CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE
CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND
IMPLIED CONDITIONS
– SECURITY AND RETENTION
Source
Original judgment source is linked above.
Catchwords
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THECONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS ANDIMPLIED CONDITIONS– SECURITY AND RETENTIONFUNDS – where the applicant and the respondent entered into acontract for the applicant to perform construction work on therespondent’s gold mine – where, pursuant to the contract, theapplicant provided two bank guarantees – where therespondent was requiredto return the second bank guarantee at the expiry of the final defects liabilityperiod – where therespondent refused to return the bank guarantee on thebasis that it had overpaid the applicant and had a claim for the overpaidamount– where the applicant applies for the release of the bank guarantee– whether the respondent can retain and haverecourse to the guarantee forthe amount it claimsCONTRACTS – GENERAL CONTRACTUALPRINCIPLES – CONSTRUCTION AND
INTERPRETATION OF CONTRACTS – where the contract
Judgment (206 paragraphs)
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CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - SECURITY AND RETENTION
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FUNDS - where the applicant and the respondent entered into a contract for the applicant to perform construction work on the respondent's gold mine - where, pursuant to the contract, the applicant provided two bank guarantees - where the respondent was required to return the second bank guarantee at the expiry of the final defects liability period - where the respondent refused to return the bank guarantee on the basis that it had overpaid the applicant and had a claim for the overpaid amount - where the applicant applies for the release of the bank guarantee - whether the respondent can retain and have recourse to the guarantee for the amount it claims
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CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND
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provides that the respondent is entitled to retain the bank guarantee provided by the applicant for it to have recourse to "any amount payable under the Contract (including any Claim)" - where the respondent submits that its claim for restitution for overpayment amounts to a "Claim" - where the applicant submits that the guarantee applies only to a claim for liquidated amounts owed as a debt as a result of a final determination - whether the provision extends to a claim for restitution for overpayment
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - where
Part 4A of the Queensland Building and Construction Commission Act 1991 (Qld) applies to a "building contract" - where section 67J provides that a party may use a security or retention amount to obtain "an amount owed under the contract" only if the contracted party has given written notice to the other party - where the applicant submits that section 67J covers the field as to when a party is entitled to have recourse to security under a building contract - whether the contract is a "building contract" - whether the work was "construction work in mining" - whether section 67J affects recourse to security for an amount that is not "an amount owed under the contract" - whether there is an "identifiable period" in the contract for the release of the security
[1] Sun Engineering (Qld) Pty Ltd and Ravenswood Gold Pty Ltd entered a contract under which Sun undertook to perform construction work for Ravenswood as part of the expansion of a gold mine near Townsville.
[2] The parties are in dispute over recourse to, and retention of, a bank guarantee. Ravenswood's case is that the security is available to meet its claim against Sun for overpayment.
[44]
[3] The Contract required Sun to provide security for the performance of its obligations under the Contract in the form of two bank guarantees, each in the amount of 2.5 percent of the Contract Price. Each guarantee was in the amount of $541,934.27.
[4] Ravenswood was required to return one of the bank guarantees within 10 business days after the "final Supply Acceptance Date". It was required, subject to certain conditions, to return the second bank guarantee within 10 business days of the "final Defects Liability Period".
[5] The last work performed under the Contract was on 2 August 2022. The Defects Liability Period ("DLP") was 12 months. No additional Defects Liability Period came into existence. Therefore, the DLP ended on 2 August 2023. Subject to the provisions of clause 10.5(a)(ii), the second bank guarantee was to be released within the next 10 business days, namely on or before 16 August 2023.
[6] Prior to 2 August 2023, and in response to certain payment claims, Ravenswood asserted that it had overpaid Sun and that Sun was liable to pay the amount that it had been overpaid. The extent of the claimed overpayment varied from time to time, depending on assessments of the work done and the amount that had been paid to Sun as at that date. These claims about overpayment arose in the context of payment claims made by Sun under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) ("BIF Act"). By way of example, on 21 February 2023, in response to Sun's progress claim 18, Ravenswood gave Sun a letter which was described as its "Payment schedule 18". That document relevantly:
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(a) noted that $11,951,369.50 had been claimed by Sun;
(b) disputed Sun's entitlement to the claim, including pursuant to clause 18.4 of the Contract; and
(c) stated that Sun was "liable" to Ravenswood in the sum of $288,638.30.
[46]
[7] Payment claim 18 proceeded to an adjudication decision in Sun's favour in the amount of $9,170,485.24 (excluding adjudication fees). In a separate proceeding, BS 9278/23, Ravenswood has applied to another judge of this Court to obtain a declaration that the decision is void. That decision is reserved. Pending that decision, Ravenswood paid the adjudicated amount into Court.
[8] On 20 September 2023, in response to another progress claim (progress claim 19), Ravenswood wrote to Sun in a document described as its "Payment Schedule 19". That document relevantly:
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(a) noted that $14,886,078.16 had been claimed by Sun;
(b) disputed Sun's entitlement to the claim because, amongst other things, "the total amount already paid by [Ravenswood] (directly to [Sun] and into Court) far exceeds [Sun's] claim to payment of $14,886,078.16"; and
(c) identified the overpayment to Sun as $3,264,220.51.
[48]
[9] On 21 September 2023, in response to a progress claim made by Sun (also numbered 19, but different to the progress claim mentioned above), Ravenswood gave Sun a letter headed "Notice of Dispute - Contractor's Final Progress Claim". The Notice of Dispute relevantly:
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(a) stated:
"For the reasons in [PS19], [Ravenswood] has paid more for the Supply than what [Sun] is entitled to be paid for the Supply pursuant to the Contract."
(b) identified the overpayment to Sun as $10,027,865.14, being the difference between what Ravenswood was said to have paid for the works ($31,756,169.31) and the assessed value of the works (being $21,728,304.17); and
(c) concluded:
"The overpayment is an amount payable by [Sun] to [Ravenswood] under the Contract that [Ravenswood] has a claim to and demands repayment of
$10,027,865.14."
[50]
[10] The amount demanded was not paid by Sun. As a result, on 18 October 2023, Ravenswood advised Sun that it continued to hold the second guarantee and that it intended to have recourse to the security in full to partially satisfy the demanded repayment amount of $10,027,865.14. The letter advised that although its position was that it was not required to provide Sun with any notice pursuant to s 67J of the Queensland Building and Construction Commission Act1991 (Qld) ("QBCC Act"), should notice be required and without prejudice to its primary position, notice was given under s 67J.
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[11] Sun seeks a variety of orders in this proceeding. They include orders:
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(a) to restrain Ravenswood from having recourse to the bank guarantee (or its substitute);
(b) to compel the return of the original bank guarantee (or its substitute); and
(c) to declare notices purported to be issued pursuant to the Contract and the
QBCC Act to be void or otherwise ineffectual.
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[12] The original bank guarantee would have expired before Sun's application was able to be heard. Therefore, on 13 December 2023, following the exchange of mutual
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undertakings, it was exchanged for an unconditional bank guarantee from another bank in the same amount. I refer to this as the substitute guarantee.
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[13] The critical provisions governing recourse to security and release of security are clause 10.4 and 10.5 respectively.
[14] Clause 10.4 which is headed "Recourse to Security" relevantly provides: "(a) [Ravenswood] may call upon the Security provided by [Sun]
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under this clause 10 at any time in respect of any amount payable under the Contract (including any Claim) and [Sun] must not take any steps to injunct or otherwise restrain:
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(ii) the Company from taking any steps for the purposes of making a demand under any Security provided under the Contract or receiving any payment under any such Security; or ..." (emphasis added)
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[15] A central issue in the proceeding are the words "including any Claim" in clause 10.4(a). The word "Claim" directs attention to clause 1.1 where "Claim" is defined to mean:
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"... any action, suit, proceeding or demand of any kind, whether actual or threatened and includes any claim for payment of money (including damages) or for an increase in the Contract Price (including by or against the Company or its Personnel by Personnel of the Contractor or any third party):
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(a) under, arising out of, or in connection with, the Contract;
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(b) arising out of, or in connection with the Supply under the Contract; or
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(c) arising otherwise under Law or in equity including by statute, in tort for negligence or otherwise, including negligent misrepresentations or for restitution." (emphasis added)
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[16] Clause 10.5 governs the release of the Security. As noted, 50 percent of the security was to be released 10 business days after the final Supply Acceptance Date. Clause 10.5(a)(ii) governs the release of the guarantee that is the subject of this proceeding. It provides:
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(a) Subject to this clause 10.5, the Security will be released:
(i) 50% will be released 10 Business Days after the final Supply Acceptance Date under the Contract; and
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(ii) 50% will be released 10 Business Days after the expiry of the final Defects Liability Period subject to:
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all sums of money owed by the Contractor to the Company or Claimed by the Company under or in connection with the Contract have been paid in full; and
all defects identified by the Company in accordance with clause 14.4 prior to the expiry of the Defects Liability Period have been rectified.
