BPL Contracts (Scotland) LTD against Beattie FRC LTD (Court of Session)

Factual and Procedural Background

Company A entered into two oral sub-contracts with Company B in relation to packages of works (the "Crown Wall" works and the "Pavement Slab" works) forming part of an expansion project awarded by The Authority. The sub-contracts were agreed orally at meetings; the parties disputed the terms and the sums remaining due. Company A sought declarators as to the terms and payments; Company B denied sums were due and counterclaimed for alleged overpayments in respect of the Crown Wall sub-contract. The action was raised in July 2023 as an ordinary action. The procedural history involved multiple changes in Company B's pleaded positions, disclosure and timing issues, a discharged proof originally fixed for December 2024, and a proof which ultimately commenced in June 2025. Judge Ericht heard oral evidence, expert reports and submissions and made factual and legal findings.

Legal Issues Presented

1. What were the terms of the Crown Wall sub-contract—specifically, whether a 50/50 profit share related to net profit on the whole Crown Wall contract or only to the labour element?
2. What were the terms of the Pavement Slab sub-contract—specifically, whether a 90/10 arrangement related to 90% of net profit or 90% of labour rates?
3. To which sub-contract was a £200,000 payment made by Company B in December 2022 to be ascribed?
4. Whether deductions for overheads should be made in calculating the pursuer's entitlement under the oral sub-contracts.
5. How to allocate Company B's labour and plant costs between overlapping work packages (e.g. Crown Wall, Coping, Pavement Slab) for the purposes of quantifying profit.
6. Admissibility and weight of post-contract conduct and contemporaneous documentation in establishing the terms of oral contracts.

Arguments of the Parties

Company A's Arguments

• The Crown Wall oral sub-contract provided Company A with 50% of the net profit made by Company B under Company B's contract with The Authority (not merely labour profit).
• The Pavement Slab oral sub-contract provided Company A with 90% of the net profit made by Company B under Company B's contract with The Authority.
• No deduction for overheads should be made because the agreements were simple, informal oral deals without any discussion of complex overhead calculations.
• Post-contract conduct and contemporaneous documents (organogram, payment applications, correspondence, payment receipt) support Company A's account of the terms and the attribution of the £200,000 payment to the Pavement Slab works.
• Expert evidence from Company A's expert (Expert A) should be preferred on quantum issues where Company B's expert relied on undisclosed or unled factual material.

Company B's Arguments

• The Crown Wall 50/50 arrangement related only to the labour element of the Crown Wall works; Company B asserted differing accounts of who participated and when commercial terms were concluded at the meeting.
• The Pavement Slab arrangement was a subcontract to pay 90% of labour rates (and not 90% of net profit under Company B's contract with The Authority).
• Deductions should be made for overheads in calculating profit shares; Company B advanced a methodology (via Expert B) to calculate such deductions.
• Deductions agreed between The Authority and Company B (efficiency savings and form-work failure sums) should reduce the amounts on which Company A's share is calculated because they reduce what Company B was paid.
• Company B sought exclusion of Expert A's evidence in part and relied on Expert B's alternative quantifications based on documents and datasets which Company B asserted supported its position.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Kennedy v Cordia (Services) LLP [2016] UKSC 6	Principles governing admissibility and role of expert evidence.	The court rejected a general ground for excluding Expert A and treated challenges as matters of weight; Kennedy was cited in assessing admissibility and weight of expert opinion.
Ruby Properties (Scotland) Limited v Watt [2025] CSOH 61	Requirement that expert opinion be founded on factual evidence before the court; risk of "substratum" being absent.	Used to criticise Expert B's conclusions where those conclusions rested on factual material not produced or led at proof; the court found Expert B's opinion of limited assistance on those issues.
Bairds Trustees v Bairds and Co (1877) 4R 1005	Post-contract conduct is generally not admissible to alter an unambiguous contract.	The court distinguished interpretation issues from factual disputes about terms of an oral contract and permitted consideration of post-contract conduct to establish what the parties understood their oral bargain to be.

Court's Reasoning and Analysis

Judge Ericht analysed disputed factual issues and applied legal principles distinguishing interpretation of an unambiguous written contract from the court's task of finding the existence and terms of an oral contract. The court treated post-contract conduct and contemporaneous documentation as relevant evidence to establish the parties' understanding of an oral agreement.

On credibility, the court accepted Company A's key witnesses (Witness A and Witness B) and several independent witnesses as credible and reliable. The court rejected significant aspects of Company B's witnesses (notably the account given by Company B's principal director and certain family witnesses) because of inconsistencies, late changes in pleaded positions, and attempts to explain contemporaneous documents as mistakes.

For the Crown Wall sub-contract the court preferred Company A's account that the agreed 50/50 share related to 50% of the net profit made by Company B under its contract with The Authority. The reasons included consistency with contemporaneous documentation (an organogram and payment applications), post-contract conduct, and the unreliability of Company B's changing explanations.

On quantification issues the court accepted Expert A's methodologies where Expert B's conclusions relied on factual material that had not been disclosed, produced or led at proof. For allocation issues the court adopted broad-brush methods: for labour allocation the court accepted a 9.5 men-per-week figure (from precognition evidence corroborated by site witness estimates); for plant and material allocation the court accepted extrapolation methods based on periods when only certain works were active and cross-checks rather than Expert B's reliance on undisclosed spreadsheets.

On overheads the court held that no deduction for overheads should be made in assessing the profit shares because the oral agreements were simple and there was no evidence the parties contemplated complex overhead calculations; reliance on post-dated accounts to compute overheads was therefore inappropriate.

For the Pavement Slab sub-contract the court found on the balance of probabilities that Company B's principal made an offer to pay Company A 90% of net profit (not 90% of labour rates); the court relied on oral evidence (credited Witness B), contemporaneous emails and spreadsheets, the bargaining context (urgency and Company B's weak bargaining position), and the absence of discrete labour rates in The Authority's Bill of Quantities. The court therefore granted a declarator to that effect.

Regarding the £200,000 payment, the court found the payment was made in respect of the Pavement Slab sub-contract, based on contemporaneous payment receipts, timing of The Authority's certification, the credited oral evidence of Company A's witness and rejection of Company B's later, inconsistent account.

The court noted procedural shortcomings (late changes of position, late disclosure of figures and materials) that undermined Company B's case and reduced the weight of Expert B's opinions where they were founded on material not before the court.

Holding and Implications

CORE RULINGS

• Declarator granted: Company A is entitled to 50% of the net profit made by Company B under Company B's contract with The Authority for the Crown Wall works (as orally agreed on 8 March 2021).
• Declarator granted: Company A is entitled to 90% of the net profit made by Company B under Company B's contract with The Authority for the Pavement Slab works (contract formed by Company A's commencement of performance in May 2022).
• No deduction for overheads is to be made when calculating the profit shares under the oral sub-contracts.
• The £200,000 payment made by Company B in December 2022 is ascribable to the Pavement Slab sub-contract.
• Company B's counterclaim premised on its alternative version of the Crown Wall sub-contract falls away as a result of the court's factual findings.

Implications: The court's findings determine the contractual entitlements between Company A and Company B and the basis on which outstanding sums are to be calculated (including accepted allocation methodologies for labour, plant and materials). The court reserved quantification implementation to interlocutor and reserved all questions of expenses. The opinion resolves the disputes between the parties on terms and key components of quantum but does not purport to establish new legal precedent beyond applying established principles on admissibility of post-contract conduct, expert evidence and factual evaluation.