Bulk Materials (Coal Handling) Pty Ltd, Re [1997] QSC 18

-~-. (/) ..,' .~.. -""" t=. ',-- ,... •..,.~ .,....._._ ..:0- .. 1 ·State .Reporting Bureau TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION DEMACK J No 3 of 1997 IN THE MATTER OF THE SUB-CONTRACTORS CHARGES ACT 1974 and IN THE MATTER OF ORDER 64 RULE 1B OF THE RULES OF THE SUPREME COURT and REVISED COPIES ISSUED State Reporting Bureau Date :r I 'd.. I '1 f . _,.....,. IN THE MATTER OF AN APPLICATION BY BULK MATERIALS (COAL HANDLING) PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 001559 655) and IN THE MATTER OF "THE CORPORATIONS LAW II and IN THE MATTER OF THE ADMINISTRATION OF BULK MATERIALS (COAL HANDLING) PTY LTD (ACN 001 559 655) and Iu THE MATTER OF AN APPLICATION BY QUEENSLAND STEEL PRODUCTS PTY LTD (ACN 010 632 694) FOR LEAVE TO INSTITUTE PROCEEDINGS AGAINST BULK MATERIALS (COAL HANDLING) PTY LTD (IN ADMINISTRATION) -- 1 of 6 -- ROCKHAMPTON .. DATE 07/02/97 JUDGMENT 10 20 30 50 60 2 -- 2 of 6 -- 070297 KHW (Demack J) HIS HONOUR: There are two applications before me but the principal one is an application to determine whether Queensland Steel Products Pty Limited ("Queensland Steel") is entitled to a charge on money payable by Queensland Magnesia (Operations) Pty Ltd ("QMag") to Bulk Materials (Coal Handling) Pty Limited ('~Bulk Materials") in respect of a contract between QMag and Bulk Materials for the construction of an ore sorting magnesium plant at QMag's Kunawarara mine. In a notice given to Bulk Materials on 25 November 1996 under the Subcontractors Charges Act 1974 (liThe Act"), the charge was claimed upon the money that will be payable by QMag to Bulk Materials in respect of work done by Queensland Steel "Under the contract with (Bulk ~1aterials) to supply, fabricate, blast clean, paint and deliver structural steel work for the QMag's Ore Sorting." The amount of the charge was $256,769.75. While the agreement between Queensland Steel and Bulk Materials was expressed more fully in the affidavits filed in Court, it seems to me that the words in the notice accurately express Queensland Steel's obligations - lito supply, fabricate, blast clean, paint and deliver" - structural steel to QMag's Kunawarara mine. In performing those obligations, Queensland Steel's managing director, David Parker, made suggestions and recommendations about matters of design and of protective coating. He also visited the construction site. It was also Queensland Steel's responsibility to touch up paint work on the steel and this would be done at the construction site. JUDGMENT 3 10 20 30 40 50 60 -- 3 of 6 -- 070297 KHW (Demack J) Bulk Handling appointe~ an administrator under Part 5.3A of the Corporations Law on 19 November 1996. On 12 January 1997, QMag paid Queensland Steel the amount of $256,769.75 on the condition that Queensland Steel would indemnify it for any loss it might sustain should the charge not be valid. Mr H Fraser QC, 'for Bulk Materials, submitted that the charge was not valid because the defini tion of "work" in section 3 (1 ) of the Act refers to work upon the land where the contract or subcontract is being performed. Here the work done by 10 20 Queensland Steel was not performed on the mine site at Kunawarara. He relied on William Andrew Pty Ltd v. Santalucia ~ (1983) Qd.R. 349, ex parte Peter Fardolulys Pty Ltd (1987) Qd.R. 345, re Leighton Contractors Pty Ltd (1985) 2 Qd.R. 377, and Dowstress Pty Ltd v. The Mission Congregation Servants of the Holy Spirit (1987) 1 Qd.R 150 C'DoVlstress"). Mr Jones QC, for Queensland Steel, submitted that, while the contract between QMag and Bulk Materials was required to be upon land, there was no requirement under the Act that the work done by a subcontractor had to be on the land at Kunawarara. He relied on the judgment of Derrington J in 50 Dowstress, re R A Story Pty Ltd (1993) 2 Qd.R. 355 ("Story") and Kaldow Propriety Limited v. H J GLow & Associates Limited (1971) N.Z.L.R. 311. In my opinion, the Full Court decision in Dowstress is JUDGMENT 4 60 . -- 4 of 6 -- 070297 KHW (Demack J) indistinguishable from the present set of facts and requires me to find that Queensland Steel has no valid charge. In Dowstressi the subcontractor agreed to supply prestressed hollow floor beams to the contractor which was constructing extensions to the owner'~ hospital. The Full Court held that no valid charge existed. Moynihan J (with whom Kelly ACJ. agreed) based his decision on the words in s.3 of the Act which defined "work in terms of 't;1hat is done or commenced upon the land where the contract is being performed. II (p .157) . Derrington J did not regard these words as signi£icant, pointing out that under s.5 the charge may attach whether the contract is in respect of land, buildings or chattels. He based his decision on the fact that a charge applies only in respect of "work done under the subcontract. II (p.152), so that, "a contract to supply goods on which work of manufacture is performed by a subcontractor is not a contract for work within the meaning of the Act." (p.152). Relying on the reasoning of Derrington J, Ryan J in Story held that where a subcontractor who was to fabricate and erect structural steel engaged another subcontractor to perform work on the steel away from the land where the steel was to be 10 20 30 40 erected, the second subcontractor had a valid charge. With 50 respect, that is correct, but a very different situation from the present case. As I have said, this case is not distinguishable from Dowstress. Queensland Steel has attempted to show that its 60 JUDGMENT 5 -- 5 of 6 -- 070297 KHW (Demack J) "work" can be separated from the cost of materials. That does not alter the situation because the entitlemenf to the charge arises from a contract to perform work alone, unless the subcontractor is performing work on the land the subject of contract. In these circumstances, the materials used on that land are embraced withiI) the inclusive definition of "work" in section 3. That is not the case here. An attempt was made by Queensland Steel to demonstrate that its contribution to the whole project of constructing an ore sorting magnesium plant was very substantial. That is not a factor that has any significance under the Act. I am satisfied that Queensland Steel does not have a valid charge and I order accordingly. Queensland Steel's application for leave to proceed against Bulk Materials is dismissed. I order that Queensland Steel pay Bulk Materials' costs of both applications. JUDGMENT 6 10 20 30 50 60 -- 6 of 6 --