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A south-east London housing association has lost a Court of Appeal case over repeated late payments to a contractor.

Hexagon, a mid-sized association with a stock of about 4,500 homes, hired West Sussex based Providence 好色先生TV Service in 2019 on a 拢7.2m contract to build a development of 37 flats in Purley.

Hexagon failed to pay Providence a 拢365,812 bill, issued on 28 April last year, within the 21-day deadline specified in the contract.

The day after this payment deadline Providence issued a termination notice.

The decision to issue this notice followed a previous late payment by Hexagon of 拢264,242 for a bill issued in November.

Hexagon鈥檚 failure to meet the December payment deadline triggered the issuing of specified default notice by Providence on the following day after which the association paid in full a fortnight later.

When issuing the termination notice in May, Providence said Hexagon鈥檚 non-payment repeated the default specified in December鈥檚 notice.

Providence said that 19 of that Hexagon鈥檚 32 payments to pay had been made late.

Hexagon challenged the termination notice on the grounds that the default notice only applied to the previous payment delay.

In July last year an adjudicator found in favour of the association.

In November, deputy High Court judge Adrian Williamson KC also backed Hexagon, saying in his judgement that to not do so would 鈥渁llow a trigger-happy contractor to terminate for repeated default, even if the default was a very small underpayment or a small delay in payment鈥�.

However in a fresh judgement following an appeal by Providence, handed down yesterday (Thursday), the Court of Appeal has over-turned November鈥檚 ruling.

Allowing Providence鈥檚 appeal, lead judge Lord Justice Stuart-Smith, said the consequences of accepting Providence鈥檚 stance is 鈥渃ommercially acceptable鈥� even though it leaves employers like Hexagon on 鈥渢hinner鈥� ice.

And he disagreed with the High Court that contractors, like Providence, have a 鈥渂attery鈥� of other remedies to pursue missed payments, such as the rights to suspend the payment of statutory interest and to refer disputes to adjudication.

鈥淣one provides a satisfactory and immediate solution. Each involves a measure of delay and, in the case of suspension or resorting to adjudication, additional cost and uncertainty for the contractor in pursuing them,鈥� the judge said

Accepting Hexagon鈥檚 interpretation would allow 鈥渁 serial defaulter to escape any meaningful consequences of their defaulting on payment鈥� if they delayed payments sufficiently, he added.

Hexagon has been contacted to comment for this article.