England and Wales High Court (Technology and Construction Court) Decisions

Between

(previously Johnson Filtration Systems Limited)

Plaintiff

- and -

Defendant

(previously Johnson Filtration Systems Limited)

First Plaintiff

- and -

(previously Tilghman Wheelabrator Limited)

Second Plaintiff

- and -

Defendant

Case numbers: 1997 ORB 67 and 1996 ORB 799

Date of Judgment: 14 January 1999

(1) Contract. Contract for erection of water treatment works. Whether still in force in relation to a new site when planning permission for original site refused. Effect of express term: "Should planning permission be refused and the Works moved to an alternative site ....".

(2) Warranty. Warranty that "solids removed .... generally 60 - 90% of the feed". Apparent compliance during acceptance tests. Failure to comply during "protocol" tests ordered during the proceedings.

(3) Misrepresentation. "Promissory" representations. Criterion of falsity.

The text of the judgment approved by His Honour Judge John Hicks QC is as follows.

1. Dwr Cymru Cyf ("DCC") is the body responsible for the supply in Wales of potable water which meets current health and safety requirements. Those requirements became more demanding upon the coming into force of the Water Supply (Water Quality) Regulations 1989, themselves introduced to ensure compliance by the United Kingdom with two European Community Directives concerning the quality of water intended for human consumption. In particular DCC was concerned to improve the treatment of water from two sources, Ystradfellte and Bolton Hill.

2. At Ystradfellte there was an impounding reservoir in the southern flanks of the Brecon Beacons, over four kilometres upstream of the village of the same name, collecting upland water from the Afon Dringarth and from smaller streams feeding directly off the hillside into the reservoir. The water from the reservoir was treated only by disinfection and liming before being accepted into the supply system. It was apparent that compliance with the 1989 Regulations would necessitate additional treatment, including filtration and a means of reducing levels of manganese in drought conditions. The whole area, including all potential sites for a water treatment works, was within the Brecon Beacons National Park, for which the planning authority was the Brecon Beacons National Park Authority.

3. At Bolton Hill, some five kilometres south-west of Haverfordwest, there was an existing water treatment works in rolling farmland, drawing water from the Western and Eastern Cleddau rivers via reservoirs. It included single-stage filtration. DCC decided that it was necessary to instal a pre-filtration treatment stage.

4. The Plaintiff company JFS (UK) Ltd ("JFS") was engaged in the business of designing and manufacturing water treatment plant. In particular it marketed a pre-filtration process known as an adsorption clarifier ("AC") developed by associated companies in the United States of America and in widespread use there. JFS entered into contracts with DCC to supply and instal a complete water treatment works, including ACs followed by filters, at Ystradfellte, and ACs to pre-treat the water at Bolton Hill before it reached the existing filters.

5. At Ystradfellte planning permission was refused for the originally intended site; after much delay planning permission was obtained for a new site and the land acquired, but at that stage DCC terminated what both parties at the time believed was still a subsisting contract, although it is now DCC's case that the contract was specific to the original site and was discharged by agreement when refusal of planning permission for the original site was imminent, or by the inability of DCC to supply the site when that refusal occurred. If there was still a subsisting contract it is not alleged that there was any ground for termination.

6. At Bolton Hill the AC was installed and put into operation, but DCC complain that it has not conformed with a warranty that it would remove "generally between 60% and 90%" of the solids in the feed and needs to be completely replaced - indeed it transpired for the first time at a late stage in the trial that a contract for its replacement had already been let.

7. There are other claims and counterclaims in addition to those implicit in that outline of the history, and other issues to be decided, but so much will serve by way of introduction.

8. The treatment of water for human consumption is largely directed to the reduction of impurities or harmful organisms to acceptably low levels of concentration. In these actions, although manganese compounds and two organisms (cryptosporidium and giardia) play minor roles, the contaminants chiefly concerned are those which give rise to "colour" and turbidity.

9. Colour is the term used to describe a tinted appearance (or in the evidence before me more commonly the cause of that appearance) deriving from the presence in water of soluble organic compounds ("true colour") or colloidal particles ("apparent colour"). Fulvic acid and humic acid are typical of the organic compounds involved. Turbidity, likewise, means originally the interference by fine particulate matter with the passage of light through a liquid, but in evidence the word more commonly described the particles causing that interference.

10. Colour and turbidity are either irremovable by filtration or, if in principle removable by a sufficiently fine filter, not by one capable of economic or practical use in the treatment of water for public supply. The goal of the treatment of coloured or turbid water is therefore to induce chemical reactions which will result in the creation of insoluble particles which will chemically or physically incorporate the colour or turbidity and will agglomerate so as to be capable, by reason of size or other characteristics, of being removed by filtration or some other economically feasible process.

11. The method of choice is to "dose" the water with aluminium sulphate (alum) or ferric sulphate, or a mixture of both, with a view to the formation of insoluble compounds, including in particular the hydroxides, hydrous oxides, fulvates and humates of aluminium and iron, to "carry off" the colour and turbidity. Such dosing, moreover, involves not only the production of insoluble compounds in place of soluble ones (precipitation) but also a change in the electrostatic regime (coagulation); the colour molecules in solution and particles in suspension before dosing are negatively charged and therefore repel each other, whereas after dosing there is a mixture of positively and negatively charged and neutral molecules. These molecules, and aggregations of them, are then capable of adhering to each other under the influence chiefly of electrostatic attraction, Van der Waals (electromagnetic) forces or hydrogen bonds if they come into contact (it might be more strictly accurate to say "into sufficiently close proximity", but "contact" was the word generally used, even by the expert witnesses, so I shall adopt it here).

12. The next requirement, therefore, if the goal of economic removability is to be attained, is that there be adequate opportunities for contact so that agglomerations of molecules can form and grow. That process is called flocculation, the constituent elements being flocs. It occurs in two stages, which overlap because at any one moment after the earliest there is a mixture of sizes of floc. (There is a third mode of flocculation, differential sedimentation, which did not feature in the designs I have to consider.) At the first stage the particles are small enough to be jostled by the random thermal movement of the surrounding water molecules and thus brought into contact with each other by Brownian motion. That is called perikinetic flocculation. It is typically significant in a size range from an initial order of magnitude of nanometres (10-9m) up to the order of one micron (10-6m). That is still far too small to be of any use as an end product. The second stage, of orthokinetic flocculation, requires the input of energy to induce the velocity gradients which accompany bulk fluid motion. There is some academic debate, to which I shall return only if I have to, as to whether, or in what circumstances, the better measure of the rate of contact and of floc growth is rate of energy dissipation or average velocity gradient, but I shall for the moment bypass it by using the non-technical phrase "degree of agitation". Orthokinetic flocculation prevails from about one micron to the largest sizes considered in the evidence before me, which were of the order of one or two millimetres (10-3m).

13. After a trial in which flocs were freely described by expert witnesses by such unspecific adjectives as "large" or "small", without quantification, I find it salutary to remember that I am therefore dealing with a process which spans a range of a thousandfold or so at each of the perikinetic and orthokinetic stages, or a millionfold altogether, and those merely in linear dimensions; for comparisons of volume or mass one must think in terms of the cubes of those ratios.

14. During orthokinetic flocculation, then, under the mechanisms so far considered, floc size increases while agitation continues and the rate of increase is a direct function of the degree of agitation. Common sense suggests, however, and theory and experiment confirm, that too violent an agitation can break flocs up as well as bring them together. The ability of a process to grow and present to an extraction stage flocs of any particular size therefore depends not only on their growth by contact but on their degradation by breakup. To assess the former may require only some means of quantifying the total agitation, whereas the latter involves consideration of the form and degree of stress induced by different levels of agitation at each stage and the ability of flocs of different sizes and characteristics to resist such stresses, that is to say their strength. For the purposes of this background it suffices to note three features in that regard, without at this point differentiating between shear, normal and tensile strength. The first is that flocs vary in strength according to their origin; other things being equal colour flocs are likely to be weaker than turbidity flocs. The second is that they vary in strength according to their chemical treatment; in particular they can be strengthened by the addition of a polymer (or polyelectrolyte) to the water at a suitable point after initial dosing. The third is that for any given population of flocs and any given level of agitation there will be a maximum size above which few flocs will survive unbroken.

15. Once flocs of suitable characteristics have been grown the ultimate means of extraction in most water treatment works is filtration, in which they are intercepted by various mechanisms as the water passes through a filter bed consisting typically of sand, anthracite or a mixture in one or more grades. I am concerned here, however, with clarifiers. Whereas the word filtration is descriptive both of what is aimed at and of how it is achieved the word clarification seems to serve only the former end. It is used of any process of partial extraction of solids which precedes filtration. Clarifiers, however, take several different forms. A blanket clarifier operates, as I understand it, by balancing the settlement rate of flocs of a particular size (I have the impression, although it is not a matter of any moment whether correctly so, that they are typically of the order of a millimetre or more) under gravity against a very low upward flow rate of water. Dissolved air clarifiers work by the reverse mechanism of sweeping flocs upward on air bubbles coming out of solution.

16. Those are sketchy descriptions. One might suppose, by contrast, that in an action concerning ACs there would be available a full explanation of their modus operandi. That is, however, not entirely so. To begin with, the word "adsorption" implies the exploitation of a surface phenomenon of some kind, specific to this process and to the medium used in it. There was no evidence of anything of that sort. Dosed water flows upwards through beads and fragments of a plastic of unspecified composition, but its choice seems to have been dictated by its specific gravity rather than by its surface properties, which for all I have been told are not materially different from those of sand so far as colour and turbidity flocs are concerned (there is some question whether they have an advantage over ordinary sand when it comes to manganese). It is true that most interception mechanisms in any filtration process, such as this plainly is, involve attaching the particles to be removed to the surface of the grains of the medium, but the operating cycle here involves the retention at the end of each wash of some 25% of the attached floc, which suggests that there is no additional affinity between floc and bare grain surfaces but rather the reverse.

