Kudu Granite Operations (Pty) Ltd v Caterna Limited

Kudu Granite Operations (Pty) Ltd (Kudu) and Caterna Limited (Caterna) were parties to a joint venture in granite mining in Zimbabwe. In October 1997 they concluded a written agreement in terms of which Kudu sold its 49% shareholding and loan account in the joint venture company (Ruenya) to Caterna for R4 million. Part of the purchase price was to be discharged by Caterna delivering specified granite blocks from Ruenya’s stock to Kudu, with the balance payable in cash after agreement on the value of a separate loan account (the CAG loan account). Kudu selected and received 179 granite blocks, which were delivered by Ruenya as Caterna’s agent. The parties failed to reach agreement on the CAG loan account, and KPMG was also unable to determine it. As a result, the agreement failed without fault on either side in October 1998. Caterna, having received no counter-performance from Kudu, sued for restitution of the granite blocks or their value, alleging unjustified enrichment.

The appeal succeeded in part. The order of the High Court was set aside and replaced with an order directing Kudu to pay Caterna R933 405.68, together with interest at 15.5% per annum from 6 January 1999 to date of payment, and one half of the costs of suit. Caterna was ordered to pay the costs of the appeal.

This case is a leading South African authority on restitution following the failure of a contract without fault. It clarifies the distinction between contractual remedies after cancellation and enrichment remedies where a contract is extinguished by supervening impossibility or frustration. The judgment confirms the applicability of the condictio ob causam finitam in such circumstances and establishes that enrichment is measured by the agreed value of the prestation, not its market value.