LIQUIDATORS AT WAR
Legal fight drags on in Aurora mining debacle over lawyer’s R11.3m fees – but workers still not paid
About 2,000 former mine workers are still awaiting payment for the period they worked for Aurora Empowerment Systems. Meanwhile, legal battles rumble on between the liquidators of two sets of owners of the mines.
The High Court in Pretoria has ordered lawyer John Walker to hand over financial records related to R11.3-million in legal fees he accumulated in the decade-long Aurora mine saga.
Walker was the attorney for the liquidators of Pamodzi Gold, which owned several mines that went into liquidation in 2009. A second group of liquidators, for embattled mining start-up Aurora Empowerment Systems, has challenged Walker’s fee payments, arguing that they induce a “sense of shock”.
Aurora Empowerment Systems, a company owned by Zondwa Mandela, the nephew of former president Nelson Mandela, and Khulubuse Zuma, the nephew of former president Jacob Zuma, took over Pamodzi mines in North West and Springs when Pamodzi went into liquidation.
Aurora was run from behind the scenes by father-and-son duo Suliman and Fazel Bhana and, during the liquidation process, the Pamodzi and Aurora liquidators launched several court cases to reclaim funds from the Bhanas and their associates.
They eventually retrieved R10-million through these court cases. Khulubuse Zuma had agreed to pay R23-million but only paid R10-million. These collections meant that an amount of R20-million became available to pay various debtors, including thousands of workers owed salaries for the months that they worked for Aurora.
In 2015, 311 workers were paid from some of the funds received, leaving more than 2,000 still waiting for payment today.
How the battle began
The fees dispute originates from an agreement between the Pamodzi and Aurora liquidators signed in July 2012. The “F&M agreement” was for Pamodzi to fund the litigation needed to recover funds to the Aurora estate. According to Aurora’s liquidators, the funds were primarily meant to be used to pay Aurora’s debtors and, as a result, they’ve questioned the fees paid to Walker. Pamodzi is also owed R1.5-billion by the Aurora estate, making it the largest debtor.
In August, acting Judge DT Skosana ruled that Walker should turn over his records, saying it was clear that he was meant to keep the Aurora liquidators in the loop regarding funds collected and paid out.
“In the first place, the prologue of the F&M agreement evinces a mandate emanating from Aurora, through its liquidators, appointing attorneys. The reason for the co-signing of the F&M agreement by Pamodzi is clear from paragraph 1.1 thereof, being the payment of fees for services rendered in terms of such agreement. But paragraph 4 contractually distinctly obliges such attorney to render accounts to Aurora notwithstanding that payment thereof is to be effected by Pamodzi,” said Skosana.
“Mr Tsele, for the applicant, further points me to various correspondence, most of which was authored by Mr Walker, which unequivocally confirmed that Mr Walker has been acting for and representing Aurora. I agree with his submission that the respondent’s belated defence is contrived and it’s not supported by their own papers,” the judge said.
The Aurora liquidators intend to take these records and dispute payments made to Walker, which they believe are excessive. However, Walker is requesting leave to appeal the judgment.
“In the course of the application, I had already handed over all statements and proof of disbursements to the court and tendered to have all of my bills verified by way of taxation. Aurora has refused to enjoin me to verify my charges and my bills of account by way of taxation,” Walker said.
DSC Attorneys in Cape Town explains the taxation process on its website: “After you’ve won a case and have been awarded legal costs, a bill of costs is prepared – often by an external service provider known as a cost consultant – and served on the unsuccessful party. It’s also forwarded to an officer of the courts known as the taxing master.
“The taxing master decides which costs are recoverable, and payable by the losing party in [this] case. This process is known as ‘taxation’.”
Walker argues his fees were fair for the work he performed, litigating in several cases and also conducting an inquiry into Aurora’s conduct in the liquidation of Pamodzi.
“All fees that I have debited as well as disbursements I have incurred have been reasonable over the 10-year period. As I said, I tendered the taxation of my bills some three years ago already and Aurora has refused. The issue of who is entitled to monies recovered is an issue to be decided upon between Aurora and Pamodzi and has nothing to do with me,” he said.
Walker has also questioned why Aurora liquidators have gone after him instead of the company directors.
“You will recall that only [Khulubuse] Zuma has made payment in terms of the judgment against the directors in favour of Pamodzi. Despite their contentions, and if these contentions are correct [which Pamodzi disputes], Aurora has taken no steps whatsoever to recover monies from the other directors of Aurora. In lieu thereof, they have expended a great deal of money to verify my accounts, when I tendered taxation some three years ago,” he said.
Read more in Daily Maverick: The Aurora gold mining saga: ‘Not a victimless crime’
The Pamodzi liquidators also intend to appeal the decision, saying Aurora and the court have misinterpreted the agreement signed by the two sets of liquidators.
“Aurora never had any funds to institute litigation nor were they capable of litigating without the intervention and assistance of the liquidators of Pamodzi,” said Deon Botha on behalf of the Pamodzi liquidators.
“The liquidators of Pamodzi disagree with the perceived interpretation of the agreement as advanced by Aurora.”
Botha added that the Pamodzi liquidators were considering a case to clarify the agreement. “The liquidators of Pamodzi are considering issuing a summons for the rectification of this agreement since we are of the opinion that the continuing of the current litigation and appeal processes, based on the incorrect interpretation of an agreement, is in no party’s interest.
“In the application procedure and appeal procedure, no evidence can be led by witnesses, which we submit is necessary for the rectification and true reflection of the intention of the parties during the conclusion of the agreement,” he said.
Meanwhile, Gert de Wet, representing the Aurora liquidators, said the group would await the outcome of the case before launching new cases to retrieve funds.
“The Aurora liquidators can consider their position regarding collections against other individual/s after the John Walker matter has been dealt with. In the region of 2,000 workers’ claims have been submitted for proof at a special meeting of creditors in April 2023. Depending on successful collections going forward, consideration can be given to the distribution of funds.
“Liquidators will, where applicable, request the necessary extension of time from the Master of the High Court.” DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.