Key construction case law updates in 2026
We’re not even three months into 2026, and we're already seeing a number of developments in construction case law which are set to impact contract interpretation and the rights of employers and contractors.
In this article, Ross Galbraith, partner and Hannah Hunt, trainee solicitor, both in our construction team, share key insights from the cases of Providence Building Services Ltd v Hexagon Housing Association Ltd and Paragon Group Ltd v FK Facades Ltd.
Providence Building Services Ltd v Hexagon Housing Association Ltd
In its first judgment of 2026, the Supreme Court overturned the decision of the Court of Appeal and clarified when clauses 8.9.3 and 8.9.4 of a standard form JCT contract can be used to terminate.
Background
Hexagon Housing Association Ltd (‘Hexagon’) engaged Providence Building Services Ltd (‘Providence’) to carry out construction works under an amended JCT Design and Build Contract 2016 (“Building Contract").
A dispute arose between the two parties due to Hexagon's repeated late payments.
In December 2022, Hexagon failed to pay the sum due in the latest payment notice by the final date for payment, and Providence duly served a clause 8.9.1 notice of a specified default. Hexagon subsequently paid.
In April 2023, Hexagon again failed to pay the sum due under the latest payment notice by the final date for payment. The following day, Providence issued another notice – this time under clause 8.9.4, giving notice that Hexagon had repeated a specified default, and Providence was therefore terminating the Building Contract.
Hexagon later paid in full, but subsequently disputed the lawfulness of Providence's notice of termination and asserted that Providence had repudiated the contract.
Technology and Construction Court (“TCC”) Decision
The trial judge in the TCC found in favour of Hexagon.
It held that Providence could not terminate the Building Contract under clause 8.9.4 unless a right to terminate under clause 8.9.3 had first accrued. This meant that Providence’s notice to terminate was not valid, as the “right to terminate” had not been established pursuant to the conditions within clause 8.9.3.
Court of Appeal Decision
However, the Court of Appeal found in favour of Providence.
The Court of Appeal relied on the wording in clause 8.9.4, that the contractor could terminate the contract ‘for any reason’ on repetition of a late payment (even if the right to terminate under clause 8.9.3 had not previously accrued).
The Court of Appeal adopted a strict, literal interpretation of the Building Contract rather than the commercial context in which the parties concluded the Building Contract.
Supreme Court Decision
Hexagon appealed to the Supreme Court.
The Supreme Court agreed with the decision of the trial judge in the TCC and ruled that Providence’s termination was invalid, overturning the decision of the Court of Appeal.
The Supreme Court found that entitlement to terminate under clause 8.9.4 could not arise without a termination right under clause 8.9.3 having first arisen.
Impact
The Supreme Court’s decision is a key one for the industry. Under the relevant JCT contract forms, employers no longer face the prospect of termination by contractors for repeated delays to payment which do not exceed 28 days. However, employers should remain aware that any failure to make a late payment may still have serious consequences that fall short of termination of the contract.
Paragon Group Ltd v FK Facades Ltd
Under the Housing Grants, Construction and Regeneration Act 1996 (‘Construction Act’), parties to a construction contract have the right to refer disputes to adjudication.
In Paragon Group Ltd v FK Facades Ltd, the TCC considered whether an assignee of a construction contract is allowed to refer contractual disputes to adjudication.
Background
Office Depot International UK Limited (‘ODI’) employed FK Facades Limited (‘FK Facades’) under a JCT Minor Works Contract. The JCT contract specified that ODI and FK Facades, as the original employer and contractor, were the parties to the contract.
ODI went on to assign the benefit of the contract to another party, who then assigned it to Paragon Group (‘Paragon’). Paragon was assigned the employer's 'rights, title, interest and benefit’ in the contract.
A dispute arose between Paragon and FK Facades due to delays with the works. Paragon terminated the contract and claimed liquidated damages for the delay. FK Facades disputed this claim, and so Paragon referred the matter to adjudication.
The adjudication concluded in Paragon's favour, with FK Facades required to pay liquidated damages. FK Facades refused to pay, and challenged the adjudicator’s jurisdiction on the basis that as an assignee, Paragon was not a party to the contract and therefore did not have the authority to refer matters to adjudication.
Paragon applied to the TCC to enforce the decision, and the judge was required to consider whether an assignee had the right to refer a matter to adjudication.
Decision
The judge ruled that Paragon was entitled to refer the dispute to adjudication.
Despite not being named as a party to the contract, all rights and remedies in the contract had passed to Paragon on assignment - including the right to refer a dispute to adjudication.
Therefore, unless a contract expressly states otherwise, assignees will have the right to refer to adjudication. This will provide certainty to those who acquire rights under construction contracts by assignment, such as funders.
Usually, construction contracts include wording or are amended to confirm whether an assignee will be treated as a party to the original contract.
This judgment highlights the importance of including such wording to clarify the position of parties who receive an assignment of a construction contract.
Laying the foundations for success
Both cases demonstrate the need for businesses to stay informed about the rights of those involved in any project. It's essential to seek legal expertise to avoid reputational and financial risk and ensure your construction operation runs smoothly.
If you have any queries in relation to the content of this article and need any assistance with construction projects generally, please contact Ross Galbraith on 0191 211 7999 or [email protected].