Contractor appeals after losing court case against housing association over late payments

At the Technology and Construction Court in London on 7 November, deputy high court judge Adrian Williamson KC found in favour of Hexagon.

He ruled that the contractor had “a battery of weapons available” to protect its cash flow position, including a right to suspend the works, the payment of statutory interest, and the right to refer disputes to adjudication.

Therefore, the judge ruled, it was not “necessary or appropriate” for Providence to terminate the contract.

Providence has appealed the decision, arguing that it will have a “trickle-down effect” of promoting late payments and will make the final date of payment “optional”.

“It’s had a negative impact not just on us but on our supply chain as well,” Darren Tancred, managing director of Providence, told Inside Housing. “Many of the sub-contractors we use are small family firms… it was important for us that we were able to pay them.”

An appeal judge will now read the submission and decide whether it has the prospect of appeal.

The housing association is now working with other contractors to complete the works.

Kerry Heath, development and sales director at Hexagon Housing Association, said: “This case arose as the contractor were in essence trying to terminate the contract on the basis Hexagon was one day late in paying.

“The payment deadlines imposed by the Construction Act are very tight, which can on occasion create minor delay.

“This was never a case in which Hexagon wilfully sought to delay payment. We sought a declaration to that effect in an adjudication and received it. The contractor then issued proceedings in the Technology and Construction Court and the hearing took place in November.

“Again, we were successful and the contractor’s arguments were rejected. The judge held that the contractor’s attempt to terminate was unlawful.

“The contractor applied for leave to appeal from the judge but this was refused. The contractor has now applied for leave directly to the Court of Appeal. We are still awaiting the outcome of that application.

“Our primary focus is to complete the works so we can provide much-needed homes for people in housing need. We will naturally be seeking to recover from the contractor all our costs and losses.”

Providence maintained that Hexagon was 30 days late in paying, not one.