J & B Drilling Ltd. - v. -, 2014 SKPC 194

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2014 SKPC 194 Date: November 4, 2014 File: 5/2014 Location: Swift Current _____________________________________________________________________________ Between: J & B Drilling Ltd. - and - Owen Sebastian Self-Represented For the Plaintiff Scott Allen For the Defendant _____________________________________________________________________________ JUDGMENT K.

BAZIN , J _____________________________________________________________________________ [ 1 ] This matter involves a claim by the plaintiff, a water well driller, for the payment of their account, for the drilling of a water well for the defendant. Mr. James Brown is the Director of the plaintiff company, which is a small family business. Mr. Brown has been drilling for 20 years and averaged about 30 wells a year. [ 2 ] The d efendant alleges that the plaintiff did not perform the contracted services with the requisite skill, care and diligence as

required.

That the plaintiff failed or refused to perform their obligations under the contract and as a result they were forced to contract with a third-party to perform the drilling of a domestic water well. [ 3 ] The defendant also alleges that there was an agreement on July 4, 2012 between the plaintiff and defendant to terminate the agreement to drill a domestic water well. [ 4 ] From the evidence I find that there was a verbal contract between the parties that the plaintiff would drill in an attempt to find water and if water was found, develop for the defendant a domestic water well. [ 5 ] The price was based on the estimate provided by the plaintiff that outlines an estimate for a 120 foot well.

It is important to note that the estimate is by and large based on the depth of the well and only a few items are based on time and quantity of material used. The bill is, for the majority of work, simply a per foot pricing for drilling.

It is not based on how long it takes to drill the well. [ 6 ] I also find that there was no agreement, pursuant to the verbal contract, that the plaintiff would actually find water for the defendant, nor was there as part of the contract that the plaintiff would be able to find and develop a domestic water well that would produce a specified gallon per minute volume. [ 7 ] In the end, it is moot as to whether or not the plaintiff would find water, as the evidence is that he did find water at 120 feet, in the first hole drilled and water in the Shaunavon/Frenchman aquifer in the second hole drilled.

Due to the anticipated quantity and quality of the water in the first hole drilled, this hole was abandoned by agreement between the parties and a new well was drilled in order to have the water well in the much desired Shaunavon/Frenchman aquifer. This aquifer was located based on the E-logs, the plaintiff ’ s knowledge of the area and his extensive exper ience drilling into the Shaunavon/Frenchman aquifer. [ 8 ] I also find that there was no time for completion of the water well stipulated in the contract. T he expert witness David Tratch, M. Sc., P.

Eng outlined in his report, as well as his testimony that due to the many unforeseen aspects of drilling, that each project has its own time frame. He believed that, on average, a well could be finished in approximately one to two weeks. The plaintiff took 44 days to drill two wells and complete the second into a producing well.

The subsequent driller, Hayter Drilling, that the defendant contracted to drill another well after being unsatisfied with the plaintiff’s well, took one and a half days. [ 9 ] The testimony of all p arties indicate that the real concern for the defendant was that the PVC casing for the water well had dropped 57 inches in a matter of days and he lost confiden ce in the water well structure. [ 10 ] The report and testimony of the expert David Tratch addresses the issues raised by the defence as to whether or not the work was completed with the required care and diligence. [ 11 ] The following outlines the various issues raised by the defence as it relates to requisite skill, care, diligence and performance of the contract.

The time taken to drill the well [ 12 ] The parties did not dispute the fact that there was no time period agreed to as part of the contract between the parties to drill for a well. The defence argues that pursuant to the law there is an implied agreement to perform the contract within a reasonable time, and cites 658207 Ontario Ltd. v Gorgi Construction Ltd., 1991 OJ No 998 as authority. [ 13 ] While the expert testified that one to two weeks would be about the average to drill a well, it was dependant on all the circumstances. Of note in the evidence of Mr.

Brown for the plaintiff was that they were delayed continually due to the rain in the area which prevented him from accessing the source of water required for drilling. The wet conditions prevented the heavy water hauling

trucks to safely access the water and transport it to the well site. [ 14 ] In addition a number of employees assisting in the drilling had left the company, during the drilling. Of particular note were the difficulties that the plaintiff had ran into with the loss of circulation in the first well, the decision to abandon the first well and the need to install 60 feet of steel casing in order to stop the loss of circulation in order to drill down to the Shaunavon/Frenchman aquifer, in the second well. I accept Mr.

Brown’s testimony that he never gives a time line to complete a well simply because of the many unknown factors involved in drilling. I also accept Mr. Brown’s testimony that in the defendant’s matter he would not have given a time line to finish the well, as he had just come out of the hospital for a broken back when the defendant contacted him about doing a well for the defendant. [ 15 ] Even taking an industry average by Mr. Tratch of one to two weeks for a well, the plaintiff drilled two wells, which would put him in the average range of two to four weeks in any event.

