24 April 2002

South Africa: Legal Bills Mounting in Leisurenet Probe

Johannesburg — Legal bills are mounting on all sides as Leisurenet's public commission of inquiry has now sat for more than 30 days over the past 10 months. Another 17 days of hearings are scheduled for the next six weeks.

Leisurenet, the owner of the Health & Racquet and Healthland International chains of gyms, was placed in provisional liquidation in October 2000. After liquidation, the Health & Racquet Club assets were sold to Virgin Active for R320m. To date, claims filed against the group total about R600m.

In June last year a public commission of inquiry was convened to probe the reasons for the collapse. This could be followed by civil suits to recover monies.

At a conservative count, assuming only one day's preparation for counsel for each day of the commission's hearings, legal fees at R10000 to R15000 a day for senior counsel and junior counsel at two-thirds of that, plus appearances for three counsel over several days in the Cape Town High Court, are likely to mount to at least R3m by the time the inquiry is completed.

Meanwhile, Cape Town attorney Joubert Rabie said yesterday he had not resisted the application of Leisurenet's liquidators to gain recognition in Jersey but he has successfully excluded his name and that of Cape Town/German businessman Hans Moser from the court orders.

He issued a statement to the media yesterday to correct the impression created by the liquidators that he had abandoned his application. Far from abandoning it, he had persisted with it and succeeded in having his and Moser's names deleted from the Cape Town High Court's letter of request to Jersey. The liquidators will also have to apply to the Jersey court to have Rabie's and Moser's names deleted from the Jersey order, at their own expense, he said.

"The direct effect of the order was that Moser and I achieved substantial success in that the liquidators were compelled to withdraw the relief which they originally obtained against us and in terms of which they purportedly froze our assets and impounded our documents in Jersey."

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