Amey Birmingham Highways Ltd v Birmingham City Council [2016] EWHC 2191 (TCC)

“8. Pursuant to the Project Agreement, the Claimant undertook to provide the Services from the Service Commencement Date for the remainder of Contract Term, which runs to the 25th anniversary of the Planned Service Commencement Date (7 June 2010). The Services were defined as: "the works and services which are necessary for the Service Provider to undertake (or to procure the undertaking of) in order to comply with the provisions of schedule 2 (Output Specification) and the other provisions of this Contract". 9. Schedule 2 of the Project Agreement is divided into 11 parts. Parts 1 to 10 set out 11 Performance Standards: Part 1 contains Performance Standard ('PS') 1A and PS 1B. Parts 2 to 10 contain PS 2 to PS 10 respectively. 10. Part C of the Project Agreement (clauses 9 and 10) relates to the Core Investment Period. Clause 9 sets out 10 Milestones; and clause 9.1 sets out the Planned Milestone Completion Dates… [which are then set out] The period of time between the Service Commencement Date and the date on which a Certificate of Completion for Milestone 10 is issued (or the Claimant is deemed to have achieved Milestone Completion in relation to Milestone 10) is described as the Core Investment Period or CIP. 11. PS 1A (in Part 1A of Schedule 2) relates to the works to be carried out by the Claimant during the CIP (also defined as the Core Investment Works (or "CIW")). PS 1B (in Part 1B of Schedule 2) relates to the works to be carried out by the Claimant after the CIP. PS 2 to PS 10 (in Parts 2 to 10 of Schedule 2) relate to works to be carried out by the Claimant both during and after the CIP, throughout the whole of the Contract Term. The contractual definition of the Core Investment Works is as follows: "those works and/or services to be carried out (or procured to be carried out) by the Service Provider in order to meet the requirements of part 1A of schedule 2 (Output Specification) during the Core Investment Period". 12. Pursuant to clause 45 and the Payment Mechanism in Schedule 4, the Claimant is to receive Monthly Payments from the Defendant. Central to the quantification of these is the Monthly Unitary Charge (or MUC) which is to be calculated in accordance with paragraph 1.4 of Schedule 4. Central in turn to the quantification of the MUC is the Monthly Adjustment Factor (or MAF). Pursuant to paragraph 1.6 of Schedule 4, the MAF is calculated by reference to the Milestone step-up set out in Table 1 in Schedule 4. Pursuant to clause 9.2 and Schedule 4, where the Independent Certifier has issued a Certificate of Completion in respect of a Milestone pursuant to the provisions of clause 12 that Milestone shall, from the relevant Milestone Completion Date, be taken into account for the purposes of calculating the Milestone step-up (and hence the MUC). There are similar provisions relating to Certificates of Partial Completion. In simple terms, the Milestone step-up (and hence the MAF and in turn the MUC) increases as more Milestones are certified as complete by the Independent Certifier. 13. Pursuant to clause 13.2.2, the Independent Certifier is to assess whether Milestone Completion or Partial Milestone Completion has been achieved by the Claimant. Milestone Completion is defined as, in respect of each Milestone, 'the completion (or deemed completion) pursuant to clause 9.4.4 and 9.4.7 (as applicable) by the Service Provider of the Services necessary to meet both the relevant Milestone Completion Criteria, the relevant Targets for Milestone Completion in all Districts and the requirements of part 2 of schedule 2 (Output Specification). The Milestone Completion Criteria are set out in Schedule 15 and refer back to the Milestone District Target Tables in PS1A; and the Targets for Milestone Completion are likewise set out in PS 1A. Thus, Milestone Completion (to be certified by the Independent Certifier) is defined in large part by reference to the requirements of PS 1A. 14. Also pursuant to clause 13.2.2, the Independent Certifier, having assessed whether Milestone Completion or Partial Milestone Completion has been achieved, must, within 10 Business Days of the date of assessment referred to in clause 13.2.1, issue to the Claimant a Certificate of Completion, a Certificate of Partial Completion or a Certificate of Non-Completion. In the latter two instances, the certificate is to specify the outstanding matters that must be attended to before a Certificate of Completion (or, in the case of a Certificate of Non-Completion, a Certificate of Partial Completion) can be issued. 15. Clause 13.4.1.1 provides that the Milestone Completion Date shall be the date upon which the Certificate of Completion is issued for that Milestone, provided that if a Certificate of Completion is issued before the relevant Planned Milestone Completion Date, the Milestone Completion Date shall be the same as the Planned Milestone Completion Date. … 17. The Milestone District Targets are set out in detail in paragraphs 1.4 to 1.13 of Part 1A of Schedule 2 (for Milestones 1 to 10, respectively). For the purpose of these proceedings, the most important elements of those targets are the targets in relation to the condition indices. The following condition indices are of particular relevance: (1) the Network Condition Index or NCI which means the index representing the condition of RSLs (which term is explained below) in the Project Area; (2) the Footway Condition Index or FWCI which means the index representing the condition of Footways in the Project Area; (3) the Verge Condition Index or VGCI which means the index representing the condition of Verges in the Project Area; (4) the Kerb Condition Index or KBCI which means the index representing the condition of Kerbs in the Project Area; (5) the Cycle Track Condition Index or CTCI which means the index representing the condition of Cycle Tracks in the Project Area. Detailed rules are set out in Schedule 2 (and in particular Part 11 of Schedule 2) as to how these indices are to be calculated. 18. By way of summary only: (1) There are 4 separate NCI calculations for Carriageways: for NCImain (which relates to the Strategic Route and Main Distributor Network); NCIsec (which relates to the Secondary Distributor Network); NCIlink (which relates to the Link Road Network); and NCIlocal (which relates to the Local Access Road Network). NCImain is calculated by reference to three other indices: the Pavement Condition Index or PCI; the Skid Resistance Index or SRI; and the Surface Condition Index or SCI. ... Each of those indices is to be calculated in respect of, and by reference to a Road Section Length or RSL. This is defined as follows: "the individual section lengths of a Project Road between consecutive nodes in the Project Network Model". (2) There are 2 separate FWCI calculations ... which relates to the Prestige, Primary and Secondary Footway Network ... and […] the Link and Local Access Footway Network. Each of those indices is to be calculated in respect of, and by reference to, a Footway Section Length or FSL […] This is defined as: "a length of Footway associated with a Road Section Length for an individual cross sectional position identified in the Project Network Model". (3) VGCI ... is calculated in respect of, and by reference to, a Verge XSP Length. This is the same as a Verge Section Length or VGSL. This is defined as follows: "a length of Verge for an individual cross sectional position identified in the Project Network Model". (4) CTCI ... is calculated in respect of, and by reference to, a Cycle Track XSP Length. This is the same as a Cycle Track Section Length or CTSL. This is defined as follows: "a length of Cycle Track for an individual cross sectional position identified in the Project Network Model". (5) KBCI ... is calculated in respect of, and by reference to, a Kerb XSP Length. This is the same as a Kerb Section Length or KSL (or KBSL). This is defined as: "a length of Kerb associated with a Road Section Length for an individual cross sectional position identified in the Project Network Model". For the avoidance of doubt, XSP means cross-sectional position. This is a standard industry term which is used to describe inventory items (such as carriageways, footways, verges, kerbs, etc.) relative to the centreline of a carriageway. 19. Each of the definitions quoted in paragraph 18 above refers to the Project Network Model (or "the PNM"). This is defined as follows: "the database document 0626 which provides information in respect of the Project Roads including RSLs, numbering, length, hierarchy, allocation and preferred direction of survey and inspection and digitised geographical centreline representation". 20. The Project Network Model is a database consisting of 6 data tables, namely: (1) MSEC: this includes data on RSLs (including, amongst many other matters, their length and their description); (2) MINV: this includes further data on RSLs and data on FSLs, VGSLs, CTSLs and KSLs (including, amongst many other matters (and where appropriate), their length, their width, their surface type and their XSP); (3) MSURV: this includes records of surveys carried out on the road network; (4) MSECSURV: this includes records of survey dates and sections included in the surveys; (5) MCON: this includes records of condition data from Detailed Visual Inspections or DVIs and Deflectograph Surveys; (6) MSCRIM: this includes records of condition data in respect of skid resistance. 21. Under Method Statements 2 and 13 (which are at Schedule 3 to the Project Agreement), the Claimant was, from the date of the Project Agreement, to use the Pavement Management Model (or "the PMM") to calculate the condition indices. Paragraph 2.62 of Method Statement 2 provides that the PMM shall be the Claimant's main tool for calculating all condition indices in accordance with the Output Specification; and that it shall use the PMM to determine the annual investments required to upgrade and maintain "those Project Roads held in the Project Network Model". Paragraph 2.374 of Method Statement 13 provides that the PMM shall use the Project Network Model (containing the Road, Footway, Verge, Cycle Track and Kerb Section Lengths) as its base, against which all condition data shall be referenced.” "the works and services which are necessary for the Service Provider to undertake (or to procure the undertaking of) in order to comply with the provisions of schedule 2 (Output Specification) and the other provisions of this Contract". The period of time between the Service Commencement Date and the date on which a Certificate of Completion for Milestone 10 is issued (or the Claimant is deemed to have achieved Milestone Completion in relation to Milestone 10) is described as the Core Investment Period or CIP. "those works and/or services to be carried out (or procured to be carried out) by the Service Provider in order to meet the requirements of part 1A of schedule 2 (Output Specification) during the Core Investment Period". (1) the Network Condition Index or NCI which means the index representing the condition of RSLs (which term is explained below) in the Project Area; (2) the Footway Condition Index or FWCI which means the index representing the condition of Footways in the Project Area; (3) the Verge Condition Index or VGCI which means the index representing the condition of Verges in the Project Area; (4) the Kerb Condition Index or KBCI which means the index representing the condition of Kerbs in the Project Area; (5) the Cycle Track Condition Index or CTCI which means the index representing the condition of Cycle Tracks in the Project Area. Detailed rules are set out in Schedule 2 (and in particular Part 11 of Schedule 2) as to how these indices are to be calculated. (1) There are 4 separate NCI calculations for Carriageways: for NCImain (which relates to the Strategic Route and Main Distributor Network); NCIsec (which relates to the Secondary Distributor Network); NCIlink (which relates to the Link Road Network); and NCIlocal (which relates to the Local Access Road Network). NCImain is calculated by reference to three other indices: the Pavement Condition Index or PCI; the Skid Resistance Index or SRI; and the Surface Condition Index or SCI. ... Each of those indices is to be calculated in respect of, and by reference to a Road Section Length or RSL. This is defined as follows: "the individual section lengths of a Project Road between consecutive nodes in the Project Network Model". (2) There are 2 separate FWCI calculations ... which relates to the Prestige, Primary and Secondary Footway Network ... and […] the Link and Local Access Footway Network. Each of those indices is to be calculated in respect of, and by reference to, a Footway Section Length or FSL […] This is defined as: "a length of Footway associated with a Road Section Length for an individual cross sectional position identified in the Project Network Model". (3) VGCI ... is calculated in respect of, and by reference to, a Verge XSP Length. This is the same as a Verge Section Length or VGSL. This is defined as follows: "a length of Verge for an individual cross sectional position identified in the Project Network Model". (4) CTCI ... is calculated in respect of, and by reference to, a Cycle Track XSP Length. This is the same as a Cycle Track Section Length or CTSL. This is defined as follows: "a length of Cycle Track for an individual cross sectional position identified in the Project Network Model". (5) KBCI ... is calculated in respect of, and by reference to, a Kerb XSP Length. This is the same as a Kerb Section Length or KSL (or KBSL). This is defined as: "a length of Kerb associated with a Road Section Length for an individual cross sectional position identified in the Project Network Model". For the avoidance of doubt, XSP means cross-sectional position. This is a standard industry term which is used to describe inventory items (such as carriageways, footways, verges, kerbs, etc.) relative to the centreline of a carriageway. "the database document 0626 which provides information in respect of the Project Roads including RSLs, numbering, length, hierarchy, allocation and preferred direction of survey and inspection and digitised geographical centreline representation". (1) MSEC: this includes data on RSLs (including, amongst many other matters, their length and their description); (2) MINV: this includes further data on RSLs and data on FSLs, VGSLs, CTSLs and KSLs (including, amongst many other matters (and where appropriate), their length, their width, their surface type and their XSP); (3) MSURV: this includes records of surveys carried out on the road network; (4) MSECSURV: this includes records of survey dates and sections included in the surveys; (5) MCON: this includes records of condition data from Detailed Visual Inspections or DVIs and Deflectograph Surveys; (6) MSCRIM: this includes records of condition data in respect of skid resistance. Paragraph 2.374 of Method Statement 13 provides that the PMM shall use the Project Network Model (containing the Road, Footway, Verge, Cycle Track and Kerb Section Lengths) as its base, against which all condition data shall be referenced.”

