Leaky Homes Exposed 

What is the Court Case About? 

The Class Action Lawsuit against the James Hardie group of companies, has been brought by a group of 1,000 litigants (plaintiffs) who claim that they have suffered loss due to a faulty cladding system (Harditex).

Harditex (and the similar products Titan and Monotek), were widely sold into the New Zealand construction industry between 1987 and 2005. Many buildings clad with these products subsequently leaked and the timber under the cladding decayed.  

Owners from nearly 400 residential homes, plus five commercial buildings and five retirement villages are taking on the multinational corporate James Hardie in one of the largest cases of its kind in NZ history.

What the Plaintiffs Claim?

• Harditex was not fit for purpose, i.e. it was a defective cladding system
• James Hardie Technical Information for installation was deceptive and misleading
• Weathertightness testing had never been done before it was launched on the market
• Harditex had no way of allowing the timber to dry out when it got wet
• James Hardie knew the product was defective but were slow to take it off the market
• When James Hardie did finally test the product, it failed and didn’t take it off the market quickly enough
• James Hardie failed to warn the public about potential problems when they learnt about them 
• James Hardie could not find even one single homeowner who did not have issues with their Harditex product.

What do James Hardie Claim?

James Hardie's response to the accusations so far have been that:

• Harditex was fit for purpose and was not defective
• Builders, designers, and specifiers did not follow James Hardie technical instructions, 
• Only a small percentage of houses had cladding that failed
• Changes to timber specifications (untreated timber) and lax building consent and inspection standards also contributed to the problem
• The plaintiffs represent only a tiny fraction of the thousands of houses clad with Harditex that didn’t have problems
• They are targeted because they are one of the few companies left from the leaky home era that still has value.  All others have wound up or gone under.

How Much Money is Involved?

A figure of $220 million dollars has been suggested with individual claims ranging from $100,000 to $17 million.  However, legal costs would have to come out of whatever is awarded or negotiated.  A litigation funder, Habour Litigation Funding from the UK, are covering the costs of the case, however they will take a hefty fee from any positive result.

Who is Going to Win?

Only one side is 100% guaranteed to win – and in fact have been winning since this case first started – the lawyers.  James Hardie will pay their lawyers no matter what happens.  The plaintiffs’ lawyers are paid by the litigation funder if they lose, or out of any settlement, if they win.  How much will be left for the homeowners remains to be seen?

This type of class action is uncommon in New Zealand.  However in the USA, where they are common, reports suggest 95% end up being settled for legal costs only – i.e. only the lawyers and the litigation funders get paid any worthwhile amount of money.

If that happens here, the owners will end up with very little money, a lot of additional stress and still with houses requiring extensive repairs.  Except now, all of their legal options will be exhausted.

Even if the plaintiffs do win, and win a large settlement, what happens next?  James Hardie is a large offshore conglomerate, and are used to playing legal games.  Almost inevitably James Hardie  are expected to appeal should things not go their way, which only drags out the process and continues to line the lawyers' pockets.  Look at the asbestos judgements that went against them and the difficulty the claimants have had getting any money out of the company. 

Under What NZ Laws is This Case Being Heard? 

The two pieces of legislation which the plaintiffs claim were breached by James Hardie, are the Consumer Guarantees Act and the Fair Trading Act.

How long is the Case Expected to Last? 

The High Court in Auckland is setting aside circa 15-16 weeks. The case started on 17th  May and is expected to run until September 2021. Then Judgement day, which could be a year or more away. Then inevitable appeals, and then what?

Who is Hearing the Case?

Judge Christian Whata at the High Court in Auckland.  Judge Christian Whata was sworn in as a High Court Judge in 2011.  His law practice prior to this appointment was largely in the fields of Resource Management and Maori issues.

What is Harditex?

Harditex is a compressed fibre cement sheet product, sold by James Hardie from around 1987 to 2005.  Harditex sheets were installed mainly over wooden framed houses. It was then jointed and colour textured into a monolithic cladding system by companies approved by James Hardie.  Technical literature was supplied describing fixing, cutting, window detailing, control joints and lists of product names for merchants to stock and sell, which together made up ‘the Harditex system’. 

Of all the various monolithic cladding systems, Harditex is most often associated with leaky buildings.  This is partly because the James Hardy marketing machine was so successful at selling the product, but also as you will see in other articles, Harditex was installed over untreated timber, with no ventilation and with almost a 100% guarantee that it was going to leak and the timber would rot well within the 50-ear durability period required in the Building Act.  Judge Christian Whata gets to decide whether James Hardie are legally liable for this.