Minister of Education v Carter Holt Harvey Ltd

[2020] NZHC 1539

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2013-404-1899

[2020] NZHC 1539

UNDER

Consumers Guarantees Act 1993, the Fair Trading Act 1986, the Building Act 2004

BETWEEN

THE MINISTER OF EDUCATION AND OTHERS

First to Fourth Plaintiffs

AND

CARTER HOLT HARVEY LIMITED

Defendant

AND

AUCKLAND COUNCIL AND OTHER TERRITORIAL AUTHORITIES LISTED IN SCHEDULE 1 TO THE FIRST

AMENDED STATEMENT OF CLAIM BY THIRD DEFENDANT AGAINST FIRST TO FIFTIETH THIRD PARTIES

First to Fiftieth Third Parties

Hearing:

2 to 5 June 2020

Counsel:

JA Farmer QC, NF Flanagan, J Carlyon, EC Rutherford and KM Moon for Plaintiffs

DM Salmon, M Heard, ED Nilsson, HAT Bush and SGT Ma Ching for Defendant

Judgment:

2 July 2020

JUDGMENT (No. 9) OF FITZGERALD J

[As to pre-trial interlocutory applications – admissibility and discovery]

This judgment was delivered by me on 2 July 2020 at 3pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar ………………………………..     Date…………………………………..

Solicitors:           Meredith Connell, Auckland

LeeSalmonLong, Auckland

The Minister of Education v Carter Holt Harvey Limited [2020] NZHC 1539 [2 July 2020]

CONTENTS

Ministry’s challenge to the admissibility of Carter Holt’s evidence

Introduction and preliminary points  [7]

Category A – the causation evidence  [17]

Category A objections – submissions  [34]
Category A objections – discussion  [40]
Category B – the building practice evidence  [55]
Category B objections – submissions  [59]
Category B objections – discussion  [61]
Category C evidence – objections and submissions  [63]
Category C evidence – discussion  [68]

Miscellaneous objections  [76]

Carter Holt’s challenge to the admissibility of the Ministry’s evidence

Introduction and approach  [96]
Irrelevance – material not addressing the pleaded defects  [101]
Not evidence in reply

Introduction  [117]
 Reply evidence – principles  [120]
 Application to the Ministry’s reply evidence - overview  [137]

Reply evidence that is repetitive of evidence in primary briefs  [141]

Reply evidence which does not address new matters, but expands on or
 “bolsters” topics already discussed in primary briefs  [144]

Reply evidence which raises new matters/late testing evidence                   [169] “Late” testing evidence included in Ministry’s October 2019 briefs  [175] Ministry’s evidence as to Shadowclad’s performance on particular school buildings

Introduction and submissions  [187]

Discussion  [197]

Objections to hearsay statements  [207]

Gregory O’Sullivan  [208]
 Christopher Ross (reply brief)  [213]
 Peter Graham (reply brief)  [215]
 Jeanette Drysdale (primary brief)  [219]

Philip O’Sullivan (primary brief)  [221]

Robin Wakeling (primary brief)  [227]
 Thomas Wutzler (reply brief)  [228]

Ministry’s application for discovery related orders

Introduction and orders sought  [234]

Legal principles  [248]
Why the Ministry says there is evidence of ongoing systemic issues
warranting the orders sought  [258]

Search for documents held by a further custodian  [285]

Orders and result  [292]

Schedule A Schedule B

[1]    The defendant, Carter Holt, is the manufacturer and supplier of a cladding product called Shadowclad. Shadowclad was used to clad a number of buildings at schools around New Zealand. In these proceedings, the plaintiffs (who I will refer to collectively as “the Ministry”) say that Shadowclad is inherently defective and unfit for purpose, in that when it is used to clad school buildings by way of direct fix (that is, without a cavity), it causes or will cause those buildings to fail from a weathertightness perspective.

[2]    Carter Holt disputes that Shadowclad is inherently defective in the manner alleged. It says the issues the Ministry is experiencing with the weathertightness of school buildings is nothing to do with the inherent quality of its product, but is the result of a range of construction, installation and maintenance defects (which I will refer to collectively as “construction defects”).

[3]    There are more than 800 school buildings in issue. A six-month Stage 1 trial is scheduled to commence before me on 3 August 2020. Three key issues will be determined at the Stage 1 trial:

(a)whether Shadowclad is defective in fact;

(b)whether Carter Holt owes the Ministry a duty of care; and

(c)if the answer to (b) is “yes”, whether Carter Holt breached that duty by designing, manufacturing or supplying Shadowclad for use on school buildings.

[4]    In accordance with timetable orders leading up to the Stage 1 trial, the parties have each discovered a (very) large number of documents and exchanged briefs of evidence to be adduced at the trial. Those briefs of evidence, from 56 witnesses, extend to thousands of pages. Unsurprisingly in a trial of this nature, the vast majority of the evidence will be expert rather than factual evidence.

[5]    I have been case managing these proceedings since 2017 and have delivered eight earlier judgments on various interlocutory matters. There are presently three pre-trial interlocutory applications before the Court:

(a)first, the Ministry challenges the admissibility of aspects of Carter Holt’s briefs of evidence;

(b)second, Carter Holt challenges the admissibility of aspects of the Ministry’s briefs of evidence; and

(c)third, the Ministry seeks orders in relation to Carter Holt’s claims of privilege over discovered documents and in particular, that:

(i)Carter Holt provide an individualised factual explanation for each claim of privilege it has made; and

(ii)those explanations and the underlying documents are then reviewed by an independent barrister appointed for that purpose by the Court, who will then make recommendations to the Court on whether privilege has properly been claimed.

[6]I address the applications in the order set out above.

Ministry’s challenge to the admissibility of Carter Holt’s evidence

Introduction and preliminary points

[7]The Ministry’s application relates to three categories of Carter Holt’s evidence:

(a)Category A – being evidence to be called by Carter Holt about the cause of undue water ingress in particular school buildings (the “causation evidence”).1 The Ministry says the causation evidence is irrelevant,2 or if relevant, its probative value is outweighed by the risk it will

1      The bulk of the Ministry’s challenges to admissibility fall into this category.

2      Evidence Act 2006, s 7.

needlessly prolong the proceedings.3 The Ministry says the causation evidence does not support the proposition that Shadowclad does not routinely lead to undue water ingress; rather, it merely shows that the relevant school buildings also suffer from other defects and issues. It says that if this evidence is admitted, it will need to fully engage with it, including by way of extensive cross-examination, thus needlessly prolonging the proceedings.

(b)Category B – being evidence as to the Ministry’s procurement practices and management of its property portfolio (the “building practice evidence”). Again, the Ministry says this evidence is inadmissible on the grounds of irrelevance, or its probative value is outweighed by the risk of it needlessly prolonging the proceedings. The Ministry says this is because the evidence relates only to causation and/or Carter Holt’s affirmative defences which will not be determined at the Stage 1 trial.