“26. Paragraph 8 is admitted. The Claimant undertook to provide Services to the entire Project Network and deliver a 'fence-to-fence' approach [the Defendant then repeats paragraphs 11 to 18 which is their positive case on the construction of the Project Agreement]. 27. Paragraphs 9, 10 and 11 are admitted. 28. Save that the reference to 'clause 12', should be to 'clause 13' and that no admissions are made as to how 'central' various matters are to quantification, paragraph 12 is admitted. 29. Paragraphs 13, 14 and 15 are admitted, save that it is denied that the Project Agreement provides that the Independent Certifier 'must' issue the Certificates as alleged in paragraph 14. Further: 29.1. Pursuant to Clause 13.2.1, the Claimant has to notify the Independent Certifier and the Defendant 5 Business Days before the date upon which the Claimant requires the Independent Certifier to perform its assessment; and 29.2. Milestone Completion Criteria is defined by reference to each Project Network Part, which is the actual inventory. 30. For the avoidance of doubt, the Independent Certifier does not have authority to determine and/or affect the proper interpretation of the Project Agreement. Clause 5 of the Independent Certifier's Deed of Appointment provides: ‘5. LIMITATIONS ON AUTHORITY The Independent Certifier shall not: 5.1 make or purport to make any alteration or addition to or omission from the Output Specification (including, without limitation, the setting of performance standards) or issue any instruction or direction to any contractor or professional consultant employed or engaged in connection with the Project; or 5.2 unless both the Authority and Service Provider consent in writing [sic] or agree to any waiver or release of any obligation of the Authority or the Service Provider under the Project Agreement or of any contractor or professional consultant employed or engaged in connection with the Project; for the avoidance of doubt, the Independent Certifier shall not express an opinion on and shall not interfere with or give any advice, opinion or make any representation in relation to any matters which are beyond its role and responsibilities under this Deed. 31. Paragraph 16 is admitted. The Adjudicator considered and correctly interpreted Clause 13.5 in paragraphs 163 to 170 of his Decision. 32. Paragraph 17 is admitted, save that it is denied that any elements of the Milestone District Targets are more important than the others and/or are of particular relevance. It is noted that the Claimant accepts that the condition indices are defined by reference to the Project Area, RSLs, Footways, Verges, Kerbs and Cycle Tracks. Those terms are all defined by reference to the actual inventory (the Project Road), and are not limited to a static DRD0626. 33. Paragraph 18 is admitted. The defined terms identified all refer back to the actual inventory. By way of example only: 33.1. Road Section Lengths, or RSLs, are merely a convenient way of breaking the network down into measurable sections (also referred to as maintenance lengths); 33.2. RSLs are defined as (emphasis added): "the individual section lengths of a Project Road between consecutive nodes in the Project Network Model." 33.3. RSLs are therefore defined by the Project Road, namely the actual inventory. Insofar as it is relevant, as the Project Network Model is updated to reflect the actual inventory, the reference to the Project Network Model is consistent with (and supports) the Defendant's construction of the Project Agreement; and 33.4. The information provided on Road Section Lengths in the static DRD0626 does not, and is nowhere stated to, limit the Claimant's obligations. 34. Paragraph 19 is admitted. The Project Network Model models, provides information on, and is defined by reference to Project Roads, the actual inventory. 35. Paragraph 20 is admitted, save that MSCRIM only contains functional thresholds for skid surveys as opposed to records of condition data. The Claimant is obliged to update all the 6 data tables in the Project Network Model. Paragraph 18 above is repeated. In fact: 35.1. The Claimant collects condition and inventory data which would enable it to update all the data tables, including the MINV; 35.2. The Claimant accepts it is required to update all the data tables in the Project Network Model save for the MINV; however 35.3. The Project Agreement does not differentiate between which data tables should be updated and the Claimant has provided no reasonable justification for distinguishing MINV. As the Claimant collects the relevant data for MINV, there is no legitimate reason why the Claimant does not update MINV; and 35.4. Instead, the Claimant stated in the Adjudication that it updates another database, the Project Network Inventory. The Claimant therefore appears to hold two databases recording the same data, one live and one static. 36. Paragraph 21 is admitted, save to the extent that it differs from the precise wording of Method Statements 2 and 13. Further: 36.1. Method Statement 2 also confirms that the Pavement Management Model should be updated with any inventory data from surveys. By way of example only: 36.1.1. Paragraph 2.64 provides that the Asset Manager shall "provide the updated Detailed Visual Inspection (DVI) data and inventory updates necessary to run the PMM"; and: 36.1.2. Paragraph 2.67 provides that the Claimant "shall direct that its Pavement Life cycle Manager shall ensure that the PMM is continually updated throughout the Contract Term"; and 36.2. Method Statement 13 also confirms that the Project Network Model and Pavement Management Model are to be updated throughout the Project. By way of example only: 36.2.1. The Service Delivery Statement at paragraph 2.2 provides that the Claimant "shall use the information arising out of all surveys, inspections, tests and assessments to draw up and update the Service Provider Programmes to bring the Project Network up to the required standards defined in schedule 2 (Output Specification) and to continue to maintain the Project Network at the required level during the Contract Term to ensure safe passage for users of the Project Network"; 36.2.2. Paragraph 2.46: "The Service Provider shall ensure that all of the survey data referred to in paragraph 2.46 above is stored and referenced to the Project Network Model held as the Confirm UKPMS module forming part of the MIS. The Service Provider shall extract the required data from the UKPMS module to populate the PMM which shall be updated with data on a regular basis...”; 36.2.3. Paragraph 2.118 provides: “The Asset Manager shall run the PMM regularly during the CIP with the most current survey data to demonstrate the Service Provider's compliance with the Milestone District Targets in Part 1A ... of schedule 2 … and post CIP continued compliance with Part 1B of schedule 2 from DVI surveys shall also be used to monitor performance in respect of Part 2 ... of schedule 2". 36.2.4. Paragraph 2.376 provides: "The Service Provider shall ensure that all survey data is [sic] collected in accordance with Clause 6 (Surveys and Inspections) of the Contract in order to enable the calculation of condition indices". 36.2.5. Paragraph 2.377 provides: "The Service Provider shall ensure that all [sic] surveys are loaded to the PMM as soon as practicable after results have been collected …"; and 36.2.6. Paragraph 2.388 provides: "In accordance with Part 11 … of schedule 2 … the Service Provider shall only use complete and current survey datasets to calculate the condition indices with the following exceptions ...” 29.1. Pursuant to Clause 13.2.1, the Claimant has to notify the Independent Certifier and the Defendant 5 Business Days before the date upon which the Claimant requires the Independent Certifier to perform its assessment; and 29.2. Milestone Completion Criteria is defined by reference to each Project Network Part, which is the actual inventory. ‘5. LIMITATIONS ON AUTHORITY The Independent Certifier shall not: 5.1 make or purport to make any alteration or addition to or omission from the Output Specification (including, without limitation, the setting of performance standards) or issue any instruction or direction to any contractor or professional consultant employed or engaged in connection with the Project; or 5.2 unless both the Authority and Service Provider consent in writing [sic] or agree to any waiver or release of any obligation of the Authority or the Service Provider under the Project Agreement or of any contractor or professional consultant employed or engaged in connection with the Project; for the avoidance of doubt, the Independent Certifier shall not express an opinion on and shall not interfere with or give any advice, opinion or make any representation in relation to any matters which are beyond its role and responsibilities under this Deed. 33.1. Road Section Lengths, or RSLs, are merely a convenient way of breaking the network down into measurable sections (also referred to as maintenance lengths); 33.2. RSLs are defined as (emphasis added): "the individual section lengths of a Project Road between consecutive nodes in the Project Network Model." 33.3. RSLs are therefore defined by the Project Road, namely the actual inventory. Insofar as it is relevant, as the Project Network Model is updated to reflect the actual inventory, the reference to the Project Network Model is consistent with (and supports) the Defendant's construction of the Project Agreement; and 33.4. The information provided on Road Section Lengths in the static DRD0626 does not, and is nowhere stated to, limit the Claimant's obligations. 35.1. The Claimant collects condition and inventory data which would enable it to update all the data tables, including the MINV; 35.2. The Claimant accepts it is required to update all the data tables in the Project Network Model save for the MINV; however 35.3. The Project Agreement does not differentiate between which data tables should be updated and the Claimant has provided no reasonable justification for distinguishing MINV. As the Claimant collects the relevant data for MINV, there is no legitimate reason why the Claimant does not update MINV; and 35.4. Instead, the Claimant stated in the Adjudication that it updates another database, the Project Network Inventory. The Claimant therefore appears to hold two databases recording the same data, one live and one static. 36.1. Method Statement 2 also confirms that the Pavement Management Model should be updated with any inventory data from surveys. By way of example only: 36.1.1. Paragraph 2.64 provides that the Asset Manager shall "provide the updated Detailed Visual Inspection (DVI) data and inventory updates necessary to run the PMM"; and: 36.1.2. Paragraph 2.67 provides that the Claimant "shall direct that its Pavement Life cycle Manager shall ensure that the PMM is continually updated throughout the Contract Term"; and 36.2. Method Statement 13 also confirms that the Project Network Model and Pavement Management Model are to be updated throughout the Project. By way of example only: 36.2.1. The Service Delivery Statement at paragraph 2.2 provides that the Claimant "shall use the information arising out of all surveys, inspections, tests and assessments to draw up and update the Service Provider Programmes to bring the Project Network up to the required standards defined in schedule 2 (Output Specification) and to continue to maintain the Project Network at the required level during the Contract Term to ensure safe passage for users of the Project Network"; 36.2.2. Paragraph 2.46: "The Service Provider shall ensure that all of the survey data referred to in paragraph 2.46 above is stored and referenced to the Project Network Model held as the Confirm UKPMS module forming part of the MIS. The Service Provider shall extract the required data from the UKPMS module to populate the PMM which shall be updated with data on a regular basis...”; 36.2.3. Paragraph 2.118 provides: “The Asset Manager shall run the PMM regularly during the CIP with the most current survey data to demonstrate the Service Provider's compliance with the Milestone District Targets in Part 1A ... of schedule 2 … and post CIP continued compliance with Part 1B of schedule 2 from DVI surveys shall also be used to monitor performance in respect of Part 2 ... of schedule 2". 36.2.4. Paragraph 2.376 provides: "The Service Provider shall ensure that all survey data is [sic] collected in accordance with Clause 6 (Surveys and Inspections) of the Contract in order to enable the calculation of condition indices". 36.2.5. Paragraph 2.377 provides: "The Service Provider shall ensure that all [sic] surveys are loaded to the PMM as soon as practicable after results have been collected …"; and 36.2.6. Paragraph 2.388 provides: "In accordance with Part 11 … of schedule 2 … the Service Provider shall only use complete and current survey datasets to calculate the condition indices with the following exceptions ...”

