15th January 2026
The Supreme Court has today handed down Judgment in the case of Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1. Jonathan Lewis KC acted with Nick Kaplan (instructed by Mark London and Lena Barnes of Devonshires LLP) for Hexagon.
In allowing Hexagon’s appeal and reversing the decision of the Court of Appeal (Coulson, Popplewell and Stuart Smith LJJ), the Supreme Court has (unanimously) decided that on the correct construction of the JCT Design & Build Contract (2016) a contractor may not terminate its employment under clause 8.9.4 of the contract unless a right to terminate under clause 8.9.3 had previously accrued (but not been exercised). What this means in practice is that a contractor may not terminate its employment for successive instances of late payment unless it had first attained a right to terminate the contract because of a previous instance of late payment that had been notified but not been cured within the contractual cure period. The Supreme Court further held that the objective meaning of the words was supported by a more rational commercial outcome than Providence’s interpretation which would have allowed a contractor to terminate its employment for potentially minor repeated instances of late payment, albeit that payment had been made before the expiry of the cure period. This was described as “an extreme outcome” by the Supreme Court. It is of note that as part of the unitary exercise of contractual interpretation the Supreme Court considered that a court may favour a more rational outcome even where both rival interpretations produce rational outcomes.
Also of importance is that, in construing the contractor termination provisions, the Supreme Court agreed that the employer termination provision (clause 8.4) had a different meaning: such that an employer may terminate the contractor’s employment under the contract for a repeated default notwithstanding a previous right to terminate had not accrued. The first instance Judgment had not made any express decision on this point, which the Supreme Court has now clarified.
The decision is extremely important to the construction industry given the very wide use that is made of this standard form and indeed the fact that the new edition of the JCT D&B contract published in 2024 uses the same wording in its termination clauses as the 2016 edition. It will no doubt be met with differing enthusiasm by employers and contractors respectively.
It is striking (and a reflection of the importance of the point), that the meaning of less than 20 words has occupied 9 of this country’s most senior judicial minds as well as that of an adjudicator, and with different conclusions being reached by the Court of Appeal and Supreme Court. However, the position is now settled.
The Judgment is not only of importance to the construction industry. The Supreme Court has provided important guidance on the principles of contractual interpretation that apply to standard form contracts generally. At paragraph 31 of his speech Lord Burrows said: “…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”. What that likely means in practice is that in construing a standard form, it will be important to consider the objective intention of the draftsperson of the form, with the objective intention of the parties being generally taken to be consistent with that intention. This is a different inquiry to that undertaken when construing a bespoke commercial contract.
A link to the Supreme Court Judgment may be found here.
Helen Dennis has provided commentary on the judgment which you can access on Lexis Nexis.
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