Recent BCIPA claim decision has implications for the mining industry

Organisations carrying out work in the mining industry may need to rethink their payment arrangements following the recent Supreme Court case of Agripower Australia Ltd v J & D Rigging Pty Ltd & Ors [2013] QSC 164.

In this case, the Court 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).

Background

Agripower was the owner of a mining plant based at the Skardon River Mine at Cape York. The land on which the mine is situated is subject to certain mining leases.

In June 2012, Agripower engaged J & D Rigging to dismantle and remove a plant located at the mine. On 30 November 2012, J & D delivered a payment claim to Agripower under the BCIPA contending that Agripower owed it $3.1 million for construction work.

Agripower argued that it was not obliged to pay the amount claimed as the work did not constitute ‘construction work’ within section 10 of the BCIPA.

The adjudicator dismissed this argument and ordered Agripower to pay J & D in excess of $2.5 million.

Agripower commenced proceedings in the Supreme Court of Queensland seeking a declaration that the adjudication decision was void on the basis that the work carried out by J & D was not ‘construction work’ under the BCIPA.

The decision

In deciding whether the work carried out by J & D Rigging was ‘construction work’, the Court considered whether the mining plant comprised structures or works that formed part of the ‘land’, within the meaning of section 10(1) of the BCIPA.

The Court decided that the dismantling works to be carried out under the contract did not constitute ‘construction works’ on the following grounds:

1. A mining lease does not create an interest in the land over which the mining lease is granted and therefore does not fall within the definition of ‘land’ under the BCIPA.

2. Although most of the plant was affixed to the land, the affixation was to stabilise the plant to allow for efficient operation, rather than to add some additional feature to the land on which it rested.

3. The mining plant may have formed part of the mining lease, but did not form part of the land.

Accordingly, a payment claim could not be made pursuant to the BCIPA and the adjudicator’s decision was declared void.

Significance

Organisations involved in the mining and mining services industries should take note of this decision and review their payment arrangements to account for the fact that work done for a mining lease holder may not fall within the ambit of the BCIPA regime.