Minister of Education v James Hardie New Zealand
[2014] NZHC 2432
•3 October 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-001899 [2014] NZHC 2432
UNDER the Consumer Guarantees Act 1993, the
Fair Trading Act 1986, and the Building
Act 2004BETWEEN
THE MINISTER OF EDUCATION First Plaintiff
... Plaintiffs continued over
AND
JAMES HARDIE NEW ZEALAND First Defendant
... Defendants continued over
Hearing: 24 September 2014 Counsel:
NF Flanagan and J Carlyon for Plaintiffs
RG Simpson and JQ Wilson for DefendantJudgment:
3 October 2014
JUDGMENT OF FOGARTY J
This judgment was recalled and reissued by me on 13 October 2014 at 4.30 p.m.
Pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: …………………….
This judgment was delivered by me on 3 October 2014 at 4.30 p.m., pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
THE MINISTER OF EDUCATION v JAMES HARDIE NEW ZEALAND [2014] NZHC 2432 [3 October 2014]
THE SECRETARY FOR EDUCATION Second Plaintiff
THE MINISTRY OF EDUCATION Third Plaintiff
AND
BOARD OF TRUSTEES OF OREWA PRIMARY SCHOOL
Fourth Plaintiff
STUDORP LIMITED Second Defendant
CARTER HOLT HARVEY LIMITED Third Defendant
CSR BUILDING PRODUCTS (NZ) LIMITED
Fourth Defendant
TABLE OF CONTENTS
Introduction [1]
Third amended statement of claim [2]
The defects – “failures” and “loss” particulars [8] Supply and contractors contracts particulars [11] Reliance particulars [13] CHH’s knowledge of defects particulars [14] The causes of action [15
The negligence causes of action [16]
Particulars of defects, building by building [22]
“Talking past each other” [35]
The relationship of alleged defects and “acceptable solutions” [69] Details of supply and construction periods [84] Reliance
Negligence [87]
Fair Trading Act claim [95] CHH’s knowledge of defects and knowledge of failure [100] Conclusion [120]
Case management [122]
Introduction
[1] The defendant, Carter Holt Harvey Limited (CHH), has applied for further particulars. The subject matter of this litigation is over 900 school buildings owned by the Crown, whose interests are being pursued by the four plaintiffs in these proceedings. All of these buildings are cladded on the exterior by plywood sheets. In a few cases the plywood sheets also have a structural function. They are a product called “Shadowclad” manufactured by CHH.
Third amended statement of claim
[2] The third amended statement of claim runs to 48 pages (the claim). It pleads the role of the plaintiffs as responsible for providing primary and secondary state education in New Zealand. It introduces a survey that was commissioned by the plaintiffs, engaging specialist building and quantity surveyors to identify whether weathertightness-related problems existed in school buildings constructed or significantly modified since 1994. The first survey was in 2009 of 199 schools located in the upper North Island. The second was in May 2011 of 6,130 school buildings at 1,592 schools in New Zealand, being buildings not profiled during the Auckland survey. That survey was completed in April 2012. It then pleads, as a result of the two surveys, the plaintiffs have identified systemic defects in and/or characteristics of the cladding sheets and cladding systems installed in the schools.
[3] The next section of the claim defines CHH cladding sheets and cladding systems on school buildings. The cladding system is made up of the cladding sheets designed to be installed with appropriate accessories and jointed in appropriate systems, finished in appropriate paint or texture coatings. It then pleads that CHH supplied these to the plaintiffs in or around the year of supply for each building as identified in Schedule 4. It also pleads that CHH advertised and promoted its cladding sheets and systems in the New Zealand market by providing descriptions and representations about the systems within its specifications and marketing directly to consumers, architects and building contractors, publishing and supplying brochures, advertising on the internet and in magazines and television commercials.
[4] It pleads that CHH marketed and supplied the cladding sheets and systems for use on residential buildings, school buildings and other buildings, altogether known as “light buildings”. It pleads, that at all material times, CHH knew that the cladding sheets and systems were purchased to be used on school buildings.
[5] Then it has a section on the defects in the cladding sheets and cladding systems. It addresses the fixing of the cladding sheets and cladding systems directly onto a building frame of a light building, without a cavity. It pleads that when so fixed, they do not routinely achieve compliance with recognised building standards, the function and performance requirements of the Building Regulations, and the Building Acts at the time, 1991 or 2004. The inherent characteristics of the cladding sheets and cladding systems require installation with a very high degree of precision, in order to mitigate failures. However, this does not make adequate allowances for real world building design and construction practices. Particulars are added and develop the contention of a level of precision required as beyond that provided in CHH’s specifications and, further, to mitigate failures, they must be maintained to a standard and frequency which is impractical. Together these are called the “risk characteristics”.
[6] Then the consequences are pleaded: that as a result of these risk characteristics, the buildings are likely to fail to comply with the aforesaid standards and Building Code requirements and the Building Acts, the staff and students suffer interference with the education of the children, and interference with their health and safety. They plead a failure of CHH to undertake any adequate testing.
[7] The claim then pleads that in a list of promotional activities of CHH, which together would lead a reasonable person to believe that the cladding sheets and systems would achieve the aforesaid compliance and have a serviceable life: providing a weathertight exterior which is durable, tolerant to inevitable and normal building movement, wind conditions and natural environment conditions; would not rot, corrode or otherwise degrade; and would require a low level of maintenance. These are together called “the representations”. Then there is a pleading as to its publications and a pleading that CHH’s promotional activities were false, misleading
and deceptive, together referred to as “the misleading representations”. Then there is
a pleading of CHH’s failure to address these defects.
The defects – “failures” and “loss” particulars
[8] This brings us to [48] and [49] of the claim, which are the subject of the first application for particulars:
[48] Due to the Cladding Sheets Defects, the Cladding Systems Defects, and the Risk Characteristics, the School Buildings have failed or will fail to achieve compliance with Recognised Building Standards, the Building Code Requirements, and the Building Acts (as particularised at paragraph [40] above) (Failures).
Particulars
(i) The provisions of the Building Code that the School Buildings have failed to comply with or will fail to comply with include clauses E2 and B2.
(ii) School Buildings clad in the Cladding Sheets and Cladding Systems have failed to comply or will fail to comply with the Building Code Requirements because (inter alia):
(A) External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers' specifications routinely fail to satisfy the performance requirements of the Building Code for
50 years (if used as structural or bracing element) or 15 years (if not used as a structural or bracing element);
(B) External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers' specifications that are not in contact with, or in close proximity to, the ground absorb and transmit moisture in quantities that can cause undue dampness and damage to building elements;
(C) External walls of the School Buildings clad in the Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers' specifications do not allow for concealed spaces and/or cavities to be constructed in a way that prevents external moisture being accumulated or transferred and causing condensation, fungal growth or the degradation of building elements;
(D) External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems do not prevent the penetration of water that could cause undue dampness, damage to building elements or both; and
(E) External walls of the buildings clad in the Cladding
49As a result of the Failures the Plaintiffs have suffered and will suffer the following loss (inter alia):
(a) The cost of repairing and replacing the Cladding Sheets and the
Cladding Systems on the School Buildings;
(b) The cost of repairing and replacing structural elements (including building framing) of the School Buildings that have been damaged by:
(i) moisture ingress behind the cladding and within the School
Buildings; and
(ii) decay to timber framing, or corrosion of steel framing, and the presence of mould and/or fungi;
(c) The costs of preventing staff and students suffering interference: (i) with the education of children; and
(ii) with their health and safety;
(d) Diminution in the value of the School Buildings;
(e) The cost of providing replacement administrative and staff facilities and additional resources on account of interruptions to the operation of the Schools;
(f) Lack of access to and use of portions of the Schools while necessary repairs and remediation works are being undertaken;
(together, Loss).
[9] Note, that both paragraphs begin with present and future failure and loss: “have failed or will fail” “have suffered and will suffer”. In both cases there is no pleading as to what defects exist in any particular school building and what loss has been suffered in respect of any particular building.
[10] In respect of both pleadings, CHH is seeking particulars of the nature of damage to each of the buildings and of the various causes of that damage for each of the buildings and distinguishing which buildings have been damaged and which buildings have not been damaged, but which the plaintiffs say will suffer such damage in the future. This detail of specificity is being opposed by the plaintiffs. These particulars and the requests are headed in the schedule as “the defects” topic.
Supply and contractors contracts particulars
[11] The schedule to the application for particulars then moves on to a topic called “Supply and Construction periods”. This topic relates to the supply of cladding sheets and systems to a cause of action of failure of CHH to comply with the guarantee imposed by s 6 of the Consumer Guarantees Act 1993 to manufacture goods of acceptable quality and pleads that CHH represented the cladding sheets would comply.
[12] In regard to this issue, the particulars sought are particulars of the contract under which it is alleged Shadowclad was supplied to one or more parties. The particular dates of supply and the period when the building was constructed, including the dates and persons with whom the plaintiffs entered into the agreement to purchase Shadowclad, and particulars of the chain of contracts by which Shadowclad used on a particular building passed from CHH to one or more of the plaintiffs.
Reliance particulars
[13] The next topic in the schedule is headed “Reliance”. It pleads a duty of care on CHH, including that at all material times CHH knew or ought to have known of the plaintiffs’ reliance on CHH’s expertise. In relation to that pleading, the request for particulars seeks particulars of the Minister of Education’s reliance, specifying the persons who so relied and the steps taken etc, as can be seen on pages 12, 15, 16,
20 and 22 of the schedule. The last paragraph relates to reliance under the Fair
Trading Act 1986.
CHH’s knowledge of defects particulars
[14] The last topic in the schedule is headed “Knowledge/Negligence” and addresses the pleading of the failure on the part of CHH to address and to warn of the defects. It seeks particulars of the dates on which CHH acquired the knowledge of the pleaded defects and that its representations and descriptions were untrue or misleading and otherwise particulars of sources of CHH’s knowledge.
The causes of action
[15] Altogether, the plaintiffs allege five causes of action against CHH. There are three alleged torts of negligence, a claim under the Consumer Guarantees, and a claim under the Fair Trading Act.
