10 Nov 2020

Court reduces Steel and Tube fine for substandard steel mesh

4:18 pm on 10 November 2020

A court has found a record-breaking $2 million fine imposed on Steel and Tube over its seismic reinforcing mesh was "manifestly excessive".

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Photo: RNZ / Dan Cook

The listed company was fined for misrepresenting the mesh in a four-year period when it sold almost half a million sheets to strengthen house floors.

Instead of increasing the fine, as the Commerce Commission sought, the Court of Appeal has reduced it.

A $1.56m fine was appropriate, in part, to reflect the steps the company took to set things right, its ruling said.

Steel and Tube first pleaded guilty in 2017 to 24 representative charges of misleading conduct and false representations.

Certificates that asserted the mesh was independently tested, when it wasn't, were exposed by RNZ in 2016.

While the offending was "serious", "large scale" and the company "lacked an adequate excuse", it had believed the mesh did comply with tighter standards brought in after the 2011 Christchurch earthquake, the Court of Appeal said.

"The representations were not intended to mislead or deceive," it said. "The company did not mislead for gain, and we are not able to estimate what gain it actually made.

"The company responded by withdrawing the mesh from the market as soon as it was put on notice that its testing processes did not comply."

The company's appeal was heard at the same time as that of the Commerce Commission, which argued the High Court had discounted the fine too heavily to $2m by not attributing to the company the "state of mind" of the employee responsible for the flawed testing processes.

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