REUTERS | Stephen Hird

How to avoid disputes about timesheets and invoices

The recent case of Furmans Electrical Contractors v Elecref Ltd concerned a construction dispute over only a few thousand pounds. Although it made no headlines, this case raises an interesting question – one which you are best avoiding going to court to answer.

In Furmans, the parties to a sub-sub-contract agreed a daily rate for the sub-sub-contractor’s works. After the works had been on-going for some time, it emerged that the parties had differing views about how many hours actually comprised a day’s work. As is common in construction disputes, the court had to establish the terms of the contract between the parties so that it could decide what the sub-sub-contractor should be paid.

The judgment in Furmans is largely dependent on the facts of the case, especially the communications between the parties. One of the minor facts mentioned in court was that the sub-contractor’s site supervisors had signed off the sub-sub-contractor’s invoices for some time before the sub-contractor questioned the sub-sub-contractor’s working hours. This raises the question, what is the status of timesheets or invoices that are signed-off by the site supervisor?

Unfortunately for us, the court in Furmans did not directly address the status of the signed-off invoices, because other evidence answered the questions before it. However, the judgment confirms that courts will consider signed-off invoices or timesheets as evidence (paragraph 39, judgment), although the weight they give such evidence may vary. This seems a fair approach, but makes it difficult to predict the outcome of a specific dispute with any certainty.

Clearly, it is best to avoid having to answer tricky questions like this, especially in court. The chances of having to do so may be reduced by taking the following steps:

Make sure the detailed basis on which a daily rate will be paid is agreed in writing. This should include the number of people that will work and the length of their working day; any breaks they are allowed; any travel or accommodation costs and when those can be claimed.

Make sure that site supervisors are aware of the agreed terms and only sign off documents they have verified. Ideally, agree the form of document that the site supervisor will be asked to sign-off and set out on the face of the document what matters it evidences, emphasising that it may be subject to further enquiry before payment is made.

Where possible, make sure the invoices or timesheets are submitted regularly. A common trick is to submit a large pile of invoices covering many months’ work late on a Friday afternoon. When this happens, the scope for errors by the person signing-off the documents is greatly increased.

If you suspect you have made an overpayment:

  • Raise the matter immediately, even if it is just to flag the issue pending further investigation. Failure to do so may be seen as waiving your right to reclaim any overpayment later.
  • Think carefully before making any further payment. Again, further payment may be seen as waiving your right to reclaim any earlier overpayment at a later stage. However, refusing further payment raises the possibility of the contractor/sub-contractor walking off site, so in some cases it may be expedient to make some further payment on the express basis that you reserve the right to reclaim sums following further investigation.

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