“23. In the premises of the Particulars of Claim and of the foregoing and/or in any event, the second sentence of paragraph 26 is denied. 24. As to paragraph 28, it is admitted that clause 13 was the intended reference. 25. As to paragraph 29: (1) Paragraph 29.1 is admitted. (2) As to paragraph 29.2, Schedule 15 sets out Milestone Completion Criteria - insofar as they pertain to Project Roads after Contract Year 1 - for NCI, FWCI, VGCI, KBCI, CTCI and SRI. Those are not Project Network Parts. The Milestone Completion Criteria relevant to the present proceedings are therefore defined by reference to the various condition indices which in turn are to be calculated by reference to the data in the PNM. 26. As to paragraph 30: (1) It is admitted that the Independent Certifier's Deed of Appointment contains clause 5 as quoted therein (subject to the replacement of "[sic]" with "consent"). (2) It is no part of the Claimant's case that the Independent Certifier was obliged to, or did, determine or affect the proper interpretation of the Project Agreement. Its role and obligations are pleaded (in summary form) in paragraphs 13 and 14 of the Particulars of Claim. Alternatively if (which is denied) as part of its role and obligations laid down in the Project Agreement the Independent Certifier was obliged to determine or affect the proper interpretation of the Project Agreement, then it had authority so to do. 27. In the premises of the Particulars of Claim and of paragraphs 56 to 64 below and/or in any event, the second sentence of paragraph 31 is denied. 28. As to paragraph 32, save that it is admitted that some of the condition indices are calculated by reference to RSLs, the second and third sentences are denied. The Defendant has again misunderstood the Project Agreement (and paragraph 17 of the Particulars of Claim): the condition indices are not defined by reference to the Project Area, Footways, Verges, Kerbs and Cycle Tracks, but are indices which represent the condition of RSLs, Footways, Verges, Kerbs and Cycle Tracks (as more fully pleaded in paragraph 17 of the Particulars of Claim). 29. As to paragraph 33, the Claimant repeats paragraph 2(2) above. In the premises and/or in any event: (1) The second sentence is denied. (2) Paragraph 33.1 is denied. (3) The quoted definition in paragraph 33.2 is admitted (save for the added emphasis). (4) The first sentence of paragraph 33.3 is denied. RSLs are defined as "the individual section lengths of a Project Road between consecutive Nodes in the Project Network Model". (5) As to the second sentence of paragraph 33.3, the Claimant repeats paragraph 2(5) and 9(5) above. (6) As to paragraph 33.4, the Claimant repeats paragraph 9(4) above. 30. As to paragraph 34, the Claimant repeats paragraphs 2(2) and 9(5) above. 31. As to paragraph 35: (1) The Claimant repeats paragraphs 9(5) and 16 above. (2) The Claimant does not believe that MSCRIM contains only the functional thresholds as pleaded (but this is of no importance to the parties' dispute). (3) The Claimant collected and continues to collect condition and inventory data that could - subject to such update being in accordance with the provisions set out at paragraph 9(5) above - be used to update the tables in the PNM. (4) It is admitted that the Claimant recorded and continues to record survey data in the Project Network Inventory (and that it confirmed that in the adjudication). That accords with the provisions set out at paragraphs 9(5) and 16 above. The Defendant was well aware before the adjudication that the Claimant was recording survey data in the Project Network Inventory as shown by the extract from its letter of 24 November 2014 to the Independent Certifier provided at paragraph 41 where the Defendant informed the Independent Certifier that its view was that the Network Condition Indices should be calculated using the Project Network Inventory. (5) Save as aforesaid, paragraph 35 is denied. 32. As to paragraph 36: (1) The quoted extracts from Method Statements 2 and 13 are (subject to the correction of minor typographical errors) admitted. (2) It is denied (if the same be alleged) that these extracts impose any obligation on the Claimant to update the PNM in the manner alleged by the Defendant. Rather the extracts are consistent with and support the Claimant's case as pleaded in the Particulars of Claim and herein as to its obligations (including its obligations in relation to the updating of the PNM).” (1) Paragraph 29.1 is admitted. (2) As to paragraph 29.2, Schedule 15 sets out Milestone Completion Criteria - insofar as they pertain to Project Roads after Contract Year 1 - for NCI, FWCI, VGCI, KBCI, CTCI and SRI. Those are not Project Network Parts. The Milestone Completion Criteria relevant to the present proceedings are therefore defined by reference to the various condition indices which in turn are to be calculated by reference to the data in the PNM. (1) It is admitted that the Independent Certifier's Deed of Appointment contains clause 5 as quoted therein (subject to the replacement of "[sic]" with "consent"). (2) It is no part of the Claimant's case that the Independent Certifier was obliged to, or did, determine or affect the proper interpretation of the Project Agreement. Its role and obligations are pleaded (in summary form) in paragraphs 13 and 14 of the Particulars of Claim. Alternatively if (which is denied) as part of its role and obligations laid down in the Project Agreement the Independent Certifier was obliged to determine or affect the proper interpretation of the Project Agreement, then it had authority so to do. (1) The second sentence is denied. (2) Paragraph 33.1 is denied. (3) The quoted definition in paragraph 33.2 is admitted (save for the added emphasis). (4) The first sentence of paragraph 33.3 is denied. RSLs are defined as "the individual section lengths of a Project Road between consecutive Nodes in the Project Network Model". (5) As to the second sentence of paragraph 33.3, the Claimant repeats paragraph 2(5) and 9(5) above. (6) As to paragraph 33.4, the Claimant repeats paragraph 9(4) above. (1) The Claimant repeats paragraphs 9(5) and 16 above. (2) The Claimant does not believe that MSCRIM contains only the functional thresholds as pleaded (but this is of no importance to the parties' dispute). (3) The Claimant collected and continues to collect condition and inventory data that could - subject to such update being in accordance with the provisions set out at paragraph 9(5) above - be used to update the tables in the PNM. (4) It is admitted that the Claimant recorded and continues to record survey data in the Project Network Inventory (and that it confirmed that in the adjudication). That accords with the provisions set out at paragraphs 9(5) and 16 above. The Defendant was well aware before the adjudication that the Claimant was recording survey data in the Project Network Inventory as shown by the extract from its letter of 24 November 2014 to the Independent Certifier provided at paragraph 41 where the Defendant informed the Independent Certifier that its view was that the Network Condition Indices should be calculated using the Project Network Inventory. (5) Save as aforesaid, paragraph 35 is denied. (1) The quoted extracts from Method Statements 2 and 13 are (subject to the correction of minor typographical errors) admitted. (2) It is denied (if the same be alleged) that these extracts impose any obligation on the Claimant to update the PNM in the manner alleged by the Defendant. Rather the extracts are consistent with and support the Claimant's case as pleaded in the Particulars of Claim and herein as to its obligations (including its obligations in relation to the updating of the PNM).”

“2(2) The Defendant's case is reliant on the concept or concepts variously described as "the entirety of the Project Network", "the entire Project Network", "the Project Network as a whole", "an actual inventory, reflecting the true nature and extent of the Birmingham road network" and - most frequently - "the actual inventory" when none of those statements reflects any contractual definition. The contractual definition of the Project Network is set out at paragraph 34 of the Particulars of Claim which the Defendant admits at paragraph 51. It is that definition that circumscribes the Project Network and there is no meaningful qualification (such as 'entire' or 'actual') that can extend that definition or the extent of the Project Network beyond its proper contractual meaning. … 2(4) The Defendant has misunderstood and/or mischaracterised the Claimant's case as a case which ignores entirely the definitions and use of the terms Project Network, Project Network Parts and Project Roads. The Claimant does not ignore those definitions: it expressly pleads the definitions of Project Network and Project Roads. The Claimant's case is not that its obligations only arise in respect of some subset of the Project Network, rather that the agreed contractual measures for achievement of various performance standards in the Output Specification are clearly to be calculated by reference to the PNM. 2(5) The relationship between the Defendant's case on the proper construction of the Claimant's obligations and the Defendant's case that the Claimant was obliged (in some undefined way) to update the PNM is unclear. However, it would appear (in particular from the Defendant's repeated comparisons between a static and an updated PNM) that its case has shifted to a case based principally on the Claimant's obligation to update the PNM rather than a case based on construing the provisions relating to the calculation of the condition indices. For the reasons given below, the Defendant's case on the updating obligations is wrong. … 9(5) ... (a) As defined in the Project Agreement the Project Network Model provides information in respect of the Project Roads. It is not defined as providing and as a matter of fact it does not provide information about any other Project Network Part nor is it defined as modelling the Project Network. (b) Save to the extent that amendments to the lengths of existing carriageway inventory recorded in the PNM are to be made in accordance with paragraphs 3.2.4, 3.2.5, 4.2.4, 4.2.5, 5.2.4 and 5.2.5 of Part 11 of Schedule 2 (as pleaded in paragraph 39 of the Particulars of Claim), the second sentence is denied. Paragraph 2.2.4.1 of Part 8 of Schedule 2 provides that the results of all surveys required to be carried out pursuant to clause 6 are to be recorded by the Claimant in the appropriate part(s) of the Management Information System ('MIS'). A similar provision is found at paragraph 1.3.1 of Part 11 of Schedule 2. In accordance with clause 19.1, paragraph 2.2 of PS 8 and table 1 at paragraph 2.28 of Method Statement 2, the PNM is not part of the MIS. (c) The Claimant's obligation to update the PNM is set out in clause 19.2.1 by reference to PS8. Paragraph 2.3 of PS 8 sets out the Claimant's obligations in respect of updating the PNM, as pleaded in paragraph 45 of the Particulars of Claim. Clause 55.1.9 relates to that obligation, and the Claimant will rely upon the whole of clause 55.1, which specifies the liability in respect of which the Claimant indemnifies the Defendant. (d) In the premises and/or in any event, it is denied that the Claimant has a free-standing general obligation to update the information in the PNM other than in accordance with PS 8.” (a) As defined in the Project Agreement the Project Network Model provides information in respect of the Project Roads. It is not defined as providing and as a matter of fact it does not provide information about any other Project Network Part nor is it defined as modelling the Project Network. (b) Save to the extent that amendments to the lengths of existing carriageway inventory recorded in the PNM are to be made in accordance with paragraphs 3.2.4, 3.2.5, 4.2.4, 4.2.5, 5.2.4 and 5.2.5 of Part 11 of Schedule 2 (as pleaded in paragraph 39 of the Particulars of Claim), the second sentence is denied. Paragraph 2.2.4.1 of Part 8 of Schedule 2 provides that the results of all surveys required to be carried out pursuant to clause 6 are to be recorded by the Claimant in the appropriate part(s) of the Management Information System ('MIS'). A similar provision is found at paragraph 1.3.1 of Part 11 of Schedule 2. In accordance with clause 19.1, paragraph 2.2 of PS 8 and table 1 at paragraph 2.28 of Method Statement 2, the PNM is not part of the MIS. (c) The Claimant's obligation to update the PNM is set out in clause 19.2.1 by reference to PS8. Paragraph 2.3 of PS 8 sets out the Claimant's obligations in respect of updating the PNM, as pleaded in paragraph 45 of the Particulars of Claim. Clause 55.1.9 relates to that obligation, and the Claimant will rely upon the whole of clause 55.1, which specifies the liability in respect of which the Claimant indemnifies the Defendant. (d) In the premises and/or in any event, it is denied that the Claimant has a free-standing general obligation to update the information in the PNM other than in accordance with PS 8.”

