CRIDGE v STUDORP LIMITED [2021] NZHC 2077

CRIDGE v STUDORP LIMITED [2021] NZHC 2077 [11 August 2021]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2015-485-594[2021] NZHC 2077BETWEEN T J CRIDGE AND M A UNWINPlaintiffsAND STUDORP LIMITEDDefendantCIV-2015-485-773BETWEEN K M FOWLER AND S WOODHEADPlaintiffsAND STUDORP LIMITEDDefendantJAMES HARDIE NEW ZEALANDLIMITEDSecond DefendantHearing: 17 August–11 December 2020 and 23 June 2021; furthersubmissions received 28 July 2021Counsel: J A Farmer QC, R J B Fowler QC, D J S Parker, E S K Dalzell,J T Wollerman, D S Thorne, B M Lambert, D A Fry andD Viatos for PlaintiffsJ E Hodder QC, B A Scott, J A McKay, E S Scorgie, T D Smith,J Y Moran, Z E Koo, S R Roberts, J P Papps, B J M McIntoshand O E Battell-Wallace for DefendantsJudgment: 11 August 2021JUDGMENT OF SIMON FRANCE JTable of ContentsParagraph No.INTRODUCTION [1]Overview [1]Introductory comments [8]What is Harditex? [11]The purpose of a cladding system [22]The alleged defects [24]Structure of the judgment [37]BUILDING SCIENCE [40]Introduction [40]Moisture management [43]A face-sealed system? [44]Capacity to drain [53]The contribution of the building wrap to drainage [76]Capacity to dry [87]Other systems [101]Independence of Dr Lstiburek [106]Conclusion [127]Durability [129]The composition of a Harditex sheet [136]Fungal decay as a failure mechanism [140](i) A discussion of the trial evidence and the original closing submissions [140](ii) A discussion of the post-trial evidence [181]Differential movement as a failure mechanism [206]Flexural testing [210]Conclusion [221]Capacity to cope with normal building movement [222]Mould [244]The susceptibility of Harditex houses to mould [245]The risks and dangers of mould [257]Further alleged vulnerabilities [263]H-mould [264]Base of sheet [287]Exterior corners [310]Windows [317]Conclusion [340]TESTING [345]The Helfen test [348]The testing process [348]Issues [356](a) Construction of the wall [356](b) Specifications [362](c) Design features [371]Conclusion [382]The RDH test [385]The testing process [385]Results [390]Criticism [397]Conclusion [412]Prolonged duration test [414]Conclusion [423]HOUSES [424]Introduction [424]Bay Lair [446]The damage [446]History [450]A Harditex house? [455]The problems [460](a) The h-mould [463](b) Window [471](c) Base of sheet [473]An alternative water source? [481]Conclusion [491]Woodhouse [495]Cracking/building movement [500]Base of sheet [506]Assessment of Woodhouse [509]San Vito [516]Ambassador [528]Carnelian [533]Golf Road [535]The Esplanade [537]Portsmouth [542]Conclusions [545]BUILDABILITY [551]Introduction [551]Difficulties in building – general evidence [561]Difficulties in building – evidence about specific areas and coating issues [622]Assessment on buildability [645]Inherent defect nine - maintenance [655]NEGLIGENCE [664]Did James Hardie owe a duty of care? [664]James Hardie's argument [665]The homeowners' case [674]Assessment [678]Breach of duty – the product and the system [687]Breach of duty – the technical literature [690]The duty [690]The alleged breach [691]The JHTI documents [696]The evidence [707]Legislative and other background context [723]Other material [729]Assessment [735]Breach of duty – the failure to modify product or warn consumers of the risk [745]The duty [745]The alleged breach [749]The evidence [753]Pre-1999 [753]The Harditex Improvement Project (1999–2001) [773]Senior Management [795]Assessment [816]Knowledge of problems requiring consumers to be warned [817]Untreated timber [820]Monotek improvements [825]Conclusion [827]FAIR TRADING ACT CLAIMS [834]The Law [834]Alleged misstatements – Bay Lair [857]Sheet statements said to be false or misleading [862]System statements said to be false or misleading [869]Buildability statements said to be false and misleading [879]Bay Lair statements [880]Other alleged misrepresentations [882]Conclusion [887]OVERALL CONCLUSION [888]APPENDIX [892]Testing of Harditex before its release on the market [893]BRANZ [900]Complaints system and number of houses [916]Repairs [922]Evidence challenges [932]Recall application [933]INTRODUCTIONOverview[1] In 2002 an overview group established by the Building Industry Associationnoted that in recent years moisture problems had become the single-most commonreason for unsatisfactory building performance in New Zealand. The authors, in whathas become known as the Hunn Report, identified a multiplicity of contributors toNew Zealand's leaky building crisis and made various recommendations.1 In 2004 anew Building Act was passed and in 2004/05 a new version emerged of E2/A511 Report of the Overview Group on the Weathertightness of Buildings to the Building IndustryAuthority (Building Industry Authority, 31 August 2002) [Hunn Report].(3rd ed). E2 is the external moisture clause of New Zealand's Building Code. Thisversion represented a first regulatory push towards the use of cavities behindcladding;2 in 2011 cavities became mandatory for all timber-framed houses.[2] A major player in the New Zealand building industry is James Hardie, thedefendant in this proceeding.3 It manufactures and sells various cladding products forhouses. It is an international company but the New Zealand operation is stand-alone,although obviously drawing on and flowing from the parent. Products may havedifferent names domestically and some different features such as the colour of thesheets, but their physical essence is the same.[3] From 1987 until 2005, James Hardie produced and marketed to the NewZealand building industry a sheet cladding called Harditex. It was a variant on anexisting product called "New Hardiflex". That had been introduced in 1983 and wasnotable for being a fibre-cement product that was asbestos-free. Prior to this, asbestoswas a key component in fibre-cement cladding, but emerging awareness of health risksnecessitated alternatives be developed.[4] The period through which Harditex was on the New Zealand market coincides,most certainly in its later stages, with New Zealand's leaky building crisis. At its mostgeneral, the question this case raises is what role, if any, Harditex played in the crisis.[5] In this proceeding, owners of homes clad in Harditex sue James Hardie forselling what is said to be a cladding product not fit for purpose. That purpose was toprovide a weathertight cladding for New Zealand residential homes, and the plaintiffssay it did not safely achieve this, with their homes suffering from moisture ingress andmoisture-related damage as a result. The plaintiffs, alternatively called "thehomeowners", are:(a) four "lead" homeowners (the actual plaintiffs) involving two dwellings.Ms Fowler and Mr Woodhead are the respective owners of each half of a2 Cavities are a gap between the external cladding and the building wrap that encloses the timberframing. Their intended effect is to facilitate drainage and/or drying.3 Once James Hardie New Zealand Ltd, it is now Studorp Ltd. I will refer to them as the defendantor James Hardie.single duplex dwelling located in Karori, Wellington. Duplex means thereare two separately titled dwellings attached to each other and sharing acommon wall. The other plaintiffs are Ms Cridge and Mr Unwin, whoown one-half of a similar dwelling in Island Bay, Wellington. The ownerof the attached dwelling is not a participant in the proceeding;(b) there are, then, 144 represented owners of 151 properties, all clad inHarditex, where the owners have "opted into" the proceeding. Theproceeding is a class action, meaning these properties receive the benefitsof any applicable findings, or accept the consequences, as regards JamesHardie liability, for their properties if the litigation is unsuccessful. Ofthese, six represented homeowners' properties have been selected as"sample" properties and subject to destructive testing to analyse the extentof moisture damage and the causes of it.[6] The homeowners' case involves a challenge to the suitability of the cladding,and of the method by which it had to be installed. The plaintiffs allege the compositionof the cladding is inherently flawed, the system of installation was inherently flawedand, anyway, too difficult for builders to get right, and the information provided byJames Hardie to assist with using its product was misleading and inadequate. JamesHardie denies these claims. Concerning the eight properties that have been the subjectof detailed analysis, it is common ground they are water damaged, and should not be.[7] At a very general level, the competing positions are:(a) for the plaintiffs, this was a bad product and a bad system which wasunsuitable for New Zealand conditions and which required a level ofbuilding skill that was beyond the skill levels of a reasonably competentbuilder. It is said James Hardie did not do the necessary level of testingbefore releasing the product on the market, and provided inadequateinformation to consumers (including building practitioners) about how tosafely build a house with this new product; and(b) for the defendant, this new product was a relatively minor development ina decades-long system of sheet cladding generally, and fibre-cementcladding particularly, with which competent builders were very familiar.The sheets themselves are of an established proven composition, housescan and were built perfectly well with it, and such failures as have occurredreflect inadequate design of the house and bad workmanship in itsbuilding. The decline in New Zealand building skill standards throughoutthis period is well recognised, including in documents such as the HunnReport.Introductory comments[8] There will understandably be interest in a case about a major product used toclad houses during the time from which emerged New Zealand's leaky home crisis.Anyone with exposure to the emotional and financial impact a leaky home can haveon the people involved can only have the greatest sympathy for those caught up insuch a situation. It is undoubtedly a miserable and stressful experience. It is importantto emphasise, however, this proceeding is an adversarial case where the outcomereflects the Court's assessment of the evidence led by the parties. It is not a furtherinquiry into New Zealand's leaky home crisis, and the Court is not carrying out aninquisitorial role.[9] There was a lot of evidence. The written briefs and their appendices amountedto more than 10,000 pages. The notes of oral evidence are more than 6,000 pages.The documentation is vast. The function of this judgment is not to report or narratethe evidence, but to reach an assessment based on it.[10] The judgment addresses the numerous topics in a particular order. No doubtother structures were possible. What is important to understand is that the differentareas and topics all impact on each other. The science is relevant to understanding thedamage in the houses and the causes of that damage. What the damaged houses arerevealing is relevant to assessing the merits of the competing views on the science.While therefore the judgment adopts an order for discussing topics, that sequence doesnot reflect a progressive unravelling of the answer. The interconnections arerecognised and were considered by me before any of the judgment was written. It isjust that one cannot get all the different influences down on a single page. So whenthe building science is considered and resolved, that outcome is reached with anawareness of all the other evidence, and of conclusions already reached about whathas happened to the houses.What is Harditex?[11] Harditex is a fibre-cement cladding that forms part of a weatherproofingsystem for a house.[12] The traditional New Zealand cladding is weatherboards, which are wooden,bevelled and installed overlapping each other. This method creates drainage pathsbehind the weatherboards, thereby allowing any water getting in behind theweatherboard to drain away. Building wrap, placed between the timber framing andthe weatherboard, provides a further barrier to liquid moisture reaching the framing.The primary barrier, however, is the painted weatherboard.[13] Cladding in the form of sheets has been around as an alternative toweatherboards for quite some time. One such sheet option was fibre cement which isa mixture now of cement and cellulose fibres. Originally a key component of thesesheets was asbestos but as the health risks associated with that became known,alternatives were developed. The Harditex formula used cellulose fibres extractedfrom Pinus radiata. Harditex was the second James Hardie version of an asbestos-free sheet, the first being New Hardiflex.[14] The Harditex sheets are rectangular and roughly twice as high as they are wide,but sometimes taller. They are installed vertically, over a timber framing. Thatframing is wrapped in a breathable building wrap which is stapled to the timberframing. Over the top goes the Harditex sheet, again directly nailed to the frame butobviously with the wrap sandwiched in between. Each 2.4 x 1.2 m sheet has 63 nails,so there is a significant clamping effect between sheet and timber frame.[15] Harditex is a "substrate". It must be coated. The jointing and coating systemsseal some aspects of the sheet,4 fill the gaps between sheets with a tape reinforcedcompound, and then coat the whole sheet with a flexible high quality acrylic coating.The flexibility is key because if the coating is too rigid it will crack with buildingmovement.[16] The coating process should cover all exposed parts of the sheet, including forexample the bottom of the sheet. Fibre cement sheets absorb water so the texturecoating is a vital cog in weatherproofing the house. Those familiar with a predominantstyle of these houses – Mediterranean look, often no eaves, sometimes parapets – mayrecall some have a flat finish and others have something more akin to a rough-castfinish. The rough cast is an aesthetic feature only. The coating system and productsare the same in either case.[17] It is a trial issue how much of a change Harditex represented, and this initialsummary is not a comment on that. Essentially, however, Harditex was the existingNew Hardiflex asbestos-free product but with bevelled edges. That is, at each side ofthe sheet the last few millimetres had a slope on them, thereby avoiding a straight edgefinish.[18] At the time Harditex was introduced, James Hardie's understanding of themarket was that there was a desire for a completely flat finish to walls (the monolithiclook). Whenever one sheet finishes and another starts (both usually nailed to the sameupright timber piece – the stud), it is necessary for weathertightness reasons to fill thegap between them in some way. A popular early method was initially to cover thejoins with battens, but that is not a flat look. So James Hardie developed these sheetswith sloping edges that created a gap which when filled, with tape and compound,could be made flush to the surface of the sheet, preparatory to the application of thetexture compound.[19] Another feature developed by James Hardie were architectural shapes whichwere basically polystyrene shapes designed to be affixed to Harditex. This provideda wide range of architectural trim details for windows, arches, cornices and columns4 The systems varied.at a fraction of the cost of constructing such shapes out of other materials. Thesefeatures of the bevelled edges as a way of joining the sheets, together with accessoriesneeded for some specific joint situations, plus the architectural polystyrene shapes,and completed with an acrylic coating, lead to the following proposition which iscentral to understanding the trial issues:Harditex is both a cladding sheet and a system.[20] James Hardie brochures themselves recognise both features, observing:The Harditex system is comprised of four basic components:Harditex sheetsjointing systemsarchitectural shapescoating systems.[21] The homeowners' case takes aim at both the sheet and the system.The purpose of a cladding system[22] For present purposes the following two paragraphs from the defendant'ssubmissions capture the task:5295 The Building Code requires that the building prevent the penetrationof water that could cause undue dampness or damage to buildingelements. That does not require the exclusion of all water from theassembly. It instead requires that water be managed to prevent unduedampness and damage.296 That is a rate issue. When the rate of wetting exceeds the rate ofdrying, accumulation occurs. When the quantity of accumulatedmoisture exceeds the moisture storage capacity of a material orassembly, damage occurs.6[23] Building philosophy is very much influenced by "the 4Ds", being deflection,drainage, drying and durability. These reflect the preceding paragraph – keep thewater out (deflect it), drain out as much as you can of what is not deflected, and dryout the materials which have been exposed and have consequently absorbed some of5 Footnotes omitted.6 This paragraph is sourced in a defence witness, Dr Lstiburek.that moisture. Durability, in this context, relates primarily to the need to treat theframing timbers, but also the cladding itself.The alleged defects[24] The homeowners allege nine inherent defects in the sheet and system whichcan be described in these terms:Inherent defect one – The Harditex sheet is inherently moisture absorbent andwill therefore absorb moisture and, when directly fixed to the timber framing,permits the transfer of moisture to adjacent building elements such as theunderlay and the framing.Inherent defect two – The Harditex cladding system (which is direct fixed tothe framing of the building) allows water ingress at various locations includingat the base of sheets, at horizontal control joints, at penetrations includingwindow junctions, at junctions with other building elements, through areaswhere cracking occurs and elsewhere.Inherent defect three –The Harditex cladding system does not adequatelymanage drainage and drying of any water that penetrates or accumulateswithin the Harditex cladding system and underlying areas. This is contrary tosound water management principles.Inherent defect four – The Harditex cladding system fails to adequatelyaccommodate normal building movement (whether that arises due to thermalactivity, effect of moisture, seismic activity, structural movement throughwind pressure or through other normal and expected causes of buildingmovement), which leads to cracking, water ingress and damage.Inherent defect five – The Harditex sheet is not durable. It absorbs moistureand is prone to damage from exposure to moisture, including swelling, rottingand decay.Inherent defect six – The Harditex 1991 Technical Information was inadequateand incapable of providing a cladding system which was fit for its purpose asa durable and weathertight exterior wall cladding system and able to meetappropriate standards and requirements for building.Inherent defect seven – The Harditex 1991 Technical Information fails tospecify a method of installation of the Harditex cladding system which makesadequate allowance and contains sufficient tolerances for the typicalconditions that exist on a building site, including climatic conditions, the skilland precision of a reasonable cladding installer and the tolerances to whichbuildings are constructed.Inherent defect eight – The Harditex 1991 Technical Information failed toprovide details and specifications for important and commonly occurringdetails including face sealed window junctions, terminations of the horizontalcontrol joints and exterior and interior corners.Inherent defect nine – The maintenance requirements for the Harditexcladding system were vague, and impractical or impossible to achieve.[25] From this list it can first be noted that there are two allegations about the sheetitself, being defects one and five. Defect one is a claim that the sheet is inherentlymoisture absorbent. That this is so is common ground, and indeed is true of mostbuilding materials – for example, everyone knows wood absorbs moisture unlesscoated. Concrete is quite porous, as is brick. The exceptions are metal and glass. Itremains unclear to me why this was pleaded as an inherent defect. It is an importantbackground fact to many of the other claims, and explains, in the homeowners'assessment, a pathway for moisture transfer from sheet to timber framing, but of itself,the fact that a cladding in its natural (uncoated) state is moisture absorbent is not, andcannot be, an inherent defect. The real dispute around the issue is what happens tomoisture stored within the Harditex sheet.[26] The second alleged sheet defect is that found in defect five – the sheet is notdurable because it is prone to damage from exposure to moisture. The damage takesthe form of swelling, rotting and decay. These characteristics are disputed by JamesHardie. For example, in its literature, James Hardie claims that Harditex will not rot.This is a claim that is not Harditex-specific but reflects James Hardie's view of theproperties of fibre-cement products. The homeowners dispute this.[27] Moving from sheet defects, a second group of alleged defects relates to theHarditex system. This concerns how the Harditex sheet is attached to the wall, andhow it interacts with other building elements, such as windows. There are two broadclaims – that the system lets water in behind the cladding, and then it does notadequately deal with that water. The relevant defects are two, three, four, and aspectsof nine (maintenance).[28] To explain some of these further by way of illustration, it is convenient toanalyse a Harditex wall starting at the bottom. The Harditex system calls for the sheetto be affixed slightly off the bottom concrete foundation. This is achieved by buildingthe framing with a slight overlap on the base so that an affixed sheet will have a gapbetween it and the concrete base. The bottom of the sheet, and the gap to the base, areboth then to be coated. It is common ground that due to the absorbency of Harditex,if the bottom edge closest to the ground is not coated, water is likely to be absorbedinto the sheet. How much water and to what height up the sheet is disputed, but theidea of some absorption (called wicking) occurring with an uncoated bottom of sheetis accepted.[29] Returning then to the claim about a defective system, the homeowners say itwas too hard on a building site to coat the bottom of the sheet and most often this didnot happen. It was too hard because applicators used spray guns that were too long tofit under the sheet. There was usually not enough clearance between the bottom of thesheet and the ground to allow this to happen. Further, any alternative means ofapplication such as a brush were too erratic for the nature of the product and whendealing with a thin 7.5 mm wide surface. It is said the effect of no coating is eitherthat the sheet degrades and becomes crumbly, or the moisture wicks up the board farenough to reach timber framing, where the rotting process starts.[30] Moving from the base of the sheet, the homeowners focus on the joins betweenthe sheets. The main concern is the sufficiency of the prescribed gap between thesheets. To understand this, it is necessary to understand that buildings will inevitablymove. Further, in the case of timber frames, the timber will shrink. This is becausewhen it is enclosed the timber will have a higher moisture content than its natural state.Over the first year or so of enclosure, this moisture will dry out until the framingreaches what is known as its moisture equilibrium. The moisture leaving the timbercauses the timber to shrink in all directions – it gets shorter and narrower. If the timbershrinks, inevitably things nailed to it will move. For example, if two Harditex sheetsare nailed to the same piece of wood which then itself shrinks, the sheets will movecloser to each other because the piece of wood is smaller. The plaintiffs claim theprescribed gap to be left between sheets was too small to accommodate this inevitablemovement. The sheets coming together force out the jointing compound so that thesurface coating itself pouts out. This can and does lead to cracking through whichmoisture enters.[31] Next in the area of systemic building flaws, wall penetrations are said to be amajor example of poor advice from James Hardie on how to protect them. A commonexample of a wall penetration is a window. It is submitted these are difficult to installin a weathertight manner, and the assistance given was insufficient.[32] Finally, reference must be made to what is known as the "h-mould". Thecontext is a two storey house, and the area under consideration is where the two storeysmeet – the inter-floor area. The h-mould is a specifically designed accessory made ofPVC. As its name suggests, it is shaped like an "h". The idea is the top sheet sitsabove the horizontal flat top of the "h" hook and the bottom sheet slots in underneath.The joint then needs sealing and coating. The homeowners say the h-mould was aflawed design that would inevitably allow in moisture to attack the uncoated back ofthe sheet, the wrap and ultimately the timbers.[33] These system flaws, and others not yet mentioned in the judgment, are said tobe the means by which the homeowners say the Harditex system allowed water to getin behind the cladding. The second key issue, and in a way the most important topic,is the ability of the system to handle that moisture. If, for example, it all drained awaythen there would not be a rotting problem in the framing.[34] The homeowners say that the Harditex system could not cope adequately withmoisture. This is based on two complementary streams of evidence – (i) what may betermed building science evidence which points out the flaws in the Harditex designthat suggest it will inevitably fail, and (ii) the houses themselves which are said topresent the evidence that these design flaws have materialised in damage. In additionto relying on the damage suffered by the houses, the homeowners' experts built a testwall which was meant to represent a whole wall of a Harditex system house built toJames Hardie specifications. When subjected to water pressures, the test wall failedspectacularly, leaking as it were at every pore. The plaintiffs say this proves thecorrectness of their building science evidence, as do the houses which indisputably aresuffering from moisture damage. It is a conceptually flawed and impractical system.[35] Finally, there are the group of defects (six, seven and eight) that focus on theJames Hardie Technical Literature (JHTIs). These brochures contain specific buildingassistance. They set out installation rules that must be followed and give details ofwhat is and is not warranted by James Hardie. The JHTIs are alleged by the plaintiffsto be incorrect in some of the instructions provided and deficient in a large number ofareas where help was needed and not given. An issue relevant to the resolution of thisdispute is the extent to which Harditex was novel. Obviously the more different it is,the less familiar with the technical requirements builders may be.[36] A summary of the homeowners' case which captures its essence is set out inthe closing submissions:49. The Harditex System was a direct fixed system, using a sheet 7.5mmthick which had untested and unproven durability, and did not incorporateany provision for drainage or [drying]. It was an attempted face-sealedor barrier system, but fails to perform as a face-sealed or barrier systembecause the details provided cannot keep water out, and it is not a realisticexpectation for a cladding system to keep all water out. This appears tobe acknowledged by cl E2.3.2 of the Building Code, which only requiresprevention of penetration of water that could cause undue dampness ordamage: there is no requirement to prevent the penetration of allmoisture. The Harditex System does not manage moisture or movementand is not durable.50. In addition the various editions of the JHTI were not adequate and didnot provide sufficient installation details that would enable the product tobe used in a way which produces a weathertight building.51. When viewed as a whole, each of the inherent defects established by theplaintiffs come together to comprise a defective system which is not, andwas never, fit for purpose.52. This is at odds with the way in which James Hardie held out the Harditexproduct (in various versions of the JHTI) as being suitable, proven [1987only], durable, and which will meet the building code. These statementswere incorrect, false and misleading.53. The combination of these various flaws in the Harditex system hasresulted in significant damage at each of the lead and sample properties.There is no dispute between the parties as to the fact of damage: the issuelies in relation to the cause of the damage and whether this has beencaused by the alleged inherent defects (or as the defendants contend,entirely as a result of workmanship).54. The plaintiffs' evidence is that the damage at the lead and sampleproperties has been substantially caused or contributed to by the inherentdefects.Structure of the judgment[37] The judgment first analyses the evidence in this order:(a) the building science evidence, which includes consideration of themoisture management issue, the durability of the sheet, the ability tomanage building movement, some specific alleged design flaws such asthe h-mould, and the susceptibility of the system to mould;(b) specific testing done for the case on model walls; and(c) the evidence in relation to the damage suffered to houses owned by theplaintiffs, plus the six other sample houses selected by the plaintiffs toillustrate their case.[38] The judgment then applies these conclusions to the law. The topics to beaddressed there are the general issue of whether a manufacturer of residential claddingmaterial owes a duty of care to the owner for the time being of the house. If so, thethree areas where that duty is said to have been breached are in the manufacture of thesheet and the design of the system, in the adequacy of the literature that accompaniedthe product, and in James Hardie's alleged failure to react to a growing awareness ofa problem with its product. The timing of this aspect is circa 2000, and it is allegedJames Hardie breached its duty of care by failing to either withdraw the product orwarn consumers of the established risks in using it. The final topic to be addressedare the plaintiffs' Fair Trading Act claims.[39] Those two sections, the evidence and the law, will resolve the case. Not everytrial issue requires resolution to reach that point. Following the Conclusion, anAppendix will note these unaddressed topics with at times a brief conclusoryobservation, but the judgment will already be long enough so as to tell against furtherexploration of the evidence or issues.BUILDING SCIENCEIntroduction[40] A core claim advanced by the homeowners is that the Harditex system is poorlydesigned. These flaws made it inevitable that Harditex system houses would fail,which they have. It is this proposition that informs the label advanced by thehomeowners – inherent defect one, inherent defect two and so on.[41] There is a considerable body of building science to assist with analysing thecorrectness of this claim. Topics that arise include the size of gaps needed to allowwater to drain, the absorption and drying rates of different materials including woodand fibre cement, predicted levels of water penetration into building envelopes, theproperties of building wraps, the prospects of decay in various materials, the likelyshrinkage rates of materials such as wood and the expected movement of a timber-framed house from various forces such as wind or shaking.[42] The first section of the judgment is an analysis of the Harditex system byreference to this evidence and science. Its purpose is to assess the correctness of thehomeowners' claim of an inherently flawed system.Moisture management[43] The moisture management topic considers whether a Harditex sheet nailed toa timber frame over building wrap is a design that can be expected to safely managethe expected amounts of water that will inevitably get behind the external cladding ofa residential house. The key topics are whether the system has any capacity to drainaway such water, what contribution, if any, the building wrap makes to drainage, andthe capacity of the Harditex sheet to safely absorb this water. "Safely absorb" refersto the capacity of the sheet to store water which the sheet's mechanisms are then ableto dry.A face-sealed system?[44] There was some trial focus on the type of moisture management systemHarditex is. The homeowners claim it is a face-sealed system which is a system relianton keeping out 100 per cent of the water that hits the exterior surface. A face-sealedsystem has no purpose-built capacity to drain away water that gets behind the claddingbecause none is meant to.[45] The primary proponent of this claim was Mr Hazleden, a well-credentialledexpert from Canada in the areas of building envelopes and weathertightness. He wasan important plaintiff witness in that his testimony was the primary (but not only)building science response to the defence experts – Drs Lstiburek and Straube. Thosewitnesses said Harditex was a concealed barrier system (the wrap being the concealedbarrier) with capacity for drainage behind the external cladding.[46] It is convenient at this early point to comment further on Drs Lstiburek andStraube who were key defendant witnesses. They are internationally recognised asexperts in the area of the weathertightness of building envelopes. Dr Lstiburek hasworked for 38 years as a forensic engineer in the area of building failures, with aspeciality in "rain penetration, air burners, vapour burners, air quality, durability andconstruction technology". He is a consultant to numerous major manufacturers ofbuilding products. He has been called in to assist with all the major leaky home crisesthat occurred in North America.[47] Dr Lstiburek is the author of numerous publications, some of which are award-winning. He himself has been the recipient of lifetime achievement awards from manyrelevant organisations. He has chaired standard drafting bodies and is a fellow ofNorth America's leading organisation dealing with all aspects of building enclosures.My assessment, which I do not understand the plaintiffs to challenge, is that he is pre-eminent in the relevant fields.[48] Dr Straube has 30 years of similar experience. He has been involved in projectsthroughout the world. His doctorate was in moisture control in enclosure walls andthat has been his life work since. He also consults to major product manufacturers andto numerous government agencies. He is a building scientist and has undertakenextensive laboratory work. He has been involved in analysis of most types of buildingcladding and has long experience with computer modelling.[49] The correct label for the system was not a topic I found particularly helpful. Itwill be an important question for a designer of a system since the moisturemanagement system being adopted will obviously influence the design of thecomponents of that system. Here, however, the Harditex system has been and gone,and the issue the homeowners advance is that it had inadequate moisture managementcapacity. If that is correct, it did not seem to matter whether it was an unsuccessfulface-sealed system or an unsuccessful concealed barrier system. Conversely, if it didmanage moisture, whether that was through good planning or good fortune did notseem particularly to matter from a litigation viewpoint.[50] To the extent an answer is needed, I do not consider Harditex was a face-sealedsystem, nor that it was intended to be or thought to be. By this I mean that no-onethought the system would keep out all rainwater, although the design of it is that itshould do so as much as possible. That is true of every cladding system.[51] It is important not to confuse the aim of keeping out rainwater with theproposition that there is no way of dealing with moisture if it does penetrate thecladding. All systems aim to keep out rain. Deflection is the first of the 4 "Ds", andthe more you deflect, the less one needs to worry about the other Ds. If the propositionis that Harditex was intended to keep out all water with a consequence that thedesigners thought there was no need to think about what happened to moisture behindthe cladding, the evidence does not support that.[52] The reality is that Harditex could never be a face-sealed perfect barrier system.There are inevitably penetrations in the cladding, such as holes for windows, pipes andvents. The sheets are nailed, thereby creating at least 63 holes per sheet. A basicunderstanding of rain and moisture management would dismiss the idea it could everbe a 100 per cent barrier. Efforts to make it as deflective of water as possible thereforedo not of themselves mean the system cannot deal with moisture that did get through.Capacity to drain[53] The first topic is drainage. Harditex has no intentional drainage paths. Thereis no cavity or other feature designed with the specific intention of draining away waterthat got behind the cladding. I agree with Mr Hazleden on this, although I do notunderstand the defendant to argue otherwise. Rather, through Dr Lstiburek and DrStraube, James Hardie says there are nevertheless drainage paths which inevitably andalways exist. They are the gaps that will exist between the back of the sheet and thefront of the wrap.[54] This is on its face a somewhat surprising proposition because, as has beendiscussed, the system requires the sheets to be tightly nailed to the framing. The wrap,a thin usually synthetic material, is compressed between the timber and the sheet.Drainage down its face might be thought unlikely.[55] Dr Straube and Dr Lstiburek say that there is still enough of a gap. There aretwo aspects to this – the small gaps drainage theory, and the reality of a building. Totake the latter first, it is noted that the clamping effect will not be uniform – across thesurface of the wrap there is a large surface not held to the back of the sheet by a nail.It will be very near to it but not stuck to it, and this is where small gaps drainage comesin. Those small gaps which occur where the sheet is not tightly held to the frame areenough to allow drainage. Further, a timber frame is not uniform. Timber is nevercompletely straight and building lines never perfectly exact. All codes allow fortolerances and these timber variations and tolerances create gaps. Finally, where thewater does encounter a clamp, such as where it is nailed, by its very nature it worksits way around the clamp, moving sideways until gravity again asserts itself and thewater heads on down.7[56] Inherent to this discussion, and a topic to which I will return, are the propertiesof a building wrap. By law all building wrap has long been required to be waterresistant but vapour permeable. If there is a drainage path in the small gap, the waterrepellent nature of the wrap will encourage drainage.[57] Mr Hazleden is critical of this theory for its lack of planning (ie not a designedfeature), and its lack of predictability. He says a properly designed system should havean intentional drainage path, and one cannot know where these inconsistencies in theframing will occur. I do not understand the defence experts to disagree except to saythe existence of the inconsistencies is predictable, just not where they will be withinthe frame. But it is certain they will exist, and therefore certain drainage will occur.7 This is not to say the clamping is irrelevant. It will certainly create an opportunity for water topool at the clamp: see Mark R Bassett, Greg Overton and Steve McNeil "Water Management inWalls with Direct-fixed Claddings" (2015) 38 Journal of Building Physics 560 at 575.[58] The small gaps literature is, in my view, convincing. Its most accessibleexposition is a paper by Jonathan Smegal,8 prepared for his Masters degree. Iunderstand Dr Straube was the supervisor, and he later co-authored a further articlewith Mr Smegal.9 The import of the research is that water can drain through gapssmaller than 1 mm.[59] The plaintiffs seek to minimise this evidence and research by noting the linksbetween the sources – Drs Straube and Lstiburek, and Mr Smegal. The independenceof Drs Lstiburek and Straube is a topic which will be addressed later, but I note firstthat this is not the only literature on the topic. Dr Straube refers in his evidence tonumerous articles and research reports which support and indeed establish theproposition.10[60] It can be noted that two of the other plaintiff witnesses, Mr Lalas andMr Wutzler, accepted that drainage in small gaps can occur. Mr Wutzler is not awitness who I consider has the requisite expertise in this area,11 but I note the evidenceas indicative of the soundness of the general proposition. Other research supports theevidence of the defendant's experts. For example, an experiment by Onysko andothers examined a number of different direct-fixed claddings.12 A general conclusionof the research was that:In most of the above cases some moisture appears to have migrated downwardeven though the siding should have been tightly clamped to the wall. Intypical walls, there are discontinuities in the contact between siding and thewall, as well as between adjacent courses of siding.[61] The main contest to the drainage theory came through Mr Hazleden. AlthoughI accept his expertise and standing, there were issues with his evidence that cause me8 Jonathan Smegal "Drainage and Drying of Small Gaps in Wall Systems" (MASc Thesis,University of Waterloo, 2006).9 John Straube and Jonathan Smegal "The Role of Small Gaps Behind Wall Claddings on Drainageand Drying" (paper presented at 11th Canadian Conference on Building Science and Technology,Banff, 2007).10 See, for example, Timothy D Tonyan, Kevin W Moyer and William C Brown "Water Managementand Moisture Transport in Direct-Applied and EIFS Wall Assemblies" (1999) 27 Journal ofTesting and Solution 219; and William Brown, Peter Adams, Timothy Tonyan and James Ullett"Water Management in Exterior Wall Claddings" (1997) 21 Journal of Thermal Insulation andBuilding Envelopes 23.11 I address Mr Wutzler's expertise at [77] and [93]–[94].12 Donald Onysko, Constance Thivierge, Silvio Plescia and Barry Craig "Drainage and Retention ofWater by Cladding Systems" (paper presented at Proceedings of BEST Conference, 2008) at 14.to accord it lesser weight. Mr Hazleden's evidence was presented through the lens ofa design assessment. This in turn brought into play two propositions – his belief itwas a face-sealed system, and his design perspective that a system should have in-built overcapacity. Without rejecting it as irrelevant, whether the system is a gooddesign or could be better is much less important from a litigation viewpoint than theissue of whether it can work, or, as the plaintiffs describe it, whether it is fit forpurpose.[62] The key aspect of Mr Hazleden's evidence on the moisture managementcapacity of Harditex was some modelling work he did. The purpose of the first modelwas to identify the likely level of water penetration of a Harditex wall in Wellingtonand in Auckland. A second model then calculated the likely drying capacity of thosewalls. For the purposes of these models, Mr Hazleden calculated what he believedwere the standard weather patterns for these two districts. A sound system would havegreater drying capacity than the expected wetting.13 On Mr Hazleden's modelling, forHarditex in these environments the drying capacity was less than the likely wetting,meaning it was not fit for purpose.[63] Dr Straube was very critical of Mr Hazleden's modelling. He first argued thatit was an inappropriate model to use, and that there were many more suitable modelscommonly used for this exercise. Dr Straube then made a detailed critique of theassumptions and inputs underlying each of the wetting and drying models.[64] It is necessary to spend some time on Mr Hazleden's response to thesecriticisms. First, and most importantly, he made no response to Dr Straube's critiquesof the drying model, and in cross-examination he confirmed he was making none. Thenature of Dr Straube's analysis was such as to mean the results achieved byMr Hazleden could not be relied on. Mr Hazleden's lack of response means a Courtcan only infer Dr Straube's criticisms to be correct. This in turn removes one half ofthe equation. If the drying model cannot be relied on, then a conclusion that wettingexceeds drying must also be put to one side.13 If one adopted the overcapacity theory, the drying would exceed the wetting by a considerablemargin.[65] Although that is enough to resolve the issue of what probative value to givethis aspect of the evidence, it is appropriate to note what happened concerning theother half of the equation, the wetting model. In his evidence, Dr Straube hadexpressed the view the wetting model was more flawed in its assumptions than thedrying model.[66] Mr Hazleden's initial response to this was not to defend his wetting model, butrather to proffer a wholly different one which he said equally proved his point. Thisnew model was ruled inadmissible.14 However, when giving oral evidenceMr Hazleden did finally proffer a revised version of his original wetting model. Thiswas intended to respond to Dr Straube's initial criticisms. It was provided to thedefendant only the night before Mr Hazleden was cross-examined, but objection wasnot taken to its admissibility.[67] The revised model was presented in a confusing and unhelpful way that attimes was misleading. For example, it appeared that changes to the original modelwere highlighted in yellow. However, under cross-examination it emerged that therewas in fact several more changes that were not highlighted. Further, there were aspectsI consider unconvincing. For example, an issue with moisture management isassessing how much water which gets behind the cladding will ultimately reach thetimber framing (and in what form – liquid or vapour). Mr Hazleden modelled on thebasis that the amount of water behind the cladding that would penetrate the wrap andreach the timber was 50 per cent of all such water. This was a vastly greater figurethan any other figure identified in the evidence. His rationale, which reflects an earlierpoint about assumptions influencing the evidence, was that there was no drainage in aHarditex wall so the water had to go somewhere.[68] Overall, my conclusion is that Mr Hazleden's evidence on the moisturemanagement capacity of the Harditex system did not merit weight.[69] Turning to other evidence on the drainage capacity of the system, a topic ofcontention was the requirement of the Harditex system for there to be an "inseal" stripjust above the base of the sheet along the inside. Its purpose was to limit water14 Cridge v Studorp Ltd [2020] NZHC 2185.splashing up behind the sheet from the ground. The plaintiffs submit it was anobstruction to the alleged drainage paths. Drs Straube and Lstiburek accept this butsay water will get by it anyway. Of interest, the main building analyst for the plaintiffs,Mr Wutzler, says in his experience it was a detail "rarely ever used". My assessmentof the evidence on this point is that the inseal, when present, would impede drainagebut not block it.[70] In discussing drainage, both parties point to the results of testing donespecifically for the litigation. Each side commissioned testing companies to build aHarditex wall and subject it to various water tests. The methodologies and testingprocedures were quite different, the outcomes hopelessly so, and I use the adjectiveadvisedly. The structure designed by the plaintiffs failed so dramatically one wouldwonder that any Harditex house could remain standing. The one built for thedefendant worked marvellously, and it is hard to believe a house ever failed. Thejudgment will need to tackle these tests and will do so. For now, I prefer to analysethe matters without significant reliance on either side's results. I do not dismiss theoutcomes completely. Each provides support to their designer's case, and soinevitably one version will support to a certain degree the case I prefer, but other thanoccasional references to them, I will deal with them in a separate section.[71] In similar vein to the last comment, whether the houses are examples of theHarditex system's inability to drain needs to be put aside for later consideration. Thereis no doubt that in these houses water has accumulated in sufficient quantities to causedamage. It is a fair inference that this means that water has not drained away, or hasnot done so quickly enough, to avoid the damage occurring. That is suggestive of aproblem but whether it is a drainage problem turns in part on where the water iscoming from and in what quantities.[72] There is no absolute answer on how much moisture a system should be able tocope with. I do not understand anyone to suggest it should cope with anything natureand poor building can throw at it, but plainly it must be able to cope with expected,and probably a percentage of more than expected, moisture. In this regard, there isvalidity in the overcapacity point, but ultimately it is just another description for anundefined figure.[73] Within building science, there are working assumptions as to the expected levelof water ingress with a properly built house. The American Society of Heating,Refrigeration and Air Conditioning Engineers (ASHRAE) is described byDr Lstiburek as the premier professional organisation in North America dealing withbuilding enclosures. For its various modelling exercises, for this type of direct-fixedcladding system, ASHRAE assumes one per cent of water will penetrate the exteriorcladding and then one per cent of that water will penetrate the wrap. This is notanything more than a modelling assumption but gives some insight into the necessarycapacities of a system. It also illustrates the somewhat extreme nature ofMr Hazleden's assumption of 50 per cent penetrating the wrap.[74] My conclusion on this topic is that Harditex has some drainage. It obviouslyis not as much drainage as there would be with a designed cavity (of whatever width)but drainage nevertheless happens. I am not aware of evidence that James Hardierelied on this drainage capacity as part of its planning, but on the other hand I acceptthe evidence of Drs Straube and Lstiburek that drainage is what has always happenedwith direct-fixed systems so long as the building wrap does not adhere to the surfaceof the cladding.15 It may be that James Hardie knew or understood these systemsdrained without exactly recognising the underlying science but what matters for thislitigation is that I accept drainage occurs.[75] There were other witnesses who made general comments on the nature of theHarditex system, and its capacity to manage moisture. Prominent for the homeownerswere Mr Sutherland and Mr Wutzler. Mr Sutherland is a very experienced architectwho has held various positions within the architecture community in New Zealand.His evidence was the subject of a pre-trial challenge amongst other things forpartiality, or the lack of detachment expected of an expert. I reserved final assessmentbut noted it was a challenge that had a reasonable basis.16 I do not at this point needto comment further. Mr Sutherland's opinion on this was undoubtedly his view butwas, like much of his evidence, more assertion than analysis. It did not cause me todiffer from the analysis set out in these paragraphs.15 This is something that did happen with some stucco systems.16 Cridge v Studorp Ltd [2020] NZHC 794.The contribution of the building wrap to drainage[76] Integral to the small drainage gap theory, and relevant also to the next topic ofdrying capacity, is the subject of building wraps. The homeowners submit that duringthe life of Harditex, kraft type building papers were more prevalent in New Zealandthan the synthetic wraps now available. A kraft type wrap is tar impregnatedcardboard. It is further submitted that these kraft type building papers were neverdesigned for and cannot withstand prolonged wetting, particularly when in contact orclamped.[77] The homeowners' evidence on this is scant. The only reference provided inthe closing submissions is to statements made by Mr Wutzler. Mr Wutzler is aWellington-based building surveyor with undoubted experience and expertiseanalysing houses affected by moisture issues. Mr Wutzler has 22 years' experience asa building surveyor and 15 years of that also as a remediation specialist. He has atvarious times been on the executive on the New Zealand Institute of BuildingSurveyors and is presently on the Executive of the Building Enclosure Council of NewZealand. He is a special advisor to the Building Practitioners Board which investigatescomplaints and contributed to a publication focusing on the correct methodology fordiagnosing leaky buildings. He has had teaching roles and has presented to industrygroups. He is a member of the relevant industry bodies. He is a principal of HelfenLtd and an owner of Façade Testing New Zealand Ltd (FTNZ), an accredited testingfacility which can test windows, curtain walls and building facade systems. FTNZoversaw the project in which the homeowners constructed a model Harditex wall andtested it.