RBH Building Contractors Ltd v Ashley James & Anor

A jurisdictional challenge to adjudication enforcement which depends on disputed evidence is unsuitable for summary determination where the defendant has a realistic prospect of establishing the residential occupier exception. Under section 106 of the Housing Grants, Construction and Regeneration Act 1996, intention to occupy is assessed objectively at the time the contract is made. A conditional intention, or an intention to let the property for part of the year, does not necessarily prevent residential occupation. Later events may assist in assessing the original intention.

A payless notice is valid if, construed objectively and commonsensically, it makes tolerably clear what is withheld and why. It need not contain a separate arithmetical calculation if the disputed items and reasons adequately identify the sum considered payable. An adjudicator’s decision on liability for fees is ancillary and is not ordinarily open to review in later proceedings.

RBH Building Contractors Ltd sought summary judgment to enforce an adjudicator’s decision requiring Ashley and Tracy James to pay £663,016.16, interest and the adjudicator’s fees. The Jameses applied under CPR Part 8 for declarations that their payless notice was valid.

The contract concerned project-management and construction works for a new house. The Jameses contended that they intended to occupy the property as their residence, bringing the contract within the residential occupier exception in section 106 of the Housing Grants, Construction and Regeneration Act 1996. They also relied on a notice disputing specified payment-application items and stating that nothing was payable.

The central issues were whether the residential occupier question could be resolved summarily, whether the notice was valid, and whether the court could reverse the adjudicator’s order concerning fees.

1. Residential occupier exception. The residential occupation issue was fact-sensitive. Applying the summary judgment approach in Estor Ltd v Multifit (UK) Ltd, the court could not finally determine it where substantial conflicting evidence required oral evidence and cross-examination. The Jameses therefore had a real prospect of establishing that section 106 applied, so the adjudicator’s decision was not enforced.
2. Section 106 contains two separate grounds: actual occupation as a residence and an intention to occupy as a residence. The relevant intention is that held objectively when the contract was formed. Subsequent events may be considered as evidence of that original intention, but cannot retrospectively change the statutory applicability of adjudication.
3. An intention may be conditional without ceasing to be an intention. An intention to let the property for holiday periods did not prevent it from being intended as the employers’ residence where they otherwise planned to live there and had no other home. Commercial loan documents, development-company references and other contradictory material were relevant evidence, but were not determinative. A contractual breach with a financier was different from unlawful occupation contrary to planning regulation.
4. Payless notice. Assuming the Act applied, the notice dated 27 November 2024 was valid under section 111(4). Applying the objective and commonsense approach summarised in Advance JV v Aniska Limited, the notice identified the payment-application items disputed and briefly stated why they were disputed. The items exceeded the sum claimed, so stating that £0 was payable was sufficiently clear. Section 111 did not require a separate arithmetical calculation.
5. Adjudicator’s fees. The court had no power to alter the adjudicator’s fee decision. The authorities, particularly Castle Inns (Stirling) Ltd v Clark Contracts and A&V Building Solution Ltd v J&B Hopkins Ltd, supported a settled rule that fees are ancillary to the adjudication and are not subject to later review. Aspect Contracts v Higgins concerned recovery of overpayments and did not extend to fees.
6. The summary judgment application was dismissed. The Jameses succeeded on the Part 8 claim. No order was made concerning the adjudicator’s fees, and the court would hear counsel on the precise declarations.