English Supreme Court Overrules Court of Appeal on Termination in JCT Contracts

In its first judgment of 2026, the Supreme Court has overruled the Court of Appeal’s decision in Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1, providing clarity on the contractor’s right to terminate for repeat defaults under a JCT contract.

Hexagon Housing Association Limited (Hexagon), the employer, and Providence Building Services Limited (Providence), the contractor, agreed to the construction of several buildings. The contract took the form of an amended JCT Design and Build Contract 2016. This case overruled the Court of Appeal decision (our briefing on which can be found here).

The dispute concerns a pair of late interim payments under the contract, and the contractual interpretation of clauses 8.9.3 and 8.9.4 of the contract. 

The relevant clauses (with the parties’ amendments in square brackets) were as follows:

“8.9  .1 If the Employer:

.1 does not pay by the final date for payment the amount due to the Contractor in accordance with clause 4.9 and/or any VAT properly chargeable on that amount; or

.2 fails to comply with clause 7.1 [number not used]; or

.3 fails to comply with clause 3.16, the Contractor may give to the Employer a notice specifying the default or defaults (a ‘specified’ default or defaults).

[…]

.3 If a specified default or a specified suspension event continues for 14 days [28 days] from the receipt of notice under clause 8.9.1 or 8.9.2, the Contractor may on, or within 21 days from, the expiry of that 14 day [28 day] period by a further notice to the Employer terminate the Contractor’s employment under this Contract.

.4 If the Contractor for any reason does not give the further notice referred to in clause 8.9.3, but (whether previously repeated or not):

.1 the Employer repeats a specified default; or

.2 a specified suspension event is repeated for any period, such that the regular progress of the Works is or is likely to be materially affected thereby,

then, upon or within a reasonable time [28 days] after such repetition, the Contractor may by notice to the Employer terminate the Contractor’s employment under this Contract.“

Under Payment Notice 27, Hexagon was required to pay Providence £264,242 on or before 15 December 2022. It failed to do so and on 16 December, the contractor served a notice of specified default under clause 8.9.1. Hexagon remedied the default, paying in full, within 28 days meaning there was no right to terminate under clause 8.9.3.

Then, under Payment Notice 32, Hexagon again missed a payment deadline for £365,812 due on 17 May 2023. The following day, Providence issued a notice of termination under clause 8.9.4 referring back to the notice of specified default in December and relying on the non-payment in May as “repetition of a specified default”. On 23 May, Hexagon paid in full.

On 31 May 2023, Hexagon then accepted what it characterised as Providence’s repudiatory breach. It referred the dispute to adjudication, where it was successful. Providence commenced Part 8 proceedings seeking a declaration as to the correct interpretation of clauses 8.9.3 and 8.9.4.

Decisions of the lower courts

The TCC considered that a right to terminate under clause 8.9.3 must have arisen before notice to terminate could be given under clause 8.9.4.

The Court of Appeal overruled the TCC and considered that the words “for any reason” were wide enough to cover cases where the notice under 8.9.3 was not given because there was no accrued right to it. Therefore, there was no need for a right to termination to accrue under 8.9.3 for a right to terminate to occur under 8.9.4.

Supreme Court

The Supreme Court overturned the Court of Appeal’s decision for the following reasons:

1. The objective natural meaning of clause 8.9.4 meant it was “parasitic” on clause 8.9.3 rather than independent of it. Providence must have had an accrued right to terminate under clause 8.9.3 first, before a right to terminate under 8.9.4 occurs. Whereas the interpretation argued by Providence would make “[i]f the Contractor for any reason does not give the further notice referred to in clause 8.9.3” in clause 8.9.4 redundant.
2. Only if the employer had failed to cure any earlier specified default within 28 days under clause 8.9.3, could the contractor terminate for a repetition of the specified default under clause 8.9.4. 
3. The interpretation suggested by Providence and agreed by the Court of Appeal produced an extreme outcome. It would allow the contractor to terminate the contract after just two marginally late payments some months apart, thereby providing “a sledgehammer to crack a nut“. The Supreme Court considered the alternative interpretation to be less extreme, as a right to terminate would only arise where the first late payment was delayed beyond the specified 28 days and was therefore particularly serious.
4. The Court of Appeal’s “heavy reliance” on clause 8.4.3 (which concerned the employer’s termination rights) to determine the scope of contractor’s termination rights was “misplaced“. The employer and the contractor had different termination rights reflected by different contractual wording and there was no reason to presume the termination rights would be identical.

Conclusion

This judgment rolls back on the Court of Appeal’s decision. As we commented in our briefing, the Court of Appeal’s decision meant that a right to terminate arose under clause 8.9.4 where there was a relatively minor (but repeated) breach by the employer, even when this was rectified. The Supreme Court felt this was an extreme outcome and has helpfully clarified that a right to terminate under clause 8.9.4 only arises where the default under clause 8.9.3 is not remedied within the 28-day period.

Another important take away from the judgment is the Supreme Court’s guidance on industry-wide standard form contracts (which are widely used in construction) – they should be interpreted consistently for all contracting parties and should not be contradicted by the parties’ objective intentions.

Will Hale, Trainee Solicitor, assisted in the preparation of this briefing.