SAMRO COMMENTS ON THE JUDGEMENT HANDED DOWN BY THE NORTH GAUTENG HIGH COURT IN A MATTER INVOLVING THE NATIONAL CREDIT REGULATOR.

The Southern African Music Rights Organisation, Limited (by Guarantee) (SAMRO) expressed disappointment with the decision of the North Gauteng High Court judge, Judge J. Poswa, to dismiss its application for a declaratory order for the court to determine whether the organisation’s system of advance payments to its songwriter members fell within the ambit of the National Credit Act (NCA). The application was dismissed with costs almost two years after the matter was heard in July 2009. As part of the decision the Judge also ordered that “should [SAMRO] wish to bring another application seeking the [same] relief [as the original one], it must join those of its members likely to be affected by the court’s order in that regard.”

According to SAMRO’s spokesperson and Chief Operating Officer, Greg Zoghby, the difficulty with this judgment, besides having been extraordinarily delayed, is that it does not provide any more clarity than when SAMRO brought the matter before the courts. “It is, obviously, disappointing in that the intention of the legal action was not against the NCR pe se, as SAMRO fully supports the work of the institution,” Zoghby says. ‘The intention was to seek clarity as to whether the provisions of the National Credit Act apply to the advances on royalties that SAMRO provides to its members or not. Unfortunately the Judge did not rule on that.”  

In his judgment the judge pointed some procedural deficiencies by both parties, but found that SAMRO’s failure to annex its constitutive documents in its initial / founding affidavit was a major procedural flaw in the matter. SAMRO’s management and legal team will be studying the judgment in greater detail to decide upon the appropriate action.

Prior to instituting the legal proceedings SAMRO approached the NCR with a view to finding a workable solution on the matter but the NCR refused to entertain SAMRO’s representations. SAMRO even went as far as recommending that the application for the declaratory order be a collaborative one where both parties would jointly approach the court for an order, without creating adversarial positions on the matter.  This suggestion too was refused by the NCR. It was only after such attempts that SAMRO lodged the matter with the North Gauteng High Court. 

Important as the order may be, it will have little or no effect on the operations of SAMRO. Advances on royalties are a non-core activity of the organisation both in terms of the organisation’s mandate as well as the numbers of members and the amounts involved. SAMRO’s core function is to license Performing and Mechanical Rights and distribute royalties to the rights holders whose music was used by those licensed by SAMRO to do so. At the end of the last financial year SAMRO distributed royalties in excess of R200 million while it granted advances not exceeding eight hundred thousand rand (R800,000.00). The advances were granted to approximately a hundred and fifty members out of total membership of ten thousand.

While the board and management of SAMRO study the judgment and decide on the appropriate action, the granting on royalty advances will continue in terms of the requirements of the National Credit Act, a practice that was put in place in 2008.