Cridge v Studorp Ltd

JurisdictionNew Zealand
CourtHigh Court
JudgeSimon France J
Judgment Date11 August 2021
Neutral Citation[2021] NZHC 2077
Docket NumberCIV-2015-485-594

[2021] NZHC 2077

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

Simon France J

CIV-2015-485-594

CIV-2015-485-773

Between
T J Cridge and M A Unwin
Plaintiffs
and
Studorp Limited
Defendant
Between
K M Fowler and S Woodhead
Plaintiffs
and
Studorp Limited
Defendant
James Hardie New Zealand Limited
Second Defendant
Counsel:

J A Farmer QC, R J B Fowler QC, D J S Parker, E S K Dalzell, J T Wollerman, D S Thorne, B M Lambert, D A Fry and D Viatos for Plaintiffs

J E Hodder QC, B A Scott, J A McKay, E S Scorgie, T D Smith, J Y Moran, Z E Koo, S R Roberts, J P Papps, B J M McIntosh and O E Battell-Wallace for Defendants

Building, Fair Trading, Tort — claim against the manufacturer of a building product in negligence and misrepresentation under the Fair Trading Act 1986 — whether the product was inherently flawed — manufacturer's duty of care — duty to warn of weathertightness deficits

The issues were: whether James Hardie owed a duty of care; if yes, whether that duty had been breached; whether James Hardie had a duty to warn consumers about the product and whether

The Court held that James Hardie owed the homeowners a duty of care. The manufacturer was the start of a chain of persons involved in the building of a house, a duty had been recognised on every actor subsequent in the chain to the manufacturer. The obvious difference was the manufacturer's role was generic, the role for everyone else in the chain was house specific.

James Hardie had not breached the duty of care owed by it to the owners of Harditex-clad homes. Harditex was not an inherently flawed product or system, nor too difficult for builders to install. It was fit for purpose, namely, to provide a waterproof cladding for residential homes constructed in accordance with applicable standards and sound building practice. James Hardie also discharged the obligation of a reasonable cladding manufacturer to provide adequate technical information to assist with the installation of its product. It was reasonable for James Hardie to assume the target audience of that information would be competent builders with requisite experience in installing fibre-cement sheet cladding generally, from which Harditex was not materially different. The evolution of the technical information reflected an awareness of decreasing building standards and the need for more comprehensive guidance.

There was no duty on James Hardie to warn consumers to weathertightness deficits. Harditex was not fundamentally flawed, and therefore there was no obligation on James Hardie to warn of deficits that did not exist. The evidence had not indicated a belief, or that there should have been a belief that aspects of Harditex were failing or represented a risk which required special action. James Hardie had no duty to warn consumers of the risks associated with untreated timber framing, a material which the regulatory scheme had specifically been amended to allow and which had no bearing on the performance of Harditex.

The homeowners had not established that Harditex was a flawed product unable to deliver a watertight house. There was a pattern of incompetent building and poor texture coating that was more likely to be the cause of the damage suffered by the properties

The FTA claim significantly overlapped the negligence claims and failed in its entirety. None of the statements regarding the product represented a breach of the FTA. James Hardie had not engaged in conduct that was misleading or deceptive, or likely to be so.

The claims were dismissed.

JUDGMENT OF Simon France J

Table of Contents

Paragraph No.

INTRODUCTION

[1]

Overview

[1]

Introductory comments

[8]

What is Harditex?

[11]

The purpose of a cladding system

[22]

The alleged defects

[24]

Structure of the judgment

[37]

BUILDING SCIENCE

[40]

Introduction

[40]

Moisture management

[43]

A face-sealed system?

[44]

Capacity to drain

[53]

The contribution of the building wrap to drainage

[76]

Capacity to dry

[87]

Other systems

[101]

Independence of Dr Lstiburek

[106]

Conclusion

[127]

Durability

[129]

The composition of a Harditex sheet

[136]

Fungal decay as a failure mechanism

[140]

(i) A discussion of the trial evidence and the original closing submissions

[140]

(ii) A discussion of the post-trial evidence

[181]

Differential movement as a failure mechanism

[206]

Flexural testing

[210]

Conclusion

[221]

Capacity to cope with normal building movement

[222]

Mould

[244]

The susceptibility of Harditex houses to mould

[245]

The risks and dangers of mould

[257]

Further alleged vulnerabilities

[263]

H-mould

[264]

Base of sheet

[287]

Exterior corners

[310]

Windows

[317]

Conclusion

[340]

TESTING

[345]

The Helfen test

[348]

The testing process

[348]

Issues

[356]

(a) Construction of the wall

[356]

(b) Specifications

[362]

(c) Design features

[371]

Conclusion

[382]

The RDH test

[385]

The testing process

[385]

Results

[390]

Criticism

[397]

Conclusion

[412]

Prolonged duration test

[414]

Conclusion

[423]

HOUSES

[424]

Introduction

[424]

Bay Lair

[446]

The damage

[446]

History

[450]

A Harditex house?

