notice to highveld syndication 15-22 investors

NOTICE TO HIGHVELD SYNDICATION 15-22 INVESTORS / SHAREHOLDERS
HIGHVELD SYNDICATION ACTION GROUP (“HSAG”)
RE: APPEAL / RESCISSION OF SANCTIONING OF SCHEME OF ARRANGEMENT
IN TERMS OF SECTION 155 OF COMPANIES ACT
14 May 2015
The hearing of the appeal / rescission of the Orthotouch Scheme of Arrangement,
which was published in the national press, to be heard on 19 May 2015, refers.
It is patently clear that Mr Nic Georgiou, Orthotouch and Mr Hans Klopper (for some
unbeknownst reason) would go to great lengths to prevent this matter (and naturally
all other matters regarding the merits of this case) to be promptly ventilated before a
court of law. This delaying tactic by the Respondents that they would delay any court
case was already publicly announced by Mr Michael Kiriakidis, spokesperson for
Orthotouch, during an information meeting to raise support for the Scheme of
Arrangement in the Southern Cape during November 2014.
Despite the fact that Orthotouch and Mr Hans Klopper received notice in the beginning
of March about the hearing, they have now, almost three months later and shortly
before the matter was due to be heard, complained through their Reputation
Managers, Messrs Vuma, that our firm supposedly misled two High Court judges and
broke the court rules to have the matter heard on the aforesaid date! These allegations
are blatantly misleading and false, and rejected with contempt.
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The HSAG attorneys have consulted with their senior counsel (Adv. Schalk Burger
SC) and junior counsel (Adv. Casper Maree) on Tuesday, 12 May 2015, in order to
decide the future process and whether the appeal / rescission matter should be
proceeded with on 19 May 2015 or not.
The decision was, not to proceed with the hearing on the scheduled date but rather to
apply for the appointment of a case manager judge to oversee the procedural issues
and facilitate a swift hearing of the matter.
Further to the above and for the convenience of the HS investors / shareholders
follows a timeline regarding the progress in the Section 155 rescission / appeal
application:
1.
On 26 November 2014 Orthotouch obtained a court order in the Johannesburg
High Court (Gauteng South Division) to sanction the scheme of arrangement.
See the Notice of Motion of Orthotouch marked Annexure “A.”
2.
The seat of the court where the judgement was obtained, was contrary to the
court stipulated in the Scheme of Arrangement document which stated
unequivocally that the Pretoria High Court (Gauteng North Division) is defined
as the Court (with jurisdiction). See page 17 of the Scheme of Arrangement
marked Annexure “B.”
3.
This order was furthermore obtained on an ex parte basis, which means that a
court date was obtained by Ms Natalie Lubbe, the attorney acting for
Orthotouch, from the High Court, to be heard before a judge, without notifying
any other interested party involved in the Highveld Syndication (“HS”)
companies. Our courts have ruled over many years that, in ex parte matters
(such as this one) good faith must be observed, and all material facts must be
disclosed (our own emphasis). If any facts which might in the opinion of the
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court have influenced its decision are withheld, whether wilfully and mala fide
or negligently, the court will as a rule not grant the relief, or it may even set its
order aside. No mention was made by Orthotouch or their attorney, Ms Lubbe,
on the papers of the commencement of the class actions (in October 2014) or
any other relevant facts which may have influenced the court’s decision.
4.
The HS investors / shareholders definitely have an interest in the matter, but
none of them or their legal representatives (Theron & Partners or their
correspondent attorneys) were notified of the ex parte application. Legal
proceedings have already (almost a month before on 31 October 2014)
commenced against Mr Nic Georgiou, the Managing Director of Orthotouch,
and others for class actions against them totalling altogether R4.6 billion.
5.
Mr Hans Klopper, the business rescue practitioner of the HS Companies, is also
a director of Orthotouch and party in both matters, and represented by Mr Diaan
Ellis. No relief was so far asked against Mr Klopper.
6.
Ms Natalie Lubbe acts for Orthotouch in the class action matter in the Pretoria
High Court as well as the Johannesburg High Court.
7.
Orthotouch and its attorney, Ms Lubbe, were undoubtedly aware of the class
action in Pretoria. The court papers were served on Orthotouch, Mr Hans
Klopper and other respondents electronically on 31 October 2014 and Mr
Klopper advised on 3 November in reply that he “will only accept service of
pleading by the Sheriff”. (See Annexure “C.”)
