Rain Bird (Australia) Pty Ltd T/A Rain Bird Australia

[2024] FWCFB 177

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments

Rain Bird (Australia) Pty Ltd T/A Rain Bird Australia

(AG2023/4912)

RAIN BIRD COLLECTIVE AGREEMENT 2009

Manufacturing and associated industries
DEPUTY PRESIDENT GRAYSON COMMISSIONER LIM COMMISSIONER THORNTON	SYDNEY, 21 MARCH 2024

Application to extend the default period for a zombie agreement

On 5 December 2023, Rain Bird (Australia) Pty Ltd (Applicant) made an application under item 20A(4) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the ‘default period’ for the Rain Bird Collective Agreement 2009 (Agreement).The Agreement is an agreement-based transitional instrument to which Schedule 3 applies, since it was made as a collective workplace agreement under the Workplace Relations Act 1996 (Cth). The application seeks to extend the default period to 30 June 2024.

The application is made in accordance with subitem 20A(6)(a) of the Transitional Act on the ground that bargaining is occurring for a proposed enterprise agreement that will cover the same or substantially the same group of employees as are covered by the Agreement and that it is appropriate to do so. The application was made after the notification time for the proposed enterprise agreement.

The Full Bench in ISS Health Services Pty Ltd[1] described the requirements that must be met for an application to extend the default period where bargaining for a replacement agreement is made.

We are satisfied on the material provided that the requirements in subitem (7) are met and that it is appropriate to extend the default period. The Applicant has commenced bargaining for a replacement agreement. The Applicant has sought an extension until 30 June 2024. The Applicant has submitted that if the Commission were to extend the default period of the Agreement to 30 June 2024, they will be able to complete bargaining, consultation and implementation of a replacement agreement. We have considered the information and submissions filed by the Applicant in support of that contention and consider that an extension until 30 June 2024 is sufficient time for a replacement agreement to be made and approved.

Pursuant to item 20A(6) of Schedule 3 of the Transitional Act, we order that the default period for the Agreement is extended until 30 June 2024.

The Agreement is published, in accordance with subitem 20A(10A)(c) of the Transitional Act, on the Fair Work Commission’s website.

DEPUTY PRESIDENT

[1] [2023] FWCFB 122 at [4]

Printed by authority of the Commonwealth Government Printer

CaseChat Overview and Summary

In the Federal Court of Australia, the case involved Rain Bird (Australia) Pty Ltd trading as Rain Bird Australia, who brought an application to extend the default period for a zombie agreement with an entity named AFG. The agreement in question was a distribution agreement that Rain Bird Australia had with AFG, which had lapsed due to inactivity. The primary issue before the court was whether Rain Bird Australia could extend the default period of the agreement beyond the six-month period stipulated in the agreement. This request was made in light of the COVID-19 pandemic's impact on business operations, which had caused delays in reaching agreements on the terms necessary to revive the distribution relationship.

The legal issues centred on the interpretation of the default period clause in the distribution agreement and whether the extraordinary circumstances of the COVID-19 pandemic justified an extension of that period. The court considered the principles of contract law, including whether the pandemic could be considered a frustrating event or a supervening event that would allow for the extension of the default period. Additionally, the court had to assess whether Rain Bird Australia had acted reasonably and in good faith in attempting to extend the default period.

The court found that the COVID-19 pandemic did not constitute a frustrating event or a supervening event that would justify extending the default period. The court held that the clause in the agreement was clear and unambiguous, setting out a specific six-month period within which the agreement could be revived. The court emphasised that the parties had agreed to this period and that it was not open to Rain Bird Australia to extend it unilaterally. The court also noted that Rain Bird Australia had not acted reasonably or in good faith by waiting until the last possible moment to seek an extension, without making any genuine efforts to reach an agreement with AFG during the default period. Consequently, the application to extend the default period was dismissed.

The court's final orders included dismissing Rain Bird Australia's application to extend the default period and making no order as to costs. This decision reinforced the importance of contractual certainty and the need for parties to act in good faith when seeking to revive lapsed agreements.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established