Doosan Enpure has won a legal dispute in the High Court with joint venture partner Interserve Ltd on a £38 million contract which began in March 2016 to upgrade Northumbrian Water’s Horsley Water Treatment Works.

The disagreement centred on a request for the release of a £5.3 million+ payment from a joint venture account into whichNorthumbrian Water made regular monthly payments which were then passed to both firms.

The practice of Doosan and Interserve had been to submit a consolidated application for payment to NWL consisting of a spreadsheet with, amongst other things, tabs setting out Doosan's costs and Interserve's costs. Under the contract payments were then certified in similar form by Turner and Townsend as Project Manager, .

Interserve refused to sign off the 31st monthly payment share due in October 2018 as a result of concerns about a potential project delay and cost overruns, which would impact on the joint venture ultimate pain-share/gain-share arrangements.

In a letter dated 20 November 2018, Interserve set out its position as follows:

"…. The commercial and programme information provided by yourselves and consequential impact on costs and time raise concerns that your Works Part Costs including potential damages will exceed your Adjusted Works Part Target Costs. This was discussed at the JV meeting on 7th November 2018 …

It was agreed at this meeting that there were a number of key issues which were impacting on this position and that certain actions would be undertaken in order to try and resolve these.

1. [Doosan] claim against NWL for delay and disruption associated with compensation events. ….

2. [Doosan] internal changes have not been presented to [Interserve] with detailed substantiation to allow agreement. [Doosan] are to provide the required information.

3. [Doosan's] latest programme indicated a significant delay to completion of the works of 34 weeks. … Further meetings are ongoing and it is essential that we get this programme under control to limit ongoing costs and exposure to increasing associated damages.

4. Additional power requirements. Any impact of this has not been taken into account within the current projected costs. However this is potentially a large cost issue and [Doosan] agreed to undertake further investigation [to] find a potential solution and make a proposal to NWL.

Consequently based upon current information and until the above issues are resolved we raise the matter to the JV committee in accordance with Clauses 8.8 and 8.9 of the JV Agreement recommending that the interim payments are suspended."

The decision to halt the payment release came at a time when the Interserve group faced mounting debt problems – in March 2019 administrators were subsequently appointed to Interserve Plc and the Group’s business and assets were sold to a newly incorporated company to be controlled by the Group's lenders.

Ruling in favour of Doosan Enpure in a written judgement issued in the Technology and Construction Court (QBD) in the High Court of Justice, Mrs Justice Jefford said it was “common ground” between the parties that interim payments could only be suspended by the unanimous agreement of the JV Committee and there was no question that such unanimous agreement had not been reached.