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Steel & Tube pleaded guilty in 2018 to misleading customers that their steel foundation mesh met New Zealand standards.
The Court of Appeal has reduced the fine Steel & Tube must pay for wrongly informing builders that their reinforcing steel mesh had been independently tested to earthquake standards.
He pleaded guilty in 2018 to the charges brought by the Commerce Commission and was fined a total of $ 1.885 million after a hearing in District Court.
That rose to just over $ 2 million after both parties appealed to Superior Court and the company argued that the fine should be less and the commission argued that it should be higher.
But after a third hearing, Court of Appeal Justices Forrie Miller, Patricia Courtney and Brendan Brown, reduced the total Steel & Tube had to pay to $ 1.56 million.
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The charges relate to the sale by Steel & Tube between 2012 and 2016 of approximately 480,000 sheets of steel mesh, bringing the company about $ 24 million.
After the Canterbury earthquakes, a new standard was set for the steel mesh used in concrete slab floors on “good” terrain, and Steel & Tube developed steel mesh to meet this standard.
The company told clients that the mesh met the standard, but the three judges of the Court of Appeal ruled: “The steel can meet the ductility requirements of the Standard, but that cannot now be verified.”
“What can be said is that it was not tested in the prescribed manner and therefore strictly cannot be said to be compliant with the Standard. By stating that it did and that it had been independently tested, Steel & Tube misled consumers, ”they said.
“The independent evidence statements were highly misleading,” the Court of Appeal concluded.
The tests were conducted internally by Steel & Tube employees, overseen by a particular employee, who retired in 2014. But those tests were not enough to show that the mesh met the standard, the judges said.
The judges found that the former employee, and therefore the company, had intentionally chosen not to meet the testing requirements, believing his methods to be superior.
The employee did not set out to deceive or deceive, the judges said.
But, they said: “No one signed their decisions not to follow the Standard, nor did anyone verify their [the former employees] job.”
“There was no internal or external audit system to monitor compliance. He trained the personnel who tested the mesh but followed the processes he prescribed; they weren’t familiar with the standard. “
When he retired, his successor continued with his practices, ”the judges said.
Steel & Tube argued that the starting point for the $ 3.5 million fine, lowered due to the company’s first convictions, was too high.
He said he had not had a chance to argue the point in court.
The Commerce Commission argued that the fine was too low as the company got too much credit for its early returns and did not take into account Steel & Tube’s size, resources and financial gain, making the $ 2 million in fines are “manifestly inappropriate”.
All three judges ruled that all of the fines imposed on Steel & Tube were too high and reduced them.