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(b) If the Company's entitlement to the Security reduces or ceases, the Company must release the Security or the relevant portion of the Security to the Contractor." (emphasis added)
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[17] The parties made substantial written submissions. Sun's initial submissions filed on 7 December 2023 run to 426 paragraphs stretching over 66 pages. The parties also produced a concise list of issues for the purpose of the hearing. The issues were further narrowed and refined by oral submissions on 4 and 5 March 2024.
[18] The issues fall into two broad categories. The first concerns contractual entitlement issues that turn on the proper interpretation of clause 10.4(a), principally the meaning of "including any Claim". The second category concerns the possible application of Part 4A of the QBCC Act and, if it applies, what effect, if any, it has on Ravenswood's contractual right to retain the security.
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[19] Ravenswood submits that it was entitled to retain and have recourse to the original bank guarantee (and now to the substitute guarantee). This is because the Contract provides for it to have recourse in respect of any "Claim". Ravenswood says that it has a "Claim", being a claim for restitution in relation to an overpayment.
[20] Sun submits that, despite the words "including any Claim" in clause 10.4, that clause applies only to a liquidated amount that is owed as a debt. The issue of interpretation is this: does clause 10.4 extend to a claim for restitution such as Ravenswood's claim for overpayment?
[21] If it does, a further issue is whether Ravenswood made a "Claim" prior to the date by which the Security was to be released under clause 10.5. Depending on the construction of the Contract, this date was either 2 August 2023 or 16 August 2023.
[22] Ravenswood contends there was a subsisting claim by it at the relevant release date. First, it points to Payment Schedule 18 in which it asserted that Sun was liable for an overpayment of $288,638.30. Alternatively, it points to earlier claims for overpayment.
[23] Sun contends that each of the amounts asserted by Ravenswood were not liquidated sums, and were no more than amounts that Ravenswood disputed in relation to claims made by Sun or were unliquidated set-off claims.
[24] Sun also submits that none of the assertions of overpayment amounted to a "Claim". For example, it submits that Payment Schedule 18, which on 21 February 2023
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stated that Sun was "liable" to Ravenswood in the sum of $288,638.30, was not a demand for payment. Sun also contends that Ravenswood is not entitled to rely upon earlier payment schedules because any later payment schedule discharged the results pressed in an earlier one.
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[25] The second category of issues concern the proper construction of the QBCC Act and consideration of the judicial decisions about its provisions.
[26] The first issue is whether the Contract was a "building contract" for the purposes of Part 4A. In short, the issue is whether the term "building contract" in s 67AAA draws on the definition of "building work" and "building" in the Schedule 2 Dictionary to the Act, or whether it has some different meaning because the statutory definitions are excluded by some process of necessary implication. Another issue arises because Ravenswood contends that the work under the Contract is "of a kind" that falls within the term "construction work in mining", such that it is excluded from the Schedule 2 definition of "building work". This issue turns on the meaning and scope of the exclusion and also the factual issue of whether the work was of a kind that may be described as "construction work in mining".
[27] An issue that arises if Part 4A of the QBCC Act applies to the Contract is the meaning and effect of s 67J. Section 67J provides that a contracting party for a building contract may use a security or retention amount to obtain "an amount owed under the Contract" only if the contracting party has given notice in writing to the contracted party advising the proposed use and the amount owed.
[28] The essential issue of statutory interpretation is whether s 67J of the QBCC Act affects Ravenswood's entitlement to have recourse to the Guarantee in respect of a claim that is not for an "amount owed under the contract" within the meaning of s 67J. Sun contends that any contractual provision permitting recourse is ineffective by force of either s 67E or s 108D of the QBCC Act to the extent that it permits Ravenswood to have recourse to an amount that is not an "amount owed under the contract" within the meaning of s 67J. In simple terms, Sun contends that s 67J covers the field as to when a party is entitled to have recourse to security under a building contract.
[29] This issue entails a consideration of decisions of this Court, the most recent being the decision of Holmes CJ in Saipem Australia Pty Ltd v GLNG Operations Pty Ltd.1 Ravenswood relies on Saipem No 3 in support of the submission that s 67J does not govern recourse to security for unliquidated amounts - it applies only to recourse to obtain "an amount owed under the contract". Sun relies on the earlier decision in .2
said to not provide for the release of the retention amount or security "at the end of an identifiable period". Ravenswood disputes this contention because the Contract provides for the release of the Bank Guarantee at the end of an identifiable period, namely the period of 10 business days after expiry of the 12-month DLP, as provided for in clause 10.5(a)(ii). This final issue concerns a matter of construction: did the Contract provide for the release of the Bank Guarantee "at the end of an identifiable period"?
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[31] This issue turns on the meaning of "Claim" and the interpretation of the words "including any Claim" in clause 10.4 in the context of clauses about recourse to security and the release of security.
[32] Sun contends that, despite the width of the definition of "Claim", the entitlement to have recourse under clause 10.4 is limited to the recovery of a liquidated amount that is owed and payable as a debt.
[33] Absent the additional words in parentheses "including any Claim", the words "any amount payable under the Contract" would limit recourse to a liquidated amount owed by one party to the other for an amount that is both due and payable. It would not apply to an amount "that is only contingently due; that is, a liability of which it cannot at present be predicated that there will in the future ever be any amount payable at all".3
[34] Sun asks the Court to interpret the words "including any Claim" as enabling recourse to security only when the amount the subject of the Claim has become liquidated, such as upon judgment or an arbitrated determination. It contends that to allow recourse to a Claim that is awaiting a final determination would be a strained interpretation and not make business sense.
[35] I do not agree that the interpretation of clause 10.4 contended for by Ravenswood is strained or uncommercial.
[36] The use of the word "including" may serve to clarify or render certain what is within the words that go before it. On occasions, the word "including" expands what would otherwise be within its subject.4 Having regard to its context and apparent purpose, clause 10.4 is open to the interpretation that it permits recourse both for a sum of money that is owed and payable under the Contract, and for a sum that falls within the broad definition of "Claim", including a claim for unliquidated damages or a claim for restitution.
[37] The interpretation contended for by Sun construes the words "including any Claim" as if they read "including any liquidated Claim" or "including any Claim that has been determined". Had the parties intended clause 10.4 to be limited to recourse to a liquidated amount owed as a debt or payable pursuant to a judgment or arbitral determination, clause 10.4 might have been worded in such a fashion.
[38] The language of clause 10.4 is apt to include a Claim, such as a claim for damages or restitution, which is yet to be determined. An example would be a claim that is discovered shortly before the expiry of the DLP and which remains disputed at the date upon which the guarantee would be released pursuant to clause 10.5(a)(ii) in the absence of such a claim. Such a claim for damages, possibly for defective work, could not be litigated and resolved within the available time. It seems unlikely, as a matter of business sense, that parties who included the words "including any Claim" intended that there be no recourse to security in such a situation.
[39] An apparent purpose of clause 10.4 and clause 10.5 is to secure Ravenswood in respect of a claim for unliquidated damages, restitution or other claims falling within the definition of "Claim". The object of those clauses is to provide for an amount to be available to satisfy the Claim, rather than Ravenswood carry the risk of litigating a claim that might result in an empty judgment. As Ravenswood submits, an interpretation of "including any Claim" in accordance with the terms of the Contract is consistent with the provisions as to security operating as a risk allocation device by which Sun, not Ravenswood, would be out of pocket in the event of a dispute between the parties. A bank guarantee protects against the risk of not being able to recover on a valid claim. It also allocates the risk of who shall be out of pocket pending resolution of a dispute. The beneficiary of the guarantee is able to call on it even if it turns out, in the end, that its claim was wrong.5
[40] Clause 10.4 should be construed in the context of clause 10.5 which - subject to a requirement to pay money owed or claimed by Ravenswood under or in connection with the Contract - obliges the security to be released 10 business days after the expiry of the final DLP. In that context, a reasonable businessperson would appreciate that circumstances giving rise to a Claim may emerge only shortly before the expiry of the DLP such that the claim could not be litigated to a final determination before that date. Such a person would be unlikely to interpret clause
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10.4 in the way Sun contends. It would make commercial sense for the security to be available to meet such a claim, or for the security to be released pursuant to clause 10.5 upon payment of the claim in full. An interpretation that limits recourse only to claims in respect of which a court or arbitrator had determined an amount to be payable would deprive the security of utility in relation to a claim that emerges late, or which cannot be litigated to judgment before the expiry of the DLP. Sun's interpretation would limit the utility of the clause to claims that could be commenced and litigated to judgment within that period. This is not a reasonable or business-like interpretation in the context of claims that may be complex or emerge late and not be able to be litigated to judgment before the expiry of the DLP.
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[41] Clause 10.5 provides contextual support for the interpretation urged by Ravenswood. Clause 10.5(a)(ii)A provides for the release of the security 10 business days after the expiry of the final DLP "subject to all sums of money owed by [Sun] to [Ravenswood] or Claimed by [Ravenswood] under or in connection with the Contract have been paid in full". Expressed differently, clause 10.5(a)(ii)(A) provides for the release of the security if either:
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5 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd[1998] 3 VR 812 at 826-7.
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(a) money owed by Sun to Ravenswood has been paid in full; or
(b) a sum of money "Claimed" by Ravenswood under or in connection with the Contract has been paid in full.
