Computer wholesaler Z-Tek Computer (SA Group) is taking legal action against 21 computer resellers in an attempt to reel in unpaid debts.
The wholesaler claims it is owed hundreds of thousands of dollars from retailers around the country. It has already settled cases with five resellers, and is in the process of taking action against a further 16.
Business manager for Z-Tek Computer (SA Group), Paul Judd, said the wholesaler was in “fightback mode” against those in the channel that have had bad blood with it.
Judd pointed to several reasons why resellers were not fronting up for debts they owe the wholesaler.
He said the introduction of the GST had severely hampered the retail channel, and that many technically-proficient people opened computer retailers without possessing the necessary business acumen.
Judd also said that Z-Tek’s past was misunderstood and misrepresented by the press.
Five resellers have already settled with the wholesaler, both in and out of the courts.
“Some went to court, and we had a nice victory,” Judd said. “Others came forward and said, let’s settle this.”
But not all of the retailers have capitulated so easily. Two of South Australia’s largest resellers and white box dealers, A&R Computers and Hindley Computer City, are currently fighting Z-Tek over unpaid debts in the District Court of South Australia.
Z-Tek claims that A&R Computers owes $69,524.40 and that Hindley Computer City owes $46,883.56.
As reported previously in ARN, these resellers claim that the bad debts stem from faulty power supplies fitted to computer cases each purchased in large volumes from Z-Tek. “They stopped honouring their warranty,” said Bob Johnson, director of A&R Computers. “They refused to repair the faulty goods they sold us, as soon as they did that they broke their contract.”
Hindley Computer City proprietor, Mario Komljenovic, claimed that many of the retailers forced into a legal battle with Z-Tek had refused to pay over the same circumstance (the faulty products).
“This is more than a nuisance,” he said. “This is simply bad faith. Everybody knows that power supplies can fail, but not this often. And normally when they fail, they have no effect on the rest of the components. In this case a large proportion of them failed and they often damaged the rest of the computer.”
Komljenovic said he had hoped other resellers would stand together to fight the legal action as a consolidated group, but many folded to avoid the costs of the legal process.
Thus far, the District Court of South Australia has passed down a summary judgement recognising that the retailers did owe the monies in question. Subsequently, the funds have been paid into the court.
However, the case will not proceed further until the court has heard a counter-claim on behalf of the two defendants, who will submit expert evidence pertaining to the faulty goods sold by Z-Tek.
A solicitor representing the retailers, Rich Schroeder, said the case was now progressing toward trial.
The retailers will seek a significantly larger counter-claim against Z-Tek with relation to the faulty products.
“I am confident the counterclaim will be successful,” Schroeder said.
Two weeks ago, the two resellers offered Z-Tek a settlement, but were turned away.
“We gave them the option to come to the party and settle,” Johnson said. “They refused. So now we will stand our ground.” “I think it has got to a point where [Z-Tek] has nothing left to lose,” Komljenovic said. “If they win, they win a lot and knock competitors out of business. If they lose, they close up the company again. We tried to be fair – but now we are not holding back. We are going for blood.”