The Supreme Court of Queensland has ruled this week that payment claims and adjudication applications under security for payments legislation cannot be made for construction works performed on a mining lease.
In Agripower Australia Ltd v J & D Rigging Pty Ltd, Justice Margaret Wilson held that the definition of “land” in the Building and Construction Industry Payments Act (BCIPA Act) does not include mining leases.
The relevant construction contract between the parties was for the dismantling and removal of mining plant.
Agripower purchased mining equipment and affixed it to land the subject of a mining lease. J&D performed works to dismantle and remove the plant under its contract with Agripower. The plant included small and large mixing tanks, storage bins, baghouses, and a kiln. The plant ranged between 9 – 260 tonnes, and all were secured to concrete slabs or structures.
J&D served a payment claim on Agripower under the BCIP Act, claiming it had performed works worth around $4.4m but only received payment of around $1.3m. Agripower served its payment schedule in response claiming the works were not ‘construction work’ under section 10 of the BCIP Act.
Agripower served an adjudication application for around $2.8m. The adjudicator’s determination required Agripower to pay to J&D $2,513.705.37. J&D applied to the Court to enforce payment.
Agripower argued that the works did not fall within section 10 which requires a payment claim to be referrable to a “construction contract” to carry out “construction works”, and that the plant being removed did not “form part of land”. Further, that under the Mineral Resources Act 1989 (Qld) it was a condition of every mining lease that prior to termination of the lease, the holder remove any building, structure, equipment or plant from the lease area, and the grant of a mining lease did not create any interest in the land.
The definition of ‘construction work’ under section 10(1) of the BCIP Act relevantly includes:
- the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures, whether permanent or not, forming, or to form, part of land;
- the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, powerlines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for land drainage or coast protection.
The question for the Court of whether the works were “construction works” turned on whether the plant being dismantled consisted of structures or works “forming part of land”.
The Court noted that the BCIP Act contains no definition of “land” or “forming part of land”, and agreed that:
- the plant was brought onto the land for the purposes of the mining lease, to stabilise it and allow efficient operation, rather than to add some additional feature to the land;
- a mining lease merely entitled the holder to remove minerals, and does not create an interest in the land; and
- the plant had to be removed prior to the expiry of the mining lease, and did not become part of the “land” under the BCIP Act.
Justice Wilson found that the dismantling of the plant was not “construction work” under a “construction contact” and the adjudication determination was void. Further, the definition of “land” in section 10 of the BCIP Act does not include mining leases.
Whilst this decision was made in Queensland, it is open for the Supreme Courts in other states to follow suit when considering payment claims and adjudication applications made under the respective state based security for payments legislation. The decision is likely to become equally as important for construction companies operating in the Western Australian mining industry. Mining companies may now have an immediate defence to payment claims served by contractors.