[78] Mr Wutzler has been used by the plaintiffs to provide evidence on a vast arrayof topics, the basis for some of which can only be experience and self-teaching.Mr Wutzler claims to have talked to many people within the building industry and tohave learned from them. I will address the issue of his expertise more fully later,17 butat this stage merely observe these caveats. I do not doubt his evidence about damagehe has seen to building wraps.17 See [92]–[94].[79] The starting point is that any building wrap used in New Zealand hasconsistently been required to meet an unchanged regulatory standard. Thehomeowners query whether this regulatory threshold establishes a capacity to surviveprolonged wetting but do not advance any research to support their doubts.Mr Wutzler says that he has seen these kraft type papers degrade, unlike the moremodern synthetic wraps. He is supported in this by Dr Wakeling, a scientist and expertin mould analysis and timber decay who has over the years analysed many samples.[80] Drs Straube and Lstiburek were more complimentary about the capacity ofkraft type building wrap. Dr Straube noted that in North America it was very prevalentin the 1950s and 1960s but had been around much longer. Asked in cross-examinationabout prolonged wetting, his evidence was:A. So the building paper being in contact isn't a problem. I think theconcern, not, it's certainly [not] desirable, the risk is how long do youkeep it wet. Keep it wet for a week or two, you know, no biggy. Keep itwet for a month or two, probably not a problem. Keep it wet for two tofive years, now you have a problem.And again:Q. And building papers of that type are certainly not designed or meant tobe kept subjected to prolonged moisture are they?A. Well they're not – we're describing a highly wet situation for two to fiveyears. They're not designed for that but luckily that doesn't really happenvery often and that's the reason why building papers have been used verysuccessfully for, I don't know, 50 plus years. I mean obviously they goback even further than that.[81] Dr Lstiburek, when asked, considered liquid water would need to be heldagainst a kraft paper type wrap for over a year for it to fail.[82] James Hardie also relies on a 2002 project undertaken by the BuildingResearch Association of New Zealand (BRANZ) involving a bituminous buildingwrap which concluded such wraps appropriately resisted liquid water.18 Likewise, a2015 study also noted the resistance of building wraps to liquid moisture.1918 BRANZ Weathertightness of Selected Building Wraps (Report T1070, 30 April 2002).19 Bassett, Overton and McNeil, above n 7. The study also observed that drainage was possible butthat absorption into the uncoated back of the sheet would occur.[83] In the end I doubt there is a contest here. A building wrap is required to resistwater and does so. It is the case that some older versions of the wrap, the non-synthetictype, were more vulnerable to decay if subjected to prolonged wetting. How muchwetting, and for how long, is not established by any science presented to the Court,but I accept the opinion evidence of Drs Straube and Lstiburek that it will need to havebeen for a long period of time, probably measured in years. This leads me to anassessment that the proposition that the Harditex system has some drainage capacityis made more likely by the longstanding New Zealand requirement for there to be useda water resistant building wrap.[84] This conclusion as to the contributing role of the building wrap is arguably atodds with aspects of the current regulatory scheme. Within the Code there are methodsprescribed by which a manufacturer can establish its product is compliant. These aretermed Verification Methods, and one exists for the External Moisture standard. It isE2/VM1 and stipulates that to meet the requirements of the Code:20no water shall be transferred to the plane of the building wrap or splash ontothe building wrap.[85] This standard obviously involves no reliance at all on the water resistantqualities of the wrap, and indeed seems designed almost to protect it. It is somewhatunexpected given the longstanding requirement that wrap be water repellent.Dr Straube says there is no science underlying that standard and he is unaware of itbeing replicated in any other jurisdiction. Mr Hazleden agreed with both propositions.I am satisfied that whatever the reason for New Zealand adopting such a standard, itdoes not undermine the reality of a wrap's capabilities (and indeed its purpose).[86] Finally, for clarity I observe that my conclusion about drainage capacity is nota suggestion that all the water will drain away. It is one route of getting the moistureout. As will be seen in the next section, some of the moisture will not drain but willabsorb into the back of the fibre-cement sheet. Other of the moisture will no doubtfind its way in liquid form into the timber frame through perforations in the wrap such20 Ministry of Business, Innovation and Employment Verification Methods E2/VM1, and AcceptableSolutions E2/AS1, E2/AS2, and E2/AS3 for New Zealand Building Code Clause E2 ExternalMoisture (3rd ed, 5 November 2020) at 24.as those caused by the wrap staples and by the sheet nails. Also, if there are greateramounts of water than there should be, then the wrap may well eventually decay,especially the older paper-based wrap, which will further allow water to access thetimber framing. The limit of this conclusion is that the building wrap can and doescontribute to drainage.Capacity to dry[87] Drying addresses the capacity of the system to retain and expel any liquid thathas found its way behind the cladding and has not drained away. This involvesconsideration of the ability of the timber framing and the Harditex sheet to dry.Concerning wood, there is very little dispute as to the science. Concerning theHarditex sheet, there may be a greater level of disagreement but again the picture isreasonably clear.[88] For wood, the saturation level is at 28 per cent moisture content. At that leveldecay will start to occur unless the moisture content is brought down. Dr Wakelingtestified that timber requires a 30 per cent moisture content for two to three weeksbefore it decays. Conversely, Mr Hazleden considered it might take as much as threemonths at that moisture level before decay occurs. Even accepting the shortertimeframe proffered by Dr Wakeling, the point to be taken is that decay is notimmediate. Once decay has started, the process will continue until the moisturecontent drops. How far it needs drop to stop the decay process was the subject ofmixed views, but two specialists in the topic suggest it will stop once moisture contentdrops back below 25 per cent.[89] There are rules about the permissible moisture content of timber framing. Until1999 the regulatory scheme allowed timber framing to be enclosed with a moisturecontent in the range of 18–24 per cent. However, from 1999, 18 per cent was themaximum permissible level. The timber framing, once enclosed by cladding, will thendry out until it reaches an equilibrium moisture content point of 12 per cent.[90] The JHTI specified that Harditex should not be affixed to timber framing witha moisture content greater than 24 per cent. When the regulation changed in 1999 torequire no greater than 18 per cent moisture content, James Hardie failed to update itsliterature. So for a period there was a conflict between the JHTI which permitted24 per cent and the regulation which mandated 18 per cent or less. Other than beingan example of carelessness in the JHTI, the conflict was in my view a non-issue. Theregulatory scheme prevails. Builders know that. There was no evidence to thecontrary. The JHTI also said as much (in an admittedly contradictory way) in so faras it required that the timber framing must comply with the relevant standard,NZS 3604.[91] Turning to the Harditex sheets, an uncoated sheet is absorbent. More of thewater getting behind the cladding is likely to absorb into the sheet than it is to drainaway.21 As noted, the homeowners plead this absorbency as an inherent defect; thedefendant counters that it is a good thing and an important aspect of the moisturemanagement system. Water is safely absorbed in the Harditex sheet until it leaves asvapour.[92] A key plaintiff witness on this topic was Mr Wutzler. As previously noted, heis a Wellington-based building surveyor and remediation specialist. He is a directorand shareholder in Helfen Ltd which provides expert advice on issues concerningbuilding failures, and manages remediation projects. He is undoubtedly veryexperienced in the area of assessing water damaged houses, and what is needed to fixthem.[93] Mr Wutzler's standing as an expert is not through formal qualifications. Hehas one trade certificate. He is not an experienced builder but he understandsresidential buildings, how they work, what the risk points are and where they fail. Heis very experienced at looking at damaged houses. He has undoubtedly learned a lot,and he has no doubt read a lot in preparing his evidence for this case and others likeit. Mr Wutzler's evidence covers a vast range of matters. Not only detailing what hehas found in the houses, and what is needed to fix them, Mr Wutzler comments indetail on the mechanism of failure. He is probably the homeowners' main witness onthese things. Mr Wutzler gives evidence, for example, on how water travels within21 See for example Stephen McNeil and Michael Bassett "Moisture Recovery Rates for Walls inTemperate Climates" (paper presented at 11th Canadian Conference on Building Science andTechnology, Banff, 2007).the building enclosure, how it enters the Harditex sheet and system through variouscomponents, and what it does when in there. He interprets patterns on the back ofHarditex sheets as disclosing water paths. Indeed, he comments on most aspects ofthe building science issues.[94] The defendant makes a strong challenge to Mr Wutzler's expertise and capacityto give a significant proportion of his evidence. I also have considerable reservationsabout the scope of his evidence given his relatively narrow formal training and sparsebuilding experience. When it comes to matters of building science, I regardMr Wutzler's opinions as coming from a limited base. His views are vulnerable tocompeting evidence from truly qualified witnesses who have demonstrable expertisein these matters. Two such witnesses are Drs Straube and Lstiburek. There are nooccasions where I consider Mr Wutzler understands the science better than them, andwhenever there is a conflict I prefer by a margin the evidence of Drs Straube andLstiburek. I accept Mr Wutzler's evidence about actual observations but if, forexample, Drs Lstiburek and Straube say that his suggested mechanism for failure isscientifically not possible, I unhesitatingly accept their evidence.[95] Generally on the topic of drying, it is clear that a ventilated system, whichHarditex is not, works best. However, Dr Lstiburek pointed out there are manysuccessful systems that have neither drainage nor ventilation. A solid masonry wall isone such example. Although there may be better systems than Harditex, the trial issueis whether the Harditex system has sufficient drying capacity.[96] The evidence of Drs Straube and Lstiburek is that the moisture within theHarditex sheet can only leave as vapour. It will not leave as liquid moisture. Thevapour can leave the sheet in either direction. This is determined by season – insummertime it will head inwards; in winter towards the exterior. Vapour leaves lesseffectively to the outside because of the inhibiting effect of the external acrylic coating.By contrast, the fibreglass insulation used in walls (such as Batts) is generally morevapour permeable than wrap, and so allows vapour to travel to the inside with littleimpediment. A character change from vapour to liquid moisture on contact with theinterior gypsum board is possible and occasionally happens, but normally the moisturejust diffuses through the gypsum to the inside as vapour.[97] The primary contrary evidence from the homeowners on this drying capacitywas that of Mr Hazleden, and I have previously explained why I do not accept hisevidence. Accordingly, I accept the defendant's evidence that the Harditex system hasa sufficient drying capacity. That is not to say it is a perfect system, nor that it couldnot have been improved. Rather, I reject the homeowners' case that from a buildingscience viewpoint it is flawed.[98] This conclusion has accorded considerable probative value to the evidence ofDrs Lstiburek and Straube. However, there is other evidence supportive of thisconclusion. There are, for example, computer models available that can predict orsimulate the behaviour of materials within a building enclosure. Perhaps the mostprominent of these is the WUFI system.22 It predicts heat and moisture transportwithin and through a building envelope. WUFI analysis was undertaken in this caseby Ms Hugens for the homeowners, and Drs Künzel and Straube for James Hardie.There is a degree of dispute between these witnesses over the outcome of themodelling in terms of whether the Harditex system creates a concerning potential formould growth, but as regards the system's moisture management capacity there islargely agreement.[99] Ms Hugens, the homeowners' expert, agrees any moisture that enters thebuilding wall enclosure will not accumulate but rather will increase and decrease involume. The rate at which it does this depends on the season, but moisture within theHarditex system will dry out. Ms Hugens also agrees the modelling shows there is norisk of condensate run-off developing or occurring within the walls. Theseconclusions mirror the science analysis of Drs Lstiburek and Straube.[100] These results of a universally recognised computer modelling system reinforcethe earlier evidence that the moisture balance of the Harditex system is fundamentallysound. If the wall is built properly with only expected levels of moisture penetrationthe system could cope with such moisture.22 Wärme Und Feuchte Instationar.Other systems[101] I conclude the moisture balance analysis by briefly summarising the evidenceof Drs Straube and Lstiburek on comparable systems. There were two aspects to thisevidence – a description of comparable systems that similarly succeed, and anidentification of the differences between the Harditex system and those systems thathave led to leaky home crises elsewhere. This latter evidence is interesting, but notcrucial to this case so will be dealt with briefly.[102] Dr Lstiburek notes three systems that in his view are comparable to Harditexand which are recognised as having acceptable moisture management characteristics.The first he terms a three-coat stucco system which has been used for decades in NewZealand, Australia, Canada and the United States. Its drainage path was essentiallythe same as Harditex's. Dr Lstiburek then refers to two other common NorthAmerican direct-fixed systems which use either a plywood sheet (T1-11) or now LP-Smartside. The latter is the primary system used by Clayton Homes which is describedas the largest manufactured home builder in the United States. Similar to Harditex,both systems involve direct nailing the board over a wrap onto a timber framing.[103] Mr Hazleden dismissed these comparisons as irrelevant, essentially because ofclimate differences. However, no evidence to support this alleged climate differencewas proffered, and there seemed to be acceptance in cross-examination that some ofthe areas where these products were used were indeed comparable to New Zealand.[104] The value of this comparative evidence, not to be overstated, is that it providesa cross-check of the core evidence about Harditex. It is a sound analytical approachto identify whether there are other successful examples of this type of system.Likewise, Dr Lstiburek provides by way of elimination evidence, an explanation ofwhy failures have occurred elsewhere. His evidence shows that there are inherentfeatures in the design of these failure systems – which occurred in Vancouver, Toronto,North Carolina, Minneapolis, Minnesota, Boston, and Seattle – which are not presentin Harditex. Dr Lstiburek advises he has been involved with all those areas and inresolving the weathertightness problems. He accordingly speaks with a significantdegree of direct knowledge of those systems.[105] I accordingly regard the WUFI computer analysis, and the evidence aboutcomparable systems, as supporting the earlier conclusions based primarily on theevidence of Drs Straube and Lstiburek about the adequate moisture managementcapability of Harditex.Independence of Dr Lstiburek[106] The homeowners submit that serious doubts exist about the admissibility ofDr Lstiburek's evidence, or the weight to be attributed to it, because of non-disclosureby him of his longstanding involvement with James Hardie. What follows may seeman overly long analysis of this challenge, but it is necessary and appropriate. First,Dr Lstiburek is an important witness on whom the Court places considerable reliance.Further, the independence challenge was in fact the homeowners' main challenge toDr Lstiburek's evidence (as opposed to contesting the substance of it).[107] I begin with Dr Lstiburek's written evidence and what was disclosed thereabout his relationship with James Hardie. Given the challenge, it is preferable to setout the paragraphs in full:First brief:11. I have visited New Zealand in a professional capacity on five occasionsand visited numerous building sites in Auckland. As well as advisingJames Hardie New Zealand (James Hardie) on weathertightness issues,during these visits I gave presentations on weathertightness and watermanagement to BRANZ, the BIA, several territorial authorities and otherparticipants in the building industry.12. I was first engaged by James Hardie as an independent expert witness inrelation to weathertightness issues in New Zealand in 2003, in relation toa claim in the Auckland High Court known as Burton Street (BC No.204299 & Ors v Approved Building Certifiers & Ors: CP No 399/SD02).I first became familiar in detail with the opinions of Mr Wutzler andMr Lalas in relation to the Harditex product in about 2010.50. I have not visited the lead properties owned by the plaintiffs, or the othersample properties relied on by the plaintiffs. However, I have visitedNew Zealand five times in a professional capacity in relation toweathertightness issues. I visited numerous building sites in Aucklandduring those visits, including a large multi unit development clad inHarditex known as Burton Street and (in later visits) two other large multiunit complexes known as Eden Residential and Eden 2. I also spoke to alarge number of consultants and other stakeholders with an interest in the"leaky building" crisis which was unfolding in New Zealand.And Reply brief:86. In paragraph 99 of my first statement of evidence I mentioned that Idemonstrated drainage over a building wrap over open wood studframing in a simple experiment in Auckland in 2003.87. That simple experiment was set up with my assistance on site by a formerJames Hardie employee, James Gleeson. At the time, Mr Gleeson wasthe Research and Development Manager for the Asia Pacific Region. Iasked Mr Gleeson to construct a frame wall, install a building wrap overthe frame wall and install a sheet. The simple idea was to add water atthe top and collect it at the bottom. I was present when Mr Gleeson dida preliminary test that clearly showed drainage. I attach my photographsin Appendix A which show this preliminary test.88. I was satisfied that the test, while basic, was useful and asked Mr Gleesonto do a more controlled series of tests. Those controlled tests weredescribed in three Test Reports prepared by Mr Gleeson dated24 February 2004 which were sent to me in February 2004. I attach theseReports in Appendix B which I only recently recalled had been sent tome. The three different tests referred to in the Test Reports varied theamount of water added. I also include in Appendix B a brief of evidencefrom Mr Gleeson which refers to the same tests which I understand wasprepared for a case which settled in 2004 known as Burton Street (CP No399/SD02).89. I consider it appropriate to mention that I am aware of the three TestReports and Mr Gleeson's brief of evidence in view of the fact that I amgiving evidence about the closely related preliminary test I observed andassisted with and in view of the comments in my evidence on the recenttesting undertaken by RDH.90. I will not refer to the test results in any detail as I was not present whenthe final tests were conducted, but I can say that like the preliminary testsample which I observed directly, the tests clearly showed drainage anddemonstrated the [significance] of the building wrap in that regard. Thetests do not attempt to also demonstrate drying. I also comment that theresults are consistent with the more recent and sophisticated testsconducted by RDH and referred to in the evidence of Mr Schumacher. In2004 there was no accepted rate of water addition or test method.91. The key point with the tests I refer to above is that all of the test sampleassemblies drained.[108] The homeowners submit this evidence significantly underplays what was infact an extensive relationship, described by them as "a longstanding consultancy(including technical advisory)".[109] It is first said Dr Lstiburek accepted in cross-examination that he should haveincluded James Hardie in his list of building product manufacturer clients. In thisregard Dr Lstiburek stated:I am a consultant to numerous manufacturers of building materials andproducts including Dupont, U.S. Gypsum, Georgia Pacific, Dow, Certainteed,Carrier, Fortifiber, Masco and Greenfiber, all of which are Fortune 500companies.When it was put to him James Hardie should also have been there, Dr Lstiburek saidJames Hardie was a minor, insignificant client over the last 20 years.23 He also saidhe did not think his involvement with James Hardie was a secret to anyone in the case:I didn't think it was unknown that I had done work for James Hardie overmany decades.[110] Next it is submitted by the homeowners that in cross-examination Dr Lstiburekconfirmed at trial a previously non-disclosed involvement in the HarditexImprovement Project. This was a project initiated by James Hardie in the late 1990sand was, as its name suggests, an examination of how Harditex could be improved andwhat its place was in a changing market. Dr Lstiburek elaborated that James Hardiehad asked him many questions on building performance and he told them what thingshe thought were important, and what issues should be addressed.[111] I observe there was no attempt to clarify with Dr Lstiburek the details of hisinvolvement. Dr Lstiburek's first recorded visit to New Zealand was in 2003 whenthe Harditex Improvement Project was certainly coming to an end. The evidence doesnot support a submission Dr Lstiburek was involved in any meaningful way.Dr Lstiburek says that at the time of that visit, as well as James Hardie he talked tomany people about these same issues, including territorial authorities.[112] Next the homeowners submit:2423 Concerning this topic, the Notes of Evidence record Dr Lstiburek as saying: "It's an error on mypart, I apologise". Counsel for the defendant note their recollection is that the answer was in fact"If that's an error on my part ". Nothing particular turns on this, but I record that the defendant'srecollection is my very clear recollection as well. The reality is that Dr Lstiburek did not think hispast involvement with James Hardie was either noteworthy or unknown, and he made this plain.24 Footnotes omitted.Dr Lstiburek confirmed that he was involved with "James Hardie sponsoredwork" during this period. Dr Lstiburek confirmed that he had been "veryinvolved" with Mr Gleeson of James Hardie on weathertightness matters.Dr Lstiburek stated that he had met with Mr Knox and Mr Gleeson of JamesHardie "on numerous occasions during my visits and I think 2003 onwardsand so I was, not insignificant discussions with Mr Gleeson and Mr Knox overthis time period."[113] Further analysis of this is required. A document was put to Dr Lstiburek incross-examination that he had not previously seen. It was an internal James Hardiedocument, undated and without an identified author. It appeared to be, as suggestedto Dr Lstiburek, a document from the early 2000s and was an overview of NewZealand's weathertightness issues and how James Hardie was being impacted by thoseissues. In a section of the document headed "Product Development – James Gleeson"the document records that there are key projects happening, one of which is the:JH sponsored work by Dr Joe Lstiburek of Building Sciences intoweathertightness (that includes the construction of a test hut on our Penrosesite as well as in other locations around the world).Later, the document refers to Dr Lstiburek's "expert third party verification" of JamesHardie's products.[114] Two aspects of this document were explored with Dr Lstiburek. The first wasthe Penrose test hut mentioned in the extract. Dr Lstiburek said the document was"totally mistaken" and he did not have involvement in it. He recommended thatDr Straube and Mr Schumacher be used. He agreed, however, he was involved withMr Gleeson in general weathertightness matters. This was from 2003 onwards. Theparagraphs earlier set out from his written brief refer to working with Mr Gleeson. Myassessment is that the document overstates Dr Lstiburek's role, and I accept hiscontrary evidence.[115] Many other matters of a similar nature are raised by the homeowners. Thereis, for example, an internal document that observes that Dr Lstiburek's assistance with2003 litigation (why he was visiting then) was also proving beneficial to productdevelopment. The same document comments that James Hardie could extract somemarketing advantage from using Dr Lstiburek's name. It would demonstrate JamesHardie's commitment to resolving current problems in New Zealand. I do not considerthe document, which sets out the thoughts of someone within James Hardie,demonstrates any unknown participation by Dr Lstiburek.[116] Two other matters relied on by the homeowners merit some comment. Thefirst is a claim that Dr Lstiburek was involved in a test hut project in Vancouver inwhich James Hardie was also involved. I am unsure if the point is that he wasinvolved, or that it was not disclosed. Either way, it is necessary to set outDr Lstiburek's evidence on this which was not really challenged and which I accept.Concerning this proposition, Dr Lstiburek advised:(a) the purpose of the hut was to explore the reasons for the Vancouver condocrisis;(b) it was a project of $150,000 between him and a Vancouver constructioncompany. He personally contributed $70,000;(c) there was no contract between him or his firm and James Hardie, and hereceived no money from James Hardie;(d) some materials were supplied by James Hardie to the constructioncompany which built the hut;(e) Dr Lstiburek's firm provided some subsequent analysis of the results. Itdid not charge for this work; and(f) James Hardie, along with other contributors, were noted on the report as aprofessional courtesy for supplying some material. Manufacturers whosupported investigations into building failure should be acknowledged andencouraged, and that is what the report did. It was not a James Hardieinitiative or project.[117] The second matter on which comment is needed is the correct proposition thatDr Lstiburek's name and reputation have been used in James Hardie promotionalmaterial. The documents are two James Hardie brochures which promote itsfibreboard products. Within those brochures Dr Lstiburek is quoted as praising thequalities of fibre cement as a cladding material. The evidence is that the quote is apast statement of Dr Lstiburek's that is being re-used, rather than any comment hemade specifically for the brochure. That said, Dr Lstiburek accepts he would havegiven his permission for James Hardie to use it. He says he has done the same thingfor other cladding manufacturers and gives two examples. He does so when askedbecause he endorses fibre cement as a desirable cladding material from aweathertightness viewpoint. It is endorsement of a material not a specific product.[118] As I understand the homeowners' overall submission, the challenge is more toDr Lstiburek's independence than to the partiality of his evidence, but I will considerboth. On independence, the homeowners cite this passage from EXP v Barker wherethe appellant had a professional connection to the expert witness:25[The Judge] considered that the witness had so compromised his approach thatthe decision to admit his evidence was finely balanced, and that the weight tobe accorded to his views must be considerably diminished. In my view hewas fully entitled to take that view. Indeed, had he decided to exclude [theexpert's] evidence entirely, it would in my view have been a proper decision.Our adversarial system depends heavily on the independence of expertwitnesses, on the primacy of their duty to the Court over any other loyalty orobligation, and on the rigour with which experts make known any associationsor loyalties which might give rise to a conflict. [The expert] failed to do sohere, despite an express direction to that effect. Indeed, the omission ofmention of papers co-authored with [the appellant] points in the otherdirection.And from the lower Court in the same case:26Failure to make early disclosure, particularly of an obvious conflict, also tendsto raise a natural suspicion that the default was not inadvertent, and toreinforce the court's concern that the witness has, most exceptionally, becomeso compromised that the evidence must be altogether excluded.[119] The matters which it is said Dr Lstiburek failed to disclose are his involvementin the Harditex Improvement Project, his advice to James Hardie on building mattersand improvement, his involvement in the test hut, and that his work provided a basisto influence regulators and politicians on the strength of James Hardie's position.25 EXP v Barker [2017] EWCA Civ 63 at [51].26 EXP v Barker [2015] EWHC 1289 at [58].[120] Concerning influencing regulators, the basis for this proposition is anotherinternal James Hardie document detailing that this is potentially how the unidentifiedauthor thinks Dr Lstiburek's work on the case could be used. It is instructive to citefrom the evidence the relevant question and answer:Q. Go to the top of the next page. Just go back please to where we were atthe bottom of the previous page. So there's a reference to you and towork you are doing on what they describe as their legal case andresearch projects and they raise the possibility of your work beingcommunicated with regulators and elected politicians to demonstrateboth the strength of James Hardie's position and their commitment tothe solution, good corporate citizenry, et cetera and also to convinceterritorial authorities and insurance interests that direct fixed claddingremained a viable material. Now that's what it says. Do you agree thatyour role was to assist with those objectives in mind?A. Well this was never explained to me in this manner, but I was certainlyhelping them with legal matters and I was certainly helping them withtrying to improve their products and reduce risk. And this is what I dowith not just James Hardie but almost everybody.There is no basis in this evidence to suggest Dr Lstiburek was engaged to helpinfluence regulators and politicians, or that he knew this was how he was being used.The homeowners' reliance on it reflects, in my view, that there is a large degree ofoverstatement of the actual evidence.[121] Although I consider there is little in this challenge to Dr Lstiburek'sindependence, it is important to put it in context. This is a case where numerouswitnesses for both sides have past connections with the players in the litigation. Theyhave either been instructed in litigation where James Hardie was the defendant or theyhave been instructed by James Hardie in its defence. A contact or past relationship,still always requiring to be considered, is far from an uncommon thing in thislitigation. At least 10 witnesses have prior involvement.[122] In relation to involvement with James Hardie New Zealand there was nomaterial non-disclosure. Dr Lstiburek said he was here helping with a case, he saidhe was working with Mr Gleeson, and he said he had been to New Zealand five times.He further said that on his visits he met with various groups, including regulators, totalk about weathertightness issues. That he also talked to James Hardie about thosetopics seems a rather obvious proposition.[123] I do consider Dr Lstiburek should have disclosed any relationship with JamesHardie abroad, and that appearing in a promotional brochure is always a basis forconcern in terms of independence and partiality. However, I note two caveats –Dr Lstiburek was endorsing fibre cement as a material rather than a specific JamesHardie product and he advises that he has also done so for other manufacturers whichhe named. The quote used in the brochure was a previously available statement, andoverall it is a benign example of endorsing a relevant building material.[124] Finally, it is relevant to consider Dr Lstiburek's standing and reputation, andhow he gave evidence. An insight into his reputation comes from that internal JamesHardie document previously discussed. The unknown author thought the mere factthat Dr Lstiburek was involved would display to the world a commitment on JamesHardie's part to weathertightness solutions. That reflects that Dr Lstiburek is a worldleader in building envelopes and weathertightness.[125] Dr Lstiburek was an excellent witness. He came across as an enthusiast for thescience of building envelopes and what makes them work. His expertise was apparent,and he answered questions directly and fairly. He was not an advocate and did notseek to be one. It is fair to observe, and a careful subsequent review has not changedme on this, that he was not significantly challenged on the substance of his evidence.There was instead a considerable focus on these independence issues but thereafter asomewhat gentle exploration of some topics which did not in any way undermine thestrength of his evidence, nor particularly seek to. I accordingly reject the homeowners'submission that his evidence should be given reduced weight.27[126] I mentioned earlier that there were some similar criticisms made of Dr Straube,and observations about James Hardie's involvement in the small gaps research. Theevidence did not, in my view, suggest any significant James Hardie involvement in27 The parties approached me prior to the case with an agreed position concerning the obligation toput the case. The essential proposition, which I endorsed, was that to make the length of theproceeding manageable, counsel would be flexible as to how much contrary evidence needed tobe put. It was a sensible suggestion and was followed. I mention this so it would not be thoughtI have overlooked it when commenting on the lack of challenge to Dr Lstiburek. There can be nodispute that his was pivotal evidence, and the lack of challenge to it was notable, at the time andstill. I consider an inference that the substance of his evidence could not be seriously challengedis available and appropriate.that research (perhaps not surprising since the homeowners' case is that James Hardiedid not think about drainage). The closing submissions did not mount the same sortof sustained challenge to Dr Straube as was done in relation to Dr Lstiburek. I notefor the record, however, my conclusion would have been the same. Drs Straube andLstiburek have obviously worked closely over the years but this is apparent. AgainDr Straube was a very good witness who addressed questions appropriately, and whosecommand of the area was very apparent.Conclusion[127] My conclusion is that the Harditex system has not been shown to beconceptually flawed from a moisture management perspective. Rather, the way itmanages moisture reflects well-established principles of moisture management. Thecontrary evidence was not convincing, and it is notable that current software modellingreaches the same conclusion. The evidence did not cause me to believe relevant JamesHardie personnel understood all the mechanisms by which the moisture managementwas achieved,28 but that it worked and had done so with sheet systems for a long timewas understood.[128] I accordingly reject the existence of inherent defects one and three.Durability[129] The second building science topic is durability. This is an inquiry into whetherthe Harditex sheet itself is fit for purpose. The homeowners' case is that it issusceptible to mould and decay, and that it breaks down. The regulatory context isthat the sheet is required to perform its function for 15 years. However, if it is a bracingelement of the house, which Harditex can be, it should last 50 years. Whether thesheet is used as a bracing element has nothing to do with its composition. It will bethe same sheet either way, so that is the relevant figure.28 I do not mean by this to diminish the technical expertise of those involved. I consider witnessessuch as Mr Cottier to have an extensive understanding of the product, much in the same way asDr Akers, a plaintiff witness involved in developing a similar European product.[130] The topic of testing comes up in this section. Plainly when a new product isreleased on the market, it cannot have an established history of performance, let alone50 years of such history. There are various methods used to accelerate the wear andtear a product can be expected to encounter so as to provide a reasonable basis onwhich to assess likely performance.[131] The trial evidence discloses that on some occasions, in some places butparticularly at the base of a sheet, a sheet has failed in that it can be easily broken offand at times appears almost to crumble. The parties are agreed this should not happen.As I understand it, depending on the extent of such damage and where it occurs, it isnot necessarily a critical failure, but it would at least require replacement of the sheet.If, of course, the failure has exposed the underlying timber framing to moisture whichhas in turn started to decay, then it is a very significant issue.[132] The homeowners say the state of these sheets discloses an inherent flaw withthe product. James Hardie says they are isolated occurrences probably explicable byexcessive liquid moisture. This easy summation of the issue masks some complexscientific evidence concerning the alleged mechanisms of failure. I have decided thebest structure is to analyse the issues as presented by the homeowners in their closingsubmissions.[133] The homeowners identify, through Dr Wakeling, two mechanisms either ofwhich could explain why this sheet failure happens. Either would represent aninherent flaw in the composition of the sheet. The first alleged mechanism is that thewood fibre component is subject to fungal attack and decay. Put simply, the board rotsfrom the inside because its cellulose comes from wood fibre. The second allegedfailure mechanism is termed "differential movement", which is a nascent theory ofDr Wakeling's. It focuses on the relationship between the wood fibres and the cementmatrix in which they sit.[134] This section on durability has undergone a belated rewriting. In circumstancesexplained in the Appendix, further evidence was admitted by consent in June this year.An application to recall a witness was declined, but an opportunity for submissions onthe new evidence – a collection of 33 internal James Hardie documents – was given.[135] Although it is an unusual approach, on reviewing the draft I decided it wouldbe best at this stage to leave my initial conclusions expressed as they were, eventhough they might have been modified in how they were expressed if I had had thenew evidence. The discussion of the new evidence is addressed in an extra sectionunder this topic of durability.The composition of a Harditex sheet[136] A Harditex sheet consists of:(a) seven per cent cellulose fibres, which are fibres from Pinus radiata thathave been through what is known as the kraft process. That processremoves most of the lignin from the wood fibre;(b) 28.5 per cent cement;(c) 60.7 per cent silica (broadly speaking, sand);(d) 3.5 per cent alumina trihydrate (an addition during early development toovercome cracking issues); and(e) 0.3 per cent pigment (to colour the sheet pink).[137] The kraft process referred to in (a) has been around since 1884. It is notnecessary to detail it. It removes almost all of the lignin in the wood fibre. Lignin isa food source for decay fungi, as are some of the sugars and hemicellulose alsoremoved by this kraft process.[138] The cellulose fibres used in Harditex are converted (by the third party doingthe kraft process) into sheets. These sheets are then further refined by James Hardieby a spinning process that separates the cellulose into individual fibres. These nowindividual fibres emerge with fine hair-like fibres on their surface which in turnimproves bonding with the other materials when mixed together. All the sheet'smaterials are added together to form a slurry. This is made into very thin films whichare then layered on top of each other. The number of layers determines the thicknessof the sheets (generally 7.5 mm but some 9 mm were made). The evidence describesthe sheet as emerging from this process like a sheet of wet cardboard. Trimmed to sizeit is then left to pre-cure for several hours before autoclaving.[139] Autoclaving is one of the two main processes used worldwide in relation tofibre cement. This involves subjecting the sheets to a controlled pressure cycle ataround 180 degrees Celsius for eight hours or more. The process causes the calciumin the cement to react to the silica so as to form the cement matrix (calcium-silicate-hydrate – CSH). CSH exists in different forms or phases. The autoclaving processproduces a crystalline form called Tobermite which is a stronger form and contributes,James Hardie says, to the durability of the board. The cellulose fibres bond chemicallyto the Tobermite, which is why it is called a fibre-cement sheet.Fungal decay as a failure mechanism(i) A discussion of the trial evidence and the original closing submissions[140] There is a significant dispute here between the experts over whether fibrecement is susceptible to fungal decay. James Hardie says it is not because the highalkalinity of the cement matrix prevents it. Dr Wakeling contends otherwise and sayshe has seen decay within fibre cement on numerous occasions. He is supported in thisby another plaintiff witness, Ms Burnie, who produced photos of slides said to depictsuch decay happening. Dr Wakeling agrees that it is the correct interpretation of theslides. The defendant experts disagree.[141] Dr Wakeling, whose evidence is subject to sustained challenge by thedefendant, is an expert in the biodeterioration of wood. He says he specialises in thedecay of timbers in buildings and other wooden structures caused by fungi and otherbiodeteriogens. This has led to him analysing and providing advice in the leaky homecontext. Dr Wakeling advises that he has, in this context, examined samples ofcladding and other materials.[142] Of Harditex, Dr Wakeling says he has analysed several thousand Harditexsamples, and a similar number of samples of "proximal building materials" by whichis meant, as I understand it, the building wrap and the timber framing.29 He concludes"with a very high level of confidence" that the Harditex cladding system lacks theminimum performance criteria required by the Building Code. He then gives a verybroadly expressed opinion that the move from asbestos to: the highly perishable and dimensionally unstable wood fibre, was anirrecoverable step to widespread systemic failure, a failure I have nowrecorded in thousands of Harditex samples across hundreds of buildings whichare representative of thousands more buildings.[143] The essence of Dr Wakeling's evidence is that, notwithstanding the kraftprocess, the cellulose fibres remain wood fibres and are to be analysed from thatviewpoint. The removal of the lignin, which is a protective layer over the fibres, makesthe fibres more vulnerable.30 The Harditex sheet is absorbent so the vulnerable fibreswill be exposed to moisture and become wet; therefore decay is inevitable andpredictable.[144] The key disagreement concerns the impact of the cement component on therefined wood fibre. The cement mix is highly alkaline, and alkalinity at a certain levelprevents rot fungi from surviving. While it is agreed that the high (pH) level of themix will decline over time, it is argued by the defendant that it does not get to the levelwhich would allow rot fungi to survive. It is this quality that underlies the JamesHardie claim that Harditex "never rots or decays". It is a statement about fibre cementgenerally. The corollary of this is that if something causes the alkalinity to drop toolow, the fungi can survive. This is the position of both James Hardie's experts andDr Akers. If, for example, the cement matrix breaks down with a resultant decline inpH levels, then the protection against fungi attacking the cellulose is lost.[145] Dr Wakeling disputes that the pH level will stay that high, but also advancesthe proposition that the wood fibres form an interconnecting network within the29 Dr Wakeling during his evidence made various claims involving figures such as thousands. Thedefendant in its closing has analysed these claims to demonstrate the exaggerated nature of them.I accept the defendant's analysis – the point was obvious when the evidence was being given. Itdoes not require further comment.30 In their closing submissions, the plaintiffs state that a defendant expert, Dr Spiers, agreed with this"more vulnerable" comment – NOE 5840/5. This is to take an answer out of context. Dr Spiersagreed the fibre if left exposed would be more vulnerable "if it hadn't been subject to boiling andalkalinity it's not that susceptible at all."cement matrix. This network allows the fungi to migrate from fibre to fibre withoutengaging with the cement matrix. Dr Wakeling says he has seen decay fungi withinHarditex on hundreds of occasions. He, however, produced no imagery of this forothers to observe and comment on. When queried on this, Dr Wakeling's answer inpart was that you need a lot of experience to recognise what it is that he is recognisingin these samples.[146] Dr Wakeling at one point advanced the proposition that Harditex should beclassified as a wood product. He then referenced New Zealand standards applicableto wood products with a view to showing how Harditex was non-compliant with thoseStandards. NZS 3640:2003 applies to round and sawn timber. NZS 3602:2003 appliesto wood-based products, being products made primarily from wood or wood fibres. Itwas a surprising and not credible proposition that these Standards apply to fibrecement. Dr Wakeling's analysis seemed premised on the idea that fibre cementcontained "wood" without sufficient recognition of the process to which the woodfibres had been subject. I accept this kraft process may not mean the fibres lack allthe properties of wood, but the approach taken by Dr Wakeling was not helpful.[147] This leads to a more general assessment of Dr Wakeling's evidence. I havenoted the evidence is subject to strong attack, and I observe I agree with most of thecriticisms. It is necessary to consider them in some detail as Dr Wakeling's evidencewas central to the plaintiffs' claimed inherent defect five.[148] There is a body of published literature that supports James Hardie's positionthat fibre cement is at very low or no risk of fungal decay.31 In advancing his contrarythesis, Dr Wakeling in his initial brief made no reference to any of this literature, orindeed to any literature supportive or otherwise of his evidence. This is itselfsurprising in an area such as this, but Dr Wakeling's style was to assert.31 See for example W R Sharman and B P Vautier "Accelerated durability testing of autoclavedwoodfire-reinforced cement-sheet composites" (1986) 3 Durability of Building Materials 255 at273; and Marcia Shirakawa, Edson Aihara, Cleber Dias, Christine Gaylarde and Vanderley John"Fungal Colonization on Fiber Cement Exposed to the Elements in a Tropical Climate" (paperpresented to 11th International Conference on Durability of Building Materials and Components,Istanbul, May 2008).[149] When challenged in cross-examination about this initial lack of supportingmaterial, Dr Wakeling said he did not dream that anyone would contest the propositionthat perishable kraft pulp fibre would not decay. This was also surprising. The casecontext, of course, is not about perishable kraft pulp fibres in some suspended state,but about such fibres within the cement matrix of a fibre cement board. If it was notappreciated that this was contested, Dr Wakeling knew insufficient about the case tobe giving evidence.[150] Dr Wakeling produced a second brief, which was a response to the literaturerelied on by the defendant's experts:Q. But you'd agree you don't refer to any literature in your first brief ofevidence. You only refer to literature in the second brief because theevidence of the defendants' witnesses that say there's literature and youdidn't respond to that, agreed?A. Well, that was partly because the – it seemed to be suggested that aperishable draft pulp fibre would not decay which to me was such asurprise, I was then forced to produce work from other people to say thatit did, [151] Dr Wakeling's use of the literature to which he refers has become a secondfocus of challenge. The papers he refers to as supportive of his theories stand for theopposite proposition to that which he advances.32 Some extracts will make the point.The emphasis is mine.[152] In a paper by Parameswaran and Brӧker33 the authors examined themicromorphology of cement bonded insulation boards and wood-cement blocks whichhad been in use for 25 years. They also considered a wood-cement composite that hadbeen in the ground for 30 years. The authors observed:The first two samples showed no structural changes in the wood tissue. Thesample taken from the ground, on the other hand, showed colonization byfungal hyphae of the outermost 2-3 mm: the wood cells were degraded,showing decay patterns resembling soft rot and white rot. The inner sectionsof this sample were, however, completely free from fungal hyphae and showed32 In making this statement I am not overlooking the plaintiffs' closing submissions on these articles.The plaintiffs seek to support Dr Wakeling's interpretation. Counsel's reading of the papers is nothow I read them. I consider their import plain.33 N Parameswaran and F W Brӧker "Micromorphological investigations on wood-cementcomposites after long-term use" (1979) 33 Holzforschung 97. The paper is in German. Thedefendant produced a certified translation.no sign of degradation. This suggests that cement composite is not prone toextensive changes in the micromorphology even after years of use.[153] A second publication by Goodell and others similarly found no decay. Theauthors observed:34Because the decay test did not show significant weight losses, it is likely thedecay observed with microscopy was at a very early stage of development.Whether significant decay (i.e., weight loss) would be obtained by extendingthe duration of the decay – a very severe decay test – is unknown. Given theresults observed in this test, it is likely that only wood regions exposed insurface regions to the fungi will be accessible for fungal attack. An earlierstudy by Parameswaran and Brӧker (12) examined a single sample of wood-cement composite that had been buried under soil during construction of abuilding. Similar to that observed in our soil-block study, surface degradationof the wood in this sample was observed but the interior remained free offungal attack.[154] Likewise, Huang and Cooper note:35Wood-cement composites are known to be highly resistant to decay due to theencapsulation of wood particles and the high pH environment in the composite(8.22). Conventional measures of decay resistance have been difficult tointerpret because when the composites are exposed to decay fungi in astandard laboratory test, carbon dioxide produced by fungi may be absorbedby the cement resulting in weight increases that confound expected weightlosses from the wood decay (8). Wang and Takahashi (22) evaluated the lossin internal bond (IB) strength of wood-cement particle-board and concludedthat strength loss was minimal.