Ihug's plans to stop support for theGooey, the web portal it developed in partnership with Wellington developer Ifision, has Ifision contemplating legal action.
Ihug says it will stop supporting the portal, which went live last June, from January 31.
Ifision's lawyer, Peter Morahan says Ifision is seriously considering legal proceedings against Ihug for breach of contract.
Ihug said in a statement issued on Friday that it had decided to withdraw support for theGooey because of a dispute between current and former Ifision directors over who owned VisOs, the internet operating system developed by Ifision on which theGooey is based.
"They're in dispute as to who owns the underlying software, and the risk is we'll be drawn into it," says Ihug chief executive Martin Wylie. "So we're getting out."
Morahan says the dispute -- between former Ifision director Grant Wattie and current director Sheldon Kerr, Kerr's brother Travis and associated IT company Zoe Communications, which has involved legal action -- is irrelevant to Ifision's arrangement with ihug.
"They're exaggerating it."
Morahan says the real issue is that Ihug hasn't paid Ifision money it is owed under the terms of the agreement between the companies. Ifision's case is that it is owed licence fees of $160,000 plus GST.
Morahan says that Ihug claims it's paid the fees to theGooey -- which was set up as a standalone company -- but hasn't provided proof of it.
"That is completely incorrect," says Ihug's Wylie. "We've been funding the development of theGooey all along and we've paid theGooey [the company]."
He says the money, which Ihug calls development funding and Ifision says is licence fees, amounted to $10,000 per month for approximately 16 months, corresponding with the amount Ifision says it is owed.
"We've paid the money; they're saying we paid it to the wrong person."
Morahan says that there is a provision in the contract between Ifision and Ihug for resolving disputes. Ifision has sought meetings with Ihug to address the licence fee issue, but Ihug declined.
"We're very regretful Ihug has taken the attitude it has."
TheGooey, so named because it is accessed through a GUI or graphical user interface, allows those who use it webmail, personalised news feeds, text and voice messaging, calendaring and file storage facilities, among other features.
Morahan says a statement on theGooey's website, stating that theGooey was developed by Ihug and Wired Icon, a company associated with Ifision director Wattie, is incorrect.
Ihug's own media statement says theGooey "was established as a joint venture between Ihug and Wellington software developer Ifusion". Ihug has advised clients using the service to migrate their files and data away from the portal before the end of the month.