I find that in the circumstances of this project, it was completed in a reasonable time. The loss of circulation issue [ 16 ] The term “circulation” in water well drilling is the ability for the water being pumped into the hole during drilling to be returned to the surface with the drilling cuttings. Loss of circulation is when the drilling water does not flow back to the surface but flows into the formation that is being drilled through. The evidence was that in the southwest part of Saskatchewan coal seams often cause loss of circulation, but there are many other factors that cause this.

In this matter all parties testified to, and I find as a fact, that there were coal seams present on the defendant’s property, as the defendant had shown the plaintiff what appeared to be an abandoned coal mine on his property. [ 17 ] The loss of circulation caused an increase in time to drill. The second well required the plaintiff to install 60 feet of steel outer casing to seal off the first 60 feet of the formation being drilled, which was agreed to by the defendant. This was installed successfully and as testified to by Mr. Brown once installed there were no loss of circulation issues. Both Mr. Brown and Mr.

Tratch testified that loss of circulation is an aspect of drilling that occurs from time to time, because of what they run into in the formations that they drill through. [ 18 ] I find that the issue as to loss of circulation is simply a factor that occurs in water well drilling and it increases the time for drilling and in this case the cost of steel casing. The fact that loss of circulation occurred does not mean that the plaintiff was not performing the contract in a diligent manner.

The defendant testified that the second driller also encountered loss of circulation issues, which they recovered and were able to complete a well successfully for him as well. Location of the two drilling sites [ 19 ] The defence position as to the location of the well was that the plaintiff solely on his own picked the location to drill, and as such the difficulty he ran into in drilling had to do with the fact that he picked a location that he should have known better to attempt to drill due to the old coal mine on the property. [ 20 ] As to the location of the water well, I accept the evidence of Mr.

Brown that Mr. Sebastian had a particular location where he wanted the water well drilled. Mr. Brown testified to the fact that being as far away from the coal mine was important. Mr. Sebastian testified that he told Mr. Brown he could drill anywhere on his property, and he had a full quarter

section of land to choose to drill on. I do not find Mr. Sebastian credible on this point. Mr. Tratch testified, and it makes common sense, that the location of the water well is a concern for owners because of the necessary trenching of the water line from the water well to the home. It is a financial consideration. [ 21 ] From the bill of Horizon Backhoe to trench the water lines, filed by the defence, it took 13 ½ hours at $110.00 an hour. We know from the pictures filed by the defendant that the wells drilled by the plaintiff and Hayter Drilling are fairly close to the home and yard site.

It is inconceivable that if it cost $1,400.00 to trench the water line to the home that a homeowner would not be concerned whether or not he is paying about $1,400.00 for 50 feet versus potentially tens of thousands of dollars for thousands of feet in distance.

The abandoned 120 foot well [ 22 ] The fact that the plaintiff drilled a 120 foot well which did not encounter the Shaunavon/Frenchman aquifer, does not constitute any lack of due diligence on behalf of the plaintiff. It is simply a fact of life, and not disputed by the defendant, that there are no guarantees of what water source will be found. [ 23 ] The defendant did not dispute the plaintiff’s claim that it was agreed that the defendant wished to access the Shaunavon/Frenchman water aquifer, and for that reason it was agreed that a new well was drilled approximately 20 feet from the first well.

The plaintiff explained that you cannot re-drill into the same hole once the casing had been put down to test the water from the first well. The use of steel surface casing to manage circulation issues [ 24 ] As outlined under the issue of loss of circulation, the expert testified that the use of steel surface casing, being a larger diameter steel casing to which the driller then drills through, is an acceptable method of overcoming loss of circulation. Steel casing provides the barrier to prevent loss of circulation into the ground formation.

The plaintiff testified as well as the defendant, that it was agreed when they started the second hole that they would use the steel casing in light of the loss of circulation on the first hole. The plaintiff is only charging the defendant for the cost of the casing, but the overall cost is set out in the plaintiff’s bill to the defendant to a large extent simply based on the depth of the drilling. The use of steel surface casing does not indicate any lack of due diligence on behalf of the plaintiff. Production of second water well [ 25 ] Mr.

Brown testified that the well from his calculations when pumping would produce 20-30 gallons a minute. Mr. Brown in addition to his own estimate as to what the well was pumping, had Mr. Randy Pain, another water well driller independently pump the site for four hours. He was personally present and from his observations he testified that when Randy Pain was pumping the well he estimated the well would produce 20 to 30 gallons per minute. [ 26 ] Mr. Brown also testified that even five gallons a minute is a lot of water for a residence. Mr. Tratch testified that based on the draw down evidence as provided by Mr.

