The legal battle between ‘Please Call Me’ inventor Nkosana Makate and Vodacom heads back for a re-hearing in the Supreme Court of Appeal to settle the contract duration dispute.
A newly constituted court will hear another round of legal arguments between Makate and Vodacom next month, in a re-hearing ordered by the apex court in August.
Makate, who rejected a R47m compensation offer from Vodacom CEO Shameel Joosub six years ago, believes the company should compensate him as if he had an 18-year contract with them for his lucrative Please Call Me (PCM) idea.
The telecommunications giant, however, believes Makate should be compensated for just five years as they would have never entered into a lengthy 18-year contract back in 2001.
The argument is essentially on what would form a 5% PCM revenue share for Makate and the duration of the contract, which would inform what would be due to the inventor.
Vodacom has been using PCM since January 2001 and disputes that it would have entered into a contract with Makate that would have gone beyond five years back in 2001.
Makate suffered a devastating loss, with costs, in the Constitutional Court when it ruled three months ago that Vodacom was not afforded a fair hearing by the SCA, as some of the evidence it presented was ignored.
In court papers before the SCA, which the Sunday Times has seen, Makate argued that Joosub had failed to treat PCM as a VAS (value-added service) where an ongoing revenue share was granted.
“Vodacom’s PCM product description document defined PCM as ‘VAS’ ... other VAS providers such as iBurst enjoyed all the benefits of a franchisee, for example, ongoing revenue of billing of 5% and that other VAS providers also received such benefits, making them multi-millionaires over and over,” Makate stated in his head of arguments filed last week.
He also attached an annexure titled “Summary of Contract” in which he listed nine VAS contracts Vodacom had with Netcare (between 1995 and 2014), Look 4 me, Centric Insurance and Vodago Auto, among others.
Makate illustrated that some of the contracts were still running while some saw the service providers enjoying double-figure percentage in shareholding.
“The duration of the contracts demonstrates that VAS products without patent protection entitled the holders thereof to a share of revenue for as long as the products earn revenue,” stated Makate in court papers.
Vodacom, however, argued in its heads of argument that Joosub “concluded that the contract, which Vodacom would have awarded to Makate in 2001, would have been for a period of three to five years at most”.
The company also stated that Joosub’s assumption was in Makate’s favour as he assumed that the contract would have been five years.
“In reaching this conclusion, the CEO drew on his extensive experience of the standard contractual arrangements between Vodacom and its service providers at the time,” Vodacom stated.
The benchmark that Joosub relied on in reaching a R47m settlement offer was “the typical contract that Vodacom concluded with new service providers in 2001″, argued Vodacom.
“It was a matter of which he had extensive knowledge and experience. Mr Makate compared himself with outliers and not the typical service providers,” stated Vodacom.
Vodacom argued that if Makate’s argument is accepted, it would translate to a compensation of R28bn to R110bn.
Other disputes centred on the models both parties relied on to reach what they consider to be a fair and equitable settlement from the revenue derived from a PCM.
Delivering the unanimous judgment in August, in his last ruling, outgoing acting deputy chief justice Mbuyiseli Madlanga said some aspects of how the SCA judgment dealt with the case were difficult to understand.
Madlanga said the SCA did not consider Vodacom’s evidence that sought to show that Makate’s calculation of what he was entitled to may have been incorrect.
“Everything about Vodacom’s case was about demonstrating that Mr Makate’s computation was wrong. So there was evidence that sought to demonstrate ... whether or not Vodacom would have succeeded in this regard is something else,” Madlanga said.
In its ruling, which upheld Vodacom’s appeal of an SCA judgment, the Constitutional Court set a new constitutional standard — the “duty of proper consideration” — which it recognised as “an integral part of the constitutional right to a fair hearing”.
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