8.
On 18 November 2014 (See Annexure “D.1”) the papers were served by the
Sheriff of the High Court on Orthotouch. Orthotouch thereafter even gave notice
of intention to oppose it by their attorney, Ms Natalie Lubbe, on the 24 th of
November 2014 (See Annexure “D.2”).
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9.
When the HS investors / shareholders became aware of the Johannesburg
court order that sanctioned the Scheme of Arrangement, both Messrs
Orthotouch and Klopper were, already since November 2014, requested by
their legal advisors to furnish a copy of the order, which request was simply
deferred and ignored.
10.
Eventually a copy of the court order was obtained by the Johannesburg HSAG
correspondent attorneys shortly before the Christmas holidays in December.
Theron & Partners consulted with their counsel during January 2015 and
February 2015 to discuss the merits of the case and process to be followed.
11.
The advice from senior counsel was clear that the sanctioning of the Scheme
of Arrangement and the terms thereof by the Court must be appealed /
rescinded (set aside).
12.
The advice was also that, as opposed to Orthotouch, the Applicants must give
notice to all known interested parties of their intentions, including the 18 000
HS investors / shareholders of whom they do not have all the particulars and
information. Currently more than 8 500 claimants support the class action and
it was decided that notice be given on both the HS Action Group website
(www.hsaction.co.za) as well as in the printed press by advertisement in two
national newspapers. Altogether there are currently approximately 18 000
investors whose rights are affected.
13.
To advertise in the newspapers, a fixed date had to be obtained from the High
Court prior to the hearing date which required a special prayer in the application
for appeal / rescission. In paragraph (a) of the Notice of Motion (application) the
Applicants request that condonation be granted for the non-compliance with the
court rules with regards to the form and service of the application (See
Annexure “E.1”). To obtain a court date, junior counsel for the Applicants
communicated in February with the Registrar of the Judge, the Honourable
Judge Moshidi, who granted the order in favour of Orthotouch. Attached hereto
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see Annexure “E.2”, the written communication between counsel and the
Registrar between 25 February and 4 March where counsel arranged a date
with the Registrar prior to publication in the press. (Counsel also communicated
telephonically with the said Registrar.)
14.
The simple (and obvious) reason why the Registrar of the said Judge (and not
the Judge himself) was contacted by junior counsel, was to obtain a specific
administrative date (long in advance) to inform all those interested parties
(including HS investors / shareholders) who were unaware of the proposed
application for appeal / rescission.
15.
The pre-arranged date (19 May) was almost three months in advance and the
court papers were thereafter issued on 3 March 2015 (See Annexure “E.1”).
None of the respondents could suffer any prejudice if the matter was heard on
that date and, until shortly before the hearing date, none of them complained
about the timing of the application on 19 May 2015.
16.
All the respondents, including Orthotouch, Mr Nic Georgiou and Mr Hans
Klopper were without delay, after the issuing of the papers, notified
electronically on 3 March 2015 of the intended application and court date of 19
May 2015. The same documents were served on Messrs Orthotouch and Nic
Georgiou on 6 March and on Mr Hans Klopper on 13 March by the Sheriff of
the High Court (See Annexures “F.1”, “F.2” and “F.3”).
17.
The advertisements were published in the Rapport and Sunday Times on 15
March 2015.
18.
On 20 March junior counsel again sent an e-mail to the Registrar of the said
Judge inter alia confirming that the date of the hearing (of 19 May 2015) was
published in the press.
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19.
The Registrar of Judge Moshidi then advised telephonically that the judge was
no longer available to hear the application. A letter, dated 9 April, was thereafter
transmitted to the Deputy Judge President (“DJP”) requesting that another
Judge be allocated on the said date (See Annexure “G.1”) A copy of this letter
was also transmitted to Natalie Lubbe attorney, acting for Orthotouch.
20.
Theron & Partners then received a reply from the DJP on 14 April indicating
that an alternative judge will be appointed (See Annexure “H.1”). On 15 April
counsel transmitted an e-mail confirming that he was informed telephonically
by the Registrar of Judge Moshidi that the judge “is no longer available on 19
May to hear the application” (See Annexure “H.2” ).
21.
