Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2025] HCA 10

What the court decided

Hutchinson was the head contractor on a construction project in Queensland and in March 2016 it subcontracted waterproofing works to a subcontractor that had no enterprise bargaining agreement with the Construction, Forestry and Maritime Employees Union (the CFMEU) [5]. On 11 June 2016 a CFMEU representative told Hutchinson's project manager that the CFMEU would "sit the job down" if the subcontractor came back on site [6]. Hutchinson terminated the subcontract by letter dated 26 July 2016 [6]. It never gave the CFMEU any spoken or written assent that it would do so [7]. In the High Court it was not disputed that Hutchinson's only reason for terminating was to avoid the threatened industrial action [44], [74].

In civil penalty proceedings brought by the ACCC, the primary judge (Downes J) found that Hutchinson had made an arrangement or arrived at an understanding with the CFMEU to stop acquiring the subcontractor's services and to terminate the subcontract (contrary to section 45E(3)) and had given effect to it (contrary to section 45EA) [2], [8], [10]. Her Honour also found that the CFMEU had been knowingly concerned in or party to those contraventions and had induced them [2]. Her Honour imposed penalties of $300,000 for each of Hutchinson's two contraventions and $750,000 on the CFMEU [2]. The finding rested on an inference of consensus drawn from 33 primary facts, matters and circumstances [10]. A Full Court of the Federal Court (Wigney, Bromwich and Anderson JJ) unanimously allowed the appeals [2]. By its single ground in the High Court, the ACCC contended that it was enough for an understanding that Hutchinson succumbed to the threat by doing what was demanded and no longer contended that there was an arrangement [3], [18].

The High Court dismissed both appeals with costs [27], [72]. Gageler CJ, Gleeson and Beech-Jones JJ gave joint reasons and Edelman J, in separate reasons, agreed that the appeals should be dismissed with costs; Steward J would have allowed them [72], [112].

The joint reasons held that arriving at an understanding of sufficient substance to contain a prohibited provision involves interaction in which one party communicates to the other, by words or conduct and expressly or tacitly, a commitment to act or not act in a particular way [20]. An understanding may be arrived at where a person who receives a demand backed by a threat communicates a commitment to do what is demanded [21]. It is not, without more, arrived at when a person decides unilaterally how to respond to another's conduct, even conduct that includes a threat [22]. That is perhaps no more than to say that there is no special category of understandings arising from threats of industrial action; giving in to a threat may be a rational commercial response rather than collusion [23]. Diplock LJ's statement of what makes an arrangement in In re British Basic Slag Ltd's Application may be treated as applying to an understanding, provided it is read in its context, which concerned offers to accept restrictions, not a threat, which is the opposite of an offer [24], [25].

Their Honours accepted the Full Court's understanding that the primary judge had found the arrangement or understanding reached on or about 11 June 2016 [13], [14]. In their Honours' view, her findings implied that it was reached no later than a few days after that date and implicitly rejected the ACCC's closing case that it arose when Hutchinson terminated the subcontract [14]. On the facts found and not challenged by the ACCC, and with no proof of any communication, express or tacit, by which Hutchinson and the CFMEU reached a common mind, the Full Court was right to find no understanding [26].

Edelman J held that a contract, arrangement or understanding requires reciprocity [31], [48]. Where one party makes an undertaking with a request for performance, the other must communicate its assent unless the first party expressly or impliedly dispenses with that need [48], [56]. If it is dispensed with, the requested act may at once form the understanding and give effect to it [59]. His Honour said there might have been a strong case that the CFMEU had dispensed with communication of assent, but the ACCC conceded that it had never run that case, so reciprocity was not proved [32], [69], [71]. He applied Keith Russell Simplicity Funerals Pty Ltd v Cremation Society of Australia (ACT) Ltd, an interlocutory decision of the Federal Court unchallenged for more than 40 years, in which no prima facie case of an arrangement or understanding was shown where the respondents had complied with a union ultimatum [60], [61], [62], [63].

Steward J, dissenting, held that in the context of section 45E an arrangement or understanding means no more than a decided course of conduct [82]. He regarded a search for a meeting of minds as misconceived: the question is whether a party has been induced by a union's action to change its preferred course [85]. His Honour would have found the arrangement or understanding made when Hutchinson terminated the subcontract on 26 July 2016 and would have allowed the appeals with costs [100], [112]. He said that the majority's decision "renders that provision inutile" [73].

Why it matters

Under the joint reasons, a contractor's compliance with a union's threat, with no communication to the union of any commitment, does not establish an understanding under sections 45E(3) and 45EA, even where, as here, it is not disputed that the contractor gave in to the threat and had no other reason to act. For Edelman J, the result turned on the absence of any case that the union had dispensed with the need for a reply; on his Honour's approach, the act of compliance could otherwise form the understanding. On the joint reasons, a party alleging an understanding of this kind must prove some communication of commitment by the contractor, express or tacit; Edelman J would also accept proof that the union dispensed with communication of assent, a point the joint reasons did not address.

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