(c)Category C – being evidence said to be inadmissible hearsay statements.

[8]    There are two preliminary matters on which it is helpful to comment before addressing each of the above categories of evidence:

(a)first, in an earlier judgment delivered by me on 25 February 2019, I addressed (as a matter of principle) the admissibility of the causation evidence (the “Admissibility Judgment”);4 and

(b)second, the approach to determining admissibility challenges pre-trial in civil proceedings.

[9]    At an earlier stage of these proceedings, and in light of indications by Carter Holt of the type of evidence it proposed to call at the Stage 1 trial, the Ministry sought orders that evidence as to the cause of water ingress in individual school buildings was

3      Section 8.

4      Minister of Education v James Hardie New Zealand Ltd [2019] NZHC 245.

irrelevant and thus inadmissible at the Stage 1 trial. In my Admissibility Judgment, I declined to make such an order, which was being sought in a vacuum without visibility of the actual evidence to be called. Rather, I noted that detailed evidence as to the fact that construction defects are causing undue water ingress in particular school buildings says nothing, at least in and of itself, about Shadowclad as a product and whether it is also contributing to or will in the future cause such water ingress. But despite this, I observed that the causation evidence was unlikely to be wholly irrelevant. The following extracts from my Admissibility Judgment are illustrative of the approach I took:

[37]      Is, therefore, the disputed evidence relevant and otherwise admissible? In a simple way, relevance can be tested by applying the following sequence of logic:

(a)Some school buildings have already suffered undue water ingress;

(b)Factors such as faulty design, construction and/or poor installation of Shadowclad are causing the undue water ingress; therefore

(c)Shadowclad is not a defective product in the sense alleged by the Ministry.

[38]      I accept Mr Farmer’s submission that there is a non sequitur in the above reasoning. Ultimately, I understood Mr Miles to accept this, acknowledging that evidence to the effect that other factors are causing undue water ingress would “beg the question” of whether Shadowclad was also a reason for that outcome.

[39]      That must be right. For example, evidence that Shadowclad has been improperly installed on dozens of buildings causing undue water ingress does not, in and of itself, say anything about whether Shadowclad as a product is contributing to the water ingress, or will in the future cause water ingress. All it demonstrates is that an allegedly faulty product has also been installed in a faulty manner and the latter is causing undue water ingress. Or using the car tyre and silicone breast implant examples referred to above, evidence that a faulty braking system is routinely causing some vehicles to lose road traction in wet conditions does not, in and of itself, say anything about whether the tyre on the same vehicle is also contributing to those effects, or even once the braking system is fixed, it will routinely have such effects. Nor does evidence that other external factors are causing serious health issues in a woman who has silicone breast implants mean the silicone breast implants are not also causing or contributing to (or will in due course cause or contribute to) the same health issues.

[40]       I do not agree with the Ministry, however, that the evidence Carter Holt proposes to lead is wholly irrelevant. The purpose for which it is to be led is in my view important. As noted above, Mr Miles says Carter Holt’s

experts’ primary evidence will be that they have seen nothing to suggest any observed undue water ingress is the result of Shadowclad’s alleged inherent defects (at least when properly installed and maintained). In support of that primary evidence, Carter Holt’s experts wish to also be able to say, in effect, that the Court can have confidence in their view that Shadowclad performs as intended because they can explain the observed water ingress by pointing to other factors. In this way, and as I understood Carter Holt to have advanced its argument, the disputed evidence is only to be deployed in the context of and for the purpose of supporting its experts’ primary evidence that the pleaded defects in Shadowclad do not routinely, or will not routinely, lead to undue water ingress in buildings to which it is affixed.

[41] Ultimately, and subject to any objection it might raise on the basis of s 8 of the Evidence Act once it sees the disputed evidence, the Ministry accepts that evidence of the type described at [12](b) above is relevant at the Stage 1 trial, including whether the pleaded inherent defects have caused buildings to fail to meet the performance requirements of the Building Code. To bolster its primary evidence that the pleaded inherent defects have not caused the buildings to fail, Carter Holt ought to be permitted to adduce supporting or corroborative evidence which suggests the failures are being caused wholly by other factors. I therefore accept that in a general sense, the disputed evidence, at least when deployed in the manner discussed, has some probative value in the context of the issues to be determined at the Stage 1 trial.

[42]      The Ministry is right, however, to be concerned that such evidence might seek to bring the issue of individual causation back into the Stage 1 trial. The Stage 1 trial is not concerned with detailed consideration of, or the making of findings on, the various causes of water ingress in particular school buildings. Detailed evidence of other causes of water ingress in a large number of individual buildings risks diverting attention from what will be a key question at the Stage 1 trial and the most probative evidence in relation to it – namely evidence directed to whether Shadowclad as a product is fit for its intended purpose.

[footnotes omitted]

[10]   The Ministry’s present challenge to the causation evidence must therefore be considered in the context of these observations.

[11]   As noted, the second preliminary point is the proper approach to pre-trial determination of admissibility of evidence in civil proceedings. This is relevant to both the Ministry and Carter Holt’s admissibility applications.

[12]   Simon France J examined these issues in his very recent judgment in Cridge v Studorp Ltd (delivered in April of this year), litigation not dissimilar to the present proceedings (involving a cladding product manufactured by James Hardie).5 As Simon France J noted, there is a degree of reluctance on the part of the Court to

5      Cridge v Studorp Ltd [2020] NZHC 794.

determine admissibility challenges on a pre-trial basis in civil proceedings, particularly challenges based on relevance.6 This is because determining these challenges will often require the Court to consider the challenged evidence in the context of all the evidence to be called at trial. This is particularly so in very large and complex proceedings such as. In such cases, it is generally unrealistic to expect the trial Judge to have a detailed knowledge or understanding of all the evidence at the pre-trial stage.

[13]   In Cridge v Studorp, Simon France J also made the following observations about the approach to determining admissibility challenges pre-trial with which I respectfully agree and accordingly adopt:

[11]              As noted, some cases – Air Chathams, Diagnostic Medlab and Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd – are proffered as examples of evidence being excluded prior to trial. I accept they are indeed that, but regard them of no particular precedent value. In the particular circumstances of each case the Court felt able to make a pre-trial decision concerning admissibility. In doing so, the Court was applying the principles already identified.

[12]              Mr Hodder accepts that evidence may be provisionally admitted with a final decision of admissibility deferred until a fuller context is known. For every decision in which evidence is excluded prior to trial, in civil proceedings, I have no doubt there will be more, by a considerable factor, where the decision has been deferred. There are good reasons for this. For example, relevance can be difficult to determine in advance. Applications to exclude on this basis prior to trial often simply reflect the lens the applicant party brings to the proceeding. A Judge, not at that stage as familiar with the material as counsel, will properly be hesitant to exclude for relevance.

