R E Phillips Nominees P/L T/A Splash Touch Free Car Wash v Hanna Wash Systems P/L (No 2)

[2008] SADC 134

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

R E PHILLIPS NOMINEES P/L T/A SPLASH TOUCH FREE CAR WASH & ANOR v HANNA WASH SYSTEMS P/L & ORS (No 2)

[2008] SADC 134

Judgment of His Honour Judge David

16 October 2008

TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION

Plaintiff succeeded on action in misleading and deceptive conduct under Trade Practices Act 1974 (Cth) – parties appealed to Full Court of Supreme Court – matter remitted for reconsideration – issue of causation – whether modifications caused or contributed to quality problems.

Held:  Modifications did not cause or contribute to quality problems – damages awarded to plaintiff on reconsideration of remitted issue accordingly.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - OTHER MATTERS

Plaintiff succeeded on action in contract – parties appealed to Full Court of Supreme Court – matter remitted for reconsideration – issue of causation – whether problems attributable to design or installation – identification of party responsible for installation.

Held:  Problems attributable to design and installation – Hanna Wash responsible for installation – damages awarded to plaintiff on reconsideration of remitted issue accordingly.

Trade Practices Act 1974 (Cth) s 82; Supreme Court Civil Rules 2006 (SA) r 292(3)(c), referred to.
Specialty Equipment Company Inc v R E Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v R E Phillips Nominees P/L [2007] SASC 433; R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127, discussed.

R E PHILLIPS NOMINEES P/L T/A SPLASH TOUCH FREE CAR WASH & ANOR v HANNA WASH SYSTEMS P/L & ORS (No 2)
[2008] SADC 134

Civil

1. DAVID J.               The Full Court of the Supreme Court has remitted this matter for reconsideration pursuant to r 292(3)(c) of the Supreme Court Civil Rules 2006 (SA).

   Background

2. I presided over the trial, which commenced in the District Court in November 2005. I awarded R E Phillips Nominees Pty Ltd (“Phillips”) damages against Hanna Wash Systems Pty Ltd (“Hanna Wash”) and Maxwell Henry Hill, as director of Hanna Wash, for breach of contract, and damages against Specialty Equipment Company Incorporated (“SEC”) for breach of s 52 of the Trade Practices Act 1974 (Cth) (“the Trade Practices Act”). The parties each appealed against my decision to the Full Court of the Supreme Court (“the Full Court”) and their appeals were partially upheld as to liability. The Full Court upheld my decision and dismissed the appeals as to the assessment of damages.[1]

   [1]    Specialty Equipment Company Inc v R E Phillips Nominees P/L & Anor; Hanna Wash Systems P/L v R E Phillips Nominees P/L (2007) 99 SASR 535, [2007] SASC 433.

3. The dispute relates to a car washing system (“the Millennium”), which was manufactured by SEC, and sold by Hanna Wash to Phillips. The judgment of the Full Court[2] sets out the relevant background facts and the points clarified on appeal. I turn immediately to the remitted liability issues.

   [2] Ibid.

   Misleading and Deceptive Conduct: Section 82 of the Trade Practices Act

4. The Full Court held that Hanna Wash and SEC both made a representation relied upon by Phillips, in a context and manner capable of misleading and deceiving, that the Millennium would provide a high quality wash or a good quality wash and that it would do so without the need for manual cleaning. The Full Court found that it was implicit in my reasons that the Millennium fell substantially short of providing a high quality wash or a good quality wash.

5. Phillips made a number of modifications to the Millennium. One of the first modifications involved the installation of a manual pre‑soak station. On this aspect of the claim, an award in favour of Phillips against both defendants was upheld on appeal. The awards I made in favour of Phillips, in relation to the problem of contamination and the need for additional labour, have been remitted for reconsideration. More specifically in relation to these items, the Full Court noted:[3]

   That brief reference to relevant events and relevant correspondence sufficiently identifies the issue between the parties. Clearly enough, Phillips was interested in reducing the time taken by the Millennium to wash a car, so that it could wash more cars a day. Phillips had in mind modifications to achieve that end. The Judge’s findings do not resolve the question of whether modifications were made for that reason, or to remedy a failure to give a good quality wash. Nor do they resolve the question of whether modifications intended to reduce the wash time caused or contributed to quality problems.

   Doyle CJ, with whom White and Anderson JJ agreed, also foreshadowed that:[4]

   a decision on this topic requires careful scrutiny of the evidence of a number of the main witnesses in the case. It is likely to involve an assessment of the reliability of aspects of their evidence, and to call for some witnesses to be accepted in preference to others. As best I can tell it will involve consideration of expert evidence given before the Judge. … The trial Judge might be able to resolve the issue in a relatively straightforward way, depending upon the view he takes of witnesses. I say this because the trial Judge may have formed views as to the reliability of relevant witnesses and relevant evidence…

   I will embark upon resolving the remitted issue by way of setting out and assessing the relevant evidence in sequential order. At the remitted hearing, counsel for Hanna Wash and SEC urged me to rely solely upon the evidence of Mr Phillips. Counsel for Phillips, in contrast, extracted the relevant transcript of all witnesses at trial. Given the passage of time since the delivery of my judgment, it is important that I reconsider the evidence more comprehensively.

   [3] Ibid (2007) 99 SASR 535, 562; [2007] SASC 433 [168].

   [4] Ibid (2007) 99 SASR 535, 558-9; [2007] SASC 433 [149].

   The modifications

6. It is not disputed that the formal process of commissioning the Millennium with Mr Payette from SEC present concluded on 3 June 2001. In response to interrogatories, Phillips’ solicitors set out all the modifications effected to the Millennium since that date as follows:[5]

   [5]    See exhibit P16.

   1.1In or about July 2001:

   (a)     a second pump, being a Cat 35‑20 pump, was installed in the Millennium to increase the efficiency of the Millennium by Reg Hall from Valley Pumps and Irrigations Systems, a subcontractor of Hanna Wash Pty Ltd (Hanna);

   (b)     the front and rear manifolds in the wash arch were linked. This modification, including the design of the modification, was carried out by:

   (i)Hugh Browell, an engineer from Almet Masters Pty Ltd (Almet Masters); and that

   (ii)Jim Fletcher, a hydraulics engineer from Almet Masters; and

   (c)     approximately 20 extra nozzles/jets were fitted to the wash arch to increase the quality of the wash. This modification was carried out by Allshapes Sheetmetal & Cladding Services Pty Ltd, which is a stainless steel welding, fabrication and design business.

   1.2On or about 26 August 2001:

   (a)     a manifold was installed at the pump used to pump water containing product to the wash bay;

   (b)     three separate solenoid valves were attached to the manifold which allowed water to be pumped through three separate lines;

   (c)     this remedied the contamination of the lines which had previously occurred when one line was being used to carry three products (soap and water, rinse water and wax and water);

   (d)     the three separate lines were already present in the Millennium as they had been installed in anticipation that a second wash bay would be used;

   (e)     this modification was carried out by:

   (i)David Murray of Davids Electrical Contracting Pty Ltd; and

   (ii)Hugh Browell and Jim Fletcher from Almet Masters manufactured and designed the manifold. (Emphasis in original)

   Mr Hill, the director of Hanna Wash, also gave evidence that Mr Phillips modified the Millennium after it was commissioned by:[6]

   ·adding a circulating heat exchange engineer for the pre‑soak in the automatic passes;

   ·adding a second pump, being a large CAT pump used in the delivery of high pressure water to the arch;

   ·adjusting the number of water jets on the manifold;

   ·adjusting the manifold, contained within the arch to allow water to come out of the two top manifolds simultaneously;

   ·providing separate lines from the plant room to the arch situated in the wash bay to allow for different high pressure cycles; and

   ·supplying air operated valves to the inlet of the pump.

   Mr Hill was not sure whether all of these modifications had been implemented by the time of Mr Phillips’ letter of complaint dated 31 July 2001.[7] It is the second to fifth of these modifications, which are most relevant to the remitted issue of causation. The Full Court upheld an award for both the first and final.

   [6]    Transcript of proceedings, R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors (District Court of South Australia, Judge David, 11 October 2005‑7 July 2006) (“Trial TX”), M H Hill XXN, p 2010 line 21 to p 2011 line 2.

   [7]    Trial TX, M H Hill XXN, p 2011 lines 3‑5.

7. Mr Phillips also gave evidence in chief about the changes to the way in which the Millennium was used. He was asked the following:[8]

   Q.What changes were made, was it progressive or in one hit, where you changed from the pre-wash with the guns and the lads for the wheels and front and back and then into the machine, to what we know occurs now, which is pretty well all the pre‑wash and high pressure wash cycles is all done external to the Millennium and then the final pass is done through the Millennium, mostly for the purposes of the wax, to give you the bead before you drive. So explain to his Honour what occurred between – you have got the pump station and what happens now.

   A.I have explained to your Honour the pump station. Are you satisfied with that?

   Q.After the pump station, the pump station is installed, up to now.

   A.We purchased from a company in Adelaide a number of pumps, for smaller pumps to be installed at the wash to be used by hand by the boys to wash the cars in the prep zone immediately before the entrance to the car wash to ensure that the cars were washed completely. Then the cars would be put through the wash.

   Q.When did you make that major change which is no longer the Millennium doing the major wash but it’s done by the lads.

   A.Probably during the early part of 2002.

   Ultimately, I must satisfy myself that none of the items of damage are a consequence of these modifications, but are rather a consequence of the representation in contravention of s 52 of the Trade Practices Act.

   [8]    Trial TX, R E Phillips XN, p 406 line 36 to p 407 line 22.

   The letter dated 24 June 2001

8. Mr Phillips gave a large amount of evidence focussing on the letter he wrote to Mr Demarre dated 24 June 2001[9] and the events surrounding it.[10] Mr Phillips gave evidence that the purpose of the letter was two‑fold.[11] First, it was the “first sunny Saturday” and he was genuinely excited about the prospect of the Millennium in terms of the prestige market it attracted. Second, he had in mind certain modifications to increase the speed of the Millennium and he wanted to seek sanction from SEC to carry out the modifications. In cross‑examination, he was asked the following:[12]

   [9]    See exhibit P9 pp 631-632.

   [10]   See eg Trial TX, R E Phillips XN, pp 381‑383.

   [11]   Trial TX, R E Phillips XN, p 381 lines 33‑38.

   [12]   Trial TX, R E Phillips XXN, p 1309 lines 13‑34.

   Q.Do I need to remind you that your letter of 24 June commences by stating “The car wash is up and running and has exceeded all expectations, we have had a few bugs that have been quickly overcome by Max Hill and our specialists. The customer reaction has also exceeded all of our expectations and we are receiving accolades from each and every one of them, the Millennium is simply the best touch-free system available”.

   A.Yes, I remember that letter and I remember writing those comments.

   Q.And as you have said, they were true at the time you wrote them, weren’t they.

   A.Not necessarily. If you notice the letter, the reference of that letter is to modifications and I gave Jack Demarre a true and honest account of what happened on 24 June – I think that’s the date that’s blocked out on this letter – in that the car wash did exceed all expectations, it was the first sunny Saturday, perhaps two weeks after we had opened and we did 60 to70 cars and they were all very up-market motor cars and at that stage I realised that what I had set out to do had succeeded, we had attracted those cars.

   Counsel for Hanna Wash and I then further pressed Mr Phillips as follows:[13]

   [13]   Ibid p 1310 line 9 to p 1311 line 23.

   HIS HONOUR

   …

   Q. … why didn’t you mention in that letter the problem with the presoak instead of lauding and saying it was above all expectations.

   A.I believed we would overcome problems that there were with the car wash through Max Hill and through the Zep people, they were all very keen and spent a lot of time at the car wash testing and I believed those problems would be overcome …

   …

   Q.But how could you say … “The car wash is up and running and exceeding all expectations”.

   A.I am probably wrong in my choice of words there. I was over the moon that it has attracted over 60 or 70 cars in the first sunny day. I then realised what I had been planning for some time had exceeded my expectations.

   Q.But it wasn’t doing the job.

   A.It probably wasn’t till afterwards, until the streaks became apparent and everything else, that I was very unhappy -

   …

   XXN

   Q.How do you explain this statement, … which is not a general statement about your delight of the number of people queuing up I suggest, it’s quite specific “That the best wash we have at the moment is wash 3, which consists of two presoak, dwell time, two high-pressure wash, two high-pressure rinse, one high-pressure wax and one spot free. The cars come out clean and our clients are happy”.

