Fri | Jun 22, 2018

NCB wins court battle against software developer

Published:Friday | January 26, 2018 | 12:00 AMMcPherse Thompson/ Assistant Editor - Business
NCB Financial Group headquarters, The Atrium, at Trafalgar Road, New Kingston.

​A software developer engaged by National Commercial Bank Jamaica, NCB, to provide it with a cell-phone application has lost its case in a US$64-million ($8-billion) claim against the bank for sharing its copyright information with a third party.

The developer, Hassan Aswan, trading as HMA Solutions Limited, a software and development consultancy service, terminated the agreement to provide a top-up phone service to the bank because of what he and his business partner Christopher Donaldson contended was a breach of confidentially.

At the same time, NCB contended that as a consequence of the wrongful termination of the agreement, it suffered losses and is unable to offer the service.

Supreme Court Justice Lennox Campbell found that email communication on which Aswan and Donaldson relied on as evidence of the breach showed that they themselves were acquiescent in the flow of information to the third party, and ruled against the tech developers.

According to the judgment, in May 2005, Aswan entered into discussions to provide and customise a unique cell-phone top-up application for NCB's banking environment.

The arrangement would allow NCB to use HMA's application to deliver an electronic cell-phone recharge direct-delivery system to its customers. The application had the unique feature of a voucher-less system of top-up using a debit or credit card at a point-of-sale terminal.

The application would work by only one swipe of a customer's credit or debit card which would effect two transactions, namely, the charge of the customer's account and the top-up of phone credit.

The parties signed an agreement in January 2006. However, their business relationship deteriorated and Aswan terminated the agreement in June 2006.

The court documents said the claimants argued that the basis of the termination was breach of a confidentiality clause which prohibited the disclosing of confidential information to any third party. The claim was that NCB disclosed the specification document - which describes the functions that a system or component must perform - to eFunds Limited, without written permission.

According to the judgment, NCB sought the assistance of eFunds when the business relationship with HMA deteriorated. The bank had wanted a launch of the application in September 2005 and had raised concerns about the deadline.

Aswan and Donaldson's claim

In their lawsuit filed September 2007, Aswan and Donaldson alleged that they were the owners of the copyright to the top-up application and sought damages for breach of contract.

Under the terms of the agreement, while HMA Solutions would customise its direct top-up system for NCB, it remained the proprietor and copyright holder of the software system, which was to be connected to the bank's more than 8,000 debit and credit point-of-sale terminals.

It was also agreed that HMA's top-up system, including the centralised management system, would attract a per-transaction charge for each of the telecommunication companies in operation at the time - Digicel, Cable & Wireless Jamaica and MiPhone Jamaica - at rates included in the January 2006 written agreement.

Lawyers submitted on behalf of Aswan and Donaldson that HMA Solutions lost revenue of approximately US$63.98 million for the first three years of the agreement, which was contemplated to be in perpetuity and, accordingly, the company continued to suffer loss as a result of the alleged breach.

Citing the Paymaster Jamaica Limited v GraceKennedy Remittance Services Limited case, Justice Campbell noted the court considered it a settled principle that where confi-dential information is shared, the recipient had an obligation not to divulge the information. He said there is no contest that the specification document was unique to Aswan and Donaldson.

But the judge also ruled that in order for the document to be protected as confidential, it must not be available in the public domain and it must have been imparted in circumstances of confidentiality.

Referring to the claimants' discovery of the breach through emails on which they contended, they were accidentally copied, Justice Campbell said "the emails complained of were all copied to the claimants and communications from the claimants themselves displayed an acquiescence in the flow of information to the third party."

He found that Aswan and Donaldson knew of eFunds' role and was complicit in information being communicated by NCB to that company.

"The presence of the claimants in the banking environment and their failure, according to them, to be aware of the breach up to the time of their termination of the agreement further fortifies my finding. For those reasons, I would be reluctant to enforce the obligation of confidentially," the judge ruled.

Attorneys Ayana Thomas and Stephanie Forte, who represented Aswan and Donaldson, were not reached for comment. Attorneys Maliaca Wong and Shani Nembhard represented NCB.

mcpherse.thompson@gleanerjm.com