Trustco sues Econet

Trustco Mobile Private Limited of Namibia the firm that provided software and support services for Econet Wireless's popular Ecolife cover and bonus points system has now taken the local firm to the High Court challenging the cancellation of their deal.

Econet, Trustco and First Mutual Life Assurance concluded a tripartite agreement in which the Namibian firm was to provide software and support service to Econet for facilitation of the popular free life insurance cover to Zimbabwean cellular phone users.

Econet would then procure life cover from First Mutual Life Assurance.

The free life cover was going to be offered to all clients against purchase of Econet airtime.
Econet has sought to terminate the agreement following some disagreements, but Trustco has filed an application challenging the decision and advocating for the restoration of the status quo that obtained before the cancellation.

High Court judge justice Andrew Mutema has reserved ruling on the application after hearing submissions from both the three parties.

Advocate Thabani Mpofu, instructed by Gill Godlonton and Gerrans appeared for Trustco Mobile and its holding company Trustco Group International, while Mr Tawanda Nyambirai of Mtetwa and Nyambirai appeared for Econet Wireless.

According to the court papers filed at the High Court, the three parties concluded the deal on August 17 last year.

Trustco undertook to provide the software and support service for Ecolife.

The agreement should run for 18 months from the date of signing agreement.

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.

That prompted Trustco to approach the High Court seeking to nullify the cancellation and to restore the status quo.

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.

"The only possible dispute pending between the parties arising from the cancellation of the agreement relates to the calculation of and quantum of payments that were due to First applicant (Trustco) as at the date of cancellation of the agreement.

"Applicants are free to pursue and prove its claim for such outstanding payments, if any, through appropriate court process.

"Similarly, should applicants consider that respondents are infringing their proprietary intellectual property rights, they are free to pursue redress.

"Respondents deny that they are making use of applicants' intellectual property," he said.

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.