Background
Avanton Capital CC Limited engaged LUC Construction Limited under a design-and-build contract for three industrial units at Culvert Court, London. After practical completion was certified in April 2025, disputes arose over the final account. LUC commenced seven adjudications concerning valuation issues, while Avanton commenced an adjudication alleging that LUC had failed to serve a valid payment or pay less notice and therefore had to pay a notified sum of £1,877,640.25.
An adjudicator ordered LUC to pay that notified sum, interest, and the adjudicator’s fees. LUC initially opposed enforcement on natural-justice grounds but abandoned those arguments. Avanton accepted that the judgment should account for £184,140 awarded to LUC in a separate adjudication. The remaining dispute concerned LUC’s application under CPR 83.7(4) to stay execution, principally because Avanton allegedly might not repay the money if the award were reversed and enforcement allegedly would prevent LUC from funding an arbitration over the final account.
The Court’s Holding
Mr Justice Constable granted summary judgment and refused a stay. Although Avanton was a special-purpose vehicle with little cash, substantial secured borrowing, and negative net assets, LUC established only a possible—not probable—inability to repay. Avanton had historically received substantial group funding, its ultimate parent had significant positive net assets, and there was evidence that support would continue. The absence of a binding guarantee did not satisfy LUC’s burden of proving probable non-repayment.
The court also held that any numerical deterioration in Avanton’s accounts did not represent a materially different repayment risk from the risk LUC knowingly accepted when contracting with an SPV. LUC’s reliance on its own finances likewise failed because it provided no evidence addressing realistic funding from its shareholders or other sources. It therefore did not prove that it could not pay or that enforcement would stifle the arbitration and cause manifest injustice. Judgment was entered for £1,603,500.25 plus interest and £13,742 for the adjudicator’s fees.
Key Takeaways
- A stay based on the successful party’s finances requires proof of probable inability to repay, not merely a material possibility of non-payment.
- A party that knowingly contracts with an SPV will ordinarily struggle to obtain a stay based on financial risks inherent in that structure from the outset.
- A judgment debtor alleging that enforcement will prevent payment or stifle further proceedings must address realistic funding from owners, associated parties, and other available sources.
Why It Matters
The decision reinforces the strong policy of promptly enforcing construction adjudication awards. Financial uncertainty, competing valuation decisions, and the temporary nature of an adjudicator’s ruling do not by themselves justify postponing payment.
It also clarifies that a defendant’s impecuniosity may exceptionally contribute to a stay where enforcement would cause manifest injustice, but detailed evidence is required. Where competing risks are finely balanced, the court should follow the ordinary course and enforce the judgment.