The Supreme Court approved 3 grounds for appeal & cross-appeal today in Carter Holt Harvey Ltd’s defence of leaky building claims against it by the Ministry of Education & a number of schools.
The bench of Justices Sir Willie Young, Dame Susan Glazebrook & Terry Arnold said the 3 grounds were whether the Court of Appeal was correct to conclude that the claims in negligence were arguable, the claims for negligent misstatement were not arguable, and section 393 of the Building Act 2004 (on limitation defences) didn’t apply to the claims.
In July, the Court of Appeal allowed Carter Holt’s appeal in part and struck out the third cause of action in relation to negligent misstatement.
The Minister, Ministry & Secretary of Education, on behalf of the boards of trustees of schools – possibly over 1400 of them, with Orewa Primary named in the cases – filed a product liability claim against 4 manufacturers, including Carter Holt, saying the cladding sheets & cladding systems installed in various schools throughout New Zealand were defective and were designed & manufactured by Carter Holt in circumstances giving rise to a tortious duty of care & other causes of action.
The claimants filed claims against Carter Holt in negligence, breach of the Consumer Guarantees Act & breach of the Fair Trading Act. Carter Holt applied to the High Court to strike out all claims, except the Fair Trading Act claim, arguing the causes of action couldn’t succeed and so should not proceed to trial. Carter Holt also argued the proceedings were brought out of time, falling outside the 10-year longstop limitation period in the Building Act.
The High Court held that all challenged causes of action were arguable, and found that the claim wasn’t out of time.
The first appeal question was whether it was arguable Carter Holt was liable as a product manufacturer for carelessly designing & manufacturing its cladding product, shadowclad.
The Court of Appeal said the existence of a duty of care was arguable in light of the contractual context between the parties, the relevant statutes governing building and the construction of schools and their health & safety obligations. The court also found it arguable that Carter Holt owed a separate duty of care to warn the claimants about any potential risk the cladding sheets might pose.
The Court of Appeal ruled against the schools’ claims of negligent misstatement. They’d argued Carter Holt had falsely stated through its advertising materials that the cladding was fit for purpose, and the claimants had relied on those statements. However, the court ruled that these statements weren’t reasonably capable of being relied upon because they were general & made to all consumers.
On the question of being out of time, the Court of Appeal held that the claims weren’t subject to the Building Act longstop, saying this was consistent with the policy of the Building Act, which wasn’t intended to apply to manufacturers & suppliers of building products.