Avanton Capital CC Limited v LUC Construction Limited

A stay of execution following adjudication enforcement is exceptional. A party relying on the successful claimant’s financial position must prove probable inability to repay; a material risk or present lack of cash is insufficient. The risk will not ordinarily justify a stay where it was similar when the contract was made or results significantly from the judgment debtor’s non-payment. The debtor’s own inability to pay may exceptionally contribute to manifest injustice, but the debtor must address realistic sources of funding, including owners and associated persons. The court assesses prejudice from all relevant perspectives. If competing risks are finely balanced, the ordinary course is to enforce the judgment.

Avanton Capital CC Limited engaged LUC Construction Limited under a design and build contract to construct three industrial units. After disputes arose over the final account, an adjudicator directed LUC to pay Avanton £1,877,640.25, interest and adjudicator’s fees. Other adjudicators had found that some of Avanton’s contra-charges were overstated. A separate award of £184,140 was due to LUC.

Avanton applied for summary judgment to enforce the decision. LUC abandoned its natural justice objections and did not oppose judgment subject to the separate award. It cross-applied for a stay of execution pending final determination of the account, contending that Avanton might be unable to repay and that enforcement would prevent LUC from continuing to arbitration. The central issue was whether LUC had established grounds for a stay under CPR 83.7(4).

1. Summary judgment and stay. The court entered summary judgment for £1,603,500.25 plus interest, reflecting the £184,140 due to LUC, and £13,742 for the adjudicator’s fees. LUC’s application for a stay of execution was refused.

2. Avanton’s ability to repay. The approach in Wimbledon Construction Company 2000 Limited v Vago [2005] EWHC 1086 (TCC) required LUC to prove probable inability to repay, rather than a possibility of non-payment. Avanton had limited cash, negative adjusted equity and depended on discretionary group support. But substantial support had historically been provided, its ultimate parent had significant net assets, and there was evidence that support would continue. LUC had not proved that Avanton would probably be unable to repay after arbitration.

3. Change in financial position. Even if probable inability had been established, the evidence did not show a materially different repayment risk from that inherent when LUC contracted. Avanton’s negative equity had worsened numerically, but this reflected the development structure and property value of a special purpose vehicle. LUC knew Avanton’s nature and purpose from the outset. The court applied the commercial-risk reasoning in Herschell Engineering Limited v Breen Property Limited and drew a comparison with LXB RP (Crown Road) Ltd v Squibb Group Limited.

4. LUC’s inability to pay or pursue arbitration. A debtor’s impecuniosity will rarely, by itself, justify a stay, though it may be relevant in exceptional circumstances creating a risk of manifest injustice. Where enforcement is said to stifle a final challenge, the applicant must address realistic funding from owners, associated persons and, where appropriate, external funders. By analogy with Goldtrail Travel Limited (in liquidation) v Onur Air Tasimacilik AS [2017] UKSC 57, assertion was insufficient. LUC provided no evidence about whether its shareholders could fund payment or arbitration. It therefore failed to prove inability to pay or stifling, and could not establish manifest injustice.

5. Overall balance and undecided issues. The factors in AWG Construction Services v Rockingham Motor Speedway [2004] EWHC 888 are not an inflexible list; the court considers prejudice from all relevant perspectives. Corresponding risks do not automatically cancel out. If competing risks are finely balanced, enforcement remains the ordinary course. Since LUC had not established the necessary inability or stifling, the court did not decide the jurisdictional objection to the other adjudicators’ decisions or the weight those decisions might otherwise carry.