“13(4). As to paragraph 15.3, the Claimant repeats paragraph 7(1) above. The Project Agreement should not be construed by reference to alleged practical difficulties (which are denied, as pleaded further below) which emerged following contract formation. Further or alternatively, the purported practical difficulties set out at paragraph 15.3 and its sub-paragraphs are also unrealistic and wrong: (a) The example given in paragraph 15.3.1 presupposes that: (i) the Claimant is under an obligation to rehabilitate all of the "actual inventory"; and … (ii) the Claimant would choose not to carry out works on the "10 cm strip" on the basis that it would be left out of account in the calculation of the FWCI. Each of those presuppositions is incorrect. As to (i), the Claimant repeats paragraph 9 above. As to (ii), account would be taken of any defects in the 10 cm strip in the calculation of FWCI. (b) As to paragraph 15.3.2, the Claimant does not make any choice to obtain a preferential outcome as suggested therein. It simply calculates the condition indices in accordance with the Project Agreement. (c) As to paragraph 15.3.3, it is admitted that there are occasions on which the condition data obtained by the Claimant does not marry up with the inventory data. It is denied that this gives rise to the calculation of skewed results or that the data readings are inaccurate or incomplete. As to the example given by the Defendant: (i) It is denied that there are no Verges in the Project Network Model. (ii) The relevance of a grass verge to the calculation of the condition index is not understood. (iii) The allegation that the condition of a grass verge is "inputted against the default details for a Footway" giving rise to the consequence in the last sentence is denied. (d) As to paragraph 15.3.4, it was never the intention that 100% of the Project Roads would be rehabilitated (if by that the Defendant means subject to treatment). Using Footways by way of example, by use of a statistical Output Specification the Project Agreement provided - in broad terms - that sufficient treatments would be carried out: (i) to bring the average FWCI in each PFI district to "Good" condition or above ... By virtue of the statistical nature of the Output Specification, that requirement can be achieved even though, for example, numerous FSLs are on the threshold of being Poor as long as there are enough FSLs in Good or Excellent condition to raise the average FWCI above 6.6; (ii) to ensure that no individual FSL had an FWCI of "Poor” or “Failed" ... By virtue of the statistical nature of the Output Specification, that requirement can be achieved even though, for example, individual 20m sub-sections of an FSL are Poor or Failed as long as the rest of the FSL is of a sufficiently high condition to raise the average FWCI for that FSL above 4.8. (e) Paragraph 5.4 is denied.” (a) The example given in paragraph 15.3.1 presupposes that: (i) the Claimant is under an obligation to rehabilitate all of the "actual inventory"; and … (ii) the Claimant would choose not to carry out works on the "10 cm strip" on the basis that it would be left out of account in the calculation of the FWCI. Each of those presuppositions is incorrect. As to (i), the Claimant repeats paragraph 9 above. As to (ii), account would be taken of any defects in the 10 cm strip in the calculation of FWCI. (b) As to paragraph 15.3.2, the Claimant does not make any choice to obtain a preferential outcome as suggested therein. It simply calculates the condition indices in accordance with the Project Agreement. (c) As to paragraph 15.3.3, it is admitted that there are occasions on which the condition data obtained by the Claimant does not marry up with the inventory data. It is denied that this gives rise to the calculation of skewed results or that the data readings are inaccurate or incomplete. As to the example given by the Defendant: (i) It is denied that there are no Verges in the Project Network Model. (ii) The relevance of a grass verge to the calculation of the condition index is not understood. (iii) The allegation that the condition of a grass verge is "inputted against the default details for a Footway" giving rise to the consequence in the last sentence is denied. (d) As to paragraph 15.3.4, it was never the intention that 100% of the Project Roads would be rehabilitated (if by that the Defendant means subject to treatment). Using Footways by way of example, by use of a statistical Output Specification the Project Agreement provided - in broad terms - that sufficient treatments would be carried out: (i) to bring the average FWCI in each PFI district to "Good" condition or above ... By virtue of the statistical nature of the Output Specification, that requirement can be achieved even though, for example, numerous FSLs are on the threshold of being Poor as long as there are enough FSLs in Good or Excellent condition to raise the average FWCI above 6.6; (ii) to ensure that no individual FSL had an FWCI of "Poor” or “Failed" ... By virtue of the statistical nature of the Output Specification, that requirement can be achieved even though, for example, individual 20m sub-sections of an FSL are Poor or Failed as long as the rest of the FSL is of a sufficiently high condition to raise the average FWCI for that FSL above 4.8. (e) Paragraph 5.4 is denied.”

“62. Paragraph 44 is admitted. For the avoidance of doubt, the Adjudicator did not rely solely on Clause 19.2.1. The Defendant will rely on paragraphs 143 to 157 of the Decision in full (much of which are unchallenged by the Claimant). 63. Save that the Claimant has correctly quoted from paragraph 2.3 of PS 8 and that Method Statement 10 provides some (albeit limited) information on the Claimant's obligation to update the Project Network Model, paragraph 45 is denied. The proper construction of the Claimant's obligations to update the Project Network Model, supported by Method Statements 2 and 13 (see paragraph 36 above), is set out in paragraph 18 above. 64. Paragraph 46 is denied. Without prejudice to the generality of the foregoing denial: 64.1. The Adjudicator's Decision was correct. Clause 19.2.1 (amongst others) does impose an obligation on the Claimant to update the Project Network Model. Paragraph 18 above is repeated. On the Claimant's (wrong) interpretation the words "and shall ensure that the information contained in it is up to date at all times" in Clause 19.2.1 are redundant; 64.2. The Defendant did rely on Clause 19.2 (amongst others) in the Adjudication; 64.3. The Claimant's obligation to update the Project Network Model is consistent with paragraph 2.3 of PS 8 and paragraph 2.61 of Method Statement 10. The Claimant has failed to particularise any inconsistency; 64.4. The Claimant's reliance on paragraphs 34 to 42 is noted, but it is denied those paragraphs support the Claimant's position. Paragraphs 51 to 60 above are repeated. The proper construction of the Project Agreement is set out in paragraphs 11 to 18 above; and 64.5. It is denied that the Defendant accepts that its case on the Claimant's obligation to update the Project Network Model is dependent on its case on the scope of the Core Investment Works...” 64.1. The Adjudicator's Decision was correct. Clause 19.2.1 (amongst others) does impose an obligation on the Claimant to update the Project Network Model. Paragraph 18 above is repeated. On the Claimant's (wrong) interpretation the words "and shall ensure that the information contained in it is up to date at all times" in Clause 19.2.1 are redundant; 64.2. The Defendant did rely on Clause 19.2 (amongst others) in the Adjudication; 64.3. The Claimant's obligation to update the Project Network Model is consistent with paragraph 2.3 of PS 8 and paragraph 2.61 of Method Statement 10. The Claimant has failed to particularise any inconsistency; 64.4. The Claimant's reliance on paragraphs 34 to 42 is noted, but it is denied those paragraphs support the Claimant's position. Paragraphs 51 to 60 above are repeated. The proper construction of the Project Agreement is set out in paragraphs 11 to 18 above; and 64.5. It is denied that the Defendant accepts that its case on the Claimant's obligation to update the Project Network Model is dependent on its case on the scope of the Core Investment Works...”

"3.3. Pursuant to Schedule 2 (Output Specification) the Service Provider is required to continually monitor and maintain the Project Network. There are 10 Performance Standards ("

“6.2 The Authority also seeks orders that the Service Provider: 6.2.1 re-calculates the current actual Network Condition Indices through the Pavement Management Model based upon the actual inventory and Condition Surveys and inspections;”

“1. The main issue between the parties is one of construction of the Project Agreement. The core issue can be summarised as follows: "Is the scope of Services to be provided by ABHL in Performance Standard 1 the same as, or less than, that to be provided in Performance Standards 2-10, and in particular is ABHL obliged to perform Core Investment Works in Performance Standard 1 to the Project Network as a whole or only to the inventory contained in the Project Network Model?" 2. The parties' updating and maintaining obligations inform the correct interpretation of the Project Agreement and are also in dispute. In light of ABHL's Rejoinder, the remaining issue, as to the effect of the Milestone Certificates, appears now to be more procedural than substantive (although it is still not entirely clear).”

"The issues 18. In summary, the first principal issue between the parties is what is the scope of ABHL's obligation in relation to the Core Investment Works? 19. The second principal issue is whether ABHL is under an obligation to keep updated the Project Network Model (PNM). 20. The third principal issue is whether the Milestone Certificates issued by the Independent Certifier can be, and if so, should be, set aside."

“56. The primary reason for ABHL's submission that it is the RSL as shown in the PNM that must be used in the NCI calculations is ABHL's interpretation of the contractual definition of RSL. The contractual definition is as follows: “RSL means the individual section lengths of a Project Road between consecutive Nodes in the Project Network Model and “Road Section Lengths” or “RSLs” shall be construed accordingly." It is apparent from ABHL's submissions that it reads the definition such that "in the Project Model" qualifies the totality of the individual section lengths of a Project Road between the consecutive Nodes". … 61. Although the Authority did not express the point in quite these terms, its argument would appear to involve a construction of the definition of RSL that would require that the words 'in the Project Model' are read as qualifying only 'between consecutive Nodes'. Read in this way, an RSL would mean the extent of a part of a Project Road as represented between two consecutive Nodes, which Nodes are set out in the PNM. This alternative construction is suggestive of an RSL having a physical aspect capable of objective measurement apart from its representation in the PNM. … 113. I accept, of course, that the parties were free to make any lawful bargain that commended itself to them, and ABHL say that the bargain struck between the parties was that, in respect of the CIP works, ABHL took only condition risk and had a defined scope of works, being limited to the extent of RSLs shown in the PNM. Having such a defined scope of work, says ABHL was commercially necessary to it. However, the result of ABHL's construction strikes me as being commercially unlikely in the context of a PFI upgrade and maintenance contract. For the result of ABHL's construction is that only an arbitrary part of the Project Network is upgraded in the CIP. Whilst, in principle, the Authority could seek to vary the works so as to include further parts of the Project Road which are not in the PNM, this would seem to require the scope of the works to be varied from the commencement date or soon thereafter, which makes little sense. If the intention were as ABHL suggests, I would expect there to be very clear words in the Contract which would drive one to the conclusion that its construction is correct. 114. In my view there are no such clear words. Rather, what ABHL's preferred construction depends very largely upon is its interpretation of the definition of RSL as meaning an RSL as recorded in the PNM. For the reasons that I have sought to explain in paragraph 56 et seq above, I do not consider that that construction is correct. In my view, the references to RSLs and other Section Lengths in Part 1 and Part 11 of Schedule 2 are references to actual RSLs and other Section Lengths in the Project Network, save where the reference is expressly to RSLs, or other Section Lengths set out or otherwise recorded in the PNM. Once ABHL's construction of RSL as meaning the RSLs as set out in the PNM is rejected, there is little in the wording of the Contract that supports ABHL's construction of its CIP obligations. … 142. My conclusion in respect of the issue as to the scope of ABHL's works in the CIP is that ABHL's obligation extends to the Project Network and the Project Road and is not limited to the representation thereof or the representation of RSLs in the PNM. This follows from the proper construction of the definition of RSL and its use in Part 1 of Schedule 2. My conclusion is reinforced by the Contract’s focus on the Project Network and the Project Road and the upgrading thereof and the fact that the Contract does not express an intention to limit the scope of the CIP works to something less than the Project Network but to then expand the scope to cover the Project Network in the post-CIP. I also place reliance on what I consider to be the commercially unlikely result of ABHL's construction and the lack of clear words in the Contract which would justify such a construction.”

“154. Clause 19.2.1 contains two updating obligations. The first is to update the PNM in accordance with PS 8 of Schedule 2, i.e. where the Authority notifies the Service Provider of a change to the Project Network. The second obligation is to ensure that the information in the PNM is up to date at all times. This is obviously independent of the first obligation as, inter alia, otherwise the words “and shall ensure that the information contained in it is up to date at all times" would be otiose. 155. I also read paragraph 2.3.3 of PS 8 as being consistent with the second obligation under clause 19.2.1 of the main body of the Contract. And clause 19.2.2 appears to dovetail with paragraph 2.3.3 of PS 8. … 157. Accordingly, as a matter of the proper construction of the Contract as a whole, I am satisfied that ABHL are under an obligation arising under clause 19.2.1 to update the PNM and to ensure that it is kept up to date at all times. Such obligation is without prejudice to its obligations under the other relevant provisions of the Contract to update and/or amend the PNM, including those under paragraph 2.3 of PS 8.”

“158. In light of my decision as to the scope of ABHL's works in the CIP, it follows that I consider that the Milestone Certificates were prepared and issued on an erroneous basis.”

"164 … This is doubly so when one considers the limited desk-top nature of the certification exercise, as described by Mr William Moss, one of the Independent Certifiers actually involved in the certification of Milestones 1 to 9, and the fact that he was not aware at the time of the production of the Milestone Certificates whether ABHL's calculations were based on the original PNM inventory or on the actual Project Network. … 174 ... (ii) It is easily demonstrable without extensive investigation (indeed it is accepted by ABHL) that the decision, alternatively the certificate and the process or procedure leading to its issue, is based upon calculations which (if I am right on construction) are based upon an erroneous interpretation of the Contract."

