Paragon Group Limited v FK Facades Limited [2026] EWHC 78 (TCC) 

Mathias Cheung acted for the Claimant and Max Twivy acted for the Defendant in Paragon Group Ltd v FK Facades Ltd. The case concerned whether a construction contract and the Scheme for Construction Contracts permitted an assignee of the Employer’s rights to refer a dispute against the Contractor to adjudication. The Court held that the assignee, Paragon, did have the right to adjudicate. FK has been granted permission to appeal to the Court of Appeal.

Background

The dispute arose out of an amended JCT Minor Works Contract 2016 (“Contract”) for remedial works to the roof installation at a commercial property in Greater Manchester.

The original Employer under the Contract was Office Depot International (UK) Ltd (“ODI”). In 2021, ODI assigned the benefit of the Contract to OT Group Ltd (“OTG”), and OTG in turn assigned the benefit of the Contract to Paragon in 2024.

Article 6 of the Contract provided that “[I]f any dispute or difference arises under this Contract either Party may refer it to adjudication in accordance with clause 7.2”. Clause 7.2 then provided that the Scheme for Construction Contracts (“Scheme”) shall apply to any such adjudication.

Clause 3.1 of the Contract, as amended, allowed the Employer to assign the benefit of the Contract at any time without the Contractor’s consent.

Paragon commenced an adjudication against FK to recover liquidated damages for delay and interest. The adjudicator gave a decision awarding liquidated damages to Paragon.

Paragon therefore commenced adjudication enforcement proceedings in the Manchester TCC, and FK sought to resist enforcement on the basis that Paragon had no right as an assignee to refer a dispute to adjudication under the Contract or the Scheme.

Decision

FK’s case relied on the references to a “party to a construction contract” in paragraphs 1(1) and other paragraphs of the Scheme: see [30] to [33]. FK’s case, as summarised at [40], was (inter alia) that: (a) under the Scheme, only a party to a construction contract can refer a dispute to adjudication; (b) an assignee does not become a party to the construction contract and thus does not fall within the Scheme; and (c) insofar as is relevant, commercial commence supports this conclusion, given the difficulties and complications which may arise from allowing an assignee to refer a dispute to adjudication.

In response, Paragon’s case, as summarised at [41], was (inter alia) that: a proper interpretation of the whole of the contract, and when read with an understanding of the general law in relation to assignments, showed that a party included any statutory assignee of the original employer or contractor who, thus, also had the right to refer disputes to adjudication; and the difficulties and complications raised by FK were insubstantial.

The Judge noted at [2] that there was surprisingly no direct authority on the question of whether an assignee of the benefit of a building contract is entitled to refer a dispute to adjudication, and that the issue was not entirely straightforward. He noted at [44] that the previous authorities (some of which contained obiter observations on the relationship between assignment and adjudication) were “at best, of marginal assistance”.

The Judge ultimately approached the issue as a question of interpretation of the wording of the Contract and the Scheme.

The Judge stated at [77] that “I must confess that I have found the point finely balance”, but ultimately decided that on an objective interpretation of the contract in question an assignee can adjudicate an assigned claim against the original other party. In doing so, the Judge decided (inter alia) that:

• FK’s case had “the undoubted benefit of simplicity”, and “at first blush” the reference in the Scheme to “any party to the construction contract” is confined to the employer and contractor: see [56]. Further, “in strict legal analysis, an assignee does not become a “party” to the contract in the full sense”: see [63].
• However, there was an “apparent indiscriminate approach to the use of the word “party” in the Scheme” (see [59]) and that “The contract and the Scheme can be read as if the words “or any legal assignee of such party, where applicable” are read into the definition of a party” (see [77]);
• Article 6 of the Contract was the primary operative contractual provision on adjudication, and the reference therein to “Employer” and “Contractor” must be considered in the context of clause 3.1 as amended which allows the benefit of the contract to be assigned: see [60] to [63]. Further, that “a statutory assignment of the benefit of a thing in action under a contract passes the legal right to the thing and all legal rights and other remedies for the same, which are transferred to the assignee as if they had been theirs from the beginning, and which would thus… include the right to adjudicate”: see [63].
• The Judge accepted that “there are some practical complications which would arise if an assignee could adjudicate against an original party” (see [65]), for example the problem of whether findings in an adjudication between assignee and original party would be binding on the assignor and the corresponding risk of inconsistent findings (see [67] to [69]). However, the Judge said that some of these complications were “more apparent than real” (see [72]) and that “as against all of these difficulties or perceived difficulties, must be set the difficulties which would arise if the only way an assignee could adjudicate a claim was by forcing or persuading the assignor to lend their name to an adjudication against the other original party” (see [75]).
• That FK’s alternative argument, that a claim by an assignee does not arise “under the contract”, did not have any freestanding merit: see [79].

Permission to appeal granted

The Judge granted FK permission to appeal to the Court of Appeal, on the basis that the arguments for and against were finely balanced such that an appeal would have a real prospect of success, and the lack of any previous direct authority on the point.

Interim moratorium lifted

FK filed a notice of intention to appoint an administrator before the handing down of judgment, which gave rise to an interim statutory moratorium. Relying on Coulson J’s decision in South Coast Construction Ltd v Iverson Road Ltd [2017] EWHC 61 (TCC), the Judge exercised the Court’s discretion to permit the proceedings to continue under paragraph 43(6)(b) of Schedule B1 to the Insolvency Act 1986 for the purposes of hand down and making a consequential order.

Mathias Cheung was instructed by gunnercooke LLP and acted for the successful Claimant.

Max Twivy was instructed by Beyond Corporate Ltd and acted for the Defendant.

You can read the full judgment here.