Contractors performing work on mining leases in Queensland
granted under the Mineral Resources Act 1989 (Qld) cannot claim
progress payments or have disputes adjudicated under the Building
and Construction Industry Payments Act 2004 (Qld)
(BCIPA), following the Queensland Supreme
Court's decision last week in Agripower Australia Limited v
J&D Rigging Pty Ltd  QSC 164 (25 June 2013).
While this is a Queensland decision, it could have wider
implications given the presence of similar legislation in other
Why didn't the BCIPA apply to construction work on mining
Justice Wilson concluded that the definition of
"construction work" under the BCIPA did not include the
dismantling of mining plant performed on the mining leases
the mining plant was brought onto the relevant land for the
purposes of the mining leases;
in so far as the mining plant was attached to the land, it was
done so to stabilise it and allow its efficient operation rather
than to add some additional feature to the land on which it
the mining plant had to be removed before the expiry of the
mining leases, under the terms of the mining leases;
the mining leases granted the holder only a right to extract
minerals, but not an interest in the land;
the mining leases did not themselves comprise "land"
as this term is understood under the Acts Interpretation Act 1954
(Qld) and the common law; and
the mining plant may have formed part of the mining leases, but
it did not form part of the land the subject of those mining
leases, and accordingly did not form part of "land"
within the meaning of the BCIPA.
Justice Wilson concluded that the work was not
"construction work" for section 10 of the BCIPA, because
this term requires work to relate to structures forming, or
to form part of, "land".
What could happen next?
Many might question whether Justice Wilson's interpretation
of section 10 reflects the intention of the legislature, and it is
unclear if the decision would withstand appeal.
That said, pending an appeal or a legislative amendment to
clarify the meaning of section 10, the Agripower decision will
stand as authority for the proposition that the BCIPA does not
apply to work carried out on an area over which a mining lease has
been granted, where the work is performed for the purpose of the
mining lease, and where the work must be removed at the expiry of
the mining lease.
Given the significant volume of construction work currently
being carried out in the mining industry in Queensland, the case is
of significance to contractors and mine operators alike.
It is possible that the courts will take a similar approach to
construction work in other resource gathering industries, for
example the coal seam gas industry, where work is carried out on
petroleum leases which, like mining leases, do not confer an
interest in the land upon which the lease is granted, and with
respect to which installations and equipment require to be removed
at the expiry of the lease.
It is also possible, given the existence of security of payment
legislation around Australia, that the decision could have wider
application outside of Queensland.
What you should do now
In practice, unless and until the decision is overturned or the
definition of "land" in section 10 of the BCIPA is
clarified, recipients of payment claims under the BCIPA for
construction work performed on mining leases and similar tenements
should consider taking the jurisdictional point in payment
schedules to preserve the ability to raise the issue in subsequent
adjudications and court proceedings.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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