Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd

[2008] QDC 301

DISTRICT COURT OF QUEENSLAND

CITATION:

Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd [2008] QDC 301

PARTIES:

SEQUEL DRILL & BLAST PTY LTD

Plaintiff

V

WHITSUNDAY CRUSHERS PTY LTD

Defendant

FILE NO/S:

BD2223/2004

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

12 December 2008

DELIVERED AT:

Brisbane

HEARING DATE:

22, 23 November and 12 December 2007

JUDGE:

Tutt DCJ

ORDER:

1.    Judgment for the plaintiff against the defendant in the sum of $2,747.74 inclusive of interest of $852.75. 

2.    I shall hear the parties further on the question of costs.

CATCHWORDS:

CONTRACT LAW – contractual arrangements between parties both orally and in writing – plaintiff’s business drilling and rock blasting – defendant’s business rock crushing – contract provided for services to be performed by plaintiff – no express time-frame stipulated – implied term to complete in a “timely manner” – contract not completed – set-off and counter-claim by defendant for damages suffered for non-completion – breach of implied term.

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266

Canning v Temby (1905) 3 CLR 419

Hick v Raymond & Reid[1893] AC 22

Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537

COUNSEL:

I A Erskine for the plaintiff

M J Steele for the defendant

SOLICITORS:

Tucker and Cowan Solicitors for the plaintiff

ClarkeKann Lawyers for the defendant

Introduction:

1. Sequel Drill and Blast Pty Ltd (“the plaintiff”) claims the sum of $57,938.99 plus interest and costs from Whitsunday Crushers Pty Ltd (“the defendant”) arising out of a contract between the parties for the drilling and blasting of rock at the German Creek Coal Mine (“the site”) near Middlemount, Queensland, whereby in or about November 2003 the defendant engaged the plaintiff to perform drilling and blasting at a quarry operated by the defendant near the site.

1. The plaintiff is a company engaged in the business of drilling and blasting rock and the defendant is a company engaged in the business of crushing rock for a variety of purposes, including road construction.

Background and facts:

1. It is not in dispute that the plaintiff carried out work for the defendant and issued invoices to the defendant for the total amount of $179,552.84, of which the defendant has paid a sum of $121,613.85, leaving a balance owing of $57,938.99 as claimed.

1. While the defendant admits that the plaintiff performed work for it at the site, it alleges that in relation to one of the “shots”,[1] namely shot 3, the depth of rock blasted was only 12 metres not 15 metres as invoiced and as a consequence the plaintiff has overcharged the defendant in respect of this “shot” in the amount of $7,348.00.[2]

   [1]The term “shot” refers to a single blast or explosion when the explosive material within the drill-hole is detonated to break the rock.

   [2]See Exhibit 1 at pages 21 & 22, together with Exhibit 2; the quantum of this figure was not challenged by the plaintiff.

1. The defendant also counter-claims against the plaintiff in the sum of $85,218.00 for damages for breach of contract on the basis that the defendant suffered loss and damage when it “… was unable to operate its crushing plant for a period of 14 shifts at a cost to the defendant of $6,087 per shift”.[3]

   [3]Defendant’s further amended counterclaim filed 11 August 2006 at para 2(a).

1. Essentially therefore the defendant raises two issues in its defence of the plaintiff’s claim, namely:

(a)         The plaintiff’s claim for payment of invoice 533 dated 12 December 2003 in respect of shot 3 is overstated in that the “blast report”[4] refers to “AV. Depth – 15” whereas on the defendant’s evidence the shot depth when excavated “was only 12 m.”[5]; and

(b) The defendant alleges that the plaintiff breached an implied term of the contract “that the plaintiff would provide the services in a timely manner and in accordance with the defendant’s instructions” in respect of shots 5, 6, and 8 as a result of which the defendant’s crushing plant was unable to operate and therefore suffered the loss of shifts claimed as set out in paragraph [5] above.[6]

It is common ground that the plaintiff did not conduct shot 8.[7]

[4]Exhibit 2.

[5]Plaintiff’s written submissions at paragraph 6(a) and Exhibit 1 at page 11.

