Amey LG Ltd v Cumbria County Council

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeHis Honour Judge Stephen Davies
Judgment Date11 November 2016
Neutral Citation[2016] EWHC 2856 (TCC)
Docket NumberCase No: 3MA500110
Date11 November 2016

2016 EWHC 2856 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

MANCHESTER DISTRICT REGISTRY

TECHONOLOGY AND CONSTRUCTION COURT

Manchester Civil Justice Centre,

1 Bridge Street West, Manchester M60 9DJ

Before:

His Honour Judge Stephen Davies

Sitting as a Judge of the High Court

Case No: 3MA500110

Between:
Amey LG Limited
Claimant
and
Cumbria County Council
Defendant

David Streatfeild-James QC, Andrew Singer & Jonathan Ward (instructed by Pinsent Masons LLP, Solicitors, Leeds) for the Claimant

Martin Bowdery, QC, Paul Stafford, Frances Pigott, Lauren Adams (instructed by REN Legal, Solicitors, London EC2) for the Defendant

Hearing dates: 8, 9, 10, 15, 16, 17, 18, 22, 23, 24, 25, 29 February; 1, 2, 3, 7, 8, 9, 10, 14, 15, 16, 17 March; 4, 5, 6, 7, 13, 14, 18, 19, 20, 21 April; 3, 4, 5, 9, 11, 12, 25, 26, 27 May 2016; 27, 28 October; 10 November 2016 (draft judgments circulated 6 September 2016 and 3 November 2016)

JUDGMENT APPROVED

His Honour Judge Stephen Davies

No.

Section

Para. refs.

General:

1

Introduction and preliminary matters

1.1 – 1.54

2

The contract

2.1 – 2.66

3

The witnesses

3.1 – 3.89

4

Sources of documents and disclosure issues

4.1 – 4.57

5

Local area overhead

5.1 – 5.19

6

Chronology of relevant events

6.1 – 6.61

Amey's claims:

7

Amey's part 1 claim

7.1 – 7.30

8

Item (j) – Lillyhall depot works

8.1 – 8.20

9

Item 1: Sellafield de-trunking (winter)

9.1 – 9.16

10

Item 2: other de-trunking (scouting / winter)

10.1 – 10.13

11

Item 3: red diesel – road marking vehicles

11.1 – 11.19

12

Item 4: red diesel – MEWPS

12.1 – 12.9

13

Item 6: landfill tax

13.1 – 13.25

14

Item 8: increased employer national insurance contributions

14.1 – 14.11

15

Item 12: Better Highways rate

15.1 – 15.92

16

Item 13: Better Highways trial support

16.1 – 16.18

17

Item 14: Better Highways impact cost

17.1 – 17.34

18

Item 17: patching thickness

18.1 – 18.34

19

Item 19: uplift for works carried out in specified periods

19.1 – 19.17

20

Item 20: timebound works

20.1 – 20.14

21

Item 23: efficiency savings on volumes of works

21.1 – 21.26

22

Item 24: account production costs

22.1 – 22.10

Cumbria's counterclaims:

23

Schedule 1: winter services

23.1 – 23.3

24

Schedule 2: patching and patch testing: introduction

24.1 – 24.6

25

(1) Visual defects

25.1 – 25.189

26

(2) Work not done

26.1 – 26.49

27

(3) Incorrect materials

27.1 – 27.15

28

(4) Patch testing

28.1 – 28.11

29

Schedule 2: surfacing and surface testing: introduction

29.1 – 29.8

30

(1) Visual defects

30.1 – 30.63

31

(2) Thickness

31.1 – 31.11

32

(3) Surface testing

32.1 – 32.26

33

Schedule 5: street lighting overcharging

33.1 – 33.18

34

Schedule 7: notified defects outstanding

34.1 – 34.66

35

Schedule 8: waste material

35.1 – 35.17

36

Schedule 13: subcontractor uplifts

36.1 – 36.13

37

Balance due and Interest

37.1 – 37.3

38

Glossary

38.1

1

Introduction and preliminary matters

1.1

I will begin this judgment by way of a general introduction, and then proceed to address some preliminary matters, including the approach I have adopted in deciding some of the claims in this case, a consideration of the reliance placed by Cumbria on extrapolation, and an overview of the technical issues involved.

