IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
In the matter between
HYDRO HYPE (PTY) LTD
and
CONSORTIUM BEEF AGRICULTURAL PRIMARY
CO-OPERATIVE LIMITED
(Previously Consortium Beef (Pty) Ltd)
JOHANNES CASPARUS DE VILLIERS
PIETER WILLEM ADRIAAN NEL
JAN JACOBUS DE VILLIERS
ISOBEL STOLS
NICOLAAS JOHANNES ZAA YMAN Reportable/Not Reportable
Case no: 3977/2023
Applicant
First Respondent
Second Respondent
Third Respondent
Fourth Respondent
Fifth Respondent
Sixth Respondent
2
Coram: Naidoo J
Heard: 23 May 2024
Delivered: This judgment was handed down electronically by circulation to
the parties' representatives by email. The date and time for hand-down of the
judgment is deemed to be 11 h00 on 24 March 2025.
Summary: Law of contract -fixed date for termination of contract -terminated by
effluxion of time -payment on termination in accordance with contract -calculation
of value of cattle units in terms of formula and method of calculation stipulated in
contract
ORDER
1. The interlocutory application in this matter is granted.
2. The agreement entered into between the applicant, Hydro Hype and the first
respondent, Consortium Beef, is declared to have terminated by the effluxion of time,
on 17 January 2023;
3. The first respondent is directed to calculate the value of applicant's 469 cattle
units and provide the calculated value, with a full detailed breakdown of the calculation,
to the applicant, within thirty (30) calendar days of the service of this order upon the first
respondent.
4. For the purposes of the calculation referred to in para 3 above, the parties will be
guided by clause 9 of the agreement, any other relevant provision of the agreement
and any further terms and conditions that they may agree upon.
5. The costs of the application and the interlocutory application are to be paid by
the first respondent, such costs to include the costs consequent upon the appointment
of two counsel, on scale C in respect of senior counsel and scale B in respect of junior
counsel.
JUDGMENT
Naidoo J
[1] This is an application by the applicant, Hydro Hype, essentially for payment in
respect of its cattle units by the first respondent, Consortium Beef Agricultural Co
operative Limited (Consortium Beef) alternatively, payment of the value of each head of
cattle. The second to sixth respondents were joined in this application, by virtue of each
being a director of Consortium Beef. No costs order was sought against them. 3
[2] Hydro Hype sought, in summary, the following relief, in the form of declaratory
orders:
a) the agreement between it and Consortium Beef, which was regulated in terms of
section A thereof, terminated, lapsed and/or alternatively came to an end by effluxion of
time on 17 January 2023;
b) the value of Hydro Hype's 469 cattle units shall be R7 867 552.00, alternatively,
R7 392 331.10.
Alternatively to b), Consortium Beef be directed to calculate the value of Hydro Hype's
cattle units and provide the calculated value, with a full and detailed breakdown of the
calculation, to Hydro Hype within 7 days of the service of the court order upon
Consortium Beef. There were also extensive directives set out for how the calculation
was to be done, what steps were to be taken in the event that the parties could not
agree on the calculation, as well as how other post-termination procedures were to
unfold.
[3] The brief background to this matter is that Hydro Hype entered into an
agreement (the agreement) with Consortium Beef, in terms of which it made available
to Consortium Beef, 413 cows, 267 calves and 8 bulls (being a total of 688 animals), in
exchange for 469 cattle units. Although the agreement is dated 26 February 2018, it
seems that the parties accept that the effective date was 18 February 2018. They also
accepted that they were bound by the agreement in spite of it not bearing the details of
Hydro Hype, nor being signed on behalf of Hydro Hype. Other details, such as the
calculation of a cattle unit were also not completed. The cattle units mentioned entitled
Hydro Hype to monthly profit sharing payments by Consortium Beef, which were
calculated in terms of a formula agreed between the parties. The termination date of
the agreement was 17 January 2023, which provided that upon termination, Hydro
Hype was entitled to elect whether its cattle units should be sold or whether it would
receive cattle of equivalent value. In August 2022, Hydro Hype indicated that it
preferred to receive payment for its cattle units from Consortium Beef, upon termination
of the agreement.
[4] I pause to note that the notice of termination is dated 15 June 2022, and was
sent on the same day to a functionary, 'Johannes', at Consortium Beef. In a
subsequent email on 18 August 2022, Hydro Hype reiterated its intention to receive 4
payment for its cattle units at termination and attached the notice of termination again.
The reason for this appears to be that the email address of the functionary at
Consortium Beef had changed and Hydro Hype was, subsequent to 15 June 2022,
informed of this, hence the email of 18 August 2022. I note that it is not disputed that
proper notice of termination was given.