   A.And I was pretty convinced that the cars were coming out clean, it wasn’t until perhaps at the end of that day and maybe the days in the coming week, where the casual boys that we employed informed me that they were wiping a lot of dirt off the car where they shouldn’t be, they should be just taking the drops of water off, they were actually taking dirt off the cars or road grime.

   Despite the euphoric nature of the letter, I consider it does not detract from the clear evidence, which I will outline in further detail shortly, that streaking was noticed on vehicles before modifications were carried out. I accept Mr Phillips’ evidence as to why he wrote the letter in the terms that he did.

   When did the problem with contamination arise? What was its effect?

9. Mr Payette, from SEC, gave evidence that when he left Adelaide at the end of commissioning, the wash the Millennium produced was satisfactory.[14] He said Mr Phillips seemed quite happy and he could not recall him expressing any dissatisfaction. As I found in my earlier judgment, Mr Payette had very little, if any, independent memory of events. His evidence was therefore of limited use.

   [14]   Trial TX, K A Payette XXN, p 1125 lines 31‑33.

10. Mr Phillips gave evidence that during commissioning Mr Payette had advised, through Mr Hill, that there might have been a slight bit of contamination due to incorrect valves, and recommended the fitting of the correct size and type of valves to prevent it.[15] Mr Phillips explained that one of the valves originally fitted was a swing check valve, which would open to ease the pressure on the other valve; the substituted valves were positive pilot operated valves, and instantly opened or shut at a signal from the Millennium.[16] Each valve was connected to a different water source which was required by the Millennium.[17] Mr Phillips disagreed with Mr Hill about how long it took to source the replacement valve.[18] In his view, the valve was supplied within six to seven days rather than six weeks.[19] Either way, the evidence is consistent in that it discloses that all parties, including Mr Phillips, were alert to the potential for contamination in the wash products from the time of commissioning. Mr Phillips said that after he replaced the valve there was still contamination in the wash arch, because all products were being discharged to the wash bay through the same line.[20]

    [15]   Trial TX, R E Phillips XN, p 426 lines 6‑25; p 521 line 5 to p 522 line 5.

    [16]   Ibid p 527.

    [17]   Ibid p 530 lines 7‑10.

    [18]   See exhibit P9 p 639.

    [19]   Trial TX, R E Phillips XN, p 534 lines 22‑30.

    [20]   Ibid p 531 lines 13‑15 and 26‑36.

11. In his report dated 9 July 2003, Mr Aukland, the expert called by Phillips, confirmed that the incorrect valves caused reclaimed water to enter the Millennium at the wrong time.[21] The replacement of the valves prevented reclaimed water mixing with bore water for the rinse pass of the Millennium and improved the quality of the wash.[22] Mr Swain, the expert called by SEC, criticised Mr Aukland’s conclusion on the basis that he did not take the water pressure into account.[23] Mr Swain was of the view that the replacement of the valves would have adversely affected the functionality of the Millennium unless the control system was reconfigured.[24] In any event, in his letter to Mr Phillips dated 3 August 2001, Mr Hill disclosed the possibility of this problem occurring,[25] and at trial, Mr Payette confirmed that such contamination was not uncommon.[26]

    [21]   See exhibit P17, reference AES300-C-S0008, p 8.

    [22]   Ibid p 11.

    [23]   See exhibit D22 p 14.

    [24]   Ibid p 16.

    [25]   See exhibit P9 pp 637‑639.

    [26]   Trial TX, K A Payette XN, p 1092 line 16 to p 1094 line 36.

12. In my earlier judgment I awarded Phillips the cost of replacing the valves and the Full Court has upheld that award against Hanna Wash.[27]

    [27]   Specialty Equipment Company Inc v R E Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v R E Phillips Nominees P/L (2007) 99 SASR 535, 566; [2007] SASC 433 [210].

13. Mr Phillips gave evidence that, despite his letter to Mr Demarre on 24 June 2001, he was not satisfied with the quality of the wash.[28] The week after he wrote that letter, many customers returned complaining about white streaking which emanated from crevices in their vehicles after they had left.[29]

    [28]   Trial TX, R E Phillips XN, p 381 lines 25‑30 and p 382 lines 19‑24.

    [29]   Ibid p 382 lines 22‑24.

14. Mr Phillips gave evidence that he noticed a problem with streaking during commissioning, before Mr Payette left on 3 June 2001. However, it was not evident when vehicles exited the Millennium and were parked in a stationary position, because the “lads” he had employed had wiped them down.[30] He said that although this problem of streaking was not addressed while Mr Payette was present during commissioning, it had already arisen at that stage.[31] It was being addressed, and in my view, its effects somewhat disguised, via the use of spray bottles for pre‑soaking and via “lads” wiping down vehicles and letting them stand to dry.[32]

    [30]   Ibid p 383 lines 8‑29.

    [31]   Trial TX, R E Phillips XXN, p 1257 lines 11‑17.

    [32]   Ibid pp 1256‑1257.

15. Mr Phillips gave evidence that they were not yet charging for washes in June 2001.[33] When cross-examined by counsel for Hanna Wash with reference to an advertisement put together for the potential sale of the business,[34] he said it was on 24 June 2001, or thereabouts, that they began charging for washes.[35] Mr Tirrell gave evidence that customers paid for washes from the beginning,[36] which he seems to consider was July 2001.[37] In addition, it must be borne in mind that Mr Tirrell only became substantially involved in July 2001. The fact that they were not charging each and every vehicle for the wash until at least late June 2001, which I accept, also goes some way towards explaining why the persistent nature of the streaking became fully evident only into July 2001.

    [33]   Ibid p 544 lines 9‑12.

    [34]   See exhibit D40.

    [35]   Trial TX, R E Phillips XXN, p 755 lines 27‑34.

    [36]   Trial TX, P J Tirrell XN, p 1558 lines 18‑21.

    [37]   Trial TX, P J Tirrell XXN, p 1617 line 36 to p 1618 line 8.

1. Mr Tirrell first became involved with the Millennium in a managerial role in June 2001,[38] but only started spending a significant amount of time at the Millennium in late June 2001 and early July 2001. Mr Tirrell was cross‑examined on the accuracy of statements, such as those contained in Mr Phillips’ letter of 24 June 2001, which were made before the installation of the second pump:[39]

   Q.From your point of view it would be quite wrong to suggest that in that period when you were there full-time and before the second pump was added, it couldn’t be said with any truth that customer reaction was exceeding all your expectations and that customers were providing accolades, each and every one of them, as to the quality of the wash that they were receiving from the Millennium. It couldn’t be true, could it.

   A.No.

   Q.On your evidence.

   A.No.

   [38]   Trial TX, P J Tirrell, p 1548 line 36 to p 1549 line 2.

   [39]   Trial TX, P J Tirrell XXN, p 1575 lines 8‑18.

2. Mr Tirrell explained that initially Mr Phillips thought that the Millennium simply needed fine-tuning.[40] Customer reaction was good but was based on the initial clean before vehicles drove away, which allowed the streaks to re‑emerge.[41] Vehicles that had been wiped down looked clean, but as they were driven away wash water would flow out of vehicle crevices leaving streaks, which customers complained about on subsequent visits.[42] He said that in July 2001, when he became more involved in the wash testing, they discovered they were remedying the problem through wiping.[43] He said the streaks that appeared in the photographs taken following tests on 9 and 11 August 2001 were consistent with what he saw on vehicles.[44]

   [40]   Ibid p 1573 lines 2‑9.

   [41]   Ibid p 1573 lines 24‑3; p 1,574 lines 27‑30.

   [42]   Trial TX, P J Tirrell XN, p 1558 lines 5‑16.

   [43]   Ibid p 1551 line 29 to p 1553 line 5.

   [44]   Trial TX, P J Tirrell XN, p 1557 line 28 to p 1558 line 3.

3. Mr Tirrell said that he assumed he would have spoken to Mr Hall about the problems they were experiencing, including the streaking, at the time the second pump was installed.[45] He said before the modifications were made, including the installation of the second pump, the Number 3 wash, which was an eight‑pass wash, would have given the best wash available from the Millennium in terms of removing most of the residue.[46] However, he said that this wash still resulted in streaking and required preventative wiping to ensure customers were happy with the wash.[47] He said the problem with the streaking existed from the time of the Millennium’s opening, however, he could not recall that precise date.[48] He denied that the problems emerged only after the second pump was installed, or that he could be mistaken about when the problems emerged.[49] The problems had not only become evident when there was a reduction in the number of passes,[50] though it was possible the number of passes was reduced at some stage while they were trying to resolve the problems.[51] Mr Tirrell gave evidence that they stopped using the reclaim system, but this still did not eliminate the streaking.[52] After attempting to eliminate the streaking in other ways, they discovered the problem:[53]

   was the way the wash was set up, the same piping was being used for different stages of the wash, which meant that, in a wash cycle, for instance, we weren’t using clean wash water, we were using residue from the previous cycle in the wash run, so it meant that the wash was really out of sequence with the water that was being supplied to it or the product that was being supplied to it and that was the, well, that was one of the major issues as to why it just couldn’t do the job.

   [45]   Trial TX, P J Tirrell XXN, p 1587 lines 3‑22.

   [46]   Ibid p 1590 lines 19‑37; p 1572 lines 4‑5.

   [47]   Ibid p 1590 lines 19‑37; p 1572 lines 4‑5.

   [48]   Ibid p 1611 lines 11‑21.

   [49]   Ibid p 1619 lines 17‑32.

   [50]   Ibid p 1595 lines 9‑27.

   [51]   Ibid p 1595 lines 1‑8.

   [52]   Trial TX, P J Tirrell XN, p 1553 lines 27‑35; p 1554 lines 6‑7.

   [53]   Ibid p 1554 lines 14‑23.

4. Mr Tirrell said the wash quality improved with the separation of the product lines and elimination of contamination,[54] but he did not know whether this eliminated the problem with streaking.[55] He said he had had to deal with customers complaining from the time the Millennium opened until at least September 2001, when the wash quality was improved through the re‑plumbing.[56] As customers ceased complaining about the streaking once the wash was re‑plumbed through separate lines, I find that the streaking was caused by the contamination.

   [54]   Trial TX, P J Tirrell XXN, p 1596 lines 24‑26.

   [55]   Ibid p 1597 lines 7‑12.

   [56]   Trial TX, P J Tirrell XN p 1559 lines 2‑10.

5. Mr Tirrell gave evidence that he became involved with the Millennium at a time when he had no other employment or business commitments. Mr Phillips had asked him to become involved because there was a possibility he may have to attend hospital at short notice, and because his son, James, for whom Mr Phillips was setting up the business, was not yet fully trained. Mr Tirrell’s evidence disclosed that he was interested in starting a Millennium car wash business himself, and therefore interested in its performance. He said that although he and Mr Phillips had been friends for some time, they had not spoken to one another about this litigation. I consider Mr Tirrell to have been both a credible and reliable witness, and I accept his evidence as to the nature and circumstances of the streaking and that it had been happening on 24 June 2001 and before any modifications were made.

6. Mr Phillips gave evidence that they had been testing vehicles that came out of the Millennium from the time of commissioning, but photographs of such tests were only taken on 9 and 11 August 2001.[57] At that stage the Millennium completed the wash with the aid of the pre‑soak station.[58] The vehicles tested were hand‑washed and dried before entering the Millennium for a wash and 60 second dry; they were then driven approximately 10 kilometres before inspection.[59] The problem with streaking was not apparent immediately after each wash; it was only later when the vehicles had left the Millennium altogether that the streaking emerged.[60] Mr Phillips said the purpose of the test was to show Mr Hall, whom was present on 11 August 2001, that there was contamination in the wash.[61]

   [57]   Trial TX, R E Phillips XN, p 540 line 24 to p 543 line 12.

   [58]   Ibid p 609 lines 3‑8.

   [59]   Ibid, p 541.

   [60]   Ibid p 544 lines 26‑32.

   [61]   Ibid p 609 lines 9‑27.

7. Mr Hall, a sub‑contractor of Hanna Wash, gave evidence that he was present when Mr Phillips’ daughter’s vehicle was tested through the wash and driven around before they inspected it. He saw streak marks on the vehicle similar to those in the photographs. He agreed that at some stage he had a conversation with Mr Phillips about whether he, as a customer, would be satisfied with the standard of the wash. He said he would not.[62] He said had his vehicle been in the same condition as the test vehicle, he would have taken it back and asked for a refund.[63]

   [62]   Trial TX, RJ Hall XXN, p 2159 to p 2160.

   [63]   Ibid p 2160 lines 33‑39.

8. Both Mr Phillips’ and Mr Hall’s evidence regarding the circumstances of the test they witnessed in August 2001 is further confirmation that the problem of streaking was the direct result of contamination in the Millennium wash.

