Some dubious points here.
Once a name goes suspended the forwarding should stop due to zonefile exclusion... so there's negligence on their part.
4months? not noticing after 4days is reasonable, but still borderline.
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Did he give up this right?
If it's the registrars fault, then maybe not.
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It wouldn't IMO be looked at kindly. The registrar has a duty of care, and the old registrant has a duty to the registrar and Nominet to provide the correct information. It's in the Nominet contract.
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You have to be pretty unlucky to have your registrar not renew your domain after you pay, then not update your address so the Nominet letter goes missing in the post.
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No pro-forma invoice? No email to the registrant to indicate payment? Even if they paid why did they not check it?
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then not to notice through the expired/suspended states that your domain isn't working, then for a period of 4 months after this not even notice that someone else has your expired domain. Can this guy have a reasonable claim on this domain.co.uk
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Not IMO. He might have an issue with the registrar. Nominet and yourself have done nothing wrong. Nominet do in rare cases give the name back. But not to show action after 4months even though the primary domain is the com is negligent.
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I've been working on a project. He says that he will reimburse the transfer fees but what about all my time working on this domain and planning the project.
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Don't ignore him. Just politely decline his offer and state you registered the name in good faith according to Nominets t&c and have plans for the domain which would not be contrary to the original use. Also repoint him back to the registrar.
S