Commerce Commission v Global Fibre8 Limited & Anor – Breach of the Fair Trading Act 1986

In this article I discuss this decision of the District Court where a cladding supplier was found liable for making false or misleading representations in trade in connection with the supply of goods.   

Global Fibre8 supplied a product called K3T being an internal and external wall building system, consisting of magnesium-oxide boards held together by spacers which are filled with concrete once erected. It was marketed by Global Fibre8 as a “cheaper and quicker” alternative building method. Global Fibre8 imported K3T for sale in New Zealand and also sold licences to sale agents in New Zealand. 

Mr Tuake (the Second Defendant) engaged SAI Global Certification Service (being a product certification company in Australia) to gain CodeMark certification for K3T. Whilst this was achieved for K3T for Australian Building Code purposes (BCA), it was never achieved under the NZ Building Code (NZBC). 

Therein lied the basis of the complaint/prosecution of the Commerce Commission, it alleged in several different circumstances that both Global Fibre8 and Mr Tuake had actively represented that K3T complied with the NZBC wherein it only had BCA certification. 

The core allegation made against both Defendants was that Section 13(e) of the Fair Trading Act 1986 had been breached which states:-

“13 False or misleading representation

No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services –

(e)          make a false or misleading representation that goods or services have any sponsorship, approval, endorsement performance characteristics, accessories, uses, or benefits; or”

The different circumstances where the Commerce Commission alleged breach of this section can be summarised as follows:-

·         Website representation;

·         TVNZ interview;

·         Global Fibre8 Limited letter;

·         Representations made to licensees and installers. 

Website Representation

The website for GlobalFibre8 recorded the following:-

“Launched in 2014, the K3T wall system has received notification under the CodeMark Scheme. This certification scheme for Australia and New Zealand is one of the highest testing in the world and this sets the system apart from other products and systems. 

CodeMark certification for the K3T wall means guaranteed acceptance by regulatory bodies and demonstrates alignment with mandatory compliance requirements.”

And under the heading of K3T Wall System Features there was the following paragraph:

“Certificate of Conformity: other systems are only assessed on a couple of areas unlike the K3T Wall Systems which is fully certified.”

The Court ruled that the reading of the website page as it is presented establishes that the product has received certification under the CodeMark system, and further that this related to Australia and New Zealand. It ruled that the statements were misleading and designed to confirm to prospective consumers that K3T wall systems had CodeMark certification within New Zealand. 

Charge in Relation to TVNZ

There was a news feature conducted by TVNZ via TV1 relating to K3T where Mr Tuake whilst being  interviewed told the interviewer that the product does meet the NZBC, and represented that by holding up the CodeMark Certificate offering to the interviewer that it can dispute it with CodeMark. 

The Court held that a breach of section 13(e) had been committed by both Defendants within that interview. 

The Letter 

A similar outcome was reached when considering the letter written on Global Fibre8 letterhead. This letter reports that CodeMark has issued certification for K3T and that it now will convince clients of compliance and supersedes (testing) of all Councils. 

The Court ruled that the letter was unequivocal as to the position of the CodeMark certification in the building consent process in New Zealand.  It was sent to persons in New Zealand who are involved with the product either as to its sale, its supply, or in its use. The letter is emphatic about it covering “all that” with reference to past testing and that certification will ‘supersede’ all Councils testing.  In other words, it is a paramount document. It was deemed to breach section 13(e). 

Licensee and Installer Representation Charges

The Court ruled that written and oral representations had been made to the licensee and installers as to CodeMark certification of the K3T wallboards compliance with the NZBC which were also in breach of section 13(e) of the Fair Trading Act 1986. Specific testimony was provided by licensees to the effect that Councils could not turn down applications made on the CodeMark certification, and that it was a worldwide certification. 

Ultimately the prosecution was made out on every charge against both the company and the director Mr Tuake, and both were convicted on each of the charges brought. The decision does not report what fine was imposed. 

NOTE: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by TM Bates & Co. Barristers / Solicitors to anyone who relies on the information contained in this article. All copyright in this article is retained by TM Bates & Co.