MONADELPHOUS ENGINEERING PTY LTD & ANOR V WIGGINS ISLAND COAL EXPORT TERMINAL PTY LIMITED [2015] QCA 290

The Queensland Court of Appeal has confirmed that a contract for construction work at a coal export terminal at the Port of Gladstone was not a contract for “building work” under the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).

Consequently, the parties were not bound by the strict requirements of the QBCC Act, including in relation to calling upon security.

THE FACTS

  • The parties entered into a contract for the construction of a jetty and wharf (the Contract).
  • The issue in dispute was whether the Contract was a “building contract” for the purposes of Part 4 of the QBCC Act. This issue had serious implications for whether the principal could call upon securities under the Contract, despite its failure to give notice prior to the call as required by section 67J of the QBCC Act.

NOT “BUILDING WORK” UNDER THE QBCC ACT

Relevantly, the QBCC Act applies to a “building contract”, being a contract or other arrangement which requires the carrying out of “building work” in Queensland.

“Building work” is defined in Schedule 2 of the QBCC Act to mean, among other things, “the erection or construction of a building” but does not include “work of a kind excluded by the regulation...”. The Regulation[1] contains an extensive list of exclusions, including ‘Work on harbours, wharfs and other maritime structures’ (the Item 19 Exclusion).

Despite the Item 19 Exclusion, the contractor argued that the Contract was for “building work” due to the nature of some of the temporary works it was required to perform under the Contract. These works included the establishment of site offices, facilities, roads, and crew transfer pontoons at a temporary wharf.

Holmes CJ, and Applegarth and Boddice JJ, upheld the primary judge’s decision that:

  • a "building contract" is a contract for the construction of a fixed structure;
  • something which was built only to facilitate the construction of the jetty and wharf, rather than as something to have a use after the performance of the contract, could not be building work; and
  • the temporary works confirmed the close relationship between the work and the construction of the jetty and wharf, which falls within the Item 19 Exclusion.

WHAT DOES THIS MEAN FOR ME?

Where a contract pertains to building work which ‘closely relates’ to work which is excluded from the definition of “building work” under the QBCC Act, it will also be considered work that is outside the definition of "building work".

For contractors, we strongly recommend you refresh your knowledge of the exclusions to ensure that you are not caught out. If you want to ensure that your contract for the “building work” is a “building contract” for the purposes of the QBCC Act, you may wish consider separating the “building work” and “non-building work” components and create two separate contracts.

Principals should carefully consider whether the QBCC Act applies to their contract, to ensure compliance with the strict provisions it imposes, in particular, the requirements for calling on security.