Carter Holt pursues tissue case against Cottonsoft

By Mark Peart

Friday 2nd July 2004

The next phase of a David and Goliath battle between a Dunedin manufacturer and one of the country's biggest companies is set to be played out in the Court of Appeal.

Cottonsoft this week learned Carter Holt Harvey had been given a September hearing for its appeal against Auckland High Court judge Justice Rhys Harrison's April judgment in a Fair Trading Act claim involving the two former competitors.

Carter Holt Harvey is proceeding with the appeal and a claim for damages even though the sale of its tissue business to Swedish multinational CSA went unconditional in May.

Carter Holt Harvey sued Cottonsoft for labelling toilet tissue made from raw tissue imported from Indonesia, New Zealand-made.

However, Justice Harrison said a statement on packaging material that a product is made in New Zealand is a representation not so much about the source and origin of its raw materials but about the place where it was produced or manufactured.

The judge said the average shopper is alive to the modern economic reality that some New Zealand companies manufacture products here from imported raw materials.

"He or she would accept as true a statement that goods are made in New Zealand even if the raw materials originate elsewhere provided the manufacturing process occurred substantially here."

Cottonsoft chief executive Steve Silvey told the National Business Review Carter Holt Harvey's legal action was to "keep us in our place a bit, and get rid of one of our brands [Kiwisoft] off the supermarket shelves, which was hurting them quite a bit."

Carter Holt Harvey has denied its action was motivated by the loss of market share to Cottonsoft.

Silvey said the court found his company had to put some explanatory labelling on its packaging and to that extent it was in breach of the Fair Trading Act.

But he said the court did not find that the Kiwisoft brand, and the use of a kiwi on the packaging, breached the act, but suggested a clarification statement on packs would prevent consumers being misled.

Silvey said his company offered to include such a packaging statement before the case went to trial but this was rejected by Carter Holt Harvey.

"The court later found that [clarification statement] was exactly what we needed to do, so we're in the process of making those changes."

Justice Harrison said an injunction or a directive to include a bold-typed disclaimer was unnecessary.

In his words, "It would be analogous to using a sledgehammer to crack a walnut."

Silvey agreed.

"We don't want big words next to [the brand] saying made in New Zealand from imported tissue ... in our view that would destroy the packaging and the whole brand.

"We'll fight them and see them in the Court of Appeal."

Justice Harrison said Carter Holt Harvey had proved all its allegations of breach for the "Cottonsoft" brand and some for the "Kiwisoft" and "Tuffy" brands.

But while Carter Holt Harvey was still entitled to pursue its claim for damages, it faced evidential difficulties, the judge said.

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