Simbra Cattle Breeders' Society of South Africa v SImmentaler Cattle Breeders' Society of South Africa (4425/2021) [2021] ZAFSHC 287 (25 November 2021)

IN THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Case no. 4425/2021

In the matter between:

SIMBRA CATTLE BREEDERS’ SOCIETY APPLICANT

OF SOUTH AFRICA

[Registration number: 62/98/R-13]

and

SIMMENTALER CATTLE BREEDERS’ RESPONDENT

SOCIETY OF SOUTH AFRICA

[Registration number: 62/98R-05]

CORAM: DE KOCK, AJ

HEARD ON: 18 NOVEMBER 2021

JUDGMENT BY: DE KOCK, AJ

DELIVERED: 25 NOVEMBER 2021

INTRODUCTION:

[1] The Applicant and the Respondent are both voluntary associations and registered as cattle breeders’ societies in accordance with the provisions of the Animal Improvement Act 62 of 1998. The Applicant currently promotes the Simbra cattle breed, whereas the Respondent promotes the Simmentaler cattle breed.

[2] Until recently the name of the Respondent was “Simmentaler and Simbra Cattle Breeders’ Society of South Africa”. As its previous name suggests, the Respondent previously served the interest of both Simmentaler – and Simbra cattle breeders.

[3] The Applicant on the 22nd of September 2021 launched an urgent application. In terms of the Notice of Motion the application was set down for hearing on the 2nd of November 2021. Only Part A of the Notice of Motion was launched on an urgent basis. The relief in Part A is framed as an interim interdict pending the final determination of the relief sought in Part B. The relief sought in paragraph 2 of the Notice of Motion, which forms part of Part A, essentially involved an ante dissipation type of interdict. The application was removed from the Court roll. The Applicant subsequently proceeded to set the application down on the ordinary opposed Motion Court roll for Thursday, 18 November 2021. The Court indicated that in its view the main application pertaining to Part B is ready to be adjudicated, due to the fact that a replying affidavit has been filed thoroughly dealing with the Respondent’s answering affidavit. The Court evenly indicated that a fourth set of affidavits can only be filed with the leave of the Court. Counsel for both the Applicant and the Respondent proceeded to address the Court on the relief sought in Part B of the Notice of Motion. This Judgment evenly deals with the relief sought in Part B of the Notice of Motion.

[4] In Part B of the Notice of Motion the Applicant seeks declaratory relief and payment of a monetary amount from the Respondent. The relief sought in Part B of the Notice of Motion is set out as follows:

4.1 Declaring the resolution passed at the annual general meeting held on “the 15 January 2021 by the members of the applicant and respondent, (“the Resolutions”) of full force and effect namely that:

4.1) The Simmentaler/Simbra Cattle Breeders’ Society of South Africa be restructured into two distinct societies, namely the Simmentaler Cattle Breeders’ Society of Southern Africa and the Simbra Cattle Breeders’ Society of Southern Africa, respectively with effect 1 January 2021;

4.2) The Constitution of the Simmentaler Cattle Breeders’ Society of Southern Africa be amended to insert clause 12.9A, which amended clause reads as follows:

‘In terms of a resolution adopted at a general meeting, the assets of whatever nature may be donated or transferred to an animal breeders’ society registered in terms of Section 8 of the Act, for a breed of cattle referred to in Table 7(b) of the regulations to the Act, provided that such animal breeders’ society has objectives similar to the society and is also exempted from the payment of income tax in terms of Section 10(1)(c)A(i) of the Income Tax Act.”

4.3) That the President and Vice-President of the Simmentaler/Simbra Cattle Breeders’ Society of Southern Africa together with the auditor of the Simmentaler/Simbra Cattle Breeders’ Society of Southern Africa (and any other individuals they may deem fit) may be directed to implement the restructuring as approved by the members.

