denied the things that were ultimately found against them. That is, Mr Clarke denied that he had made the threat, Mr Steele denied that he had authorised the threat and Mr Berlese denied knowledge of various things, including what he meant when he gave the instruction to Mr Meland, “just deal with it”, which Mr Meland understood and her Honour construed as meaning to terminate the contract.

So, there was not something to cross‑examine these people about because they did not agree that they had done the very things that it said that they would have had the purpose about. But I do want to identify something, which is the way in which her Honour made findings about purpose was not – I think in fairness, I should acknowledge – how we had made a submission in writing about how a purpose was to be determined. That is, in writing we had made a submission about what could be inferred about the individual purposes of each of the four men, but the way in which her Honour dealt with it was not to descend to dealing with the individual four men but to make the findings at the more general level of the corporation.

In our submission, that is unsurprising, and the reason that it is unsurprising is because once you get to the point of having found that there was an understanding and it contained a provision providing for the termination of WPI, it is inevitable that you would have to conclude that each of the people who are agreeing to do that held the relevant purpose, and that is because the relevant purpose, as it is described in the Act, is a purpose of ceasing to acquire services. So, there is not detailed reasoning from the primary judge in relation to this, but, in our submission, that is unsurprising given the detailed reasoning that had already taken place leading up to the conclusion that there was an arrangement or understanding.

Can I then ask your Honours to take up the primary judgment, and there are some parts of that to which I wish to direct your Honours. So, this is in the appeal book, and, relevantly, I want to begin on page 55 of the appeal book. Actually, I am sorry, I withdraw that. Could I ask your Honours to begin on page 49 of the appeal book, where you will see a heading which is “Conversation between Mr Meland and Mr Clarke”. You will see her Honour identifies in paragraph 184 what a “critical issue” in the case was, which was whether the alleged conversation on 11 June had even taken place.

Then, if your Honours come through to paragraph 53, you will see, in paragraph 198, Mr Clarke had denied that the conversation had taken place. Then, if your Honours then come through to page 55, you will see the conclusion, where her Honour finds that the conversation took place and, in paragraph 208, that:

To the extent that Mr Steele denies giving any such instructions to Mr Clarke, and Mr Clarke denies receiving them, I reject their evidence –

Then could I ask your Honours to then come through to paragraph 225. So, what her Honour does is go through and deal with – there is a series of disputed conversations and communications where, in each case, what is happening is that Mr Meland is giving his explanation of what is happening and somebody else is denying it. Your Honours will see at paragraph 225 her Honour finds that:

a conversation occurred between Mr Steele and Mr Meland which included statements by Mr Steele to the effect that Mr Raymond Hadfield “won’t be doing your waterproofing, he won’t be able to get an EBA”, that there would be issues if Hutchinson proceeded with WPI and “Why don’t you use someone like Spanos –

Then, if your Honours come through to paragraph 233, and this is relevant to the timing issue – that is, the point in time from which WPI was excluded – you will see that her Honour finds that:

probably during June 2016, Mr Thone also spoke to Mr Clarke . . . what prompted this conversation was Mr Thone’s discovery that the CFMEU had an issue with WPI and would not allow the company’s workers on site.

And it is explained why that is. Then, if your Honours come through to paragraph 238 on page 62, you will see her Honour finds that the conversation likely took place:

at a time after WPI had been excluded from the site –

And that:

Mr Clarke informed Mr Thone of two things: that WPI was not allowed back on site and the reason was that they did not have an EBA.

Then, if your Honours come through to paragraph 249 – this is on page 63 ‑ ‑ ‑

GAGELER CJ: Just remind me why we are doing this.

MR HODGE: We are doing this because, as we apprehend it, a few things have been raised about the findings made by the primary judge. The first is that it is said that in light of the findings of the primary judge, it would not be possible to conclude that there was the relevant purpose, and the second reason is that, as I apprehend it, it is said, effectively, there is some procedural unfairness that would arise if your Honours were to entertain the way in which the ACCC has put the case before this Court on the basis of what could alternatively have been done at trial, and Mr Gleeson expounded to your Honours upon the questions that, in his submission, ought to have been asked of witnesses at trial in order to allow that case to be run. That is the reason why I am doing it.

There is a third small detail point, which is there is an issue that has arisen, which is: ought your Honours adopt the findings of Justice Wigney as to delay and conclude that in fact there was no delay, and they were not excluded until July? So, those are the reasons. For obvious reasons, and until now, I have resisted trying to take your Honours through the primary judge’s findings, but I think I need to cover off on a few small things of which I can assure your Honours I have almost finished.

GLEESON J: The case on the appeal was about whether or not the primary judge erred in finding the arrangement or understanding that she had found. That is right, is it not?

MR HODGE: Before the Full Court?

GLEESON J: Yes – it was not broader than that?

MR HODGE: In the sense that we did not file a notice of contention making an alternative argument, but I have shown your Honour ‑ ‑ ‑

GLEESON J: You filed a notice of contention that it did not cover ‑ ‑ ‑

MR HODGE: About a specific factual finding, that is right.

GLEESON J: Yes, okay.

MR HODGE: Whatever the procedural consequences of that are, we are stuck with, obviously. But nevertheless, as I have identified for your Honours, it is not as if this issue of the termination completing the arrangement or understanding was not raised both at first instance and also, as I have tried to show, in the appeal submissions.

