On January 15, 2026, the UK Supreme Court released its judgment in Providence Building Services Limited v Hexagon Housing Association Limited, resolving an important question of contractual interpretation concerning clauses 8.9.3 and 8.9.4 in the commonly used JCT Design and Build Contract (2016 edition) (“JCT Contract”). This decision will be of significant interest to employers and contractors across the UK construction industry, especially as the 2024 edition of the JCT Contract contains the exact same wording for these clauses.
The sole issue for the Supreme Court to determine was whether a contractor can terminate under clause 8.9.4 for a repeated specified default if a right to serve a termination notice under clause 8.9.3 had never previously accrued—that is, where the earlier default had been cured within the specified period.
For the reasons below, the Supreme Court unanimously decided no; there is no right to terminate under clause 8.9.4 for a repeated specified default, unless that party had previously held the right to terminate under clause 8.9.3 for a prior default.
The Contract and Relevant Provisions
In February 2019, Hexagon Housing Association Limited (the "Employer") and Providence Building Services Limited (the "Contractor"), entered into a contract for the construction of a number of buildings in London (the “Contract”). The Contract incorporated the 2016 edition of the standard-form JCT Contract as amended by the parties and contained the following relevant clauses:
- Clause 8.9.1: “If the Employer 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, the Contractor may give to the Employer a notice specifying the default or defaults (a "specified" default or defaults).”
- Clause 8.9.3: “If a specified default or a specified suspension event continues for 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 28 day period by a further notice to the Employer terminate the Contractor's employment under this Contract.”
- Clause 8.9.4: “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 after such repetition, the Contractor may by notice to the Employer terminate the Contractor's employment under this Contract.”
Default and Termination
During the project, the Employer made a number of late payments.
In December 2022, the Employer failed to make a payment on time and the Contractor served a notice of specified default under clause 8.9.1 of the Contract, but the Employer cured the default by paying the outstanding sum within the 28-day cure period.
In May 2023, the Employer again failed to pay on time. The Contractor immediately served a notice on May 18, 2023, purporting to terminate the contract under clause 8.9.4, arguing that this was a "repetition" of the earlier specified default entitling it to terminate without waiting for a further cure period.
On May 23, 2023, the Employer paid the full sum. The following day, the Employer disputed the lawfulness of the termination notice and asserted that the Contractor had repudiated the contract. On 31 May 2023, the Employer wrote again to the Contractor, accepting what it characterized as the Contractor's repudiatory breach.
The Employer referred the dispute to an Adjudicator who found largely in the Employer’s favour. The Contractor then commenced court proceedings seeking a declaration as to the correct interpretation of clauses 8.9.3 and 8.9.4.
The Decisions Below
The High Court held in favour of the Employer, finding that that the party purporting to terminate under clause 8.9.4 must have previously had a right to terminate under clause 8.9.3.
The Court of Appeal allowed the Contractor's appeal, finding the opposite, that the Contractor did not necessarily have to have an accrued right to terminate under clause 8.9.3 to terminate under clause 8.9.4. The Court of Appeal reasoned that the words "for any reason" in clause 8.9.4 were "broad enough to catch a case where the reason why the further notice may not be given is that there is no accrued right to give it".
The Supreme Court’s Ruling
The Supreme Court confirmed that the proper interpretation of a contract is to ascertain the meaning of words used by applying an objective and contextual approach. This is still in the case when interpreting standard form contracts widely used in the industry. The Court held that “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.”
Taking this approach, the Court took special notice of the wording in clause 8.9.4, which states, “If the Contractor for any reason does not give the further notice referred to in clause 8.9.3…” The Court wrote that these opening words indicated that clause 8.9.4 was “parasitic” on clause 8.9.3, rather than independent of it. Further, the phrase “for any reason” refers to any number of various reasons why a Contractor might choose not to exercise an already-accrued right to terminate; it does not refer to the absence of any such right.
The Court found that any other interpretation of 8.4.9 would render the opening words of that clause superfluous.
The Court also went on to say, as a practical matter, that the Employer's interpretation produced a rational outcome: only where an earlier breach went uncured for 28 days may the Contractor terminate immediately for a repeated late payment. The Contractor's interpretation, by contrast, would permit termination even where two payments were each only one day late - an outcome the Court described as potentially providing "a sledgehammer to crack a nut".
Commercial Implications for Contractors
This decision has some interesting implications for contractors.
The Contractor had argued that its interpretation was necessary to protect against Employers who persistently pay late. Technically, under the Supreme Court's interpretation, an Employer could strategically make every payment up to 27 days late - just within the cure period - and thereby prevent the Contractor from ever acquiring a right to terminate.
The Supreme Court did acknowledge this concern but held that arguments based on commercial common sense did not assist either party. Lord Burrows, writing for the Supreme Court, stated that even if the Contractor's other remedies (such as the right to suspend works, statutory interest, and adjudication) were inadequate, "the interpretation of the disputed termination clause should not be distorted so as to favour the Contractor". Any perceived deficiency in the contract is a matter for the JCT to address in future editions.
Key Takeaways
In short, under clause 8.9.4, a contractor cannot terminate immediately for a repeated late payment unless the earlier late payment went uncured for the full 28-day period. Where an Employer cures a late payment within time, the Contractor must wait to see whether any subsequent late payment is also cured before a termination right arises.
Contractors facing persistent late payers will need to rely on alternative remedies such as suspension of work, statutory interest, and adjudication remedies. These remedies may not adequately address cash flow difficulties and may be something that the JCT should consider when re-wording its termination clauses in later editions to specifically protect against repeated late payment.