A major victory for James Hardie: No liability for Harditex cladding

Cridge and Unwin v Studorp Limited; Fowler and Woodhead v Studorp Limited and James Hardie New Zealand Limited [2021] NZHC 2077

The High Court has recently ruled against 144 Harditex-clad homeowners in their claim against James Hardie.  The homeowners claimed, but did not establish, that the Harditex cladding was a cause of the weathertightness issues in their homes and that James Hardie breached its duty of care to them.  The homeowners also failed to prove that James Hardie had engaged in misleading or deceptive conduct under the Fair Trading Act.

Background

Between 1987 and 2005, James Hardie manufactured and sold Harditex cladding for use on residential homes.  A group of 144 homeowners alleged that the Harditex cladding was not fit for purpose, inherently flawed, and was too difficult for builders to install.  Further, they claimed that James Hardie breached its duty of care in that the information provided by it to assist with using the Harditex cladding was misleading and inadequate.

The High Court judgment

Did the Harditex cladding cause the weathertightness issues?

On the basis of the defendant’s expert evidence, the Court concluded that the Harditex system had not been shown to be flawed.  Expert evidence showed that the moisture management system was consistent with well-established principles.  The plaintiffs had also failed to prove that Harditex was too difficult to build with.

The Court was also not convinced by the homeowners’ evidence on Harditex cladding’s durability.  The homeowners had claimed that the cladding was not sufficiently tested prior to its release and was susceptible to mould and decay.  The Court, however, said that while a new product could not have an established history of performance, there were nonetheless methods to reasonably assess its likely performance.  

Overall, the system was fit for purpose, namely, to provide a waterproof cladding for New Zealand residential homes constructed in accordance with applicable standards and sound building practice.  Instances of where the Harditex cladding had failed were more likely to have been the result of incompetent building and poor texture coating.

Did James Hardie breach its duty of care?

The Court affirmed that a manufacturer like James Hardie will owe a duty of care to the owners of homes clad in Harditex.  The live question was the nature of that duty and whether the duty had been breached. 

In that regard, the Court found no breach in respect of the product itself, as the system was fit for purpose.  

Secondly, there was no breach in respect of the technical literature.  The Court found that James Hardie had discharged its obligation as a reasonable cladding manufacturer to provide adequate technical information to assist with the installation of the cladding.  It was reasonable for James Hardie to assume the target audience of this information were competent builders with the requisite skill in installing fibre-cement sheet cladding which was not materially different to Harditex cladding.  The evolution of the technical information reflected James Hardie’s awareness of decreasing building standards and the need for more comprehensive guidance.

Finally, while the Court stated that a duty to warn is recognised as an element of a duty of care, it found there was also no breach of this duty.  Given the finding that the Harditex cladding was not a fundamentally flawed product, there could be no duty on James Hardie to warn of defects that did not exist.  There was little in the evidence that suggested there was a belief, or should have been a belief, that aspects of Harditex were failing, or had a risk which required special attention.

The Court also found there was no duty to warn in relation to untreated timber framing, a material that the regulatory scheme had specifically been amended to allow.  Further, the introduction of a superior product at a later point does not, in itself, require a manufacturer to give warnings about deficiencies in an inferior product.

Fair Trading Act claims

Given the significant overlap of the claims of misleading conduct under the Fair Trading Act with the inherent defects and negligence claims, the Court found that the Fair Trading Act claims also failed in their entirety.

As a result, the High Court concluded that the homeowners’ case failed in its entirety.  Given these results, it remains to be seen whether this decision will be appealed.

Comment (Philippa Fee)

The question of whether Harditex is a bad product, or simply a good product installed by bad builders, has been an issue that has been ‘bubbling along’ in mediation rooms and industry forums since the beginning of the leaky building crisis in the late 1980s.   

Now, at the end of a four-month trial, after scrutinising over 10,000 pages of written evidence and hearing 6,000 pages of oral evidence, the High Court has vindicated James Hardies’ position that the product is fit for purpose. 

We will have to wait and see whether there is an appeal and, if so, the outcome of that appeal.  The apparent thoroughness of the decision and its extraordinary complexity suggests that the homeowners may have a difficult job overturning the decision.  If that is the case, then this will be the end of the road for those who no longer have an in-time claim against anyone else. 

Philippa Fee is a Partner at Fee Langstone