“175. My conclusions on the principal issues can be summarised as follows: (i) ABHL's scope of works in the Core Investment Period is to determined [sic] by reference to the actual Project Network and the RSLs therein, not those recorded in the original PNM. (ii) ABHL's performance is to be calculated by reference to the actual Project Network and the RSLs therein. (iii) ABHL is obliged to update the PNM and to ensure that it is at all times up to date. (iv) Milestone Certificates 6 to 9 inclusive are in error and should be set aside or opened up, reviewed and revised. (v) ABHL's completion or otherwise of Milestones 6 to 9 inclusive should be certified by reference to the actual Project Network and the RSLs therein.”

“176. The Authority seeks seven wide-ranging declarations as set out in paragraph 6.1 of Adjudication Notice [sic] and paragraph 5.6 of its Submission dated 18 May 2015. As explained below, I find the terms of some of the requested declarations to be imprecise and their appropriateness questionable. In my view it may have been better to have first determined the principal issues as to construction and the status of the Milestone Certificates and then for the parties to have made submissions as to the most appropriate way forward in terms of the precise formulation of any declarations or orders. That is an option that the parties could still take, but only if it were an agreed course of action. 177. Paragraph 6.2 of the Adjudication Notice also sought five Orders against ABHL. The request for such Orders was not repeated in the Authority's Submissions dated 18 May 2015. In its Submissions dated 29 May 2015, ABHL concluded that the request for such Orders was no longer being pursued by the Authority, which conclusion was not disputed by the Authority in its Reply Submissions dated 9 June 2015. The remedies sought in the Authority’s Skeleton Argument dated 22 June 2015 are limited to the requested declaratory relief. Accordingly I conclude that the relief sought by the Authority is currently limited to such declaratory relief. I will not, therefore, consider further or make the previously requested Orders. However, as explained below, it is appropriate to order that the NCI calculations be re-done in accordance with my construction of the Contract. 178. The first requested declaration sought is in the following terms: That the Service Provider's obligation to perform the Core Investment Works and meet the requirements of Performance Standard 1 extend to the Project Network as a whole and not the Project Network as defined by the Project Network Model contained in DRD0626 179. For the reasons set out herein I shall grant this declaration in the terms similar to those sought. 180. The second requested declaration is sought in the following terms: That the Service Provider must update the Project Network Model and maintain a Project Network Inventory which accurately reflects the actual extent of the Project Network - more particularly the Project Road. 181. I have found that ABHL is under an obligation to update the PNM so as to reflect the actual extent of the Project Network. It does not appear to be in dispute that the PNI should be updated and should reflect the Project Network. Indeed, ABHL say that this is precisely what they have done and what they do. As such ABHL say that the request for declaratory relief is misconceived. 182. In my view, given that ABHL does not dispute its obligation in respect of the PNI, and given my decision in respect of updating the PNM, it is appropriate to make the declaration in terms similar to those sought.”

“187. The fifth requested declaration is in the following terms: That the Certificates of Completion for Milestones 6-9 be set aside. 188. For the reasons set out herein I have decided that the Certificates of Completion for Milestones 6 to 9 should be set aside, alternatively opened up, reviewed and revised and the relevant calculations performed again by reference to the actual Project Network inventory. I am not aware of what the result of such re-calculation will be. Until this has been done I am not sure on what basis it can be assumed that the relevant Milestones will be shown not to have been achieved. Mr Moss explains that, as one would expect, if the calculations are performed by reference to the Project Network inventory instead of the original PNM inventory, the results could change. However, how the figures would change has not been explored in the evidence or the Parties' submissions. 189. Accordingly in my view the correct way to proceed is for the calculations to be re-done. I will therefore make the declaration in terms similar to those requested but will also order that ABHL re-calculates the Network Condition Indices relevant to each of Milestones 6 to 9 inclusive by the reference to the actual Project Network inventory. The consequence of such re-calculation is not something that can be dealt with in this Decision. I would expect the Independent Certifier to be able to assist with this process, although it will also require input from ABHL and the Authority.”

“70.1.1 Any Dispute arising in relation to any aspect of this Contract shall be resolved in accordance with this clause 70 (Dispute Resolution). 70.1.2 If a Dispute arises in relation to any aspect of this Contract, the Service Provider and the Authority shall first consult in good faith in an attempt to come to an agreement in relation to the Dispute. 70.1.3 If the Service Provider and the Authority fail to resolve the Dispute through such consultation within fifteen (15) Business Days, either party may refer the matter to an Adjudicator selected in accordance with clause 70.2 (Adjudication) below. Without prejudice to clause 70.1.2 above, either party may give the other notice of the intention to refer the Dispute to adjudication and the Adjudicator shall be selected in accordance with clause 70.2 (Adjudication).”

“any difference or dispute between the Authority and the Service Provider arising out of or in connection with the Contract (including any question as to the validity or interpretation of the Contract and including any dispute arising before or after termination of the Contract or any failure by either Party to perform their obligations pursuant to the Contract)”

“70.2.3. In any event, the Adjudicator shall provide to both parties his written decision on the Dispute within twenty (20) Business Days of appointment (or such other period as the Parties may agree after the reference, or thirty (30) Business Days from the date of reference if the party which referred the Dispute agrees). Unless the Parties otherwise agree, the Adjudicator shall give reasons for his decision. Unless and until revised, cancelled or varied by the Arbitrator, the Adjudicator's decision shall be binding on both Parties who shall forthwith give effect to that decision (save where clauses 70.3.1.2 or 70.3.1.3 apply).”

“70.3.1 If … 70.3.1.2 either Party is dissatisfied with or otherwise wishes to challenge the Adjudicator's decision made in accordance with clause 70.2.3; or 70.3.1.3 both Parties agree; then either Party may (within thirty (30) Business Days of receipt of the Adjudicator's decision, where appropriate), notify the other Party of its intention to refer the Dispute to: … 70.3.1.5 the Courts of England and Wales if it relates to a question of law.”

“The court may make binding declarations whether or not any other remedy is claimed.”

“The power to make declarations is a discretionary power. As between the parties to a claim, the court can grant a declaration as to their rights, or as to the existence of facts, or as to a principle of law (Financial Services Authority v Rourke [2002] C.P.Rep 14 (Neuberger J.)). When considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose, and whether there are any other special reasons why or why not the court should grant the declaration (ibid)”, at page 1349. And further at page 1350 "In considering whether or not to grant a declaration as to the proper construction of a contract, the court should, at the very least, proceed with caution and in accordance with the principles referred to in the notes and authorities referred to above (Thomas Brown Estates Ltd v Hunters Partners Ltd [2012] EWHC 21 (QB), January 12, 2011, unrep. (Eder J).”

“3.2. Survey Information and Data Room. Information on existing conditions will be supplied to all bidders. It will be the bidders’ responsibility to verify the accuracy and adequacy of that information. A data room will be established to enable bidders to access all current available information. … 3.3. Service Requirements. The City Council has prepared a first draft of the Service Requirements for the PFI contract, which are based on meeting key performance standards and adopting a holistic 'back of footway to back of footway' service provision ...”

“Amey accepts the risk allocation as proposed by the Authority, with no changes required. The Register below is therefore the Project Risk Register." The Project Risk Register (at page 5) included "Accuracy of Inventory and all Surveys.”

“14.1 MSEC: This table ... lists 14,091 sections of Carriageway or Footpath in Birmingham. These sections are called Road Section Lengths or RSLs in the Project Agreement … MSEC also includes information about each of the RSLs, including a unique reference number, the length of the RSL, and an alphanumeric code … that indicates the Carriage hierarchy of the RSL under the Project Agreement", and then gives details of those codes. “14.2. MINV: It is a standard practice in the pavement management industry to characterise pavement assets by reference to their position relative to the centreline of the section of road with which they are associated. This referencing system has been standardised, and is set out in the “UKPMS User Manual” ... For example … a single carriageway might have a left hand lane immediately to the left of the centre line of the road, denoted “CL1”, for traffic flowing forward relative to the chosen orientation, and a right hand lane immediately to the right of the centre line of the road, denoted “CR1”, for traffic flowing in the other direction. ... Since pavement assets are categorised by reference to the centreline of the road, they are referred to as “cross sectional positions” or “XSPs”

“11 … Mr Woodgate makes no reference to the fact that the inventory recorded in relation to approximately 60% of the RSLs in the MINV table is default data which is not reflective of the actual inventory ... 12. ... ABHL should update the default data in the MINV table after it carries out surveys so that it becomes progressively more accurate throughout the Core Investment Period." In doing so, he relies upon clause 6.3 of the Project Agreement. He goes on to indicate, having reviewed the data files, that he believes the position is, amongst other things, as follows: “14.3 surveys which were carried out in August 2008 or after were not incorporated into DRD 0626 ... DRD 0626 was taken from software known as MARCHpms ABHL used different software called Confirm and, because of this, the Authority switched to using Confirm in or around July 2008 in preparation for the Project Agreement. After this switch, survey data was not incorporated into DRD0626 and would instead have been incorporated into a Confirm database.”

“10. I understand that ABHL's position is that, although it carries out surveys in accordance with the Project Agreement, it is not required to update the Project Network Model with the inventory data gathered from surveys. This is nonsensical. In order to explain why, it is necessary to explain how surveys and pavement management systems should operate in practice and in accordance with Good Industry Practice. The pavement management system on this Project comprises the Project Network Model and the Pavement Management Model. 11. UKPMS details a number of surveys which can be used to record data in respect of “maintenance lengths”

“(A) In accordance with the Government's Private Finance Initiative and pursuant to a notice published in the Official Journal of the European Union on 25 May 2004, the Authority invited expressions of interest from appropriately qualified consortia for services relating to the rehabilitation, maintenance, management and operation of the Project Network for a period of 25 years from the Planned Service Commencement Date. … (C) The Service Provider has submitted proposals to the Authority setting out how it will meet the Authority's requirements relating to the rehabilitation, maintenance, management and operation of the Project Network. (D) The Authority has selected the Service Provider for the rehabilitation, maintenance, management and operation of the Project Network pursuant to this Contract.”

“This Contract shall be construed and interpreted as a whole provided that in the event of any conflict or inconsistency between the provisions of the Main Body, the schedules and annexures, or between any of the schedules, or between any of the annexures, then, save as expressly provided for by clause 1.3, the conflict or inconsistency shall be resolved according to the following descending order of priority: 1.2.1. the Main Body and schedule 1 (Definitions, Interpretation and Construction); 1.2.2. schedule 2 (Output Specification); 1.2.3. schedule 4 (Payment Mechanism); and 1.2.4. all other schedules and annexures.”

“The Service Provider shall commence delivery of the Services from the Service Commencement Date and shall provide the Services for the remainder of the Contract Term in accordance with the terms of this Contract.”

“1. The Service Provider shall supply the Services continuously throughout the Contract Term in accordance with the specifications set out in each part of this schedule 2 (Output Specification). 2. Each part of this schedule 2 (Output Specification) details the overall aspirations of the Authority in the sections headed Required Outcomes. For the purposes of determining whether or not any Adjustments are to be made to the Monthly Unitary Charge pursuant to schedule 4 (Payment Mechanism)] of this Contract the performance of the Service Provider shall be measured against the Service Delivery Outputs and their corresponding Performance Targets set out in this schedule 2 (Output Specification) in accordance with the Monitoring Procedures set out in this Contract.”

“The Service Provider shall comply with the provisions of this Performance Standard 1 and ensure that at the end of the Core Investment Period and thereafter until the expiry of the Contract Term in relation to the Project Network:”

“‘CIP’ means the period of time commencing on the Service Commencement Date and ending on the date on which a Certificate of Completion in respect of the final Milestone is issued pursuant to clause 13.4.1 ... or the Service Provider is deemed to have achieved Milestone Completion in relation to Milestone 10 pursuant to clause 9.4.7 […]”

“The Service Provider shall complete each Milestone in accordance with clause 9 ... of this Contract and the Milestone District Targets are set out in paragraphs 1.4 to 1.13 below.”

