Clarification of important construction concepts by the Courts

2026 has opened with a bang for developments in construction law, with 2 judgments setting down some important principles. The first case, Providence Building Services Ltd v Hexagon Housing Association Ltd, one of only a handful of construction cases to reach the Supreme Court, concerned a contractor’s right to terminate under a standard form contract where the employer had repeatedly failed to pay on time. The second case, Paragon Group Ltd v FK Facades Ltd, considered whether an assignee of a construction contract could instigate an adjudication.

Providence v Hexagon

This a significant decision because the Supreme Court confirmed what a contractor must do in order to validly terminate the contract for non-payment under the widely-used JCT Design and Build Contract 2016.

By way of background:

• Hexagon engaged Providence under an amended JCT 2016 to design and construct apartment blocks;
• The contract permitted Providence to be paid through a monthly interim valuation process which required Hexagon to make payments by a specified “final date for payment”;
• Hexagon failed to pay make the November 2022 payment on time and Providence served a notice of specified default. The termination provisions in the contract permitted Providence to terminate if the default was not remedied within 28 days. Hexagon duly remedied the default within 28 days;
• Hexagon then failed to make the April 2023 payment on time and Providence served a notice terminating the contract on the basis that a notified specified default had been repeated.
• A dispute then crystallised as to the legitimacy of the termination and which ultimately ended up before the Supreme Court.

The central issue was the interpretation of the JCT in connection with terminating for repeated default. The relevant clauses were:

The parties were at odds as to the application of these clauses and specifically, whether the right to terminate under clause 4.9.4 was conditional upon the accrual of a right to terminate under clause 4.9.3. In other words, was termination under clause 4.9.4 subject to solely a repeated default or instead, a repeated default following an earlier identical default that had not been cured within the cure period (28 days).

The High Court decided that the repeated default must follow an un-cured earlier default. The Court of Appeal decided differently – they thought the un-cured default was not necessary. The Supreme Court, however, reinstated the High Court’s decision. In their view, by applying the principles of contractual interpretation, the natural and ordinary meaning of the contract was that an accrued (but unexercised) right to terminate under clause 8.9.3 was required before termination could be deployed under clause 8.9.4. Critically, clauses 8.9.3 and 8.9.4 had to be read together, rather than looking at clause 8.9.4 in isolation.

Given that these termination provisions are common throughout the JCT suite of forms, implications of the judgment will inevitably be felt across the industry. Contractors are, for example, likely to look to reduce the cure period for late payments to mitigate the risks of serial late payers.

Reference: Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1

Paragon Group Ltd v FK Facades Ltd

The second judgment of note kicking off 2026 was from the High Court - Paragon v FK Facades. Here, the issue for Court was whether an assignee could adjudicate under a construction contract. Although assignment and adjudication are, of course, commonplace in the construction industry, the consequences of their intersection had not hitherto been considered by the Courts. This decision therefore provides useful clarity on whether an assignee of a construction contract can adjudicate.

Here, the underlying construction contract was an amended JCT Minor Works Contract (2016). The contract, relevantly, permitted assignment by the employer (without the contractor’s consent) and contained standard adjudication provisions, to the effect that the parties to the contract could refer disputes to adjudication and which would be conducted in accordance with the Scheme for Construction Contracts (“Scheme”).

The contract was assigned twice and Paragon became the eventual assignee. FK was the contractor. Paragon terminated FK’s employment for non-performance, which led to a dispute regarding delay and FK’s liability for liquidated damages. Paragon referred this dispute to adjudication and was successful. FK resisted enforcement of the adjudicator’s decision on the basis that the adjudicator did not have jurisdiction because Paragon, as an assignee, was not a party to the contract and therefore had no right to adjudicate.

The issue for the Court was whether an assignee became a “party” for the purposes of the contract and the Scheme. FK contended that Paragon was not a party because an assignee does not, unlike a novated party, step into the shoes of the contracting party, but simply takes over the benefit of the contract, and therefore had no right to adjudicate. By contrast, Paragon’s case was that the references in the contract and Scheme to “party” should be interpreted as “party and any assignees” because assignment was expressly permitted.

The Court described the issue as finely balanced and ultimately agreed with Paragon’s interpretation. The Court considered that the intention behind the relevant clauses of the Scheme and contract was that parties to a contract should be construed to extend to their assignees where assignment was permitted.

This decision would appear to extend the scope of adjudication and it will no doubt give cause for assignees and counterparties alike to revisit claims that were thought inappropriate for adjudication. There is also likely to be some amendments to Deeds of Assignment.