Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1
This case has involved the careful determination of the interpretation of around 20 words in the JCT termination provisions. It has gone through adjudication, the TCC, the Court of Appeal and has finally been determined by the Supreme Court.
The dispute relates to termination rights for late payment under the JCT Design and Build Contract 2016. The court confirmed that a contractor is not automatically entitled to terminate, simply because an employer has paid late on more than one occasion.
The dispute arose between Providence Building Services Ltd and Hexagon Housing Association Ltd in relation to a contract for the construction of social housing in South London. The standard JCT form had been amended to extend the final date for payment from 14 to 28 days, the termination provisions remained unchanged.
In December 2022, Hexagon paid one interim payment late. Providence served a Notice of Specified Default under clause 8.9.1. Payment was then made within the cure period that follows the Notice of Specified Default.
In May 2023, Hexagon was late again in making a further payment. The day after the final date for payment, Providence issued a Notice of Termination relying on clause 8.9.4, asserting that Hexagon had “repeated a specified default” and that clause 8.9.4 entitled it to terminate.
Hexagon challenged the termination, arguing that Providence had never accrued a right to terminate under clause 8.9.3 because the first late payment had been remedied within the 28-day period.
The central issue was the correct interpretation of clauses 8.9.3 and 8.9.4 of the amended JCT D&B 2016 contract:
- Does clause 8.9.4 allow termination for a repeated specified default, in this case late payment?
- Or does it only apply where the contractor had already accrued (but chosen not to exercise) a termination right under clause 8.9.3?
Hexagon position was that clause 8.9.4 only applies where the contractor has already accrued a right to terminate under clause 8.9.3 and has chosen not to exercise it. Because the first late payment was remedied within 28 days, no termination right ever arose and clause 8.9.4 was never engaged.
That argument succeeded at first instance in the Technology and Construction Court. Although the Court of Appeal later took a different view, the Supreme Court has now restored the original decision and provided authoritative guidance on the correct construction of the clause.
The Technology and Construction Court held that Providence was not entitled to terminate. The court decided that clause 8.9.4 can only be triggered if:
- A specified default has continued for 28 days after notice (thereby giving rise to a termination right under clause 8.9.3); and
- The contractor chose not to exercise that right; and
- The employer then repeats the default.
Because Hexagon cured the first late payment within 28 days, Providence never acquired a right to terminate under clause 8.9.3. As a result, clause 8.9.4 was never engaged.
The court also rejected the suggestion that contractual interpretation should be bent to protect contractors from cash-flow difficulties. While late payment is a serious issue, the JCT form already provides other remedies, including interest, suspension rights and adjudication. Termination, as the court reaffirmed, is a drastic remedy that must be clearly and strictly justified under the contract.
This decision brings certainty for users of the JCT Design and Build form, particularly given that the same termination wording has been carried forward into the 2024 edition. Employers can take comfort that minor or promptly remedied payment delays will not automatically expose them to termination, while contractors are reminded that strict compliance with the contractual machinery is essential before taking the ultimate step of walking off site.
Way forward for contractors / subcontractors
The key takeaway is simple: under the JCT Design and Build wording, the occurrence of two specified defaults, in this case late payments, does not automatically give you a right to terminate.
The Supreme Court has confirmed that the contract sets up a staged route to termination. First, the employer has to miss the payment date and then fail to put it right within the cure period after a valid notice. If the payment is made within the cure period, the termination right never arises and you cannot rely later on the “repeat default” wording just because another payment is late.
That makes good housekeeping important. Contractors should keep a close eye on payment dates, make sure any specified default notice is served correctly, and clearly diarise when the cure period ends. If that date passes without payment, you then need to make a clear decision about what to do next and document it.
Where late payment is becoming a pattern but is repeatedly remedied within the cure period, the more effective tools are often the ones the contract and statute already provide, such as interest, suspension (where available) and adjudication. The Supreme Court’s message is that termination is not meant to be a shortcut for persistent but technically “cured” late payment.
Termination also remains a high-risk step. If you terminate without the right to do so, you may be the party in breach, with potentially significant consequences.
What this means for employers
For employers, the decision brings some reassurance: a short lived payment delay that is put right within the cure period should not, by itself, open the door to termination under the repeat default mechanism. But it is not a free pass to pay late! Persistent delays can still lead to interest, suspension and adjudication, and can quickly damage trust and working relationships even where termination is not available.
Good administration and early engagement on payment issues remain the best way to avoid disputes turning into something more serious.
How CCC can help
CCC supports contractors, subcontractors and employers with the commercial issues that commonly arise on live projects, including payment and valuation, programme, change control and dispute strategy. We focus on clear, practical advice on how contracts operate in practice, helping our clients make informed decisions and manage risk as issues develop.
Where matters progress into dispute, we assist with negotiation, adjudication and other resolution routes, with an emphasis on proportionate outcomes and protecting commercial position.
