JOHANNESBURG \u2013 Lawyers bringing the class action application on behalf of the 18 000-odd investors in Highveld Syndications 15 to 22, the property syndication companies promoted by Pickvest, have defended their decision to automatically include all investors in the application and require individual investors to opt out should they not want to be a part of the action.<\/p>\n
Having debated with senior legal counsel and researched class actions internationally, Theron & Partners \u2013 the lawyers bringing the application on behalf of investors \u2013 say class actions are rarely started on an opt in basis. In other words, where those concerned must actively opt into the action before their claims are included.<\/p>\n
\u201cWe understand that such an option will be more suitable where the class is not easily identifiable. In the Highveld Syndication matters, the classes are easily identifiable,\u201d explains Marina Verdoes of Theron & Partners.<\/p>\n
All the individuals concerned in this matter invested some amount of money \u2013 an average of R250 000 per investor, according to the attorneys \u2013 in one or more of property syndication companies, Highveld Syndications 15 to 22.<\/p>\n
If a class action was certified, by way of example, for HS 19 to 22 (which collectively have 9 000 investors) and investors were then given 30 days to opt in, Verdoes points out that this would create an \u201cadministrative conundrum\u201d.<\/p>\n
Perhaps more importantly, explains attorney and head of the class action Jacques Theron, the claims of investors \u2013 many of whom are pensioners who may not yet be aware of the action \u2013 might prescribe before the message of the action reaches them.<\/p>\n
On the other hand, notes Verdoes, \u201cIf opting out is applicable, a few investors opting out over the period [30 days] would be much easier to handle\u201d.<\/p>\n
\u201cIf the certificate is granted and the court endorses the opt out option, investors will be afforded 30 days within which to indicate whether they do not want to join the class action,\u201d she continues. \u201cAs part of the relief sought in the certification application, we have requested a list of all investors from the business rescue practitioner and will therefore be in a better position to contact investors directly.\u201d<\/p>\n
All this would seem to make the \u2018opt-out\u2019 basis of the class action a much safer option.<\/p>\n
\u2018Investor support driving the action\u2019<\/strong><\/p>\n Reshana Pillay, partner at law firm Hogan Lovells, agrees the class action lawyers are \u201cplaying it safe\u201d by launching the action on an opt-out basis. \u201cIt is however important for people to know whether or not they fall within the class definition so that they know whether they should either opt in or out,\u201d Pillay says.<\/p>\n \u201cIf they opt out there is nothing that prevents them from pursuing their individual claim,\u201d she notes.<\/p>\n According to Verdoes, however, \u201ca large number of the claimants are pensioners who cannot afford to litigate in person against large companies and\/or wealthy respondents\u201d, which include the likes of property mogul, Nic Georgiou.<\/p>\n Georgiou is MD of Orthotouch, which bought properties in the HS companies on the grounds that it would maintain investors\u2019 interest payments. It has failed to do so and recently had a new scheme of arrangement sanctioned in court as a compromise with investors.<\/p>\n Theron & Partners has applied to have this scheme rescinded.<\/p>\n Pillay, meanwhile, is not sure whether the court, when deciding on whether or not to certify the class action, will be keen on the R1 000 per-claim registration fee investors need to pay to participate in the action. \u201cThis will be decided in the certification hearing,\u201d she says, supporting Verdoes\u2019s comments that ultimately the court has discretion to order which option is more suitable.<\/p>\n \u201cThere is nothing in law that prevents the representative of the class to require payment of an amount upfront, whether the amount is fair and reasonable is debatable,\u201d Pillay adds.<\/p>\n While roughly 7 000 investors have joined a class action group, the Highveld Syndication Action Group (HSAG), Theron confirms that not everyone has paid the registration fee. \u201cA lot of people have promised their support and promised to pay over a few months,\u201d he tells Moneyweb. \u201cInvestors are very much in favour of this class action and the support of the investors is obviously driving this certification application forward.\u201d<\/p>\n