[6]Defendant’s second further amended defence at para 4 and plaintiff’s written submissions at para 6(b).

[7]Plaintiff written submissions at para 7.

1. The contract between the parties was negotiated (both orally and in writing) by Stephen Payne (“Payne”) on behalf of the plaintiff and Peter Fitzgerald (“Fitzgerald”) on behalf of the defendant, for the plaintiff to blast rocks for the defendant which it required for the construction of a mine haul road at the site. Different sized rocks were required for the road base and road surface respectively.

1. Payne and Fitzgerald had discussions in October/ November 2003[8] and there were a series of emails in early November 2003 as contained in Exhibit 1[9] which form part of the contract between the parties. This correspondence refers to a number of factors relevant to the work to be performed by the plaintiff such as the “powder factor”;[10] the price per “B.C.M.”;[11] and the “blast pattern”.[12]

[8]Trial Transcript (T.T.) page 10 lines 35-40; page 116 line 18.

[9]See Exhibit 1 pages 1-7.

[10]The ‘powder factor’ is a term which is the weight of the explosives as against the amount of material (to be blasted); it represents a measurement of the relative strength of the explosive used; T.T. page 11 line 13; T.T. page 12 line 33.

[11]B.C.M. refers to “Bench Cubic Metre”, that is rock that is in situ and measured in a solid block; T.T. page 10 line 51.

[12]The ‘Blast Pattern’ is a series of drill-holes designed in a specific pattern in the ground into which the explosive material is pumped; T.T. page 14 line 17.

Plaintiff’s evidence:

1. The plaintiff called 3 witnesses in support of its claim namely, Payne, Mrs Joanne Payne, and Dr. John Heilig, a consulting engineer.

1. Apart from confirming the initial discussions with Fitzgerald and the contractual arrangements  as set out in the correspondence, Payne explained the manner in which the plaintiff carried out its work including the manner in which “the driller and shot firer”[13] prepares the drill holes into which the explosive material is poured and the “drill pattern” adopted for the blast.

   [13]The plaintiff’s “driller and shot firer” on site was a Mr Raymond Stevenson who died on 7 March 2005 – see Exhibit 9 “Death Certificate”.

1. Payne further interpreted the “Blast Reports” documents contained within Exhibit 1 and in particular the “Blast Report” with respect to the contentious “shot 3”.[14] Blast Reports are prepared by the on-site “driller and shot firer” and contain full details of the shot actually fired to enable the appropriate invoices to be prepared at the plaintiff’s office as well as for other purposes required by law.[15]

   [14]Blast Report for Shot 3 is Exhibit 2, refer also to Exhibit 1 page 11.

   [15]Required to comply with the Explosives Act 1999; T.T. page 16 line 7.

1. Payne himself was not on site when shot 3 was fired[16] but interpreted the information contained in Exhibit 2 as prepared by the late Mr Stevenson, which recorded the drill depth at “…obviously 15 metres”.[17]

   [16]The evidence is Payne was only on site “…the very first day that we started on the project” 17 November 2003 –  T.T page 27 lines 24-29; Shot 3 was fired on 22 December 2003 – see Exhibit 2.

   [17]T.T. page 17 line 27.

1. Payne also produced an invoice from Orica Explosives[18] which contains the costs charged by Orica Explosives and details of the volume of explosives attributed to this invoice which refers to Shot 3 fired on 22 December 2003.

   [18]The company which supplies the explosives – see Exhibit 3.

1. Payne further stated that there was no “mention of time being imperative” during any conversations he had with Fitzgerald. “It depended on how quick they crushed the material … they had other processes still on the job and depending on how that worked … Obviously we wanted to get in – in and out as quick as we could.”[19]

   [19]T.T. page 28 lines 15-24.

1. The following represents a table of the number of shots conducted and the timing of those shots:[20]

   [20]Plaintiff written submissions at para 8.

