Phoenix Salt Industries (Pty) Ltd. vs. The Lubavitch Foundation of Southern Africa - (03 Jul 2024)

Process of interpretation should not be divorced from the circumstances surrounding the contract

Civil

In present matter, Phoenix Salt instituted an application in the Gauteng Division of the High Court, Johannesburg (the high court) to claim payment of the sum of R2 886 005.20 plus interest and costs from Lubavitch. The high court, dismissed the application and found that Phoenix Salt had waivered their rights to enforce payment. Aggrieved by the high court’s findings, Phoenix Salt appealed, with leave of the high court to this Court.

Before this Court, the issue was whether Phoenix Salt through the Krok Brothers waived its right to claim the remaining loan amount from Lubavitch, if so, whether such a waiver was competent in the face of the non-variation clause.

The process of interpretation should not be divorced from the circumstances surrounding the contract. The relationship between the contracting parties and their conduct during the subsistence of a contract has a significant relevance in the process of interpretation. It further held that while surrounding circumstances should not be elevated over words of the contract, consideration of such evidence helps the decision maker to acquire an enhanced insight into the intention and the purpose of the contract.

The words and actions of the Krok Brothers and Rabbi Lipskar, as contracting parties, before the signing and during the subsistence of the contract demonstrated that there was no intention on the Krok Brothers as the seniors of the Krok family to demand payment of the loan directly from Lubavitch. They conducted themselves in a way that clearly showed that they abandoned their right to enforce the terms of the contract against Lubavitch. The high court’s finding that Phoenix Salt waived its right to call up the loan and to enforce payment was correct. Appeal dismissed.

Tags : PAYMENT ENFORCEMENT RIGHT