RBH Building Contractors Ltd v James & Anor

[2026] EWCA Civ 511

Although the decision on the residential occupier point was sufficient to deal with RBH’s attempt to enforce the adjudicator’s decision, Coulson LJ went on to consider the issues relating to the pay less notice. Once again, the judge summarised the relevant principles:

1. What matters is not how the recipient of the notice in fact understood it; the question is how a reasonable recipient would have understood the notice.
2. The notice must be construed in context. In other words, the reasonable recipient will be credited with knowledge of the relevant contract. If the notice in question is a pay less notice, the recipient will be taken to know the detail of its own payment notice, to which the pay less notice is a response.
3. Every payment notice or a pay less notice must comply with the contractual requirements or, in this case, the statutory Scheme. The notice must clearly set out the sum that is due and/or the sum to be paid (even if it is £0), and the basis on which that sum is calculated. Beyond that, it is a question of fact and degree. Coulson LJ noted that: “the court will be ‘unimpressed by textual analysis or arguments which seek to condemn the notice on an artificial or contrived basis’”.
4. The adverse consequences that follow from an unanswered application or payment notice are relevant to the reasonable recipient test.
5. There is no requirement for a valid notice to have a particular title, or to make specific reference to a relevant contract clause or term of the Scheme, because the question is whether, viewed objectively, the notice had the requisite intention to fulfil that function.
6. One way of testing whether the pay less notice was a valid notice is to see whether “it provided an adequate agenda for adjudication as to the true value of the works”. Coulson LJ said that it would be insufficient for the notice merely to identify a figure and state, without more, that it was the relevant amount of the payment notice or the pay less notice. A pay less notice would be invalid if it contained none of the information which could have allowed the reasonable recipient to work out the basis on which the zero sum had been calculated.

Coulson LJ concluded that:

“In summary, the content of payment notices and payless notices should be considered in a common-sense way. They should not be allowed to become tick-box exercises, or traps for the unwary. In reality, the question is a simple one. Does the payment notice explain in a tolerably clear way what is due and why? Does the payless notice explain, also in a tolerably clear way, what (if any) part of the payment notice is said to be due, and why less is being paid than has been sought? It is tempting to regard everything else as lawyerly over-complication.”

Here, the letter of 27 November was a pay less notice. The reason for this included the RBH payment application itself, which was described as an “unsatisfactory document” by Coulson LJ, who said that it was: “in truth just a list of invoices… Many do not indicate the work done other than in very general terms … and some are so vague as to be useless … They do not explain why the sums are due and owing”.

The letter of 27 November expressly said that Mr and Mrs James intended to withhold payment of the entirety of the sum claimed. It could not, therefore, have been clearer that they were not paying any part of that sum. The only other thing that the notice needed to do, in accordance with the authorities set out above, was to make it “tolerably clear” on the figures why Mr and Mrs James said that nothing was due to RBH.

The letter did just that. Each of the 11 bullet points took issue with the 11 different features of RBH's claim. Five explained why nothing at all was due under each of those items. With the remaining six items, it was said that insufficient evidence had been provided to identify what sum, if any, might now be due. The judge noted that such “disputes are all too common under construction management contracts where the employer is removed from any dealings with those actually carrying out the work”.

Timing, too, was a relevant element of the context. RBH’s payment notice had taken some time to prepare, but it was sent without warning and Mr and Mrs James had just over a fortnight to prepare a response. Coulson LJ said that this was “objectively, an unreasonably short period to consider and respond to a final account claim, although it was in accordance with the Scheme”. The judge further commented that:

“this was what is known in adjudication circles as a ‘smash and grab’ claim, made in the hope that there would be no proper payless notice in the short time allowed by the Scheme, thus entitling the contractor to payment in full of the large sum claimed. The content of the payless notice must be considered against that background too.”

The pay less notice provided a clear and unequivocal agenda for an adjudication: the eleven disputed items. It did exactly what it was supposed to do. The fact that the reasonable recipient would have to know the detail of its own claim, as set out in the payment notice, in order to understand the detail of the response is simply part of the context of this particular pay less notice.

Finally, Coulson LJ noted that:

“I would add this. It is very important that payment notices and payless notices do not become some sort of technical battleground where one or other party seeks a potentially unfair advantage by relying on the short time periods applicable to payment and payless notices in order to recover sums (or to withhold sums) that could not be justified on a detailed analysis.”

This is what happened here, but the pay less notice of 27 November was sufficient to prevent that from happening.

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