James Hardie 'knew cladding not working', High Court told

Monday, 17 August 2020

Leaky homes built in the 1980s to early 2000s have cost homeowners billions of dollars to fix, and many remain unfixed.

James Hardie knew its Harditex cladding was not working years before it withdrew the product, the High Court at Wellington heard on Monday.

The Australian building products maker is defending itself against a group of 144 property owners seeking multimillion-dollar damages for the cost of fixing leaky homes.

The case is scheduled to run for 16 weeks, but homeowners have had to wait for their day in court after filing their claim in 2015.

The homeowners claim James Hardie was negligent and made misleading statements in relation to the manufacture and sale of its Harditex wall cladding system.

James Hardie has denied the allegations.

Lawyer Dan Parker says it is not known how many buildings were clad in James Hardie’s cladding systems.

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James Hardie blamed the cladding failures on poor installation. But a lawyer for the plaintiffs, James Farmer, QC, said the product was inherently defective, irrespective of any poor workmanship.

The product liability claim case accused the manufacturer of being negligent, breaching a duty of care for manufacturing, and selling a material that was not fit for purpose.

The purpose of exterior cladding is to keep moisture out and not retain it if it enters. Neither Harditex or Hardieflex was tested for weathertightness, Farmer said.

The cladding was marketed as a product that could be directly fixed to timber framing, but doing so exacerbated its defects, Farmer said.

In addition, New Zealand regulators in the mid-1990s allowed the use of untreated timber, so if moisture got in it would cause more rapid deterioration. James Hardie knew untreated timber was able to be used, Farmer said.

Harditex was manufactured in New Zealand from July 1987 to July 2005.

By December 1999, James Hardie knew its product wasn't working, Farmer said, and it should have warned the market and immediately withdrawn the product.

James Hardie did not test the cladding, Farmer said, but developed a separate product called Monotech, which it marketed as a cheaper alternative.

James Hardie was on notice from 1995, Farmer said, after internal documents expressed concern about the possibility of court action.

No building was perfect, but no amount of good workmanship could overcome the defects, Farmer said. Poor workmanship was not the cause of damage, despite claims from James Hardie, he said.

There were also issues regarding the accuracy and adequacy of technical information provided by the company, and the lack of allowance for “real-world building issues”.

“Blaming poor installation doesn't defeat the claim.”

‘Major and serious problems’

Lead plaintiff Katrina Fowler, who bought her Harditex-clad Wellington home in 2000, called a builder under warranty after leaks, then in May 2015 decided to get building survey report.

There were no visible signs of mould, decay or moisture. But in 2015, after more information became available and with the prospect of legal action against James Hardie, she arranged a further inspection. This revealed the property was suffering significant weathertightness issues.

Fellow plaintiffs Tracey Cridge and Mark Unwin bought a property in 2005. A pre-purchase report in 2005 identified minor issues but said the cladding was generally good.

In 2015 Unwin noticed a minor leak, which led to an invasive inspection, and the damage meant the house needed to be completely reclad and the timber framing replaced.

All the owners spoke of the stress and anxiety these events had caused them, Farmer said.

None of the problems were visible in a visual inspection, and needed a more invasive inspection to reveal what were “major and serious problems”.

The case represented owners of 151 Harditex clad properties.

The homeowners were seeking damages for the cost of repairs plus special damages, general damages, and post-remediation “stigma”, alleging that even though their properties had been fixed, buyers were still not willing to pay the price they would have paid had the homes never leaked.

Another lawyer for the plaintiffs, Dan Parker, said the court would first determine whether James Hardie had a legal duty to homeowners, and if so, whether that duty was breached and whether misleading statements were made in the technical literature.

The case, before Justice Simon France, is proceeding.

The spelling of Tracey Cridge’s name has been corrected.