Shot Number	Commenced Drilling	Date of Blast	Time Expired Since Last Blast
Shot 1	17.11.03 – 25.11.03	25 November 2003
Shot 2	26.11.03 – 15.12.03	16 December 2003	21 days
Shot 3	15.12.03 – 21.12.03	22 December 2003 (3 days pre xmas)	6 days
Shot 4	*NB Email PF to SP 01.01.04 seeking to delay for 1 week 09.01.04 – 05.02.04 [Ex.1 Doc# 6]	5 February 2004	45 days
Shot 5	18.02.04 – 21.02.04	21 February 2004	16 days
Shot 6	23.02.04 – 01.03.04	2 March 2004	10 days
Shot 7	02.03.04 – 10.03.04	10 March 2004	8 days

1. In cross-examination Payne agreed that:

·     he mainly discussed the tender for the job with Fitzgerald;[21]

[21]T.T. page 35 lines 20-22.

·     he was required “…to come in, drill some holes, blast segments of this land away…”;[22]

[22]T.T. page 35 lines 32-33.

·     “…the defendant would take away whatever rubble was created, crush it however they wanted to crush it and do whatever they wanted to do with it”;[23]

[23]T.T. page 35 lines 37-39.

·     a major factor in “…what the size of the fragments will be” is “the powder factor”;[24]

[24]T.T. page 36 lines 15-21.

·     “…the powder factor is not going to mean that if you drill to 15 metres and place explosives in 15 metres that only 12 metres will fragment”;[25]

[25]T.T. page 36 lines 23-26.

·     “…that the defendant had a lot of work on”;[26]

[26]T.T. page 41 line 40.

·     “…it was implicit in your agreement that you would do your job on time”.[27]

But denied that:

·     The reason the plaintiff “…didn’t finish shot 8 is because Mr Stevenson left”.[28]

[27]T.T. page 42 lines 1-2.

[28]T.T. page 44 lines 28-29.

1. Payne further agreed that:

·     Ray Stevenson was the only person from the plaintiff on site;[29]

[29]T.T. page 45 lines 21-25.

·     Shot 5 was blasted on 21 February 2004;[30]

[30]T.T. page 47 lines 56-57.

·     the drilling for Shot 6 started on 27 February 2004 and blasted on 2 March 2004;[31]

[31]T.T. page 50 lines 22-26.

·     the plaintiff “…lost 2 drill rods” which explains some of the delay;[32]

[32]T.T. page 50 lines 32-39.

·     the plaintiff left the site after 10 March 2004;[33]

·     in relation to Shot 3 “…if in fact it was only 12 metres (not 15 metres) then the plaintiff is entitled to less”;[34]

·     the plaintiff was “…asked to do other shots after the 10^th of March”;[35]

[33]T.T. page 51 lines 34-35.

[34]T.T. page 59 lines 24-25.

[35]T.T. page 61 line 17.

1. Mrs Joanne Payne’s evidence included that:

·     she was the plaintiff’s “office manager” at all relevant times and that her “…main role is all of the administration”;[36]

·     she was responsible for the invoicing, debtors, creditors, safety management systems, the wage records and HR;[37]

·     she invoiced the defendant on the information she received from the shot firers reports and contract terms;

[36]T.T. page 92 lines 3-12.

[37]T.T. page 92 lines 12-15.

1. Essentially Mrs Payne’s role was to check all information provided to her with respect to the work carried out by employees in the field and then prepare and render invoices on that information in accordance with the plaintiff’s quotations to the customer on the work to be carried out.  Likewise she was not present on site when the work was performed.

1. Dr Heilig (“Heilig”) prepared a report and supplementary statement[38] and confirmed his expertise as a consulting engineer.

   [38]See Exhibit 10.

1. Heilig’s report concentrates on Shot 3 and based on the information provided to him including the “Blast Report”[39] and the “Orica Explosive Invoices 9270390, 9270391 and 9269084”, Heilig concluded “…that the design implemented on the 22^nd December 2003 is consistent with a drilled depth of 15.5 metres.”[40]

   [39]See Exhibit 2.

   [40]Report of Dr Heilig dated July 2007 marked as Exhibit 10 at para 27.