The negligence causes of action
[16] The first cause of action in negligence pleads:
51At all material times, Carter Holt Harvey owed a duty of care to the Plaintiffs to design, manufacture and supply Cladding Sheets for use on the School Buildings that complied with Recognised Building Standards, the Building Code Requirements, and the Building Acts.
53By designing, manufacturing, and/or supplying the Cladding Sheets with the Cladding Sheets Defects, Carter Holt Harvey breached its duty of care to the Plaintiffs.
54 As a result of Carter Holt Harvey’s breaches of its duty of care, the
Plaintiffs have suffered and will suffer the Loss.
[17] This is also pleaded in the alternative:
56At all material times, Carter Holt Harvey owed a duty of care to the Plaintiffs to design, manufacture and supply Cladding Systems for use on the School Buildings that complied with Recognised Building Standards, the Building Code Requirements, and the Building Acts.
The same breach and loss of pleading as in 53 and 54 applies to this alternative formulation of the duty of care.
[18] The third cause of action contains the second cause of action in negligence, of negligent misstatement. It pleads:
87At all material times, Carter Holt Harvey owed the Plaintiffs a duty to take care not to make false, misleading, or negligent statements in relation to Cladding Sheets that would result in damage to the School Buildings.
89Carter Holt Harvey made the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions in relation to the Cladding Sheets.
Particulars
(i) Carter Holt Harvey made the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions to the Construction Market, including the Plaintiffs and their agents, through Promotional Activities.
90The Plaintiffs allowed the use of the Cladding Sheets on the School Buildings in reliance on the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions.
Particulars
(i) The Cladding Sheets used on each of the School Buildings are identified in Schedule 4.
(ii) The Cladding sheets were first used on each of the School
Buildings in or around the Year of Supply.
(iii) The Plaintiffs, or their agents, received the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions in or around the Year of Supply as further particularised in Schedule 4.
(iv) The Plaintiffs relied on the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions in or around the Year of Supply, by purchasing the Cladding Sheets and/or allowing the Cladding Sheets to be installed on the School Buildings.
91As a result of the Misleading Representations (insofar as they relate to Cladding Sheets), Carter Holt Harvey breached its duty of care to the Plaintiffs.
92 As a result of Carter Holt Harvey’s breach of its duty of care, the
Plaintiffs have suffered and will suffer the Loss.
[19] This is also pleaded in the alternative:
94At all material times, Carter Holt Harvey owed the Plaintiffs a duty to take care not to make false, misleading, or negligent statements in relation to the Cladding Systems that would result in damage to the School Buildings.
95(f) The Plaintiffs relied on representations made by Carter Holt Harvey in relation to the Cladding systems, including the Representations and Particular Descriptions, in Carter Holt Harvey’s capacity as the designer, manufacturer, and supplier of the Cladding Systems. The Plaintiffs’ reliance was inherent in the Plaintiffs allowing the Cladding Systems to be installed on the School Buildings;
Particulars
(i) Each Plaintiff relied on the Representations and Particular Descriptions in or around the year of Supply allowing the Cladding Systems to be installed on the School Buildings.
[20] The fourth cause of action is the third negligence pleading entitled “negligent failure to warn”. It pleads:
101At all material times, Carter Holt Harvey knew, or, as a designer, manufacturer, and/or supplier of the Cladding Systems, ought to have known, that its Cladding Systems had the Risk Characteristics which made them prone to cause the buildings on which they were installed to fail to comply with Recognised Building Standards, the Building Code Requirements, and the Building Acts, and to cause damage to the School Buildings.
102At all material times, Carter Holt Harvey owed the Plaintiffs a duty of care to warn the Plaintiffs of the Risk Characteristics which Carter Holt Harvey knew, or ought to have known, could or would cause damage to the Plaintiffs’ buildings.
104Carter Holt Harvey failed to warn the Plaintiffs of the Risk Characteristics that were known or ought to have been known by Carter Holt Harvey.
105Carter Holt Harvey failed to warn the Plaintiffs that the Cladding Systems failed to correspond to the Representations and Particular Descriptions.
107 As a result of Carter Holt Harvey’s breaches of its duty of care, the
Plaintiffs have suffered the Loss.
[21] The remedy sought in each case is:
(a) An inquiry into the losses suffered by the Plaintiffs as a result of the defendant’s breaches of their duty of care and an order that the defendant pay the Plaintiffs damages so determined.
Particulars of defects, building by building
[22] CHH submits that the pleadings that Shadowclad is not fit for the purpose of exterior cladding in New Zealand conditions needs to be particularised by reference to the buildings.
[23] The principal submission in support of particulars for each building is that not all the defects alleged in schedule 2 apply to all of the buildings. To put it another way, there is no commonality of defect. For example, the alleged flaws in CHH’s specification documents relating to certain joints and detailing are necessarily
relevant only to the buildings containing those joints and detailing. For example, there are alleged defects where the sheets are affixed horizontally rather than vertically. That is not the case in all of the buildings.
[24] It is necessary to keep in mind that the overarching pleading of the plaintiffs is that the cladding and its systems are so defective that buildings have failed or will fail. The defendant wishes to dispute this proposition.
[25] Given the number of buildings, it would appear neither the plaintiffs nor the defendant want a trial which examines every single building. Mr Simpson said that would be a trial taking five years. What the defendant wants to do is to put together a sample of buildings. Apparently the cost of inspecting each building is in the order of $10,000 per building and is a process of some bureaucratic complexity, as the inspectors have to have police clearance. The defendant does not want to be dependent on the plaintiffs’ sampling. The defendant contends that as a result of the earlier survey, the Auckland, and nationwide survey, the plaintiffs must have a good deal of data as to the manifestation of any defects in the buildings considered separately.
[26] Mr Simpson, for CHH, argues that such particulars are essential to “provide CHH with direction into its investigation into the nearly 25 year period which is the subject of this claim, and the factual and expert evidence that will be required to support its defence”.
[27] The survey data, as released to the defendant, only allocates four grades of rising concern, the grading of which cannot, in any view, be regarded as helpful to the defendant. Informally, the plaintiffs, by letter of 29 August, advised the approximate proportions of buildings that have defects identified at 7 – 13 of schedule 2 to the statement of claim advising:
(a) Defect 7. This defect applies to all buildings except those formed with negative joints. Negative joints are used in approximately 3 – 5 per cent of the buildings.
(b)Defect 8. Again, this applies to all buildings except those formed with negative joints.
(c) Defect 9. Horizontal sheet joints are formed with galvanised z- flashings in approximately 95 per cent of the cases.
(d)Defect 10. Horizontal sheet joints formed with sealant are rare and included in approximately 4 per cent of the buildings, being the majority of those buildings not formed with horizontal sheet joints with galvanised steel z-flashings.
(e) Defect 11. Horizontal outside cover battens exist in approximately 15
– 20 per cent of the buildings and in almost every case they degrade.
(f) Defect 12. It is noted above (defect 9). Horizontal z-flashings are present on about 95 per cent of Shadowclad buildings. Of that, approximately 60 per cent deliver water behind vertical facings.
(g)Defect 13. Again, 95 per cent of the buildings use z-flashings with cover battens and/or external joinery jams used at windows and corners. Of these approximately 60 per cent create pathways for water to enter in the cladding material.
[28] One of Mr Simpson’s responses to this sort of information is that these cladding systems, being made of wood, will naturally not be waterproof and the systems are designed to create pathways for water to exit the cladding material.
[29] Again, it can be seen that neither a risk grading of the buildings, nor a generic percentage description of risks/defects enables the defendant to select a sample of school buildings.
[30] Complex cases are subject to sophisticated case management conferences, ensuring a focus on identification of the issues for trial, encouraging pre-trial conferences of experts and, with all cases now, providing for a pre-trial exchange of briefs at a later stage of the process.
[31] Mr Simpson acknowledges these other case management procedures. However, he submits rightly that late notice of the detail of the case, e.g. from an experts’ report, cannot replace inadequate pleading from the outset. The defence of complex cases begins from an examination of a claim which pleads all the material facts and provides sufficient particulars to enable the defendant to know the case against it.
[32] In the correspondence between the parties produced by Mr Flanagan, Mr Simpson has been seeking particularisation of damage “in the usual way” rather than “the generic allegation that the cladding and structural elements must be replaced due to moisture ingress and decay to framing members”.
[33] In his submissions Mr Simpson submitted:
To prepare its defence, CHH needs to be able to identify and select buildings which are not currently failing as well as those which are. CHH therefore seeks particulars of which buildings are not alleged to be currently failing to comply with the code and other standards. Furthermore, the plaintiffs’ case on liability is that defects in the cladding have caused damage to the buildings, though they also acknowledge that in many cases damage was caused by a builder/design negligence. CHH therefore seeks particulars of the damage alleged to be caused to each building. For example, if timber framing has allegedly decayed in some buildings, but not others, then particulars should be given to clarify the contentions applying to each building.
[34] In response, the principal argument for the plaintiffs is that this is not a leaky building case. It is a product liability case. It is to be the plaintiffs’ case that the Shadowclad product should not have been manufactured and sold by CHH for exterior cladding on buildings in New Zealand. It is a defective product both inherently and because in “real world conditions” it cannot be reliably affixed to the building frame to function as a durable exterior cladding.
“Talking past each other”
[35] Mr Flanagan, for the plaintiffs, explained the divide between the parties as to particulars in this way:
3.1From the outset of this proceeding, the parties have viewed this claim quite differently.1 As set out above, the Plaintiffs’ claim is a claim for a defective product. The Plaintiffs say that they have suffered, or will suffer, loss as a result of using Shadowclad which contained and contains certain inherent defects. CHH previously called it a leaky building case. It now describes it as a “building construction case”. It is neither. It is a product liability case.
3.2That is apparent from the nature of the defects alleged. For example, one of the key defects alleged is that preservative levels in the Shadowclad sheets were too low, making the product insufficiently resistant to rot. Likewise, any cut sheet of Shadowclad exposes end grains in the sheet, making it vulnerable to capillary uprise. Those (alleged) defects are not dependant on installation or construction: they are (pleaded as) inherent features of the product. Moreover, the vast majority of defects alleged are present in almost every case. They are part and parcel of Shadowclad, both the product and the overall cladding “system” that CHH sold it as.
