James Hardie leaky homes trial ends early with settlement, but no compensation for owners

Tuesday, 3 August 2021

The $220 million​ class action lawsuit by leaky homeowners against Australian building materials group James Hardie has ended with a mid-trial settlement.

Plaintiffs “reluctantly” agreed to the settlement which ended the 15-week trial at the High Court in Auckland, after their London-based funder Harbour Litigation Funding said it would no longer fund the case.

The trial, which began in May, pitted the owners of 376 buildings against James Hardie, with the owners claiming James Hardie’s Harditex exterior fibre-cement cladding systems were defective and leaked causing their homes to rot.

James Hardie denied the allegation saying its products worked well when properly installed, and blamed poor bad builders for leaks.

**READ MORE:

* The Detail: $250m James Hardie High Court case for leaky houses

* James Hardie blames 'atrocious' workmanship for failure of its Harditex cladding

* Leaky home owners seek $220 million in damages from James Hardie

**

But Lesley Wheatley​, one of the homeowners suing James Hardie, said the homeowners felt they had no choice but to agree to the settlement.

“The plaintiffs would have continued, if the funder had continued funding,” Wheatley said.

In a statement to investors on the ASX Australian sharemarket, James Hardie said it had been paid $1.25 million as a result of the settlement.

James Hardie’s New Zealand manager John Arneil said: “While we are happy with this outcome, and believe the settlement supports our continued belief that the allegations lacked merit, and we behaved as a responsible manufacturer, we remain very sympathetic to homeowners negatively impacted by weathertightness issues.”

The plaintiffs had reluctantly agreed to the settlement because they could not afford to take the case on themselves, Wheatley said.

“Reluctant is a very gentle word for it,” she said.

It was a bitter experience for homeowners, many of whom ended up having to borrow heavily to fix their leaking homes, Wheatley said.

“We haven’t had our day in court. If we had followed the court case right through, that would have been justice,” she said.

The settlement did mean that James Hardie could not pursue them for costs, she said.

“This settlement means the homeowners have not incurred any costs,” she said.

Wheatley believed Harbour Litigation Funding pulled its funding because it no longer believed it could win the case.

The James Hardie leaky homes class action lawsuit was launched by Auckland lawyer Adina Thorn, who secured the loans from Harbour.

She described the settlement as disappointing.

“After approximately six years of strongly contested court proceedings, involving over 1000 plaintiffs and numerous highly qualified experts, this is obviously a disappointing outcome halfway through the trial on liability,” she said.

“We remain very sympathetic to all homeowners involved.

“It must be emphasised that the settlement does not say anything about the qualities or properties of Harditex. The settlement was accepted by the representative claimants on behalf of the plaintiffs and following a process by an independent Queen’s counsel,” she said.

“It represents a compromise between the interests of the plaintiffs, funded by Harbour Litigation Funding, and seven James Hardie companies.”

Thorn also organised a leaky home class action case against Carter Holt Harvey with funding from Harbour, but that had ended earlier this year when the funding was discontinued.

Litigation lenders, including ones based in New Zealand, have played a big part in the rise of class action lawsuits.

Litigation funding allows large groups of people who have suffered loss to take cases they might not otherwise have been able to afford.

But it is an unregulated industry, and the Government has begun moves that would set minimum standards, as has happened in Australia.

Arneil said the settlement ended one of three weathetightness claims James Hardie faced in New Zealand.