The Court of Appeal has released its decision in Cridge v Studorp Limited [2024] NZCA 483, upholding the High Court’s decision that a manufacturer of building products can owe a duty of care to the owners of buildings which used those products.
Background
The building product in question in this proceeding was Harditex, a James Hardie (which has now changed its name to Studorp Ltd) branded fibre-cement sheet used for cladding.
In the High Court, the plaintiffs brought a class action against Studorp, involving almost 150 claimants. The plaintiffs claimed that Harditex itself was a defective product, as it was inherently moisture absorbent and that it was prone to damage (in the form of swelling, rotting, and decay) from exposure to moisture. They also claimed that the Harditex system was inherently defective, in that it let water in behind the cladding, and then did not adequately deal with that water.
The plaintiffs claimed that James Hardie was negligent, in that it breached its duty of care in respect of the product and the system, the technical literature, and the failure to modify the product or to warn consumers of the risk. They also claimed that James Hardie had made false or misleading statements in trade, in breach of the Fair Trading Act.
The High Court decided that James Hardie did owe a duty of care, but that it was not breached: the houses leaked not because Harditex was a defective product, but because of poor workmanship by the builders when using the product.
The Court of Appeal’s decision
The plaintiffs appealed all aspects of the High Court’s decision. The Court of Appeal has upheld the original decision, noting, in agreement with the High Court, that:
“None of the test properties had been built in compliance with the James Hardie installation instructions and all contained significant building defects. They did not provide a meaningful test of the Harditex system.”
However, the Court of Appeal agreed with the High Court’s key finding: that a manufacturer of a building product owed a duty of care to the owner of a building reliant on that product. The Court said that the duty is:
“appropriately and simply formulated in the following general terms: the manufacturer of a cladding product intended for use as a key component in the construction of a weathertight building owes a duty of care to an owner of the building to exercise reasonable care and skill in the design, manufacture and supply of the product so as to prevent loss from damage to the building caused by water ingress”.
In this case, the evidence did not show that the duty had been breached, and Studorp was therefore not liable to the plaintiffs in negligence.
The plaintiffs had also claimed that the literature on using Harditex was false and misleading under the Fair Trading Act. The Court of Appeal decided that the statements were not false or misleading, and nor were any of the statements relied on by either the owners or the builders. In any event, a claim under the Fair Trading Act must be brought within three years, which meant that this cause of action was time-barred.
Key takeaway
This decision provides clarification that a manufacturer of building products can owe a duty of care to both homeowners and the owners of commercial buildings.
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Special thanks to Partner Jonathan Scragg and Hayley Dale for preparing this article.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
