Legal stoush over leaky schools

By Morgan Tait, Nicholas Jones

Long Bay Primary School principal Linda Barton in the school's hall which is a leaky building. Photo / APN
Long Bay Primary School principal Linda Barton in the school's hall which is a leaky building. Photo / APN

The Ministry of Education has begun legal action against major building product companies, including Australian giant James Hardie, over its huge repair bill for leaky school buildings.

The move comes as the ministry fights more than 100 leaky building court cases.

Acting Secretary for Education Peter Hughes yesterday announced the ministry had lodged a High Court claim against wall cladding manufacturers that had supplied materials used in schools.

The decision to go after cladding manufacturers, in addition to builders and architects, has been labelled a difficult test-case by a prominent leaky building lawyer.

"This leads me to think that there must be some fundamental design failings in the systems and key elements of the building process," Principals' Federation president Philip Harding said.

Remediation work is under way in more than 800 buildings at more than 300 schools nationwide.

The cost for full remediation across all schools has been put at around $1.5 billion.

The Ministry of Education has not named the companies involved. However, yesterday James Hardie Industries, the Australian building products company, confirmed it was one of them.

It temporarily halted trading in its shares, saying the legal action affected two New Zealand subsidiaries and other parties.

The court action comes after information obtained by the Herald under the Official Information Act reveals the extent of the ministry's battle to recover money.

The ministry has 101 leaky building legal cases in the court system. It has settled 27 legal cases as of April 5, for cash or services in kind worth $8,494,372 (against legal costs of $744,282).

In a statement to the Australian Stock Exchange, James Hardie said the ministry was seeking costs and unspecified damages for "thousands" of leaky school buildings.

"James Hardie and the [NZ subsidiaries] are working with legal advisers with respect to their response to the claim."

Potential claims in relation to "alleged product failure" were recognised as a contingent liability in James Hardie NZ Holding's 2012 annual report filed to the Companies Office. A $20.9 million provision in current liabilities and a further $10.3 million provision in non-current liabilities was made "which covers the expected costs of investigating, defending and otherwise resolving these claims," the report said.

Lawyer Paul Grimshaw, who specialises in leaky building cases, said it was a multibillion-dollar lawsuit that could take years to resolve.

"[I'm] not saying the Government will not succeed, but it is going to be a difficult case because they will have to show that the system that James Hardie put together was negligently put together or flawed. James Hardie will argue there was nothing wrong with the system they put together ... it is the fault of the people who put up the James Hardie product."

Mr Harding said any legal action on leaky classrooms was welcome, he said, but only a fraction of the cost would be recovered.

"I was talking to a senior ministry official [on Tuesday] who said that some of the players had gone broke. That's a protection that some of them will doubtless use.

Specialist leaky home lawyer Adina Thorn, who is acting for a number of owners, said James Hardie was facing numerous claims in New Zealand. "Some of those claims allege that the company's products, in themselves, did not perform. Those claims are denied by James Hardie."


Leaky schools

• Total repair bill about $1.5 billion

• Fresh legal action against cladding manufacturers

• More than 100 other court cases Nicholas Jones and Morgan Tait

- NZ Herald

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