[13]              On the requirement for an expert to be impartial, Air Chathams is an example where the Court felt able to determine a lack of neutrality solely on the basis of the brief. It was obviously a flawed brief. The Court described it as “studded with condemnatory remarks”. More often, however, it will be difficult to assess the issue without hearing from the witness, especially when the impartiality is said to be evidenced by only a few comments in a lengthy brief that otherwise complies. The danger of over-weighting incautious language must be borne in mind.

[14]              The same can be said for complaints about exceeding the scope of one’s expertise. Often it is not possible from the qualifications alone to discern the complete experience underlying a qualification, and oral explanation can clarify. Particularly with technical evidence, caution is needed before too hasty an assessment is made about whether the evidence falls within the scope of witness’s expertise.

6      At [6] and [12].

[15]              I accept the starting point is a party has an onus to ensure that its briefs of evidence on their face comply with the High Court Rules. It also should be acknowledged that there are both difficulties and costs for the other party confronted with a non-complying brief. It can be difficult to respond to submission presented in the guise of a brief, and ultimately unhelpful to the Court if the response manifests itself as opposing submissions also in the guise of a brief. Further, there may be unnecessary cost in producing expert evidence to counter evidence that either is not impartial or exceeds its proper scope.

[16]              Balancing this, and in addition to the reservations I have expressed about the ability pre-trial to accurately determine these matters, there are the policy concerns identified by Hammond J in Air Chathams:

[48] Judges are always hesitant to rule out a brief of evidence at the outset. First, one can never be completely confident that something might not be useful or matters might have been misperceived by the Judge at the outset. Secondly, Judges do not lightly turn away from the seat of justice matters of “evidence” which one side would like to have before the Court. This leads to a sense of grievance on the part of plaintiffs that they have not had their full day in Court.

[17]              Ultimately, in determining these applications, a Court returns to a need to strike a balance, bearing in mind there are firm rules about expert evidence that should be complied with. On the other hand, insistence of slavish adherence, with the need to amend and recast evidence that otherwise will just be ignored, is to be avoided.

[Footnotes omitted]

[14]   The difficulties inherent in ruling on admissibility challenges pre-trial is particularly acute in this case given the sheer volume of evidence that has been exchanged between the parties and the sheer volume of the admissibility challenges each party has made. By way of example, on Carter Holt’s admissibility application, a schedule listing the individual challenges extends to more than 100 pages. Accordingly, while the parties were in agreement that all their admissibility challenges ought to be dealt with pre-trial and on a challenge-by-challenge basis, that is, with respect, simply unrealistic.

[15]   Given the issues noted by Simon France J and the particular difficulties inherent in this case, I have deliberately adopted a cautious approach to ruling evidence inadmissible on the present applications. In some instances, I have been able to accurately assess the admissibility of the evidence and I have made rulings accordingly. But for many of the challenges, it would be inappropriate or is simply impossible to rule on admissibility pre-trial. Accordingly, admissibility challenges on

which I have not ruled in this judgment will need to await trial.7 I would hope, however, that the broader observations I have made in this judgment assist the parties to winnow down the scope of challenged evidence to focus on that of real significance.

[16]I turn now to the specific Carter Holt evidence to which the Ministry objects.

Category A – the causation evidence

[17]   This aspect of the Ministry’s challenge largely concerns the evidence to be given by Neil Alvey and Frank Wiemann.8

[18]   Before addressing Messrs Alvey and Wiemann’s evidence, it is relevant to note that the Ministry’s core building expert evidence will focus on buildings from four case study schools (which I will refer to as the “Stage 1 buildings”), one test hut constructed  specifically  for  the  purpose  of  this  litigation  and  approximately    18 additional school buildings.9 It is also relevant to note that the Ministry does not challenge the admissibility of Carter Holt’s specific building evidence detailing well- built and apparently well performing Shadowclad buildings, or evidence that the damage observed in particular schools relied on by the Ministry to demonstrate Shadowclad’s alleged defects has in fact been caused or contributed to by factors other than Shadowclad.

[19]   Mr Alvey is a building surveyor who until recently was the principal of Kaizon Limited (Kaizon). Kaizon was engaged by Carter Holt in 2013 to inspect the Ministry’s school buildings. Mr Alvey personally inspected 107 of the Ministry’s school buildings clad in Shadowclad, as well as the four Stage 1 buildings and the test hut. He also inspected wall models made of Shadowclad and discussed by Thomas Wutzler, a witness to be called by the Ministry.

7      Pursuant to s 14 of the Evidence Act 2006, evidence may be provisionally admitted. Remaining challenges to admissibility can be dealt with at trial, on a witness by witness basis in closings, or by way of rulings in my substantive judgment.

8      Excluding schedules, Mr Alvey’s brief of evidence is 246 pages in length. Mr Weimann’s brief of evidence is 120 pages in length.

9      As discussed later in this judgment, Carter Holt objects to the admissibility of the Ministry’s evidence on these additional school buildings. I say there are “approximately” 18 of these additional buildings, as there was some dispute at the hearing about how many of them the Ministry experts will give evidence on. But whether it is 18, 20 or 22 additional buildings is not material to determining Carter Holt’s admissibility challenge.

[20]   Mr Alvey is of the opinion that Shadowclad, when properly installed and maintained, will meet the weathertightness requirements of the New Zealand Building Code.10 He says the Ministry’s case that Shadowclad compliant buildings will still leak is inconsistent with his inspection of a large numbers of school buildings. The following extracts from section 5 of his brief of evidence (“Summary of the basis for my evidence”) is indicative of the overall thrust of his opinion:

Performance of Shadowclad from my inspections

5.7Having inspected a large number of buildings clad in Shadowclad, I am of the opinion that Shadowclad, when properly installed, will perform and meet the requirements under the Building Code. When it is installed correctly in accordance with the building consent documentation and good trade practice the cladding both does not allow water entry and remains durable. When it is installed incorrectly, especially when there are multiple defects in installation, water entry is inevitable. It is no different to any other cladding product in this respect.

5.8While the majority of buildings I have seen were being subjected to repairs for the reasons set out above, I have seen Shadowclad performing with no evidence or signs of any ingress or damage to buildings, or large parts of buildings. On occasions the buildings had defects in construction some of which led to isolated water ingress.

5.9Berkley Normal Middle School Block A, Classroom 7 (B0022), Frankton School Block G (B0105), Lucknow School Block D (B0271), and Snells Beach School classroom blocks Kahikatea, Kauri, Manawa and Puriri and the Administration and Library Block are all examples of buildings that are reasonably constructed and largely performing. I have described these buildings further in Schedule 3 to this brief of evidence.

5.10The Snells Beach School buildings were inspected under the amended inspection protocol as non-claim buildings. It appears that they had been investigated by the plaintiffs’ experts who had carried out extensive sheet removal and destructive testing, but they were excluded from the claim despite being clad in direct-fix Shadowclad.

