On 20 December 2013, the Queensland Court of Appeal
delivered its judgement, finding for the appellant, in J & D Rigging Pty Ltd v Agripower
Australia Ltd & Ors [2013] QCA 406.
The dispute arose out of a contract between the parties to
dismantle a number of large treatment and storage tanks (Plant) on land subject to a mining lease near Cape York. The
appellant, who was engaged to dismantle the Plant, claimed $3.1 million for the
work it had performed. When the respondent did not pay the claimed amount, the
matter was adjudicated pursuant to the Building
and Construction Industry Payments Act 2004 (Qld) (BCIP Act). The adjudicator awarded the appellant an amount just
over $2.5 million.
The respondent brought proceedings in the Supreme Court
seeking to have the adjudicator’s decision declared void on the basis that the
dismantling of the plant was not ‘construction work’ as defined in the BCIP Act
and, therefore, that the adjudicator did not have jurisdiction to determine the
dispute.
The Supreme Court held that the dismantling of the Plant
was not ‘construction work’ under a ‘construction contract’ and consequently
the adjudicator’s decision was void. In coming to that finding the Supreme
Court noted:
- the meaning of ‘construction work’ in section 10 of the BCIP Act includes ‘dismantling of buildings or structures, whether permanent or not, forming, or to form, part of the land’,
- ‘land’ in section 10 of the BCIP Act (which defines ‘construction work’) does not include mining leases,
- the Plant may have formed part of the mining lease, and
- the Plant did not ‘form part of the land’ within the meaning of section 10 of the BCIP Act and therefore the BCIP Act did not apply.
The Court of Appeal unanimously overturned the Supreme
Court’s decision which, in effect, resulted in the reinstatement of the
adjudicator’s decision. Their Honours held that:
- the phrase ‘forming, or to form, part of the land’ in section 10 of the BCIP Act should be interpreted in accordance with its ordinary meaning which does not import the requirements of the law of real property (in respect of the ownership of things affixed to the land),
- while a mining lease may not be legally characterised as ‘land’, the actual land on which the building, structure or plant is affixed does not change its character by reason of the existence of a mining lease,
- section 10 simply requires consideration of the physical characteristics of the thing that has been (de)constructed or is to be (de)constructed and the thing’s relationship to the land which will determine whether it forms part of that land for the purposes of the BCIP Act, and
- the Plant formed part of the land and the contract between the parties was to carry out ‘construction work’ within the meaning of the BCIP Act.
The decision clarifies that work undertaken on mining tenements
or petroleum and gas tenements (by analogy) will not be excluded from the
operation of the BCIP Act on the basis that the tenement holder has no estate
or interest in the land. Principals engaged in construction contracts will be
subject to the BCIP Act adjudication regime (regardless of their interest in
the land) if the building, structure or plant the subject of the contract forms
part of the physical land upon which it is (or will be) situated.
For further information, please contact Jay Leary,
Partner, Roger Allingham, Graduate, or your usual Herbert Smith Freehills
contact.
No comments:
Post a Comment