David Streatfeild-James QC and Andrew Fenn win for Connect Plus in M25 dispute

31st Jan 2018

Following a costs hearing on 19 March 2018, the Court confirmed that Connect Plus (M25) Ltd was the successful party on the central issue in dispute in a complex case concerning the M25 – Connect Plus (M25) Ltd v Highways England Company Ltd [2018] EWHC 140 (TCC) (31 January 2018).

Connect Plus (M25) Limited (CP) is a company created for the purposes of entering into a 30-year, £6.2 billion PFI contact related to the M25 by a consortium comprising Balfour Beatty, Skanska, WS Atkins and Egis. The Design, Build, Finance and Operate (DBFO) Contract was originally undertaken with the Secretary of State for Transport and was statutorily transferred from the Secretary of State to Highways England (HEC).

Under the DBFO Contract, CP undertook to carry out the design and construction of the widening of sections of the M25 London orbital motorway, refurbishment works, network improvement and safety schemes, and operation and maintenance of the motorway. CP is entitled to a net monthly payment from HEC, calculated by reference to a series of adjustments made to the gross monthly figure. The adjustments include a “Critical Incident Adjustment” which provides for adjustments in respect of the time taken for CP to respond to and manage unplanned events, and which can result in the payment of a bonus, or a deduction from monies otherwise due. The central dispute between the parties was whether the declaration of a Critical Incident is a matter of subjective discretion or based on objective criteria:

(1) CP’s position was that incidents falling within a “deemed” list of Critical Incidents in the Network Management Manual (NMM) are required to be declared as Critical Incidents for the purpose of the DBFO Contract.

(2) HEC’s case was that the Secretary of State has a general discretion to declare Critical Incidents, and that incidents falling within the deemed list in the NMM are not required to be declared as Critical Incidents.

Both parties sought declaratory relief accordingly.

CP advanced various alternative arguments to the same essential outcome: that the Secretary of State (or someone on his behalf) was required – either pursuant to an administrative agreement (Issue (ii)), or pursuant to a settlement (Issue (iii)), or as a result of an estoppel (Issue (iv)) – to declare incidents in the deemed list in the NMM as Critical Incidents.

The Court held that the declaration of a Critical Incident is required if an event falls within the “deemed” list (Judgment Paragraph 112); but that that list is not closed and an event will also be a Critical Incident if it falls within the general definition set out in the introductory part of paragraph 7.3.2 (Paragraph 113). The Court held that the alternative arguments put forward by CP were not established.

Following the Judgment both parties argued that they were the successful party and sought an order for costs. At a hearing on 19 March 2018, the Court confirmed that Connect Plus was the successful party on the central issue in dispute and made an order for costs against HEC.

David Streatfeild-James QC and Andrew Fenn (instructed by Pinsent Masons LLP) for the Claimant.

To view the full judgment please click here.

31 January 2018

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