1. In cross‑examination Heilig confirmed that his opinion was based upon the information he had been given and the calculations he had made thereon but he agreed that if a hole was drilled to a depth of 15 metres and detonated the explosion would initiate at the bottom of the hole before the top which would leave unexplained why there would be an explosion to a depth of 12 metres only not 15.

Defendant’s Evidence:

1. The defendant called three witnesses, namely Fitzgerald, Mr Kane Whiteleg (“Kane W”) and Mr Keith Whiteleg (“Keith W”).

1. Fitzgerald gave evidence which included the following:

·     At all material times he “was employed as a senior project manager” for the defendant company which was to provide rock to be used as road base material;

·     “…in November 2003 … had discussions with Mr Payne from the plaintiff … about coming and performing drill and blast on this project for us”;[41]

[41]T.T. page 116 lines 16-23.

·     The plaintiff’s role “…was purely to drill and blast material”;[42]

[42]T.T. page 117 lines 15-16.

·     The defendant’s arrangement with the plaintiff was that the plaintiff would do “…all of the work”;[43]

[43]T.T. page 117 line 24.

·     Had discussions with Payne “… that we needed him to keep up with our program and to maintain a steady flow of rock to the crushing plant”;[44]

[44]T.T. page 118 lines 1-2.

·     In respect of “timeframes” what was “…talked about was meeting production”;[45]

[45]T.T. page 118 lines 24-25.

·     The “bench” in respect of shots 1 and 2 was “about 15 metres” but in respect of shot 3 “certainly appeared that it had only been drilled to 12 metres approximately” and that there was “…a hard bench of approximately 3 metres of hard rock left on the bottom of the shot”;[46]

[46]T.T. page 121 lines 52-53.

·     A number of photographs were tendered including a photograph which became Exhibit 15 and this photograph revealed the 3 metres of “hard bench” the explanation for which was that the blast in respect of shot 3 extended to a depth of 12 metres, not 15;

·     Explanations were given as to how “drill rods” can be stuck and how the explosive material might escape the full depth of the drill hole;[47]

[47]T.T. page 126 lines 30-50.

·     He instructed Payne that the defendant “needed to have it (shot 5) completed by the 17^th (February 2004)”;[48]

[48]T.T. page 130 line 28.

·     Shot 5 “…wasn’t done until 21 February” and the defendant therefore “…lost four shifts”;[49]

[49]T.T. page 130 lines 39-44.

·     That in respect of shot 6 he spoke to Payne to complete this shot by 25 February 2004 but this shot was not fired until 2 March 2004 with the result that “two shifts” were lost;

·     That the plaintiff left the site after shot 7; shot 8 was drilled by another driller;

·     That he “…made a number of phone calls … To Steve Payne … to find out what was happening … why the – the driller wasn’t there”;[50]

[50]T.T. page 136 lines 31-40.

·     That Payne had informed him that the driller (Stevenson) “…had resigned or he wasn’t available”;[51]

[51]T.T. page 137 lines 1-2.

·     That four and a half shifts of production were lost between 17 February and 20 February;[52]

·     Two production shifts were lost between 27 February and 2 March;

·     Nine and a half shifts lost between 22 March 2004 and 31 March 2004 until shot 8 was blasted by another company;

[52]T.T. page 143 lines 5-20.

1. Under cross‑examination Fitzgerald agreed:

·     That on 17 February 2004 there were “33 mm of rain at 6 am” recorded.

·     That it was a possibility that “…that might well be the reason why it (crushing) did not occur on that day”;[53]

[53]T.T. page 153 lines 18-21.

·     “…that the down time” on 19 February 2004 was due to “…carrying out breakdown repairs on the crusher”;[54]

[54]T.T. page 156 lines 23-26.

·     That on 20 February 2004 two shifts were lost;

·     That two shifts were lost between 27 February and 2 March 2004;[55]

·     That in respect of 25 March (2004) there was a loss of two shifts downtime;[56]

·     That two shifts were lost on each of 26, 29, and 30 March 2004;[57]

[55]T.T. page 162 lines 1-5.

[56]T.T. page 168 line 14.

[57]T.T. page 169 lines 25-35 – evidence clarified that 2 shifts were lost on each of 25, 26, 29 & 30 March 2004.