4.4) That the implementation of the restructuring be carried out to give effect to the financial proposal voted upon by the members at the general annual meeting on 15 January 2021 and with a distribution of such joint assets of the erstwhile Simmentaler/Simbra Cattle Breeders’ Society of Southern Africa, between the Applicant and the Respondent, in a ratio of 60/40% in the Respondent’s favour.

4.5 Ordering the Respondent to effect payment to the Applicant of its 40% share of the joint assets of the erstwhile Simmentaler/Simbra Cattle Breeders’ Society of southern Africa, in the sum of R3 546 177.00 within thirty (30) days of this order being made.

4.6 The Applicant furthermore seeks a cost order against the Respondent.

COMMON CAUSE FACTS:

[5] It is common cause that on the 15 January 2021 the Simmentaler and Simbra Cattle Breeders’ Society of Southern Africa restructured into two distinct societies namely the Simmentaler Cattle Breeders’ Society of Southern Africa and the Simbra Cattle Breeders’ Society of Southern Africa. It is furthermore, common cause that the Constitution of the Simmentaler Cattle Breeders’ Society of Southern Africa was amended by the insertion of clause 12.9.A which reads as follows: ‘In terms of a resolution adopted at a general meeting, the assets of whatever nature may be donated or transferred to an animal breeders’ society registered in terms of Section 8 of the Act, for a breed of cattle referred to in Table 7(b) of the regulations to the Act, provided that such animal breeders’ society has objectives similar to the society and is also exempted from the payment of income tax in terms of Section 10(1)(c)A(i) of the Income Tax Act.”

[6] It is not necessary for this Court to grant the relief sought as set out in

paragraphs 4.1 and 4.2 above as same is common cause between the parties.

DISPUTED FACTS:

[7] What is in dispute is whether the financial aspects of the restructuring was voted on.

THE APPLICANT’S VERSION:

[8] It is the Applicant’s version that it was envisaged by a proposed consolidated resolution and by the members in attendance (and voting) at the Annual General Meeting that the Simbra members would essentially form their own society and be paid out their share of the assets held by the joint society, in accordance with the financial proposal presented to the members during the annual general meeting.

[9] It is averred by the Applicant and was evenly emphasized by Counsel on behalf of the Applicant that by way of analogy, the Respondent essentially acknowledges the “divorce” of the parties but refuses to adhere to the financial consequences thereof. At no stage would the members have voted and approved such a restructuring, without due regard being had to the financial consequences thereof. The obligation to account to the Applicant, post the AGM and the decisions taken thereat, is inseparable from the decision taken to restructure the joint society and to operate as two distinct societies.

[10] The Applicant states that the Simmentaler members voiced their concerns as to the financial effect of a restructuring. It is averred that it was accordingly agreed that an ad hoc committee would be appointed to investigate and report back to the members on the financial aspect of the restructuring at the next annual general meeting. The ad hoc committee was elected for this exact purpose, and it was agreed that pursuant to their report back on the financial implications of the restructuring that the matter would be voted upon at the next annual general meeting. It is averred in the founding affidavit that it was in no way at any material time ambiguous as to what the task of the ad hoc committee was, and all the members of the joint society at all times knew and understood that in the event that the restructuring was to take place that there would be obvious financial implications and consequences. At no stage was there any confusion as to the role of the committee to investigate and the report back to the members in regard to the financial aspects of the suggested restructuring.

[11] It is stated in the founding affidavit that the Council members decided unanimously at a meeting held in August 2020 that the deponent to the founding affidavit was to present the financial implications of the restructuring and proposed asset distribution to the Council at the next meeting to be held. A detailed presentation was made to the Council at a meeting held on the 13th and 14th October 2020. The Council members approved the revision of the assets on a preliminary basis and only amended the model by suggesting that the Applicant be excluded from the Spitskop Trust as a beneficiary. On this basis, the assets of the Simmentaler and Simbra members will be divided on a 60/40% ratio in favour of the Simmentaler members.

