Simply because you’re the sufferer of a past due paying consumer, you can’t suppose that proper is in your facet.
That’s the lesson from a Superb Court docket judgment passed down the day gone by within the dispute between Hexagon Housing Affiliation (the buyer) and Windfall Construction Services and products (contractor).
Hexagon argued that Windfall used to be now not entitled to terminate its contract with the housing affiliation in spite of past due fee of invoices.
The dispute arose from a JCT contract between Windfall and Hexagon for the development of six blocks of social housing in Purley, South London, valued at £7.2m.
The important thing factor used to be whether or not Windfall may terminate its contract after 21 past due bills, even after Hexagon had amended the usual JCT 2016 contract via converting fee phrases from 14 to twenty-eight days.
Windfall used to be accused of being “cause satisfied”. However the contractor mentioned that it have been left with out a choice however to “cross nuclear” and stroll away.
In December 2022, the Hexagon paid Windfall 14 days past due. In Might 2023 Hexagon didn’t pay on time for a 2nd time and the Contractor, on the next day to come, issued a realize to terminate the contract.
Windfall argued that the contract entitled it to terminate if Hexagon paid past due two times (supplied a specified default realize have been served via Windfall in admire of the primary past due fee, which used to be the case right here). Hexagon rejected that interpretation. It argued that the contract handiest entitled Windfall to terminate for a 2nd past due fee if the primary past due fee had now not in the long run been made inside 28 days of its due date and right here the primary past due fee have been paid inside 28 days.
In November 2023 the Era & Development Court docket (TCC) dominated that, underneath the phrases of the amended JCT Design and Construct Contract 2016, it used to be important that Windfall had collected the fitting to terminate its employment. The pass judgement on dominated in favour of Hexagon.
Windfall’s utility for permission to attraction used to be to start with denied in August 2024 the case used to be in spite of everything dominated on via the attraction courtroom – in Windfall’s favour.
In December 2024 Hexagon used to be granted permission to attraction to the Superb Court docket.
The Superb Court docket judgment used to be passed down on 15th January 2026, figuring out that Windfall used to be now not entitled to terminate the contract. The 5 regulation lords had been unanimous at the foundation in their interpretation of clause 8.9 of the JCT contract.
At the beginning, they determined that the hole phrases of clause 8.9.4 imply {that a} contractor will have to have had an collected proper to terminate underneath clause 8.9.3 ahead of clause 8.9.4 applies. If clause 8.9.4 simply signifies that the contractor is entitled to terminate the contract if the employer two times fails to pay it on time, its reference again to the previous clause is superfluous. Put in a different way, if all this is wanted for the contractor to terminate is that the employer has repeated a specified default, the clause would merely get started with the later phrases, “if the Employer repeats a specified default”.
2nd, the Superb Court docket determined that it might be an excessive consequence – a sledgehammer to crack a nut – if a Contractor had been entitled to terminate the contract as it won each and every of 2 bills a unmarried day past due. It could be much less excessive if a 2nd lengthen entitles the contractor to terminate the contract handiest the place the primary past due fee has been not on time past the desired 28 days and has due to this fact been in particular severe.
The Superb Court docket additionally makes transparent that “it might be improper to distort the proper interpretation of the disputed termination clause as some way of defending contractors from cash-flow difficulties led to via past due bills”.
Commenting at the judgment, Hexagon’s solicitor Mark London, head of the development, engineering and procurement workforce at Devonshires, mentioned: “Having been relatively stunned via the verdict of the Court docket of Enchantment I’m now extremely joyful that the Superb Court docket have clarified the proper method to interpret the clause in query. In doing so it has introduced walk in the park again to an trade the place using JCT usual shape is commonplace.
“Whilst the judgment is necessary to the development trade give the superiority with which the JCT bureaucracy are used, this judgment will affect an important selection of events and tasks around the nation. In an trade the place ‘coins is King’, and venture prices creep ever upward, the reversal of the Court docket of Enchantment’s resolution has clarified an influence coverage for employers.”
Jonathan Lewis and Nick Kaplan of four Pump Court docket barristers’ chambers, acted for Hexagon in courtroom. They mentioned of the Superb Court docket judgment: “The verdict is terribly necessary to the development trade given the very large use this is manufactured from this usual shape and certainly the truth that the brand new version of the JCT D&B contract revealed in 2024 makes use of the similar wording in its termination clauses because the 2016 version. It’s going to indubitably be met with differing enthusiasm via employers and contractors respectively.
“It’s hanging (and a mirrored image of the significance of the purpose), that the that means of not up to 20 phrases [clause 8.4 of the JCT D&B contract 2016] has occupied 9 of this nation’s maximum senior judicial minds in addition to that of an adjudicator, and with other conclusions being reached via the Court docket of Enchantment and Superb Court docket. On the other hand, the location is now settled.
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