admin
insurance deal with a Namibian-based company Trustco Mobile Private Limited saying the agreement was still valid.
On August 10 last year Econet, Trustco and First Mutual Life Assurance concluded a tripartite deal in which they agreed to jointly offer free life insurance cover popularly known as Ecolife cover and bonus points system to cellular phone users against purchase of airtime.
ECONET
According to the agreement, the Namibian firm was to provide software and support service called the Trustco Mobile Concept while Econet would procure life cover from First Mutual.
But Econet allegedly breached the agreement by failing to pay royalties to Trustco and premiums to First Mutual Life and Trustco threatened to terminate the agreement if Econet failed to pay within two weeks.
Before Trustco terminated the agreement as earlier threatened, Econet then went on to “accept” the cancellation before denying Trustco access to the system to an extent that it could not monitor the airtime being bought and what it was entitled to get from the deal.
That prompted Trustco, through its lawyers Advocate Thabani Mpofu and Gill, Godlonton and Gerrans law firm to successfully file an urgent chamber application seeking restoration of the status quo that existed before the purported cancellation.
Econet chairman Mr Tawanda Nyambirai appeared for his company in the court case.
Justice Andrew Mutema granted the application saying the said cancellation was invalid and ordered immediate restoration of Trustco’s access to the system.
“Having found that there was no valid cancellation of the agreement and the agreement is still alive, specific performance ought to be ordered to restore the status quo ante.
“The application is accordingly granted in terms of the amended draft order:
“The first respondent (Econet) is directed to restore to the first applicant (Trustco Mobile) the internet-based reporting links and all access to Trustco Mobile hardware and software thus enabling it to monitor and process airtime purchase transactions and otherwise perform its obligations in terms of the agreement.
“The first respondent is directed to refrain from undertaking and implementing a competing, infringing service to that provided by the first applicant in terms of the agreement,” ruled the judge.
Justice Mutema found that the threatened cancellation of the agreement by Trustco was in the future and that there was no valid cancellation of agreement, thus the parties should continue operating like before.
Justice Mutema queried if Mr Nyambirai, being the chairman of Econet could represent the company without staining some ethical considerations.
According to the August 2010 agreement, the tripartite deal was to run for 18 months from the date of signing.
Ecolife, according to the application, increased the airtime sales for Econet.
The number of subscribers by December 2010, had increased by 422 202 because of the life cover system.
Substantial revenue was generated as a result of the system.
By end of February 2011, Ecolife subscribers had purchased a month-on-month average of US$18,86 worth of airtime vouchers, while the month-on-month average airtime voucher for non-subscribers amounted to US$10,46.
For the month of May 2011, it is claimed that 65 percent of all pre-paid funds received by the first respondent were those of Ecolife subscribers.
In May First Mutual Life Assurance provided US$313 million worth of life cover.
The dispute arose in February over some royalty fees that Trustco claimed were due to it.
It was stated in the papers that Econet once agreed to pay part of the money and refused to remit the balance on the basis that there were some incomplete data details in respect of some customers.
On May 31, 2011, Trustco informed Econet that it was in breach of the agreement for non-payment of royalties and premiums to First Mutual Life and gave Econet up to 14 days to pay up the fees.
According to Trustco, it reserved the right to cancel the agreement if Econet failed to meet its obligations in two weeks time. Econet therefore did not pay the said amounts and “accepted” the threatened cancellation.
Econet reportedly terminated its internet-based reporting links and all access to Trustco Mobile hardware and software to Trustco, thus precluding it from monitoring and processing airtime purchase transactions in terms of the agreement.
However, Econet has opposed the application arguing that Trustco was the one that cancelled the agreement after Econet failed to pay the claimed funds within the given 14 days. Econet’s deputy finance director, Mr Roy Chimanikire, tendered an opposing affidavit stating that the issue to be determined was the quantum of funds due as at the date of cancellation of the agreement.
He said Econet did not have access to the source code of Trustco’s system and is therefore unable to appropriate and utilise the system.
Econet argued that the application was not urgent and that it should be dismissed on that basis.
It was also submitted that Trustco, being a foreign firm, should first tender security for the application before suing.
Online Reporter