9. In a letter to Mr Phillips dated 3 July 2001, Mr Hill stated that the commissioning of the Millennium had been complete for some time, “save for a few small items and the Millennium is working in accordance with its intended specifications”.[64] He then proceeded to list three issues with the Millennium, none of which contemplated any problem with contamination. In cross‑examination, Mr Phillips said the contamination was also present on 3 July 2001, but he was not aware of it because it was yet to appear.[65] This statement in isolation might be considered internally inconsistent. However, in the context of the other evidence to which I have referred, I understand Mr Phillips to mean the cause and nature of the problem was yet to present itself.

   [64]   See exhibit P9 pp 633‑634.

   [65]   Trial TX, R E Phillips XN, p 388 lines 7‑12.

10. Mr Hill gave evidence that between 24 June 2001 (when he was present at the Millennium) and 31 July 2001 (when he received Mr Phillips letter of complaint that the Millennium was “not operating correctly and not washing cars properly”), he had not received any like complaints from Mr Phillips.[66] He said there was only one occasion during that period when he visited the Millennium and witnessed poor wash quality. He said this was due to a problem with the water softener tank and was rectified immediately.[67]

    [66]   Trial TX, M H Hill XN, p 1906 lines 23‑37.

    [67]   Ibid p 1906 line 37 to p 1907 line 20.

11. Counsel for Hanna Wash and SEC both attach significant weight to the fact that Mr Phillips first notified Hanna Wash of the contamination problem in writing by letter dated 31 July 2001.[68] When asked by his counsel how he could fix dates for various events, Mr Phillips said that he “immediately” notified Mr Hill of Hanna Wash and his subcontractor, Mr Hall, of all failures in the Millennium by “fax or letter, as well as telephone” and that he could therefore fix dates by cross-referencing.[69] According to both his own and Mr Tirrell’s evidence, however, the nature of the streaking prevented it from becoming fully apparent at any one point in time, unlike orthodox “failures”, such as a piece of equipment ceasing to function. It is also worth noting that Mr Hall gave evidence that he and Mr Phillips “had a lot of long telephone conversations”[70] and Mr Phillips mainly communicated with he and Mr Hill via telephone.[71] Further in evidence, Mr Phillips said it was his practice to notify Mr Hill “immediately by phone” if he had a problem with the Millennium, which he could not attend to, or did not understand.[72] He said if he was not happy, he then put it in writing to Mr Hill.[73]

    [68]   See exhibit P9 pp 635‑636.

    [69]   Trial TX, R E Phillips XN, p 259 lines 8‑13; p 646 lines 1‑3.

    [70]   Trial TX, R J Hall XXN, p 2163 lines 30‑33.

    [71]   Ibid p 2165 lines 1‑9.

    [72]   Trial TX, R E Phillips XN, p 478 lines 14‑18.

    [73]   Ibid p 478 lines 14‑18.

12. Despite Mr Hill’s evidence, it is therefore possible that Mr Phillips did, at least verbally, raise the problem of contamination with him earlier than 31 July 2001. Alternatively, due to its nature, he may not have considered it a problem about which he should have earlier contacted Mr Hill. Nevertheless, because of my findings regarding the letter of 24 June 2001; the nature and circumstances of the streaking; the causal connection to the contamination of the wash products; and the fact that its manifestation preceded modifications, it is immaterial whether Mr Phillips earlier notified Mr Hill of the contamination problem.

13. I find that the problem of contamination causing streaking was present, although not yet fully apparent because vehicles were being wiped down and allowed to stand for some time before being driven, from the time of commissioning onwards throughout the modifications made in July 2001.

    Why were the pump and nozzles installed and manifolds linked in July 2001?

14. Mr Tirrell gave evidence that the second pump, manifold and extra nozzles were installed after he had become involved with the Millennium, and he was aware of them.[74] He was not directly involved in the modifications effected to improve the wash,[75] nor was he present when they were being physically implemented.[76] He said that although some of the modifications may have had the effect of shortening the wash, he thought that none of the modifications would have been made if the Millennium had produced the finish it was supposed to produce.[77] He said it was his understanding that the second pump and additional nozzles were intended to increase the volume of water to produce a better finish.[78] He said he had discussed the speed of the wash with Mr Phillips with a view to improving its throughput,[79] but those discussions never disclosed that Mr Phillips wanted to increase wash speed at the expense of wash quality.[80]

    [74]   Trial TX, P J Tirrell XXN, p 1571 lines 12‑34; p 1585 lines 6‑14.

    [75]   Ibid p 1571 lines 1‑6; p 1586 lines 5‑13.

    [76]   Ibid p 1571 lines 12‑21; p 1587 lines 30‑31.

    [77]   Ibid p 1589 lines 5‑17.

    [78]   Ibid p 1620 lines 16‑24.

    [79]   Ibid p 1592 lines 23‑25.

    [80]   Ibid p 1593 lines 16‑30.

15. Mr Tirrell agreed that the Number 3 eight-pass wash took a long time compared to other washes, and said that he had seen vehicles peel away from the queue because of the long wait.[81] He said this was of concern[82] and something that any businessman would have to address and overcome.[83] Having said that, however, he did not agree that Mr Phillips made the modifications to prevent vehicles from leaving the queue.[84] Indeed, as stated earlier, he said that before the modifications effected to produce a better finish,[85] the wash left streaking and was not producing a good quality wash.[86]

    [81]   Ibid p 1592 lines 14‑35.

    [82]   Ibid.

    [83]   Ibid p 1592 lines 26‑35.

    [84]   Ibid p 1619 lines 33‑38.

    [85]   Ibid p 1620 lines 16‑24.

    [86]   Ibid p 1590 lines 19‑37; p 1572 lines 4‑5.

16. I put the argument of Hanna Wash and SEC directly to Mr Tirrell as follows:[87]

    [87]   Ibid p 1620 lines 1‑15.

    HIS HONOUR

    Q.What is being put to you is this: it is that these changes were made to speed it up, although there was nothing wrong with the quality.

    HIS HONOUR:     Is that right, Mr Hoile?

    MR HOILE:That’s right.

    HIS HONOUR

    Q.Do you agree with that.

    A.No.

    Q.And that’s why these changes were made, not because of the quality.

    A.No, it is because of the quality.

    Q.It is also put that after the changes were made, that’s when the quality went bad.

    A.No, the quality has constantly improved.

    Mr Tirrell was not aware that the desire to increase the speed of the Millennium, more so than its quality, is what motivated Mr Phillips to make the relevant modifications. This may be, in part, because of his view that with the modifications, the quality of the wash improved rather than deteriorated.

17. Mr Hall, who installed the pre-soak station and did some work on the second pump between 10 and 15 July 2001 on behalf of Hanna Wash, was asked about the purpose of the second pump and associated works:[88]

    Q.What did Mr Phillips tell you about that pump and what it was going to do.

    A.Well, that pump had been coming for a little while, at that stage. He was having it made. He was going to run that in conjunction with the original pump to run a couple of the arches or manifolds on the machine together, so he would need more water. So he was putting that pump on to achieve that goal.

    Q.Did he tell you what his goal was with all this.

    A.Yes, he was wanting to make the car wash wash better, wash faster, wash - more water, you can - you can make it do its job better.

    This evidence is consistent with the evidence of Mr Tirrell; at least insofar as it supports the proposition that wash quality was of equal, if not greater importance, than wash speed. After the second pump was installed, Mr Hall said he made programming changes to the wash pass times to make them as fast as possible with the second pump.[89]

    [88]   Trial TX, R J Hall XN, p 2133 line 38 to p 2134 line 11.

    [89]   Ibid p 2136 lines 11‑25.

18. Mr Phillips gave evidence that the modifications entailing the addition of the second pump and associated works, were undertaken because:[90]

    [90]   Trial TX, R E Phillips XN, p 400 lines 30‑36.

    instead of having car washes of five and a half minutes duration, to bring them back to around half that time or less and I could see that I could achieve that same result by the linking the manifolds, that is cut the number of passes in half, which would reduce the time to around the 2 minutes and 15 seconds per wash which I saw in the USA …

    The same is clear from his evidence in cross‑examination[91] and the following excerpts from his contemporaneous letter to Mr Demarre dated 24 June 2001:[92]

    [91]   Trial TX, R E Phillips XXN, p 640 lines 3‑27.

    [92]   See exhibit P9 pp 631‑632.

    …

    The best wash we have at the moment is wash 3 and consists of the following, 2 pre soak, dwell time, 2 HP wash, 2 HP rinse, 1 HP wax and 1 spot free, the cars come out clean and our clients are happy, but it takes 5 min and 20 seconds for a mid size vehicle plus drying, Max and I increased the speed of the passes but this resulted in a poor quality wash so we returned to the original 5.20.

    …

    Later that day it dawned on me that if we put in another pump and linked both manifolds in the arch and maintained the same nozzle pressure of 800 psi we might be able to eliminate one HP wash and one HP rinse pass and therefore speeding up wash 3 considerably, I spoke with Max, and had our engineers from our Air compressor packaging company have a look at it and they could not see a reason why it would affect the system and would go a long way towards Duplicating 2 passes of HP wash and 2 of HP rinse at a considerable saving in time.

    With 5.20 washes plus drying we can wash around 10 cars per hour if they are perfectly stacked and waiting, the reality is that they will never be perfectly stacked and waiting and therefore will wash somewhere around 5-6 cars per hour and around 50-60 cars in a 10 hour day.

    …

    We need to wash around 100 cars per day and hopefully a lot more, I believe the extra pump will help achieve this without Putting extra loads on the Millennium, I also believe that will be possible for us to get up to 300 plus cars on some days of the week without to [sic] much trouble.

    …

    If your Company decides to sanction the use of the extra pump allowing us to run both manifolds together, this will go along way to reducing the time of number 3 wash, it will not only be Splash car that benefits but Max Hill and Specialty.

    I am not looking to reinvent the wheel, and I am not looking to change the principals [sic] of Specialties great product but simply quicken the process time and maintain the quality of the present wash no 3 that works very well.

19. It is clear from the evidence of Mr Phillips, as well as from the evidence of Mr Tirrell, that whatever the primary motivation for the modifications may have been, Mr Phillips did not want to implement them at the expense of wash quality.

20. In response to Mr Phillips’ letter dated 24 June 2001, by letter dated 3 July 2001,[93] Mr Hill advised that SEC would continue to honour its warranty of the Millennium, but could not warranty items that failed as a result of the modifications.[94] Mr Phillips understood that if the modifications caused any problems, which Mr Hill cautioned they might, he would then be “on his own”.[95]

    [93]   See exhibit P9 pp 633‑634.

    [94]   Ibid.

    [95]   Trial TX, R E Phillips XXN, p 1307 lines 31‑33.

21. I find that Phillips added the second pump and nozzles and linked both manifolds to duplicate some of the passes of the Millennium and thereby speed up the Millennium’s wash time. I find that in making those modifications, Phillips was also concerned about maintaining the wash quality.

    Did the modifications made in July 2001 cause or contribute to quality problems?

22. Mr Phillips gave evidence that he undertook the modifications relying on his own expertise and knowledge, supported by his engineers.[96] Mr Hall said he made programming changes as a result of the installation of the second pump using the training he had received from Mr Payette during commissioning.[97]

    [96]   Ibid p 1307 lines 35‑38; p 1308 lines 21‑24.

    [97]   Ibid p 2145 lines 15‑37.

23. Mr Phillips said the addition of the second pump and associated works did not generate any problem with the Millennium, but substantially improved wash times.[98] Mr Tirrell thought the wash quality improved with these modifications.[99]

    [98]   Ibid p 640 lines 28‑34.

    [99]   Trial TX, P J Tirrell XXN, p 1620 lines 13‑15.

1. Mr Hall said he did not think installing the second pump was wise, being unaware of the effects it might have, and refused to install it knowing that Hanna Wash and SEC did not support it.[100] He said he expressed concern to Mr Phillips as to whether any gain that might be achieved by the installation of the second pump would warrant its cost.[101] He agreed he had never informed Mr Phillips in writing that he thought the modifications he implemented had caused problems.[102]

   [100] Trial TX, R J Hall XN, p 2134 line 24 to p 2135 line 6.

   [101] Ibid p 2134 lines 33‑35.

   [102] Ibid p 2163 line 11 to p 2164 line 2.

2. Mr Hill said in evidence that he recommended Mr Phillips against the addition of the second pump and associated works because they had the potential to give rise to an “engineering nightmare”.[103]

   [103] Trial TX, M H Hill XXN, p 2011 lines 10‑26.

