Can someone you have never contracted with drag you into adjudication and hit you with a claim for liquidated damages? A new English decision, Paragon Group Limited v FK Facades Limited [2026] EWHC 78 (TCC) (linked here), says yes.
Background
Office Depot International (UK) Limited (ODI), and FK Facades Limited (FKF) entered into a JCT Minor Works Building Contract (Contract) for remedial roof work to a commercial property. Clause 3.1, as amended, allowed ODI to assign or charge the benefit of the contract without FKF’s consent, while FKF required ODI’s written consent to assign or novate. The contract was later assigned twice: once in 2021 from ODI to OT Group Ltd, and a second time in 2024 from OT Group Ltd to Paragon Group Limited (Paragon).
In early 2025, Paragon terminated the Contract for delay and claimed liquidated damages. FKF disputed the claim, and Paragon commenced adjudication. FKF challenged the adjudicator’s jurisdiction on the basis that as an assignee was not a “party” to the Contract, it was not entitled to seek adjudication under the Contract.
The adjudicator assumed jurisdiction and proceeded to order FKF to pay £80,500 in damages to Paragon and £17,787 in costs. When FKF refused to pay, Paragon fronted the adjudicator’s costs and sought enforcement of the adjudication at the Technology and Construction Court of England and Wales (Court).
Technology and Construction Courts Decision
The Court concluded that an assignee has a right to commence an adjudication in recovering a benefit or charge of a thing in action, unless the contract expressly provides to the contrary.
General Principles of Assignment
Setting a clear distinction between assignment and novation, the Court noted that it is only through novation that a party “assumes the benefits and the burden of the contract.”
On the other hand, while assignees may have rights to the performance of the contract, and redress when those contractual obligations are not performed, fundamentally assignees are not parties to the contract. Under section 136(1) of the Law of Property Act 1925 (UK), the effect of statutory assignment is the passing of a party’s legal rights under a contract to debt or a thing in action and to all legal rights and other remedies to recover those legal rights.
Referring disputes to adjudication, as a dispute resolution mechanism for construction contracts, is set out as an option to “parties” in section 108 of the Housing Grants, Construction and Regeneration Act 1996 (UK) (the HGCRA). As the right to seek adjudication is available to the original contracting parties as a means of ensuring performance, the Court held that, unless a contract expressly provides otherwise, an assignee also acquires the corresponding right to adjudicate in order to enforce the benefit assigned to them.
Statutory and Contractual Context
The Court determined the issue substantially rested on opposing interpretations of “parties” under the Contract and Scheme. Clause 7.2 of the Contract sets out that “either Party” can refer a dispute or difference under the Contract to adjudication. The Contract elected via clause 7.2 for Part 1 of the Scheme for Construction Contracts to apply in referring a dispute or difference to adjudication (Scheme). The Scheme refers to “any party to a construction contract” when it details who may provide written notice to initiate the adjudication process.
FKF contended that “parties” under the Contract and the Scheme are limited expressly to the “employer” and “contractor.” It was argued that clause 7.2 entitled only ODI and FKF to the right to refer disputes to adjudication, and not Paragon.
The Court found this narrow interpretation unpersuasive, finding that “the drafters did not have a conscious intention to differentiate between the position of an original contracting party and that of an assignee when referring to a ‘party to a construction contract’.”
The Court further found that the various references to “party” in the Contract and the Scheme could be perfectly read as including “any legal assignee of such party, where applicable” without causing “violence to the wording of the Scheme” that deals with adjudication.
Relevance and Application in New Zealand
Although this case was decided under a UK JCT standard form contract and provides real clarity for similar projects, it also has evident applicability for New Zealand construction law.
Comparison of Jurisdictions
The New Zealand statutory framework governing adjudication and statutory assignment, largely mirrors that of England and Wales. Section 136 of the Law of Property Act 1925 (UK) is replicated to near identical effect by Sections 50 – 53 of the Property Law Act 2007 (PLA) which provides for statutory assignment in New Zealand. There are, however, subtle differences between the jurisdictions regarding the right to refer a dispute to adjudication.
Section 108 of the HGCRA provides for an implied contractual right to seek adjudication, whereas section 25 of the Construction Contracts Act 2002 (CCA) provides a plain statutory right. This distinction, when considering Paragon’s applicability and relevance in New Zealand, is merely academic as the effect of a valid statutory assignment under section 50 of the PLA is that the assignee obtains all the remedies the assignor had in relation to the transferred charge or other benefit of a thing in action. In simpler terms, the assignee steps into the assignor’s shoes and can exercise any statutory rights the assignor could have used to recover the assigned benefit; this includes the right to refer a dispute to adjudication. While the source of that right differs between England and Wales, and New Zealand, the practical outcome is the same.
If, however, the assignment fails to meet the standards of section 50(1) the assignment is an equitable one. The consequence is that an assignee’s ability to act alone is limited. While a valid statutory assignment allows an assignee to pursue remedies independently, a purely equitable assignee must join the assignor in any action to recover the assigned legal chose in action, because legal title remains with the assignor.
It should be noted that if the underlying contract expressly prohibits assignment, any attempted assignment, either statutory or equitable, is void.
NZS 3910:2023 Implications
It is useful to consider Paragon against the backdrop of NZS 3910:2023, which includes clause 2.10: Assignment requires the consent of both parties.
While clause 13.3 sets a clear preference for arbitration as an alternative dispute resolution mechanism, section 12 of the CCA is clear that rights under the CCA cannot be contracted out of. Consequently, while clause 13.3 purports to limit parties to arbitration, a statutory right to unilaterally refer disputes to adjudication remains. As in Paragon, an assignee refers a dispute with a party to adjudication under a NZS 3910:2023 construction contract consistent with s 50 of the PLA. Such an approach is consistent with the statutory provisions of both the PLA and CCA.
Key Commercial Takeaways
On orthodox New Zealand assignment principles, a statutory assignee would likely be entitled to refer a dispute to adjudication under section 25 of the CCA, unless the contract expressly restricts assignment of dispute resolution rights. It is fair to conclude that Paragon would be a practical authority for New Zealand courts.
This decision also provides a practical commercial reality check – assignment does not just transfer rights; it also transfers remedies. Anyone who steps into the principal’s shoes can adjudicate unless the express contract drafting clearly shuts that door.
New Zealand courts will want to ensure construction contracts retain options for the speedy resolution of disputes, beyond the courts. Parties need to carefully consider these consequences when drafting assignment clauses in construction contracts or when agreeing to an assignment of rights.
If you have any questions about construction contracts please get in touch with our Construction and Infrastructure Team or your usual contact at Hesketh Henry.
Glen and Claudia acknowledge Bryn Dingemans (summer clerk) as co-author of this article.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