“9.1 The Service Provider shall achieve Milestone Completion by the relevant Planned Milestone Completion Date. The Milestones and their respective Planned Milestone Completion Dates are set out in the table ...”

“Where the Independent Certifier has issued a Certificate of Completion in respect of a Milestone, pursuant to the provisions of clause 13 ... that Milestone shall, from the relevant Milestone Completion Date, be taken into account for the purposes of calculating the Monthly Unitary Charge in accordance with paragraph 1.4 of the Payment Mechanism”

“...means a certificate issued by the Independent Certifier pursuant to clause 13 ... certifying that, in respect of the Milestone in question, it is satisfied that Milestone Completion has been achieved in all Districts;”

“13.2.1 The Service Provider shall notify the Independent Certifier and the Authority five (5) Business Days before the date upon which the Service Provider requires the Independent Certifier to assess whether it has achieved Milestone Completion or Partial Milestone Completion in respect of each Milestone. 13.2.2. Following notification pursuant to clause 13.2.1 above, the Independent Certifier shall assess whether Milestone Completion or Partial Milestone Completion has been achieved by the Service Provider, and shall, within ten (10) Business Days of the date of the assessment referred to in clause 13.2.1, issue to the Service Provider (with a copy to the Authority): 13.2.2.1 a Certificate of Completion; or 13.2.2.2 a Certificate of Partial Completion ...; or 13.2.2.3 a Certificate of Non-Completion ...” 13.2.2.1 a Certificate of Completion; or 13.2.2.2 a Certificate of Partial Completion ...; or 13.2.2.3 a Certificate of Non-Completion ...”

“Verify that the NCI at District level meets or exceeds the values set out in the relevant Milestone District Target tables contained in schedule 2, Performance Standard 1A”

“The Service Provider shall notify the Independent Certifier in accordance with clause 13.2.1 when it considers Milestone Completion or Partial Milestone Completion has been achieved together with details of all the works undertaken in respect of the Carriageways relevant to such Milestone Completion or Partial Milestone Completion. The Independent Certifier shall notify the Service Provider within two (2) Business Days of the data it intends to inspect as part of the 5% sample audit. The Service Provider shall provide such additional information, as the Independent Certifier considers reasonably necessary to support the notice, to the Independent Certifier.”

“The data entered into the approved Pavement Management Model is delivered from two streams and may consist of ... updated PCI, SCI and SRI survey data and/or ... re-setting of PCI, SCI and SRI following completion of interventions to individual RSLs. For updated survey data the Independent Certifier shall validate through a 5% sample check of data that any updated survey results were obtained as follows: ... PCI - Deflectograph Falling Weight Deflectometer ... SCI - DVI data collected in accordance with the latest version of the UKPMS Survey Manual using accredited DVI inspectors SRI - collected using a SCRIM … The Independent Certifier shall run a report from the PMM to confirm that the most up to date data has been input to the PMM. Where re-setting of the PCI, SCI and SRI following completion of interventions to individual RSLs has been undertaken. [sic] The Independent Certifier shall carry out a desk top audit to verify that the RSLs which have been treated are correctly reset to 'excellent' (in accordance with part 11 of schedule 2) within the PMM. Having validated the input data the Independent Certifier shall verify that the output from the PMM meets or exceeds the individual Milestone District Targets for NCI as set out in the tables contained in schedule 2, Performance Standard 1A. The Independent Certifier shall issue the appropriate certificate pursuant to clause 13.” ... PCI - Deflectograph Falling Weight Deflectometer SRI - collected using a SCRIM The Independent Certifier shall issue the appropriate certificate pursuant to clause 13.”

"create and maintain a Management Information System"

“1. The Service Provider shall carry out those inspections, surveys, tests and assessments that it is required to carry out during the Contract Term, pursuant to clause 6 (Surveys and Inspections) of this Contract and in accordance with Method Statement 13 (Inspections, Assessments and Monitoring); 2. This schedule 11 sets out the specific Monitoring Methods required to monitor performance of the Services described in schedule 2 (Output Specification). In respect of each Monitoring Method set out within schedule 11, the Service Provider shall carry out monitoring against the Performance Targets as set out in schedule 2 (Output Specification). In addition, in respect of certain Performance Targets as set out below, the Service Provider shall carry out monitoring as specifically described in this schedule 11. 3. Monitoring Method A The Service Provider shall carry out those inspections, surveys, tests and assessments to enable the Service Provider and the Authority to run the NCI Calculation Methodology, the FWCI Calculation Methodology, the KBCI Calculation Methodology, the VGCI Calculation Methodology and the CTCI Calculation Methodology at least once by 1 November of each Contract Year.”

“‘MIS’ means the electronic system comprising of the Project Network Inventory, Powered Apparatus Inventory, Underground Apparatus Inventory, Routine Maintenance Management System, Bridge Management System, Tunnel Management System, Structure Management System, Street Lighting Management System, Street Work Management System, Tree Management System and the Customer Care Management System to be provided and maintained by the Service Provider in accordance with this Contract”

“2.3.1 Where the Authority notifies the Service Provider of a change to the Project Network in accordance with this Contract, the Service Provider shall ensure that all information provided to the Service Provider by the Authority relating to such change is input into the Project Network Model within five (5) Business Days of the date of such notification unless otherwise agreed between the parties. 2.3.2 On each occasion where the Project Network Model is updated in accordance with paragraph 2.3.1 the Service Provider shall provide the Authority with an electronic copy of the updated Project Network Model within one (1) Business Day of the date on which the Project Network Model is altered in accordance with paragraph 2.3.1 above. 2.3.3 The Service Provider shall, from the Service Commencement Date, notify the Authority on a monthly basis of any amendments it would recommend to be made to the Project Network Model specifying all details and the reasons for such recommendation.”

“The Authority may use the provisions of schedule 19 ... to Accrue or De-Accrue Project Network Parts except in the case of Structures ... The Parties agree and acknowledge that the Authority is not obliged to use the provisions of schedule 19 ... and may, if it requires, (at its sole discretion) change the Project Network Parts pursuant to schedule 18 …”

“39. Either Party may request a Change in accordance with the provisions of Schedule 18 ...”

“43.1.1.2 maintain and update the Management Information System in accordance with clause 19 … and schedule 2 ...”

“5.1. The Service Provider confirms that subject to 5.2, it has satisfied itself as to: 5.1.1. the condition and extent of the Project Network at the Pre-Commencement Survey Date (including the volume and type of Apparatus and Highway Trees); and 5.1.2. the work that it needs to carry out on the Project Network in order to comply with the requirements of schedule 2 …”

“2.75. The Service Provider has taken the network information contained in the UKPMS database (document reference 0626) to be the definition of the Project Roads. … 2.81. During the bid period the Authority provided Deflectograph, SCRIM, Grip Tester, CVI and DVI data for parts of the Project Network within document 0626 'Latest UKPMS Tables" dated 23rd October 2008. … 2.82. The most current of these datasets ... has been used to populate the Service Provider's PMM. These data sets have been supplemented by additional data collected by the Service Provider. Additional Deflectograph, Grip Tester and DVI data has been collected during the bid process. This additional data collection resulted in complete coverage for Districts 2, 8, 11 and 12 and in excess of 25% coverage in all other Districts. … 2.83. The Service Provider has used its PMM (as described in Method Statement 13) to calculate the NCI and establish the long-term programmes of work and investment required as part of the Service Provider Programmes for the Project Network. 2.84. The PMM calculates the current condition of every section and sub-section against the Authority’s performance criteria. This results in the production of a current pavement condition index (PCI), surface condition index (SCI), Skid Resistance index (SRI) and NCI at Road Section Length (RSL) level. It also calculates the NCI for each road hierarchy within each PFI District. … 2.86. As described in Method Statement 13: Inspections, Assessments and Monitoring, the Service Provider's PMM not only calculates the current indices but it is also predictive, making use of deterioration modelling to predict future pavement performance without interventions. Where a pavement sub-section does not fail, the Service Provider has deteriorated the relevant NCI data in accordance with NCI Data Deterioration Principles as set out in Part 11 of Schedule 02 (Output Specification). This methodology allows the Service Provider to predict when a failure will occur and plan preventative maintenance ahead of that failure. 2.87. Through its planning processes, the Service Provider has grouped together failed sub-sections to varying extents, as appropriate, to determine the most suitable treatment over a contiguous section length. The grouping of sub-sections into contiguous treatment lengths will ensure that the resulting surfacing is generally uniform in nature, reducing the visual impact of works in the built environment. 2.88. The Service Provider has used its PMM to assess the full extent of the work it shall carry out, based on detailed analysis of PFI Districts 2 and 8 and PFI Districts 11 and 12 only. From this the Service Provider has determined the likely pavement performance and necessary investment profile required for the Contract Term. These PFI Districts are the ones for which the Authority has provided most complete datasets, particularly in terms of DVI data, and the Service Provider has supplemented this with DVI data of its own during due diligence to in excess of 99% coverage for PFI Districts 2 and 8 and PFI District 11. The Service Provider considers that these data sets provide greatest confidence in terms of likely starting conditions. There is sufficient network coverage provided from these PFI Districts for the Service Provider to consider the outputs to be representative of the whole Project Network. Using this extrapolation for the remaining PFI Districts, the Service Provider has calculated Condition Indices and investment works for the full Contract Term. … 2.90. The Service Provider has developed its Programme of Surfacing Works for Year 1 Requirements for Carriageways, Footways, Verges and Kerbs based on the Authority's Programme of Surfacing Works for Year 1 (data room document 0627). The Service Provider has incorporated the data, collected from the additional surveys described above, into the PMM. This has enabled the Service Provider to identify additional schemes to be incorporated into its Annual Programme for Year 1. … 2.92. The Service Provider shall direct its Pavement Lifecycle Manager to oversee the update of all condition data in line with the requirements of clause 6 … of the Contract. The Service Provider shall ensure that machine data is collected and pre-processed by accredited and quality assured data collection Sub-Contractors, Sub-subcontractors or supply chain partners. Teams of inspectors working for the Asset Manager shall collect Detailed Visual Inspection data in-house. The collection of a complete dataset will eliminate the use of CVI data from the PMM and will reduce to an absolute minimum the use of data 'filling' techniques. … 2.94. After the Service Commencement Date, the Service Provider shall apply updates to the PMM for the Authority's works actually carried out prior to Service Commencement. If any amendment is required arising from changes to actual works undertaken when compared against the Carriageway and Footway indicative maintenance programme 2009/2010 (data room doc 0647)... the Service Provider shall make application for any Unitary Charge adjustments in accordance with clause 5 … of the Contract. During this period, the Service Provider shall work with the Authority to incorporate any Project Network changes arising from the New Build and Third Party Works, and assist in providing information for any change required in accordance with clause 37 … of the Contract. The Service Provider shall update any changes to the Project Network Model carried out at this time, or at any time during the Contract Term, and provide them to the Authority in electronic format in accordance with paragraph 2.3, Part 8 … Schedule 2 ...”

“2.169. Definitions of 'raw data', 'processed data', 'unrepresentative data' and 'survey data' have been included in the Table of Definitions at the beginning of this Method Statement. 2.170. Throughout the Project, the Service Provider shall collate condition data in accordance with clause 6... of the Contract and Method Statement 13 ... so that data can be used to monitor network performance and to calculate the condition indices in accordance with Part 11 … Schedule 2 … of the Contract. … 2.712. The Service Provider shall undertake various validating processes to ensure that data is representative of the condition of the network which shall include: (a) checking survey lengths against network lengths to ensure that the data meets the requirements of paragraphs… of Part 11… Schedule 2… of the Contract … (b) confirming that the data is in the correct format and structure to be loaded into the MIS and PMM ...”

