VODACOM South Africa will be fighting back against the ruling made by the Supreme Court of Appeal (SCA) and the order to pay out almost R20 billion to the ‘Please Call Me’ creator, Nkosana Makate.
The telecoms giant, valued at R194 billion, issued a statement on the JSE Stock Exchange News Service yesterday in which it said it would be lodging an application for leave to appeal the judgment.
The judgment if upheld would have a vast and wide-ranging impact on both Vodacom South Africa and the Vodacom Group, as well as the attractiveness of South Africa as an investment destination, the telecoms giant said.
After various court battles, the ‘Please Call Me’ case ended up at the SCA, and earlier this month it ordered that Vodacom must use the models that Makate’s team had submitted to calculate the monies owed to him.
Vodacom said there were key aspects of the matter which did not accord with the spirit of the law and that the judgment and order were fundamentally flawed.
“It is apparent from the dissenting judgment of the SCA that the majority judgment overlooked or ignored many of the issues between the parties and their evidence and submissions relating to those issues,” Vodacom said.
According to the SCA judgment, Makate is entitled to be paid 5% to 7.5% of the total revenue of the Please Call Me (PCM) product as well as the time value of money calculated at 5% for each successive year he was owed and the capital amount or annual portion thereof.
Vodacom contends that the SCA’s order impinges on the Rule of Law as it deprives Vodacom of its right to a fair trial and that the SCA misdirects itself by considering and deciding on issues which had not been placed before it for adjudication by either Vodacom or Makate.
It maintained that the SCA orders were unintelligible, incomprehensible and vague, rendering them incapable of implementation and enforcement.
Makate’s legal team calculated that a 5% share of an estimated R205bn in revenue over 18 years equated to R20bn in compensation.
Vodacom contends that the SCA selectively chose to only have regard to Makate’s evidence, as in the case of models for computing compensation payable, while ignoring evidence contesting Makate’s version.
Vodacom had told the court it had been generous to go over the maximum contractual period of three years, which was the term generally applied to contracts with third parties, to grant Makate a five-year contractual period.
However, the SCA emphasised that it would have been an eminently un-businesslike and an unreasonable decision by Vodacom not to have extended the contract it made with Makate and determined that the valuation was flawed and inequitable.
Makate argued that the approach that the CEO had adopted in making the determination was a superficial reconciliation as he failed to properly identify the references, which he took into account to compute the valuation. This as he had ignored information on Vodacom’s revenue from 2001 to 2021, which included that generated by PCM.
The valuation was premised on the CEO capping the duration of the contract at five years, which the CEO deemed generous.
The Constitutional Court in 2016 ordered that the parties enter into good faith negotiations to determine reasonable compensation for the invention and use of PCM and that if the negotiations reached a deadlock, the CEO of Vodacom was instructed to determine a reasonable amount in compensation.
The SCA noted that, ultimately, negotiations did break down as the amount determined by the CEO was unsatisfactory, which prompted Makate to institute proceedings in the High Court.
The High Court found in favour of Makate but the matter was remitted to the CEO to determine a fair amount.
The SCA has upheld that it deemed it a fruitless endeavour to remit the matter to the CEO to determine an equitable outcome as this was not what was originally sought by Makate in the High Court.
“In the result, the order of the High Court was set aside and substituted with one determining that a decision that the respondent is entitled to be paid 5% to 7.5% of the total revenue of the PCM product as well as the time value of money calculated at 5% for each successive year which was owed to the applicant and the capital amount or annual portion thereof,” the court said in its judgment.
BUSINESS REPORT