Contractors carrying out work on mining leases in Australia have
had their commercial position weakened by a recent decision in the
Supreme Court in Queensland.
The decision by Justice Margaret Wilson in Agripower Australia
Ltd v J & D Rigging Pty Ltd & Ors is likely
to have significant commercial consequences for the mining and
construction industries ahead of the finalisation of a review of
the Security of Payment Act in Queensland.
The Building and Construction Industry Payments Act 2004
(Qld) provides for a fast-track adjudication process for payment
claims in relation to construction work carried out, or related
goods and services supplied, under construction contracts. There is
similar legislation in the other States and Territories of
Australia.
The entitlement to make a payment claim, and receive an adjudication and speedy payment, under the
legislation depends on the claim being a claim for payment for
carrying out of "construction work", or supply of
"related goods and services", under a "construction
contract" within the meaning given to those terms in the
legislation.
In its relevant parts, the definition of "construction
work" requires the relevant work to be carried out in relation
to works, buildings or structures "forming, or to form, part
of land". The legislation expressly excludes from
"construction work" the drilling for, or extraction of,
oil or natural gas and the extraction of minerals (including
underground works).[1]
The main issue for determination by the Court was whether mining
plant that had been erected on a mining lease in Queensland formed
part of land, and whether work involving the dismantling and
removal of the plant was "construction work" for the
purposes of the legislation.
Justice Wilson decided that the dismantling of the plant was not
"construction work" under a "construction
contract" for the purposes of the Act. Relying on a recent
High Court decision (relating to stamp duty on assets on land the
subject of a mining lease), Justice Wilson held that the mining
lease was not "land" within the meaning of Building
and Construction Industry Payments Act 2004 (Qld).
Justice Wilson also decided that the mining plant was required to
be removed prior to the expiry of the lease, was not affixed to the
land but only stabilised on the land, and did not add some
additional feature to the land. Therefore, the mining plant might
have formed part of the mining lease but did not form part of the
"land".
The decision will not necessarily prevent the Act from applying to
work carried out on works, buildings or structures on mining leases
where the structures are not required to be removed at the expiry
of the mining lease and are affixed to (rather than just stabilised
on) land, including where the owner of the mining lease holds an
interest in the land (in addition to holding the mining
lease).
Finally, the decision does not affect the application of the
Subcontractors' Charges Act 1974 (Qld) as it is
expressed to apply to certain work carried out in relation to
mining plants.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.