Widespread design, construction and maintenance issues

5.11The common theme throughout all of my investigations is that there has been a significant lack of proper design, construction and use of Shadowclad when installed on school buildings. Almost all of the buildings I inspected had significant installation issues which either

10     For ease of reference, I will refer to buildings on which Shadowclad has been properly installed and maintained as “Shadowclad compliant buildings”.

presented a weathertightness or durability risk, or which had resulted in the failure of the building envelope and water ingress or damage of the kinds alleged by the plaintiffs. It was not surprising to find that the buildings were failing, because of how poorly they had been designed, built and maintained.

5.12In many cases, the installation issues reflected failures to adhere to CHH’s specifications, or poor design or building practice or workmanship. The errors were so basic that they indicated a complete disregard to CHH’s specifications and standard industry practices for the installation of cladding. Similarly, maintenance on many schools was poor, resulting in the premature deterioration of the cladding and other building elements.

Causes of failure on school buildings

5.13The failure of the school buildings within the claim in my experience has been a result of:

(a)Multiple defects in construction and design;

(b)Poor build quality;

(c)Failures to follow the building consent documentation;

(d)Incomplete building consent documentation;

(e)A lack of appropriate maintenance of the building in question; or

(f)A combination of the above.

[21]   The Ministry does not object to paragraphs 5.7 to 5.10 in the above extract, but says paragraphs 5.11 to 5.13 are inadmissible, together with following paragraphs in which Mr Alvey expands on the type of construction defects he has observed in school buildings.

[22]Mr Alvey then goes on to state:

Kaizon’s findings are consistent with Ministry reports

5.20      Kaizon’s findings are consistent with the findings and the conclusions of the reports commissioned by the Ministry from Prendos and Hampton Jones, and which I understand served as catalysts to this proceeding.

5.21      The Prendos report is dated 7 February 2011. It was based on a visual survey of 1,074 buildings constructed or modified after 1994 at 199 schools in the Auckland area. A copy of the report can be found at document

[PL00100180]. The buildings surveyed by Prendos were not limited to buildings clad in Shadowclad.

5.22      The report indicated that building defects were present in many of the school buildings surveyed, including as a result of poor building practices. The executive summary at page 4 includes the following observation:

This survey indicated that building standards in schools are poor, due to a combination of high risk materials, poor tradesmanship, and non- durable designs. The incidence of buildings requiring repair is very high, typically higher than observed in the residential sector, even for normally reliable material such as brick.

5.23It continues at pages 5-6:

…[S]chools have been using building techniques that have a high failure rate, such as untreated timber, fibre cement with unreliable joints, multiple and complex junctions, blocked weep holes on internal drainage cavities, among other factors. We observe that the residential sector has greatly improved its weathertight performance since 2004 due to changes in design standards and compliance, primarily E2/AS1. However schools are predominantly built by commercial contractors working to different standards, and while some change has occurred since 2004 (notably use of treated timber in framing), our survey observed a significant number of defects allowing water ingress into school buildings, even from recently built projects.

5.24      At page 10 under the heading “The problem”, the report notes that design issues, such as back sloping soffits are typical in the school buildings surveyed. The report does not provide details of specific defects in any of the buildings inspected. However, at section 3, “Findings”, it makes clear that defects were found to be present in a high percentage of buildings irrespective of cladding type (see page 15), including cladding materials which are generally considered “robust” to weathertightness issues, such as brick (see page 16).

5.25      The Hampton Jones report is dated April 2012.3 It is based on a visual survey of 6,130 buildings constructed or modified after 1994 at 1,592 schools across the country. Like the Prendos report, the survey was not limited to buildings clad in plywood. The report contains fewer details as to defects, but makes a similar observation as to design practices in respect of school buildings. At page 11, it notes:

It was observed during the National Survey that many school buildings are designed with the objective of conveying a certain image. This could be due to cultural influence or the desire to give an impression of a modern or innovative environment. These aspirations for school buildings often do not align with good weathertightness principles

[23]The Ministry does not object to this part of Mr Alvey’s brief.

[24]   The balance of Mr Alvey’s brief of evidence addresses each of the alleged inherent defects in Shadowclad listed in schedule 2 to the Ministry’s statement of claim. His discussion of each alleged defect generally follows the following format:

(a)some introductory comments about the defect;

(b)his opinion that he has not seen the alleged defect in Shadowclad when correctly installed and maintained (and giving “good” examples where that is the case);

(c)that in many school buildings he has inspected, a range of construction defects exist which he considers is causing the undue water ingress that can be observed (and giving “bad” examples of this); and

(d)a response to the Ministry’s experts’ evidence in relation to the alleged defect.

[25]   The Ministry generally objects to those parts of Mr Alvey’s evidence which fall into (c) above (together with two schedules to Mr Alvey’s brief in which he lists each building he has inspected and “checks” a box as to whether he has seen various construction defects in each building, or summarises the school buildings suffering from construction defects on a defect-by-defect basis).11 The Ministry’s objections are sometimes to a whole paragraph or a series of paragraphs of Mr Alvey’s brief, or in some instances, to a particular sentence within a paragraph. Generally, the Ministry has not objected to a statement of the specification requirements for installation or maintenance of Shadowclad12 or to Mr Alvey’s evidence of problems that can arise generally where those specifications are not met,13 but does object to his discussion of such requirements not having been met in particular buildings he has inspected and

11 Schedule 4 (“Buildings I have inspected and issues found”) and Schedule 6 (“Table of defects  found on school buildings”). The Ministry does not object to Schedule 3 (“Examples of well constructed buildings”) or Schedule 5 (“Non claim buildings I have inspected”).

12 For example, the Shadowclad specification requirements as to ground level clearances, at 8.13 to

8.15 of Mr Alvey’s brief of evidence.

13 For example, paragraph 8.16 of Mr Alvey’s brief of evidence, excluding the first sentence; paragraph 8.21, excluding the last sentence; paragraph 8.61, excluding the last sentence; paragraph

25.56 excluding the last sentence; paragraph 32.4.

water ingress occurring as a result.14 The objection to this latter aspect of Mr Alvey’s evidence is not universal, however. There are aspects of Mr Alvey’s brief of evidence in which he discusses construction defects he has seen in school buildings to which the Ministry does not object.15 Or, where Mr Alvey gives a general view as to problems he has seen in school buildings he has inspected (which is not objected to),16 and then a specific reference to a particular school building (which is objected to).17

[26]   As noted, the balance of the Ministry’s challenge to the category A evidence is largely found in Mr Wiemann’s brief of evidence.

[27]   Mr Wiemann is a registered building surveyor and a director of sectionOne Limited, a building surveying firm. Carter Holt engaged him in 2017 to carry out inspections of the Ministry’s school buildings which are the subject of this  claim. Mr Wiemann has inspected 84 school buildings, the test hut, certain wall models constructed by the Ministry’s experts, as well as three of the four Stage 1 buildings. 63 of the 84 school buildings Mr Wiemann has inspected form the basis of parts of his brief of evidence.