[155] I have selected these extracts to enable focus on two aspects – the generalconclusion of each, and the hint of a caveat in each. There is no doubt that each articleprovides strong support for James Hardie's case. They each assert the core propositionof resistance to decay due to the high pH and do so in relation to materials which arenot fibre cement, but are similar to it. The differences between these products andfibre cement only increase fibre cement's inherent protection from rot compared to thematerials considered in these articles. Dr Wakeling's use or description of thesearticles was misleading and inaccurate and caused me to significantly doubt the valueI could place on his expert evidence alongside his attempt to classify fibre cement asa wood product.34 B Goodell, G Daniel, J Lieu, L Mott and R Frank "Decay Resistance and Microscopic Analysis ofWood-Cement Composites" (1997) 67 Forest Products Journal 75 at 79. Note how the authorshave interpreted the Parameswaran article.35 Chen Huang and Paul A Cooper "Cement-Bonded Particleboards Using CCA-Treated WoodRemoved from Service" (2000) 50 Forest Products Journal 49 at 50.[156] I refer to a caveat out of fairness to Dr Wakeling. The passages I chose all havean aspect supportive of his position. An example is the Parameswaran passage whichdoes record penetration to the "outermost 2–3 mm". This is plainly penetrationbeyond the surface. As I understand it, Dr Wakeling saw in each article an aspect ofthe research which, when all put together, provided some support for his theory. Thatis in itself an available methodology but only, in my view, if one makes thatmethodology clear. That was not done here. If I have correctly understoodDr Wakeling's approach, that understanding has only come about as a consequence ofcross-examination. Further, if one is doing this, it nevertheless remains necessary foran expert to acknowledge and to confront properly the obvious contrary central thesisof the research referred to. That was never done.[157] Other matters concerning Dr Wakeling's methodology also arose. Dr Wakelingwas requested to analyse samples provided to him by the homeowners'representatives. What he did could be described as destructive testing. Dr Wakelingsays what was left after his testing would not be of use to anyone but this cannot beotherwise known because Dr Wakeling destroyed all the remnants. Dr Wakelingadvises that is his normal practice and he expected the other party to have possessed asample taken from an immediately adjacent spot.[158] The defendant's experts were critical of this and said it was not their practicenor common. That is also the Court's experience and I would expect a personexperienced in litigation as Dr Wakeling says he is would at least have checked beforedisposing of sample material.[159] This aspect of depriving the other party of an opportunity to review arose moreclearly in relation to Dr Wakeling's evidence about what he has seen and can see whenreviewing slides. Although claiming to have viewed decay on countless occasions,36no supporting evidence was produced. When challenged on this, the response, and Iconsider this a fair summary, was that it was too time consuming to produce qualityslides and the litigation was not worth that effort. However, he was working on apaper to be published in the future which would have such images.36 In hundreds of samples, but not in any of the samples submitted to him from houses in this case.[160] The form in which evidence is presented to the Court is ultimately a choice tobe made by Dr Wakeling and those instructing him, but the outcome is that there is nosupport provided by Dr Wakeling for his evidence, nor has he chosen to subject hisanalysis to peer scrutiny. Its value is correspondingly diminished. I wish to emphasisethis is not any formal critique of the expertise of Dr Wakeling, the scientist. I am alertto the potential for him ultimately to be proved correct, possibly solely by his ownpublication. It is, however, very much a critique of Dr Wakeling as an expert witnessin this case. The methodology underlying his evidence, and his understanding of theexpectations on an expert were not satisfactory. It significantly undermined theprobative value I am willing to attach to his evidence.[161] It is necessary to conclude this aspect by reference to the style of evidence. Itis an extension of that to which I have already referred. The tendency was to assertwithout providing any support, and when challenged to claim that what he was sayingwas so fundamental he thought there was no need to offer any support for it. This wassaid notwithstanding a bevy of experts on the other side proffering a contrary view.Likewise, suggesting that he is the only one in New Zealand with the experience tosee what he observed in the slides, but again without providing opportunity for othersto assess his opinion, also demonstrates the difficulties with his approach.[162] Before concluding, I note that these challenges to Dr Wakeling's evidence werewell-flagged and were addressed in the defendant's closing. Correspondinglytherefore the plaintiffs undertook a defence of his evidence in their submissions. Irecord that before setting out my conclusions on the evidence, I had regard to thesesubmissions but I do not wish to prolong this section by outlining them in detail. Ihave spent the time I have on the topic because Dr Wakeling was an important witnessfor the homeowners and, as with Dr Lstiburek, it is important to articulate the reasonswhy evidence is accepted or rejected, or accorded high or low probative value.[163] The plaintiffs relied in their original closing submissions on four other matterssaid to point to the capacity of fibre-cement sheeting to decay:(a) a James Hardie test sometime prior to 1996;(b) reports received by James Hardie from a New Zealand laboratory, Biodet,that refer to mould on and within the sheet;(c) reports of mould growth on painted Hardiplank; and(d) patents registered in the United States in which, in narrative sections,James Hardie appear to acknowledge this very risk.[164] The pre-1996 test was during trial referred to as the Allunga Tully test. Whatwas available were seven pages of a fuller document which pointed to James Hardietesting in extreme conditions on a fibre-cement sheet, possibly Harditex. Since thehearing the full document from which the page was taken has become available. It isconfirmed the product was Harditex. This full document is part of the new evidencewhich is discussed shortly. I first address, however, the other three matters on whichthe homeowners relied.[165] The Biodet reports related to two properties in Auckland. The first reportsuggested fungi penetration on a Harditex sheet to 3 mm. The report concluded theback of the sheet had been very damp for a period of time. The second report recordedgrowth on a sheet indicative of a 20 per cent moisture content for at least three to sixmonths.[166] The reports were put to the defendant experts but the exchanges did notproduce helpful evidence from my viewpoint. The most that can be said is that thefirst report is evidence of a fungi penetration beyond the surface but does not otherwiseadvance matters. As I understand it, the issue is not the capacity to penetrate but tosurvive once having done so.[167] The third topic does not require consideration. It is accepted mould can growon an uncoated surface, and indeed in certain circumstances on a coated one.[168] The fourth issue is patents held in the USA by James Hardie. The patentscontain statements at odds with James Hardie's case position. For example:However, cellulose fiber cement materials can have performance drawbackssuch as lower resistance to water induced damages, higher water permeability,and higher water migration ability (also known as wicking) compared toasbestos cement composite materials. These drawbacks are largely due to thepresence of water conducting channels and voids in the cellulose fiber lumensand cell walls. The pore spaces in the cellulose fibers can become filled withwater when the material is submerged or exposed to rain/condensation for anextended period of time. The porosity of cellulose fibers facilitates watertransportation throughout the composite materials and can affect the long-termdurability and performance of the material in certain environments. As such,conventional cellulose fibers can cause the material to have a higher saturatedmass, poor wet to dry dimensional stability, lower saturated strength, anddecreased resistance to water damage.[169] There is little to be said here. They are statements by James Hardie (aninternational section thereof) which are at odds with its present case. The evidence,for reasons given, has satisfied me the present case is correct but it cannot be deniedthe statements exist. The plaintiffs say the new evidence strengthens the propositionthat what is said in the patent application reflects James Hardie's knowledge.[170] The decision not to accord much weight to Dr Wakeling's evidence underminesthe plaintiffs' case on this topic. That said, it is important not to focus solely onDr Wakeling's evidence. In my view, the overall evidence suggests the defendant'spropositions about rot reflect the present scientific understanding.[171] First, and not needing further detailed rehearsal, the published literaturesupports the proposition that fibre cement is not subject to fungal decay, or at least therisk is so low as not to be a factor. Further, no-one referred to any published literatureclaiming the opposite proposition as its conclusion.37 This is significant. Science, likemany disciplines, develops not only through research but through the publication ofthat research which can then be built on, or critiqued. I consider the absence of anypublished literature (at least to which I have been referred) which supports thehomeowners' core proposition is telling.[172] Second, a panel of experts on fibre cement which included the plaintiffs' ownexpert, Dr Akers, agreed at an experts' conference that fibre cement was not subject todecay. Their agreed position was:37 The patents are an exception but they are not studies, just statements.- Surface colonization by microorganisms (mould growth) is possible inboth technologies (as well other materials), depending on themicroclimate.- There is no evidence that the microorganisms will penetrate in the cementmatrix to destroy (feed on) cellulose fibres.- After the matrix has been leached to a point that fibres are exposed,biological degradation of the fibres is possible.[173] The point made there by the experts, about the cement matrix leaching, can benoted to be the preferred explanation of the defendant's experts on why on occasionHarditex sheets have lost their strength. The experts agree excessive exposure to watercan cause the cement matrix to leach, and this effect is increased if the water is acidic.The second bullet point represents the experts, including a homeowners' expert,agreeing with James Hardie about durability.[174] Third, the only other evidence of decay occurring within a sheet was someslides produced by another defence expert, Ms Burnie, a microbiologist with anexpertise in building material analysis. Her original brief concerned analysis of fungiand mould on the surface of some Harditex samples and did not address this topic.However, in her reply brief she engaged with the issue of decay within a Harditexsheet. Ms Burnie supports Dr Wakeling's conclusion. She produced slides that weresaid to be evidence of such decay. The defendant's experts differed, saying either theimages were unclear or noting that if there were mould hyphae present, they wereplainly stressed, indicating that the high alkalinity of the sheet was having the expectedeffect.[175] This conflict in what could be seen on the slides is not one the Court canresolve. It is clear it needs an experienced eye aware of what is being looked at. Forthis reason, I prefer to base my assessment on the overall preponderance of theevidence.3838 I do not dismiss Ms Burnie's evidence or expertise but weigh it in the mix. That said, there wasan example in her evidence of not understanding the proper role of an expert. Ms Burnie said inher reply evidence that there was literature supporting her and Dr Wakeling's position. This cameas a surprise, and would be important given, for example, the judgment's earlier observation thereis none that was relied on. It transpires the "article" cited by Ms Burnie was an in-housepublication of a Minneapolis-based building consultancy. It is not peer reviewed or in any senseauthoritative. Ms Burnie had only found it the night she was preparing her reply evidence as aresult of a web search. She was unaware of any of the contrary published literature this judgmenthas referred to. I consider this aspect of her evidence was capable of misleading the Court and[176] Fourth, the defendant proffers a viable alternative explanation for the damageseen to some sheets. I put it no higher than that because it, likewise, seems generallyunsupported by literature. It does, however, have the endorsement of the experts'conference including Dr Akers who is very experienced with fibre cementmanufacture.[177] Central to the defendant's proposition that fibre cement will not rot is theoverall alkalinity of the sheet. A fibre-cement board will start with a pH level ofaround 12.0 but this will reduce over time due to a process known as carbonisation.How low the pH will go, and whether it will reach levels facilitative of fungal decay,was a point in dispute.[178] The general consensus of the defendant's experts, and of some of the publishedliterature, was that a sheet would normally only reduce to a pH level of around 8.0 to9.0. This would be too high for the fungi to operate. This evidence is consistent withthe extracts earlier cited from the published literature which note alkalinity to be theprimary barrier to decay.[179] However, Dr Spiers, a defence expert, noted he had recorded readings insamples as low as 6.8 and 7.0.39 The plaintiffs submit that the evidence shows that thepH level can alter, especially when acidic water enters the cement matrix therebydecreasing the alkalinity. However, the isolated low pH reading could also beconsistent with the leaching theory where, once the cement matrix breaks down, thepossibility for decay obviously increases.[180] For the purposes of the litigation, a conclusion is only needed on the plaintiffs'fungal decay proposition. I recognise that on occasions Harditex sheets, or at leastpart of them, lose their strength, and at the extreme become crumbly. On the basis ofthe evidence, and supported by the current state of published literature to which I havebeen referred, I am satisfied that this loss of strength is not due to fungal decay. It hasrepresented an incorrect approach to the role of an expert that to some extent diminished the valueof her evidence.39 Conversely, in other aged Harditex samples he found a pH level of around 9.5.not been shown that the sheet is prone to rot, and the preponderance of scientificevidence says the opposite.(ii) A discussion of the post-trial evidence[181] The new evidence consists of a collection of internal James Hardie documents.They are:(a) the full suite of documents concerning an exposure test on uncoatedHarditex at a site in Queensland (called the Allunga Tully documents).An extract from one of the documents had been available at trial;(b) a series of what are called research and development reports;(c) a compendium document, drafted it seems in 1996, which seeks tobring together knowledge held within James Hardie about fibre cementdurability. It collates a history of post-asbestos testing and outcomes;(d) a series of reports on mould issues; and(e) a collection of documents on various topics such as coating systemsand recessed edges.[182] The homeowners consider the documentation significant and advance eightpropositions based on them:401. The sole 'Allunga' document available at trial relating to testingundertaken on Harditex by James Hardie at its Allunga, Tully test sitewas an incomplete 10-page document. That document recorded alarmingproperty degradation of Harditex on natural exposure at the AllungaMould Growth Test Site.2. The defendants have withdrawn their closing submission questioning theprovenance of the document available at hearing and accepted thatHarditex was subject to the Allunga testing. This followed their recentdiscovery of a bundle of documents relating to testing at Allunga andassociated documents (the Allunga documents). The provenance of theAllunga document could hardly be doubted as a James Hardie internaldocument.40 Footnotes omitted.3. The Allunga documents contain highly relevant and probativeinformation confirming that Harditex had no track record of performanceor 'proven durability'; it degraded as a result of microbiological attackand the defendants knew (or at the very last ought to have known) thatHarditex was an unproven product which was subject to significantongoing durability problems since its release to the New Zealand marketin 1987. The documents are entirely consistent with and corroborate theplaintiffs' case and undermine the entire factual basis for the defendants'position.4. By way of overview, the Allunga documents discussed below establish:(1) James Hardie cellulose reinforced fibre cement had no proventrack-record of performance. Harditex was an experimental anduntested product when it was released to New Zealand in 1987.Harditex never had proven durability;(2) Harditex is highly susceptible to mould growth andmicrobiological attack of the cellulose within the sheet causingdegradation. Harditex is not immune to water or rot;(3) The Allunga testing was undertaken by James Hardie to assess thedurability of asbestos-free fibre cement (including Harditex). Theresults are applicable to New Zealand and other aeras whereHarditex was intended for use and are not limited to tropicalconditions. The results are particularly relevant to New Zealandwhich James Hardie knew to be a high mould growth area;(4) James Hardie knew that the durability of Harditex was notestablished, including that: the addition of alumina did not resolveissues with carbonation, moisture movement and cracking; andHarditex and other autoclaved asbestos-free fibre cement productsdegrade as a result of fungal decay;(5) The uncertain effect of the addition of alumina in resolving issueswith sheet cracking, and problems with mould growth causingdegradation of fibre cement, were critical issues of focus for JamesHardie Research & Development (R&D) which were of increasingconcern and never addressed or resolved with respect to Harditexin New Zealand. James Hardie knew Harditex never had a 50-yeardurability lifespan;(6) James Hardie R&D held an extensive library of internal researchwhich was kept confidential and was not released to the widerscientific community. From the recent disclosure it is apparent thatthe research and knowledge of microbiological attack entirelycontradicts the limited "published literature" cited by thedefendants' experts, corroborates the plaintiffs' expert evidenceand explains the James Hardie patent for fibre cement usingbiocide treated cellulose fibres to protect against bio-decay of thefibres;(7) The information held within James Hardie R&D was accessibleand available to the defendants, and the defendants relied ontesting undertaken by James Hardie R&D for its claims regardingthe durability of Harditex. If the defendants did not rely on theknowledge of R&D, they had no basis to assert the durability ofHarditex and have failed to carry out any relevant testing. Thatwas negligent;(8) The documents show the unreliability of the evidence given byMr Cottier, who suggested trouble-free usage following theaddition of alumina trihydrate to the formula. Likewise, theinability of Mr Cottier or Mr Kuizenga to recall detail regardingAllunga or other microbiological tests is questionable given theclear significance and knowledge of microbiological attackcausing degradation that is apparent from the Allunga documents.[183] Of these topics two merit particular consideration – the Allunga Tully testingand what it says about microbiological attack of the cellulose fibres; and the claimsconcerning the success or otherwise of adding alumina to the composition of the sheet.[184] I begin with an observation that is also in part a conclusion. The plaintiffs'submissions brought into clearer focus for me what I see as a fundamental flaw in theircase – a lack of evidence. There are for example, as can be seen, strong submissionsmade on what messages can be taken from the results of the Allunga Tully testing, butthere is no expert witness saying any of it. The Allunga Tully testing involved placingan uncoated sheet of Harditex outside at a 45 degree angle in the harshest ofenvironments – one of the hottest and wettest places in Australia. After seven yearsthe uncoated sheet lost half of its cellulose content, which the documents suggest is aconcern.[185] But the question remains – of what relevance is that outcome to the use of acoated Harditex sheet on a house in New Zealand? This is not in my view a questionto be answered by submission. It needed evidence from someone able to explain itssignificance, but none was proffered. The plaintiffs' witnesses included Dr Akers whowas undoubtedly an expert and indeed the durability of fibre cement is his coreexpertise. His essential endorsement of James Hardie's autoclaved fibre cement hasbeen noted, including his agreement that:There is no evidence that the micro organisms will penetrate in the cementmatrix to destroy (feed on) cellulose fibres.After the matrix has been leached to a point that the fibres are exposed,biological deterioration of the fibres is possible.[186] In the absence of further evidence from Dr Akers or a different expert, in myview the Court cannot itself read the results of a test such as Allunga Tully andconclude it overrides the agreed views of the experts, and the current state of theliterature.[187] Given these observations I am unsure how much detail needs to be given ofthis test. James Hardie sent a collection of its products for exposure testing at this site.As it appears it is a pretty simple test – the sheet is left outside on a frame at a pre-setangle. It is uncoated and completely exposed to the elements. Analysis of how it wasaffected in this environment was undertaken at six months, one year, two years, fiveyears and seven years.[188] In relation to Harditex, mould started to appear quite quickly, but otherwise atthe 12-month stage the assessment was that the product was displaying good tolerance.The mould had consisted of a 100 per cent thin film coverage. The same was so aftertwo years except the mould had thickened and the surface under the mould hadconsequently softened. It had lost some flexural strength.[189] The five-year report caused concern in relation to the loss of cellulose material.It was estimated it had lost 25 per cent of its cellulose and predicted that the same rateof loss would continue, meaning 50 per cent after 10 years. After seven years theassessment was the test showed:(a) high carbonation;(b) severe physical performance reductions;(c) poor physical appearance; and(d) cellulose degradation.[190] James Hardie's position, which I accept, is to question the relevance to the trialissue of how it will perform in service in New Zealand and to note the absence ofevidence about this. James Hardie also makes a legitimate point that the test resultsmay be considered within the context of all the trial evidence. There is a dangerotherwise of viewing it as the only testing. For example, BRANZ conducted a seriesof weathering tests on New Hardiflex that suggested it would have appropriatedurability. The trial evidence was that the exposures conditions matter, with Dr Johnsuggesting an average increase of 10 degrees in the climate can double reaction rates.[191] The other aspect of the Allunga Tully report that needs comment is thehomeowners' claim that the results show the product is subject to fungal attack. In theabsence of evidence I do not accept that, at least if the claim is that it shows a healthysheet can be subject to microbiological attack. There is no analysis apparent in thereports of what process had happened to the sheets and whether, for example, thecement matrix had collapsed which would expose the cellulose to such an attack. Onthis issue I do not regard the fresh evidence as advancing matters.[192] It can be noted in conclusion on this that the James Hardie document discussingthe Allunga Tully results concluded:Products subject to the Allunga environment should have protective coatings(paint etc) applied as soon as possible after installation to help prevent thesevere losses in product performance.I do not cite this to minimise the plaintiffs' case but rather to illustrate the need forcontext and the need to not view these things in isolation. No doubt there is much inthe study that those who are expert in product development would see as helpful orinstructive, but objectively it was not viewed internally as some crisis. It is aconclusion that also reinforces the earlier observation that linking the study to theperformance of the product in service needed evidence.[193] The other matter identified for fuller discussion was the topic of aluminatrihydrate. This was the product added in 1980 (it was thought) to address issues ofcracking and shrinkage due to carbonation. Mr Cottier had provided the date (frommemory) and had claimed it solved issues that had emerged when the product was firsttrialled in Western Australia. The homeowners say that new documents show it wasfirst added only in 1984 and there were still issues subsequently. By 1987 JamesHardie could not be satisfied it had solved issues with carbonation, moisturemovement, cracking and shrinkage. It was still experimenting with alumina. All thisis reflected in the compendium document which in 1996 noted:There is no definitive proof that Alumina improves the durability sufficientlyto cover the up to 50 years warranted long term survival.This and the Allunga Tully testing led to the wider submission based on the documentsthat Harditex was "an experimental and unproven product" when it was released onthe market in 1987.[194] Carbonation is a common chemical reaction that can affect the properties ofthe sheet. It can cause the sheet to shrink, and to crack. It was not a trial issue and notlinked by the plaintiffs to any alleged defects, or house-specific problems. Aluminatrihydrate was regarded by James Hardie as an important development. The agreedstatement of the experts, again including Dr Akers and again not modifiedsubsequently by evidence, is that:We agree that the addition of alumina trihydrate resolved the issues relating tocarbonation induced cracking shrinkage.[195] The compendium document provides a basis for a submission that in 1996James Hardie was still assessing the effectiveness of different amounts of alumina.Dr Akers in his brief had noted that the amount can be varied depending on the purposeof the particular fibre-cement product. As an example, ceiling boards have less thanwall cladding.[196] It is not of any obvious significance in itself that James Hardie was analysingthe effectiveness of different amounts near the time of release of Harditex. There isno evidence to say this sort of product development is indicative of some issue. Therewas never Harditex sold in New Zealand without alumina added, and myunderstanding of the evidence is that the formula did not in fact change during its timeon the market here. On the specific topic of alumina, there is no basis to go behindthe experts' agreed statement.[197] Concerning the wider proposition of an unproven product, there is in my viewlittle that is particularly new or significant. Asbestos-free fibre cement started in 1981.That is as far back as it goes, and so when Harditex was released six years later that isthe extent of its in-service history. There had, however, been a number of tests done,including accelerated ageing that led entities such as BRANZ to consider it wouldhave appropriate durability. The judgment elsewhere concludes the testing wassufficient.[198] Turning to the compendium document on which reliance is placed, it is asummary by the author of various documents held by James Hardie. It is thereforethat person's assessment of other people's documents. It describes itself as a draft. Itbrings together various issues known to James Hardie about its products over the then15 year life of asbestos-free fibre cement. The Allunga Tully information initiallyavailable at trial in fact comes from this document rather than the original AllungaTully reports.[199] The document is 41 pages long and covers a broad range of topics, many ofwhich have no relevance to trial issues. Aspects of it are technical suggesting theauthor has expertise but it is not always clear what is original comment and what issourced in other documents. No conclusion is offered which leaves somewhat unclearits purpose. At the start the purpose is described as creating:a stepping stone to a shared document summarising important fibre cementdurability developments or understanding However, its intended audience is unclear. My impression is that considerabletechnical expertise is needed to understand it or find it useful, but that is as far as itgoes.[200] I have formed the view it is not a document that needs further detailing. In theabsence of tested evidence about the implications of any of its contents, I do notconsider it merits the Court seeking to draw conclusions from what is a collation ofinformation which does not itself proffer any conclusion.[201] Without unduly prolonging this topic of the new evidence, I address finally thequestion of James Hardie knowledge. On the individual level, the evidence did notcause me to doubt Mr Cottier, a witness who impressed me. That he misrememberedthe exact date for when alumina was introduced some 30 years ago seemsinconsequential. His evidence on its effectiveness mirrored the experts' panelassessment. (He was not part of that panel.) In relation to the other documents it isvery unclear which of them he may have seen or not.[202] On the issue of corporate knowledge, there are statements by individuals thatappear to acknowledge microbiological attack as a reality. However, those statementsare usually general and do not engage with the trial topics. For example, does themaker of the statement think that can happen in a healthy sheet with high alkalinity,and if not what has happened to the sheet to allow it? They are not statements thatlead me to doubt the current view of the literature concerning this topic, nor to thinkthat James Hardie knew the literature to be wrong but nevertheless publicly and oftenasserted the opposite, and indeed sold the product on that basis – namely, that it doesnot rot.[203] The discussion to date has not dealt with all of the points made by the plaintiffsor even most of them. It has addressed the most important ones. It is not necessary toanalyse the material further because the answer will normally be the same I gave atthe outset. There is simply an absence of the evidence that would be necessary for theCourt to draw the type of conclusions the plaintiffs claim. Repeating that viewpointon numerous occasions will not assist.[204] Looking at the documents for their face value, I consider the plaintiffs overstatethe conclusions to be drawn. I gave one example with the conclusion the paper drewfrom the Allunga Tully research; namely, if you are going to use Harditex in such anenvironment, paint it. More generally, I acknowledge there is material in thedocuments that the plaintiffs would like to have had at trial, and to have had theopportunity to put it to witnesses. But it was not available and nothing can changethat.[205] For these reasons the new material did not change my assessment of fungaldecay, durability, or James Hardie knowledge.Differential movement as a failure mechanism[206] Differential movement is a hypothesis advanced by Dr Wakeling. I do notintend to dwell on this aspect of the case. He fairly made it clear it is a hypothesis andnothing more at this point. It was him trying to explain why in his view sheets fail asoften as he has seen. Initially he suggested that differential movement was the primaryfailure mechanism. However, in oral evidence it became his secondary mechanismbehind decay.[207] The theory is that, in response to moisture entering the sheet, the cellulosefibres and the cement matrix react differently. In relation to this theory it is, as Iunderstand it, agreed by all experts that the cellulose fibres will react more than thecement matrix to the moisture. The fibres will expand over their diameter butminimally along their length. This differential movement between the twocomponents creates a stress on the connection between the fibre and the cementmatrix. That connection will eventually break and as this breaking of the bond isrepeated, the sheet's strength breaks down.[208] Various witnesses were cross-examined on this theory. I preferred the analysisof Dr John, who was able to cite published literature to support his propositions that itwas flawed. Dr John's expertise on the issue, comparative to that of Dr Wakeling, wasqueried by the plaintiffs. Dr John is a Professor of Building Materials at the Universityof San Paolo. His tertiary qualifications, including his doctorate, are in the relevantareas. He has been researching and writing on the topic of the durability of cellulosefibre cement since 2000. Ranking experts is seldom a rewarding exercise. Myassessment is that his specialty is probably more specifically directed at this topic thanis Dr Wakeling's, but the reality is they are both qualified albeit they perhaps come tothe topic through different routes.[209] I preferred Dr John's methodology and the fact that he pointed to literature insupport. However, for reasons already given, it is not necessary for me to do morethan conclude Dr Wakeling's proposition has not been established on the evidence.Flexural testing[210] Flexural testing is a method by which the strength of Harditex sheets can betested. A collection of 10 Harditex samples taken from the eight properties were givento Dr Jia to undertake such testing to see if the sheets had retained the level of strengthrequired by the Building Code.[211] Dr Jia is a specialist in construction materials which was also the subject of hisdoctorate. His research as a student was on a project which explored alternativemethods to autoclaving. He is experienced in the area of cement-based materials. Heis well published and has presented at conferences.[212] The samples were provided to him by Mr Wutzler's company Helfen Ltd.They were grouped by Helfen into three categories of condition – good, fair and bad.Dr Jia's assessment was the flexural strength decreased in conformity with Helfen'sassessment. The weakest samples were those labelled bad by Helfen, and so on.[213] Dr Jia reported his results with this introduction:10 samples were tested for flexural strength in accordance withAS/NZS 2908.2:1992, being the first standard that would have applied totesting of Harditex. This test involves assessing flexural strength inaccordance with the procedure set out in AS/NZS 2908.2:1992. The testprocedure is set out in AS 2908.2:1992 which is attached and marked YJ-2. Ido not repeat the test procedure here.[214] The table which followed allocated a flexural strength measured inmegapascals to each of the Helfen samples. Dr Jia concluded the average MPa for thecategories was 16.86 (for the good), 14.23 (for the fair) and 8.69 (for the bad). Theseconclusions had two implications – it appeared to endorse the soundness of Helfen'svisual observations of the quality of sheets41 and it provided relative assessments ofwhether the boards met the necessary strength requirement. However, on this latteraspect, Dr Jia, having analysed the relevant Standard, concluded he could notdetermine whether the samples tested met the required level of strength.[215] The defendant's expert, Dr John, identified a number of areas in which he saidDr Jia had not in fact applied the Standard's methodology as he had claimed. Theseincluded adopting a displacement rate significantly lower than those required by theStandard; not detailing nor accounting for the direction of the test sample (the sheet issignificantly stronger in one direction (longitude) than the other (traverse)); and notensuring the sheet had the required moisture levels before conducting testing.41 This in turn would add strength to Mr Wutzler's evidence and opinion on what he was observingat the eight houses.[216] When challenged, Dr Jia accepted these points and essentially acknowledgedhe had been unable to fully comply with the Standards. Of itself that is not a concernin that one can ultimately test in whatever way considered helpful and then defend it.What is, with respect, not acceptable in an expert is to mislead by asserting compliancewhen that has, apparently knowingly, not been done. This, in my view, is poor practiceat a level which means the evidence should be put to one side. I do not think weightshould be accorded to the evidence of an expert witness who has misled the Court inthis way in relation to his core evidence. I understand of course that it is a situationwhere the witness has not properly understood the responsibilities that come with therole (despite all these witnesses stating the Code of Conduct had been read andcomplied with). I also understand that Dr Jia was not seeking to disguise matters. Hereadily acknowledged Dr John's points, without, it seemed to me, any concern on hispart that it was a significant matter. It would, though, be placing insufficient weighton the requirements of the Code for the Court not to respond to this level of non-compliance.[217] There were two other aspects concerning Dr Jia's evidence where issues arose.First, Dr Jia cited some papers in support of his evidence. Mr Hodder QC took him tothose papers, and to specific paragraphs within them. It was surprising when Dr Jiaadvised the Court he had not read those paragraphs because he only reads the synopsisand the conclusion. As a practice that is an understandable approach. Lawyers arefamiliar with reading headnotes to cases to get a sufficient understanding of what theystand for. However, to have relied on the articles in evidence without having readthem is a further illustration of a lack of understanding of the role of an expert witness.[218] Second, during his evidence Dr Jia ventured the opinion that James Hardie wasprobably not doing the autoclaving of its sheets properly. I initially thought this hadonly emerged in oral evidence, but reviewing his written evidence I can see it is hintedat in the brief. As best I understand the sequence, following this claim being made byDr Jia in evidence, information was then provided to Dr Jia by James Hardie whichallayed his concerns. It is surprising that an expert would make such a claim withoutfirst getting the necessary information. Dr Jia may well have been right but the caveatis that James Hardie is a worldwide manufacturer of autoclaved fibre-cement productsand has been doing so for more than 40 years. I would expect an expert to explore thisproperly rather than make what seemed to me a casual assertion or proposition. It wasanother factor which did not give me confidence in the evidence.[219] All this aside, James Hardie submits that Dr Jia's work, properly analysed, infact supports its case. Dr John obtained Dr Jia's raw data. His subsequent re-analysisof that data led him to conclude that:within the weakest sheets there was evidence of significant ongoingcontribution to strength by the cellulose fibres, but a breakdown of the cementmatrix.The defendant submits this is further evidence supporting its degradation theory, andevidence contrary to Dr Wakeling's decay theory. If decay of the fibres was the causeof a loss of strength, they would not be still contributing.[220] Dr John concluded his further analysis with the opinion that, properly assessed,all the samples tested by Dr Jia meet the requirements of the Standard. I am not awareof any evidence contradicting this.Conclusion[221] The plaintiffs have not established inherent defect five. This conclusionreflects two factors. First, the opinion of the defendant's experts is consistent with thecurrent scientific understanding of the underlying issues. Second, the contrary viewwas presented by expert witnesses concerning whom there were significant issues withthe manner in which their evidence was presented. These issues led me to devalue theprobative value to their evidence. It is important to observe, however, that thedefendant's evidence was sounder in any event. On the topic of decay, it wassupported by current literature and the Court was pointed to no contrary literature. Onthe question of ongoing strength, Dr John's analysis countered, successfully, thepropositions advanced by Dr Jia.Capacity to cope with normal building movement[222] The next building science topic is alleged inherent defect four. Thehomeowners say that the rules James Hardie imposed for how the sheets were to benailed to the timber framing were flawed. Not enough gap was allowed between thesheets. As the building moved, the sheets came too close together, forcing the coatingwithin the gap outwards. This in turn causes pouting, which is an aesthetic issue; butpouting if not addressed will lead to cracking of the coating which can allow wateringress. Movement is said to also cause cracking elsewhere, for example, at cornersand along the bottom of the h-mould.[223] The pleading identified several sources of this building movement – seismicactivity, thermal activity, wind, and the timber frame shrinking. The last of thesetopics, timber frame shrinkage, was the primary focus of the evidence, and the solefocus of the homeowners' written closing. The underlying building science disputeconcerns the extent to which a timber frame will shrink. This in turn will dictate howmuch of a gap between the sheets should have been mandated to cope with thisshrinkage.[224] To recap the issue, at the time cladding is nailed to the timber frame, the timberframing will have a particular level of moisture content. What that level is will dependon the type of timber, and the circumstances that existed before the cladding wasnailed. If, for example, the timber has been exposed to significant rain not long beforecladding, the moisture content will be higher. If, however, the rain was a few weeksearlier, the timber is likely to have dried considerably. Another variable is the type oftimber used; if it is "kiln-dried" timber, the moisture content will be much lower. Oncethe house is clad, the timber will dry out from that point until it reaches its equilibriummoisture content (EMC). As the timber dries, it shrinks three-dimensionally, meaningthe width, depth and length of the timber all decrease in size.[225] Translating that process to a house –(a) shrinkage of an upright timber stud. The sides of two cladding sheets(right-hand side of one sheet, left-hand side of the other) will be nailed tothe one stud. There will be a gap between those sheets. If the width of thetimber on which they are nailed narrows, the sheets will inevitably movecloser together;(b) shrinkage of a horizontal timber plate. This is the piece of timber runningacross the bottom of a wall. Sheets are nailed to its side. If the length ofthis piece of wood shortens, then the sheets nailed to it will move closerto each other.[226] The JHTI requirements were that for the upright studs, the gap between sheetshad to be 1–2 mm. For a period this was amended to 2–3 mm before being changedback. For horizontal joins (between two floors), the prescribed gap was 9 mm. Thehomeowners contend these gaps are insufficient, and it represents an inherent flaw.James Hardie's experts say it is enough. The issue matters for the Harditex systemmore than some because of the jointing system which relies on the exterior coating tofill the gap. If there were, for example as under some systems, a batten over the joins,it would not matter. All the activity would happen underneath the batten.[227] There are limits to the value of any general discussion. The extent to which ahouse will be affected by shrinkage is very much case-specific. It depends on themoisture content on the various pieces of wood that make up the frame. It has alreadybeen noted that the rules concerning moisture content changed. Also, through the1990s the use of drier kiln-dried timber increased. This timber shrinks less. Thesevariables mean linking a general theory of likely building movement to what hashappened on a particular house is at best uncertain. It is very unlikely, for example,that years later anyone would know what the initial moisture content was.[228] A second theoretical aspect of this topic is that, in this case, cracking was notthe alleged primary source of water ingress for any of the houses. Yet anothertheoretical dimension, related to the last, is that there is little evidence in the case tosuggest cracking when it occurs is a major water ingress concern, as opposed to anaesthetic one. Certainly cracks can let in water, but there would need to be quite anumber of cracks unattended for a considerable time to pose a real risk. Even arudimentary level of maintenance should eliminate the concern before moisturebecame a problem. None of this is to say a crack cannot be a problem, just that theevidence in the case does not suggest they have resulted in significant moisture ingressconcern.[229] The primary witness on timber shrinkage and building movement for thehomeowners was Mr Hadley. He is an experienced civil and structural engineer with25 years' experience in the design, management and construction of buildings.Mr Hadley took what he called a first principles approach, which meant undertakingthe task as if he had been asked by a manufacturer, at the development stage, whattolerances should be allowed for. It is a criticism made of James Hardie that there isno evidence this type of exercise was ever done.[230] Mr Hadley analysed different wall lengths, and assumed initial moisturecontents of 18 per cent, 24 per cent and 29 per cent. His conclusion was that JHTIrequirements were flawed; the gap tolerances were insufficient for the expectedshrinkage.[231] James Hardie presented contrary evidence from Dr Buchanan, formerly theholder of a Chair in Engineering at the University of Canterbury. His particularexpertise is in timber design and he had edited since its inception the Timber DesignGuide which is a comprehensive publication for architects, engineers and builders.Dr Buchanan also has private practice experience and was the chair of the advisorycommittee that wrote and produced the most recent Timber Structures Standard.[232] Dr Buchanan took issue with four aspects of Mr Hadley's work. The firstconcerned what was the correct base moisture level. Mr Hadley argued for 24 per centas that was both the James Hardie limit, and for many years the upper limit allowedby the Regulations. Dr Buchanan produced a list of reasons why in his view it wastoo high. The debate in part reflected the different starting points. Mr Hadley waspresenting a model he considered appropriate for a manufacturer which is launching aproduct. A measure of tolerance would therefore be appropriate. Dr Buchanan wasanalysing from his understanding of existing conditions. Whilst I see the strength inDr Buchanan's points, given the JHTI and the regulatory scheme applicable for muchof Harditex's life allowed a 24 per cent moisture content, I consider Mr Hadley's wasa reasonable assumption.[233] The second issue was whether Mr Hadley was correct to include a shrinkagecomponent because of thermal movement. Mr Hadley assumed there had occurred a20 degree Celsius change in temperature which in turn would cause thermalmovement. There was no dispute between the witnesses that the impact of this wouldbe small in terms of shrinkage – a fraction of a millimetre – but Dr Buchanan disagreedit was appropriate to include it at all. For a change of that dimension to occur, thetimber would have had to be in, say, 30 degree heat for several weeks prior to enclosureand then within the frame decline to a temperature of 10 degrees. Dr Buchananthought that was highly unlikely. The matter does not particularly need resolutiongiven the minimal impact, but I preferred Dr Buchanan's reasoning.[234] The third area of dispute was methodology. First, in terms of raw calculations,Dr Buchanan said Mr Hadley had erred in his horizontal shrinkage figures byincluding a width (traverse) decrease as well as length. Mr Hadley appeared to agreewith this challenge and did some recalculations, but this aspect of his evidence wasconfusing. The adjustments seemed to not give effect to the logic of the change, andMr Hadley was reluctant to accept what appeared to me to be obvious consequencesof the adjustment.[235] The next point of methodology dispute concerned how a two-storey house willreflect the vertical shrinkage. There was agreement on the amount of shrinkage butMr Hadley placed all the impact on the timbers at the midpoint of the house.Dr Buchanan said this was wrong and the shrinkage will occur half at each end of thetimber. Therefore, the midpoint of the house will experience half of the shrinkage ofthe bottom storey and half of the shrinkage of the top. Mr Hadley disagreed. IfDr Buchanan was correct as to how the shrinkage would manifest, the tolerancesallowed for by James Hardie were sufficient.[236] I preferred the evidence of Dr Buchanan who was a good witness and who isan expert in these matters. That is not in any way to dismiss Mr Hadley who prepareda clear brief and was generally a sound witness. He is no doubt an experienced andvery competent practitioner, but Dr Buchanan has held a Chair in the area, has taughtthis material at tertiary level and is the editor of a leading text in the area. I saw in theevidence and his presentation of it no reason not to accept what he said.[237] I also, in this respect, agreed with Dr Buchanan's third challenge which wasthat it was unrealistic and incorrect for Mr Hadley's model to be based on a stand-alone wall, unconnected to any other component of the house. Dr Buchanan was ofthe view that this would exaggerate shrinkage by ignoring the constraints thoseconnections to other members place on shrinkage. Mr Hadley contended it wasappropriate for a first principles approach. Even if that were so, it is not helpful interms of the trial issues. Walls do not stand apart and it cannot prove a claimed flawto not have regard to the reality. A wall will always be connected to another. Theextent to which a model recognises that will influence the value of the consequentanalysis to the trial issues.[238] These conclusions, which are that Dr Buchanan was correct that the gaps weresufficient, are further supported by the general evidence. If Mr Hadley's calculationswere correct, coating failure should be inevitable and regular since the basic sheetlayout was flawed. However, there is no evidence that this occurred other than at aspecific subdivision (Clemmows) which was something of a test project, for warrantypurposes, between James Hardie and others.[239] The evidence did leave me satisfied that at the higher end of moisture contents,the system tolerances were very tight. It may be, given this conclusion but also theabsence of any evidence of general failure, that Dr Buchanan's reasons why anassumption of a 24 per cent moisture content was too high were correct. He notedresearch that suggest an average mean moisture content figure in winter of21.4 per cent and in summer of 16.9 per cent. He also noted the increasing prevalencethrough the 1990s of kiln-dried timber which had a much lower moisture content. Ifthe moisture content were generally lower than the assumed 24 per cent, the amountof shrinkage would have been less, hence the absence of evidence of a generalproblem.[240] At this point I do return to what I see as the theoretical aspect of this. There isno evidence of the widespread failure that would result from an inherent defect of thetype claimed. It is possible that some houses might have suffered a pouting issue ifthe enclosed moisture content level has been above the authorised level. From 1999on, it would need to have been a significant example of non-compliance to presentshrinkage of the amount required to be a problem.[241] It is unnecessary to traverse in any detail James Hardie's other responses onthis topic. Generally, it relies on the whole design process to illustrate its awarenessof the topic of building movement and the need to accommodate it. An example is theneed for relief joints at specific lengths, the sole purpose for which is to address thisissue.[242] As noted, the pleadings mentioned other sources of movement which are notin dispute as a potential source. As I understand it, they were raised as part of thegeneral thesis that this was a poorly thought out product concerning which JamesHardie did insufficient testing before releasing it on the market. That general topicwill be addressed later, but, within the confines of defect four, I do not understandthese other factors to be significant contributors. As noted, the closing submissionson this defect do not address them.