Supreme Court Confirms Applicability of Security of Payment Legislation to Mining Projects

27 January 2012

In Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd and Anor [2011] QSC 345, the Queensland Supreme Court considered whether the Building and Construction Industry Payments Act 2004 (Qld) (Act) applied to certain work that was carried out at two mines.

Thiess, the operator of the mines, subcontracted with Warren to (among other things) clear vegetation, strip topsoil and construct drainage and dams. Warren submitted payment claims under the Act, which Thiess disputed and were then referred by Warren to adjudication. The adjudicator found in favour of Warren in each case. Thiess then applied to the Supreme Court, arguing that the adjudicator’s decisions were void because there was no “construction contract” between the parties as defined in the Act. The central issues were whether the work to be undertaken by Warren constituted “construction work” under section 10(1) of the Act, or whether instead it fell within the mining exception under section 10(3).

Fryberg J rejected Thiess’ application and held that the work carried out by Warren fell squarely within the meaning of “construction work” in section 10(1), which includes relevantly works forming, or to form, part of land, including installations for land drainage (subsection (b)) and any operation that forms an integral part of, or is preparatory to such work, including site clearance, earthmoving, excavation and site restoration” (subsection (e)).

In finding that the work carried out by Warren was also not caught by the mining exception, his Honour considered it relevant that the work was for purposes collateral to the physical extraction of coal, was remote from the location where the extraction was to take place and was also remote in time, having been carried out before major digging occurred.

Accordingly, his Honour concluded that there was a construction contract for the purposes of the Act and that the adjudicator’s decisions should stand.

Fryberg J was also required to determine whether two hire agreements, under which Warren supplied excavators to Thiess, were “constructions contracts” as defined in the Act. In this instance the issue was whether the supply of excavators constituted “related goods and services in relation to construction work”, as set out in section 11. His Honour held that while the excavators were intended to be used directly for mining purposes, they were also supplied for constructing the drains and dams and excavating topsoil, and these latter purposes were sufficient to bring the two hire agreements within the scope of the Act.

Principals and contractors should always consider whether the security of payment legislation might apply to their mining projects. Contracts for the carrying out of construction activities – or goods and services supplied for those activities – might well be caught by the Act, particularly where the work is collateral to, and remote from, the mining itself.

The case can be read in full here.