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[42] Clause 10.5(a)(ii)A does not support Sun's contention that the security is limited only to a liquidated amount that is owed and payable. As Ravenswood submits, it would be a curious result to construe the Contract as permitting the Security to be retained in circumstances where the reason for retention would be insufficient to justify recourse.
[43] In my view, Sun's interpretation which reads the word "Claim" in clause 10.4 as limited to an amount that is presently owing is not supported by its context and the provisions of clause 10.5. The interpretation urged by Ravenswood gives both clauses a harmonious operation.
[44] Sun's submissions in reply reiterate that its interpretation gives the clauses a business-like interpretation. It points to possible recourse to the guarantee or a delay in its release simply because Ravenswood asserts an unliquidated entitlement to payment. It raises the spectre of Ravenswood having recourse to the guarantee simply by making a "Claim" that is spurious. I take that submission into account. However, the proper interpretation of the clause is not greatly illuminated by imagining worse case scenarios one way or the other. Sun points to the possibility of dubious or doubtful Claims permitting recourse to the Security or a delay in the Security being released. By the same token, it is possible to imagine a Claim that is meritorious, indeed indefensible, but which is disputed so as to force Ravenswood to litigate it in circumstances in which the Claim cannot be quickly and finally determined.
[45] Sun also submits that, on Ravenswood's construction, it would be entitled to retain all of the guarantee regardless of the "Claim" amount. In other words, it would be entitled to retain the guarantee by simply asserting a "Claim" for $1. This interpretation should not be accepted. The intent of clause 10.4 is to permit Ravenswood to call upon the Security in respect of the amount that is payable under the Contract or the amount of the Claim. Also, if recourse has not been had to the Security, Sun might obtain its release in accordance with clause 10.5(a)(ii)A upon the payment of the amount claimed, not upon payment of the full amount that was secured by the guarantee.
[46] Finally, Sun contends that it is not a business-like interpretation to construe the Contract so as to allow it to be indefinitely held out of money to which it is entitled. I do not accept that Ravenswood's interpretation has that effect. If having had recourse to the Security to the amount of the Claim, or having been paid the amount of the Claim in order to obtain the guarantee's release, Ravenswood does not litigate its claim with expedition, then it is open to Sun to activate dispute resolution procedures and to obtain an early determination of the merit of the Claim.
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[47] Ravenswood's interpretation of clause 10.4 and the words "including any Claim" is to be preferred. It accords with the language of the Contract. The words "including any Claim" expand what otherwise would be the scope of the preceding words "any
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amount payable under the Contract". Sun's interpretation requires the words "including any Claim" to be read as if they apply to only a liquidated claim that is payable or an unliquidated claim that has been determined.
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[48] Sun's interpretation, which restricts "including any Claim" to a liquidated amount, for example, as a result of a final and binding determination, is unattractive in a commercial sense. It would deprive clause 10.4 of the operation apparently intended by the words "including any Claim" when read in conjunction with the definition of "Claim", namely, to claims for compensation. The language of clause
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10.4 is apt to apply to unliquidated claims for damages. The wording of clause 10.4 applies to claims that have yet to be determined. The introduction of the words "including any claims" tends to indicate that the parties intended to expand recourse beyond a liquidated amount that was payable.
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[49] An interpretation of clause 10.4 by which the words "including any Claim" are interpreted in accordance with their terms is consistent with clause 10.5. Clause
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10.5 provides for the release of the Security only if the sum claimed by Ravenswood under or in connection with the Contract has been paid in full. It is difficult to see why that provision would exist if the security did not permit recourse for the type of claim that Ravenswood asserts.
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[50] Clauses 10.4 and 10.5 expressly refer to a Claim that, by definition, includes any claim for payment of money (including damages) and extends to compensation in equity, under statute, for negligence or otherwise, and for restitution. As a matter of construction, clause 10.4 may apply to a Claim for overpayment under or in connection with the Contract. The provisions secure Ravenswood's position in relation to a Claim that has yet to be determined. They protect Ravenswood against the risk of a Claim which results in a judgment that cannot be satisfied. The provisions about recourse and release are a risk allocation device. They effectively allocate the risk of litigating a disputed claim to Sun. There is nothing uncommercial in parties negotiating provisions as to security which operate as a risk allocation device.
[51] The Contract should be construed to permit recourse to the Security in respect of a Claim for overpayment.
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[52] Ravenswood's case is that it was not required to return the bank guarantee pursuant to clause 10.5 by 16 August 2023 because it had made a "Claim" against Sun by that date. It relies on a document dated 21 February 2023 headed "Payment Schedule 18" which responded to a payment claim made by Sun dated 31 January 2023. The document explained why Ravenswood had assessed no amount being payable to Sun and that, based on its assessment, "the Contractor is liable to pay the Company in the sum of $288,638.30".
[53] Ravenswood submits in this proceeding that PS18 was a "Claim" being a claim for money "in connection with the Contract", namely a claim for the reimbursement of money that had been paid to Sun under the Contract.
[54] Sun responds that PS18 was "nothing more than a notice pursuant to clause 18.4 of the Contract". Clause 18.4 relates to a disputed invoice. According to Sun, PS18
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simply explained why Ravenswood did not accept the amount claimed by Sun in its payment claim and was not a demand for the payment of money from Sun. It compares PS18 with earlier payment schedules that expressly demanded Sun pay the amount of an asserted overpayment.
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[55] In my view, neither the form nor contents of PS18 dated 21 February 2023 amounts to simply a notice that an invoice is disputed and that the claimed amount will not be paid. The document positively asserted that Sun "is liable" to Ravenswood in the sum of $288,638.30. It asserted a present liability to pay because of past overpayment. The asserted liability was not a future or contingent liability. The document implicitly made a claim for payment of $288,638.30. It did not specify whether the claimed amount should be paid within a specified period of, say 10 days, or that the payment be effected by some other means such as a reduction in a present or future claim by Sun.
[56] The absence of a specified date for payment of the claimed liability does not alter the fact that PS18 was a claim for payment of money. It was a claim for payment of money "under, or arising out of, or in connection with, the Contract" (clause 1.1 definition, subparagraph (a)), or a claim for payment of money for restitution (subparagraph (c)).
[57] This makes it strictly unnecessary to decide whether there was an earlier Claim. If PS18 was not a "Claim" then Ravenswood relies on claims of $369,370.77 and
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$419,069.98 in PS17 (dated 20 September 2022) and PS16 (dated 8 August 2022) respectively. Each document expressly demanded the reimbursement of an overpayment.
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[58] Sun contends that PS17 operated to discharge the results pressed in PS15 and PS16. This submission was made in the context of submissions about PS15. It is also unnecessary to detail the reconciliation of the various Payment Schedules. These were explained by Mr Thomas Ambrose in oral submissions and are the subject of a reconciliation document that became exhibit 5. It is unnecessary to do so because if PS18 was not a "Claim" then PS17 was.
[59] PS17 was a Claim that was not withdrawn. PS18 did not discharge PS17. It was a new Claim made in circumstances that then prevailed.
[60] As at August 2023, none of the demands for overpayment had been admitted, let alone paid in full. Because the "Claim" had not been paid in full, the proviso in clause 10.5(a)(ii)A applied. Because it applied, Ravenswood was not contractually obliged to release the bank guarantee on or before 16 August 2023.
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[61] Because Ravenswood was not contractually obliged to release the bank guarantee, it was able to have recourse to it at least to the extent of any Claims made against Sun prior to 2 August 2023. These would include unpaid claims arising in relation to PS16, PS17 or PS18.
[62] A different question is whether Ravenswood was and is entitled to call on the Security in respect of a "Claim" that was first made after 2 August 2023 or, in the alternative, 16 August 2023. Ravenswood contends that it can do so in respect of
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the amount of the claim made in the "Notice of Dispute - Contractor's Final Progress Claim" which it gave on 21 September 2023.
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[63] This claim arose after an adjudicator determined that Sun was entitled to
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$9,170,485.24 (including GST) plus interest and costs in respect of its Progress Claim Number 18. Sun made a further Progress Claim Number 19 to which Sun responded on 20 September 2023 in the form of Payment Schedule 19. Final Progress Claim Number 19 is different. In response to it, Ravenswood sent Sun a letter headed "Notice of Dispute - Contractor's Final Progress Claim" in which Ravenswood disputed Sun's entitlement to the claim. The Notice of Dispute relevantly stated:
"For the reasons in [PS19], [Ravenswood] has paid more for the Supply than what [Sun] is entitled to be paid for the Supply pursuant to the Contract."
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[64] In this proceeding Ravenswood submits that by the time it notified Sun of its intention to have recourse to the original bank guarantee, Sun had received, in addition to PS16, PS17 and PS18, the Notice of Dispute which raised a new "Claim" being an updated claim for payment of $10,027,865.14 on account of overpayments.
[65] Sun contests that as a matter of contractual construction Ravenswood is entitled to access the Security to partially satisfy a "Claim" made in the Notice of Dispute dated 21 September 2023 because it was made after the expiry of the DLP. It reiterates some of the arguments earlier made on the point of construction about the mere making of a "Claim" that, however disingenuous, triggers a right to have recourse. It adds that the bank guarantee is not available for claims arising after 2 August 2023 (or, in the alternative, after 16 August 2023). It submits that were this to be the case it would be required to continually reinstate the Security under clause 10.6 or to replace it under clause 10.7.
