The claimant, LXB RP (Crown Road) Ltd (“LXB”), sought to enforce an adjudicator's decision in the sum of £294,303.50 against the defendant, Squibb Group Ltd (“Squibb”).

Stuart-Smith J rejected Squibb’s argument that there should be a stay because LXB may not be in a position to make payment to it, once Squibb’s final account had been determined. Applying the principles in Wimbledon Construction Co 2000 Ltd v Vago [2005] EWCH 1086 (TCC) which says that where payee’s financial position is the same or similar to the position as at the time the parties entered into the contract, or, if the payee’s financial position is due (wholly or significantly) to payer’s failure to pay the adjudication sum, a stay will not be justified, here the court was not satisfied that “LXB has been shown to be in a worse financial position or that it is a worse financial risk for Squibb than it was when the parties contracted in July 2014”.

Further, the court noted that while LXB was an SPV that is “not remotely unusual for substantial construction projects to be carried out by SPVs in this way”, its accounts did not demonstrate “that there has been manipulation of funds, assets or liabilities with a view to reducing LXB’s ability to meet its liabilities.”

Stuart-Smith J rejected any suggestion that the claimant would be put into liquidation accepting two company directors’ evidence that doing so “would risk putting them in breach of their obligations as directors and that they would not do so.”

The practical effect of this case is that evidence that the claimant is in poor financial health may not in itself be sufficient to prevent enforcement. Importantly, what is material is the state of the claimant’s finances at the time of enforcement as compared to the position when the relevant contract was entered into and the reasons for any deterioration. The case adds to the large body of case law confirming the very limited grounds for resisting adjudication decisions.