Avanton Capital v LUC Construction: stay of adjudication enforcement refused despite claimant's weak finances

The Technology and Construction Court has refused a contractor's application to stay enforcement of an adjudicator's decision, holding that it had not shown the developer would probably be unable to repay and had not proved its own inability to pay.

In Avanton Capital CC Ltd v LUC Construction Ltd [2026] EWHC 2630 (TCC), Mr Justice Constable entered summary judgement for £1,603,500.25 plus interest, together with £13,742 for the adjudicator's fees. The figure reflects an offsetting award of £184,140 owing to the contractor under a separate adjudication. The contractor had abandoned its natural justice defence before the hearing, leaving only its application under CPR 83.7(4).

The claimant, a special purpose vehicle created to develop industrial units, had obtained a decision that the contractor owed a notified sum of £1,877,640.25 after failing to serve a valid payment or pay less notice. The contractor had itself started seven adjudications on the value of the final account, and three produced awards finding the claimant's contra-charges overstated by £710,264 in aggregate. The other adjudicators resigned once the claimant's decision issued.

The judge applied the principles in Wimbledon Construction Co 2000 Ltd v Vago [2005] EWHC 1086 (TCC), confirming that the burden lies on the applicant and that probable, rather than possible, inability to repay is required. He also considered how a defendant's own impecuniosity bears on the exercise. Citing Galliford Try Building Ltd v Estura Ltd, JRT Developments Ltd v TW Dixon (Developments) Ltd and J&B Hopkins Ltd v A&V Building Solution Ltd, he accepted that it will rarely matter but may do so in exceptional cases involving a risk of manifest injustice.

Counsel for the claimant, William Webb KC, argued that a defendant's inability to pay cancels out concern about a claimant's solvency. The judge agreed with the thrust of that submission but rejected a mechanistic approach, holding that the court must weigh all relevant prejudice. Where competing risks are finely balanced, he said, enforcement should be the default, following Kersfield Developments (Bridge Road) Ltd v Bray and Slaughter Ltd. Drawing an analogy with Goldtrail Travel Ltd v Onur Air Tasimacilik AS, he added that a defendant claiming its challenge would be stifled must show that no realistic source of funding exists, including owners and associated persons.

The claimant's accounts were unimpressive. After correcting an error that treated a shareholder loan as an asset, and conceding the point, its management accounts showed negative equity of £1,656,758, falling to £2,488,161 if a formal valuation of £20.5m for the development replaced the figure used. The judge accepted there was negligible cash, substantial secured borrowing and reliance on discretionary group funding, and found the evidence about intra-group support unsatisfactory in places.

That did not discharge the contractor's burden. Group funding had historically been provided throughout the project, there was direct evidence it would continue, and the ultimate parent had significant positive net assets. The judge was not satisfied that probable inability to repay had been shown.

He added that, even had it been, the claimant's position did not represent a materially different risk from the one the contractor knowingly accepted. A director of the contractor's 50% shareholder had described the claimant's single-project purpose and expected liquidation after disposal of its asset. Relying on Herschell Engineering Ltd v Breen Property Ltd and LXB RP (Crown Road) Ltd v Squibb Group Ltd, the judge said the deterioration flowed from the development structure and asset value.

The contractor's own case failed on the evidence. It had turnover above £14m, profit after tax of £453,121 and paid dividends of £491,883, and conceded it could not pay without raising funds. Yet there was no evidence of the finances of its 50% shareholder or of other shareholders, despite the witness being a director of that shareholder. That omission was fatal, and without inability to pay or stifling there was no manifest injustice.

Because the contractor did not argue that the three adjudication awards justified a stay on their own, the judge did not decide whether those adjudicators had jurisdiction, an issue turning on Henry Construction Projects Ltd v Alu-Fix (UK) Ltd and Bexheat v Essex Services Group.