[28]   The following extracts from Section 2 of Mr Wiemann’s brief (“Summary of my opinions”) provide an overview of his evidence:

2.1        I understand that the plaintiffs have alleged that Shadowclad routinely fails to perform and meet the requirements of the Building Code and other relevant standards due to alleged inherent defects when installed on light buildings in a direct-fix application.

2.2        In short, I do not consider that the pleaded defects have been demonstrated. My opinion is informed by the large number of inspections I have carried out.

2.3        When Shadowclad is installed correctly according to CHH’s technical documents and the requirements of the Building Code, and in accordance with good design principles, good building practice and normal maintenance, I expect that it will meet the durability and relevant requirements of the Building Code.

14 For example, the first sentence of 8.16 of Mr Alvey’s brief of evidence; the last sentence of paragraph 8.21 to 8.23; the last sentence of paragraph 8.61; the last sentence of paragraph 25.56; paragraphs 32.5 and 32.6.

15 See, for example, paragraphs 8.31, 8.34, 8.66(a) to (c), 15.17 and 22.7.

16     See, for example, paragraph 24.15.

17     See, for example, paragraph 24.15.

2.4        I have identified weathertightness issues and damage at a large number of the schools that I have inspected. However, almost without exception these issues were present where there were faults in design, workmanship, or maintenance.

2.5        All school buildings I inspected showed some, and often severe installation defects, negatively affecting the performance of the Shadowclad sheets and often resulting in significant damage to both the sheets and the buildings. Many buildings also had basic design issues which contributed to water ingress.

…

2.17      Based on my inspections I consider that Shadowclad is leaking where multiple of the installation issues I have set out are present, often compounded by poor maintenance. The installation defects that individually would not necessarily have affected the performance of the cladding were found to be the overriding cause of water ingress when considered in combination.

2.18      In my view, the weathertightness issues seen on school buildings are not a result of any inherent defects in the Shadowclad product but are due to a combination of separate departures from good practice, Building Code requirements and CHH’s installation requirements.

[29]   The structure of Mr Wiemann’s brief then follows a similar format to that of Mr Alvey, in that he goes on to comment on each of the alleged inherent defects in Shadowclad and in relation to each, comments on the specification requirements for installation and maintenance, and expresses his opinion that when these requirements are met undue water ingress is highly unlikely. He then goes on to say that during his inspections, he often observed construction defects which mean the specification requirements were not met and that “a combination of [these] defects has caused water ingress at all of the sites that I destructively inspected.”18 For some of the alleged defects, Mr Wiemann gives examples of where specification requirements have been met and where he says no undue water ingress is evident. He generally concludes that the water ingress caused and damage observed at school buildings was a result of other construction defects and is not an example of any inherent defects in Shadowclad.19

[30]   Mr Wiemann’s brief of evidence also contains a section in which he comments on the Ministry’s evidence in relation to two of the Stage 1 buildings. The overall thrust of this aspect of Mr Wiemann’s evidence (in which he gives a range of examples

18     Paragraph 8.16 of Mr Wiemann’s brief of evidence. The Ministry object to this paragraph, as well as its surrounding paragraphs.

19     Paragraph 8.59.

of construction defects at those school buildings) is that the damage to the Stage 1 buildings has been caused by poor installation and maintenance, rather than inherent defects in Shadowclad or Carter Holt’s technical literature.20

[31]   The Ministry’s objections to Mr Wiemann’s evidence follow a similar pattern and theme to those it has made to Mr Alvey’s brief of evidence. The Ministry objects to those aspects of Mr Wiemann’s evidence which deal with construction defects in the school buildings. The objections are largely to whole paragraphs or sections of Mr Wiemann’s brief of evidence, and are not so “granular” as many of those to     Mr Alvey’s brief.21

[32]   Minor objections are taken to what the Ministry says is also causation evidence in other Carter Holt briefs of evidence. The Ministry objects on this basis to nine paragraphs in Paul Barnett’s brief,22 and four paragraphs in Peter Jordan’s brief.23

[33] The Ministry does not object to that section of Mr Wiemann’s brief discussed at [29] above, or any of the examples he gives of construction and installation defects.

Category A objections – submissions

[34]   Mr Farmer QC, senior counsel for the Ministry, submits that Carter Holt’s causation evidence falls squarely within the type of evidence I indicated in my Admissibility Judgment would not be admissible, or at the very least would be of low probative value. He says it suffers from the very non sequitur discussed in those aspects of my Admissibility Judgment set out at [9] above. And to the extent Mr Alvey and Mr Wiemann in particular purport to give “primary” evidence that Shadowclad is not inherently defective with the causation evidence deployed in a “supportive” or

20 Paragraph 29.4.

21 My overall impression is that a greater proportion of Mr Wiemann’s evidence addresses construction defects than Mr Alvey’s evidence, which may explain the slight difference in the nature of the Ministry’s objections to each.

22 Mr Barnett’s brief is 19 pages long. The paragraphs objected to largely relate to alleged lack of maintenance at school buildings.

23 Mr Jordan’s brief is 62 pages long. The paragraphs objected to contain high level observations of construction defects in 99 schools Mr Jordan has inspected, and that he considers there also to have been maintenance failures by the schools. While Mr Jordan lists the school buildings he has inspected in a schedule to his brief, the schedule does not contain any detail in relation to the alleged construction defects said to exist at each of the schools.

“collaborating” role, Mr Farmer says that in substance, the causation evidence  is   Mr Alvey and Mr Wiemann’s primary evidence; that is, there is no other support for their conclusion that Shadowclad is not inherently defective other than the fact that the school buildings suffer from a range of construction defects.

[35]   Mr Farmer says the causation evidence is therefore inadmissible. But even if the Court were to conclude it has some, albeit limited, probative value, he submits that s 8 of the Evidence Act 2006 (the Act) is engaged, given leading the causation evidence and, importantly, the need to respond to it, will needlessly prolong the proceedings. Mr Farmer submits for example, that in relation to the schedules attached to Mr Alvey and Mr Wiemann’s briefs of evidence, the Ministry will be required to critique that evidence building-by-building, elevation-by-elevation and defect-by-defect, including as a result of the Ministry’s cross-examination obligations under s 92 of the Act.    Mr Farmer says the Court could not have any regard to the  conclusions  drawn by Mr Alvey and Mr Wiemann unless their evidence had been tested by the Ministry in this way. Mr Farmer says that is the very approach I rejected in my Stage 1 judgment.

