CLIENT UPDATE: BREAKING GROUND
17 august 2012
Breaking Ground is a regular publication by the Allens Infrastructure and Construction group to keep you informed of the latest news and developments in this area. For more information or for legal advice, please contact one of the Partners listed below. We look forward to hearing from you.
BlueScope Steel and Nippon Steel Corporation joint venture – 13 August 2012
BlueScope Steel Limited and Nippon Steel Corporation have agreed to form a new joint venture, encompassing BlueScope's ASEAN and North American building products business. The 50:50 joint venture, called NS BlueScope Coated Products, hopes to facilitate entry into new markets.
Source: BlueScope Steel news and media
NSW inquiry into building industry collapses – 9 August 2012
The New South Wales Government announced that it will inquire into insolvency in the building industry, after Reed Constructions, St Hilliers and Kell and Rigby collapsed, with millions of dollars owing to subcontractors. NSW Finance Minister Greg Pearce stated that hundreds of building companies in NSW collapsed between 2009 and 2011, leaving many subcontractors close to failing. The inquiry will look into reforms needed to lower the adverse effects on subcontractors.
Source: Paul Hemsley, 'NSW inspects corruption bankruptcy', Government News, 9 August; 'Construction industry inquiry welcomed', ABC Mid North Coast NSW, 9 August 2012
Queen's Counsel Bruce Collins, a leading construction law specialist, has been appointed to chair the inquiry and is calling for submissions from interested parties. The inquiry will focus on the extent and cause of insolvency in the construction industry, and potential legislative or policy responses; in particular, regarding the position of subcontractors. There are, of course, myriad issues that may cause construction industry participants to face solvency issues and the results of the inquiry will be eagerly anticipated.
There have been numerous recent high-profile insolvencies, which have caused significant difficulties on major projects across the state of NSW. The Allens team have been actively engaged in helping a number of clients address issues arising from some of these insolvencies, and are very familiar with the projects and the difficulties concerned. The current economic climate means there remains significant risks of further projects being impacted.
SA Government building and construction stimulus – 7 August 2012
The South Australian Government will provide an economic stimulus initiative to revive building and construction activity, after the state lost its AAA credit status from ratings agency Standard and Poors.
Source: 'SA to fast track construction industry' Government News, 7 August 2012
Leighton Holdings balances losses to unveil $115 million profit – 7 August 2012
Construction giant Leighton Holdings has unveiled a profit of $115 million. The company balanced losses on Australian projects, such as the Wonthaggi desalination project and the Brisbane Airport link, with a boom in overseas work.
Source: Neil Wilson, 'Leighton Holdings builds a $115m profit', Herald Sun, 7 August 2012
Government assistance needed to stimulate building industry in Victoria – 6 August 2012
With three building-related businesses failing every week in Victoria, industry leaders are pleading for urgent government assistance. Some developers are considering relocating operations to Queensland, WA and the NT. The Property Council is calling on the State Government to stimulate construction activity, by bringing forward community infrastructure investment and overhauling the planning system.
Source: Jason Dowling and Chris Zappone, 'Builders face grim outlook as confidence tumbles', The Age, 6 August 2012
KBR appointed engineering consultant for Acacia Prison expansion – 7 August 2012
KBR has been awarded a $90 million contract to serve as engineering consultant for the 387-bed expansion of Acacia Prison in Wooroloo, WA.
Source: KBR press release
Renewal of Ararat prison PPP – 2 August 2012
The Victorian Government will renew the $400 million Ararat prison public private partnership (PPP). The project came to a halt part-way through construction when St Hilliers' construction arm was placed in voluntary administration.
Source: John Ferguson, 'Baillieu to revive failed public-private jail deal', The Australian, 2 August 2012
Anktell Point port receives EPA approval – 30 July 2012
The Environmental Protection Agency (EPA) approved the construction of a port at Anktell Point, WA. Aquila Resources and Posco-backed AMCI will construct the port in a joint venture. The completed port will have capacity of 115 million tons per year, which will be sufficient capacity to support API's $6 billion West Pilbara iron ore project.
Source: 'Environmental Protection Authority gives thumbs up for Anketell Point port', Herald Sun, 30 July 2012
Lumsden Point chosen for Pilbara Maritime Common Use Facility – 30 July 2012
Lumsden Point, Port Hedland, has been selected as the location for the proposed Pilbara Maritime Common Use Facility (PMCUF). PMCUF will provide access to common-use infrastructure such as laydown areas, a ship lift, slipway and loading facilities for industry. Four feasibility studies are currently underway.
Source: Western Australian Minister for Finance; Commerce and Small Business ministerial media statement
Fortitude Mining allowed to test for gold in Victorian Wombat State Forest – 12 August 2012
The Victorian Government has given Fortitude Mining permission to test for gold in the Wombat State Forest in central Victoria. The project is scheduled to start next month and will involve removing native vegetation, extracting 5000 tonnes of material from the ground, and taking it away for processing. If successful, Fortitude Mining will seek permission to set up an open cut goldmine.
