Building products not subject to 10 year long-stop

Carter Holt Harvey (CHH) has continued its unfortunate run of losing every significant court case in recent time; the latest being a summary judgment decision from the Supreme Court in CHH v Minister of Education [2016] NZSC 95. [CHHvMOEOrs (1)]

The case related to defective building products produced by CHH (primarily Shadowclad) that have been used on school buildings throughout the country. As a result of the defects the Minster alleges the schools are not weathertight.

CHH sought summary judgment that the Minister has no claim against CHH. Summary judgement is a preliminary determination where the facts are taken to be true in order to determine whether the Minister may be a legal claim. As a result full argument was not heard on each issue and the judgment needs to be read in this light.

The Minister brought a number of claims against CHH, for the purposes of this post we focus on the two key likely to have a significant impact on the industry:

  1. Negligence
  2. Limitation under s 393 Building Act 2002

Negligence

CHH had argued that no duty of care was owed because there were complex commercial relationships involved and a duty would cut across the contractual arrangements (a principle originally formulated in an earlier case in which CHH was unsuccessful on this point). The Court found that it was arguable that a duty of care was owed by product manufacturers and the issue would need to be determined at trial.

Limitation

Section 393 of the Building Act 2002 provides a 10-year limitation in relation to building work. CHH submitted that there was no meaningful distinction between building work and the supply of building products and that the long-stop should apply to CHH products. The Court did not agree, finding that the long-stop provision does not apply to defective building materials or products.

There are two ways to look at this result.

  1. If you are a supplier of building products or materials you may owe a duty of care to building owners that is not limited by the 10-year longstop in the Building Act.
  1. If you are a building owner and can identify defective products in your building the scope for bringing a claim against the manufacturer has increased significantly.
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Photo from TVNZ – Fair Go

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