Property group Orthotouch has criticised the developments in the Supreme Court of Appeal (SCA), which saw the group withdraw its appeals and tendering punitive legal costs to the Highveld Syndication Action Group (HSAG).
Orthotouch claims its legal counsel wasn’t given an opportunity to argue its case in full and that the appeals were withdrawn to avoid references of impropriety that may have been made in a judgment.
The appeals were against two scathing High Court judgments involving Orthotouch and its owner, property magnate Nic Georgiou. The courts found Georgiou acted unethically and abused the legal system when he secretly settled the claims of the six applicants who represented around 7 000 HSAG members in the applications to have the Section 155 Scheme of Arrangement set aside and for the certification of the class action. After settling the claims, the six withdrew their applications and changed lawyers without informing the HSAG’s lawyers. If allowed, it would have scuttled the applications.
In a press statement, Orthotouch says it is “disappointed that the SCA did not allow its full legal argument to be heard… and believes that had the Orthotouch counsel been given the opportunity to argue the appeals, the court would have been in a position to give clarity on the rights and obligations of the representative plaintiffs in applications to certify class actions”.
The statement, which largely addresses inaccurate media reports, went on to state that the appeals were withdrawn by Orthotouch and Georgiou’s “legal teams to avoid any inference of impropriety being drawn and costs were tendered. There was furthermore no concession that Georgiou acted unethically and abused the legal system”.
Moneyweb did not attend the hearing, but has confirmed from several sources that the full bench of judges was highly critical of Orthotouch and Georgiou’s conduct during their counsel’s legal argument.
Read the full statement here.
Moneyweb put Orthotouch’s claims of not being allowed to present their full legal argument to the court to the chief registrar of the SCA, Mrs C van der Merwe. She officially responded as follows:
“The following is what, in fact, occurred. Proceedings took place in open court. During the course of argument by counsel on behalf of the appellants, they were afforded an opportunity to take instructions. After a fairly lengthy adjournment the court was informed that the appellants were withdrawing the appeals and tendered costs. The respondents were unwilling to accept costs other than on a punitive scale. At that stage the parties could not reach agreement on costs. Consequently, the court reserved judgment in relation to costs. Minutes thereafter, counsel on behalf of the appellants informed the court in chambers that they were now offering costs on a punitive scale.”
Read the SCA letter here.
The HSAG legal representative Jacques Theron of Theron and Associates, rejected Orthotouch’s version of events. “It is startling to even suggest that five judges of the SCA disallowed a party to present its arguments to the court. If this was the case, it should be a national scandal of historic proportions!”
He said that Orthotouch and Georgiou’s counsel set out their arguments in their Heads of Argument, which were filed at the court prior to the hearing. “The five judges simply made it clear that they were very unimpressed with any of those arguments.”
In response to Orthotouch’s assertion that the appeals were withdrawn to avoid any inference of impropriety being drawn, Theron said two high courts already found improprieties in Orthotouch and Georgiou’s conduct.
He added that the tendering of punitive costs “speaks volumes… any punitive costs order is given only if a party acted in a way that warrants the strongest disapproval or condemnation by the court”.
He added that the HSAG is of the view that Georgiou and Orthotouch, through their withdrawal, prevented the judges to give a scathing written judgment.
Late payment of interest
Derek Cohen, receiver of the scheme, also took action against Orthotouch regarding the late payment of interest to investors.
In a letter addressed to investors he states that the late payments are unacceptable.
“Late payments persist despite the latitude given to Orthotouch and Zephan in this regard. In recent months payment of monthly interest on the 7th of each month (per the arrangement) has become the exception rather than the rule. More recently, there has been a deterioration in the payment patterns.
“I find this position to be unacceptable and therefore my attorneys have been instructed to address a letter of demand to Orthotouch and Zephan placing them on terms and inter alia demanding that should future monthly interest payments not be paid by the 7th of each month I will be compelled to approach the courts.”
Read the full letter here.