Rotten wood in a leaky building Photo: Philip O'Sullivan
Was the product defective – or were the builders incompetent?
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That’s the nub of the High Court case in progress in Auckland at the moment over James Hardie’s monolithic cladding systems.
It is massive in money terms - $250 million worth – but still a drip in the bucket when it comes to the decades-old leaky building saga.
Today on The Detail, Emile Donovan talks to Business Desk reporter Victoria Young, who has been following this story for years.
The case involves more than a thousand plaintiffs, an Irish multi-national worth billions, is being bankrolled by a British litigation funder, and is scheduled to last four months. Other, similar cases are watching closely to see what comes out of it.
It’s also the latest development in a problem that stems from changes in the late 1980s, when there was a lot of deregulation in the housing market.
“A lot of untested building products came onto the market, and this, coupled with the taking away of training for builders and plasterers and that sort of thing at the same time …. a lot of untreated timber was used in the market …. and there was this big trend towards monolithic cladding … all of these things at the same time happened,” says Young. “It obviously took a while to realise it didn’t work. You live in it for several years and then all of a sudden, you’ve got rot.”
In the James Hardie case homeowners have been brought together by lawyer Adina Thorn, and targets both James Hardie in New Zealand and its parent company, one of the biggest suppliers of fibre-cement products in the world.
Young says James Hardie describes its cladding as a “system”, consisting of products that should be used together for them to work properly, including the board, flashings and special coatings. It claims it’s not the product that is defective, but the work of those using it.
“They’re blaming the builders. They’re saying you know, we gave you the ingredients and you didn’t build the recipe correctly.”
The plaintiffs “are basically just saying it doesn’t do what it said it would do because the water’s got in.”
It will be expert versus expert for 15 weeks.
It’s a big case, but not the biggest.
“The leaky schools one would have been bigger than this – it was settled at the end of last year,” says Young.
That case saw the Ministry of Education seeking compensation of between $1.1b and $1.3b from building company Carter Holt Harvey for defective materials affecting 800 schools around the country. The terms of the settlement are confidential.
The homeowners v James Hardie case also comes as the government steps away from the problem.
“They’ve allowed local councils to carry the can for a lot of this,” she says. “Often the council is the last man standing because the builders, the architects, engineers, surveyors – they’ve often gone under.
“Every class action that goes ahead and succeeds, other property owners, other disgruntled shareholders or consumers might get more confident about taking these sorts of actions. In many ways they are sometimes in a position where they’ve got nothing to lose anyway, so they just say, ‘why not?’. A lot of them are no-win, no-fee, so you’re not risking anything.
“You’re just having a hope that you might see some recovery.”