In
giving leave for a criminal prosecution against Wild Nature (NZ) Ltd to
continue, the High Court has warned directors against putting their companies
into liquidation to avoid potential liability for fines.
Wild Nature pleaded
guilty in late 2012 to Commerce Commission charges that it breached the Fair
Trading Act by falsely labelling alpaca, merino and southdown wool duvets as
being New Zealand made. These products
were sold to tourists from China, Korea and Taiwan brought in by tour
operators.
Seven other companies
were also convicted. They were fined
between $22,000 and $200,000. Before
Wild Nature could be sentenced, the company was put into voluntary
liquidation. Once liquidation has
commenced, all legal proceedings against a company are stopped. They require court approval to continue. The Commerce Commission asked the High Court
to allow the prosecution of Wild Nature to continue through to sentencing. It said Wild Nature was the worst offender of
the eight companies prosecuted. Not only
did the company mislabel the products’ origin, the company also manufactured
false certificates to support the false labelling. The Commission said these were particularly
cynical breaches of the Act. It would be
seeking a fine in excess of the $200,000 penalty imposed on the second-worst
offender.
Justice Venning gave
leave for the prosecution to continue.
The company has pleaded guilty, only sentencing remains. He said deterrence and denunciation are
important considerations. Wild South’s
behaviour can have an adverse effect on the tourism trade.
Commerce
Commission v. Wild Nature (NZ) Ltd – High Court (17.11.14)
14.053