[243] The evidence does not establish inherent defect four.Mould[244] Harditex samples from some of the case houses had mould on them. This isprobably not surprising in that each of the houses is acknowledged to have moistureingress issues. The existence of the mould led to evidence about its significance. Thisevidence raised two issues:(a) is a Harditex system house conceptually prone to, or at risk of, mouldissues; and(b) what are the known health risks associated with mould?The susceptibility of Harditex houses to mould[245] The evidence on this topic comes from the WUFI modelling discussed earlierin relation to moisture management. Amongst its other capacities, the WUFI softwarecan predict the relative humidity rates likely to exist within a wall cavity. Ms Hugens,who completed a WUFI analysis on behalf of the homeowners, identified a relativehumidity (RH) percentage that would be a concern. Ms Hugens' opinion was that, atthat percentage/relative humidity level, mould growth would occur all year round, andthat this would have a cumulative effect year on year. In other words, the amount ofmould would just keep increasing. The defendant's experts obtained different results,a situation reflective of different inputs.[246] As earlier noted, Ms Hugens first conducted an initial moisture balanceexercise, the outcome of which, in agreement with the defendant's experts, suggeststhe Harditex system does not display moisture balance concerns.42 Ms Hugens thenput these results through what is known as a WUFI Bio programme. She explains thisto be a system designed to assess the risks of mould growth where there are elevatedmoisture readings. Ms Hugens explained the WUFI Bio programme can consider themould risks in a particular building element. It records its results by a simple colourcoding – green (fine), orange (caution), and red (mould growth inevitable).[247] Ms Hugens has 26 years' experience in New Zealand and Australia as aconsulting structural engineer. She identifies her particular expertise as being inthermal bridge free construction,43 air tightness detailing, low embodied energybuilding materials, structural durability and indoor environmental health. She "hasexperience" in the preparation of WUFI simulations and lists projects in which she hasbeen involved.[248] The defendant's experts were Drs Straube and Künzel. Dr Straube'squalifications have previously been discussed. Dr Künzel, since 1994, has been theHead of the Department for Hygrothermics at Fraunhofer Institute of BuildingPhysics. The department specialises in analysing the dynamic heat and moisturebehaviour of building materials and components, and whole building complexes. Hehas chaired the German National Standard Committee on Moisture Control and theEuropean Committee for Standardisation Working Group on Hygrothermal42 At [98]–[99].43 Thermal bridges facilitate heat transfer so can impact negatively on the efficiency of a building.Performance of Building Components. Dr Künzel developed the WUFI softwareprogramme as part of his PhD thesis.[249] Dr Künzel replicated Ms Hugens' tests using the exact same inputs andobtained the same results. However, there are aspects of what she did with which hedisagrees. Concerning the initial WUFI analysis, Dr Künzel disputed several inputs.However, he and Ms Hugens are agreed that the only one that made a significantdifference was the coating input. Ms Hugens had used an acrylic polymer modifiedcement stucco sourced from the database of Northern American coatings. BothDrs Künzel and Straube said this was an error as it is not an acrylic coating of the typeused in New Zealand. As I understand it, Ms Hugens accepted this point.[250] However, disagreement then arose between her and Dr Künzel as to thealternative he chose. Ms Hugens said it was not a product typically available in theHarditex era in New Zealand. I note that as regards this dispute, although the WUFIexpertise plainly lies with Dr Künzel, it is not really a dispute that turns on thatexpertise as much as an understanding of the attributes of the coatings used in NewZealand at the time.[251] Ms Hugens relied on a 2000 BRANZ Report in which that organisation hadtested several Harditex sheets with different coatings.44 Being 2000, I accept it is areasonable basis on which to determine the attributes of coatings available during theperiod Harditex was on the market. Ms Hugens considered the data from this paperabout coatings favoured her position, but a reply brief from Dr Straube was, in myview, decisive.[252] Dr Straube was of the view that Ms Hugens was misunderstanding theterminology being used by BRANZ in the Report. The detail of this does not needrepeating but the analysis satisfied me he was correct. It was a topic clearly withinDr Straube's expertise. The focus was on the water vapour flow resistance componentof the BRANZ coatings. The analysis indicated that the coating chosen by Dr Künzelwas much closer to that used in the BRANZ testing.44 BRANZ Water Permeability Test of 8 Harditex Systems (MTR 1245, 31 March 2000).[253] Dr Künzel's analysis, using this different coating, indicated to him there wereno mould issues with the Harditex system.[254] The WUFI Bio test conducted by Ms Hugens was challenged in several ways.First, in terms of inputs, this test uses and builds on the initial basic WUFI analysis.An error concerning the coating will necessarily affect the Bio results also. Second,Dr Künzel explains it was anyway the wrong test to use. WUFI Bio does not factor inseasonal changes. This defect, in his opinion, explains why Ms Hugens' analysisconcluded that mould would just keep accumulating year on year; the test assumes aconstant environment rather than one affected by fluctuating seasonal impacts.45WUFI Bio is best used for testing interior surfaces than building enclosures near theexterior of a house and therefore impacted by climate.[255] Dr Künzel said the correct test to use was the WUFI VTT programme. Whenthis was done, no issues emerged such that Dr Künzel concluded:there is no negligible risk of mould growth at the interface between the glassfibre insulation and the building wrap.[256] The interface referred to in this conclusion is the inside face of the wrap whereit meets the timber framing. I note for completeness that Dr Künzel disagreed withMs Hugens' interpretation of her own test results, considering they also did notdisclose concerning outcomes. It is not necessary to explore that further. I accept therevised combined analysis of Dr Künzel and Dr Straube, and accordingly concludethere is no inherent mould growth risk in the Harditex system.The risks and dangers of mould[257] For completeness, I record that evidence was heard from several witnessesabout the health risks of mould. The main witnesses were Dr Shorter and Mr Prezant.Both were experts in their area and gave clear evidence within their expertise. Therewas a degree of consensus but also areas of disagreement. The disagreements includedthe capacity of mould to travel from a wall cavity to the occupied spaces of a house,and the proven health risks associated with mould and mould odour.45 Mould on paths is an example of mould coming and going depending on the season.[258] It is not necessary at this stage to attempt a resolution of these matters givenmy conclusion on the preceding topic. I understand there would be agreement that:(a) there is a link between dampness and adverse health effects but the exactmechanism is not yet established; and(b) there is evidence suggestive of a link between mould and adverse healtheffects but the causal link has not yet been established. This is the currentassessment of the World Health Organisation.[259] On the issue of pathways, Mr Prezant did not deny the potential for transferfrom the interior of a wall to an occupied space, but considered the likelihood of ithappening, and in what quantities, was not yet established by current research. Heconsidered this was due to the many variables within the occupied space and theadjacent wall cavity that would influence the capacity of fungal particulates to migrate.[260] Dr Shorter considers the potential risks to occupants of wall cavities thatcontain mould are well established in the literature. She also considered moreemphasis should be given to the presence of mould odours and its implications –"mould odour has been strongly associated" with health effects in various researchpieces.46[261] I note finally on this point, given its presence on some samples, that bothDr Wakeling and Dr Shorter agreed that no direct link had yet been establishedbetween Stachybotrys and adverse human health consequences. Dr Shorter notesresearch on animals has identified some effects that make a link to adverseconsequences in humans "plausible" but puts it no higher than that.[262] It would be necessary to return to this issue if James Hardie were held to beresponsible for some of the damage reported in the plaintiffs' houses but for now thetopic can be left. The homeowners have not established mould potential is an inherent46 Dr Shorter refers in her evidence to M Jaakkola, R Quansah, T Hugg, S Heikkinen and J Jaakkola"Association of indoor dampness and molds with rhinitis risk: A systematic review and meta-analysis" (2013) 132 Journal of Allergy and Clinical Immunology 1099; and J Mendell andK Kumagai "Observation-based metrics for residential dampness and mold with dose-responserelationships to health: a review" (2017) 27 Indoor Air 506.flaw in the Harditex system. That is not to deny it has been found in the houses; justthat on the evidence, it is not an expected consequence of using the Harditex system.Further alleged vulnerabilities[263] This section addresses a number of further alleged vulnerabilities:(a) the h-mould;(b) the base of sheet detail;(c) external corners; and(d) windows.H-mould[264] The h-mould is a specifically built PVC mould. The use of a specificallydesigned accessory to join two sheets is not novel. A similar accessory was used from1983 for the New Hardiflex system. Mr Longman notes that prior to that, plasticjoiners had long been used for vertical joins, but that metal "z" moulds had beentraditionally used for horizontal joins.[265] The h-mould looks like this:4747 In its original form it is off-white and not so dirty.[266] Descriptions and illustrations in technical literature of how to build a specificitem are commonly called "details". The first JHTI detail for an h-mould was in the1991 version:4848 Mr Longman notes the 1988 and 1989 JHTIs, which were not just for Harditex but covered manyproducts, included h-mould details for Hardiflex, as did an earlier 1983 Hardiflex-specific JHTI.[267] In this detail, the Harditex sheets are on the right of the diagram next to thetimber. The h-mould is halfway down, sitting on what is known as the mid-floor joist.It is the black outline in the middle of the Harditex sheets. For terminology purposes:(a) the upright piece of the h-mould which sits hard against the joist will becalled the "vertical part";(b) the part of the h-mould that forms the "h" will be called the hook. Thehorizontal surface of the hook is flat, not sloping; the very bottom of thedownward face of the hook has a slight inward curve.[268] The matters to note for present purposes are:(a) the bottom sheet fits into the hook, with a 3 mm gap to be left between theunderside of the hook and the top of the sheet;(b) the top sheet sits above the hook, with a 6 mm gap to be left between thebottom of the sheet and the flat surface of the hook;(c) the back unsealed face of the sheets sits against the vertical part. Thevertical part is 55 mm high in total with the hook occurring 30 mm down.So, allowing for the prescribed gaps, 24 mm of the bottom of the top sheet,and 22 mm of the top of the bottom sheet will sit against the vertical part;49(d) as can be seen in the diagram, the sheet nails do not go into the joist, butinto the plates above and below the joist. This is what makes it amovement control joint. As the joist shrinks, as it will, the impact on thesheets (and therefore the wall assembly) is ameliorated because the sheetsare not nailed to it; and(e) in addition to the backs of the sheet which are never coated, the top of thebottom sheet will be covered by the hook so the exterior coating cannotget at that part of it.[269] The plaintiffs, relying primarily on the evidence of Mr Wutzler, identify severalflaws. Mr Wutzler is generally supported by Mr Lalas. The other witnesses whocomment on the h-mould are Mr Hazleden and Mr Sutherland.[270] The issues identified by the homeowners are:(a) concerning the design of the h-mould, the vertical part should be longerand the horizontal surface of the hook should be sloped not flat. It is notedthat the h-mould for Harditex's successor (Monotek) includes both thesemodifications. The height of the vertical part affects the ability of anywater which has got in between the sheet and mould to work its way upand over the top of the vertical part of the mould. When water does this itwill meet both the wrap, and the uncoated back of the sheet. Obviouslythe longer the vertical part, the harder it is for water to work its way upover it. The flat surface is said to encourage water to pond, rather thanflow off as it would if sloped;49 These figures make no allowance for the thickness of the hook so may be a millimetre or so out.(b) concerning the manufacture of the h-mould, it came in 3 m lengths. Wallsare often longer. Two pieces needed therefore to be joined on the joist. Itis said this could not be done in a satisfactory way;(c) concerning installation of the sheets, the 6 mm gap between the bottom ofthe top sheet and the surface of the flat part of the hook is said to beinsufficient. It was too hard to get the exterior coating properly into thegap and particularly onto the bottom edge of the sheet that sits above theflat part of the hook;(d) the coating within this gap, and the coating covering the point where thecurved bottom of the hook met the sheet, both had a tendency to crack;and(e) the h-mould distorts when subject to temperature differentials.[271] Some of these topics inevitably overlap with past discussions. To the extentthat water encounters uncoated Harditex, the sheet will absorb some or much of thatwater. The previous conclusion is that the sheet should cope with that and adequatelydry unless these flaws mean excess water will get in.[272] A building science issue which arises is what happens to the water which getsbetween the back of the top sheet and the vertical part of the mould. It is commonground some water will be held there. It does so by two mechanisms. First, surfacetension holds the water against the surface of the sheet. However, as Dr Straubeexplains, with constant rain it will only be the last drop held there as subsequent rainotherwise washes preceding rain off. But some rain will cling to the bottom, and thedesign also means some will sit in the 6 mm coated gap. Second, the gap between theback of the sheet and the front of the vertical part of the mould is very narrow and thisfacilitates capillarity. Capillarity will pull water into the gap; the narrower the gap themore powerful the capillarity forces work. Third, Dr Lstiburek explains thatcapillarity pulls water into pores but cannot expel it. Some other process is needed. Ido not understand this to be disputed, but if it is, I accept Dr Lstiburek's expertise.[273] There are then two options for expelling this water that is sitting between sheetand h-mould – absorption into the sheet, or wind-driven force driving the liquid fromthe gap and up over the top of the vertical part, where it will enter the buildingenclosure. I pause here to repeat an earlier observation that the higher the vertical partthe more difficult it is for that to happen. So a taller vertical part to the h-mould wouldbe better, and again I understand it to be common ground that the current Monotekdesign of 70 mm is better. The issue is whether the Harditex predecessor was flawed.[274] Dr Lstiburek calculates that the wind forces needed to drive the water from thegap into the building enclosure would occur, on average in Wellington, once every fiveyears for a one-hour period.50 In Dr Lstiburek's opinion this is too infrequent an eventto merit focus. He also considers none of the water ingress mechanisms, if the join isproperly formed, could deliver sufficient water to test the drying capacities (ie thevapour diffusion properties) of the sheet to a level where it could not cope. He notesthat if on rare occasions liquid water does get up over the vertical part, the wrap willreject it in that form (other than where the wrap is damaged or there are penetrations).The water will therefore disperse and either drain or absorb.[275] Reviewing the competing evidence, I note Mr Lalas contends for a lowerdegree of wind being needed – approximately half that assessed by Dr Lstiburek. Theevidence does not allow me to fully understand his differing calculation, but even if itwere as he says, it is still not likely to be of sufficient regularity to force sufficientquantities of water into the building enclosure to represent a flaw. Further support forthe homeowners' case is taken from Mr Sutherland, but his evidence was that he hadseen "instances" where water has gone over or under the h-mould. He seems,however, to link this to being a product of a crack in the coating. As such it does notadvance the claim that the h-mould is inherently flawed.[276] Overall, I again prefer the evidence of Dr Lstiburek with respect to howmoisture will behave. The defendant also has other witnesses, such as Mr Longmanan experienced building surveyor whose evidence sits against that of Mr Wutzler's,50 It is recognised that this calculation does not factor in wind forces around the building which,depending on the building design, may increase or decrease the winds' effect at a particularmoment but it is illustrative of the situation needed for wind to have this effect.but for this particular aspect I consider following the science is the correct analyticalroute. The rest of the evidence is opinions or interpretations of what people haveseen.51 I accordingly do not accept it is an inherent flaw that some water will getbetween the sheet and the mould and I accept Dr Lstiburek's evidence as to how muchand what will happen to it.[277] The next issue, namely adequacy of a 6 mm gap between the bottom of the topstorey sheet and h-mould for coating purposes, is really just a matter of competingopinions. My own observation of the exhibits prepared by Mr Wutzler for the case52is that they seem to have coating adequately applied in the gap. It is easy to see thereare susceptibilities to cracking – within the open joint between the bottom of the topsheet and the top of the hook, and also along the line at the bottom of the hook whereit meets the bottom storey sheet. This is, however, where maintenance comes in. Icannot see any difficulty here with the capacity to maintain. If the spot was coveredonce, it can surely be covered again or painted over.[278] Mr Moginie, not a texture coater but a person from within that industry, gaveevidence that 150 mm was the necessary gap to allow for adequate coating of a bottomedge. Mr Moginie is experienced in the exterior coating domain, and was a technicalmanager for Fosroc, one of the main coating systems. Mr Moginie also agrees withMr Longman, however, that a brush can be used instead of the gun applicator.[279] More generally, and related to these points, the evidence does not satisfy methat the h-mould cannot be properly installed or coated. If it is properly installed, thereis no reason why sufficient water should enter through it, even if there is somecracking, to pose a hazard. There may well be examples at the lead and sampleproperties of building wrap degradation and timber decay around the point of anh-mould, and this will need considering, but given the building science it is very hardto contemplate it can be the design of the h-mould that has caused it. The evidencecan be recalled, for example, about the length of time the building wrap must beexposed to constant liquid water before it will decay. It does not rain constantly or51 As I have done previously, I acknowledge these opinions are informed by an understanding of thescience. But it is in my view a general understanding, albeit maybe to a good level. It must yieldto the clear eminent expertise of someone like Dr Lstiburek.52 Exhibits 9A, 9B and 9C.anything like it; and the coated exterior surface anyway repels most of that water. Itis also difficult to imagine a crack would let in sufficient moisture to cause a majorissue, especially if the wall is even minimally maintained.[280] The other major topic raised here is the alleged difficulty of sealing a joinbetween two lengths of h-mould. It seemed that everyone accepts it is not an easy jointo seal. This is because the width of the end of the h-mould is only about 1 mm. Thatis not much of a surface to adhere to the equivalent end of another piece. However,some of the experienced builders said it could be done. To my unskilled and untrainedeye it seemed a case of immersing the ends in sealant; I use the word "immersing"advisedly because it seemed to be thought by everyone that a thin bead of sealant wasnot the answer.[281] This was a topic on which I accept I may not have quite grasped the issue. Itseems generally accepted that care is needed with sealant as a waterproofing device,especially if it is exposed to the elements. It breaks down under UV light and generallyhas a shelf life. This latter point feeds into the homeowners' challenge to the abilityto maintain the system. Once the sealed join is covered by the exterior coating, howcan it be maintained? The answer is plainly that it cannot. A query that can be raised,however, is that as long as it is covered by the external coating and that is maintained,does it matter? In other words, although clearly it is a potential vulnerability, it seemsto need some other failure mechanism to turn latent into a reality. And it will only bea single point on some walls; why water would ingress exactly there if the coatingcovers it properly is not apparent to me on the evidence.[282] There was, as with all the topics, a lot more evidence about h-moulds but noneof it impacts on these core conclusions. Reviewing the homeowners' closingsubmissions, the preceding discussion addresses the key matters raised. I thereforeaddress the balance of the topics only briefly.[283] An aspect of the homeowners' evidence and submissions on this topic was inpart defensive in the sense that when problems with the h-mould are pointed to on thelead and sample properties, James Hardie notes the extent to which there is anon-compliance with the JHTI. Some of that will be addressed later, but a point madehere by the homeowners is that their evidence suggests that the h-mould's location onthe inter-storey join does not affect the watertightness of the joint. I accept that is so,but with one qualification. It is a movement control joint so non-compliance removesone mechanism by which the building was to be compatible with movement.Movement, amongst other things, causes cracking so, as indeed Mr Wutzler observedon numerous occasions, these things are interconnected.[284] The defendant presented considerable evidence to counter that of thehomeowners which included the fact that the h-mould was part of the system whichhad BRANZ approval, and that it was a detail consistent with other cladding productmanufacturers. Mr Longman analyses the technical brochures concerning severalalternative products – ETERPAN, CSR, Duratex and Primebase. His opinion is thatthe JHTI was either as comprehensive as or plainly more so than the othermanufacturers, and he notes CSR also had a BRANZ approval certificate whichcovered its very similar h-mould. I accept this analysis.53[285] Further in this regard, two BRANZ publications are supportive of the h-mouldconcept. In 1993 BRANZ first published a House Building Guide, the 1996 versionof which showed an h-mould.54 Then in 2001 BRANZ produced a Good Texture-Coated Fibre-Cement Practice Guide.55 The Guide recommended as one of the joinoptions a PVC horizontal flashing. It was noted sealant should not be used if directlyexposed to the weather (which as noted will not be the case once the wall is coated).[286] Overall, my conclusion concerning the h-mould is that, while it could havebeen improved in the way that is now seen with the Monotek version, there is noreason why, if installed as directed, it should not have worked, and the evidence didnot satisfy me it could not be done properly.53 The systems are by no means identical. CSR used a "z" mould. Duratex provided no detail,although Mr Longman says in his experience PVC h-mould jointers were commonly used withDuratex.54 BRANZ House Building Guide (July 1996) at 189.55 BRANZ Good Texture-Coated Fibre-Cement Practice Guide (Wellington, April 2001). It is acriticism of James Hardie by the homeowners that James Hardie declined to assist with thispublication, believing there was a threat to its intellectual property.Base of sheet[287] It is convenient to summarise this challenge with two extracts from theplaintiffs' materials. First, the Fowler statement of claim:56The Harditex sheets are inherently moisture absorbent such that the sheetsthemselves will readily absorb and accumulate moisture and can transfer thismoisture to other building elements including the underlying framing timbers.The absorbent nature of this fibre cement is particularly relevant at the bottomedges of sheets where water clings to the bottom edge of the sheet undersurface tension which promotes water ingress via absorption. This water canalso be absorbed by the inside face of the base of the sheet. The defect isparticularly relevant at the base of the north, east and west elevations of theproperty where the Harditex sheets have absorbed and transferred moisture toadjacent building elements such as the building underlay and underlyingframing timbers to which they are directly fixed;Second, the closing submissions:99. The plaintiffs' evidence is that failure at the base of sheet occurs wherewater which runs down the face of the sheets to the base clings to thebottom edge under surface tension, and from there it can enter the wallassembly either by capillary action or being absorbed through the baseof the sheet or the rear of the sheet. Once the water is absorbed by thesheet it can travel through the sheet and where the sheet is in contactwith the underlay:(a) The water can either be absorbed through the underlay (in thecase of Kraft paper); or(b) Can access the framing through fixing holes or other holes inthe underlay (in the case of both Kraft paper and syntheticpapers).[288] There is no dispute that water running down the face of the sheet can be heldagainst the sheet, including the bottom of it, by surface tension. If that bottom of thesheet is not sealed and coated, then the established absorbency of the sheet will takethe water up into the sheet. The evidence suggests there would need to be a lot ofwater before this was an issue, but theoretically, and depending on the climate and rainpattern, one could envisage a situation of continual wetting sufficient to overwhelmthe drying capacity. At the extreme, it would break down the cement matrix. But allthis is unlikely. I also accept Dr Straube's point it will only be the last drops of eachrain event that linger to be absorbed.56 Fowler, fourth amended statement of claim, at [36](a).[289] I am unsure exactly what is the import of the closing submissions in terms ofwater pathways but repeat the earlier conclusion that I am satisfied water onceabsorbed can only exit the sheet in vapour form. I do not therefore understand theproposition, if that is what it is, that water will be absorbed through the kraft paper. Iaccept depending, on the relative temperatures, it may exit inwards through thebuilding wrap in vapour form, but it will definitely be in vapour form if the source ofthe moisture is the sheet.[290] The real issue arising from the evidence is the practicality of coating the bottomedge. I can say immediately in my view the evidence shows it can be difficult, becausean applicator gun will often be unable to be used. Brushing will therefore be required.[291] More generally, care and effort are definitely required. The evidence in thiscase would not give any confidence that all applicators at the time would take that careor put in that effort, or even appreciate the importance of it. If not coated, the bottomof the sheet is exposed, and will become a moisture pathway.[292] Concerning how much moisture will get into the building enclosure at thebottom of the sheet, at many of the properties the uncoated back of the sheets showeda moisture staining pattern at the base which was like the outline of the tops of rollinghills, or the tops of waves. It is agreed this pattern is evidence of moisture having beenthere. The parties are at odds as to whether that pattern reflected water wicking upwithin the sheet from the base or water coming down from above. I will consider thattopic later but observe for now that the existence of a staining pattern reflective ofwater having come and gone would seem to favour Dr Lstiburek's evidence – undernormal conditions the sheet will dry out.[293] The prescribed detail for this base of sheet area is:(a) the bottom of the sheet should hang down past the bottom plate, which isthe bottom piece of wood, by at least 50 mm;(b) the bottom of the sheet should be above the ground. The JHTI rules havebeen an inconsistent mess. Original iterations of the JHTI required thesheet to sit at least 20 mm above the ground after landscaping had beendone. In 1995, it became 50 mm but the BRANZ appraisal of that sameyear said it should be 100 mm above hard surfaces and 175 mm aboveunpaved ground. A different detail within the 1995 JHTI said 100 mm and150 mm respectively. In 1996, it seems to be 100 mm and 225 mm, andthen in 1998, 100 mm across the board. However, again within thesedocuments, other inconsistencies can be found;(c) where it is a concrete slab house, there was to be a gap between the backof the sheet, and the concrete slab (the capillary gap). For all JHTIs untilthe last one in 1998, the required gap was 2–3 mm. In 1998, this became6 mm. It can be noted that throughout the whole period the applicablebuilding standard, NZS 3604, required a gap of 6 mm, so all JHTIs priorto 1998 were inconsistent with the Standard;(d) this prescribed gap between the slab and the back of the sheet was to bebridged by a strip of inseal placed 5 mm above the bottom of the sheet;and(e) the JHTI required the coating to cover the bottom of the sheet and goacross the inseal to the slab.[294] The overall theory of the detail, as I understand it, is that the overhang belowthe plate, the inseal strip and the ground clearance protect the bottom timber plate fromwater. The coating on the face and the bottom protects the sheet.[295] The primary challenges are:(a) the sheet should have had a drip edge to promote water drainage;(b) the capillary gap prior to 1998 was inadequate and from 1998 only just so;(c) the inseal would not work to prevent water splashing but did inhibitdrainage. It was impractical to install and Mr Wutzler's evidence is thathe has rarely seen it used;(d) the ground clearance details were very inconsistent; and(e) it was too hard to coat the bottom of the sheet.[296] Of these, several were raised by the plaintiffs more to respond to an aspect ofthe defendant's case, than as an assertion of a problem. For example, the defendantoften points to non-compliance with the ground clearance requirements whenresponding to an allegation of base of sheet damage. In response, the plaintiffshighlight the inconsistency of James Hardie's treatment of the ground clearancerequirement so as to make its case that such non-compliance was not a reason for thedamage.[297] The only issue that really matters here is the ability or otherwise to coat thebottom of the sheet. Of the other topics, the experts disagree on whether the sheet asis operates as a drip edge or whether some specific design was needed to achieve that.A designed drip edge seems not to have been a feature of any rectangular claddingsheet at the time. The inseal would no doubt, if effective, be an extra safeguard againstwater getting up, but its efficacy can certainly be debated. But undoubtedly it wouldbe a flaw if the sheet cannot be coated on its exposed bottom edge, and it is to thatissue that attention turns.[298] The homeowners' criticisms of this aspect include:(a) the JHTI never placed significance on the need to coat, or maintain thebottom edge;(b) there is considerable evidence from both sides that it is difficult to coat it;and(c) Mr Wutzler's experience is that the coating will be uneven and willdegrade over time, an issue reflective of the difficulty of initial application.[299] I accept all these points, and as noted earlier accept that coating the bottomedge is a difficult task for the applicator. The evidence does not satisfy me, however,that that makes the design wrong.[300] It seems fundamental to coat exposed surfaces of an absorbent exteriorcladding, whatever the cladding. No special knowledge needs to be imparted, orshould need to be imparted, concerning this. It is clear that whether an applicator guncan be used to coat the bottom depends on the particular site. For example,photographs emerged during trial of the Woodhouse Avenue property (the property ofMs Fowler and Mr Woodhead) that suggest there would have been ample clearance tocoat the bottom with an applicator gun. There will undoubtedly be other propertieswhere there is not sufficient clearance. Where that is so, a brush would have to beused, but I do not accept it is a flaw that a product manufacturer requires a builder orwhoever is responsible for the exterior to ensure the surfaces are coated.[301] There must be options. For example, the Good Practice Guide issued byBRANZ suggests sealing the bottom of the sheets while they are on the pallet.57 Thatdoes not seem unduly burdensome. Ultimately it is not for the Court to determinewhat the best method is. What is clear on the evidence is that it must be done, andwhile there will often be difficulty and it will need endeavour, it can be done. It seemsto me, as with many of these things, it just needs a little thought and planning andprobably time. I accept also that brushing may not be as effective as an applicatorgun, but it is a longstanding way of coating surfaces.[302] I therefore proceed on this topic on the basis that the JHTI required the bottomof the sheet to be sealed and coated and this should have happened. Analysis ofwhether the base of sheet detail is inherently flawed starts with that conclusion.[303] Looking next at the issue of the capillary gap between sheet and slab, I agreethat the JHTIs prior to 1998 were flawed. The gap should have been bigger. If theaim is to prevent capillarity, then it was not good methodology to require this small agap. Dr Lstiburek confirms capillary action does not operate once the gap is 6 mm ormore. This was the requirement of NZS 3604.58 The homeowners also cite the initial2–3 mm capillary gap requirement as an example of the unworkability of the Harditex57 BRANZ, above n 55, at [4.12.2].58 Dr Straube considered 2–3 mm would achieve the purpose, and that a much smaller gap wasneeded before a real issue would arise. Given the NZS 3604 Standard sets it at 6 mm, I considerthe correct assessment is to conclude the JHTI figure was incorrect. I accept though that it was alarge enough gap to limit the worst effects of capillary action.system. It is said it was unrealistic to expect a builder could achieve that sort of gaparound the whole building with what are inevitably imperfect lines in the slab and intimbers. The defendant does not disagree but notes there is no evidence in the lead orsample houses, or elsewhere, of anyone trying to construct to that narrow margin.[304] On that issue, it seems clear that any builder, recognising an inconsistencybetween a minimum requirement in a New Zealand Standard and that stipulated inproduct technical information, should apply the Standard. It is the regulationgoverning the building of the house, and there is no capacity for a manufacturer tolower minimum requirements. Accordingly, the JHTI flaw, while very poor, shouldnot have been material. No doubt, however, on occasions it nevertheless induced error.[305] The inseal strip issue was somewhat a moving event. It seemed at times to beargued by the homeowners that it would not prevent splash-up but would preventdrainage; on the other hand, James Hardie claimed the opposite – it prevents splash-up but not drainage. The homeowners further submit the recommended inseal sizewas incorrect in order to achieve a seal, but then Mr Wutzler said in his experienceno-one used the inseal anyway. James Hardie says it was not a detail concerning whichcomplaints were much received.[306] Overall, perhaps reflecting all this, it is not an issue on which I have a firmview. The evidence shows competing opinions within James Hardie about its utilityand the homeowners seem to say it was conceptually flawed but not particularlyimportant. I do not regard it as a significant topic.[307] Likewise with ground clearance. The JHTI details are a clear example of alack of attention to detail within the JHTIs. There are inconsistencies within aparticular JHTI, let alone changes across iterations without any obvious basis for thechange. It is difficult to discern one JHTI that properly reflects the requirements inthis regard of NZS 3604.[308] All that said, there does not appear to be a situation where the amountprescribed by the JHTI at any given time would be a real source of risk. The amountscould and should have been more, but putting the sheets too close to the ground wouldbe contrary to NZS 3604, to the JHTI and to the Good Practice Guide.59 I agree withthe homeowners that assuming a basic level of clearance is achieved, it is hard toaccept a failure to have more mattered given James Hardie's apparent indifference (asreflected by the JHTI inconsistencies) to the issue.[309] In conclusion, I accept there are difficulties in meeting the requirement, andthat aspects of the technical information suggest a lack of care about consistency andabout compliance with NZS 3604. However, in terms of weathertightness, it wasalways clear the base of the sheet should be sealed and coated, and there is no reasonwhy that could not be done. Sound building experience should have ensured sufficientground clearance such as to not be a significant issue whatever height was chosen.Exterior corners[310] Identifying exterior corners as a separate flaw comes from the defendant'ssubmissions rather than the plaintiffs'; but it is nonetheless a convenient heading fordrawing together some topics.[311] An exterior corner is a corner exposed to the elements, and what one usuallythinks of when talking about the corner of a house. The contrast is an interior cornerwhich occurs, for example, where there is an inward bay in a wall. Interior cornerstend to be more protected from the elements. The issues which arise are whether thedetailing within the JHTI was sufficient and workable for:(a) joining two walls; and(b) ending an h-mould at a corner (or joining them at that point).[312] External corners are obviously risk points. Whatever the cladding, there willbe a join that needs weatherproofing. Obviously, conceptually this is as it has alwaysbeen with a building.59 BRANZ, above n 55, at [2.10].[313] Reviewing Mr Wutzler's evidence on this, the main concern seemed to be withthe termination of the h-mould or with where h-moulds met at a corner. At a cornerthe JHTI allowed for either filling the gap with a jointing compound or using a PVCdesigned mould placed over the corner. Mr Wutzler says his experience is that thelatter was more common. He is critical that no detail satisfactorily explained how tohandle the PVC h-mould meeting the PVC corner mould.[314] This topic reflects an ongoing point of difference between the parties, and inparticular Mr Wutzler for the plaintiffs and Mr Longman for the defendant. It is theextent to which the JHTI needed to explain sound building practice. For example onthe topic of h-moulds meeting, Mr Longman says the obvious thing is that you mitrea joint (cut the ends on an angle so they fit together). Mr Wutzler observes this is notsuggested anywhere in the JHTI. I will discuss this point of difference in more detaillater but note the absence in the JHTI of any explanation of what Mr Longman says isa basic building skill is a constant point raised by the plaintiffs.[315] The external corners, like everything else, should be and will be coated. Theissue as Mr Wutzler sees it is that the joining system, be it with jointing compound orsealant, is not robust enough to allow the joints to cope with movement. Cracks willresult, and will let in moisture which causes the damage he has seen. The James Hardiewitnesses dispute the inability to cope with movement. Mr Longman accepts the detailimproved in the 1995 JHTI and subsequently when a proprietary PVC corner mouldwas stipulated, but remains of the view that the prior detail worked.[316] This issue can otherwise be left until the houses are considered. If it is aproblem it should be apparent, although much of the same context will exist – howmuch moisture would anyway get in, and whether it would exceed the capacity todrain and dry it.Windows[317] Along with the h-mould, the difficulties encountered with installing windowswere the key focus of the plaintiffs in relation to the alleged inherent defect two –"being that the system allows water ingress at various locations". The inclusion ofwindows within this defect implicitly assumes they are part of the Harditex systemwhich is something denied by James Hardie.[318] By way of background, at issue are what are called face-fixed or flushed-fixedwindows, which are just regular windows. They are windows that sit flush on the wall(as opposed to being recessed in). James Hardie first addressed this feature in its 1995JHTI where it provided a detail for a head flashing above the window, and instructionsfor joints and sill flashings. The head flashing is the metal strip one sees abovewindows that protrudes out from the wall and acts like an awning or eave, only it isjust a few millimetres wide. In 1998, details for sill (underneath the window) andjamb (side of window) flashings were added.[319] The homeowners raise two issues or criticisms:(a) joinery/cladding junctions are a critical weathertightness component of abuilding, and details should have been provided from the outset;(b) but not the details that were eventually provided because they wereinadequate and flawed.[320] I address first the general question of whether it was James Hardie'sresponsibility to provide these details at all.60 In support of their argument that it was,the homeowners note:(a) every penetration, including windows, in monolithic cladding is apotential water ingress point, so manufacturer literature should providedetails as to how to install it properly;(b) Harditex was "an absorbent cladding material with no provision fordrainage and drying" so it was more important they be provided;60 This topic is returned to later when the adequacy of the JHTIs is considered as a discrete topic.However, they were presented as part of inherent defect two and it is convenient to consider allaspects of the topic in the one place.(c) Harditex was an Alternative Solution under the Code, which means moredetail should have been provided;(d) the need for these details was ultimately recognised by James Hardie andthey were provided, which shows they should have been there in the firstplace; and(e) In 2002, James Hardie paired with a window manufacturer to providewindow flashings designed for its latest cladding, Monotek. This isevidence of a manufacturer recognising or assuming responsibility for thecladding window interface, a responsibility that the homeowners say hasalways existed but was not recognised by James Hardie.[321] In support of these propositions the homeowners rely on statements by MessrsWutzler, Lalas and Sutherland. I accept the latter's experience in New Zealand as anarchitect and his involvement in technical literature. Mr Sutherland's evidence on thepoint, though, as with much of his evidence, tends to be assertion rather thancontaining reasoning as to why the views are held.[322] Relevant to this, there is no evidence that any other manufacturer provided thissort of detail. The homeowners called two witnesses, Mr Glover and Mr Baines, whowere experienced in the window industry. The whole of their evidence left mesatisfied that there was quite a shift in the late part of the 1990s through to the 2000s.It seemed to me that prior to that there was compartmentalisation of tasks –manufacturers produced the claddings, window manufacturers produced the windows,and builders joined these components. Mr Glover accepted, for example, that hiscompany, a prominent aluminium window manufacturer, did not produce flashingsother than head flashing as anything approaching a standard item until the late 1990s.[323] Care is needed, I consider, when a defendant such as James Hardie initiallyresponds to a challenge about its product by urging the Court to look at the contextand the times. The primary focus must be on what the manufacturer did, not whetherothers were as bad. However, here I consider there is legitimacy in the point. Therehas been a significant change and what a cladding manufacturer does now in relationto the interface of its cladding with windows is very different from what anymanufacturer did for most of the life of Harditex.[324] The James Hardie evidence was that the shift in approach – in 1995 when ahead flashing detail was first provided, and then in 1998 when jamb and sill detailswere added – was a response to growing awareness that errors were being made, andgrowing awareness that assumptions as to building knowledge may be, or indeed were,wrong. It seems that head flashings were not being even used on some buildings,61 letalone the idea of jamb and sill flashings.[325] The evidence seemed consistent that at the time Harditex was released, amanufacturer did not assume responsibility for providing details on how to deal withpenetrations generally, and windows specifically. I accept the James Hardie evidencethat it started to engage with the topic as it received evidence of poor practice andtherefore failures. There is no evidence to suggest its approach was different from anyother manufacturer.[326] A relevant inquiry is whether there was anything different about Harditex thatnecessitated a different approach. In closing submissions the homeowners emphasiseit was an absorbent cladding "with no provision for drainage or drying". These mattershave been addressed and the conclusion of the judgment is that the latter part of thestatement is incorrect. The homeowners also refer to Harditex being an AlternativeSolution,62 which is correct but that status does not mean that the manufacturer of thecladding must in its technical literature explain to builders how to build homes. Thereasonable expectation must be that the manufacturer's literature deals with the newfeatures of a product that require new building skills or tasks.[327] Harditex is a rectangular cladding sheet, the style of which had been around along time. Its primary changes were (arguably) its composition and (certainly) itsrecessed edges. Neither of these matters impacts at all on windows and I accept the61 I recall but cannot locate a witness observing they had seen unused head flashings discarded on abuilding site.62 An Alternative Solution is a design which requires specific consent each time. Most claddingsystems, other than timber and stucco, were Alternative Solutions.defendant's position that it was not negligent in failing to tell builders how to buildwindows in a house.[328] Mr Longman made the points just noted in his evidence, to which Mr Wutzlerreplied:63Mr Longman's primary response to my criticism of the lack of details in anyof the Harditex JHTI for face fixed window/cladding junctions until 1995 isthat flashing of doors and windows is "basic building practice", that acompetent builder "would know" how to detail them and that builders also hadaccess to various generic guidance in BRANZ publications and a JamesHardie telephone helpline. Mr Knox repeats similar themes, stating atparagraph 1324.1 that the face fixed window details in the JHTI were"standard trade practice" and notes they were similar to "equivalent detailsfor stucco walls". Mr Knox's comments fail to take into account the fact thatHarditex was an Alternative Solution incorporating an absorbent, non-durablesheet encapsulated in a coating which effectively entraps any moisture whichpenetrates the board. These details differ from other sheet cladding systemssuch as plywood painted in a thin paint system through which moisture couldmore easily diffuse. In this situation, I am of the opinion that the protectionof the window/cladding junctions within Harditex required more than anassumption that builders knew how to detail the areas and should have beenthe subject of specific detail and testing.[329] I am satisfied this captures the essence of the homeowners' case on the aspectand for the reasons given, I do not accept it. It is premised on Mr Wutzler's opinionthat the sheet is in itself a deficient cladding option, which in turn means greater careand initiatives were needed than either were the industry norm or were done byanyone. If the premise is not established, and it has not been, the force of the balanceof the proposition diminishes.[330] The second aspect of the windows topic is the adequacy of the instructions ordetails that were given in 1995 and subsequently. Some of the material is verytechnical. It is sufficient for this judgment to capture the key aspects at a general level.On these technical issues there were competing views which are difficult for a factfinder without building expertise to resolve. Some conclusions are, however, possible.[331] A key focus was the safe construction of the head flashing. As noted, it is thesill above the window. One can imagine a single sheet with a square cut in it into63 Footnotes omitted.which a window will be inserted.64 A head flashing has to be placed at the top edge ofthe hole immediately above the window. The flashing will have an upstand that hasto go up beneath the cladding. That upstand should have the building paper over it,between the metal upstand of the flashing and the back of the sheet, so it is importantto position the flashing correctly. If the cladding and building paper have beeninstalled first, it is not easy to slide the flashing upstand in between them withoutdamaging or bunching up the building wrap. If the sheet has already been nailed hard,it is not possible. Further, the flashing has to be, and is, wider than the window sothere will be an extended notch cut at each side.[332] The issues the homeowners raise, all of which focus either on the capacity ofthe window penetration to let water in or its alleged incapacity to drain, are:(a) there was inadequate direction as to how to seal the notches properly. Thisincluded insufficient instruction as to the type of sealant to be used. Thesealant will eventually fail either through exposure to UV light, or throughstress from building movement. If coated, this failure will not be evidentand cannot be fixed. Sealant is not a satisfactory weatherproofingmechanism;(b) it was not until the 1998 JHTI that builders were told to lap the buildingpaper over the upright stand of the flashing. There was never sufficientinstruction how to do this;(c) connected with these, the installation sequencing is unclear, and inparticular whether to put the window in before the flashing. It seemscommon ground the best approach is probably to put the flashing in placebefore or at the same time as the cladding, with the window last. Thisenables the building paper to be properly positioned. However, thehomeowners say it is an impractical sequencing because it requires theflashings to be onsite prior to the windows arriving and this does nothappen;64 This is not how a window will be built but it suffices as an example for present purposes.(d) the JHTI required a 75 mm upstand for the head flashing at a time whenthe industry standard was 40 mm; and(e) there was an inconsistency in the technical literature about whether theback of the sheet immediately above the window should be first sealed.For a while there was a requirement for sealing the bottom 200 mm of thesheet above the window but this changed to putting a strip of inseal on theback of the sheet so the inseal sat between the sheet and the face of theupstand. This altered requirement is said to be impractical and animpediment to drainage.[333] James Hardie witnesses provided responses. It is clear that this aspect ofbuilding, namely fitting the windows, is a difficult task, but for reasons alreadydiscussed there is nothing new about it and there were several sources of informationto assist. Witnesses were taken to BRANZ bulletins, and window manufacturers'technical information on how to do it, although, again, any level of detail did notemerge in the manufacturers' literature until around 2000 and beyond.