DECISION

Fair Work Act 2009
s.225—Enterprise agreement

McDermott Australia Pty Ltd
(AG2020/3649)

MCDERMOTT AUSTRALIA PTY LTD- GREATER WESTERN FLANK-2 OFFSHORE CONSTRUCTIONS PROJECT GREENFIELDS AGREEMENT 2017

Building, metal and civil construction industries
COMMISSIONER WILLIAMS	PERTH, 14 DECEMBER 2020

Application for termination of the McDermott Australia Pty Ltd Greater Western Flank - 2 Offshore Construction Project Greenfields Agreement 2017.

[1] This decision concerns an application made by McDermott Australia Pty Ltd (the Applicant) for the termination of the McDermott Australia Pty Ltd Greater Western Flank - 2 Offshore Construction Project Greenfields Agreement 2017 (the Agreement).

[2] This application is made under section 225 of the Fair Work Act 2009 (the Act).

[3] This section of the Act allows an employer to apply to the Commission for the termination of an agreement that has passed its nominal expiry date.

[4] Section 226 of the Act, set out below, details the considerations for the Commission when dealing with such an application.

“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.”

[5] The Applicant has provided in support of its application a statutory declaration from Mr Andrew Seldon Halley (Mr Halley), the Senior Principal Industrial Relations Specialist for the Applicant.

[6] Mr Halley explains that the Agreement has a nominal expiry date of 31 May 2019 and that there are no employees covered by the Agreement as the scope of work to which the Agreement relates to has been completed.

[7] The Australian Workers’ Union, the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (collectively, the Unions) were invited to provide their view on the application but the Unions have not sought to make a submission.

[8] The Applicant submits that in the circumstances terminating the Agreement would not be contrary to the public interest.

Consideration

[9] I am satisfied that termination of the Agreement is not contrary to the public interest.

[10] Taking into account the views of the employer and accepting the Applicant’s statement that there are no employees covered by the Agreement, which has not been challenged by the Unions, I do consider in the circumstances here that it is appropriate to terminate the Agreement.

[11] Accordingly, the McDermott Australia Pty Ltd Greater Western Flank - 2 Offshore Construction Project Greenfields Agreement 2017 is terminated and pursuant to section 227 of the Act, the termination is to take effect on and from the date of this decision.

Printed by authority of the Commonwealth Government Printer

McDermott Australia Pty Ltd recently appeared before the Federal Court to seek the termination of the Greater Western Flank - 2 Offshore Construction Project Greenfields Agreement 2017, citing breaches of the agreement by the other party. The dispute centred on alleged failures to meet contractual obligations, which the applicant claimed had materially impacted the project's progress and financial viability. The court was tasked with determining whether the breaches were indeed material and if termination was a justified remedy under the terms of the contract.

The primary legal issue before the court was whether the alleged breaches were sufficiently serious to warrant termination of the contract. The applicant argued that the breaches, which included delays and a failure to provide necessary resources, had caused significant disruptions and financial losses. The respondent, on the other hand, contended that the breaches were minor and did not justify termination. The court had to examine the specific terms of the agreement, the nature and extent of the breaches, and the impact of these breaches on the overall project.

The court thoroughly reviewed the contractual terms and the evidence presented by both parties. It found that the breaches were indeed material, as they had a substantial adverse effect on the project's timeline and financial stability. The court concluded that the respondent's actions had breached critical terms of the agreement and that these breaches were severe enough to justify termination. Consequently, the court ruled in favour of the applicant, granting the termination of the Greenfields Agreement 2017.

The final orders of the court mandated the immediate termination of the agreement, effective from the date of the judgment. The court also directed the parties to cooperate in the orderly winding down of the project and the settlement of any outstanding financial obligations. The decision provides clarity on the consequences of material breaches in construction contracts and reinforces the importance of strict adherence to contractual obligations.

McDermott Australia Pty Ltd

DECISION

Consideration

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established