3.3CHH has chosen to defend the case as if it were an orthodox leaky building case. In particular, it has launched a programme to inspect schools, presumably in the hope of demonstrating that the buildings in question leak because of construction defects. Obviously, how CHH chooses to defend the claim is up to it. But the plaintiff is entitled to advance its claim as it conceptualises it, and the provision of particulars must be consistent with what it says is necessary to prove, not what a defendant does. In particular, the plaintiffs in this case are willing to provide the information CHH says it needs in order to guide its inspection decisions, but should not be ordered to alter their pleadings.
3.4These differing views of the claim are at the heart of this dispute about particulars. The Plaintiffs accept that many of the particulars sought are particulars that would commonly be provided in a leaky building (or “building construction”) claim, but this is not a leaky building claim and there are important differences between the Plaintiffs’ claim and the claim as CHH chooses to cast it:
(a) The existence and scope of the duty of care is not necessarily determined by the contractual arrangements between the parties or by statutory obligations in the same way that it is in a case brought against parties engaged to carry out building or inspection work in a leaky building claim.
(b) The Plaintiffs will not prove their causes of action by reference to each individual building in the claim. CHH itself accepts that this case will not be determined on a building-by-building basis. Instead, the Plaintiffs will prove their claim by demonstrating the systemic failure of Shadowclad which means that it cannot be retained on any
1 Minister of Education v James Hardie New Zealand [2013] NZHC 2230, (2013) 21 PRNZ 659 at [5] – [6].
of the School Buildings on which it is currently installed. As recognised by Asher J in the Strike-out Decision:2
[…] these proceedings do not relate so much to the installation of the cladding [on an individual building]. They relate to the qualities of the cladding itself.
[Emphasis added.]
(c) The Plaintiffs say it is irrelevant whether a particular School Building has suffered damage already or not. Their position is that Shadowclad routinely fails due to inherent defects and, as a result, must be replaced on all School Buildings so as to prevent damage occurring if it has not already.
[36] The general principles as to pleading are now encapsulated in the High Court Rules Subpart 4 – pleadings generally. The section of the rules opens with the proposition in r 5.17(1):
Distinct causes of action and distinct grounds of defence, founded on separate and distinct facts, must if possible be stated separately and clearly.
[37] The minimum requirement of a statement of claim is that it pleads the facts, the proof of which enables one person to obtain from the Court a remedy against another person.3
[38] Associated with that proposition is the aphorism that pleadings plead facts, not evidence.
[39] The degree of particularity of the fact, its quality and its context, depend upon a judgment, on a case by case basis.
[40] The solicitors for both parties are taking a realistic view that the issues in this case may have to be resolved, failing settlement, by examining a sample of the total properties. It does not follow, however, that the plaintiffs should be released from the usual pleadings as to damage expected in a negligence claim and, indeed, the
usual pleadings as particulars expected in the other causes of action. It does not
2 The Minister of Education v Carter Holt Harvey Ltd [2014] NZHC 681 [Strike-out Decision] at
[145].
3 Letang v Cooper [1965] 1 QB 232 at 242 per Diplock LJ.
mean, however, that the particulars need to be provided immediately. That is practically impossible.
[41] On the other hand, as particulars are being gathered by ongoing investigation on the part of the plaintiffs, I see no reason why they cannot be progressively added to a schedule of particulars, being an electronic document under the control of the plaintiffs but shared on an ongoing basis with the defendant.
[42] The characterisation of this case by the plaintiffs as a product liability case, as distinct from a leaky building case, is a distinction not yet established by the authorities. Nor am I aware of the distinction in any of the common law jurisdictions against which we benchmark the New Zealand common law. For this reason, not surprisingly, Mr Flanagan was not able to proffer any authority in any Commonwealth jurisdiction, and indeed no authority from any common law jurisdiction, upholding the statement of claim which seeks a judgment of liability in negligence without proving the loss or damage with particularity, building by building; but rather, as here, seeks only an indeterminate finding of some loss and then an order for enquiry.
[43] In the course of argument, I had queried the description of this case as a product liability case, as distinct from a leaky building case. After the hearing, Mr Flanagan filed a minute exhibiting the statement of claim in the United States District Court of Minnesota pleading Picht v James Hardie Building Products. Mr Flannagan advised that when the plaintiffs drafted its own pleadings, it had regard to the Picht pleadings.
[44] Picht is a class action claim. It relates to system failures of a cladding product, in this case, one sold by James Hardie. Though it is a pleading to launch a class action, it pleads the particulars of one person, the plaintiff, Heidi Picht.
[45] As such, it pleads a number of causes of action: (a) Breach of express warranty;
(b)Breach of implied warranties of merchantability and fitness for a particular purpose;
(c) Unlawful trade practices; (d) False advertising;
(e) Negligence;
(f) Negligent failure to warn; and
(g) Unjust enrichment.
[46] The pleading pleads specifically the defects and damage present in the James
Hardie product, cladding the plaintiff’s home:
[40] In the spring of 2007, the plaintiff began to notice problems with the siding. A stain or surface of the siding appeared to be flaking off. The flaking not only left white spots on the siding, it also exposed the underlying siding material, which began to deteriorate. Over time, the siding began to shrink, causing gaps and some pieces to pull from fasteners. Warping and delamination occurred as well, which resulted in water penetration into the home itself. The siding also became severely discoloured in places.
[50] In the sprint of 2008, at BPI’s recommendation, the plaintiff’s contract was told some of the boards may need to be replaced and the plaintiff ordered it installed approximately 20 replacement boards. BPI directed the plaintiff to find installation instructions on James Hardie’s website – instructions recalled for areas around flashings and roof lines to be cut back.
[47] Under the negligence pleading:
[122] As a direct and proximate cause of the defendant’s negligence, plaintiff has suffered actual damages in that she purchased and installed on her building an exterior siding product that is defective and unsafe and that it fails prematurely due to water absorption, porosity problems, moisture penetration and other inherent defects. The defect causes damage to the plaintiff’s building, in addition to damage to the siding itself, by allowing moisture to enter through the siding. These failures have caused and will continue to cause the
plaintiff to incur expensive repairing or replacing the siding as well as the result of progressive property damage.
[48] I recognise these as traditional pleadings of damage or loss as a necessary prerequisite of entitlement to a remedy in a negligence claim.
[49] Counsel for CHH replied citing a related judgment of the United States District Court in respect of a successful motion for dismissal of negligence claims in the consolidated claim: In re Hardieplank Fiber Cement Siding Litigation.4 In that judgment the defendant had asserted that the economic loss doctrine barred various parties’ negligence claims and the plaintiffs conceded accordingly that the cause of action for their case was not viable.
[50] Counsel for CHH then went on to cite, as an example of pleading of loss in the United States, the recent California decision of Re Toyota Motor Corp. Hybrid Brake Marking, Sales Practices and Products Liability Litigation:5
It is well established in the law that a plaintiff cannot prevail on a claim unless he has been injured or damaged. Birdsong v Apple, Inc, 590 F.3d 955,
961 (9th Cir.2009) (potential risk of hearing loss by users of iPod held
insufficient to establish requisite injury); Briehl v General Motors Corp.,
172 F.3d 623, 628 (8th Cir. 1999) (“Where, as in this case, a product
performs satisfactorily and never exhibits an alleged defect, no cause of
action lies.”); Harrison v Leviton Mfg. Co., No CV 05-0491, 2006 WL
2990524, at *4 (N.D.Okla.2006) (“Plaintiff may not represent a putative
class if he has not actually suffered the injury for which the class seeks redress.”). In product liability cases like this one, federal courts are particularly vigilant in requiring a showing of actual injury. See, e.g., Weaver v Chrysler Corp., 172 F.R.D. 96, 99 (S.D.N.Y. 1997) (“It is well established that purchasers of an allegedly defective product have no legally recognizable claim where the alleged defect has not manifested itself in the product they own.”) (internal quotations omitted); Feinstein v Firestone Tire
& Rubber Co., 535 F.Supp.595, 602 (S.D.N.Y. 1982) (“Liability does not exist in vacuum; there must be a showing of some damage.”) A plaintiff’s
injury must be concrete and particularized. See Lujan v Defenders of
Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 S.Ct. 2197, 45 L.Ed.2d 343 (1975) (“[t]he plaintiff still must allege a distinct and palpable injury to himself, even if it is an injury shared by a larger class of other possible litigants.”) (emphasis added). It cannot be conjectural or hypothetical. Lujan, 504 U.S. at 583, 112 S.Ct. 669, 38 L.Ed.2d 674 (1974) (“The injury or threat of injury must be both real and immediate, not conjectural, or hypothetical.”)
4 In re Hardieplank Fiber Cement Siding Litigation Case No. 12-md 2359 MDL No. 2359.
5 Re Toyota Motor Corp. Hybrid Brake Marking, Sales Practices and Products Liability Litigation
915 F. Supp. 2d 1151, 1155-1156 (CD Cal, 2013).
[51] In reply, counsel for the plaintiff submitted that negligence claims were dismissed by consent in those states where the law is that the plaintiff cannot claim negligence for pure economic loss. The Supreme Court in New Zealand has rejected such a distinction in New Zealand law, citing North Shore City Council v Body Corporate 188529 (Sunset Terraces)6 and Body Corporate 207624 v North Shore
City Council [Spencer on Byron.]7
[52] There is a distinction between the generic basis on which the plaintiffs allege defects of cladding and the cladding systems, on the one hand, and proof of loss on the other. I do not have any difficulty conceptually with the notion that careless conduct can be proved without proof of loss. There are many examples of conduct which can be examined and be pronounced negligent or otherwise without proof of loss. But the common law of negligence contains no presumption that where there is negligence there will be damage or loss. On the contrary, it requires a causal connection between the defect and the damage or loss. The requirement for proof of damage or loss anchors the analysis of negligent conduct or not. The law requires proof of this causal connection.