17. What is clear is that the design flow rate is substantially higher than that in a conventional gravity filter. That is integral to its design philosophy, in that the plastic medium has a specific gravity such that it is held up by the flow of water in a compact porous mass against a restraining screen near the top of the tank while in operation, but readily breaks up into a loose collection of separate grains by air blown through during cleaning and settles on the bottom when there is a backflush. It is also claimed as, and no doubt is, an important economic attraction, since it enables the clarifier to be smaller and therefore cheaper. What is not so clear, and is the subject of disagreement in the expert evidence before me, is how this flow rate affects floc sizes and strengths at various points in the system, and rates of floc growth, deposition and removal in the clarifier itself, although it seems to be common ground that for successful operation it does at least presuppose the injection of polyelectrolyte as described in paragraph 14 above.

18. The ACs, built or designed, with which I am concerned, are therefore best classified as high rate upflow filters, receiving water dosed with coagulant and polyelectrolyte as described above, and passing clarified water to a final filtration stage. That description, and in particular the use of the word "clarified", is not intended to beg any of the issues before me as to the standards of performance required or attained.

19. In the action concerning Bolton Hill (1997 ORB 67) the sole Plaintiff is a company which until 23 December 1991 was named Johnson Filtration Systems Limited. On that date it changed its name to JFS (UK) Limited and on the same date a company of that name changed it to Johnson Filtration Systems Limited. Nothing in that action turns on those changes of name; it is not disputed by DCC that it was the Plaintiff company which (by its old name) entered into and is (under its new name) entitled and subject to the benefits and burdens of the Bolton Hill contract.

20. In the action concerning Ystradfellte (1996 ORB 799) the First Plaintiff was originally named as Johnson Filtration Systems Limited. That was a mistake, as became clear when the original Defence was served, and leave was given on 19 December 1997 for the Writ to be amended and reissued, substituting JFS (UK) Limited for Johnson Filtration Systems Limited. Again nothing any longer turns on that; subject to the agency point to which I come next DCC accepts that the present First Plaintiff was the contracting party.

21. Having thus disposed of the "change of name" point I can now revert to the use of the abbreviation "JFS" to refer to the relevant Plaintiff.

22. By the Substituted Statement of Claim in the Ystradfellte action it is alleged that as part of the contract documentation JFS disclosed to DCC that it was owned by and operated as agent of the Second Plaintiff. It is accordingly averred that the contract with DCC was entered into by the Second Plaintiff as disclosed principal. Damages are claimed by the Second Plaintiff and in the alternative by JFS. In the Amended Defence DCC's primary case is that the contract was made between DCC and JFS, but an alternative case is pleaded on the basis that JFS acted as agents for the Second Plaintiff.

23. Since on both parties' cases, albeit by different routes, JFS is entitled to the fruits of any successful claim, and since it does not, as I understand it, deny liability for any successful counterclaim, this seems to be an issue of no moment. I am, however, asked to make a finding. There was no oral evidence and no challenge by DCC to the existence or effect of the documentary evidence pleaded and relied upon by JFS. I find the situation to be as alleged in the Substituted Statement of Claim.

24. At the dates of the contracts JFS was, to DCC's knowledge, ultimately under the control of an American group of companies which had developed and successfully marketed ACs; it was also relying upon and advancing the merits of a technology developed and most widely applied by that group in the U.S.A., and it was calling upon and receiving technical support from that group. By the date of termination of the Ystradfellte contract it had lost that connection and was, again to DCC's knowledge, under the control of the Rust group of companies, which was not marketing ACs and had made a decision to move out of the water treatment business except to the extent required to fulfil existing obligations, of which however it plainly regarded Ystradfellte as one. I cannot see that any issue of liability is affected by those facts. If there was no continuing contract they are irrelevant. If there was one, then it was not JFS or Rust, whether for those or any reasons, who terminated it, but DCC. Again, if for those reasons, whether alone or in combination with others, the continuation of the contract would have been unprofitable or JFS would have been likely to terminate it (lawfully or unlawfully) had DCC not done so, that goes to damages, not to liability.

25. As appears from the Introduction, two principal issues are whether there was still a subsisting contract for work at Ystradfellte when DCC terminated relations with JFS there and whether JFS' work at Bolton Hill complied with its contractual obligations. I have dealt above with some questions as to the parties. In the remainder of this section I propose to identify the other outstanding issues and to indicate the order in which I shall deal with them.

26. In the Re-re-amended Statement of Claim in the Bolton Hill action there is a claim for the price of variations. I have found no Defence in the trial bundles amended to answer that claim, but it is implicit in Miss Jackson's closing submissions that it is in dispute. Liability for those variations therefore falls to be determined.

27. If DCC establish breach at Bolton Hill by inadequate performance there are issues as to causation and measure of damages in relation to DCC's claim to recover the cost of a replacement clarifier.

28. At Bolton Hill JFS relies in its Amended Defence to Counterclaim on a contractual limitation period of four years from the date of taking over or bringing into use. That defence is put in issue by a Reply to Defence to Counterclaim.

29. At Ystradfellte there are counterclaims by DCC for damages or rescission for misrepresentation.

30. There are some matters which are ostensibly in issue on the pleadings or experts' reports but which I believe are not now pursued. There are pleas by DCC of discharge of the Ystradfellte contract by frustration or supervening illegality, but I do not understand them to be relied upon. There is a deduction in DCC's Quantity Surveyor's report for liquidated damages for delay but that is not pleaded and was not mentioned in Mr Streatfeild-James' opening or closing submissions. I accept Miss Jackson's submission that unless pleaded it cannot be pursued.

31. There was no prior direction for trial of separate issues, and the parties had prepared for a trial of quantum as well as liability, although it was agreed that quantum evidence on both sides should come after all other evidence was complete. DCC's counterclaim for damages at Bolton Hill, as pleaded, was for the cost of "complete replacement of the pre-treatment process" on the basis that DCC "intends to install a dissolved air flotation and pre-flocculation process" (my emphasis). That was supported by expert evidence of the estimated cost of such a replacement. The replacement scheme, while of course advanced as a realistic resolution of what DCC alleged were the deficiencies of the situation, was clearly a "paper" scheme in the sense that it had been prepared solely for the purpose of quantifying the counterclaim; there was no suggestion that any decision had been made to proceed with it or to go out to tender on it, still less that it or any scheme had been let, or indeed that any actual remedial work had been done. The cost as at the first quarter of 1998 is estimated in the expert's report at just under £2.4M.

32. On day 16, at the close of all except the quantum evidence, Mr Streatfeild-James was obliged to tell me with some embarrassment that, unknown to DCC's legal advisers and expert witnesses until the trial was well advanced, another replacement scheme had not just been mooted but actually commenced during the course of August this year. The contract price was just over £1.3M, although there were additional items which might amount to some £324K. He applied, in the alternative, for the adjournment of the issue of the quantum of that counterclaim only, or for leave to adduce supplementary evidence from his quantity surveyor in support of a revised counterclaim for the cost of the new replacement plant. Miss Jackson opposed both applications and submitted in the alternative that if any order were made it should be for the adjournment of all issues of quantum. For reasons which I gave at the time I acceded to Miss Jackson's alternative submission and adjourned quantum generally, adding by way of explanation:

33. I propose to deal with the issues thus identified as outstanding in the following order:

Limitation

34. The Defence to Counterclaim in the Bolton Hill action pleads that the counterclaim is barred by Clause 30A of the Bolton Hill contract, which provides as follows:

35. Clause 21(iv)(b) imposes a three-year limitation from the taking over of all the Works on claims against the contractor for loss, damage or injury to persons or property. It is not suggested by either party that the saving from clause 30A by reference to that clause applies here.

36. The Writ in the Bolton Hill action was issued on 11 January 1995, a date which on any view was within the period allowed by clause 30A. The Counterclaim was served on 21 March 1997.

37. The Reply to Defence to Counterclaim alleges that DCC brought proceedings, for the purposes of clause 30A, on the date of the Writ and that so far as the counterclaim is a defence and set-off it has not brought proceedings at all for those purposes. It was conceded by Mr Streatfeild-James in opening that the first of those points - the "relation back" argument - could not be maintained in answer to a contractual limitation provision such as this (the rule as to statutory limitation is different; see section 35(1)(b), (2)). It was conceded by Miss Jackson, for her part, that the second point was good. I accept both concessions. The counterclaim, so far as established on the merits, therefore serves pro tanto as a set-off in any event, but whether it entitles DCC to judgment for any damages which it may prove in excess of the amount required to extinguish the claim depends on whether time began to run before 21 March 1993.

38. Subject to a point arising from the wording of the taking-over certificates, to which I shall come, no question of the taking over or bringing into use of the works sectionally or by portions arises, so the date on which time began to run for the purposes of clause 30A is on the face of it to be ascertained by the simple factual enquiry: what was the later of (i) the date of taking over of the works, and (ii) the date on which they were brought into use by DCC for their intended purpose?