[66] On Ravenswood's approach, it is entitled to have recourse to the guarantee for a further Claim first made at any time after August 2023 in circumstances in which the original Claim had not been satisfied from the guarantee.
[67] Clause 10.4 entitles Ravenswood to call upon the Security "at any time" in respect of any amount payable under the Contract (including any Claim). Ravenswood's argument appears to be that if Sun wished to avoid Ravenswood having recourse to the guarantee in relation to further Claims, then it should have done what clause
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10.5 envisages being done in order to have the Security released. Relevantly, this would be to pay in full all sums owed by it to Ravenswood or "Claimed" by Ravenswood under or in connection with the Contract. If it had done so, Sun would not be exposed to the Security being called upon in relation to additional claims.
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[68] The point of construction arises in the context of the payment by Ravenswood of the
[103]
$9,170,485.24 adjudicated amount. Ravenswood asserted in PS19 that it had already paid to Sun and into Court amounts that far exceeded Sun's claim for the payment of $14,886,078.16. Its 21 September 2023 document relied upon the payment into Court to demand repayment of $10,027,865.14.
[104]
[69] Sun cites authority in the context of legislation that is comparable to the BIF Act that a payment into Court does not amount to a payment to the claimant for the purposes of security of payment legislation.6 I accept the correctness of those authorities. Sun also asserts that because Ravenswood did not pay the adjudicated money to Sun, but instead paid the amount into Court in order to address a statutory obligation to pay Sun, its subsequent contention in this proceeding that Sun is indebted to Ravenswood for amounts Sun has never received, amounts to an abuse of process.
[70] I am not persuaded by the abuse of process argument. However, the unresolved status of the amount paid into Court presents a complication. I would not treat the payment into Court as any kind of recognition by Ravenswood of the validity of the payment claim that was adjudicated. If, however, the adjudication decision is not set aside in the separate proceeding that Ravenswood has brought before another Judge, then, presumably, the sum paid into Court will be paid out to Sun, together with accretions.
[71] If the adjudication decision is not set aside, then it is open to Ravenswood to litigate the merits of the dispute that was adjudicated in further proceedings. In doing so, it can claim that there has been an overpayment. By that time the money paid into Court presumably will have been paid out to Sun.
[72] Shortly put, Ravenswood's assertion of an overpayment in its 21 September 2023 Notice of Dispute is consistent with the assertion by it of legal rights that it is entitled to restitution in relation to an overpayment, including the amount that it paid into Court to meet an adjudicated amount that is a statutory debt it was obliged to pay.
[73] Because the validity of the adjudication decision and consequential orders about the payment out of the money paid into Court have yet to be decided, it seems inappropriate to presently determine whether Ravenswood has a "Claim" based on the 21 September 2023 Notice of Dispute in respect of which it can have recourse against the bank guarantee and the extent of any such recourse. The extent of any permissible recourse will depend on whether the moneys paid into Court are paid out to Sun or to Ravenswood.
[74] I will, however, dispose of one submission made by Sun's submissions in reply about the duration of the guarantee. It points to clause 10.2(e) that required Sun to ensure the bank guarantee was maintained and remained valid and enforceable until the expiry of the final DLP. By reference to clause 10.2(e) it submits that the guarantee is limited to claims made in advance of the expiry of the DLP.
[105]
6 On Forbes Developments Pty Ltd v Chase Building Group (Canberra) Pty Ltd(2020) ACTSC 163 at
[106]
[77] ; Nova Builders Pty Ltd v Civil & Civic Corporation Pty Ltd[2022] ACTSC 209 at [49]-[60].
[107]
for example, sums of money owed by Sun to Ravenswood or claimed by Ravenswood under or in connection with the Contract have not been paid in full, then it is available for recourse until the guarantee has expired. Here, the guarantee did not expire until 31 December 2023. Also, clause 10.7 provides for a replacement bank guarantee where the bank guarantee has an expiry date and the Contract requires the Security to remain in force beyond the expiry date of the bank guarantee.
[108]
[77] In this matter a claim was made before the expiry of the DLP. It was not paid in full. Ravenswood was entitled to retain the guarantee and to have recourse to it for at least the amount of the claim it made prior to 2 August 2023. It has a reasonable argument that the retained guarantee is available to be called upon "at any time" in respect of any "Claim" (or at least one under or in connection with the Contract).
[78] The amount paid into Court is secured. In the event that Ravenswood succeeds in having the sum paid out to it, it could not claim to have recourse under the guarantee in respect of the sum paid to it.
[79] Therefore, I decline to determine whether Ravenswood presently is entitled to have recourse to the original bank guarantee or the substitute guarantee for amounts other than the unpaid claims made in PS16, PS17 and PS18.
[109]
Should the Notice of Dispute dated 21 September 2023 be declared invalid?
[110]
[80] In its Notice of Intention to have recourse dated 18 October 2023, Ravenswood relied upon the Notice of Dispute given on 21 September 2023 that demanded repayment of an overpayment in the amount of $10,027,865.14. Sun contends that Ravenswood failed to identify the existence of a debt due and owing or a legal basis upon which to contend that Sun was indebted to Ravenswood in that amount. It argues (as would appear to be the case) that the amount demanded is substantially comprised of the monies paid into Court.
[81] Sun develops an argument, by reference to the terms of the contract, that, as a matter of construction, a debt from Sun to Ravenswood can only arise in limited circumstances and that, having regard to the operation of certain clauses, there is no debt due from Sun to Ravenswood.
[82] It is unnecessary for me to presently resolve those contentions or to decide whether the amount that has been paid into Court to satisfy a statutory debt that arises under the BIF Act (and which may be paid out to Sun) may feature in a claim by Ravenswood for restitution.
[83] It is at least arguable that Ravenswood is entitled to pursue a claim for overpayment on the basis that the adjudicator's decision about entitlements under the BIF Act is a provisional one made for the purposes of the BIF Act and has not finally determined the party's legal rights.
[84] If Sun's submissions about the assertions in the Notice of Dispute are correct (a matter which I decline to decide) then this simply means that the Notice contains erroneous contentions about an entitlement to be repaid an overpayment. In oral submissions, Counsel for Sun submitted that it would invalidate the Notice of Dispute; however, no authority was cited to support such a conclusion. In the
[111]
circumstances, I decline to make a declaration that the Notice of Dispute or the cautionary notice given on 18 October 2023 of an intention to have recourse are invalid.
[112]
[85] Also, for the reasons that follow, a notice under s 67J of the QBCC Act was not required before Ravenswood proposed to have recourse to the guarantee.
[113]
[86] Sun contends that any contractual entitlement of Ravenswood to retain the guarantee and to have recourse to it is governed by certain provisions of Part 4A of the QBCC Act. Part 4A regulates certain building contracts. The meaning of "building contract" for the purpose of Part 4A is defined by s 67AAA. One provision in Part 4A that Sun relies on is s 67J which requires a notice in writing to be given where a contracting party proposes to use a security or retention amount "to obtain an amount owed under the contract". The other provisions are ss 67NA and 67NB which relate to the release of a security held after practical completion in relation to the need to correct defects in building work under the contract. It provides a "statutory defects liability period" where the contract does not provide for the release of the retention amount or security "at the end of an identifiable period". If the contract does not so provide, then the retention amount or security must be released at the end of 12 months starting on the day of practical completion for the contract.
[87] The first issue of statutory interpretation is whether the Contract is a "building contract" for the purposes of Part 4A. Does the term "building contract" in s 67AAA draw on the definition of "building work" and "building" in the Schedule
[114]
2 Dictionary to the Act, or does it have some different meaning because the statutory definitions are excluded by some process of necessary implication?
[115]
[88] The next issue is whether the work under the Contract is "of a kind" that falls within the term "construction work in mining", such that it is excluded from the Schedule 2 definition of "building work". This issue turns on the meaning and scope of the "construction work in mining" exclusion in Item 28 of the Queensland Building and Construction Commission Regulation 2018 (Qld) ("QBCC Regulation") and the factual issue of whether the work was of such a kind.
[89] Ravenswood's position is that:
[116]
(a) the Contract is not a "building contract"; and
(b) in any case, ss 67J, 67NA and 67NB do not operate in the way that Sun submits to disentitle Ravenswood from having recourse to the Security.
[117]
Is the definition of "building contract" in s 67AAA informed by the definition of "building work" and "building" in Schedule 2 of the QBCC Act?
[118]
[90] Ravenswood submits that, as a matter of statutory interpretation and in accordance with numerous decisions of the Court of Appeal and the Trial Division, the reference to "building work" in s 67AAA is informed by Schedule 2 definitions. Ravenswood goes on to submit that the Contract falls outside the ambit of the s 67AAA definition because the work was of a kind that falls within an exclusion in the QBCC Regulation concerning "construction work in mining".
