191211 Exaggeration & Misrepresentation – Balfour Beatty Mott Mac Donald (BBMM) / Area 10 Rates

11/12/2019 to  Jim O’Sullivan @ highwaysengland.co.uk
cc: Tim Reardon @ highwaysengland.co.uk & Colin Matthews @ highwaysengland.co.uk

Dear Mr O’Sullivan,

Exaggeration & Misrepresentation – Balfour Beatty Mott Mac Donald (BBMM) / Area 10 Rates
Example – Your ref: HE 112/010/SG504

I wrote to you 27/03/2019 (attached) being concerned about rates presented by your contractor in Area 10. 17/04/2019, I received an email from Tim Reardon (attached).

However, I am presented a contradiction:

  • It is claimed by Highways England there is no schedule of rates in Area 10 for unplanned / emergency work.
  • It is said by BBMM there is a schedule of rates in Area 10 for unplanned / emergency work.

Who is providing an accurate account, how are the above statements reconciled?

In 02/2018, your witness, Mr Ellis, a quantity surveyor for BBMM, gave evidence before HH Godsmark progressed in the name of Highways England. You possess a copy of the Judgement but I have reproduced it here ‘15/02/2018 Derby County Court BBMM for Highways England

In Area 10, BBMM use CECA rates below threshold when billing Third Parties (TP) these rates are substantially higher than others we encounter. It is apparent HH Godsmark wished to consider the appropriateness of CECA by comparing them to another schedule. The Judgement contains the statement ‘The only one suggested is the £10,000 + repair regime rates …’

HH Godsmark was informed:

1. There is a schedule of rates, HH Godsmark recording ‘BBMM do have agreed rates with Highways England for repairs where the total is over £10,000.’

But it was claimed:

2. These rates are subsidised. Mr Ellis stated ‘the £10,000 + rates were negotiated prescribed rates which were in part subsidised by the lump sum paid under the agreement’. HH Godsmark accepted Mr Ellis’s evidence that the £10,000 + repair rates are subsidised in part by the lump sum payment[1]

‘1’ above contradicts your position, that there is no schedule. To what is Mr Ellis referring? I have sought the schedule Mr Ellis refers to, the schedule held by BBMM, at the very least, on behalf of HE. To date this has not been produced by BBMM or HE.

‘2’ above is contradicted by an FoIA response HE has provided; there is no subsidy associated with above-threshold rates. The subsidy relates, as we have always understood (logically) to those incidents where a culprit is not identified – obviously not the case in the matters we handle.

The Judge also noted that ‘2’ jarred with Mr Ellis’ witness statement:

“Whilst still defined by the contract as part of the lump sum duty, no payment is made within the lump sum to cover the repair costs incurred due to third party negligence”.

Who is providing an accurate account? Has Mr Ellis misled the Court?

I am seeking clarification of the situation; which statements (at ‘1’ and ‘2’ above) are correct and why are we being provided contradictory responses? The existence of contradictions reflects poorly on HE, it gives rise to suspicion, surely something you are keen to address.

HH Godsmark’s Judgement states:

It would be odd if a tortfeasor was liable to Highways England for diminution in value of a damaged chattel in one sum if sued by Highways England itself and in a different sum if sued by Highways England via BBMM. Accordingly, I find that clause 87.2 authorises BBMM to claim in the name of Highways England the sum which Highways England could recover from the tortfeasor.

However, if HH Godmark was misled, misinformed, if there is no subsidy of the rates, the above threshold charges are appropriate and by reference to the above, the sum to be claimed should be based upon these.

Please confirm you will put a stop to the exaggeration and misrepresentation with immediate effect and ensure BBMM:

1. Apply actual costs
2. Provide the schedule of rates to which they are referring.

When is the greater transparency around repair costs going to occur?

