UK: Adjudication Enforcement & Insolvency: To Stay Or Not To Stay?

Last Updated: 15 December 2009
Article by Adrian Bell

Problems in enforcing adjudicators' decisions can arise when insolvency intervenes. Two recent cases demonstrate how fine the line is between events that will justify a stay and those that will not.

The courts are reluctant to enforce adjudicators' decisions if it is arguable that a sum awarded by an adjudicator would have to be repaid by a claimant at a later date in final proceedings but there is significant doubt that the claimant would be able to do this. The courts will (and are required to) stay the enforcement of a decision if the claimant is in liquidation, but in other cases they have a discretion to order a stay. In exercising that discretion, the courts are less likely to order a stay of execution where the claimant is merely in financial difficulties, especially if the claimant's financial position is (i) the same or similar to its financial position at the time that the relevant contract was made or (ii) due, either wholly, or in significant part, to the defendant's failure to pay those sums which were awarded by the adjudicator.

The two cases described below illustrate the balancing act that the courts have to carry out in deciding whether to grant a stay in these circumstances (a possible effect of which is that the claimant will not survive).

JPA Design and Build Limited v Sentosa (UK) Limited

In this case, JPA commenced enforcement proceedings for £300,000. When considering Sentosa's claim for a stay the court had to decide whether JPA's financial position had changed since the contract was let and, if so, whether Sentosa was responsible for this.

The court observed that JPA's accounts for the financial year ending shortly after the contract was let showed a net profit of £53,237 on a turnover of just under £500,000. By contrast, its account the following year (filed just before the enforcement proceedings) showed a loss of £307,124 on a turnover of almost £3million. JPA owed about £700,000 to creditors and was the subject of an unsatisfied county court judgment and winding-up petition. The court therefore concluded that JPA's financial position had altered significantly.

However, the court held that despite not paying JPA the sum awarded by the adjudicator, Sentosa was not responsible for JPA's deteriorating financial position because:

  • JPA had not mentioned its claim for £300,000 for over a year and had failed to issue a claim in that amount until after the contract had been terminated.
  • If Sentosa had paid JPA the £300,000 awarded by the adjudicator, JPA's indebtedness to its creditors would only be reduced to £400,000.

The court concluded that the financial position of JPA would justify a stay on these bases.

SG South Limited v King's Head Cirencester LLP

In this case, SG South sought the enforcement of two adjudicators' decisions, the cumulative outcome of which was a net payment of some £90,000 plus interest to SG South.

Having reviewed the evidence provided by the parties, the court concluded that SG South was undoubtedly in some financial difficulty. Amongst other things:

  • There were no up to date management accounts. The latest draft account showed a modest profit after tax of £130,000 on a turnover of £1.6million. Cash at the bank was said to be less than £2,000 and the company had more than £90,000 of unpaid tax.
  • The other contracts or work which SG South said that it had were fairly minor or illusory. There was also evidence that another company had been set up with a similar name, which it was said by King's Head suggested that SG South would be allowed to slip into dissolution.
  • There were two unsatisfied judgments against SG South, the largest of which was for £6,662 and was being repaid at only £100 per month.

However, the court said that the financial position of SG South was the same or very similar to its financial position at the time the relevant contract was made.

The court also held that the financial difficulties faced were due, either wholly, or in significant part, to the failure of King's Head to pay the sums awarded by the adjudicators without justification for not doing so. Having regard to all of the facts, the court said that the injection of some £90,000 plus whatever it had paid to its solicitors in relation to the enforcement proceedings into the cash flow would give a much greater chance of continuing with its business.

In comparison to the JPA case, the court therefore concluded that this was not a case where it was appropriate for a stay. It said that whilst SG South was primarily by reason of cash flow in difficulties at the moment, it was certainly no worse off than when King's Head took the risk of entering into the contract with it and it was more likely than not that its current financial difficulties had been significantly caused or contributed to by the unjustified non-payment by King's Head.

In summary, it is clear from these two cases that the court will carry out a detailed financial analysis of all of the circumstances when deciding whether to grant a stay. They will not look kindly on payers who unjustifiably withhold amounts awarded by adjudicators which may provide valuable lifelines for contractors and subcontractors in these troubled times.

Reference: JPA Design and Build Limited v Sentosa (UK) Limited( (other aspects of this case were discussed in a separate Law-Now article) ( and SG South Limited v King's Head Cirencester LLP (

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 11/12/2009.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.