[334] It is not for the Court to determine the best method of the available options forthe sequencing of installing a window. One witness said, and I suspect it is correct,that experienced builders develop their own technique and stick to it. The focus of thehomeowners' evidence, and this is not a criticism, was to critique the methodologysuggested by James Hardie. The evidence, however, did not in my view establish therewas an obviously better way that James Hardie ignored. It is just a difficult task in thebuilding of a house.[335] My conclusion on this is that windows, like all penetrations, present an area ofrisk. They are a technically difficult component of the process of building a house,and no doubt some builders are better at it than others. There seem to be differentways of doing it and knowledge about the best way to do it has improved. Forexample, there is now agreement that the answer with the building paper is to do whatis called double lapping (building paper under and over upstand), but in the 1990s thatwas apparently not a common practice.[336] The evidence did not establish that this difficulty with windows was an issuenew to or different with Harditex than has always existed.[337] I conclude on this by mentioning other topics simply for completeness. Therewas criticism that James Hardie's window details did not provide for an air seal. Thiswas a counsel of perfection at best, and on some views, not shown to be a necessarilydesirable or a necessary thing. The cross-examination of Mr Glover, who along withMr Wutzler advanced the point, led me to conclude there was nothing in the point asa criticism of what James Hardie was doing at the time.[338] In similar vein, the lack of attention by James Hardie to jamb and sill flashingsis not a criticism that merits weight. By that I mean it is no doubt correct these thingsall assist but they were not a feature of construction at the time, at least to the extent itcould be said James Hardie was negligent in its treatment of them or lack thereof.[339] For these reasons it has not been shown that James Hardie was negligent in theway it dealt with windows. The evidence does not satisfy me that there was anobligation on James Hardie to do more than it did, and I am influenced in this by theabsence of any evidence that anyone else did more. Further, there is nothing uniqueabout Harditex when it comes to windows, so it was reasonable to rely on generalbuilding skills to deal with them.Conclusion[340] Various topics have been considered. Some are in effect the claimed inherentdefect; others are a component of a wider alleged defect. The conclusions have notbeen favourable for the homeowners but that is where the evidence points, and quiteclearly so.[341] The homeowners' starting point of absorbency as an inherent defect is quitesignificant. The evidence has satisfied me that rather than a defect, it is an advantage.It is a mechanism by which water that penetrates the exterior cladding can be safelystored and then removed (through drying in vapour form).[342] The only basis on which it might have been a defect is if the sheet could not infact cope with expected levels of moisture. This was where the issue concerning decaycame in. The plaintiffs had a difficult task here in that there was a significant body ofpublished literature that said fibre cement was not prone to decay. Further, theplaintiffs' own fibre cement expert agreed with the defendant's experts that fibrecement is not prone to decay. I will not repeat comments already made but just noteat this stage that I consider the contrary evidence of the homeowners on this topic waspresented in a deficient way.[343] Generally as regards the evidence underlying this section of the judgment, thecumulative package of evidence about the nature and properties of Harditex presentedby James Hardie was superior, and notably so. Its experts were at least as wellcredentialled, but usually more so. The scope of their evidence was as a rule moreconfined to their expertise; they were not asked to, and did not, stray beyond thatexpertise. The methodology was sounder. The end result was the assessment of theevidence which I have set out in the preceding paragraphs.[344] My conclusion is that it has not been shown Harditex was a conceptuallyflawed product.TESTING[345] The judgment now leaves the building science and turns to the various testsundertaken by both parties to prove their propositions. The building scienceconclusions will, however, inevitably come across to this and to succeeding sectionsand inform conclusions.[346] There are three tests to consider:(a) the Helfen test, a homeowner test involving a Harditex wall, said to havebeen built in accordance with the JHTI, and subjected to an AS/NZS 4284test, which is a building facade test that assesses water penetration and airinfiltration.(b) the RDH test, the defendant's test involving a less complex Harditex wallalso said to have been constructed in accordance with the JHTI andsubjected to a series of specifically designed tests; and(c) a prolonged duration test conducted by the homeowners which subjecteda piece of Harditex to applied water to test its absorbency.[347] The key tests were the Helfen and RDH tests. Whilst a party may obtain itsevidence as it wishes, this was a very unhelpful exercise from the Court's viewpoint.Separate walls, conceptually different in their design, to which were applied differenttests. Both sides say the other built their wall wrongly; both sides criticise the utilityand execution of the other's tests; both claim success; and both agree their resultscannot both be right.The Helfen testThe testing process[348] The homeowners' testing approach was to use the AS/NZS 4284 test.Previously not approved for residential dwellings, since the time cavities became aregulatory requirement it is an available methodology for a residential wall. It is amatter of dispute between the parties but I consider there is no doubt that the originalpurpose of this test was to test curtain walls on commercial buildings. These generallyare walls such as glass and aluminium which are intended to keep out all moisture.65The test sprays the specimen wall with measured quantities of water at both constantand then cyclic (increasing and decreasing) pressures.[349] The choice of test is significant. It reflects the homeowners' case that theHarditex system was a face-sealed system designed to keep all water out with nocapacity to drain and dry. Consistent with this, the definition of failure in the Helfentest protocol was any water getting behind the external cladding. This is a standard65 There is evidence I will touch on later from two witnesses involved in the development of thepredecessor to the 4284 test, SIROWET, that it could always be adapted to low-rise residentialbuildings. Regardless, I am satisfied the common understanding as to its use was that it wasdesigned for large commercial buildings.failure definition for these tests, and rightly so for curtain walls, the purpose of whichis to keep out all water.[350] I state at the outset that I consider the utility of the exercise has been diminishedby it being premised on what I have concluded is a mistaken premise. Namely, thatthe Harditex system has no capacity to drain and dry. This by no means removes allutility but it is a significant initial caveat. Dr Straube's evidence that it was the wrongtest (evidence itself premised on the contrary theory that Harditex does drain and dry)was compelling.[351] The wall was built by independent builders who were given writteninstructions that originated within Helfen Ltd, which is Mr Wutzler's business. Thebasic idea was to build it in accordance with the JHTIs, but also sound buildingpractice. It sought to include every feature relevant to the plaintiffs' case so there werefour windows installed using different building methods, a bay was created, anddifferent sealing plans were used. On this aspect, I consider it unfortunate Mr Wutzlerwas involved. As will be discussed, the line of authority within Helfen Ltd concerningthe construction process was very murky. My assessment, however, is that it wasmuch influenced by Mr Wutzler, and his views on the JHTIs and what they required.The builder assigned to the task was not left to his own devices to construct the wallin accordance with his assessment of the JHTI and sound building practice as shouldhave been the case.[352] The test specifications were designed by Mr Lalas. He is an experiencedfacade engineer, and undoubtedly has expertise in relation to curtain walls. He hasaccordingly had a long involvement with 4284 testing. Mr Lalas' test specificationwas peer-reviewed by Mr Bennie, who also undoubtedly has expertise in the area. Heagreed Mr Lalas' specification reflected 4284. Dr Straube also believed it was a sound4284 test. To relate this to my comments in the preceding paragraph, there are twophases: building a wall reflective of the JHTI, and then subjecting it to a properlydesigned test. The comments about confusion in Helfen Ltd apply to the first phase.The comment about the soundness of the test protocol in terms of compliance withAS/NZS 4284 address the second phase.[353] The actual testing was carried out by FTNZ, a New Zealand testing facilitywith international accreditation. Mr Wutzler is an owner but says he was not involvedfor independence reasons in the actual testing.66[354] The results of the testing were a spectacular fail for the wall: The summaryof the test results was that:(a) for windows, water penetration occurred at the initial no pressure test andcarried on getting worse as pressures increased;(b) at h-moulds water penetration again occurred at zero static pressure, at 225pa applied constantly and also during the cyclic tests; and(c) at the exterior corners, at 225 pa during the cyclic testing phase.In brief, water started entering the building enclosure at virtually no pressure andincreased markedly as the wind pressure was increased such that by the highest pointsit was flooding in. It found its way behind the building wrap onto the timber framing.Mr Wutzler believes this confirms his view that all Harditex houses will fail. At theend of his evidence I put to him what seemed an obvious question – were the resultsnot too bad to be true? Mr Wutzler and the homeowners say not; James Hardiecontends otherwise.[355] The wall was also subjected to a seismic test which caused cracking at internalcorners, above windows and at steel joints, all resulting in pouting.Issues(a) Construction of the wall[356] Looking at the construction process, I agree with the defendant that there isconfusion about what was done and why. Evidence was heard from Mr Wutzler,Ms Hohaia (the primary Helfen supervisor) and Mr Cuneen who was the builder.66 Some hesitancy in being sure of the relationships comes, in part, from the fact that it wasMr Wutzler who in evidence reported on and interpreted the results of FTNZ's work. The mainFTNZ tester, Mr Scott, gave evidence but not about the results.[357] To comment first on the choice of Mr Cuneen, he had little experience withHarditex. For myself, I do not see that as particularly mattering if he was anexperienced builder. The defendant's theory of the case is that Harditex is notparticularly innovative or special; it just needs competence, so particular experiencewith Harditex would not be crucial. Experience in building with cladding sheets ofwhatever composition would, however, have been a sensible qualification.[358] Mr Cuneen lacked the appropriate general building experience. He is not alicensed building practitioner and therefore not himself permitted to clad buildings,although he can do so under supervision. His experience at installing windows waslimited to probably "half a dozen" times before this exercise. I do not say for a momenthe lacks competence, but to the extent this exercise is meant to also assist with theissue of buildability, he was not the appropriate choice for this test.[359] The evidence about the instructions Mr Cuneen was given was, across therelevant witnesses, inconsistent and confusing. There is no value in trying to unravelit. Mr Cuneen did his best, relying primarily on what he called "JHTI books". He wasrequired to refer matters of uncertainty to Helfen personnel, who no doubt areknowledgeable but none of whom are or have been registered builders.[360] The key driver of the wall design, and its method of construction, seems tohave been Mr Wutzler's desire to test all the theories. For example, there wereinstructions to seal some joints and not others. Likewise, it was a very complex wallincorporating every available building feature. This does not per se matter, but oncewater enters, working out where it has come from becomes difficult through toimpossible depending on the quantities. Water of course obeys gravity but otherwisefinds its own pathway so where it is seen does not necessarily reflect the point ofingress.67[361] All this said, it does not appear there are major concerns with the ultimateconstruction. The point of the previous discussion is to explain my assessment thatthe exercise has no value in terms of the buildability topic.67 Anyone who has experienced a leaky roof, or a leak in a car, will attest to this.(b) Specifications[362] I have touched already on the failure definition of no water past the cladding .It is not a relevant standard for assessing a direct-fixed Harditex system which hasdrainage and drying capacity.[363] Turning next to the air pressures component of the test (that is, the forcesapplied to replicate wind), the specifications were:(a) Static (or constant) pressures – 0 pascals, 225 pa and 330 pa;(b) Cyclic pressures – 150 rising to 300 pa; then 300 rising to 600 pa; andfinally 340 rising to 680 pa.[364] Mr Lalas assessed 330 pa as representative of a "very high" wind zone asdefined in NZS 4211, the standard for windows. The defendant submits Mr Lalas ismisreading the documents which require that level of wind only in the context ofbracing requirements. I am not in a position to resolve this but the evidence satisfiedme the pressures chosen were representative of either the worst conditions likely to beexperienced rarely, or of a level higher than that. Dr Straube gave evidence, forexample, that the lowest static wind pressure level (225 pa)68 was something thatwould be experienced on a Wellington hillside for five to 10 minutes once every fiveyears.[365] The purpose of tests such as 4284 is to stress a system and thereby identify itsfailure point, if any. The pressure levels stipulated by Mr Lalas do that. This is not acriticism, just something that puts all this in context for the actual litigation. Failureat an extreme level means, at best, a house may struggle at that extreme.69 It does notmean all or any houses will fail whenever there is rain. On Dr Straube's analysis, thelevels stipulated are several times greater than the peak hourly rainfall rate he foundin an analysis of six years of data for Wellington and Auckland. Likewise, usingpublished data, the worst hour-long period of wind/rain expected on a 50-year cycle is68 Other than 0 pa.69 "May" is appropriate as there will be factors such as the site's exposure which will alwaysinfluence the pressures and the likely failure point.two times less than the 4284 pressures. These matters reflect the different purposes oftests. A test designed to expose the extreme failure point may be less instructive as tothe likely causes of problems being discovered in houses not being exposed to thosestresses.[366] The next contest in relation to the specifications is pressure differential. Thepressure in a wall cavity will reduce from the outside cladding to the inside. The morethat pressure is taken by the inside lining, such as the gypsum board, the less pressurethere is at the outside cladding. Less pressure lessens the load on the outside wall andtherefore the risk of rainwater penetration.[367] The Helfen test replaced the usual internal lining (gypsum board) with perspex(to allow viewing). Holes of a 6 mm diameter were also drilled to mimic penetrationsthat occur in a wall assembly – power points in the gypsum and holes in the timberframing for wiring and piping. James Hardie's witnesses say the effect of thesechanges was to greatly reduce the pressure at the inside wall, sometimes to as low aszero. A defendant witness (Mr Schumacher)70 measured the range in pressure at thisinside wall as between 0 pa and 20 pa. This is significantly lower than would normallybe expected. Mr Schumacher says the effect of this low pressure at the inside liningis to double the pressure at the external cladding – an apparent 225 pa on the outsidewall, when there is such a low pressure on the inside lining, makes the 225 pa theequivalent of 450 pa. The homeowners' response to this in closing submissions is:(a) to emphasise Mr Schumacher's lack of experience with New Zealandconstruction;(b) to note that the importance of the interior lining was never emphasised inthe JHTI;(c) to note there are areas in a New Zealand home which do not have internallining (for example, waste pipe penetrations) that therefore will have thiszero pressure; and70 Mr Schumacher is the person who oversaw the equivalent James Hardie exercises. He is aprincipal of RDH.(d) the internal gypsum lining is not and is not intended to be airtight.[368] The response is not persuasive. To take the last two points, if accepted theypoint to a contest with the Straube/Schumacher calculations concerning the impact ofthe design on the internal pressures, but no contrary evidence is provided. Further, thedefendant's calculations are taken in part from a New Zealand BRANZ paper whichestimated that the airtightness contribution of the internal lining in a traditional wallassembly would be as much as 83 per cent.71 This supports the key point of thedefendant's thesis which is that the interior lining takes a lot of the pressure.Constructing a test where that pressure is so significantly reduced on the internal liningis a flaw.[369] As for the criticism of Mr Schumacher's experience, his evidence on this pointdoes not appear country-specific. It is no doubt the case that other countries such asCanada will have different assemblies including internal vapour barriers, but thecalculation methodology will be the same. And the source of his data was NewZealand papers. The plaintiffs' final point, which notes the lack of emphasis on therole of the internal lining in the JHTI, does not merit weight. The topic is the effect ofa lining on the internal air pressure and therefore the value to be attached to the test.It is not about a JHTI (which in any event no doubt assumed a New Zealand homewould generally have an internal lining).[370] The evidence satisfies me that the utility of the H test has been significantlyreduced by the test wall not having typical pressures at the internal lining.(c) Design features[371] Three design features need consideration – the use of sealant, the method ofinstalling the head flashing, and the observation portholes.71 See M R Bassett Air Flow Resistances in Timber Frame Walls (BRANZ, Study Report No 80,1988). The authors conclude the interior linings determine the air infiltration rate through walls.See also R C Bishop and M R Bassett Weathertightness of Domestic Claddings (BRANZ, StudyReport No 22, 1990).[372] To take the third of these, the Helfen test included seven observation viewportssituated in the timber framing opposite an h-mould. This enabled observers to viewthe back of the Harditex sheet, and therefore the inside of the assembly. However,they were not sealed and for each of them the building wrap was removed for the sizeof the face of the viewing port. Mr Schumacher said this affected the validity of anyresults about the system because a key component was compromised. When askedabout it, Dr Straube replied:my view is that if you cut a large hole in a membrane [the building wrap]that's supposed to keep water out, it won't keep water out. That's my view.[373] I can simply observe there is no answer to this criticism. It is surprising ithappened but perhaps not so much if one returns to the idea that Harditex is a face-sealed system. Cutting holes in the building wrap and not sealing the penetrations isless important if moisture management and pathways are not the focus, and failure isdefined as any water at the back of the cladding. I accept the defendant's evidencethat this feature further undermines the value of the exercise.72[374] Before leaving this aspect, I refer to one further submission of the homeowners'closing submissions. When responding to James Hardie's criticisms of the test, theplaintiffs submitted:Mr Wutzler explained that having done the test multiple times the results werethe same.[375] There are several instances in Mr Wutzler's evidence of comments like this. Idecline to place weight on them. The circumstances and details of those tests are notin evidence and it is not evidence that can be allowed in under the label of qualifyinga witness. Unsupported references to other tests are not admissible and I ignore them.[376] The second topic is sealant. The evidence demonstrates the same lack of clarityas to what the builder of the wall was required to do. That confusion was exacerbatedby the absence of any definitive records of what was done and the uncertain72 Mr Wutzler's evidence was that he did not observe water entering by this means. I do not doubtthat is his assessment but as a test its integrity in this aspect has been compromised. Further at thehigher pressures Mr Wutzler agreed it was very difficult to know where the water was comingfrom.recollections of Ms Hohaia and Mr Cuneen. There is simply no sound record of whatwas sealed and by whom.[377] In closing submissions the homeowners rely on Ms Hohaia's evidence thatsome sealant was applied after the sheets were installed. Mr Cuneen, however, saidhis instructions were to leave sealing to the coating applicator and that is whathappened. The plaintiffs say this was normally done in the field, referring to a passageof evidence from Mr Wutzler:A. Well, often it's done by the texture coater, and the sheets are alreadyapplied. So the only part of the end that's exposed is this little bit here.Q. Why do you say it is done by the texture coater?A. Because on the hundreds of thousands of buildings (sic) I look at that'swho normally applies it, and it's probably the most appropriate person toapply it.Q. Good trade practice would be for the builder to install the sealant as theh-mould is being fitted, correct?A. No, not necessarily. I think there's multiple interpretations [378] No builder to my recollection supported this, and others described how they,the builder, would do the sealing. On other occasions Mr Wutzler seemed to accept itwas good practice for the builder to do it and that seems obvious as it is easier to dowhen, for example, the h-mould is being fitted in the first place.[379] When sealant was or was not used on the test frame was influenced byMr Wutzler and his belief that the JHTIs were deficient in not telling builders to sealjoins. This meant he wanted some joins unsealed to reflect the unsoundness in theJHTI. The silence in the JHTI was because it assumed builders knew joins needsealing. This was a reasonable assumption. Instructions to the test wall builder not toseal some joins were another flaw.[380] Sealant issues in relation to this construction also arise with the area aroundthe head flashings, and in particular whether some of the extended notches have beensealed. From photographs it is difficult to discern there being any sealant at all insome of these places. I do not understand there to be disagreement that there shouldbe. Mr Wutzler would dispute the sealant's value, but I am sure he would support theuse of it.[381] The third issue is the installation of the head flashing. I have touched on thetopic before, and the debates that exist about the best way to do it. It is clear thatMr Cuneen put the upper sheets on first and at least firmly tacked them, if not indeednailing them all the way. Getting the upstand of the flashing underneath the hardnailed sheet was therefore very difficult. On one occasion a chisel was used to leverin the flashing and it was damaged. It is inevitable in these situations that the plane ofthe building wrap was disturbed. It probably ended up bunched at the top and notcovering the upstand, or alternatively the upstand was in front of the wrap rather thancovered by it. It is very unlikely it remained in its correct position. This is veryrelevant to whether water will properly drain away.Conclusion[382] My assessment is that the test was not done well enough to make it reliableevidence for establishing the plaintiffs' case. I do not purport to have an answer forevery penetration of water occurring especially at the very low static pressure levels(nor is it the Court's function).73 My assessment is whether in the end the methodologyand the implementation allow the Court to give the exercise weight, and how much.[383] My primary reasons for not regarding it as reliable enough to establish orsignificantly assist the plaintiffs' case are:(a) the flawed premise of the test which was that Harditex is a face-sealedsystem with no water management capacity;(b) the limited value for the litigation of testing upper end pressures as apointer to a general system deficit;73 James Hardie links the 0 pa leaks to specific design flaws. It is suggested, for example, that thesites of water ingress matched unsealed aspects of the model – a nail hole or a viewing port. It isnot necessary to resolve these.(c) the related fact that those upper end pressures are much higher thanexpected weather conditions in New Zealand;(d) the absence of an appropriate pressure level at the internal lining whichsignificantly exacerbates those already high pressures on the externalwalls;(e) the inadequate use of sealant which is a necessary and legitimate aspect ofweathertightness, and the use of which is required by good buildingpractice;(f) the unsealed viewports and the corresponding cuts in the building wrapmembrane; and(g) the building paper concerns around the head flashings.[384] Lesser concerns I would add are:(a) the general inexperience and unsuitability for this particular exercise ofthe builder; and(b) the very confused instruction system and recordkeeping of what was done(not the fault of the builder).The RDH testThe testing process[385] RDH74 is the name of the Canadian company which carried out the testing forJames Hardie. The main person overseeing the exercise was Mr Schumacher althoughDr Straube was closely involved, designing the air pressures and water spray rates inmuch the same way as Mr Lalas did for the Helfen test.74 RDH Building Science (Inc). It has nine offices across North America. It does not hold the sameinternational accreditation as FTNZ which did the Helfen test.[386] The concept of the RDH test was different in that a single wall of two storeyswith windows and an h-mould was constructed. Tests were then designed andimplemented, separately but sequentially, in order to answer six questions that wereunderstood to underpin the plaintiffs' case:1 Can liquid water pass through a coated sheet?2 Does a building wrap resist rainwater penetrating into the wood framingcavity, even at significant water and wind pressure rates, and does thewhole system (ie cladding added over the wrap) resist rainwaterpenetration into the wood framing cavity?3 Does the system drain and dry?4 During heavy rain does the rainwater overtop the h-mould verticalupstand; and, if so, does that water reach the timber?5 Do windows installed with flashing details common to the 1990s work tolimit rain penetration?6 Does the base of sheet detail provide sufficient drainage to manage waterdraining from above?[387] The water spray rate was the same as used in the Helfen test, both being thefigure specified in AS/NZS 4284.[388] The wind pressure rates varied according to the tests. Where the issue wasdraining, the air pressure was nil. (tests one, three and six). In test two, which was arainwater penetration test, pressures varied between 75 pa (which Dr Straube saysrepresents a moderately frequent example of severe rain and wind) through to 300 pa.Concerning the testing of whether water would overtop the vertical part of theh-mould, the pressures ranged from 150 pa to 1200 pa. Finally for the window testthe air pressures were those specified in the relevant window standard NZS 4211.[389] Recalling the earlier discussion about pressure differences within the assemblyand the role of the internal lining, the pressure differential was maintained at 50 percent for each lining, being the halfway point of the range identified by Bishop andBassett in their BRANZ article.75Results[390] Test one. This seemed an unnecessary test based on a misunderstanding of theplaintiffs' case. It showed that water would not penetrate a coated sheet where therewas not a join or a crack. This is not contested. It is, in effect, a testing of thedeflection requirement of Mr Hazleden's "four Ds". It is unnecessary to consider thistest further.[391] Test two. There were two stages. First, the timber frame was covered only bywrap and subjected to wetting events, and then cladding was put over the wrap and thesame thing done again. With the wrap only,76 some water was seen to penetratethrough staple penetrations. The frame retained 5 kg of moisture from the 7400 kgsprayed over the course of four hours. With the cladding in place there was no visiblepenetration, but a moisture retention of 2.5 kg. The rates of penetration represent 0.07percent and then 0.03 percent and compare favourably to the ASHRAE defaultassumption of one per cent discussed earlier.77[392] Test three. This was the test designed to test drainage capacity and dryingability. Water was inserted at the top of the frame between the back of the sheet andthe wrap. For the drainage part of the test, the internal lining was perspex to allowobservation of water movement.78 The bulk of the water exited at the h-mould pointhalfway down. Recalling the building paper is lapped over the h-mould upstand, thewater went down the back of the sheet and then followed the path of the wrap. Thismeant it exited to the exterior at the h-mould and then travelled down the exterior face.29.1 kg of water was introduced. 25.6 kg exited by the method discussed. 3.6 kg was75 Bishop and Bassett, above n 71; and Bassett, above n 71.76 This is really just a test of building wrap capacities. It is of some utility but the reality is that fora long time building wraps have been required to have the capacities demonstrated by the test. Itkeeps water out unless there are holes in it, which there will be where staples and nails penetrate.77 As noted earlier, ASHRAE assumes one per cent through cladding, and one per cent of that throughwrap. This suggests the latter figure over-estimates the amount that will get through a sound wrap.78 The difference here from Helfen is that the enclosure was pressure controlled.retained either on the face of the wrap or the external face of the sheet or absorbed intothe back of the sheet.[393] The exercise was then repeated to assess the capacity of the system to dry theretained water. Because the focus was drying, the perspex was replaced by a standardgypsum board lining.79 The same water quantities were introduced, and a very similardrainage rate/retention amount balance was achieved. Eighty-four hours of "moderatesolar heating" was then applied. The effect was that the retained moisture dried out.[394] Test four. This test applied pressure-driven water to the face of a wall with anh-mould constructed in it. The test used a range of pressures from 150 proposeswavered pa to 1200 pa. The pressure differential was varied from the default 50:50(internal:external) through to 0:100 (internal:external). The result was that water didnot overtop the h-mould at any pressure. Dr Straube admitted he was surprised howwell the h-mould worked, but considered the explanation was that the gaps inherent ina real-world assembly impact on pressure differential sufficiently to produce thisoutcome.[395] Test five. This tested the penetration of rainwater at windows. There were twowindows – one installed with the "Harditex system" and one using weatherboards.The windows worked. The dispute about the test is the extent to which the design ofthe windows was representative of the time Harditex was on the market, but that is nota challenge that undermines the proposition that windows can be installed properly.[396] Test six. This was the base of wall test. The window design used was thatrecommended in the 1998 JHTI, with inseal applied. The water was inserted betweenthe back of sheet and the wrap. This test also reflected a misunderstanding of thehomeowners' main complaint about the base of sheet. Mr Wutzler says the issue isthe face of the sheet and water gathering at the unsealed bottom. The test, if accepted,showed the inseal feature did not prevent drainage.79 This is because vapour can penetrate these linings (but not perspex).Criticism[397] The homeowners make some general criticisms. Taking the substantive ones,they are that it is an inadequate exercise because the tests were not done on a full wallassembly with windows, h-mould and corners all on the one elevation. This criticismtaps into an ongoing dispute between the parties as to whether there exists a propertesting system for this type of wall assembly. That aside, however, it is a point to note.To the extent to which the presence of other features on the wall may impact theoperation of the feature being tested, this RDH test does not capture that.[398] The other general points made can be listed but do not need analysis. Thehomeowners say RDH should have done a 4284 test,80 the homeowners' expertsshould have been given more notice of when the testing was happening,81 reflectingtheir lack of familiarity with the product RDH had to construct a trial wall, somethingwhich was not disclosed,82 and the RDH builders had no experience with New Zealandbuilding.83[399] I turn now to the criticisms of each test. I observe that the primary source ofthe criticisms is Mr Wutzler which, again, brings his experience into focus. I do notneed to dwell further than I have on my doubts as to the basis on which he can givethese opinions, but I note one relevant further aspect. Mr Wutzler owns FTNZ, thetesting facility used by the homeowners for their tests. When asked about this,Mr Wutzler said he did not do this testing and that it was important he did not:[FTNZ] is an IANZ accredited facility and has very strict protocols. Itsaudited.[400] This of course makes sense but, again, calls into question the basis on whichMr Wutzler presents the results of the homeowners' test and critiques the RDHprocesses and testing methodologies.84 Mr Wutzler says he observes a lot of FTNZwork but it could be argued, even expected perhaps, that Mr Scott, the main person at80 As discussed, James Hardie says, and I agree, this is the wrong test.81 On the material I have seen, more notice could have been given.82 Obviously it eventually came to be known. For the purposes of the assessing the value of thetesting it did not seem to me to be particularly relevant.83 This is correct.84 I do not include in this reservation Mr Wutzler's observation of the construction of the rig.FTNZ who does the testing, and who is in effect Mr Schumacher's equivalent, is betterplaced to give this commentary. Testing is his expertise.85[401] Tests two and three.86 The plaintiffs criticise the frame used for both tests twoand three. It is suggested a lack of precision in building has created drainage pathwayswhich would not normally exist. The proposition gains strength from the optics – atone point the top sheet juts out from the h-mould in a very noticeable way. Dr Straubeand Mr Schumacher both agreed that this would not be tolerated on an actual house,and would need redoing, but explained why it was left for the purposes of the test.[402] I have wavered somewhat in my views on this. It is clear the frame is notperfect; the answer of the James Hardie experts is that nor are houses and all thedeviations identified by the homeowners nevertheless fall within allowable buildingcode or JHTI tolerances. Mr Wutzler disputes this and cites examples where thedeviation is greater than the allowed tolerance. Whether that is correct seems to turnin part on the measuring methodology. To explain, Mr Wutzler had an experiencedCanadian builder take measurements for him. However, he was dissatisfied with thatperson's initial methodology so sent him back again to take further measurementsdoing it a different way. The defendant notes the different outcomes obtained by theCanadian builder on each of his visits, submitting the first which was more favourableto RDH were valid. It submits Mr Wutzler's method gives no value to the fact that thesheets, when nailed, will conform to the frame. The consequence is that gaps whichmay seem likely to exist if just the frame is measured do not eventuate when the sheetsare nailed on.[403] I consider a case can be made either way, but in the end have concluded that ifthe purpose was to construct a wall built in accordance with the JHTI, then it shouldhave been constructed more precisely. There were errors that should not have occurred– for example, a line of nailing was completely missed.85 It can also be noted that, correctly, it was not Helfen Ltd who provided the technical specifications.Mr Lalas did that.86 As noted, there is insufficient dispute concerning test one for it to merit further consideration.[404] To counter the point about water draining out where the sheet sits noticeablyout from the h-mould, the defendant notes that the drainage through the h-mouldoccurred across the whole width of the sheet and was noticeable even where it sitstight on the frame as it should. I agree with this.87 It was matters like this that nearlypersuaded me to accept the test three outcomes, but in the end I consider that ifdemonstrating drainage was the purpose, the sheets should have sat properly all theway. It is accepted no-one would allow the house to be finished that way, so the testsample should not be.[405] Overall, there are too many occasions where the defendant was forced to, andgenerally did, produce reasonable arguments as to why defects or omissions did notinvalidate the results. The better course would have been not to have these defects.For this reason I did not place weight on the outcomes of tests 2 and 3 (acknowledging,however, as I must that those results do reflect the conclusions I have otherwisereached on the building science analysis).88 I also observe the primary defect whichrelated to potential drainage capacity should not affect the validity of the drying resultswhich do tend to reflect the evidence of Drs Lstiburek and Straube about the dryingcapacities of fibre cement in this type of building enclosure.[406] Test four – the h-mould walls. The homeowners criticise the construction. Forexample, in some the top sheet sat between 9 and 11 mm above the h-mould ratherthan the stipulated 6 mm. There was originally a criticism of the sheets used but thisappears not to be pursued.89 Finally, sealant was applied between the bottom plate andthe plywood flooring. This would not occur in a house but was done by RDH to enablethem to control air pressures for the purposes of the test. Dr Straube explained whereit would impact, and where it would not. 90 The primary effect would be at the interiorlining, not the h-mould in the external wall. Dr Straube later explained the RDHmethodology was to control air with a flow control device so issues such as sealantsor screws are neutralised. This evidence seemed not to be challenged but if it is, I note87 There was a video taken of the water draining.88 Reviewing the judgment prior to release, I acknowledge this aspect continued to trouble me. Thereis a reasonable case to say these tests were sound and capable of proving James Hardie's case.However, the judgment by a narrow margin adheres to the conclusions expressed.89 It was incorrectly understood by the homeowners that factory-sealed Monotek was used.90 NOE 5376/20 and also 5608/13.I accept it, essentially for the same reasons as previously. I accept Dr Straube'sexpertise and understanding of these matters.[407] It was not apparent to me that the increased gap between the bottom of thesheet and the h-mould made any operative difference to the test outcome.91 I amsatisfied the results of test four are sound. The results confirm the building sciencethat water may trap between the upstand and the sheet but in normal circumstances,even with high winds, will not be expelled over the top of the upstand. It will of courseabsorb into the sheet.[408] Test five – the windows test. It seems it has to be accepted that if nothing else,the test shows that windows and particularly head flashings can be properly installedin a weathertight way. The homeowners note several attempts were needed to get itright but again this is consistent with it being one of the more exacting tasks in a build.The homeowners' primary challenge was the proposition this is not how windowswere installed in the 1990s. I am not sure the trial evidence as a whole establishes thatto be so (as opposed to it just not being installed properly on houses where thewindows have failed), but even if it did, the question would surely be why not. Asnoted, the answer to that, whatever it may be, does not seem to me to be Harditex-specific.[409] Test six. As noted earlier, the parties were somewhat at cross-purposes here.The test focused on the back of the sheets whereas the homeowners' focus on the frontand bottom of the sheet. Again, as with tests two and three, there was non-compliantnailing (which, if relevant, would affect drainage). Further, the inseal was placed atthe bottom of the sheet, rather than 5 mm up. This might help with coating the inseal,but otherwise seemed not particularly relevant.[410] The plaintiffs assert Mr Wutzler's evidence challenging the design of this testwas unchallenged. This is not exactly so in that some responses or clarifications wereelicited in evidence-in-chief of defendant witnesses, so it was not so much challengingMr Wutzler as explaining a concern he had raised.91 When this topic arose at trial, the reason advanced for allowing a bigger gap was to better facilitatecoating.[411] Overall, my assessment was that test six stood up, although I accept there areaspects which provide a basis for challenge.Conclusion[412] I conclude by recording a general submission on behalf of the homeownersthat conceptually the organisational structure of the RDH testing is not acceptable.They were tests wholly designed and implemented within RDH, and the results werenot peer-reviewed. The RDH testing facility is not accredited to an independent body.It is also alleged insufficient data was provided to the plaintiffs to allow the test to berepeated or properly reviewed.[413] To the extent the evidence enables me to comment on the last aspect, I disagree.At least in my assessment the evidence does not establish the criticism. As for lack ofpeer review that is so. I would not have expected peer review, but agree it has nothappened. I do not accept the structural arrangements for RDH are materially differentfrom that of the Helfen test structure. There the test was designed by Mr Wutzler andhis company, Helfen Ltd. The specifications were provided by Mr Lalas, in the sameway as Dr Straube. The test was done by a company owned by Mr Wutzler and theresults reported by him. On the evidence before me, suggestions of betterindependence within the Helfen test structure are not made out.Prolonged duration test[414] Mr Wutzler obtained a piece of used Harditex from a house owned by one ofthe persons who has joined the class action. The condition of the sheet was notchecked other than by means of a visual inspection which assessed it as in goodcondition.[415] The test protocol was designed by Mr Wutzler and Mr Lalas. It placed a 1 msquare of coated Harditex in a chamber on a typical house frame and subjected it tocombinations of water and drying. There was debate about the cycle but I understandDr Straube's analysis to be accepted. If not accepted, in my view it is correct. Thecycle was a repeating six-hour cycle involving:(a) an hour of wetting at 125 pa;(b) two hours of wind (no rain) at 125 pa; and(c) three hours of drying with no air pressure.This was carried out in a sealed container.[416] The observations relied on by the homeowners are:(a) staining patterns became visible on the back of the sheet. This is said tobe consistent with moisture absorption with more occurring at the base;(b) mould growth on the back of the sheet;(c) mouldy building wrap, with crinkling (indicating moisture) at the bottom;(d) the coating on the base of the sheet was delaminating;(e) concerning the timber framing, elevated moisture readings and mouldgrowth; and(f) generally the base was in much poorer condition with elevated moisturereadings at the bottom.[417] The closing submissions of the homeowners submit the test provides "usefulinformation" that the sheets are absorbent, that moisture can transfer from the sheet tothe underlying building paper and framing; and that regardless of how well the baseof the sheet is coated, it will fail.[418] This might be thought to be a relatively modest set of claims taken by thehomeowners from the test outcomes. There is good reason for that. It was not, on myassessment of the evidence, a sound test. I am conscious that my observations herelargely reflect the criticisms made of the test by James Hardie, but that is because Iaccept them.[419] There was confusion within the homeowners' witnesses over the protocol forthe test, and who set what are termed the "environmental overloads" that the test rigwas subjected to. Ultimately it does not matter as the real issue is whether those loadswere sound, but the uncertainty between Mr Lalas and Mr Wutzler was plain.Mr Scott, who carried out the test at FTNZ, said he had nothing to do with it.[420] Dr Straube had two primary criticisms – the environmental load was muchmore extreme than any house would be subjected to and the specimen was never givena proper opportunity to dry. Dr Straube's evidence was that the design parameterswere incorrect because there was a fundamental misunderstanding of what was beingdone. Rather than testing water penetration, the protocol as designed was in effect anextreme humidity vapour test that would have produced the same outcomes withtimber weatherboard or stucco cladding. The primary mechanism actually tested waswater adsorption via vapour diffusion, rather than water absorption. Adsorption is theprocess by which water vapour is taken up and held by a porous material from thesurrounding air; absorption is the process of drawing liquid water into porous materialsby capillary suction forces.[421] Dr Straube calculates that the sheet was exposed to very high relative humidityfor well over a thousand hours.92 Dr Straube conducted his own analysis of the data,which was not subsequently challenged. It showed repeated cycling with relativehumidity at 90 per cent for three hours and then 70 per cent for three hours. The latterfigure varied between 60 and 70 per cent but was repeated through 500 continuouscycles. In Dr Straube's assessment, the average vapour pressure difference, which isthe force driving water vapour from the air into the sheet (adsorption), was 567 pa.On his calculations of available New Zealand data, the likely real-world rate would onaverage be 92 pa.[422] I accept the criticisms identified by Dr Straube. It greatly diminishes theprobative value to be taken from this test.92 It can be recalled when discussing mould that Ms Hugens' concern from her WUFI analysis wasthe levels of relative humidity that her modelling predicted: see above at [245]. It seems commonground that high sustained relative humidity will encourage mould.Conclusion[423] When analysing the building science, I had put to one side each party's relianceon the testing they undertook for the case. This was because, given the purpose,neither had been executed to a standard which meant the Court could wholly rely onit. There were aspects of the defendant's test that were sound, and reflective of thebuilding science, but the key tests for the defendant, tests two and three, were let downby the construction of the wall. Likewise, I assessed the Helfen test as being flawedin fundamental ways. I consider the Prolonged Duration Test was misconceived andunhelpful. Overall, there are aspects of the defendant's test which legitimatelyreinforce the conclusions otherwise reached in the judgment – particularly dryingcapacity, ability to insert windows safely, and the h-mould design.HOUSESIntroduction[424] This section considers the evidence presented about what has gone wrong witheight houses and why. From the homeowners' perspective, the reason for consideringspecific houses is that the houses are built with Harditex sheets, they suffer frommoisture-related damage and therefore they are examples of the inherent defects atwork. The contest to this proposition that is advanced by James Hardie comes downto two key questions:(a) given the departures from the system, is it fair to call any of the eighthouses a Harditex system house; and(b) can the moisture-related damage be linked to an alleged inherent flawrather than the more obvious cause, as James Hardie sees it, of poorbuilding?[425] How the judgment deals with this evidence has been influenced by severalfactors. First, there is far too much evidence to attempt any overview. In relationsolely to the damage and its causes, so therefore ignoring evidence about what isneeded to fix the houses, I estimate the evidence-in-chief to be nearly 2,000 pages.93To that figure can then be added the reports of all the analysis done on samples takenfrom the houses, numerous volumes of photos, and weeks of cross-examination.94 Forexample, in relation to the Bay Lair property there were 900 pages of photographs,and a document booklet of 230 pages.[426] The next factor influencing how I deal with all this is the nature of thisevidence. The damage that each house has suffered is fact evidence and is largelyundisputed. However, the evidence about the causes of that damage is opinionevidence, almost all of which is reconstructed after the event, and consists ofinterpretation of where the moisture has come from.[427] The deconstruction work95 was all done after the event. No-one has seen thewater entering, and in some cases (such as with stained but now dry sheets) the wateringress may have been some time ago. Further, the purpose of the work was not onlythe normal one of ascertaining what remediation was required. There was also thepurpose of advancing the plaintiffs' case in the sense of fitting the damage into one ofthe inherent defects advanced. This in my view influenced the methodology. It is alsocommon ground that with all the houses there are building mistakes. There is a disputeover the extent and significance of those mistakes, but that there are some, and inreality plenty of mistakes, is beyond question. And, finally, as will be seen, there isno evidence at all from anyone involved in the builds, be they designer or builder.[428] As I listened to this opinion evidence from both sides, it became clear that itwas far from an exact science leading to conclusions in which one could have a highlevel of confidence. In part this reflects the reality of moisture which finds its ownpaths, and is dictated by gravity so tends not to remain where it started. Further, verylittle if any of the opinion evidence was underpinned by, or reflective of, scientific93 The main contributors are: Mr Wutzler (450 pages), Ms Johnson (981 pages), and Mr Sylvia, whoanalysed only two properties (nearly 200 pages). There are further building witnesses and alsoscientific witness who did the analysis of samples and give evidence speaking to their analyses.94 The evidence lasted 14 weeks. Most evidence-in-chief was taken as read or briefly summarised.Around 80 per cent of the evidence is likely to be cross-examination.95 Deconstruction work refers to the process followed by Mr Wutzler and Ms Johnson. It involvestaking numerous cut-outs from the cladding, photographing what is revealed, and taking samplesfor analysis.literature. There were, for example, debates about the message to be taken fromstaining patterns on the back of the sheet. Everyone had an opinion, but the Court wasnot referred to any research underpinning the opinion.[429] This context explains why the judgment started with the building science.There are significant limitations in the deconstruction and cause analysis. By contrast,the analysis of moisture activity within building envelopes, and its drivers, is wellestablished. Sophisticated modelling programmes exist, as does a significant body ofresearch. The Harditex system was able to be analysed through the lens of thatestablished body of science. It was a sounder anchor than this opinion evidence.