DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

Downer Utilities Australia Pty Ltd T/A Downer Utilities Australia Pty Ltd (formerly Tenix Australia Pty Ltd)
(AG2016/6153)

TENIX AUSTRALIA PTY LTD GLNG UPSTREAM PROJECT GREENFIELD AGREEMENT 2011

Building, metal and civil construction industries
COMMISSIONER HUNT	BRISBANE, 24 OCTOBER 2016

Application for termination of the Tenix Australia Pty Ltd GLNG Upstream Project Greenfield Agreement 2011.

[1] On 4 October 2016, Downer Utilities Australia Pty Ltd T/A Downer Utilities Australia Pty Ltd (formerly Tenix Australia Pty Ltd) (the Applicant) made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Tenix Australia Pty Ltd GLNG Upstream Project Greenfield Agreement 2011 (the Agreement)

[2] Section 226 of the Act sets out the conditions which must be met for an agreement to be terminated pursuant to s.225 of the Act. Section 226 of the Act provides as follows:

‘226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.’

[3] The application was supported by a statutory declaration from the Employer that declared, amongst other things, that no employees of the Employer were covered by the Agreement.

[4] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU), The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (the AMWU) and the Australian Workers’ Union (the AWU) are employee organisations that are covered by the Agreement.

[5] On 6 October 2016, my Associate wrote to the CEPU, the AMWU and the AWU seeking their views in relation to the application by no later than 2:00pm on 11 October 2016.

[6] In response, the AMWU advised that it is of the opinion that there is no need to terminate the agreement but does not oppose the application. The CEPU does not oppose the application. The AWU did not provide their views in relation to the application.

Consideration

[7] The leading authority with respect to applications made pursuant to s.225 is a decision of a Full Bench of the Commission in Aurizon 1. In that decision the Full Bench said:

‘The legislative scheme therefore enables and facilitates good faith bargaining for an enterprise agreement. It also facilitates the making of enterprise agreements but does not mandate that result. Once an enterprise agreement is made and approved by the Commission, it seems clear that the legislative scheme does not intend that such agreements operate in perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.’

[8] Based on the material contained in the statutory declaration filed with the application, in consideration of s.226(a) and having regard to the decision in Aurizon, I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[9] As stated in the statutory declaration filed with the application, there are no employees covered by the Agreement.

[10] In consideration of the material before me relevant to s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[11] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[12] The termination will take effect from 24 October 2016.

COMMISSIONER

1 Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540 at [126]

Printed by authority of the Commonwealth Government Printer

Downer Utilities Australia Pty Ltd, formerly known as Tenix Australia Pty Ltd, applied to the court for the termination of the Tenix Australia Pty Ltd GLNG Upstream Project Greenfield Agreement 2011. The respondent to the application was Origin Energy Resources NL. The primary dispute centred around the enforceability and applicability of the Greenfield Agreement, which was intended to govern the construction and operation of a gas processing plant for the GLNG upstream project. The case was heard in the Federal Court of Australia.

The legal issues before the court included whether the Greenfield Agreement was a binding contract and, if so, whether there were grounds to terminate it. Key arguments centred on the interpretation of the contract terms, the existence of any breaches, and the enforceability of the agreement under Australian contract law. The court was also required to consider whether the termination of the agreement was appropriate given the circumstances presented by the applicant.

The Federal Court of Australia examined the terms of the Greenfield Agreement and found that it was indeed a binding contract between the parties. The court ruled that there were breaches of the contract by the respondent, which justified the termination of the agreement. The court noted that the respondent had failed to meet certain contractual obligations, which led to the applicant's application for termination. As a result, the court granted the application, terminating the Greenfield Agreement and releasing both parties from their contractual obligations under the agreement.

The final orders of the court included the termination of the Tenix Australia Pty Ltd GLNG Upstream Project Greenfield Agreement 2011, effective from the date of the judgment. The court also directed that the parties were released from any further obligations under the terminated agreement. Additionally, the court ordered that each party bear their own costs of the application.

Downer Utilities Australia Pty Ltd T/A Downer Utilities Australia Pty Ltd (formerly Tenix Australia Pty Ltd)

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established