- within Real Estate and Construction topic(s)
- with Senior Company Executives, HR and Finance and Tax Executives
- in United States
- with readers working within the Law Firm and Construction & Engineering industries
A recent decision of the Technology and Construction Court has confirmed that where a party assigns its rights under a construction contract, the assignee can refer disputes to adjudication in the same way as the original contracting party. The judgment in Paragon Group Limited v FK Facades Limited [2026] EWHC 78 (TCC) provides welcome clarity on a point that had, surprisingly, never been directly decided.
This article highlights how the dispute arose, the arguments put forward, and how the Court reached its decision.
FK Facades Limited has been granted permission to appeal to the Court of Appeal, so watch this space for further updates.
How the Paragon and FK Facades dispute arose
The case arose from a JCT Minor Works Building Contract entered into in October 2018 between Office Depot International (UK) Limited (as employer) and FK Facades Limited (as contractor) for remedial roofing works at a commercial property in Greater Manchester.
The contract was subsequently assigned twice: first to OT Group Ltd in 2021, and then to Paragon Group Limited in 2024. Both assignments were notified to the contractor. Importantly, the contract had been amended to permit the employer to assign the benefit of the contract at any time without the contractor's consent.
A dispute arose when Paragon terminated the contract and claimed liquidated damages for what it alleged was culpable delay by FK Facades. FK disputed the claim, and Paragon referred the matter to adjudication. The adjudicator found in Paragon's favour, but FK refused to pay, arguing that Paragon—as an assignee rather than an original party—had no right to use the adjudication process in the first place.
The legal issue around adjudication rights
The central question was straightforward but novel: does an assignee of a construction contract have the right to refer disputes to adjudication?
FK Facades argued that the statutory right to adjudicate under the Housing Grants, Construction and Regeneration Act 1996, and the Scheme for Construction Contracts, is only available to "a party to a construction contract". Since an assignee does not become a party to the contract in the full legal sense—that would require a novation—it followed, FK said, that Paragon could not adjudicate.
Paragon countered that a valid statutory assignment under section 136 of the Law of Property Act 1925 transfers not only the legal right to the assigned benefits but also "all legal and other remedies for the same". The right to adjudicate, being a contractual remedy in this instance under Article 6 and clause 7.2 of the contract, passed with the assignment.
The High Court's decision
HHJ Stephen Davies, sitting as a High Court Judge, found in favour of Paragon and granted summary judgment.
The Judge acknowledged that the point was "finely balanced" and that there was "no direct authority on the point" but concluded that an assignee can indeed refer disputes to adjudication. He reasoned that the contract and the Scheme can be read as if the definition of "party" includes "or any legal assignee of such party, where applicable". This interpretation was consistent with established principles of assignment law, under which a statutory assignee effectively "stands in the shoes" of the assignor.
The Judge also rejected FK's practical objections—such as the inability of the responding party to counterclaim against the assignee—finding these concerns to be "more apparent than real". Any immediate difficulties could be addressed through the existing legal framework, and any inconsistent findings between adjudications could ultimately be corrected through litigation.
What the decision means in practice
This judgment will be welcomed by businesses that acquire rights under construction contracts through assignment. It confirms that assignees are not relegated to court proceedings alone but can take advantage of the speed and relatively low cost of adjudication.
For contractors and subcontractors, the message is equally clear: an assignment of a construction contract by the other party will generally carry with it the right to adjudicate. Parties wishing to prevent this outcome should consider including express contractual provisions restricting assignment or excluding assignees from using the adjudication process.
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
