CONSTRUCTION INDUSTRY PORTABLE PAID LONG SERVICE LEAVE ACT 1985

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES Welldrill

APPLICANT

-v-

Construction Industry Long Service Leave Payments Board

RESPONDENT

CORAM Commissioner S Wood

HEARD Thursday, 5 February 2009

DELIVERED Thursday, 12 MARCH 2009

FILE NO. BOR 4 OF 2008

CITATION NO. 2009 WAIRC 00109

CatchWords Construction Industry Long Service Leave – Appeal – Activities of company – Construction Industry Portable Paid Long Service Leave Act 1985, ss 3, 30 – Industrial Relations Act 1979 (WA) s 48

Result Applicant not an employer "in the construction industry" within the meaning of the Construction Industry Portable Paid Long Service Leave Act 1985

Representation 

Applicant Mr W G Spyker of Counsel

Respondent Mr D P Winch of Counsel

Reasons for Decision

1         This application is an appeal under section 50(b) of the Construction Industry Portable Paid Long Service Leave (CIPPLSL) Act 1985.  The applicant company, Welldrill, seeks a review of the decision of the Construction Industry Long Service Leave Payments Board (the Board) that it be registered under that Act.  The Board’s letter of 22 October 2008 states:

“Re: Construction Industry Portable Paid Long Service Leave Act 1985: Employer registration

Your correspondence of 21 October 2008 has been received and your comments noted.

As explained in our correspondence of 26 September 2008 the definition of construction industry in the above Act includes “...works for the storage or supply of water...”

The drilling of water wells is obviously “works for the supply of water” and accordingly the work carried out by your employees does fall within the definition of construction industry.

Consequently you are required to be registered with the Board as an employer engaging in work within the construction industry and you are required to submit quarterly returns along with any necessary contributions.

Should you wish to appeal this you may do so by contacting the W.A. Industrial Relations Commission and applying for a Board of Reference hearing under the Industrial Relations Act 1979.

If you do intend applying for a Board of Reference hearing it is essential that you advise the Board in order to avoid possible legal proceedings for failing to lodge returns.

Any discussion or correspondence relating to this matter should be addressed to the undersigned on 9476 5409.”

2         The requirement for registration of employers appears in s.30 of the CIPPLSL Act as follows:

“30. Registration of employers and employees

 (1) Every natural person, firm or body corporate that is an employer in the construction industry (whether or not he or it carries on any other business) shall register as an employer under this Act.”

The remainder of s.30 is not relevant for the purpose of deciding this application.

3         Section 3(1) of the CIPPLSL Act defines “construction industry” in the following terms:

 “construction industry” means the industry —

 (a) of carrying out on a site the construction, erection, installation, reconstruction, re‑erection, renovation, alteration, demolition or maintenance of or repairs to any of the following —

 (i) buildings;

 (ii) roads, railways, airfields or other works for the passage of persons, animals or vehicles;

 (iii) breakwaters, docks, jetties, piers, wharves or works for the improvement or alteration of any harbour, river or watercourse for the purposes of navigation;

 (iv) works for the storage or supply of water or for the irrigation of land;

 (v) works for the conveyance, treatment or disposal of sewage or of the effluent from any premises;

 (vi) works for the extraction, refining, processing or treatment of materials or for the production or extraction of products and by‑products from materials;

 (vii) bridges, viaducts, aqueducts or tunnels;

 (viii) chimney stacks, cooling towers, drilling rigs, gas‑holders or silos;

 (ix) pipelines;

 (x) navigational lights, beacons or markers;

 (xi) works for the drainage of land;

 (xii) works for the storage of liquids (other than water) or gases;

 (xiii) works for the generation, supply or transmission of electric power;

 (xiv) works for the transmission of wireless or telegraphic communications;

 (xv) pile driving works;

 (xvi) structures, fixtures or works for the use on any buildings or works of a kind referred to in subparagraphs (i) to (xv);

 (xvii) works for the preparation of sites for any buildings or works of a kind referred to in subparagraphs (i) to (xvi); and

 (xviii) fences, other than fences on farms;

 (b) of carrying out of works on a site of the construction, erection, installation, reconstruction, re‑erection, renovation, alteration or demolition of any buildings or works of a kind referred to in paragraph (a) for the fabrication, erection or installation of plant, plant facilities or equipment for those buildings or works;

 (c) of carrying out of work performed by employees engaged in the work referred to in paragraph (a) or (b) and that is normally carried out on site but which is not necessarily carried out on site,

  but does not include —

 (d) the carrying out of any work on ships;