[430] How the judgment deals with this house-specific evidence is also necessarilyaffected by the stage at which it is discussed. My structure, and no doubt others werepossible, has led me to a point where I have not been satisfied, on the evidenceavailable, that the alleged inherent flaws that have thus far been analysed exist.96 Itwould not now be sensible to write up this house-specific evidence as if thoseconclusions had not been reached.[431] The aim of this section, therefore, is to explain the damage and the competingtheories as to cause, but not in a way that is reflective of the quantity of evidence.There is too much, and a lot of it consists largely of these competing analyses neitherof which can be certainly proved. I preferred on a general level the evidence of somewitnesses to others, but quite plainly those witnesses will not always be right oneverything, and the other witnesses always wrong. That is not the nature of the beast.[432] Further, the witnesses inevitably have underlying views about the soundnessof the Harditex system that must have influenced their analysis. This is not to criticisethese witnesses for that, just to state what I think is the obvious:(a) if you think the h-mould is essentially sound, then it is natural to look forother causes of nearby water damage; and96 The ones omitted to date are the adequacy of the JHTI and, more generally, buildability.(b) if you think the h-mould is a flawed design, then it is natural to see nearbymoisture damage as evidence of that.[433] The eight houses, their location, and their date of construction are:(a) Bay Lair, Wellington (1992)(b) Woodhouse, Wellington (1996)(c) San Vito, Kāpiti Coast (1997)(d) Ambassador, Tauranga (1996)(e) Carnelian, Auckland (1996)(f) Golf, Auckland (1996)(g) Portsmouth, Auckland (1996)(h) Esplanade, Kāpiti Coast (1996)[434] The first two houses are the "lead houses" in that they are the properties of thetwo sets of plaintiffs – Ms Cridge and Mr Unwin, and Ms Fowler and Mr Woodheadrespectively. The other six houses are the "sample houses". They were proffered bythe plaintiffs because they are said to reflect particular defects.[435] The choice of the houses was that of the plaintiffs. As I understand theevidence, Mr Wutzler looked at all the properties associated with the 146 claimants,97and these eight were selected. The timing and notification of those selectionsobviously influenced the access the defendant could have. There are issues over thisI will address later.[436] Mr Wutzler analysed each house for evidence of moisture-related damage. Asnoted, this involved doing "cut-outs" of the Harditex sheets to expose the back of thesheet, and the underlying building wrap and timber framing. Various analyses werethen done. For example, samples were sent to Dr Jia and to Dr Wakeling for analysisof strength and fungal decay respectively, and also for the presence of mould.[437] Mr Wutzler's evidence-in-chief was the means by which the detail of thedamage alleged, and of which inherent flaw the damage was said to be symptomatic,was provided to the defendant. At some point thereafter, the defendant was givenaccess.97 The plaintiffs represent two claimants with 144 others in the class action.[438] The primary expert for the defendant was Ms Johnson. She was assisted inher work by an experienced builder Mr Kennerley, but also at times analysis wasundertaken by Mr Sylvia and Mr Longman. Specialists in remediation of housesrepresenting both parties have also visited the sites. As I noted, at least from thedefendant's viewpoint, this process was not always smooth or desirable and there arecomplaints as to lack of access.[439] The provision of the defendant's evidence on the houses sparked a substantialquantity of reply evidence which at times tested the concept of reply. However, theprocess to a certain extent made this inevitable – just as the defendant did not knowthe homeowners theory about a property until Mr Wutzler's evidence was provided,so the homeowners did not know how James Hardie analysed the property until theyreceived Ms Johnson's evidence, and the evidence of others such as Mr Sylvia. It isalso a fact, however, that on the face of his original evidence Mr Wutzler did not seemto have considered the damage to the house as a whole, or to have overtly consideredwhether there was a primary overarching problem contributing to all location-specificdamage. His approach seemed to be to go directly to a "problem location" such as anh-mould and start from there. Consequently, when the defendant's experts often cameback with a whole-of-house analysis, there was a need for Mr Wutzler to consider thistheory, as well as the specific challenges to his location analysis. Hence the length ofthe reply evidence.[440] There was a site visit by the Court to the two lead properties. Amongst otherthings this exercise brought home the intrusive nature of this deconstruction exercise,and the impact on the houses. One in particular, on some walls, looked almost like apatchwork quilt, with so many now covered cut-outs. I make this observation toacknowledge that although there are 146 claimants, it would be incorrect to assumeeach of these properties were freely available to Mr Wutzler and the plaintiffs for useas an example. Many would not be willing to endure the process. That said, the claimis the plaintiffs' and they must stand by the evidence that is presented, and theinferences to be fairly drawn. The fair inference is that these houses are the bestavailable to demonstrate the alleged inherent flaws.[441] Turning to the structure of the pleading, in relation to the two lead properties,the inherent defects are pleaded, and also where those defects are said to bemanifesting on these two houses. Also acknowledged for each property is a list ofbuilding defects. These are reasonably extensive. On Bay Lair, for example, there isacknowledged, amongst others, to be a lack of capillary gaps, inadequate provision formovement, incorrect placement of the h-mould, inappropriate sheet lay-out, andinadequate protection of the base of sheet edges .[442] Concerning witnesses, the main homeowners' witness on the houses and thecauses of damage is Mr Wutzler. I have previously discussed his qualifications andexperience.98 He is experienced in remediation and as qualified as the equivalentwitnesses for the defendant. All their evidence on causes, when not building related,is vulnerable to competing opinion sourced in research.[443] The homeowners also rely on Mr Peryer and Mr Proffitt. Mr Peryer has beena registered master builder since 1988 and has a firm which employs 30–40 builders.The firm undertakes both public and private sector work, with a recent preponderanceof work remediating school buildings. Mr Proffitt is a registered building surveyorand remediation specialist dating back to 2003. He has an advanced trade certificatein carpentry and was both an employed and self-employed builder. He hassubsequently been a construction manager, before the present focus as a buildingsurveyor and remediation specialist.[444] For the plaintiffs, Ms Johnson is a registered building surveyor with 32 years'experience in the building industry. She has been a member of, and at various timeson the boards of, relevant industry groups. She has performed various teaching rolesand was on a working group developing standards for qualifications for buildingofficials. She has written or co-authored a number of papers in the relevant areas.Mr Longman is a life member and past president of the New Zealand Institute ofBuilding Surveyors. He was the BRANZ accredited advisor for the Hawke's Bayregion for 10 years. There are a number of qualifications and positions held goingback to 1968 that attest to his experience within the New Zealand building industry98 At [92]–[94].and his capacity to give evidence about building practices. Mr Sylvia is a buildingsurveyor and qualified carpenter who has worked in the industry since 1995. He isexperienced in commercial and residential construction. He is very familiar withworking with sheet cladding but has more limited experience with Harditex itself. MrDonnan is an architectural drafter with 20 years' previous experience in carpentry,including extensive work building Harditex homes.[445] I turn to the houses.Bay LairThe damage[446] The subject property is a single building, two-dwelling duplex, only one halfof which is involved in the litigation.[447] The pleaded damage is:(a) elevated moisture content in framing;(b) decay in some framing;(c) degradation of Harditex sheets at the bottom, and decay of wood fibres inthe sheets;(d) degradation of building wrap;(e) degradation of particle board floor in places;(f) mould growth on various building elements;(g) corrosion of fixings; and(h) cracking to texture coatings and sheet joints.[448] It will be helpful if, for one of the houses, the judgment sets out how theevidence was presented. For each property Mr Wutzler produced a photo of the housewith locations noted on it, and a description/record of what is said to be the issue atthat location. The location is superimposed on the photo accompanied by a dialoguebox containing a description of the findings at the location. For Bay Lair there are36 boxes. I set out in detail the content of the dialogue boxes for most of the locations.Location 0199Photographs: 4-8Deteriorated cladding and wrap. Cladding was brittle.MC 22 – 40%+ across most timbers after testing.Beagle Report 1 – 16.7.2015Sample 12 – Stud (left – below flashing)Framing – "No decay but dense fungal growths, paper wrap had traces of rotand low numbers of spores of Stachybotrys."Sample 14 – Joist (left – above flashing)Advanced soft rot across the depth. Low numbers of spores of Stachybotrys.Sample 15 – Joist – (right – above flashing) "Pockets of early to advanced softrot across much of the depth. Low numbers of spores of Stachybotrys."Sample 17 – Building Wrap "Pockets of advanced soft rot in wood fibres andgrowths of Stachybotrys."Location 02Photographs: 9-13Prolific mould growth in area.MC – 40%+ in timbers after testingBeagle Report 2 – 14.9.2015Sample 5 – Stud (below flashing) "Pockets of early to advanced soft rot andsuspected incipient brown rot"Sample 6 Boundary joist (above flashing) "Traces of soft rot in the outer1mm"Sample 18 – Corner Stud (Below flashing) "advanced soft rot throughout.Low numbers of spores of Stachybotrys."Sample 21 – Building Wrap "Pockets of soft rot in wood fibres and growthsof Stachybotrys."Location 03Photographs: 14MC – 22% in east timberMC – 40%+ in northern timberBeagle Report 1 – 16.07.2015Sample 7 – Bottom Plate "Advanced soft rot across the depth. Low numbersof spores of Stachybotrys.Sample 8 – North Boundary Joist "No established decay micromorphology.Dense fungal growths."Sample 9 – East Boundary Joist "No established decay micromorphology.Dense fungal growths."99 MC is moisture content of the timber framing in that location. Beagle Report refers to thecompany doing the analysis of samples sent. The samples were numbered and the results are thennoted.Location 04Photographs: 15MC – 22% in bottom plate after testing.Beagle Report 1 – 16.7.20Sample 10 "No established decay in micromorphology and no incipientbrown rot detected. Dense fungal growths."Location 05Photographs: 16-18Dye absorption to the bottom of top fibre cement sheetMould growths on reverse of fibre cementMC – 40% in left after testingMC – 32% in right after testingBeagle Report 1 – 16.7.2015Sample 01 – Top plate (left – below flashing) "Pockets of advanced soft rotacross the depth in latewood, Low numbers of spores of Stachybotrys."Sample 02 – Joist (left – above flashing) "Framing – traces of soft rot acrossthe outer 1mm.Paper – Pockets of soft rot in wood fibres and low numbers of spores ofStachybotrys."Sample 03 – Stud – (Right – below flashing) "Framing – traces of soft rotacross the outer 1mm."Sample 04 – Joist (right – above flashing) "Framing – Pockets of early toadvanced soft rot and suspected incipient brown rot.Paper wrap – Pockets of soft rot in wood fibres and growths of Stachybotrys."Sample 19 – Building wrap – right hand side – above flashing "Pockets ofsoft rot in wood fibres and growths of Stachybotrys"Sample 20 – Building wrap – left hand side – above flashing "Pockets of softrot in wood fibres and growths of Stachybotrys"Location 06Photographs: 19Wrap is degradedCrack in fibre cement cladding down sheet join aboveFibre cement was friable on removalMC – 40%+ in bottom plateBeagle Report 1 – 16.7.2015Sample 16 – Bottom plate "Mixed advanced soft rot and white rot throughout.Low numbers of spores of Stachybotrys.Location 07Photographs: 20Timber visibly decayed in area.MC – 18% in timbers.Beagle Report 1Sample 11 – Corner Stud "Advanced insect borer damage. Brown rot also."Sample 22 – Building Wrap "Pockets of soft rot in wood fibres and growthsof Stachybotrys."Location 08MC – 22%, 24% in boundary joist.Location 09MC – 16 % and 18% in trimmer studLocation 11Photographs: 21-23Dye absorption to the back of fibre cement – appears friable/brittle on removalMC – 36% in stud and 22% in soft bottom plate after testingLocation 12Photographs: 40Fibre cement appeared stained, friable and brittle on removal.Building wrap had beads of moisture on it and was degraded.MC – 32% in trimmer stud, 20% in second trimmer studCrack in cladding emanating from corner of joinery unit. Fibre cementappeared stained, friable and brittle on removal. Building wrap had beads ofmoisture on it and appeared degraded.MC – 32% in trimmer stud, 20% in second trimmer studLocation 13Photographs: 41Wrap is degraded behind the wall and moisture evidence.MC – 40% in bottom plate, 28% in boundary joist, 32% in stud, 22% directlybelow joinery unit after testing.Location 14MC – 18 %Location 15Photographs: 24-25Dye absorption at base of sheetWrap wrinkled and degradedFibre cement was brittle on removal and stainedMC – 40%+ in bottom plate after testingLocation 16MC – 24% in trimmer stud, 20% in second trimmerLocation 17MC – 22% in trimmer stud, 20% in second studLocation 18Wrap was degraded and wet when cladding removed.Fibre cement stained on the reverse under corner junction and slightly brittleon removal.MC – 23% in framing timbersLocation 19InternalWater damage to timber revealLocation 21MC – 32% in bottom plate and stud.Location 22Photographs: 26MC – 32% in bottom plate left hand side of post40% in bottom plate right hand side2% in postLocation 23MC – 22% in framing timbers in soffitLocation 26Photographs: 27-28Dye absorption up the base of top sheetMC – 40% in stud below flashingBeagle Report 2 – 14.0.2015Sample 24 – top plate – pockets of advanced soft rot across depth.Stachybotrys.Sample 25 – Fibre cement – traces of moulds and yeast – no decaySample 26 – Boundary joist – pockets of advanced soft rot across depth.Stachybotrys.Sample 27 – Building wrap – Advanced soft rot in wood fibres. Stachybotrys.Location 27Photographs: 29Corrosion to metal angle installed at two sides of glass blocks.MC – 32% in dwang24% in Stud/postStaining to back of fibre cement sheet on other side of party wallLocation 28Photographs: 30Corrosion to metal angle at change in planeMC – 22% in top plateLocation 30Slight degradation of building wrapLocation 31Photographs: 31Degradation to building WrapMC – 28% in bottom plate after testingMould growths on the reverse of fibre cement claddingBeagle Report 2 – 14.9.2015Sample 28 – No decay of bottom plate but dense fungal growths.Sample 29 – Building wrap – traces of soft rot in wood fibres. Stachybotrys.Fibre cement – Traces of soft rot in wood fibres. Stachybotrys.Location 2019/1100Friable, brittle and mouldy fibre cement.Location 2019/2Slight staining to fibre cement.Beagle Report 3 – 30.4.2019Sample 67 – Fibre cement – prolific fungal growths but no fungal decay.Location 2019/3100 The single location numbers were Mr Wutzler's original cut-out and samplings. Location numberswhich include a year – for example, 2019/1 – were samplings done more recently by one or otherof the parties.Photographs: 32-33Fibre cement stained, mouldy and friable.MC: 32-40% in bottom plate, 32-36% in joist and 25% in bearer.Location 2019/4Photograph: 34Fibre cement stained, friable and brittle. Bearer under-packer decayed withStachybotrys present.MC: 24-34% in joist, 29% in bearer.Beagle Report 3 – 30.4.2019Sample 68 – timber A – "Dense fungal growths"Location 2019/5Photographs: 35Fibre cement mouldy and very friable.MC: 20.5% in sill timbers.Beagle Report 3 – 30.4.2019Sample 71 – Fibre Cement – "Pockets of soft rot – fibre cement very friable.Growths of Stachybotrys"Location 2019/6Photographs: 36MC: 28% in Joist. 23% in Timber. Fibre cement stained and mouldy.Beagle Report 3 – 30.4.2019Sample 72 – Timber to which H-mould affixed – "Pockets of advanced softrot, low number of spores of Stachybotrys"Sample 73 – Fibre Cement – "Well established rot within 10-560mm of thebottom edge including fixing holes Low numbers of spores ofStachybotrys"Sample 74 – Building Paper "advanced soft rot pockets. Growths ofStachybotrys"Location 2019/7Photograph: 37Stained, mouldy and friable fibre cement. Visible decay of building paper,corner stud, and adjacent stud.Location 2019/8Photographs: 38-39Rear face of fibre cement was stained and very friable at jamb/sill junction.MC – 22% in timbersBeagle Report 3 – 30.4.2019Sample 75 -fibre cement- "fungal soft rot and loss of structural integrity".Sample 76 – timber: "Dense fungal growths".Sample 77 – Plasterboard – "soft rot pockets. Growths of Stachybotrys".Location 2019/9Beagle Report 3 – 30.4.2019sample 78 – Pockets of [soft] rot – fibre cement very friable. Stachybotrys.[449] The overall content of these boxes captures the condition of the house. Whilenot every aspect of the narrative is agreed, the bulk of it is. The remediation, as it iswith all the houses,101 is to remove the cladding, replace any timbers which aredamaged and reclad it.History[450] The house was built 28 years ago. No evidence was called from anyone witha connection to the house prior to the current owners, Ms Cridge and Mr Unwin, whobought it in January 2006. Accordingly, everything prior to that is based on suchrecords as are available.[451] The house was seemingly built by a person who can be described as adesigner/builder. The house was transferred in a very short time to the builder's sonwho onsold it to someone who owned it for 13 years before that person sold it toMs Cridge and Mr Unwin. The builder's experience with designing and building isnot known.[452] The building consent was for 6 mm Hardiflex (not Harditex), "plastered tospecs" and it was contemplated there would be a timber covered batten or approvedPVC moulding. At the time of consent in mid-1992, Harditex had been on the marketfor four and a half years, yet Hardiflex was specified for but then not used.[453] Ms Johnson describes the plans and specifications as very rudimentary bytoday's standards but not uncommon for the times. Her view, which I do notunderstand to be disputed, is that the brief specifications reflect the approach that thenprevailed with timber-framed houses, which was that it was left to the builder toconstruct the house in accordance with NZS 3604: 1990.[454] The house is located in a "very high" wind zone, a matter demonstrated on theday of the site visit. It is built over three levels with the garage at the lower levelimmediately off the road. There are short flights of stairs to each level. The sectiongoes downhill from the road frontage to the back so when you look at the back of thehouse, some of the back wall is the same height as a two-storey house. However,101 With the exception of San Vito which was pulled down many years ago.beneath the top level, which is the occupied space, there is just a dug-out basement.There is a mirror image house on the other side of a dividing wall.A Harditex house?[455] Throughout the trial the defendant put to the plaintiffs' witnesses that thedepartures from the JHTIs on these houses meant that it could not be called a Harditexhouse, and it was a flaw in their evidence to assume it was. It was not a line ofquestioning the Court encouraged as it really is a question of labels. When does non-compliance become such as to say it is not a Harditex system house? It seemed to meultimately a pointless debate. However, what underlies the question is a valid issuefor the judgment to consider. It is that, given all the departures from the JHTI, howmuch value can one attach to the property and its issues as an example of a Harditexhouse in action, and something that is meant to illustrate inherent flaws in a Harditexsystem house.[456] The non-compliance features identified by James Hardie fell into two groups– things required to be done by the JHTI which were not, and things required by theJHTI which had been done but badly. To take the Bay Lair omissions, vertical reliefjoints were required and not used.102 A horizontal control joint was required but absenton the north wall as the joist seems not to be kiln dried.103 Inseal tape and galvanisedangles were required for corners and not used.[457] Moving from omissions to alleged poor compliance with the JHTI, a generalintroductory comment is needed. Many of the requirements of the JHTI, such as therequirement for a capillary gap at the base of the sheet, can also be found in aregulatory document such as NZS 3604. It is also a requirement that would berecognised as sound building practice independent of either the JHTI or the standard.This means that some building defects could be seen as non-compliance with any ofthese sources.102 The trial evidence suggests this omission is common; it is not a structural joint.103 The h-mould is a movement joint. Using kiln-dried timber significantly reduces movement, whichmeans an h-mould was not always required. That said, some method of joining the sheets wasneeded, and the h-mould accessory was sometimes used to fulfil this role even though not servingas a movement control joint.[458] For Bay Lair, there are some aspects that can be identified primarily as non-compliance with the JHTI. The h-mould construction at this address is submitted tobe so non-compliant as to suggest (and in this I agree with the defendant) that thebuilder cannot have been trying to comply with the JHTI. Further, the sheet layoutwas poor. There are rules about where to place the sheets, and particularly about wheresheets should end in relation to penetrations like windows and doors. These were notfollowed. Compliance with the need for a capillary gap at the base of the sheet waserratic and there are numerous examples of the bottom of the sheet not being sealedand coated, or if it had been, then very poorly.[459] It is the extent of the omissions and non-compliance that underpins thedefendant's submission it is not a Harditex system house. One of the difficulties I hadwith the argument is that the JHTI required compliance with NZS 3604, which bringsinto Harditex system the whole regulatory scheme on timber framing. Any non-compliance with that could not be sufficient to make it not a Harditex system house,and so one inevitably progresses to a debate about how much non-compliance isneeded. The better approach is to recognise that the scale and nature of buildingdeficits may well impact on the inferences that can be drawn from that property aboutwhether the Harditex system was sound.The problems[460] The defendant in its closing submission has grouped the locations relied on bythe plaintiffs by reference to the inherent defects they are said to represent. Thatprovides a convenient starting point for analysis. These locations were:104(a) h-mould: locations 1, 2, 3, 5, 26 and 2019/6;(b) base of sheet: 3, 6, 11, 15, 31 and 2019/3, 4 and 6;(c) windows: 7, and 2019/5 and 8;(d) boundary fence: 21, 22, 27 and 28.104 Recalling these locations are the ones detailed above.[461] The boundary fence is a wall at the back of the houses that separates the decksbetween the two houses. It is unrelated to the structural dividing wall between the twohouses. I do not consider it is relevant to the case and so do not address it further.[462] The defendant notes that there are a number of locations, all described in thedialogue boxes previously set out, which are not relied upon at all as indicative of theinherent defects, without explanation as to why not. The defendant invites aninference they are therefore accepted by the plaintiffs to be solely the product of poorbuilding. As regards windows, for example, there are eight such locations whereanalysis was done, and damage exists, but which are not said to be illustrative of aninherent defect.(a) The h-mould[463] The h-mould is situated on the rear wall where the vertical height of the wallis at its greatest. It is undoubtedly a spot calling for an h-mould. Looking at thecondition of the building envelope under the h-mould, there was evidence of waterstaining, damaged wrap, some timber decay, very high moisture content in most of therelated timbers, and mould. It is clear water has been present in significant quantitiesabove and below the h-mould, along its whole length.[464] There are several errors in the installation of the h-mould which can bediscussed, but a better initial focus is the area above the h-mould. The timbers haveextremely high moisture content along its length (40 per cent, 32 per cent, 40 per cent,28 per cent, 23 per cent, 40+ per cent). These readings are regularly found up to200 mm above the top of the h-mould, and in one place 400 mm above. How didsufficient water get to those points, in sufficient quantities and with sufficientregularity to prevent drying and to have this effect? The relevant inherent defecttheory suggests the water seeps through cracks in the coating or has lodged betweenh-mould and sheet and then either been driven up into the enclosure by wind or hasabsorbed into the sheet and then transferred from there.[465] It is here that the building science intervenes to say that is unlikely, or even, asDr Straube suggests, is not scientifically possible. Dr Lstiburek and Dr Straube haveexplained, as previously discussed, the very rare wind events that could achieve theforce necessary to blow liquid water out of the capillary gap and up over the upstand.Those wind/rain events are sufficiently rare that they could not, in my view, accountfor the quantities of water that have plainly been present here. The alternative inherentdefect option is for the water to have been absorbed into the sheets and wicked its wayup that way. However, it would only emerge from the sheet as vapour, and all of DrLstiburek, Dr Straube and Mr Lalas agree it will not anyway wick that far up withinthe sheet.[466] As well as the timber moisture content, there is evidence of staining on theback of the sheets consistent with the sheets wetting and drying. The staining oftenends in a "top of a hill range profile" earlier noted. There are peaks and dips. Theissue again becomes how did water get to that spot. For Mr Wutzler and the plaintiffsthe answer is as he says – it gets in through the deficient h-mould and works its wayup. For the defendant the explanation must be it is coming down, as water does, fromsomewhere above, and enough of it is being held there to cause this damage.[467] On this particular house, in the spot of the h-mould, there was other evidencethat, in my view, supported the defendant's theory. There was some very fine debris(like fine sawdust) patterned onto the building wrap. It seems clear it is debris createdwhen a power point was installed above. The position and pattern of the debrissuggested it had washed down. Mr Wutzler's contrary view was that it must havefallen there when he disturbed the cladding sheets by removing them. This seemedspeculative and unlikely when the pattern pointed obviously to the remnants havingbeen washed down.[468] Commenting on the construction of the h-mould itself, it is located on thewrong piece of timber (the bottom plate of the upper level rather than the joist), a joinin its length is not sealed at all and it ends at each end of the wall without apparentlybeing sealed off in a satisfactory manner. As for the incorrect positioning of theh-mould, I accept Mr Wutzler's position that this is generally not relevant toweathertightness, at least directly. However, it is an error that both points to the qualityof the building work, and which removes one aspect of the system designed to assistwith movement.[469] The defendant's experts contend there are other aspects of the construction ofthe h-mould that have facilitated moisture movement once it has arrived at this locationfrom above. They note what is said to be misaligned framing, the fact that the h-mouldis on a slope and the fact it has been clamped to the timbers by nailing (it is meant tofloat).[470] In summary, it is clear that there is a lot of water damage on the inter-storeytimbers. However, given the apparent amount of wetting and the relevant buildingscience, I consider it unlikely the h-mould was the source of this moisture ingress.(b) Window[471] A notable feature of this house was a large mitred corner window. In otherwords, the window was on two walls with a glass join forming the external cornerwhere they met. It is common ground that this is inherently a risky building featureand one not well executed here. There is a lot of damage to the timber framing belowthis window all the way to the ground. It is plain it has been leaking for a long time.Out of this mess, Mr Wutzler appeared initially to suggest there nevertheless could befound three illustrations of inherent flaws.105 The locations were below the externalmitre glass join, and on either side of the window where it meets the wall cladding.However, in reply evidence it appeared that Mr Wutzler no longer relied on these, butinstead maintained the extensive damage to the framing below the window is a signthat the system cannot manage water that gets behind the cladding.[472] The window is poorly designed and executed. It is plain it has leaked for along time and significant water damage has been caused. Mr Wutzler's reliance ontimber damage below it as a sign of a system unable to cope with water was surprising.It cannot credibly be suggested the system should be designed to manage this, andthere was no evidence to suggest the outcome would be different with any othercladding. It was not a cladding-specific problem. Mr Wutzler may have had in mindthat a cavity system would manage it. I do not know if that is what he meant but Iconsidered this aspect of his evidence far from compelling.105 The locations were 7, 2019/5 and 2019/8.(c) Base of sheet[473] Eight base of sheet cut-outs (out of 11) are relied on. Five come from the rearof the house where there is the h-mould and three from elsewhere.[474] Considering first the issues with the timber framing near the locations reliedon, and looking at the rear wall, at location 15 there is a moisture content of 40 per centin the bottom plate, and a similar reading at location 6 further along the same wall,where there was also evidence of rot. Further along the wall to an area below the mitrewindow (location 11), there were readings of 36 per cent and 22 per cent in the "softbottom plate". A further location, 2019/7, is immediately below the corner of the mitrewindow where there is extensive decay all the way down.[475] Building deficits acknowledged by Mr Wutzler were that, in some places, therewas no capillary gap, the sheet did not overhang the bottom plate by the requiredamount, no inseal was used and there was a lack of coating to the bottom edges. It iscontended nevertheless that the moisture content along the base reflects the inherentflaws.[476] To these building issues, Ms Johnson would add an error in the framing thatmeans the bearer is set back from the foundation, thereby creating a lip on which watercan pool. This is relevant if it is accepted water may be coming down from somewhereabove. There is also in places an error in the installation of the damp proof course (alayer of waterproof material designed to prevent moisture movement from the groundinto the home) which would provide a moisture pathway from the concrete foundation.[477] The fifth bottom of sheet location relied on this back wall is location 3 whichis at the end furthest from the mitre window, and is at the corner of the wall where itmeets decking and stairs. In addition to the missing inseal at the base of the sheet, aninseal up the vertical length of the corner was also not used although required by theJHTI.106 The defendant notes that the highest moisture content recording is furthestup the framing. This is submitted to point to moisture coming from above, a pointMr Lalas accepted had potential validity. The defendant submits, and I have accepted,106 Mr Wutzler is of the view the inseal would not have made a difference.the science would suggest there is no plausible theory to explain these results if thesource of the water is the base of the sheet. It makes no scientific sense why themoisture content reading would increase and be highest further up the stud.[478] As regards all these locations, the defendant complains about a shiftingposition in relation to whether the plaintiffs were saying the base of the sheet had beentexture coated or not. I agree at times it is unclear whether it was being claimed theywere coated and have subsequently delaminated, or if it is being acknowledged it wasnot coated. The pleading, on balance, suggests the latter, although my impression fromthe evidence is that Mr Wutzler believes it was coated, perhaps not well, and hassubsequently failed. If the latter, it certainly has not been maintained as required.107[479] I tend to the view that generally the base looks like it has not been coated, butcan see the spots that Mr Wutzler highlights which could be traces of old coating.What can be said, though, is that to the extent these cut-outs are meant to demonstratea base of sheet flaw, the value of the evidence is significantly diminished by a clearlack of compliance with the coating obligations.[480] The remaining base of sheet locations do not raise different issues from thosealready discussed. Leaving to one side the issue of where else the water might comefrom, the reality is that the base of sheet detailing on this building so departs from theJHTI requirements that the results cannot support a conclusion that the base of sheetdetail is inherently flawed. This building does not test its soundness or otherwise.An alternative water source?[481] The defendant claims the house has a defective rainwater system which causesthe gutterings to overflow, discharging water into the building enclosure. It is fair tosay it was a keenly contested theory. However, it is common ground that the Klassfascia gutter system used on the house is recognised as a relatively high-risk system,and that the recognised risk is exactly that which the defendant experts identify. It isa system where an internal gutter is hidden behind a fascia to give clean lines. As I107 Mr Unwin is a painter by trade. He painted the house in 2009. He did not paint the undersides ofthe sheets, even in spots where that was not difficult.understand it, an issue with the system was that the angle of the internal gutter wasoften downwards from the outside in, thereby directly flowing into the building cavity.[482] The defendant's theory of a guttering issue starts with an analysis of Councilrecords which it said disclose dampness issues quite early on.108 In 1994, the ownerof 2A Bay Lair wrote saying:The outer framework under the house is very wet, there is evidence of waterrunning down the building paper, and there is mildew developing on theconcrete floor of the garage, in line with the outside wall.The Council replied that it had inspected the property and recommended the additionof a downpipe as there might be a build-up in the concealed gutter, stating that "A highwater mark indicates this could be the cause of the problem." The evidence thensuggests alterations were made over time to the guttering to redirect the flow of wateracross the roof. Mr Sylvia's analysis was that the house's system today still hasinsufficient downpipe capacity. Ms Cridge also confirmed there had been waterflowing down the inside of her sliding lounge doors. Indeed, it was moisture thatcaused Ms Cridge to contact Helfen Ltd and Mr Wutzler, and she confirms shementioned this lounge water issue then.[483] The theory of James Hardie's experts is that the water down the lounge windowevent is something that happens elsewhere unobserved, including in the rear wall. Itis caused by the gutter overflowing. If the gutter theory is correct, one might expectevidence of flooding inside the ceiling cavity. Numerous photos, taken by Mr Wutzlerbefore this was known to be an issue, were pored over and opinions expressed. It isclear that in some places there was debris within the roof cavity such as twigs, butagain no agreement on how it got there. Some say from the gutters overflowing;Mr Wutzler would say wind. The issue was one on which informed persons coulddisagree, and reinforced my assessment of all the house-specific evidence. The guttertheory was a contestable theory not resolved by the evidence, and largely justcompeting opinions. The opinion on the source of the debris, for example, inevitablyreflected the witness' core theory because no-one can definitively say how the debrisgot there.108 The first correspondence is about two years after construction.[484] At this point it is necessary to divert to an issue concerning the availableevidence. In closing submissions the homeowners observe:Ms Johnson acknowledged both in her evidence and on cross examination thatshe had undertaken no investigations to confirm this [gutter] theory.The statement is correct. Why Ms Johnson had not done so needs consideration.[485] The access allowed to the defendant's experts to inspect and analyse propertieswas a constant issue during the trial. It often arose the same way. Counsel for thehomeowners in cross-examination advanced the proposition there was everyopportunity to check things out if wanted. The witnesses would usually respond it wasdifficult, or it was plain to them it was not encouraged. There was then a counter thatformal requests could have been made but were not, and the witness replied that fromtheir viewpoint the situation was difficult.[486] To illustrate, Ms Johnson was asked about the absence of a flood test of thegutterings to support her theory. She said she had been invited to attend the propertyon the one day when Mr Wutzler would be there with scaffolding:I was informed that Mr Wutzler would take responsibility for the scaffold andthat we could observe what Mr Wutzler was doing.And then:Q. And you did not request to undertake a flood test of your own in the gutterregion, did you?A. Mr Wutzler did a flood test near that location – sorry, Mr Wutzler put ahose into the gutter from that location 23 and directed the water downtowards the downpipe which is on the west elevation. I observed thatMr Wutzler's ladder wasn't high enough for us to get a very good look atwhat was going on, so I used the ladder of my carpenter so we could gethigher to look at it. And then Mr Wutzler – so the downpipe wasn'tblocked. The water was put into the gutter in a way it would operate if itwas raining. Mr Wutzler asked someone to turn the hose off and then wewere whisked away from the site. So Mr Wutzler kept saying: "We'vegot to go, we've got to go", banged on the window where Sarah wasallowing Mr Sylvia and Mr Donnan to look inside, banging on thewindow saying "We've got to go, we've got to go", and we were rushedoff the site.[487] When it was suggested she could have asked subsequently, Ms Johnsonobserved:Every time I asked for something, there was a counter argument back again.[488] This was a common refrain. I formed the view that whatever arrangementscounsel may have thought were in place, on the ground Mr Wutzler was obstructiveof access for the defence witnesses. This assessment was reinforced by an incidentthat occurred later in Auckland at a site when Mr Wutzler told Ms Johnson no furtheraccess was possible for anyone. However, he then returned the next day for asignificant time and took samples and photos. There was a conflict over this but Ipreferred the recollection of Ms Johnson and consider Mr Wutzler's conduct at thetime was misleading.[489] My conclusion is that the homeowners' repeated submission that the defendanthad as much access as it wanted comes with a significant caveat, namely that the unitedsense of those who might have initiated such requests was that they were discouraged,and that such requests would not be granted or would result in a contest. Mr Wutzlerwas the source of that commonly held view.[490] Returning to the gutter theory, the homeowners provided counter points to eachof the matters on which the defendant witnesses had relied. Most responses positreasonable alternative analyses. However, I consider it is significant that a concernabout water was being raised by the initial owners soon after construction, and that theresponse of the council who had inspected the property was to point to the gutters. Itis also significant that the "gutter theory" is consistent with a well-recognisedweakness in the style of guttering used. These are objective independent facts thatgive considerable credence to the defendant's theory. The lack of high moisturecontent readings at the top of the house was a pointer against it, but not a particularlystrong one given the reality that water will go down, if it can, and there is generallygood drying in a roof space. I accept a flood test was not done but make the obviouspoint it was not done by either party.Conclusion[491] The most significant damage consistent with the inherent flaws initiallyappeared to be the damage to the inter-storey timbers that occurred around theh-mould. There is also damage to the ground floor bottom plate that is without doubta sign of water ingress into the building envelope, and so links potentially to the baseof sheet detail. Some of the base of sheet has become damaged in a way consistentwith the cement matrix breaking down. But only in some spots.[492] In terms of what the house might say about buildability, there is no evidenceabout the capacity or experience of the builder. It is known, though, that they were adeveloper/builder who did a poor job at building with fundamental errors apparent(such as capillary gaps, wrong framing leading to inadequate nailing of sheets,incorrect sheet layout, and inadequate roof water removal capacity) and withnumerous departures from the JHTI. I accept the defendant's submission that thenature and scale of these cast genuine doubts on whether the builder had a JHTI, or ifso knew how to apply it. The base of sheet detailing is too poor to use as a basis foran assessment of whether that detail works. It would be a generous approach to thehomeowners' case not to draw the same conclusion about a wrongly placed,inadequately sealed h-mould.[493] There is moisture present in framing timbers at heights inconsistent with thetheories underlying the alleged inherent defects. This is accompanied by objectiveevidence of water having come down inside the building envelope, and a credibletheory as to where the water is coming from. It is relevant to that credibility that theflaw being identified by the defendant's expert is the exact flaw for which that style ofguttering is known, and that a concern with water was first raised with the Councilonly two years after the house was built. The Council suggested a change to thedownpipes, having inspected the guttering and noting an issue.[494] The house has not been shown to have damage resulting in whole or in partfrom an inherent flaw with the Harditex system.Woodhouse[495] The detailed discussion of Bay Lair illustrates the process that was followedfor all the houses; in particular how the relevant damage was identified, how theplaintiffs' experts linked that damage to one or more of the alleged inherent defects,and how the defendant and its experts responded. It is not necessary to repeat theexercise in the same detail for the rest of the houses.[496] Woodhouse is the second lead property. It is again a duplex similar to Bay Lairbut with both units involved in the litigation. It is a two-storey building separated inthe middle by an internal party wall. The two units are structurally separate. Becausethe section slopes downwards across its road frontage, the left-hand unit is higher thanthe right-hand unit. This means, for example, that as you look at them from the street,the h-mould on the left-hand unit is about one metre higher than its equivalent on theright-hand unit. This emphasises they are separate units – the inter-storey framing (iethe framing that separates the top and bottom floors of each unit) does not itselfconnect in any way with the inter-storey framing of the other unit.[497] The building has various damage issues but generally not to the extent foundat Bay Lair. Ms Fowler was the first and only owner of her half, having seen the houseduring construction and arranging to buy it. Mr Woodhead, on the other hand, onlybought his house in 2015 and three weeks later, after talking to Ms Fowler, joined thelitigation.[498] There are two general topics needing to be addressed regarding this property,namely an issue with cracking/building movement, and the damage apparent at thebase of some sheets.[499] The two key experts are Mr Hadley for the homeowners and Mr Smith for thedefendant. Mr Hadley's experience has been set out previously.109 Mr Smith has52 years' experience as a structural engineer. He was for 38 years a director, and isnow a consultant, to Spencer Homes Ltd, a firm of civil and structural engineers. He109 At [229].is a member of the relevant associations, and was a member of advisory groupsfollowing the Christchurch earthquake. He was an advisor to the Royal Commission.Cracking/building movement[500] This property has suffered issues with cracking to the exterior coating fromearly on. The first 10 years were covered by a warranty, used often by Ms Fowler andwhich saw the builder/developer return to repair the coating. The related inherent flawrelied on by the plaintiffs is the building movement claim.[501] The defendant counters by claiming there are fundamental structural issueswhich together have led to a situation where the building moves more than it should.A key focus is the adequacy of the bracing, a topic on which competing evidence wascalled. Mr Smith identified six interconnected structural flaws which he said wereresponsible for an overall structural movement defect. Having reviewed the evidenceand the homeowners' closing submissions, I accept James Hardie's proposition thatthe homeowners' reply evidence from Mr Hadley only really contests one of these sixcontributors, the adequacy of the bracing.[502] Concerning bracing, the building was not constructed, from a bracingviewpoint, in accordance with the consent plans. The difference between the expertsis that Mr Hadley contends the as-built version, when all components are considered,nevertheless provides adequate bracing. Mr Smith says that bracing cannot beassessed in the manner Mr Hadley does, and that if one is looking at the as-built ratherthan the concept, the better guide is the actual performance of the building which hasbeen flawed from the outset.[503] Mr Hadley's evidence as to adequacy of the bracing had two aspects. Heconsidered the top storey adequate as built. As for the bottom storey, he accepted thatif the two halves were considered individually, each was deficient. However, ifconsidered together, he was of the view they met the requirements. Mr Smith saysthey are not designed to, and do not work, as a single dwelling, and so the "onebuilding" analysis is not valid. On this aspect I consider Mr Smith's evidence was tobe preferred. They are structurally two separate halves. It did not seem to me correctto address bracing on a whole of building basis.[504] As earlier noted, bracing was but one of six interconnected structural flaws,which Mr Smith said meant the building was subject to excessive movement. Theothers were that the timber framing did not comply with NZS 3604:1999; the sheetswere incorrectly installed; there were missing vertical control joints; and the horizontalcontrol joint was incorrectly installed.[505] It is relevant that these cracking issues started early and have continued onthroughout the whole life of the building, notwithstanding repairs. The defendant'sfocus on the structural integrity of the building, rather than anything to do withHarditex, as the source of the issues is not a theory being imposed at the end, but onethat reflects the in-service history of the building.Base of sheet[506] The second general topic is the base of the sheet condition. There are severallocations along the ground floor base where the board is damaged, and there areelevated moisture readings in the bottom plate (generally a moisture content readingin the mid-20 per cent range).[507] As with Bay Lair, there was a dispute between the witnesses as to whethertexture coating had ever been applied to the bottom edge. In this context uncertaintyarose about which coating system had been used, who had applied it, and how well ithad been done. Mr Wutzler and Mr Moginie (a former technical director of Fosroc)suggested that based on colour it was a former Fosroc product, but they could not besure. Mr Moginie did, however, say the application of the coating was "very poor"and he would not have expected any authorised Fosroc applicator to give a warrantyin relation to that quality of work. It can be observed no coating warranty was everlocated concerning the house. It was a poor coating job.[508] Relevant to this uncertainty, I note the identity of the builder/developer isknown. Generally I do not place too much weight on the omission of witnesses,preferring to focus on the evidence there is. Here, however, it is of some relevancethat the builder was not called to clarify the issue, or to comment on any other aspectof the building. It was this builder who came back repeatedly to repair the cracks.Assessment of Woodhouse[509] The evidence satisfied me that the deficiencies in this building were such thatcare was again needed before any reliance was placed on the house as evidence offundamental defects. There are clear building defects associated with each locationthat the homeowners rely on as illustrations of an inherent flaw. The most significantfeatures are:(a) the sheet layout is non-compliant in obvious ways and particularly inrelation to several windows and across the gap between the two houses;(b) I accept Mr Smith's evidence on the structural deficiencies and hisproposition that together they contribute to an unstable house in the senseof one which moves much more than it should. Cracks, and moistureissues related to those cracks are reflective of this rather than any allegedinherent flaw;(c) generally there were poor building skills displayed around penetrationswith some not sealed by any method; and(d) the coating, whatever it is, is a "very poor" job, to accept Mr Moginie'sdescription, and has not been properly applied if at all to the base of thesheets. Photographs emerged during the trial that show in almost all areasthere was ample ground clearance at the time of construction to enableproper application to the bottom of sheets and this just was not done.Again, this undermines the value one can attach to the house as evidenceof a base of sheet flaw.[510] Reviewing the homeowners' closing submissions, some further comments arenecessary. On the topic of the bracing, the homeowners submit Mr Smith's approachtoo narrowly focuses:110on whether the bracing has been constructed in accordance with the bracingrequirements of the 1998 JHTI. Mr Smith did not account for other factorswhich may provide bracing support.110 Emphasis added.[511] This submission is, I consider, quite telling. It reflects a constant battle for thehomeowners which is to try and offset so many basic building deficiencies in order toprove there are other causes of the problems being experienced. Here the basic bracingrequirements have not been complied with in a house that manifests damage consistentwith building movement. A witness is critiqued for focusing on the non-compliance.The homeowners' task in the face of such regular and fundamental non-compliancewas a hard one, especially when the building science is also against them. If thescience had suggested these conceptual flaws existed, one might more readily viewthe problems as the homeowners contend. However, here, for example, in response tothe question why this is happening, the homeowners must first contend with the factthat their illustrative faulty Harditex system house does not in fact follow the requiredHarditex system bracing requirements. This is not minor. Bracing is about handlingmovement, excessive movement causes cracks, and cracks have been a constant issuefor this house.[512] Another extract from the closing submissions could be used to make the samepoint:The defendants also focussed on the sheet layout at the property. The plaintiffsaccept there are several examples of incorrect sheet layout, predominantly onthree elevations the properties whereby vertical sheet junctions have beenformed in line with window jambs. Many of these sheet joints have crackedalthough it is relevant to note that there is also sheet joint cracking at locationswhich are not impacted by incorrect sheet layout.