CCF WA BULLETIN

Member Editorial Samples

2 Q1 2019 | CCF WA BULLETIN

NPE helps pump new life into old mineTake an abandoned zinc mine, a forward thinking new owner and National Pump & Energy and you have yourself a recipe for success.

Well, that was the case for New Century Resources (NCR) at the Century mine, located at Lawn Hill, 250km north-west of Mount Isa in the Lower Gulf of Carpentaria.

Just 3 years ago the mine was abandoned by MMG when zinc prices bottomed out. New Century were quick to pounce on the site in a deal that saw MMG pay New Century $46 million to take over the rehabilitation of the Lawn Hill mine site.

Wind the clock forward to today and NCR has just exported their first shipment of zinc to China and are well and truly on track to meet the scheduled 8 million tonnes a year by the end of the first quarter 2019.

So, how did they do it and what was the master stroke that lead to NCR turning the site from a money pit to a pit making money?

Step in National Pump & Energy (NPE) and a specialised process that has been refined and perfected by NPE known as hydraulic (or hydro) mining.

Hydraulic mining is an innovative process involving the use of extremely high pressure water cannons to recover once unwanted

tailings and enable it to be re-processed through the plant for the valuable residual resources it contains.

The process involves the use of a range of highly specialised equipment that combines to break down the cemented tailings to create a slurry that is sent to the processing plant and then onto the port to be shipped around the world.

It all starts at an evaporation pond where the water winning pontoon pumps collect the water used for the hydromining on the tailings dam and pump it back to the area some 1.2km away.

Once the water is back at the hydromining site, it is then pumped via another series of pumps to the cannons working on the tailings dam.

It goes without saying that a system delivering a whopping 35 bar of pressure at the cannons has some pretty serious pumps behind it. Those serious pumps in this case are eight Metso pumps with 2,000kW motor capacity and producing 300 litres a second.

Out on the tailings dam is where the most impressive of the action occurs and it is carried out by expert operators and a remote controlled skid-steer with a front mounted hydro cannon.

Here the operators manoeuvre the machines to blast away at the concrete-like crust of the tailings deposits to turn it into a slurry consistency. This slurry is gravity fed to a pontoon housing 4 huge 240kW submersible slurry pumps which sends the tailings slurry on to a screen and hopper.

Once passing through the hopper, a series of Warman 12/10 belt driven pumps with 500kW mine spec motors drive the slurry along a 7km pipeline back to the process plant.

This kind of mine model is an exciting opportunity not just for closed mines, but for any operation that the opportunity to re-mine their tailings.

Queensland Mines Minister Anthony Lynham said the NCR takeover of the abandoned mine site was an exciting new model of economic rehabilitation in dealing with mine sites that have concluded their original intended purpose. “It’s the ultimate recycling story,” Dr Lynham said.

To find out more about the innovative and potentially lucrative hydromining option for your site, contact National Pump & Energy on 1800 PUMP RENTAL (1800 786 773)

NEWS

3 Q1 2019 | CCF WA BULLETIN

Australian financial markets are constantly changing and with these changes comes a new lending environment. It is important the stay on top of and understand these changes when approaching financial institutions (banks/lenders), to ensure your business receives a positive outcome.

Below are some thoughts on the debt market as we currently see it, with primary focus on the small medium enterprises (SME) market and how this is being impacted. Further focus is how this impacts the equipment finance market over the short to medium term - the life line of capital intensive balance sheet businesses.

Following the GFC in 2007/2008 there has been a trend to increased risk aversion by mainstream financial institutions. This has accelerated in Australia over the past 5 years as financial markets have been subjected to enquiry after enquiry

culminating in the Royal Commission. Whilst many of these enquiries have been focused on consumer lending market there has been material “splash back” into the SME market. In particular the Western Australian market has been further affected by the market correction which followed the mining construction boom.

What does this mean for borrowers in the SME and mid cap public company space? In essence “caution” is a key feature of the current banking and finance markets.

