Amey has been ordered to pay £9.5M to Herefordshire District Council (HDC) in a dispute over roadworks payments and the amount these were increased to take inflation into account.
The judgement was made by Justice Fraser in the High Court’s Technology and Construction Court on Monday (3 October). The case was to decide whether a previous adjudication, called the Molloy Decision, was enforceable. HDC said it should be enforced, Amey Wye Valley Limited said it was not enforceable because of inconsistencies with an earlier adjudication and a calculation error.
The issue at stake was a service delivery agreement between the council and Herefordshire Jarvis Services, which was subsequently taken over by Amey. The contract was for works to highways and roads, and ran for 10 years between 2003 and 2013.
The agreement included a mechanism for rates to be adjusted to account for inflation, therefore ensuring Amey would be remunerated at rates relative to the current market for work throughout the duration of the contract. This was done using the Retail Price Index.
The Molloy Decision found that the council had overpaid Amey for works during the contract period by £9.5M. Overall, the 10-year term saw Amey paid £204M.
Justice Fraser concluded: “HDC is entitled to summary judgment for the full amount of the Molloy Decision, as adjusted for interest, in its Part 7 proceedings. The Part 8 proceedings brought by Amey fail, and Amey is not entitled to any of the declarations sought in those proceedings.”
After the hearing, a spokesperson for Amey said: “This case is extremely complex so we’re in the process of going through Monday’s High Court judgement to ensure we fully understand the implications and any potential next steps.”
Herefordshire Council said it was pleased with the ruling.
“Our contract with Amey ran from 1 September 2003 to 31 August 2013 and we have been taking action to resolve a range of disputed matters since 2012,” said a spokesman.
“This particular ruling relates to the amounts paid for inflation. It is the culmination of a dispute resolution process as set out by the contract and legislation. The council has, in line with proper contract management principles, made payments to Amey in accordance with our contract, until the dispute is resolved.
“We shall continue to take all reasonable steps to resolve all remaining matters, acting in the interests of the council and the people of Herefordshire. Given that those matters are yet to be determined, we do not wish to comment further.”