South Africans seeking damages for medical negligence or malpractice, or from an unlicensed and uninsured driver responsible for a crash, or from a seller who has ripped out all the “fixtures” from their new house, know that justice is not blind. It’s not cheap. Too often, because of the prohibitive cost, it is simply unattainable.
Only those with deep pockets seem to get justice. This is why legal insurance exists. Or why lawyers work on a “no win, no fee” basis. It is also why litigation funding exists.
Litigation funding supports those engaged in complex, high-stakes cases against well-resourced defendants. It is not for the faint-hearted. Cases invariably take years to be resolved. It is a high-risk business, which is reflected in the fees agreed in the event of success: about 40% of the payout. Conversely, a loss invariably runs into tens of millions of rand for litigation funders. The funder loses the entire investment, in addition to having to pay any adverse cost orders imposed on the client.
As far as litigation goes, none comes at higher stakes than Nkosana Kenneth Makate’s 17-year epic battle against mobile giant Vodacom. Today, Makate is South Africa’s newest multimillionaire, having secured an estimated R700m payout from Vodacom for his “Please Call Me” idea.
But back in 2011 — three years after he launched his David vs Goliath battle — Makate was just a regular Joe of no special means or influence who was adamant he should be paid the 15% promised by Vodacom for his idea.
Then, the basis of his claim against Vodacom was mired in procedural confusion and ineffective strategy. Crucially, he lacked the necessary evidentiary and financial support to win.
But advocate Chris Schoeman read through the papers and saw merit in Makate’s claim. Schoeman approached me, recommending that Sterling Rand Litigation Fund take on the case. My London partners weren’t enthused, so Schoeman, Tracey Roscher and I agreed to fund the matter ourselves.
It was decided that the matter would be housed in an offshore entity, Black Rock Mining, which is registered in the British Virgin Islands. We also appointed a new legal team for Makate: Cedric Puckrin SC and Reinard Michau SC, who would be briefed by attorney Wilna Lubbe of Stemela & Lubbe.
Today, ironically, we find ourselves in the same situation Makate was: fighting for someone to keep their word
Our agreement with the legal team was based on a contingency arrangement whereby they would earn half their usual fee but retain a 5% interest each in Black Rock.
In return for our backing, Makate entered into a written funding agreement on November 7 2011 for financial backing in return for 40% of the proceeds from any victory or settlement.
Schoeman immediately reformulated Makate’s claim, shifting the litigation onto stronger legal grounds, centred on breach of agreement. And we tracked down and persuaded Makate’s former manager at Vodacom — who had relocated to the UK — to testify on his behalf, which was the linchpin of Makate’s eventual success.
We gave R500,000 to Lubbe in initial funding in 2013. A further £250,000 was raised from funders in Luxembourg that year, while Roscher transferred R500,000 from the Sterling Rand account in 2014.
In addition to this legal funding, Black Rock also gave Makate R50 for fuel in one instance so he and a colleague, Mandla, could get home from a meeting; R3,000 on another occasion after he arrived unannounced at Schoeman’s house in Pretoria begging for money to feed his family; and R100,000 to see him through the high court trial in 2013.
And Black Rock would have continued to support Makate were it not for a breakdown in relations with Lubbe, who deliberately sidelined Black Rock in 2014. Matters were, admittedly, not helped by our reporting Lubbe to the Serious Fraud Office in 2015, whose investigations are still ongoing.
In the last decade, we have found ourselves up against Makate repeatedly in a bid to get him to honour the agreement he signed. The dispute was even referred to arbitration, which found in Black Rock’s favour.
Today, ironically, we find ourselves in the same situation Makate was: fighting for someone to keep their word.
The simple facts of the matter are that Black Rock believed in Makate when no-one else did. Black Rock committed to providing the financial resources he needed to take on Vodacom. Black Rock provided him with the initial capital, legal strategy and legal team, which helped him succeed.
Black Rock are not opportunists trying to get more than our due. We simply want Makate to honour his word, to do what is right, to stand by what he agreed to … just like he expected Vodacom to do.
Elsdon is director of Sterling Rand Litigation Fund
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