Key Takeaways

• In determining the location of cross-border (New South Wales and Queensland) construction works, the geographical focus (and therefore the appropriate territorial nexus) is the building, structure or other work – not the individual activity undertaken
• The building, structure or other work must be situated wholly outside of Queensland to exclude the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act)
• A payment claim submitted in a cross-border project does not need to identify the precise location of every piece of the construction work in each State.

Facts

Lendlease Building Pty Ltd (Lendlease) was engaged as head contractor for certain construction works at the Gold Coast Airport. Lendlease subcontracted BCS Airport Systems Pty Ltd (BCS) to design and construct a baggage handling system within the airport.

Uniquely, the New South Wales and Queensland border runs directly through the Gold Coast Airport, including the specific work zone, with the result that some of the construction work was undertaken partly in Queensland and partly in New South Wales.

Furthermore, the site is designated as a “Commonwealth Place”, meaning it is regulated under the Commonwealth Places (Application of Laws) Act 1970 (Cth).

On 22 July 2022 BCS submitted a payment claim for approximately $1.2 million for contract works, variations and delay damages. Lendlease approved payment of $59,282. BCS subsequently progressed the matter to adjudication under the BIF Act.

In its adjudication response, Lendlease submitted that the adjudicator did not have jurisdiction because BCS could not distinguish which works had been carried out in New South Wales and which works had been carried out in Queensland. Section 61(4) of the BIF Act relevantly provides:

This chapter does not apply to a construction contract to the extent it deals with construction work carried out outside Queensland or related goods and services supplied for construction work carried out outside Queensland.

Rejecting Lendlease’s position, the adjudicator determined that BCS was entitled to payment of $995,000.

Supreme Court of Queensland Decision

Lendlease commenced proceedings in the Supreme Court of Queensland, seeking to have the adjudicator’s determination set aside for jurisdictional error (and other bases).

BCS argued that section 61(4) of the BIF Act should be read so that it only excluded construction works which were “wholly” carried out outside of Queensland.

Placing significant emphasis on the purpose of the legislation; that is, to aide contractors in getting paid, Sullivan J accepted the BCS position and dismissed Lendlease’s application. His Honour found that:

• The geographical focus of section 61(4) is the building, structure or other work, not the individual activity undertaken; and
• Any alternative interpretation would require a bolt-by-bolt analysis containing minute detail which would be prone to dispute and make it difficult for any contractors on cross-border projects to be paid.

For contractors and subcontractors involved in cross-border construction projects, this case clarifies that the BIF Act will not be excluded simply because the work involved is in both States. It is only if the work is “wholly” outside Queensland that the BIF Act does not apply.

Further information / assistance regarding the issues raised in this article is available from the authors, Patrick Kaluski, Partner, Joshua Murgatroyd, Associate and James Davis, Lawyer, or your usual contact at Moray & Agnew.