Markus Jooste, the former CEO of the scandal-plagued global retailer Steinhoff, is being sued for allegedly persuading a trust to swap its shares in the PSG Group for Steinhoff shares in June 2015.
Here is what you have to know about the case.
1. Why is there a court case happening?
The court case relates to the precipitous fall in Steinhoff's share price that took place after Jooste abruptly resigned amid an accounting scandal in early December 2017.
The global retailer's share price plunge shrank the company's market capitalisation by over R200bn, incurring huge losses for investors. Once one of the JSE's largest firms, the Stellenbosch-headquartered retailer now has a market capitalisation of just over R5bn after its shares lost over 90% of their value.
2. Who is suing whom?
The trustees of a group called the Le Toit Trust, which includes Jaap du Toit - a founding member of the PSG Group - are claiming damages of R740m in two actions.
The defendants in the first action are Jooste, Steinhoff and la Grange. In the second action Jooste is the sole defendant.
In court papers, the trust's legal teams state that in June 2015 it swapped 3 840 000 shares in the PSG Group for about 10 million newly issued Steinhoff shares. The trust is arguing that while it made the exchange based on the understanding that the true value of the shares were R74, the shares in fact were only worth R1.27.
Had it known the real state of Steinhoff's finances, it would not have entered into the exchange agreement. It alleges the share swap was based on false financial information, "the extent of which is at this time known to Mr Jooste".
The former Steinhoff CEO has, however, objected. "Jooste has, in both actions, excepted to the particulars of the plaintiffs' claim," his legal team's court papers state.
3. How does this relate to the PwC report?
In December 2017, after Jooste resigned, PwC was hired by Steinhoff to conduct an independent forensic probe of the retailer's finances. The results of the 15-month probe were given to Steinhoff leadership in mid-March.
The report found that a "small group" of former Steinhoff executives inflated the profit and asset values of the Steinhoff group for years.
While Steinhoff views the full 3 000 page PwC investigation as privileged, at a Parliamentary committee meeting in June it named two of the people implicated as Jooste and La Grange.
4. What does Jooste's legal team say?
Jooste's legal team has lodged two exceptions to the claims made by the Le Toit Trust.
Much of the argument is very technical, with the former Steinhoff CEO's legal team arguing that allegations of wrongdoing have not been made with sufficient detail for him to be able to respond.
Lawyers for plaintiffs deny this, saying the pleadings "do not want for detail".
Jooste's legal representatives say the claims made by the Le Toit Trust are "vague and embarrassing" meaning the defendant may be prejudiced in court.
"If the allegations in the particulars of claim are not pleaded with such 'reasonable distinctness that the defendant may know the case he has to meet' (emphasis supplied), the particulars will be held to be vague and embarrassing," states Jooste's legal team in court filings.
For example, they state that one of the claims made by the the trust – that the true market value of the swapped shares were R1.27 and not R74 - is unclear.
"It is entirely unclear what is meant in this context by the 'true market value' of the Steinhoff shares at the time. The market - or ruling - price of publicly traded shares is the monetary value that investors are willing to pay for a share of the company's stock," their filing states.
They note that the financial implications of what they call the "alleged misrepresentations" of the financial position of Steinhoff are still being quantified, meaning the plaintiffs cannot with certainty say what the 'true market' value of Steinhoff shares should have been in 2015.
The plaintiffs, meanwhile, state this argument is "contrived".
5. And the sms?
The plaintiffs, in their court documents, include an alleged sms exchange between Jooste and a colleague the day after the share price plunged.
It states (translated from the Afrikaans): "My dear friend, I apologise for the shame I have brought upon Steinhoff, I made big mistakes and must now pay the price. Danie, Ben, Mariza and Stehan [Grobler] were not in any way involved. Again terribly sorry!"
Lawyers for the trust state this shows that Jooste has an understanding of what happened: "A man that can, immediately after a scandal in which he is involved breaks, apologise, take responsibility and absolve four others, cannot turn around when sued for his role in that scandal and claim that he cannot parse particulars of claim that his erstwhile colleagues have no problem understanding".
Before the main case between the Le Toit Trust and the defendants can be argued, the Western Cape High Court has to rule on the exceptions lodge by Jooste. According to court documents, Steinhoff and La Grange have both already pleaded.
* This article was updated at 22:00 on Wednesday, August 7, to make clear that the Western Cape High Court first has to rule on the matter of the exceptions before the merits of the case can be argued.