[12] It is averred in the founding affidavit that the method of calculation was duly discussed with the members of the joint society as per the presentation made at the annual general meeting on the 15 January 2021 and overwhelmingly approved. It was clear that the sum would be limited to cash and investments on hand. The third aspect of the consolidated resolution allowed for the Respondent to report back to the Simmentaler members as to the manner and timing of the final sum to be paid to the Applicant. The voting process thus entailed one vote per member, either in favour or opposed to the restructuring as a whole.

[13] The Applicant’s version as stated in the papers is in essence that the Applicant and its members would never have voted in favour of a restructuring, in the absence of a clear understanding of how the assets would be divided. It is averred that it is for this very reason that numerous meetings were held, and an ad hoc committee appointed, prior to the Annual General Meeting being held. That the Respondent no longer wishes to be associated with the Simbra members was always clear and the “divorce” of the parties became inevitable. It is stated that the contentious part always surrounded the division of assets, and this was finally accomplished after much deliberation between the parties.

[14] It is argued on behalf of the Applicant that the Respondent’s tender of the sum of R1,5 million in the answering affidavit, demonstrates a clear concession that there is a valid lis between the parties as cited.

THE RESPONDENT’S VERSION:

[15] The following is set forth in the Respondent’s answering affidavit:

15.1 What was voted upon at the meeting of 15 January was simply whether there should be a separation between the Simmentaler and Simbra Breeders in accordance with the proposed amendments to the Constitution. Nothing more was decided at the meeting of 15 January 2021. No decision was taken that a specific amount of money or a specific percentage of the assets would be donated to a new voluntary associated to be formed by the Simbra Breeders. As a result of the decision taken on the 15 January 2021 all the references in the Respondent’s Constitution to the Simbra breed were deleted. In addition, a new paragraph 12.9.A was included in the Constitution. Prior to the amendment of the Constitution to include paragraph 12.9.A the Society in terms of paragraph 12.9 of its Constitution was only entitled to donate or transfer assets of the Society to another organization with objectives similar to those of the Society upon the termination or dissolution of the Society and after settlement of all its debts and liabilities. The purpose with the amended paragraph 12.9.A was simply to enable the Respondent to donate to a breeders’ association (like the Applicant) in future. There was no decision taken about any donation that would be made in future. It is stated that the members of the Respondent were not aware of the establishment of the Applicant during the meeting of 15 January 2021. Although there were certain in principle discussions between the members of the Respondent concerning a possible donation to breeders’ associations to be formed by the Simbra members in future, no resolution to that effect has ever been tabled at any meeting of the Respondent and no such agreement has been reached.

15.2 Insofar as it is alleged by the Applicant that there was some or other oral donation agreement, such agreement does not accord with Section 5 of the General Law Amendment Act 50 of 1956. There is most certainly no donation agreement in existence that complies with the requirements of the General Law Amendment Act. As a result of the legal nature of a voluntary association individual member (like the Simbra members) do not have a claim to the assets that belong to the voluntary association. This applies when they were members and after resignation. The Respondent as a voluntary association has existed since 1964. All that happened subsequent to the establishment of the Respondent is that the Respondent’s Constitution was amended and specifically refers to two breeds namely Simmentaler and Simbra.

15.3 The Respondent referred to annexure “TV5” to the founding affidavit being a typed draft minute of the meeting that was held on Friday, 15 January 2021. The Respondent refers in its answering affidavit to the following extract from the Minutes that was held on 15 January 2021:

“Tito Vorster: ‘Die bedoeling was en ons kan dit nie voorspel nie maar ons vertrou dat die sinvolheid daarvan sal seevier en dat ons hier na twee genootskappe sal hê en dat ons aktief sal saamwerk binne een liggaam waarin die registrasie owerheidsdienste vir ons gelewer sal word. Om dit te kan doen het ons nodig om die huidige konstitusie te wysig. Hierdie konstitusie is gewysig met die uitsluitlike doel om hierdie punt te fasiliteer ...”

