Deceitful Profiting From Misery

Highways England has enabled, if not permitted, contractors to take advantage of those who cause damage to the SRN … whether at fault or not.  A prime example of this strategy can be seen below, involving Highways England and their appointed contractor Kier Highways.

We believe there exists agreed set of rates or at the very least a schedule held by the contractor and likely the Authority,  utilised by Kier in Area 9 (and BBMM in Area 10) to bill Highways England. After all, if you appoint contractors to repair and maintain your highways upon an exclusive monopoly basis, you really ought to know what they might charge you! 

An agreed set of rates is a basic consideration and failing to include these (if true) on every ASC (contract) since 2012 appears negligent at best.  Yet, Highways England will now (post 12/2018) say a schedule of agreed rates does NOT exist, that they “overlooked” agreeing on costs for repairs following DCP (damage to Crown property) and only settled on ‘scheme or planned works’ prices – no rates for emergency works.

Furthermore, Highways England has been charged ‘actual rates’ for attendance and repairs since 2012 in Area 100 and since 01/07/2014 in Area 9.  The Authority know the actual rates they also know that Kier should have been charging Third Parties using these same ‘mates rates’, but never have.  

So that it is one rule for Highways England, and anything goes for that contractor charging anyone else, using Highways England’s name.

We find the not held’ statements unlikely in the extreme and contrary to all pre-2019 factual documents and information provided.  Originally (2013 to 12\2018), HE identified DCP rates were ‘commercially sensitive’ (and therefore not subject to any public disclosure) – we remain bemused; how is something that does not exist confidential?

When this excuse was challenged, Highways England denied a request for information citing ‘vexatious’.  No mention of ‘not held’ but £1,000’s of taxpayers money spent on lawyers to protect this imaginary rate data.

‘Vexatious’ was dismissed by a Tribunal who found against the Authority.  The Court also criticised them for not following the law adding the request for information was of merit.  But instead of releasing the rates, the Authority changed tack and said the information was ‘not held’.  They still have not disclosed the information they wanted to withhold, by claiming that it never existed in the first place. Wonderful!

To give some more history:

  • 01/07/2014, Kier Highways Ltd, then EM Highways Service Ltd., were appointed to Area 9 and their attendance charges to a Third-Party for a DCP incident sub-£10k increased from £125 (2013) to £2,700 due to adopting a contract non-compliant process we refer to as ‘1153’. 

Whilst Highways England looked after themselves, agreeing on inflationary increases … a couple of per cent, a Third Party saw an increase of over 2000%

This possibly looked enticing to Kier who acquired EM Highways mid-2015.

1153 was the figure Kier used to recover their entire overhead, being the supposed total number of claims occurring each year.  So each incident was charged 1/1153 of a very big number. The fact that the actual number of claims per annum was many more thousands seems to have evaded Kier and Authority audit processes. A nice little earner.

The contractual agreement with Highways England, at Appendix to Annex 23, sets out in clear terms the maximum a Third Party was to pay; defined cost (£) + uplift percentage (25.29%). But Kier never complied with this, the Authority did not enforce it and both parties never referred to the Appendix, which was an agreed cap upon recoveries from third parties for DCP claims.  This small section of the contract seemingly intended to stop Third-Parties being excessively charged was kept from the very people who needed it Kier and the Authority.

1153 was an abuse resulting in gross exaggeration (5-fold at least) of the actual costs of repair incurred and a duplication of some payments the Authority was already making to Kier.

  • 10/2015, we had undermined 1153 to such an extent, it was unsustainable and Kier replaced the process with another speculative process which inflated costs so as to make a hidden profit. To these high costs Kier then applied uplifts or multipliers on operatives rates of 50% after 5pm of a weekday claiming these were rates paid to the 9-5 employees.

Firstly, they were not paid these uplifts, secondly, the operatives worked shifts. I obtained this information by contacting operatives employed by Kier, asking if they really were paid the uplifts and £70,000+ each year.

Having raised the issue of these multipliers being charged by Kier as a cost but one which they did not incur ‘undoubtedly fraud’ is one response received.

Whilst individual claims may not amount to a significant sum to interest Third Parties or Police authorities when multiplied across tens of thousands of claims, it certainly does add up!  Between 07/2014 and 10/2015 we estimate Kier fleeced TP’s by £10million+. The Authority will claim TP claims are a small part of their business as though to dismiss concerns however, Kier’s profit for the aforementioned period was about the same sum.

  • 03/2016, we were again at loggerheads with Kier; their new process was clearly exaggeration in another guise.

Kier placed all matters with Corclaim. Proceedings began to be issued so as to bully insurers into making payments.