[513] Again, the homeowners are first required to acknowledge that there are severalexamples of incorrect sheet layout, which is recognised as a potential source ofcracking. The sheet layout flaws are very basic ones of incorrectly lining up sheetendings with window jambs.[514] These are but two examples but they do illustrate the nature of the task thehomeowners had, namely the need to sufficiently "disentangle" (to use the defendant'sterm) these building flaws from the accompanying damage in order to be able to showthat damage to the house is a sign of the inherent flaw in action.[515] Concerning Woodhouse, there are other disputes I do not consider it necessaryto detail. For completeness I note them to be an issue as to whether failing metal strapson the exterior corner have deformed or been badly installed, the fact that the concretefoundation had plaster applied to it and the consequence of that,111 the location of theinseal (which was in fact used here), whether the windows show signs of wateringress,112 and the significance of the plaintiffs not relying on this building's h-mouldas an example of the inherent flaw.113San Vito[516] San Vito was built in 1997. It was demolished in 2018. The timing of eventshas limited the analysis opportunity –(a) Mr Wutzler first visited, as part of his survey of all the houses, in January2018;(b) Mr Wutzler, accompanied by Ms Johnson, returned on 18 October 2018 todo invasive or destructive testing, and a Helfen employee returned on23 October; and(c) the house was nominated as a sample property in November 2018 bywhich time it had been demolished.[517] I make no further comment on the sequence other than to observe its truncatednature, and the destruction of the house, means that, in my view, there has been limitedopportunity to properly analyse matters. Its value as a sample house is therebyreduced. The fact that greater deconstruction than normal was possible on 18 October,because the house was being demolished, does not affect the fact that it was a verytight timeframe allowing no opportunity, in reality, for reflection or further analysis.On all these houses it has to be recalled the defendant only knew the detailed claimsas to damage once Mr Wutzler's brief was received, and often did not have theknowledge or assurance the house was being relied upon for the litigation until afterthe initial defendant visit.111 The defendant's witnesses say it created a lip that acted as a reservoir to hold water in place at thebase.112 Described in the homeowners' closing as "more subtle" ingress than at other properties.113 The homeowners say the focus was elsewhere; the defendant notes that several cut-outs werenevertheless made along the h-mould but are not relied on.[518] I have commented already about the access dispute, and the differingperceptions of what happened and why. I set out, to further illustrate the matter, anextract from Ms Johnson's evidence on San Vito.114 As noted, I generally accept herrecollection of events, and also her assessment of them, reinforced as it was by otherwitnesses on several occasions:3 Mr Wutzler says he attended site visits at the property on 20 January,18 October and 23 October 2018. I was not invited to attend the initialsite visit. The schedule for the subsequent inspection changed severaltimes during September and October, however, a confirmed date wasestablished during mid-October and I attended the site visit on18 October when Mr Wutzler carried out destructive testing.4 I was advised by email that the plaintiffs' experts were intending toreturn to the site following the 18 October 2018 inspection to collectfurther cladding and timber samples. I was invited to observe thisremoval, but did not attend on 23 October.5 Mr Wutzler says that I was also advised that I could undertake afurther site visit to this area of destructive testing at any time. I do notrecall that open invitation but do know that, at the time he says theoffer was made and while attending site on 18 October 2018, I did notknow that this property would later be included as a sample propertyin these proceedings. By the time that I knew that it was beingnominated as a sample property (in late November 2018), the propertyhad been demolished.6 At the time of my visit the property was unoccupied, but the ownercame to site once or twice during the day and spoke with Mr Wutzler.Mr Wutzler explained to me that the owner was not in the best ofhealth and that he would not introduce me to him. This seemed a kindsuggestion.7 I was not aware that the property had been vacated for some timebefore the 18 October 2018 visit until I read this in Mr Wutzler'sSchedule 3. There was no power or water to the site and I hadassumed that this was because demolition was to occur in the verynear future, rather than because the house had been left unoccupiedover the winter. I note that from my inspection of the property I donot think that the condition of the interior of the house supportedMr Wutzler's comment that the condition of the house was "such thatthe house could not be occupied."[519] San Vito had a number of high-risk features, in particular parapets, no eavesand areas of flat butynol roofing. About 80 locations were inspected but only 18 arerelied on. Mr Wutzler says that does not mean the other 62 may not have been relevantor not had an issue; it is just that discretion was being exercised in the number of areas114 Footnotes omitted.detailed and relied on. The defendant suggests a different inference should be taken,namely that the features were working as they should, or that damage was due to acause other than an inherent defect.[520] The main damage is around the windows and at the base of sheet. It seems,however, the house was actually chosen because it used the polystyrene plant-ons andwas said to illustrate the issues with those. However, they do not otherwise feature inthe evidence.115[521] There was a significant division of views on the quality of the build at SanVito. Reviewing the material, the divergence is perhaps strongest in relation to thesignificance of agreed building non-compliance, rather than whether such non-compliance had happened. The defendant, as its evidence did on all the properties,emphasised departures from the JHTI and the relevant Code. The homeowners,primarily through Mr Wutzler, tended to minimise the significance of non-compliancein terms of its potential to impact on weathertightness.[522] Mr Wutzler's evidence on this particular property, particularly the cross-examination, reinforced for me a view that building standards at the time were oftennot good. Mr Wutzler tended to regard non-compliance as not significant because itwas common non-compliance. This is not, in my view, a correct approach. The HunnReport similarly notes the decline in building standards during this period, but thatReport does not diminish the significance of non-compliance to the leaky buildingcrisis. 116[523] San Vito was representative of a poor build and I reject the homeowners'contention to the contrary. There were revealed to be a litany of errors includingincorrect framing and bracing, misaligned framing, poor sheet layout, sheet joints withliterally no support at all under them, missing relief joints, incorrectly configuredh-mould, missing capillary gaps, poor ground clearance, and poor window detailing.115 Mr Wutzler's summary of issues in his original schedule relating to San Vito does not focus onthese as an issue (sch 3, at [18]–[19]). They are mentioned only briefly in his later summary ofissues at [120(c)].116 Hunn Report, above n 1, at 16 and 35.[524] The defendant suggests, and it can be put no higher than that, that the roof andparapets were a likely source of moisture. One dye test conducted by Mr Wutzlersupported this, but he described it as an anomaly.[525] There is no doubt that under the windows, wherever the framing was exposedprior to demolition, there was significant damage. As to cause, the parties disagree onthe significance of gaps that existed between the window sill and the plant-onunderneath it. I observe that where that gap was present it seemed an obviouscontributor, but more generally there is no doubt the construction of the windows hasled to much of the damage. That much is probably common ground. It is whether theissues are reflective of an inherent flaw or specific (but not necessarily uncommon)building flaws that is the real issue.[526] In my view, resolution on San Vito can only be found by reference back toone's view of the broader picture. Based on the preceding analysis of the science, andthe fact that there are numerous windows in this litigation that have not failed in thisway, I would side with the defendant's analysis of San Vito representing site-specificissues. I recognise this is ultimately circular, or perhaps a bootstrap-type argument,but that point was always going to be reached in the analysis. Determining cause afterthe event is not a certain science, and so recourse to fundamental perceptions isinevitable.[527] Here, Ms Johnson's evidence satisfies me water may have been coming fromelsewhere, and there was obvious bad workmanship around the windows. The baseof sheet locations do not raise new issues.Ambassador[528] This was an unsatisfactory sample property. It is a motel complex consistingof three buildings, only one of which was in issue. The particular building in issuewas built in 1996 and was already being reclad at the time of engagement with thelitigation. The relevant sequence is:(a) Mr Wutzler visited on 3 and 4 August 2018;(b) Ms Johnson was invited to visit on 26 and 27 February 2019 by whichtime recladding had started; and(c) In August 2019, so after the recladding was done, the building wasnominated as a sample property.[529] The plaintiffs appear to rely on Ambassador for problems around an h-mouldalong one wall and as an example of the inability of the system to handle moisture thatdoes get in. There are also examples of windows as a source of moisture ingress.[530] A notable feature is the significant departure of the as-built from the approvedplans. For example, the plan called for a specially designed h-mould; this was notdone. This is therefore another situation where reference can be made to the absenceof evidence from those involved.[531] Ms Johnson is of the view that the primary source of moisture ingress is thefailure of the waterproof membrane used on the balconies. As I understand it, thehomeowners do not disagree this was an issue but point to other damage which theysay cannot be related to this issue. However, there are again a litany of other buildingdefects, and particularly around the windows some failings which are very likely toallow moisture ingress. These include the absence of jamb and sill flashings incircumstances where the plans called for them, inadequate flashings, a lack of sealantand poor coating.[532] I consider it is relevant that there is a significant, and unexplained by theevidence, departure from the consented plans. I am aware from other evidence thatdepartures from the consent plans are not uncommon, although the expectation is thatthe departures will be properly recorded, noted to an Inspector, and ultimatelyapproved by an amended consent. The evidence does not disclose any of that havinghappened here.Carnelian[533] Carnelian was built in 2002, and the current owners purchased it in 2005. Ithad changed hands three times before then. Ms Johnson described access difficultiesthat were the subject of disputed evidence between her and Mr Wutzler. I preferredMs Johnson's recollection of events, while accepting Mr Wutzler may have believeda different message was being conveyed. The end result was limited access to anotherhouse where recladding had already started. The homeowners rely on it asdemonstrating base of sheet issues, and window/cladding junction issues.[534] The defendant raises building issues and non-compliance issues, noting alsothere is a mixture of claddings used. It is common ground that there is a movementissue, the cause of which has not been identified by the case evidence. Ms Johnsonconsiders there is more movement occurring than Mr Wutzler accepts, but both agreesomething is happening. There has also been significant moisture ingress from anincorrectly constructed deck and balustrade. If a formal conclusion is necessary, Iagain confirm I accept Ms Johnson's assessment that it is poorly built. Even ifMr Wutzler were correct that many of these building deficits are not uncommon, itwould not divert me from the label.Golf Road[535] Enough has perhaps been said about access but concerning this property thedefendant's experts were not able to visit it at all. Mr Wutzler made his usual visitsbut by the time Ms Johnson and Mr Longman travelled to Auckland to look at it, inNovember 2019, it had been sold and entry was declined.[536] It should not, in my view, have been used as a sample property and it is unclearto me how the Court could fairly place reliance on the analysis of only one party.The Esplanade[537] This house is relied on as disclosing the three standard defects; namely, baseof sheet, h-mould and window/cladding junctions. Of this property, the homeowners'closing submissions begin:117434. On cross examination Mr Wutzler was taken through a copy of a pre-sale report obtained by the owners in 2017 which referred to varioushigh risk features and poor detailing, with which Mr Wutzler mostly117 Footnotes omitted.concurred. The house was constructed some 24 years ago and shouldbe viewed in that context. Many features which are now recognisedto be high risk were not considered to be high risk at the time ofconstruction.435. This is supported by the comments in the pre-sale report whichcommented under a heading of "design detailing" that this was"standard practice for era of construction" and that "original detailingwill required upgrade".436. Mr Wutzler agreed in cross examination that many of the details,particular on the front elevation and the details relating to the upperstorey deck, were poor and it was also unclear if some of the unusualdetailing was original (including for example the termination of the h-mould in the middle of the front elevation). However, as Mr Wutzlerexplained in cross examination this was one reason why he confinedhis destructive testing to the rear part of the house.[538] The difficulty previously highlighted is again on display. Mr Wutzler hasconfined himself to the rear of the property, where he considers inherent flaws areevidenced, because the rest of the house is too badly built to be used. Ms Johnson andMr Sylvia query whether a qualified builder actually built the property. A letter is onthe Council file from a neighbour who is a builder, and who had priced the buildingjob for the owner on a labour-only basis. His quote was accepted but then theneighbour decided not to do the job. The circumstances caused him to write to theCouncil, noting:What worries me most is the owners scant knowledge of building practicesand scant regard to adhering to Council building requirements. He seems alaw unto himself who will not listen to advice I have declined the work because when discussing extra requirements for veryhigh wind area he again didn't want to know [539] It is of this property Ms Johnson observes the cladding is very poorly installedandI question whether its installation was undertaken by a qualified carpenter.[540] Care is obviously needed before much weight is placed on a letter of this typeon the Council file, but in the absence of any information about the construction, it islegitimate to consider it, especially when significant problems are acknowledged byexperts from both sides. Of the h-mould, Ms Johnson contends none of the JHTIrequirements have been complied with and it has been nailed through (not floating);the base of sheets are not coated, and the head flashings are wrongly installed. I alsonote, and accept, Mr Sylvia's evidence concerning the implications of the incorrectinstallation of the damp proof membrane.[541] I do not accept that a building of this quality can be used to provide proof ofthe inherent flaws. The need for the plaintiffs' expert to focus on only one part of thehouse is telling, and inevitably undermines the legitimate value that can be taken fromit. The little that is known of the history when that is considered in light of the analysisby Mr Sylvia and Ms Johnson, is significant.Portsmouth[542] The homeowners rely on this property for proof of the base of sheet flaw, asevidence of cracking and its effect, and for difficulties with the joinery/claddingjunctions. When Ms Johnson attended, along with Mr Longman and Mr Kennerley,they were denied the opportunity to do any destructive testing, or to go inside thehouse. It is somewhat surprising, therefore, that the plaintiffs' closing says thedefendant's competing analysis has not been investigated fully.[543] Of this particular property, while not resiling from my initial comments thatthere was no general pattern of deliberate non-disclosure, it was an occasion where Iwas troubled by the lack of disclosure by Mr Wutzler of his dealings with the owners.Mr Wutzler was also loose with his initial language in relation to the issue of whetherthe house had a Code of Compliance. His initial evidence was that a copy of it wasnot on the file provided to him, but in fact one has never been issued and at some pointMr Wutzler seems to have known that.[544] There is little to be gained in dwelling on another property concerning whichthere is limited in-service knowledge, where there are plain building issues, and wherethe property does not have a Code of Compliance. It is another poor vehicle throughwhich to demonstrate inherent flaws.Conclusions[545] At the risk of repetition, some general observations can be made.[546] Looking at all these houses, one can only be struck by the poor buildingpractices that they evidence. Recognition of these deficits does not reside solely inthe defendant. Mr Wutzler's evidence is replete with similar acknowledgments,although, as discussed, he would attribute less or little significance to them from aweathertightness viewpoint.[547] Reference can be made to the Hunn Report. It was an important historicaldocument in terms of the impetus for change it generated. It identified manycontributing causes to the leaky home crisis, and any reference to one of those causesmust come with a caveat that there were many, and no sectors of the industry wereseen as blameless. The following fairly captures the essence of the Report: 118The Overview Group believes there is potential for a major systemicbreakdown across the industry. While buildings have always leaked,traditional building methods have had a greater degree of redundancy in theirdesign – 'belt-and-braces' – and have coped by providing reasonableprotection and by dealing with water penetration when it occurs – even ifinadvertently. A confluence of factors has now made the systemic problemmanifest. In summary, these include:• Changes in responsibilities and relationships of designers and builders• Town planning criteria relating to plot ratio and yard distances thatinadvertently lead to particular building solutions or contribute to thechoice of building style• Lack of professional and trade skills and good judgements. There hasbeen widespread comment about an identifiable decline in the levels ofskills in most trades on site• Changes in on-site structures and responsibilities (sub-trades)• Imperatives of cost and speed (cutting corners)• Emphasis among product manufacturers on product rather than buildingsystem• Lack of effective supervision/inspection practices• Lack of detail, prescription, performance criteria, and guidance in theApproved Documents (both the Acceptable Solution and the VerificationMethod) regarding weathertightness compared to other aspects such asstructural integrity.• Lack of designer and constructor attention to achieving weathertightnessperformance compared to other aspects such as structural integrity[548] As can be seen just from the bullet points there is a potential value in theconclusions for both parties to this litigation. Concerning building trade practice, it isnoted:119118 Hunn Report, above n 1, at 16.119 At 35.At the trade level, the Overview Group became aware that there is a perceptionthroughout the industry that skill levels on site are declining. The evidencefor this is related not only to the weathertightness problem itself but moregenerally to workmanship practices and the on-site working environment.Reasons ascribed to this perceived decline include problems with theapprenticeship system, a lack of skilled workers, the predominance of labour-only contracts, the lack of regulation of standards, and of quality assuranceand accountability across the industry.and later:120In the comments made to us not only was concern expressed about anidentifiable decline in the levels of skills in various trades on site and thevariable application of trade skills and good judgements, but there were alsosome observations about changes in:• on-site structures and responsibilities (sub-trades)• responsibilities and relationships of designers and builders• the application of professional skills and good judgementsThe advent of labour-only contracts has changed the responsibilities of themain contractor and sub-trades. There is now a proliferation of sub-trades on-site from traditional carpenters and plumbers to specialist cladders and coatingapplicators, to labourers. Some product manufacturers are becoming morecareful about who they employ or allow to be employed to install theirproduct. Some companies offer relatively extensive education programmesbefore licensing approved installers or applicators. Some insist that onlyapplicators who have completed their specific courses successfully may installor apply their product, otherwise their product guarantees are invalid.However, on-site supervision of how one element of the building relates withanother sequentially or otherwise is apparently no longer seen as a paramountresponsibility of the main contractor, project manager or architect. Onespecialist sub-trade may work alongside another with little or no knowledgeof how their product operates (or does not operate) in relation to another.[549] The detailed analysis of the lead and sample houses has had on the Court theopposite effect from that sought by the homeowners. Rather than point to theinherently flawed nature of one of the materials used in construction, the analysis hasconfirmed that indeed there was a decline in building skills. If more evidence wereavailable it might provide an explanation, but on what is before the Court it has to bequeried why there were so many departures from good practice, and how suchdepartures passed inspection. Many of these departures disclosed a fundamental lackof understanding as well as flaws in implementation. That is exactly what the Hunn120 At 37.Report notes with specialists working beside each other with no understanding of therelationship of one to the other.121[550] It is also noticeable, at least on the evidence before the Court, how often it wasunclear what had happened during construction and why, including who had built theproperty, and why there were such immediate departures from consented plans.Cladding type was changed without acknowledgment, core features were omittedwithout comment. The consequence, from my viewpoint, is that it was not possible tosensibly isolate spots on houses and say, on any significant level, that they reflectedan inherent flaw. I accept the defendant's evidence that other explanations, almostalways at least as likely, exist. The industry context at the time lends weight to thatproposition. The homeowners' evidence did not establish that the houses wereexamples of the inherent flaws in action.BUILDABILITYIntroduction[551] This is not of itself a pleaded inherent flaw but brings together under one labelall or part of three alleged flaws –(a) defect seven, being the Harditex system did not contain sufficienttolerance for normal building conditions;(b) defect six, which is that the JHTI was defective in its content; and(c) defect eight, which is that the JHTI lacked detail it should have had.[552] The plaintiffs' pleading captures it best:122The Harditex Cladding System was a proprietary sheet cladding system,designed by James Hardie specifically for textured exterior finishes. JamesHardie was in a position to know and understand the most suitable method of121 It must be borne in mind that litigation like this deals with damaged houses. As the Hunn Reportsaid, houses could be and were being built properly. The importance of houses to New Zealanders,and the terrible impacts of a leaky house, understandably require attention and analysis, but it isimportant to recognise there were sound builders building sound properties.122 Cridge, third amended statement of claim, sch 1, at [21(e)–(f)].installing the cladding system it had designed and should therefore haveprovided clear and unambiguous instructions for the installation of theelements of the cladding system. In particular James Hardie should haveprovided clear instructions on the method of installation of common (and highrisk) elements such as face fixed joinery and corner detailing at the horizontalcontrol joint. A proprietary cladding system which lacks clear instructions foran installer is not fit for purpose.[553] In terms of buildability it will be helpful to first briefly address some researchon building defects that relates to the relevant period.[554] In December 2000 the Unitec Institute of Technology produced a report inwhich 287 pre-purchase reports were analysed for what they said about buildingdefects.123 The source of the inspection reports was the firm associated withMr O'Sullivan, a witness for the homeowners.[555] By way of background the report notes the growth in forms of cladding otherthan timber weatherboards that occurred in the 1990s. Taking stucco, fibre cementand EIFS124 together, in the 1970–1980 period they represented six to nine per cent ofnew builds. This figure rose to 38 per cent in the 1990s.125 Obviously the growth insuch materials was significant and rapid.[556] The Report found that, when looking at all identified building defects, fibrecement was less represented than other major materials.126 However, when the Reportcreated a subset of moisture-related defects, the percentages altered:127(a) stucco – 41 per cent;(b) fibre cement – 22 per cent; and(c) timber – 23 per cent.123 UNITEC Institute of Technology School of Architecture Auckland House Cladding Survey: AReport for the Building Industry Authority (Wellington, December 2000).124 Exterior Insulation and Finish Systems, being a system of plaster and paint over a polystyrenesubstrate.125. UNITEC Institute of Technology School of Architecture, above n 123, at 13.126 Fibre cement accounted for only 14.5 per cent of identified defects compared to timberweatherboards, which accounted for 40 per cent, and stucco, which accounted for 27 per cent.127 UNITEC Institute of Technology School of Architecture, above n 123, at 22.[557] For stucco and fibre cement, about a third of the total building defects inrelation to each had moisture implications. The percentage figure was lower forweatherboards.128[558] A second piece of research was one undertaken by MBIE entitled Data onResidential Weathertightness Failures. It represents an analysis of claims brought tothe Weathertight Homes Resolution Service. This was not officially published andwas made available as a draft under the Official Information Act.129 I do not recall itbeing relied upon by the parties, although in the material before the Court; however,some of its data is of background relevance.[559] As at mid-2014, 9912 dwellings had been the subject of claims.130 Of these,28 per cent were single dwellings, 30 per cent were apartment complexes, and42 per cent were other complexes.131 This latter group includes duplexes andcomplexes of stand-alone dwellings, both of which could involve dwellings relevantto the present litigation.[560] Of all the claims filed, 89 per cent of the dwellings had monolithic cladding.Of these, 45 per cent of claims concerned fibre cement, 28 per cent EIFS and20 per cent stucco. The building consent figures do not break down the cladding typebuild rates, but fibre cement is very likely to represent much more than half of thosethree types of houses. The 89 per cent figure speaks for itself in terms of where theleaky building crisis manifested itself.Difficulties in building – general evidence[561] I recognise there are some difficulties for the homeowners in leading evidenceof the problems in working with a product not now on the market for more than15 years. Further, those who did build Harditex houses are not likely to come forward128 At 22–24.129 Andrea Knox and Lisa Star Data on Residential Weathertightness Failures (MBIE, 16 February2015) (obtained under Official Information Act 1982 request to MBIE).130 Claims must be lodged within 10 years of build date. Obviously not all houses that are the subjectof leaks are the subject of claims so it cannot be suggested the figures necessarily reflect theproblem.131 Andrea Knox and Lisa Star, above n 129, at 3.and give evidence that they found they could not safely build with Harditex, but didso anyway.[562] A consequence of this is that the plaintiff witnesses who did give evidence ofthe difficulties did not themselves say they could not build a safe Harditex house.Rather, it was said that it was hard, and required care and skill. As a list of qualitiesneeded for a builder, care and skill would not strike most lay people as particularlyunexpected.[563] Mr Proffitt and Mr Peryer were important plaintiff witnesses on this topic ofbuildability. Mr Proffitt completed his apprenticeship in 1977 and then worked as acarpenter for about 13 years. Then for a similar time, for different entities, heperformed a role that could be described as project managing construction. This seemsto have covered all types of building, but many of them were larger scale enterprises.In 2003 Mr Proffitt entered into the building surveyor field, and then in 2010 addedremediation work to his portfolio.[564] In terms of Harditex, Mr Proffitt built one house with it. I infer he built itsuccessfully; he does not say otherwise. His primary contact with Harditex seems tohave been first as a project manager for a company that used Harditex as one of itscladding options, and then his work as building surveyor and remediation expert. Asproject manager, the scale of his engagement with Harditex emerged in oral evidenceas much greater than had been apparent from his written brief. Mr Proffitt spoke ofinvolvement in as many as 50 Harditex buildings, not all of which would have beendomestic dwellings. It seems he was a resource for site builders on how to do things,and also had the role of inspector, correcting building errors when he saw them.[565] Mr Proffitt's evidence-in-chief is a powerful statement for the homeowners asto the buildability of Harditex, or its lack thereof. Mr Proffitt gives his own lengthylist of problems with Harditex, a considerable few of which are not mirrored in thepleadings. Overall though the following best captures his evidence-in-chief:Prior to my work as a building surveyor and remediation specialist, I gainedsignificant experience building with Harditex, particularly in the late 1990'sand early 2000's while I was with Primesite. During this time, I learned that,despite our best efforts, we had more weathertightness failures related toHarditex cladding than any other cladding. Much of the detailing of theHarditex system was critical to the weathertightness of the building, howevergood detailing was difficult to achieve on an everyday basis in on-siteconditions while guidance on a number of critical details were completelyabsent, for example saddle flashings to parapets and balustrades, cladding toroof clearances and joinery flashings other than a head flashing. Other detailswere introduced via the manufacturers technical literature as problems becameapparent, though this always seemed to be done in an ad hoc fashion, with nomajor review of the information provided to the industry until the introductionof the Monotek product and a drained cavity cladding system in the early2000s.[566] It is fair to observe, however, that a quite different context emerged duringcross-examination. Mr Proffitt has a very bleak view of the skills of the buildingindustry at the relevant time. The following is not just picking up on a bad moment,but is fairly reflective of his evidence:Q. The essence of your position is that James Hardie needed to provide a setof training wheels for everyone, not only experienced people butunexperienced people, bad builders, everyone, it needed a manual foreveryone?A. Yes, or restrict who could put it up. And I think that last point is veryimportant, in my view at least.Q. So in terms of exactly who these poor builders are, so your evidence ispretty scathing. You say pretty bluntly that most of the profession wasn'tup to it, correct?A. Yes.Q. Not just a few bad eggs but most of it?A. Yes.Q. The vast majority?A. More than 50%.Q. And you say, in paragraph 40(d) of your reply brief.A. Can I just go back, that 50%, I mean I have no basis for arriving at that,just to Q. No, no, I understand, it's just an intuitive feel?A. Yes.[567] In that extract can be seen not only his assessment of building standards, butan explanation for much of Mr Proffitt's evidence. Given those standards, he believesmore should have been done to reduce the risk. The JHTI should have contained basicbuilding information including statements on fundamental topics such as thatpenetrations should always be sealed.[568] Other relevant evidence included that, in his experience as a project manager,head flashings could be brought onto a site ahead of windows to enable pre-installation; and if the JHTI lacked details, he believed the architect or designer shouldhave provided them for the builder. I also infer from his evidence that he believes theproduct is buildable by a competent builder, albeit it is not easy. However, becausethe product was generally available to be purchased by anyone, all those potentialbuilders should have been catered for in the JHTI.[569] Mr Proffitt was not asked by counsel or the Court to comment on what now inhindsight seems an obvious follow-up; if many of the builders were so bad, wouldmore information have been of assistance? Would it have even been read, and wouldthe builders have been able to follow it?[570] Finally, I observe Mr Proffitt confirmed that throughout the period a commonbuilding model was a project manager and labour-only builders. I observe of this thatlabour-only should not be equated with "not competent"; many no doubt were goodbuilders, but obviously many were not. Mr Proffitt's main concerns were with "specbuilders" who built a large quantity of these houses. Spec builders are peoplegenerally not in-trade as a builder but who undertake construction of a dwelling forthemselves, often with an intention of on-selling.[571] Mr Peryer owns a building firm which employs 30–40 builders, many of whomhave been with him a long time. He founded the business in 1989, so very much atthe time Harditex was introduced onto the market. However, his first experienceworking with Harditex was not until 2002, when building an administration block fora school.[572] Mr Peryer's brief, and his oral evidence, showed him to have a dim view ofHarditex as a product. This seemed to primarily relate to Harditex's alleged inabilityto deal with moisture. Mr Peryer's view was that it was a face-sealed system and thatwhen water got behind it, it attacked the timber.[573] There were difficulties with Mr Peryer's evidence. The basis for his evidencewas often unclear. For example, having stated his first contact with Harditex was ona school building in 2002, the brief talks of difficulties working with early versions ofthe JHTI. For example:There was no requirement to seal or prime the bottom edge or the back of theHarditex sheets. The 1996 details for the head flashing called for some sheetseal on the back of the sheet above the head flashings but not the 1998 details.It was difficult to keep up with the various changes to the JHTI. Any unsealedcladding would delaminate over time from moisture penetrating the edgesespecially around cut edges.[574] Mr Peryer did not actually have experience working with either the 1996 or1998 JHTI. Nor has he had to deal with changes, because the last JHTI was publishedfour years before his first engagement with Harditex. It never changed during MrPeryer's time working with the product. Mr Peryer was asked about this and advisedhe had downloaded the earlier JHTIs so as to be able to comment on them. He couldnot explain why he had done this, but confirmed that comments, for example, on thedifficulties of working with Harditex in the 1990s were just recounting what othershad told him. The unsatisfactory nature of this is clear, and the weight to be accordedwhat is largely unacknowledged hearsay evidence is accordingly significantlydiminished.[575] Some of the evidence in this case, including that from Mr Peryer andMr Holmes who is also connected with a large firm, makes plain that there are builderswho firmly believe Harditex was a bad product. However, in litigation it is necessaryto be clear about the basis for the belief, and allow it to be tested. Where testing hasbeen possible, on many occasions significant caveats such as the hearsay componentof Mr Peryer's evidence have emerged.[576] As another example, it was not apparent from his written evidence thatMr Peryer had built a Harditex house for himself. This emerged in cross-examinationand so accordingly there was no evidence about it.132 Should one infer, therefore, asthe defendant suggests, that Mr Peryer experienced no problems building his Harditexhouse, or since?132 My sense at the hearing was that plaintiffs' counsel was also unaware of this. I omitted to checkthis point.[577] I make these observations not as a criticism of Mr Peryer but to confront anunderlying theme that many in the industry think Harditex a poor product.133 It wouldbe wrong not to acknowledge it, but also not to respond in the way I have with a factnoted at the start of the judgment. This is litigation and a Court must act on admissiblereliable evidence.[578] Other witnesses who gave buildability evidence for the homeowners includedMr Wutzler, Mr Lalas, Mr Cuneen (who built the test frame), Mr Holmes, Mr Williamsand Mr Sutherland.[579] I have commented on Mr Wutzler's experience previously. In terms ofbuildability issues, although Mr Wutzler is experienced in the industry generally, hehas limited experience as a tradesman builder, and little experience in building withHarditex. Mr Sutherland is an experienced and respected architect. His evidence isprimarily directed at the JHTIs.[580] Mr Lalas is a facade engineer who provides evidence on most aspects of theplaintiffs' case. This includes a very long commentary on the contents of the JHTIs,and opinions on the Harditex system and on the alleged inherent flaws. I haveconcerns in relation to his evidence that require some development.[581] He is an experienced facade engineer. My assessment is that experience relatedprimarily to weathertightness, load capacity and general engineering soundness of thefacades of commercial buildings. In this he was appropriately an expert. I do not bythat suggest that an understanding of the underlying science and principles that mustaccompany such expertise cannot translate to knowledge about other buildingenvelopes. But his is very much an expertise in commercial or large building facades.[582] More generally, Mr Lalas was not an expert witness on whom reliance shouldbe placed. There were too many aspects where his evidence was based on errors, andon careless misreadings of material; much of his evidence (which in total was more133 I am conscious in this regard of some internal James Hardie documents that register concern thatHarditex has become equated with, and is used to describe, all fibre-cement products. It was,however, the predominant one in the market, although that market share diminished from the late1990s.than 400 pages) was outside his expertise; there was incorrect use of publications, andhe made allegations of impropriety about witnesses for the other side that wereunfounded and can only be explained by the lack of objectivity that permeated hisevidence.[583] To take the latter first, as has been discussed, RDH built the James Hardiemodel wall and conducted various tests. The outcomes of those tests were that,consistent with the evidence of Drs Straube and Lstiburek, the system drained. As partof his criticisms of the RDH work, Mr Lalas made and adhered to what I can onlydescribe as the extraordinary proposition that RDH had deliberately built in a non-disclosed batten to in effect create a cavity. There was simply no basis for thisproposition and it indicated, as did other aspects of his evidence, a lack ofunderstanding of the role of an expert.[584] This was not the first occasion where Mr Lalas had done this. In his originalevidence he accused RDH of misusing the results of a third party research report inorder to achieve the most favourable results. This allegation was withdrawn at thebeginning of his oral evidence because Mr Lalas realised it was in fact he who wasmisreading the research. It is of course one thing to interpret a publication differentto other witnesses. It is quite another, without any basis, to allege improper motivesin the other party's claimed misreading. This is another example of a lack of balanceand objectivity that was a concern. These concerns were apparent throughout theevidence.134[585] The matter on which I have just commented, the misreading of the researchpaper, was one of numerous examples where Mr Lalas misread or misunderstood thematerial he was critiquing. The nature and number of the errors diminished theconfidence a Court could have in him as an expert witness.134 Aligned with this, Mr Lalas, who had a consultancy as a facade engineer until 2010, advised theCourt that since then his main work had been on this type of litigation. He still did some facadeconsultancy. As I understand it, much of the recent work involved James Hardie although exactlyhow much is not clear. Further, I acknowledge some of the buildings, such as large apartmentbuildings, would be much more within his expertise. There is a concern when an expert has largelyengaged in this type of work for the past 10 years. It is not of itself a matter on which I wouldnecessarily place weight, but it does gain some greater relevancy given my assessment of aprevalent lack of objectivity.[586] Another matter on which Mr Lalas gave evidence was the issue of whetherJames Hardie should have undertaken a SIROWET test as part of its productdevelopment. SIROWET is the predecessor to the 4284 test used by FTNZ whentesting the Helfen model wall. Although undoubtedly a topic within his expertise, Iconsider Mr Lalas' approach to the matter again reflected an inappropriatecommitment to his side of the case. One of the issues around this test is whether itwas designed for residential houses, or just commercial buildings. I accept opinionsmight differ, but to me it is clear that all the written text suggests the latter is true. Togive but one example, the current version of the relevant New Zealand externalmoisture standard observes of this test:135The weathertightness test of AS/NZS 4284 is modified for generic domestic-oriented cladding because it was developed primarily for testing specific, non-absorptive facades and curtain wall systems on high-rise commercialbuildings.[587] Mr Lalas was not willing to accept that comment reflected the clear tone of thewritings. Eventually he may have done so, but his rigidity was not a helpful approach.Generally his evidence reflected an inflexibility inappropriate for an expert witness.Mr Lalas' thesis on the use of the test was that there was general industry awarenessof its availability and suitability. In support he referred to two documents. One was adraft BRANZ letter from 1998 (more than 10 years after Harditex's release to themarket). The draft letter does suggest the authors (BRANZ employees) were alert tothe possibility. I accept therefore it provided support for his thesis but its obviouslimits (its age and that it was a draft) were not acknowledged.[588] Mr Lalas also referred the Court to what he termed a publication, informingthe industry of the applicability of SIROWET to residential buildings. However, thiswas incorrect. It was not a publication, but seemingly a paper presented to aconference. Mr Lalas could not identify where or when it was presented, nor tell theCourt how it could be obtained. Mr Lalas was also significantly in error as to the dateof the paper. This aspect of his evidence should not be overstated; standing alone itwould only go to the particular point and would not cause me to have doubts about theoverall probative value of the evidence. But it again involved misstatement (as to its135 Ministry of Business, Innovation and Employment, above n 20, at 21.availability) and carelessness (as to the date of the paper which was very significantto its relevance).[589] Another factor in my assessment of a lack of probative value of Mr Lalas'evidence is that much of the evidence falls outside the scope of his expertise. Mr Lalaspurports to offer a commentary on the JHTIs and their adequacy. He has no orinsufficient experience in residential construction to allow him to do this. His lack ofknowledge of building science and technique was exposed on numerous occasions incross-examination. Mr Lalas does not accept this lack of expertise but I consider it isirrefutable, and for that reason alone would set aside the bulk of his evidence. I needto stress this is not just a paper critique, matching his experience and qualifications tothe content of his evidence. In my view, it was apparent from his oral evidence onmany aspects concerning residential construction that Mr Lalas was not qualified tobe giving evidence on these things as an expert. He appeared often to not understandthe issue he was giving evidence about. For all these reasons I have given his evidencelittle weight.[590] Mr Williams works for Mr Peryer, and has done so since 2003. Prior to thathe worked at a large building supplier, where his responsibilities included pricing fromplans, then as a representative on the road and then running a manufacturing plant. Hejoined Mr Peryer's firm as a contract manager. His experience is with "the supply ofbuilding products and with management of building projects". He can accordinglyspeak on his experience with how Harditex was sold and his relationships with andknowledge of James Hardie representatives and their approach. Mr Williams says hisfirst experience with Harditex was in 2000 when the firm was recladding a schoolblock. Following that he supervised the construction of several Harditex cladproperties, including one where 300–400m2 of Harditex was installed.[591] The balance of Mr Williams' evidence was somewhat unusual in that it closelymirrored, with a significant portion of identical text, the evidence of Mr Peryer. Itbecame clear they had collaborated on their evidence. This was a somewhat unusualapproach. The collaboration related as much to the opinion evidence as the underlyingfactual basis. It is of course permissible and not wholly uncommon for a second expertto confirm they agree with the first. It can add independent weight to an opinion.Usually, however, I suggest the approach would and should be to indicate when thatis happening, rather than to produce apparently independent briefs which in fact havemuch common jointly prepared content.[592] Mr Williams joined Mr Peryer's firm not as a builder, and does not have anyexperience in that capacity. He has not physically himself installed Harditex, andgenerally has not worked on the tools. I accept his factual evidence as to what he hasseen, and that he holds similar views to Mr Peryer. They are not, however, viewsbased on relevant knowledge or experience. In saying this I do not discountmanagement experience – something relevant to Mr Peryer, Mr Holmes andMr Proffitt. But those other witnesses had a background as a builder before turning tomanagement. I did not find Mr Williams' evidence of assistance, and do not considerhim qualified to comment on buildability.[593] Mr Holmes runs a substantial construction company. He first assisted hisfather in his company, Holmes Construction, when he was a child and started work inthe building industry at the age of 17. He spent seven years learning the trade beforeleaving for a while but then returning as a project manager for Fletcher Construction.Those seven years are his "on the tools" experience. As a project manager Mr Holmesis plainly skilled and very experienced. His evidence is that the experience has taughthim the importance of using quality people not only as site managers and forepersons,but in the sub-trades. Mr Holmes returned to Holmes Construction in 1986.[594] Mr Holmes advises the nature of his business changed from 1991, as it"stopped being traditional builders" and moved more to project managing, and sitemanagers. Mr Holmes developed a practice of having specialist suppliers such asJames Hardie attending building sites to confirm products were being used properly.This reflects Mr Holmes' general view that from the 1990s the range of differentproducts that emerged required different detailing than the products that had been thefocus in polytechnic courses, and also were different from the inherent knowledgebuilt up in the industry in relation to more traditional products.[595] Mr Holmes details his experience, and by that he means the firm's, in dealingwith Harditex:(a) The first development was Courtenay Apartments. James Hardie was notinvolved. After nine years, three decks needed re-laying due to a failureof the membranes. This work caused other inspections, and water ingresswas found on one level. The problem was identified as being with thewindow/cladding junction. These were fixed. The building is 22 yearsold. Mr Holmes describes the texture coating used as "the saviour of thebuilding" which I apprehend is, to the extent known, in good condition;(b) The next development was Palm Grove Apartments. Mr Holmes says asfar as he was concerned there were no issues during installation.(c) The next large development was Stadium Gardens. Mr Holmes says thatJames Hardie representatives were often on site.[596] For non-Wellington readers of this judgment, it is appropriate to note the lastproject was not successful in that the building suffered significant moisture damageissues which were the subject of high-profile litigation. The proceeding, more typicalof its type in that it involved a large number of defendants, settled.[597] Mr Holmes adds that the company has used Harditex on a number of smallerresidential apartments and on a newer apartment block, Kate Sheppard. That buildingis undergoing work due to earthquake damage. Mr Holmes notes that in his opinionthe performance of the cladding has improved due to the requirement for a cavity, "airsealing at the property" and treated timber.[598] Of Harditex and its use, Mr Holmes observed:68. We understood that BRANZ had tested Harditex with various coatingsystems and that they had provided appraisal certificates for theproduct. We assumed that the tests carried out by BRANZ wererobust, but later found out that the tests carried out only tested thedurability of the coatings and that no water tests were conducted onany junctions or control joints, or the system as a whole. We alsoassumed that James Hardie had tested the product to ensure that itwould perform.69. However, I did see a construction risk around how the product washandled and installed. To be fair that risk was recognised as much byPaul Meo and Brent Pitkethley as me, and I totally agreed with theirapproach. The Harditex specification was not written in overlytechnical terms, but it was a system that not just anyone could put up.We would not just want unskilled labour or hammer hands to put itup. They would need to be properly supervised and trained, in orderto pay attention to details such as the fixing spacings, framingsubstrate and back seals, which needed to be done properly and in theright order.70. The specificity of the details around the placement and constructionof the expansion and control joints, the sheet layout, nailing centres,placement of inseal tape and head flashing details meant that carefulattention was required when installing the product. Harditex couldonly have been installed properly by competent people, if these detailswere to be adhered to.71. The tolerances of 1-2mm required in the JHTI are virtually impossibleto achieve on any project which uses concrete slabs and timber framedstructures. By contrast, the accepted tolerance for concrete use is±3mm over a length of 3m.