[91] Sun resists the conclusion that the meaning of "building contract" in s 67AAA is informed by the statutory definitions. It places particular reliance on a decision of the Queensland Court of Appeal in Vickers v Queensland Building and Construction Commission,7 which related to the construction of s 56AC in Part 3A and which made passing reference to s 67AAA.
[92] Sun's original submissions contain a lengthy essay about principles of statutory interpretation, including resort to statutory definitions. The principles are not contentious. One such principle is that a definition is not to be construed independently of the operative provisions. Unless a definition is expressly or impliedly displaced, the words of the definition must be read into the operative provision, and then the operative provision construed.8
[93] In some circumstances, a definition is expressly or impliedly displaced. The ease or difficulty of fitting a definition into a particular operative provision may be a primary basis for deciding whether it should be excluded by implication.9
[94] In Council of the Law Society (NSW) v Bouzanis,10 Basten JA stated:
[119]
"That a statutory definition should not readily be put aside may be accepted, but where context suggests that a different meaning should be adopted to give effect to the apparent purpose of a specific provision, to depart from the definition is to comply with the obligation to adopt a construction that would promote the purpose or object of the provision, rather than one which would not ..."
[120]
[95] The purpose of the QBCC Act is to regulate the building industry. It does so by ensuring the maintenance of proper standards in the industry, and seeks "to achieve a reasonable balance between the interests of building contractors and consumers".11
[96] The term "building work" is defined in Schedule 2 to the QBCC Act. The term is used in many places throughout that Act. Depending upon the operative provision in which the definition is applied, the statutory term may be given a wider or narrower construction. This is because different provisions of the Act in different parts have very different purposes.12
[97] Part 4A of the Act relates to building contracts that are not domestic building contracts. Division 1 of Part 4A includes s 67AAA which defines "building contract" as follows:
[121]
"(1) For this part, a building contract means a contract or other arrangement for carrying out building work in Queensland but does not include -
[98] In s 67A (also in Division 1) the term "carry out building work" is defined to mean: "(a) carry out building work personally; or
[131]
(b) directly or indirectly, cause building work to be carried out; or
(c) provide advisory, administrative, management or supervisory services for carrying out building work." (emphasis added)
[132]
[99] Schedule 2 to the QBCC Act defines the term "building work" by reference to descriptions of particular types of work set out in 11 paragraphs and concludes that it "does not include work of a kind excluded by regulation from the ambit of this definition". The exclusion in Item 28 of the QBCC Regulation is discussed later in this judgment.
[133]
[100] Ravenswood notes that the proposition that "building work" in s 67AAA is informed by the definition of "building work" and "building" in Schedule 2 has been accepted in numerous decisions. It cites three decisions of the Court of Appeal in Monadelphous Engineering Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd;13 Monadelphous Engineering Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd;14 and _Australian Building Insurance Services Pty Ltd v CGU Insurance Ltd._15 Ravenswood also cites the decisions in Saipem Australia Pty Ltd v GLNG Operations Pty Ltd;16 Monadelphous Engineering Pty Ltd & Muhibbah Construction Pty Ltd trading as Monadelphous Muhibbah Marine v Wiggins Island Coal Export Terminal Pty Ltd;17 and Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd.18
[101] Ravenswood submits that there is no warrant to depart from the approach adopted by the Court of Appeal or by this Court. Such an approach is said to be consistent with the presumption that words in a statute have their defined meaning, which is not displaced without good reason.
[102] As noted, Sun relies on Vickers to contend that the Schedule 2 definitions do not apply to s 67AAA.
[134]
13 [2014] QCA 330 ("Monadelphous") at [6]-[7] and [12]-[18].
Vickers v Queensland Building and Construction Commission
[141]
[103] _Vickers_19 concerned the interpretation of s 56AC of the QBCC Act, which is in Part 3A. Section 56AC governs the exclusion of an "excluded individual" and an "excluded company". The section uses the term "construction company" which is defined by s 56AC(7) to mean "a company that directly or indirectly carries out building work or building work services in this or another State ..." (emphasis added).
[104] The appellant, Mr Vickers, argued that:
[142]
(a) by operation of the Acts Interpretation Act 1954 (Qld) and the presumption against extra territorial regulation, the carrying out of "building work" and "building work services", as defined in Schedule 2, is confined to activities in Queensland.20
(b) Section 56AC(7) picked up those territorially confined definitions and thereby confined the definition of a "construction company" to a company that undertakes activities with respect to buildings in Queensland.21
(c) If "building" was not confined to a structure in Queensland, the words "in this or another state" in s 56AC(7) would not have been necessary;22 and
(d) the addition of the words "in this or another State" was beyond the constitutional power of the Queensland Parliament.23
[143]
[105] The Court of Appeal rejected the appellant's contentions. Morrison JA (with whom Holmes CJ and Gotterson JA agreed) had regard to the context of s 56AC and its terms. The focus of s 56AC(2) was on a construction company that had gone into liquidation and (relevantly) a person who is or has been a director of a failed company which carried out building work or building work services.24 The words of s 56AC(7) "in this or another State" meant that s 56AC(2) applied to a person who was a director or secretary of a company that had gone into liquidation or been wound up, wherever that occurred.25 The plain words of s 56AC(7) displaced the presumption against extra territoriality in s 35(1)(b) of the Acts Interpretation Act. The presumption was displaced by a clear statement of contrary intention by the use of the words "in this or another State".
[106] Therefore, it was not appropriate to read into the definition of s 56AC(7) the definitions from Schedule 2 as if they were interpreted in accordance with the presumption against extraterritoriality.26 The section applied to a construction company which had carried out building work or building work services either in Queensland or any other State of Australia.27
[107] This conclusion was said by Morrison JA to be reinforced by s 67AAA, who observed that s 67AAA was an example of where the legislature had confined "building work" to the State of Queensland. Morrison JA noted that had the appellant's contention about the definition of "building" or "building work" being confined to buildings located in Queensland been correct, there would have been no requirement for the inclusion of the words "in Queensland" in s 67AAA(1).28
[108] Sun seeks to draw from Vickers the proposition that Part 4A should be construed without regard that the definitions of "building work" and "building" in Schedule 2. It seeks to do so whilst acknowledging that this is contrary to the approach taken by Morrison JA and other judges of the Court of Appeal in Monadelphous.29 Sun submits that Vickers should be read in a way that requires me to reach the conclusion that the better view is that the Monadelphous decisions were per incuriam and should not be followed.
[109] Sun's reliance on Vickers to interpret s 67AAA and the provisions of Part 4A is misplaced. Vickers did not address the interpretation of Part 4A and the issue whether its provisions, and s 67AAA in particular, should be interpreted by incorporating the definitions in Schedule 2 (subject to any contrary intent). The passing reference in Vickers to s 67AAA was to highlight the erroneous interpretation of s 56AC contended for by the appellant in that case, namely that its terms should be confined to buildings in Queensland.
[110] Vickers did not state any general approach to the effect that provisions of the QBCC Act in general should be interpreted by disregarding the definitions in Schedule 2. Such an approach would be contrary to the principle that defined words are read into an operative provision unless a definition is expressly or impliedly displaced.30 The terms of s 56AC clearly displaced the territoriality presumption in of the .
interpretation of "building contract" in s 67AAA is informed by the definition of "building work" and "building" in Schedule 2 of the QBCC Act.
[150]
[114] In other parts of its submissions, Sun correctly observes that the question of what amounts to "building work" for the operation of Part 4A of the QBCC Act does not necessarily yield the same answer as the application of the definition to other sections of the QBCC Act, such as ss 42 and 72. One might observe, with equal force, that what amounts to "a building" for the purpose of s 56AC does not yield the same answer for the purpose of the definition in s 67AAA. This is because each section of a statute must be considered according to its term and context, including whether a statutory definition fits into a particular operative provision.31
[115] For completeness, I should briefly address some of the other arguments advanced by Sun as to why Part 4A should be construed without regard to the Schedule 2 definitions. Contrary to Sun's submissions, the interpretation which I follow is not inconsistent with a protective purpose of Part 4A. The Act's protections and its obligations do not apply to certain building contracts as a result of the exclusions in the QBCC Regulation. Sun does not explain how the definition of "carry out building work" in s 67AAA does not reconcile with the Schedule 2 definition of "building work". If the Schedule 2 definitions were to be excluded, one would expect that to appear in a substantive provision like s 67AAA. Finally, Sun's arguments about the express reference to "construction work" in s 65 of the BIF Act is misplaced for the reasons advanced by Ravenswood at [120]-[123] of Ravenswood's submissions. Nothing of substance turns on the difference between the definitions of "building" in the BIF Act and the definition of "building" in Schedule 2 of the QBCC Act. The interplay between the BIF Act definition of "construction work" and the QBCC Act was addressed and explained by Fraser JA in Monadelphous.32
[151]
When is work "of a kind" that falls within the term "construction work in mining"?
[152]
[116] The "Work" under the Contract falls within the definition of "building work" in Schedule 2 unless it is within an exclusion in the QBCC Regulation. As noted, the definition of "building work" in Schedule 2 of the QBCC Act does not include "work of a kind" excluded by regulation from the ambit of that definition.
[117] Ravenswood relies on Item 28 in Schedule 1 to the Regulation: "Construction work in mining".