3. Mr Demarre, from SEC, gave evidence that the addition of the second pump and associated works would have had to be accompanied by the readjustment of various components, such as valves and pipes, as well as reprogramming.[104] He said he did not know who installed the second pump,[105] nor did he know how Mr Phillips had addressed the effects, if any, of it being installed.[106] During cross‑examination, he said despite not knowing these details, the addition of the second pump would have had a domino effect in terms of the myriad of engineering adjustments which would be necessary to accommodate it, and he suspected that a lack of the necessary expertise would have caused problems.[107]

   [104] Trial TX, J B Demarre XN, p 840 line 29 to p 841 line 19.

   [105] Ibid p 839 lines 27‑29.

   [106] Ibid p 928 line 34 to p 929 line 4.

   [107] Ibid p 930 lines 12‑38; p 876 lines 22‑28.

4. Mr Payette, from SEC, gave similar evidence to that of Mr Demarre on this topic. He said the addition of a second pump could have affected the Millennium, especially since it was not plumbed to handle the doubled amount of water being pumped.[108] He said he had never thought of adding another pump to the Millennium because water was at such a premium in the United States that no one would consider doubling its use.[109] He said extra nozzles would probably have had to be added to accommodate it.[110]

   [108] Ibid p 1091 line 13 to p 1092 line 5.

   [109] Trial TX, K A Payette XN, p 1091 line 13 to p 1092 line 5..

   [110] Ibid p 1091 line 13 to p 1092 line 5..

5. The evidence of these witnesses, called by Hanna Wash and SEC, corresponds closely to the comments that were contained in the letter from Mr Hill to Mr Phillips dated 3 August 2001.[111] The letter stated that the modifications, “(doubling the flow with the addition of a second main high pressure pump) enter an area of untried ground”. The letter stated that they could not advise of the likely outcome, but they warned that there were “a great many variables that could adversely impact the system or the vehicles being washed”. Evidence of what might have happened is not evidence of what did happen.

   [111] See exhibit P9 pp 637‑639.

6. In re-examination, Mr Phillips explained his modifications and their effect in more detail.[112] Mr Phillips said Hanna Wash and SEC incorrectly assumed he was simply doubling the amount of water flowing through the wash arch. He said by linking the manifolds and eliminating one of the high‑pressure soap passes and one of the high-pressure rinse passes, he actually reduced the amount of water being used for the equivalent of an eight-pass wash. He said the first pump was 35 gallons per minute and the second was 23 gallons per minute. He calculated that the eight-pass wash taking, as it was, 5 minutes at 35 gallons per minute actually used slightly more water than the modified six-pass wash taking 3 minutes at 58 gallons per minute. He said that the extra nozzles were installed into the wash arch so as to remain within SEC’s guidelines on pressure rating.

   [112] Trial TX, R E Phillips REXN, p 1359 line 33 to p 1362 line 19.

7. Mr Aukland, the expert called by Phillips, said the second pump would have had no impact on the contamination problem.[113] Mr Swain, the expert called by SEC, similarly said that the second pump would have had no impact of itself,[114] but commented in his report dated 3 February 2005:[115]

   In my opinion, changes to the arch sprays would have radically altered the spraying pattern and have made it difficult to retrospectively assess functionality of the supplied system.

   …

   Whilst I do not have expertise in design and operation of the actual spraying aspect of car wash operation it appears to me that changes to the arch sprays made by the Plaintiff, radically altering the spraying pattern, have the potential to make the system non‑functional.

   …

   I do not have the expertise in the relevant spray washing system to form an opinion as to whether the change would be positive or negative.

   Mr Aukland said Mr Swain’s opinion that the modifications had the potential to make the system non‑functional was not supported.[116] Both experts indicated that the contamination problem could rather be attributed to the length of the single delivery pipe - a topic to which I will return in more depth shortly.

   [113] Trial TX, J S Aukland XXN, p 1698 line 34 to p 1702 line 5.

   [114] See exhibit D22 p 25.

   [115] Ibid p 20.

   [116] Trial TX, J S Aukland XN, p 1670 lines 26-31.

8. SEC and Hanna Wash both argue that the modifications Mr Phillips made to increase the speed of the Millennium caused or contributed to problems with the Millennium’s wash quality. However, the expert and eyewitness evidence was, predominantly, that the second pump and associated works had no adverse impact on the problem of contamination, which remained the same regardless.

9. In any event, as I have already found that the problem with contamination causing streaking existed from commissioning throughout the modifications, Phillips would have already thereby discharged its onus of proof. The modifications cannot have caused streaking if that problem pre‑existed.

10. I find that the modifications, including the installation of the second pump, additional nozzles and the linking of the manifold, did not cause or contribute to problems with the Millennium’s wash quality. As long as road grime remained on the underside, front, back and wheels of vehicles, and streaking on the body of vehicles, the Millennium did not clean to the standard represented.

    Were the installation of the manifold and the use of three lines necessary?

11. In the event, as I have found that the modifications in July 2001 did not cause, or contribute to quality problems, Hanna Wash and SEC argue that the contamination problem could have been resolved without incurring any cost. This argument is linked to their argument that the modifications made to increase the speed of the Millennium were the cause of the contamination problem.

12. In response to Mr Phillips’ letter of complaint dated 31 July 2001,[117] Mr Hill wrote a letter dated 3 August 2001 in which he made the following comments:[118]

    [117] See exhibit P9 pp 635‑636.

    [118] See exhibit P9 pp 637‑639.

    Despite the distance, the Millennium is well-equipped to be programmed to cater for the remoteness of the plant room and still remain dramatically under the wash times of similar competitive equipment without compromise to wash quality.

    The remedy for the issue regarding the “purging” of previous cycle product can be achieved by:

    ·    Slowing the speed of those particular HP cycles,

    ·    Slowing the acceleration of those particular HP cycles,

    ·    Adding of a Stutter pass at the commencement of the new HP cycle

    The strategic inclusion of stutter pass(es) is our recommended option. Please advise how you wish to proceed and we will perform the appropriate programming changes for any of the above methods that can be managed within the constraints of the current equipment.

    The longer term solution is to have Specialty develop a program especially for your site so that it will allow you to speed the process to the level you require. …

    Notably, the letter refers to the wash times of “similar competitive equipment”. By letter dated 24 August 2001, Hanna Wash further advised the following:[119]

    We confirm our previous advice to remedy your HP contamination issues via programming a stutter pass as an option at this time. Another option could be to include another fresh water rinse pass after the HP wax pass. This would eliminate any contamination of wax mixing with the HP soap on the next vehicle. It will however increase the entire wash time by approximately 20 seconds, but this appears to be a minor issue as compared to the contamination being a very serious problem. Both Mr Paul Fisher and Mr Reg Hall have detailed their observations regarding the extent of contamination and both maintain the time that the contaminated water is purged to be around the 12 second mark. This will easily be remedied by programming without unreasonable increase to wash times.

    As discussed this date I am aware that you are being told another story by Mr Reg Hall and Mr Paul Fisher. To eliminate any possibilities of misunderstandings and inaccuracies I propose that we convene a meeting at the Applied Chemicals office…

    From these letters, as he also said in evidence, it is clear that Mr Hill thought the provision of separate lines for the delivery of products was unnecessary.[120]

    [119] See exhibit P26 pp 1711‑1713.

    [120] Trial TX, M H Hill XXN, p 2011 line 32 to p 2012 line 5.

13. A report Mr Phillips obtained from Applied Chemicals Pty Ltd dated 20 August 2001, also suggested remedying the problem by slowing the Millennium:[121]

    The car wash seems to be running too fast to clear the line before pumping through the next product causing cross contamination between the High Pressure Soap and wax products. Best results will be achieved if the car wash is slowed down to its original speed setting in order for the lines to be cleared during the cycle or separate lines must be used for each product.

    I reject this report insofar as it implies the cause of the contamination problem is the speed of the wash obtained through modifications. I find that the brevity of the report indicates the author may not have been sufficiently briefed as to the problem and that this impacts significantly upon its reliability. I therefore prefer to rely upon the expert and eyewitness evidence as I outline above and below.

    [121] See exhibit P25 p 1554.

14. Mr Phillips responded to each of Mr Hill’s suggested solutions.[122] As to the first, he said that the solution would have extended each pass by 20 seconds, taking the complete wash to approximately six and a half to seven minutes - slower than the Millennium’s original speed. As to the second, he said that the solution would not have been a solution at all, due to the length of time over which the contamination was present, and that it would similarly add up to 60 seconds to the wash. As to the last, he said the solution would not have been effective, would also have added 60 seconds and would have led to water and wash product wastage. As to the longer-term solution, he said it would have taken too long to develop. He said, as I found in my previous judgment,[123] that the manifold and use of three separate lines for the delivery of wash product eliminated the contamination.[124] As per my earlier finding, this therefore also eliminated the problem of streaking.

    [122] Trial TX, R E Phillips XN, p 535 line 4 to p 536 line 11.

    [123] Trial TX, N W Swain XN, p 1827 lines 22‑29.

    [124] Trial TX, R E Phillips XN, p 536 lines 16‑18; p 545 line 37 to p 546 line 2.

15. Mr Tirrell said Mr Phillips made adjustments to the wash speeds, dwell times and stutter times.[125] He was cross‑examined about the report by Applied Chemicals,[126] which stated that the problem of contamination could have been resolved by slowing down the wash. He said:

    ·the suggested solution would not have stopped the contamination problem because it originated from product remaining in the line from the previous pass;

    ·they attempted to pre-empt the end of the pass with the product that travelled through the pipes;

    ·even when they ran it as per its original settings the problem remained; and

    ·if they used a stutter pass to clear the line at the end of each pass it would have wasted wash solution and made the Millennium slower than its original speed.[127]

    According to Mr Tirrell, separating out the product lines solved the problem of contamination.[128] Again, as per my earlier finding, this therefore also solved the problem of streaking.

    [125] Trial TX, P J Tirrell XXN, p 1607 lines 24‑33.

    [126] See exhibit P25, p 1554.

    [127] Trial TX, P J Tirrell XXN, p 1602 to p 1604.

    [128] Ibid p 1605 lines 8‑25.

16. Mr Payette gave evidence that minimum purge times were programmed into the Millennium and could be adjusted, but not altogether deleted.[129] He said part of the reason for the purge was to disgorge the product from the previous pass.[130] He said given the distance from the plant room to the wash bay he probably increased the purge times when setting the Millennium up.[131]

    [129] Trial TX, K A Payette XXN, p 1186 lines 21‑32.

    [130] Ibid p 1187 lines 2 6.

    [131] Ibid  p 1187 lines 19‑22.

17. Mr Swain was of the opinion that the solutions suggested in Mr Hill’s letter to Mr Phillips dated 3 August 2001[132] would have resolved the contamination.[133] He also accepted that the problem could have been resolved by adding another rinse pass following the wax pass.[134] According to Mr Swain’s calculations based on the 2-second per litre capacity of the pump and 17 litre “dead space”, it would have taken an extra 12 seconds to clear the line at the end of each pass.[135] He would not comment on whether or not the extra time involved in that solution would have been reasonable.[136] He said that the reasonableness would depend on whether that extra 12 seconds for each pass were acceptable to the operator. [137]

    [132] See exhibit P9 pp 637‑639.

    [133] Trial TX, N W Swain XN, p 1827 lines 22‑29.

    [134] Ibid p 1828 lines 10‑15.

    [135] Ibid p 1828 lines 16‑38.

    [136] Ibid p 1829 lines 1­9.

    [137] Ibid p 1829 lines 9‑12.

18. Mr Aukland in his report dated 9 July 2003 expressed the opinion that the contamination of products being delivered to the wash bay was due to the length of the single delivery pipe:[138]

    Although it can be agreed that the electronic controls for the plant could be programmed for the ‘right time’ and ‘right duration’ requirements, as designed the system fails to deliver the ‘right products’ repeatedly, if at all. The delivery path (pipes) carrying the right products was so long that it entrained a significant quantity of the product to be delivered. At the conclusion of each electronically controlled cycle the product was retained in the pipe.

    On the basis that the feeder pipe is 28 mm in diameter and about 30 m long and that the pump delivers 75 litres of fluid per 30 second cycle then the feeder pipe contains about 25% of product at the end of each cycle.

    When cross‑examined as to the effect of the second pump delivering another 23 gallons per minute, Mr Aukland explained that the level of contamination would remain unchanged because the 25 per cent figure in his report represented the pipe’s approximate 18 litre capacity, based on its length and diameter.[139]

    [138] See exhibit P17, reference AES300-C-S0008, p 3.

    [139] Trial TX, J S Aukland XXN, p 169 line 34 to p 1702 line 5.

