UK Supreme Court Unanimously Allows Providence v. Hexagon Appeal

In November 2025, the UK Supreme Court heard the appeal in the case of Providence Building Services Limited v Hexagon Housing Association Limited [2026] UKSC 1 concerning termination provisions in the JCT Design and Build 2016 Contract. In its recent judgement, the Supreme Court five-judge panel unanimously allowed the Employer's appeal finding that the Contractor was not entitled to terminate the contract.

Facts

Hexagon Housing Association Limited ("Hexagon") engaged Providence Building Services Limited ("Providence") for the construction of a number of buildings in Purley, London under an amended JCT Design and Build 2016 form ("Contract"). The Contract provided for interim payments and for the Contractor (Providence) to terminate (i) for a specified payment default which continued beyond 28 days (clause 8.9.3), and (ii) where the Employer (Hexagon) repeated a specified default (clause 8.9.4).

Hexagon was late in making an interim payment, and although it did make that payment within the contractually allowed 28-day period, it was then also late in making a subsequent payment. At this point, Providence immediately sought to terminate the Contract under clause 8.9.4. As termination was in dispute, Providence issued CPR Part 8 proceedings seeking a determination as to whether a right to terminate under clause 8.9.3 must first have accrued before a right to terminate under clause 8.9.4 could arise for a repeated specified default.

Court of Appeal Decision

While the trial judge found for Hexagon that the termination right under clause 8.9.3 must first have arisen before the right in respect of repeated breach under clause 8.9.4 would be triggered, the Court of Appeal ("CA") disagreed. Looking at the precise wording of clause 8.9.4, in particular the language that the Contractor "for any reason does not give the further notice required under clause 8.9.3", the CA found that the condition to be met in advance of the repeated default of late payment was the failure of the Contractor to give a further clause 8.9.3 notice "for any reason". As such it upheld Providence's appeal, holding that it was not necessary for a right to arise under clause 8.9.3 before a termination right could be triggered under clause 8.94 for repeated default. Hexagon appealed to the Supreme Court.

Supreme Court Ruling

The Court unanimously held that, under clauses 8.9.3 and 8.9.4 of the Contract, a right to terminate under clause 8.9.3 must have accrued before the right under clause 8.9.4 could be used to terminate for repeated specified default. The judgment cited several reasons for this, including:

1. On the current judicial approach of objective assessment of contractual terms, also applicable to industry standard form contracts (such as the JCT form), the reference to clause 8.9.3 at the start of clause 8.9.4 meant that the later clause was, in the Court's words, "parasitic on clause 8.9.3 rather than independent of it". The inclusion of the words "does not give the further notice referred to in clause 8.9.3" meant that the right to terminate must first have accrued under clause 8.9.3 before a contractor could terminate for repeated specified default, otherwise this wording would be redundant. The Court pointed out that had the Employer paid later than the allowed 28-day period, the right would have accrued and the Contractor's termination would have been valid.
2. Also, on an objective assessment, the Court held that it would be an extreme outcome if an earlier right to terminate need not accrue to exercise termination under clause 8.9.4, as it would mean that the Contractor could terminate the Contract if the Employer was one day late in making payment on two occasions.
3. The Contractor argued that, while the Employer's similar rights to terminate under clause 8.4 were drafted slightly differently (referring in clause 8.4.3 to the failure of giving notice being "as a result of the ending of the specified default or otherwise"), the Contractor and the Employer termination provisions should be construed in the same way. This argument held little weight with the Court. The Court found there to be no reason why there should be symmetry in the termination rights of the Employer and the Contractor. It was acknowledged that the wording of the clauses was very similar. However, the parties had agreed on specific differences in terms of notice periods, and the JCT drafters had also included subtle differences in drafting between the clauses. This would not have been the case if the clauses had been meant to operate in the same manner.
4. The fact that other contractual remedies available to the Contractor may have been inadequate for the Contractor to counter cashflow difficulties consequent on late payment did not mean that the termination clause should be distorted to favour the Contractor.

Key Takeaways

• Great care should be taken in assessing termination rights, particularly where for repeated default. If there are any prerequisites to exercising a termination right, including the expiry of any allowable cure period, it should be confirmed that these have occurred and that the right had accrued before terminating.
• Although the JCT Design & Build 2016 contract has now been superseded by the 2024 version, the relevant clauses in the newer version are identical to those in the 2016 version, so the Court's ruling would equally apply to current forms.

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