Fabrication of equipment from Malaysia to be installed in QLD can be included in a BCIPA Claim

The Supreme Court of Qld has just released an important decision on the application of BCIPA to the fabrication of equipment in Malaysia –to be installed on a project on the Wiggins Island Coal Export Terminal in Qld.

WICET, was ordered by an adjudicator to pay to MMMJV, the sum of $22,132,839.35. WICET appealed on the basis that the adjudicator had no power to order any sum to be paid for what it says was the relevant construction work, because MMM’s claim was for construction work which it had carried out outside Queensland and was thereby excluded from the operation of the Act by s 3(4).

The Adjudicator’s Jurisdiction

The contract which is relevant to this case concerns equipment called the Shiploader and an associated piece of equipment called the Tripper, which together will operate on a wharf to deliver coal into the hatches of ships which are docked there. The Tripper will facilitate the transfer of coal from the wharf conveyor belt to the Shiploader, upon which another conveyor will direct the coal into ships.

The Act

The relevant exception to the application of the Act to construction contracts is that stated in s 3(4) as follows:

“(4) This Act 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”

WICET’s argument was that the Act did not apply to this contract to the extent that it dealt with construction work carried out in Malaysia and that all of the work for which MMM had made the relevant claim had pre-dated the delivery of the equipment to Queensland. And to the extent that MMM had claimed for the supply of related goods and services, those goods and services had been supplied for the construction work carried out in Malaysia.

The adjudicator found that the contract provided for the supply of components, namely the Shiploader and the Tripper to form part of the structure, namely the wharf, which was to arise from construction work at Wiggins Island in Qld. Accordingly, the contract was a construction contract because it was for the supply of related goods to be used for construction work in Queensland.

WICET disputed the finding by the adjudicator that the Shiploader and Tripper were “components” or they (otherwise) formed part of the structure which was the wharf. WICET argued that the Shiploader together with the Tripper formed a distinct structure which, upon installation on the wharf, formed part of the land. WICET’s argument likens the Shiploader and the Tripper to a prefabricated water tank to be installed at a building. WICET claimed that like a water tank, this equipment was not to be “incorporated into the construction work” of the wharf tank in the sense of becoming “an inseparable and indistinct part of it”

The Court held that the contract was more than to supply a Shiploader and tripper. There were extensive provisions of the contract by which it was to fabricate this equipment. This meant that if the equipment is properly characterised as components of the wharf structure, so this was a contract for the carrying out of construction work rather than a fabrication of the Shiploader and Tripper have the necessary close connection with the construction of the wharf in which they will form an essential part as the wharf is intended to be used.

For the supply of related goods and services, the required association is that they be supplied in relation to construction work carried out in Queensland. In that context, the place of manufacture component is irrelevant. The essential association with Queensland is the part which the supply of those goods plays in the construction of something upon Queensland land.

Conclusion

The fabrication of equipment outside Queensland that is an integral part of construction work in Qld will come under BCIPA.

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