Gencor sucked into R1.9bn case

Gencor sucked into R1.9bn case

By David McKay, Mineweb, Johannesburg

15th October 2002

Gencor shareholders learned the bitter-sweet news today (15 October) that attempts to stop the company's unbundling had been potentially weakened but that the former mining house may be forced to co-defend a separate round of asbestos-related legal suits in the UK totalling R1.9 billion. This was after a UK lawyer successfully applied to have the South African mining house added as co-defendant in the Cape plc case.

Richard Meeran, a London-based attorney, said earlier this month that he would petition the UK courts to force Gencor to co-defend the highly publicised £115 million claim against Cape plc, a company which mined asbestos in the Northern Cape province between 1963 and 1984. This was after it emerged this year that Gencor faced similar legal action by former employees of Griqualand Exploration & Finance Company Ltd (Gefco), a Gencor company with asbestos operations in the Northern Cape province.

Meeran took up the cudgels on behalf of his clients against Cape plc in 1997, alleging that company's negligence had caused to a spate of terminal lung diseases - lung cancer, mesthelioma and asbestosis - among former employees, their families, as well as inhabitants of the areas near the mines.

Cash-strapped Cape plc had originally agreed to a £21 million out-of-court settlement with Meeran's clients, an agreement against which the company has since reneged. Meeran sought a new court date to bring a fresh £115 million action against Cape. But he added that at least 25 percent of Cape's liability rested with Gencor, and that he was ready to prove many of his clients' illnesses were caused by exposure to asbestos mined from Gefco.

Referring to today's developments, Gencor said that no official papers had been served and it was therefore not called upon to respond. "Gencor will have an opportunity to deal with the matter if papers are served upon it in South Africa," the company said in a statement. However, it questioned the necessity for being sued in the UK:

"Gencor is a South African company and it takes issue with the necessity for South African citizens to sue a South African company in England. Gencor points out that it is not in the ordinary course subject to the jurisdiction of English courts and that it is unaware of any grounds which could properly justify its joinder to the Cape plc proceedings."

In a related matter Meeran's company, Leigh Day & Co, failed to have a restraining order passed against legal firm Webber Wentzel Bowen (WWB) disclosing confidential information to Gencor that it had gained while acting for Cape plc in its related case. The application incurred the displeasure of the UK judge who slapped Leigh Day with indemnity costs, deemed an unusual action and indicative of judicial wrath.

Unbundling

Gencor's lawyers confirmed that 5,150 applicants hoping to halt its unbundling, including the R17 billion stake in Impala Platinum , and who were part of the Cape plc legal case, were no longer represented by Richard Spoor. Spoor is a partner of Ntuli, Noble & Spoor, the legal firm acting for former employees of Gefco. "Gencor said it had noted the more than 75 percent drop off in the number of applicants who sought relief against it and confirmed that the application would be heard during November," a statement read.

A Johannesburg analyst commented last night that the complexities of the legal case were a secondary issue compared to the delays on the unbundling. "This is a real bleeding sore," he said adding that shareholders could expect a protracted debate before the matter was settled.