[36]   Carter Holt accepts that it has taken a different approach to the evidence overall to the Ministry. Carter Holt says the Ministry is trying to demonstrate that Shadowclad is inherently defective largely by laboratory and other similar testing, whereas Carter Holt’s experts are looking at the performance of Shadowclad in “the real  world”.  Mr Salmon, senior counsel for Carter Holt, accepts that in that sense, the parties are “ships in the night”. But at least in relation to the Ministry’s building specific evidence, Mr Salmon says that just as the Ministry’s experts are giving evidence of their observations of building performance in the real world, so too are Mr Alvey and Mr Wiemann.24 Mr Salmon says it cannot be the case that the Ministry’s building specific evidence is admissible but Carter Holt’s is not. If Carter Holt’s causation evidence is excluded, Mr Salmon says this would mean the only evidence at trial of Shadowclad’s performance “in the real world” will have been driven by the Ministry’s selection of school buildings which would be highly prejudicial to Carter Holt.

24     The Ministry says that its building specific evidence is not evidence of building performance, but rather of Shadowclad’s performance on particular school buildings.

[37]   In terms of the particular aspects of Mr Alvey and Mr Weimann’s evidence to which the Ministry objects, Mr Salmon submits the causation evidence is advanced in the supporting or contextual role envisaged in my Admissibility Judgment. By way of example, he notes that Mr Alvey gives evidence of a number of Shadowclad compliant buildings which are not suffering undue water ingress and which tend to prove that Shadowclad is not inherently defective, and then contrasts this with his evidence of his inspections of buildings with construction defects and where undue water ingress is occurring.25 Mr Salmon says this approach informs Mr Alvey’s primary opinion that Shadowclad does not, for example, “absorb and retain problematic amounts of moisture when properly designed and installed”. In other words, and as Mr Salmon emphasised in his oral submissions, it would be inappropriate to look at the challenged evidence in isolation, rather than in the broader context of the witness’s entire evidence. Mr Salmon also rejects the suggestion that Carter Holt’s evidence as a whole “ignores” Shadowclad as a product, and says the causation evidence also needs to be considered in the context of Carter Holt’s evidence overall, much of which is directed to Shadowclad’s inherent characteristics. Viewed in this broad way, he says it is clear that the causation evidence, which forms a relatively small part of Carter Holt’s evidence overall, is being deployed in a supporting role.

[38]   Mr Salmon further submits that evidence of alleged maintenance issues on school buildings not only provides critical context to whether reliable conclusions can be drawn about Shadowclad as a product, but is also relevant to the contractual matrix into which Shadowclad was sold and whether it is fair, just and reasonable for the Court to find that Carter Holt owes the schools (as end users) a duty of care. And while accepting that the Supreme Court stated that vulnerability as part of the proximity analysis is to be assessed by likely plaintiffs as a class (and not any particular plaintiff),26 Carter Holt will argue that the Crown is in a “class of its own”

25     Mr Salmon notes that the smaller number of compliant buildings addressed by Mr Alvey and     Mr Wiemann simply reflects that there are not very many such buildings in the overall pool of buildings the subject of this claim.

26 Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [54], citing Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 [Spencer on Byron] at [197]–[198].

as a plaintiff.27 It will therefore argue that the Ministry’s maintenance policies are relevant to the duty of care assessment. Mr Salmon says these points are of particular relevance to the Ministry’s challenge to aspects of Mr Barnett’s evidence.

[39]   Finally, Mr Salmon also queries the Ministry’s submissions on the need to cross-examine witnesses on the causation evidence, at least to the detailed extent suggested. He notes that the Ministry has always accepted that the school buildings suffer from a range of construction defects so that the overall thrust of the causation evidence ought not to be in dispute. This is particularly so given the Stage 1 trial will not be determining or making findings on individual causes of undue water ingress in individual school buildings. Mr Salmon says the proper focus of the cross- examination would be what inferences or conclusions can be drawn from the experts’ overall evidence as to what they observed during their inspection of school buildings.

Category A objections – discussion

[40]I decline to rule the causation evidence inadmissible. My reasoning follows.

[41]   First, I accept the Ministry’s submission that detailed evidence of construction defects in school buildings which are causing undue water ingress does not, in and of itself, say anything about the performance of Shadowclad as a product. I reached that conclusion in my Admissibility Judgment. But I also concluded that, when deployed for the purpose identified in that judgment, causation evidence would have some probative value. Ultimately, so long as the evidence passes the gateways of ss 7 and 8 of the Act (and s 25 in the context of expert evidence), how Carter Holt chooses to meet the Ministry’s case is a matter for it.

[42]   I have carefully reviewed Mr Alvey and Mr Wiemann’s briefs of evidence. They both, and Mr Alvey in particular, advance a primary view or conclusion as to the performance of well-constructed buildings which they say do not leak (which I will refer to as their conclusion “A”), and then contrast that with the performance of poorly constructed buildings which they say do leak (which I will refer to as their conclusion

27     Referring to Williams J’s recent judgment in Stafford v Accident Compensation Corporation

[2020] NZCA 164 at [158]–[394].

“B”). The witnesses say, in effect, that it is proper to infer from conclusions A and B that it is not Shadowclad which is causing buildings to fail to comply with weathertightness requirements, but the construction defects which they have identified. And while the Ministry says that the very foundation for Mr Alvey and Mr Wiemann’s conclusion “A” is thin, or is in fact conclusion “B”, I consider that a matter for trial.

[43]   The relevance of the challenged aspects of Mr Alvey and Mr Wiemann’s evidence must also be considered in the context of Carter Holt’s evidence as a whole. I for one certainly do not have any real sense at this time of the detail of Carter Holt’s evidence overall, which is dense technical evidence to be given by some 33 (mainly expert) witnesses.

[44]   I also consider that some aspects of the Ministry’s objections are, prima facie at least, illogical or inconsistent. For example, there are aspects of Mr Alvey’s evidence where he discusses, at a general level, problems which occur if Shadowclad specifications are not followed (evidence which is not objected to by the Ministry), followed by examples of those problems occurring in actual schools (evidence which is objected to). Further, some of the objections are to parts of paragraphs only (for example, one or two sentences) and I agree with Mr Salmon that such a “surgical” approach to pre-trial admissibility rulings is unwise and could leave aspects of the briefs incoherent.

[45]   Carter Holt also says some of the challenged evidence is deployed not for the purpose of assessing whether Shadowclad is defective in fact, but whether Carter Holt owed a duty of care to the end user schools. This is particularly so in relation to evidence of maintenance policies and programmes. As noted, Mr Salmon suggested that this is relevant to the contractual matrix which the Supreme Court emphasised would be relevant to whether a duty of care ought to be found. At least as a matter of first impression, the Ministry’s maintenance programmes or policies would not appear to fall within the contractual matrix, which is more to do with the relationship between the parties (being the focus of the proximity inquiry overall). As noted, Carter Holt will also argue that maintenance programmes and policies is relevant to the question of vulnerability. As far as I am aware, matters such as these have not been advanced

by Carter Holt previously as relevant to the duty of care inquiry. Ultimately, however, whether evidence concerning the Ministry’s maintenance programme and policies is relevant to the duty of care inquiry is not something I can or ought to rule on in this pre-trial judgment. This is particularly so given the Supreme Court has emphasised that the two stage analysis used to determine whether a duty of care is imposed provides a framework, not a straightjacket.28

[46]   Turning to s 8 of the Act, can I be satisfied at this stage that the probative value of the causation evidence is outweighed by the risk it will needlessly prolong the proceedings?

