Leaky home crisis lawsuit: Former James Hardie boss says he would not buy a house built with company's Harditex cladding

The Sacramento apartments undergoing repairs in 2010 was one of the first and largest leaky home cases. Photo / Brett Phibbs

A former Vice President at James Hardie says he remembers thinking he wouldn't buy a house with the cladding system now at the centre of a $220 million lawsuit.

The James Hardie group of companies deny claims from homeowners who blame Harditex monolithic cladding for problems, including damp, mould and rot.

Brad Bridges told the High Court in Auckland today he worked for James Hardie in three countries and remembered when leaky building claims emerged.

"It was troubling to me that Harditex was being marketed as a cladding system," he said.

"I remember thinking that it would need to be tested fully and installed to exacting standards."

Bridges worked for James Hardie from 1989 to 2002.

Harditex was sold in New Zealand from 1987 to 2005 and the court has heard an employee warned of major potential problems with the system in the mid-1990s.

"They were pushing Harditex as being something new," Bridges told the class action.

"I remember thinking I would not buy a house built with that system."

Bridges said a James Hardie manager in New Zealand once pointed to a student hostel built with Harditex as a great success.

The former VP said he later discovered that hostel was alleged to be leaky.

Bridges had various executive roles and in 2001 worked as senior VP in Mission Viejo, California.

He said the James Hardie group management team, or GMT, had felt the company should focus on the growth of fibre cement products globally.

"It was clear to me and the GMT that there needed to be more detail and less ad-hoc approach."

He said James Hardie at some point seemed to have no single best-practice approach for premarket product testing and checking.

Bridges said he and other employees toured companies including Gillette and DuPont, believed to have high standards in these areas.

The trial at the High Court in Auckland is expected to last at least until September. Photo / Nick Reed

The former VP said he returned from the tours feeling James Hardie was very poorly-resourced by comparison.

Homeowners suing James Hardie have claimed Harditex was not adequately tested for New Zealand conditions.

Some have told the court of ruined dreams, rotten homes and anguish over years as houses were afflicted with hugely expensive leaking and rotting.

Bradley said he remembered hearing about a leaky building claim in Queenstown.

"My recollection was it was nothing compared to the much bigger problem of Harditex in New Zealand."

He said within the company, he was told Harditex-related leaks were a builder's problem.

"My thinking at the time was James Hardie was dodging a bullet."

BUILDING INFLUENCE

Bridges said James Hardie deployed "push-through and pull-through" marketing, where influence cascaded through the construction sector and consumers would ask for Harditex.

Intermediaries, such as building merchants, would apply push-through and influencers and investors would apply pull-through.

"You influence the architects. They influence the consumers."

He said pull-through could manifest in TV advertising directed at consumers who would then ask their builder or architect for Harditex.

But under cross-examination, Bridges said he said he wasn't overseeing the company's New Zealand marketing at this time.

An ongoing issue in the trial relates to who among numerous James Hardie entities knew what, and when.

The plaintiffs - the people suing James Hardie - have argued the company's global leadership knew about problems with Harditex before the product was withdrawn.

But the defence has accused homeowners of trying to entangle parent company James Hardie Industries PLC in the lawsuit.

The parent company is now domiciled in Ireland.

Defence counsel Jack Hodder QC asked Bridges about James Hardie's business units and decision-making.

Bridges said he agreed that separate business units made marketing decisions.

Tax avoidance and tax law expert Professor Michael Littlewood said the James Hardie entities were highly integrated.

But Hodder said that was just an assumption.

"It's obvious. I haven't assumed it," Littlewood replied. "I've formed that opinion on the basis of documents I've seen."

He added: "The higher the degree of integration, the greater the degree of tax savings obtainable."

"You don't know the degree," Hodder replied. "You can't give us an opinion that's useful."

MEGA-LAWSUIT

Homeowners suing James Hardie entities claim Harditex was vulnerable to water ingress and relied on impossibly high-quality workmanship not to leak.

But James Hardie has argued shoddy building practices and industry deregulation were responsible for leaky homes.

In a brief of evidence shown to the court, another former James Hardie employee said the use of untreated timber and absence of eaves could be blamed for the crisis.

The James Hardie group has also suggested homeowners are suing it because builders, council inspectors and other relevant people don't have as much money as it does.

The lawsuit is the largest leaky housing case in New Zealand's history.

The trial before Justice Christian Whata continues.