39. I start with the latter, since there are no definitions or "deeming" provisions to import any special meaning into the words "brought into use by [DCC] for their intended purpose". The first-hand evidence as to that was the evidence of DCC's plant operator, Mr Rees, which I accept. It was that the ACs were supplying water to the filters, and thence into the supply system (which, I interpose, was plainly their intended purpose) during the "28-day tests" (which lasted from 11 March to 8 April 1992), and continued to do so until 11 June 1992, when they were taken out of service until October of that year. They were then restarted for one day and again in November for four days. Until 11 June he had been operating the plant and using it as part of the treatment of water going into the potable water supply. He does not deal in detail with the subsequent history, but it is not in dispute that for the most part the Bolton Hill ACs were in use "on line" until this year. Assuming in DCC's favour that use during the 28-day tests was not use by DCC it is nevertheless clear on that evidence, in my view, that the ACs were brought into use by DCC for their intended purpose at latest by 9 April 1992. The fact that they were subsequently taken out of such use for temporary periods cannot retrospectively alter that fact.

40. Was the date of taking over later? "Taking over" is not defined in the interpretation clause of the contract. There are references, for example in clause 21(iv)(a), to taking over "under clause 28 (Taking Over)", but in my view that is not an implied definition; the reference in brackets is simply to the side heading of clause 28, rather in what was once the style of statutory draftsmanship. Clause 28, however, which provides for the issue by the Engineer of a certificate certifying the date on which the works have been completed and have passed the prescribed tests, does provide that "[DCC] shall be deemed to have taken over the Works on the date so certified". Much of the argument before me proceeded on the assumption that the reference in clause 30A is therefore to that date, and I am content first to adopt that assumption before dealing with the alternative.

41. In the event the Engineer issued two taking-over certificates. The first, dated 25 June 1993, certified that 9 April 1992 was the date on which specified "portions" of the works were completed and passed the tests. The "portions" specified were effectively the whole works excluding what was in argument referred to as the "air entrainment problem", the precise wording of the exclusions being:

The second, dated 26 June 1993, was an unqualified certificate of completion of the whole works on 9 March 1993.

42. JFS relies on the certified date of 9 April 1992 as the date of taking over for the purposes of clause 30A. DCC replies first that the relevant dates under the certificates are the dates on which they were issued, 25 and 26 June 1993. That is plainly wrong on the express provision of clause 28 that the works are deemed to have been taken over "on the date so certified". There could well be an argument that the unqualified second certificate is the relevant one and the date therefore 9 March 1993, but that would still be too early for DCC's purposes and was not advanced. There can, however, be no ground whatever for treating the date of signature as material.

43. Secondly, DCC advances a number of arguments which amount to saying, in one way or another, that the certificates should not have been issued. That, however, fails at every level. As to the underlying facts DCC's own witness Mr Fothergill, who was the senior person called of those advising the Engineer, accepted not only that the certificates were properly issued but, in effect, that they should have been issued much earlier and were being withheld for tactical reasons; he himself had endorsed one letter of complaint from JFS: "Prevaricate".

44. As to the status of certificates, although clause 28 does not make them conclusive it does contain the deeming provision already noted and the certificates have not in the event been set aside or varied. If, therefore, certification is the appropriate criterion for ascertaining the date of taking over for the purpose of clause 30A there is no justification for going behind the certificates in fact issued.

45. If, on the other hand, this line of attack amounts to a submission that certification is not the appropriate criterion, then "taking over" becomes an ordinary English phrase bearing its natural meaning. On that test I have no hesitation in finding, on the strength of the evidence of Mr Rees already summarised, that the date of taking over was 8 or 9 April 1992.

46. I conclude that the Bolton Hill counterclaim is time-barred under clause 30A, except in so far as it serves as a defence by way of set-off.

47. The first issue to be resolved under this head is the true construction of one paragraph of DCC's letter of acceptance, dated 28 March 1991, of JFS' tender. It is not in dispute that the letter was part of the documentation constituting a contract in writing between the parties. The paragraph reads as follows:

48. That clause has to be construed as part of the whole contract and against the factual setting in which that contract was made. Parts of both are set out in paragraphs 2, 4 and 5 above. It is also relevant that although the contract was in terms one to design and build there had been a joint design team at work since October 1990, that civil engineering works were to be carried out under a separate contract by another contractor, that it was a contract negotiated with JFS after presentations by prospective contractors but without competitive tendering and that the price was made up of "bids" from sub-contractors and suppliers, disclosed to and approved by DCC, plus sums payable for JFS' own work, in particular a priced item for "contract management, design, site facilities, administration and profit" amounting to some 33% of the total. The process of disclosure and approval of bids seems from the outset to have been described as "validation" and to have been subject to revision even before the contract was entered into; JFS' letter of 22 March 1991, submitting what DCC in the letter of 28 March described as the "tender" which was being accepted, is actually expressed as "enclosing our re validated offer".

49. The contract incorporated the General Conditions of Contract for use in home contracts recommended by the Institution of Mechanical Engineers and other bodies, 1976 edition, with amendments. Condition 10(i), as amended, provides so far as material as follows:

50. Two aspects of the factual setting are of particular relevance. The first is the planning situation. There had already, before JFS was involved, been a history of unsuccessful attempts to find a suitable site which would, among other requirements, meet the likely objections of the planning authority to such a development in the National Park, but I confine my attention to facts known to both parties at the date of the contract as being the only ones relevant to its true construction. By the time JFS came on the scene the chosen site was at Bryn Bwch, and on 20 July 1990 application had been made for outline planning permission. At the "Pre-award meeting" on 19 October 1990 it was reported that the planners were not prepared to grant outline permission and required a full planning application. That was effectively the first of a series of meetings of the joint design team and it was the evidence of DCC's witness, Mr Fear, which I accept, that "we were keeping JFS informed of the planning issues as we progressed in the joint design team". That evidence was given in the context, in particular, of questions about a meeting between DCC's architect and the planning officers on 18 December 1990. The notes of that meeting refer to "extreme concern" by the planning authority (presumably meaning the officers), to the inevitability of "strong objections" and to the prospect that the progress of the application would be "slow and difficult". Mr Fear agreed that that was still the position in March 1991 - "it was an ongoing difficulty throughout". In fact, at the date of the contract the application for full planning permission had still not been lodged; that did not happen until 15 May 1991.

51. The other material feature of the factual setting was that 31 March 1991 was the end of DCC's financial year and DCC was "anxious to maximise capital expenditure during the current financial year". That quotation comes from an internal document of 25 February 1991 but it is clear that JFS was aware of pressure to have a contract signed by 31 March for financial reasons; in the minutes of a progress meeting on 27 March there are recorded statements by DCC that "there was a need to accrue the appropriate sum of commitment despite the problem with planning" and that "it was still hoped that the award would be made before the end of the current financial year". There was some attempt in DCC's evidence to minimise the importance of this element by suggesting that there were misunderstandings by its representatives and inaccurate use of accountancy terms, but even if that is right it is beside the point, which is the shared perception of urgency by those negotiating on behalf of DCC and JFS. I find that to be established.

52. DCC's contention is that without the letter of 28 March 1991 the contract would have been one for work at a specified site (Bryn Bwch) and nowhere else, there being no power under Condition 10 to change the site under the guise of a variation order. So far I agree. The question is whether, as DCC further contend, the letter is inapt to change that situation or whether, as JFS submit, its effect is that the contract is still to subsist if the works are moved to another site.

53. The question is one of the construction of a short and fairly straightforward passage and does not admit of much elaboration. The principal consideration in DCC's favour is that the letter deals expressly with only one of many elements of the specification which would be likely to need modification should the site change, coupled with the difficulty of finding express or implied terms capable of providing for such modification and the other consequences of a change of site. There is also the point, albeit in my view one of minor importance, that the words "it has been agreed" look more like a reference to some collateral arrangement than like a substantive term of the contract itself. The principal consideration in favour of JFS is that the second sentence of the paragraph in question quite explicitly proceeds on the basis that if planning permission (meaning permission for the Bryn Bwch site) is refused "and the Works moved to an alternative site" there will still be subsisting "the Contract", which can in such circumstances only be a contract to carry out "the Works", with any necessary modifications, at the new site.

54. In my judgment the JFS version is the true construction. The express common intention of the parties that the contract shall survive a change of site is in my view quite plain. The singling out of the Onllwyn and Ystradfellte pumps and associated pipework is explicable on the basis that they were, as reference to the specification shows and as the letter itself implies, high lift pumps required to pump against precisely specified heads and therefore identified uniquely with the topography of Bryn Bwch. Moreover it is also implicit in the letter itself that they are items which would in the absence of special provision have to be ordered promptly. It has not been shown by DCC that there were other items of any significance which had comparable characteristics; the "re-validation" exercises which were embarked upon when there were prospective site changes were not explored before me in detail, but differences arising in them seem largely to have been concerned with price rather than with any difficulty or complication in adapting design or specifications. It would no doubt have been better draftsmanship had much more detailed provision been made for the adaptation of the contract terms to a change of site, but its absence is explicable by the pressure to have a binding contract in place by the financial year end.

55. There might have been an argument that the same lack of detailed provision made the apparent contract void for uncertainty but in my understanding that argument was not run and in any event, as I find, it would have failed. The parties had the clearest possible contractual intent and had agreed all the terms which they needed to agree in order to be bound. The facts fall squarely within the category of case in which any terms not expressly provided for are capable of being supplied by operation of law, by custom or usage or by implication. Their formulation may not in some respects be entirely straightforward or uncontroversial but that does not, and should not, deter courts from undertaking the task so far as necessary.

56. It is not always necessary. It may well be, for example, that a term should be implied setting a reasonable time limit on the continuance of the contract in the absence of any suitable and available site having the necessary planning permission, and the question what would be such a reasonable time limit would clearly be debatable, but in this instance it does not have to be debated because the parties, as they were clearly free to do, dealt with the question of extensions consensually before any issue of expiry arose.

