Expert Witness Journal Issue 68 August 2026 - Flipbook - Page 75
Supreme Court clari昀椀es JCT
termination rules:
Providence v Hexagon
by Gwilym Evans, Senior Associate at Stevens & Bolton LLP.
Termination mechanisms based on a two‑notice
procedure are common across commercial
contracts. Typically, an innocent party may serve
an initial notice (the 1st Notice) requiring a breach
to be remedied. If the breach is not cured within a
speci昀椀ed period, the innocent party may then issue a
second notice (the 2nd Notice) bringing the contract
to an end.
•
The proper interpretation of clause 8.9.4 was central
to the dispute in Providence Building Services Ltd v
Hexagon Housing Association Ltd [2026] UKSC.
This structure provides a fair and predictable
process: the defaulting party is warned and given
a chance to correct the issue or misunderstanding,
and the innocent party has a contractual route to
termination that avoids the uncertainty of relying
solely on common law rights.
The dispute
Hexagon failed to make an interim payment by its
昀椀nal date for payment. Providence responded by
serving a 1st Notice under clause 8.9.3. One day
before Providence could have issued the 2nd Notice
to terminate, Hexagon cured the default by making
payment.
The JCT suite adopts this approach across several
clauses. A recent Supreme Court judgment has now
examined how this mechanism works under clause
8.9 of the JCT Design and Build Contract 2016—a
clause reproduced unchanged in the 2024 edition.
Shortly afterwards, Hexagon again failed to make
payment on time. This time, Providence issued a
single terminating notice relying on clause 8.9.4,
arguing that the employer had “repeated” the
earlier non‑payment and that a fresh 1st Notice was
unnecessary.
Clause 8.9 – overview
Clause 8.9 sets out the circumstances in which a
contractor may terminate for employer default:
•
8.9.1 – 1st Notice for employer default:
The contractor may issue a 1st Notice for listed
defaults, including non‑payment.
•
8.9.2 – 1st Notice following suspension:
A 1st Notice may also be issued where the works
have been suspended for a speci昀椀ed period for
reasons not caused by the contractor.
•
8.9.3 – 2nd Notice to terminate:
If the issue identi昀椀ed in the 1st Notice continues
for the stated period (usually 14 days), the
contractor may terminate by serving a 2nd
Notice. Under the unamended JCT, this must
be served within 21 days after the 14‑day remedy
period expires.
EXPERT WITNESS JOURNAL
8.9.4 – Repeated default:
Where an employer repeats a default that has
already been the subject of a 1st Notice, the
contractor may dispense with the 1st Notice
and issue a terminating 2nd Notice within a
“reasonable time”.
Hexagon disputed the termination, arguing that
because the earlier default had been remedied
within the clause 8.9.3 window, Providence had not
acquired the right to terminate and could not rely
on clause 8.9.4.
Supreme Court’s decision
The Supreme Court found in favour of the employer,
overturning the Court of Appeal’s earlier decision.
Clause 8.9.3 is a “gateway” to clause 8.9.4.
The court held that a contractor can only rely on
clause 8.9.4 if the right to terminate under clause
8.9.3 had already arisen. In this case, Hexagon’s
73
AUGUST 2026
