Bitter dispute between Melb comms partners heads to court

Two Victorian telecommunications providers are locked in a bitter legal battle over the rights to a hosted PBX platform and the customers served by it.

Melbourne-headquartered Alltel has taken URL Networks and its sole director Ashley Breeden to the Federal Court of Victoria, in a case that started in January over a hosted PBX platform that Breeden developed from 2010 to 2011.

According to court documents, both sides agree that in late 2009, the two companies started negotiating with an aim to create a joint venture for the supply of wholesale, hosted communications services. URL Networks had a previous relationship as a wholesale supplier for Alltel's retail business.

In early 2010, an agreement was made for a $100,000 per annum "salary" to be paid to Breeden. He then started developing a hosted PBX system, which went live to Alltel customers in early 2011.

This stipend continued to be paid until 2014, when the dispute arose. In total, Alltel claims it paid $479,026 to Breeden over that period, plus $43,538 into his personal superannuation fund. 

According to court documents, Alltel believed that during the initial negotiations Breeden had expressed a desire to relinquish his small retail customer base and concentrate on computer programming. Alltel stated that the salary had made Breeden its employee, with intellectual property rights going to the employer.

However, Alltel alleged that it later discovered URL Networks had been signing up new customers to put on the newly developed PBX system on Alltel's infrastructure. Alltel's lawyers alleged that once the discovery was made, URL Networks removed the PBX system off Alltel's servers, and refused to hand the software back.

Alltel is seeking compensation for the missing software developed by Breeden, the customers signed by URL Networks since the agreement, and the cost of commissioning AAPT to deploy a replacement hosted PBX system for its customers.

Breeden contends that under the terms of the joint venture, URL Networks had every right to gain new customers. He denies that he gave an undertaking to relinquish his customer base, and his lawyers stated that URL already had a hosted PBX system in place distinct from the one Breeden later developed for Alltel.

URL Networks and Breeden said that the $100,000 per annum payments were capital contributions towards the joint venture. They allege that Alltel founder Keith Brinsley had suggested the "salary" arrangement, for tax advantages.

Alltel maintains that the joint venture was never agreed upon and the employment agreement was the actual outcome from the 2009-2010 negotiations. In the latest submission to court, Alltel's lawyers have said the company would never have entered into an arrangement with Breeden if URL Networks was expanding its customer base.

CRN contacted Breeden, who declined to comment on the basis the case was continuing. Alltel did not respond to enquiries.

The case continues in the Federal Court of Victoria.