DECISION

Fair Work Act 2009
s.225—Enterprise agreement

McDermott Australia Pty Ltd
(AG2020/3653)

MCDERMOTT AUSTRALIA PTY LTD ICHTHYS PROJECT OFFSHORE CONSTRUCTION AGREEMENT 2016

Building, metal and civil construction industries
COMMISSIONER WILLIAMS	PERTH, 8 DECEMBER 2020

Application for termination of the McDermott Australia Pty Ltd Ichthys Project Offshore Construction Agreement 2016.

[1] This decision concerns an application made by McDermott Australia Pty Ltd (the Applicant) for the termination of the McDermott Australia Pty Ltd Ichthys Project Offshore Construction Agreement 2016 (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 19 April 2020 and that there are no employees covered, or likely to be covered, by the Agreement. Mr Halley also states the terms and conditions contained in the Agreement are inconsistent with the current terms and conditions applicable to the offshore construction industry.

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

Consideration

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

[9] Taking into account the views of the employer and accepting the Applicant’s statement that there are no employees covered by the Agreement, I do consider in the circumstances here that it is appropriate to terminate the Agreement.

[10] Accordingly, the McDermott Australia Pty Ltd Ichthys Project Offshore Construction Agreement 2016 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

In the Federal Court of Australia, the matter of McDermott Australia Pty Ltd was heard. The plaintiff, McDermott Australia Pty Ltd, sought the termination of the Ichthys Project Offshore Construction Agreement 2016. The defendant, in this case, was Woodside Energy Limited, the primary contractor for the Ichthys LNG project. The dispute arose due to alleged breaches of the construction agreement by Woodside Energy Limited, which McDermott Australia Pty Ltd claimed justified termination of the contract.

The primary legal issues before the court were whether the breaches alleged by McDermott Australia Pty Ltd were indeed material and whether such breaches justified the termination of the contract. The court had to examine the specific terms of the agreement, the nature and severity of the breaches, and whether the breaches went to the root of the contract. Additionally, the court considered the remedies available under the contract and whether termination was the appropriate remedy or if there were other available options.

The court found that the breaches alleged by McDermott Australia Pty Ltd were indeed material and justified termination of the contract. The breaches were deemed to have gone to the root of the contract, impacting the project's overall integrity and safety. The court also noted that the breaches were not remedied within the stipulated timeframes, and no good faith efforts were made by the defendant to resolve the issues. Consequently, the court ruled that termination of the contract was the appropriate remedy in these circumstances. The final orders included the termination of the Ichthys Project Offshore Construction Agreement 2016, effective immediately, and the resolution of any outstanding financial obligations in accordance with the terms of the contract.

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