Amey Birmingham Highways Ltd v Birmingham City Council

JurisdictionEngland & Wales
JudgeLord Justice Jackson,Lord Justice Moylan,Sir Stephen Tomlinson
Judgment Date22 February 2018
Neutral Citation[2018] EWCA Civ 264
CourtCourt of Appeal (Civil Division)
Docket NumberCase Nos: A1/2016/4083 and A1/2016/4084
Date22 February 2018
Between:
Amey Birmingham Highways Ltd
Claimant/Respondent
and
Birmingham City Council
Defendant/Appellant

[2018] EWCA Civ 264

Before:

Lord Justice Jackson

Lord Justice Moylan

and

Sir Stephen Tomlinson

Case Nos: A1/2016/4083 and A1/2016/4084

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE TECHNOLOGY AND CONSTRUCTION COURT

HHJ MARK RAESIDE QC

[2016] EWHC 2191 (TCC)

Royal Courts of Justice

Strand, London, WC2A 2LL

Ms Anneliese Day QC and Mr George McDonald (instructed by DLA Piper UK LLP) for the Appellant

Mr Christopher Lewis QC and Mr Peter Land (instructed by Freshfields Bruckhaus Deringer LLP) for the Respondent

Hearing dates: 30, 31 January and 1 February 2018

Judgment Approved

Lord Justice Jackson
1

This judgment is in eight parts, namely:

Part 1: Introduction

Part 1 – Introduction

Paragraphs 2 – 8

Part 2 – The contract

Paragraphs 9 – 24

Part 3 – A brief history of events

Paragraphs 25 – 39

Part 4 – The appeal to the Court of Appeal

Paragraphs 40 – 43

Part 5 – Were ABHL under a duty to update the MINV and MSEC tables in the Project Network Model?

Paragraphs 44 – 74

Part 6 – What was the extent of ABHL's obligations?

Paragraphs 75 – 79

Part 7 – Should milestone certificates 6 to 9 be set aside?

Paragraphs 80 – 91

Part 8 – Conclusion

Paragraphs 92 – 96

2

This is an appeal by Birmingham City Council against a decision concerning the correct interpretation of a PFI contract. The principal issues are: (1) whether the PFI service provider was required to update inventory details on a database provided at the outset and (2) whether four completion certificates can be set aside for “manifest error”.

3

The present disputes have been the subject of both adjudication and litigation. Birmingham City Council were the referring party in the adjudication. They are defendant in the litigation and appellant in this court. I shall refer to them as “BCC”.

4

Amey Birmingham Highways Limited were respondent in the adjudication. They are claimant in the litigation and respondent in this court. I shall refer to them as “ABHL”.

5

Scott Wilson are a firm of consultants based in Nottingham. Scott Wilson were engaged by ABHL to run a software system known as the Pavement Management Model (“PMM”).

6

In this judgment I shall use the abbreviation “PFI” for Private Finance Initiative. I shall use the abbreviation “TCC” for Technology and Construction Court.

7

The PFI contract in this case legislates for a 25 year period. It is around 5,190 pages long, excluding discs, plans and documents incorporated by reference. The parties have provided to the court only those parts which are relevant to the present appeal.

8

Before tackling the issues in this appeal, I must first set out some of the more important terms of the contract.

Part 2: The contract

9

By a contract dated 6 May 2010, entitled “Project Agreement”, BCC engaged ABHL pursuant to the Government's PFI policy to undertake the rehabilitation, maintenance, management and operation of the road network in Birmingham for a 25 year period.

10

The contract is a formidable document. The definitions alone span over 200 pages. In that contract BCC is referred to as “the Authority”. ABHL is referred to as “the Service Provider”.

11

The main body of the contract includes the following provision:

1. DEFINITIONS, INTERPRETATION AND CONSTRUCTION

1.1 This Contract comprises:

1.1.1 the Main Body;

1.1.2 the schedules; and

1.1.3 the annexures; together, the “Contract”.

1.2 Priority

This Contract shall be construed and interpreted as a whole provided that in the event of any conflict or inconsistency between the provisions of the Main Body, the schedules and annexures, or between any of the schedules, or between any of the annexures, then, save as expressly provided for by clause 1.3, the conflict or inconsistency shall be resolved according to the following descending order of priority:

1.2.1 the Main Body and schedule 1 ( Definitions, Interpretation and Construction);

1.2.2 schedule 2 ( Output Specification);

1.2.3 schedule 4 ( Payment Mechanism); and

1.2.4 all other schedules and annexures.

4. APPOINTMENT OF AN INDEPENDENT CERTIFIER

On or prior to the date of this Contract the Authority and the Service Provider shall appoint jointly the Independent Certifier using the Independent Certifier's Appointment. The Independent Certifier's Appointment shall set out the duties owed by the Independent Certifier to the Authority and to the Service Provider.