57. On 12 August 1991 DCC wrote to JFS about planning delays and difficulties, including an intimation that the planning officers would be recommending rejection of the Bryn Bwch application. "Obviously this means that it will not now be possible for you to commence work on site in November 1991 as originally intended. .... In the meantime I suggest that no further orders should be placed or progressed; in addition, perhaps we should hold an early meeting to discuss the current position of the contract." That meeting took place on 19 September 1991 and its outcome was confirmed by a letter from JFS to DCC's engineers on 27 September, which included the following:

The effect of that was quite plainly, in my view, that the parties were postponing during the period of suspension any possibility that the contract might come to an end by virtue of an implied term of the kind under consideration.

58. Mr Streatfeild-James relied on evidence that the parties contemplated "renegotiation" or "revalidation" as showing that there was only an unenforceable agreement to agree. I must return to the separate question how the price at a new site was to be arrived at, but for its present purpose this argument suffers from the fatal flaw that it presupposes, contrary to the fact, that DCC has won, not lost, on the construction of the letter of 28 March. Had the contract been for Bryn Bwch alone then to extend it to some other, as yet unidentified, site would indeed have required all the elements of binding contractual accord, including certainty; agreement to negotiate would not have been good enough. Since there was already a continuing contract, however, what required certainty and the other necessary contractual elements, if it was to come to an end by the act of the parties, was their agreement that it should indeed do so. That was plainly lacking - quite the reverse; they clearly intended to keep it alive. DCC's pleaded case that the contract, if still subsisting at 19 September 1991, was (apart from the "exceptions to the suspension" listed in the letter of 27 September) then discharged by agreement therefore fails.

59. On 11 October 1991 planning permission for Bryn Bwch was refused. Notwithstanding the fact that DCC appealed that refusal it pleads that the contract, if still subsisting, was thereupon forthwith discharged under a condition to that effect, or for supervening illegality, or by frustration. On my findings as to its true terms and effect those pleas, so far as still live issues, must clearly fail.

60. There were further vicissitudes before DCC eventually obtained the site at which, and the planning permission under which, it finally constructed the Ystradfellte works, but they do not raise any fresh point of principle, and I do not therefore give them any separate attention. Subject to any consequences of the misrepresentation issue, which I shall address separately, no further justification was pleaded or argued for DCC's termination, which was therefore a repudiatory breach of contract. It is now common ground, and I find, that in law that termination occurred not when DCC's Mr Wilshaw on 21 July 1994 gave instructions for all work to cease and told JFS that he was recommending termination but when on 7 November 1994 he wrote to JFS to say that the board of DCC had accepted that recommendation. He agreed, however, that for all practical purposes the decision was made on 21 July when, after the meeting of that date and with the approval of his superior, Mr Jones, he wrote to JFS confirming what he had said and done. It seems to me, therefore, although I do not remember any argument on the point, that in so far as any loss or expense flowed from the events of 21 July rather than from the termination itself the court should proceed on the basis that there was a breach sounding in damages on the earlier date, albeit that breach was not formally the terminating act.

61. There remain, under this head, some demarcation issues as to how far I can or should go at this stage in deciding questions on or near the borderline between liability and quantum. The measure of damage, as always, involves comparing what happened in the event with what would have happened had there been no breach. In the latter event both parties would have continued to be bound by the contract. An important question, therefore, is what would have been the contract price for the work at the eventual site, Gwernblaedde. On 21 July 1994, when everything came to a halt, the parties were involved in the process of "re-validation" for that site, and JFS had just submitted an estimate of the revised tender sum which was expressed to be "totally non-committal on our part" and to be "purely a discussion document". Had matters proceeded the parties would undoubtedly have tried to agree a revised price by negotiation. It was, indeed, part of DCC's case on the construction of the letter of 28 March 1991 that such negotiations might fail to result in agreement and that that would leave an essential term of the contract uncertain. In rejecting that case I implicitly accepted, at the end of paragraph 55 above, responsibility for deciding, if necessary, how that term can be reduced to certainty.

62. In my view the solution lies in the conjunction of the letter of 28 March 1991 (paragraph 47 above) and Condition 10 (paragraph 49). The change of site is not itself a "Condition 10" variation; it comes about by DCC's "[moving] the Works" under the letter of 28 March "should planning permission [for Bryn Bwch] be refused". (There might, of course, in principle be a dispute as to whether a new site chosen by DCC was an "alternative site" within the scope of the letter - there must be some implied limits, e.g. that it is Ystradfellte water which is treated - but that does not arise here.) Once there is such a change, however, any consequential variations fall to be dealt with and priced under Condition 10, if not agreed. Negotiations must be taken to be conducted against the background fact, known to both parties, that in default of agreement that is what will happen, and the price should for the purpose of quantification of damages be assessed accordingly.

63. So far the issues remain within the realm of what in my view I can and should decide at this stage, and I accordingly do so to the effect set out in the last paragraph. Once a price has been assessed, however, further and potentially more problematic questions arise. If the price so assessed would have given JFS a satisfactory profit it seems likely, subject to any submissions which anyone may wish to make to the contrary, that the appropriate assumption is that it would have wished to proceed and that its damages are the loss of the right to do so. If the price would have involved it in a loss, however, and perhaps even if there would have been an unattractively low profit, the question may arise whether it would have wished to escape further involvement and if so whether it would have been entitled to do so without breach by reason of the "15% proviso" in Condition 10 or would have had to choose between unprofitable performance and repudiation on its part. DCC may wish to pursue arguments, if open to it on the pleadings, that in the light of JFS' performance at Bolton Hill the inference should be drawn that it would not have been able to fulfil its obligations at Ystradfellte, and that such a finding would affect the damages recoverable. The answers to some or all of these questions may be affected by the circumstances outlined in paragaph 24 above.

64. I have come to the conclusion that all these issues or potential issues should be deferred to the quantum hearing. None of them has to my mind been sufficiently explored as yet in evidence or submissions to enable me to reach a confident conclusion. Some may not in the event arise in the light of my findings on other liability issues or because the parties or their quantum experts eliminate or reduce certain areas of difference or agree that they do not materially affect the outcome.

65. As part of amendments of the Defence and Counterclaim for which leave was given during the trial DCC, under paragaphs 45(2) and 55A of the Amended Defence and Counterclaim, claims to recover as money had and received the sum of £276,521.86 alleged to have been paid to JFS and/or the Second Defendant "in excess of the costs incurred by either or both". No doubt it may be necessary in dealing with quantum to have regard to the state of the account between the parties, including the payments made by DCC, but it is not pleaded, nor was it the case, that this was a contract under which either the price or the amount of payments on account was limited to "costs incurred" by the contractor. I therefore see no basis for this as an independent head of claim and consider that it can and should be rejected at this stage.

66. It is common ground that the only relevant contractual term as to the performance of the Bolton Hill ACs is to be found in a single ungrammatical sentence originating in a printed document emanating from JFS and entitled "The Adsorption Clarifier". That sentence reads: "The solids removed by the clarifier is generally between 60% and 90% of the feed".

67. There was some dicussion about the meaning of those words. It is not, I think, now in dispute, and I find, that "feed" means water as fed to the AC. That is of some significance because the process of dosing described in paragraph 11 above, with its consequent precipitation and coagulation, actually increases the solid content of the dosed water above that of the raw water before treatment begins.

68. It is clear in my view, and so far as the point may still be in dispute I hold, that the effect of the word "generally" is that there is no absolute warranty that removal shall never drop below 60%. A fortiori there is manifestly no breach when removal exceeds 90%, although that is also literally outside the specified range. I see no need to define more precisely the meaning of the words, since it is now accepted by DCC that on any arguable interpretation the Bolton Hill ACs met the required standard on the results of the "28 day" acceptance tests in March and April 1992, while JFS equally accept that on any such interpretation they failed to do so by a substantial margin on the results of the "protocol" tests directed by His Honour Judge Thornton for the purposes of these proceedings and conducted jointly by the parties' expert witnesses in March and April 1998. The essential dispute under this head is what conclusion should be drawn from those apparently contradictory facts.

69. That dispute can in turn be narrowed down to one on the expert evidence, since there is no challenge to the factual accuracy of the test results; the readings during the 28-day tests, on which JFS rely, were taken by DCC's plant manager and those during the protocol tests were planned and monitored by the experts on both sides.

70. I begin with JFS' reason for discounting the protocol tests, namely the "removal of the floc towers", the meaning of which phrase I must first explain. The regime before the installation of the ACs was that water from the two source rivers was pumped into raw water reservoirs, from which there was a gravity feed into the plant. The first stage there was dosing by the addition of alum, followed by pH (acid/alkaline balance) adjustment with sodium carbonate. After that the water passed into four tanks piped in parallel and called flocculation towers (abbreviated to "floc towers"), from which it was piped to the rapid gravity anthracite/sand filters. The subsequent stages are not material. Presumably the original purpose of the floc towers was what their name implies, namely to enable floc to develop to a size and strength best adapted to the efficient operation of the filters. There was, however, no evidence how far, if at all, they advanced that purpose. I simply do not know how long water took to pass through a floc tower, whether and if so how vigorously it was stirred while doing so, what size of floc, on average or in range, entered or left, what size of floc was aimed for at the entry to the filters or what size was achieved.

