Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1

A construction dispute concerning interpretation of termination clauses in a JCT Design and Build Contract. The Supreme Court held that a contractor cannot terminate under clause 8.9.4 for repeated default unless a right to terminate under clause 8.9.3 had previously accrued, requiring the employer's earlier default to have continued uncured for 28 days.

Facts

In February 2019, Hexagon Housing Association Limited (the Employer) and Providence Building Services Limited (the Contractor) entered into a construction contract incorporating the JCT Design and Build Contract (2016 edition) for buildings in Purley, London, with an original contract sum of approximately £7.2 million.

On 25 November 2022, the Employer was required to pay £264,242.55 by 15 December 2022 but failed to do so. The Contractor served a notice of specified default on 16 December 2022 under clause 8.9.1. The Employer paid in full on 29 December 2022, within the 28-day cure period specified in clause 8.9.3.

Subsequently, the Employer failed to pay £365,812.22 due on 17 May 2023. The following day, the Contractor issued a termination notice under clause 8.9.4, claiming this was a repetition of the earlier specified default.

Issues

The sole issue was whether a contractor can terminate employment under clause 8.9.4 of the JCT 2016 Design and Build Form where a right to give the further notice referred to in clause 8.9.3 has never previously accrued because the earlier default was cured within the stipulated period.

Judgment

Interpretation of Clause 8.9.4

Lord Burrows, delivering the unanimous judgment, held that clause 8.9.4 is parasitic on clause 8.9.3 rather than independent of it. The opening words of clause 8.9.4 make clear that a previously accrued right to terminate under clause 8.9.3 is required:

“If clause 8.9.4 were independent of clause 8.9.3 there would be no need for those opening words. If all that is needed for the Contractor to terminate is that the Employer has repeated a specified default, the clause would simply start with the words in clause 8.9.4.1, ‘If the Employer repeats a specified default…’.”

Rejection of the Court of Appeal’s Reasoning

The Supreme Court disagreed with Stuart-Smith LJ’s reliance on clause 8.4.3 (termination by employer). Lord Burrows identified three reasons why this comparison was misplaced:

“First, there is no necessary reason why the right to terminate should be symmetrical as between Employer and Contractor given that the relevant contractual obligations are so different. Secondly… clauses 8.9 and 8.4, as incorporated in this contract, were plainly asymmetrical… Thirdly, different words were used by the drafter of the JCT standard form in clause 8.4.3 to those used in clause 8.9.4.”

Commercial Consequences

Lord Burrows noted that the Contractor’s interpretation would produce an extreme outcome:

“For example, if the Employer made two late payments, each being made one day late, the Contractor, on this interpretation, would be entitled to serve a notice terminating the contract… That might be thought to provide a sledgehammer to crack a nut.”

Standard Form Contract Interpretation

On the interpretation of industry-wide standard form contracts, Lord Burrows confirmed:

“the established approach, based on the objective intentions of the contracting parties in the relevant context, should still be applied to the interpretation of an industry-wide standard form contract.”

Implications

This decision has significant implications for the construction industry given the widespread use of JCT contracts. It establishes that contractors seeking to terminate under clause 8.9.4 for repeated defaults must first have had an accrued right to terminate under clause 8.9.3, meaning the earlier default must have continued uncured beyond the stipulated period. The judgment emphasises that termination provisions in JCT contracts may be deliberately asymmetrical between employer and contractor, and courts should not assume symmetry. The Supreme Court also indicated that any perceived inadequacy in contractor remedies for late payment is a matter for the JCT to address in future drafts rather than through judicial reinterpretation.

Verdict: Appeal allowed. The Contractor was not entitled to terminate under clause 8.9.4 because no right to terminate under clause 8.9.3 had previously accrued, as the December late payment had been cured within the 28-day period.

Source: Providence Building Services Limited v Hexagon Housing Association Limited (UKSC/2024/0130)