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Client Update: Breaking Ground

15 July 2013

In brief: 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.

Allens publications

Focus: Post-termination payment claims – new issues – 8 July 2013

A recent decision has upheld that a party to a terminated construction contract cannot make a subsequent payment claim under BCIPA. Partner Ren Niemann and Overseas Practitioner Andrew Middleton report on the case and its implications.

Focus: National infrastructure plan revealed – 5 July 2013

Infrastructure Australia has released a 50-year plan for national infrastructure, including an update to the national infrastructure priority list. The plan identifies key infrastructure challenges, and what needs to be done to address them in the near and long-term future. Partner Emma Warren and Lawyer Freya Dinshaw report.

Focus: Are you rehabilitation-fund ready? – 28 June 2013

The Western Australian mining rehabilitation fund is about to come into effect. It will replace the existing regime of unconditional performance bonds, with significant implications for tenement holders. Partner Jodi Reinmuth and Lawyer Peter Jensen report.

Focus: Warning – SOPA will not apply to construction works on mining leases – 27 June 2013

A recent decision has significantly altered security of payment conditions for construction works undertaken on mining leases. Partner Michael Ilott, Senior Associate Nikki O'Leary and Law Graduate Emily Giblin report on the case and on its commercial impact.

Breaking Ground blog

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Breaking news

Construction industry
Northern Territory engineering and construction boom – 4 July 2013

The NT Government has released findings, based on figures from the Australian Bureau of Statistics (the ABS), that reveal engineering and construction work in the Territory has grown at a record rate over the past year. The quarterly report, Engineering Construction Activity, Australia, Mar 2013, was released by the ABS on 3 July. The figures illustrate an increase of 121.4 per cent in the year to March 2013, compared with the previous 12 months, after taking inflation into account. This growth is thanks to the State Government and the development of major schemes, such as the Ichthys project, expansion activity at several mine sites and continued works on the Montara oilfield development.

Source: 'Engineering construction boom', Engineers Australia, 4 July 2013

Mongolia gives green light to Rio copper shipments – 8 July 2013

The Mongolian Government has cleared Rio Tinto's $7.3 billion Oyu Tolgoi copper mine to begin shipments. Shipments to Chinese smelters were postponed twice throughout June, as Mongolia sought to ensure revenue from the mine was processed through Mongolian banks.

Source: 'Mongolia gives green light to Rio copper shipments', The Age, 8 July 2013

Brockman signs agreement with Aurizon for Pilbara iron ore rail link – 3 July 2013

Brockman Mining Ltd has appointed Australia's rail freight operator, Aurizon Holdings, as its exclusive supplier to develop and operate the rail and port infrastructure it needs for its planned Marillana and Opthalmia projects in the Pilbara region in Western Australia. This appointment is crucial to the Chinese firm's efforts to start producing iron ore.

Brockman recently bid for access to Fortescue Metals Group's rail line, which is seen as potentially paving the way for others, like Atlas Mining and Flinders Mines, to open new mines without having to build multi-billion dollar rail lines.

Source: 'Brockman signs deal with Aurizon for Australia iron ore rail link', Reuters, 3 July 2013

Port Hedland June iron-ore exports to China almost break record – 2 July 2013

Iron-ore exports to China from Australia's Port Hedland, which handles about a fifth of the global seaborne market for the steel making raw material, eased about 2 per cent in June compared with May but were up 43 per cent from a year ago.

Source: 'Port Hedland June irone ore exports to China near record', MiningWeekly, 2 July 2013

Energy and resources
Australia's biggest solar farm gets approval – 2 July 2013

Simon Corbell, the ACT's Minister for the Environment and Sustainable Development, has used his call-in powers to approve Australia's largest solar farm.

The 20-megawatt solar farm will be made up of 83,000 photovoltaic panels and will be constructed on 50 hectares near Royalla, just off the Monaro Highway in Tuggeranong, ACT. The development is expected to begin later this year.

