David Daly, co-Founder of HD Construction Solutions Ltd, on the importance of good record-keeping
THE IMPORTANCE OF GOOD SITE RECORDS The case of Premier Engineering -v-MW High Tech (2020) provides a timely reminder of how important good record keeping is. The facts MW Hi Tech Projects UK Ltd (“MW”) were contracted on a large energy project in Hull worth £150m. In 2017, it employed Premier Engineering (Lincoln) Ltd (“Premier”), essentially to supply labour and supervision for multiple trades under the direction of MW. MW retained responsibility for design and programming whilst Premier provided basic materials related to each trade. Premier was not employed under a typical subcontract where it was contracted to execute a defined scope of works, for an agreed price and which was to be completed within a defined period; its role was largely limited to that of a labour supply contractor with supervision. As the judge said, this meant that MW were “… to identify and control the work that the men supplied by Premier were required to carry out.” [para 7] By 2018, Premier substantially increased its labour at the instruction of MW – the EPC contract included for substantial penalties for delay but by this time, MW “…had a failing project on its hands” [para 3]. Essentially, the parties fell out over the value of the labour supplied by Premier, primarily during 2018, with an amount of £1.3m disputed. The fundamental difference centred on the applicability of timesheet records and turnstile data collection. The typical process
for Premier’s timesheets was that each week it would submit to MW its labour hours comprising hours worked, together with operative travel and incentive hours. A MW representative would review and approve, and these approved timesheets would then form the basis of Premier’s invoicing. To support its timesheets, Premier provided signing in sheets, later superseded by a biometric system. One of the main areas of dispute related to MW’s use of turnstile data to verify the timesheets. With agreement from MW, Premier then installed a biometric system in April 2018 which was used to verify its timesheets from that point on [para 41]. Findings As there was no defined scope of works, contract price or completion date, it was held that MW essentially directed Premier’s labour [para 9]. Signed timesheets were essential evidence to substantiating Premier’s hours with the judge stating: “…The purpose of signature is obvious and is to vouch for the accuracy of the timesheets…” [para 13]. The judge also found that MW’s argument that it signed off timesheets without properly verifying them was unacceptable: “The purpose of having timesheets signed off by the employer’s representative on site is clear: it is to signify knowing agreement and to prevent disputes later. Signed timesheets are therefore the primary (and should be the best) evidence for the parties and the Court.” [para 23] The time for challenging invoices was at or around the time they were submitted
when the relevant MW staff were on site, not after: “…the invoices were submitted when Premier had current knowledge of the reasons why each sub-invoice was submitted...MW’s contemporaneous assessment of the invoices was carried out by people with current knowledge of Premier’s work on the Project and what their requirements for plant and materials would be or had been. That was, therefore, the time when issues could and should have been raised...” [para 254] Practical tips 1. Ideally employ subcontractors on a defined subcontract, with an agreed price, a defined duration and scope of works etc. Failure to do so could mean you assuming responsibility for your subcontractor’s works; 2. Where applicable, agree the method of verifying hours worked in advance of starting works, whether that is through hard copy timesheets with signatures, turnstile records or biometric data; 3. If using timesheets and you disagree with the hours stated on them, do not sign them, or expressly limit your approval to the hours that you do agree with; 4. Similarly, signing timesheets but adding ‘RPO’ to it (record purposes only) is unlikely to be reliable evidence that you disagreed with the hours. Think about the literal meaning of the words ‘record purposes only’; and 5. Challenge invoices at the time of submission – do not rely on the Court to do this for you substantially after the fact as the Court (or adjudicator) is likely to find it a disproportionate use of its time.
Premier Engineering (Lincoln) Limited -v- MW High Tech Projects UK Limited [2020] EWHC 2484 (TCC): https://bit.ly/2Wj4jtQ Disclaimer: this content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by HD Construction Solutions Ltd.
17