Tier 1 financial institutions are becoming hesitant lenders on transactions that they might have been prepared to take on in the past but are now deemed too complex or financially challenging to approve. As an example, businesses ATO position, both current and historical, will be scrutinised by the lender. To help navigate these issues, Ledge’s close working relationship

with businesses has given us meticulous understanding of this space with regards to debt, effective life or value of the assets and how to build long term balance sheet value, which is ultimately ‘enterprise value’. This is where we are able to assist our clients with an understanding of both commercial risk and financial risk, which is critical in the current market conditions.

Ledge often see our clients going through change, growth & development brought about by both internal and external pressures. This is where Ledge forms relationships with clients at their early stages to assist with such growth & development.

To find out more or if you have any questions, talk to our CCFWA - Ledge contact, Brad Spencer on 0481 196 496 or email brad@ledge.com.au.

Changing market creates a new lending environment

Transformer bucket boosts productivityWith increasing workload and specific project needs, Queensland-based contractor Aussie Enviro needed units which would allow the company to achieve more efficient material processing and at the same time meet their site requirements.

CCF WA Member Total Rockbreaking Solutions recommended an ALLU DS3-17 Transformer bucket coupled with a patent TS blade set, with a specific screening aperture size. The DS3-17 is capable of not only producing the results required with the soil but could also give Aussie Enviro

flexibility from job to job as the blade set can be changed for each job, depending on material type being screened and end-product grade required.

Attached to a Case CX250C excavator, the ALLU DS3-17 bucket is currently processing up to 30% more product than before, even if the product has been high in moisture.

For more information on ALLU Transformer buckets contact Total Rockbreaking Solutions on 1300 921 498 or visit www.totalrockbreaking.com.au/construction/allu-buckets

Caleb Walsh from CCF WA Member RJ Vincent & Co recently commenced the RII30815 Certificate III in Civil Construction Plant Operations. Caleb is already kicking goals with his traineeship; here he is completing his roller ticket at the Whiteman Edge development in Henley Brook as part of his course. Talk to Civil Train today about training options for your staff on 0400 223 470 or email Karyn on kgrant@ccfsa.com.au.

Caleb is on a roll

Caleb Walsh from RJV

NEWS

Hayley Rolfe

What’s in your skip?

Generally speaking, on-site skips deal with two kinds of waste: construction and demolition waste; and general waste (which means everything else). But what happens to skip waste when bins are removed from a work site? Ardea Waste spoke with skip providers in the Perth metropolitan area and regionally to look at whether skips are the best way to deal with waste and what happens when they leave a work site. By Hayley Rolfe from Ardea Waste.

Construction waste – MetroDwayne Rapley from Cleanaway says that at least 80 % of construction waste they collect in the metro area is recycled. Cleanaway take construction and demolition waste to third-party material recovery facilities around the city where the waste is sorted and materials recovered. General waste not readily recycled is sent to landfill. Contamination problems occur primarily from organic materials such as food and green waste as well as hazardous waste streams like asbestos, tyres, and batteries.

In some cases, food and green waste in a skip will mean an additional fee, but that depends on which recovery facility is doing the sorting. Any skip with asbestos contamination will be sent directly to a landfill licensed to accept it, and the landfill levy will be charged for the entire skip. Asbestos contamination in a skip full of heavy materials will be expensive (the landfill levy is charged by the tonne).

A dedicated Asbestos waste skip is unlikely to incur levy charges. Waste asbestos products such as asbestos sheeting, fence panels or lagging are exempt from the landfill levy, but mixed materials are not exempt.

Jake Hickey from Instant Waste Management estimates that between 80 and 90 % of construction waste can be

recovered at a range of Instant Waste recovery facilities and depots between Bunbury and the Northwest, and higher than 95% recovery rates are possible in the metro area. Instant Waste Management’s facilities are licensed to receive more than 1.8 million tonnes of construction waste per year and process around one third of all construction waste in Western Australia. Approximately 65% of this waste (by weight) is concrete, bricks, and sand.

Other than choosing the right waste provider, Jake says that better on-site skip placement to avoid windblown waste is another good way to make sure you are doing the right thing with your waste as local governments issue fines for messy waste stockpiles.

