New Zealand Law Society - Firms fined over false steel mesh representations

Firms fined over false steel mesh representations

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Timber King Ltd and NZ Steel Distributor Ltd (NZSD) have been fined $400,950 for making false and misleading representations relating to their steel mesh products which are used to strengthen buildings.

In his judgment, Auckland District Court Judge Robert Ronayne fined Timber King on five charges and NZSD on two charges under the Fair Trading Act. The pair pleaded guilty to making false, misleading and unsubstantiated representations relating to their TS10 steel mesh between June 2015 and February 2016. The two firms work in tandem: NZSD imports the steel from China, Timber King then sells it to customers.

The Commerce Commission says the offending involved representations made on batch tags, invoices and receipts, and on a forged test certificate which claimed the steel had been independently tested and complied with the Australia/New Zealand standard for reinforcing steel and was suitable for structural use in an earthquake zone.

In his judgment, Judge Ronayne said: “It is quite obvious in New Zealand, given our history of earthquakes and the consequences of them, that there is a vital need for consumers to rely on representations as to Standard compliance and, in particular, earthquake Standard compliance.”

He concluded that the steps taken by the companies to ensure that the product complied with the Standard were “grossly negligent”.

“The creation of the fake certificate can only have been deliberately carried out in order to provide an additional false assurance of compliance with the Standard," he said.

“The use of non-compliant steel mesh, especially in the context of earthquake compliant mesh, has actual and potentially enormous consequences for consumers, for competitors and for the reputation of the building industry.”

“Very strong specific and general deterrence is required in these circumstances.”

The Commission has carried out a series of investigations into steel mesh following a complaint in August 2015. Following its investigations:

  • Fletcher Steel Ltd was issued with a warning;
  • United Steel Ltd and Pacific Steel (NZ) Ltd were issued with compliance advice;
  • Brilliance Steel Ltd pleaded guilty to 20 charges and will be sentenced on 25 May;
  • Steel and Tube Holdings Ltd pleaded guilty to 24 charges and are awaiting sentencing;
  • The Commission filed 59 charges against Euro Corporation in December 2017.