19. In his report dated 3 February 2005, Mr Swain similarly remarked that in his opinion “the length of the delivery pipe [did] not appear to have been taken into account in the design of the system. … The control system needed to be configured to accommodate the “dead” space in the systems by means of lag times and/or delay times”.[140] He said had the plant room been located closer to the wash bays, it would have reduced the amount of “dead space” in the system and thereby reduced the problem with the contamination of wash products.[141] Though expressing some reluctance to attribute blame in his report, in cross‑examination, Mr Swain agreed that those supplying the Millennium ought to have taken into account the location of various components, such as the plant room.[142] He said he had not been advised who was responsible for what parts of the Millennium.[143]

    [140] See exhibit D22 p 4.

    [141] See exhibit D22 p 4; Trial TX, N W Swain XXN, p 1839 lines 5‑12.

    [142] Trial TX, N W Swain XXN, p 1839 lines 18‑22.

    [143] Ibid p 1839 lines 18‑22; p 1844 lines 23‑38.

20. Mr Swain was cross‑examined as to his understanding of the pipes originally planned. He agreed that there was a plan, which was followed, for there to be three 25 mm inside diameter stainless steel pipes, each of which were suitable for accommodating the Millennium’s three high-pressure cycles.[144] He also agreed that only one of those pipes was used for all of those three high-pressure cycles.[145] He said he could not think of any reason why an installer would put the three cycles through one pipe when there were three pipes installed which were suitable for the cycles.[146] In his report dated 3 February 2005, he stated that a recommendation to separate out the supply pipes would have avoided any contamination problems, but it was not clear from the fax from Mr Hill to Mr Cook dated 10 December 2000,[147] that the separation of the high‑pressure product lines was indeed the recommendation.[148]

    [144] Ibid p 1841 line 31 to p 1842 line 20.

    [145] Trial TX, N W Swain XXN, p 1841 line 31 to p 1842 line 6.

    [146] Ibid p 1842 lines 21‑28.

    [147] See exhibit P9 p 511.

    [148] See exhibit D22 p 4‑5.

21. By facsimile dated 4 December 2000 to Mr Demarre, Mr Hill provided SEC with a revised FINAL plant room layout with measurements indicated, and asked:[149]

    [149] See exhibit P9 p 323.

    1.Could you please examine these sketches and give any advice you or your engineers think necessary.

    2.Will this plant room layout work??

    3.Could you and your engineering crew please advise of the schematics, for plumbing, power and drainage necessary to make this work to its best ability. Please understand we have NO experience with Touchfree Automatics and wish to do everything by the book so to speak to ensure the best success.

    4.Please advise of requirements for Stainless PVC or copper plumbing etc.

    5.Please advise of lines sizes for all connections.

    …

    On 7 December 2000, Mr Hill sent a further facsimile to Mr Demarre ordering “a full set of schematics for the plant room and wash site layout”, the design of which was to be based around the installation of two Millenniums.[150] On 10 December 2000, Mr Hill sent a facsimile to Mr Cook and a copy to Mr Hall, in relation to the following recommended service lines between the plant room and the wash bays:[151]

    [150] Ibid p 508.

    [151] Ibid p 511.

Supply	Inside Diameter	Outside Diameter
High Pressure Rinse	25mm	32mm
Undercarriage Blasters	25mm	32mm
Spot Free	25mm	32mm
Pre-Soak	20mm	25mm
Shampoo	20mm	25mm
Triple Foam Wax Color 1	20mm	25mm
Triple Foam Wax Color 2	20mm	25mm
Triple Foam Wax Color 3	20mm	25mm
High Pressure Wax	20mm	25mm
Air Supply @ 80-100 p.s.i.	20mm	25mm

Mr Hill also noted in his facsimile that Hanna Wash preferred their technicians attend to installing the above service lines and plumbing services.[152] I agree with Mr Swain’s observation that this facsimile does not disclose any recommendation to have the three high-pressure products travel through separate pipes. It does, however, disclose that three suitable pipes were available.

[152] Ibid p 512.

1. Mr Hill was cross-examined as to the design and use of the pipes available. He remembered that the plan, which was followed, was for there to be three 25 mm inside diameter pipes installed.[153] He eventually agreed as follows:[154]

   [153] Trial TX, M H Hill XXN, p 2,045 lines 15‑19.

   [154] Trial TX, M H Hill XXN, p 2046 line 7 to p 2047 line 15.

   Q.What was installed would allow one pipe to be used for each of the three high pressure functions.

   A.No.

   Q.No.

   A.No.

   Q.There were three pipes, one of each, which could have been utilised for each of the three high pressure functions for the Millennium. Is that not right.

   A.They could have, yes.

   Q.And they were not.

   A.No.

   Q.Why not.

   A.Because it wasn’t the design.

   Q.Whose design.

   A.Speciality’s design.

   Q.So the Specialty design - am I right about this - is to have three 25 mm inside pipes each of which are suitable to use for a high pressure function but which weren’t used for those three high pressure functions; is that what you are saying.

   A.Can you just repeat that question again?

   Q.Yes. Am I right that your evidence is that there were three pipes installed which were each suitable to be used for each of the high pressure functions but the SEC design was to use only one of them for the three high pressure functions.

   A.Yes, that’s correct. Theoretically you could separate them out if you wish, but then you wouldn’t have 25 mm lines to the other two functions that we allowed for and how we designed it to do.

   Mr Hill’s evidence was similarly evasive as to the detail, or lack thereof, in his invoices regarding where the so-called “additional lines” came into the picture.[155]

   [155] Trial TX, M H Hill XXN, p 2047 line 24 to p 2048 line 2.

1. Mr Hall gave evidence that he installed the pipes based on instruction from Mr Hill as to how many pipes were necessary and where they were to run.[156] He understood, through Mr Hill, that SEC had asked for the three high-pressure products to travel through one single pipe.[157] He gave evidence that Mr Phillips said the three pairs of pipes he laid in February 2001 were to be used to carry the wheel cleaner and pre‑preparation product.[158] His explanation for the third pair of stainless steel pipes was uncertain:[159]

   A.It was expected that there would be a wheel cleaner and pre-prep of some description there.

   Q.You say that’s why the stainless steel pipes went in.

   A.That’s one of the reasons why the stainless steel pipes went in.

   Q.Is there another reason.

   A.As far as I know, the stainless steel pipes were to deliver wheel cleaner, a pre‑prepping product for the bugs and there was, at some stage in the early days, a suggestion that a third line would be put in, but he said “No, we only need two”. At the time I would have known what it was for but I have forgotten. The reason for the lines was for those products, to the best of my knowledge.

   [156] Trial TX, R J Hall XN, p 2115 lines 17‑26.

   [157] Trial TX, R J Hall XXN, p 2194 line 36 to p 2195 line 8.

   [158] Trial TX, R J Hall XN, p 2131 lines 6‑12.

   [159] Trial TX, R J Hall XXN, p 2178 lines 20‑33.

2. Mr Cook, the builder employed by Phillips, gave evidence, which I accept, that Mr Hall laid all the pipes for the Millennium and that they were utterly and totally his responsibility.[160]

   [160] Trial TX, J R Cook XXN, p 1447 lines 1‑6.

3. In his evidence Mr Phillips said that Hanna Wash installed the Millennium with the correct number of pipes, as recommended by SEC, to supply the three high-pressure products separately to the wash bay, but never connected them up.[161] Mr Phillips said no one explained why only one of four or five of the pipes available to carry product from the plant room to the wash bay was utilised.[162]

   [161] Trial TX, R E Phillips XN, p 388 lines 14‑21; p 401 lines  18-21.

   [162] Ibid p 532 lines 9‑17.

4. Most of the evidence suggests that the contamination problem was caused by the defective pipe design, rather than pipe installation. Separate 25 mm inside diameter pipes should have been used for the delivery of the three high‑pressure products to the wash bay to avoid any problem with contamination.

5. I find that there were three pipes available for the separate delivery of the three high-pressure products. There were also spare lines available due to the plan for a second Millennium. I find that these pipes should have been utilised in the design from the outset to avoid any problem with contamination. Whether the contamination could or should have been resolved differently is another question, but the fact that the pipes were available is telling to the solution.

6. Mr Swain repeatedly referred to the need for performance criteria, and pointed out that Mr Aukland’s opinion was often given in the absence of such criteria.[163] In cross‑examination, Mr Swain indicated it would be poor practice for a supplier to fail to develop performance criteria through testing.[164] He said it allows the supplier to know its target or aim in supplying its product, and its absence created problems for all parties, particularly during commissioning.[165] He was further questioned about the material with which he was provided:[166]

   [163] See exhibit D22 p 4 and Trial TX, N W Swain XXN, p 1837 lines 7‑33.

   [164] Trial TX, N W Swain XXN, p 1837 line 34 to p 1838 line22.

   [165] Ibid p 1838 lines 3‑16.

   [166] Ibid p 1838 lines 17‑38.

   Q.When you say “In my opinion performance standards were not clearly defined”, when you make that observation, you are calling up the things that you know when you are preparing this report from the documents you were given.

   A.That’s correct. That’s all I have to go on.

   Q.In the documents you were given you couldn’t find anything which clearly defined the performance standards.

   A.That’s correct.

   Q.But were you told, am I right, about what things had been told to the customer, the purchaser, by the supplier before the purchase order was placed.

   A.All I ascertain from the documentation was there was some discussion of the timing, the length of time of the wash.

   Q.What I am very interested to know is whether you were told what discussions had occurred between supplier and customer for this Splash car wash which went to the issue of the performance specification.

   A.Verbal discussions?

   Q.Yes. Were you told anything about that.

   A.No.

7. Both experts, Mr Swain and Mr Aukland, relied upon information supplied regarding the standard time of the wash in providing their opinions. Mr Aukland was of the opinion that the Millennium could not achieve the 4 minute 36 second wash, as discussed, without major modifications. If Phillips had extended the wash times by adopting the stutter pass solution to contamination, Mr Aukland said this would have taken the wash time over that discussed.[167] Mr Swain also accepted the 5 minute 20 second wash above the 4 minute 17 second wash he said was discussed between Mr Demarre and Mr Phillips, but that Mr Phillips ought to have persevered with optimising the Millennium as it was commissioned.[168] Mr Swain then said the Millennium may have been as slow as 5 minutes 20 seconds due to problems such as contamination, which he also said could have been resolved by slowing the Millennium down yet further.

   [167] See exhibit P17, reference AES300-C-S0008, p 14.

   [168] See exhibit D22 p 23.

8. Quite understandably, Mr Phillips did not wish to sacrifice the speed gains he had successfully made through modifications so as to bring the Millennium closer to the speed discussed while not having compromised the quality of its wash. He understood that wash quality and time would vary depending on each vehicle.

9. Due to the absence of performance criteria, both experts were forced to base their opinions on the speed at which it was asserted by both Hanna Wash and SEC the Millennium could perform. The representation to be falsified is that the Millennium, under normal operating conditions, would provide a good or a high quality wash without the need for manual cleaning. I accept Mr Tirrell’s evidence that contamination and streaking persisted when the Millennium was run at its original speed, let alone at the increased speed Mr Phillips managed to achieve.

10. Both experts, Mr Swain and Mr Aukland, agreed that the three options outlined by Mr Hill in his letter to Mr Phillips dated 3 August 2001,[169] would have solved the contamination problem, but would have done so at the cost of an increased wash time and increased water and chemical consumption.[170] Both experts indicated the cause of contamination was the single delivery pipe. In this light, I find as I did in my original judgment, namely that the contamination could only practically be solved by the installation of the manifold and separation of product lines. I award Phillips damages against both Hanna Wash and SEC in the amount of $4,679.56 for the cost of rectifying the contamination problem.

    Was the need for additional labour attributable to modifications intended to shorten the wash cycle?

    [169] See exhibit P9 pp 637‑639.

    [170] Trial TX, J S Aukland XN, p 1654 line 34 to p 1655 line 6. See also exhibit D22 p 5.

11. Mr Ross‑Smith, counsel for Phillips, submitted that the need for extra labour arose solely from the installation of the manual pre-soak station. Mr Hoile and Mr McNamara QC, counsel for Hanna Wash and SEC respectively, submitted that subsequent to the installation of the pre‑soak station, other modifications, and the resolution of the contamination, the Millennium was further modified by the introduction of extra manual labour intended to speed up the wash, and that this thereby subsumed the labour needed for the operation of the pre-soak station. In other words, once Phillips employed labour for other purposes, unrelated to the labour required for the pre-soak station, it suffered no further loss on that account.

