201104 Reimbursement of Unauthorised Payments

04/11/2020 to Highways England

Dear Mr Bingham,

Thank you for confirming the DOV does not apply to expired contracts and that the previous contractual limits of your contractors’ scope of authority to pursue recoveries on your behalf.

Given that these contracts have since expired, will you now disclose the relevant schedules of rates as applied to the recently settled matters before Cardiff County Court? I note that the Judge was assured that these did not require judicial scrutiny and could be agreed between the parties. It is only fair that these are now disclosed to others whose cases were stayed.

On a wider point, It is apparent that in:

• Area 6/8 the scope of authority was limited and Kier Highways exceeded this Authority

• Area 9 the scope of authority was limited from 07/2014 until at least 01/2019 and Kier Highways exceeded this Authority

Kier accordingly recovered costs in your name without legitimate authority.

We had in fact alerted you to the conduct in writing since 10/2015. In 06/2017, we met with Highways England presenting the evidence in person. In 11/2017, we repeated the point that Kier were acting other than in accordance with the contract when speaking at length to KPMG who you appointed to audit them (https://www.englandhighways.co.uk/kpmg-overview/ ).

It is unfortunate that KPMG seemingly accepted what they were told by Kier at face value, and therefore the audit has no merit.

Please advise you intentions to carrying out an appraisal with regard to recalculating Area 6&8 claims and pre-01/2019 Area 9 claims, such that over payments can be recovered.

Finally, I would advise that Kier’s appointed solicitors (also your lawyers), Shakespeare Martineau (Corclaim), are still pursuing new and old claims by applying the DOV and ignoring the recent judgment. You have also awarded Corclaim the tender to recover your own above threshold matters. It would appear that they have a conflict of interest; one client (your contractor) instructs them in your name upon an unlawful basis and yet you also instruct them directly, presumably in accordance with the recent determination.

I would welcome your thoughts in this regard.


copy 12/11/2020 & 19/11/2020


Response 27/11/2020:

I refer to your two emails dated 19th November and your subsequent email dated 24th November. Please take this as my reply to the various issues you have raised.

The majority of the ground you cover concerns the recent Judgement given by His Honour Judge Harrison in the case of Highways England v Booth and Another. Please note that this claim was a below threshold matter, where the repair costs were initially estimated to be less than £10,000. As such, Highways England were party to these proceedings in name only. The Judge noted in his decision that our contractor, Kier Highways Ltd, had established the appropriate contractual authority to bring a claim in our name in this way.

It follows that we are unable to comment on the reasons for specific conclusions reached by the Judge on this occasion. We were not represented at the hearing by virtue of being the legal Claimant in name only. Instructions on this litigation were provided by Kier to legal representatives acting on their behalf. We were not privy to these discussions, but we can offer our observations on the Judgement.

Firstly, as we have previously informed you, there is no schedule of rates for damage repair claims that is held either by or on behalf of Highways England. You will be aware that this much was determined by an Information Rights Tribunal by way of decision dated 12th December 2019.

With regards to the Judge’s comments at paragraph 6 (iv) that contractually agreed rates are charged for repairs valued in excess of £10,000, our interpretation is that the Judge may have been referring to the pricing schedule for target costs of schemes, which details the rates offered during contract tender. This seems to be a plausible explanation for the reference as we are aware that this schedule was disclosed for the Area 3 Asset Support Contract during the course of this litigation by Order of the Court. The schedule was been found to be commercially sensitive by an Information Rights Tribunal on 4th December 2018 and, as such, has not been released into the public domain. We maintain that this information is still commercially sensitive. It was only released by Order of the Court for the purposes of this litigation. To be clear, this is not a schedule of rates for damage repair claims.

As previously mentioned, you have correctly identified that the Judge decided, on this occasion, that the changes introduced by the Deed of Variation dated February 2020 did not apply to the Area 6/8 contract as this had already come to an end by the time the Deed of Variation was agreed. As such, the previous, non-amended, version of the contract was held to govern the relationship between ourselves and Kier. This does not alter the fact that a schedule of rates for damage repair claims doesn’t exist. It simply means that an alternative charging methodology for the calculation of damage repair costs was used in the Tesco action.