“6.3.1. The Service Provider shall carry out Condition Surveys on all Project Roads annually for the duration of the Contract Term in accordance with this clause 6 … and any applicable Highways Standards. … 6.3.3. The Service Provider shall carry out Deflectograph Surveys … annually during the Core Investment Period. 6.3.4. Following completion of the Core Investment Period, the Service Provider shall carry out Deflectograph Surveys... 6.3.5. The Service Provider shall ensure that the Deflectograph Surveys required to be carried out... are carried out in sufficient time ... so that the data is available to be used by the Service Provider to calculate the NCI using the Pavement Management Model and in accordance with the NCI Calculation Methodology ... 6.3.6. The Service Provider shall carry out DVI on a half of all: 6.3.6.1. Carriageways; 6.3.6.2. Footpaths; 6.3.6.3. Kerbs; and 6.3.6.4. Verges, within the Project Network annually (so that a DVI is carried out on all Carriageways, Footpaths, Kerbs and Verges every two (2) years).”

“2.1. This Method Statement 13, Inspections, Assessment and Monitoring sets out how the Service Provider shall comply with the requirements of clause 6 ... and how the Service Provider shall use the data collected as a result of the monitoring and reporting obligations set out in clause 43 ... and Schedule 11 ... This Method Statement also set out [sic] the Service Provider's response to the Authority questions contained in schedule 3… 2.2. The Service Provider shall use the information arising out of all surveys, inspections, tests and assessments to draw up and update the Service Provider Programmes to bring the Project Network up to the required standards defined in schedule 2 ... and to continue to maintain the Project Network at the required level during the Contract Term to ensure safe passage for users of the Project Network. … 2.4 The data from the various surveys and inspections will be key to managing the Project Network in line with Good Industry Practice and to inform the investment programmes.”

“2.45 In order to enable the Service Provider to calculate the NCI during August of each Contract Year in accordance with Monitoring Method A, schedule 11 ... and … each Contract Year in accordance with paragraph 6.3.5, clause 6 ... the Asset Manager shall ensure the Service Provider has programmed, carried out and processed all the Condition Surveys required. The Service Provider shall undertake a DVI survey in Contract Year (1) one for all Project Roads, including Carriageways, Footpaths, Cycle Tracks, Kerbs and hardened Verges, and then on each Project Road every two (2) Contract Years for the remainder of the Contract Term (so that after Year 1 the DVI is carried out on all Carriageways, Verges, Footpaths and Kerbs every two years). The Service Provider shall undertake Skid Resistance Surveys of all 'hierarchy 1 and 2' roads and Deflectograph Surveys on the Strategic Route and Main Distributor Network. Each inspections process is described in detail below. 2.46. The Service Provider shall ensure that all of the survey data referred to in paragraph 2.46 above is stored and referenced to the Project Network Model held as the Confirm UKPMS module forming part of the MIS. The Service Provider shall extract the required data from the UKPMS module to populate the PMM which shall be updated with data on a regular basis and the NCI shall be calculated no less frequently than required in the Contract and to support Milestone completion demonstration during the CIP. The NCI process is described in more detail in paragraphs 2.370 to 2.401 of this Method Statement”

“2.109. The Service Provider shall use DVI surveys as the primary method to collect surface condition data in order to calculate: the Surface Condition Index ('SCI'); the Footway Condition Index ('FWCI'); the Verge Condition Index ('VGCI'); the Cycle Track Condition Index ('CTCI') and the Kerb Condition Index ('KBCI') in accordance with Part 11 … of schedule 2: … 2.115. The Service Provider shall carry out DVI surveys in accordance with the current UKPMS User Manual and the latest Department for Transport Guidance for the calculation of National Indicators. 2.116. The Service Provider shall ensure that DVI survey data is uploaded every day from the PDA either remotely or by docking with a computer. The data shall be validated by the Asset Management Team for Project Network fit and data integrity and converted to an HMDIF file using UKPMS accredited conversion software. The Asset Manager shall investigate any anomalies with the relevant DVI Inspector. If these cannot be resolved then any problem data shall be resurveyed. On passing validation the data shall be loaded within one (1) Business Day into the Confirm UKPMS module and then the PMM. 2.118. The Asset Manager shall run the PMM regularly during the CIP with the most current survey data to demonstrate the Service Provider's compliance with the Milestone District Targets in Part 1A … of Schedule 2 ... The Service Provider shall use the most recent DVI surveys to inform and produce adjustments to the Service Provider's Annual Programme for the forthcoming Contract Year.”

“the index representing the condition of RSL’s in the Project area that is calculated in accordance with the NCI Calculation methodology”

“During BaFO refresh, Amey has attended a number of meetings with representatives of the Authority to demonstrate that the Service Provider's PMM calculates condition indices which are correct. At these meetings some very minor differences were noted, but these differences have only occurred due to slightly different approaches to the way in which defects or condition measures are related to the underlying network. The Service Provider believes that both approaches are equally merited, and that it has demonstrated to the Authority's representatives that the Service Provider's calculations are therefore wholly valid. The Service Provider believes that the Authority's representatives are satisfied that the Service Provider's calculations are therefore correct, that they accurately describe the condition of the Assets and that they shall therefore provide legitimate reports of the levels of service achieved by the Service Provider as the Contract intends. If required, during preferred bidder, the Service Provider shall liaise with the Authority to further confirm the compliance of the Service Provider's PMM. 2.396. Prior to the date of this Contract, the Authority tested and verified that the Service Provider's PMM correctly calculates the condition indices. At the date of this Contract each Party has a certified copy of the Service Provider's PMM … 2.400. No changes shall be made to the certified copy of the Service Provider’s PMM without the agreement of all interested parties to the Contract in accordance with the Contract. Should each Party agree to a change then, following software changes and compliance testing, a revised certified copy shall be issued to each Party. If subsequent to the change the Service Provider's PMM is found to incorrectly calculate the condition indices then the previous certified and agreed version of the software will be reinstated and the condition indices recalculated. 2.401. Throughout the Contract Term, the Authority ... may audit the PMM or undertake parallel calculations using its own model or systems.”

“54.4.1. The Service Provider shall be deemed to have: 54.4.1.1. satisfied itself as to the assets to which it will acquire rights and the nature and extent of the risks assumed by it under this Contract; and 54.4.1.2. gathered all information necessary to perform its obligations under this Contract and other obligations assumed, including: (a) information as to the nature, location and condition of the Project Network … 54.4.2. Save as expressly set out in clauses 54.4.1.3 to 54.4.1.5, the Service Provider shall not in any way be relieved from any obligation under this Contract nor shall it be entitled to claim against the Authority on grounds that any information, whether obtained from the Authority or otherwise ... is incorrect or insufficient and shall make its own enquiries as to the accuracy and adequacy of that information.”

“45. Gayhurst Drive is an example where the default inventory is less than the actual inventory ... Gayhurst Drive is a cul-de-sac with turning heads where ABHL has failed to resurface the corners of four turning heads at the end of the cul-de-sac. The works were carried out by ABHL between 14 and 15 July 2014. [The relevant monitor sheets and photographs were then provided.] … 52. Crowhurst Road is an example where on ABHL's approach the condition data inputted into the Project Network Model does not marry up with the inventory data which leads to the condition data being 'dropped' from the Project Network Model and the Pavement Management Model as ABHL refuses to update the inventory data. 53. This is directly contrary to UKPMS guidance ...”

“22. Mr Betts is incorrect to say that “ABHL has sought to take advantage” of the fact that the PNM records default data for XSP R1 at Moor Leasow ... we are simply calculating the Condition Indices by reference to the PNM. 23. Mr Betts is also incorrect that the FSL at L1 at Moor Leasow “will be treated more regularly” than that at R1 … As Mr Betts points out, the L1 FSL already has a score of 6.68, which means that it is in fair condition and would not contribute negatively to ABHL's meeting the relevant District level FWCI target of 6.6 for Milestone 10. Since the PMM does not algorithmically deteriorate condition data for FSLs, assuming that the Major and Minor deterioration found during subsequent DVI surveys did not bring the FSL into poor or failed condition or threaten the relevant District level FWCI, the FSL might never be treated during the remaining life of the Project Agreement. It is worth mentioning in this regard that the main source of deterioration of off-Carriageway XSPs is when heavy vehicles mount the kerb and drive over them ... This means that an FSL, say, in fair condition can be instantaneously put into failed condition if driven over by an HGV for any significant distance. This equates to an [sic] sudden extreme rate of deterioration that cannot be predicted at all.”

"This certificate is issued in accordance with Clause 13.2.2.1 of the Project Agreement. Issue Date of Certificate of Completion 30th May 2013 Signature of Independent Certifier"

“8. In light of clause 5 and in particular Milestone Completion Criteria set out in Schedule 15 of the Project Agreement, I did not, and still do not, believe that it was within the scope of the Independent Certifier's authority to consider or determine (i) whether or not ABHL was obliged to perform the services under PSI in accordance with the default inventory or the actual inventory; or (ii) whether ABHL was contractually obliged to update the Project Network Model (and thus the Pavement Management Model) using the actual inventory. 9. By "actual inventory" I mean the real features of the relevant asset, obtained by direct survey. By "default inventory" I mean any industry averages which have been entered against an asset in a database but have not been obtained by a direct survey of the asset.”

“10. When I perform (and have performed) the milestone certification process I seek to undertake this in accordance with the Milestone Completion Criteria in Schedule 15 of the Project Agreement. 11. The process starts upon ABHL notifying the Independent Certifier when it believes Milestone Completion or Partial Milestone Completion has been achieved. ABHL produces a QITP Certificate (an internal quality assurance document) which confirms that the works have been completed and that ABHL is satisfied with those works. In practice, ABHL and the Authority wrote jointly in order to confirm any practical variations which had been agreed so that any agreed variations required to meet Milestone Completion were clear to the Independent Certifier. The Independent Certifier then notifies ABHL of the data it intends to inspect as part of the 5% sample audit. 12. In accordance with Schedule 15 I am not required to carry out any site inspections on carriageways, footways, verges, kerbs or cycle tracks (after Milestones 1 and 2). In order to carry out the milestone certification process, I audit a sample of the data on a desktop basis. 13. As such, I check the input data as defined in Schedule 15 within the model provided to me by ABHL (which may have been produced on a default or live basis) to consider the Network Condition Indices. However, I did not certify the position regarding the inventories used as I did not believe we were required to do so. 14. Pages 4-5 of the Milestone Completion Criteria (in Schedule 15 of the Project Agreement) deal with the NCI criteria and sets out the test procedures to be followed … 15. This data therefore includes PCI, SCI and SRI survey results and any agreed resetting of the PCI, SCI and SRI values following the completion of interventions based on revisions after the survey was done: i.e. where ABHL have carried out works after the original survey was done. Although the inventory data was collected as part of the survey, the inventory was not checked to see whether it was the default or live inventory as I did believe that was not part of the Independent Certifier's role under Schedule 15. … 17. There is a reference above to the Independent Certifier running a report from the PMM (Pavement Management Model). For the sake of completeness, I should confirm that it was not possible for the consultant working for ABHL to run such a report from the PMM and so the Independent Certifier attended the consultant's offices in Nottingham to review the data. This revised process was agreed between the parties prior to Milestone 1. As above, although the actual inventory data had been collected as part of the surveys, I did not consider that it was part of the Independent Certifier's role to check that part of the data. 18. In my view, the reference to up to date data having been put onto the PMM is referring to the surveys and any resetting data (for example as set out in page 4 of Schedule 15 as quoted above). However, I do not believe that I had to check whether default or actual inventory was used in the PMM (or whether updated actual inventory was inputted into the PMM) as I do not consider that there is a requirement for that inventory to be checked by the Independent Certifier. 19. The role of the Independent Certifier was designed by the Project Agreement to be a relatively high level role. Given the information provided to the Independent Certifier and my understanding of the scope of the role set out in Schedule 15, it was never the Independent Certifier's intention or role to determine the matters currently in dispute between the parties.”

