The Court of Appeal’s decision in Providence Building Services Ltd vs Hexagon Housing Association Ltd on the workings of the termination provisions in JCT contracts and its interaction with cure periods was, it is fair to say, a surprise. Any party wishing to terminate a contract requires clarity on how to achieve this end.  

Then in January, the Supreme Court settled the short but important question: when can a contractor terminate for repeated late payments? This decision is a reversion to a position which most of the industry had assumed was the case all along. 

To recap, Hexagon (the employer) and Providence (the contractor) entered into an amended JCT Design and Build Contract 2016. 

Clause 8.9.3 of the amended contract provided that if a default continued for 28 days from the receipt of a notice of default, the contractor could terminate. Key to the case was clause 8.9.4, which provided that if the contractor “for any reason does not give the further notice referred to in clause 8.9.3” (to terminate the contract) and the employer repeats the specified default, the contractor may terminate upon such repetition.

Hexagon was required to pay around £260,000 to Providence by 15 December 2022 pursuant to a payment notice, but failed to do so. Providence served a notice of default under clause 8.9.1 of the JCT contract, following which Hexagon paid in full on 29 December 2022 – so, 14 days late but within the 28-day cure period specified in the contract. 

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