J Browne Construction Company Ltd v Chapman Construction Services Ltd & Others

[2016] EWHC 152 (QB)

Here HHJ Taylor had to consider a claim that CCS was paid for  work invoiced without timesheets, which were required under the contract, and that they deliberately and fraudulently overcharged JB in respect of both the standard work done and overtime. The contract was said to be on JB’s standard labour subcontract terms, and provided that in the absence of any variation or waiver, provision of timesheets containing specified information was a condition precedent to payment under the contract. That information was the names, dates and shifts worked by each individual on the project to which the Sub-Contract Order related. The timesheets that were produced by CCS did not contain the name of any individual involved in the project.

It was also not disputed that timesheets were not attached to the invoices when they were submitted, which was generally by email. The evidence was that the invoices were compiled from information taken down by hand from workers over the phone, which was then used as the basis of timesheets. Alternatively they would be handed over on site to be signed. CCS said this meant that the timesheets that were in evidence were genuine and contemporaneous.

JB said that there never were any timesheets, and all of the CCS timesheets for the contract had been fabricated and backdated after the dispute between the parties arose. There were no records of them at JB or in any of the contemporaneous correspondence. JB further said that the timesheets were not “proper” timesheets  in that they did not perform the function for which they were required and were not the standard form used in the construction industry. It was not possible to determine who worked at which site on which date. That information was necessary to identify who was on site and to calculate what to pay each man.

After consideration of discrepancies in sample invoices, the Judge concluded that the likelihood was that these invoices had been fabricated after the dispute arose. The lack of contemporaneous evidence as to their existence and the discrepancies with the contemporaneous emails that did exist were supportive of their being later documents.

The Judge then had to consider whether or not this had been a fraud or conspiracy or deceit. It was clear that the document- keeping was poor and in some respects non-existent. Certain health and safety documents were not completed for the first three months of the contract and had to be backdated. Witnesses suggested that on many occasions the attendance records were either not filled in, or were partially filled in, where workers had checked in, not out. Invoices were submitted without timesheets, and nobody asked for them. There was not, however, fraud.

The Judge noted that the control of documentation for a contract of this size was “dismal”. The provision of timesheets was not insisted upon because there was a degree of trust that the invoices were accurate, even though the lack of timesheets amounted to a breach of contract. This was a contract where more work than anticipated was carried out. When the timesheets were prepared afterwards, they did not always overstate but rather understated the work in some respects when compared with the contemporaneous emails. That was not consistent with dishonesty. The Judge considered that the most likely explanation for the backdated invoices was a “misguided and wrongful attempt to meet allegations of fraud which they considered to be wholly unjustified…”

JB pleaded that as the provision of timesheets was a condition precedent to payment and that prior authorisation was needed for overtime, nothing was payable. However, it was accepted that if work was done, some remuneration was due. There was little evidence before the Judge on which to assess what any overpayment may be. She considered the documentation as a whole with the presumption that CSS were in the wrong and held that as there had been inaccuracy throughout, there was a margin of error of 15% of the invoice value.