J D Rigging Pty Ltd v Agripower Australia Ltd Ors 2013 QCA 406 – CTI Lawyers Case Summary

Decision Overturned:

The Queensland Court of Appeal has recently confirmed in J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2013] QCA 406, that construction work on land subject to a mining lease will be captured by the provisions of the Building and Construction Industry Payments Act 2004 (Qld) (‘BCIPA’).

Agripower Australia Limited (‘Agripower’), the owner of the mining plant and equipment, entered into a Contract with J & D Rigging Pty Limited (‘J & D Rigging’) to dismantle the mining infrastructure. J & D Rigging served Agripower with a payment claim under the BCIPA asserting that they had completed $4.4 million worth of works under the Contract and had only been paid $1.3 million worth of works from Agripower. J & D Rigging were successful at adjudication. However, the Queensland Supreme Court held the Adjudication decision was void, finding that:

1.       the dismantling of the equipment did not constitute “construction work” under a “construction contract” within the meaning of s 10 of the BCIPA; and

2.       that “land” does not include mining leases, nor does plant “form part of the land” in terms of s 10 of the BCIPA. 

Whether dismantling mining equipment is considered “construction work” turns on the meaning of “forming, or to form, part of land” in s 10(1) of the BCIPA. As this phrase is not defined in the BCIPA, the significant issue on appeal was whether this phrase should be interpreted in the context of rules relating to fixtures and chattels in common law principles of real property law, an argument initially raised by Agripower.

The Court of Appeal did not agree with Agripower’s argument, holding that the words in s 10 of the BCIPA should be given their ordinary meaning. The Court commented that it could not be assumed that Parliament intended the application of common law rules and that the words should be used in their ordinary sense in order for contractors to ascertain as simply as possible whether the BCIPA applies in the circumstances.

When applying a practical assessment of the physical relationship between the object and the relevant land the Court held that the mining plant and equipment did “form part of the land”. The Court confirmed that legal ownership of land or any other legal interest is not relevant when making a progress payment claim or applying the BCIPA. Ultimately the BCIPA applies to construction work on temporary buildings or structures given that that they form part of the land and, as the Court suggests, the BCIPA could apply to factories, warehouses and industrial plants with a limited life and which are to be dismantled.