In the case of Paragon Group Limited v FK Facades Limited [2026] EWHC 78 (TCC), the Technology and Construction Court (TCC) had a novel task on its hands in considering whether an assignee, who had received the employer's benefit of a building contract through two assignments, could bring an adjudication claim against a contractor under the building contract.
Whilst case law has previously addressed claims involving an assignee bringing a claim under the original contract, the TCC noted that there is no direct authority that goes to the heart of whether an assignee can bring such a claim in the first instance. This is therefore a notable decision where the TCC found, on the facts, that the assignee did have the right to adjudicate. However, permission to appeal has been granted to the Court of Appeal and so the appeal outcome will be eagerly awaited.
The background
Office Depot International (UK) Ltd as employer (ODI) entered into a JCT Minor Works Contract 2016 edition with a bespoke set of amendments with FK Facades Limited as contractor (FK) for remedial works to a roof installation in Manchester.
The building contract defined the "Employer" as ODI and the "Contractor" as FK, and these defined terms were used throughout the building contract, along with the term "Party" and "Parties". Some key terms of the building contract were as follows:
- Article 6: "If any dispute or difference arises under this Contract either Party may refer it to adjudication in accordance with clause 7.2"
- Clause 7.2: "If a dispute or difference arises under this Contract which either Party wishes to refer to adjudication the Scheme shall apply…..".
- Clause 3.1: "…1. the Employer may assign or charge the benefit of this Contract at any time without the Contractor's consent…."
There were two assignments of ODI's benefit of the building contract: one in 2021 from ODI to OT Group Ltd and another in 2024 from OT Group Ltd to Paragon Group Limited (Paragon), and both assignments were notified to FK.
Paragon alleged that FK delayed in completing the works and referred this to adjudication, where the adjudicator awarded liquidated damages to Paragon. Paragon then commenced enforcement proceedings wherein FK argued that the adjudicator did not have jurisdiction on the matter, on the basis that Paragon as an assignee did not have the right to refer the dispute to adjudication.
As the Scheme for Construction Contracts (England and Wales) Regulations 1998 (the Scheme) applied under the building contract, the TCC had to consider some key terms of the Scheme:
- Paragraph 1(1): "Any party to a construction contract (the “referring party”) may give written notice (the “notice of adjudication”) of his intention to refer any dispute arising under the contract, to adjudication."
- Paragraph 1(2): "The notice of adjudication shall be given to every other party to the contract."
- Paragraph 1(3): "The notice of adjudication shall set out briefly - (a) the nature and a brief description of the dispute and of the parties involved, ... and (d) the names and addresses of the parties to the contract…."
- Paragraph 2(1): "….subject to any agreement between the parties to the dispute as to who shall act as adjudicator…."
The decision
The TCC approached the issue as one of interpretation of the underlying building contract and of the Scheme, together with the general law on assignments:
- In relation to the Scheme, the TCC said that the references in the Scheme to a "party" or to "parties" do not make unequivocally clear that these are only the original parties to the construction contract, and moreover, the Scheme also references "parties to the contract" and "parties to the dispute" without an obvious distinction.
- In relation to the building contract, the TCC said that the question of who the "Employer" is under the contract must be considered in the context of clause 3.1 which allows the employer's benefit of the contract to be assigned.
- In relation to the general law on assignments, the TCC considered that i) an assignee does not become a party to the relevant contract but that ii) an assignment passes the legal right to the thing in question, together with all legal rights and remedies for the same, which would include the right to adjudicate, unless there is express provision to the contrary.
In light of the above, the contract and the Scheme were to be read as if the words "or any legal assignee of such party, where applicable" were added into the definition of a "party" so that in this case the assignee had the right to adjudicate. Any practical complications arising from this (such as whether the result of an adjudication between an assignee and an original party would also be binding on an assignor) were said to be outweighed by the difficulties and delay that would arise if assignees could only adjudicate by requesting that the assignor, as the other original party to the contract, lends their name to proceedings.
The implications in practice
The decision of the TCC confirms that an assignee of a construction contract can have the right to bring adjudication proceedings. However, as the TCC relied on interpretation of the construction contract as part of its reasoning and thought that the case was "finely balanced", this suggests that not all cases may necessarily have the same outcome.
Considering this, parties to a construction contract may wish to reflect on whether additional drafting in an assignment clause is preferred to expressly state whether an assignee receives the benefit of the right to adjudicate under the construction contract as part of an assignment or not.
Furthermore, for parties that typically receive the benefit of a security package of construction contracts in transactional arrangements, such as lenders and property purchasers, an in depth review of the primary construction documents and the language used in assignment provisions is now arguably increasingly important. In addition to exact wording of assignment clauses, definitions of parties such as "Employer" may need to also be considered, as it could be interpreted that including language to also capture "permitted assignees" in such definitions gives more strength to an argument that an assignee has the right to bring an adjudication. Such drafting, along with a clear assignment clause, should provide increased comfort to potential purchasers or other assignees who may want to have the option to exercise rights of adjudication.
The above is however subject to the outcome of the appeal and so we look forward to hopefully receiving further clarification from the Court of Appeal.