[118] The relevant inquiry is whether the subject work is "of a kind" described in the item. In Monadelphous, Fraser JA (with whom Muir and Gotterson JJA agreed) observed that:33
"[I]f the relevant work is 'of a kind' described in an item it is outside the definition of 'building work'. It is therefore not necessary that the work be precisely described by the item."
Fraser JA also stated that the decision about whether work is of a kind stated in an item requires the work to "fall within a broad and practical interpretation of the item".34
[156]
"... Morton Engineering Co Pty Ltd v Stork Wescon Australia Pty Ltd at first instance endorsed the approach that the items 'should be given a reasonably liberal construction consistent with a practical application of what the legislature intended' and which 'would avoid any unduly strict or technical limitations'. Similarly, on appeal it was held that the items should be given a 'broad meaning'."
[157]
[120] In Monadelphous 2, the Court of Appeal considered Item 19 of the QBCC Regulation which related to the construction, maintenance or repair of harbours, walls and other maritime structures. In that appeal I did not treat their inclusion as extending to any work "that is associated with, incidental to, or required to be carried out in order to construct a maritime structure".36 I accepted that Item 19 should be construed so as to achieve the purpose of the Act in regulating a contract which requires a carrying out of any building work. However, this did not require "am unduly narrow construction to be placed upon an exclusion such as Item 19".37 This was because an exclusion should be interpreted in a broad and practical way. As I wrote, "[a]n exclusion may apply to construction work which, if considered in isolation, might be 'building work' but which is undertaken as part of the construction of a structure, such as a maritime structure ...".38
[121] The essential issue in that case was whether the relevant construction was part of the construction of a maritime structure. I went on to observe that "where works play an integral part in the construction process itself, for example by providing temporary supports or a site office at which to control the construction process, it seemed appropriate to have regard to the close connection between those works and the creation of the end result".39 The observations that I made about playing "an integral part" applied the terms of the exclusion in a broad and practical way. They did not create a new statutory test. Holmes CJ and Boddice J agreed with my reasons.
[122] Monadelphous and Monadelphous 2 provide general guidance about adopting "a broad and practical interpretation" of the excluded item and about what is meant by "of a kind". They and other authorities provide limited guidance about the scope of Item 28. Therefore, it is unnecessary to dwell on some of the cases cited by the
[158]
parties such as _Cook's Construction Pty Ltd v Stork ICM Australia Pty Ltd_40 which concerned Item 27 and entirely different facts.
[159]
[123] Neither "construction work" nor "mining" is defined in the QBCC Regulation. For example, it does not pick up definitions of "mine" or "mining" from other statutes.
[124] The "construction work in mining" exemption (then regulation 3A(l)(u)) was considered by Derrington J in Morton Engineering Co Pty Ltd v Stork Wescon Australia Pty Ltd.41 His Honour observed:
[160]
"The applicant tried to limit this strictly to the activity of winning of the product from the soil, but that too is unjustifiably restrictive in this context. The purpose of the provision and the colour that it draws from the general nature of the description of other activities are against it. In respect of the product in this case, natural gas, the mining process would certainly include the transport of the product from the well to the central storage facility. Further in this context, the concept of mining could well include the process used for the removal of impurities at the storage site.42 The authorities that refer to the separation of the won material from natural impurities support an extended meaning for the term in a case such as this, while the context where a more restrictive construction has been applied43 is distinguishable." (footnotes in original)
[161]
[125] In reaching that conclusion, Derrington J had regard to a number of authorities including Gonzo Holdings No 50 Pty Ltd v McKie.44 Gonzo arose in a different statutory context and a different factual setting to which I will return. In short, the issue was whether the appellant carried out mining operations in contravention of s 11.17(1) of the Mineral Resources Act 1989 (Qld). That involved a consideration of a definition in that statute of the word "mine". However, before considering the statutory definition of "mine", McPherson JA and Thomas J considered the ordinary meaning of "mining". Their Honours observed:45
[162]
"...the expression 'mining' has been held to have no fixed meaning but is one that is 'readily controlled by context and subject matter'.
[163]
N.S.W. Associated Blue-Metal Quarries Limited v. F.C.T. (1956) 94
[164]
C.L.R. 509, 522. The primary signification of the word 'mines', of which 'mining' is a derivative, is underground excavations or underground workings: ibid., at 523. But, in relation at least to certain metals, minerals and substances which have been traditionally recovered by underground workings, its meaning has, particularly in Australia, been extended, so that 'whatever the form of the excavation that is made for the purpose of winning them, whether underground or open-cast, it will be called a mine and the
operations will be called mining': ibid., at 523-524. Gold is a mineral, which is found in a variety of situations, alluvial and otherwise; but, wherever it may be found, the process of winning it is, in Australia, generally now described as gold mining."
[170]
[126] The work under the Contract was for the Ravenswood Gold Mine Expansion Project. The Project was to increase the processing capacity of the existing mine by expanding the crushing, grinding and leaching circuits for the mine. The mine is open-cut, as opposed to underground.
[127] The affidavit material explains that the works involved the installation of critical infrastructure required for the expansion and, in particular, for the extraction of gold from the "ore". The word "ore" is used to describe the rock that contains the gold.
[128] Mr Lawry's affidavit gives the following very simple explanation of the gold mining process:
[171]
"(a) The ground is drilled to create holes for the placement of explosives. The explosives are then detonated to break rock and allow for mining. Ore and waste are delineated and mined separately.
(b) The rock containing the ore is then transported via the excavators and trucks to an ore pad, where it is then placed using loaders into the primary crusher and onto the various conveyor belts for further crushing and screening as described further below.
(c) The ore is then further processed to separate and recover the gold from the other material.
(d) From there, the gold is recovered before finally being smelted into gold bars for sale.
(e) The remaining material, called tailings, is then disposed of into a dedicated tailings storage facility (TSF). The TSF is made from mine waste and lined with an impervious geomembrane liner."
[172]
[129] Mr Lawry's affidavit and Mr Courtney's affidavit give a detailed account of the structural, mechanical and piping works that were involved in the Project. Mr Fraser gave an affidavit that addressed rock anchors, crib rooms and mechanical ventilation. I have had regard to the plans, drawings and photographs that are contained in the affidavit material. I also was assisted by enlarged copies of some of these documents which became exhibits, particularly Exhibit 12 being an Overall Process Flow Diagram and Exhibit 11 which is an annotated version of the mine layout. It is unnecessary to detail the work involved in the construction of the infrastructure used in the gold mining process.
[130] The structures that are the subject of the Contract were built close to where the rock (ore) was being won. The infrastructure that Sun constructed was for the purpose of separating gold from its natural state in rock. It entailed primary, secondary and
[173]
tertiary crushing and screening plants. The crushed rock then undergoes a grinding process followed by a leeching process involving tanks. The following part of the process, described as "electrowinning", consists of tanks with electrolyte. The sludge is then placed in a hopper and filtered before being dried in an oven. The end product is then placed in a furnace to be smelted into bars which are placed in a safe. The affidavit material explains the process more fully and the purpose of the buildings and other structures that were constructed as part of this process. It includes buildings that house pumps and electrical components, including simple structures to protect equipment and to allow maintenance under a shelter.
[174]
[131] Ravenswood's essential submission is that Sun was engaged to build these structures for the purpose of crushing, grinding and leeching the ore to produce gold. As Mr Thomas Ambrose orally submitted, the structures were "a necessary and integral part of the mining process". The very purpose of the mining operation and the work that was undertaken at the site was to isolate gold. That was the focus and purpose of what Ravenswood was doing on the mine site and the reason that it engaged Sun to undertake the Works.
[132] Simply put, without the mining process that Sun constructed, one would not have any gold. One would just have rock.
[133] I have concentrated on the result of the Works and the permanent structures that exist to extract gold from rock. I should briefly mention that in the course of construction there were onsite offices for Sun staff, a fabrication facility, and a painting facility. These were necessary for Sun staff to undertake the installation of the mining plant and equipment for the Project. The site offices at the construction site here are analogous to the kind of site office discussed in Monadelphous.46 They were necessary to control the construction process and a close connection exists between them and the end result of the construction process.
[175]
[134] Sun submits that to fall within "construction work in mining" the construction work has to be "integral" to the activity of mining, rather than simply enabling mining to occur. It contends that "construction work in mining" only applies to work that is "integral to the activity of removing the mineral from the ground". It submits the exclusion does not apply to the construction of a site office or a structure for moving the ore once it is removed from the ground. It would confine "construction work in mining" to matters such as the installation of "rock anchors" to prevent the collapse of parts of an underground mine, the construction of a "crib room" in an underground mine, or a mechanical ventilation system in a mine.
[135] Sun's ultimate submission is that the better interpretation is one that limits "construction work in mining" to "the performance of the activities incidental to the physical act of digging up minerals which would otherwise meet the description of a structure affixed to the land".
[136] Ravenswood submits that, adopting a broad and practical interpretation, the work under the Contract is of a kind referred to in Item 28 in that:
[176]
(a) the work was performed at an operational mine covered by a mining lease;
(b) the purpose of the work was the expansion of the mine; and
(c) the work involved the construction of infrastructure used in the process of extracting gold from the ore that was removed from the ground on the mine site.
