[2025] EWHC 2005 (TCC)
RBH sought the summary enforcement of a "smash and grab" adjudicator's decision in their favour of £665k. Mr and Mrs James said that the contract in question was a construction contract with a residential occupier, so the adjudicator lacked jurisdiction to determine the dispute. They also sought a Part 8 declaration that their pay less notice was valid.
During the adjudication, the Jameses objected to the adjudicator's jurisdiction on the basis that they were residential occupiers. RBH said that the Jameses were property developers, and that they had never occupied it and they never intended to occupy it.
Section 106 of the HGCRA provides as follows:
"(1) This Part does not apply:
a) to a construction contract with a residential occupier (see below) ...
(2) A construction contract with a residential occupier means a construction contract which principally relates to operations on a dwelling which one of the parties to the contract occupies or intends to occupy as his residence ..."
Deputy Judge Moody KC said that there were two separate and disjunctive grounds where the exception may arise: (i) where a party occupies the property as their residence; or (ii) where they intend to occupy it. Here, Mr and Mrs James had never occupied the house. Indeed, the house was now up for sale, and they accepted that they now had no intention of occupying it. However, their case was that, at the time of the contract and until around November 2022, it had been their intention to occupy it. They stated that their intention changed because their finances were such that they were compelled to put the property up for sale. For the judge, the factual issue which arose on the residential occupier point was: what was their intention, objectively determined, at the time of the contract?
RBH's position was that they had never been informed that Mr and Mrs James intended to occupy the property. This was a development property.
The judge noted that there was evidence, (registering with a local GP, and going on the electoral roll, as well as screenshots of messages with friends) which supported the Jameses' case on their intention at the time of the contract. That evidence, if accepted would be determinative. However, this was an application for summary judgment, and there was conflicting evidence which meant that this issue had to be determined on the basis of oral evidence and could not be resolved summarily. As the judge considered that Mr and Mrs James had a real prospect of establishing that the residential occupier exception in section 106 applied, the application for summary judgment was dismissed.
As for the pay less notice, this was in the form of a letter with 11 bullet points. The letter of 27 November 2024 disputed items with a total value of £1,245,140.55. RBH had claimed a balance due of £663,016.16. The November letter took issue with specified, quantified claims which were in bullet points 1-5, 7 and 9. In the remaining bullet points, the letter rejected certain heads of claim wholesale without referring to figures. The quantified and unquantified heads exceeded £663,000, and so the notice concluded that the sum owing was £0.
The judge considered how the bullet points in the letter which related to the payment application would have been understood by any reasonably objective reader who had knowledge of the contract works. In his view, on that basis, the bullet points set an adequate agenda for an adjudication by identifying specifically which elements of the payment application were not accepted and, briefly, why they were not accepted. The judge did not accept that the letter had to set out an arithmetical calculation in order to amount to a valid pay less notice. That would be to read into the HGCRA an additional requirement that did not appear and would be to take an overly prescriptive approach to the contents of a notice.
The judge referred with approval to the following comment about pay less notices from Sir Peter Coulson at paragraph 3.36 of his book on Construction Adjudication (4th edition):
"The Courts will take a commonsense, practical view of the contents of a pay less notice and will not adopt an unnecessarily restrictive interpretation of such a notice ... It is thought that, provided that the notice makes tolerably clear what is being held and why, the Court will not strive to intervene or endeavour to find reasons that would render such a notice invalid or ineffective."
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