JP Mac Ltd v Hanson Quarry Products (Europe) Ltd

A subcontractor cannot be treated as having transferred its contractual relationship to another member of a joint venture without its knowledge and consent. The court determines the contracting party from the parties’ communications, contemporaneous documents and conduct. Where the evidence shows that the subcontractor accepted a new contracting arrangement and invoiced the new contractor in accordance with its procedures, the original contractor is not liable for the subsequent work. The claimant bears the burden of proving its claim on the balance of probabilities.

J.P. Mac carried out work on the M27 motorway renewal project. It claimed an agreed sum from Hanson, alleging that its subcontract remained with Hanson throughout. Hanson contended that only the initial work, capped at £20,000, was performed under a Hanson subcontract and that subsequent work was undertaken for Associated Asphalt Ltd and Stenoak under the joint venture arrangements.

The court considered the contractual documents, invoices, billing arrangements, contemporaneous communications and witness evidence, including the absence of material witnesses. The central issue was whether J.P. Mac had agreed that work beyond the initial £20,000 would be performed for AAL/Stenoak rather than Hanson.

1. Contractual identity. A change from a subcontract with one joint-venture participant to a subcontract with another could occur only with the subcontractor’s knowledge and consent. Without that consent, the subcontractor would be entitled to assume that its contract remained with the original contractor.
2. Evidence of agreement. The contemporaneous documents showed that Hanson’s liability was limited to the initial work. Invoice No. 202 was paid by Hanson and related to work within the initial arrangement. Subsequent invoices were addressed to AAL/Stenoak and followed its self-billing procedure, including the endorsement that they were not tax invoices. The court found that these matters demonstrated J.P. Mac’s agreement that the subsequent subcontract was with AAL/Stenoak.
3. The court rejected the explanation that invoices were redirected merely because payment would be quicker or easier. It found that the later Hanson invoices had been produced to support the claim and that the claimant’s evidence was unreliable. The documentary evidence and the evidence of Mr. Flowerdew’s conversations with Mr. Webster reinforced the conclusion already reached on the primary evidence.
4. The claimant bore the burden of proving its claim on the balance of probabilities. Even without relying on the hearsay evidence concerning Mr. Webster, the claim would have failed.
5. Disposition. The court found for the defendant. The claim for £164,816.59 was dismissed.