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Amey ordered to pay £54m to Birmingham Council

Amey has been instructed to pay Birmingham City Council £54m following an adjudication decision over road maintenance work.

Adjudicator Andrew Goddard QC found in favour of the council’s claim that it had overpaid Amey Birmingham Highways for road maintenance work the contractor had not carried out.

The council argued that the monthly fees it had paid Amey Birmingham Highways were made on the basis that certain milestones were hit.

Having stated that these milestones were not hit, the council claimed it was entitled to repayment of the fees.

Amey Birmingham Highways (ABH) is a special purpose vehicle contracted by Birmingham City Council to deliver a 25-year highways contract.

The dispute between the two parties stretches back to 2014, when a review of ABH’s work prompted the council to launch a legal challenge against the contractor claiming some sections of roads and footpaths had been left unrepaired.

The adjudication claim for overpayment was first brought by the council in July 2015, with Mr Goddard finding in favour of ABH on that occasion.

That decision was overturned at the Technology and Construction Court in August 2016, with Judge Mark Raeside drawing opposite conclusions to Mr Goddard.

However, the council won a subsequent judgement at the Court of Appeal in February this year, with the appeal judge rejecting what he called ABH’s “ingenious new interpretation of the contract.”

Following this victory, the council resubmitted its claim for repayment.

As a result of February’s decision, Amey’s parent company Ferrovial set aside €237m (£208.6m) to cover possible losses in its accounts for the first three months of 2018.

Ferrovial said at the time: “Following this judgement, and in view of communications received from the council, it has become clear the project’s investment profile needs to be changed.

“Given that the income at this stage has been exhausted, a provision had to be registered for the amount of the investment.

“The company has reassessed its forecasts regarding the level of penalties given the stance that the council has been seen to adopt in recent months, when it has applied penalties and deductions in extremely high amounts.”

Amey agreed the 25-year £2.7bn PFI deal for highways maintenance across Birmingham back in 2010.

The contractor must pay the total of £54,950,547.08 by 4pm on or before Friday 22 June 2018.

A spokeswoman from Birmingham City Council told CN that it was unable to comment due to the confidential nature of adjudication decisions.

Amey has been contacted for comment.

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