A judge has ruled a highways contractor’s “ingenious new interpretation” of a contract, which served to reduce its workload in Birmingham, was in breach of the original agreement with the city council.
Birmingham City Council said the ruling, handed down by the Court of Appeal this week, is a “significant step” towards getting more investment into its roads and footpaths.
The case centred around an interpretation of terms in a 25-year-long contract, which came into effect in May 2010, with Amey Birmingham Highways Ltd.
In 2014, the council’s PFI contract and performance manager Clive Betts noticed “a most remarkable thing”, the ruling said. “Some parts of the roads and footpaths were being left unrepaired. [Amey] were deliberately leaving the defects in selected areas untreated.”
This is because Amey argued they were not specified in the original database of assets – the inventory which had been largely based “upon national averages rather than detailed observation and measurement” although “both parties were well aware of this fact”, the ruling said – and therefore were not contracted to carry out works on them.
Lord Justice Jackson said the contract had “worked perfectly satisfactorily for the first three and a half years” but added: “Things only went wrong in 2014 when [Amey] thought up an ingenious new interpretation of the contract, which would have the effect of reducing their workload, alternatively increasing their profit if [Birmingham City Council] issued change notices.”
He rejected Amey’s “ingenious new interpretation of the contract” and upheld Birmingham’s appeal against a case it had lost in the High Court in 2016.
In a statement issued after the ruling, Birmingham’s cabinet member for transport and roads, Stewart Stacey (Lab), said: “This is a significant step for the council in our aim of getting the level of investment into our roads that we believe should have been provided by Amey during the first five years of the contract.
“It fully justifies our decision to appeal the High Court judgment from 2016 and we now need to move forward in light of the Appeal Court ruling in getting the condition of our roads and footways to the standard that the people of Birmingham expect and deserve.”
A spokesman for Amey said: “We have been involved in a dispute with Birmingham City Council over the last 24 months regarding the scope of our contractual obligations in the core investment period. Unfortunately, despite the High Court having found in our favour previously the ruling was overturned by an appeal.
“Amey is disappointed at the outcome of the case, and has been preparing for all outcomes. We are currently considering all options for next steps.
“We remain committed to the market and all our clients. The issues raised in this dispute were very specific to the contract and its structure.”
The spokesman said the company had “delivered significant investment in the city’s roads” including resurfacing “500 miles of carriageway – over one-third of Birmingham’s roads – and over 400 miles of pedestrian footway” as well as replacing 42,000 street lights, and more than half of the city’s traffic signal systems.