Cridge v Studorp Ltd

• Jurisdiction: New Zealand
• Judge: Simon France J
• Judgment Date: 11 August 2021
• Neutral Citation: [2021] NZHC 2077
• Docket Number: CIV-2015-485-594
• Court: High Court

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

[2021] NZHC 2077

Simon France J

CIV-2015-485-594

CIV-2015-485-773

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

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

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

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 to be a cladding product not fit for purpose. That purpose was to provide a weathertight cladding for New Zealand residential homes, and the plaintiffs say it did not safely achieve this, with their homes suffering from moisture ingress and moisture-related damage as a result. The plaintiffs, alternatively called “the homeowners”, are:

• (a) four “lead” homeowners (the actual plaintiffs) involving two dwellings. Ms Fowler and Mr Woodhead are the respective owners of each half of a

  single duplex dwelling located in Karori, Wellington. Duplex means there are two separately titled dwellings attached to each other and sharing a common wall. The other plaintiffs are Ms Cridge and Mr Unwin, who own one-half of a similar dwelling in Island Bay, Wellington. The owner of the attached dwelling is not a participant in the proceeding;

• (b) there are, then, 144 represented owners of 151 properties, all clad in Harditex, where the owners have “opted into” the proceeding. The proceeding is a class action, meaning these properties receive the benefits of any applicable findings, or accept the consequences, as regards James Hardie liability, for their properties if the litigation is unsuccessful. Of these, six represented homeowners' properties have been selected as “sample” properties and subject to destructive testing to analyse the extent of moisture damage and the causes of it.

6 The homeowners' case involves a challenge to the suitability of the cladding, and of the method by which it had to be installed. The plaintiffs allege the composition of the cladding is inherently flawed, the system of installation was inherently flawed and, anyway, too difficult for builders to get right, and the information provided by James Hardie to assist with using its product was misleading and inadequate. James Hardie denies these claims. Concerning the eight properties that have been the subject of detailed analysis, it is common ground they are water damaged, and should not be.

7 At a very general level, the competing positions are:

• (a) for the plaintiffs, this was a bad product and a bad system which was unsuitable for New Zealand conditions and which required a level of building skill that was beyond the skill levels of a reasonably competent builder. It is said James Hardie did not do the necessary level of testing before releasing the product on the market, and provided inadequate information to consumers (including building practitioners) about how to safely build a house with this new product; and

• (b) for the defendant, this new product was a relatively minor development in a decades-long system of sheet...