Skellerup in $7m stoush over faulty rubber rings

Skellerup produces industrial rubber products. Photo / Simon Baker

Skellerup Rubber Services, a subsidiary of NZX-listed Skellerup Holdings, has been accused of selling faulty rubber rings to PVC pipe maker Marley New Zealand, who is seeking some $7.3 million in damages from the industrial rubber goods maker.

Marley claims rubber rings it bought from Skellerup to use as seals in its pipes between 2006 and 2009 didn't meet Australian and New Zealand standards and weren't watertight, and is suing Skellerup for losses suffered as a result. Skellerup denies the claims.

A July 2 judgment by Justice Edwin Wylie, published online today, found Skellerup's draft statement of defence was "impenetrable."

"In my judgment, the approach adopted by Skellerup in its draft third amended statement of defence is unclear, confusing and cumbersome," the judge said. "It is difficult for the reader, and does not answer the statement of claim in a fair way."

Marley sought an order for Skellerup to file a more explicit defence, saying the third amendment was deficient and didn't comply with court rules.

Because the statements of claim and defence were still in draft stage, the judge reserved leave for Marley to come back to the court if it was still "unhappy with Skellerup's amended statement of defence."

Skellerup noted an unnamed consumer claim as a contingent liability in its 2012 annual report, filed in September last year, alleging a product the rubber goods maker supplied wasn't fit for purpose.

The company said independent engineering reports and product specialists indicated the claim "has no validity" and no dollar figure was attached to the claim.

Skellerup's shares were unchanged at $1.37 today, and have shed 14 percent this year. The company cut its annual earnings guidance in May, blaming weak local demand due to the drought across the North Island and slow sales in North America and Europe.