Paragon Group Limited v FK Facades Limited

An assignee of the benefit of a construction contract may refer an assigned claim to adjudication where the contract permits assignment and contains no express restriction on adjudication by an assignee. A statutory assignment under Law of Property Act 1925, s 136 transfers the assigned legal rights and the legal and other remedies for enforcing them. Contractual references to a “party” may therefore include the legal assignee where that construction is consistent with the contract, the statutory framework and the commercial context. A claim advanced by the assignee in that capacity remains a dispute arising under the construction contract, rather than under the assignment.

Paragon Group Limited sought summary enforcement of an adjudicator’s decision awarding it £80,500 and directing payment of the adjudicator’s fees. Paragon was assignee of the benefit of a JCT Minor Works Building Contract 2016 between Office Depot International (UK) Limited and FK Facades Limited. The contract permitted the employer to assign the benefit without consent and incorporated Part 1 of the Scheme for Construction Contracts.

After Paragon referred a delay and liquidated damages dispute to adjudication, FK challenged the adjudicator’s jurisdiction. The central issue was whether a legal assignee of an original contracting party was a “party” entitled to refer an assigned claim to adjudication under the contract, the Housing Grants, Construction and Regeneration Act 1996 and the Scheme.

1. Summary judgment. The claim succeeded. The adjudicator had jurisdiction and Paragon was entitled to summary judgment.
2. The court adopted the robust approach to adjudication enforcement endorsed in Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358. That approach did not permit the court to disregard a substantial and self-contained jurisdictional point of law.
3. Under s 136(1) of the Law of Property Act 1925, a valid statutory assignment transfers both the legal right to the assigned thing in action and all legal and other remedies for it. The assignee does not become the contracting party in the full sense, because the burden of the contract remains with the assignor unless there is novation. However, absent express contrary provision, the transferred remedies include the right to adjudicate the assigned claim.
4. The adjudication provisions had to be interpreted as part of the contract. Applying the unitary process described in Assia v BT [2023] EWCA Civ 451, the references to “either Party” in Article 6 and clause 7.2 were read in the context of the amended assignment clause and the general law of assignment.
5. The wording of the Scheme was not conclusive against the assignee. Its references to a “party”, “parties to the contract” and “parties to the dispute” were capable of including a legal assignee. The contract and Scheme could be read as including “any legal assignee of such party, where applicable”.
6. Practical difficulties concerning counterclaims, inconsistent adjudication decisions and confidentiality did not outweigh that construction. Those matters could be addressed by equities, contractual protections, later litigation and the parties’ ability to restrict assignment or expressly prohibit adjudication by an assignee.
7. A claim brought by an assignee in its capacity as assignee was a claim arising under the construction contract. The assignment supplied the assignee’s standing but did not change the legal character of the underlying claim.