RBH Building Contractors Limited v Ashley James & Anor

The residential occupier exception applies where a party occupies, or genuinely intends to occupy, a dwelling as a residence. Intention is assessed at contract formation, with evidence before and after that date potentially relevant. The test includes a bona fide intention and a realistic, rather than fanciful, prospect of occupation within a reasonable time.

A third-party loan agreement is evidence of intention, not a legal trump card, and its breach does not make occupation unlawful. Part-year holiday letting is fact-sensitive. A payless notice is valid if, read objectively and in context, it makes tolerably clear what is withheld and why. No separate arithmetical calculation is required where the notice provides an adequate adjudication agenda.

RBH provided construction management services for a house being built for Mr and Mrs James under an oral contract. RBH made an application for payment exceeding £633,000. Mr and Mrs James served a letter purporting to be a payless notice stating that the sum due was zero and identifying eleven disputed items.

An adjudicator rejected the residential occupier objection and ordered payment. The High Court, applying the summary judgment test, declined to enforce the decision because the respondents had a real prospect of establishing that the exception in section 106 of the Housing Grants, Construction and Regeneration Act 1996 applied. It also held that the letter was a valid payless notice: [2025] EWHC 2005 (TCC). The appeal concerned the proper approach to the residential occupier exception and the requirements for a payless notice under section 111(4).

1. Ground 1 dismissed. Lord Justice Coulson gave the leading judgment, with Lady Justice King and Lord Justice Males agreeing. The question on the residential occupier issue arose on an application for summary judgment. The court was not making a final determination. It had to decide whether the respondents had a realistic prospect of establishing the jurisdictional defence. Where credible evidence exists on both sides, the issue may not be suitable for summary determination.
2. The burden lies on the party seeking to invoke section 106 of the Housing Grants, Construction and Regeneration Act 1996. Whether a person intends to occupy a property as a residence is a question of fact. The relevant intention is assessed when the construction contract is made, although evidence before and after that date may test the accuracy of the assessment. The test has two elements: a bona fide intention to occupy and a realistic, rather than fanciful, prospect of bringing that occupation about. The intention must also have a temporal aspect, involving occupation within a reasonable time after completion.
3. The development loan and related undertakings were relevant evidence but did not override the respondents’ other evidence. A possible breach of a loan agreement was a civil contractual matter. It did not make occupation unlawful in the same way as occupation in breach of planning law. The reasoning in Howsons was therefore confined to its planning-law context and the absence there of a realistic prospect of lawful occupation. The proposed letting of the property for about one quarter of the year did not prevent it being intended as a residence. The issue was fact-sensitive, and the respondents had no other home.
4. Ground 2 dismissed. A payment or payless notice is construed objectively, from the perspective of a reasonable recipient, in the relevant contextual scene. The recipient is taken to know the contract and the payment notice to which the payless notice responds. The notice must comply with section 111(4), but the question remains one of fact and degree. No particular title or reference to a contractual provision is required, and courts should avoid artificial or overly technical analysis.
5. The payless notice stated that the whole sum claimed was withheld and that the sum to be paid was zero. Its eleven bullet points identified the disputed items and explained why they were challenged. Those items exceeded the amount claimed, and a reasonable recipient familiar with RBH’s spreadsheet would understand why no part of the claim was accepted. The notice therefore provided an adequate agenda for adjudication and was valid. The appeal was dismissed.

1. Court of Appeal (Civil Division) dismissed RBH’s appeal on both grounds and upheld the High Court’s refusal to enforce the adjudicator’s decision and its conclusion that the letter was a valid payless notice.
2. High Court, Technology and Construction Court, [2025] EWHC 2005 (TCC), declined summary judgment enforcing the adjudicator’s decision because the respondents had a real prospect of establishing the section 106 exception, and held that the 27 November 2024 letter was a valid payless notice.