Contractors performing work on mining leases in Queensland granted under the Mineral Resources Act 1989 (Qld) cannot claim progress payments or have disputes adjudicated under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA), following the Queensland Supreme Court's decision last week in Agripower Australia Limited v J&D Rigging Pty Ltd [2013] QSC 164 (25 June 2013).

While this is a Queensland decision, it could have wider implications given the presence of similar legislation in other jurisdictions.

Why didn't the BCIPA apply to construction work on mining leases?

Justice Wilson concluded that the definition of "construction work" under the BCIPA did not include the dismantling of mining plant performed on the mining leases because:

  • the mining plant was brought onto the relevant land for the purposes of the mining leases;
  • in so far as the mining plant was attached to the land, it was done so to stabilise it and allow its efficient operation rather than to add some additional feature to the land on which it rested;
  • the mining plant had to be removed before the expiry of the mining leases, under the terms of the mining leases;
  • the mining leases granted the holder only a right to extract minerals, but not an interest in the land;
  • the mining leases did not themselves comprise "land" as this term is understood under the Acts Interpretation Act 1954 (Qld) and the common law; and
  • the mining plant may have formed part of the mining leases, but it did not form part of the land the subject of those mining leases, and accordingly did not form part of "land" within the meaning of the BCIPA.

Justice Wilson concluded that the work was not "construction work" for section 10 of the BCIPA, because this term requires work to relate to structures forming, or to form part of, "land".

What could happen next?

Many might question whether Justice Wilson's interpretation of section 10 reflects the intention of the legislature, and it is unclear if the decision would withstand appeal.

That said, pending an appeal or a legislative amendment to clarify the meaning of section 10, the Agripower decision will stand as authority for the proposition that the BCIPA does not apply to work carried out on an area over which a mining lease has been granted, where the work is performed for the purpose of the mining lease, and where the work must be removed at the expiry of the mining lease.

Given the significant volume of construction work currently being carried out in the mining industry in Queensland, the case is of significance to contractors and mine operators alike.

It is possible that the courts will take a similar approach to construction work in other resource gathering industries, for example the coal seam gas industry, where work is carried out on petroleum leases which, like mining leases, do not confer an interest in the land upon which the lease is granted, and with respect to which installations and equipment require to be removed at the expiry of the lease.

It is also possible, given the existence of security of payment legislation around Australia, that the decision could have wider application outside of Queensland.

What you should do now

In practice, unless and until the decision is overturned or the definition of "land" in section 10 of the BCIPA is clarified, recipients of payment claims under the BCIPA for construction work performed on mining leases and similar tenements should consider taking the jurisdictional point in payment schedules to preserve the ability to raise the issue in subsequent adjudications and court proceedings.