A Court of Appeal decision last week on leaky schools will open the floodgates for building owners outside the 10 year limit to sue cladding manufacturers.
NBR – FRIDAY JULY 24, 2015
Adina Thorn, who is leading a $100 million plus class action against cladding manufacturers, says the decision endorses the High Court judgment of Justice Raynor Asher that the Building Act’s 10-year longstop doesn’t apply to manufacturers of cladding products.
The Court of Appeal has thrown out four of the five arguments Carter Holt Harvey (CHH) advanced to have court action against it over leaky school buildings thrown out.
The court has upheld the Ministry of Education’s right to sue CHH on behalf of boards of trustees at 1400 schools over leaky school buildings across New Zealand, saying four of the five causes of action are arguable.
The ministry claims weathertightness issues have been caused by faulty cladding products negligently designed and manufactured by the company.
CHH argued the ministry should not be allowed to advance claims alleging CHH had a “duty of care” to schools using its products, on the grounds that such a claim could not succeed in law, in part because schools’ contractual relationships were with builders, not CHH as the materials supplier.
The court agreed with Justice Asher that “in a case where a novel duty of care is alleged, the court should be cautious about striking the claim out. This is particularly true where the facts alleged in the statement of claim cover a range of different factual circumstances.”
CHH also argued the causes of action could not succeed because the proceedings were brought out of time, falling outside the 10-year longstop limitation period in the Building Act.
Examining the five grounds of appeal by Carter Holt, the court says the claims are not out of time and they are not subject to the Building Act longstop. It says this is consistent with the act’s policy, which was not intended to apply to manufacturers and suppliers of building products.
However, the court did throw out a ministry claim alleging CHH had engaged in “negligent misstatement” by making a variety of claims in explanatory materials about its product Shadowclad, attesting to its suitability for weathertight applications.
Ms Thorn says she has always argued building work is just that and is not about manufacturers’ cladding products and they don’t come under the 10-year limit.
“This is another confirmation this is the correct decision,” she says. “It opens the way for owners of leaky buildings who haven’t sued because they believed the 10-year stopgap applied to now take action. I would think this decision opens the floodgate to sue manufacturers and suppliers of cladding products.”
Ms Thorn’s Good Cladding case is at the point where more than 1000 viable claimants will be invited to join the class action and sign the funding agreement. Harbour Litigation has agreed to fund the defective cladding class action.