Liability of a cladding supplier/manufacturer

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Timothy Bates of Auckland law firm Legal Vision.

In this month’s article I focus upon a decision where the liability of a supplier/manufacturer was considered under the Consumer Guarantees Act 1993.

This was an interlocutory decision as to whether to strike out the claims brought in negligence, and under the Consumer Guarantees Act 1993, on the basis that they were time-barred.

It is to be noted that a claim may be struck out if it discloses no reasonable cause of action, or partially, if the result will be a genuine reduction in the scope of the case.

 

Factual background

• The plaintiffs owned a house which they reclad in 2008 with a cladding system imported into New Zealand by Mico, known as Anthra Zinc.

Before installing it, Metal Design Solutions (MDS) advised that there could be some white staining which would appear naturally but, in time, would gradually be incorporated into the colouring of the cladding.

The install occurred between May 1, 2008, and July 25, 2009. The cladding MDS installed had been supplied by Mico.

Ultimately, the white staining appeared on the cladding surface and never disappeared, contrary to what had been represented. Several techniques were used to remove the white staining, first, by applying oil and, second, by using a heated water blaster.

Neither of the two techniques worked, and the plaintiffs were left with a badly white-stained cladding surface.

Legal issues

Central to the legal debate in the proceedings was the fact that the plaintiffs had brought the claim as against Mico more than six years after the date of the supply of the cladding system so, potentially, the claims were statute barred by operation of section 4 of the Limitation Act 1950.

 

Negligence

The six-year limitation period imposed by the Limitation Act 1950 does not commence until all elements of the cause of action in negligence have accrued — namely, duty, breach of duty and damage/loss.

It was argued for Mico that, as at delivery date, the cause of action accrued as it was a defective product.

However, the counter argument pursued by the plaintiffs was that their cause of action in negligence did not accrue until the defect became reasonably discoverable.

In particular, the plaintiffs argued that until visible staining appeared they could have sold the house for market value, unaffected by latent defects.

Her Honour, Associate Judge Sargisson was attracted by this argument, and ruled that it was not so clearly the case that the cause of action based in negligence accrued at the date of delivery of the cladding product, that she should strike out the claim.

Her Honour was also unwilling to entertain an argument that the claims available to the plaintiffs as against Mico were limited to contract and the Consumer Guarantees Act 1993.

She cited the Court of Appeal judgment in Carter Holt Harvey Ltd v Ministry of Education as being authority for the proposition that despite a clear contractual chain being in place as between supplier, installer and end user of the product, a duty of care may still be owed.

In particular, she cited from the detailed analysis provided by Justice Asher in the Carter Holt Harvey decision.

The plaintiffs argued that in order to establish breach of a guarantee as to acceptable quality, a principle akin to the test of reasonable discoverability must be applied in terms of limitation.

In this way it was argued that the six-year limitation period, as prescribed by Section 4 of the Limitation Act 1950, ought to be extended out to the date of discovery of the cladding problem.

 

Consumer Guarantees Act 1993 

Her Honour took note of the fact that for a successful claim to be brought pursuant to the Consumer Guarantees Act 1993, then a remedy will only be provided by Section 27 where loss has occurred.

Ultimately, she held that it was not sufficiently certain that the cause of action under the Consumer Guarantees Act 1993 accrued as at date of delivery of the cladding material, such that she could strike out that cause of action.

I note there was no detailed examination of Section 4 of the Limitation Act 1950 within the judgment, and whether it could be said to apply to claims brought pursuant to the Consumer Guarantees Act 1993.

The six-year limitation imposed by Section 4 is mainly directed at claims brought in contract and tort.

The Consumer Guarantees Act 1993 cause of action brought in the decision of Carter Holt Harvey v Metal Design Solutions Ltd & Others is neither of these although, arguably, it is an “action to recover any sum recoverable by virtue of any enactment” which would also have a six-year limitation period imposed by Section 4 of the Limitation Act 1950.

I note the Consumer Guarantees Act 1993 provides no specific direction on the application of the Limitation Act 1950.

 

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by Legal Vision or Building Today to anyone who relies on the information contained in this article.

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