JCT Termination provisions – continuing defaults.
I’ve been involved in adjudication since its inception, at the start both preparing adjudication Referrals and Responses and latterly acting as an Adjudicator. Below are some of my thoughts on adjudication.
A recent case (Providence Building Services Limited v Hexagon Housing Association Ltd [2023] EWHC 2965 TCC ) has shed light on the termination provisions in JCT contracts.
In summary, Hexagon’s agent certified £260k to Providence. This wasn’t paid by Heaxagon, and Providence served a Notice of Specified Default under the JCT provisions. Hexagon did not pay by the final date for payment.
Providence then issued a Notice of Termination under clause 8.9.3 of the JCT D&B 16, relying on the repetition of the specified default. However Hexagon subsequently paid the sum claimed by Providence.
it appears that the crux of the dispute before the court was: could Providence legitimately terminate the contract by relying on a continuing default – if that default had been rectified (by Hexagon making payment)?
The Judge stated that contract termination notices are to be strictly construed and must be strictly complied with (you can see where this is going). Essentially the judge stated that Providence could not terminate when the specified default had been cured, and also stated that in this scenario the contractor has a ‘battery of weapons’ available to it including the right to suspend, the right to interest and the right to adjudicate.
To my mind, the takeaway from this is the judges comment that termination clauses are strictly construed. and as always if a party is considering terminating a contract, it has to comply exactly to the contract provisions and must be ‘watertight’.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
BDAS specialise in: providing contract advice, resolving construction disputes, managing construction claims & adjudications and will give you competitive, independent advice tailored to your specific construction problems.
If you could benefit from this please call Jon now on 07795 231 231 or email: Enquiry@BDAS.co