[5] Hydro Hype alleges that this decision was initially noted by Consortium Beef, but
shortly thereafter, the latter disputed that it was obliged to buy any cattle from Hydro
Hype and tendered, instead, delivery of cattle to the same value. A few months later, in
November 2022, it seems that Consortium Beef changed its mind again, withdrawing its
tender of delivery of the cattle and advising that compensation would be paid in terms
of the agreement. Two months later, on 10 January 2023, Consortium Beef once again
had a change of mind and insisted that Hydro Hype collect the cattle at locations to be
provided. Hydro Hype alleges that details of such locations were never provided to it,
making it impossible to inspect the cattle tendered in order to decide whether to take
delivery of the cattle or opt for payment for its cattle units. After the termination date for
the contract had elapsed, Consortium Beef, on 20 January 2023, advised Hydro Hype
that due to non-collection of the cattle, the agreement between the parties had
automatically become renewed for a further five years. That was the catalyst for this
application, as Hydro Hype disputed the renewal and approached this court for relief.
[6] Hydro Hype set out in detail the extensive interactions between the parties over
a number of years. These interactions commenced in approximately 2017 when Hydro
Hype agreed to participate in an investment plan devised by Consortium Beef, where
Hydro Hype would give possession of its cattle to Consortium Beef, to farm with for five
years, and would receive monthly payments. Hydro Hype would retain ownership of the
cattle and be entitled to the return of the cattle at the end of five years. For the
purposes of calculating the monthly return to Hydro Hype, the number of cattle it gave
over was assessed as 'cattle units'. It was advised by the fourth respondent that Hydro
Hype would be entitled to 550 cattle units. 5
[7] After the cattle were received by Consortium Beef, Hydro Hype was informed by a
representative of Consortium Beef, that Hydro Hype might be entitled to fewer than 550
cattle units. Hydro Hype was dissatisfied with this, and it seems that correspondence was
exchanged between the parties in this regard, until the fourth respondent, representing
Consortium Beef, made a final offer on 24 February 2018 for an all-inclusive issue of 469
6
cattle units. Hydro Hype accepted the offer, in writing, on the same day. Another relevant
point is that in a letter dated 10 April 2018, another functionary, Dr Paul Lubout, who was
also involved in the transactions and interactions with Hydro Hype, confirmed to the latter,
that 'You now own cattle units not specific animals'. This was confirmed by Consortium
Beefs attorney, in a letter dated, 15 November 2018, to Hydro Hype's attorney: 'We record
that your client's cattle were converted to cattle units ... After a five year period, your client
has the decision to convert his cattle units to animals or receive payment of the value of the
cattle unitls'.
[8] It is also evident that Consortium Beef accepted that section A of the agreement was
applicable to Hydro Hype, as the agreement was forwarded to Hydro Hype where section A
was circled and correspondence sent by Consortium Beef advising that section A applied to
the agreement. Hydro Hype accepted this. The correspondence between the parties
confirms that the termination date of the agreement was 17 January 2023. Hydro Hype also
confirmed, repeatedly, that the agreement would terminate on that date, and gave no
indication that it considered the possibility of renewing the agreement. Consortium Beefs
responses indicate that it vacillated between accepting that the parties agreed to the
conversion of its cattle into cattle units, for which it paid a monthly amount to Hydro Hype,
and the insistence that it collect these cattle units by physically loading them onto a truck.
Consortium Beefs letter to Hydro Hype, dated 17 January 2023, is evidence of this. In that
letter, Consortium Beef noted its acceptance of Hydro Hype's previous election that, upon
termination of the agreement, to receive a pay out in respect of the cattle units, and referred
to Consortium Beefs letter of 19 September 2022, confirming that it would assist Hydro
Hype with the correct count.
[9] Based on the above, Consortium Beef alleged that it, at no stage, agreed to
make payment of cattle units upon termination of the agreement. In addition to the letter
sent by Consortium Beefs attorney, which I referred to earlier, a reference to the
agreement indicates a distinction between physical cattle (referring to animals) and
cattle units. Under the heading 'The Parties Agree to the Following', the distinction is
created by reference to 'A', being 'That the owner buys cattle units .. .', and 'B' 'That the
owner entrusted his herd to the management of CB .. .' Under 'Interpretation', the
agreement defines what a cattle unit is and proceeds to set out a detailed formula for
the calculation of a cattle unit, which both parties considered binding on them. Section
E of the agreement deals with 'Selling and Reclaiming after Termination of the
Agreement'. Clauses 6.1 provides that 'If the owner wishes to sell his/her cattle units
after termination of the contract, the following will apply', and clauses 6.2 to 6.3 set out
the formula for calculation of the selling price. Clause 6.4 deals with 'Repossessing'
and provides for the valuation by an independent valuer of the cattle or cattle units.
