Australia: Contractors can make payment claims for construction work on mining leases - Queensland decision overturned

Last Updated: 13 January 2014
Article by Aleisha MacKenzie, Craig Sawford and Craig Tanzer

In brief - Contractors in Queensland can recover payments under Act for construction work on mining lease

A recent Court of Appeal decision has determined that contractors can make payment claims under the Building and Construction Industry Payments Act 2004 (Qld) (the Act) for construction work performed on mining leases, overturning an earlier decision by the Queensland Supreme Court.

Payment claims for construction work carried out on "land"

In mid-2013, the Supreme Court of Queensland delivered its decision in Agripower Australia Ltd v J & D Rigging Pty Ltd & Ors [2013] QSC 164. In that case, the Supreme Court controversially determined that construction work carried out on land the subject of a mining lease was not construction work carried out on "land" and therefore could not found a payment claim made under the Act. The court's reasons for concluding so were complicated. (The decision was discussed in our earlier article, Agripower Australia v J & D Rigging.)

Section 3 of the Act provides that the Act only applies to "construction contracts", which is defined to mean "a contract, agreement or other arrangement under which one party undertakes to carry out construction work for... another party" [emphasis added]. Section 10 of the Act provides that "construction work" is work relating to "buildings or structures, whether permanent or not, forming, or to form, part of land" [emphasis added].

Dictionary definition and legal definition of "land"

The Supreme Court reached the conclusion that mining leases are not "land" according to the legal definition of the word "land", and that the Act could therefore not apply to construction work carried out on a mining lease.

The dictionary definition of "land" and the legal definition of "land" differ markedly. The dictionary definition of "land" cited in that case was "the solid portion of the earth's surface, as opposed to sea, water". The legal definition of "land" cited in that case was "an estate or interest in land".

Mining leases are granted by the Crown and all minerals extracted are vested in the Crown, rather than the owner of the land the subject of the mining lease. The leaseholder is granted an entitlement to remove the minerals, but the Mineral Resources Act 1989 (Qld) expressly provides that the leaseholder acquires no interest or estate in the land itself.

Supreme Court determines that Act does not apply to construction work on mining leases

Whilst the mining lease was clearly "land" according to the dictionary definition (i.e. it was a portion of the surface of the earth and it was not water), it did not fit the legal definition of "land" which has developed historically through case law in Australia and the United Kingdom.

The Court concluded that work carried out on a mining lease cannot fit the definition of "construction work" under the Act, as that work did not form part of land. Accordingly, the Act could not apply to such work, as it was not "construction work" and therefore could not found a "construction contract" to which the Act applies.

Court of Appeal determines that dictionary definition of "land" should apply

That decision was appealed in J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2013] QCA 406. On appeal, it was argued that the Supreme Court made an error in deciding that the legal definition of the word "land" applied where the word "land" appears in the Act, as opposed to the dictionary definition. The Court of Appeal agreed and overturned the Supreme Court's decision.

Claimants should not be forced to investigate the various interests in land

The Court of Appeal held that it could not have been the intention of the Act that each claimant be required to investigate the title of the land on which work is carried out in order to determine the interest in land and objective intentions held by parties unrelated to the contract between the claimant and the respondent.

Furthermore, a head contractor should not have to investigate the various interests in land in order to determine whether its subcontractors are entitled to use the Act to recover payments against it.

The Court of Appeal reasoned that the words "whether permanent or not" in the definition of construction work would be redundant if the word "land" was to be given its legal meaning, as the legal concepts of fixtures and chattels would then apply.

Contractors in Queensland can recover payments under Building and Construction Industry Payments Act for construction work on mining leases

The Court of Appeal case confirms that the Act (at least in Queensland) will apply to construction work carried out on a mining lease and that a person carrying out construction work on a mining lease will be able to take advantage of the Act to recover payments.

However, bear in mind that "construction work" does not include the work carried out actually to extract minerals or oil in the course of mining.

Aleisha MacKenzie Craig Sawford Craig Tanzer
Construction and engineering
Colin Biggers & Paisley

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Aleisha MacKenzie
Craig Sawford
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