Just when the Please Call Me inventor thought his days in court were over after reaching a settlement with Vodacom, he is gearing up to fight a firm that is demanding 40% of the payout.
Black Rock Mining Limited, a company registered in the British Virgin Islands, has reportedly filed papers in the Johannesburg High Court to interdict Vodacom from paying Nkosana Makate his settlement, as it argues it is entitled to 40% of the money.
Makate has acknowledged that he met with the representatives of Black Rock and entered into an agreement with them. However, the agreement to have them as his litigation funder was later cancelled.
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Vodacom to pay Makate
Vodacom told shareholders last week that it has reached an out-of-court settlement with Makate, but the amount of the settlement will remain confidential. Based on calculations using Vodacom’s earlier estimate of its earnings and the earnings it reported, Makate is expected to receive around R660 million.
Black Rock Mining wants an injunction that will order Makate’s lawyers not to transfer the funds into his account. Using the R660 million estimation, Black Rock’s request as litigation funders would cost Makate R264 million.
The question of whether the settlement should be interdicted is expected to be heard in court soon.
However, a Vodacom spokesperson told The Citizen they have not received any interdict preventing them from paying Makate the settlement. “Vodacom can confirm that we have not been interdicted on this matter.”
Makate’s litigation funders
Taking on a telecommunications giant like Vodacom requires deep pockets, as the legal fight can go on for years; therefore, many people turn to litigation funders to help cover the costs.
According to News24, Makate has described his 2011 meeting with Black Rock as one of the “most unfortunate incidents” of his life. He had a meeting with Black Rock to have them as his litigation funders during the legal fight.
Makate further labelled the demand for 40% of the settlement as a disgrace. “Black Rock now wishing to share in the spoils is an utter disgrace.” Litigation funders are third parties with no direct interest in a legal case, but they decide to finance the legal costs in return for a share of the claim.
Litigation funding is generally not considered a loan, but rather as a form of an asset purchase as the funding does not have to be repaid if the plaintiff’s lawsuit is unsuccessful.
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Black Rock vs Makate
According to Sunday World, Black Rock wants Vodacom, included in the court papers as the third respondent, to pay 40% of the funds into the account of Makate’s lawyers, Stemela and Lubbe Attorneys, who are included as the second respondent in the suit.
“Pending final determination of Part B of this application, the third respondent is interdicted and restrained from making payment in respect of any award/settlement concluded between the first respondent and the third respondent pursuant to the so-called ‘Please Call Me’ litigation into any bank account other than the trust bank account of the second respondent,” read the papers.
A representative of Black Rock is one of his former directors, Errol Elsdon. He said he was introduced to Makate in November 2011 by the late Christian Schoeman.
“Schoeman informed me that Makate was in need of financial support for his litigation against Vodacom, which had been dragging since 2008. I informed Schoeman that I would be interested to put together funding for the litigation.”
Please Call Me funding agreement
In Elsdon’s affidavit, he continued to detail the agreement between them and Makate.
“On 7 November 2011 in Pretoria, Mr Schoeman, acting for a company to be formed, and Mr Makate, representing himself, concluded a written funding agreement for the company to fund his legal costs.
“Where the matter is settled by negotiation and agreement, neither Makate nor the attorneys would be entitled to effect settlement without the written consent and approval of the company, unless the amount payable in terms of such settlement agreement exceeded R650 million,” read the papers.
How much did litigation funders spend?
Makate reportedly said only a few thousand were paid to his attorneys by the litigation funders; however, Elsdon said at least R2.4 million was paid.
“I raised £250,000.00 (approximately R3.7 million at that point in time) from a London investor, the Global Distressed Alpha Fund Ill, represented by its agent, Simba Capital VIll Särl.
“In total, an amount of R4.3 million was raised and applied to fund the litigation. Of this, R2.4 million was paid to Stemela & Lubbe in respect of fees and disbursements, with the balance applied to counsel, expert witnesses and litigation expenses,” read the papers.
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