General waste – MetroSome recycling is possible for general waste skips in the metro area depending on where the skip is processed. All waste in the metro area attracts a landfill levy charge of $70 per tonne (before transport and gate fees), so unless your skip provider is separating heavy construction items, you may be paying more for tipping costs than you need to.

Construction waste/general waste – RegionsSkip providers we spoke to in regional areas separate some of the more obvious waste streams like metals and wood; the rest is disposed of in a landfill. The level of service changes between providers; some are expanding their separation services to increase recovery (such as Hastie Waste in Bunbury) while others are taking all skip waste to landfill. Regional businesses using skips will need to ask each provider about their waste recovery practices if you are looking for good waste outcomes.

Get smarter with your general waste:

• Front-lift general waste bins are a good value option for lightweight general waste on-site but be sure to size them correctly. Every time the bin is emptied you’ll pay for the size of bin you have, not the amount of waste in the bin. Use the smallest bin and

the lowest number of collections you can get away with to make savings.

• If you’re generating small amounts of general waste and lunch-room waste on site, consider taking your own bins when you set up then take them with you back to your depot for your regular collection. You’ll save on delivery, collection and regular bin collection charges but only if you are making these trips anyway. Be sure to check your obligations concerning controlled waste if you are transporting your own waste between sites.

Want to do better on waste? Take control of your waste with Ardea Waste www.ardeawaste.com Ardea Waste is developing a one-stop-shop for commercial wastes. Our commitment to sustainability and value means that you’ll be able to compare the waste disposal options for your waste as well as the cost. We’re offering a $1000 discount for the first 5 businesses to book waste services with us. Terms and conditions apply, to access the discount quote CCFWA.

NEWS

4 Q1 2019 | CCF WA BULLETIN

Doug Norton from CCF WA Member Coates Hire

5 Q4 2018 | CCF WA BULLETIN

Trench Welfare

A recent trench-collapse in Victoria came on the heels of two trench incidents in 2018. While construction industry workers are accustomed to these excavations, it’s worth reminding ourselves: any trench is a high-risk work area and may be considered a confined work space. The sides of a trench can represent thousands of kilograms of weight that could potentially fall in and this can be triggered by a combination of vibration, groundwater, machinery or rain.

At Coates Hire we design shoring solutions for excavations. These are our recommendations for all for trenches, regardless of size and soil type:

1. Planning and Preparation: before excavating you must conduct a risk-assessment of your trench. Collect as much information as possible about the soil, the groundwater, the expected weather, the site layout and proximity to roads, rivers, drains etc. You have to think ahead: where will excavated materials be stored? Is there room for delivered materials? Are structures or pipes/conduits close to the trench? How will people and vehicles move around this site? Does the public have access? Can you place safety fences and/or fixed hand rails around the perimeter? What kind of tools and equipment will be used? Address the hazards before you dig, not after. Use services such as Dial Before You Dig or engage a consulting engineer to assess the site.

2. Access and Egress of Personnel: you must have one person at-site responsible for how workers get into and out of the trench, and how they behave when they’re in it. This person is a “spotter” who is separate from supervisors, machine operators and labourers. The supervisor must do two things before work starts: develop and document the emergency response procedure, which will include a secondary access point and protocols for an unplanned event such as instant responses from machinery operators, rescue equipment and procedures, calling 000 and clearing an access corridor for emergency

services. Access and rescue equipment may consist of ladder platforms with fall restraints and rescue davit arms designed to be used with harnesses or stretchers. Scaffold staircases can be built for large numbers of workers. Secondly, the supervisor should conduct a toolbox talk for anyone who is new to the trench – rules include never leaving a lone worker in the pit (use the buddy system) and checking with the supervisor before drilling or hammering. Communication is essential in busy excavations – workers must be encouraged to report changes or problems.

3. Trench Safety Equipment: trenches and other excavations are typically shored with heavy duty struts (or hydraulic rams), shoring boxes or shoring shields. If there is groundwater, you need dewatering equipment. The supervisor should check the shoring equipment is compliant with Australian Standard 4744 and that it is accompanied by a current certification. Genuine shoring equipment has an Earth Pressure Rating in Kilopascals (kPa) and it will come with operating manuals which must be stored at-site. Where a supervisor is unsure if the equipment is sufficient or installed correctly, we advise two responses: engage a consulting engineer to

ensure the equipment is up to the job and is installed correctly; or have the responsible people attend a Registered Training Organisation course.

