Godfrey Hirst Cleans Up Carpet Industry

Godfrey Hirst Cleans Up Carpet Industry
News Release

Godfrey Hirst New Zealand Limited said today the Court of Appeal has allowed its appeal and confirmed that a High Court judgment it obtained in July 2013 against Cavalier Bremworth over misleading warranties did not go far enough to protect consumer interests.

Godfrey Hirst General Manager, Tania Pauling said: "We are pleased that the Court of Appeal has agreed that the High Court underestimated the extent to which Cavalier's conduct was likely to mislead consumers. The Court has found that the headline statements in Cavalier Bremworth's advertising gave consumers a false impression of the value of these warranties, given the large number of conditions and exclusions.

We expect that others in the industry will now clean up their act, and stop advertising warranties that promise the earth but are gutted by their fine print. It is wrong to advertise a "soil resistance" warranty that excludes mud, or a "stain resistance" warranty that excludes almost anything that might stain a carpet.

We also believe that this clear decision from the Court of Appeal will be of real value to New Zealand consumers in other retail segments in New Zealand where headline warranties are offered which do not deliver in any meaningful or substantive manner.”

Ms Pauling also thanked the Commerce Commission, who intervened in the appeal because of their concerns over the use of misleading headline advertising, particularly in online advertising and selling.

Ends

Background
Sections 9 and 13 of the Fair Trading Act prohibit a person in trade from undertaking conduct, or making representations, that are false or misleading.
In April 2013 Godfrey Hirst issued proceedings in the High Court in respect of Cavalier Bremworth's misleading advertising of its synthetic carpets, specifically that consumers would wrongly gain the impression that these carpets were supporting by "superb" comprehensive warranties. In fact, the warranties were heavily qualified by terms and conditions.
In July 2013 the High Court found in favour of Godfrey Hirst and ruled that Cavalier Bremworth's website and carpet samples were misleading, although not to the extent that Godfrey Hirst said. The Judge found that Cavalier Bremworth's advertising was misleading because:
Consumers would think that Cavalier Bremworth provided or stood behind the warranties when it did not.

Cavalier Bremworth's advertising of its fade resistance warranty was misleading because it claimed "long lasting resistance against fading from … common house hold cleaners", when the warranty in fact did not cover fading caused by cleaning products.

Cavalier Bremworth's advertising of its abrasive wear warranty was misleading because it claimed the carpet would "spring back to shape and resist crushing" when the warranty in fact excluded damage by crushing.
In August 2013 Godfrey Hirst appealed to the Court of Appeal, arguing that the High Court Judge had not provided clear guidance to the carpet industry, and had providing insufficient protection for consumers, permitting headline advertising with significant "fine print" qualifying statements.
In May 2014 the Court of Appeal allowed the Commerce Commission to intervene in the appeal and make submissions because of the wider implications of the case, and the fact that the Court of Appeal's decision was likely to be used as an important source of general guidance for other persons involved in trade.
The appeal was heard in June 2014. On 27 August 2014 the Court of Appeal allowed Godfrey Hirst's appeal. In doing so the Court of Appeal found that:
The High Court Judge did not apply the appropriate principles for considering headline representations with qualifying information ([60] and [67]).

The dominant message of Cavalier Bremworth's web advertising was misleading because of the preconditions, scope and exclusions contained in the fine print ([80]).

The reference to the existence of terms and conditions, and the inclusion of a link to those terms and conditions, was not enough to prevent the web advertising from misleading consumers ([83]).

Cavalier Bremworth's advertising of its "soil resistance" warranty was misleading as consumers would expect this to cover soiling by mud or pets, and this was excluded in the terms and conditions [75].

Cavalier Bremworth's advertising of its "trusted stain resistance" and "stain resistance" warranty was misleading because of the conditions and exclusions that applied [73], [78], [80] and [87].

Cavalier Bremworth's advertising of its "enhanced durability" was misleading because of the conditions and exclusions that applied [73], [76], [78], [80] and [87].

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