We do not intend to carry out recalculations of previous claims for Areas 6, 8 and 9 in the manner you have suggested. If quantum is disputed on any current claims, you have recourse to the Court on those matters for which you hold instructions. It will then be for a Judge to determine the appropriate measure of damages and, as previously mentioned, we consider this the appropriate forum in which to resolve any such disputes.

Finally, we reject your assertion that Kier have instructed, or continue to instruct, Corclaim in our name on an unlawful basis. This is not true and is contrary to the recent findings of His Honour Judge Harrison. We also deny that there is any conflict of interest in our own instruction of Corclaim.

Regards,

Alex


04/12/2020 to Alex Bingham @ Highways England:

Dear Mr Bingham

Thank you for your email 27 November 2020.

I would comment that it is certainly very curious you refer to the proceedings as involving Highways England Company Ltd ‘in name only’ when the point I was making was the Court had declared in a previous hearing that it would be very strange if an agent of the claimant could seek damages greater that those which the claimant in person would be able to recover (para. 25 of HHJ Godsmark’s Judgement). In the more recent hearing (HHJ Harrison), the Court went further to say that it is most undesirable that a contractor can set their own ‘market’ rates for recovery purposes.

Additionally, HE’s CEO Jim O’Sullivan was aware there had been various abuses going on, via HE’s agents. Jim was to speak with contractors and sort it out, leading to the application of a schedule of rates for DCP claims by HE, since abandoned. In early 2019, Jim O’Sullivan was not happy with the uplifts but acknowledged what he could do about the uplifts was a moot point; presumably, because you lack control. 18 months later, 08/2020, your/Kier’s witness confessed to Judge Harrison he could find no authority for the uplifts.  But ‘Jim, Tim & Nick’ appear to have missed this despite ‘a lot of effort‘ in late 2016.

Yet rather than address the uplift (and other) issues, you pressed ahead presumably in the hope you could bamboozle Judge Harrison?

Your plausible’ explanation is implausible.  You state:

With regards to the Judge’s comments at paragraph 6 (iv) that contractually agreed rates are charged for repairs valued in excess of £10,000, our interpretation is that the Judge may have been referring to the pricing schedule for target costs of schemes, which details the rates offered during contract tender.

The Judge was considering DCP (damage to Crown property), the specific statement reads:

iv) For repairs valued in excess of £10,000 Highways England are charged by Kier using contractually agreed rates.

What gives you cause to believe the Judge ‘may’ have been referring to rates agreed for pre-planned works or schemes i.e. ‘ASC Rates’? The Judge is referring to REPAIRS, but specifically those ‘valued IN EXCESS of £10,000’.  The £10,000 cited is the threshold for DCP works. 

If ‘the pricing schedule for target costs of schemes’ was commercially sensitive, why would HE go on to derive one and apply it? And why would contractors like Aone+ publish a full schedule which matches exactly the pricing schedule for tender purposes? It is because it is this schedule which is then applied once the tender is awarded. The AOne+ schedule is also applied in accordance with the contract, namely the same published base rate to HE and TP’s, the total divergent due to different uplifts; the Appendix A to Annex 23 process you hid. ,

In the more recent case, it was explained to the Court that a shared computer drive existed as between the contractor and HE for declaration and verification purposes.

To stick to ‘there is no schedule of rates’ is sophistry on your part. I wish to remain polite here, but making artificial distinctions on nomenclature is unworthy of a professional person. Have you made enquiries as to what that shared drive consists, and that that is in itself a disclosable document? Kier clearly possesses a schedule of rates – it is to these that they have applied the unauthorised uplifts we alerted you to years ago.

I am obviously aware of the Information Rights Tribunal decision dated 12th December 2019. However, I have yet to understand how the pain/gain share acknowledged by your witness, Patrick Carney, can be applied in the absence of known rates.  Furthermore, you fail to mention my concerns the CBD appears to have been tampered with; references to schedules of rates utilised by Kier i.e. ‘held on behalf of HE’, removed.

Finally, in relation to expired contacts dating back to 2014, can you please explain to me why the historic ‘pricing schedule for ‘target cost of schemes’ remains commercially sensitive when the whole basis of the contractual relationship with your contractors has moved away from an ASC (asset support) basis to AD (asset delivery) maintenance and repair model where HE undertakes the recoveries directly, without any above and below threshold distinction?

I look forward to hearing from you

Philip Swift