12. Although the Full Court upheld my judgment insofar as it awarded Phillips the cost of the installation of the manual pre-soak station, this became a sticking point in submissions at the remitted hearing. This is essentially because, after making my finding as to the costs of the installation of the pre-soak station, I said:[171]

    I find no other costs proved that relate to the failure of the automatic pre-soak system, other than the general costs for extra labour, which I will refer to later.

    Further in my judgment, before assessing damages for the extra labour, I said:[172]

    As I have already indicated, the extra labour for the pre-soak was required due to the automatic pre-soak not working, and was never contemplated by the plaintiff. I also find that after the testing was carried out, there was clearly a need for extra manual labour to properly complete the washing of cars, and the automatic aspect of the Millennium did not perform an adequate function. The letter of 24 June 2001 (exhibit P9, vol 2, tab 6, p 631), although euphoric about the results, was written before the cars were tested in August and does not affect my assessment.

    As can be seen, I also considered that extra labour, over and above that required to operate the pre-soak station, was necessary to achieve a wash of the quality represented. As to the letter dated 24 June 2001, the Full Court commented:[173]

    The letter of 24 June received a lot of attention at trial, and on appeal. The Judge accepted, despite the letter, that the Millennium did not continue to provide a wash of a satisfactory quality as time went on. But if the quality of the wash was satisfactory on 24 June, and Mr Phillips’ evidence suggests that it was, the question arises of what caused the quality to become unsatisfactory during July, when further modifications were made. And, as I have indicated, the further issue is raised of whether the modifications in July were made to shorten the time taken for a car wash, and were themselves the cause of an unsatisfactory wash quality. As I understand the evidence, a number of the modifications foreshadowed in the letter of 24 June 2001 were made in due course, and a number were made during July 2001.

    [171] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006) [87].

    [172] Ibid [114].

    [173]  Specialty Equipment Company Inc v R E Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v R E Phillips Nominees P/L (2007) SASR 535, 561; [2007] SASC 433 [163].

13. I have already made findings with respect to the letter of 24 June 2001 and the question of causation. However, it is clear that because I did not restrict my finding as to the necessity for extra labour to the installation of the pre-soak station, nor quantify the extra labour in such a way as to restrict it to the installation of the pre-soak station, and instead related it somewhat to contamination, the Full Court had to remit that item of damage with the broader question of causation. It is also clear that because I did not so restrict the extra labour, the Full Court viewed it as itself a potential modification (not to the Millennium itself, but to the way the Millennium was used), rather than solely an item of damage, the cause of which is now for me to re-consider in light of the above.

14. On appeal, the Full Court made the following observations as to the extra labour:[174]

    The first difficulty that arises is that the evidence on these matters is unclear. There was some evidence from Mr Phillips that the Judge accepted: reasons at [113]. This suggested that the plaintiff would have employed one or two staff if the Millennium operated as expected, but had employed up to 11 casual staff. But the evidence does not appear to focus on the question of the additional labour required to produce a satisfactory wash, as distinct from additional labour used for other purposes, or because of changes in the way the business was conducted. In any event, the Judge clearly was not persuaded that this evidence satisfied him to the level of detail required. Some of the evidence appears contradictory. In his evidence, Mr Irvin[g] said (reasons at [121]) that the claim for the future cost of labour was based on two additional staff. That was based on an instruction emanating, I gather, from Mr Phillips. How that is to be reconciled with Mr Phillips’ evidence that up to 11 staff are being employed to clean cars is unclear.

    Based on this particular instruction Mr Irving calculated the future cost of additional labour at $106,280 per annum, which Phillips claimed at least for the life of the Millennium.

    The Judge said that he was not able to make a reliable finding on the evidence. He said at 124:

    ^[124]I find that there is no clear quantification of the loss incurred due to the extra labour. The evidence is vague as to how much labour would be needed to clean each car to the required standard. I have already found that labour was needed, and that the Millennium as warranted and represented required no labour. However, compensating the plaintiff for this head of damage is complicated by the fact that the car wash is running at a profit. It is also complicated by the fact that there is an unknown factor as to whether the use of extra labour may affect the income of the car wash, namely that more cars might be pushed through for greater income, which may offset the extra expense of the “lads”. There is also the unknown factor of what other duties they might be performing as well as attending to the cars.

    I am not persuaded that the Judge is wrong in this respect. Mr Ross-Smith pressed the argument that the situation was really quite clear. Namely that Phillips intended to operate the business with no more than two casual employees, and for the future was obliged to employ an additional two staff to clean cars. The difficulty is that the Judge was not prepared to accept that simple approach. Running through his reasons, and through such of the evidence as I considered, is the recurring question of the tasks being performed by the hired labour, and other matters relevant to the operation of the business. The Judge was satisfied that some additional labour had to be employed, but I cannot accept that he simply overlooked the evidence, and overlooked the submission by Mr Ross-Smith, that he should quantify that additional labour at two persons. He must have rejected that approach. I am not persuaded that the Judge erred. (Emphasis added.)

    The Full Court ultimately upheld my assessment of damages for the extra labour.

    [174] Ibid (2007) 99 SASR 535, 561; [2007] SASC 433 [240]‑[242]

15. Mr Phillips said that on 24 June 2001 all of the washing process was being done by the Millennium and that the pre-soak station was not yet installed.[175] Mr Hall and Mr Hill had recommended the pre-soak station shortly after commissioning,[176] and Mr Phillips thought it was installed towards the end of June or early July 2001.[177] Mr Hall said the pre-soak station was installed between 10 and 15 July 2001.[178] Mr Phillips said that after it was installed, the Millennium continued to apply a pre‑soak as well.[179] He said the pre-soak station had to be manned and still had to be manned so as to apply pre‑soak as at the date of the trial.[180] In Mr Phillips’ opinion, it marginally improved quality.[181] As set out earlier, he was asked about the progression of changes to the way in which the Millennium was used thereafter:[182]

    Q.What changes were made, was it progressive or in one hit, where you changed from the pre-wash with the guns and the lads for the wheels and front and back and then into the machine, to what we know occurs now, which is pretty well all the pre-wash and high pressure wash cycles is all done external to the Millennium and then the final pass is done through the Millennium, mostly for the purposes of the wax, to give you the bead before you drive. So explain to his Honour what occurred between - you have got the pump station and what happens now.

    A.I have explained to your Honour the pump station. Are you satisfied with that?

    Q.After the pump station, the pump station is installed, up to now.

    A.We purchased from a company in Adelaide a number of pumps, for smaller pumps to be installed at the wash to be used by hand by the boys to wash the cars in the prep zone immediately before the entrance to the car wash to ensure that the cars were washed completely. Then the cars would be put through the wash.

    Q.When did you make that major change which is no longer the Millennium doing the major wash but it’s done by the lads.

    A.Probably during the early part of 2002.

    It is my understanding from this passage of evidence that Mr Phillips initially used the high‑pressure function of the pre‑soak station with the Millennium’s six‑pass wash, which he had managed to achieve through his modifications in July 2001. It was during the early part of 2002 that he made the “major change”, whereby he began relying entirely on the manual prepping to clean vehicles before putting them through the Millennium for a four-pass rinse and wax cycle.

    [175] Trial TX, R E Phillips XN, p 387.

    [176] Ibid p 397.

    [177]  Ibid p 395; p 255 lines 13‑14.

    [178] Trial TX, R J Hall XXN, p 2166 lines 6‑10.

    [179] Trial TX, R E Phillips XN, p 396.

    [180] Ibid p 398.

    [181] Ibid p 398

    [182] Ibid p 406 line 36 to p 407 line 22.

16. In cross‑examination, Mr Phillips said that he bought the high‑pressure pump, which he had installed into the second wash bay, from Spitwater in about August or September 2001, when the pre-soak station still failed to deliver a wash of what he considered good or high quality.[183] He said he made this change to the way the Millennium operated because the Millennium aided by the pre‑soak station continued to give a poor quality wash in terms of leaving road grime on the wheels and front and back of vehicles.[184] He agreed that it created a second place where pre‑soak could be applied manually.[185] He said the number of vehicles that could be prepped at one time was nonetheless limited by the timing of the wash, the temperature on the day and the number of “lads” available.[186] He denied that he by-passed the pre-soak applied by the Millennium for the sound business reason that it was slowing it down, rather than failing to perform.[187]

    [183] Trial TX, R E Phillips XXN, p 1265 lines 8‑16.

    [184] Trial TX, R E Phillips XN, p 407; p 624 lines 25‑30.

    [185] Trial TX, R E Phillips XXN, p 1266 lines 26‑28.

    [186] Ibid p 1270 lines 27‑38.

    [187] Ibid p 1291 line 36 to p 1292 line 4.

17. Mr Phillips gave evidence that he intended to have one or two employees on site to run the café, drive vehicles through the wash if necessary and touch up the drying of vehicles, even if the Millennium operated as represented.[188] He said when the pre-soak station was introduced two further employees were required to operate it.[189] He said in about August or September 2001, when the high-pressure pumps were introduced to assist the Millennium clean the underside, front and back, and wheels of vehicles and virtually pre-wash vehicles before they went through the Millennium, two additional employees were required to operate that high-pressure function of the pre-soak station.[190] He said he also needed another two employees to wipe road grime and brake dust off vehicles when the pre-soak station and Millennium did not take it all off.[191] As at the date of the trial, he said there were days when, to cope with customer demand, they had up to 11 employees doing any or all of the jobs already mentioned.[192]

    [188] Ibid p 611 lines 19‑37.

    [189] Ibid p 613 lines 2-14.

    [190] Ibid lines 16‑35.

    [191] Ibid p 614 lines 1-10.

    [192] Ibid, p 614 lines 13‑33.

1. Mr Tirrell gave evidence that Mr Phillips had never disclosed a plan he had to introduce any of the manual aspects to the wash.[193] He said there had been problems with the Millennium throughout his involvement from July to approximately October or November 2001; that is, even after resolution of the contamination problem.[194] Mr Tirrell said that before the high-pressure pre-soak was installed the wash quality was still unsatisfactory, though they compensated for it by wiping vehicles down.[195] He described the changes made as follows:[196]

   A.It then progressed where - and I’m not sure exactly the timing of these, but where we would then presoak the car before presoaking - you know, it’s like a preparation detergent to loosen the dirt on the car, so that would be manually sprayed on the car before it goes through the car wash. Then it would go through the normal Millennium cycle, then further down the track it would be high pressure cleaned. So presoaked, high pressure cleaned and then go into the car wash, so now it’s got to the stage where really the car is washed before it goes into the car wash and the car wash simply rinses.

   This changed use of the Millennium, ultimately to merely rinsing and waxing, is essentially the same as what Mr Phillips described as occurring by early 2002.[197]

   [193] Trial TX, P J Tirrell XN, p 1562 lines 13‑29.

   [194] Ibid p 1555.

   [195] Ibid p 1563 lines 23‑32.

   [196]  Ibid p 1561 line 36 to p 1562 line 8.

   [197] Trial TX, R E Phillips XN, p 406 line 36 – p 407 line 22.

2. Mr Phillips was cross‑examined as to the fact that by May 2004, he had made a number of modifications to the Millennium and the manner in which it was used. He agreed that by that stage he was only using one of the original four programs, namely a modified four-pass wash program taking about two and a half minutes[198] and that the Millennium was only being used to rinse and wax.[199] As at the date of the trial, Mr Phillips agreed there were three preparation processes, one being the application of wheel cleaner from hand‑held spray bottles, another being the low pressure pre‑soak from hand‑held guns at the pre‑soak station and another being the high-pressure rinse from hand-held guns at the pre-soak station.[200] After this preparation process, vehicles were then driven underneath the Millennium wash arch for a four‑pass wash cycle taking 2.6 minutes.[201] He accepted that if vehicles spent 5 minutes and 20 seconds in the Millennium, it would do no more than 12 vehicles per hour.[202]

   [198] Trial TX, R E Phillips XXN, p 716 lines 27-30.

   [199] Ibid p 717 lines 16‑18; p 1244 line 5 to p 1245 line 19.

   [200] Ibid p 1242 line 25 to p 1243 line 14.

   [201] Ibid p 1244 lines 5‑25.

   [202] Ibid p 1245 lines 3‑8.

