A big company in the gun for allegedly leaky cladding did a backflip when a massive lawsuit approached, a lawyer for upset homeowners says.
And the High Court at Auckland today heard an expert nicknamed "Dr Rot" warned James Hardie about its Harditex cladding years before the panels were withdrawn from sale.
The monolithic cement and wood fibre cladding systems are the centrepiece of a $220 million lawsuit.
James Hardie denies the claims from hundreds of homeowners, who allege the Australian company knew or should have known about Harditex problems.
The plaintiffs - the people suing James Hardie - claim the products are to blame for expensive and unhealthy problems including damp, mould and rot in their houses.
Simon Hughes QC, a lawyer for the plaintiffs, said some James Hardie employees raised concerns about Harditex a decade before the panels were pulled from the market.
"Harditex was known to be a very difficult and vulnerable product almost from the start of its launch in 1987," Hughes told Justice Christian Whata.
He cited a 1995 company memo, where an employee voiced worries James Hardie couldn't guarantee the quality of the system it was promoting.
"The company's being exposed to potential rectification costs of a substantial nature," the memo warned.
The court was told building surveyor Philip O'Sullivan and others were drawing more attention to dry rot problems in the 1990s.
Hughes said O'Sullivan discussed watertightness issues with James Hardie and in June 2000 said field studies were needed for Harditex research and development.
According to Hughes, the building surveyor added: "The more convinced I am that a drained and ventilated cavity is absolutely essential behind claddings such as Harditex."
The court heard O'Sullivan was nicknamed Dr Rot.
"He rejoiced in that name, at least for a while," Hughes added.
Harditex was withdrawn from the market in 2005.
The lawsuit has evolved over many years, and Hughes said James Hardie had recently employed a strategy of portraying the cladding to be something it wasn't.
He said the company's position involved a 180-degree turn in relation to how Harditex was supposed to work.
Hughes said as a lawsuit snowballed, the company contrived the idea of a concealed barrier with "magical draining properties".
He said James Hardie seemed to contend it had previously misunderstood the nature of its own product.
The plaintiffs' lawyer also said Canadian testing of Harditex in Waterloo, Ontario, was deeply flawed.
"The testing did not faithfully replicate the real-word environment in which Harditex would have to perform," Hughes said.
Hughes said the tested versions had gaps which the Harditex system promoted in New Zealand did not.
"They created the very gaps which don't exist in the system in order to prove that the system works. To call it a party trick is to trivialise the effort that has gone into it."
He said in real life, James Hardie encouraged joints to be perfectly sealed and the system failed to let any moisture drain adequately to the outside, or to dry out.
The upshot, he said was that it was impossible to make the system work, and if it had worked on any houses, the court was yet to see an example.
"To draw an inference from the absence of evidence about a successful build seems inherently dangerous," Justice Whata said.
"This is a case of buildings that haven't gone so well."
But Hughes replied: "You will not be shown a house built with Harditex correctly that doesn't leak."
James Hardie has not yet had a chance to respond at length to Hughes' claims and may not for some time.
Hughes will continue his opening remarks tomorrow - and the trial is expected to last at least four months.