4. Monitoring: soil is a dynamic medium. It changes with rain, drought and vibrations. It changes by cutting a trench in it. For this reason, a trench should be monitored constantly, especially after rain and if it is adjacent to a main road or a railway line. A trench filling with water could mean a groundwater problem, and 15 minutes of rain could change the integrity of the structure. A supervisor should not be afraid to get workers out of the excavation when changes to the conditions create uncertainty.

Trenches are high-risk areas, and must be treated with respect. Following these guidelines is a start but it is not a replacement for at-site leadership that looks-out for the welfare of workers. We have to work in trenches, so let’s make them safe.

Doug Norton holds a Master of Engineering Management and a Bachelor of Civil Engineering. He is the Coates Hire Temporary Works Engineer for Western Australia and the Northern Territory and is based in Perth.

Proper planning and the right equipment can make trenches safe for workers. By Doug Norton from Coates Hire.

NEWS

WestlineWestline provides tailored, integrated drainage solutions for leading companies in Civil, Industrial and Commercial Industries. We are a privately owned company that is committed to delivering industry best practice results.

We deliver a range of drainage capabilities with a dedicated, experienced and motivated team. We have a fully equipped fleet of company-owned and maintained plant and equipment for maximum productivity and value added outcomes.

Westline prides itself on its versatility, initiative and innovation to solve seemingly difficult projects. Our team has a can-do approach and a reputation for attention to detail, efficiency and high quality results, repeatedly recognised by satisfied clients.

Westline is meticulous about safety. Our team follow strict management systems, health and safety processes and protocols to consistently ensure highest HSEQ

standards.

Westline partners with clients including major land developers, leading construction and civil companies, experienced civil engineers and the Water Corporation of WA. We have gained industry trust and maintained long term business relationships with repeat business.

We have successfully completed contracts in the Perth Metropolitan area, regional and remote Western Australia. We adapt to evolving industry needs and are committed to delivering the best outcomes – whatever it’s complexity. Westline has invested in people, processes and capital equipment to meet any project challenges.

For quality civil and hydraulic drainage

solutions, Westline can deliver.

Web: www.westline.com.au Email: office@westline.com.au Phone: 0419 928 295

NEWS

6 Q1 2019 | CCF WA BULLETIN

Research Australia has acknowledged CCF WA Member MACA’s corporate leadership, naming the company 2018 winner of the prestigious Leadership in Corporate Giving Award at the annual Health and Medical Research Awards.

Research Australia presents the Leadership in Corporate Giving Award each year in recognition of outstanding leadership by a corporation or business that supports health and medical research in a meaningful way. The award focuses on their commitment and relationship building rather than just the financial results.

MACA was nominated for the award by the Harry Perkins Institute of Medical Research. In 2012, MACA became a major sponsor for the Ride to Conquer Cancer, the biggest funding event for the Harry Perkins Institute, and three years later took over the title sponsorship. Since then MACA has become the largest team in the Ride to Conquer Cancer in the world.

This year, MACA’s team had 292 riders and contributed $1.372 million to the cause (each rider raises a minimum of $2,500 to participate). Overall the event raised $4.1 million in 2018, bringing the overall event total to $32 million. Over the past 7 years (2012 - 2018) MACA has fielded more than 1,800 riders and raised over $8.5 million for the Perkins Institute. MACA has been a role model to the Perth business community and has started a wave of momentum that now means over 50 corporate teams ride and fundraise in the event, many of them MACA suppliers or partners.

MACA’s giving culture isn’t just internal; they encourage suppliers and business partners to join in and fundraise also. They have built a business network of likeminded people with similar values who all share a passion for fundraising to cure cancer and have raised millions in doing so.