On 16 April Orthotouch’s and Mr Hans Klopper’s (and others’) attorneys wrote
letters to the DJP insisting that the matter cannot be enrolled for various
reasons. Orthotouch’s attorney suggested that the matter is “not ripe” for
hearing. Amongst other factors the opposing Respondents (including
Orthotouch and Mr Hans Klopper) have not filed their opposing affidavits and
certain Respondents requested documents, including the prospectuses of the
HS Companies, head lease agreements etc., that were already in their
possession from the HSAG Applicants. They then also complained that they
were not appraised of the date that was obtained three months before, despite
the fact that the date was inserted in the Notice of Motion that was served on
them at the beginning of March 2015.
22.
It was clear that Orthotouch wanted to delay the matter as far as possible.
Something else that also surfaced in the process was an affidavit deposed to
by Mr Nic Georgiou in the Pretoria High Court certification application (in an
interlocutory application to file his opposing papers at a later stage in that
matter). Therein Mr Georgiou stated, in no uncertain terms, that “the terms of
the Scheme of Arrangement and the manner in which the HS investors’
rights were restructured in terms thereof constitutes an absolute defence
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to the causes of action relied upon by the Applicants in the main
application” (certification application in the Pretoria High Court). The relevant
pages of the said affidavit are attached (See Annexure “I.” )
23.
On 23 April the DJP advised that he was unaware of Orthotouch’s letter of 16
April 2015 to him and requested that, if the parties cannot come to an
agreement, a meeting must be arranged to be held in his chambers at 08h00
on a weekday. (See Annexure “J.”) Orthotouch’s suggestion was
unacceptable (by simply delaying the matter further) and a meeting in the
chambers of the DJP was eventually arranged on 7 May 2015, which meeting
was attended by the legal advisors (including attorneys and/or advocates) of
the parties.
24.
There are some 27 Respondents of whom some are represented by the same
attorneys. Needless to say, the Honourable DJP’s office was too small to
accommodate all the legal representatives, who were then requested to make
use of an available courtroom that was large enough to accommodate
everyone. The meeting was still held in chambers and the DJP acted as such
during the meeting. It was definitely not an “open court” as now presented by.
Mr Hans Klopper and his attorney, Mr Diaan Ellis (who was present at the
meeting in person).
25.
Despite the directive in the HSAG application (Notice of Motion), Orthotouch
and Mr Nic Georgiou, amongst others, lodged notices of opposition but failed
to deliver their opposing affidavits to enable the matter to be heard. Instead,
they required by notice copies of various documents (e.g. the prospectuses,
lease agreements etc.) of which they were already in possession. They
furthermore filed various procedural notices clearly in an attempt to delay the
hearing of the merits of matter.
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26.
The normal legal process in opposed matters is that, after the filing of opposing
affidavits by the Respondents, the Applicants (HS investors / shareholders)
have the opportunity to file answering affidavits. Thereafter both parties file their
heads of argument whereafter the matter is heard by a judge. In this instance,
however, no such affidavits were filed by Orthotouch and Mr Hans Klopper,
which in effect made it impossible for the merits to be heard and argued on 19
May 2015.
27.
On 11 May 2015 Messrs Hans Klopper and Diaan Ellis distributed a press
release stating that the Honourable Judge Moshidi and the Deputy Judge
President of the Johannesburg High Court had been misled by our offices and
that the date of 19 May 2015 for the hearing of the Leave to Appeal, alternatively
the setting aside of the Court Order (sanctioning a Scheme of Arrangement
between Orthotouch and its alleged trade creditors) had indeed not been
obtained.
28.
The contents of such press release were replete with inaccuracies and false
allegations which are devoid of all truth. This press release followed a direct
letter in a similar tone to the Judge who was allocated for the hearing, who
thereafter indicated that she will not hear the appeal of the matter, simply for it
to be postponed.
29.
After discussing same with counsel, Theron & Partners have decided, in order
to avoid the incurrence of potential unnecessary costs and expenses, not to
proceed with the hearing on 19 May 2015. Instead, it was decided, to rather
apply for a case manager Judge to be appointed on the matter, in order to
ensure that justice prevails and in particular also to prevent further delays and
abuse of the court process by Orthotouch and other Respondents.
30.
The above is a synopsis of recent developments and events in the appeal /
rescission matter and the Highveld Syndication Action Group will furnish the HS
investors / shareholders with further updates in due course.
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[End report]
THERON & PARTNERS
STELLENBOSCH
[email protected]