(a) General introduction

1.2

This is a claim and counterclaim arising out of a contract under which the claimant, Amey, agreed to provide highways maintenance and associated services for the defendant, Cumbria, for a term of 7 years starting 1 April 2005. The services had previously been provided by Cumbria's direct labour organisation (DLO), which was effectively taken over by Amey. Over the duration of the contract around 36,000 individual works instructions were issued by Cumbria, with an approximate processed value of £250 million. This included the laying of around 2,200 surfacing beds, with a combined area of around 4.2 million m 2 and a total value of around £41 million, and the issuing of around 1,700 separate patching instructions, with a combined area of around 745,000 m 2.

1.3

Before outsourcing its DLO Cumbria had already outsourced its highways department, responsible for overseeing the highways maintenance services, to the professional services company, Capita, who was to act as overseeing organisation under the contract. The intention was that all 3 organisations would work in partnership for the benefit of Cumbria's road users.

1.4

Although there were, as might be expected, some difficulties along the way, the overall impression is one of reasonable satisfaction on all sides for the first few years of the contract. However in 2008 Cumbria decided to conduct a root and branch review of its highways maintenance services prompted, it appears, by a perception of widespread dissatisfaction with the state of Cumbria's roads, coupled with budgetary pressure to make financial savings. The review process involved the use of external management consultants and had the enthusiastic support of new senior management within Cumbria's highways section. It culminated in a decision to bring Capita's services back in-house once its contract expired at the end of January 2011, and a decision to do the same with Amey's services once its contract expired at the end of March 2012. This decision was taken despite Cumbria being aware that Capita and Amey were very keen to obtain extensions to, or renewals of, their contracts and, in Amey's case, was prepared to offer significant price reductions to secure a contract extension. Cumbria also decided, at around the same, time to trial and then to roll out a new model for undertaking basic road maintenance and repairs, known originally as Customer Care and subsequently as Better Highways. The decision was taken not to await the expiry of the Capita contract and the Amey contract before introducing this new model.

1.5

From 2009 onwards the relationship between Amey and Cumbria had steadily deteriorated, so that by the time the contract expired a number of claims and counterclaims had already been intimated, with Cumbria making substantial deductions from Amey's final monthly payment applications, and with both parties actively preparing to pursue claims against the other under the final account process. Neither the final account process nor the subsequent pre-action protocol process resulted in an overall settlement of the claims and counterclaims, with the result that Amey commenced proceedings in the Manchester Technology and Construction Court in December 2013. The claim as pleaded amounted to over £30 million together with interest. The counterclaim, even after taking into account Cumbria's valuation of Amey's claims, was around £20 million. The parties have endeavoured to settle their disputes throughout the course of the proceedings, including undertaking a week-long mediation in May 2014, and have achieved some success, but the majority of the claims and counterclaims remain in dispute.

1.6

At the first substantive case management conference the case was listed for a 16-week trial commencing early 2016 and, despite a number of difficulties and disputes along the way the parties have worked hard and co-operated to ensure that the trial date was maintained. The parties sensibly agreed that the trial should be a paperless trial, in circumstances where otherwise the parties and the court would have been overwhelmed by the sheer volume of documentation in paper and electronic format generated during the course of the contract and the dispute.

1.7

Although there is considerable strength of feeling within both parties in relation to what each considers to be the discreditable conduct of the others in certain regards, and although the case has been vigorously contested on both sides, I should record my gratitude at the outset to those advising and representing the parties for co-operating with a view to ensuring that, despite the challenges involved, the litigation process ran reasonably smoothly and the trial was able to be completed within the time allocated.

1.8

The trial proper began on 8 February 2016 and took 42 days of court time, the first 3 being taken up with oral opening submissions and contested applications, the next 24 with factual evidence, followed by a short break and then 12 days of expert evidence, with a further short break for written closing submissions and concluding with 3 days of oral closing submissions, ending on 27 May 2016. I also had the benefit in the first week of a site visit day, where I was taken to a number of different roads within Cumbria and shown various features of relevance to the issues in this case.

1.9

It was recognised by me and by the parties that my judgment produced after this stage could not conclusively determine all of the issues, particularly the final ascertainment of some of the figures, and that certain further working out by the parties, assisted by their quantum experts, would be necessary once I had determined the substantive issues in dispute. Following circulation of this judgment in draft on 6 September 2016 it was agreed that the parties should have time to consider it and to seek to agree or address the outstanding matters, and a further 2 day hearing was scheduled for 27 – 28 October 2016 to determine any outstanding matters which could not be agreed. Prior to that hearing the quantum experts held further discussions and produced a further joint statement. The parties also produced a very helpful combined list of typographical errors. Cumbria also produced a document...

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