3. Mr Phillips was also cross‑examined as to information he had supplied to Mr Younger in relation to a proposed sale of the business in October 2001.[203] He said the statement “four washes available from 2.20 to 4.00 minutes” was true.[204] He said that figure was achieved “with the inclusion of a pump station and high pressure pumps to prewash the cars”.[205] It does not follow, as counsel for Hanna Wash and SEC submit, that the speed the Millennium was able to achieve at that stage must be attributable to a further reduction in the number of passes, from six down to four. Mr Phillips’ evidence is that 10 months after commissioning he was still utilising the arch to deliver pre‑soak to vehicles despite the pre‑soak station.[206] If that were the case, the most often-used wash could not have been reduced to four passes until at least March 2002. This is consistent with his evidence that the “major change” came into effect by about early 2002. He said that before what he and his counsel also referred to as “the move to manual”, namely minimising the Millennium to rinsing and waxing, the pre-soak station consisting of the pre-soak and wheel applications was used.[207] Phillips was quite entitled to stop using the Millennium pre-soak function once the pre-soak station was installed. It does not follow that it was no longer used to improve speed rather than performance.[208] A by-product of its elimination, however, was that there were then greater speed efficiencies in running the business.

   [203] See exhibit D40.

   [204] Ibid p 754 lines 22‑38.

   [205] Trial TX, R E Phillips XXN, p 754 lines 29‑30; see also p 758 lines 27‑35.

   [206] Trial TX, R E Phillips XN, p 283 lines 11‑16.

   [207] Ibid p 255 line 28 to p 256 line 30.

   [208] Trial TX, R E Phillips XXN, p 1272 lines 28‑37.

4. At one point during the trial, I sought to clarify the meaning of pre-soak as follows:[209]

   [209] Ibid p 1267 line 35 to p 1268 line 9.

   HIS HONOUR

   Q.By “presoak”, do we mean all the stuff that’s done before the car goes into the car wash.

   A.No, “presoak” refers simply to the detergent that’s sprayed onto the car either by the Millennium arch or by these low-pressure guns that are connected to those stainless steel pipes in photo 125.

   Q.So I am on the wrong track then. The high-pressure water system to get rid of all of that, you don’t consider that to be part of the presoak.

   A.No.

   Q.That is the aftermath of the presoak.

   A.Yes, it is taking the presoak off the car.

   In my earlier judgment I noted in the context of my award for the “Pre-soak System Failure”: “I was much impressed by the evidence of Mr Tirrell, who said that changes were gradually made to the automatic system because it was not doing the job”.[210] I referred to Mr Tirrell’s evidence that Mr Phillips never intended to introduce the high-pressure spray in any event, and that before the high-pressure spray was introduced the quality of the wash was not satisfactory. I also referred to his evidence in cross-examination, refuting that it was always part of Mr Phillips’ plan to have employees prepping vehicles. Both Mr Tirrell and Mr Phillips said that employees were limited to those needed for offering the optional extra services, such as, drying and vacuuming vehicles. It was my understanding, as it also mistakenly was during the trial, that the high-pressure spraying of vehicles was part of the award for the “Pre-soak System Failure”.

   [210] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006) [83].

5. Now that I have reconsidered the remitted issue insofar as it concerned the contamination, I find that after the separation of the product lines in August 2001, no labour was required to deal with streaking on the body of the vehicles.

6. I find that the high pressure spraying of vehicles before they entered the Millennium preceded the further reduction in the number of passes and addressed the same issue as the low-pressure spraying of vehicles, namely road grime on the underside, front, back and wheels of vehicles. I find that though some witnesses, such as Mr Hill, suggested that it was always part of Mr Phillips’ plan to have employees on site, that suggestion is not necessarily inconsistent with the evidence of both Mr Phillips and Mr Tirrell, namely, that those employees were more limited. I reject the hypothesis that Mr Phillips always intended to have employees operating either the manual low‑pressure and high-pressure sprays.

7. I note that any profit that might come from operating the business in this modified way, I specifically endeavoured to take into account in the assessment of damages. The Full Court upheld the methodology I used.

8. I award Phillips damages against both Hanna Wash and SEC in the amount of $64,234 for the cost of additional labour.

   Defective Components: The Implied Term of the Contract

9. The Full Court determined that Phillips could entertain a claim against Hanna Wash for breach of the implied term of the contract “that the parts supplied by Hanna Wash were fit for the intended purpose and were in good working order”.[211]

   [211] Specialty Equipment Company Inc v R E Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v R E Phillips Nominees P/L (2007) 99 SASR 535, 563; [2007] SASC 433 [184].

   Reclaim system and bore: $5,115.00 and $922.86

10. In my earlier judgment, I awarded damages against both Hanna Wash and SEC for the cost of disconnecting the reclaim system and converting its sand filter into a water softener for the bore. I similarly awarded Phillips damages for the cost of electrical work in relation to this conversion.[212]

    [212] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006) [72]‑[78].

11. The Full Court stated that although both experts appear to agree that the system was installed incorrectly, I did not deal with the argument “that SEC designed the reclaim system correctly, and that the incorrect installation was due to an error by Phillips’ own contractors”.[213] The matter has been remitted to me so that I can consider “whether the problem, whatever it was, was attributable to a defect in the design of the system, or in the installation of the system, and in the latter case … who was responsible for the error in the installation”.[214]

    [213] Specialty Equipment Company Inc v R E Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v R E Phillips Nominees P/L (2007) 99 SASR 535, 565; [2007] SASC 433 [196].

    [214] Ibid (2007) 99 SASR 535, 565; [2007] SAS 433 [198].

12. The Full Court further stated that I similarly did not deal with the argument “that Phillips chose to connect the Millennium to a bore, for its own reasons, at an early stage and before the alleged problem developed”.[215] The matter has been remitted to me so that I can consider “if bore water was available before any problem with the reclaim system developed, and that availability meant that there was no need to fix the reclaim system, … [whether] the previously incurred cost of making the bore water available should be allowed by way of damages”.[216]

    [215] Ibid (2007) 99 SASR 535, 565; [2007] SAS 433 [197].

    [216] Ibid (2007) 99 SASR 535, 565; [2007] SASC 433 [198].

13. In relation to this second issue, what I must not have made sufficiently clear in my earlier judgment is that the damages I awarded were not for the previously incurred cost of making bore water available, but were for the cost of converting the reclaim system sand filter into a filter suitable for softening the bore water.

    When and why did Phillips connect to bore water?

14. Mr Phillips gave evidence that he wanted the Millennium to have its own underground, water supply to avoid the increasing costs of water.[217] One of his friends, a drilling contractor, undertook the drilling.[218] At between 42‑48 metres below the surface, the drill hit an aquifer under pressure, meaning that the water would flow to the surface at the rate of 4,500 litres per hour without the aid of a pump, rather like a spring.[219] When it was pump‑tested to see how long it would maintain its flow rate, Mr Phillips said they were able to pump three times the amount that it free‑flowed.[220] Mr Phillips said the bore proved its quality and its high capacity at the time it was drilled, which was before February 2001, but whether it would maintain that quality and capacity could vary year to year.[221] Mr Phillips said mains water was never used at the Millennium site.[222]

    [217] Trial TX, R E Phillips XN, p 354 lines 4‑8.

    [218] Ibid p 353 line 34 to p 354 line 4.

    [219] Ibid p 354 lines 9‑19.

    [220] Ibid p 354 lines 19‑23.

    [221] Trial TX, R E Phillips XXN, p 1282 line 14 to p 1283 line 10.

    [222] Trial TX, R E Phillips XN, p 589 lines 35‑37.

15. I find that Mr Phillips was concerned about the source of water for the Millennium and for that reason connected the bore before February 2001.

    Was the reclaim system designed and installed correctly?

16. Mr Phillips gave evidence that the turbine counter located in the pump of the reclaim system blocked with black sludge within the first two weeks of operation after commissioning.[223] He explained that reclaimed water flows through the turbine counter to the sand filter and that when a certain volume has passed through, it sends a signal to the sand filter to start backwashing.[224] He knew there was a problem with the turbine counter because the digital read-out on the face of the computer stopped counting down at about 80,000 gallons, though it was meant to start backwashing much later than that.[225] He said if the turbine counter is blocked the capacity of the reclaim system is greatly reduced.[226]

    [223] Ibid p 460 lines 7‑13; p 461 lines 7‑11.

    [224] Ibid p 460 lines 14‑31.

    [225] Ibid p 460 line 32 to p 461 line 1.

    [226] Ibid p 461 lines 29‑31.

17. One or both of Mr Hill and Mr Hall advised Mr Phillips to pull the turbine counter apart.[227] To do this, he had to turn the reclaim system off.[228] He found that there was black sludge blocking the impellers, through which water passes and is counted.[229] He therefore followed Mr Hill’s instructions to remove and clean the impeller and then restarted the reclaim system.[230] Over the next 30 week period thereafter, Mr Phillips said he removed and cleaned the impeller on a weekly or twice weekly basis.[231] He spoke to both Mr Hill and Mr Hall about the problem.[232]

    [227] Ibid p 461 lines 2‑6.

    [228] Ibid p 461 lines 12‑16.

    [229] Ibid p 461 lines 17‑28.

    [230] Ibid p 461 lines 32‑38.

    [231] Ibid p 462 lines 1‑7.

    [232] Ibid p 462 lines 11‑15.

18. Mr Phillips gave evidence that Mr Hill, who had spoken to Mr Demarre about the problem, advised him it was most likely caused by algal bloom, and recommended he purchase some chlorine with which to dose each of the reclaim system pits.[233] He was advised to put one litre of chlorine per thousand gallons of water, but dosed it with more to ensure its effectiveness, and continued to dose it on a weekly basis for three or four weeks.[234] This did not fix the problem, but during that time the seals on the pump leaked and the impeller corroded,[235] which had the effect of reducing the pressure and slowing the pump down.[236] They were replaced after about two weeks of operation and once again about four to six weeks after operation.[237] Mr Phillips said Mr Hall disassembled the pump the second time the seals leaked, and that is when they saw the corrosion to the impeller.[238] Mr Hall suggested the cause of the seals leaking and impeller corroding may have been the detergents that were running through the reclaim system.[239] Mr Phillips said this was approximately eight to ten weeks after commissioning.[240]

    [233] Ibid p 462 lines 16‑27.

    [234] Ibid p 462 lines 25‑31.

    [235] Ibid p 462 line 37 to p 463 line 2; p 463 line 21 to p 464 line 20.

    [236] Ibid p 464 lines 22‑29; p 465 lines 25‑29.

    [237] Ibid p 463 line 23 to p 464 line 10.

    [238] Ibid p 464 lines 11‑20.

    [239] Ibid p 465 line 37 to p 466 line 6.

    [240] Ibid p 466 lines 22‑24.

19. Mr Phillips said neither Mr Hill nor Mr Hall advised him how to stop the problem of the blocking of the reclaim system, except that the algal bloom had caused it and that he should remove and clean the turbine counter.[241] Mr Phillips said it was suggested that in order to stop the seals leaking and the impeller corroding, he use different wash chemicals and change the impeller to one made of different material.[242]

    [241] Ibid p 466 lines 34‑36.

    [242] Ibid p 467 lines 13‑36.

20. Mr Phillips said he completed a series of checks on the system as advised by Mr Hill and then reported on them.[243] Mr Phillips said none of those checks resolved the problem with the turbine counter.[244] He said the problems with the reclaim system meant that “the main bore pump - the main supply to the car wash was cutting in a lot more often and supplying water to the reclaim tank”.[245] He said the reclaim water tank was fitted with two inlets, one from the third pit of the reclaim system, and another one filtered from the bore to replenish supply.[246] Mr Phillips said that if the bore water had to replenish the reclaim system supply too often the benefits of keeping the system connected were lost.[247]

    [243] Ibid p 463 lines 3‑9.

    [244] Ibid p 463 lines 6‑20.

    [245] Ibid p 464 lines 32‑34; p 466 lines 16‑21.

    [246] Ibid p 464 line 35 to p 465 line 7.

    [247] Ibid p 465 lines 8‑18.

21. After seeing the problems with the pump and the black sludge persisting, Mr Phillips decided to disconnect the reclaim system and rely completely on bore water.[248] He said he disconnected it in about September or October 2001.[249] He agreed that the problems with the reclaim system were fixable,[250] but the suggestions given at the time as to how to fix the problems did not fix them.[251]

    [248] Ibid p 466 lines 25‑33.

    [249] Ibid p 1282 lines 3‑13.

    [250] Trial TX, R E Phillips XXN, p 1283 lines 15‑18.

    [251] Ibid p 1283 line 25 to p 1284 line 2.

22. Mr Phillips gave evidence about the appearance of the reclaim pits. He said there were a couple of inches from the base of the pits to the four inch connecting tube joining pit 1 and pit 2.[252] He said wash water dropped into pit 1 to start the cleaning process, but because the tube was placed so low the water ran straight into pit 2.[253] He said a four inch tube at the top of the pits also joined pits 2 and 3.[254] He said he had shortened and heightened the suction pipe in pit 3 after commissioning, so as to prevent it from taking the black sludge back to the sand filter.[255] He said once the pits had been emptied, he was told the problem was related to the placement of the interconnecting pipe between pits 1 and 2.[256]

    [252] Trial TX, R E Phillips XN, p 471 line 30 to p 472 line 13; p 472 line 16 to p 473 line 7.

