Battle against SOP claims

Australian miners have been fighting an uphill battle against contractors when it comes to disputing payment claims made under the Building Construction and Industry (Security of Payment) Act 2004 (Qld) (BCIP Act) (and similar legislation in other States). This is particularly so with the narrow interpretation of the mining exclusion given by courts in recent cases.

However, on 25 June 2013, the Queensland Supreme Court (in the case of AgripowerAustralia Ltd v J & D Rigging Pty Ltd1 (Agripower)) held that a mining lease is not ‘land’’ within the meaning of section 10 of the BCIP Act, and that therefore, work which is performed on a mining lease is not ‘construction work’ under section 10(1) BCIP Act.

This decision represents a victory for the miners, at least for now, as it significantly narrows the definition of ‘construction work’ in section 10(1). However, the ultimate victor in the battle against security of payment claims remains to be seen as the BCIP Act is currently under review by the Queensland Government.

Agripower – The facts

Agripower bought some mining plant (including storage bins, conveyors and tanks) from the mining lease holder of the Skardon River mine in Cape York, Queensland.

Agripower separately contracted with the mine operator, J & D Rigging, to dismantle and remove that mining plant from the mine (Contract).

J & D Rigging made a payment claim under the BCIP Act. Agripower resisted payment on the grounds that the work was not ‘construction work’ within the meaning in section 10(1) of the BCIP Act. The dispute was referred to adjudication and the adjudicator determined that Agripower should pay J & D Rigging.

Agripower appealed to the Queensland Supreme Court.

The main issue was whether the mining plant ‘formed part of land’ within the meaning of section 10(1) of the BCIP Act. If so, the dismantling and removal work would be work which fell within the definition of ‘construction work’ under the BCIP Act.

Agripower – The decision

The court held that:

  • the word ‘land’ in section 10 should be broadly defined to include not only the physical land but any other legal rights attached to the land;
  • a mining lease gives the lease holder a right to mine minerals and to carry out mining activities on the land, but it does not give them any legal rights in the land itself2, and so ‘land’ in section 10 does not include mining leases;
  • the mining plant formed part of the mining lease (as it was used for mining purposes) but it did not ‘form part of the land’ within the meaning of section 10 for the following reasons:
  1. the mining lease was not ‘land’,
  2. the mining plant was only temporary in nature as it had to be removed before expiry of the mining lease, and
  3. the mining plant’s attachment to the land was only to stabilise it and allow its efficient operation as mining plant3, and
  • therefore, the work of dismantling and removing the mining plant was not ‘construction work’ and the adjudication determination was void.

Implications for miners

For now, Queensland miners appear to have a firm ground on which to stand when faced with statutory payment claims for work performed on mining leases under the Mineral Resources Act 1989 (Qld). This decision may also be relevant for miners in other States under similar mining leasehold legislation (including South Australia).

However, the Agripower decision has been appealed and the Queensland Government is yet to issue its report on the BCIP Act review. The BCIP review raises important issues relating to the jurisdiction of, and statutory rights and remedies currently provided by, the BCIP Act, including issues relating to the meaning of ‘construction work’.

Therefore, miners should stay tuned for future developments in this space and, until then, should continue to pay close attention to all forms of payment claims as well as being aware of alternative forms of relief that contractors may have available at law or under the relevant contract.