1. Kane W’s evidence was in the following terms:

·     He is the defendant’s operations manager;

·     He first visited the site on or about 20 February 2004 and remained “…there until the end of the project … all day every day for six days a week”;[58]

[58]T.T. page 194 lines 53-58.

·     He saw what is called “…a toe throughout shot 3 … on an average of about two and a half, 3 metres”;[59]

[59]T.T. page 195 lines 36 and 54 – ‘toe’ means solid rock at the base of where the rock above that level has been blasted or removed.

·     He identified the “toe” by reference to the photographic exhibits;

·     He confirmed that he “…rang Mr Payne at 7.30 in the morning looking for the drill rig”;[60]

[60]T.T. page 198 lines 37-38 – referring to 17 March 2004.

·     He was advised “that the driller had resigned … The drill rig would be back but he was trying to find a driller”;[61]

·     He denied “…ever suggesting to Mr Payne or to ‘Bubba’ (Stevenson) that they should leave the site”;[62]

·     He tried to ring Payne on a number of occasions on Wednesday/Thursday, 17/18 March 2004 without success but eventually another driller arrived on site “…by the name of Peter Beadsell” who had been “organised” by Payne.[63]

[61]T.T. page 199 lines 1-2.

[62]T.T. page 199 lines 18-20.

[63]T.T. page 201 lines 28-32.

1. Keith W’s evidence was in the following terms:

·     He is the defendant’s managing director and is a civil engineer;

·     He confirmed the nature of the defendant’s business namely that of crushing rock for road base material;

·     He produced evidence of the “Oak Park Daily Costs Analysis” which was an assessment of the defendant’s costs “…in relation to the machinery and labour that was at the quarry site”;[64]

·     The costs per shift calculated at the sum of $6,087.00;[65]

·     Ultimately the defendant’s counterclaim is particularised in the loss of a total of 14 shifts at $6,087 per shift.

[64]T.T. page 228 lines 47-57.

[65]See Exhibit 25.

Timeliness of Plaintiff’s Performance:

1. As stated in paragraph [5] hereof the defendant claims that the plaintiff breached the implied term of the contract between the parties in respect of shots 5, 6 & 8 that the services were to be provided in a timely manner and because they were not so provided, the defendant suffered loss as particularised.

The Law:

1. It is well-established that courts may imply terms into contracts, including terms necessary to give the agreement business efficacy.[66]

   [66]See BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at [282]-[283].

1. Further, it is also well-established that where a contract does not specifically provide for a time in which to perform the parties’ obligations, the obligations must be performed within a “reasonable” time.[67] The question of what is a reasonable time is one to be determined at the time performance is due, rather than the date of entry into the agreement.[68]

   [67]See Hick v Raymond & Reid[1893] AC 22 at [32]; Canning v Temby (1905) 3 CLR 419 at [424].

   [68]See Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at [567]-[568].

1. In respect of shot 5 the defendant submits that Fitzgerald informed Payne on 11 February 2004 that this shot was required by 17 February but it was not in fact fired until 21 February.[69] As a result 4 shifts were lost and the plaintiff has therefore breached its implied term of timely completion of this service.

   [69]See paragraph [24] hereof.

1. In respect of shot 6 the defendant submits that Fitzgerald informed Payne on 25 February 2004 that this shot was required by 27 February (which Payne denied)[70] but the shot was not fired until 2 March resulting in an alleged 4 day delay and the further loss of production shifts.[71]

   [70]T.T. page 50 line 20.

   [71]There is some confusion in the evidence of Fitzgerald on point as to whether the shot had to be completed by 25 February or 27 February; see T.T. page 131 lines 5-15.

1. In respect of shot 8 the defendant submits that the plaintiff had left the site before completing this shot in breach of the contractual arrangements between the parties and ultimately this shot was completed by another contractor[72] who had been “organised” by Payne.[73]

[72]A Mr. Peter Beadsell.

[73]See paragraph [26] hereof.

