ispONE last month launched a bold counter-strike in its fight with business partner and customer Kogan Mobile. It failed.
Perhaps ispONE, which resells prepaid access to Telstra’s 3G network, was always destined to fail. After all, it made its counter move – accusing entrepreneur Ruslan Kogan’s company of breach of contract by failing to stop end users who allegedly abused the service – only after Kogan had come after it with a big legal stick for cutting off mobile phone accounts in the first place.
ispONE had suspended over 600 accounts, alleging overuse of the service, without getting Kogan’s agreement to do so. The two sides couldn’t resolve their differences amicably, so early last month Kogan Mobile took its service provider to the Victorian Supreme Court, accusing it of acting outside the terms of their wholesale agreement.
But the courts are just another forum, along with the court of public opinion, in which businesses seek to do battle with each other. By throwing a handful of accusations back at Kogan and turning a one-day trial into a procedure that threatened to stretch to four days, ispONE seemed to be posing a game of chicken, daring Kogan to expose its brand to another four days of court case and extending the damage to its brand that it had already complained about.
There was a chance to resolve their differences again last week, after the two sides spent a day in negotiations that were ordered by Justice James Judd.
“It seems to me, if I may be so bold, to be the kind of case that screams out for somebody to sit down and bang some heads together and say you have got to arrive at a solution to a very practical problem,” Judd said.
The matter that has marked a poor start to Kogan’s months-old mobile phone service has been in part a consequence of poorly-drafted documents that the judge remarked on during the case. Whether the contractual documents around which the argument raged – the master wholesale agreement and the acceptable use policy – will be rewritten is unclear. ispONE’s capitulation is a concession that it transgressed the terms of the contract it was seeking to change. Kogan Mobile can now argue that the court has endorsed the documents as it interpreted them.
The game of chicken continued, however. Neither side was willing to reach an agreement and on Monday they assembled in Court 3 of the Old High Court building on Little Bourke Street. Judd pronounced himself “disappointed” that he had to be back to hear a matter that should have been settled. The trial opened.
Would either side blink?
ispONE did. On Tuesday afternoon the company abandoned its counterclaim. Its counsel filed an amended document that struck out the counterclaim entirely.
ispONE declined to comment.
It wasn’t just the end of ispONE’s counterclaim. The company seemingly decided not to fight Kogan’s claims against it and on Wednesday morning the case was stood down while the two sides went into talks about a settlement the court would authenticate. That happened on Wednesday afternoon.
Just after 4pm Judd declared that ispONE had breached the master wholesale agreement by suspending the accounts, or by preventing the recharging of the accounts, of just over 900 of Kogan Mobile’s customers.
Of course, when it comes to public posturing, Ruslan Kogan is no shrinking violet. His company was quick off the mark, sending out a statement claiming victory.
“Today’s victory means that Kogan Mobile customers can rest assured that their services will not be unlawfully interfered with by the wholesaler,” the company said in a statement. “Australians can trust Kogan Mobile to continue to provide the best deals in the market. We’re glad the right result was reached, and that the truth about the last few months is now abundantly clear.”
The fact that Kogan was publicly beating its chest at about 3pm – an hour before the judge had even authenticated the agreement – did show it was jumping the gun. Even though the two sides had reached an agreement, there was nothing that had received the approval of the court. Had the company done the same thing in a criminal case, it could arguably have found itself in contempt.
A gamble is a gamble. A problem with posturing is that it can put you in a position from which you take a big tumble. ispONE has not just lost its apparent bid to rewrite a business agreement it didn’t like, it has done so publicly.
But they’re not the only losers. The sentence the rest of us face from ispONE’s failed game of chicken is that we have to put up with Kogan’s crowing.