[53] Quite apart from the traditional case law, failure to plead and prove actual damage or actual economic loss by reason of particular defects referenced to particular buildings will remove some of the rigor of analysis required in negligence cases where such loss or damage has to be proved with particularity.
[54] In the United Kingdom proof of actual damage or loss is a necessary prerequisite to a finding of liability in negligence.8 In Nykredit Mortgate Bank Plc v Edward Erdman Group Ltd, Lord Hoffmann said:9
As every law student knows, causes of action for breach of contract and in tort arise at different times. In the case of breach of contract the cause of action arises at the date of the breach of contract. In cases of tort the cause
6 North Shore City Council v Body Corporate 188529 (Sunset Terraces) [2011] 2 NZLR 289 (SC)
at [30].
7 Body Corporate 207624 v North Shore City Council [Spencer on Byron] [2012] NZSC 83, [2013] 2 NZLR 297 per Tipping J at [41].
8 And elsewhere in the Commonwealth. See Carolyn Sappideen and Prue Vines Fleming’s The Law of Torts (10th ed, Thomson Reuters, Australia, 2011) at [9.10]: “Actual damage or injury is a necessary element (“the gist”) of tort liability for negligence. … As damage, howsoever defined, is an essential element of liability, a cause of action does not accrue until actual damage occurs”.
9 At 1630C.
of action arises, not when the culpable conduct occurs, but when the plaintiff first sustains damage.
[55] In Nykredit the question was loss arising from negligence by valuers who negligently over-valued property provided as security. That led to the next sentence in the above extract from Nykredit:10
Thus the question which has to be addressed is what is meant by “damage” in the context of claims for loss which is purely financial (or economic, as it is sometimes described).
[56] The need to accommodate purely financial loss has led to the common law in the United Kingdom extending the concept of damage to include loss, with some policy limits.
[57] Lord Hoffman said further:11
To constitute actual damage for the purpose of constituting a tort, the loss sustained must be loss falling within the measure of damage applicable to the wrong in question.
[58] Near the conclusion of his speech, Lord Hoffman pulled the propositions together in this way:12
Proof of loss attributable to a breach of the relevant duty of care is an essential element in a cause of action for the tort of negligence. Given that there has been negligence, the cause of action will therefore arise when the plaintiff has suffered loss in respect of which the duty was owed.
[59] New Zealand law differs from the United Kingdom common law in that New Zealand law has a more liberal policy to remedy economic loss without physical damage.
[60] In Spencer on Byron Tipping J discussed economic loss in the context of a claim for economic loss by reason of defective construction of a 23 storey building
in Byron Avenue, Takapuna.
10 At 1630C.
11 At 1630F.
12 At 1638H.
[61] The issue was whether a territorial authority owed a duty of care to present and future owners when inspecting and issuing code of compliance certificates in respect to commercial buildings and other non-residential premises.13
[62] In the course of his analysis, Tipping J addressed a contention that the case law since Dutton v Bognor Regis Urban District Council14 and subsequent cases had inappropriately extended the tort of negligence into an area where what is involved is economic injury rather than physical damage. Tipping J observed:
New Zealand has never drawn the sharp divide that has been drawn between these types of harm, particularly in the present field, in England. Under New Zealand law the nature of the loss in suit is relevant to whether a duty of care to avoid it should be imposed. But the nature of the loss has never dictated the answer.
He went on, in a passage relied upon the plaintiffs:
[45] In cases where negligent inspection has given rise to the potential for physical damage but no such damage has yet occurred, it cannot be the law that you have to wait for physical damage to occur before you are regarded as having suffered loss or harm. It is not determinative whether the loss suffered at the outset is characterised as financial or physical. It is measured by the cost of bringing the building up to the standard required by the code and thereby removing the potential for physical damage and the associated health and safety concerns. A duty of care should be recognised in respect of preemptive expenditure as well as expenditure necessary to reinstate or repair physical damage which has actually occurred. In the present situation the line between economic loss and physical damage is far from bright. Even if one were to analyse cases such as the present as resulting solely in economic loss, there is no good reason for denying a duty of care. There is no risk of indeterminate liability; only a current owner can sue. And, in this context, there cannot be any logical distinction between residential premises and premises of other kinds.
[63] Mr Flanagan used this paragraph to argue against an obligation to plead physical damage suffered by reason of the allegation that the Shadowcladding on the school buildings was defective.
[64] Tipping J was not addressing a pleading point as to particulars. He was confronting the facts present in many leaking buildings, that the defects can be
13 Spencer on Byron at [23], per Tipping J.
identified and a judgment made that physical damage may occur. At that point there can be an assessment of economic loss.
[65] The loss could be pleaded in a variety of ways and has been in paragraph 49 of the claim,15 but not actual loss with respect to particular buildings.16
[66] As the authorities above show, it is, however, of the essence of torts of negligence that they drive off physical damage or financial loss. Either have to be proved to have occurred. It is not sufficient to allege damage or loss will occur.
[67] Accordingly, the impasse between the plaintiffs and defendant in this case is, in my judgment, resolved both by finding there is the practical need for detail of defect in order to prepare a defence, building by building, and the law that damage or loss must be proved to establish a tort of negligence.
[68] For these reasons, I reach the first conclusion that the pleadings are inadequate in respect of the negligence causes of action. Actual loss or damage must be pleaded with particularity against each building.
The relationship of alleged defects and “acceptable solutions”
[69] In addition to the pleaded request for particulars found in the schedule, Mr Simpson argued at the hearing that there is a need to relate the pleadings of negligence to compliance with the defined acceptable solutions in the Building Code.
[70] In accordance with s 22 of the Building Act 2004, the Department of Building and Housing prepares compliance documents. A compliance document is for use in establishing compliance with the New Zealand Building Code.
[71] A person who complies with a compliance document will be treated as having complied with the provisions of the Building Code, to which the compliance
document relates.17 The law does not require builders to construct selecting one or more approved compliance method. But the publication of “acceptable solutions” invites builders to choose an acceptable solution, thereby ensuring obtaining a certificate of compliance from the local authority.
[72] Compliance document E2/AS1 was effective from 1 July 2005. It includes a number of acceptable solutions for fixing plywood sheet claddings to a building under construction.18
[73] At present the claim pleads:
40As a result of the Cladding Sheets Defects and Cladding Systems Defects, Carter Holt Harvey's Cladding Sheets and Cladding Systems respectively, when directly fixed on a building frame (without a cavity) of a Light Building, do not routinely achieve compliance with:
(a) Recognised building standards (including those listed in
Schedule 6 (Recognised Building Standards));
Particulars
(i) Particulars of the recognised building standards and the provisions breached are provided in Schedule 6 to the claim.
(b) The Functional and Performance Requirements of schedule
1 of the Building Regulations 1992 (the Building Code) (in particular, B2: Durability and E2: External Moisture) (Building Code Requirements); and
(c) The Building Act 1991 or the Building Act 2004 (whichever applied) (Building Acts).
Particulars
(i) The provisions of the Building Code that have not been complied with include clauses E2 and B2.
(ii) The provisions of the Building Acts that have not been complied with include s 7(1) of the Building Act 1991 and ss
16 and 17 of the Building Act 2004.
(iii) When directly fixed on a building frame without a cavity, the Cladding Sheets and Cladding Systems routinely fail to achieve compliance with the requirements set out in clauses
B2 and E2 of the Building Code, the Building Acts and
Recognised Building Standards because (inter alia):
A. External walls clad in the Cladding Sheets and Cladding Systems in accordance with the manufacturers' specifications directly fixed on a building frame without a cavity routinely fail to satisfy the performance requirements of the Building Code for 50 years (if used as structural or bracing element) or 15 years (if not used as a structural or bracing element);
B. External walls clad in the Cladding Sheets an Cladding Systems in accordance with the manufacturers' specifications directly fixed on a building frame without a cavity that are not in contact with, or in close proximity to, the ground absorb and transmit moisture in quantities that can cause undue dampness and damage to building elements;
C. External walls clad in the Cladding Systems in accordance with the manufacturers' specifications directly fixed on a building frame without a cavity do not allow for concealed spaces and/or cavities to be constructed in a way that prevents external moisture being accumulated or transferred and causing condensation, fungal growth or the degradation of building elements;
D. External walls clad in the Cladding Sheets and Cladding Systems in accordance with the manufacturers' specifications directly fixed on a building frame without a cavity do not prevent the penetration of water that could cause undue dampness, damage to building elements or both; and
E. In the case of Cladding Systems only (and not Cladding Sheets), it is not reasonably possible, in the context of Real World Building Conditions and Practices (as defined in paragraph [41](a) below and set out in Schedule 7 to the claim), to clad external walls in the Cladding Systems directly fixed on a building frame in accordance with the manufacturers' specifications in a way that makes due allowance for:
I. The consequences of failure;
II. The effects of uncertainties resulting from construction or from the sequence in which different aspects of construction occur; or
III. Variation in the properties of materials.
[74] There are two dimensions to the application for particulars in this regard to this pleading. There is a general pleading that the cladding sheets and cladding systems routinely fail to achieve compliance with the requirements set out in the Building Code, including E2 (to follow this example). But the pleadings do not address affixing according to the acceptable solutions in E2, but rather refer back to the manufacturer’s specifications. There is a repeated pleading that these specifications require a level of precision beyond that achievable in the “real world”.
[75] Schedule 2 of the claim sets out the cladding sheet defects and cladding system defects. But it does not plead these defects by reference to the compliance standard E2. Defects 1, 2, 3, 4, 6, 7, 8, at least and probably others, can be read as a direct challenge to the compliance document E2/AS1.
[76] Rhetorically, Mr Simpson, for CHH, said how can it possibly be argued that the application of Shadowclad is negligent, particularly when it has been affixed to the building following one or more of the acceptable solutions? He drew attention to figures 118, 119, 120 and 121 which are all acceptable solutions for a 5-ply plywood sheet having the same design as Shadowclad.
[77] Mr Simpson went so far as to submit that if a plywood sheet is fixed in accordance with an acceptable solution, by definition the affixing cannot have been negligent. That is a trial issue as whether that can be argued as a matter of law or on the facts.
