23 July 2021

Chapman Tripp
PO Box 993
WELLINGTON 6140 By email

Attention: Grant David

ALLEGED FAIR TRADING ACT CONTRAVENTIONS

1. We act for Cavalier Corporation Limited and Bremworth Limited (together

"Cavalier").

2. We are in receipt of your letter on behalf of Godfrey Hirst NZ Limited ("Godfrey

Hirst") dated 16 July 2021. We set out our clients' response below.

3. In sending our clients' response, we wish to make clear that it is sent on an

"open" basis. It will be provided to the Court when our clients seek indemnity
costs, should Godfrey Hirst persist with its threats to take legal proceedings.

Inadequacies with the 16 July 2021 letter

Partners 4. In your letter, you refer to alleged "specific claims" made by our clients in "press
Frederick Ward releases", "marketing materials" and "NZX announcements" said to be aimed at
Malcolm Crotty
Joe Windmeyer investors and the public generally. However, wholly insufficient particulars of the
Guy Lethbridge
John Powell
alleged claims have been provided for our clients to be able to respond in any
Ed Crook meaningful manner and in the short timeframe imposed by Godfrey Hirst.
Tim Clarke
Sarah Keene
David Hoare 5. There are no attachments to your letter containing examples of the specific press
Matthew Kersey
David Butler releases, "widely published marketing materials", NZX announcements or
Craig Shrive
Deemple Budhia
"associated imagery and wording" you have referred to.
Mei Fern Johnson
Daniel Jones
Polly Pope
6. No explanation has been provided for this, and there is no credible basis as to
Allison Arthur-Young why such particulars would not be provided, especially given:
Christopher Curran
David Raudkivi
Tom Hunt (a) Godfrey Hirst is threatening imminent legal proceedings;
Kylie Dunn
Daniel Minhinnick
Troy Pilkington (b) Godfrey Hirst has had considerable time to consider our clients'
Marika Eastwick-Field
Ian Beaumont commercial strategy and representations; and
Joe Edwards
Benjamin Paterson
Emmeline Rushbrook (c) the commercial absurdity and unreasonableness of the undertakings
Anna Crosbie
David Weavers required by Godfrey Hirst.
Liz Blythe
Nathaniel Walker
William Irving 7. Beyond broadly referring to the alleged claims that our clients may have made at
Kirsten Massey
Caleb Hensman
paragraph 7 of your letter, you have failed to even provide confirmation of the
Cath Shirley-Brown
Simon Pilkinton
Michael Taylor
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 precise words used in any alleged claims made by our clients or the publications
in which they are contained.

8. As both you and Godfrey Hirst will be well aware, and as expressly
acknowledged in your letter, when assessing whether any publications are in
breach of the Fair Trading Act 1986 ("FTA"), it is the overall impression that is
critical. Notwithstanding this, you have chosen not to provide our clients with an
opportunity to consider the alleged claims in the context in which they have been
made. Given our client's recent strategy has been in the market since July 2020,
it is implausible to expect our client to identify specific publications containing the
alleged claims, given how broadly they are worded in your letter. Further and
importantly, in the time available, we are instructed that our client has been
unable to identify any publications containing a number of the alleged claims.

9. It is therefore impossible for our clients, or indeed the Court, to assess the overall
impression created by a claim without understanding exactly what that claim was
and how the claim was presented to the public.

10. Once sufficient particulars are provided, then our clients will respond accordingly,
however, they remain confident their publications comply with all laws, including
the FTA.

Responses to alleged claims

11. Notwithstanding Godfrey Hirst's failure to provide sufficient particulars, we set out
our clients' response to the "specific claims" alleged in your letter, where
possible.

Single-use plastic bags

12. In order to assess this alleged claim, we require further particulars as to why
Godfrey Hirst considers this to be a breach of the FTA. Where comparisons
have been made according to weight, they have been done so in a manner that
is readily understood by consumers and that has been substantiated from
information from a number of sources.

Microplastics

13. In order to assess this alleged claim, we require further particulars. In the time
available, our clients have not identified a publication containing the specific
claim that "synthetic carpets produce, and release uncontrolled into the
environment, harmful microplastics under normal use", nor is it aware of what
constitutes the "associated imagery".

Environmental impact

14. In order to assess this alleged claim, we require further particulars. In the time
available, our clients have not identified a publication containing the specific
claim at subparagraph 7.3 that begins "wool creates a safer, more sustainable
product with reduced environmental impact…".