Can I then just direct your Honours’ attention to one further thing, which is, if your Honours come to paragraph 259 on page 66, you will see this is setting out an email that was sent by Mr Hadfield on 13 July 2016. You will see in the first paragraph, it says:

Over the last month we have made numerous attempts to get in contact with both Justin Steele and Scott Vink and have been unsuccessful in regards to being forced to stop work at Hutchinson builders Southpoint A construction site.

Now, the point to be drawn from that, as her Honour notes at paragraph 260, the following paragraph, is that is contemporaneous evidence of the fact that WPI has been excluded from the site and they are recording the fact in mid‑July that they have been seeking to get in contact because they have been forced to stop work for about a month and, therefore, that is inconsistent with the conclusion that Justice Wigney came to in which his Honour determined that in fact there had not been any exclusion that had happened until July.

That is all the parts – perhaps of great relief to the Court – that I want to direct your Honours to in relation to the primary judgment at this point, other than to note I said to your Honours that there was a finding that was made by her Honour that the termination was a manifestation of mutual consent to carry out a common purpose, and that is the finding made at subparagraph (33) of paragraph 340 of the judgment.

I will just give your Honours the reference to the evidence of Mr Meland, but at paragraph 263 her Honour sets out the affidavit evidence of Mr Meland which is explaining the termination, where he says:

I did not believe that I had any option other than terminating WPI, otherwise the CFMEU would have shut down the site.

Then her Honour, at paragraphs 272 to 274, makes her findings in relation to that.

GAGELER CJ: I just do not quite understand the finding at subparagraph (33), which you have just read to us, that is rejected by the Full Court, is it not?

MR HODGE: No, the way in which the Full Court approach it is to say, at least as I understand it – it depends upon whether your Honour is talking about Justice Wigney’s judgment or the plurality’s judgment – the way in which the plurality reasoned is to say the arrangement or understanding must have already arisen as at about 11 June 2016. And then, when they look at the subsequent things that occur, they really just ask, is that capable of supporting a conclusion that the arrangement or understanding had arisen back on 11 June 2016 – which is distinct from even the concept arising from Associated Collieries, which is if your acts that are the manifestations of mutual consent are the things themselves that give rise to the combination or coordination or complete it.

Mr Gleeson is directing me – or perhaps your Honours through me – to paragraph 186 of the Full Court’s judgment.

GLEESON J: I feel funny about complying with it, but I am doing it anyway.

BEECH‑JONES J: Was there an accompanying threat?

MR HODGE: I understand that is always the case with Mr Gleeson. Can I ask your Honours, then, to – or then, can I address your Honours on some other issues unrelated to or not specific to the facts but as matters of principle.

The first thing is, your Honours were taken this morning and into the early afternoon to the Harper review and the explanation in the Harper review in relation to concerted practices. The submission we make about that is – and I will give your Honours the reference without taking you to it, it is volume 10, page 2954 – what is explained there is that there is an idea of why it is that a concerted practice’s prohibition is required. It is directed to ideas of price signalling and something that is therefore not caught under the existing Australian laws but is something that is caught in overseas jurisdictions. It does not, in our submission, inform the meaning of what is a contract, arrangement or understanding.

The second issue is, it was submitted to your Honours by Hutchinson that, as we apprehend it, there is no issue in relation to the first sentence at paragraph 112 of the Full Court’s judgment. Mr Gleeson also submitted to you that that is a non‑issue. As we understand it, the premise of the submission is that the court there is not rejecting the proposition that subsequently giving – conduct that gives effect to an arrangement or understanding could be evidence of the existence of the arrangement or understanding. But that, of course, is not the point that we are making.

The point that we are making is that the conduct giving effect to the arrangement or understanding can itself be the completion of the arrangement or understanding, so that it is possible, by the same conduct, to both arrive at the understanding and also to give effect to the understanding. As we apprehend it, ultimately, that is a point about which the respondents disagree, one reason being your Honours heard the contention made on behalf of Hutchinson that “unilateral” must be contrasted with “bilateral”, and “bilateral”, for the purposes of the Act, means acting for a reason communicated to the Union.

That, as we apprehend it, is a submission that you cannot by the Act – that is, itself giving effect to the arrangement or understanding – have completed the arrangement or understanding. You have to have first communicated that you are going to act, and in fact, you have to have gone even further; you have to have communicated the specific reason that you are going to be undertaking the act before it is capable of constituting the completion of the arrangement or understanding.

In our submission, that is incorrect, insofar it is not supported by an authority that it is necessary to explicitly communicate the reason for acting in a particular way, and we would adopt the description of what is involved in an arrangement or understanding from this Court in Lutovi. I will just give one further reference in relation to Lutovi. It is also referred to in ACCC v IPM Operation, which is joint bundle volume 7, page 1765, paragraph 106.

Your Honours, those are our submissions in reply.

EDELMAN J: Just before you finish, did the ACCC at any stage make any submissions, or run any case, that the nature of threat by the CFMEU was one that dispensed with any requirement of communication as to compliance with the associated demand?

MR HODGE: Not in those terms. No, we did not put it in that way.

GAGELER CJ: Thank you. The Court will consider its decision in this matter and will adjourn until 10.00 am tomorrow.

AT 4.14 PM THE MATTER WAS ADJOURNED