Homeowners lose leaky building action

A group of New Zealand homeowners has lost a case against a cladding manufacturer they alleged was responsible for their leaky buildings.

Leaky buildings have been an ongoing construction and legal issue in New Zealand with many timber-framed buildings built from 1988 to 2004 not being fully weather-tight.

NZ’s High Court has ruled against 144 homeowners whose homes were clad in Harditex, manufactured by James Hardie. The homeowners unsuccessfully claimed the cladding was a cause of weathertightness issues in their homes and James Hardie had breached its duty of care to them.

The homeowners also failed to prove James Hardie had engaged in misleading or deceptive conduct under the Fair Trading Act.

In a commentary on the case, Philippa Fee, a Partner with Fee Langstone, said: “The question of whether Harditex is a bad product, or simply a good product installed by bad builders, has been an issue ‘bubbling along’ in mediation rooms and industry forums since the beginning of the leaky building crisis in the late 1980s.”  
 

Fit for purpose

She said the High Court had vindicated James Hardies’ position that the product was fit for purpose, following a four-month trial that included more than 10,000 pages of written evidence and 6,000 pages of oral evidence.

“The apparent thoroughness of the decision and its extraordinary complexity suggests the homeowners may have a difficult job overturning the decision. If that is the case, this will be the end of the road for those who no longer have an in-time claim against anyone else,” Ms Fee said. 

Fee Langstone’s case notes said James Hardie manufactured and sold Harditex cladding for use on residential homes from 1987 to 2005.

On the basis of expert evidence, the court found the Harditex system was not flawed.  Its moisture management system was consistent with well-established principles and the homeowners failed to prove the product was too difficult to build with.

The court was also not convinced by the homeowners’ evidence on Harditex cladding’s durability. The homeowners had claimed the cladding was not sufficiently tested before its release and susceptible to mould and decay. But Justice Simon France found while a new product could not have an established history of performance, there were methods to reasonably assess its likely performance. 
 

Waterproof cladding

Overall, the system was fit for purpose to provide a waterproof cladding for NZ homes constructed in accordance with applicable standards and sound building practice. Instances where the cladding had failed were more likely to have been because of incompetent building and poor texture coating.

The High Court affirmed that a manufacturer like James Hardie would owe a duty of care to the owners of homes clad in Harditex, but there was no breach of that duty because the product was fit for purpose. 

Nor was there a breach with the technical literature. Justice France found James Hardie had discharged its obligation as a reasonable cladding manufacturer to provide adequate technical information to assist with installation of the cladding.

It was reasonable for James Hardie to assume the information’s target audience was competent builders with the requisite skill in installing fibre-cement sheet cladding like the Harditex cladding. The evolution of the technical information reflected James Hardie’s awareness of decreasing building standards and the need for more comprehensive guidance.
 

Duty to warn

The court said a duty to warn was recognised as an element of a duty of care, but there was no breach of that duty. Given the finding the Harditex cladding was not a fundamentally flawed product, there could be no duty on James Hardie to warn of defects that did not exist.

The court also found there was no duty to warn about untreated timber framing, a material the regulatory scheme had specifically been amended to allow. Introducing a superior product later, did not, in itself, require a manufacturer to give warnings about deficiencies in an inferior product.

Given the significant overlap of the claims of misleading conduct under the Fair Trading Act with the inherent defects and negligence claims, the court found the Fair Trading Act claims also failed.

Cridge and Unwin v Studorp Ltd; Fowler and Woodhead v Studorp Ltd and James Hardie New Zealand Ltd [2021] NZHC 2077