 (e) the maintenance of or repairs or minor alterations to lifts or escalators; or

(f) the carrying out of maintenance or repairs of a routine or minor nature by employees for an employer who is not substantially engaged in the industry described in this interpretation;”

4         In arguing whether Welldrill is an employer ‘in the construction industry’ both parties relied on the decision of Ipp J in Aust-Amec Pty Ltd t/a Metlab Mapel & SRC Laboratories and Others v Construction Industry Long Service Leave Payments Board 62 IR 412.  In that decision the principal issue was whether the employers were obliged to be registered under s.30 of the CIPPLSL Act.  Ipp J analysed the provisions in ss.3, 30 and 34 of the CIPPLSL Act and determined that:

“an employer who is required to register under s 30(1) must not only be a person who so “engages persons as employees in the construction industry” (by virtue of the definition of “employer” itself) but must, also, by reason of the requirements of s 30(1), be an employer in the construction industry.  The only difference, under the Act, between employers, simpliciter, and employers who are required to be registered, is the additional element of being “in the construction industry” that is applicable, by s 30(1), to the latter.  It follows, in my opinion, that some meaning must be given to the phrase “in the construction industry” in s 30(1).”

In that matter the issue was whether the work done by the employers could be classified as “maintenance” as that term is used in the definition of construction industry. 

5         The key issue then in this appeal is whether the work undertaken by Welldrill and its employees can be said to be “for the storage and supply of water” and therefore be “in the construction industry”.  The respondent submitted that there are other aspects of s.3(a) notably subclauses (vi), (viii), (ix) and (xvii), which also apply.  I do not agree, but I will come to that in due course.

Evidence

6         The only evidence is that of Mr Peter Chegwidden, the owner and director of Welldrill.  He says that the nature of his business is exploration drilling [Exhibit A1].  He says:

“Basically, exploration drilling for us is to find out whether there's particular mineral, if we're doing mineral drilling, or the particular water, if there's water drilling, whether there's a resource there. Exploration means looking for a resource.” (T3)

7         Apart from administration staff the business employs four drillers and six offsiders.  They operate from a factory in Henderson and maintain their own fleet of equipment which includes 3 drilling rigs, 15 trucks, mud pumps, compressors and various other equipment for the drilling rigs.  At present the rigs are doing exploratory water drilling which involves installing a series of monitor bores so that the mining companies can gather information for planning.  Since September 2006 he estimated that the company has drilled approximately 1,000 holes.  None of these were extraction holes. 

8         Mr Chegwidden says that under EPA regulations monitoring bores are required outside a mine site.  Water monitoring is undertaken to assess water table levels, salinity and stygafauna.  Testing for water depth or taking grab samples is undertaken by hydrologists or scientists and not by Welldrill.  Welldrill drills the hole, installs a casing and does the headworks on top of the hole so that the hole is not run over and destroyed.  Welldrill does not install pumps or piping and is not registered to do so. 

9         Welldrill also drill exploration holes.  These are a series of holes in a zone marked by the geologist or hydrologist to ascertain whether there is water in that location.  Generally exploration bores will be backfilled and left to nature.  The backfilling is done immediately upon a decision not to install the site as a monitoring bore.  Basically monitoring holes and exploration holes are the same; some holes are turned into monitoring holes and some are backfilled.  The monitoring hole has a concrete plinth installed around the hole with a lockable secure capping system. 

10      There are larger bores which are drilled for water extraction and a larger screen is installed in these to accommodate a pump.  Before drilling a hole the driller must sight the permit for that hole.  The licence is different for a monitoring bore than for an extraction bore.  Monitoring bores cannot have pumps installed in them as they are usually a 50 millimetre construction and nobody makes a pump that size.  Extraction bores would, “usually start around about 150 millimetres ID of casing upwards, as against a 50 millimetre ID casing”. 

11      Under cross-examination, Mr Chegwidden’s evidence was that Welldrill did not engage in dewatering services.  They drill holes at the planning stage before any mine site is established.  The holes that are drilled have utility for someone in the future to use as a bore or a source of water supply.  Welldrill does not revisit the site and hence does not know what the holes are used for.  Mr Chegwidden in answer to questions explained the process of mud rotary drilling in detail, and how aquifers are screened and holes are flushed clean. 

