“Part of the land” – another potential avenue for BCIP Act disputation

Summary

The recent Queensland Supreme Court decision of Agripower Australia Ltd v J & D Rigging Pty Ltd and Ors [2013] QSC 164 has called into question the application of the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) to mining projects. Justice Margaret Wilson held that dismantling a mining plant on a mining lease did not constitute construction work for the purposes of the BCIP Act.

The Context of the Decision

Our readers may recall that in December 2012 the State Government released a Discussion Paper, seeking feedback from industry participants regarding the operation of BCIP Act. The findings and recommendations have not been released, however these are expected shortly.

One of the issues raised by the Discussion Paper was the application of BCIP Act to the resources industry, which is likely to involve a refocus of the definition of “construction work” and may erode the longevity of this decision.

BCIP Act currently excludes the following from constituting construction work – the drilling or excavation of oil or natural gas[1] and the extraction of minerals or constructing underground works for that purpose.[2] However these activities are construed narrowly.[3]

The Facts

In June 2012 the respondent, the holder of a mining lease under the Mineral Resources Act 1989 (Qld) (MRA) over part of the Cape York Skardon River Mine, entered into a contract with the applicant, which concerned the dismantling and removal from the mining lease land of the mining plant by the respondent.

A dispute arose as to the obligations of the parties and in November 2012 the respondent delivered a payment claim under BCIP Act. The applicant contended in their payment schedule that it was not liable under the BCIP Act for want of jurisdiction as the works set out in the contract did not fall within the definition of “construction work” within s 10 of the BCIP Act. The Adjudicator did not accept the applicant’s submissions and proceeded to adjudicate the matter.

The Decision

Her Honour in considering the parties’ submissions, determined that the main issue for consideration was whether “the mining plant to be dismantled consisted of structures or works ‘forming part of land’ within the meaning of s 10(1) paras (a) and (b) of the BCIP Act.”[4]

Her Honour held that because a mining lease does not create an interest in the land, it cannot be “land.” The mining plant existed for the purpose of carrying out the activities permitted by the mining lease. In addition the MRA required that the mining plant be removed prior to the expiry of the mining lease, further supporting the contention that the plant did not form part of the land. Although Her Honour noted that a structure need not be permanent under the BCIP Act[5] it still must form part of the land.

Her Honour found that the affixation of the structures comprising the mining plant was to “stabilise the plant and allow its efficient operation rather than to add some additional feature to the land on which it rested”[6] led to Her Honour’s conclusion that “the mining plant may have formed part of the mining lease, but it did not form part of the land…”

As the plant “did not ‘form part of the land’ within the meaning of s 10,” the relevant contract did not involve the carrying out of construction work under BCIP Act. The adjudicator’s decision was therefore void for want of jurisdiction.

As a result, works on mining leases may not be subject to the BCIP Act regime in Queensland.

Ramifications of the Decision

The security of payments legislation of New South Wales, Victoria, South Australia and the Australian Capital Territory Act, incorporate substantially the same definition of construction work as BCIP Act. The meaning in Western Australia and the Northern Territory is slightly narrower, by excluding the construction of the plant itself from the definition of “construction work” when that plant is for the purpose of discovering, extracting or processing oil, natural gas or any mineral.

It will be interesting to see whether Her Honour’s reasoning will be extended to petroleum authorities or pipeline works under the Petroleum and Gas (Production and Safety) Act 2004 (Qld) due to its similarities with the MRA.

The decision is currently on appeal. As such, this new jurisdictional ground of challenge for resources proponents to the BCIP Act may be short-lived.