Vodacom Pty Ltd v Nkosana Kenneth Makate and Shameel Joosub N.O.

In November 2000 Mr Nkosana Makate, then a trainee accountant at Vodacom, devised the “Please Call Me” (PCM) service. An agreement was concluded with Vodacom representatives under which Makate would disclose the idea and, if successful, receive a share of revenue generated, with the Vodacom CEO to break any deadlock on quantum. After Vodacom launched the service in 2001 and earned billions of rand, Makate’s attempts to negotiate compensation were unsuccessful. Following prolonged litigation, in 2016 the Constitutional Court confirmed the existence of the contract and remitted the matter to the Vodacom CEO to determine reasonable compensation. The CEO awarded approximately R47 million. Makate launched review proceedings in the High Court (Hughes J), which set aside the CEO’s determination as unreasonable and patently inequitable, substituting its own remedial order. The Supreme Court of Appeal (SCA) majority (Mocumie JA, Mothle JA and Nhlangulela AJA) largely dismissed Vodacom’s appeal and ordered Vodacom to pay Makate 5% of the revenue earned from return calls made within the first hour of a PCM being sent, calculated over 18 years, together with interest and costs. Vodacom now seeks leave to appeal to the Constitutional Court. The text supplied is Makate’s opposing heads of argument, contending that the application raises no constitutional issue or arguable point of law of general public importance and that the SCA’s factual and discretionary findings cannot be impugned.

• Whether the Constitutional Court has jurisdiction under section 167(3) of the Constitution to entertain Vodacom’s application for leave to appeal, either because the matter raises a constitutional issue or an arguable point of law of general public importance that ought to be considered by the Court.
• Whether it would be in the interests of justice to grant leave to appeal, or whether Vodacom’s application is an impermissible attempt to re-litigate factual disputes and delay payment after 24 years.
• Whether the SCA majority exceeded its appellate jurisdiction by reconsidering and substituting the remedy and varying the costs order in the absence of a cross-appeal by Makate, and whether the SCA’s order is vague.
• Whether the SCA majority’s conduct infringed Vodacom’s section 34 right to a fair hearing by allegedly disregarding the true issues, evidence and submissions.
• Whether substitution was an appropriate exercise of the SCA’s remedial discretion, particularly given the history of the litigation and the risk of further delay.
• The correct standard of review applicable to the CEO’s deadlock-breaking determination (the so-called Bekker test) and whether the CEO’s determination was vitiated by ex post facto reasoning, patent errors or the omission of significant revenue streams such as MTR and contract-subscriber revenue.
• Factual disputes regarding the variables used to quantify PCM revenue, including contract duration, PCM volumes, call-back success rates, call duration, effective call rates, and the proper treatment of mora interest and the time value of money.

No final order or outcome is recorded in the supplied text, which consists of a party’s heads of argument. The relief sought by Vodacom (leave to appeal) had not been decided by the Constitutional Court at the time of this document.

Cannot be extracted. The supplied text is heads of argument submitted by a party in pending leave proceedings, not a delivered court judgment. No binding legal principle has been established by this text.

Cannot be extracted. The supplied text is heads of argument in pending proceedings and does not contain any judicial obiter dicta.

The underlying dispute is one of South Africa’s longest-running and most high-profile commercial controversies. It raises important questions about: (1) the enforcement of revenue-sharing agreements concluded in informal corporate settings; (2) the scope of review of a contractual deadlock-breaker or quasi-arbitrator and the application of the Bekker test; (3) the powers of appellate courts to substitute remedies and reconsider costs orders; (4) the boundary between ordinary commercial/factual disputes and constitutional jurisdiction under section 34 (fair hearing) and section 167(3) of the Constitution; and (5) the methodology for calculating compensation for innovative ideas where the developed product has generated revenue over decades. The case also has broad public interest given the massive financial stakes and its implications for corporate accountability to innovators.