Local authority launches High Court action against Bam Nuttall and parent company for overrun

Cambridgeshire council has launched a £54.7m legal claim against contractor Bam Nuttall and its parent company Royal Bam Group over a delayed £151m guided busway.

According to legal documents acknowledged in court this week, the council is suing the civils contractor and its Dutch parent company because of a guarantee given by Royal Bam in February 2009 to cover any of Bam’s liabilities on the project.

The council is also suing Zurich Insurance for £7.5m of that sum because of a guarantee bond taken out in December 2009.

The writ, filed in the Technology and Construction Court, says the target price of the job, to build a 25km-long guided bus route from St Ives to Trumpington via Cambridge, was originally just £83.9m.

A design and construction contract between BAM and the council was signed in September 2008 with an intended completion date of early 2009. Court papers confirm that when the project finally reached completion on 21 April this year it was more than two years beyond its deadline.

The papers contain little detail of the nature of the dispute, but Cambridgeshire council has previously said the busway was delivered more than £60m over budget. The writ now confirms it is attempting to have the vast majority of this overspend repaid.

It also maintains that its contract with Bam allows it to charge £14k per day for every day beyond the completion date, which amounts to £10.8m. The council has already withheld payment of £10.5m in respect of this amount.

Bob Menzies, head of busway delivery at the council, told the BBC last month that: “Bam Nuttall finally delivered the scheme two years late and now dispute they should be liable for the overspend as set out in the contract.

“The council has no choice but to bring in extra resources to manage the contract and make sure that Bam Nuttall’s claims are properly assessed.”

BAM Nuttall is understood to be contesting the claim, however the firm declined to comment on the case. Zurich Insurance also declined to comment.