A recent Supreme Court of Queensland decision demonstrates the
importance for resources companies of understanding the role that
security of payment legislation plays when carrying out
mining-related construction works.
In Queensland, the Building and Construction Industry
Payments Act 2004 (BCIPA) ensures that those who undertake
construction work or supply related goods and services under a
construction contract are able to receive progress payments for
their work. The process for resolving payment disputes includes
appointing an adjudicator, who only has jurisdiction if the
contract in question is considered a construction contract within
the meaning of BCIPA. There are some restrictions on the type of
contracts covered by the legislation, including restrictions on
certain works carried out on mining sites.
Here, partner Adam Carlton-Smith and senior associate Michelle
Hall discuss the findings in Thiess Pty Ltd v Warren Brothers
Earthmoving Pty Ltd & Anor and outline how these findings
apply to mining-related construction works in Queensland.
Businesses that enter into construction contracts need to
determine whether the construction work and related goods and
services are covered by BCIPA. In many cases, it is not clear
When work is being performed on or in connection with a mine,
companies need to determine whether the work is exempt from BCIPA.
While the legislation excludes certain mining-related construction,
works performed on a mining site may still be covered.
Thiess v Warren Brothers
The Supreme Court of Queensland delivered the decision of
Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd &
Anor in December 2011. The case related to subcontracts
entered into with an earthmoving contractor for works in connection
with two open cut coal mines in central Queensland.
Thiess sought to have adjudication decisions in favour of the
subcontractor, Warren Brothers Earthmoving, declared void on the
basis that the contracts were not construction contracts within the
meaning of BCIPA. Ultimately, the Court found that the subcontracts
were construction contracts, and that the adjudicator had
jurisdiction to determine the matters before him.
Mining works covered by BCIPA
BCIPA excludes certain mining-related works from the application
of the legislation. Relevantly, it provides that construction work
does not include "the extraction, whether
by underground or surface working, of minerals,
including tunnelling or boring, or constructing underground works,
for that purpose" (emphasis added).
Thiess argued that the works performed by Warren Brothers were
for the extraction of minerals, and as such were not construction
works to which BCIPA applied. However, the Court found that the
works were covered by BCIPA.
The Court's key findings
In arriving at its decision, the Court considered the nature of
the work that Warren Brothers performed, and whether that work was
"construction work" as defined by BCIPA.
It first determined that coal is a mineral. It also determined
that the earthmoving works performed by Warren Brothers were a
necessary part of opening the coal mines. However, the exemption
provided by BCIPA to extracting minerals does not apply for work
undertaken to open a coal mine, or in preparation for opening a
coal mine. Therefore, the works could not be described as the
"extraction" of coal, and as such, none of the work
performed was exempt from BCIPA's application.
The Court also found the following:
The meaning of "to form part of land" as set out in
BCIPA is a phrase of wide meaning, and dams and drains were works
when constructed that formed part of the land on which they are
Stripping and hauling topsoil to stockpile is preparatory work
and as such was covered by the meaning of construction work under
Clearing and grubbing was construction work within the meaning
Another key issue in the case was whether subcontracts for the
hire of excavators were covered by BCIPA.
The type of construction work that is undertaken will determine
whether the plant or materials are to be used in connection with
the carrying out of construction work, so as to fall within the
definition of related goods and services to which BCIPA applies.
Hiring excavators for earthmoving or excavation does not
necessarily mean the contract is covered by BCIPA, as the work must
be "integral" to the type of construction work expressly
covered by BCIPA.
In this case, the Court held that the excavators were planned
for use in connection with the carrying out of construction work,
and held that the construction of dams and drains, and excavating
topsoil and removing and storing it, are covered by BCIPA.
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