“24 November 2014 … 4. The Authority's view is that the Contract requires the Network Condition Indices to be calculated using the Project Network Inventory, which reflects the actual inventory of Project Network Parts. The Service Provider is using the original inventory (including default inventory, rather than the actual Carriageway and Footway widths and areas) in the Project Network Model to input to the Pavement Management Model. This results in incorrect outputs from the Pavement Management Model in respect of measurement of current NCIs and therefore also the consequential works required to be carried out. If you need further information to explain the issue, please let me know and I will be pleased to provide further details.” “1 December 2014 … I have considered your representation (in accordance with clause 13.1.3) that Atkins, as the Independent Certifier (IC), consider whether we are able to certify the NCIs as part of Milestone 9. From our commercial review of the Deed of Appointment of the Independent Certifier, our contractual obligations are to evaluate Milestone 9 and make an independent judgement on whether this milestone has been achieved in accordance with the Milestone Completion Criteria defined in Schedule 15 of the Project Agreement. Not proceeding with the evaluation and the issuing of the certification could result in Atkins breaching our contractual role as an Independent Certifier … Clause 2.3 requires that Atkins provides the Services independently, fairly and impartially and 2.2.1 requires Joint Notice from the Counterparties to request any Varied Services. Not certifying on the basis of a dispute could be in breach of our obligations. Limitations on Authority in clause 5 of the Deed state that the IC [the Independent Certifier] shall not express an opinion on and shall not interfere with or give any advice, opinion or make any representation in relation to any matters which are beyond its role and responsibilities under the Deed. With the lack of any specific clause relating to the obligations of the IC in a dispute situation Atkins feel we are obliged to proceed with the evaluation of Milestone 9 following the scope of services defined in our Deed of Appointment. Nevertheless, bearing in mind the ongoing dispute between the Authority and the Service Provider, I propose to add the attached note to the front page of the Certificate for Milestone 9: Note: The actual indices achieved shown in Table 1.9b are calculated using the original Pavement Management Model. The Independent Certifier recognises that the Authority and the Service Provider are in dispute regarding the validity of the Project Network Model and Project Network Inventory and any change to the Project Network Model or Project Network Inventory could change the numbers in Table 1.9b”

“14. There is no dispute that the principles on which a contract (or any other instrument or utterance) should be interpreted are those summarised by the House of Lords in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, 912-913. They are well known and need not be repeated. It is agreed that the question is what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. The House emphasised that "we do not easily accept that people have made linguistic mistakes particularly in formal documents" (similar statements will be found in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251 ...) but said that in some cases the context and background drove a court to the conclusion that "something must have gone wrong with the language". In such a case, the law did not require a court to attribute to the parties an intention which a reasonable person would not have understood them to have had.”

"14. For the most part, the correct approach to construction of the bonds, as in the case of any contract, was not in dispute. The principles have been discussed in many cases, notably, of course, as Lord Neuberger of Abbotsbury MR said in Pink Floyd Music Ltd v EMI Records Ltd [2010] EWCA Civ 1429, para 17 by Lord Hoffmann in Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, passim, in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912F to 913G, and in Chartbrook Ltd v Persimmon Homes Ltd (Chartbrook Ltd Part 20 defendants) [2009] AC 1101, paras 21-26. I agree with Lord Neuberger (also at para 17) that those cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant. As Lord Hoffmann made clear in the first of the principles he summarised in the Investors Compensation Scheme case [1998] 1 WLR 896, 912H, the relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract."

“14. Over the past 45 years, the House of Lords and Supreme Court have discussed the correct approach to be adopted to the interpretation, or construction, of contracts in a number of cases starting with Prenn v Simmonds ... and culminating with Rainy Sky SA v Kookmin Bank ... 15. When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to "what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd … para 14. And it does so by focussing on the meaning of the relevant words, in this case the clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions. In this connection see Prenn v Simmonds 1384-1386; Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 1 WLR 989, 995-997, per Lord Wilberforce; Bank of Credit and Commerce International SA v Ali ... para 8, per Lord Bingham of Cornhill and the survey of more recent authorities in Rainy Sky …, paras 21-30, per Lord Clarke of Stone-cum-Ebony JSC. 16. For present purposes, I think it is important to emphasise seven factors. 17. First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook …, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by provision when agreeing the wording of that provision. 18. Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting the more ready the court can properly be to depart from their natural meaning. This is simply the obverse of the sensible proposition that the clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning. If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve. 19. The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG ... 251 and Lord Diplock in Antaios Cia Naviera SA v Salen Rederierna AB (The Antaios) ... 201, quoted by Lord Carnwath JSC at para 110, have to be read and applied bearing that important point in mind. 20. Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpreting is to identify what the parties have agreed, not what the court thinks they should have agreed. Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party. 21. The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. Given that a contract is a bilateral, or synallagmatic, arrangement involving both parties, it cannot be right when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.”

"He illustrated the other side of the coin by quotations from Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG ... 251: “The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.” and Lord Diplock in Antaios Cia Naviera SA v Salen Rederierna AB (The Antaios) ... 201: "

“ABHL's obligations to perform the Core Investment Works and meet the requirements of Performance Standard 1 extend to the Project Network as a whole and are not limited to the RSLs as recorded in the Project Network Model contained in DRD0626”

“70. The point is simply a bad one. It is not a natural reading of the words. It does not fit with the provisions in Part 11 of Schedule 2 (in particular those requiring the use of the length in the PNM). It does not fit with the definitions of the other sections lengths (FSL, VGSL, KSL and CTSL ...), And, most simply of all, it cannot work as a reading of the definition because there are no "Nodes set out in the PNM". The parties agree that the PNM does not expressly contain Nodes, being the five figure identifiers as defined in the Project Agreement ... Had the point been raised by the Adjudicator at the hearing or before he issued his Decision, no doubt this would have been pointed out to him.”

“19. The Project Agreement requires ABHL to perform Core Investment Works across the entire Project Network. All the data from surveys (including condition and inventory data) is collected and input into the database, the Project Network Model. The condition data marries up with the inventory data. The survey data is then processed by the Pavement Management Model, which (i) produces condition indices which should reflect the actual condition of the Project Network; and (ii) should enable work to be carried out across the Project Network in an efficient order (e.g. parts of the Project Network in a worse condition are treated first).”

“Paragraph 56, the Adjudicator sets out the contractual definition of, "RSL". Then in paragraph 61, over the page, page 13, he gives his construction of the term, "RSL", so that he reads the words, 'In the Project Network Model', as qualifying only the words, “Between consecutive nodes”

"A length of footway associated with a Road Section Length for an individual Cross-sectional Position identified in the Project Network Model"

“‘Project Roads' means those Carriageways, Footways, Kerbs, Verges, Footpaths and Cycle Tracks identified in the Highway Register ...”

“32. The scope of ABHL's Core Investment Works is clearly defined in Performance Standard 1 of the Output Specification (Schedule 2 of the Project Agreement) by reference to the Project Network. Thus paragraph 1.1 of the Required Outcomes in Performance Standard 1 ... stipulates that: "The Service Provider shall comply with the provisions of this Performance Standard 1 and ensure that at the end of the Core Investment Period and thereafter until the expiry of the Contract Term in relation to the Project Network...”” "The Service Provider shall comply with the provisions of this Performance Standard 1 and ensure that at the end of the Core Investment Period and thereafter until the expiry of the Contract Term in relation to the Project Network...””

“So, my Lord, in summary, those sixteen references show that it is obvious that the Project Network Model is at the very heart of the Condition Index calculations which must be undertaken pursuant to Part 11 of Schedule 2. Remember, what are they there are for? They are there to determine whether the Milestone District Targets have been achieved, and it is that which determines whether there has been Milestone Completion or not.”

“ ... Their case hinges entirely on the words "Project Network Model", and then what they do from that is they seek to use that to justify their position. Now, there are actually not significant differences between the parties in terms of how the Condition Indices operate, so that -- there was a lot of time taken up yesterday with going through how the Condition Indices operate. Much of that is agreed, so just to be clear for the court, the major disagreement between the parties is whether you use actual inventory or default inventory. We agree that the PMM calculates the Condition Indices using data from the PNM in accordance with the Output Specification. So the 16 or 17 references to the PNM ... are, therefore, not relevant to the issues between the parties.”

“My Lord, the other thing we would say is if you go back to 19.2.1 you will remember that those same words were used again in 19.2.1. If you look at the summary we have done, we have helpfully set that out just above that one. So you can see that we have in repeated places ... the obligation to ensure that the information in the PNM is up-to-date at all times. There is no restriction in 55.1.9 to Schedule 2 or Performance Standard 8. It couldn’t be clearer. That, my Lord, also ties in with the references we were looking at yesterday, particularly in Method Statement 13. Again, that is page 7 of this document we have produced, 2.46. All the survey data is stored and referenced in the PNM. Then it is used to populate the PMM, which shall be updated with day it on a regular basis, and the NCI shall be calculated. So it was expressly stated that the updated PNM and the PMM are to be used to calculate the NCI, and then to go through Milestone Completion process”

"The Service Provider shall maintain …"

"… the Project Network Model throughout the contract term and…"

"… shall be updated from time to time in accordance with paragraph 2.3, part 8 of Schedule 2.” There it is, my Lord, in black and white. That is the obligation. Your Lordship will search in vain through the other references on those nine pieces of paper to any other reference to updating the Project Network Model in Method Statement 13 … My Lord, the picture which emerges is, in my respectful submission, clear. The obligation which we owe to update the capital P, Project, capital N, Network, capital M Model, is contained in paragraph 2.3 of PS8.” (b) ensuring the quality of any survey data entered into the PMM. "

“the Service Provider to run the NCI Calculation Methodology, the FWCI Calculation Methodology, the VGCI Calculation Methodology ... and the CTCI Calculation Methodology using the Pavement Management Model (and, for the purpose of this Contract, solely the Service Provider shall perform such calculations and such calculations shall only be performed using the Pavement Management Model).”

“the Service Provider shall carry out those inspections, surveys, tests, and assessments that it is required to carry out during the Contract Term, pursuant to clause 6 (Surveys and Inspections) of this Contract and in accordance with Method Statement 13 (Inspections, Assessments and Monitoring)”

“The Service Provider shall carry out those inspections, surveys, tests and assessments to enable the Service Provider and the Authority to run the NCI Calculation Methodology, the FWCI Calculation Methodology, the KBCI Calculation Methodology, the VGCI Calculation Methodology and the CTCI Calculation Methodology at least once by 1 November of each Contract Year”

"The Service Provider shall ensure that the Deflectograph Surveys required to be carried out ... are carried out in sufficient time ... so that the data is available to be used by the Service Provider to calculate the NCI using the Pavement Management Model and in accordance with the NCI Calculation Methodology on 1 November in each Contract Year"

"The Service Provider shall use DVI surveys as the primary method to collect surface condition data in order to calculate: the Surface Condition Index ("

“If BCC's interpretation is preferred then Milestone Certificates 6-9 were issued in reliance on the wrong data and thus the wrong basis ...”

"The decision of Andrew Goddard QC dated 09 July 2015 was wrong and is not binding upon the Claimant or the Defendant"

"… rebuilding the Project Network Model with the data from the Project Network Inventory; obtaining and inputting condition data in respect of the altered features of the Project Network Model imported from the Project Network Inventory; undertaking remodelling to seek to reflect the new data in the Project Network Model and the Pavement Management Model; running the remodelled Pavement Management Model in order to seek to produce the revised condition indices; and seeking to identify the further work which would be required in order to achieve the Milestone Completion Criteria and the relevant Targets for Milestone Completion for Milestone 10 (on the basis of the Decision). In the future, this is likely to involve similar exercises in relation to each Milestone 6 to 9, together with a retrospective assessment (to the extent this is possible, which has not yet been ascertained) to seek to determine when Milestone Completion would have occurred in respect of each of Milestones 6 to 9 (on the basis of the Decision). Depending on the outcome of those exercises and any agreement between the parties, it may also involve the undertaking of additional works on the Project Network."

"… However, when you come to answer the question retrospectively the position is much more complicated. If (on undertaking the new analysis required by the Decision) the targets have not been achieved at the date when the Certificate of Completion was issued, then it becomes necessary to assess at what later date they were achieved. However, this is a notional exercise, because no such assessment was made at the time (until the date when the next Certificate of Completion was issued). Because the targets could have been achieved at any intermediate date, you have to undertake a process of trial and error, which is complicated by the fact that the process of undertaking works and carrying out condition surveys was also ongoing during the same period"