Carter Holt loses on most counts in 'leaky schools' appeal

Carter Holt Harvey has failed on four out of five counts to have court action taken against it over leaky school buildings thrown out.

Building materials manufacturer and supplier Carter Holt Harvey has failed on four out of five counts to have court action taken against it over leaky school buildings thrown out.

The Court of Appeal issued its decision today on CHH's appeal against the High Court decision of Justice Raynor Asher that the Ministry of Education's claim on behalf of some 1,400 schools and as many as 5,000 individual school buildings should be allowed to go to trial. They accepted the ministry could at least argue that CHH had a 'duty of care' to schools in supplying a plywood cladding product, known as shadowclad, which failed to provide weathertight classrooms.

The only element of the CHH appeal upheld in today's decision was its contention that the ministry could not advance a sufficiently strong case to allege that CHH has engaged in "negligent misstatement" by making a variety of claims in explanatory materials about shadowclad, attesting to the product's suitability for weathertight applications.

However, the judgement of appeal court judges Tony Randerson, Lyn Stevens and Mark Cooper dismissed four other grounds for appeal that CHH advanced.

The decision does not establish liability on CHH's part. Rather, it clears the way for a High Court case in which the ministry will be allowed to argue that the problems experienced with shadowclad were 'foreseeable', that there had been a 'negligent failure to warn' that the product might not perform in the way that schools expected, and that CHH had a claim under the Consumer Guarantees Act.

CHH argued that the ministry should not be allowed to advance claims alleging CHH had a 'duty of care' to schools using its products, on the grounds that such a claim could not succeed in law, in part because schools' contractual relationships were with builders, not CHH as the materials supplier.

But the appeal court agreed with Justice Asher that "in a case where a novel duty of care is alleged, the court should be cautious about striking the claim out."

"This is particularly true where the facts alleged in the statement of claim cover a range of different factual circumstances."

The appeal court ruled against CHH's argument that the action should be disallowed because the Building Act limits action on claims where the cladding was installed more than 10 years before the ministry filed proceedings, saying it was clear that Parliament had not intended these 'long-stop' provisions "to apply to building products, manufacturers, and suppliers."

CHH is in the process of being prepared for sale by its owner, billionaire New Zealander and head of a global packaging and materials empire, Graeme Hart. A share float was mooted earlier in the year for CHH but was put on hold amid reports that trade buyers were showing interest.