Amey Birmingham Highways Ltd v Birmingham City Council

A contractual dispute-resolution clause limits the court to questions of law arising from the dispute referred to adjudication. On a de novo construction of a complex PFI agreement, the scope of core investment works and the obligation to update a Project Network Model depended on the express contractual language and the agreement read as a whole. The Project Network Model formed the base or reference system for other data, but the contract imposed no general obligation to update it with all survey and inventory data. The Pavement Management Model, not the Project Network Model, was the vehicle for processing survey data and calculating condition indices. Commercial common sense cannot justify departing from clear language or rely on events occurring after contract formation. The adjudicator’s declarations and consequential recalculation order were therefore wrong and non-binding.

Birmingham City Council referred three issues under a 25-year highways PFI agreement to adjudication: the scope of Amey Birmingham Highways Ltd’s core investment works, whether it had a general obligation to keep the Project Network Model updated, and whether completion certificates for Milestones 6 to 9 should be set aside. The adjudicator decided that the works extended to the actual Project Network, imposed a general updating obligation, set aside or reopened the certificates, and ordered recalculation of the relevant indices.

Amey brought proceedings under the contractual mechanism permitting the courts to determine questions of law. The court considered the dispute afresh, while limiting itself to the issues actually referred.

1. Jurisdiction. The contractual mechanism permitted the court to determine questions of law arising from the adjudicated dispute, but not new or wider disputes. The court’s task was de novo construction of the Project Agreement, not an appeal on fact.
2. Construction of the scope of works. The adjudicator’s reasoning based on the definition of Road Section Length was unsustainable. The Project Agreement’s detailed provisions, especially Schedule 2 and the definitions used in the condition-index calculations, showed that the Project Network Model had a defined and limited contractual function. The court therefore declined to grant the declaration that the core investment works were extended beyond the contractual PNM-based scheme.
3. Updating obligation. Clause 19.2.1 required accurate updating of the Project Network Model in accordance with Performance Standard 8 and required the information in it to be up to date. Read with the detailed Schedules and Method Statements, those words did not impose a free-standing obligation to back-engineer all survey and inventory data into the PNM. The Pavement Management Model was the contractual vehicle for storing and processing survey data and calculating the condition indices. The PNM was the base against which data was referenced and was updated in the specified circumstances under Schedule 2, Part 8.
4. Certificates. The challenge to Milestone Certificates 6 to 9 depended on the correctness of the declarations on Issues 1 and 2. Once those declarations were rejected, there was no basis on the issues referred for setting aside the certificates.
5. Relief. The court declared that the adjudicator’s decision, summarised in paragraph 195(1) and (2), was wrong and was not binding. It refused wider declarations concerning the complete operation of the PNM, and the stayed restitution or implied-term claim required further consideration.

This was a first-instance determination of questions of law arising from an adjudicator’s decision under the parties’ contractual dispute-resolution clause. The court declared the relevant parts of the adjudicator’s decision wrong and non-binding.