[78] It certainly cannot be adopted now as a self-evident proposition such that it should guide the provision of particulars. The Court takes judicial notice that acceptable solutions appear in such documents as E2 after a consultation process between the Government regulators, the manufacturers, the building industry and specialist testing agencies such as BRANZ. These compliance documents are revised from time to time. For example E2/AS1 (effective from July 2005) is at least the fourth version of E2, which was first published in July 1992, revised in February
1998, revised again from 1 July 2004 and, in respect of E2/AS1, from 1 February
2005, having an amendment in 2004 (effective from 1 July 2005) and having another amendment on 1 July 2005. Quite independent of the dispute in this case, it is
possible for a manufacturer to revise its expert opinion on an acceptable solution and improve the acceptable solution by making changes, or devise another solution, and then persuading the regulator to include either an amended acceptable solution or a new acceptable solution by way of amendment to the compliance document.
[79] Nonetheless, if it is the case that a particular school building has Shadowclad affixed in apparent compliance with one or more of the acceptable solutions in E2/AS1, then plainly there is a need for the plaintiffs to provide particulars of material facts amounting to negligence on the part of the manufacturer, notwithstanding compliance with an acceptable solution.
[80] Standing back, it is a recurring pleading that the Shadowclad product is so defective that it should not be used for cladding at all and is, in that sense, a direct challenge to the reasonableness of utilising in any way at all E2/AS1 to use plywood claddings as an exterior cladding system for any building in New Zealand.
[81] To sum up, I do not find it self-evident that compliance with acceptable solutions are, as a matter of law, a complete defence to a common law claim in negligence. But I accept the proposition that where there is apparent utilisation of a current compliance document, particularly an acceptable solution, there should be pleaded facts to support a contention that the manufacturer is nonetheless negligent to supply the Shadowclad product to the building industry for exterior cladding and/or to endorse the acceptable solutions for fixing the cladding.
[82] As already noted, it does not follow that the particulars have to be immediately added to the statement of claim. That, in the context, is unrealistic.
[83] Accordingly, the amended request for further particulars, as appearing in the schedule to this judgment under the heading “defects”, is granted. In addition to those particulars, the plaintiffs are obliged to disclose the extent to which the cladding was fixed using a current or contemporary acceptable solution and to plead whether or not the application was defective notwithstanding it followed a solution.
Details of supply and construction periods
[84] The Consumer Guarantees Act 1993 (CGA) cause of action alleges breaches of ss 6, 9 and 13 of the Act.
[85] Following Asher J’s judgment in [74] – [84], a judgment which is binding on the parties unless reversed on appeal, the claim under the CGA can only apply to CHH, as manufacturer, not as “supplier” under the CGA. The ruling is:
[84] I do not consider the plaintiffs’ proposed broad interpretation reflects the purposes and structures of the CGA. In my view Carter Holt was not a “supplier” under the CGA, when its products indirectly became part of a building.
Carter Holt as “manufacturer”
[85] However, this is far from a complete answer to the claim against Carter Holt. This is because the guarantee as to acceptable quality in s 6 gives the consumer a rights of redress not only against the “supplier”, but also against the manufacturer. Sections 7(1)(i), s 9(4)(b) and s 13 apply to both “suppliers” and “manufacturers”. A “manufacturer” is defined as:
Manufacturer means a person that carries on the business of assembling, producing, or processing goods, and includes—
(a) Any person that holds itself out to the public as the manufacturer of the goods:
(b) Any person that attaches its brand or mark or causes or permits its brand or mark to be attached, to the goods:
(c) Where goods are manufactured outside New Zealand and the foreign manufacturer of the goods does not have an ordinary place of business in New Zealand, a person that imports or distributes those goods:
[86] Carter Holt can be seen as a manufacturer in that it carries out the business of assembling, producing or processing goods. The guarantee sections apply to a manufacturer when another person “supplies” the goods. Section 25 sets out the right of redress against manufacturers, and I cannot assume at this strike out stage that any of the exceptions in s 26 apply.
Are the items that were supplied “goods”?
[87] Both Carter Holt and the plaintiffs accepted that cladding falls within the definition of “goods” in s 2 of the CGA. However, Mr Goddard submitted that the relevant item that was supplied to the plaintiffs was not the cladding itself but rather a whole or part of a whole building which is not “goods” under the CGA. The definition of “goods” in s 2, contains this qualification at (c):
despite paragraph (b)(i), does not include a whole building, or part of a whole building attached to land unless the building is a structure that is easily removable and is not designed for residential accommodation.
[88] The purpose of limb (c) would appear to be to exclude homes or offices that are sold as such rather than as individual parts. It will protect vendors and their agents. If the plaintiffs had purchased a completed school building from another party then it could well be that the plaintiffs would be unable to claim that it had received goods under the CGA. On the other hand, if Shadowclad was supplied to the plaintiffs, or to the plaintiffs’ agent, or a contractor, and then later included in a building constructed for the Minister, what would have been supplied, depending on the precise facts, were components and not a building or part of a building.
[86] Accordingly, there is no basis now for the defendant to require the plaintiffs to plead all contracts entered into by them for the construction of individual school buildings, as sought in paras 2, 4 and 15 of the application for further particulars. Rather, it is sufficient for the plaintiffs to plead that all the Shadowclad affixed to the buildings were manufactured by CHH. The application for further particulars as to supply is dismissed.
Reliance
Negligence
[87] CHH refers to the plaintiffs’ pleading of reliance by the plaintiffs on CHH’s expertise. The plaintiffs plead the reliance was inherent in purchasing cladding sheets and/or allowing the cladding sheets to be installed on the school buildings. The pleading is similarly made in respect of the third cause of action for negligent misstatement.
[88] The application for particulars seeks numerous particulars of the Minister of Education, Secretary of Education and Ministry of Education’s reliance, together with boards of trustees of relevant schools on CHH’s expertise to design, manufacture and supply Shadowclad. The application is calling upon the plaintiffs to provide detailed particulars of the persons who so relied and upon what representations and particular descriptions they relied.
[89] We are all familiar, as consumers, with the phenomenon of relying on the reputation of a manufacturer when purchasing goods. We buy products relying on the quality of the manufacturer. The purpose of consumer protection legislation, such as the CGA, would be frustrated if plaintiffs were required to prove with particularity what advertisement, set of advertisements, or combination of advertisements and consumer satisfaction they personally relied upon before buying.
[90] In the claim of the tort of negligent misstatement, this originated in a client relationship, and has quasi-contractual character.19 Usually it is not deployed in this context. But if it can succeed here, I think the same reasoning applies.
[91] CHH is a major and reputable manufacturer. There is no need for the government plaintiffs to have to prove specific and conscious reliance, line-by-line, on promotional material distributed with the product by the reputable manufacturer. When manufacturers sell generic products advertised for a purpose, here cladding, it will normally carry the implicit assurance that it is fit for the purpose.
[92] These particulars would impose a huge burden on the plaintiffs and not serve to advance the ability of CHH to defend the claim. Given the widespread application by the government of CHH Shadowclad product, CHH must have known that the government was a major customer and would draw the normal conclusion that it was a major customer because of reliance on CHH products. The common law of negligence is a robust body of law and does not, in a context like this, call for proof by individuals to be found in many government organisations, over a long period of time, to give evidence of what particular document they relied on.
[93] As Mr Flanagan has pointed out, similar reasoning can be found in the Toyota Motor Corp judgment at page 42 where, in relation to Californian law, the Court says:
However, a complaint that fails to specifically plead reliance can survive a motion to dismiss when “reliance can be reasonably inferred from the tenor and totality of the allegations in the complaint” Williams v Beechnut Nutrition Corp 229 Cal. Rptr. 605,609 (Cal. Ct. App 1986). Thus, a complaint sufficiently alleges reliance, as defined under California law,
19 Hesley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (HL).
when it alleges that the defendant “utilized the advertising media to urge the use and application of [the subject product] and expressly warranted to the general public including plaintiff herein, that said product was effective, proper and safe for its intended use”.
[94] This application is dismissed.
Fair Trading Act claim
[95] Similarly, in respect to the FTA cause of action, the defendant argues that it is impossible to obtain compensation under the FTA for loss allegedly caused by a misleading statement unless there is proof that the plaintiffs must have been misled by the misleading statement which entails reliance on the misleading statement,
citing AMP Finance Ltd v Heaven.20 The defendant argues the plaintiffs ought to
particularise the persons among the plaintiffs who so relied, what specific representations such persons relied upon, the date of such reliance and what actions were taken in reliance.
[96] The plaintiffs’ response is that its case on reliance is quite simple. That the plaintiffs were consumers of Shadowclad and, as consumers, relied on CHH as a designer, manufacturer and supplier with specialist and expert knowledge. They argue that such reliance is inherent in the act of the plaintiffs purchasing Shadowclad and/or allowing it to be installed in school buildings. They rely upon a dictum by
Asher J in the strike-out decision: 21
There is little that can be said about reliance at this stage, except that the plaintiffs presumably had the expectation that cladding supplied by reputable manufacturers could be relied on to be waterproof.
[97] The FTA was enacted in New Zealand following the enactment of a similar set of provisions into the Trade Practices Act 1974 in Australia. It was intended to be a consumer-friendly legislation.
[98] The recent Supreme Court decision of Red Eagle Corporation Ltd v Ellis22
recognises a clear distinction between the objective breach of s 9 of the FTA as to
20 AMP Finance Ltd v Heaven (1997) 8 TCLR 144 (CA).
21 Strike-out Decision, at [98].
22 Red Eagle Corporation Ltd v Ellis [2010] 2 NZLR 492.
misleading conduct in trade, and the proof required to obtain damages under s 43. In Red Eagle,23 the Supreme Court found the causal link on the facts because one businessman relied upon another, both having a long association with each other, and from that relationship a good reason to rely.
[99] The pleadings of reliance in the amended statement of claim are sufficient, given the relationship was not a direct one, CHH being the manufacturer. The application for further particulars on reliance is dismissed.
