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Settlement a significant win for schools


Hon Nikki Kaye
Associate Minister
of Education

23 December 2013 Media Statement
Settlement a significant win for schools
The settlement of legal action by the Ministry of Education against two New Zealand subsidiaries of James Hardie over weather-tightness of school buildings is good news for the future of New Zealand schools, says Associate Education Minister Nikki Kaye.

“This settlement represents a win-win situation for both parties and I’m very pleased to see it reached,” Ms Kaye says.

The Ministry and James Hardie have agreed to a settlement that includes mutually beneficial terms to the supply of certain James Hardie products.

The Ministry is a significant client of building supplies and the construction industry. The school property portfolio has a replacement value of $21.9 billion that includes more than 2000 Crown-owned schools and over 29,000 buildings.

“Each year the Ministry commits on behalf of Government around $500 million to maintain and develop existing school properties. This year alone an additional $134 million was set aside to invest in areas of growth – $70 million of these funds have already been allocated to establish three new schools,” Ms Kaye says.

“This agreement strengthens the Government’s ability to significantly address weather-tightness issues in our schools and support future investments in school property – without the need for lengthy court action. It will also support the on-going manufacture of building supplies in New Zealand, which directly supports industry and jobs,” Ms Kaye says.

Specific details of the settlement remain confidential. As part of the settlement, the Ministry has agreed to discontinue the claims made against the Company’s two New Zealand subsidiaries, but will continue its action against additional parties.

“Legal action will continue to be taken to protect the Government’s significant investment in schools and to ensure that our students and teachers have the best possible learning environments for our learners and teachers,” Ms Kaye says.

“The Ministry remains fully committed to pursuing other defendants in this and other legal matters relating to weather-tightness issues affecting school buildings on behalf of New Zealand taxpayers.”

--

Frequently asked questions
When was the claim involving James Hardie lodged?
12 April 2013.
What are the details of the settlement?

The Ministry and James Hardie have agreed to a settlement that includes mutually beneficial terms to the supply of certain James Hardie products.

What are the benefits of the settlement?

This is a win-win situation for the Ministry and James Hardie - an arrangement has been entered into that will:
• strengthen the Government’s ability to significantly address weather-tightness issues in our schools and support future investments in school property – without the need for lengthy court action.
• support future, high quality school property developments around New Zealand
• bring a discontinuation of claims by the Ministry of Education against James Hardie’s New Zealand subsidiaries
• support building supplies manufacturing in this country, and support New Zealand industry and jobs.

What is the value of the settlement?

Specific details of the settlement remain confidential as the Ministry continues its action against additional parties, but it strengthens the Government’s ability to significantly address weather-tightness issues in our schools and support future investments in school property – without the need for lengthy court action.

Legal action will continue to be taken to protect the Government’s significant investment in schools and to ensure that our students and teachers have the best possible learning environments for our learners and teachers.

Which companies remain involved in the product liability claim still before the High Court?

• Carter Holt Harvey Limited (Carter Holt Harvey);
• CSR Building Products (NZ) Limited (CSR Building Products).

Is settlement likely to occur with the remaining companies?

It’s too early to comment on the outcome of matters still before the courts, but the settlement with James Hardie is encouraging.

Why is the Ministry continuing legal action?

The Ministry has been pursuing legal action on leaky buildings since 2009/2010 and to date has successfully settled more than 40 claims.

It continues to take legal action as needed to protect the value of crown assets, deliver quality learning environments, and promote better building practices in the future.

When will the remediation of leaky school buildings be completed?

The Ministry is in year 4 of a 10-15 year work programme that started with the highest priority buildings and is progressing through to future proofing all New Zealand schools against these types of issues.

What has been done to prevent future issues of this kind?

A priority for the Ministry is future proofing schools to ensure they continue to be the best possible modern learning environments. The Ministry has introduced mandatory Weather-Tightness Requirements under its New Zealand School Property Strategy – these requirements:
• ensure school buildings are weather-tight and fit for purpose
• are used by designers and work in conjunction with the New Zealand Building Code
• include a peer review of all school designs.

The Ministry has also introduced processes and standards that will help protect against any future negligence on the behalf of Councils that could impact the quality and sustainability of school buildings.

Will the Ministry be pursuing Councils in relation to leaky buildings?

The Ministry has considered the issue of potential Council liability and decided to not directly pursue Councils or Territorial Authorities in relation to leaky buildings, unless there are exceptional circumstances, because:
• such action will interfere with the current successful programme of legal cases and settlement negotiations by:
o significantly increasing the complexity, time and cost involved in obtaining settlements or judgments though the Ministry’s successful recovery programme
• any successful claims against Councils or Territorial Authorities would simply shift costs between tax payers and rate payers
• the Ministry has introduced processes and standards to protect against any future negligence on the behalf of Councils that could impact the quality and sustainability of school buildings.


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