The Queensland Court of Appeal has recently handed down two major decisions, which clarify the application of the Queensland Security of Payment Legislation; the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).
These decisions are Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd & Anor (Thiess)1 and HM Hire Pty Ltd v National Plant and Equipment Pty Ltd & Anor (HM Hire)2.
The provisions of BCIPA are substantially the same as those in equivalent legislation in New South Wales, Victoria, South Australia, Tasmania and the ACT. These decisions can be equally applied in those jurisdictions.
There has been much commentary about the Thiess and HM Hire decisions regarding the application of the mining exclusion under BCIPA. See for example our article Court of Appeal confirms ‘Narrow View’ of Security of Payment ‘Mining Exclusion’.3
There is, however, another interesting point from the decisions; namely that an adjudicator’s decision will not be invalid merely because the payment claim contained items that were not “construction work” or “related goods and services” within the meaning of BCIPA. So long as the contract is a “construction contract” within the meaning of BCIPA, the payment claim will be valid. This means the threshold issue for challenging an adjudicator’s decision in this area is whether there is a “construction contract”, being a contract substantially for “construction work” or “related goods and services”, not whether the payment claim is solely for “construction work” or “related goods and services”.
Holmes JA in Thiess, concisely summarises this issue where she stated:
“In any event, I agree with Philippides J, for the reasons she has given, that an adjudicator does not exceed his jurisdiction by determining, on the material provided to him in accordance with the Act, the extent to which a payment claim is made for construction work or related goods and services. A mistake of fact made in that exercise does not amount to jurisdictional error so as to invalidate the determination.”4
This was adopted in HM Hire by Fraser JA where he stated (referring to the Thiess decision):
“It was held that an error in the determination of how much of a payment claim is for “construction work” or “related goods and services” and its extent and value is not a jurisdictional error which would invalidate the adjudication determination.”5
Therefore, the correct question to be asked is whether the contract is substantially for construction work or related goods and services. If it is then it is a construction contract.
Practically speaking, this could mean that a payment claim could validly include items that are not construction work or related goods and services, such as the actual extraction of minerals, so long as the contract that relates to that claim is substantially for construction work or related goods and services.