Mining leases are subject to BCIPA & no middle ground for jurisdictional error

Key Points:

In December 2013 the Queensland Court of Appeal overturned two important, controversial BCIPA decisions of lower courts.

The Queensland Court of Appeal's pre-Christmas reversal of two primary judge decisions handed down in 2013 will provide certainty on two fronts:

• construction work on Queensland mining leases ARE subject to the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) (J&D Rigging Pty Ltd v Agripower Australia Ltd [2013] QCA 406); and
• an adjudication determination found by a court to be affected by jurisdictional error has no legal effect, so ALL amounts paid pursuant to the void adjudication must be repaid - not simply that part found to be in error (BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394).

Agripower – Construction work on mining leases is subject to the Building and Construction Industry Payments Act

In Agripower the lower court found that the term "land" in the section 10 definition of "construction work" includes not just physical land, but also legal rights to land. As mining leases did not give any legal rights to land (in the property law sense) the lower court reasoned that work performed on mining leases did not fall within BCIPA.

At the time we questioned whether this decision would withstand appeal, and said the decision, which was of significance to contractors and mine operators, had potential application to other industries, such as coal seam gas where work is performed on petroleum leases.

The Court of Appeal has now set aside that decision, finding that the fact the land on which the work is to be performed is not owned by the principal is irrelevant and that "Requirements of the law of real property about ownership of things affixed to land are not imported into section 10". Instead, whether a thing forms part of land is answered by considering its physical relationship with the relevant land, for example, is it fixed?

It is now clear that construction work performed on Queensland mining leases can be covered by the operation of BCIPA. Mine owners in particular should be alert to claims made under BCIPA, given the serious consequences under the Act if such claims go unanswered.

BM Alliance – There is no middle ground for an adjudication affected by jurisdictional error

In BM Alliance the lower court found the adjudicator had made a jurisdictional error in allowing a claim for termination costs ($4.35 million), out of a total adjudication award of approximately $26 million, which was paid by BM Alliance to BCG with other incidental amounts.

BM Alliance sought an order that the adjudication be declared void, with an order that the $26 million plus interest be paid back. The primary judge ordered that only the sum infected with jurisdictional error ($4.35 million) be returned, not the whole amount. This was done to "correct the error which resulted in the determination of an amount in excess of jurisdiction and to achieve a just result".

The outcome in the lower court meant that if jurisdictional error by an adjudicator was found, the party would also have to show the error affected the whole decision, if it were to avoid the judge finding a more convenient or just remedy, which might include part repayment only.

Following the Court of Appeal's decision on 20 December 2013, it is now clear that where a court finds jurisdictional error in an administrative decision, such as determinations made by adjudicators under BCIPA, that decision is "regarded, in law, as no decision at all". There is no legislative intention to the contrary under the Act, and no declaration that the decision is void is required. It simply has no legal effect.

The Court of Appeal found that the primary judge was wrong "to deny BMA the remedy dictated by the finding of jurisdictional error", and ordered that BCG pay back the $26 million plus interest and other amounts.

This decision is a welcome clarification about the status of determinations which are found by a court to be void as a result of jurisdictional error, even where the jurisdictional error concerns one discrete part of a total claim.

You might also be interested in...

• Security of payment legislation may not apply to energy and resources projects
• Construction work on Queensland mining leases not subject to the BCIPA

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. Persons listed may not be admitted in all states and territories.