Providence v Hexagon: Why the Supreme Court put the JCT termination sequence back in order

Can a contractor really play the ‘you’re out’ card the second time the employer pays late? The Supreme Court says that under JCT 2016, it is not that simple. Clause 8.9 is not a pick-and-mix of options; it is a carefully structured sequence. If you skip a step, you lose the right to terminate. This case is a reminder that timing and process matter as much as substance.

Let us look at what happened.

• In December 2022, Hexagon missed a payment. Providence served a clause 8.9.1 notice. Hexagon paid within the 28-day period, so the right under clause 8.9.3 never accrued.
• In May 2023, another payment was late. Providence tried to terminate under clause 8.9.4, treating it as a repeated default. The Technology and Construction Court said no. The Court of Appeal said yes. The Supreme Court restored the original interpretation: clause 8.9.4 only applies if clause 8.9.3 was already available for that specific payment default.

Here is the clause at the heart of the dispute:

Termination by Contractor – Default by Employer
8.9.1 If the Employer:

1. does not pay by the final date for payment the amount due to the Contractor in accordance with clause 4.9 and/or any VAT properly chargeable on that amount; or
2. [number not used]; or
3. fails to comply with clause 3.16, the Contractor may give to the Employer a notice specifying the default or defaults (a ‘specified’ default or defaults).  A specified default or a specified suspension event continues for 28 days from the receipt of notice under clause 8.9.1 or 8.9.2, the Contractor may on, or within 21 days from, the expiry of that 28 day period by a further notice to the Employer terminate the Contractor’s employment under this Contract.
4. 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):                                                                                               

• 1. the Employer repeats a specified default; or
• 2. a specified suspension event is repeated for any period, such that the regular progress of the Works is or is likely to be materially affected thereby,
  then, upon or within 28 days after such repetition, the Contractor may by notice to the Employer terminate the Contractor’s employment under this Contract.

Why did the Court of Appeal think you could skip a step? It focused on the words ‘for any reason’ in  clause 8.9.4 and took them literally. Its view was that if the contractor did not terminate under clause 8.9.3 the first time—whatever your reason—you could still go straight to clause 8.9.4 on a subsequent default. It also drew comparisons with the employer’s rights to terminate under clause 8.4.3.

The Supreme Court has disagreed and explained why in clear terms.

• First, the language of the clause matters: clause 8.9.4 assumes that the right under clause 8.9.3 has accrued. Otherwise, the reference to clause 8.9.3 would serve no purpose. 
• Second, commercial sense matters: allowing termination because two payments in different payment cycles were each a day late would be an extreme outcome. Linking clause 8.9.4 to a serious first default keeps the mechanism fair. 
• Third, symmetry is not required: the employer’s and contractor’s termination rights are worded differently for a reason.
• Finally, the Supreme Court emphasised that standard forms are interpreted using ordinary principles, but with an eye to their structure and purpose.

Employers can also take some comfort from the clarity this decision brings. Once a default has been cured within the 28 day period, they should not have to walk on eggshells indefinitely. The contractor cannot (in these circumstances) weaponise this kind of minor administrative slip to trigger the nuclear option of termination. This aligns with the Supreme Court’s emphasis on proportionality, commercial fairness, and the deliberate sequencing built into the JCT mechanism.

The bottom line is simple: the sequence rules. You start with a clause 8.9.1 notice, the 28 day cure period expires without remedy (ie payment being made), the right under clause 8.9.3 arises, and only then can a contractor use clause 8.9.4.

Why does this matter? Because what looks like routine administration is actually critical risk management. Employers need to track cure periods precisely. Contractors need to resist the temptation to fast forward. Developers and funders should expect sharper focus on payment governance and, if a quicker remedy is desired, bespoke amendments agreed upfront.

The good news is that this decision feels less like a shock and more like a return to orthodoxy. The Supreme Court has restored the structure that most people had originally assumed was there. Hopefully this will provide some comfort and predictability to the industry and lead to less disputes. 

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