[16] The Respondent evenly referred to paragraph 7.1.3 of the Minutes where it is stated that:

“Mr Holliday mentions to the members that today they only voted for proposed amendments to the constitution and that the members will be informed about the process going forward and will at all times remain informed about the way forward.”

[17] It is stated in the Respondent’s answering affidavit, that the deponent to the founding affidavit seems to compare a member of a voluntary association with a shareholder in a company or a partnership.

[18] The Respondent states in its affidavit that the Minutes of 15 January 2021 speaks for itself. It is averred that obvious that the Applicant holds the view that the detailed agreement was concluded based on the resolutions taken at the 15 January 2021 meeting. It is stated that the latter view is clearly wrong, only in principle decisions were taken at the aforesaid meeting.

[19] It was highlighted on behalf of the Respondent that the tender of the amount of R1,5 million in no manner constitutes a concession that there is a lis between the Applicant and the Respondent or that the Respondent acknowledges any indebtedness.

COURT’S FINDINGS:

[20] This Court is of the view a real bona fide dispute of fact exists between the parties. Based on the diametrically opposed versions of the parties as outlined above, it is inescapable that a bona fide dispute of fact exists as to what precisely was decided at the General Annual Meeting of 15 January 2021 and more importantly whether the financial aspects of the restructuring were voted on. This Court fails to understand the Applicant’s election to prove its claim by way of motion and not trial action. There is nothing untenable or far-fetched about either party’s versions. The probabilities are equivocal and therefore neither party’s version warrants mere rejection on the papers. (Administrator Transvaal and Others v Theletsane and Others [1990] ZASCA 156; 1991 (2) SA 192 (A) at 196 I – 197 A; Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1162 – 1168.

[21] That the issues of fact would have arisen ought reasonably to have been anticipated by the Applicant. The Applicant before launching the application proceedings knew what the Respondent’s stance was.

[22] Annexure “TV21” to the founding affidavit, correspondence from the Respondent, dated the 18 May 2021 stated as follows: “…Die Raad is nie oortuig dat die AJV besluit geneem het wat die Raad bind om enige bates aan die Simbra Beestetelergenootskap van Suid-Afrika te skenk of oor te dra nie…..”In further correspondence annexed as annexure “TV23” to the founding affidavit the Respondent on 24 June 2021 again advised that:

“… die Raad se standpunt is as daar nie ‘n spesifieke besluit ten opsigte van die skenking of oordrag van bates aan die Simbra Beeste Telergenootskap by die algemene jaarvergadering van 15 Januarie 2021 geneem is nie. Die nuwe Grondwet moes eers aanvaar word voordat klousule 12.9A van krag sou word. Die diskresie wat in voormelde klousule geskep is, sou eers na wysiging van die Grondwet uitgeoefen kon word. Soos u waarskynlik bewus is, berus die besluit vir die oordrag of skenking van bates aan ‘n ander telergenootskap by ‘n algemene vergadering van die Simmentaler Genootskap. Die Raad is van voorneme om die kwessie van oordrag/skenking van bates aan die Simbra Beestelergenootskap by die eerste beskikbare geleentheid na ‘n Algemene vergadering vir besluit te verwys.”

[23] In correspondence dated the 20 July 2021 annexed as annexure “TV25” to the founding affidavit it is indicated that the Respondents were of the view that the AGM held in January 2021 was only for the purpose of amendments to the Constitution. It was explicitly stated that it is abundantly clear that there are numerous material factual disputes and that the application procedure will neither be prudent nor suffice. It was once again reiterated that the Respondent is not unwilling to entertain the notion regarding the possible distribution of assets, however, as per the amended Constitution any decision relating thereto lies with the Annual and/or Special Meeting.

[24] In these circumstances the appropriate order is one of the dismissal of the application with costs and it is so ordered.

D. DE KOCK, AJ

For the Applicant: Adv APJ Els

Instructed by MVMT Attorneys

c/o Phatshoane Henney Attorneys

Bloemfontein

For the Respondent: Adv G Benson

Instructed by: Honey Attorneys