Source: 'Australia's biggest solar farm gets go ahead in ACT', Canberra Times, 2 July 2013; 'Local residents will 'continue to be heard' in solar farm project', ABC News, 3 July 2013

Downer GE consortium awarded Boco Rock wind farm contract – 27 June 2013

Downer has been awarded a contract, with consortium partner GE Australia and New Zealand, for work on stage one of the Boco Rock Wind Farm project by Boco Rock Wind Farm Pty Ltd. The total project is valued at approximately $350 million. When all stages are completed, the wind farm will consist of more than 100 turbines on a site located 10 kilometres south west of Nimmitabel, in the NSW Snowy Mountains region.

Source: Downer ASX Announcement, 'Downer GE Consortium Awarded Boco Rock Wind Farm Contract', Downer Group, 27 June 2013

Australasian Railway Association calls for high-speed rail to be put to market – 1 July 2013

In its submission to the Phase 2 High Speed Rail Implementation Study, the Australasian Railway Association (the ARA) has called for the high-speed rail project to be put to market. The ARA submission applauds the recommendation for a dedicated high-speed rail corridor but proposes that the costs, timeframe, links to airports, freight opportunities and regional benefits are re-explored.

Source: ARA Media Release, 'ARA calls for high-speed rail to be put to market', Australasian Railway Association, 1 July 2013

Leighton trio wins $1.15 billion North West Rail Link contract – 26 June 2013

A joint venture between Thiess (50 per cent), John Holland (25 per cent) and Dragados (25 per cent) has won a $1.15 billion NSW Government contract to build Sydney's North West Rail Link tunnels and excavate underground stations for the project. Under the civil works contract, the joint venture will construct 15 kilometres of twin tunnels running between Bella Vista and Epping. It is reported that these will be the longest rail tunnels ever built in Australia.

Source: Thiess Media Release, 'Thiess, John Holland and Dragados to deliver first major construction for North West Rail Link', Thiess Australia, 25 June 2013

Victoria expands land bid scope – 4 July 2013

The Victorian Government will sell all its growth corridor holdings on the outskirts of Melbourne to a buyer equipped to manage a $3 billion housing development portfolio. This is a change in strategy for Places Victoria, as it had originally planned to sell the holdings piecemeal to preferred developers.

Source: Rebecca Thistleton, 'Places Victoria widens land bid scope', AFR, 4 July 2013

Other projects
Commonwealth Games Village shortlist announced – 27 June 2013

Three developers have been officially shortlisted to build the Gold Coast 2018 Commonwealth Games Village. One company and two consortia have been invited to participate in the quest for proposal. The shortlisted developers are Grocon, a Mirvac Queensland–Laing O'Rourke partnership; and the Village Park Consortium, comprising Australand Holdings and Citta Property Group. The three developers now have to submit detailed proposals, including master plans, by October.

Source: Queensland Cabinet and Ministerial Directory Media Statement, 'Commonwealth Games Village shortlist announced', Queensland Cabinet and Ministerial Directory, 27 June 2013

Published reports and articles

Infrastructure Australia releases its 2013 national priority list – 2 July 2013

Up to $91.2 billion of projects have made it on to Infrastructure Australia's 2013 national priority list. The plan also includes a 50-year plan to plug long-term building needs and seize Asian economic growth opportunities. In its fifth annual National Infrastructure Plan release, the body announced $11 billion of 'ready to proceed' projects, including Victoria's Monash Freeway's High Street to Warrigal Road and Warrigal Road to Clyde Road upgrades, NSW's Pacific Highway upgrade and Queensland's Brisbane Cross River Rail.

Source: Infrastructure Australia, 'Infrastructure Australia National Priority List', 2 July 2013

ABS releases Engineering Construction Activity, Australia, March 2013 – 3 July 2013

The ABS has published Engineering Construction Activity, Australia, Mar 2013. Engineering Construction Activity, Australia is a quarterly publication reporting estimates of engineering work undertaken in Australia by both public and private sector organisations. These estimates, together with results from the Building Activity, Australia publication, provide a quarterly picture of total construction activity.