71. The ACs were installed between the floc towers and the filters. The 28-day tests were conducted and the ACs taken over and brought into use in April 1992 in that configuration. There was, however, continuing concern about blockages of the 2mm holes in the inlet pipes or "headers" of the ACs. The contract had provided that it was "necessary to exclude particles larger than 1.5mm" and it was eventually decided to instal strainer screens between the reservoirs and the initial dosing point. That, however, raised a problem. The feed from the reservoirs was, as I have already explained, by gravity, so there was only a limited head of water available to drive the water through the system. The amount of that head used up, or "lost", in any particular piece of equipment or process is known as its headloss. The headloss of the existing floc towers and the new screens was such that the required flow rate could not be achieved if the water had to pass through both. DCC therefore decided to bypass the floc towers, and that was done when the screens were installed between November 1993 and February 1994. A "static mixer" was provided at the same time, so that the sequence was reservoir, screen, coagulant dosing, pH adjustment, static mixer, polyelectrolyte, ACs, but it was not suggested by DCC that the mixer took the place of the floc towers or performed an equivalent function.

72. Two questions arise as to the removal of the floc towers. The first is the scientific and factual question whether it could and did make a sufficient difference to the performance of the ACs to account for the failure of the protocol tests. The second is the legal question whether JFS' warranty of performance was conditional upon the retention of the floc towers. If both questions are answered in favour of JFS it is not liable under this head. If the second question is answered in DCC's favour the removal of the floc towers cannot in any event be a defence to JFS' liability for breach of warranty, given its acceptance of the validity and effect of the protocol tests and the fact that no other change since installation is now advanced as capable of giving rise to any sufficient deterioration of performance. The first question would in that event, however, still be relevant to the measure of damages, since if the removal of the floc towers was the cause of the failure remedial measures could have been limited to some equivalent means of reinstating the necessary "contact time" which JFS say was lost by that removal.

73. I address the second question first and answer it in favour of DCC. The proposal or offer by JFS which on acceptance by DCC constituted the contract included the following provision:

74. There was a meeting on 13 December 1990, after that proposal was submitted but before it was accepted, of which a note was made on each side. Mr Handcock's, for DCC's engineers, refers to the floc towers twice: "Poly - after floc towers" and "Floc towers to remain". JFS' note contains a diagram showing the flow as being through the floc towers to the "Poly" dosing point and then to the ACs. Mr Handcock accepted in cross-examination that "Q: .... that [was] the way it [was] to be? A: Certainly initially, yes". He had said in his witness statement that "JFS were made aware of [DCC's] intention to remove the floc towers at some time in the future and that water [might] be taken direct from the inlet main", but in cross-examination he could not recall any document going to JFS saying so. Nevertheless knowledge by JFS of that intention seems the most likely reason for the insertion in the proposal of the provision quoted in the last paragraph above, and I accept Mr Handcock's evidence on this point.

75. In any event that provision was not altered following the meeting of 13 December and I find that it was a term of the contract. There is not, as I understand it, any plea or argument based on variation, estoppel, misrepresentation or mistake, nor any claim to rectification; in her closing submissions Miss Jackson simply advanced the point as one turning on "foreseeability", but even if I had been with her on the facts, which as I have indicated I am not, I do not know of any defence on that ground to liability, the issue with which I am at present concerned.

76. I turn to the first question, whether the removal of the floc towers was the cause of the ACs' failure to pass the protocol tests. For that purpose I first take up the point about quantification made in paragraph 13 above and consider how far the expert witnesses were able to make their evidence about size of flocs more specific than simply "large" or "small". Two crucial questions of that kind were the desirable size for flocs entering the clarifier medium and the maximum size likely to survive in any significant quantity the violently agitated (as everyone agreed it was) passage through the 2mm holes of the inlet header.

77. The former question was not addressed in any of the expert's reports. I raised it with Dr Bache, who was called by JFS:

The first part of that answer is clear; below 80 microns is too small. The second part is a little more diffuse, but the effect is plain enough: the aim should be an average of about 100 microns. It is inherent in the design philosophy of the AC that flocs are growing during their passage through the plastic bed or medium. Whether the 80 micron figure is at entry or is the minimum required for interception (which would imply at any time before exit) is not explicit, but the 100 micron average is expressly concerned with the "solids .... fed into .... the plastic bed".

78. That was put to Dr Bache's opposite number, Professor Ives, but he seemed unwilling to give an answer in those terms. He repeatedly said that the particle size would range from 5 microns to as large as 400; that was in response to the question at what size the majority would be trapped but I do not see how it can really be understood as an answer to that question, since he added that Stokes' law applied, by which collectability would rise as the square of the diameter. A range from 5 to 400 gives a ratio, on that basis, of 1 to 6,400, and therefore seems to me much too wide to be either meaningful as a design aim or plausible as the limits of majority capture. If, however, Professor Ives' answers are to be understood as conveying simply that, without specifying any actual or desirable distribution, that range of sizes is likely to be present and is likely to be differentially captured in accordance with Stokes' law, the difficulty of acceptance disappears, as does any conflict with Dr Bache. I accept Dr Bache's evidence on this point.

79. On a related point, however, I found Professor Ives' evidence helpful. The reason for his upper limit of 400 microns was that at over that diameter the floc would tend all to be intercepted at or near the entry face of the medium and therefore to clog or "blind" it, the typical pore size of the medium being 600 microns. It is clear on evidence from both sides which I accept that this phenomenon of blinding can occur and is to be avoided, and that piece of evidence from Professor Ives, which I also accept, quantifies it in this instance.

80. I turn to the second question identified in paragraph 76 above, as to the maximum size of floc likely to survive in any significant quantity the passage through the 2 mm holes of the inlet header. Here the relevant evidence came during the cross-examination of Professor Ives. I have not traced the evidence, if any, which supports the case which was being put to him, but in the event that does not matter. Miss Jackson was considering the condition of the floc immediately before the water entered the AC:

81. Professor Ives therefore accepted that the maximum size of flocs immediately after leaving the turbulence of the header pipe was possibly about 30 microns, but believed that it would be even lower, although he did not quantify any reduction. It suffices for present purposes if I simply accept that evidence, as I do.

82. The other evidence which I find helpful in assessing the effect, if any, of the removal of the floc towers, is that of Mr Uban. Mr Uban was at the relevant time Director of Research and Advanced Technologies for Johnson Filtration Systems (the American company of that name). Although not called as an expert he was, I am satisfied, the witness with the best understanding of the design intention and working method of the adsorption clarifier. It became clear, however, that in one respect, at least, the ACs at Bolton Hill departed from the conformation with which he was familiar, since he had never come across a design for a header pipe incorporating a screen with 2mm holes occupying 50% of the area of the perforated plate, which was the layout there.

83. In order to introduce the relevant passage from Mr Uban's evidence I should explain one word which I have not previously had occasion to use. The plenum is the space, occupied by ascending water, between the floor of the clarifier, close to which is the inlet header pipe, and the underside of the plastic medium. Mr Uban was being cross-examined by Mr Streatfeild-James about that:

84. As it happens, Mr Streatfeild-James went on to challenge Mr Uban's belief that flocs, once broken, can grow again, a dispute which recurred at various stages in the evidence. In my view, however, it does not affect the present issue and I need therefore take no more time over it than to record my acceptance of Mr Uban's and Dr Bache's evidence on the subject and my finding that they can do so as readily, in the circumstances relevant here, as when growing for the first time.

85. The situation, therefore, is that for the efficient operation of the ACs flocs entering the plastic bed should have an average diameter of about 100 microns, that they should not at that point include any significant proportion of 400 microns diameter or more, and that there will not be a significant proportion of more than 30 microns diameter, at most, surviving the passage through the inlet header screen.

86. If the issue were whether, in theory, the ACs could be expected to work satisfactorily in those circumstances I should have to consider in detail the regimes and the probable growth rates of floc in the plenum and the plastic bed, the probable rates of deposition and detachment in the latter, and how all those factors are affected by the flow rate of the water through the ACs, on all of which questions there was a great deal of dispute although not, to my mind, much enlightenment.

87. That, however, is fortunately not the issue. The issue is whether the removal of the floc towers could have caused a material deterioration of performance. Clearly it could not if their function was to create flocs which, after polyelectrolyte dosing, would be of the right size and strength to enter the medium, because if that was the intention it was nullified by the breakdown of those flocs to much smaller dimensions in the inlet headers. Perhaps because this last fact did not emerge until after the trial began, and was not quantified until it was well advanced, much of the Plaintiff's evidence seemed to be directed to establishing that that was indeed the function and effect of the floc towers. It may have been, but that is nothing to the point.

88. What would have been material would be to show that the floc towers were needed to reduce, and did materially reduce, the proportion of particles too small to grow to capture size in the plenum and plastic bed, whether that was achieved by growing flocs so large that they would be broken down in the inlet headers, or by increasing the proportion of flocs of a size small enough to survive the inlet headers but large enough to grow to capture size, or by a combination of both. None of the evidence called for JFS, however, established that that was so; indeed, I am not at all clear that any of it was intended to. Most, and in particular the jar tests on which JFS' expert Mr Hyde heavily relied, was not capable of differentiating between particles below visible size. The grading used, by reference to standard "comparators", ranged from A or 1, at 0.3mm to 0.5mm (300 to 500 microns), to G or 7, at 3.0mm to 4.5mm. Particles a little below size A are just visible and are recorded as <A. Virtually all the recorded observations are therefore of flocs too big to be of any relevance. The distinctions crucial to the present issue are far below the visible level and are lost in the blank boxes in the record sheets, or would have needed observations at an earlier stage than that at which they occurred.