    [253] Ibid p 471 lines 2‑8.

    [254] Ibid p 473 lines 19‑24.

    [255] Ibid p 473 lines 25‑36.

    [256] Ibid p 474 lines 6‑38.

23. In his report dated 9 July 2003, Mr Aukland, the expert called by Phillips, stated that the reclaim system could not have functioned properly as it was designed and installed because pits 1 and 2 two were connected at the bottom, neither had internal baffles and the pump suctions were placed too low rather than at about mid-depth, therefore disabling their function as a sequential sediment trap.[257] Mr Swain, the expert called by SEC, criticised Mr Aukland for relying upon his observations alone, rather than also conducting a review of the design and installation.[258]

    [257] See exhibit P17, reference AES300-C-S0008, p 6.

    [258] See exhibit D22 p 9.

24. In cross‑examination, Mr Aukland agreed that on the SEC design[259] there was an inverted U pipe between pit 1 and pit 2 located approximately 18 inches from the base of the pits.[260]  He also agreed that the U pipe would have only allowed the water containing suspended dirt in between the sludge at the bottom of the pit 1 and the oil at the top of pit 1 to move into pit 2.[261] He said the main problem with the reclaim system was the connecting pipe between these pits.[262] He said coring and pitting another pipe could have easily fixed the problem.[263] However, in Mr Aukland’s opinion coring and pitting the pipe as per the SEC design would not have fixed the problem because the inverted U pipe would still have been positioned too low for the oil to then be removed from the top of pit 2 by the filtering process.[264] Mr Swain did not agree that the SEC design was erroneous in this respect.[265]

    [259] See exhibit P14 pp 1308‑1314.

    [260] Trial TX, J S Aukland XXN, p 1713 line 3 to p 1714 line 22.

    [261] Ibid p 1716 line 12 to p 1717 line 26.

    [262] Ibid p 1717 line 27 to p 1718 line 23.

    [263] Ibid p 1718 lines 24‑37.

    [264]  Ibid p 1719 line 14 to p 1720 line 7.

    [265] Trial TX, N W Swain XN, p 1830 line 15 to p 1831 line 17.

25. In his report dated 3 February 2005, Mr Swain, the expert called by SEC, noted a number of problems with the reclaim system. He said the most critical aspect of the design related to the management of biological growth.[266] He said one of the design problems reducing filter throughput was the absence of any air assisting in filtration, and either a separate filter backwash pump or an additional feed pump.[267] In Mr Swain’s opinion, the absence of these was among the problems that would have had to be rectified for the reclaim system to function.[268] He said while baffles may have improved the system, they were not essential.[269]

    [266] See exhibit D22 p 12.

    [267] Ibid pp 11‑12.

    [268] Ibid p 13.

    [269] Ibid p 12.

1. Mr Swain was instructed that Phillips managed the construction of the civil, electrical and the plumbing works for the reclaim system.[270] Mr Swain said it would be reasonable to expect Hanna Wash to take responsibility for the design and installation.[271] He made these comments relevant to the remitted issue:[272]

   [270] Trial TX, N W Swain XXN, p 1850 lines 3‑32; also see exhibit D22 p 11.

   [271] See exhibit D22 p 11.

   [272] Ibid p 12.

   It is my opinion that several of the problems with the system are related to the implementation of the design rather than the design itself.

   In my opinion, successful implementation of the design was hindered by poor design and construction management as evidence by:

   ·    The lack of process and instrumentation diagram covering the reclaimed system itself and its interface with the rest of the car washing system.

   ·    The provision of faxed A4 drawings that are hard to read.

   ·    Design changes made “on the run” with no formal process for managing these changes.

   ·    No formal checking process that constructed works met the design.

   The above has possibly led to the final system deviating from the design information produced by SEC in the following areas:

   ·    The required overflow from Pit 1 to Pit 2 was not provided (i.e. inverse ‘U’ pipe). …

   ·    The pump suctions from the pits are placed too low. Although this was not covered in the information conveyed to the Plaintiff, it would be normal engineering practice to place them above the design sludge layer. …

   ·    No provision for flocculent dosing was provided. This is recommended in SEC Bulletin 1001 and would improve capture of solids in the pits and filter.

   ·    The heating and storage of reclaimed water in a 10,000 L tank. …

   Mr Swain gave evidence that these deviations from the design, as well as the absence of air filtration and an additional pump, could have been rectified.[273] He said the latter should have been addressed at the design or maintenance stage.[274]

   [273] Ibid p 12; Trial TX, N W Swain XN, p 1832 lines 3‑21.

   [274] Trial TX, N W Swain XXN, p 1850 line 33 to p 1851 line 31.

2. Both experts thought the placement of the connecting pipe between pit 1 and pit 2, and pump suctions in those pits, were problematic. However, neither thought the rectification of those aspects alone, as per the SEC design, would resolve all problems with the reclaim system. Mr Aukland was of the opinion that there was an error in both installation and design. Mr Swain was of the opinion that there were some errors in design, and several other errors in installation. I prefer Mr Swain’s evidence as to the errors that were present in the design. He more comprehensively considered the design and its installation.

3. I find there were errors in both the design and installation of the reclaim system.

   Who was responsible for the incorrect installation of the reclaim system pits?

4. Mr Phillips said Mr Hill provided the specifications, diagrams and designs for the pits, which were then installed by contractors supervised by Mr Cook.[275] He said he had not seen several communications that passed between Mr Hill and Mr Demarre in relation to the design and installation of the reclaim system.[276] He passed the SEC design[277] on to Mr Cook.[278] He said he did notice the positioning of the U pipe in that design.[279] He said neither he nor Mr Cook ever received the schematics for the pipes of the reclaim system.[280]

   [275] Trial TX, R E Phillips XN, p 475 line 32 to p 476 line 7.

   [276] Ibid p 475 line 17 to p 476 line 33.

   [277] See exhibit P14 pp 1308‑1314)

   [278] Trial TX, R E Phillips XXN, p 719 lines 12‑25.

   [279] Ibid p 720 lines 17‑25.

   [280] Trial TX, R E Phillips XN, p 482 lines 7‑17.

5. Mr Cook gave evidence that he was only responsible for building and structural work, whereas Mr Hill was responsible for the equipment and its installation.[281] Mr Cook said the reclaim tanks and their sleeves, through which the pipes would pass, were formed on‑site, according to design, from concrete.[282] He said it was the installer’s responsibility to ensure the sleeves were placed in the correct position.[283] Mr Cook said he observed Mr Hall putting the pipes into the tank.[284] He said all the plumbing for the pits was Mr Hill’s responsibility, except for the drainage, which was done by a government plumber under instruction.[285] He said either Mr Hill or Mr Hall were on site to check and install equipment each week, for a collective total of four weeks during construction.[286]

   [281] Trial TX, J R Cook XN, p 1,418 lines 10‑31.

   [282] Ibid p 1427 lines 9‑33.

   [283] Ibid p 1428 lines 4‑29.

   [284] Ibid p 1428 lines 4‑15.

   [285] Ibid p 1418 line 33 to p 1419 line 17.

   [286] Ibid p 1424 lines 6‑20.

6. Mr Hall gave evidence that he was asked by Mr Hill to sort out issues that arose concerning pit plumbing.[287] He said he had to do some plumbing alterations such as putting a foot valve into the pit, and he also had to install the equipment to be connected to the pits.[288] He said he did not know who was responsible for pit plumbing, but he had invoiced Mr Hill for 20 hours of work in relation to it.[289] Mr Hill gave evidence that Hanna Wash was not responsible for the plumbing of the reclaim pits, but connected some of the piping and plumbing for equipment inside the pits at the completion of construction.[290] He agreed that Mr Payette did not inform him during commissioning that there was any difference between the design for the pits and what had actually been installed at the Millennium site.[291]

   [287] Trial TX, R J Hall XXN, p 2199 lines 15‑29.

   [288] Ibid p 2199 lines 15‑29.

   [289] Ibid TX, p 2199 line 34 to p 2200 line 19.

   [290] Trial TX, M H Hill XXN, p 2072 line 6 to p 2073 line 28.

   [291] Ibid p 2073 line 35 to p 2074 line 6.

7. Based on the above evidence, I find that Hanna Wash was responsible for ensuring the correct installation of the reclaim system pits. As I have already found above, there were also errors in the design of the reclaim system.

   Why was the sand filter converted to a water softener?

8. Because the amount I awarded Phillips in my earlier judgment was for the cost of converting the sand filter of the reclaim system into a water softener for the bore, I should also consider why that was done.

9. Mr Aukland said although the Millennium functioned well on the bore water, that did not necessarily mean that reclaim system was not needed.[292] In fact, Mr Phillips gave evidence that he was told that the water the reclaim system processed was better for cleaning than normal water.[293] Both Mr Phillips and Mr Tirrell also cited the environmental benefits of the reclaim system.[294]

   [292] Trial TX, J S Aukland XXN, p 1708 line 28 to p 1709 line 6.

   [293] Trial TX, R E Phillips XN, p 456 lines 18-25.

   [294] Trial TX, R E Phillips XN p 456 lines 27‑28; P J Tirrell XXN, p 1615 lines 11‑35.

10. Mr Phillips gave evidence that because they disconnected the reclaim system and had to use the bore as their sole water supply, they had to then run and maintain a down-hole pump in the bore almost continuously.[295] Using the bore as their sole supply also meant they needed to run a larger water softener.[296] As the sand filter of the reclaim system was no longer in use, they had a company called Fresh Water Systems convert it into a water softener for the bore.[297]

    [295] Trial TX, R E Phillips XXN, p 1284 lines 14‑32.

    [296] Trial TX, R E Phillips XN, p 248 lines 22‑24.

    [297] Ibid p 248 lines 25‑30.

11. As I found in my earlier judgment, there were a number of problems with the way the reclaim system was designed and installed. All of those problems (both design and installation) could have been resolved relatively inexpensively, but the availability of bore water at no cost made it unnecessary. I find that Phillips incurred costs associated with relying solely upon the bore water, rather than resolving the problems with the reclaim system, and should be compensated for those costs. I award Phillips damages against Hanna Wash in the sum of $6,037.96.

    Summary of Findings

12. The problem of the contamination of the product lines causing streaking was present although not yet fully apparent from the time of commissioning onwards. In July 2001, the second pump and nozzles were installed and the manifolds linked to speed up the Millennium’s wash time and maintain its wash quality. These modifications did not cause or contribute to problems with the Millennium’s wash quality. As long as road grime remained on the underside, front, back and wheels of vehicles, and streaking on the body of vehicles, the Millennium did not clean to the standard represented. The contamination of the product lines was caused by the single delivery pipe carrying product from the plant room to the wash bays, and could only be practicably addressed by the separation of the product lines. Once addressed in this way, extra labour was no longer needed to remove streaks.

13. Extra labour was required to operate the low-pressure manual pre-soak and the high-pressure manual pre-soak. Both were installed and operated to remove road grime from the underside, front, back and wheels of vehicles. Mr Phillips did not intend to have employees operating these pre‑soak sprays. The high‑pressure spraying of vehicles preceded any further reduction in the number of passes from six down to four passes in early 2002.

14. As to the reclaim system, Mr Phillips was concerned about water for the Millennium and for that reason connected to the bore in February 2001. The absence of air filtration and the need for an additional pump were errors in the design of the reclaim system. The location of the connecting pipe between pit 1 and 2 was an error in the installation of the reclaim system, for which Hanna Wash was responsible. Despite the availability of bore water at no cost, Phillips incurred extra costs upon disconnecting the reclaim system and relying solely on the bore water, such as the cost of converting the reclaim system sand filter into a larger bore water softener to cope with its increased use.

    Conclusion

15. I enter judgment against both Hanna Wash and SEC for the total sum of $68,913.56, comprising an award of damages in favour of Phillips for the cost of rectifying the problem of contamination to achieve a wash of the standard represented in the sum of $4,679.56 and for the cost of employing additional labour to achieve a wash of the standard represented in the sum of $64,234.

16. I enter judgment against Hanna Wash, for breach of the implied contractual term that the reclaim system as a component part would be fit for its intended purpose and in good working order, in the sum of $6,037.96 for the cost of converting the reclaim system sand filter into a larger bore water softener.

17. I will hear the parties as to final orders, costs and interest.