Georgiou may face billions in civil claims

Property magnate Nic Georgiou may face a slew of civil claims totaling more than R2 billion after the Constitutional Court dismissed his application for leave to appeal a 2015 High Court judgement.

This 2015 judgement ordered him to repay a single investor’s original capital investment, but was also binding on 45 other investors with similar claims. Their collective claims exceed R30 million.

“This is the end of the road for Georgiou on the defenses raised against the claims. It also opens the door for all the thousands of HS 21 and 22 investors to institute similar claims,” said Advocate Louis Bolt, who represents the 46 investors.

In total, thousands of investors invested more than R2 billion in these two syndications.

Bolt added that in addition to the 46 investors, three other investors received default judgements against Georgiou in recent weeks. Their collective claim is nearly R8 million.

Georgiou has indicated that he will challenge these judgements.

The Constitutional Court judgement only affects investments in the Highveld Syndications 21 and 22 schemes, as the investment contracts included specific buyback clauses. According to these clauses, Georgiou, or his company Zephan, would repay the investments according to certain agreed terms five years after the investment date.

This guaranteed the investments and many investors based their investment decision on this clause. Georgiou reneged on this guarantee.

Lengthy legal process

This case has been in the courts for nearly three years. After the 2015 High Court judgement, Georgiou was granted leave to appeal. Late in 2016 the Supreme Court of Appeal in Bloemfontein dismissed this appeal, and then Georgiou applied to the Constitutional Court for leave to appeal. It is this application that has now been dismissed with costs.

In the judgement, the Constitutional Court stated it “concluded that the application for leave to appeal should be dismissed as it bears no prospects of success”.

Georgiou argued in court papers that the business rescue plan and the Section 155 Scheme of Arrangement restructured the rights of investors and that they could not rely on the buyback agreement.

However, the court found that the buyback agreements were still in affect and ordered Georgiou to repay the investors.

Investor interest

Bolt confirmed that he is also working on other cases. “I am currently working on more than 100 cases related to 21 and 22 to the value of more than R150 million. I hope to file these claims shortly.”

At an investors’ meeting held in Potchefstroom a few weeks ago, Bolt stated that he is also in the process of instituting civil claims on behalf of investors in HS 19 and 20. These investors’ contracts do not include a buyback agreement, but Bolt says claims will be instituted against the transfer attorney, who released money from his trust account before properties were transferred.

Moneyweb approached Georgiou’s attorney Mario Kyriacou for comment, but he indicated that he had only received the judgement on Monday and will study it and respond at a later stage.

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