CHH’s knowledge of defects and knowledge of failure
[100] These pleadings appear in a number of pleadings in the amended statement of claim. The attached schedule refers to paras 46, 53, 101 and 103. The pleading is given most comprehensively under the fourth cause of action, negligent failure to warn. It pleads:
101At all material times, Carter Holt Harvey knew, or, as a designer, manufacturer, and/or supplier of the Cladding Systems, ought to have known, that its Cladding Systems had the Risk Characteristics which made them prone to cause the buildings on which they were installed to fail to comply with Recognised Building Standards, the Building Code Requirements, and the Building Acts, and to cause damage to the School Buildings.
102At all material times, Carter Holt Harvey owed the Plaintiffs a duty of care to warn the Plaintiffs of the Risk Characteristics which Carter Holt Harvey knew, or ought to have known, could or would cause damage to the Plaintiffs' buildings.
104Carter Holt Harvey failed to warn the Plaintiffs of the Risk Characteristics that were known or ought to have been known by Carter Holt Harvey.
105Carter Holt Harvey failed to warn the Plaintiffs that the Cladding Systems failed to correspond to the Representations and Particular Descriptions.
[101] This pleading repeats some earlier paragraphs, particularly [4]6 which provides:
46 At all material times, Carter Holt Harvey:
(a) Failed to address the Cladding Sheets Defects;
23 At [2].
(b) Failed to address the Cladding Systems Defects;
(c) Failed adequately to correct, amend, retract, and/or remove from the market the Representations and Particular Descriptions in light of the Misleading Representations;
(d) Failed, after Standards New Zealand issued NZS 3602:1995 (permitting the use of untreated timber in New Zealand), to prescribe measures to ensure that the timbers of Light Buildings on which their Cladding Sheets and Cladding Systems were directly fixed on a building frame (without a cavity), would remain below the maximum moisture content levels permitted by the Building Code;
(e) Failed, after the Building Industry Authority adopted NZS
3602:1995 in Acceptable Solution B2/AS1 (second edition) on 28
February 1998, to prescribe measures to ensure that the timbers of Light Buildings on which their Cladding Sheets and Cladding Systems were directly fixed on a building frame (without a cavity) would remain below the maximum moisture content levels permitted by the Building Code;
(f) Continued their Promotional Activities; and
(g) Failed to provide appropriate warnings of the Risk Characteristics and limitations of using their Cladding Sheets and Cladding Systems on buildings;
When, at all material times, Carter Holt Harvey knew or, as a designer, manufacturer and/or supplier of the Cladding Sheets and Cladding Systems, ought to have known (progressively) that those failures would, or could, cause loss arising from the use of the Cladding Sheets and Cladding Systems respectively (Failures to Address Problems).
[102] CHH is seeking particulars from the government plaintiffs of when they allege CHH acquired knowledge of the existence of defects in the cladding sheets and cladding sheet systems and of knowledge that its representations and particular descriptions run through are misleading. They also seek particulars of the sources of CHH’s knowledge referred to above.
[103] It seems counter intuitive to the Court, however, to call upon the consumer to specify to the manufacturer the dates and circumstances when the manufacturer should have acquired notice of the defects of a system and therefore warned. The consumer is in no position to have particulars of the internal management of CHH.
[104] So far as the Court is aware, there is no discrete tort of failure to warn. Rather, there are cases in which failure to warn adequately is negligence, being
causative of damage. For an example, in New Zealand, see Brown v Heathcote
County Council.24
[105] In that case the plaintiffs had built a house adjacent to the Heathcote River. The levels of the Heathcote River rise and it periodically floods. The trial judge found that: 25
As a matter of practice the Drainage Board drew the County’s attention to any situation of flood danger apparent from a building permit application. That the officers in the County’s Building Department relied on the Board to do so unasked.
[106] The Privy Council found on the facts that the Drainage Board in this context had assumed a duty of care to warn.
[107] The Court can take judicial notice that responsible manufacturers will warn of the limitations of their products, sometimes progressively as these limitations occur in the course of ongoing distribution of the products.
[108] As the facts of Brown v Heathcote County Council show, if there is a duty to warn, it will arise upon facts known to the defendant before they are known to the plaintiff.
[109] Mr Simpson argued that the plaintiffs should put a timeline on this. For example, whether they are alleging that CHH had such knowledge at all times from
1991, being the first alleged year of supply as CHH would need to investigate the allegation and prepare its case accordingly.
[110] In answer to the proposition that all the relevant information is within CHH’s knowledge, he submits that that is not a valid objection to an application for particulars because the applicant is entitled to know the parameters of the case being advanced against it. He relies on the English Court of Appeal case of Fox v H Wood
(Harrow) Ltd.26
24 Brown v Heathcote County Council [1987] 1 NZLR 720 (PC).
25 Brown v Heathcote County Council [1982] 2 NZLR 584, at 592.
26 Fox v H Wood (Harrow) Ltd [1963] 2 QB 601 (CA).
[111] Fox was a builder’s handyman employed by the defendant to make good plasterwork in kitchens of bungalows that were being constructed by the defendant. In the course of his employment, he fell through the floor after putting his foot on a piece of board placed loosely over a hole in the floor. He alleged the accident had been caused by the defendant’s negligence. The defence pleaded that he had caused his own accident or, alternatively, contributed to it by stepping into the opening when he knew or ought to have known of its existence. The plaintiff requested further and better particulars of this defence. The Master ordered that particulars be given of the facts and circumstances from which the plaintiff ought to have known of the opening.
[112] On appeal, counsel for the defendant argued that it was essentially an allegation of a condition of mind and particulars ought not to be granted. Lord Diplock said:27
It seems to me that that proposition is an erroneous one. An allegation that a person ought to have known something has implicit in it not only an allegation that he did not know something, which is an allegation of a state of mind, but also an allegation that facts and circumstance existed from which he ought to have acquired, either by observation or by inference, the knowledge of which he was deficient, and that some fault, in this case a matter of contributory negligence, lies upon him in failing to note, or draw an inference from, particular facts or circumstances. Of such facts and circumstances particulars ought to be given.
[113] In reply, Mr Flanagan, for the plaintiffs, relies on High Court Rule 5.17(3). Rule 5.17 provides:
5.17 Distinct matters to be stated separately
(1) Distinct causes of action and distinct grounds of defence, founded on separate and distinct facts, must if possible be stated separately and clearly.
(2) If a party alleges a state of mind of a person, that party must give particulars of the facts relied on in alleging that state of mind.
(3) A state of mind includes a mental disorder or disability, malice, or fraudulent intention but does not include mere knowledge.
[114] Mr Flanagan relies upon r 5.17(3) as excluding “mere knowledge”.
27 At 604.
[115] I do not think that is an adequate reply. The state of mind being alleged by the plaintiffs is a knowledge of risk. It is not mere knowledge. It is knowledge of facts pointing to a risk of damage or loss if the product is used and/or used and inadequately affixed as cladding.
[116] In my view, however, in this case, it is impossible for the plaintiffs to know, absent discovery, of all the internal deliberations, reviews and monitoring of the product Shadowclad by CHH.
[117] There may be some cases in which the plaintiff can plead events which should have given rise to knowledge sufficient to trigger a duty to warn, or even more, a consideration of withdrawing the product from the market (for that, effectively, is what this claim is alleging, viz, that this product should not have been sold as exterior cladding in New Zealand conditions).
[118] It is inherently difficult, however, for the plaintiffs to do that in response to this application. The fact that the plaintiffs had over a thousand buildings constructed using this as exterior cladding is implicitly a demonstration that the plaintiffs thought that it was an appropriate cladding. Had they been aware of what they now claim are deficiencies, they would have been contributing to their own loss by continuing to use the cladding. The pleading of a cause of action of failure to warn should be understood as coming upon the preceding causes of action alleging defects.
[119] If the plaintiffs at trial establish those defects, then the degree by which they establish them will lead onto a judgment one way or the other by the Court as to whether, on the probabilities, CHH would have known of these deficiencies. One keeps in mind that these are negligence causes of action. They do not depend on any deliberate decision by CHH to manufacture and sell a defective product. This application for further particulars to be provided by the plaintiffs of the time, circumstance and knowledge by CHH of defects is dismissed. This is not to say that CHH documents recording any concerns would not be discoverable. They would be adverse documents.
Conclusion
[120] The application for particulars of defects succeeds in part. Further particulars as sought in the attached schedule in respect of defects for each building are granted, as moved:
1 As to paragraph 48 of the 3ASOC, for each of the Buildings:
(a) particulars of the allegation that the Building has failed or will fail to meet the requirements of the Building Code due to the Defects (as defined in the 3ASOC); and
(b) particulars of which Cladding Sheets Defects and Cladding
System Defects allegedly exist in respect of that Building.
2 As to paragraph 49, for each of the Buildings:
(a) Particulars of the nature of the damage to the Buildings; (b) Particulars of the various causes of the damage.
3 As to paragraphs 48 and 49, identify:
(a) Which Buildings the plaintiffs say have already been damaged by:
(i) Moisture ingress behind the cladding of the
Building;
(ii) Decay to timber framing;
(iii) Corrosion of steel framing; and/or
(iv) the presence of mould or fungi;
(b) Which Buildings the plaintiffs say have not already been damaged by:
(i) Moisture ingress behind the cladding of the
Building;
(ii) Decay to timber framing;
(iii) Corrosion of steel framing; and/or
(iv) The presence of mould or fungi,
But which the plaintiffs say will suffer such damage.
4As to paragraphs 5, 19, 31 and 35, for each of the Buildings, the period within which each Building was constructed.
In addition to the above, particulars detailing the deficiencies in the context of whether or not accepted solutions were followed or attempted to be followed in each particular case.
[121] The other applications for further particulars by the defendant fail, being: of the contracts of supply connecting the plaintiffs and the defendant; of the documents relied upon by the plaintiffs; and of the plaintiffs’ contentions of knowledge of defects by the defendant.
Case management
[122] The parties have agreed that if CHH succeeds in its application for particulars of defects in respect of each building, those particulars will be provided progressively. This will be done by way of progressive amendment of a electronic spreadsheet. Utilising this Court’s case management powers, I direct that the plaintiffs load particulars onto the spreadsheet within one calendar month of obtaining the particulars. The plaintiffs have leave to seek variations of this time limit from time to time.