Findings:

1. On a review of all of the evidence and the submissions made I make the following findings in this proceeding:

(i)          In or about November 203 the parties entered into contractual arrangements for the plaintiff to perform drilling and blasting work (“the services”) for the defendant at a quarry operated by the defendant near Middlemount, Queensland;

(ii)         It was an implied term of the contract that the services would be provided in a timely manner in accordance with the defendant’s instructions;

(iii)        The services required a number of blasts or “shots” to be fired in accordance with pre‑determined criteria, including the “powder factor”; “Bench Cubic Metre” and “blast pattern”, to be carried out by the plaintiff’s on‑site “driller and shot firer”, the late Raymond Stevenson;

(iv)       Pursuant to the contract, the plaintiff completed seven (7) blasts or “shots” for the defendant between 17 November 2003 and 10 March 2004;

(v)        Blast reports were completed on behalf of the plaintiff by its on‑site employer, Stevenson, in which, finite criteria were recorded in respect of each blast for invoice and other purposes.

Shot 3:

(vi)       That in respect of the performance of shot 3 I prefer to accept the evidence of the defendant’s witnesses, Peter Fitzgerald and Kane Whiteleg, to that of the plaintiff’s witnesses, Stephen Payne and Dr John Heilig, where they differ, based upon their direct evidence, and the photographic exhibits tendered in respect of the depth of the shot actually fired which I further find to have been shot to a depth of 12 metres, not 15 metres as invoiced to the defendant.  I make this finding without adversely reflecting upon the credibility of the plaintiff’s witnesses Stephen Payne or Dr Heilig but on the empirical evidence and exhibits tendered to which Messrs Fitzgerald and Kane Whiteleg attested together with the concessions made by both Messrs Payne and Heilig in cross‑examination referred to in paragraphs [16], [17], and [22] hereof.

(vii)     I find therefore that the defendant has overcharged the defendant in the sum of $7,348.00 in respect of shot 3 and that this amount should be set off against any amount that might otherwise be owed by the defendant to the plaintiff.

Shots 5, 6 and 8:

(viii)    In respect of shots 5, 6, and 8 I find firstly, that the contract between the parties did not contain any express terms of the timeliness of its performance but as I found in (ii) above it was an implied term of the contract the services were to be provided in a timely manner ie., within a “reasonable” time in accordance with the well‑established legal principles on point.

(ix)       In respect of shots 5 and 6 I am satisfied on the balance of probabilities that the plaintiff performed these services within a reasonable timeframe in the circumstances then prevailing in that firstly, there were reasonable delays from time to time[74] in the normal course of business operations taking into account day to day production contingencies and secondly, the evidence on point as to these shots being drilled and otherwise prepared for firing showed a reasonable continuity of activity on the plaintiff’s part in the performance of the services to be rendered.  In any event, I find further that the actual delay between blasts was not so long as to constitute a breach of any implied term of the contract as to its performance.

(x)        In respect of shot 8 I accept the evidence of the defendant’s witnesses Messrs Fitzgerald and Kane W, where it differs from that of the plaintiff’s witness Payne and I find that the plaintiff breached its contractual obligation to the defendant in leaving the site before shot 8 was completed thereby causing the defendant a loss of shifts in its production for which the defendant is entitled to be compensated.  On the evidence before me I find that eight shifts were lost between 25 March and 30 March inclusive.

(xi)       I accept the evidence of the defendant’s witness Keith W that the loss sustained per shift was $6,087.00 in accordance with the “daily costs analysis” sheet Exhibit 25 and I therefore assess the defendant’s aggregate damages for such loss in the sum of $48,696.00.

[74]One requested by the defendant itself in respect of shot 4 – see Exhibit 1 Document 8.

1. In summary, I give judgment for the plaintiff on its claim in the sum of $50,590.99 after allowing for the set‑off in the sum of $7,348.00 as per finding (vii) above and further I give judgment for the defendant on its counter-claim in the sum of $48,696.00 as per finding (xi) above.

1. I therefore give judgment for the plaintiff in the net sum of $1,894.99 together with interest thereon from 23 June 2004 to this day calculated at the rate of 10% per annum which on my calculation amounts to the sum of $852.75. 

1. I shall hear the parties further on the question of costs.