In over a decade of leaky building litigation, there has been no decided cases on the issue of whether any of the cladding systems used over this period are inherently flawed.
With an estimated 90,000 properties (not including commercial properties) constructed using monolithic fixed face cladding in the decade following the mid 1990’s, a finding that inherent flaws in some of the claddings systems used over this period have contributed to the failures would have serious implications for homeowners throughout the country. There is nothing novel about manufacturers being held liable for defective product, and indeed the law of negligence has its origins in such as case.
It has been unclear whether the manufacture and sale of a cladding system would be subject to the 10 year long stop provision in the Building Act 2004. In order for work to come within the scope of section 393 it must be come within the definition of building work, being “for, or in connection with, the construction, alteration, demolition, or removal of a building”. A similar phrase is repeated in section 393 itself, which states “building work associated with the design, construction, alteration, demolition, or removal of any building” (emphasis added). As many of these systems were taken off the market around 2004, if the 10 year limitation period applied most of these claims would be time barred leaving home owners without a remedy.
There is now a series of cases which have found that to be subject to the 10 year limitation period that a specific building must be in mind when the work was completed. This has been consistently applied, for example:
· Thomson v CCC, CIV 2010 – 409 – 2298 – HC, 28 March 2008 – manufacturer’s specification, not associated with a specific building is arguably not “Building Work” for the purpose of section 393;
· North Shore City Council v Attorney General [2012] NZSC 49 – an audit report from the BIA of a territorial authority is not subject to the 10 year long-stop provision, because the report is not related to a specific building;
· Deeming v EIF – Ansvar Ltd – [2013] NZHC 955 – a Geotechnical report used in an application for sub-division was not subject to the 10 year limitation provision, because no specific building was contemplated at the time the report was produced. This is despite the report latter being used as the basis for the design of the foundation of the property which subsequently failure;
· The Minster of Education v Carter Holt Harvey Ltd [2014] NZHC 681 [4 April 2014] – a cladding specification is not “building work” as it is not related to a specific building;
· GPE Holdings Ltd v BASF New Zealand Ltd [2014] NZHC 802 – a claim against a manufacturer and supplier of a deck membrane system was struck out as time barred under the 10 year limitation period. In addition to producing the product and specification, the supplier recommended the product for the building and undertook onsite testing of a sample deck. The work was therefore associated with a specific building and came within the scope of the 10 year limitation period.
These cases are mostly at the High Court level and are at a preliminary stage, but they are consistent in their analysis. The Supreme Court decision in North Shore City Council v Attorney General is also consistent with this reasoning. The likely result of these decisions is that the focus of claims for building defects will shift to product manufacturers as claims against builders and territorial authorities increasingly become time barred.
We think the analysis in these cases is correct and is consistent with the wording of the section. Section 393 provides a limited long stop period for those involved in the construction of a building. There seems to be no reason why cladding manufacturers should be able to claim that they are involved in building work, any more than manufacturers of other building products should be able to. If the definition extended to cladding systems, it would also extend to anything which is involved in the construction of buildings, nails, sealant, insulation – virtually anything which could be purchased from a building supplier. It is clear the parliament did not intent for the long stop provision to have such a wide application.