12      Mr Chegwidden was then asked:

“You've got your specific aquifer that you've screened off and it can be used for ever and a day as a monitoring hole for whatever purpose the owner of that hole really wants?---Yeah, as long as the owner changes the licence over from the specific licence it's currently got on it.” (T21)

And again

“Okay. So I take it that what that is referring to is development work that was carried out by Welldrill on the Redhill project. And that development is the process of ensuring that the well that you've drilled or the bore that you've drilled is going to be capable of supplying water?---No, development is air lifting.  That's all we're doing. We're doing air lifting under instruction from the hydrology company.

So the air lifting - - -?---Till the finds are gone from the hole.

- - - is cleaning out so that the well is free of contamination?---That's correct.

Because if you were going to be taking water out of the well or extracting water from the well at any time, you want it to be clean not contaminated?---No finds in there so they can get an accurate sample.

That's a requirement of what you do - - -?---Yes.

- - - to make sure it's free from contaminants?---That's correct.” (T21-22)

13      Mr Chegwidden says that Welldrill do not do any test pumping, this work is subcontracted out, but not by Welldrill.  This work is undertaken after the hole is completed.  He was asked:

“MR WINCH: You'll see that paragraph 3, starting with the words, "The project," reads:

The project water demand for mineral processing is projected to be between 10 and 14 gigalitres per annum for the life of the project. ARL are planning to install a water supply bore field adjacent to the Fortescue River where it crosses Ashburton Coastal Plain to source part of the project water demands. A program of bore installation and testing has been designed to allow the quantification of the total water resources available in the Fortescue River aquifers.

Now, I don't expect you to be able to tell me what ARL ultimately did with the bore holes that you drilled, but it's plain in the contract that what they were contemplating is a water supply and bore field, which the exploration and monitoring holes that you went out and drilled under the contract were designed to, if you like, provide them with information to see if there's going to be sufficient water available for the purposes of the mining operations or the processing operations?---Yeah. It was the installation and testing to see if the aquifer could sustain it.

Yes?---That's right; testing.

Exactly?---Yep.

So the intent was that … the intent from reading this is that that aquifer that you were testing was to be developed into a water supply bore field. And I think we spoke before … leaving this contract for the moment, I think we spoke before about dewatering services that … in mines now … I understand you've got some experience in the mining industry. You understand how the mining process works from a water control perspective. And in your experience if a mining company engage you to drill holes around where an open-cut mine was going to be installed or operations were going to be commencing for the  purposes of identifying where the aquifer level was, that would be reasonable to expect that part of the reason at least would be so the mining company has knowledge of how much water they need to extract from the ground, at what level in order to be able to bring the water table, the aquifer level, below that at which they want to mine?---Yes, that's correct. That's what … some of the reasons for the holes.” (T24)

14      The drills crews do maintenance on their equipment and vehicles, especially as they work in remote locations.  He does not return to the holes once drilled and does not know if a hole is used subsequently for the supply or extraction of water.  Currently 70% of their work involves water-well drilling.  The remainder of the work is, “purely exploration for sample drilling”.  All the work is for the purpose of determining if and where the water is on-site. 

15      In re-examination Mr Chegwidden’s evidence is that exploration holes have a six-inch casing, monitoring holes are 50 millimetres in diameter and an extraction hole would be up to 520 millimetres in diameter.  There is a definite design for a production hole.  He says to his knowledge none of the holes drilled by Welldrill are production holes as he does not know what they have later been used for and the drilling licences were all for exploration. 

Submissions

16      Mr Spyker for the applicant submitted that the appeal is against the decision of the Board to require Welldrill to register as an employer for the purposes of that CIPPLSL Act.  He submitted that the decision appealed is the decision of the Board as represented in the Board’s letter of 22 October 2008; as opposed to whether Welldrill could be said to otherwise fall within the provisions of the Act as an employer.  He referred to the terms of the letter and s.50 of the CIPPLSL Act which states, “All claims arising out of the requirement that an employer register under this Act may be made to the Board of Reference”.  If the grounds for registration go beyond the letter of 22 October 2008 then the applicant submitted that they had no notice of that. 

17      Mr Spyker submitted that the evidence shows that Welldrill is not carrying out works for the supply of water.  The holes are drilled for the monitoring of ground water levels, to take grab samples and for environmental monitoring.  That is the purpose of the work and no permanent structure is left.  The work is done before a mine is constructed or a decision taken to mine.  This is also apparent from the stated purpose of the registered business. 