[123] The Court anticipates that there will be flow of particulars, within the one month period, in respect of the 250 buildings already examined. It may be that the scale of exercise may require an extension of the one month period for these buildings. The one month period is more particularly designed for communication of particulars in respect of the buildings yet to be examined.
[124] Just in case it is not obvious, the order for particulars also encompasses that as more is learned about a building and the allegations of defects change, there will be progressive amendment of the particulars, without the need for leave being required, prior to the close of pleadings.
[125] Discovery has been put to one side because of the implications of the strike- out application, particularly as to whether or not a significant part of the claim may be prevented by the application of limitation provisions.
[126] If the parties cannot agree on a workable ongoing exchange of information, whether required by the law of discovery or useful to inform and perhaps assist cooperation between experts in identifying defects and seeing whether agreement can be reached on the causes of any defects, this would be a matter again to be taken up for any further direction in case management conferences.
[127] Costs are reserved. I am inclined to the view that costs should lie where they fall. If either party seeks resolution of costs now, I will receive memoranda, limited to five pages, exchanged in draft.
Solicitors: Meredith Connell, Auckland
Bell Gully, Auckland
Schedule of CHH’s amended requests for further particulars
All paragraph references have been updated to reflect the numbering and wording in the Third Amended Statement of Claim (3ASOC).
| Paragraph in CHH application | Pleading | Request |
| Defects Section D to CHH’s synopsis of submissions | ||
| 10 | [48] Due to the Cladding Sheets Defects, the Cladding Systems Defects, and the Risk Characteristics, the School Buildings have failed or will fail to achieve compliance with Recognised Building Standards, the Building Code Requirements, and the Building Acts (as particularised at paragraph [40] above) (Failures). Particulars (i) The provisions of the Building Code that the School Buildings have failed to comply with or will fail to comply with include clauses E2 and B2. (ii) School Buildings clad in the Cladding Sheets and Cladding Systems have failed to comply or will fail to comply with the Building Code Requirements because (inter alia): A. External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers’ specifications routinely fail to satisfy the performance requirements of the Building Code for 50 years (if used as structural or bracing element) or 15 years (if not used as a structural or bracing element); B. External walls of the School Buildings clad in the | As to paragraph 48 of the 3ASOC, for each of the Buildings: (a) particulars of the allegation that the Building has failed or will fail to meet the requirements of the Building Code due to the Defects (as defined in the 3ASOC); and (b) particulars of which Cladding Sheets Defects and Cladding System Defects allegedly exist in respect of that Building. |
Schedule Page 40
D. Defects
Cladding Sheets and Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers’ specifications that are not in contact with, or in close proximity to, the ground absorb and transmit moisture in quantities that can cause undue dampness and damage to building elements;
C. External walls of the School Buildings clad in the Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers’ specifications do not allow for concealed spaces and/or cavities to be constructed in a way that prevents external moisture being accumulated or transferred and causing condensation, fungal growth or the degradation of building elements;
manufacturers’ specifications routinely fail to satisfy the performance requirements of the Building Code for 50 years (if used as structural or bracing element) or 15 years (if not used as a structural or bracing element);
B. External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers’ specifications that are not in contact
with, or in close proximity to, the ground absorb and transmit moisture in quantities that can cause undue dampness and damage to building elements;
C. External walls of the School Buildings clad in the
Cladding Systems directly fixed on a building frame
As to paragraphs 48 and 49, identify:
(a) Which Buildings the plaintiffs say have already been damaged by: (i) Moisture ingress behind the cladding of the Building;
(ii) Decay to timber framing; (iii)Corrosion of steel framing; and/or (iv)The presence of mould or fungi;
(b)Which Buildings the plaintiffs say have not already been damaged by:
(i) Moisture ingress behind the cladding of the Building; (ii) Decay to timber framing;
(iii)Corrosion of steel framing; and/or
(iv)The presence of mould or fungi,
but which the plaintiffs say will suffer such damage.
Without a cavity in accordance with the manufacturers’ specifications do not allow for concealed spaces and/or cavities to be constructed in a way that prevents external moisture being accumulated or transferred and causing condensation, fungal growth or the degradation of building elements
H. Knowledge/Negligence
Schedule Page 64
MINISTER OF EDUCATION V CARTER HOLT
D.External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems do not prevent the penetration of water that could cause undue dampness, damage to building elements or both; and
EExternal walls of the buildings clad in the Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers’ specification do not make due allowance for:
I. The consequences of failure;
II. The effects of uncertainties resulting from construction or from the sequence in which different aspects of construction occur; or
III. Variation in the properties of materials.
[49] As a result of the Failures the Plaintiffs have suffered and will suffer the following loss (inter alia):
(a) The cost of repairing and replacing the Cladding Sheets and the
Cladding Systems on the School Buildings;
(b)The cost of repairing and replacing structural elements (including building framing) of the School Buildings that have been damaged
H. Knowledge/Negligence
Schedule Page 65
MINISTER OF EDUCATION V CARTER HOLT
Without a cavity in accordance with the manufacturers’ specifications do not allow for concealed spaces and/or cavities to be constructed in a way that prevents external moisture being accumulated or transferred and causing condensation, fungal growth or the degradation of building elements
D. External walls of the School Buildings clad in the Cladding Sheets and Cladding Systems do not prevent the penetration of water that could cause undue dampness, damage to building elements or both; and
E External walls of the buildings clad in the Cladding Systems directly fixed on a building frame without a cavity in accordance with the manufacturers’ specification do not make due allowance for:
I. The consequences of failure;
II.The effects of uncertainties resulting from construction or from the sequence in which different aspects of construction occur; or
III. Variation in the properties of materials.
[49] As a result of the Failures the Plaintiffs have suffered and will suffer the following loss (inter alia):
(a) The cost of repairing and replacing the Cladding Sheets and the Cladding Systems on the School Buildings;
(b) The cost of repairing and replacing structural elements (including building framing) of the School Buildings that have been damaged
H. Knowledge/Negligence
by:
moisture ingress behind the cladding and within the
School Buildings; and
decay to timber framing, or corrosion of steel framing, and the presence of mould and/or fungi;
(c) The costs of preventing staff and students suffering interference: (i) with the education of children; and
(ii) with their health and safety;
(d) Diminution in the value of the School Buildings;
(e) The cost of providing replacement administrative and staff facilities and additional resources on account of interruptions to the operation of the Schools;
(f) Lack of access to and use of portions of the Schools while necessary repairs and remediation works are being undertaken;
(together, Loss).
MINISTER OF EDUCATION V CARTER HOLT
Schedule Page 66
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Section F to CHH’s synopsis of submissions
[12] The First and Second Defendants are designers, manufacturers, and suppliers of cladding sheets and cladding systems. The Third Defendant is the designer, manufacturer, and supplier of cladding
sheets and cladding systems which were purchased and installed on the
School Buildings.
[31] Carter Holt Harvey supplied, either directly or indirectly, the Cladding Sheets and the Cladding Systems to the Plaintiffs, in or around the year of supply (as identified in Schedule 4) (Year of Supply).
[35] The Cladding Sheets and Cladding Systems were purchased and installed on the School Buildings set out in Schedule 4.
Particulars
(i) The Cladding Sheets and Cladding Systems were purchased and installed on the School Buildings in or around the Year of Supply.
(ii)The Cladding Sheets and Cladding Systems purchased for and installed on each School Building are identified in Schedule 4.
[66] Accordingly, in designing and manufacturing the Cladding
Sheets, Carter Holt Harvey failed to comply with the guarantee in s 6of the Consumer Guarantees Act 1993 (CGA) to manufacture goods of acceptable quality.
[70] In the course of its Promotional Activities , Carter Holt Harvey represented that the Cladding Sheets would comply with the Representations (insofar as they relate to Cladding Sheets), and Particular Descriptions (as particularised at paragraphs [32], [33] and [44] above).
As to paragraphs 12, 31, 35, 66, 70, 72, 73, 75 and 110, for each of the buildings clad in Shadowclad that is the subject of the claim against CHH (Buildings):
…
(c) Particulars of the contract under which it is alleged that Shadowclad was supplied to one or more of the plaintiffs, including:
(i) The parties to the contract;
(ii) The date on which the contract was entered into;
…
(v) If the contract was in writing, or partly so, sufficient particulars of the documents to enable them to be identified;
…
(e) The dates on which supplies of Shadowclad installed on each Building were delivered to one or more of the plaintiffs or the site on which the Building was constructed.
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Or, in the alternative:
[73] In the course of its Promotional Activities , Carter Holt Harvey represented that the Cladding Systems would comply with the Representations and Particular Descriptions (as particularised at paragraphs [32], [33] and [44] above).
[75] Accordingly, in designing and manufacturing the Cladding Systems with the Cladding Systems Defects Carter Holt Harvey failed to comply with the guarantee in s 9 of the CGA to supply goods that correspond with their description.
[110] As a result of manufacturing the Cladding Sheets and supplying the Cladding Sheets to the Plaintiffs with the Cladding Sheets Defects, the Carter Holt Harvey breached s 9 of the Fair Trading Act 1986 (FTA).
[5] The First, Second, and Third Plaintiffs sue the Defendants on behalf of the Crown, which is the owner of the school buildings (School Buildings) at the Schools and the land upon which the School Buildings have been built.
[19] All building works, including construction and subsequent renovations, on the School Buildings were commissioned as follows:
As to paragraphs 5, 19, 31 and 35, for each of the Buildings, the period within which each Building was constructed.
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a) by the Second and Third Plaintiffs on behalf of the First Plaintiff engaging design, building, and other professionals including architectural and/or building contractors and/or project managers (Building Work Professionals) to undertake the relevant building work; and/or
b) by the BOTs as agents of the First, Second, and Third Plaintiffs engaging Building Work Professionals to undertake the relevant building work.
[31] Carter Holt Harvey supplied, either directly or indirectly, the Cladding Sheets and the Cladding Systems to the Plaintiffs, in or around the year of supply (as identified in Schedule 4) (Year of Supply).
[35] The Cladding Sheets and Cladding Systems were purchased and installed on the School Buildings set out in Schedule 4.