89. It is not, however, just a negative matter of lack of evidence in favour of JFS. Mr Uban's contribution is particularly relevant here. He repeatedly emphasised that it was unnecessary, and in fact undesirable, for flocculation to have advanced very far before the water entered the clarifier. He accepted that it would technically have begun, in the sense that there would have been charge neutralisation and molecular or microscopic particles would have started to stick to each other, but in the terms of Mr Streatfeild-James' question, with which he agreed, flocs would not have "built up" or, as would be equally acceptable, they would have broken down. It is true that he was not asked to quantify these statements and that his chief concern was to exclude floc large enough to build up on the bottom of the plastic bed, but the clear impression given is that there is no need for any special measures directed to increasing the size of floc; quite the reverse. Moreover the flow regime leading to the clarifier which Mr Uban envisages as the setting for his description of the process does not include any means of increasing the contact time beyond that inherent in the sort of layout which prevailed at Bolton Hill after the floc towers were bypassed:

90. I conclude that the removal of the floc towers was not the cause, or a contributory cause of any materiality, of the ACs' failure to pass the protocol tests. Since that was in the end the only reason relied upon by JFS for discounting the results of those tests they stand as cogent evidence of the capabilities of the ACs before as well as after that removal.

91. I turn to DCC's criticisms of the 28-day tests. Those criticisms are at this stage, of course, relevant only to the issue what weight should be given to the results of those tests as evidence of the ACs' capabilities and performance; I have already considered and rejected, in paragraphs 43 and 44 above, arguments that the tests were not valid and effective for their contractual purpose as acceptance tests and as the basis for taking-over certificates. Nor do I take account of the view of Mr Kingham, DCC's expert, that JFS "nursed" the ACs in some way, or "managed" to produce untypical results; that would be to go back on DCC's acceptance of the genuineness and accuracy of the readings and to imply an attack on the good faith of JFS which Mr Streatfeild-James did not advance and I decline to entertain or adopt.

92. The first fact to which DCC draw attention is that at the same time as the 28-day tests were being conducted DCC were continuing to keep their own records, which included routine tests showing inconsistent and inferior performance, albeit still with turbidity removal usually over 60% and often over 90% - a debatable pass. That is in my view of slight weight; the test readings were undertaken to a programme and by a means agreed between the parties and authenticated by representatives of each, whereas DCC's were internal operational records not accessible to or verifiable by JFS. There is, however, no attack on their genuineness and I take them into account for what they are worth.

93. The second ground advanced for not treating the 28-day test results as representative of the ACs' capabilities and performance is that the concurrent records of headloss across the plastic medium, kept as part of the agreed test procedure, do not show the appropriate pattern of steady build-up between washes. It is common ground that such a build-up would be expected in a properly functioning AC, since the pores of the medium would become progressively obstructed by deposited solids. Many of Mr Kingham's detailed criticisms in this respect were misplaced, being based on misreadings of the computer-generated lines joining the plots on the relevant graphs, but it remains the case that there are a number of headloss readings which are very difficult to reconcile with consistent and adequate removal of solids. I take this into account also, but it is somewhat peripheral and therefore a comparatively minor matter.

94. The third criticism, and in my view rather more substantial, is that the flow rate was almost always below, and usually far below, the level at which performance should be measured. It was of course DCC who controlled the supply of water, so this again is not, and cannot be, a complaint about JFS' conduct or good faith. It is simply a question of the value of results obtained in such circumstances as evidence of the ACs' ability to deliver the warranted performance. The flow rate was in fact for most of the time about 50% of the maximum design flow. On four days, judging from the graphs in Mr Kingham's Appendix BH7/A, there were significant periods when the flow was increased to between 75% and 95%. They were days 9, 14, 16 and 22. Mr Kingham had attempted a statistical analysis showing what correlation there was between flow rate and performance, and concluded that there was effectively none. The most informative presentation of the results is Mr Hyde's Figure 3.5, which plots percentage turbidity removal (the measure of performance agreed for the purposes of the tests) against rise rate in metres per hour. He says in his report that it shows no deterioration in treated water quality as the flow rate is increased, but I think he was constrained to agree in the witness box, and I find, that Figure 3.5 points to a rather different conclusion. It shows by far the greatest concentration of plots clustered around 50% of design maximum flow rate and 95% turbidity removal. There are scattered plots elsewhere but the only other cluster of any significance at a different flow rate centres on about 75% of design maximum flow rate and about 80% turbidity removal.

95. Despite Mr Kingham's own understandable reluctance as a scientist to put too much weight on what can be judged by eye I conclude that that points to a deterioration of performance with increased flow rate and gives some support to his view that the Bolton Hill ACs can perform acceptably only at much lower flow rates than those specified. It may be, although I do not have to decide, that if that view is to be reconciled with the American experience observed by DCC's witnesses and spoken to by Mr Uban, the explanation lies in the fact that the inlet header screens at Bolton Hill were breaking up the growing floc into even smaller particles than would otherwise be entering the plenum or than Mr Uban's evidence contemplates.

96. Taking all these considerations into account I conclude that the 28-day test results are a less reliable indication of the capabilities and performance of the ACs than the protocol tests, that the ACs accordingly failed to fulfil the contractual performance requirement set out in paragraph 66 above and that JFS are therefore in breach of contract in that respect.

97. The counterclaim for damages for misrepresentation at Ystradfellte is pleaded in the alternative under section 2(1) of the Misrepresentation Act 1967 and in negligence, but Mr Streatfeild-James does not contend that he can succeed in negligence if he fails under the statute, so I need consider only the latter.

98. There is also pleaded an alternative claim in rescission, but little or nothing was said about it. I take it that that was because of acceptance that on the facts it does not arise, and if so I agree. Rescission may be by act of the party entitled to rescind or by order of the court. The Amended Defence and Counterclaim is equivocal as to which is relied upon. In paragraph 8B DCC "hereby rescinds" the original Ystradfellte contract. In paragraph 36 it claims that the new contracts which it pleads in relation to the site finally chosen "be rescinded". The relevant prayer, however, is for a declaration that all these contracts "have been rescinded". On my findings there was only one contract, which was terminated by DCC as described in paragraph 60 above. In that paragraph I left over the consequences of the misrepresentation issue, but in truth there was no evidence or suggestion that in the conduct and communications which brought the contract to an end DCC ever intended to exercise a right to rescind or informed JFS that it was doing so. What it plainly was doing, however, was terminating the contract, which did not therefore remain in existence to be rescinded by pleading or order in this action.

99. Section 2(1) of the 1967 Act provides as follows:

100. It is trite law, and not in dispute, that the common law requirements for liability for damages for fraudulent misrepresentation thus incorporated are that the representation shall be one of fact and that it shall have induced the entry by the representee into the contract. A promissory communication or forecast may amount, and in a commercial context is commonly found to do so, to a representation of fact that the maker bona fide and on reasonable grounds has the intent or holds the opinion implicit in what is said or written. In order to be an inducement it is not necessary that the representation be the sole cause; it is sufficient that the representee was materially influenced. If the representee establishes these ingredients on the balance of probability the onus is then on the representor to make out the statutory defence of belief on reasonable grounds.

101. In these proceedings a great deal of the weight of the case advanced by JFS was that there was no reliance and therefore no inducement, and that was true of all the alleged misrepresentations. Before I consider that issue, however, I shall look at each pleaded representation in turn in order to see whether, and if so how far, DCC has made out its case that they were made in the terms pleaded, were of fact in the above sense, and if so were untrue, and how far JFS has advanced or made out the statutory defence of reasonably grounded belief.

102. The first nine representations are alleged to have been made at a presentation by JFS on 25 July 1990, one of the presentations made by each of three rival candidates before DCC decided with which to negotiate further.

103. The first is that "Adsorption clarifiers were particularly suitable for the treatment of coloured upland waters with turbidity of up to 200 NTU at a peak, and for the removal of manganese". In fact the passages relied upon as constituting this representation (in two pieces of promotional literature apparently distributed at the presentation) read as follows:

104. The only allegation of falsity made in relation to these representations is that "adsorption clarifiers were fundamentally unsuited for the treatment of coloured upland waters".

105. Clearly the representations actually made fall substantially short of those pleaded. I disregard those made but not pleaded, those pleaded but not made and those not alleged to have been false. That leaves the representations that coloured waters are among a number of situations to which ACs are "mostly applied" and that after precipitation with alum the floc resulting from organic colour can be "effectively removed in the Trident process".

106. In my judgment DCC has not established on the evidence that those representations were false. On the contrary Mr Uban gave evidence, which I accept, that in the United States there were some 450 successful Trident AC installations dealing with a wide variety of water, including water of high colour. The 450 were those currently operating at the date of his evidence, but his experience went back at least ten years and in my view the proper inference is that the substance of what he said was true of the position as at the dates of the presentation and of the contract.

107. The second representation pleaded is that "The Tricon system proposed for Ystradfellte comprised proven water treatment technology, based upon a standard design". It is alleged that in context that meant that it was a proven process for treating, inter alia, coloured upland waters with a turbidity of up to 200 NTU at a peak and for removing manganese. The passages relied upon for this plea are first paragraph 1.3 of JFS' response to the design brief and secondly a further passage from the second piece of promotional literature quoted in paragraph 103 above:

108. The allegation of falsity is that the Tricon system did not comprise proven water treatment technology "in the context of water such as that to be found at Ystradfellte" and had never been successfully used to treat coloured upland waters of the type found at Ystradfellte.

109. In my view the gloss introduced in the pleading by the words summarised in the second sentence of paragraph 107 above is unjustified, as is the allegation that Tricon (as distinct from Trident) was represented to be "proven water technology"; the contrast between "unique" and "proven" in the second extract is explicit. On the other hand the context does, in my judgment, imply that the Trident technology is being held out as proven in the treatment of water such as that to be found at Ystradfellte.

