Manifest injustice and stays of enforcement – the high hurdle

The TCC has this morning handed down judgment in Avanton Capital CC Limited v. LUC Construction Limited. This was an adjudication enforcement case, where we acted for Avanton to successfully enforce a decision in its favour for £1,877,640.25 (subject to set-off of a separate award of c.£184k).

After conceding, late in the day, that the decision was enforceable, LUC sought a stay of enforcement on the grounds of Avanton’s financial position and, unusually, its own. This application was defeated with the court not satisfied the defendant LUC had met its burden of proof – demonstrating that the criteria for a stay are high, and a defendant will generally not be able to rely on its own impecuniosity to avoid making payment.

Background

Avanton employed LUC to design and build three industrial units in Battersea. The works completed around April 2025, and disputes then progressed about the value of LUC’s final account. Avanton’s position was that it had overpaid and was due to be repaid £1,877,640.25, while LUC claimed it was entitled to monies.

In May 2026, LUC commenced seven different adjudications simultaneously, all with different adjudicators, and all looking at different aspects of the Final Statement. LUC’s reasons for commencing seven different adjudications rather than one were never explained.

Shortly after, in June 2026, we commenced an eighth adjudication on behalf of Avanton, claiming payment of the £1,877,640.25 as a result of LUC’s failure to serve a valid payment or pay less notice in response to the Employer’s Final Statement. This adjudication was decided in Avanton’s favour, and also led to the resignation of the majority of LUC’s adjudicators (save for three that had already issued decisions) based on the ‘S&T v. Grove principle’ that a true value adjudication can’t proceed where there is an unpaid notified sum.

Enforcement proceedings

When LUC refused to pay the sum awarded, we issued enforcement proceedings on Avanton’s behalf. LUC sought to defend them based on natural justice issues and a claim that Avanton’s financial position meant that a stay should be ordered.

Shortly before the hearing, LUC dropped its natural justice defence, and therefore the court was only tasked with determining its application for a stay. It relied on the well-known criteria in Wimbledon Construction Company 2000 Limited v. Vago [2005], which can be summarised as allowing a stay of execution of an adjudication decision where there is a “probable inability of the claimant to repay the judgment sum” after a substantive decision (i.e. court or arbitration determination).

That application was advanced on the following basis:

1. That Avanton would probably be unable to repay the judgment sum at the end of the substantive trial or arbitration if the adjudicator’s decision were reversed;
2. That Avanton’s financial position had substantially deteriorated since entering into the Contract; and
3. Enforcement would be manifestly unjust in circumstances where if it was forced to pay the Decision, LUC would likely be forced to cease trading without a final determination in an arbitration.

Avanton resisted the application on the basis that its financial position did not demonstrate a ‘probable inability’ to repay, and in any event its financial position had not materially changed – it was an SPV, as LUC knew, and was in the process of fulfilling its function as an SPV.

Decision

The judge considered the authorities on stays, and distilled the following principles:

“(1) whilst it will be rare for a Defendant’s impecuniosity, of itself, to play a material part in the exercise of discretion under CPR 83.7(4)(b), it may do so in exceptional circumstances where it gives rise to a risk of manifest injustice;

(2) in the context of adjudication enforcement, a Court will be alive to the temporary binding nature of the adjudicator’s decision and the risk that enforcement may in exceptional cases deprive a judgment debtor of any realistic opportunity to obtain a final determination yielding a different result;

(3) that said, where it is said the effect of enforcement would be to stifle a claim to reverse the adjudicator’s award, the Court would ordinarily wish to be satisfied that no realistic source of funding exists, whether from owners, associated persons or, where appropriate, external funders. By analogy with Goldtrail, a bare assertion that payment cannot be made will not suffice if there remains a realistic possibility that funds could be raised from available sources;

(4) other factors then to be taken account of once an inability to pay and/or fund proceedings to overturn the adjudication award has been established may include:

(a) without descending into a trial of the issues, whether there is a realistic likelihood that some or all of the adjudicator’s award will ultimately be repaid;

(b) whether a stay of execution merely delays the point at which there is a substantial judgment against the defendant, and the potential prejudice to the claimant were this to transpire

(c) the part the judgment creditor played in the debtor’s impecuniosity;

(d) the conduct of the parties more generally”.

In reaching these conclusions, the judge endorsed Avanton’s submission that “A defendant who says that the money is safer in its hands pending final determination cannot fairly complain if the claimant responds that a stay creates a real risk that the adjudicator’s award will never be satisfied”. That was relevant in this case because even if Avanton was shown to be in a poor financial position, LUC openly admitted it was in a worse one – and so there was a risk that if execution of the decision was stayed, it would never be satisfied.

Applying these overarching principles to the facts, the judge said that “the burden rests on LUC to establish probable, rather than possible, inability to repay, not merely a material risk of non-payment”, and that it had failed to do so. Even though there was a lack of cash in Avanton’s accounts and a figure of c.£4m in its management accounts was unclear, “the evidence and accounts do establish that substantial group funding has historically been made available to Avanton during the development”, and LUC had not shown to the contrary. Because of this, the application for a stay failed.

However, the judge also went on to consider other elements of the stay test. He concluded that “I am not satisfied that LUC has shown that it represents a materially different repayment risk from that inherent in the structure which LUC knowingly accepted at the date of contracting, militating against the grant of a stay of execution”. This was on the basis that Avanton was and is an SPV, a commercial risk that LUC always knew about (as its director accepted in his evidence).

Finally, as to the ‘manifest injustice’ argument, the court said that “The authorities are clear that a defendant claiming inability to pay must go beyond assertion, and also deal with other potential sources of funding” – in other words, the burden was on LUC to show that enforcing immediate payment would actually lead to insolvency and that it couldn’t obtain funding through, for example, funding from shareholders or external parties. LUC had not provided any such evidence, which was “fatal to LUC’s application”, with the judge noting that “it is not possible to conclude that refusing a stay would result in manifest injustice”.

Conclusion

The case reinforces the substantial hurdles that a party must overcome to avoid having to pay an adjudicator’s decision. Having conceded that the application was enforceable, it placed all its eggs in the basket of a stay of enforcement, but did not have the evidence to back it up.

Parties seeking a stay must be ready to evidence a ‘probable inability’ to repay a decision, not just a suspicion, and must be able to show that the commercial risk of non-repayment had materially changed from the time of contract. Where an SPV is involved, this case confirms that the usual position will be that there is no substantial change, particularly where the contractor knew the risk of an SPV (as LUC did here) and chose not to take alternative security.

The ‘manifest injustice’ defence remains very difficult to rely on, and must be considered in the context of the facts as a whole. Here, the court was clearly unimpressed with the defendant seeking to rely on ‘manifest injustice’ without adequately showing it had no other options, such as external funding.