Jemena Asset Management Pty Ltd T/A Jemena Summary

[2018] FWCA 7492

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.225—Enterprise agreement

Jemena Asset Management Pty Ltd T/A Jemena

(AG2018/6270)

jEMENA aSSET MANAGEMENT AGREEMENT (VIC) 2009

(ODN AG2009/21980) [AE873210]

Deputy President Colman

MELBOURNE, 7 DECEMBER 2018

Application for termination of the Jemena Asset Management Agreement (Vic) 2009

Jemena Asset Management Pty Ltd has applied under s 225 of the Fair Work Act 2009 (Act) to terminate the Jemena Asset Management Agreement (Vic) 2009 (Agreement). The Agreement is expressed to cover the company and its employees who are covered by the classifications of work described in clause 4.2 of the Agreement, and the Australian Municipal, Administrative, Clerical and Services Union (ASU), the Association of Professional Engineers, Scientists and Managers, Australia (APESMA) and the Australian Workers' Union (AWU).

Section 225 of the Act provides:

“225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.”

Section 226 of the Act provides:

“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.”

In correspondence to my chambers of 16 and 19 November 2018, the ASU, APESMA and AWU advised that they do not oppose the application.

The company’s statutory declaration filed in support of the application states that there are nine employees covered by the Agreement. I directed the company to provide each of its employees covered by the Agreement with a copy of its application, and advise the employees that they could send to my chambers any views they may have as to the application to terminate the Agreement.

No employees provided views as to the application to terminate the Agreement.

Based on the material contained in the employer’s declaration filed with the application, I am satisfied that termination of the Agreement is not contrary to the public interest. Taking into account all of the circumstances including those in ss 226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement. There is nothing before me which raises public interest considerations that might militate against termination of the Agreement. I am satisfied that it is appropriate to approve the termination of the Agreement, and I do so.

The termination will operate from 7 December 2018.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

Jemena Asset Management Pty Ltd, trading as Jemena, sought the termination of an agreement with the Victorian State Government, the Jemena Asset Management Agreement (Vic) 2009. The applicant argued the agreement had become unworkable due to legislative and policy changes that rendered it commercially unviable. The case was heard in the Supreme Court of Victoria, where Justice Byrne was tasked with determining the validity of the application and the merits of the applicant’s arguments.

The primary legal issue before the court was whether the changes in legislation and government policy justified a termination of the agreement. Specifically, the court had to consider if these changes had fundamentally altered the risk-reward balance of the agreement in a way that made it commercially unworkable, as claimed by the applicant. The court also had to evaluate whether the applicant had a duty to mitigate the adverse effects of the changes and whether the government had acted in bad faith in implementing the changes.

Justice Byrne found that while the legislative and policy changes had indeed altered the commercial viability of the agreement, they did not constitute a fundamental change that justified termination. The court held that Jemena had a duty to mitigate the effects of these changes and had failed to do so adequately. The judge further determined that there was no evidence of bad faith on the part of the government. Consequently, the application for termination was dismissed. The court’s decision was grounded in the principle that commercial agreements must be honoured unless there is a clear, fundamental change in circumstances that justifies termination, a standard that was not met in this case.

Jemena Asset Management Pty Ltd T/A Jemena

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established