Research Australia CEO Nadia Levin said the Leadership in Corporate Giving Award, now in its 16th year, is a significant acknowledgement of the role corporate leadership plays in advancing society at

large. “This type of leadership and support is incredible for those people who live in hope that medical research will be find the cure or treatment and change their lives forever,” she said.

“MACA’s contribution is so significant they have directly funded ground-breaking research and researches at the Perkins including in melanoma research, liver cancer and other hard to treat cancers”.

MACA’s support of the Perkins Institute helps fund cutting-edge research initiatives, specialist equipment and keeps the best and brightest medical researchers in Perth, working on the major diseases that affect our community.

In addition to the money raised through Team MACA and the Ride to Conquer Cancer, MACA has also funded a PhD student in one of the Perkins laboratories for three years, and when a vital minus 80 degree freezer became faulty, the company funded a new one.

MACA team raises millions

Far right: Ride to Conquer Cancer participants Travis Clohessy (left) and Gordon Connolly, both from Viva Energy Australia.

Above: Australia’s Chief Scientist Dr Alan Finke (left) presents the Leadership in Corporate Giving Award to MACA Executive Director, Operations Geoff Baker.

NEWS

7 Q1 2019 | CCF WA BULLETIN

CCF WA Associate Member Bayswater Mazda is offering a great range of benefits to CCF WA Member companies and their staff who purchase a new Mazda.

As Mazda Corporate Select customers, CCF WA members get:

• Free 4 years, 40,000kms servicing

• Complimentary loan car when servicing your vehicle (inc. fuel & insurance)

• Free $500 Caltex fuel card for all new vehicle purchases

• Free ongoing 24/7 roadside assistance when purchasing a vehicle.

• Access to Corporate Evaluation Vehicles

(Visit the dedicated CCF WA member page at bayswatermazda.com.au/ccf to find out more including T&Cs.)

Bayswater Mazda Dealer Principal Mr Peter Merks stressed the desire for the dealership to form a strong bond with the CCF Membership based on the reputation of the outstanding Mazda product range and the commitment by the dealership to customer service.

“At Bayswater Mazda we stand by our slogan ‘driving is better with Bayswater Mazda’ and we do everything possible to ensure the automotive experience is as enjoyable and easy as possible,” Mr Merks said.

“We welcome members and their employees to visit the CCF WA website with details of our money saving offer or call in at our centrally located showroom in Bayswater. This is a substantial offer with the 4 Year Free Service savings alone totalling between $1,605 to $1,770.”

Bayswater Mazda has assigned experienced staff member Reg Heyward to deal exclusively with the CCF WA membership.

“We look forward to offering the best possible deal, service and welcome CCF members to our showroom,” Mr Heyward said.

The Mazda range has broad appeal to the CCF WA membership, from the workhorse BT 50, the smaller Mazda 2 and 3 hatchback and sedans, to its top selling CX3, CX5, CX8 and CX9 SUV range and the Mazda 6 sedan. The Mazda brand continues to win numerous awards with the CX9 recently being awarded Wheels Car of The Year and the Mazda 6 the Judges Award at the Australian Automobile Association’s Best Cars awards.

Members benefit when buying a Mazda

Bayswater Mazda Dealer Principal Mr Peter Merks (left) and CCF WA CEO Andy Graham with the Mazda BT 50 Dual Cab at the Bayswater Mazda showroom in Bayswater.

NEWS

Members benefit when buying a Mazda

8 Q1 2019 | CCF WA BULLETIN

On 11 February 2014, voluntary administrators were appointed to mining services contractor Forge Group, which had become insolvent while engaged on two mining construction projects for Rio Tinto subsidiary Hamersley Iron.

Shortly before the administrators had been appointed:

• Forge had made, and Hamersley had certified, a progress payment claim on account of works carried out under Forge’s construction contracts with Hamersley; and

• Hamersley had claimed liquidated damages on account of delays in Forge’s works.

After the appointment of administrators to Forge, which resulted in the termination of its construction contracts with Hamersley, Forge’s lender, the ANZ Bank, appointed receivers to Forge and asserted a right to have its loans repaid out of Forge’s certified progress payments.

