A High Court judge says carpet maker Cavalier Bremworth breached the Fair Trading Act and found the firm made misleading statements about warranties for a new range.
However, the judge declined to grant an injunction against the firm that was being sought by its main rival, Godfrey Hirst.
Cavalier Bremworth, a subsidiary of NZX-listed Cavalier Corporation, manufactures and distributes carpet and introduced a new range in March this year aimed at the residential market.
The range was manufactured using synthetic fibres supplied by an Australian firm, Invista.
Invista provides warranties on these fibres and in promoting the new range Cavalier Bremworth described the warranties as "superb", "outstanding" and impressive".
But Godfrey Hirst, a competing carpet maker, claimed Cavalier's promotion of these warranties on its website, in a letter to retailers and on stickers attached to samples was "misleading and deceptive".
Godfrey said the warranties were not as valuable or extensive as Cavalier was claiming and that its website gave the impression consumers would receive the warranties from Cavalier itself, when this was not the case.
Godfrey served Cavalier with High Court proceedings, seeking a declaration its rival had breached the Fair Trading Act as well as an injunction restraining the carpet firm from making "the same, or similar, representations" about the warranties.
After service of these proceedings in April, Cavalier changed how it promoted the warranties on its website and sent another letter out to retailers.
Following a hearing in the High Court at Auckland in May, Cavalier also gave an undertaking it would not publish certain statements it had previously made about the warranties.
After considering the issues raised at this hearing, Justice Murray Gilbert yesterday found Cavalier had breached the Fair Trading Act by giving the "misleading impression on its website" that it was the party providing the warranties.
He also said the impressions Cavalier gave that warranties covered fading caused by common household cleaners and crushing caused by heavy foot traffic were misleading and were also breaches of the Act.
However, Justice Gilbert did not believe it was necessary to grant the injunction Godfrey Hirst wanted:
"The misleading statements on the website and in the letter to carpet retailers were promptly corrected as soon as the issue was drawn to Cavalier Bremworth's attention by the service of this proceeding. Further, Cavalier Bremworth has given an undertaking to the Court that it will not repeat the misleading statements in any media.
In these circumstances, I do not consider it necessary to grant the injunction sought by Godfrey Hirst. It is not necessary to issue an injunction to restrain Cavalier Bremworth from doing what it has already undertaken to the Court that it will not do," the judge said in his decision yesterday.
Justice Gilbert also said it was not necessary to formally declare Cavalier Bremworth breached the Fair Trading Act.
But the judge did note no changes had been made to the wording on stickers on carpet samples:
"This wording conveys the misleading impression that the fade resistance warranty covers cleaning when it does not. It is not in the public interest for this misleading impression to be maintained. Although an order by way of injunction is a discretionary remedy, I consider that such an order should be made in relation to his part of the wording on the stickers attached to the carpet samples," Justice Gilbert said.