Kudu Granite Operations (Pty) Ltd v Caterna Ltd

• Jurisdiction: South Africa
• Judge: Harms JA, Farlam JA, Navsa JA, Heher AJA and Shongwe AJA
• Judgment Date: 30 May 2003
• Citation: 2003 (5) SA 193 (SCA)
• Docket Number: 100/2002
• Hearing Date: 06 May 2003
• Counsel: N van der Walt (with him N P Guttentag) for the appellant. N B Tuchten SC for the respondent.
• Court: Supreme Court of Appeal

Navsa JA et Heher AJA:

[1] This appeal is against a judgment of Smit J in the Transvaal Provincial Division and raises the issue of the rights of parties who have performed in part where a contract becomes void due to intervening impossibility. D

[2] The appellant is a South African company engaged in the marketing of granite throughout the world. The respondent is a company incorporated in the British Virgin Islands which has interests in granite quarries in Zimbabwe. For convenience we shall refer to the appellant as 'Kudu' and the respondent as 'Caterna'. E

[3] During the 1990s the parties participated in a joint venture in granite mining operations in Zimbabwe through the medium of Ruenya. A change in the control of Kudu gave rise to conflicts of interest from its side. The parties therefore negotiated an end to their relationship F as a result of which, during October 1997, they concluded a written agreement providing for the sale by Kudu to Caterna of its 49% shareholding and its loan account in Ruenya.

[4] The material terms of the agreement were these:

'4.1

In consideration for the sale shares and loan account claims, Caterna shall make payment to Kudu of the sum of R4 000 000, G which shall be payable by Caterna as follows:

4.1.1

the South African Rand equivalent of Z$3 723 727 shall be discharged either partially or in full by way of transfer of stock by Caterna to Kudu or its nominees in Zimbabwe. Kudu undertakes to select at least 600 cubic metres of stock from that available (and not already H sold) by Ruenya as at 30 September 1997, which selection must take place within 15 days from the effective date. Should any block selected by Kudu not be available then Ruenya shall be obliged to replace that block with any available block of similar dimensions and quality. Ruenya shall not be obliged to transfer stock over and above 600 cubic metres. The parties record and agree that the price attributable to the I stock selected by Kudu shall be on a FOT Quarry basis and determined with reference to the Ruenya B price list a copy of which is annexed hereto as Annexure B, less ten percent. For invoicing purposes, the loan account of Z$3 723 727 will be converted into American Dollars at the rate of 12 - 2951 Z$ to one US$. As material is selected and invoiced the amount thus calculated will be reduced. J

Navsa JA et Heher AJA

Without derogating from the foregoing, upon completion of the selection process of A material by Kudu, the balance, if any, payable by Caterna to Kudu shall be payable in cash into such bank account designated by Kudu for this purpose in accordance mutatis mutandis with the provisions of 4.1.3 below;

4.1.2

the rate of conversion of Zimbabwean dollars into South African rand in order to ascertain the sum by which the purchase consideration is reduced by the transfer of stock by Caterna to Kudu in terms of 4.1.1 above shall be converted from Z$ into rand at the rate B of 2 - 6301 Z$;

4.1.3

the sum of the difference between R4 000 000 and the value of the materials selected by Kudu in terms of 4.1.1 above (the differential amount) shall be payable by Caterna to Kudu in South African rand, in cash into such bank account designated by Kudu for this purpose within 60 days of agreement being reached between the C parties of the amount owing by CAG to Caterna (the CAG loan account) on the ''effective winding up of CAG'' including shareholders' loan accounts, profits, debtors and realisable assets and which agreement shall be reached within 60 days of the effective date. Should there not be agreement on the CAG loan accounts within the D 60 day period then the parties agree to submit the effective winding up of CAG and the finalisation of the CAG loan account for determination by KPMG which determination is to be made within 15 days from such referral. The parties agree that any such determination by KPMG shall be final and binding, in the absence of any manifest error in calculation therein . . . E

4.1.4

Caterna shall be entitled to cede the CAG loan account in writing to Kudu towards the discharge in part or full of the differential amount.'

[5] The granite blocks were duly selected by Kudu and delivered by Ruenya to Kudu's nominee. Invoices were generated by Ruenya and the agreed values of the blocks were entered in US dollar terms and debited against Kudu's loan account in Ruenya in Zimbabwean dollars. F

[6] The parties could not reach agreement on the value of the CAG loan account as required by clause 4.1.3. Nor could KPMG. The agreement failed because of this on 14 October 1998. G

[7] In January 1999 Caterna issued summons against Kudu in which it claimed the following relief:

'1

An order declaring that the sale agreement, annexure CL1 to the plaintiff's particulars of claim, has failed and become unenforceable. H

2

An order directing the defendant to restore to the plaintiff at the Ruenya Mine in Zimbabwe the blocks of granite stock listed on the schedule, annexure CL2 to the plaintiff's particulars of claim, on or before a date to be determined by the Court. I

3

In respect of each block of granite stock listed on the schedule, annexure CL2 to the plaintiff's particulars of claim which the defendant has failed to restore to the plaintiff as directed, an order for judgment against the defendant and in favour of the plaintiff for the sum expressed in column 8 of the schedule CL2 in US dollars converted into South African rands on date of judgment; J

Navsa JA et Heher AJA

4

Interest on each judgment debt at the prescribed rate from date A of such judgment.

5

Costs of suit.'

[8] The basis of Caterna's case was set out in its particulars of claim as follows: B

'14

Because the sale agreement has failed and become unenforceable and the defendant has received the blocks of stock described in 8 above, the defendant:

14.1

has been unjustifiably enriched at the expense of the plaintiff in the several sums set forth in column 8 of the schedule CL2; and C

14.2

became, and is presently, obliged to restore such blocks of stock to the plaintiff at the Ruenya Mine in Zimbabwe, alternatively, where the defendant has disposed of and is therefore unable to restore a specific block of stock to the plaintiff: to restore to the plaintiff the value of such block of stock.' D

[9] It was common cause that...