Hamersley’s liquidated damages claim and ANZ’s claim against Forge’s certified progress payments were determined by the WA Supreme Court in Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2017] WASC 152 (“Forge 1”).

The decision in Forge 1 has important implications for subcontracting civil contractors seeking to be paid for their work by insolvent head contractors. The decision on appeal from Forge 1 has equally important implications.

Understanding those implications for subcontractors requires consideration of how the Court in Forge 1, and later on appeal from Forge 1, dealt with a contest between the ANZ as Forge’s lender and Hamersley Iron as Forge’s principal and owner of Forge’s construction site.

Forge 1: ANZ Bank gets the account receivable, Hamersley Iron does not

In Forge 1, the Court found that by registering a Personal Property Security Interest (PPSI) against all the insolvent head contractor’s (Forge’s) assets (other than land), the ANZ Bank got to recover loan repayments plus interest ahead of all others whom Forge owed money. There was only one such asset up for grabs. This was the progress payment that, at the time of appointment of administrators to Forge in its insolvency, Hamersley had certified as payable, but had not yet paid, to Forge, on account of its construction work.

In Forge 1, the Court found that Hamersley’s obligation to make a progress payment was an asset, in the form of an “account” to which ANZ’s PPSI had attached. According to Forge 1, this meant

that the “account” itself had become collateral for payment of Forge’s debts to ANZ.

The Court went a step further, saying that ANZ’s security interest in this “account” meant it had the same kind of ownership of the account as a beneficiary of a trust has in the assets of the trust, even though they don’t have control over those assets (that belongs to the trustee).

This finding knocked out of the running, ANZ’s only contender for the account, being Hamersley. At the time, Hamersley was seeking to enforce its claim to liquidated damages against Forge.

Hamersley was held to have lost its contest with ANZ to recover the account, because the account consisted of nothing more than Hamersley’s debt to Forge.

To avoid having to pay that debt to Forge, Hamersley had to show that it could set off its obligation to pay that account against Forge’s obligation to pay liquidated damages to Hamersley. The objective was for the two obligations to cancel each other out.

Hamersley argued that this right of set-off existed under both the Corporations Act 2001, section 553C, and the contract between Forge and Hamersley.

However, the Court in Forge 1 found Hamersley had no such right of set-off, meaning that Hamersley had to pay the entire account over to Forge’s liquidators, and Forge’s liquidators had to pay the entire account over to ANZ.

Unsurprisingly, Hamersley was dissatisfied and appealed against the decision in Forge 1.

Important implications from Forge decisions

In Forge 1, the Court found that Hamersley’s obligation to make a progress payment was an asset, in the form of an “account” to which ANZ’s Personal Property Security Interest had attached.

“”

While there were no subcontractors involved in the Forge Group cases, the reasoning in them has important implications for subcontractors’ payment rights in cases of head contractor insolvency. By Daniel Morris – Special Counsel, HHG Legal Group

COMMENT

9 Q1 2019 | CCF WA BULLETIN

On 11 February 2014, voluntary administrators were appointed to mining services contractor Forge Group, which had become insolvent while engaged on two mining construction projects for Rio Tinto subsidiary Hamersley Iron.

Shortly before the administrators had been appointed:

• Forge had made, and Hamersley had certified, a progress payment claim on account of works carried out under Forge’s construction contracts with Hamersley; and

• Hamersley had claimed liquidated damages on account of delays in Forge’s works.

After the appointment of administrators to Forge, which resulted in the termination of its construction contracts with Hamersley, Forge’s lender, the ANZ Bank, appointed receivers to Forge and asserted a right to have its loans repaid out of Forge’s certified progress payments.

Hamersley’s liquidated damages claim and ANZ’s claim against Forge’s certified progress payments were determined by the WA Supreme Court in Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2017] WASC 152 (“Forge 1”).

The decision in Forge 1 has important implications for subcontracting civil contractors seeking to be paid for their work by insolvent head contractors. The decision on appeal from Forge 1 has equally important implications.

Understanding those implications for subcontractors requires consideration of how the Court in Forge 1, and later on appeal from Forge 1, dealt with a contest between the ANZ as Forge’s lender and Hamersley Iron as Forge’s principal and owner of Forge’s construction site.

