Providence Building Services stood accused of being a “trigger happy contractor” that “jumped the gun” during the contract termination process. It has now been vindicated in the court of appeal.
East Grinstead-based Providence Building Services fell into conflict with a client Hexagon Housing Association Limited in December 2022 over payment of invoices. The dispute escalated and by May 2023 Providence had walked off the job. Hexagon disputed Providence’s right to quit.
In November 2023 the Technology & Construction Court TCC ruled that, under the terms of the amended JCT Design and Build Contract 2016, it was necessary that Providence had accrued the right to terminate its employment. The judge, Adrian Williamson, ruled in favour of Hexagon. [See previous report here.]
Providence’s application for permission to appeal was initially denied but last week the case was finally ruled on by the appeal court – in Providence’s favour.
Darren Tancred, managing director of Providence Building Services, said: “The recent litigation between Providence v Hexagon has seen Providence Building Services being forced to sway from its core values of working alongside its clients to achieve a mutually successful project for the client, the project consultants and its subcontractors. The process, since 18th May 2023, has been damaging for the business, but we remained certain that our interpretation of the contract clauses was correct. The three Court of Appeal judges agreed with us and found unanimously in Providence’s favour, re-enforcing Lord Denning’s famous message that ‘cash flow is the life blood of the construction industry’.
“Despite assertions made in recent publications, this simply was not a case of contractor being ‘trigger happy’. It was a warning to employers, who have only a few fundamental obligations and with payment in accordance with the contract condition being one of them. In this case the employer, Hexagon Housing Association, cynically and persistently ignored their payment obligations, whilst expecting Providence to continue to perform its obligations to its full extent. Hexagon’s actions left Providence with no alternative but to revert to the contract and to terminate its employment with Hexagon following 21 late payments beyond the final date of payment. It should be noted that Hexagon had already granted themselves additional time to make payments from the JCT 2016 contract by amending payment terms from 14 to 28 days.
“When the matter of persistent late payment was bought to the attention of Hexagon and their team (along with enacting other remedies) it simply fell on deaf ears. This was particularly frustrating when in the time of industry decline, when ensuring that your supply chain was paid on time to ensure it was fed and watered with upmost importance to us. Hexagon took a different view on the importance of this time and time again.
“Subsequently, Providence was left with no alternative and took the difficult, ‘nuclear’ decision to terminate their employment under the contract, to ensure its supply chain was protected from Hexagon’s continued payment abuse. In most similar cases the supply chain tends to become the collateral damage in the employer’s poor payment practises.”
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