Queensland Security of Payment

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Friday, January 31st, 2014
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The Court of Appeal has overturned the Supreme Court decision in Agripower Australia Ltd v J & D Rigging Pty Ltd.

The decision of the Supreme Court of Queensland in Agripower Australia Ltd v J & D Rigging Pty Ltd[1] was recently overturned by the Queensland Court of Appeal in J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors[2], confirming that it is possible to submit payment claims under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) for “construction work” carried out on land the subject of a mining lease.

At first instance the trial judge:

  • held that the dismantling of a treatment and storage plant (Plant) located on land the subject of a mining lease was not “construction work” for the purpose of the BCIPA because the Plant did not “form part of the land”[3] in the broad sense, by relevant enquiry into the definition of land in the Acts Interpretation Act 1954 (QLD) and the common law rules on the doctrine of fixtures; and
  •  concluded (among other things) that the Plant formed part of the mining lease but it was not a fixture forming “part of the land” in the technical legal sense, noting that the affixing of the Plant on the land was intended to be temporary, solely for the term of the mining lease and merely for the purpose of stabilising the Plant[4].

On appeal

The Court of Appeal[5] held that the trial judge erred in her interpretation of the words “forming, or to form part of the land” in section 10(1) and that the ordinary meaning of the words was preferred over the trial judge’s importation of the common law rules relating to the doctrine of fixtures. Noting that even though the words “forming, or to form part of the land” are legal terms used in the process of determining ownership of an item, object or structure on a particular piece of land (including enquiry into that person’s intention at the time of placing such things on the land) it is not always necessary to adopt the technical legal term in interpreting a piece of legislation. Much will turn on the intention of that piece of legislation.  In this instance, the BCIPA is a piece of legislation designed to ensure contractors are entitled to claim and recover progress payments for the carrying out of “construction work” under a “construction contract” or for the supply of related goods and services.  BCIPA is not concerned with the ownership of land where such work may be carried out and in a practical sense, a contractor or subcontractor entering into a construction contract may not know:

  • the nature of the legal title over the relevant land where the work is being performed;
  • the identity of the owner of such land; or,
  • where the relevant work is the dismantling of an existing structure long after it was constructed, the “objective intention of certain parties intended at the time of the construction.[6]   

“Land” in the “physical sense” and the degree of physical annexation is the relevant enquiry

Applegarth J considered the trial judge’s interpretation of the words “forming, or to form part of the land”.  He commented on the seemingly arbitrary distinction between entitlement to submit payment claims under the BCIPA for work that was carried out on the land during the mining lease; and work of the same nature carried out after expiry of the mining lease:

… it would be a curious result if a long-standing building, such as a site office, constructed on land that is subject to a mining lease, did not constitute a building that formed part of land during the term of the mining lease, but did so once the lease had expired. On that approach, a builder who undertook its demolition during the term of the mining lease would not be undertaking ―construction work within the meaning of s 10, but would be if it undertook the work after the mining lease expired.[7]

 Applegarth J concluded that the practical enquiry into the degree of physical annexation to the land was the relevant issue rather than any property law questions of ownership of fixtures and the intention of the parties at the time of construction of the structure. Noting that the actual land on which the relevant structure is affixed “does not change its character by reason of the existence of a mining lease”, Applegarth J then stated that the physical characteristics of the structure constructed (or that is to be constructed) and its relationship to the land “determine whether it forms part of the land[8]. What is important is “the degree to which it was affixed to the land” and permanency is not  essential as the “BCIPA extends to construction work on temporary buildings or structures, provided they form part of land”.[9]

By: Rob Buchanan & Grace Melki

[1] [2013] QSC 164.
[2] [2013] QCA 406; Decision delivered on 20 December 2013.
[3] The requirement that the relevant  building, structure or works are “forming, or form part of the land” is a requirement under the section 10(1)(a) – (c) definitions of “construction work” in the BCIPA ,which in turn, is relevant to determining whether or not a person is entitled to submit a payment claim under the BCIPA.
[4] [2013] QSC 164 at [73]; per Wilson J.
[5] Holmes JA and Bodice J agreed with the reasoning of Applegarth J.
[6] [2013] QCA 406 at [11], per Applegarth J.
[7] [2013] QCA 406 at [51], per Applegarth J.
[8] [2013] QCA 406 at [59] – [60], per Applegarth J.

[9] [2013] QCA 406 at [59] – [60], per Applegarth J.

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