24 October 2018
Steel & Tube's Record Fine No Help To Homeowners
Todayís 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 companyís 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 didnít. In fact, in many cases the product hadnít even been independently tested at all."
She adds that the presiding judge, Judge Cathcart says it all when he sums up the companyís 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 & Tubeís conduct therefore strikes at the core foundation of the FTA [Fair Trading Act]," said Judge Cathcart in the judgement.
Steel & Tubeís 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 todayís 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.
5 Decmber 2016
Commerce Commission's decision seen as supporting steel class action
Adina Thorn, who is leading the proposed steel class action against suppliers of non-complying steel mesh used in building foundations and driveways, says today's announcement by the Commerce Commission was expected, and is consistent with the view that much of the steel mesh sold seems to be non-compliant.
The Commission is likely to seek that fines be ordered against these companies, but this is very unlikely to result in monetary compensation for affected building owners.
"The Commerce Commissionís decision supports bringing this class action. This is an incredibly serious issue, and litigation will provide an opportunity for owners to seek compensation for non-complying steel mesh. The Commissionís testing suggests that a lot of this mesh does not meet the standards for seismic events. It goes without saying that this could have dire consequences."
"The fact that the Commission intends to proceed with criminal charges against three companies is an indication of the scale of the problem in New Zealand, which as recent events have shown, is very subject to seismic activity.
"The reality is that a prosecution can result in the companies being fined, but it is unlikely to compensate building owners, who will be hit by the losses in value that come from owning a building made of non-compliant materials.
Anybody who had a building built in the last 4 years is urged to register interest for free at www.steelclassaction.co.nz where they will be asked to fill in a simple non-obligation form that will be evaluated to see if they are eligible to be part of the class action. The class action would be fully funded and the owners would have no "out of pocket" expenses.
"We are having a steady level of response to our work on a funded steel mesh class action, details of which are on our website."
Adina says the issue emerged in March this year when it was revealed that hundreds of thousands of non-complying steel mesh sheets had been supplied to builders from mid-2012.
Adina Thorn Lawyers is also leading the $250 million plus funded "faulty cladding" action against the James Hardie Group of companies. This separate action involves more than 1,000 property owners who have suffered losses and health issues arising from the use of non-performing cladding materials. In a funded action those joining it face none of the normal "out of pocket" expenses involved in bringing an action before the courts.
31 August 2016
Steel mesh suppliers facing Class Action threat
Funded claim likely against NZX-listed Steel and Tube
Construction and building litigation specialists Adina Thorn Lawyers today invited registrations of interest for what is expected to be a fully-funded class action on behalf of building owners whose properties have been built in the past 4 years with steel reinforcing mesh that does not meet earthquake standards.
Adina Thorn, Principal of the firm, says the current Commerce Commission investigation may result in fines for the companies that have supplied the non-complying mesh, but this will not likely deliver any financial reinstatement for the owners of affected buildings.
"This is a problem because, in the advent of a natural disaster, the use of non-complying steel mesh could compromise insurance claims, pose a risk to life and cause widespread financial losses. Its existence could also affect the future and present market value of the buildings concerned."
She says the issue emerged in March this year when it was revealed that hundreds of thousands of non-complying steel mesh sheets had been supplied to builders throughout New Zealand from mid-2012.
The Ministry then said it was investigating companies that had supplied steel reinforcing mesh to builders and construction firms that did not meet the grade 500E requirement, which relates to the ductility or flexibility of the steel concerned.
One supplier, NZX-Listed New Zealand Steel and Tube Holdings Ltd, is being investigated by the Commerce Commission for making claims that its products had been certified as complying with standard 500E by using the logo of an independent testing laboratory, which had in fact not tested or certified the product.
Adina Thorn says a number of companies in addition to Steel and Tube may be named in the proposed
She says the proposed class action is to be funded by the Harbour fund in the Cayman Islands that is advised by Harbour Litigation Funding. Harbour Litigation Funding is the UKís largest litigation funding advisor. Harbour is also funding the current $250 million class action against the James Hardie group of companies in respect of plaster cladding products. This action is also being led by Adina Thorn Lawyers.
The existence of funding means owners of affected buildings can join the class action without incurring any out-of-pocket expenses, as Harbour will cover legal, expert, research, litigation, communication and administration costs, in return for a share of any proceeds recovered in the action.
The class action will proceed if there is sufficient interest from owners with viable claims.