Forge 1: ANZ Bank gets the account receivable, Hamersley Iron does not

In Forge 1, the Court found that by registering a Personal Property Security Interest (PPSI) against all the insolvent head contractor’s (Forge’s) assets (other than land), the ANZ Bank got to recover loan repayments plus interest ahead of all others whom Forge owed money. There was only one such asset up for grabs. This was the progress payment that, at the time of appointment of administrators to Forge in its insolvency, Hamersley had certified as payable, but had not yet paid, to Forge, on account of its construction work.

In Forge 1, the Court found that Hamersley’s obligation to make a progress payment was an asset, in the form of an “account” to which ANZ’s PPSI had attached. According to Forge 1, this meant

that the “account” itself had become collateral for payment of Forge’s debts to ANZ.

The Court went a step further, saying that ANZ’s security interest in this “account” meant it had the same kind of ownership of the account as a beneficiary of a trust has in the assets of the trust, even though they don’t have control over those assets (that belongs to the trustee).

This finding knocked out of the running, ANZ’s only contender for the account, being Hamersley. At the time, Hamersley was seeking to enforce its claim to liquidated damages against Forge.

Hamersley was held to have lost its contest with ANZ to recover the account, because the account consisted of nothing more than Hamersley’s debt to Forge.

To avoid having to pay that debt to Forge, Hamersley had to show that it could set off its obligation to pay that account against Forge’s obligation to pay liquidated damages to Hamersley. The objective was for the two obligations to cancel each other out.

Hamersley argued that this right of set-off existed under both the Corporations Act 2001, section 553C, and the contract between Forge and Hamersley.

However, the Court in Forge 1 found Hamersley had no such right of set-off, meaning that Hamersley had to pay the entire account over to Forge’s liquidators, and Forge’s liquidators had to pay the entire account over to ANZ.

Unsurprisingly, Hamersley was dissatisfied and appealed against the decision in Forge 1.

The appeal against Forge 1: Hamersley gets a set-off, ANZ gets

Important implications from Forge decisions

In Forge 1, the Court found that Hamersley’s obligation to make a progress payment was an asset, in the form of an “account” to which ANZ’s Personal Property Security Interest had attached.

“”

While there were no subcontractors involved in the Forge Group cases, the reasoning in them has important implications for subcontractors’ payment rights in cases of head contractor insolvency. By Daniel Morris – Special Counsel, HHG Legal Group

10 Q1 2019 | CCF WA BULLETIN

COMMENT

what’s left

The decision on appeal from Forge 1 is Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed) [2018] WASCA 163. That decision overturned the findings in Forge 1 that we have mentioned, and found instead:

• ANZ’s PPSI did not make ANZ an owner of the account in the same way as a beneficiary is the owner of a trust fund.

• Therefore, Hamersley’s and Forge’s debts to each other were mutual in a way that did require them to be set off against each other under section 553C of the Corporations Act.

• Even if section 553C did not apply, it was incorrect to say, as the Court had done in Forge 1, that section 553C left no room for any set-off to apply under the contract between Forge and Hamersley.

How the Forge decisions affect payments to subcontractors when head contractors become insolvent

There were no subcontractors involved in the Forge cases. However, the reasoning in those cases has important implications for subcontractors’ payment rights in cases

of head contractor insolvency.

This is because of law reforms that have, to varying degrees, been implemented, debated and reported on around the country, whereby:

• trusts can be used to allow subcontractors to be paid ahead of the owner/principal that engaged an insolvent head contractor (like Hamersley Iron in the Forge cases); and

• the Personal Property Securities Act can be used to allow subcontractors to be paid ahead of the lenders and other third-party creditors of the insolvent head contractor (like ANZ in the Forge case).

HHG Legal Group has been an active participant in this worthy project to improve subcontractor payment rights. We will be publishing a series of articles over the next few months to help CCF members identify and make practical sense of some of the issues arising in this area that most affect civil contractors, so as to empower CCF members to make informed decisions about protecting their payment rights.

11 Q1 2019 | CCF WA BULLETIN

COMMENT