Source: 'Engineering Construction Activity, Australia, Mar 2013', Australian Bureau of Statistics, 3 July 2013

Recent cases

BGC (Australia) Pty Ltd v Minister for Infrastructure & Transport [2013] FCA 603 – implied contract terms

BGC was seeking approval to build a large steel shed on land it sub-leased from Perth Airport. Perth Airport would not approve the building, on the basis that the 2009 Final Master Plan (the Master Plan) for the airport showed a possible future need for the construction of special lighting and a possible runway expansion in the area where BGC sought to build.

BGC argued, based on statutory interpretation, that the Minister had acted in excess of its power in approving the Master Plan, because it 'required' actions by Perth Airport that would interfere with BGC's enjoyment of its sub-lease. Justice McKerracher rejected BGC's argument, finding that the Minister did have power to approve the Master Plan and that it was not invalid.

In the alternative, Perth Airport argued that, by operation of law, there should be an implied term in the sub-lease that reserved a right to Perth Airport to install airport infrastructure on the sub-leased land, where to do so was specified in the Master Plan. Perth Airport argued that this arose due to the legislative scheme created by the Airports Act 1996 (Cth) (the Act), and the corresponding regulations, under which the Master Plan was developed. Perth Airport also argued that, under the provisions of this legislative scheme, its obligations under the Master Plan took precedence over its obligation to, and the rights of, BGC under its sub-lease. As such, there was an implied term that Perth Airport had a reserved right to install airport infrastructure on the sub-leased premises where, under the Act, the installation was specified in the Master Plan for the airport.

Justice McKerracher found, on the basis of authority and given the comprehensive nature of negotiations between experienced legal representatives having led to a very detailed sub-lease, that the term for which Perth Airport argued could not properly be implied into the sub-lease. The proposed implied term would make no provision for any form of compensation that would have been recognised in the legislative scheme in circumstances where removal of property given under a sub-lease is granted. It could not be said, therefore, that the sub-lease would be unworkable and ineffective without the introduction of that implied term.

Further, Justice McKerracher found that to imply such a term into all airport leases in Australia, without the term being expressed, would not only be inconsistent with terms and objectives of those sub-leases but might well achieve the opposite outcome.

Lastly, his Honour held that although Perth Airport relied heavily on the reasonableness of the term for its implication, the test for implication of a term at law requires more. In particular, concepts of necessity are to be considered. Nothing in the Act gave Perth Airport the power to construct infrastructure on land it didn't control, and, where it did have the power to vary rights under a sub-lease, the legislation provided for compensation to be payable. As such, the proposed term would be neither necessary nor consistent with the statutory regime. Read more>>

Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Ltd [2013] NSWSC 865 – security of payment

The Supreme Court of NSW has held that multiple payment claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) can only be made on, and from, multiple reference dates.

Halo undertook project management services for Ashmore, finishing around August 2012. Between 9 November 2012 and 7 December 2012, Halo submitted 10 payment claims (plus another consolidated claim in February 2013) under the Act. Regarding four of the claims (assessed at nil in Ashmore's payment schedule), Halo was awarded the sums sought, at adjudication. Ashmore sought a declaration from the court that the determination was void.

Under the contract, reference dates arose on the 7th of the month. The court's view was that, by virtue of the Act, only one payment claim could be served in relation to each reference date, and only one payment claim at a time could be submitted to adjudication. It was not possible to 'bank' reference dates and then serve multiple payment claims following the occurrence of a subsequent reference date. The various claims were not part of one 'super claim', as they were made on different dates, for different months, and called for payment on different dates. Thus, Halo was only entitled to serve one payment claim under the reference date on 7 November 2012, and the adjudicator did not have jurisdiction to determine the other claims.

The court also confirmed that, post termination/expiry of a contract, no further reference dates arise unless the contract expressly provides otherwise. Practically then, no further reference dates had occurred, or would occur, under which Halo could make the subsequent claims.

