Watermin Drillers Pty Limited v Cooper [2006] ACTSC 67 (7 July 2006)

Last Updated: 13 February 2007

WATERMIN DRILLERS PTY LIMITED v MICHAEL COOPER

[2006] ACTSC 67 (7 July 2006)

APPEAL - contract - proper interpretation of rate of charge for bore work.

Codelfa Constructions Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337

ON APPEAL FROM THE MAGISTRATES COURT

No SCA 104 of 2005

Judge: Connolly J

Supreme Court of the ACT

Date: 7 July 2006

IN THE SUPREME COURT OF THE )

) No SCA 104 of 2005

AUSTRALIAN CAPITAL TERRITORY )

ON APPEAL FROM THE MAGISTRATES COURT

BETWEEN: WATERMIN DRILLERS PTY LIMITED ACN 001313 499

Appellant

AND: MICHAEL COOPER

Respondent

ORDER

Judge: Connolly J

Date: 7 July 2006

Place: Canberra

THE COURT ORDERS THAT:

1. The appeal be upheld in part in that the order of the Magistrate giving judgment for the plaintiff in the amount of $8,520 be set aside, and in lieu thereof there be judgment for the plaintiff in the sum of $1,500.

2. The Magistrate's orders in respect of costs be set aside, and the parties be heard on the question of costs.

1. This is an appeal from a decision of a Magistrate concerning a claim for damages in a contractual dispute arising from the drilling of a water bore. The appeal challenges a factual finding by the learned Magistrate concerning what was said to be a failure to properly line part of the bore, and the proper interpretation of the terms of the contract.

2. The dispute arose from the construction of a bore on a residential block in suburban Red Hill. The plaintiff/respondent to this appeal had obtained the appropriate licensing approval from environmental authorities to construct and operate a bore on his property, and in February 2003 entered into an agreement with the defendant/appellant to perform drilling services to construct the bore. The project was undertaken, water was found, and in April 2003 the defendant invoiced the plaintiff for the cost of services performed. The invoice was paid in full. It is common ground that the bore was able to supply and did in fact supply water continuously after construction. In July 2004 the plaintiff issued a claim in the Magistrates Court asserting that the bore was not fit for the purposes for which it was constructed, and in August 2005 the plaintiff substantially amended that claim asserting that the defendant had overcharged for the drilling of the bore, and asserting that the defendant had failed to properly line parts of the bore that were drilled through unstable formations. The learned Magistrate heard the claim on 25 November 2005 and adjourned briefly after taking evidence and submissions. He then delivered a judgment for the plaintiff in the sum of $8,520. This was based on both the failure to properly line claim for which the Magistrate awarded the sum of $1,500, and the overcharging claim for which he awarded the sum of $7,020. The defendant appeals against both aspects of the judgment.

The Contract

3. The contract between the parties was set out in writing in a document entitled "Authority To Proceed With Drilling" signed by the parties and dated 17 February 2003. It asserts that the owner requests the contractor to carry out drilling operations at the residential property. The document is a printed form, with certain parts filled in by handwriting. The part of the document dealing with costs states:

In respect of drilling carried out under this Authority the Owner shall pay the contractor drilling costs calculated in accordance with the following rates.

Test Hole drilling in rock & stable formations

(Dry hole) $ 65.00/m

Water Production Hole air drilling with 125

PVC Casing in unstable formations only ADD $ 65.00/m

$130.00/m

Test hole mud drilling in sand, gravel & unstable

formations $

Production hole mud drilling with 125 PVC

Casing in unstable formations only ADD $

Drilling deeper than 80m, 262.40ft, above

rates plus 10%

125mm PVC Screens if required $

Casing $

Development, Reaming & Airlift testing of

approx. water supply, pressure cementing, handling

& welding casing, gravel packing, or work other

than drilling $250.00/HR

Materials, screens, casing, casing shoes, gases,

welding rods, gravel, cement, drilling mud,

additives, chemicals, earth moving equipment,

water cartage, etc if required by the contractor

COST ON SITE plus 20%

Other ................................................................... $

Location Charge $650.00

PLUS GST @10%

Plus any costs to comply with EPA requirements.

This quotation/contract does not include any government fees, taxes or charges (including and goods & services taxes) that will be payable upon acceptance of this quotation/contract and invoicing of the works. These amounts will be payable in addition to the amount quoted.

4. It was common ground that the bore was constructed, water was found and was able to be extracted, and that the bore was dug to a depth of 130 metres. The contractor sent an invoice to the owner dated 15 April 2003. This appears at appeal book page 95. It shows that the owner was charged for rock drilling 80 metres at $130 per metre, hard drilling 50 metres at $143 per metre, 1 hour for reaming, developing, airlift testing at $250, and a charge for "other materials, sand bags, PVC liners, PVC tarps, & clean up, straw (illegible) $1123", together with set up costs and GST. The total amount came to $21,475, which has been paid in full.

The claimed failure to line

5. The contract provides for a price for a "Test Hole drilling in rock & stable formations (Dry hole)" of $65 per metre, and a price for "Water Production Hole air drilling with 125 PVC Casing in unstable formations only". The price for this, it seems to me, is $130 per metre, in that it is an additional $65 above the price for the "test hole".

6. It was common ground that solid rock was found at 30 metres. It was also common ground that in the area above 30 metres, there were only some 3.25 metres that had been lined with PVC casing. The plaintiff claimed that he was due for rectification for 22 metres that should have been lined but was not. At the hearing, indeed during the delivery of the extempore judgment, the plaintiff sought to amend this claim beyond 22 metres to the difference between the lined amount and 30 metres, but this was, properly, rejected. The Magistrate had before him a report from an expert, Dr Lee, who had examined the bore hole for the plaintiff. Dr Lee also gave oral evidence, in which he asserted that the whole of the area above 30 metres was in unstable rock, and ought to have been lined. The defendant also filed an expert report, but it was apparent that when that expert attended to inspect the site the bore was operating, and the expert was not able to look down the bore or send down a camera or other apparatus. No formal application was ever made for a proper inspection and the result was that the only person who had actually inspected the first 30 metres of the bore was Dr Lee. It seems to me that, in these circumstances, the learned Magistrate's decision to accept that evidence, and hold that additional lining should have been provided, was correct. His Honour awarded $1500 in respect of this claim. I note that the expert report from the contractor, Mr McKechnie, who was unable to inspect the bore hole, agreed that, if additional PVC casing was required, the rectification cost to remove the pump, install the casing and reinstall the pump, would be $15000. This should stand.

The claimed overcharge