Providence v Hexagon [2024]

Introduction

This Court of Appeal decision in the UK concerns the interpretation of termination provisions under the 2016 JCT Design & Build Contract, specifically clauses 8.9.1–8.9.4 dealing with “specified default”. The employer twice failed to make payment by the final date, each failure triggering the contractor’s entitlement to issue warning and termination notices.
The High Court originally held that the termination was invalid—placing reliance on a narrow reading of the clause that required the first default to remain uncured. The Court of Appeal overturned that decision, confirming that a repetition of a previously specified default—even if cured within the contractual cure period—can still trigger the contractor’s right to terminate.
The judgment reinforces the importance of the plain language of JCT termination clauses, and illustrates the courts’ reluctance to rewrite commercially agreed risk allocations.

Key Takeaways

1. A cured default can still count as a “specified default” for later termination
The Court of Appeal held that the contractor may rely on a previous default—despite it having been remedied—because the contract refers to repetition of a specified default, not repetition of an ongoing default. This is a significant clarification for JCT users.

2. The plain wording of the contract prevails
The Court emphasised the “plain meaning” of the words “does not give” and the parallel wording across clauses 8.4.3 and 8.9.4. Drafting quality was acknowledged as imperfect, but still sufficiently clear to determine the outcome.

3. Commercial common sense arguments were not decisive
Both sides attempted to rely on commercial sensibility, but the Court of Appeal stressed that these arguments did not outweigh the contract’s actual wording. Courts will not impose their own view of commercial logic when the text is sufficiently clear.

4. No evidence that JCT intended to change the effect of earlier editions
The parties undertook extensive “archaeological” review of historical JCT drafting, but the Court of Appeal found no indication that the 2005 or 2016 JCT revisions were intended to alter how specified defaults operate.

5. Practical impact for contractors and employers
Contractors must be aware that repeated late payments—even when promptly cured—may entitle them to terminate. Employers, likewise, must treat repeated failures seriously, as they cumulatively increase the risk of termination rights being exercised.