Brown, the well would produce 30 gallons per minute. Mr. Tratch testified that 10 gallons of water a minute is viewed as adequate for an acreage home. [ 27 ] Although there was considerable testimony as to what the well produced, I find that there never was as part of the contract that the plaintiff guaranteed finding any water whatsoever. There is no evidence that the plaintiff guaranteed water, which the expert and Mr. Brown both testified that in water well drilling, you do not know until you drill what you will find. Mr.

Brown anticipated hitting the Shaunavon/Frenchman aquifer based on his experience in the area, but again until the test hole is drilled and E-logged, there is no way to tell what is down below the surface. Even when the E-log shows signs of a possible water bearing formation, as Mr. Tratch put it, the proof is in the pudding.

You have to drill and develop the well to see what you have. [ 28 ] I find that from the evidence that the second hole drilled by the plaintiff was developed into a water producing well, capable of producing 20-30 gallons per minute. [ 29 ] There has been no evidence produced by the defendant that contradicts the evidence of Mr. Brown and Mr. Tratch as to the

fact that the well was capable of, and did produce 20-30 gallons per minute. However even if the well drilled did not find water, the contract for drilling would have been completed by the plaintiff. Dropping of PVC casing [ 30 ] The main concern of the defendant is that the PVC casing was dropping down the hole, and the defendant had lost confidence in the well, due to the PVC casing dropping by 57 inches below the top of the steel casing. The defendant’s position is that because of this fact there is something wrong with the well.

In addition the party that they had contracted to hook up the well to the water line to the house had told them that he could not hook up the pitless adapter if the PVC casing was still dropping. [ 31 ] James Brown for the plaintiff testified that the PVC casing dropped because the well was not fully developed. The term “developed” in water well drilling is that the well is worked on by bailing, surging or pumping which compacts the sand around and at the end of the PVC casing. This process stabilizes the PVC casing in the drilled hole. Mr.

Brown testified that in the Shaunavon/Frenchman aquifer, from his experience the well will often develop itself, and stop the PVC casing from dropping. [ 32 ] For the plaintiff, James Brown testified that when he came back from B.C., in July of 2012, after the defendants told him that they were cancelling the contract, he developed the well in any event. He described being told that the contract was cancelled similar to building a house and when you have one shingle left to put on, the owners cancel the contract on you.

He wanted to finalize the well, as he testified that the well was a properly producing well. [ 33 ] He testified he surged and bailed the well, which are processes in developing the well, but did not have time to pump out the well to finalize developing before he removed his rig off the well before he left for B.C. He testified that the defendant had requested he move the rig off the well as Mr. Lynn Orr from Horizon Backhoe was going to pump out the well and install a pitless adapter to hook the well up to the house. [ 34 ] The defendant disputes that he had requested Mr.

Brown to remove his rig from the well hole, and that he told the plaintiff that Mr. Orr was going to pump out the well to finalize developing it. [ 35 ] Mr. Tratch also testified that the dropping of the PVC casing had no detrimental effect on the well. He testified that he knew it would eventually stop dropping. Mr. Brown for the plaintiff also testified that he knew the casing would eventually stop. Mr. Brown testified that when he attended around July 12, 2012 to finish developing the well, it had stopped dropping.

Although he did not specifically say how he knew this, I infer that from his conversations with the defendant and his wife, that he was aware of the fact it had dropped 57 inches as measured by the defendant. Mr. Sebastian testified that he last measured on July the 3 rd and it dropped 57 inches and he was present on July 4 th when his wife called Mr. Brown to fire him. [ 36 ] On this point Mrs. Sebastian told the plaintiff on June 25, that he had one more week to complete the well or he would be fired. [ 37 ] She also acknowledged that she told the plaintiff sometime after Mr.

Orr attended and would not install the pitless adapter, not to complete the well as they had no faith in the well. [ 38 ] She also acknowledged that on July 12, Mr. Brown called and said that the well was pumped out and that a third party Randy Pain pumped out the well for testing, and the well was completed. [ 39 ] Although there is a dispute as to whether or not the well was completely developed when Mr. Brown removed his rig from the well hole, and the reason for moving the rig, I find in the end it did not affect the fact that the well by July the 12 th was a producing well, and fully developed.

[ 40 ] Mr. Orr testified that he had no experience with a water well that had outer steel casing. He also testified he was concerned that if the inner PVC casing kept dropping it would shear off his connection with the PVC casing. [ 41 ] Mr. Tratch testified that, if you were worried about the PVC casing dropping and did not want to wait to ensure that it had stopped dropping, it is a simple matter to cut out the steel casing, or build a box structure so that if there was still a concern of the PVC casing dropping down, it would have room to drop without shearing off the connection. [ 42 ] Mr.

