The Queensland Supreme Court recently delivered a judgment indicating that the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) does not apply to ‘construction work’ carried out on land subject to a mining lease. The case of Agripower Australia Ltd v J&D Rigging Pty Ltd & Ors, delivered on 25 June 2013 has significant implications for the mining and construction industries.

What happened?

The case concerned the Skardon River Mine at Cape York in Queensland. Land at the mine was subject to 2 mining leases. The Applicant, Agripower Australia Ltd (Agripower) owned the mining plant. The First Respondent, J&D Rigging Pty Ltd (J&D) was the operator of the mine.

Agripower contracted with J&D to dismantle and remove the mining plant. Approximately 5 months later, J&D delivered a BCIPA payment claim to Agripower for $3.1 million. Agripower resisted and contended it was not obliged to pay J&D’s payment claim because among other things, the contracted work was not ‘construction work’ for the purposes of BCIPA. As a result of the subsequent adjudication determination Agripower was ordered to pay J&D in excess of $2.5 million.

Agripower brought proceedings in the Queensland Supreme Court seeking a declaration that the adjudication decision was void because the contract work was not ‘construction work’ within the BCIPA meaning.

Decision

Justice Wilson determined that BCIPA payment claims only operate where ‘construction work’ is performed under a ‘construction contract’. The mining plant to be dismantled by J&D had to consist of structures or works forming part of land to fall within the scope of ‘construction work’.

Justice Wilson determined that the works agreed under the contract did not amount to ‘construction work’ because:

  • mining leases create an entitlement for the leaseholder to extract minerals but  do not create an interest in land the subject of the mining lease;
  • the mining plant did not form part of the land because there was a statutory removal obligation and the plant was put in place for temporary purposes; and
  • the mining plant was not a fixture forming part of the land at common law.

The mining and construction industry has traditionally accepted that the BCIPA system applies to construction activities carried out at mine sites. The decision of Justice Wilson signals a clear departure from this approach.