COURT OF APPEAL OF NEW ZEALAND

23 July 2015

MEDIA RELEASE – FOR IMMEDIATE PUBLICATION

CARTER HOLT HARVEY LIMITED V MINISTER OF EDUCATION AND SECRETARY FOR EDUCATION AND MINISTRY OF EDUCATION AND BOARD OF TRUSTEES OF OREWA PRIMARY SCHOOL

CA238/2014 [2015] NZCA 321

CASE SUMMARY

This summary is provided to assist in the understanding of the Court’s judgment. It does not comprise part of the reasons of the judgment. The full judgment with reasons is the only authoritative document. The full text of the judgment and reasons can be found at Judicial Decisions of Public Interest www.courtsofnz.govt.nz.

This appeal concerns claims brought by the Minister of Education, the Ministry of Education, the Secretary of Education on behalf of the Boards of Trustees of schools (the claimants) against Carter Holt Harvey Ltd. The claimants say weathertightness issues experienced with a large number of school buildings across New Zealand were caused by faulty cladding products negligently designed and manufactured by Carter Holt.

The claimants filed claims against Carter Holt in negligence, breach of the Consumer Guarantees Act 1983 and breach of the Fair Trading Act 1986. Carter Holt applied to the High Court to strike out all claims, except the Fair Trading Act claim, arguing the causes of action could not succeed and so should not proceed to trial. It was also argued the proceedings were brought out of time, falling outside the 10 year longstop limitation period in the Building Act 2004.

The High Court declined to strike out the claims, holding all challenged causes of action were arguable. It also found that the claim was not out of time. Carter Holt appealed against that decision to the Court of Appeal.

The Court of Appeal has dismissed the appeal save for one of the negligence claims which the Court has held should be struck out. The Court examined the five grounds of appeal advanced by Carter Holt. The first was whether it is arguable Carter Holt is liable as a product manufacturer for carelessly designing and manufacturing its cladding product, shadowclad. The Court emphasised the test for striking out new claims in negligence at a preliminary stage, confirming the claim must be incapable of succeeding on the facts as alleged.

The Court of Appeal has dismissed this ground of appeal and confirmed the claim in negligence is arguable and should proceed to trial. The existence of a duty of care was arguable in light of the contractual context between the parties, the relevant statutes governing building and the construction of schools and their health and safety obligations. The Court also found it arguable there was a separate duty of care owed by Carter Holt to warn the claimants about any potential risk the cladding sheets might pose.

The Court held, however, that a third alleged duty of care owed by Carter Holt to the claimants in negligent misstatement is not arguable and should be struck out. The claimants argued Carter Holt had falsely stated the cladding was fit for purpose through its advertising materials and the claimants had relied on those statements. The Court accepted Carter Holt’s submission that the statements said by the claimants be negligent were not reasonably capable of being relied upon. The statements were general and made to all consumers. The Court has determined this is insufficiently specific to create a duty of care in negligent misstatement. Therefore, the claim in negligent misstatement should not proceed to trial.

The Court has also held the claim under the Consumer Guarantees Act should not be struck out. It is arguable that the claimants were consumers of the cladding products and that these were supplied in circumstances which potentially trigger the protections under the Act.

Finally, the Court has held the claims are not out of time. The Court has held it is not subject to the Building Act 2004 longstop. This is consistent with the policy of the Building Act, which was not intended to apply to manufacturers and suppliers of building products.

The claims this Court has held to be arguable may now be determined in the High Court. The outcome of this appeal concerns only the questions that will be argued in the High Court – it does not decide the liability of either party at this stage.

Judgment: CA2382014.pdf

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