TRUSTCO MOBILE (PTY) LTD & ANOR v ECONET WIRELESS (PVT) LTD & ANOR (1) 2011 (2) ZLR 14 (H)

Flynote

Contract — cancellation — breach of contract by one party — notice by wronged party — must be with immediate effect — notice of cancellation at some future date — such notice invalid e

Practice and procedure — urgent — application — delay in bringing matter to court — delay reasonable in circumstances — such delay not defeating urgency of case

Practice and procedure — interdict — application — requirements — clear right established — not necessary to prove irreparable injury

Headnote

The first applicant, a Namibian company, and the respondents concluded an e agreement in terms of which the first applicant undertook to provide the first respondent with certain software and support services to facilitate the provision of free life insurance cover to Zimbabwean cellular phone users and customers of the first respondent against the purchase of cellular airtime from the first respondent. In terms of the agreement, the first e applicant would procure, for and on behalf of the first respondent, such life cover from the second respondent, at no cost to the first respondent's customers against payment of a fee to the first applicant by the first respondent, prescribed and calculated in terms of that agreement. The agreement was to endure for an initial fixed duration of 18 months. A dispute arose when the first applicant and the first respondent could e not agree on the mode of calculating the royalty fees payable to the former. After some initial correspondence, the first applicant wrote to the first respondent advising that the latter was formally in breach of the agreement for non-payment of royalties to it and premiums to the second respondent. The letter stated that all obligations to provide insurance would be suspended three days later if all overdue payments were not received by then and that, if all overdue amounts were not received within 14 days from the date of the letter, the contract would be deemed to be cancelled in terms of clause 17.1 of the agreement. The following day the first respondent replied, saying "Your intention to terminate the agreement has been noted and accepted." In reply, the first applicant called on the first respondent to provide three names of people from whom an arbitrator could be chosen to enable referral of the dispute to arbitration in terms of the agreement. The first respondent reiterated its view that the contract had been cancelled and that terminated the first applicant's link to the first respondent's mobile platform. The applicants sought an urgent order directing the first respondent to restore the link and to refrain from acting in a manner inconsistent with the agreement until arbitration proceedings had been complete. The first respondent argued that the matter was not urgent; that the draft order was defective; that the relief sought amounted to an interdict, for which the requirements had not been met; that the applicants had repudiated the agreement; and that if it was found that the first respondent had repudiated the agreement, specific performance should not be granted.

Held, that where there has been a delay in bringing an application to court, either the certificate of urgency or the supporting affidavit must always contain an explanation of the non-timeous action. Law, unlike mathematics, is not an exact science. Whatever the length of the delay, if a reasonable or credible explanation for the delay is tendered, the delay should not detract from the urgency of the matter. In casu the explanation tendered for the delay was not only reasonable but understandable. Given the logistical difficulties encountered in the preparation, drafting and issuing of the application over three different jurisdictions, the delay did not defeat the urgency of the matter.

Held, further, that Article 9 of the Schedule to the Arbitration Act [Chapter 7:15] empowers the High Court to grant an interim measure of protection in the form of an interdict or other interim measure to ensure that any award which may be made in the arbitral proceedings is not rendered ineffectual where, as here, the arbitral tribunal has not yet been appointed and the matter is urgent. The relief being sought was designed to ensure that any award which may be made in the arbitral proceedings in favour of the applicants would not be rendered ineffectual.

Held, further, that the fact that the agreement was to endure for 18 months with the first applicant receiving royalties, and that only 9 months had elapsed, clearly constituted a prima facie right accruing to the first applicant. Where, as here, a clear right is established which is not open to doubt, it is not necessary for an applicant to prove irreparable injury. No other adequate remedy was available to the applicants to achieve the preservation of the status quo pending determination of the dispute by way of arbitration.

Held, further, that a valid notice of cancellation must clearly inform the guilty party of the wronged party's unqualified, immediate and final decision to treat the contract as being at an end. The right to resile from the contract must be exercised immediately. A notice of cancellation which takes effect in the future is invalid. Here, the right to resile from the agreement was not exercised ex nunc, so the notice was not valid and there was no cancellation which the first respondent could note and or accept.

Held, further, that having found that there was no valid cancellation of the agreement and that the agreement was still alive, specific performance ought to be ordered to restore the status quo ante.