[47]   I do not consider there is a risk Carter Holt leading the causation evidence will needlessly prolong the proceedings. The evidence forms a relatively small part of  Mr Wiemann’s brief overall, and an even smaller proportion of Mr Alvey’s brief overall. The evidence concerning the Ministry’s maintenance policies is more limited in scope again. The Category A challenged evidence accordingly forms a relatively small part of Carter Holt’s evidence as a whole. There was no suggestion by either party that Mr Alvey or Mr Wiemann would need to be taken through each line entry of the schedules to their briefs of evidence. The reading of the Category A challenged evidence will not in my view adversely or materially impact the length of the trial.

[48]   The Ministry’s main concern was the need for it to cross-examine the witnesses on these aspects of their evidence and the extent of cross-examination required. I do not agree, and consider the Ministry somewhat overstates the issues arising in this context.

[49]   Mr Farmer first referred to the Ministry’s duty to cross-examine Carter Holt’s witnesses on the causation evidence. But there are pragmatic limits on the cross- examination duties contained in s 92 of the Act. Cross-examination is required only on “significant matters… in issue” in the proceedings.29 The individual causes of water ingress at individual school buildings are not in issue at the Stage 1 trial and no

28     North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 [The Grange] at [149]. The two “stages” are proximity between the parties and policy considerations.

29     Section 92(1).

findings will be made on those matters. What is a significant matter and “in issue” in the proceedings is what inferences can properly be drawn from the causation evidence, in the context of the evidence as a whole, on whether Shadowclad is an inherently defective product. The Ministry will no doubt wish to cross-examine witnesses such as Mr Alvey and Mr Wiemann on the inferences and conclusions they have drawn in this regard.

[50]   Further, the Court of Appeal has observed that the duty embodied by s 92(1) of the Act was intended to give a witness the opportunity “to respond to evidence that is to be called later”.30 In that way, the rule is designed to “protect the interests of the party that has called the witness, not the interests of the party who is cross-examining the witness”.31 There will be no contradictory evidence “to be called later” by the Ministry on individual construction or installation defects on individual school buildings which, out of  a matter of fairness, ought to be put to witnesses such as   Mr Alvey and Mr Wiemann. In that sense, the cross-examination duty suggested by the Ministry does not arise. Rather, and as the Court of Appeal has noted, whether (and to what extent) a party cross-examines an opposing witness on topics where there is no duty to do so will be a matter of trial tactics.32

[51]   Accordingly, the extent to which the Ministry cross-examines on the causation evidence is a matter for it. Its view that the causation evidence is irrelevant, or at least of marginal probative value, may inform the extent to which it engages in this task. Further, whether cross-examination on the causation evidence triggers the sort of prejudice required to exclude otherwise relevant evidence is to be considered in the context that the Ministry accepts that many school buildings in the claim suffer from construction defects.33

[52]Whether the probative value of evidence is outweighed by the risk it will

needlessly prolong the proceedings ultimately involves a balancing exercise. I have

30 R v Stojanovich [2009] NZCA 210 at [22].

31 At [22].

32 Martin v R [2015] NZCA 606 at [44].

33 See, for example, Carter Holt Harvey Ltd v Minister of Education [2015] NZCA 321, (2015) 14 TCLR 106 at [22]; Ministry of Education v James Hardie [2019] NZHC 245 at [23]; Mr Gregory Sullivan’s affidavit sworn in these proceedings and dated 19 December 2017 at [22]; Ministry’s submissions on the present application, at [3.31].

concluded that the risk that cross-examination on the challenged evidence will “needlessly” prolong the proceedings is overstated. And as Hammond J made clear in Air Chathams, Judges “do not lightly turn away from the seat of justice matters of ‘evidence’ which one side would like to have before the Court.”34 Hammond J’s comment that to do so can lead to a sense of grievance on the part of plaintiffs that they have not had their full day in court applies equally to defendants. Carter Holt is facing a very significant claim by the Ministry. The Category A challenged evidence is an important aspect of Carter Holt’s defence to the claim. The Ministry of course says the causation evidence does not meet its claim that Shadowclad is an inherently defective product. But how and on what basis Carter Holt chooses to defend that allegation it is a matter for it. Accordingly, even if the causation evidence prolongs the proceeding (and there was no suggestion admitting it would mean the proceeding would extend beyond the current six-month fixture), I do not consider it would “needlessly” do so.

[53]   For completeness, the Ministry also suggests that admitting the causation evidence would needlessly prolong the proceeding given the Councils would no doubt wish to be heard, because they could be affected by any findings made in respect of the relevant buildings. But no specific findings will be made as to the cause of any particular water ingress on particular school buildings. And Carter Holt has agreed with the Councils that it will not hold the Councils to any such findings in any event made at the Stage 1 trial, in which the Councils are not participating.

[54]   In conclusion therefore, and taking into account the very real difficulties in accurately determining pre-trial challenges to admissibility on the grounds of relevance (particularly when that is complex expert evidence); that the causation evidence is likely to have some probative value; that it has not been suggested the causation evidence will prolong the proceedings beyond the current scheduled fixture; and coupled with the policy considerations noted above, I decline to rule that the causation evidence is inadmissible.

34     Air Chathams Ltd v Civil Aviation Authority of New Zealand (2003) 16 PRNZ 676 (HC) at [48].

Category B – the building practice evidence

[55]   The building practice evidence is much more limited in scope than the Category A evidence and concerns funding arrangements or budget decisions made by the Ministry in relation to its property pool. The objections relate to a small number of paragraphs  within the evidence to  be  given  by Mr  Barnett, Mr  Higgins  and  Mr Aitken.

[56]   Mr Barnett’s brief of evidence is 19 pages long. The Ministry object to eight paragraphs of his proposed evidence. Those paragraphs:

(a)Provide Mr Barnett’s opinion on a five-year property programme, as a planning tool for capital works.  The  Ministry  does  not  object  to Mr Barnett’s reference or description of the property programme but objects to his opinion as to it effectiveness.

(b)Provide an overview of a new procurement model for school contracts and Mr Barnett’s view on the impact of this model on the quality of school buildings. Again, the Ministry does not object to the general overview of the procurement model but objects to Mr Barnett’s opinion in relation to it.

(c)A brief description of Mr Barnett’s role in project management of school construction contracts and changes in policies or guidelines which he states were intended to shift responsibility for project management to Boards of Trustees. The paragraphs objected to set out Mr Barnett’s concerns at the time of how the Ministry was managing its property portfolio, including maintenance.