110. The question therefore is whether that representation was false. In my judgment DCC has not established that it was. In addition to Mr Uban's evidence summarised in paragraph 106 above I accept that of Mr Stretton, one of DCC's witnesses, of his visit to the Moshannon Valley plant in Pennsylvania, which "appeared to be operating very successfully and treated raw water of similar quality [to that] which was experienced at Ystradfellte".

111. The third representation pleaded is that the AC would remove 95% of solids from the water to be treated from Ystradfellte. If said or written it would have been promissory rather than factual, but leaving that aside for the moment I am satisfied that it was not said; it is not even contended that it was in the promotional documents. What was advanced was first (as at Bolton Hill) that solid removal was "generally between 60 and 90 per cent of the feed", or variations on that wording, and secondly that turbidity removal ranged up to 95%.

112. The allegation of falsity is that "as a result of the fragility of the flocs" the AC would not remove 95% of solids.

113. The words quoted seem to be surplusage. Leaving them aside, and assuming in DCC's favour that it can rely on the claims actually made by JFS rather than on that pleaded, which I have found was not made, the question is whether DCC has established on the balance of probabilities that those claims (being of the nature of promises or forecasts) were false statements of fact about the makers' opinions and intentions by reason of not having been made bona fide and on reasonable grounds. It is important to remember in relation to this and all other cases of promissory statements that although the issue looks very like that raised by the statutory defence at the end of section 2(1) the onus here, on the issue of falsity, is still on DCC (see paragraph 100 above).

114. I find that DCC has not by that test established the falsity of the representations of fact implicit in these statements. What would have been the actual performance of Ystradfellte if built by JFS to its own design cannot be known with certainty; the probabilities may have to be assessed for the purposes of deciding quantum issues, but that is not the present question. At the dates of the representations and of the Ystradfellte contract not even the apparently successful results of the Bolton Hill 28-day tests were known, still less the subsequent failures on which DCC relies to show what it alleges to be the fundamental incapability of the design of delivering the claimed performance. Mr Streatfeild-James also relied heavily in his closing submissions on DCC's expert evidence as to the likely performance of Ystradfellte, but I did not find that that evidence enabled me to reach any firm conclusion, and in any event the opinions on that topic of expert witnesses called by the other party in 1998 are of marginal relevance, at best, to the issues what JFS believed in 1990 and 1991 and its grounds for doing so. Those grounds included the American experience, which was favourable, and the jar tests and pilot plant trials conducted by Mr Maker. I find that those were at the time reasonable grounds for the opinions and intentions which JFS expressed and bona fide held, although they are open to criticism in some respects by hindsight. The question whether, if promises to the same effect had become contractual obligations, and if the Ystradfellte contract had proceeded to completion, those obligations would have been fulfilled or broken, is both hypothetical and at this stage the wrong question.

115. The fourth representation pleaded is that the AC would provide well-flocculated, well-conditioned water to the mixed media filters. This again is a promissory statement. The passages relied upon are again one (paragraph 1.6) from the response to the design brief and this time two from the promotional document twice quoted before:

116. The allegation of falsity is that the AC would not provide well-flocculated, well-conditioned water to the mixed media filters; it would only be partly flocculated.

117. The relevant considerations here are much the same as those canvassed in paragraphs 113 and 114 above in relation to the last head of alleged misrepresentation, except that the representation relied upon is less precise. "Well flocculated" seems in the context to mean something like "with [most?/nearly all?] of the [remaining] solids contained in flocs likely to be captured by the filters". It is difficult to see that anything meaningful is added by "well-conditioned". The reasons given in paragraph 114 above for finding falsity not established apply a fortiori, and I accordingly reach the same conclusion.

118. The fifth representation pleaded is that the AC would achieve about 25m/hr. It is alleged that in context this meant that the AC would achieve that rate while removing up to 95% solids and complying with the fourth representation. Again the passages relied upon are in the response to the design brief (paragraph 2.3.2) and in the promotional literature:

119. The allegation of falsity is that the AC would not have operated satisfactorily at 25m/hr.

120. The pleading of both the representation and its falsity is again in promissory terms, so the second passage relied upon is not directly to the point; it is most naturally to be understood as a factual statement about existing installations. Moreover it is very far from being the unqualified claim alleged and there is absolutely no evidence that it was not true.

121. That leaves the first passage to be considered. On its face "25M3/hr" relates to volumetric throughput, not linear velocity, and therefore bears no relation to the pleaded case, but I am prepared for present purposes to assume in DCC's favour that it was understood by both parties to be a typing error for "25m/hr". I agree that in the context claims about rates are to be read in conjunction with those relating to performance, but it equally follows that in considering what effect that has on the representations made and on the issue of falsity I must take into account my findings on the representations as to performance. On that basis the position is again essentially the same as that discussed in paragraphs 113 and 114 above and I reach the same conclusion.

122. The sixth representation pleaded is that the Tricon system would achieve the required water quality, as set out in the Design Brief, meaning (it is alleged) that it would do so while operating at up to 25m/hr. In my view that is not a specific allegation separable from those already considered, as is confirmed by the fact that the allegation of falsity is expressed as being consequential on the preceding one. It therefore needs no separate consideration.

123. The seventh representation pleaded is that the Tricon system would remove 100% cryptosporidium and giardia cysts, meaning (it is alleged) that it would do so while operating at up to 25m/hr. The plea of falsity, however, is not a direct allegation that that was untrue, still less that it was not put forward bona fide and on reasonable grounds, but that the failure of the ACs "to operate in the manner in which they had been designed" would have resulted in a failure to remove 100% of the specified cysts (my emphasis). In his closing oral submissions Mr Streatfeild-James was at pains to emphasise that this was only a derivative allegation:

124. Although this looks like an independent representation it also is therefore consequential and needs no separate attention.

125. The eighth representation pleaded is that the Tricon system could be operated on a start/stop basis and would be almost unaffected by flow variations. The material relied upon is in paragraph 2.3.2 of the response to the design brief and in the promotional literature:

126. The allegation of falsity is rather lengthy, but in substance is simply that the Tricon system would have been unable to produce water of the required quality almost unaffected by flow variation, stops and starts.

127. Nothing fresh was relied upon by DCC here; its case was in essence simply that on the Bolton Hill experience and its expert witnesses' opinions this assurance would not have been fulfilled. For the reasons given in paragraphs 113 and 114 above that will not do.

128. The ninth representation pleaded is that the operating costs of the Tricon system were significantly lower than [those of] a conventional plant because of longer filter runs, lower energy consumption and lower chemical consumption. The passages relied upon are from the same sources as those already quoted:

129. The allegation of falsity makes it clear that this also is not a truly independent item. The plea is that the "consequences of the deficiencies set out under (1) to (8) above" were that there would not have been longer filter runs and costs would have been higher. There is therefore no need for a separate finding.

130. The remaining four representations are alleged to have been made during the visit of Messrs Tindall and Stretton of DCC and Mr Fear of their engineers to America in September 1990.

131. The first was that the AC had been proven in a wide range of different operating regimes over a number of years. That clearly was so represented and equally clearly, on the evidence of Messrs Fear and Stretton themselves, was true. It is further pleaded that in context that meant that the AC was proven in operating conditions similar to those at Ystradfellte. I doubt whether that is so; it was for the visitors to decide for themselves how far what they saw was applicable to Ystradfellte, but it matters not because on the evidence and report of Mr Stretton I am satisfied that if the alleged innuendo is to be imported it was made good.

132. The second was that the efficiency of the AC was such that the filters operated only to "polish" the final water. The only reference of any significance to this word which I have found in the evidence is that Mr Uban comments on the pleaded allegation in his witness statement and was cross-examined upon that comment. Most of that, however, is concerned only with what might have been intended or understood had the representation been made. As to whether it ever was made Mr Uban's unchallenged evidence was simply: "I do not know who allegedly made [this statement] or indeed if [it was] made at all during Welsh Water's visit". DCC's witnesses, so far as I have been able to discover, do not say that it was. DCC has therefore failed to establish that this representation was made.

133. The third of this group of representations is pleaded as being that the process would be able to remove manganese. I have not found any pleaded allegation that this representation was false, nor do I find it established that it was. I need not therefore consider it further, although it was one of the major subjects of Mr Stretton's concern before the American visit and attention during it and features extensively in his report and evidence.

134. The fourth and last representation is pleaded as being that stabilisation of AC performance after washing or start-up was very quick. That is essentially the same as the eighth alleged representation in the first group and needs no separate attention.

135. DCC's case on misrepresentation therefore fails at this stage. I have considered how far I should express conclusions on the issues which would arise if I were in error in any of my findings or reasons so far. On the second item in the second group ("polishing") the lack of any evidence of the alleged representation seems so clear that I see no point in doing so. The sixth, seventh and ninth items in the first group and the fourth item in the second group are all either derivative or repetitive and there is no more merit in treating them separately now than before. I shall address the remainder, but in the circumstances more summarily than if I regarded the outstanding issues as determinative.

136. I deal first with the statutory defence. On the wording of section 2(1) - "unless he proves" - it is one for the representor to plead, but the only reference to it which I have been able to find is a sentence in paragraph 52 of the Amended Reply and Defence to Counterclaim: "No admissions are made as to the contention that the representations were made without reasonable grounds of belief that the same were true". It is true that in paragraph 52 of the Amended Defence and Counterclaim DCC does (whether in relation to the statutory or common law plea of misrepresentation is not clear, and in either event perhaps superfluously) make the assertion thus answered by a "non-admission", but I do not consider that such a passively negative response is an adequate assertion of the statutory defence, nor did I understand Miss Jackson to advance any submissions based on it. I therefore make no findings in that regard, although in relation to the promissory representations I have, for reasons already given, addressed closely similar considerations in dealing with the issue of falsity.