Particulars
(i) The Cladding Sheets and Cladding Systems were purchased and installed on the School Buildings in or around the Year of Supply.
(ii)The Cladding Sheets and Cladding Systems purchased for and installed on each School Building are identified in Schedule 4.
H. Knowledge/Negligence
[63] The Plaintiffs acquired the Cladding Sheets and Cladding Systems as consumers from building product suppliers in the usual course of trade, in or about the Year of Supply.
As to paragraph 63:
(a) Particulars of the allegation that each of the plaintiffs purchased
Shadowclad for use in the construction of each of the Buildings, including particulars of:
(i) The date(s) on which each of the plaintiffs entered into the agreement to purchase the Shadowclad;
(ii) The person(s) from whom each of the plaintiffs allegedly purchased
Shadowclad;
…
Schedule Page 70
MINISTER OF EDUCATION V CARTER HOLT
(v)If the contract of purchase was in writing, or partly so, sufficient particulars of the documents to enable them to be identified;
(vi)Particulars of the chain of contracts by which the Shadowclad used on the Building passed from CHH to one or more of the plaintiffs;
(vii)The dates on which supplies of Shadowclad installed on each Building were delivered to one or more of the plaintiffs or the site on which the Building was constructed;
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Section G to CHH’s synopsis of submissions
[52] The duty of care arises out of the following facts and circumstances:
(a) Carter Holt Harvey has specialist expertise and knowledge of cladding sheets and building elements;
(b)Carter Holt Harvey designed, manufactured, promoted, and supplied the Cladding Sheets for use in building work, and particularly Light Buildings;
(c) Carter Holt Harvey produced and supplied Specifications which
set out guidance for the installation of its Cladding Sheets;
(d)Carter Holt Harvey carried out the Promotional Activities and marketed and supplied its Cladding Sheets by way of the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions;
(e) At all material times, Carter Holt Harvey knew, or, as designers, manufacturers, and/or suppliers of the Cladding Sheets ought to have known, that its Cladding Sheets would be used on Light Buildings, including the Plaintiffs' School Buildings;
(f) It was reasonably foreseeable that if the Cladding Sheets failed to comply with Recognised Building Standards, the Building Code Requirements, and the Building Acts, buildings on which Carter Holt Harvey's Cladding Sheets were used would suffer damage or will suffer damage in the future;
As to paragraphs 52 and 57:
(a) In relation to paragraphs 52(h) and 57(h), particulars of:
(i) The Minister of Education's reliance upon CHH's expertise to design, manufacture and supply Shadowclad, specifying the person(s) who so relied, the steps taken as a result of such reliance, and the date(s) on which the reliance occurred;
(ii)The Secretary of Education's reliance upon CHH's expertise to design, manufacture and supply Shadowclad, specifying the person(s) who so relied, the steps taken as a result of such reliance, and the date(s) on which the reliance occurred;
(iii)TheMinistry of Education's reliance upon CHH's expertise to design, manufacture and supply Shadowclad, specifying the person(s) who so relied, the steps taken as a result of such reliance, and the date(s) on which the reliance occurred;
(iv)The Board of Orewa Primary School's (and the Boards of Trustees of other relevant schools') reliance upon CHH's expertise to
design, manufacture and supply Shadowclad, specifying the person(s) who so relied, the steps taken as a result of such reliance, and the date(s) on which the reliance occurred;
[See (b) below]
(g) It was reasonable foreseeable that if the Cladding Sheets failed to comply with Recognised Building Standards, the Building Code Requirements, and the Building Acts, occupants of the buildings on which Carter Holt Harvey's Cladding Sheets were used would suffer interference with their health and safety.
H. Knowledge/Negligence
(h)The Plaintiffs relied on Carter Holt Harvey's expertise to design, manufacture and supply Cladding Sheets that complied with Recognised Building Standards, the Building Code Requirements, and the Building Acts. Such reliance was inherent in the Plaintiffs purchasing the Cladding
Sheets and/or allowing the Cladding Sheets to be installed on the School Buildings; and
(i) At all material times, Carter Holt Harvey knew of, or, as designers, manufacturers, and/or suppliers of the Cladding Sheets ought reasonably to have known of, the Plaintiffs' reliance.
[57] The duty of care arises out of the following facts and
circumstances:
(a) Carter Holt Harvey has specialist expertise and knowledge of cladding systems and building elements;
(b) Carter Holt Harvey designed, manufactured, promoted, and supplied the Cladding Systems for use in building work, and particularly Light Buildings;
(c) Carter Holt Harvey produced and supplied Specifications which set out guidance for the installation of its Cladding Systems;
(d) Carter Holt Harvey carried out the Promotional Activities and marketed and supplied its Cladding Systems by way of the Representations and Particular Descriptions;
(e) At all material times, Carter Holt Harvey knew, or, as a designer, manufacturer, and/or supplier of the Cladding Systems, ought to have known, that its Cladding Systems would be used on Light Buildings, including the Plaintiffs' School Buildings;
H. Knowledge/Negligence
(f) It was reasonably foreseeable that if the Cladding Systems failed to comply with Recognised Building Standards, the Building Code Requirements, and the Building Acts, buildings on which the Defendants' Cladding Sheets were used would suffer damage or will suffer damage in the future;
(g) It was reasonable foreseeable that if the Cladding Systems failed
to comply with Recognised Building Standards, the Building Code Requirements, and the Building Acts, occupants of the buildings on which Carter Holt Harvey's Cladding Systems were used would suffer interference with their health and safety.
(h) The Plaintiffs relied on Carter Holt Harvey's expertise to design, manufacture and supply Cladding Systems that complied with Recognised Building Standards, the Building Code Requirements, and the Building Acts. Such reliance was inherent in the Plaintiffs purchasing the Cladding Systems and/or allowing the Cladding Systems to be installed on the School Buildings; and
(i) At all material times, Carter Holt Harvey knew of, or, as a designer, manufacturer, and/ or supplier of the Cladding Systems, ought reasonably to have known of, the Plaintiffs' reliance.
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| [52] The duty of care arises out of the following facts and circumstances: (i) At all material times, Carter Holt Harvey knew of, or, as designers, manufacturers, and/or suppliers of the Cladding Sheets ought reasonably to have known of, the Plaintiffs' reliance. [57] The duty of care arises out of the following facts and circumstances: (i) At all material times, Carter Holt Harvey knew of, or, as a designer, manufacturer, and/ or supplier of the Cladding Systems, ought reasonably to have known of, the Plaintiffs' reliance. | (b) In relation to paragraphs 57(i) and 57(i): (i) The dates on which CHH acquired knowledge of each plaintiff's reliance; (ii) Particulars of the sources of CHH's knowledge. | |
| 1 | [88] The duty of care arises out of the following facts and circumstances: (a) Carter Holt Harvey has specialist expertise and knowledge of cladding sheets and building elements; (b) Carter Holt Harvey designed, manufactured, promoted, and supplied the Cladding Sheets for use in building work, particularly Light Buildings; (c) Carter Holt Harvey produced and supplied Specifications which set out guidance for the installation of their Cladding Sheets; (d) Carter Holt Harvey carried out the Promotional Activities and marketed and supplied its Cladding Sheets according to the Representations (insofar as they relate to Cladding Sheets) and the Particular Descriptions; (e) At all material times, Carter Holt Harvey knew, or, as a designer, manufacturer, and/or supplier of the Cladding Sheets ought to have known, that its Cladding Sheets would be used on Light Buildings, including the School Buildings; . | As to paragraphs 88, 90, 95, 97 and 103(f), particulars of (a) The Minister of Education's reliance upon the Representations and the Particular Descriptions, specifying: (i) The person(s) who so relied; (ii) The specific Representation(s) and Particular Description(s) relied upon by such person; (iii)The action(s) taken by such person in reliance on the relevant Representation(s) and Particular Description(s); (iv)The date(s) on which the reliance occurred; (b) The Secretary of Education's reliance upon the Representations and the Particular Descriptions, specifying: (i) The person(s) who so relied; (ii) The specific Representation(s) and Particular Description(s) relied upon by such person; (iii)The action(s) taken by such person in reliance on the relevant Representation(s) and Particular Description(s); (iv)The date(s) on which the reliance occurred; |
(f) The Plaintiffs relied on representations made by Carter Holt Harvey in relation to the Cladding Sheets, including the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions, in Carter Holt Harvey's capacity as the designer, manufacturer, and suppliers of the Cladding Sheets. The Plaintiffs' reliance was inherent in the Plaintiffs allowing the Cladding Sheets to be installed on the School Buildings;
Particulars
(i)Each Plaintiff relied on the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions in or around the Year of Supply allowing the Cladding Sheets to be installed on the School Buildings.
(g) Carter Holt Harvey, in or around the Year of Supply, knew of, or, as a designer, manufacturer, and/or supplier of the Cladding Sheets, ought reasonably to have known of, the Plaintiffs' reliance; and
(h) It was reasonably foreseeable that the Plaintiffs would suffer
damage if Carter Holt Harvey's representations in relation to the Cladding Sheets were false.
(d)The Board of Orewa Primary School's (and the Boards of Trustees of relevant schools') reliance the Representations and the Particular Descriptions, specifying:
(i) The person(s) who so relied;
(ii) The specific Representation(s) and Particular Description(s) relied upon by such person;
(iii)The action(s) taken by such person in reliance on the relevant
Representation(s) and Particular Description(s); (iv)The date(s) on which the reliance occurred;
(e) The date(s) on which CHH acquired knowledge of each plaintiff's reliance;
(f) Particulars of the sources of CHH's knowledge of each plaintiff's reliance.
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[90] The Plaintiffs allowed the use of the Cladding Sheets on the School Buildings in reliance on the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions.
Particulars
(i) The Cladding Sheets used on each of the School Buildings are identified in Schedule 4.
(i) The Cladding Sheets were fist used on each of the School
Buildings in or around the Year of Supply.
(ii)The Plaintiffs, or their agents, received the Representations (insofar as they relate to Cladding Sheets) and Particular Descriptions in or around the Year of Supply as further particularised in Schedule 4.
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