Yours sincerely

Philip Swift

[1] Judgement statements – Case No: C08YP765 IN THE COUNTY COURT AT DERBY 13/04/2018

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16/12/2019 From: Tim  Reardon @ highwaysengland.co.uk>
Cc: Jim O’Sullivan @ highwaysengland.co.uk, Colin Matthews @ highwaysengland.co.uk  & Alex Bingham @ highwaysengland.co.uk

Extract from response insofar as it relates to Area 10: 

Jim O’Sullivan has asked me to reply to your email below as well as your further email of that date in respect of BBMM rates on Area 10.

Taking the latter first, and in particular the witness statement of Luke Ellis, he expressly states that the Area 10 ASC does not contain any schedule of rates for calculating the costs of repairing damage caused by negligent third parties when the repair cost is less than £10k.

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28/12/2019 – response to Highways England:

Dear Mr Reardon,

AREA 10

As you acknowledge, ‘Luke Ellis, expressly states that the Area 10 ASC does not contain any schedule of rates for calculating the costs of repairing damage caused by negligent third parties when the repair cost is LESS THAN £10k’. We are in agreement upon sub-threshold rates however, this is NOT the issue I raised. I am seeking the ABOVE-threshold schedule of rates Mr Ellis, who I understand handled the pricing, presentation and issuance of BBMM invoices on a daily basis, stated exist.

The Judge is specific:

A. Mr Ellis ‘was asked why the same rates which were used in pricing repairs of over £10,000 could not be used. His response was that the £10,000 + rates were negotiated prescribed rates which were in part subsidised by the lump sum paid under the agreement.’

There is no subsidy.

B. ‘I also accept Mr Ellis’s evidence that the £10,000 + repair rates are subsidised in part by the lump sum payment in the sense that I have set out above.

C. They are to that extent artificial in that they do not stand alone as representing the price of repair.

D. They are in effect preferential rates which BBMM has negotiated with Highways England. BBMM is not obliged to charge those rates to anyone else.

E. In order to reject the use of CECA Dayworks rates in pricing this repair I would have to have some alternative measure to apply. The only one suggested is the £10,000 + repair regime rates and I have already accepted that they are artificial in that they are partly subsidised by the lump sum.

F. An alternative measure based on the rates agreed between BBMM and Highways England for more extensive (over £10,000) repairs is subject to the criticism that those rates are subsidised by the lump sum element of the contract between Highways England and BBMM.

The Judge added ‘No-one can suggest anything else’. There was no need to suggest anything else, the above-threshold rates could have been used but the Judge was misled into believing the rates were subsidised. It is, therefore ‘odd’ that a Third party is

  • liable to Highways England for diminution in value of a damaged chattel in one sum if sued by Highways England itself and
  • in a different sum if sued by Highways England via BBMM.

Our quest is for a reasonable cost of repair, not the cost which is most advantageous to the tortfeasor, or the owner. The issues arising from the Judgement are therefore:

  • It is odd that a Third Party is liable to Highways England for substantially less if sued by the Authority than by Highways England via BBMM.
  • Your witness has misrepresented facts to the Court

Please confirm you will put a stop to the exaggeration and misrepresentation with immediate effect and ensure BBMM, acting in your name:

1. Apply actual costs
2. Provide the schedule of rates to which they are referring (and hold on your behalf – if you do not possess them)
3. Stop misrepresenting facts to the Courts.

I remind you of my request to Jim 25/03/2019:

I have one favour to ask you – in relation to historic matters, would you be willing to write a letter to us which states that in relation to the scope of authority which you have allowed contractors to pursue DCP claims on your behalf, that the claimed sums should not exceed the sums which Highways England themselves would be charged for those works? In other words, that below threshold rates should not exceed above threshold rates, in any particular region. That single letter will solve a very large number of outstanding historic cases at a single stroke. It concerns the scope of authority which Highways England provide, to pursue litigation in HE’s name. It would also be consistent with the current legal argument/defence being presented that agreed DCP rates do not exist.

When is the greater transparency around repair costs going to occur?

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