High Court backs Liverpool City Council Highways team in contract dispute

Liverpool City Council has scored a victory in the High Court in a contract dispute with a collapsed contractor over payment for temporary fencing.

An adjudicator had initially ordered the local authority to pay Vital Infrastructure Asset Management (VIAM) £128,500, plus interest and fees, for maintenance of fencing.

The decision was made a day after the firm went into administration last summer – leaving almost £5 million of work incomplete on five road schemes across the city.

The council refused to pay and made an insolvency application seeking permission to bring proceedings against the firm over the judgement.

Following a hearing at Manchester High Court, His Honour Judge Stephen Davies, has ruled the adjudicator conducted the adjudication in a procedurally unfair manner.

The judge found the conduct of the adjudication to be a “fundamental departure from the obligation to follow a fair procedure” because he had decided that the council had agreed the existence of a typographical error in the contract – when the point was neither argued by VIAM nor conceded by the council, and nor was there any evidence to that effect.

Judge Davies added: “He has not, in his supplemental observations, been able to explain in any way which I regard as convincing on what basis he considered that he was entitled to reach the decision he did without allowing LCC the opportunity to address him on the point.

“He has not been able to suggest that these departures from natural justice have had no practical adverse effect upon LCC. Indeed, it is apparent that LCC has lost the opportunity to have the substantive arguments which it did put forward determined by him and there is no suggestion or obvious basis for my concluding that these arguments were incontrovertibly misconceived.”

The council was represented by DWF Law LLP’s specialist Construction & Infrastructure Disputes Team.

Cabinet Member for Climate Emergency, Transport and Environment, Cllr Dan Barrington, said: “I am pleased that the High Court has ruled in the council’s favour.

“It would have been grossly unfair for Council Tax payers to have had to stump up this money when VIAM had gone into administration, leaving work unfinished across the city.

“We are determined to get best value for residents and challenge contractors if we believe they are acting unfairly.”

Karen Agbabiaka, Interim Chief Highways Officer, said: “It was important that we challenged the adjudicator’s decision because we knew that the decision was fundamentally unfair.

“This is all part of our new approach to setting up and managing contracts, resetting our relationship with contractors so that we get a fair deal.”

The full judgement can be read at https://www.bailii.org/ew/cases/EWHC/TCC/2022/1235.html.

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