Source: Farrah Tomazin 'Mining plan sparks fears for wombats', The Age, 12 August 2012
Victorian Government applies for federal roads funding – 7 August 2012
The Victorian Government has submitted several regional road projects to Infrastructure Australia for funding. The submission includes further duplication of the Western Highway between Ballarat and Stawell, and a bid for funds for a planned rail link between Mildura and Menindee.
Source: 'Federal funds bid for road, rail projects', ABC news, 7 August 2012
Plans for three new Sydney motorways – 6 August 2012
Infrastructure NSW is drawing up plans for three new motorways in Sydney. The plans include another M5 East tunnel; an M4 East running beneath Parramatta Road connecting to the city, as well as Botany and the airport; and a link between the F3 and M2. However, the plans will cost between $10 billion and $15 billion in government funds, in addition to tolls. It is understood Infrastructure NSW has been meeting with private equity firms to discuss how to make the package of motorway projects attractive to foreign investors and superannuation funds.
Source: Jacob Saulwick, 'Parramatta Road plan: dig it up for tunnel', Sydney Morning Herald, 6 August 2012
East West Link is top Victorian priority – 6 August 2012
The East West Road Link and a new underground rail tunnel are at the top of the Victorian Government's priority project list.
Source: Ashley Gardiner, 'Transport tops federal funding wish list', Herald Sun, 6 August 2012
East Coat Pipeline awarded $150 million contract – 6 August 2012
East Coast Pipeline has been awarded a $150 million contract as part of phase one construction of the Australia Pacific LNG Project. Under its contract, East Coast Pipeline will install more than 600 kilometres of high density polyethylene, to transport extracted gas and water from 145 wells at Spring Gully.
Source: '$150m LNG pipe contract awarded', The Chronicle, 6 August, 2012
Planning Minister approves Woolworths complex – 1 August 2012
Victorian Planning Minister Matthew Guy has approved a proposal from Woolworths to build an apartment and retail complex in North Melbourne, with towers up to 55 metres high. The proposal was opposed by local residents and the North Melbourne Football Club. The Melbourne City Council is planning to take the matter to the Victorian Civil and Administrative Tribunal (VCAT).
Source: Miki Perkins, 'Towers win Guy Approval', The Age, 1 August 2012
VCAT gives approval to developers of Bald Hills wind farm – August 2012
Developers of the Bald Hills Wind Farm (BHWF) applied to VCAT last month to obtain approval of various plans submitted under the planning permit for the wind farm on the basis that the Minister for Planning, Matthew Guy, had failed to do so within a reasonable time. The permit expires on 19 August 2012 if development has not commenced by then; however, development could not have commenced until the plans were endorsed by the Minister. Any extension-of-time application would have attracted the new wind farm rules brought in by the Minister that prohibit wind turbines within 5 kilometres of the coastline and within 2 kilometres of dwellings (unless the owner consents). VCAT decided that the Minister had had a reasonable amount of time to make a decision and had failed to do so. VCAT then went on to direct that the Minister approve the plans on their merits. The plans were endorsed early the following week and construction commenced shortly thereafter, in time to meet the requirement of commencing works before 19 August 2012.
Source: Allens acted for BHWF in relation to the VCAT application and hearing
TrustPower and Siemens to build SA's largest wind farm – 1 August 2012
TrustPower has appointed Siemens as its turn-key supplier to construct SA's largest wind farm at Snowtown. This is the first time gearless drive wind turbine technology will be used in Australia.
Source: TrustPower newsroom
Western Australian Government approves new train station – 5 August 2012
The WA Government has approved $80 million to build a train station at Aubin Grove. The station will have 2,000 car spaces and the Government will purchase additional rail cars to meet the increased demand on the Mandurah train line.
Source: WA Treasurer, Minister for Transport, Emergency Services ministerial media statements
Flinders Street Station design competition – 1 August 2012
More than 100 local and international architects and firms have entered designs in the Flinders Street Station design competition.
Source: 'Station redesign attracts big field', The Age, 1 August 2012
Work on the Victorian Regional Rail Link begins – 7 August 2012
After committing $3.2 billion to the Regional Rail Link through the national Building Program, construction work is now underway on the 7.5-kilometre Footscray to Deer Park section. The project is being completed through an alliance of the Regional Rail Link Authority, Metro, V/Line, Thiess, Balfour Beatty, Parsons Brinckerhoff and Sinclair Knight Merz.
Source: Victorian Minister for Infrastructure and Transport media release
Hexham rail project progressing with state significant infrastructure application lodged – 10 August 2012
A state significant infrastructure application has been lodged with the Victorian Government for the rail project at Hexham. The project will cost $90 million and will include five extra rail lines, known as relief roads, with a capacity to store a minimum of 90 wagons.