Tratch testified that the casing dropping from a hydraulic perspective did not matter. [ 43 ] He stated that as far as the PVC casing length is concerned, one can easily add an extension to the PVC casing. He testified that a $20.00 piece of PVC casing would bring the casing up to the surface if that is what was desired. [ 44 ] I accept the evidence of Mr. Tratch and Mr. Brown, that it was not something that was permanently wrong with the well, because the casing had dropped. That this occurs, and that it was an inexpensive fix to add on more PVC casing if needed. [ 45 ] It is also of note that Mr.

Orr only has experience with water wells, as far as hooking up the pitless adapter to the water well. It was clear from his testimony that he has no special training in water wells, other than he knows from experience how to hook them up so that the water from the well can be pumped to the house. It was also clear that because he had not dealt with a well with an outer steel casing he was uncomfortable in connecting the pitless adapter to the PVC casing. [ 46 ] I find that the defendant, on his own, and because Mr.

Orr had reservations of hooking up the pitless adapter, came to the conclusion that there was something wrong with the water well. Mr. Sebastian lost confidence in the well. However, I find that he had very little basis for this conclusion. He took no action whatsoever to determine if the well was actually a properly constructed water well. [ 47 ] Mr. Sebastian testified that he expected the well to be done by June 29, 2012, but this is based on him, through his wife as his agent telling Mr. Brown this. It was not part of the contract. [ 48 ] For whatever reason, Mr.

Sebastian without doing any testing on the well whatsoever, or attempting to have any perceived problem explained or rectified, fired the plaintiff. Through his agent, Mrs. Sebastian, he told the plaintiff not to finish the well, as he had no faith in the well. The well however had been completed by July 12, 2012. [ 49 ] For reasons only known by the defendant, he contracted with Hayter Drilling to drill another water well on the property, which was completed. Mr.

Sebastian never told Hayter Drilling about the wells drilled by the plaintiff, and the difficulty the plaintiff had in drilling a water well. [ 50 ] Mr. Sebastian, if he actually believed that the plaintiff’s well was improperly constructed could have easily asked Hayter Drilling about it, before going through the expense of drilling a new well, but he did not even mention to them about the well.

He also testified that Hayter would not ever have known about the other well, as they had piled wood around the pipe out of the ground so that no one would run into it. [ 51 ] In conclusion I find that the plaintiff has proven their case that they were contracted to drill in an attempt to find water for the defendant. They in fact found water, although it was not a term of the contract.

I also found that the plaintiff created a water well that had ample water for the home site and that there is nothing about the structure of the water well that prevented it from being utilized by the defendant for their water needs.

[ 52 ] As for the defendant’s position that the contract was terminated, I find that for all intents and purposes the well was completed on July 4, the date that the defendant advised the plaintiff that they were fired. I find that there was no agreement to terminate the contract on July 4, but the defendant unilaterally fired the plaintiff. The firing of the plaintiff unilaterally by the defendant does not absolve the defendant from his liability to pay for the contract. [ 53 ] The defendant, both himself and his wife, Mrs.

Sebastian indicated that they never received a bill from the plaintiff, nor did they ever know what the amount of the plaintiff’s claim was, until the case management conference when the civil action began.

It is of note that the plaintiff filed a builder’s lien on the defendant’s property in August of 2012 and this was removed by the use of solicitors. [ 54 ] The plaintiff indicated that they sent the defendant’s account information to their lawyers, and had assumed that the defendant through his lawyer was aware of the amount of the plaintiff’s account. [ 55 ] It is reasonable to infer that the defendants would have been made aware of the plaintiff’s account, through their solicitors, hired by them to remove the builder’s lien from the property. [ 56 ] The defence also raised the issue that the plaintiff did not comply with the Groundwater Regulations. [ 57 ] The plaintiff testified that they filed the necessary drilling reports in compliance with the regulations.

There was insufficient evidence by the defendants to support any allegation of a breach of the Groundwater Regulations.

In any event, if there was a breach, which I find there was not, it would have no effect on the present issue which is simply whether or not the defendant is liable for paying the plaintiff for drilling the water well on their property. [ 58 ] I find that the plaintiffs have proven their claim in the amount of $23,322.60 as per invoice 910601 filed as Exhibit P-4. [ 59 ] The plaintiff is entitled to pre-judgment interest, from September 16, 2012, being 30 days after the filing of the plaintiff’s builder’s lien on August 16, 2012 with the Land Titles Registry.

I infer that the defendant would have known about the amount owing to the plaintiff by that time. [ 60 ] As the amount proven is over the limit under The Small Claims Act , the plaintiff has limited their claim to $20,000.00. Accordingly they shall receive judgment as follows: A) $20,000.00

B) Pre-judgment interest from September 16 , 2012, to date of judgment

C) Costs in the amount of $100.00 being court filing fee. [ 61 ] Dated this 4 th day of November 2014, in the City of Swift Current, Saskatchewan.

K. Bazin, J