Clause 6.4.2, which provides that 'Notice of intention to repossess animals will be done
in accordance with Section 4.3 read together with 6.2.1 whereupon animals will be
returned to the owner (my underlining). The distinction between cattle units and the
physical animals is clear. In my view, it appears ex facie the agreement as well as the
correspondence between the parties, that cattle units were the paper calculation of the
value of an agreed number of cattle and not physical animals, after appraisal of the
type and condition of the physical animals to match those that were originally given
over to Consortium Beef. Cattle units were therefore not capable of being collected by
being loaded onto a truck and removed, as claimed by Consortium Beef.
[1 O] With regard to termination of the agreement, reference to clause 5.3 is
instructive: 'If the owner does not give notice to CB at least 6 months prior to
termination of this agreement, the agreement will automatically renew for the same
terms and conditions as contained in this agreemenf. As indicated earlier in this
judgment, the notice of termination was given, and there is no dispute that it was
properly given. However, this clause should be read with clause 5.2 which stipulates
that '[i]f the owner has the intention to resume ownership of the animals that was
delivered to CB in terms of this agreement before the expiry date of this agreement, the
owner will give written notice of such decision to CB of at least 6 months prior to the
date of termination' (my underlining). It seems to me that if the owner possessed cattle
units, it was unnecessary to give that notice. The fact that such notice was given by
Hydro Hype serves to reiterate its intention to regard the agreement as having been
terminated on the agreed date.
[11] I turn now to deal with the interlocutory application brought by Hydro Hype. It
sought an order substituting annexure FA32 attached to the founding affidavit in this
matter with annexure 'X' attached to the interlocutory application. Consortium Beef
opposed the interlocutory application. For ease of reference, I repeat the content of
para 25. 7 of the founding affidavit in the main application:
'From the statement provide by Consortium Beef (Annexure "FA32'J, it appears that
Consortium Beef calculates the value of a single cattle unit at R15 761.90, which
means that the 469 cattle units of Hydro Hype are valued at R7 392 331.10 (R15 761.0
x 469) on Consortium Beef's own version.' 7
[12] Hydro Hype's explanation is that when counsel was briefed in this matter,
annexure 'X' was attached to the statement marked FA32 as well as an email from
Consortium Beef, dated 22 March 2023. Counsel concluded that the two documents
went together, hence the wording of para 25.7. The annexures to the founding affidavit
were collated by the attorney's correspondent, who attached only FA32, without picking
up that it did not refer to the cattle unit value referred to in para 25.7. Consortium Beef
did not raise this in their Answering Affidavit, so the error went undetected until 6 April
2024, when counsel was preparing heads of argument in preparation for the hearing of
the matter on 16 April 2024. The matter was postponed on that day to allow the parties
to file the answering and replying affidavits for the interlocutory application to be heard.
[13] The explanation in respect of annexure 'X' is that it was prepared and sent to
Hydro Hype by Consortium Beef as part of the negotiations regarding the calculation of
the number of cattle units that Hydro Hype would be entitled to in respect of the 688
heads ·of cattle that it gave over to Consortium Beef. Annexure 'X' shows values for 4 78
and 458 head of cattle. The final number which was agreed upon was 469. Hydro Hype
alleges that while the number of cattle units was subject to negotiation and varied
during the period of negotiation, the individual cattle unit value of R15 761.90 remained
the same. Hence, the calculation in para 25. 7. Hydro Hype asserted that substituting
annexure 'X' for the statement in FA32 will not cause prejudice to Consortium Beef.
[14] Consortium Beefs opposition to the interlocutory application was based
essentially on two grounds, firstly that replacing FA32 with annexure 'X' will create the
incorrect impression that it was attached to Consortium Beefs dated 22 March 2023,
which is not the case, and secondly that annexure X did not emanate from Consortium
Beef and could have been prepared by Hydro Hype. In reply, Hydro Hype stated that
Consortium Beef sent an email dated 19 February 2018, under the hand of Paul Lubout,
who was part of the negotiations relating to the calculation of cattle units, to which was
attached a Microsoft Excel spreadsheet, containing two tabs. Annexure 'X' came from
the first tab. A colour copy of annexures was also attached. Another email dated 20
February 2018 emanated from Paul Lubout which discussed the agreement between
the parties about details regarding the cattle units and other details. Colour copies of
further annexures, relevant to the email dated 20 February 2018 and reflecting again
details of various figures relating to cattle units, were also attached. Hydro Hype also
indicated that the reference to the email dated 22 March 2023 was incorrect and should
have referred to the email dated 19 February 2023. Paragraph 25. 7 should therefore, 8
read accordingly. Hence, they maintain that the opposition by Consortium Beef is
technical and has no merit.