[177]
[137] It contests the proposition that Item 28 is limited to the performance of activities incidental to the physical act of digging up ore.
[178]
[138] In Australia, the ordinary meaning of "mining", as discussed in Gonzo, is not confined to underground workings. It applies to open-cut mining operations. Gonzo also supports the conclusion that the mining process includes extracting gold from excavated material, at least if the extraction process is not conducted away from the activity of extracting the ore from the ground.
[139] The observations of Derrington J in Morton Engineering that I have earlier quoted about "construction work in mining" were strictly obiter, since the application was able to be determined by reference to another exclusion. However, those observations were carefully considered in light of authorities about the meaning of "mining" including Gonzo. Morton Engineering did not concern the extraction of gold. It does, however, counsel against an "unjustifiably restrictive" interpretation of "construction work in mining" which limits it strictly to the activity of winning product from the soil. Derrington J accepted that in the context of regulations that preceded the QBCC Regulation, "the concept of mining could well include the process used for the removal of impurities" and the separation of the won material from natural impurities. These were said to support an extended meaning for the term beyond the act of winning ore from the ground. It supports the conclusion that the process of extracting gold from excavated material in close proximity to where the extraction activity occurs amounts to "mining".
[140] If it is helpful to inquire whether the work under the Contract was "integral" to the mining conducted by Ravenswood, then the answer must be in the affirmative. Without the structural, mechanical and piping works that Sun constructed, Ravenswood would not have been able to separate the gold from the ore in which it was held. The works were necessary to extract gold from the excavated rock material.
[141] The process that was undertaken by the constructed works was not conducted away from where the rock was excavated and placed in a dump truck. The Project Works were situated on the mine site. The relevant leases and the situation of the Project appear in exhibits 9, 10 and 11. That fact distinguishes it from the factual situation in Gonzo and the earlier authority of .47 In those cases ore was transported to other land and treated on another person's property with the consent of that person.
samples of mudstone, sandstone clay and quartz. The material was transported to another property at least three kilometres and perhaps six kilometres away from the leased area. The appellant established a pilot plant on that site for the purpose of processing alluvial gold. Settlement ponds were established there. The land was privately owned and was not a mining lease. The case turned upon the application of the statutory definition of "mine" in the context of an offence in relation to unauthorised mining. The appellant's process of washing or treating gold bearing material was not held to be mining in the relevant sense in the application of the statutory definition.
[181]
[143] Sun's submissions in reply mistake Ravenswood's case as asserting that the processing plant amounted to "construction work in mining" merely because it was located on a mining lease. This was not Ravenswood's submission. Instead, the fact that the plant was constructed on a mining lease and close to where the rock was extracted was simply one part of an overall submission. It also was a basis to factually distinguish Gonzo.
[144] The Court is required to adopt a broad and practical interpretation of Item 28. Doing so, I find that the Work that Sun constructed were an essential part of the process of mining. It was integral to the process of extracting gold from the rock or ore from which it needed to be extracted. Absent the Work, Ravenswood would simply have been extracting rock, not mining gold. The process of extracting material from the ground and extracting gold from it was an integrated process that occurred on a mining site and on mining leases. The Work was "construction work in mining".
[145] This conclusion is not affected by the presence at the end of the process of a location at which the extracted gold is smelted and stored in a safe. This does not convert a gold mining operation into a storage facility. It does not prevent the Works being described as "of a kind" described in Item 28. This is because it is not necessary that the work be precisely described by the Item.48
[146] I emphasise that my conclusion is fact-specific. As the authorities illustrate, questions of degree are involved. The physical distance between the places where ore is won from the ground, the place where impurities are removed and gold is extracted is relevant. None of the authorities encourage the conclusion that some process that is directly linked to mining amounts to mining. Were that to be the case, the construction of a nickel refinery near Townsville where impurities are removed and the nickel refined would entail mining, despite the refinery being hundreds of kilometres from where the nickel was won. Such a conclusion does not accord with the ordinary meaning of "mining".
[147] In this case, however, the Project was an integral and essential part of the gold mining process. The Work was undertaken at a mine site and on mining leases. The Work was "construction work in mining" for the purpose of Item 28 of the .
[182]
meaning of s 67AAA of the QBCC Act. The provisions of Part 4A upon which Sun seeks to rely, therefore, did not apply.
[183]
Does s 67J affect recourse to security in relation to an amount that is not "an amount owed under the contract"?
[184]
[149] Because Part 4A does not apply to the Contract, it is strictly unnecessary to consider the possible application of ss 67J, 67NA and 67NB. However, I will address these provisions.
[150] Section 67J, relevantly, provides:
[185]
"(1) The contracting party for a building contract may use a security or retention amount, in whole or in part, to obtain an amount owed under the contract, only if the contracting party has given notice in writing to the contracted party advising of the proposed use and of the amount owed.
(2) The notice must be given within 28 days after the contracting party becomes aware, or ought reasonably to have become aware, of the contracting party's right to obtain the amount owed.
[186]
(4) This section does not apply if, under the contract - (a) work has been taken out of the hands of the contracted party or the contract has been terminated; or (b) the security or retention amount is to be used to make a payment into court to satisfy a notice of claim of charge under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).
[187]
amount owed, under a building contract, means an amount that, under the contract, is a debt due from the contracted party for the contract to the contracting party for the contract because of circumstances associated with the contracted party's performance of the contract.
[188]
use of security or retention amount includes the act of converting securities into cash where the securities are held as negotiable instruments." (emphasis added)
[189]
[151] As emphasised, s 67J(1) applies to use of a security or retention amount to obtain "an amount owed under the contract". If the security is to be used for such a purpose, then a notice must be given in accordance with s 67J. As McMurdo J (as McMurdo JA then was) stated in Saipem Australia Pty Ltd v GLNG Operations Pty Ltd (No 2):49
[190]
"... s 67J(1) affects the right of a contracting party to use a security or retention amount only by requiring the notice which it describes. The section is engaged where that entitlement to use a security or
retention amount otherwise exists and once engaged, its effect is to qualify the entitlement by requiring the notice."
[193]
[152] Sun contends that s 67J affects Ravenswood's contractual entitlement to use the guarantee in respect of Ravenswood's claim for restitution. As discussed in the first section of this judgment, Sun contends that Ravenswood's claim is not for an amount that is owed or payable under the Contract.
[153] The clear words of s 67J(1) indicate that its notice requirement is engaged only when a party seeks to have recourse to security to obtain "an amount owed under the contract". The notice requirement in s 67J apparently does not apply where the contract entitles a party to use a security to recover other amounts, such as a claim for unliquidated damages or an amount to which a party is entitled under the general law. This conclusion is supported by the decision of Holmes CJ in Saipem (No 3).50 Saipem (No 3) held that a clause which permits recourse to security for unliquidated amounts (i.e. not an "amount owed") would not be inconsistent with s 67J.51 The section was not the source of a party's entitlement to recourse to security, but rather placed "a hurdle in the way of the exercise of contractual rights, in the form of the notice requirement".52
[154] Sun seeks to call into question the correctness of the reasoning in Saipem (No 3). It says that the decision did not refer to an earlier decision of the Court of Appeal in Multiplex Ltd v Qantas Airways Ltd.53 The decision in Multiplex concerned a different form of s 67J. However, Keane JA (with whom McMurdo P and Mullins J agreed), noted that s 67J was concerned to regulate the reduction of "an amount payable under the contract" by "an amount owed under the contract".54 I do not consider that Multiplex provides a reason to not follow the decision of Holmes CJ in Saipem (No 3).
[155] Sun also relies on an earlier decision in Beyfield Pty Ltd v Northbuild Construction Sunshine Coast Pty Ltd.55 Holmes CJ considered the reasoning in Beyfield and the reasoning in the earlier Saipem decision. Saipem (No 3) is a carefully-reasoned decision. It recognises a possible anomaly in s 67J not applying to unliquidated claims or attempts to use a security for amounts other than "an amount owed under the contract". However, that conclusion flows from the language of the section. is persuasive and I follow it.
[194]
50 Saipem Australia Pty Ltd v GLNG Operations Pty Ltd[2017] QSC 294.
[195]
contract. The section assumes the existence of a right in a contracting party to use a security or retention amount, and regulates that right by requiring a notice to be given when the contracting party to a building contract seeks to use a security to obtain "an amount owed under the contract". Section 67J is not the source of a party's entitlement to have recourse to security. It regulates a particular entitlement. It is not inconsistent with a contractual provision that entitles a party to use a security to obtain an amount that is not "an amount owed under the Contract". Clause 10.4(a) of the Contract does not entail a "contracting out" of the provisions of the Act, contrary to s 108D. The clause is not unenforceable pursuant to s 67E as being inconsistent with a provision of the Act.
[196]
[158] My conclusion as to the proper interpretation of s 67J leads to the conclusion that if Part 4A applied to the Contract (which I have found it does not), then s 67J did not apply in the circumstances so as to require a notice to be given advising of the proposed use and of the amount owed under the Contract. Section 67J did not govern Sun's contractual entitlement to use the Security for its claim for overpayment. As Sun explains elsewhere, that claim is not for an "amount owed under the contract".
