Providence Building Services Ltd v Hexagon Housing Association Ltd

Mark Chennells KC acted for the successful appellant Contractor (Providence) before the Court of Appeal (Coulson, Stuart-Smith and Popplewell LJJ) in Providence Building Services Ltd v Hexagon Housing Association Ltd [2024] EWCA Civ 962. The case concerned the lawfulness of Providence’s termination of its contract with the Respondent housing association (Hexagon), and turned upon the proper construction of Clause 8 of the JCT 2016 Design and Build Form.

In particular, the issue was as to whether the Contractor was entitled to terminate under Clause 8.9.4 upon the repetition of a ‘specified default’ in circumstances where the previous specified default had been remedied by the Employer within the cure period, such that Providence had not previously had the right to terminate under Clause 8.9.3 for the continuation of a specified default beyond the end of the cure period.

Clause 8.9.4 stipulated that “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) the Employer repeats a specified default … then …. the Contractor may by notice to the Employer terminate the Contractor’s employment under this Contract.”

The Court of Appeal unanimously held that the right to terminate upon repetition of a specified default extended to the circumstance in which the further notice referred to in Clause 8.9.3 had not been served because no right to serve it had arisen, the preceding specified default having ended before the right to serve the further notice under Clause 8.9.3 had arisen.

This was well known to be the effect of the drafting of the JCT standard forms up to 2005 (see e.g. Reinwood v Brown [2007] BLR 10 and Ferrara Quay v Carillion [2009] BLR 367), when the drafting of the relevant provisions was revised to take the form maintained in the 2016 edition (and, indeed, in the recent 2024 edition). The judgment of the Court makes clear that those drafting changes did not have the effect of radically altering the manner in which the termination provisions were to operate.

This litigation is believed to be the first to address the issue at hand and will serve to provide clarity and certainty to users of the JCT standard forms, putting this narrow but important point of interpretation beyond doubt.

Mark was instructed by Clyde & Co.

Click here for the full judgment.