[57]   Mr Higgins’ brief of evidence is 67 pages long. The Ministry objects to nine paragraphs within it. Those paragraphs relate to Mr Higgins’ experience working on Ministry projects over the last 20 years, including as the Ministry’s agent in running procurement processes. Mr Higgins provides a general overview of the tender process employed and in which he was involved, including that it adopted a lowest cost bid

approach. Mr Higgins outlines his opinion of the risks involved in such an approach, both to the principal and contractor.

[58]   Mr Aitken’s brief of evidence is 30 pages long. The Ministry objects to one paragraph within it. That paragraph forms part of a broader discussion of the role of manufacturers’ literature in the design stage of a construction project. Mr Aitken states that he has been involved in a number of education projects in which the Ministry requested cost savings which he considered led to premature failings of building elements (citing Botany High School as an example).

Category B objections – submissions

[59]   The Ministry says the building practice evidence is irrelevant in that despite trying to “join the dots” between the way in which the Ministry financed and resourced its projects, the ways in which the Ministry maintained those buildings and the damage caused to school buildings, the evidence says nothing about Shadowclad as a product. The Ministry did not suggest that if the evidence has some probative value, that is outweighed by a risk its admission would needlessly prolong the proceeding.

(d)        Mr Coveny’s reply brief of evidence

4.3 Irrespective of the exact cause, Mr Hackney agrees that sharp edges present particular difficulties and that this is a well known feature of acrylic paints, but he says that “normally as more coats are applied the corner does eventually get covered”. I do not agree. In my view, the difficulties of painting the corner are such that it will always have a lesser paint film, thereby reducing the coating’s protective effect at the edge. The much thinner coating at the edge is illustrated in the photographs in my brief of evidence. In order to achieve a film build of 100µ at corners, the reasonably experienced and conscientious painter referred to in Mr Hackney’s brief would need to paint slowly with a brush at every corner, applying a number of coats, which would be an exhaustive and time consuming process.

4.14 Despite this, Mr Hackney acknowledges that best painting practice “is not perfect for coating the edges and grain ends of timber claddings” but a “satisfactory job” can be obtained. However, even then “maintenance is key and it appears that the maintenance needs to be carried out by a “reasonably competent painter” who is said to be

responsible for inspecting and recoating the edges. This confirms the particular difficulties posed by the bottom edge and the care and attention required to ensure an adequate coating. I have read the panel edge moisture absorption testing results section of Messrs Hubbs and Finch’s brief of evidence. The testing results show effectiveness of edge coating and back priming that broadly conforms with my expectations. I am of the view that the product design needs to take into account some absorption of water regardless of paint coating. Also, I analysed the bottom of new pre-primed Shadowclad sheets in 2016. Even Carter Holt’s own pre-primed sheets had problems, including voids and pinholing within the coating exposing the end grain of the vertical veneers and cracks.

(e)        Mr Wutzler’s reply brief of evidence

96.Mr Alvey states that the Shadowclad specifications only allow unpainted edges when the sheets were not intended to be painted or when used for structural purposes. I disagree that this is clearly stated in the Specifications. In my opinion the specifications required painting of bottom edges and sheet laps only leaving the top edges of sheets unpainted.

97.Each of the Specifications included a statement (in a section referring to “preparation of the sheets”) to:

Prime or precoat bottom edges of sheets and inside shiplap joints if painting or staining, see painting recommendations. (My emphasis.)

98.That is an express restriction of priming or precoating to bottom edges.

99.I acknowledge that a later statement in each Specification (in reference to painting the sheets) refers to the fact that “laps and edges should be sealed” (or words to that effect). The wording was not restricted to “bottom” edges but I consider that the direction to prime or pre-coat bottom edges suggests that the sealing of edges only applies to bottom edges.

100.I have set out the wording which appeared in each Specification relating to the priming of bottom edge:

(f)        Mr Philip O’Sullivan’s reply brief of evidence

7.3Neither of these really addresses the issue. In response to the first, I consider that it is incumbent upon a manufacturer such as CHH, marketing and selling a cladding system; to design that system in such a way that buildings built using it will comply with the Building Code. If the cladding sheets CHH manufactures cannot incorporate a larger weathergroove, then an alternative means of keeping the joint weathertight may be required, or the depth of the sheets may need to be increased.

7.4As to the second point above, it is correct that that Acceptable Solution E2/AS1 did provide for the use of the vertical shiplap joint from July 2005. However, as noted in my First Brief, at [15.18], the shiplap joint was removed from the Acceptable Solution from August 2011. So between 2005 and 2011 the shiplap joint was allowed, but only in low risk situations when directly fixed over building wrap to framing, and there had to be a rear air barrier. In moderate and higher risk situations, a drained and vented cavity had to be included.

7.5As I explained in my First Brief, at [15.4], I was on the Workgroup that worked on the development of Acceptable Solution E2/AS1 Third Edition, which came into effect in 2005. As I noted, at the time, we were unaware of the poor performance of plywood cladding. We were, for example, unaware of complaints that CHH had received over the years regarding building clad in its product. Accordingly, we were not concerned with including the shiplap joint that formed part of the Shadowclad system. I was not involved in 2011 when the shiplap was removed from the Acceptable Solution.

7.6In any event, whether the shiplap was consistent with the Acceptable Solution or not does not address the question of whether it performs adequately in the real world. I refer to the discussion in my First Brief at [22.1] to [22.21].

7.7When the shiplap joint was removed from E2/AS1 in 2011, CHH could no longer say that its system fell within E2/AS1. It was clearly an alternative solution. CHH responded by going to BRANZ and obtaining an Appraisal for the “Shadowclad Direct Fixed Cladding System”. CHH’s expert witnesses place considerable reliance on this Appraisal. For example, at [125] of his evidence, Mr Aitken states that:

In my view, the Shadowclad detailing for this joint is effective in preventing or mitigating moisture ingress when properly installed and the best sources of knowledge and advice available (E2/AS1 and BRANZ) have since from at least 2004 regarded the shiplap joint to be a reasonable and weathertight solution.

7.8Mr Aitken appears to base his opinion on the performance of the shiplap joint on the fact that it was included in E2/AS1 Third Edition and then included in the 2011 BRANZ Appraisal, rather than with reference to any observations of the real world. I disagree that E2/AS1 and BRANZ were the best sources of knowledge available to CHH. A reasonable manufacturer would carry out its own testing. Both E2/AS1 Third Edition and the BRANZ appraisal came out after CHH had been using shiplap joint for many years so one would expect CHH have taken steps such as testing to satisfy itself as to the performance of this joint well before then.

7.9As set out in my First Brief at [15.19] to [15.29], when the shiplap was removed from E2/AS1 in 2011, CHH had to do something in order for its product to continue to be seen as acceptable in the market. It appears from email correspondence that they had concerns that the shiplap joint may fail pressure testing in a direct-fix application

However, they then proceeded to obtain an Appraisal that they knew was not based on any testing of the system in a direct-fix application.