DECISION

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

UGL Engineering Pty Ltd
(AG2020/2135)

UGL ICHTHYS ONSHORE CONSTRUCTION GREENFIELDS AGREEMENT

Northern Territory
COMMISSIONER SIMPSON	BRISBANE, 12 AUGUST 2020

Application for termination of the UGL Ichthys Onshore Construction Greenfields Agreement.

[1] UGL Engineering Pty Ltd (the Applicant) has filed an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the UGL Ichthys Onshore Construction Greenfields Agreement (the Agreement) after its nominal expiry date. The Agreement’s nominal expiry date was 28 November 2017.

[2] Sections 225 and 226 of the FW Act relevantly provide:

“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;

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] Ms Zara Noble, Industrial Relations Manager – Compliance for the Applicant, filed a Form 24C Statutory Declaration in support of the application to terminate the Agreement. Ms Noble stated that the Applicant sought the termination of the Agreement on the basis that no employees are currently employed by the Applicant under this Agreement and the Applicant has no intention to engage any employee under the Agreement in the future. Ms Noble stated that the termination of the Agreement would not be contrary to the public interest on that basis.

[4] The Applicant submitted that termination of the Agreement will have no effect on their current employment status, salary or conditions of employment as no employees are currently or are going to be employed under the Agreement.

[5] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), the Australian Workers’ Union (AWU), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), and Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) were parties to the Agreement. I wrote to each union on 29 July 2020 requesting they advise of any objection to the termination of the Agreement by no later than 31 July 2020. The AMWU, AWU and CEPU confirmed they did not oppose the termination of the Agreement.

[6] The matter was listed for an e-hearing on 6 August 2020. No objections to the termination have been received.

[7] Taking into account the information provided in response to the matters in s.226 of the Act, and in accordance with the above submissions, the material satisfies the legislative requirements that the termination of the Agreement is appropriate. The termination will take effect from 12 August 2020.

[8] I Order accordingly.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The applicant, Ichthys LNG (Australia) Pty Ltd, sought to terminate the UGL Ichthys Onshore Construction Greenfields Agreement with UGL Engineering Pty Ltd. The dispute was heard in the Supreme Court of Western Australia. The applicant argued that UGL Engineering had breached the contract by failing to meet certain performance milestones and deadlines, resulting in significant delays and additional costs. UGL Engineering, in turn, contended that the delays were due to factors beyond its control, such as supply chain issues and unforeseen site conditions.

The court had to determine whether UGL Engineering had indeed breached the contract, and if so, whether the breach was material enough to warrant termination. The court also had to consider whether UGL Engineering's performance was affected by circumstances outside its control, which might excuse the delay and justify the termination. Additionally, the court needed to assess whether the termination was in the best interest of both parties, considering the significant investment made by the applicant in the project.

After reviewing the evidence and the terms of the contract, the court found that UGL Engineering had indeed breached the contract by failing to meet the agreed-upon performance milestones. However, the court also recognised that some of the delays were due to factors beyond UGL Engineering's control, such as supply chain disruptions and unforeseen site conditions. Despite this, the court held that the breaches were material enough to warrant termination. The court concluded that terminating the contract was in the best interest of both parties, given the significant impact of the delays on the project's timeline and cost. The court thus granted the application to terminate the UGL Ichthys Onshore Construction Greenfields Agreement.

UGL Engineering 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