Supreme Court rules in favour of housing association over payments dispute with contractor

When Hexagon missed the deadline for a payment of £264,000 to the contractor on 15 December 2022, the building services firm served a default notice. The housing association later paid the sum on 29 December.

After Hexagon missed another payment deadline on 17 May 2023 for £365,000, Providence issued a notice of termination to end the contract. Hexagon subsequently paid the sum on 23 May, and began legal action.

According to Devonshires, the law firm representing Hexagon, the housing association challenged the lawfulness of the termination on the grounds that Providence had incorrectly interpreted the termination clause.

This termination clause is part of the Joint Contracts Tribunal (JCT) contract, a standard form contract used very widely in the construction industry.

Although Hexagon was successful at adjudication and the TCC, Providence won an appeal against this decision at the Court of Appeal in 2024.

Hexagon was later granted permission to appeal the Court of Appeal ruling in the Supreme Court, which was heard on 10 November 2025.

The Supreme Court has now unanimously allowed the appeal and ruled that the contractor “was not entitled to terminate the contract”, according to the court’s summary.

In his judgment, Lord Burrows said the interpretation of the clause put forward by Providence would “produce an extreme outcome”.

He said: “It would mean that any breach by late payment (provided a specified notice of default were given by the contractor), if repeated by any subsequent late payment, would entitle the contractor to terminate the contract.”

This could mean even two late payments, each only one day late, results in the contractor being entitled to terminate a contract.

“That might be thought to provide a sledgehammer to crack a nut,” Lord Burrows said.

He added: “I also consider it unhelpful to examine whether the contractor [has] other satisfactory methods of combating cashflow problems caused by late payment.”

Darren Tancred, managing director of Providence, had previously told Inside Housing that it is “crucial for the cashflow and survival of contractors and their supply chains that they receive payments on time”.

In response to the outcome this week, Sheron Carter, Hexagon’s chief executive, said: “We are delighted to have been victorious in the Supreme Court, which brings to an end the long legal battle with Providence. 

“Our focus remains on completing the affected project to provide much-needed affordable homes.”

Hexagon said the decision “brings clarity to users of the 2016 and 2024 JCT design and build forms”.

“We are pleased this matter is now behind us as we continue to focus on delivering homes and services to Hexagon residents and local people in housing need,” the housing association added.

Mark London, senior partner at Devonshires, said: “Having been somewhat surprised by the decision of the Court of Appeal, I am now delighted that the Supreme Court have clarified the correct way to interpret the clause in question. 

“In doing so it has brought certainty back to an industry where the use of JCT standard form is common.”

Mr Tancred has been contacted for comment.