171212 To Sarah Green @ Highways England re Kier Rates

12/12/2017 to Mrs S Green
Head of Claims, Recovery and Dart Charge
Highways England
Birmingham B32 1AF

Our Ref: A03A001/L565774

Dear Mrs Green,

On Friday 08/12/2017, I attended Court in respect of a claim Highways England issued in the sum of
about £8,000. We agreed to settle in the sum of £6,000; a 25% reduction.

I took the opportunity to raise the issue of costs with Ms Granville in the presence of counsel for you
and us. I find the situation incredibly straightforward; there are a set of reasonable rates to be
applied and an uplift. As we have demonstrated, Kier Highways are not using the rates (defined
costs) and Highways England are permitting this.

Ms Granville will said (say) defined costs are used and have been supplied I responded:

· a single breakdown has been supplied in respect of an AIW at £58.38 / hour but
· this was contradicted by Highways England being charged £23.71 / hour

the ‘base rates’ of defined cost should be the same. The difference should be the uplift. Ms Granville did not deny the above difference in rates, there was no contradicting my statement,
it was simply ignored.

If Ms Granville’s £58.38 figure is accurate Kier Highways are operating at a loss every hour they are not charging a Third Party, if it is false, how is the conduct other than dishonest?

It is unreasonable, particularly for a Public Authority, to keep secret the schedule of costs you have
agreed and state must be used by Kier Highways Ltd., when charging Third Parties. On the one
hand, you have access to the rates and can / should compare invoices against the list to ensure
there is no overcharging, on the other you prevent Third Parties from conducting the same exercise.
You are now aware, from the outset, Kier Highways ignored the mandated process of charging
Third Parties; 1153 saw overstatement from the start. The current ‘defined costs’ process is
exaggeration in another guise.

It is evident Highways England have done nothing to ‘police’ the environment, that ‘defined costs’
are only used when Highways England are invoiced. I informed Ms Granville (on no less than 3
occasions) that in order to resolve these claims, you only need provided defined costs. I assume
that either Kier or your counsel have brought this to your attention. I add that we also need the
Third Party Claims Overhead confirmed.

With regard to Kier Highway’s contracts, please supply:

1. the defined costs
2. the Third Party Claims Overhead

This request should be considered as made in accordance with the Freedom of Information Act
2000 and as necessary to satisfy pre-action protocols. To cite your own Green Claim manual:

Pre action protocols encourage an early exchange of information to avoid litigation
and support the efficient management of proceedings. The court is unlikely to look
favourably on a situation where by one party would not have brought the case to court
had they been in possession of all the facts, but the other party saw fit to withhold
certain facts. We must disclose any evidence, which either sustains or prejudices our

These claims should not be difficult to reconcile; the ‘rules’ have to a great extent been established
by Appendix A to Annex 23. It is of concern that Highways England are not only assisting Kier
Highways to keep ‘defined costs’ secret, failed to volunteer the existence of Appendix A to Annex
23 and have misrepresented costs (and failed to address the distortion) but are now actively
seeking to recover these excessive sums in Court.

Should a further matter progress to a hearing, despite our best attempts to resolve the outstanding
issues and make appropriate payment, we reserve the right to draw this letter and attachment to
the attention of the Courts.

I have also attached a copy of the email I have today sent your legal team.

Yours sincerely,

12/12/2017 to Mr M. Merrell

Mark Merrell @ shma.co.uk

Your Ref: letter 30/11/2017 Our Ref: A03A001/L565240

Dear Mr Merrell

I refer to your 30/11/2017.

It is surprising that, in light of an open offer to seek resolution of outstanding claims on behalf of your
client, you should respond by confirming that you have been instructed not to enter into any
communications with us. Hardly pursuing the over-riding objective of civil procedure rules, is it?
The full sentence you have cited was:

“There will be no change in our conduct until such time as you and your client stop
presenting spurious charges and start to act honestly.”

You cite the previous correspondence from April 2017. In the meantime, you will have noted the
significant change in factual circumstances whereby your client has acknowledged that, in broad
terms, the defences put forward by the insurers upon whose behalf we act, have merit.

In particular, the admission that the charging schedules used to justify the recovery of the original
damage claims ‘was a tender model’ and therefore not the agreed schedule rates, or process, for
recoveries as agreed between your client and Highways England.

Whilst I have noted your previous analysis as to the legal position that provided your client’s rates
are reasonable, they can charge whatever they like, it must now be clear to you that your client’s
principal, Highways England, takes an entirely different view and has now instigated a forensic
examination of such conduct by KPMG.

If you still maintain your legal argument, why has there been reference to Appendix A to Annex 23
of the contract unless it governs such recoveries? All that we propose is that the rates and conduct
your client agreed are applied to claims to arrive at a ‘reasonable’ figure for settlement negotiations.

Yours sincerely,