18      Mr Winch for the respondent submitted that the task of the Commission was to determine whether registration under the CIPPLSL Act is required.  The Commission is not required to examine the reasons for decision of the Board.  It is a de novo appeal.  He submitted that the issue was to determine whether Welldrill must be an employer in the construction industry and the relevant part of the definition includes, “works for the storage or supply of water or for the irrigation of land”.  He submitted, “There is no other purpose for which the holes, wells, bores constructed by the applicant can be used other than for the supply of water, the drainage of land or the extraction of materials”.  There is no requirement under the act for the works to be of a permanent nature.  In any event the holes drilled by the applicant are permanent in nature, piping is installed and the holes are capped and locked.  The activities undertaken by Welldrill are those prescribed in the award.

19      Mr Winch referred to s.3 of the CIPPLSL Act and submitted that at least subclauses (iv), (vi), (viii), (ix) and (xvii) apply directly to the work carried out by the applicant.  A monitoring hole is created for the purpose of taking a grab sample.  This is sufficient to bring the applicant’s work within subclause (vi).  The monitoring and production holes can only be for the supply of water, hence this work falls under subclause (iv).  In respect of subclause (viii) Welldrill’s employees repair and maintain equipment.  The drilling rigs have to be installed. 

Considerations

20      A question arose, perhaps due to questions from the Commission, as to whether the Commission’s task in this appeal was simply to review the decision of the Board, or more generally to consider whether Welldrill fell under the terms of the CIPPLSL Act.  Of course, any assessment is to be based upon matters raised in the application and at hearing, not on a more general investigation of Welldrill’s activities.  On this issue, I would agree with the submissions of the respondent.  I have looked unsuccessfully to see whether, at the introduction of s.50 of the CIPPLSL Act or s.48 of the Industrial Relations Act 1979, Parliament had anything to say which might illuminate this point.  The ‘appeal’ is not described in anyway.  The task then is simply to assess the activities of the applicant and apply these facts to the relevant provisions of the CIPPLSL Act.

21      It is apparent from all of Mr Chegwidden’s evidence that Welldrill operates mobile rigs at remote sites, prior to the development of any minesite, to drill exploration and monitoring holes for water.  He says uncontradicted that of the approximately 1,000 holes his company has drilled, none of these have been extraction holes.  Hydrologists or other scientists then test the water, water levels and stygafauna.  Whilst the work is obviously more complex than this simple description suggests, the description is appropriate for the totality of Welldrill’s work.  Any other activities undertaken by Welldrill, be they administrative, financial or maintenance are undertaken in support of this drilling.  The question then is whether this drilling can be said to be ‘works for the storage and supply of water’.

22      This question is answered by Mr Chegwidden’s evidence.  A driller sights a license prior to drilling a hole.  He drills an exploration hole or a monitoring hole.  An exploration hole is back filled.  A monitoring hole is cased and locked.  Production or extraction holes require a larger diameter.  Welldrill does not install pumps.

23      It is then difficult, given this evidence, to support the conclusion of the Board that the drilling undertaken by Welldrill is “obviously work for the supply of water”.  It may be that at some later stage some of these monitoring holes are converted to production holes, but that is not apparent from the evidence and it would be wrong therefore for the Commission to conclude that.  Equally, there is no evidence that Welldrill is involved in any work that involves storage of water.  Any temporary pooling of water is only done as an aide to the drilling.

24      Whilst it is plain from the Board’s letter of 22 October 2008 that the Board considers s.3(1)(a)(iv) applies to Welldrill’s activities, the respondent submitted also that other subclauses apply.  The evidence is that some piping is installed in monitoring holes to keep the hole open.  However, no pipelines are installed or constructed (as per subclause (ix)).  The evidence is that the mobile rig is set up in preparation for drilling and post drilling is removed from site and a lockable casing is left on monitoring holes.  In my view, it is drawing a long bow to suggest this work can be said to be constructing, erecting or installing a drilling rig (as per subclause (viii)) or the preparation of a site for that purpose (as per subclause (xvii)).  The evidence is instead that the drilling rig is moved around a site to drill multiple holes.  Finally, the evidence is that the grab samples are not taken by Welldrill but by hydrologists or scientists (as per subclause (vi)), if in fact a grab sample could be said to fall within the terms of that subclause, which I doubt.  If, as I have found, none of those subclauses apply, then the question of maintenance applying to any of them is irrelevant.  Section 3(a) reads such that the construction, installation or maintenance etc. must apply to one of the items in the subclauses.  In any event the maintenance is to ensure the vehicles and drilling rigs function well.

25      In light of the foregoing it is the decision of this Board of Reference that at the material time the Applicant was not required to register under s.30 of the CIPPLSL Act as an employer.