Court battle over failed hotel

The hotel in Blaauwberg.

More than 3 000 investors lost a lot of money in the Blaauwberg hotel development that went bust in 2010.

The development has been the subject of great debate of the past seven years (“Beachfront ‘Fawlty Towers’,” Tabletalk, November 29). Now a group of investors led by Deon Pienaar are taking legal action against the South African Reserve Bank, which they accuse of losing them money by pulling the plug on the development.

The case got under way in the Western Cape High Court on Monday December 4. The investors are seeking a declaratory order against SARB that its decision to shut down the development was unlawful.

The investors ploughed more than R600 million into what was meant to be a five-star luxury hotel. But they lost their money when it was sold at auction for R57 million in May 2013, after its owner, Midnight Storm Investments 386 — part of the Realcor group of companies — was liquidated in October 2011.

Mr Pienaar is a former broker who, along with other brokers, promoted Realcor to investors.

Mr Pienaar said that in 2008, SARB had issued a directive to Realcor that it had done the business of a bank without registering as such.

SARB, he said, had decided on its own that Realcor was guilty of illegal deposit taking and stopped it without the sanction of a court.

The action that Mr Pienaar and the investors are currently busy with was filed in October 2015.

An investor from Table View alerted Tabletalk to a Thursday November 30 meeting between Mr Pienaar and all interested investors in the hotel development.

The man, who is retired and did not want to be named, said he had been left penniless after sinking R1.6 million of his pension payout into the doomed scheme on the advice of a Table View broker.

Mr Pienaar said that if SARB’s actions were declared unlawful they would be able to claim back the hotel for the rightful owners and/or any further money owed.

“The buyer of the hotel was not an innocent buyer. He bought the hotel for R50m and knew fully that the previous day I had brought an urgent application to stay the sale at auction. This case was dismissed. The buyer bought a 22 000 square meter development on an erf that was bought for R60m in 2006, for an amount of R50m in 2013. Surely a person with such money should have known he had bought an unlawful asset?” said Mr Pienaar.

The current owner of the building is Zibiscope Pty Ltd and several attempts to reach the company for comment have proven unsuccessful and it is not known when it bought the hotel.

SARB did not respond to emailed questions by the time this edition went to print.