137. That leaves inducement or, as it was more often characterised in argument, reliance. Miss Jackson's principal contention was that, having not by any means been fully persuaded by the presentation of 25 July 1990, DCC arranged the American visit by Messrs Tindall, Stretton and Fear and thereafter relied wholly upon the conclusions which they drew from that visit.

138. The topic cannot, in my view, be disposed of in that sweeping way. For this purpose the representations remaining to be considered (see paragraph 135 above) fall into three groups.

139. There is first the special case of manganese removal, the third item in the second group. As I have noted in paragraph 133 above this was of special concern to Mr Stretton and, as he recounts, it was the main subject of a presentation by Karen Cooper during the American visit. Mr Stretton's reaction to the July event had been that although he had doubts about JFS' "one stage" approach to manganese removal DCC could if necessary address the problem by alternative means "at a minimal cost penalty", and could therefore "take the small risk" involved. Had DCC in all other respects been prepared to proceed to contract at that stage it is clear that it would not have been deterred by the manganese problem and would not have been contracting in reliance upon anything about manganese removal represented by JFS. Nevertheless, the effect of Karen Cooper's presentation was that Mr Stretton's "fears regarding manganese removal had been directly addressed in considerable technical detail", and as a result he reported that the AC "would seem to be particularly well suited as a manganese removal unit". That was, in my view, a significant change of approach, and although DCC still had the fall-back position of inexpensive modification I find that the representations made by Karen Cooper were a material influence on its entry into the contract. Had this head been alive in other respects, therefore, I should not have excluded it on the ground of lack of inducement.

140. The remaining representations fall into two categories. There were those which were genuine representations of existing and external facts and those which were promissory in form. In the first category are the first and second of the first group (paragraphs 103 to 110 above) and the first of the second group (paragraph 131). In the second category are the third, fourth, fifth and eighth of the first group (paragraphs 111 to 121 and 125 to 127).

141. I consider that as to the first category DCC's representatives had and took ample opportunities to verify the facts during the American visit, and find that DCC did not thereafter rely on earlier representations. Had I been against JFS on the questions considered earlier I should therefore have nevertheless dismissed the counterclaim in respect of these representations for lack of proof of inducement.

142. As to the second category, however, although the American investigations gave considerable comfort and were undoubtedly an important influence on the final decision they could not, by their nature, conclusively validate what were in substance promises or forecasts of future performance. In my view these representations, so far as made, continued to have a material influence on DCC's decision to enter into the contract. Had any of the claims in this category been alive in other respects, therefore, I should not have excluded them on the ground of lack of inducement.

143. I have hitherto discussed the issue of inducement by reference solely to the effect of the American visit. A second way in which representations might have ceased to be causative is by the incorporation of terms covering the same ground, whether or not to identical effect, in the contract itself. That, however, even if open to JFS on the pleadings and not formally abandoned, was not advanced by Miss Jackson with any vigour and in my view rightly so. The contract does not, as I understand it, contain any performance requirements for the AC in isolation. It has extensive provisions as to the quality of the final product, but there is no reason why they should supersede representations as to the characteristics of the AC and the quality of the water which it could or would pass on to the filtration stage of the process.

144. In the event, however, for the reasons given in paragraphs 102 to 134 above, the counterclaim for damages for misrepresentation fails.

145. JFS claims, as part of the sum alleged to be due under the contract for Bolton Hill, the price of five disputed variations. This topic was, to the best of my recollection, hardly touched upon as a discrete issue in oral evidence, but Miss Jackson submitted in closing that I can and should decide liability in each instance, substantially on the documents, leaving over quantum. Mr Streatfeild-James accepted that two of the five could be dealt with in that way (I assume on the footing that the result turns on the answers to questions canvassed for other purposes), but submitted that all issues concerning the other three should be left over. I shall look at each head and consider what conclusions, if any, I can reach.

146. The first, identified as VO22A, although there were no formal variation orders, is (like all the others) dated 20 July 1994 and is for modification of software to allow wash separation and printing of wash data. On 20 March 1992 JFS wrote with a priced quotation for this work, expressed as being "further to your requests to undertake modifications to software contained in your telefaxes of 11th and 12th March 1992". I have not been referred to the latter, but on 24 March 1992 DCC's engineers replied with instructions to "progress immediately" and raising questions of technical detail on the specification and their effect on the price which were answered by JFS in an undated document inserted in the trial bundle at 13 April 1992. On 16 June 1992, in a letter dealing with "the main issues between us", DCC's engineers wrote: "Payment against V.O.22 will be made upon presentation of the formal variation order". I find that DCC is chargeable for this work.

147. Next there is VO23, for the design, supply and installation of inlet header manual flushing valves. Unlike VO22A I have not been referred to any contemporaneous quotation; the only document relied upon by Miss Jackson is a fax from the resident engineer dated 29 January 1992 stating that "Your details for flushing arrangement is approved subject to [a specified addition]". That does not assist in resolving the liability issue, which as put in closing submissions is whether provision for cleaning the inlet header screens should have been included in the original design. That was much canvassed in evidence directed to other issues, all of which I take into account but do not think it necessary to review. I find that such provision should have been made, but I leave open for further submissions, if required, whether the consequence should be that JFS gets nothing for this work, or is paid subject to a partial set-off for damages on the basis that if some cleaning arrangement had originally been included the contract price would have been higher, but not by as much as the cost of installing a back-flushing system later.

148. VO24 is also related to the back-flushing arrangement for cleaning the inlet header screens. It concerns the automation of the flushing valves. In contrast to VO23, however, the instructions for this work dealt explicitly with the cost consequences. In the letter of 16 June 1992 to which I have already referred the engineer accepted that "lack of satisfactory upstream screening", on which JFS were laying the blame, was "[DCC's] responsibility to resolve" but continued:

Nevertheless, I have doubts about the performance of the headers even with screening as advised in your tender and therefore I deem the provision of automation of the backflushing system to be an operational necessity as well as overcoming design deficiencies on your part.

You are therefore instructed to continue with providing an automated system together with discharge pipework to an acceptable drainage point at your cost. In the event of automation proving unnecessary upon completion of screening the cost of the automation and additional pipework will be passed to [DCC].

It seems clear, and I find, that the engineer was in this respect not acting as DCC's agent, as has been the case in some of the situations which I have considered, but exercising his independent adjudicatory functions under the contract.

149. A test was conducted on 12 to 15 July 1994 to resolve the issue left open by that instruction. It showed no "drop off in flows" through two ACs which were not back-flushed for the test period, as compared with that through the other two, which were back-flushed normally, but the engineer concluded that the water quality at the time was "far too good .... for the test to realistically prove whether the backflush is needed normally or not". Further tests were contemplated but never held. The position must therefore be, in my view, that the cost lies with JFS, either because the original instruction to that effect by the engineer was never countermanded or because, if that is an insufficient reason and the decision lies with me, it is covered by my finding in paragraph 147 above that provision for cleaning should have been included in the original design - it is not suggested, as I understand it, that if back-flushing was to remain a permanent feature of the process it nevertheless need not have been automated.

150. VO25A, which comes next, relates to "design costs" for a raw water in-line strainer station. There is no dispute that JFS was instructed to and did prepare "proposals" for such a strainer; the proposals themselves, which deal with location, expected performance and "options" available - essentially a simple short-listing of two of the eight manufacturers considered, leaving the final assessment and decision to the engineer - were submitted in the form of a three-page letter on 3 August 1992. The issue, as Miss Jackson accepted in relation to this and the next item in the course of her final submissions, is essentially whether this is properly to be characterised on the one hand as the sort of work which any prospective contractor does at his own cost in preparing estimates or tenders in competition with others or on the other as an extra task carried out on instructions under the existing contract. I find that it was the latter. There was no suggestion that any other contractor was invited to undertake a similar exercise or that JFS was free to decline the instruction.

151. The final item in this section is VO26, for providing a "filter media quotation". Here, however, what was submitted on 9 June 1992, does bear every appearance of being indeed a quotation properly so called; JFS is plainly offering to do the work as contractor and providing a price, specification and programme, and the covering letter includes the following: "Please note that the price quoted is a lump sum price for the work specified. Written acceptance of this quotation will be required prior to proceeding with the works". I was not referred to any evidence as to the circumstances in which this quotation was invited. Confining myself, therefore, simply to the inferences to be drawn from the document itself, I conclude that it falls on the other side of the distinction drawn in dealing with the previous item and that JFS is not entitled to charge DCC for this work.

152. I am not clear, in the light of my findings on the one hand that JFS is in breach of the Bolton Hill contract but on the other that DCC is time-barred on its counterclaim and can rely on that breach only by way of set-off, how far the parties will need or wish to incur time and expense in litigating quantum issues on that front. On the basis that anything I do not decide now can, if necessary, be dealt with on the trial of the remaining issues I therefore propose to treat this topic summarily and provisionally at this stage.

153. I have already pointed out in paragraph 72 above that if, as is in the event the case, I were to decide that JFS' warranty of performance at Bolton Hill was not conditional upon the retention of the floc towers, then the factual question whether their removal materially affected performance would go only to measure of damages. By deciding that factual question in DCC's favour I have effectively excluded any argument that damages can be limited to the cost of restoring them or some equivalent. I provisionally conclude that the reasonable cost of a replacement of the ACs as a whole is a proper head of damages. No other head is at present pleaded so I need say no more at this stage, although the parties may wish to consider whether the question raised in the last sentence of paragraph 147 above has any bearing.