Fishers Tours threatens legal action over 100% contract payments

Fishers Tours of Dundee has raised the possibility of bringing legal action against Angus Council in a bid to force payment of home-to-school contracts at 100% of their value while educational establishments are closed during the coronavirus COVID-19 pandemic.

On 24 April, Angus Council emailed operators of home-to-school contracts. It informed them that where those service are temporarily suspended, it will pay 87.1% of their value until the end of June. However, James Cosgrove, Managing Director of Fishers Tours, alleges that no term within those contracts allows for such a variation and thus payments remain due in full.

Law firm Bailie Shepherd, acting for Fishers Tours, wrote to Angus Council on 1 May. It believes that Mr Cosgrove is correct in his assertion unless a contract variation is agreed. The alternative is termination within terms of the contractual provisions.

Angus Council says that it arrived at the figure of 87.1% by removing fuel costs, as per the Confederation of Passenger Transport Cost Index.

Where a contracted service remains in operation, regardless of the variation or reduction in supply from the agreed terms, Angus Council is paying its value in full. Its overall position has been developed in parallel with a Scottish Procurement Policy Note relating to supplier relief, it says.

Bailie Shepherd’s letter claims such an approach “is entirely contrary to the spirt and ethos behind the various reliefs offered.” The operator has continued to invoice Angus Council for non-operational contracts at 100% of their value.

Bailie Shepherd notes that when combined with the loss of other work during the coronavirus COVID-19 crisis, Angus Council’s approach “places our client in a perilous situation. If Angus Council is to maintain such a position, then there is a strong probability that our client will not survive the current economic crisis.”

In its email to operators of 24 April, Angus Council said that the 87.1% payment level of for home-to-school contracts that are not currently operating is subject to conditions.

One of those is that the supplier “will not be entitled to combine a claim under the contract with any other COVID-19 related relief, grant, intervention or any other measure that results in the supplier receiving more than one benefit/relief for the same underlying cash flow issues.” Where drivers are subject to the Coronavirus Job Retention Scheme, Angus Council says it cannot reimburse labour costs.

However, in answer to a separate enquiry from routeone on 6 May, the local authority said that the impact of staff being subject to the Coronavirus Job Retention Scheme would be calculated retrospectively via an open book accounting policy.

Angus Council otherwise declined to comment further on the matter.