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Hans Klopper applies for leave to appeal in Orthotouch contact details case

Rescue practitioner argues that he didn’t have the opportunity to defend the order to hand over the details of the investors, as the HSAG did not request this in its original application.

Hans Klopper, the business rescue practitioner of the failed Highveld Syndication (HS) companies, has applied to the Supreme Court of Appeal (SCA) for leave to appeal against an earlier ruling by the South Gauteng High Court (SGHC).

This earlier ruling, and the denial of a subsequent request for leave to appeal of the SGHC ruling, compelled Orthotouch and property tycoon Nic Georgiou to hand over the names and contact details of the 18 300 investors in the HS companies.

These rulings paved the way for the Highveld Syndication Action Group (HSAG) to challenge a controversial scheme of arrangement implemented in November 2014, as well as to institute a class action lawsuit against Georgiou to recover the R4.6 billion invested in the various HS schemes.

Background

The case started in 2011 when Georgiou, through Orthotouch, acquired all the properties in the failed HS investment scheme. At the time, Georgiou undertook to repay investors the R4.6 billion they invested in the various schemes. Klopper was also then appointed as the business rescue practitioner.

However, in 2014 Orthotouch defaulted on these repayments to investors. Georgiou and Orthotouch claimed they could not afford the payments and that a proposed a scheme of arrangement was the only alternative to the liquidation of the company. This scheme of arrangement was controversially sanctioned in November 2014, but unhappy investors formed the HSAG and are in the process of applying to the SGHC to have the scheme of arrangement set aside. The HSAG also started with the groundwork to lodge a class action suit against Georgiou to recover its investments.

Klopper’s SCA application

Klopper argues in the latest application to the SCA that the SGHC’s judgment went beyond the scope of the original HSAG application. The HSAG asked the court to waiver the provision that all communication with investors should be in the form of personal correspondence as the Companies Act prescribes. The HSAG said it wanted to communicate with investors through newspaper advertisements and the internet, as it did not have the names and contact details of the 18 300 investors.

The court found in favour of HSAG and ordered Georgiou and Orthotouch, the only parties that had the names and contact details of the investors, to hand them to HSAG.

Georgiou then asked for leave to appeal, but this was denied.

Klopper now argues that he did not have the opportunity to defend an application to hand over the details of the investors, as the HSAG did not request this in its original application.

Helgard Hancke, a member of the HSAG, said in reaction that the HSAG was very surprised to learn of Klopper’s application. “We were very surprised as Klopper is the business rescue practitioner. He is supposed to act in the interest of investors, and this action is clearly not in their interest. It is clearly a tactic to delay our application to have the scheme of arrangement to be set aside.”

In response to a question from Moneyweb, asking whether the application was in the interest of investors, Klopper responded: “The application is in my view, and as I have been advised, in the interest if the historic HS investors as I have been ordered by the court to provide their details to a third party without me having been afforded an opportunity to be heard in the matter as appears from my affidavit. I am advised that it is my duty to protect the personal information of more than 18 000 people that I may be able to have access to. I took note of this advice and acted accordingly.”

In response to a question as to why he brought the application, Klopper responded: “I have sought legal advice and the reasons why I launched the application are set out in the affidavit and are in essence to protect the investors’ private information. I have also been advised that I ought to appeal against an order made against me under circumstances where I abided by the court’s decision in a matter where completely different relief was sought and where was not really participating in the matter.

“Further legal advice was that, as I was unexpectedly ordered to do something without me even participating in the process and without having the right of audi alteram partem (hear the other side) afforded to me, I ought to appeal in the interest of innocent investors not participating in this litigation.”

COMMENTS   1

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I trust the judge will be asking Mr. Klopper why this application is in the interests of the 18 000 investors. In the event his answer is the kind of legalese in the article above hopefully he will be ordered to pay the legal costs HSAG in his personal capacity. This is no better than the conduct of Zuma in dragging out having his day in court. When do the judges start taking action against people who drag out the legal process? Especially when the grounds for doing so are tenuous. Mr Klopper could send a request to the investors asking if they do not wish to be contacted by HSAG. Those that do not wish to be contacted could be removed from the list. But no the rescue practitioner will use up the funds available on litigation. So sad.

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