Carter Holt Harvey Ltd v Cottonsoft Ltd - [2004] NZCA 256

IN THE COURT OF APPEAL OF NEW ZEALAND
CA83/04
BETWEENCARTER HOLT HARVEY LIMITED

Appellant

ANDCOTTONSOFT LIMITED

Respondent

Hearing:16 September 2004

Coram:McGrath J
Glazebrook J
William Young J
Appearances: R G Simpson for Appellant

W M Wilson QC and D P Robinson for Respondent

Judgment:7 October 2004

JUDGMENT OF THE COURT DELIVERED BY WILLIAM YOUNG J

Introduction
[1] This is an appeal from a judgment of Harrison J delivered in the High Court at Auckland on 8 April 2004. The Judge held that Cottonsoft Ltd, had breached s 13(j) of the Fair Trading Act 1986 (“the Act”) in that it had made false and misleading representations as to the origin of its products in some but not all of the respects alleged by Carter Holt Harvey Ltd. However, subject to Cottonsoft providing an undertaking in the terms indicated by the Judge, he declined to grant relief other than as to costs.
[2] Carter Holt Harvey now appeals the judgment in two respects:
(a)The finding made by the Judge that elements of Cottonsoft’s packaging which were the subject of complaint were not misleading and deceptive; and
(b)The refusal to grant injunctive relief.

As will become apparent, there is a sense in which these issues tended to coalesce in the course of argument in this Court.
The facts
[3]       Cottonsoft manufactures and sells two brands of toilet tissue, CottonSofts and Kiwisoft, and also Tuffy paper towels. Carter Holt Harvey also made toilet tissues and paper towels. So the two companies were direct competitors. Since the trial, Carter Holt Harvey has sold its tissue businesses but it supplies pulp to the purchasers of those businesses for conversion to bulk tissue.
[4]       Cottonsoft is a New Zealand owned company. Carter Holt Harvey is now controlled by American interests although it has had a lengthy history in New Zealand, with much capital investment and many employees in this country.
[5]       Carter Holt Harvey has not made much of its connections with New Zealand in its marketing.
[6]       Cottonsoft, however, has made much of its association with New Zealand. As part of this marketing approach, it has marketed its tissue products as having been made in New Zealand. We will refer later in this judgment to the way in which this claim was made. It is sufficient to say that it is self-evident (and indeed admitted by Cottonsoft) that such a claim was made in relation to all three of its product lines which were in issue in the case. For instance, all three product lines in issue in the case carried the “Buy NZ Made” logo on their packaging. The major issue at trial was whether this claim was true.
[7]       Tissue is produced either using recycled fibres (a process which is not relevant to this case) or by a four-stage process: the growing of the trees, the pulping of timber, the transformation of pulp into bulk tissue and the conversion of bulk tissue into consumer products. In relation to Carter Holt Harvey’s products, all…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] NZCA 256
Decision Date: 7 October 2004

CaseChat Overview and Summary

The case of Carter Holt Harvey Ltd v Cottonsoft Ltd involved an appeal by Carter Holt Harvey against a judgment of the High Court which held that Cottonsoft had breached the Fair Trading Act 1986 by making false and misleading representations regarding the origin of its products. Carter Holt Harvey alleged that Cottonsoft's marketing claims of New Zealand origin were misleading as it imported bulk tissue from overseas. Cottonsoft, however, argued that its processing of the bulk tissue in New Zealand gave the products their essential character.

The Court of Appeal held that the current packaging of Cottonsoft's products, while promoting an association with New Zealand, did not misleadingly represent the products as being made in New Zealand. The Court found that the packaging changes made by Cottonsoft, which removed the "Buy NZ Made" logo and qualified its assertions regarding New Zealand origin, were sufficient to avoid misleading consumers. The Court also found that the Judge was correct in refusing to grant injunctive relief other than as to costs, given the absence of evidence of consumer prejudice and the changes already made to Cottonsoft's packaging.

In conclusion, the Court of Appeal dismissed the appeal and held that the packaging of Cottonsoft's products, with the changes already made, did not misleadingly represent the origin of the products. The Court also found that the Judge was correct in refusing to grant injunctive relief other than as to costs. The appeal was dismissed with Carter Holt Harvey ordered to pay Cottonsoft's costs.

Orders