[197]
Is there an "identifiable period" in the Contract for the release of the security?
[198]
[159] This issue only arises if ss 67NA and 67NB apply. I have earlier found that Part 4A does not apply so as to cover the retention or release of the security.
[160] Sun submits that by reason of the operation of ss 67NA and 67NB, there was a statutory obligation upon Ravenswood to return the guarantee to Sun as at 16 August 2023.
[161] Section 67NA provides:
[199]
"(1) This section applies to a building contract if -
[200]
(a) under the contract -
(i) a retention amount may be withheld; or
(ii) a security may be held after practical completion in relation to the need to correct defects in the building work under the contract; and
[201]
(b) the contract does not provide for the release of the retention amount or security at the end of an identifiable period.
[202]
(2) The building contract is subject to a condition that the retention amount or security must be released to the person entitled to it at the end of 12 months starting on the day of practical completion for the contract (the statutory defects liability period)." (emphasis added)
[203]
[162] Section 67NB governs a failure to pay a retention amount or other security without reasonable excuse.
[163] Sun submits that the Contract does not provide for the release of the guarantee at the end of an "identifiable period". Ravenswood's simple response is that s 67NA does not apply because the Contract does provide for the release at the end of an "identifiable period", namely the period of 10 business days after the expiry of the DLP. In reply, Sun contends that this is contingent upon an unidentifiable period in clause 10.5(a)(ii)A, during which sums of money owed or claimed under or in connection with the Contract have been paid in full. Its argument is that there is no certainty as to when Ravenswood's "claim" will be resolved, such that the period referred to in clause 10.5(a)(ii)A is unknown and not identifiable.
[164] In my opinion, the better view having regard to the purpose of s 67NA is that the Contract provides an identifiable period for the release of the security. This is not a case in which the Contract is silent about when the security will be released. It provides for it to be released 10 business days after the expiry of the DLP. The release is conditional upon a payment being made. However, that does not prevent the release date being identified. A party in Sun's position simply has to decide whether to pay all sums of money owed by it or claimed by Ravenswood under or in connection with the Contract, in order to obtain the release on the identifiable date.
[165] Expressed differently, a party in Ravenswood's position is required to release the security by the date provided for its release (provided the sum of money owed or the claim has been paid in full). The date for release is at the end of an identifiable period. Sun is left to choose whether to obtain the release of the security on that date. Whether or not the security is in fact released depends upon Sun doing what clause 10.5(a)(ii)A requires in order to obtain the release.
[166] In summary, if s 67NA had applied to the Contract, then the Contract provided for the release of the guarantee "at the end of an identifiable period" within the meaning of s 67NA.
[204]
[167] Clause 10.4 of the Contract permits recourse to the Security for a "Claim", not simply for an amount that is payable under the Contract or a liquidated amount.
[168] Ravenswood's claims for overpayment are a "Claim" for the purposes of clause 10.4.
[169] Ravenswood made a "Claim" prior to the date upon which the DLP expired and prior to the date the Security was to be released.
[170] Because Sun did not pay the Claim in full, Ravenswood was not obliged under clause 10.5 to release the Security on or before 16 August 2023. It was entitled to retain it.
[171] Ravenswood was entitled to call upon the Security pursuant to clause 10.4.
[172] Ravenswood is entitled to have recourse to the substitute bank guarantee at least for the unpaid claims made in PS16, PS17 and PS18. It is strongly arguable that it also is entitled to have recourse to the substitute security to the extent of its claim for overpayment made on 21 September 2023 in its Notice of Dispute (which contained an overpayment claim based on an amount that Ravenswood paid into Court).
[205]
Because the amount paid into Court is secured, and on one scenario may be paid out to Ravenswood once another proceeding is determined, it is presently unnecessary to determine whether Ravenswood is entitled to have recourse to the bank security for a Claim that includes the amount paid by it into Court. Also, neither party seeks a declaration by me about the extent to which Ravenswood presently may have recourse to the bank guarantee.
[206]
[173] The Contract is not a "building contract" as defined in s 67AAA of the QBCC Act. This is because the Work was of a kind that falls within "Construction Work in mining" exclusion in Item 28 of the QBCC Regulation. Therefore, Part 4A of the Act, which includes ss 67J, 67NA and 67NB, does not apply to the Contract.
[174] In any case, s 67J only applies to the use of a security to obtain "an amount owed under a contract". Section 67J does not regulate use of a security for the recovery of other amounts, such as Ravenswood's overpayment claims. Ravenswood's contractual right of recourse under clause 10.4 for a "Claim" that is not "an amount owed under a contract" is not inconsistent with s 67J and therefore is not unenforceable. Clause 10.4 does not "contract out" of s 67J.
[175] Because the Contract is not regulated by Part 4A of the QBCC Act, ss 67NA and 67NB do not apply so as to affect the release or retention of the Security. In any case, the Contract provides for the release of the Security at the end of "an identifiable period", namely the period of 10 business days after the expiry of the Defects Liability Period. The date for release is specified by the Contract. The right to obtain the release is subject to the payment in full of all sums of money owed by Sun to Ravenswood or claimed by Ravenswood under or in connection with the Contract. Because the Contract provides for the release of the Security at the end of an identifiable period, the Contract is not subject to the condition stated in s 67NA(2).
[176] For these reasons, I should decline to declare that Ravenswood is not entitled to retain, or to have recourse to, the original bank guarantee or the substitute guarantee. I should also decline to grant the other declaratory and injunctive relief sought by Sun. I am disposed to dismiss the application, with costs to follow the event. However, I will hear from the parties as to the disposition of the application and the appropriate order as to costs.
[177] Because of some complexities in relation to a possible Anshun estoppel, the parties agree that I should not make orders at this stage. I will simply publish my reasons and adjourn the matter to a date to be fixed. By that time, the parties can consider what orders should be made in the light of my reasons and in the light of any disposition of proceeding BS 9278/23, relating to the validity of the adjudication decision made under the .
Parties
Applicant/Plaintiff:
Sun Engineering (Qld) Pty Ltd
Respondent/Defendant:
Ravenswood Gold Pty Ltd [2024] QSC 68
Legislation Cited (5)
Building and Construction Commission Act 1991
Resources Act 1989
Industry Fairness (Security of Payment) Act 2017
Building and Construction Commission Regulation 2018
Interpretation Act 1954
Cases Cited (6)
(2017) 97 NSWLR 488
(1995) 133 ALR 502
(1969) 120 CLR 240
(1972) 127 CLR 529
(2004) 218 CLR 216
(1956) 94 CLR 509
Beyfield Pty Ltd v Northbuild Construction Sunshine Coast Pty Ltd
[30] Finally, if Part 4A applies so as to govern the retention or release of the security, then Sun submits that Ravenswood was obliged in accordance with ss 67NA and 67NB to release the security at the end of 12 months starting on the date of practical completion ("the statutory defects liability period"). This is because the Contract is
[75] This submission does not, however, take account of the consequences of a claim being made before that date on the retention of the guarantee and recourse to it if the claimed amount is not paid in full.
[76] If no amount is payable under the Contract, no claim is made and there are no unrectified defects, then the guarantee is released in accordance with clause 10.5(a). It is no longer available to be called upon. If, however, it is not released because,
[111] Vickers did not question the correctness of earlier decisions of the Court of Appeal or of this Court about the meaning of "building work" and "building" in s 67AAA and the application of Schedule 2 definitions to its interpretation. This is not surprising because Vickers concerned the terms, context and proper interpretation of one section in Part 3A: s 56AC. It did not consider the application that the statutory definitions to the provisions of Part 4A in general or to s 67AAA in particular.
[112] Sun's submission that the approach taken by Morrison JA in Vickers requires Part 4A to be construed without regard to the definitions of "building work" or "carry out" in Schedule 2 cannot be sustained. Vickers did not state that s 67AAA impliedly excludes the Schedule 2 definitions and it does not support that conclusion.
[113] One therefore is left with decisions of the Court of Appeal and this Court that support Ravenswood's case that s 67AAA should be interpreted by reference to the Schedule 2 definitions of "building work" and "building". Sun advances no sound basis as to why I should not follow those decisions. Therefore, I conclude that the
Bismarck Range (Lucknow) Gold Exploration NL v Wentworth (Lucknow) Goldfields NL
[142] Gonzo involved a different statutory context. It also concerned a different factual circumstance. The appellant held a mining lease over certain land and it extracted
QBCC Regulation
[148] Because the Work fell within that exclusion, it was not "building work" for the purpose of the QBCC Act. The Contract was not a "building contract" within the
Saipem (No 3)
[156] Sun contends that s 67J "covers the field" as to any entitlement to convert bank guarantees. It argues that no authorisation can be found in the Act to recover any amount other than a debt due. The provision on contracting out in s 108D and the provisions of s 67E about unenforceability are relied upon to contend that there is a legislative intent to restrict the circumstances in which a security can be relied upon under a "building contract".
[157] These arguments are unpersuasive. As noted, s 67J does not provide that a security or retention amount may be used only where there is an amount owed under the