Property magnate Nic Georgiou will have to repay a former Pickvest investor more than R10 million in capital and interest after the Pretoria High Court dismissed an application to have a previous default judgment against Georgiou rescinded.
This will open the door for thousands of other investors in the Highveld Syndications (HS) 21 and 22 companies to institute similar claims against Georgiou to repay their former Pickvest investments in terms of the buyback agreements.
The investor, Suraiya Noormahomed, invested R3 million in HS 22 in 2009. She signed an agreement which stated that Georgiou or one of his related entities would repurchase the shares she received five years later in 2014 for R6 million.
Following the collapse of the HS schemes and Georgiou’s failure to buy back the shares in terms of the buyback agreement, Noormahomed launched an application in the Pretoria High Court to force Georgiou to do so.
In July last year the court granted a default judgment against Georgiou and entities related to him to repay the R6 million, as well as interest at 15.5% on this amount since August 2014. In total, this amounts to more than R10 million.
The case was made more complex as Georgiou did not notify the court in time that he would oppose the application, and therefore a default judgment was initially granted. This was caused by an apparent series of administrative bungles. However, the court eventually heard Georgiou’s application to have the default judgment rescinded and it was this application the court dismissed with costs on Monday.
The court dismissed Georgiou’s main argument that the Section 155 Scheme of Arrangement that was implemented after the HS syndications ran into financial problems and was put under business rescue, did not replace the original buyback agreements. (Read the full judgment here)
“The judgment is a clear indication that Georgiou’s argument that the Section 155 Scheme of Arrangement has no effect on the validity or enforceability of the buyback agreements,” said Advocate Louis Bolt, who appeared on behalf of Noormahomed.
Bolt also represents more than 200 other HS 21 and 22 investors with aggregate claims exceeding R1 billion. He is also in the process of instituting similar civil claims on behalf of HS 19 and 20 investors.
Georgiou did not respond to a request for comment.
Supreme Court of Appeal
This judgment follows the bruising showing in the Supreme Court of Appeals last week, where Georgiou withdrew an appeal against two scathing High Court judgments and tendering punitive costs to the Highveld Syndication Action Group (HSAG).
The two High Court judgments found that Georgiou acted unethically, tried to sabotage the investors’ rights and abused the court system. Georgiou’s legal team withdrew the appeal after the judges were highly critical during legal arguments, and tendered punitive costs.
This withdrawal of the appeal now paves the way for the HSAG to formally proceed with an application for certification of a class action on behalf of 7 000 investors.
Georgiou distributed a media statement late on Friday in reaction to media reports about this withdrawal, stating that Orthotouch was disappointed that the SCA did not allow its legal team to present its full legal argument.
“Orthotouch is disappointed that the SCA did not allow its full legal argument to be heard this week 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 reads.
“The appeals were consequently withdrawn by the appellants’ legal teams to avoid any inference of impropriety being drawn and costs were tendered. There was furthermore no concession that Mr. Georgiou acted unethically and abused the legal system.” (Read the full statement here.)