Firstel Cellular (Private) Limited will now pay US$8 million to NetOne Cellular Private Limited after the Supreme Court threw out an appeal by the former contesting payment of the debt.
By Shingie Levison Muringi
The two companies entered into a service provider agreement in which Firstel was mandated to find clients for NetOne contract lines and then remit the money collected from the subscribers to the service provider, less its commission.
However, between January and March 2009, when the country introduced the multi-currency system, most clients who bought contract lines through Firstel failed to settle their bills because of the change-over from the local currency to the United States dollars.
This resulted in Firstel failing to pay NetOne its dues to the tune of US$8 330 470. Through its lawyers, Coghlan, Welsh and Guest, NetOne successfully obtained an order against Firstel at the High Court.
The High Court ruled that Firstel was liable to pay the mobile phone services provider the entire amount it had failed to collect from the defaulting clients.
The dispute spilled into the Supreme Court with Firstel appealing against the High Court decision.
On Tuesday Justice Bharat Patel dismissed the appeal after a convincing argument by NetOne lawyer Advocate David Ochieng, who was being instructed by Ms Nokuthula Moyo of Coghlan, Welsh and Guest law firm.
Advocate Thembinkosi Magwaliba represented Firstel together with Mr Johannes Muchada of Dube, Manikai and Hwacha.
Justice Patel ruled that Firstel failed to justify its failure to pay the debt and that it was obliged to remit the money to NetOne.
“In the instant case, the appellant has dismally failed to demonstrate why its customers failed to meet their bills and how that alleged failure necessarily and definitely precluded it from meeting its payment obligations or from recovering the outstanding amounts from its clients at some later stage.
“It is apparent from all the foregoing that the appellant has not been able to proffer any plausible defence to the respondent’s claim.
“The court a quo was therefore perfectly correct in concluding that the appellant had no bona fide defence to the respondent’s unassailable claim for summary judgment.
“In the result, the appeal must fail and it is accordingly dismissed with costs,” ruled Justice Patel.
Justices Venanda Ziyambi and Paddington Garwe concurred with the decision.
On appeal Firstel argued that it would be patently against public policy to expect it as an agent to pay NetOne when it had not recovered any payments from its customers.
“It is clear that while the appellant (Firstel) was the agent of the respondent (NetOne), it was a condition precedent for the liability of the appellant to arise for payments to be made by the customers first.
“The appellant was paid by way of discounts and commissions. How could the appellant be held liable for payments where it has not earned any commission? It could only earn a commission if it had been paid by the customers,” argued Firstel.