Synthesis Projects CC v SBTJ Properties CC

In July 2013, Synthesis and SBTJ concluded a written JBCC Series 2000, Edition 5.0, Code 2101 building agreement as amended by the contract data agreed between the parties for the construction of a project named Nina Apartments Project.

A dispute arose in respect of the issue of payment by SJBT and Synthesis terminated the agreement. Negotiations ensued and a “second” agreement came into being and Synthesis withdrew its letter of cancellation.

There was a dispute regarding the “second” agreement with Synthesis arguing that the “second” agreement was conditional but SBTJ argued that it had the effect that it “revived” the JBCC contract, in any case, the court held that the JBCC contract would remain in place.

A further dispute arose regarding breaches of the JBCC contract, inter alia, relating to payments and ultimately a termination of the contract. The disputes were referred to adjudication and the parties agreed that the JBCC Adjudication Rules (October 2014) would dictate the procedure.

The Adjudicator was appointed and the Adjudicator’s decision was subsequently handed down.

In the adjudication proceedings, Synthesis sought inter alia payment of the unpaid certified payment certificates, payment for monies not certified and not paid as well as payment for loss of profit.

SBJT did not oppose the relief sought by Synthesis and also submitted a counterclaim premised upon the JBCC contract.

The Adjudicator found in favour of Synthesis and in accordance with the Adjudicator’s decision, Synthesis issued an invoice to the Respondent. Despite demand, the SBJT failed to comply. Instead, SBJT gave notice of dissatisfaction with the Adjudicator’s decision but failed to take the required steps to pursue the arbitration proceedings,

Synthesis then applied to court in terms of Clause 6.2.2 of the JBCC contract for the enforcement of the Adjudicator’s decision. SJBT opposes the application on the ground that the Adjudicator lacked jurisdiction to adjudicate the dispute.

SBJT’s opposition was premised on the provisions of Clause 40.1 and argued that the jurisdiction afforded to the adjudicator was to be determined by the parameters of clause 40.1 and was limited to:

1. Matters arising out of the conclusion of the agreement;
2. Concerning the agreement;
3. Or the termination of the agreement

SJBT argued that the provisions of Clause 40.1 did not extend to or include the disputes placed before the adjudicator.

Therefore, SJBT sought, inter alia, dismissal of the claims and to be discharged of all liability in connection with Synthesis’ claims.

The court held as follows:

1. The scope of clause 40.1 is not limited in any way and is wide enough to extend to the issues before the adjudicator;
2. At no stage did SBJT contest the adjudicator’s decision during the adjudication process. It participated in the adjudication proceedings actively without any reservations. In its notice of dissatisfaction, the issue of jurisdiction is also not raised. The parties clearly accepted that the adjudicator had the required jurisdiction to decide the dispute.
3. The issue of jurisdiction of an adjudicator or arbitrator is to be determined at the stage when they are appointed.
4. Clause 40.1 does not determine the “jurisdiction” in respect of the disputes, it is the agreement appointing the adjudicator or arbitrator that determines the disputes formulated at that stage and determine the jurisdiction.
5. Both the claims by Synthesis and SJBT arose from the provisions of the JBCC contract and those issues were the issues considered and determined by the Adjudicator.
6. The court therefore found that there was no merit in SJBT’s submission relating to the issue of non-jurisdiction and the opposition stood to be dismissed.