As a vehicle accessory intended to protect wheels from kerb damage it was a failure. Auckland-based JK Trading Ltd was awarded $223,100 damages against supplier Rimpro-Tec Ltd; money lost on a worthless licensing agreement.
The High Court was told Chris and Debbie Chester, owners of RimPro-Tec, enthusiastically promoted their rim protection product, envisaging sales of hundreds of thousands of units throughout Australasia. JK Trading signed up in 2009 as Australasian agent. It paid $130,000 goodwill for its licensed sales territory and $210,000 for stock. RimPro-Tec was a plastic product to be affixed to wheels. It didn’t work. The product launch at Auckland’s 2010 Top Gear Live show was a disaster. The double-sided tape used to fix Rim-Pro Tec to wheels proved too sticky, getting tangled. The Chesters helped JK Trading at its Top Gear stand and saw the problems first hand. The product subsequently went through various iterations including different tape and clip on components. Customer feedback was unenthusiastic. Wheels still suffered kerb damage. The accessory had to be removed for wheel alignments.
JK Trading sued for a refund, claiming the product was not reasonably fit for purpose. RimPro-Tec Ltd denied liability; the licensing agreement described JK Trading as the ‘manufacturer.’ RimPro-Tec was not responsible for any defects, it said. Justice Gordon ruled the intention of the licensing agreement was to have Rim-Pro design and produce a product protecting wheels from kerb damage. JK Trading was no more than a distributor and sales agent. Its ‘manufacturing’ responsibilities amounted to packaging components supplied by RimPro-Tec and making delivery to customers. Rim-Pro Tec was ordered to refund JK Trading’s goodwill payment of $130,000 together with the value of unsold stock. In March 2018, the Chesters put RimPro-Tec into voluntary liquidation.
JK Trading Ltd v. RimPro-Tec Ltd – High Court (15.08.19)
19.146