Contractor allegedly refuses to pay compensation despite losing appeal

News Article

A major contractor, at the centre of a long running dispute with a local authority, is allegedly refusing to pay millions in compensation, despite an Appeal Court decision and the latest judgment from the Technology and Construction Court against them.

Amey Birmingham Highways Ltd (ABHL) lost its long running legal action against Birmingham City Council earlier this year and was ordered to pay more than £50 million in compensation.

The dispute, which related to highways maintenance under a PFI contract had been hotly contested by both sides.

In July 2015, Adjudicator, Andrew Goddard QC, found in favour of the council which claimed it had overpaid Amey, because they had not carried out road maintenance work that they were obliged to.

In February this year, the Court of Appeal upheld the earlier court decision, referring to Amey’s “ingenious new interpretation” of its 25-year contract which it signed in 2010.

The court also found that Amey had been “deliberately leaving the defects in selected areas untreated” and had “been carrying out works based on inaccurate inventory information”.

According to Construction News, to date compensation has allegedly not been paid and the amount, which continues to rise with added interest, is now believed to stand at around £60 million.

Suryen Nullatamby, an Associate with Palmers who specialises in construction disputes, said: “The general advice – for any parties involved in a dispute over unpaid money – is to consider using adjudication as a means of resolving disputes.

“It is fundamental, at the outset, for businesses to have in place a dispute strategy and also ensure that its resources are properly channelled to obtain a quick resolution.

“This includes the selection of experienced representatives and experts for the adjudication, who will be responsive and keen for matters to be resolved proactively, as quickly as possible and with an agile and commercial approach.

“A phone call to obtain appropriate expert advice at the outset of any payment dispute costs nothing, in comparison to the cost of resolving an escalated dispute, as well as avoiding the occurrence of such incidents where contractors take the law in their own hands.”

For advice on all aspects of construction contracts including payment disputes and the adjudication process, please contact our Construction Specialist, Suryen Nullatamby.