Steel & Tube’s Record Fine No Help To Homeowners
24 October 2018
Today’s District Court decision to fine Steel & Tube Holdings Ltd $1.885 million on 24 charges relating to the sale of non-compliant steel mesh delivers nothing to those home owners and contractors who have used the company’s products in good faith, says litigation lawyer Adina Thorn.
She says the fines are a good result for the Commerce Commission but provide little comfort to Christchurch owners who have rebuilt only to find the reinforcing used in that process is not to standard.
“The 500E standard for the mesh at the centre of the charges brought against the company was specifically introduced in the wake of the Christchurch earthquakes to minimise damage resulting from any future events of this nature,” says Ms Thorn. Steel & Tube sold products that were specifically labelled as meeting the standard, when they didn’t. In fact, in many cases the product hadn’t even been independently tested at all.”
She adds that the presiding judge, Judge Cathcart says it all when he sums up the company’s actions as “grossly negligent.”
“Questions about the soundness of the mesh remain largely unanswerable which was precisely the mischief the Standard seeks to address. And the whole purpose of the standard is to safeguard people from injury caused by structural failure; to safeguard people from loss of amenity caused by structural behaviour; and to protect other property from physical damage. Steel & Tube’s conduct therefore strikes at the core foundation of the FTA [Fair Trading Act],” said Judge Cathcart in the judgement.
Steel & Tube’s sentencing follows sentencings of other steel companies. In April 2018 Timber King and related company NZ Steel Distributor were fined $400,950 after pleading guilty to making false and misleading representations. Most recently Brilliance International was fined $540,000 for making misleading representations about its steel mesh products.
Ms Thorn says 500E grade mesh is an earthquake-grade mesh used to provide reinforcement in concrete slabs in residential buildings and in suspended floors and structural walls of multi-storey buildings. It is designed to bend rather than break as a means of lessening earthquake damage.
“In my view, the owners of properties who built using non-compliant mesh are facing an increased level of concern, potential losses in resale value, and likely insurance complications in any future earthquake event. They will also face any necessary legal and remedial costs,” she says.
The mesh was sold across New Zealand and generally used for properties built between 2012 and early 2016, a period corresponding with the rebuilding of Christchurch following the 2011 earthquake.
The Commerce Commission began its investigation into suppliers of non-compliant steel mesh in August 2015, initially investigating five companies.
Ms Thorn says she expects today’s court decision will encourage more property owners to join the proposed funded class action being organised by Adina Thorn Lawyers.
This proposed action allows the owners of affected buildings to join with others to take legal action to recover costs and compensation from Steel & Tube and other suppliers of non-compliant steel mesh. Details of the action can be found on www.steelclassaction.co.nz
“The proposed action is funded, which means that while funding is in place, claimants will face no out-of-pocket costs, as all the legal, technical and court costs involved in a claim of this scale will be picked up by the funder in return for them receiving a share of any proceeds of success,” says Ms Thorn.