BOTSWANA’s MASCOM LOSES COURT CASE OVER AIR-TIME SUPPLY TO FONES 4 U

Telecoms

THE High Court directed Mascom Wireless last week not to terminate its contract with Fones 4 U. The order followed an urgent application launched by Fones 4 U through its attorneys Kebonang, Gaoboi and Company. In February 2003, the two companies entered into a contract for Mascom to supply Fones 4 U with airtime and sim-cards to carry out a public payphone business.

In return, Mascom would get brand endorsement and monetary benefit for the services rendered. However in March this year, the Chief Executive Officer of Mascom Jose Antonio Ferreira, wrote a letter to Fones 4 U giving them one month’s notice to terminate the contract. Fones 4 U immediately informed their attorneys who opposed the move as illegal and threatened legal action which resulted in yesterday’s judgement.

Ferreira did not give any reasons for terminating the contract on April 30, 2004. But his company’s lawyers Collins, Newman and Company responded to Fones 4 U arguing that their clients had not breached the contract. They argued that Fones 4 U had no right to claim from their client.

Granting judgement, Justice Peter Collins reserved his reasons to a later date. However, he directed Mascom to bear the costs of the case, including costs for the opposing party’s senior counsel, advocate Theodore Wouter Beckerling. Both parties had engaged high profile advocates from South Africa. Appearing with Beckerling was advocate Cyril Ziman, instructed by attorney Plato Gaoboi. Appearing on the opposite side was advocate Stephen Vivian, instructed by Virgil Vergee of Collins Newman and Company.

The case was reduced to pure legal arguments and interpretation of documents. Of particular concern to the lawyers was a section in the contract which read, " Mascom and the Purchaser shall be entitled to terminate this agreement by giving to one another not less than one month prior written notice." For his part, Beckerling argued that the clause meant that there was to be mutual agreement between the parties before termination could take place.

He submitted that no party could unilaterally pull out by merely giving notice to the other, unless due to circumstances spelt out in the contract such as liquidation, or breach of contract.

He said the decision taken by Mascom was very prejudicial to his clients, who have invested over P7 million in the phone business. He said the disputed portion of the clause was a special one that had public interest in mind and was proper. He argued that the contract between the two parties was meant to subsist for a longer period of time. All the same Collins said it was poorly drafted.

In a bid to shoot down the arguments. Vivian countered that Beckerling had misinterpreted the clause and that his interpretation would lead to absurdity. He said the construction of the clause was bad and suggested that the word "and" in it should be replaced with "or" to make legal sense. Like his opponent, he quoted a few legal precedents to give weight to his case.

He argued that courts must give words their ordinary meanings. But in the event this led to absurdity, the words needed to be modified to make them sensible. The contract between Mascom and Fones 4 U was not perpetual and it would be "very unusual and extremely surprising" if the parties who signed it intended it to be so, he said. He argued that giving each other a one month written notice was unnecessary and ludicrous.

"This implies a swapping of notices despite having reached agreement to cancel. Why? What commercial purpose is served by the notices? It is submitted that there is no commercial purpose. It is simply illogical," Vivian argued in the summary of his main points to court.

Mmegi