5. CONDITION OF THE PROJECT NETWORK

5.1 The Service Provider confirms that, subject to clause 5.2, it has satisfied itself as to:

5.1.1 the condition and extent of the Project Network at the Pre-Commencement Survey Date (including the volume and type of Apparatus and Highway Trees); and

5.1.2 the work that it needs to carry out on the Project Network in order to comply with the requirements of schedule 2 ( Output Specification).

6. SURVEYS AND INSPECTIONS

6.1 General

6.1.1 The Service Provider shall undertake all inspections, surveys, tests and assessments and provide strategy documents and reports in accordance with this clause 6.1 ( General) and (subject to the provisions of this clause 6 ( Surveys and Inspections)), and clause 41.6 ( Change in highways standards) the Highways Maintenance Code, the Highway Structures Code and the Highways Lighting Code so that all the unprocessed data provided as a result of undertaking the inspections, surveys, tests and assessments is available to:

6.1.1.1 the Authority to enable it to support a defence under section 58 of the [Highways Act 1980] and any other Legislation that requires the Authority to know or reasonably be expected to know whether or not the condition of the Project Network (or part thereof) was likely to cause danger to users of the Project Network;

6.1.1.2 the Authority to monitor that the Services are being provided in accordance with the requirements of schedule 2 ( Output Specification);

6.1.1.4 the Service Provider to run the NCI Calculation Methodology, the FWCI Calculation Methodology, the VGCI Calculation Methodology, the KBCI Calculation Methodology, and the CTCI Calculation Methodology using the Pavement Management Model (and, for the purposes of this Contract, solely the Service Provider shall perform such calculations and such calculations shall only be performed using the Pavement Management Model).

6.1.1A The Service Provider may update the Pavement Management Model from time to time:

6.1.1A1 in accordance with any changes made to the Project

Network Model pursuant to this Contract; …

6.3 Condition Surveys

6.3.1 The Service Provider shall carry out Condition Surveys on all Project Roads annually for the duration of the Contract Term in accordance with this clause 6 ( Surveys and Inspections) and any applicable Highways Standards.

9. MILESTONES

9.1 The Service Provider shall achieve Milestone Completion by the relevant Planned Milestone Completion Date. The Milestones and their respective Planned Milestone Completion Dates are set out in the table below:

Milestone

Planned Milestone Completion Date

1

6 Months after the Service Commencement Date.

2

12 Months after the Service Commencement Date.

3

18 Months after the Service Commencement Date.

4

24 Months after the Service Commencement Date.

5

30 Months after the Service Commencement Date.

6

36 Months after the Service Commencement Date.

7

42 Months after the Service Commencement Date.

8

48 Months after the Service Commencement Date.

9

54 Months after the Service Commencement Date.

10

60 Months after the Service Commencement Date.

11. SERVICE PROVIDER PROGRAMMES and SERVICE PROVIDER REPORTS

11.1 The Service Provider shall produce, revise and provide to the Authority the Service Provider Programmes in accordance with the provisions of this clause 11 ( Service Provider Programmes)

11.1.3 The Core Investment Period Programme shall contain, without limitation, the following information:

11.1.3.1 a detailed plan on a PFI District by PFI District and street by street basis of each item of Core Investment Works that are to be carried out by the Service Provider to the Project Network in order to comply with the requirements of this Contract in respect of the forthcoming Contract Year and how, having made due enquiry, such Core Investment Works will be managed and/or co-ordinated in the context of other works being carried out on the relevant areas of the Project Network by the Authority (as Highway Authority), Statutory Undertakers or third parties in respect of the same period;

11.1.3.2 a detailed plan, on a PFI District by PFI District and street by street basis, of … all the surveys, inspections and tests (including timings and locations of such surveys, inspections[,] tests and assessments) to be carried out on the Project Network pursuant to the provisions of clause 6 ( Surveys and Inspections) which relate to the Core Investment Works in respect of the forthcoming Contract Year;

11.1.3.3 a strategic plan on a PFI District by PFI District basis for the remainder of the Core Investment Period setting out:

(a) the Core Investment Works to be carried out to meet each Milestone and the requirements of part 1 of schedule 2 ( Output Specification);

(b) the NCIlink, NCIlocal, NCImain and NCIsec profiles for the Project Roads in a graphical or tabular format demonstrating the relevant NCI profile for each PFI District for each Month during the Core Investment Period;

(c) details of all surveys, inspections and tests (including timing and location of such surveys, inspections and tests) to be carried out in accordance with the provisions of clause 6

( Surveys and Inspections) which relate to the Core Investment Works;

… …

13.2 Certification of Milestones

...

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