200510 Kier’s Latest Profiteering Process

‘When the money keeps rolling out, you don’t keep books
You can tell you’ve done well by the happy, grateful looks
Accountants only slow things down, figures get in the way
Never been a trader loved as much as Kier Highway …’*

More costs, less evidence to support claims appears to be the latest approach by Kier Highways … backdated to 07/01/2019 … but why this date (authorised users read more here). 

Highways England and their contractor have agreed to Deeds of Variation in Areas 3 and 9 (but not 6&8?) which see substantial costs increases to Third Parties only:

16/03/2020 From Alex.Bingham [@] highwaysengland.co.uk

I refer to your emailed complaints dated 25th and 28th February. These complaints concern the methodology used by Kier Highways to price unscheduled damage claims, and what you consider to be their failure to comply with the contract. You refer, in particular, to their failure to comply with Appendix A to Annex 23 of the Area 9 contract. This response is intended to cover both complaints given the similarity of the issues raised. 

Please note that these provisions ( Appendix A, Annex 23) have been superseded and no longer apply. Kier Highways now price unscheduled damage claims using a fixed schedule of charges, derived from first principles using the Construction Industry Joint Council (CIJC) Working Rule Agreement and Civil Engineering Contractors Association (CECA) Schedules of Equipment Rates. These are both nationally recognised standards.

Kier Highways have our agreement to adopt this approach. The invoices they send will now be accompanied by a statement detailing the resources and associated rates which have been applied. Further details concerning these changes will shortly be provided by Kier Highways in their updated guide to insurers.

These changes do not affect any cases where legal proceedings have already been issued. These have been priced using the procedure set at Appendix A to Annex 23. This includes the cases before Cardiff County Court to which you refer.

On the basis of the above, we do not intend to take your complaints any further. Of course, should you wish to dispute liability or quantum in relation to any claim, you have recourse to the Courts.

We have handled your correspondence in accordance with the first stage of Highways England’s complaints process. For further details, please see here.

We believe the statement Cardiff County Court cases have been:

‘priced using the procedure set at Appendix A to Annex 23’

We believe to be a misrepresentation. To date, whilst we have asked the Authority to substantiate Mr Bingham’s statement (above), their response has been:

I can confirm, in accordance with Section 1(1)(a) of FOIA, that we do not hold this information.

We sought further information from the Authority by use of FoIA.  Whilst the Authority is still attempting to keep information secret citing ‘legal privilege’, refusing a request in accordance with Section 42 of FOIA, a stance we will challenge, they have written:

However, I can offer an explanation of the reasons for this decision. Kier Highways Ltd is the contractor under the ASCs for both Area 3 and Area 9. The two contracts contained differing contractual provisions and both parties felt it necessary to take steps to bring the contracts into alignment. The deeds of variation achieve this.

The process provided an opportunity to ensure that both contracts reflected the legal basis for the recovery of damages as confirmed by the Court of Appeal in the case of Coles v Hetherton.

…the case of Coles v Hetherton confirmed the legal basis for recovery of damages and the amendments were made with these provisions in mind. The case established that a Claimant is entitled to recover the diminution in value of the chattel that has been caused by the negligence of a tortfeasor. It was stated the diminution in value of the chattel or reasonable cost of repair will always be a question of fact for the trial judge to determine if it is in dispute.

A copy of the judgement is attached for reference. This approach and the use of national standards as an approach to establish reasonable costs was subsequently followed in the case of Highways England v Peter Michael Hughes.

Appendix A to Annex 23 no longer applies in Area 9 ASC because it was removed by a deed of variation which was properly agreed to and executed by the parties

The parties to the contract are Highways England Company Limited and Kier Highways Limited. No insurance company is party to the contract and none of the agreed terms of the contract are binding upon them. If an insurer wishes to dispute liability or quantum on a claim, then they are entitled to do so and have recourse through the Courts should the matter be incapable of resolution. As stated in the Court of Appeal it will then be for the Court to determine the correct measure of diminution in value or the reasonable cost of repair. An insurer will be bound by a Judgement of the Court.

These changes apply to below threshold damage repair claims. There have been no changes for above threshold claims. As previously explained at considerable length, Highways England seek to recover most of its actual cost of repairs from negligent parties. Highways England are subject to the same legal tests as any other Claimant when pursuing a claim for damages.

Appendix A to Annex 23 was not part of Area 3 ASC. Appendix A to Annex 23 in Area 9 ASC ceased to have effect from 7th January 2019.

*variation upon And the Money Kept Rolling In (And Out)
Andrew Lloyd Webber