Phoenix Salt Industries (Pty) Ltd v The Lubavitch Foundation of Southern Africa

In 1994 Phoenix Salt Industries (Pty) Ltd, a company controlled by the Krok brothers, entered into a written loan agreement with the Lubavitch Foundation of Southern Africa to settle Lubavitch’s Nedbank mortgage indebtedness of approximately R5.2 million. Golden Hands Property Holdings (Pty) Ltd, also controlled by the Krok brothers, bound itself as surety and co‑principal debtor and purchased four immovable properties from Lubavitch for the same amount as the loan. Golden Hands intended to develop the properties and ceded the proceeds of future sales to Phoenix Salt to reduce Lubavitch’s indebtedness. Golden Hands never paid the full purchase price to Lubavitch, but paid R2 429 440 to Phoenix Salt from development proceeds. For nearly two decades Phoenix Salt did not demand repayment. In 2017 Phoenix Salt demanded payment of the outstanding balance from Lubavitch. Lubavitch resisted the claim, contending that Phoenix Salt, acting through the Krok brothers, had waived its right to enforce repayment against Lubavitch, notwithstanding non‑variation clauses in the loan agreement.

The appeal was dismissed with costs, including the costs of two counsel where employed.

The case clarifies South African contract law by reaffirming that a non‑variation clause does not, without express wording, preclude a unilateral waiver of contractual rights. It draws a clear doctrinal distinction between variation and waiver and confirms that waiver may be inferred from conduct and surrounding circumstances. The judgment contributes to the jurisprudence on the limits of the Shifren principle and the role of contextual evidence in contractual disputes.