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UPDATE Skellerup scotches $7.3 mln claim in rubber ring dispute

Monday 29th July 2013

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Skellerup, the industrial rubber goods manufacturer, has rubbished a $7.3 million claim by PVC pipe maker Marley New Zealand, saying the value of the rubber rings supplied was about a tenth of that figure.

The Auckland-based company will defend itself against "unsubstantiated claims" by Marley, relating to rubber rings supplied to order for an irrigation system, it said in a statement. Skellerup said the value of the rings supplied during the period of the claim was less than $750,000.

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.

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.

The shares fell 1.5 percent to $1.35 today, and have shed 14 percent this year. The stock is rated an average 'buy' according to three analyst recommendations compiled by Reuters, with a median target price of $1.44.

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