A Supreme Court judgment issued today allows the Commerce Commission to proceed with a significant compensation claim against Carter Holt Harvey related to mis-graded timber. The Supreme Court has overturned a previous Court of Appeal ruling that the Commission had filed proceedings against Carter Holt Harvey outside of the limitation period allowed by the Fair Trading Act.
In October 2006 Carter Holt Harvey pleaded guilty to 20 charges of breaching the Fair Trading Act 1986 by selling timber that did not meet the grade claimed on packaging. The company was fined $900,000. That same month, the Commission filed civil proceedings seeking compensation for those consumers and competitors who suffered loss arising out of Carter Holt Harvey's contraventions.
Carter Holt Harvey applied to have the Commission's claim struck out on the basis that it was filed outside of the statutory limitation period and therefore out of time. The Commission successfully opposed that application in the High Court. Carter Holt Harvey successfully appealed that decision in the Court of Appeal and the Commission's claim was subsequently struck out. The Commission considered this case to be a matter of significant public importance, and lodged an appeal to the Supreme Court.
The Commission is pleased with the outcome of the Supreme Court hearing and will now focus upon progressing its proceedings on behalf of those who suffered loss arising from Carter Holt Harvey's contraventions.
The Commission will now re-commence the process of identifying parties that have suffered a loss by paying more than they should have, had they been aware of the actual quality and characteristics of the timber. The Commission believes there could be up to 60,000 houses and other buildings involved.
Homeowners and builders who believe they may have bought or used the mis-graded timber, sold between May 1998 and October 2003, can find more information about how to register with the Commerce Commission on our website. Go to www.comcom.govt.nz under Carter Holt Harvey MGP10 Laserframe Compensation.
The Commission will be making no further comment at this time due to the ongoing court proceedings.
Background
Consequences of using incorrectly graded timber. The grade of timber may affect the design of a structural component of a building. It is highly unlikely that using the non-MGP10 timber that was sold as MGP10 during the time the claim relates to would cause failure of any particular house component, but the house may suffer performance defects such as deflections in the roof and squeaky floors.
Commission's Compensation claims. The Commission is claiming that CHH pay (1) refunds to end-users of the difference between what they each paid and the fair market value of the lesser grade of timber actually supplied; and (2) loss of profit to competitors arising from selling similar timber of a lesser grade than made out.
Commission's criminal prosecution of Carter Holt Harvey. In October 2006 Carter Holt Harvey pleaded guilty to 20 charges of breaching the Fair Trading Act by selling timber that did not meet the grade claimed on packaging. The company was fined $900,000, and a Carter Holt Harvey executive was later fined in connection with the same behaviour.
