The Supreme Court decision in Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1 delivers some welcome clarity on the termination provisions of the JCT Design and Build Contract (2016 edition).

Published: 2 February 2026
Author: Kuljeet Sarai

The Supreme Court unanimously held that a contractor cannot rely on clause 8.9.4 unless the right to terminate under clause 8.9.3 previously arose, bringing much‑needed certainty to one of the most widely used termination mechanisms in the construction industry.

Relevant clauses

The Parties entered into a largely standard‑form JCT Design and Build 2016 contract. The relevant parts of clause 8.9 in the contract provided that:

• Clause 8.9.1 gave Providence the right to issue a notice of specified default where Hexagon failed to pay on time, triggering a 28‑day cure period
• Pursuant to clause 8.9.3, if the specified default continued for 28 days from receipt of the notice, then Providence could issue further notice terminating their employment
• Clause 8.9.4 offered an additional right to terminate where Providence, “for any reason” had not given the further notice but Hexagon then repeated a specified default

Background

In November 2022, the employer’s agent issued a payment notice. When December’s date for payment was then missed, Providence issued a notice of specified default under clause 8.9.1. Hexagon then paid in full, albeit 14 days late, but before the expiry of the 28-day period in clause 8.9.3 meaning no termination right accrued.

Subsequently, another payment notice was issued in April 2023, but again Hexagon failed to pay on time. Providence responded by issuing a termination notice under clause 8.9.4 on the basis that Hexagon had repeated the default specified in Providence’s original default notice. Hexagon made payment and rejected the termination, arguing that Providence could not rely on clause 8.9.4 without first having acquired a clause 8.9.3 right to terminate, an argument that ultimately brought the issue before the Supreme Court.

The TCC held that no right to terminate had arisen because the default identified in the specified default notice had been cured within the 28‑day period. On that basis, clause 8.9.4 could only apply in respect of a repeated specified default where Providence had actually been entitled to serve a termination notice in respect of the original specified default, which it had not, as the breach no longer subsisted.

The Court of Appeal disagreed. It held that the phrase “for any reason” in clause 8.9.4 was broad enough to include a situation where no further notice of termination was given because the default had been cured. In doing so, it overturned the High Court’s decision in Providence’s favour, prompting Hexagon’s appeal to the Supreme Court.

Judgment

The Supreme Court unanimously allowed the appeal, restoring the High Court’s interpretation. It held that the Contractor must have had an accrued right to terminate under clause 8.9.3, but did not exercise this right, before clause 8.9.4 applies. Therefore, it is only if the Employer fails to cure any earlier specified default within 28 days that the Contractor can terminate for a repetition of the specified default.

The Supreme Court held that clause 8.9.4 was “parasitic” on clause 8.9.3, rather than being independent of it. This was because of the opening words of clause 8.9.4, which refer to a further notice not having been given “for any reason”, if independent of clause 8.9.3, these introductory words would become redundant.

The Supreme Court also contrasted the Contractor’s termination rights with the Employer’s separate rights under clause 8.4.3. Under that provision, the Employer does not need to have acquired a previously accrued right to terminate before acting on a repeated default. The drafting makes this explicit: clause 8.4.3 refers to the Employer not giving the further notice “whether as a result of the ending of any specified default or otherwise…”. In other words, even if the Contractor cures the first default within the required time, the Employer may still terminate if the Contractor later repeats it. The Supreme Court highlighted this as a deliberate and meaningful contrast in drafting, underscoring why clause 8.9 cannot be stretched to operate in the same way.

It also criticised the attempt to create symmetry between the employer’s termination provisions in clause 8.4 and the contractor’s termination provisions in clause 8.9, noting that there are clear differences in drafting between the clauses, which are intentional features, and are not required to mirror each other.

Finally, the Supreme Court focused on the practical consequences of Providence’s interpretation, concluding that its interpretation produced a more rational and less extreme outcome than the approach argued by Providence. To illustrate this point, Lord Burrows offered an example: imagine an employer makes two late payments, each only one day late. Under Providence’s reading of clause 8.9.4, the contractor could nevertheless terminate the entire contract. The Court considered this outcome wholly disproportionate, “a sledgehammer to crack a nut”, and far removed from what parties using the JCT standard form would reasonably intend.

Interpretation of standard form contracts

The Supreme Court also used this case to restate principles governing the interpretation of standard form contracts generally.

At paragraph 31 of the Judgment, Lord Burrows held:

“…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. It is not a departure from that approach to say that, where parties choose to use an industry-wide standard form, it can generally be taken that their objective intentions in the relevant context are that their respective rights and obligations should be consistent with those of other parties using the same form and should reflect the objective intentions of those who were concerned with the drawing up of that standard form agreement”

In practice, it is likely that this means that when interpreting a standard‑form contract, the court will look to the objective intention of the form’s drafters, with the parties’ own objective intentions generally assumed to align with that framework.

Lord Burrows also commented that he did “not derive any help on the disputed question of interpretation” from the JCT’s Design and Build Contract Guide 2016, However, 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.

The Supreme Court was direct in rejecting Providence’s argument that clause 8.9.4 must be interpreted more broadly because of contractor cash‑flow pressures:

“I also consider it unhelpful to examine whether the Contractor does, or does not, have other satisfactory methods of combating cash‑flow problems caused by late payment… the interpretation of the disputed termination clause should not be distorted so as to favour the Contractor.”

The Supreme Court stressed that if the industry believes cash‑flow justifies a different balance of rights, this is for the JCT not the judiciary to address:

“…that is a matter for the JCT to consider, in the light of this judgment, in a future draft of the standard form contract.”

This underscores the Supreme Court’s consistent message: interpret the contract as written, not as one party wishes it had been written.

Conclusion

The Supreme Court’s decision is important for those contracting on the JCT Design and Build Contract (2016 edition). By reinstating the structured notice and cure sequence under clause 8.9, the Supreme Court removed the far reaching and commercially risky consequences that flowed from the Court of Appeal’s interpretation. Employers are no longer exposed to the threat of immediate termination by contractors for short‑lived breaches, such as slightly delayed payments.

For contractors, the judgment confirms that clause 8.9.4 is not a shortcut to termination: it only applies where a clause 8.9.3 right first accrued. While this narrows the termination options available for repeated late payment, the Court was clear that any recalibration of the contractor’s remedies is a matter for the JCT drafting committee, not judicial intervention.

Overall, the ruling restores commercial fairness and predictability to the JCT termination regime, ensuring that termination remains a remedy for serious and persistent breaches.