  • 01/2017, at a hearing, we noted a Kier exhibit included Appendix A to Annex 23 – the cat was out of the bag; we now knew there was a contractual mechanism by which a TP was to be charged ‘no more than’ what HE was charged for identical work, plus an agreed percentage uplift.

This was the scope of authority provided to Kier to recover claims in HE’s name.  Kier acted outside this scope, HE was not interested.   It appeared Kier subsidised their general overheads, by ripping off TP motorists (or their insurers) unfortunate enough to be involved in an accident where damage to highway infrastructure occurred.

  • 21/06/2017, I met Mrs Green of HE, the soon to be head of claims and conveyed contract non-compliance and fraud.

The intention was to undertake an audit of Kier and to approach Corclaim.

28/09/2017, Mrs Green explained CorClaim were not corresponding with her but attempted a conference call the day Kier claims manager had apparently been ‘most abusive’ to Mrs Green and sent abusive texts. Corclaim were told they had ample opportunity to speak to me and resolve some issues, they had not done so the Authority would go through the audit. KPMG were appointed.

  • 20/10/2017, Mrs Green informed us (in writing) all new claims or claims where proceedings haven’t been issued are on hold. Corclaim had been informed of this moratorium.

But Corclaim kept on issuing proceedings seemingly upon Kier’s instructions, contrary to the Authority’s instructions.

  • 28/02/2018, Mrs Green initially informed us Corclaim were instructed by Kier but acknowledged she was wrong having had ‘legal check it out’; Corclaim acted for HE.

We explained Corclaim were not doing as they were told (by Highways England.  Mrs Green was ‘fully aware of that’ and when we asked ‘Why?’, Mrs Green did not know.

There are currently matters before Cardiff Court (awaiting judgement) involving Kier, HE and Corclaim. HE tells me the claims were priced using Appendix A. This is untrue.

Kier Highways have never complied with Appendix A to Annex 23 which is simplicity; use the base rate or actual cost of an item and add an uplift. The base rate should have been the same to the Authority and a Third Party.  It is the uplift that differs.

Courts have been advised the process was complied with, it was not.

All the Authority had to do was instruct their appointed contractor Kier to ‘abide by the agreement’ and TP’s would be billed fairly, reasonably in the same manner as the Authority and in compliance with the contract. But they did not.  No-one stopped the contract non-complaint exaggeration or fraud. Rather than have Kier comply with the agreement … 

  • 2020, Highways England changed the agreement to assist Kier approving a set of rates the Authority would never pay but which would be applied to Third Party DCP claims as ‘fair and reasonable costs of repair’.

This appears to be a classic case of the fox being in charge of the chicken run.

  1. On the one hand, the Authority state they are charged ‘actual cost’ (as evidenced by their online statement after the failure of their ‘Nationwide Schedule’, the NSoRC
  2. on the other, despite knowing these costs, utilising them historically and currently, they have permitted Kier to charge using another, higher schedule of rates, which in a competitive tender situation would NEVER be accepted.

It will also be noted that clearly HE must know what ‘actual costs’ are now and before the NSoRC, (pre-24/06/2019), as the Authority has written at the above link

‘We will revert to pursuing claims based on the actual cost of carrying out the repairs …’.

Yet, Highways England has assisted Kier to operate differently and contrary to another Judgement they cite, that of HHJ Godsmark:

‘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 (a contractor)’

AGREEMENT CHANGE

  • Who was behind the agreement change; was it Kier?
  • Were Corclaim involved in drafting the Deed of Variation upon the basis that it strengthened their disingenuous claims against third parties?
  • Did HE recognise that Kier had been acting without authority previously over a number of years?

PROFITING FROM CLAIMS

Corclaim cite ‘Coles vs. Heatherton’ when pursuing claims. Corclaim wrote on-line about ‘Coles’ but subsequently removed the post ‘Subrogation Ruling Creates a Moral Dilemma’. It can be read here.

It appears Coles creates no moral dilemma for Highways England – it provides a legal argument to justify historic conduct, but it only works if the historic facts concerning actual rates agreed with HE are suppressed. If such information was released, it would be clear that the ‘fair and reasonable’ schedule of costs applied by Kier are anything but fair and reasonable and the contract was ignored from the start.  ‘Coincidentally’ Kier failed to comply with the contract and Highways England failed to note or publish the relevant section of the contact enabling Kier to operate with impunity – until Appendix A materialised.

The conclusion is that the tail is wagging the dog. Highways England are ineffective at controlling their appointed contractors and now appear to collude and suppress historic information which if revealed would further expose them as being incompetent at discharging the public duties asked of them by Parliament.

Compromised with regard to DCP works, what of schemes and planned works in which the contractor is involved?