[455]

The problems

[460]

(a) The h-mould

[463]

(b) Window

[471]

(c) Base of sheet

[473]

An alternative water source?

[481]

Conclusion

[491]

Woodhouse

[495]

Cracking/building movement

[500]

Base of sheet

[506]

Assessment of Woodhouse

[509]

San Vito

[516]

Ambassador

[528]

Carnelian

[533]

Golf Road

[535]

The Esplanade

[537]

Portsmouth

[542]

Conclusions

[545]

BUILDABILITY

[551]

Introduction

[551]

Difficulties in building — general evidence

[561]

Difficulties in building — evidence about specific areas and coating issues

[622]

Assessment on buildability

[645]

Inherent defect nine — maintenance

[655]

NEGLIGENCE

[664]

Did James Hardie owe a duty of care?

[664]

James Hardie's argument

[665]

The homeowners' case

[674]

Assessment

[678]

Breach of duty — the product and the system

[687]

Breach of duty — the technical literature

[690]

The duty

[690]

The alleged breach

[691]

The JHTI documents

[696]

The evidence

[707]

Legislative and other background context

[723]

Other material

[729]

Assessment

[735]

Breach of duty — the failure to modify product or warn consumers of the risk

[745]

The duty

[745]

The alleged breach

[749]

The evidence

[753]

Pre-1999

[753]

The Harditex Improvement Project (1999–2001)

[773]

Senior Management

[795]

Assessment

[816]

Knowledge of problems requiring consumers to be warned

[817]

Untreated timber

[820]

Monotek improvements

[825]

Conclusion

[827]

FAIR TRADING ACT CLAIMS

[834]

The Law

[834]

Alleged misstatements — Bay Lair

[857]

Sheet statements said to be false or misleading

[862]

System statements said to be false or misleading

[869]

Buildability statements said to be false and misleading

[879]

Bay Lair statements

[880]

Other alleged misrepresentations

[882]

Conclusion

[887]

OVERALL CONCLUSION

[888]

APPENDIX

[892]

Testing of Harditex before its release on the market

[893]

BRANZ

[900]

Complaints system and number of houses

[916]

Repairs

[922]

Evidence challenges

[932]

Recall application

[933]

INTRODUCTION
Overview
1

In 2002 an overview group established by the Building Industry Association noted that in recent years moisture problems had become the single-most common reason for unsatisfactory building performance in New Zealand. The authors, in what has become known as the Hunn Report, identified a multiplicity of contributors to New Zealand's leaky building crisis and made various recommendations. 1 In 2004 a new Building Act was passed and in 2004/05 a new version emerged of E2/A51

(3rd ed). E2 is the external moisture clause of New Zealand's Building Code. This version represented a first regulatory push towards the use of cavities behind cladding; 2 in 2011 cavities became mandatory for all timber-framed houses
2

A major player in the New Zealand building industry is James Hardie, the defendant in this proceeding. 3 It manufactures and sells various cladding products for houses. It is an international company but the New Zealand operation is stand-alone, although obviously drawing on and flowing from the parent. Products may have different names domestically and some different features such as the colour of the sheets, but their physical essence is the same.

3

From 1987 until 2005, James Hardie produced and marketed to the New Zealand building industry a sheet cladding called Harditex. It was a variant on an existing product called “New Hardiflex”. That had been introduced in 1983 and was notable for being a fibre-cement product that was asbestos-free. Prior to this, asbestos was a key component in fibre-cement cladding, but emerging awareness of health risks necessitated alternatives be developed.

4

The period through which Harditex was on the New Zealand market coincides, most certainly in its later stages, with New Zealand's leaky building crisis. At its most general, the question this case raises is what role, if any, Harditex played in the crisis.

5

In this proceeding, owners of homes clad in Harditex sue James Hardie for selling what is said...

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