A judge has ruled that a case against building firm Carter Holt relating to a defective cladding product can proceed, rejecting the company's attempts to have it dismissed.

A multimillion-dollar class action was filed by building and homeowners over allegedly leaky building products supplied by Carter Holt Harvey.

Property owners are seeking at least $40 million in damages after their properties were constructed with Shadowclad, a form of external cladding.

Already subject to court proceedings, the Ministry of Education alleges the cladding product was defective and left the ministry with about 800 leaky school buildings.

Advertisement

The estimated repair bill for the leaky school buildings the Ministry of Education is seeking has been reported as in excess of $1.1 billion.

The plaintiffs brought a representative claim against Carter Holt in relation to Shadowclad, a form of external cladding.

Made from pine, it is manufactured and supplied by Carter Holt Harvey and is advertised as a product that's been "trusted in New Zealand construction for over 25 years" and as suitable for both exterior and interior use.

The claim is funded a by an offshore litigation funder. Carter Holt applied to stay the claim as an abuse of process.

Carter Holt submitted that the claim had been brought without the Court's (necessary) permission; the plaintiffs' solicitor made misleading statements in promoting the claim; and funding arrangements are objectionable.

Lawyer Adina Thorn commented publicly about the claim between May 28, 2017, and June 13, 2018. Most of Thorn's comments were through press releases, publication of those, and media interviews.

Carter Holt contended within this period, Thorn made misleading statements "designed to encourage registrations of interest in the proceeding for the purpose of achieving sufficient numbers of participants to secure commercial funding".

The plaintiffs submitted that Thorn said nothing misleading, and even if she did, that should not be visited on their claim; the plaintiffs did nothing wrong.

Advertisement

Justice Mathew Downs ruled that "the misleading statements fall well short of an
abuse of process, and equally satisfied no corrective action is required, including in
relation to the plaintiffs' representation."

"I would not have granted a stay even if I had concluded the conduct amounted
to an abuse. A stay would be hopelessly disproportionate to the wrong and unfair to the plaintiffs. They did nothing improper."

Carter Holt contends "the whole process is premature" and there should be a case
management conference before that step is taken.

Justice Downs disagreed.

"The application was filed two months ago. It is time to progress it — and the claim more generally."