Carter Holt mounts last-ditch bid to toss out leaky schools claim

Wednesday 13th April 2016

Carter Holt Harvey has gone to the Supreme Court in Wellington today in a final effort to toss out a claim that it's liable for the cost of fixing about 890 leaky school buildings.

The Auckland-based building products maker wants the 10-year limitation period on claims under the Building Act applied to the suit and is also trying to throw out the Ministry of Education's claim that CHH was negligent in failing to warn that the product might not work in a way the schools intended. At the same time, the ministry is cross-appealing a decision barring it from mounting a case that the company had negligently misstated a variety of claims about the plywood cladding product, known as shadowclad.

David Goddard QC, counsel for CHH, told the court if the Building Act limitation does apply to the claim, that would remove about 600 buildings from the action.

"In terms of the number of buildings it's large and very significant in terms of the scope of any future hearings of this matter, and obviously particularly important at a range of levels for further proceedings," Goddard said.

The 10-year limitation claim is being closely watched by two separate class suits against cladding maker James Hardie Industries, as the time-bar had deterred homeowners from pursuing action prior to the Court of Appeal ruling.

Last year's Appeal Court ruling didn't establish the building products maker was liable, rather it paved the way for the ministry's claim in the High Court to recoup the costs of remediating leaky school buildings.

The Education Ministry launched a $1.5 billion action against cladding manufacturers CHH, James Hardie and CSR in April 2013, and has since reached confidential settlements with James Hardie and CSR, though there are some cross-claims against those parties as at least 73 school buildings used a mixture of cladding products.

At the same time as the school action, CHH has been in the process of being prepared for sale by its owner, billionaire owner Graeme Hart. Plans for an initial public offering of its Carters building supplies business were shelved over volatility in equity markets, having already been pared back from including the New Zealand and Australian timber processing and building supplies businesses.

Goddard today said CHH backed the shadowclad product when it was used in a properly designed and constructed building, and that any weathertightness issues depended on the design and construction rather than the cladding.

"At the heart of this claim is a question of whether the buildings as constructed were weathertight," he said.

Because the cladding was one component, Goddard said it was perfectly acceptable for CHH as the manufacturer to determine its level of potential liability through contracts, and that to allow the ministry to pursue its claim cut across existing policy mechanisms set up to address those problems.

"If there's a problem with that regime, the right place for that to be fixed is Parliament," he said.

The three-day hearing before Chief Justice Sian Elias, and Justices Terence Arnold, William Young, Susan Glazebrook and Mark O'Regan is continuing.

BusinessDesk.co.nz

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