SECURITY OF PAYMENT
The Building and Construction Industry Security of Payment Act 2009 (SA): considering the scope of the mining exclusion ALLIE A UMOFF, SENIOR ASSOCIATE, LIPMAN KARAS
T
he Building and Construction Industry Security of Payment Act 2009 (SA) (the SA Act) provides a regime by which persons who carry out construction work or supply related goods and services under a construction contract can obtain progress payments for that work, without compromising the ultimate rights of the parties in respect of the final contract price. The purpose of the SA Act is to assist persons in the building and construction industry to secure payment in a timely fashion for work performed or goods and services supplied, and to protect them from oppressive “pay when paid” or “pay if paid” clauses which had previously been found in many construction contracts.1 In order to come within the operation of the SA Act, a party must perform “construction work” or supply “related goods and services” as those terms are defined in the SA Act. Section 5 of the SA Act defines “construction work” very broadly, subject to an exclusion in subsection 2, which provides that construction work does not include (the mining exclusion): a. the drilling for, or extraction of, oil or natural gas; b. the extraction (whether by underground or surface working) of minerals, including tunnelling or boring, or constructing underground works, for that purpose; c. other work of a kind prescribed by the regulations for the purposes of this subsection.
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The regulations currently in force, Building and Construction Industry Security of Payment Regulations 2011 (the Regulations), do not include any provisions in respect of the mining exclusion. Section 6 of the SA Act also defines “related goods and services” very broadly, and the scope of this term is further broadened by section 5 of the Regulations. While the relevant sections of the SA Act have not yet been the subject of much litigation, its counterparts in Queensland2 and New South Wales,3 which are in relevantly nearly identical terms, have been the subject of comparatively more litigation. Given the similarities between the QLD Act and the NSW Act, as compared to the SA Act and to each other,4 the cases decided under those provisions can be instructive in considering the scope of the mining exclusion in the SA Act.
CONSTRUCTION WORK Courts considering the scope of “construction work” or “related goods and services” within the meaning of the Act have differed in their characterisation of the legislation as either “remedial” and deserving of a liberal interpretation,5 or as requiring a “natural” construction of the relevant definitions without any presumption of liberality.6 However, an analysis of these cases indicates that the approach has essentially been a common-sense approach that considers whether the scope of work described in the particular contract at
issue in the case can fairly be said to be, or be related to, “construction work”, by reference to the terms of the contract and the statutory provisions. For example, in Edelbrand, the NSW Court of Appeal held that contractual provisions requiring one party to manage consultants and contractors and monitor and administer the development of a factory were properly characterised as building advisory services, which were included within the NSW Act as goods and services related to construction work, such that the NSW Act applied.7 Whereas in Capricorn Quarries, the provision of rock crushing services to the owner and operator of a quarry, which then sold that crushed rock on to quarry customers (who may have eventually used the rock in work that could be deemed “construction work”), was held not to be construction work or the supply of materials for use in construction work, within the meaning of the QLD Act.8 No construction use was identified at the time of the making of the contract between the two parties and the potential future construction use of the rock by customers of the quarry was too tenuous to satisfy the requirements of the statute.9 Further, if a company’s scope of work includes some aspects which do come within the definition of construction work or related goods and services, and others which do not, those aspects of the work which come within the definition have been held to be sufficient to trigger the