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 100% pure New Zealand wool

15. We understand that our clients have, more recently, used the claim "100% New
Zealand wool". This claim is factually accurate and can be substantiated. Any
reasonable consumer will be aware that (i) the claim relates to the origin of the
wool used by Cavalier, (ii) the wool used in the carpets must be treated with
some form of chemicals, (iii) carpets are typically made from wool or synthetic
materials – the claim therefore explains the characteristics of our clients' carpets
in a manner understood by consumers; and (iv) it is standard industry practice in
New Zealand and Australia to refer to the types of carpet manufactured by
Cavalier as "100% wool" carpets. By way of example, Victoria Carpets describes
its wool carpets as "100% wool".

16. Importantly and as outlined below, Godfrey Hirst continues to describe its wool
carpet as "100% wool". Our client requires an explanation as to why Godfrey
Hirst makes such a claim but considers it is misleading when the claim is made
by Cavalier. Further, in addition to our clients' requirements set out below,
Cavalier requires written confirmation that Godfrey Hirst uses New Zealand wool
only in its carpets promoted and sold in New Zealand, as expressly claimed in a
number of publications.

Why any attempt for an injunction is inherently flawed

17. For the purposes of an injunction, there is no serious case to be tried. However,
notwithstanding that Cavalier can substantiate all claims and there is no basis for
alleging such claims are misleading, any attempt to seek an injunction in this
matter is flawed for the reasons set out below.

Extensive delay

18. As acknowledged in your letter, our clients' current commercial strategy has been
in the market since 23 July 2020. Godfrey Hirst has not objected to any
representations made as part of that strategy since that time.

19. We are also aware that the Commerce Commission has been aware of our
clients' strategy and it has not raised any objections.

Unclean hands

20. Godfrey Hirst would not be coming to the Court with clean hands. Godfrey Hirst
has been making claims similar to the claims that our clients are alleged to have
made, and it continues to do so. In addition, our preliminary review of Godfrey
Hirst's websites suggests it makes a number of claims that are not capable of
being substantiated. In light of the allegations set out in your letter and the
threats of litigation, our clients require that you provide evidence to substantiate
the following examples (with reference to the exhibits in Annexure A of this letter)
by midday Friday 30 July 2021:

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 (a) How Godfrey Hirst's wool carpets are described as "pure New Zealand
wool carpet": Exhibit A.

(b) How Feltex's Amesbury – 520 Damascus, Amesbury – 730 Fortress and
Zibeline can be described as a "100% wool carpet" and contain only New
Zealand wool: Exhibit B.

(c) How a Feltex carpet can be described as a "100% pure wool textured loop-
pile Feltex carpet": Exhibit C.

(d) In its Easy Living brochure, how Godfrey Hirst can state "Made from
natural fibres, wool carpet is environmentally friendly, warm, luxurious and
durable": Exhibit D. We understand hard copies of this brochure are sent
to consumers who order samples from Godfrey Hirst. The same claims
are also made in the residential section of the Feltex brochure: Exhibit E.

(e) On what basis Eco+ Triexta contains "healthier fibre" and are "healthier
carpets": Exhibit F.

(f) How buying a Red List Free product has a positive effect on the greater
environment: Exhibit G.

(g) How Feltex's Scenic Rise is a "natural carpet": Exhibit H.

(h) How Godfrey Hirst's Triexta carpets are made with "performance,
sustainability and health in mind" and are "softer on the environment":
Exhibit I.

(i) How Godfrey Hirst makes the most "environmentally friendly carpet on the
planet": Exhibit J.

(j) How Godfrey Hirst can describe one of its carpets as a "corn carpet" (with
no qualifying information), despite the product being largely synthetic:
Exhibit K.

21. Any injunction application will therefore fail and our clients will be seeking
indemnity costs.

Anti-competitive conduct

22. Our clients' position, with which we agree, is that this is another attempt by
Godfrey Hirst to prevent legitimate competition in what is a competitive market.
In doing so, Godfrey Hirst seeks to stifle our clients' commercial strategy in order
for Godfrey Hirst to gain an unfair competitive advantage.

23. We confirm we are instructed to accept service. For completeness, we note that
our clients will not be providing the undertakings required by Godfrey Hirst.

24. In the meantime, our clients reserve all of their rights, including taking
appropriate action in relation to the claims made by Godfrey Hirst, examples of

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 which are set out above, once we have had an opportunity to consider the
materials purportedly substantiating such claims.

Yours faithfully
RUSSELL McVEAGH

Joe Edwards | Brigette Shone

Partner | Special Counsel

Direct phone: +64 9 367 8172 | +64 9 367 8892

Direct fax: +64 9 367 8163 |
Email: joe.edwards@russellmcveagh.com
brigette.shone@russellmcveagh.com

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 Annexure A

Exhibit A

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 Exhibit B

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 Exhibit C

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 Exhibit D

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 Exhibit E

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 Exhibit F

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 Exhibit G

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 Exhibit H

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 Exhibit I

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 Exhibit J

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 Exhibit K

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