Source: 'State significant rail plans for Hexham', ABC News, 10 August 2012
Master Builder Australia: submission to APCC on Security of Payment – 6 August 2012
Master Builders Australia has made a submission to the Australasian Procurement and Construction Council (APCC) on security of payment in the building and construction industry. Master Builders Australia suggests that there is currently an imbalance in security of payment legislation that is causing friction between building contractors and their principals, and that this is curtailing the industry's viability. The submission contains 10 best practice principles that Master Builders Australia suggests should form the foundation for national action to achieve a greater degree of uniformity in security of payment legislation, to replace the outdated and increasingly nationally fragmented system.
Source: Master Builders Australia newsroom
The Victorian Supreme Court held that a contract to build a Turkish Consul-General's residence in Melbourne was a domestic building contract within the meaning of the Domestic Building Contracts Act 1995 (Vic) and therefore that the Building and Construction Industry Security of Payment Act 2002 (Vic) (the Act) did not apply.
The dispute arose out of a purported adjudication of a payment claim under the Act. In arriving at his decision, Justice Vickery noted that the definition of 'home' in the Domestic Building Contracts Act 'introduces a capacious concept rather than a restrictive one'. Although acknowledging that large events were sometimes held in the building, and that it enjoyed the same diplomatic immunity as the premises of the mission, his Honour found that it was 'principally used as a private residence'. The 'special uses and characteristics' of the building did not take it outside the meaning of 'residential premises'.
St Hilliers Construction Pty Ltd (in admin) v Fitzpatrick Investments Pty Ltd  NSWSC 804 – waiver and security
The Supreme Court of NSW considered whether the act of taking possession of works by the principal amounted to a waiver of the principal's entitlement to receive consultants' certificates and, accordingly, a right to continue to hold security that has been provided. The contractor argued it was entitled to a 50 per cent reduction in the security it provided, as the principal had, by taking possession, waived its right to receive the consultants' certificates. Justice Hammerschlag dismissed the contractor's submission, and found that the taking of possession by the principal (even if unauthorised) did not amount to a waiver, as it was not inconsistent with its entitlement to the certificates. The taking of possession did not involve the corollary that the entitlement to receive the certificates was lost.
The Supreme Court of NSW held that it is a matter of substance, rather than form, whether multiple invoiced amounts should be considered one payment claim for the purpose of an application under the Building and Construction Industry Security of Payment Act 1999 (NSW). In this instance, where two invoices were sent under cover of one facsimile, the court found that the amounts in question, though reflected in multiple invoices, formed only one payment claim.
An unsuccessful tenderer to build a storage facility for the National Library of Australia sued the library, claiming that it had disclosed the plaintiff's confidential tender information to the successful tenderer. The plaintiff's argument was based primarily on alleged similarities between its unsuccessful tender and the facility that was eventually built.
His Honour found that, although the detailed tender regime established by the library gave rise to a tender process contract, the mere fact of a tender process contract does not, of itself, import a duty of confidentiality. Rather, the court had to look to all the circumstances. Ultimately, his Honour found that although there was an implied confidentiality term, it was not breached, since there was no disclosure of any of the plaintiff's information.
In this case, the principal contractor paid into court monies the subject of a payment claim by the respondent. The claimant, a creditor of the respondent, subsequently made a payment withholding a request against the principal contractor for money it claimed it was owed by the respondent. Justice Hammerschlag held that for a principal contractor to become jointly and severally liable under section 26C of the Building and Construction Industry Security of Payment Act, there must be a voluntary act (or omission) on the part of the discharger after the receipt of the payment withholding request and the payment out of court was not a voluntary act.
Shell was successful in overturning a council decision to grant approval for a medium-density housing development opposite its Newport facility. Shell opposed the intensification of residential use of the land in High Street, Newport, on the basis that the facility was a major hazard facility and that any increase in density would pose an unacceptable risk. VCAT agreed and concluded that, due to its extremely close proximity to the major hazard facility, an increase of even two dwellings was unacceptable. VCAT stated that to allow for an increase in the density of development on the subject land, within WorkSafe's inner planning advisory area and within the EPA's buffer distance, would introduce a very small increased marginal societal risk. VCAT was concerned that, 'based on the tyranny of small decisions', it would, in the end, set a precedent for similar developments in the area, and it would be irresponsible in the circumstances to approve the development, albeit with its resulting very small increase in population density.
Integrity Amendment Regulation (No 1) 2012 No 117/2012 (Qld) (applies to 'Hospital and Health Service' established under the Hospital and Health Boards Act 2011 (Qld)).
- Leighton O'BrienPartner,
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- Brian MillarPartner,
Ph: +61 2 9230 4839
- Emma WarrenPartner, Sector Leader - Infrastructure & Transport,
Ph: +61 3 9613 8856
- Nick Rudge Partner,
Ph: +61 3 9613 8544
- Ren NiemannPartner,
Ph: +61 7 3334 3005
- Michael HollingdalePartner,
Ph: +61 8 9488 3708
- Stephen McComishPartner,
Ph: +61 8 9488 3767