Court of Appeal reverses decision on BCIPA payment claim for work on land subject to mining lease

07 January 2014 Topics: Litigation and dispute resolution, Construction and infrastructure

On 30 July 2013 we reported that the Supreme Court of Queensland had decided that work carried out on land subject to a mining lease was not ‘construction work’ under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).

On 20 December 2013, the Queensland Court of Appeal (see J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2013] QCA 406) reversed that decision.

Supreme Court decision

BCIPA allows service of a payment claim for ‘construction work’ performed pursuant to a ‘construction contract’.

‘Construction work’ is defined in section 10 of BCIPA as including work to be performed on buildings or structures that ‘form part of land’.

J & D Rigging was engaged by Agripower to dismantle and remove a mining plant based at the Skardon River Mine at Cape York. The land on which the mining plant was located is subject to mining leases that were granted in 1995 and due to expire in 2016. J & D served Agripower with a payment claim under BCIPA for the works.

In considering whether the mining plant ‘formed part of land’ within the definition of section 10 of BCIPA, the Supreme Court looked at the property law rules relating to fixtures. This required analysis of matters outside the construction contract specifically looking at the intention of the parties involved in affixing the mining plant to the land.

The Supreme Court concluded that the mining plant:

  • was affixed pursuant to a mining lease – and a mining lease was not ‘land’ for the purposes of BCIPA;
  • merely provided stability for efficient operation;
  • was not intended to form part of or add any additional feature to the land; and
  • formed part of the mining lease – not the land – and therefore did come within the ambit of BCIPA.

Court of Appeal decision

In reversing the Supreme Court’s decision, the Court of Appeal found that the fact that the plant was constructed on land subject to a mining lease, and the fact that a mining lease is not ‘land’ within the meaning of section 10 of BCIPA, did not preclude a conclusion that the work in this case was construction work on buildings or structures forming part of land for the purposes of BCIPA.

The Court of Appeal stated that while mining leases may not be legally categorised as ‘land’, the physical land on which the building or structure stood did not change its character by reason of the existence of a mining lease.

The Court of Appeal found that the requirements of the law of real property about ownership of things affixed to land are not imported into section 10 of BCIPA. Instead, the degree of annexation to the physical land will be relevant to the issue of whether or not a thing forms part of the land for the purposes of BCIPA.

In deciding that the plant did form part of land, the Court of Appeal made the following findings:

  • BCIPA applies to construction work on temporary buildings or structures provided they form part of land.
  • The plant consisted of numerous parts, which were set in or bolted to concrete slabs.
  • The fact that the plant was affixed to the land for the purpose of stability and efficiency of operation did not preclude a finding that it formed part of land.
  • Despite the fact that the plant might have to be removed in the future, it did not make it any less a feature of the land to which it was affixed.
  • Although the plant had to be removed before the mining lease expired, it formed part of the land on which it was constructed due to the nature and degree of the affixation, and until the plant was removed, it continued to form part of the land.

Accordingly, the Court of Appeal upheld the validity of J & D’s payment claim that had been declared invalid by the Supreme Court.

Implications

The Court of Appeal’s decision re-opens the door for BCIPA payment claims to be made in relation to certain works conducted on land subject to a mining lease.

Organisations submitting or responding to BCIPA claims in a mining industry context may need to adjust processes to take into account this recent decision.

The case also gives some guidance as to where works on temporary buildings or structures can amount to ‘construction work’ in a mining context, with the Court of Appeal indicating that the same principles may be applicable to work involving factories, warehouses and industrial plants that are capable of being dismantled and may have a limited life.

If you would like more information on these issues or whether your construction work falls within the BCIPA regime, please contact Rocco Russo or Sean Henderson on +61 7 3231 2444.

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