18 Mar 2016

Legal action looms over steel mesh testing

8:57 am on 18 March 2016

Building manufacturer Steel and Tube is facing possible legal action and a Commerce Commission investigation over thousands of certificates for earthquake reinforced steel mesh.

A worker spreads ready-mix concrete over steel mesh (file)

A worker spreads ready-mix concrete over steel mesh (file) Photo: 123RF

Steel & Tube's earthquake-reinforcing mesh has been wrongly certified as having been analysed by an accredited laboratory, when it was actually tested in-house.

Steel and Tube's share price lost 3 percent of its value today to close at $2.29.

Holmes Solutions - one of only of only two laboratories in the country with accreditation to test building products - said it only recently found out its name was being used on Steel and Tube's batch testing certificates.

Chief executive Chris Allington said the company was treating the matter "extremely seriously".

"We value our reputation and the work we do, and the matter is now in the hands of our legal team."

Home Owners and Buyers Association president John Gray said while it was not yet known whether there was anything wrong with the product itself, it could affect property values.

"Remediation is nigh on impossible because we're talking about the foundations and slab work. So it's not an easy task to actually remediate short of actually demolishing these homes."

The wider problem was the lack of a mandatory independent testing regime, he said.

"After years of asking for it, we've had confirmation from the Ministry of Business Innovation and Employment that it is looking at problems with our building regulatory system and product certification."

The Institution of Professional Engineers said it would support full independent certification.

President Andrew Read said when using New Zealand-made products, engineers "normally have a high level of confidence".

"As an industry, the broader construction industry, we do rely on the various elements of that industry, manufacturers being one, to make sure that their products meet the relevant standards," he said.

"And we - both as engineers and society - need to have confidence that they are appropriately certifying their products."

However, certification by an accredited laboratory is not cheap, and construction costs in New Zealand are already up to 25 percent more expensive than in Australia.

The Cement and Concrete Association, whose members produce 4 million cubic metres of concrete every year, have used a independent third-party quality assurance auditor for the last four decades.

Head Rob Gaimster said it was money well spent.

"We support industry self-regulated schemes and I think those schemes that are robust and have third party certification are going to be in a better position to say their products meet the standard and are third-party verified."

A lawyer specialising in construction claims, Gareth Lewis from Grimshaw and Co, said manufacturers had a duty of care to home owners under the law.

"If that product turned out to be defective and there were repairs required, then potentially there's a claim there for owners to bring a claim against the supplier.

However, any claim for building work must be filed within a ten-year period, he said.

The Commerce Commission said it was investigating.

"Making misleading representations - such as claiming a product was tested by a company that has not tested it - is prohibited under the Fair Trading Act," said a spokeswoman for the Commission.

As an active inquiry was underway, she said she could not comment further.

However, she confirmed the Commission was widening a separate investigation into whether steel mesh supplied by a range of companies complies with the standard to include more products.

Earlier today, Registered Master Builders Federation head David Kelly said the onus was on Steel & Tube to prove its product was safe.

"They need to move quickly to demonstrate the veracity of the product, and they need to contact all the people who were using the product, and potentially the consenting authorities."

Listen to Mr Kelly on Morning Report

Steel & Tube said in a statement to the stock exchange it was fully confident its products complied with appropriate standards and its test certificates were not misleading.

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