The residential occupier exemption and pay less notices

Tony bingham 2017 bw web

A new ruling has clarified the scope of the residential occupier exception to adjudication and what makes a pay less notice effective

The very recent Court of Appeal case RBH Building Contractors Ltd vs Mr & Mrs Ashley James [2026] usefully discusses those occasions when building work on a house can’t be squeezed into adjudication, and also tests for whether a pay less notice is effective. 

Mr & Mrs James bought a house in Ferndown, north Devon. It was ideal for knocking down and starting again. They engaged a builder, RBH Building Contractors Ltd (RBH) to get things moving – and then two years into the works they fell out. The new house was incomplete. By then RBH had been paid £1.31m. By then too, Mr & Mrs James appear to have overstretched themselves financially. RBH quit. That was in April 2024.

Six months later, RBH engaged a consultant to cast an eye over the account. He reckoned that the builder was owed and underpaid about £663,000. Without more ado, the RBH consultant launched an adjudication. There is an aside in the Court of Appeal judgment, which rang a little alarm bell, for me at least. It said that this claim was made “without warning”. To do that is a tad off. The consultant ought to have coaxed his client to issue a chapter-and-verse final account and given fair time for the customer to lift the lid and raise questions. An account of that size is a hostage to fortune when a claim comes out of the blue.

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