30 September 2020 #Construction
Many construction disputes relate to the calculation of the final account. Sometimes there may be an interesting point of law or expert evidence at stake. More often than not, the dispute will boil down to proving what work was done and / or what was the agreed price for the work.
These issues came into play in the recent case of Premier Engineering (Lincoln) Limited v MW High Tech Project UK Limited. The underlying project was very large (£150m) but Premier started work on a very small subcontract. When MW fell out with another subcontractor Premier agreed to supply additional labour to help MW the project back on track. The work was carried out on an ad hoc basis – MW told Premier each week what work was required, Premier did the work and invoiced according to its timesheets. Come the end of the project, the parties were unable to agree Premier’s final account. Premier claimed an additional £1.3m, whereas MW said that it had already overpaid.
The dispute fell into two main categories – labour and materials – which the court unravelled over the course of an 80 page judgment.
The labour charges represented by far the largest part of the claim. Premier’s claim relied on its timesheets that had been signed each week by an authorised MW representative. MW sought to distance itself from the timesheets for two reasons. Firstly, it said that it signed the timesheets without carefully checking them ‘to keep the peace’. Secondly, the turnstile records at site suggested that the hours worked were lower than claimed. The Judge rejected both arguments.
Signed timesheets are primary evidence that work has been done. It was MW’s own fault if it had not adequately resourced the job to check the timesheets before signing them off. This was the best opportunity for MW to raise any concerns about the sums claimed. In any event, MW had challenged the timesheets from time to time.
Turnstile data could have been relevant evidence.However, in this case Premier had raised concerns about the turnstiles – sometimes they were not working and on other occasions Premier’s operatives were working outside the area covered by the turnstiles. The Judge concluded that the parties had agreed that the turnstile data would not be taken into account. They agreed instead to use a biometric clock but this was not installed on site until a later date.
The materials claim threw up a different challenge. About £100k turned on the claim but it covered very many individual invoices, some of which were low value. It would not have been realistic for the court to consider every invoice. Instead it applied a ‘materiality threshold’ to exclude the lowest value invoices. It examined a representative sample of the remainder and used the conclusions on these to determine what was due under the entire batch of invoices.
The case is good illustration of how the court will approach such a claim and the challenges of determining a final account that it for a large sum but made up of very small items. It also emphasises the importance the claiming party keeping contemporaneous records and the paying party raising objections at the time.