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Amey refuses to pay disputed £60m roads bill

Amey has refused to pay Birmingham City Council money the authority has claimed it overpaid for maintenance work.

In notes from its audit committee meeting held earlier this month, the council claimed that Amey LG – a subsidiary of Amey – had refused to pay the £55m plus interest owed to Amey Birmingham Highways Limited (ABH), and “therefore the council”.

ABH is the special purpose vehicle contracted by Birmingham City Council to deliver a 25-year highways contract.

In June Amey was ordered to pay the council’s resubmitted £55m claim having lost a Court of Appeal judgement in February as part of a four-year-long dispute.

This month’s committee meeting noted that the supreme court had refused Amey LG / ABH leave to appeal the Court of Appeal judgement.

Construction News understands that the disputed figure has now risen from £55m in June to close to £60m after interest and other penalties have been applied.

This month’s notes also stated that the immediate parent company of the special purpose vehicle had been placed in a technical administration as a result of the dispute. 

The council notes: “Lenders have placed the holding company for the SPV in administration. This is a technical administration; the SPV remains solvent and able to trade.”

Amey has rejected all the claims made by the council in its latest report.

The two parties have been at loggerheads over the costs attributed to the ABH set up to deliver road improvements in and around Birmingham.

In February the contractor lost a judgement to the council at the Court of Appeal over its interpretation of the contract terms.

In this month’s meeting, the council noted: “We have also demonstrated conclusively that Amey has no right to retain this money and any milestones that are certified will only apply from the date that they are certified (ie not retrospectively).

“Amey LG has also declined in our view to transparently provide information regarding the condition of our highway network.

“For several months we consider that it has been unable to demonstrate that it is complying with the order of the Court of Appeal in respect of this.

“They continue, with ABH, to appear to seek to confuse what is required and what information has been provided.”

In July, Amey reported a £189.8m pre-tax loss for 2017 after it was forced to make a significant provision for its problem roads contract with Birmingham City Council.

The contractor has been in a four-year battle with the council over the scope of its work on a 25-year £2.7bn roads maintenance PFI.

A spokesperson for Amey said: “Amey strongly refutes the claims put forward in this paper [the council audit report] and notes that it contains a number of material errors and inaccuracies.

“Despite the challenging circumstances, Amey LG Ltd continues to deliver a high-quality service in Birmingham, while we try to engage with all of the project stakeholders to resolve this long-standing and complex dispute.”

A spokesperson for the council said: “The current position is that Amey is contractually obliged to provide programmes and perform the work and services according to the contract.

“We are working with all parties to the contract to secure a way forward on the most appropriate basis.”

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