Court favours Targus Australia in legal battle with Targus UK

The NSW Supreme Court has moved to side with the Australian subsidiary of electronics accessories vendor Targus in a legal battle with its UK-based counterpart.

The case concerns the vendor’s policies on the product ordering practices of its subsidiaries. The clash began with Targus UK’s own lawsuit against Targus Australia for its refusal to pay a recently introduced 10 percent surcharge on product orders.

Prior to the events leading to the case, Targus Australia would place an order directly to the factories producing Targus gear; the factories would invoice Targus UK and then deliver the goods to Australia. Targus UK would then extend the Australian business a 60-day repayment term on the orders.

The court heard a series of increasing demands by Targus International and Targus UK on Targus Australia, including directing it to no longer order direct from factories; the 10 percent surcharge imposed on the value of ordered items; extensions of delivery times; and it being directed to pay for goods on a cash-on-delivery basis, made managing cash flow increasingly difficult for the Australian operation.

As such, the Australian subsidiary protested the changes and refused to pay, the dispute escalated, lawyers became involved and Targus UK filed court proceedings to recover the demanded surcharge.

Targus Australia cross-claimed, arguing the various actions taken by Targus UK was in breach of a participation agreement signed by the companies in 1991, when the Australian division was appointed to distribute the vendor’s products locally.

Justice McDougall said Targus Australia argued that the conduct of Targus UK and Targus International was unconscionable and sought injunctive relief.

McDougall moved to support Targus Australia’s application for relief from the cash-on-delivery direction from Targus International for the time being, but will stand the matter over for a period of time before making definitive orders, subject to further submissions from the parties.

Targus Australia told CRN it was unable to comment at this time.