[15] I refer to the allegations by Consortium Beef that it received invoices from Hydro
Hype after termination of the agreement, and made payment in terms thereof,
indicating that the agreement was renewed. An inspection of the statement attached to
its affidavit opposing the interlocutory application reveals that the invoice from Hydro
Hype was indeed dated 18 January 2023, being after the termination of the agreement.
It is surprising, however, that Consortium Beef did not notice or was unaware that the
invoice was for monies due to Hydro Hype during the currency of the agreement, and
not for monies due after the termination of the agreement. Its argument that the invoice
served as substantiation for its assertion that the agreement was renewed is without
merit and cannot be sustained. The explanation tendered by Hydro Hype pertaining to
its assertion that replacing FA32 with annexure ' would create the wrong impression
that it was attached to its email dated 22 March 2023, is, in my view, satisfactory,
probable and sufficient to read the founding affidavit in the correct context. Consotium
Beefs argument that it did not compile annexure 'X' and that it probably emanated from
Hydro Hype, as did FA32, also cannot be sustained. The annexures attached to the
founding and replying affidavits make it clear that the document did in fact emanate
from Consortium Beef.
[16] Having said that, I point out that annexure 'X' was clearly compiled in February
2018, whilst the parties were negotiating the terms of the contract, which only
materialized a few days thereafter. Annexure 'X' does not reflect the final figure of 469
cattle units which was agreed upon, and while it is so that a single cattle unit value was
reflected as R15 761.90, that was the price that would have been determined in 2018.
The relevant date for calculation of cattle units would be the date of termination of the
agreement, being 17 January 2023, some five years later. However, annexure 'X' may
well be important as a starting point for the calculation of the value as at 17 January
2023. I am satisfied that, in the interests of justice as well as the interests of fairness
and equity, annexure 'X' should replace FA32, with the necessary adjustments to
correct the date of the email referred to in the relevant paragraphs (22.1 and 25. 7) of
the founding affidavit in the main application .
[17] Hydro Hype amended its notice of motion to reflect the name change registered
in respect of Consortium Beef. The relief claimed remained the same as in the original 9
notice of motion. As indicated earlier, Hydro Hype requested the order of the court to
incorporate extensive directives as to how the calculation of the value of the cattle units
should be undertaken, the procedure for appointment of the senior auditor referred to in
the agreement, and various other matters, such as the manner in which the
identification of cattle should unfold. These aspects are not set out in such great detail
in the agreement and it is impermissible for this court to make orders to this effect, as it
may well amount to the court making a contract for the parties. The proper course
would be for the parties to agree on these aspects and record it as they agree.
[18] With regard to costs, Hydro Hype submitted that, taking into account the
amendments to the Uniform Rules of Court on 12 April 2024, where rule 67 A was
inserted and rule 69 was amended, the court should award the costs of Mr Snellenburg
SC on scale C and that of Mr Johnson on scale B. It was submitted further that the
court should allow the costs of two counsel, and in doing so, to consider the complexity
of this matter, the value of the claim and that the relief sought is of importance
(presumably to both parties and the public). Consortium Beef sought the dismissal of
the application, with costs on scale C. In my view, this was a complex matter and
required careful consideration. The value of the claim is high and would be of
importance to the parties in this matter. The employment of two counsel by Hydro Hype
is therefore, not unreasonable or unwarranted.
[19] In the circumstances, I make the following order:
1. The interlocutory application in this matter is granted.
2. The agreement entered into between the applicant, Hydro Hype and the first
respondent, Consortium Beef, is declared to have terminated by the effluxion of time,
on 17 January 2023;
3. The first respondent is directed to calculate the value of applicant's 469 cattle
units and provide the calculated value, with a full detailed breakdown of the calculation,
to the applicant, within thirty (30) calendar days of the service of this order upon the first
respondent.
4. For the purposes of the calculation referred to in para 3 above, the parties will be
guided by clause 9 of the agreement, any other relevant provision of the agreement
and any further terms and conditions that they may agree upon. 10
5. The costs of the application and the interlocutory application are to be paid by
the first respondent, such costs to include the costs consequent upon the appointment
of two counsel, on scale C in respect of senior counsel and scale B in respect of junior
counsel. 11
NAIDOO J
Appearances
For the Applicant:
Instructed by:
For the Respondents:
Instructed by: Adv N Snellenburg SC with
Adv JMC Johnson
PWG Attorneys
c/o Maree & Partners
46 Donald Murray Avenue
Bloemfontein
Adv SJ Reinders
Honey Attorneys
Honey Chambers
Northridge Mall
Bloemfontein 12