Court shuts down Black Rock Mining's 'Please Call Me' urgent payout challenge

The Gauteng High Court, Johannesburg, has dismissed an urgent application by Black Rock Mining and investor Errol Elson to preserve 40% of “Please Call Me” Nkosana Kenneth Makate’s Vodacom payout.

The company turned to court to have the funds placed in a trust, pending further litigation, as it claims that it had funded Makate’s protracted legal proceedings and that it is entitled to its cut.

But Acting Judge Don Mahon on Monday said in his judgment that the application is not urgent, as there is no reason to believe that Makate would use the money, and thus there is no reason to urgently protect the money.

The company said it had entered into an agreement with Makate in 2011 to finance his legal fees in his lengthy battle with Vodacom for compensation regarding his Please Call Me invention. The moment Vodacom had reached a secret settlement with Makate, estimated to run into about R700-million, Elson demanded his cut.

This aspect will, however, be determined during arbitration proceedings, but he, in the meantime, wanted 40% to be held in trust.

Makate, on the other hand, argued that the company last paid him anything in 2014 and that it had failed in its contractual obligations.

Black Rock, in its urgent application which was heard last week, argued that it is contractually entitled to 40% of any amount recovered by Makate from Vodacom, by virtue of the funding agreement between Makate and the company.

It alleged that this entitlement remains extant, that the settlement proceeds fall within the scope of the agreement, and that interim judicial intervention is required to ensure that the proceeds are preserved pending the determination of its claim in arbitration or action proceedings.

In terms of the agreement, the company would fund the litigation against Vodacom in exchange for 40% of any amount recovered by Makate.

Relations between the parties, however, deteriorated in late 2014 due to an alleged breach of the funding agreement. In 2015, Makate’s lawyers cancelled the agreement, the court was told. The validity and effect of that purported cancellation are contested by the applicants.

In asking for the funds to be preserved, the applicants expressed the fear that Makate may use it for personal purposes such as to settle debts or to invest it.

But Judge Mahon commented that this concern, even if genuine, pertains to ordinary financial conduct, not dissipation in the legal sense.

“The law does not prevent a litigant from using lawfully acquired funds for lawful purposes merely because another party asserts a contractual claim to a portion of them,” he said.

The judge added: “When these allegations are viewed collectively, they do not establish dissipation or a reasonable apprehension of it. At most, they reflect the applicant’s concern that the funds will be released to Mr Makate in accordance with the settlement mandate, before the applicant is able to assert its contractual claim". 

That scenario, the judge said, however, does not constitute dissipation; it is the ordinary and foreseeable consequence of the respondents’ rejection of the applicant’s contractual assertions.

“The harm feared by the applicant is therefore not irreparable. There is no suggestion that Mr Makate would be unable to satisfy an eventual judgment". The judge said in such circumstances, the applicant may institute action or arbitration proceedings for payment of the sum it claims.

“The availability of that remedy undermines both urgency and the claim to interim relief,” he concluded.

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