Accordingly, the determination was held to be void.

The court looked at the method of service of Ashmore's payment schedule, which had been held by the adjudicator to be invalid. In essence, according to the court, service of the payment schedule to the claimant's registered address did not amount to valid service for the purposes of the Act. Service must be either to the address required under the contract, or to the claimant's ordinary place of business (as permitted by the Act). Read more>>

WTE Co-Generation & Anor v RCR Energy Pty Ltd & Anor [2013] VSC 314 – dispute resolution

Justice Vickery refused an application to stay proceedings, on the basis that the contractual dispute resolution processes agreed to by the parties had not been complied with.

The dispute resolution clause provided that 'in the event the parties have not resolved the dispute then [within a further seven days] senior executives representing each of the parties must meet to attempt to resolve the dispute or to agree on methods of doing so". As no such meeting had occurred, the plaintiffs argued, the court should give effect to the parties' agreement and stay the proceeding until the clause was complied with.

The dispute resolution clause was found to be uncertain and thus unenforceable. The second option in the clause, requiring the parties to agree on a method of resolving the dispute, was not sufficiently certain, as it was akin to an agreement to agree. In other words, no method of dispute resolution was prescribed by the contract and, as such, remained subject to further agreement by the parties. His Honour stated that 'as a minimum, what is necessary for a valid and enforceable dispute resolution clause, is to set out the process or model to be employed, and in a manner which does not leave this to further agreement'. In reaching this conclusion, Justice Vickery set out a list of 11 principles helpful to determining whether a contractual dispute resolution is enforceable. Read more>>

Recent legislation

  • Environment Protection and Biodiversity Conservation Amendment Act 2013 (Cth). This Act amends the Environment Protection and Biodiversity Conservation Act 1999 (Cth) to address significant impacts, or likely significant impacts, of coal seam gas development and large coal mining development on water resources. The Act puts in place robust environmental impact assessment processes for actions involving coal seam gas or large coal mining development that have, will have or are likely to have, a significant impact on a water resource. The Act also creates civil penalty and offence provisions for taking an action involving coal seam gas or large coal mining development that has, will have or is likely to have, a significant impact on a water resource, without an approval or exemption from obtaining an approval. These civil penalty and offence provisions are consistent with similar provisions already in the Environment Protection and Biodiversity Conservation Act 1999 (Cth).
  • NSW Self Insurance Corporation Amendment Act 2013 (NSW). The object of this Act is to amend the Self Insurance Corporation Act 2004 (NSW) to confirm that the NSW Self Insurance Corporation may provide protection on an individual basis to eligible State officials (in addition, or as an alternative, to cover for authorities to which they belong) for claims made against them in connection with the exercise of their functions; and to enable the NSW Self Insurance Corporation to provide principal arranged construction insurance that extends to non-government contractors for certain major capital works projects undertaken by, or on behalf of, the State or an authority of the State.
  • Work Health and Safety (Mines) Act 2013 (NSW). The object of this Act is to assist in securing and promoting the health and safety of persons who work at mines and related places. This Act, among other things, establishes a notification scheme for serious incidents at mines, provides for oversight of mines and mining operations by appointed government officials, provides for safety and health representatives at coal mines, extends the circumstances in which improvement notices and prohibition notices may be given under the Work Health and Safety Act 2011 (NSW) in relation to mines, and provides for stop work orders to prevent serious risks to health and safety.
  • Mineral Resources Development Amendment Act 2013 (Tas). This Act provides for a number of changes to the Mineral Resources Development Act 1995 (Tas) that encourage the development of the State's mineral resources consistent with sound economic, environmental and land use management. The primary purpose of the Act is to bring the Mineral Resources Development Act in line with legislation in other Australian jurisdictions, to improve the administrative efficiency of the Mineral Resources Development Act and to remedy a number of identified drafting deficiencies. The major addition to the Mineral Resources Development Act is the provision of a new category of licence to allow for the production of geothermal or petroleum resources, should they be discovered in Tasmania.

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