[599] Although not having been involved in the original construction of any single-level buildings, Mr Holmes says recladding work the firm is doing suggests to himthat the concerns he has with Harditex on large buildings exist with the smaller homeas well.[600] Mr Holmes filed a reply brief which picked up on various topics. Respondingto suggestions of the desirability of a different sequencing approach to head flashingthan that initially advanced by him, Mr Holmes agreed that the suggestion of thedefendant experts was technically correct but difficult to achieve. Amongst otherthings he notes, as witnesses such as Mr Wutzler do, that flashings usually arrive withthe windows. By contrast, and perhaps illustrating the reality of different approachesand experiences, Mr Proffitt, who was doing this work through the 1990s, said that hisfirm always had the flashings custom built specifically with a 75 mm upstand (asrequired by JHTI), and generally could get them delivered when wanted.[601] Relevant to the issues in this case, and bearing in mind the litigation's focus ison residential properties, Mr Holmes' response on the proposition that Harditex as acladding was just an incremental development, was:I agree that sheet products have been used for years. The difference withHarditex was that it was introduced as a product that was suitable for complexmulti-level houses and commercial buildings and it was textured to have amonolithic appearance. The impression given and stated was the combinationof Harditex sheets and an approved texture coating was sufficient to providea weathertight home. Prior to the introduction of Harditex, sheet productswere used largely on single level houses with soffit overhangs. The jointswere usually covered with a weather grooved batten.[602] The evidence does not, in my view, suggest that different building issuesemerged with Harditex over and above previously available cladding sheets. The otherhesitation I have with Mr Holmes' evidence was that it was not always clear thatMr Holmes had focused on the difference, for JHTI purposes, between the multi-storey complexes concerning which his building projects136 have involved, and thetarget of the JHTI which is a residential timber frame dwelling of not more than twostoreys. Some of his criticisms of the JHTI appeared to ignore this limitation.[603] On behalf of James Hardie, evidence was called from Messrs Longman, Sylvia,Donnan and Kennerley. Comments were made by others such as Ms Johnson who isfamiliar in the industry in the same way but no more than Mr Wutzler, from anexperienced architect, Mr Pynenburg, and from Mr Knox who is a senior research anddevelopment manager. With some of these witnesses, and meaning no disrespect, theirevidence can be paired against equivalent evidence from the homeowners. Forexample, Mr Wutzler and Ms Johnson have similar backgrounds, and the same can besaid – at a broad level – of Mr Proffitt and Mr Longman, and of Mr Sutherland andMr Pynenburg. It is not easy to discern, however, in the homeowners' case evidencecomparable to the defendant's builder witnesses Messrs Sylvia, Donnan andKennerley. I start with these latter three.[604] Mr Donnan has an architectural design business but also 20 years' experiencein residential carpentry. His recollection is he has built about 16 Harditex-clad homes.Ten were in the same complex, and six subsequently were for a prominent buildingcompany. This work occurred in the late 1990s and early 2000s. After 2010 he tookup a role with the Earthquake Commission assessing damaged properties.[605] Mr Donnan comments generally on the building industry and the skillsrequired for a builder. It was his experience in the 1990s and 2000s there was a mixtureof good builders, and builders with inadequate skills. The latter needed more136 I am not referring here to recladding and remediation work.supervision than they often received. Documentation had a lot less detail, and morewas expected of builders. It was not uncommon for plans just to instruct a builder tobuild in accordance with NZS 3604 and with manufacturer's specifications.Mr Donnan says he personally used the JHTIs. He does not today recall the detail butnor does he recall struggling with them. He believes they were comparable to thetechnical literature of other producers.[606] Concerning cladding, Mr Donnan has worked with Harditex, weatherboards(both bevel back and rusticated), linea weatherboards, stucco, and brick veneer. Hehas done a small amount of work with EIFS.[607] Of Harditex, he found it not materially more complex than other products, butit required precision, albeit not in his view a precision beyond a competent builder.He considered particular accuracy was needed with the base of sheet to ensure avisually straight edge, and with the notching for the head flashing because thatremained visible after coating. As an example of comparable difficulty with, say,weatherboards, Mr Donnan notes that splay joints require a high level of precisionbecause they will be visible. In the 1990s pre-cut scribers were not available so hadto be cut on site. His opinion is that each cladding has areas of difficulty and areasrequiring precision.[608] Other features recalled by Mr Donnan were the weight of a Harditex sheet andthe h-mould. The weight was something also referred to by Mr Holmes and it seemsclear it is a feature best solved by using two people.137 The h-mould was made moredifficult to install by being made of PVC rather than a more rigid metal but otherwisewas not unduly difficult. Finally he agrees, as do all witnesses, that allowing 35 mmtimber studs was poor in that it made fixing sheets more difficult. It could, in his view,be done, but the tolerances in a 45 mm stud were much to be preferred.[609] In cross-examination Mr Donnan confirmed his periods working on Harditexwere with other builders so he has not himself built all components of a Harditex137 As another example of different approaches and recollections, Mr Proffitt saw the advantage ofHarditex as being the speed with which it could be installed. He considered this one of the riskfactors as people then took less time and care.house. He had not, for example, built a two-storey Harditex house, so has notconstructed an h-mould. This was another example of overstated or inaccurate originalevidence as noted to have occurred with some of the homeowners' witnesses.[610] Mr Sylvia is a qualified carpenter who has been in the industry since 1995. Inhis original evidence he described himself as experienced in working with sheetcladding, but as only having worked with Harditex on a few occasions. He has20 years' experience in residential and commercial construction, has built new homes,but the majority of his career has been with older villas and bungalows. Mr Sylviagave evidence on various topics, but this section focuses on his evidence in relation tobuildability.[611] Mr Sylvia details on his experience with various cladding sheets includingHarditex, Titanboard, HardieBacker, Shadowclad and profiled metal cladding. In hisopinion the first few products all involve specific framing set-outs, and carefuldetailing in many locations including at the base of sheet and windows.[612] Setting out the propositions to which Mr Sylvia thought he was respondingprovides a convenient context for his evidence:138Mr Proffitt explains that Harditex had details that were very difficult to detailon site or had to be produced on the fly by the builder. He states that thedetails included in the JHTI were significantly more difficult to achieve, orless tolerant of poor workmanship or design detailing than the details providedby other cladding systems on the market. Mr Holmes states Harditex was sodifferent to anything he had built with previously and very different from anyother traditional building methods, although he accepts that he did not haveany background in installing sheet style products. I assume that the plaintiffs'experts are saying this to explain why so many workmanship defects exist atthe test properties.[613] In Mr Sylvia's opinion these concerns, which I agree are reasonablysummarised by him, are overstated. His essential thesis is Harditex is a sheet claddingand therefore involves many of the same issues as other sheets. The flush jointing wasa new feature but otherwise it was similar to other sheet claddings that had been aroundand continued to be.138 Footnotes omitted.[614] Mr Sylvia agrees that some cladding systems such as bevel back weatherboardsand brick veneer are more tolerant of workmanship error, but notes they are far fromimmune to it. In his earthquake assessment work he came across many examples ofhouses clad in those materials suffering from substantial water damage. Other thanthese, Mr Sylvia's opinion is the other systems are equally vulnerable to poorworkmanship, and he lists as examples vertical shiplap, stucco, rusticatedweatherboard, board and batten, and Shadowclad.[615] Concerning specific details of the Harditex system, Mr Sylvia gives examplesof similar requirements in other systems. On h-moulds, for example, he regards it asboth relatively simple, and similar to the Z flashing for plywood sheets at the inter-storey join.139 The vertical movement joints are little different from express joints inother cladding systems and the base of sheet detail is the same (other than the need foran inseal strip). Mr Sylvia notes, as the judgment earlier has, that matters such as acapillary gap are an integral part of NZS 3604, regardless of the cladding type. Finally,he observes that in his opinion the head flashings requirements are the same as for anysheet.140[616] A focus of cross-examination was with the extent of Mr Sylvia's actualexperience with Harditex. It emerges it was limited to three houses and he wasinvolved in aspects of building them relatively early in his carpentry/building career.However, concerning his opinion that cladding sheets present similar issues whateverthe particular cladding, my assessment was that Mr Sylvia's opinion withstoodchallenge. He generally was a witness who impressed me.[617] Mr Kennerley is a builder who started as an apprentice in 1987. He has workedin the construction industry in England, Canada and New Zealand. He has been a self-employed carpenter in New Zealand since 1993, as a sole trader and then owner of aconstruction business.139 In a report written for James Hardie on a project known as Clemmows, Mr O'Sullivan alsodescribed the h-mould as a simple construction.140 Picking up on an earlier comment in the judgment, I obviously was aware of the evidence whenearlier observing that the evidence had not convinced me anything had changed as regardspenetrations: see above at [335]–[336].[618] Mr Kennerley has had a lot of experience with fibre cement, includingHarditex, primarily in the context of alterations and renovations. Earlier in his careerhe worked on new builds, including Harditex townhouses in Wellington. As withMr Sylvia, he has worked with other James Hardie sheets such as Titanboard,Monotek, Villaboard and Hardiflex.[619] Mr Kennerley says he has found Harditex no more difficult to work with thanany other sheet cladding. He considers that it was a buildable product if the technicalliterature and good building practice were followed. In his renovation work he has notcome upon Harditex that had lost strength. Where moisture issues are present, hisexperience is that building errors can be seen.141[620] Pressed in cross-examination for detail, Mr Kennerley estimated as anapprentice he worked on around 10–12 Harditex houses. This was in the early daysof Harditex. Later, all in the context of renovation, he worked on another six to sevenhouses. As with Mr Sylvia, Mr Kennerley was a sound witness who, in my view,displayed a comfortable familiarity with "on the tools" building craft. It is clear heboth followed details but also adapted them as he thought best.142 Mr Kennerley wasa regular user of inseal at the base of sheet and described different methods ofinstalling windows and head flashings. His preferred style was to put the window andhead flashing in before fitting sheets from either side which met above the window.However, the method depended on the location.[621] As will be clear, I found the general evidence on buildability proffered by thedefendant to be more convincing, and comfortably so.Difficulties in building – evidence about specific areas and coating issues[622] In this section I consider further the topics of incorrect details, omitted details,the incompatibility of the JHTI requirements with normal New Zealand buildingconditions and, briefly and on the Court's initiative, coatings.141 Mr Kennerley was the builder assisting Ms Johnson at several sites. His other evidence covers hisobservations from those occasions.142 An example was altering the sizes of the inseal and also using sealant. He also sealed the bottomback of sheets.[623] Evidence was led concerning the alleged incorrectness or unworkability ofnumerous details:(a) windows – installing head flashings including sequence, safe notching,proper lapping of building paper, inseal, jambs and sills;(b) sheet layout – including the adequacy of the permitted for a while smaller35 mm stud;(c) base of sheet – including the capillary gap, the need for inseal and thedifficulties of coating;(d) control joints, both horizontal and vertical; and(e) corners – including external and internal, and ending or joiningh-moulds.[624] There was very little direct evidence from builders that the details did not workor could not be made to work. The builders called by the defendants said they worked.The plaintiffs' witnesses who gave contrary evidence either had not themselves soughtto work with the JHTI on a project or in some cases had built a Harditex home forthemselves and did not give evidence about experiencing problems. Some witnesseswho had supervised the work of others gave evidence of those builders experiencingdifficulty and I accept that is undoubtedly so, in the sense that some of the tasks weredifficult.[625] The judgment will neither set out the arguments concerning specific details,nor seek to resolve them. However, comment can be made of some of the major ones.[626] The evidence satisfied me the best sequence is to install a head flashing beforeputting the sheets up. This requires the flashing to be on site before the window (orfor the windows to be there earlier than normal.) The evidence equally satisfied methis could be done, and without much difficulty if there was planning and they wereordered. But I accept many would not have done this and so would have resorted tomore difficult installation methods which carried risks such as disturbing the buildingpaper.[627] I accept Mr Wutzler comments on the difficulty of forming the corners,although moisture issues seemed much less prevalent with corners than windows. Italso appears that for a period there was a mismatch between the prescribed accessoryfor forming the corner, and its availability. I also observe that corners occur on allbuildings, and there was nothing particularly unusual in this regard with a Harditexsheet.[628] Difficulties with some other details were overstated or not established. Insealwas an example of both. I was not satisfied on the evidence that meeting thisrequirement was difficult, although I accept Mr Wutzler's evidence it was oftenignored.[629] I reached a similar conclusion about the h-mould and the capillary gap.Concerning the h-mould, there was little evidence that it was difficult to construct inaccordance with the JHTI. Indeed, the primary focus of the homeowners was not thatit was hard to build but that it did not work. I also consider Mr Wutzler overstated thesealing difficulties in relation to the h-mould. Builders such as Mr Sylvia seemed littletroubled by the need both to apply sealant and to do so adequately. I accept thesubsequent joins would not last from a waterproofing viewpoint if they were then leftas exposed sealant joints, but that was not what was to happen. They would be coated.[630] I have commented on the capillary gap. Its treatment in the JHTI wasinconsistent and poor, and for the first 10 years conflicted with the standard set out inNZS 3604. NZS 3604, which was easier to comply with, should have been recognisedas prevailing. Strict compliance with the JHTI would increase the risks because thegap would be narrower.[631] Beyond these general comments, there is no value to the judgment or theparties in dwelling on the specifics. My conclusion on the buildability topic willreflect a preference for the building evidence of the defendant's witnesses. That doesnot mean, of course, they will be correct on everything. I also note that while therewas criticism of the adequacy or difficulty of many details, there was very littleevidence provided by the plaintiffs of alternative or better details that should have beenused.[632] Concerning omitted details, the answer to the dispute depends on the targetaudience. The omissions identified by the plaintiffs largely concern features that arenot new to Harditex but were common to sheet cladding. In some cases they weredetails that were basic to good building. This topic is addressed under the Negligencepart.143[633] This other aspect of the homeowners' case is the proposition that what wasrequired to build a sound Harditex house was impractical given normal New Zealandbuilding conditions. This is the sixth inherent flaw pleaded in the Cridge proceedingas:The Harditex JHTI up to and including the Harditex July 1991 TechnicalInformation failed to specify a method of installation of the Harditex claddingsystem which makes adequate allowance and tolerances for the typicalconditions that exist on a building site including climatic conditions, the skilland precision of a reasonable cladding installer and the tolerances to whichbuildings are constructed.[634] In closing submissions the proposition is put this way:144602. A cladding system should be designed so that it can be used andinstalled in real world building conditions. The plaintiffs' evidenceestablishes that Harditex was not able to be used and installed in realworld building conditions, and did not have appropriate buildingtolerances built in such that it could tolerate any level of occasionalpoor workmanship or minor deviations from the JHTI.603. It cannot be right that only when perfection is achieved that a systemlike this for general widespread use will perform. People andmaterials are not perfect and system design must recognise this.604. In addition, the JHTI generally requires a high level of millimetreperfect precision, and in many cases provides absolute values ratherthan a range in which the detail could be achieved. For example,providing for the Inseal to be placed 5mm above the base of the sheet.These absolute values are relied on by the defendants when assessingwhether a detail has been constructed in compliance with the JHTI,143 At [690].144 Footnotes omitted.without any consideration of whether the detail can be complied withconsistently.[635] This reflects paragraphs from Mr Proffitt's written brief:64. A cladding system should be designed so that it can be built and usedin real world conditions. Based on the details that are included theJHTI and my experience in supervising the installation of Harditex ona number of properties, it was very difficult for Harditex to beappropriately used in real world conditions. Many builders struggledto comply with the details included in the JHTI, in particular thoseoutlined above.66. The details included in the JHTI were significantly more difficult toachieve, or less tolerant of poor workmanship or design detailing thanthe details provided by other cladding systems on the market. Theobvious system that is more fault tolerant is weatherboard cladding,especially bevel-backed weatherboard.[636] Beyond these statements it is difficult to discern what James Hardie was meantto have done and did not do. It may be that these are in effect a general statement thatHarditex is not a suitable product and system but otherwise the specific evidence abouttheir significance is elusive.[637] Reviewing Mr Wutzler's primary evidence, there are references to the weather,and the implications if timber framing and cladding sheets get wet. He also refers ina similar context to problems if the concrete slab and particle board flooring get wet.These are all undoubtedly issues if the product gets wet, but they are also situationsgoverned by NZS 3604, the JHTI, and good building practice. There are rules as tomoisture content. It may be that compliance was difficult at times because of theweather, the reality of exposed building sites, and the manner and timing of thedelivery of products. What has not been made clear is what James Hardie was meantto do in this regard and did not.[638] A second topic of alleged impracticability were some of the measurementrequirements in the JHTI, with the prominent ones being the 2–3 mm capillary gap,the 35 mm stud which meant achieving nailing requirements was difficult, and thesheet gap of 6 mm above the h-mould. I agree the first two were difficult. I havecommented previously on the capillary gap, and a 35 mm stud made the nailing taskmuch harder than it was with the subsequently required 45 mm stud. I am lessconvinced by the third matter. There was no evidence to say it was easier to positiona sheet, say, 10 mm above the h-mould than the required 6 mm.[639] Of these measurement points, two comments can be made. The JHTI, as didNZS 3604, allowed identified tolerances, and there is little evidence that not meetingthose JHTI standards caused damage. A wider capillary gap would be a good thing;and a larger gap between sheet and h-mould has not been identified as an issue. Itwould shorten the height of the upstand of the h-mould, and so therefore increase (asthe homeowners would have it) the risk of water being blown over, but otherwise itseems of little moment. I accept the 35 mm stud made it more likely some sheets werenot nailed as tightly as they should be.[640] A final topic requiring some comment is the issue of the texture coating. Thecase is notable for no direct evidence from a texture coater. I accept that many of thewitnesses would, in the context of their work, speak to coaters and develop knowledgeof the systems,145 but it is nevertheless a feature that there is no direct evidence froma texture coater saying what the issues were. The closest to such an expert wasMr Moginie who was a technical director for a coating manufacturer, Fosroc. Hisevidence was that his company had little difficulty with Harditex.[641] The importance of texture coating to the "Harditex system" is plain. The sheetsneed to be sealed and coated in all places where they are exposed to the elements.There are inherent risks in the system. An example is that unless first sealed by thebuilder, some aspects of the sheet will inevitably be covered over by a board withouthaving any prior treatment. If a defect then occurs in that area, the untreated raw partof the absorbent sheet is vulnerable. As the science analysis showed, it would stillrequire a considerable period of water exposure to be troublesome to the board but145 That said, when inquiry was made of witnesses, the basis on which they commented on coatingdifficulties was unclear. The day-to-day work of many witnesses would not obviously bring theminto contact with coaters. Surveyors, for example, and those doing pre-purchase inspection reportsor engaging in remediation work all came along after the build, often by many years. I accept thata repair and remediation process could involve contact with coaters, but otherwise consider thoseinvolved in actual building in the relevant period were most likely in the best position to recountwhat is in this case all second-hand evidence.there are examples in the case where damage has happened to an uncoated portion ofsheet.[642] The evidence suggests James Hardie was uncertain as to what approach to taketo texture coating. It was consistent in noting in its JHTI that the coating applicatorwas a third party and that their work was not warranted by James Hardie. However,internally there was awareness of the importance of the coating to the durability of theboard, and the potential for at least reputational damage when there were failures.James Hardie tested coating products for sufficient flexibility, but that was the limit ofits testing.[643] James Hardie oscillated between merely recommending applicators andauthorising them. At times approved applicators were named; at other times userswere urged to contact James Hardie for details of systems that should be used. At thesame time, James Hardie encouraged and assisted applicators to seek BRANZapproval of their product for use with Harditex. Several did this over the years, andappraisals were issued.[644] In the absence of direct evidence, and it not being a pleaded defect, it is notnecessary to address the topic further.Assessment on buildability[645] If the necessary assessment is whether the plaintiffs have proved Harditex wastoo hard a product to build with, the answer can only be no, and by a margin so. Theirwitnesses lacked direct experience in building with Harditex on residential houses.That is not to say some are not experienced and respected in the industry, but fromtheir evidence I took a message of poor building standards rather than a product thatcould not be built with. By contrast, the defendant's witnesses established that acompetent builder could build a sound Harditex house. Indeed, I do not takeMr Proffitt, for example, to disagree with this.[646] The greater familiarity with working with Harditex lay with the defendant'switnesses, and particularly Mr Donnan146 and Mr Kennerley. It would, however, betoo narrow to focus just on Harditex. Experience with sheet cladding is ofconsiderable relevance. For the homeowners I consider the greatest exposure tobuilding with Harditex lay with Mr Holmes, who was also a witness who was verygood in his field. However, his field, for the time period in question, was very muchlarge-scale Harditex construction, and so not as directly relevant to the case as someothers.[647] The second conclusion I reach is that the evidence does not establish Harditex,as a building product, was much of a change from existing sheet products. There aresome caveats to that. First, everyone agrees the joins were different. That was inreality its innovation. Second, it is probably the case, as best I can infer from theevidence and reading the supporting information, articles and other material, that therewas less experience generally in the building sector with sheet cladding than there waswith timber weatherboards and brick. So, as sheet cladding became more popular, sothere was a decline in the percentage of builders familiar with the cladding they wereworking with.147[648] Third, and here the actual evidence is less clear so the Court's inference hasmore of a speculative nature, the increase in the use of sheet cladding seems to havecoincided with a change in the trade model of how houses were built.148 There aretwo parts to this. First, there was greater use of a model of foreperson and labour-onlybuilders. This model was more vulnerable since it places a premium on the quality ofsupervision. Here one can recall also the Hunn Report observation of how buildingsites became fragmented with at times a loss of overall oversight and responsibility.149The second aspect is that there seems to have been an increase in do-it-yourselfprojects and spec-built houses.146 Mr Donnan's experience was not as extensive as first appeared in that he was an employedcarpenter and all the 16 dwellings were single storey. This meant he had not installed an inter-storey h-mould, for example. In this regard his original evidence was overstated. It is the case,however, that he was a working builder on Harditex houses.147 That is not to say sheet products were novel – asbestos fibre cement, plywood, fibrelite, andasbestos-free fibre cement had all been around.148 Although I express some hesitancy in expressing too firm a conclusion, it is consistent with theevidence of witnesses from both sides, and my reading of the Hunn Report.149 Hunn Report, above n 1, at 37: see above at [548].[649] These matters combined to mean there was a decline in standards, and manyerrors were made. I can say confidently about the houses examined in this case thatfundamentally bad building practices are evident in every one of them. Further, thereis no logical reason to infer any of the other claimant houses are different. If they werebetter built, but still failed, one would expect to have seen them feature in the litigation,rather than the houses chosen. The evidence is that Mr Wutzler has inspected themall.[650] It was earlier concluded that the Harditex system can drain and dry expectedquantities of water. The reality shown in this case is that multiple building errors haveled to homes experiencing too much movement, unsealed penetrations, poorly formedjunctions and uncoated and unsealed bases of sheet. These, along with many othererrors, have exposed the building envelope to far greater levels of moisture than it isreasonable to expect or model for.[651] It is also the case, and again not disputed, that a direct-fixed system such asHarditex does not drain as well as, for example, a bevel backed timber house. Thelatter is more forgiving. It is, as I understand it, the reason why people such asMr O'Sullivan agitated for a cavity because it introduces a layer of protection againsterror.[652] On that topic of a cavity, it is too simplistic and a comment that carries a largemeasure of hindsight, to say direct-fixed sheet systems were an error. Drs Lstiburekand Straube gave many examples of such systems still working perfectly well in NorthAmerica. The hindsight, I consider, is that they are not such a great idea when thereis a significant deficit in the quality of many of those building the houses. Further, ifthey are to be built in such circumstances, it was also unfortunate that many werecomplex designs which abandoned traditional weatherproofing features such as eaves,and sloping roofs, and treated timber framing.[653] My conclusion, therefore, which places most weight on the evidence of personsactually involved in building houses, some of whom have reasonable experience withHarditex and some of whom have considerable familiarity with sheet cladding, is thatthere was nothing particular about Harditex that made it different from building withother sheet cladding. Further, although some details on their face perhaps required toomuch precision, all building systems require good builders, and involve aspects thatare difficult and which are harder than the rest of the build. Harditex was no different,and these precise details could and were managed, in their own ways, by competentbuilders.[654] In relation to the issue of whether a Harditex system house was able to be builtsafely, the evidence satisfies me it was. To put that in terms of the case onus, theplaintiffs' evidence does not satisfy me a Harditex system house could not be builtsafely. I will draw final conclusions on the JHTIs in a later section.Inherent defect nine - maintenance[655] The homeowners say that James Hardie provided insufficient assistance on themaintenance requirements. The focus seems to be on the maintenance of the coating.[656] The 1993 version, the first to address maintenance at all, had a heading"Maintenance" and stated that the coatings will require regular maintenance. Thisinvolves regular inspections to ensure there are no cracks at sheet joints which mayallow water entry. Although other areas that could be mentioned, such as base of sheet,were not, the statement at least raises maintenance, talks of regularity of inspection,notes the purpose being to avoid water entry, and provides one indicator, a crack.[657] The next change was in the 1995 version. The essential message is the same,but the reader is directed to:(a) PVC flashings and jointers;(b) inseal and butynol strips; and(c) sealants, coatings and cracks and joints.[658] The final version in 1998 contains the same information but adds that regularmaintenance is needed in order to meet the durability requirements of the Code, andthen defines regular maintenance as being inspection every 12 months, and recoatingevery seven to 12 years. I will defer consideration of duty and breach to the laterdiscussion of whether the JHTIs constitute a breach of duty.[659] The homeowners rely on opinion evidence from Mr Wutzler that therequirements are not enough as cracking can occur anytime, and that they areimpossible to achieve whenever the feature is covered by the texture coating. What isunderneath cannot be checked. While this is so, I observe the question is whetherchecking what is underneath is needed if the coating is properly maintained. Emphasisis also placed on the lack of any warning concerning the bottom edge and it issuggested that could and should have been the focus of a particular maintenancewarning.[660] James Hardie defends its performance by reference to various general factors.The first of these is that all houses require maintenance, and there were generaldocuments to assist. In that regard Mr Longman identifies a BRANZ publication from1995, "Maintaining Your Home", which covered the maintenance requirements ofmany claddings, including fibre cement.150 He also refers to other BRANZpublications and to the Appraisal Certificate for Harditex itself which speaks of theimportance of the integrity of the coating system and the need to check.151[661] Mr Longman then analyses the maintenance requirements contained incompetitors' technical information (Duratex, CSR, Primebase and Insulclad) and notesthey are similar to or less than those in the JHTI. More generally he is of the view thathidden componentry, if installed correctly, should not need maintenance as long as thecoating is maintained.[662] This was not a topic where the evidence was particularly comprehensive.Everyone agrees maintenance is required, and then there were competing opinions onthe sufficiency of what James Hardie did. It is relevant, I consider, that the Court hasnot been pointed to any comparable product literature that did more, andMr Longman's analysis on this was not challenged.150 Trevor Pringle Maintaining Your Home (1st ed, BRANZ, November 1995).151 BRANZ Good Exterior Coating Practice (November 1998); BRANZ, above n 55; and AnnaSmith Maintaining Your Home (2nd ed, BRANZ, September 2006).[663] This is an area where the enhanced details in later JHTIs point to deficienciesin the earlier ones. There can be no argument the earlier ones could have been better.If there was a duty to include advice on maintenance, palpably the 1988 version failedsince it had none, but the later ones progressively improved.NEGLIGENCEDid James Hardie owe a duty of care?[664] In this section the judgment first addresses the issue of whether James Hardieas a cladding manufacturer and seller owed a duty of care to the owner for the timebeing of a house reliant on such cladding for its weatherproof qualities. Such a dutybeing found to exist, the judgment addresses its application to three areas:(a) the product and the system;(b) the JHTI literature; and(c) evolving knowledge of issues with the product and whether that gave riseto an obligation either to modify the product or warn consumers aboutthose known risks.James Hardie's argument[665] James Hardie submits it is unprecedented for a dwelling owner to claim theywere owed a duty of care by the manufacturer and supplier of some elements whichform parts of the dwelling's enclosure. Whilst builders and council inspectors havebeen held to owe a duty, their situation is different as there is a "more directrelationship". James Hardie stresses that between itself and each plaintiff:there are the major and transformative interventions of a designer and abuilding team. Those interventions are inconsistent with James Hardie beingheld responsible for the physical damage to relevant buildings.152152 It is difficult to accept the relevance of those interventions if the problem is that the sheet is flawed.Inherent flaws in the sheet that mean the building is not weathertight would not be the product ofinterventions by anyone.[666] The plaintiffs' claim having been allocated the label "novel", James Hardie'ssubmissions then analyse the settled approach that is taken to claims of a novel dutyof care. In New Zealand it is recognised to be a two-step inquiry aimed at establishingwhether it is fair, just and reasonable to impose a duty of care on the defendant. Thetwo stages are:153(a) the proximity between the parties; and(b) the policy considerations at play that may tend to negate, restrict orstrengthen the existence of a duty.[667] Todd summarises it this way:154The first stage is "internal" and concentrates on the parties themselves and theproximity, or nature and closeness, of the particular relationship betweenthem. No special standing is accorded to this stage of the inquiry, fordetermination of the proximity issue in favour of the plaintiff raises nopresumption of a duty or prima facie duty. As for the second, "external", stageof the inquiry, this involves an explicit assessment of extraneousconsiderations of policy or principle both for and against a duty.[668] Concerning proximity, James Hardie submits the key focus must be whetherthere is a close and direct relationship that enables a defendant ability to exercisecontrol over the situation and therefore be regarded as having responsibility for it.This focus emphasises the interventions that occur between production and thecompletion of a house:It is exceptional to find in the law a duty to control another's actions to preventharm to strangers. For example, a building contractor required by its contractto follow instructions of an architectural consultant owes no duty to secondguess the architect's omission to carry out a building inspection.[669] It is submitted that a 2013 amendment to the Building Act 2004, which for thefirst time imposed statutory responsibilities on a manufacturer, recognises thisremoteness of the manufacturer to the process by creating a restrained liability:155153 Carter Holt Harvey [2015] NZCA 321 [Carter Holt Harvey (CA)] at [23].154 Stephen Todd (ed) Todd on Torts (8th ed, Thomson Reuters, Wellington, 2019) at [5.2.03](footnotes omitted).155 Building Amendment Act 2013, s 7; and Building Act 2004, s 14G.(2) A product manufacturer or supplier is responsible for ensuring that theproduct will, if installed in accordance with the technical data, plans,specifications, and advice prescribed by the manufacturer, complywith the relevant provisions of the building code.[670] James Hardie next reviews numerous cases where it considers the concept ofcontrol, or lack thereof, has been determinative, or at least very significant, inresolving whether there is a duty. James Hardie characterises the plaintiffs' claim asbeing for economic loss. This seems to also be the view of the learned author of Toddon Torts who argues the owner is suing for a disappointed expectation as to the truevalue of the house.156 If we take the facts of the famous case of Donoghue v Stevensonwhere the problem was a snail in a bottle of ginger beer, the homeowners' claim is saidto be analogous to that plaintiff claiming not for injury from the presence of the snail,but for the money wasted in buying the bottle.[671] The relevance of this, James Hardie submits, is that it is really a claim aboutthe quality of the product, and quality falls into the domain of contract, not the law ofnegligence. An exception to this is if it is a case of dangerous products rather thanshoddy ones, but here the argument is that the house is a shoddy product.157 JamesHardie puts its case for no duty this way:188 This distinction between dangerous defects and quality defects can beunderstood from the perspectives of principle and policy. Tort law isprincipally concerned with "danger" preventing likely physical injuryor property damage. As a matter of logic, a product with a defect inquality has not caused damage to person or property, whereas dangerinvolves exactly that. Damage to the article itself cannot sensibly beregarded as property damage; the article is simply less valuable thanit otherwise would have been – i.e. economic loss.189 For this purpose, a complex structure or product must be consideredas an integral whole and not divided into its constituent parts. Theplaintiffs bought a house, not a cladding sheet / system. The remediessought by the plaintiffs are illustrative of the economic nature of theirloss. They have claimed the cost of recladding and an allegeddiminution in the value of their house, not the amount of the damageto the timber framing of their house.190 The loss arising from a quality defect is "essentially the failure of thepurchaser to receive the benefit of its bargain—traditionally the coreconcern of contract law". The legal policy concern is that, if the156 Stephen Todd, above n 154, at [6.4.01(1)].157 Relying on the Supreme Court of Canada in 1688782 Ontario Inc v Maple Leaf Foods Inc 2020SCC 35, [2020] 450 DLR (4th) 181 at [43]–[47].development of tortious product liability "were allowed to progresstoo far, contract law would drown in a sea of tort". In other words,non-dangerous defects bring into play questions of quality ofworkmanship and fitness for purpose.[672] James Hardie accordingly submit the plaintiffs' claim is for economic losswhere the issue is the quality of the product. The relationship between plaintiffs anddefendant is remote, which tells against the existence of a duty.[673] Turning from the internal proximity inquiry to the second external step ofpolicy factors, James Hardie puts in issue a concern about indeterminate liability, anda plea for coherence in the law. It is submitted the particular claim has the potentialfor the type of ripple effect which the law has always guarded against. The rippleeffect arises if a duty of care is placed on manufacturers to avoid economic loss arisingfrom an alleged defect in the quality of a product. The coherence point is really thesame proposition, namely that this claim should be resolved by the law of contract,and the separate roles of tort and contract should be maintained.The homeowners' case[674] The plaintiffs dispute the case is novel158 and submit that in New Zealandpotential liability for those involved in the construction of a leaky house is wellestablished. Reference is made to a trilogy of Supreme Court decisions that aresubmitted to put the matter beyond dispute – Sunset Terraces, Spencer on Byron andCarter Holt Harvey.159 Mr Farmer QC submits that the cases which the defendantregards as part of an exceptional "category of duty for pure economic loss" representthe response of the common law to the growing need to provide legal redress foreconomic harm arising from buildings with latent defects. Mr Farmer refers to anumber of cases decided in 1986 that extended legal liability in tort which previouslylimited a homeowner's claim to instances where physical damage had occurred, to158 Reference is made to a statement by the Court of Appeal during the interlocutory stage of thecurrent proceeding where it is noted there has never been a "concluded" claim, not that there hasnot been such a claim: see Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582 at [27].159 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 289[Sunset Terraces]; Body Corporate No. 207624 v North Shore City Council [2012] NZSC 83,[2013] 2 NZLR 297 [Spencer on Byron]; and Carter Holt Harvey v Ministry of Education [2016]NZSC 95, [2017] 1 NZLR 78 [Carter Holt Harvey (SC)].situations where there was no physical damage, but the properties had diminished invalue.160[675] On the contract point, the homeowners refer to the response of the SupremeCourt to the argument advanced in Carter Holt Harvey (and similar to the positiontaken by the defendants in the current case) that it was open to a building owner toseek warranties from the manufacturers and suppliers of building components. In thatcase, the Supreme Court noted it was unrealistic for the owners to protect themselvesby those sorts of contractual measures. Such measures "would require the headcontractor on each building project to approach each supplier to negotiate warrantiesfrom the nails to the paint to the glass, and for the building owner to satisfy itself as tothe adequacy of each one".161 As latent building defects can only be identified withspecial assistance, the Court concluded there was no other available form of protectionfor a building owner, who on their own could not have been expected to know of thedefects or take steps to protect themselves against them.[676] In relation to incoherence, reliance is placed on the three cases and others tosupport a submission the issue is settled. There is a place for tort, albeit in a particularcase such as Rolls Royce162 the parties may choose to allocate risk between themselves.These cases are likely to be the exception. Similarly the Courts have not been slow todisregard floodgates arguments in the area of defective products. As Tipping J notedin Spencer on Byron,163 only a current owner can sue which itself is a break onindeterminacy.[677] In summary, the plaintiffs submit James Hardie is advancing arguments thathave been heard and rejected. It is, for example, settled law that there is scope in thisarea for contract and tort to co-exist, and the coherence of the law plea has for sometime not been regarded as a valid concern. The same goes for the floodgates argument,160 See Stieller v Porirua City Council [1986] 1 NZLR 84 (CA); Williams v Mount Eden BoroughCouncil (1986) 1 NZBLC 102, 544 (HC); Brown v Heathcote County Council [1986] 1 NZLR 76(CA); aff'd [1987] 1 NZLR 720 (PC), as cited in Invercargill City Council v Hamlin [1994]3 NZLR 513 (CA) at 529.161 Carter Holt Harvey (SC), above n 159, at [54].162 Rolls-Royce NZ Ltd v Carter Holt Harvey [2005] 1 NZLR 324 (CA).163 Spencer on Byron, above n 159, at [45].with Tipping J in Spencer on Byron noting a level of determinacy is achieved by thereality that only the current owner can sue.164Assessment[678] It is in my view reasonably plain that a duty of care is owed by James Hardie,the manufacturer of Harditex, to the plaintiffs being the owners of houses clad inHarditex. I base this conclusion on two factors:(a) the decision of the Supreme Court in Carter Holt Harvey, a case verysimilar to the present, which holds that there are no conceptual obstaclesto such a duty. In reaching this conclusion the Court addressed proximityunder four topics – the parties' relationship, the contractual matrix, thestatutory framework and vulnerability. As regards policy factors, topicsaddressed were incoherence, contractual claims and commercial certainty(essentially all of James Hardie's submissions and more).165 Further it canrespectfully be observed the Supreme Court decision was hardlysurprising given the development of negligence liability in New Zealandin the area of defective homes. The Supreme Court by its decision wasconfirming the same result that had been reached in the High Court andthe Court of Appeal; and(b) the evidence in this case, as it relates to these topics, has been entirelypredictable (to the extent there is any evidence about any of it). Nocontracts have been entered into evidence to support any suggestion of apre-eminent contractual chain. Nothing has emerged about the plaintiffsto characterise them as anything other than what will be the case with allthe group – they are subsequent purchasers of leaky homes. James Hardiedid indeed sell Harditex cladding to the general market on the basis that itwas a sound product which if installed correctly would produce aweathertight home. In terms of "vulnerability", Mr Woodhead, forexample, had two reports in relation to Woodhouse which essentially said164 At [45].165 See Carter Holt Harvey, (SC) above n 159, at [17]–[71].it was fine. No doubt that will be the case with many in the group. Inshort, the context that exists is the one in contemplation in Carter HoltHarvey. If anything, one would consider the purchasers of residentialhomes more vulnerable than a large state entity such as the Ministry ofEducation.[679] Put concisely, the Supreme Court in effect says a manufacturer is conceptuallyno more immune from tortious liability than any other player involved in theconstruction of the homes, and there is nothing particular in this case to set it apart.Against that general conclusion, it will be necessary only to comment on some aspectsof the defendant's contrary proposition.[680] I do not understand there to be any dispute about what the Supreme Court says.Rather, Mr Hodder QC emphasises the preliminary nature of the Court's conclusionand the fact that the Court emphasised it will require careful analysis by the trial court.That is indeed so, but the duty arguments now advanced by James Hardie are not atall trial-specific. The submission does not, as far as I recall, draw on any trial evidencebut repeats in a developed way the arguments considered and rejected by the SupremeCourt. It is for this reason I consider this judgment can rely on the responses given bythe Supreme Court.[681] I consider the proposition of no duty is untenable as regards the sheet itself. If,for example, the sheet's composition was flawed, it is hard to imagine that would notconstitute a breach of duty to homeowners suffering loss as a consequence. It wouldbe a latent defect in a product that is a key component in a house which is, for manyNew Zealanders, the major investment and asset in their life. Further, in terms ofpolicy factors, it is wrong to see a residential home as just an asset. If it is the familyhome, it is much more than that and to the extent there are health consequences – notyet directly proven but very likely – the vulnerability of persons, and the sureknowledge that residential houses will usually be family homes, makes it the type ofrelationship where the imposition of a duty of care seems just and reasonable.[682] I doubt the label "novel" is particularly appropriate here except in a technicalsense of this being the first time in New Zealand one of these cases has required a trialjudgment to confirm a duty which various preliminary decisions of our highest courtshave recognised likely exists. The manufacturer is the start of a chain of personsinvolved in the building of a house, and I believe it to be accurate to say a duty hasbeen recognised on every actor subsequent in the chain to the manufacturer. Theobvious difference is the manufacturer's role is generic, whereas the role for everyoneelse in the chain is house specific. This is the essence of the transformativeinterventions point made by the defendant.[683] As regards that, there seemed a danger of running together breach argumentsand duty analysis, and of seeing scope of duty arguments as denying the existence ofthe core duty. Save perhaps in one respect, the plaintiffs' claim does not seek to makeJames Hardie liable for the acts of others. The claim is that:(a) James Hardie negligently designed a flawed, not-fit-for-purpose product;(b) James Hardie issued instructions on how to install the product that weredeficient and which even if followed would produce a non-complianthouse that failed to manage water and thereby caused loss; and(c) James Hardie came to realise around 1999/2000 that its product was afailure, or came with significant risks. It therefore had a duty to act on thisknowledge so as to protect people, and failed to do so.[684] These are all allegations concerning James Hardie's conduct. They are allmatters that James Hardie could control. The essence of the plaintiffs' claim is thateven if one built this house properly, it did not work. For example, the claim is that ifa builder used the h-mould accessory, and constructed it in accordance with the JHTIand good building practice, its flawed design meant it would still let water in. Lackof control is not a valid response to the claim of a duty in relation to this situation.[685] The potential exception is the claim that James Hardie knew or ought to haveknown that the skill level of persons using its product could be below the level of acompetent builder and have designed the product in a way that allowed for this, and/orshould have targeted its literature towards this group. That is the claim that comesclosest to recognising a duty or defining the scope of the duty by reference to thirdparties' acts. Even there, however, it would not seem a particularly novel idea that amanufacturer should be aware of the likely users of its product and act accordingly.[686] For these reasons I agree with the plaintiffs that James Hardie owed them aduty of care. I consider the best way to then apply this duty to the facts of the case isto consider issues of its scope and breach in the context of three areas that were thefocus of the plaintiffs' claim. These areas are the product and the system, the literature,and the issue of a duty to warn. Issues of causation must be addressed as regards thecurrent plaintiffs, but are otherwise for subsequent trials.Breach of duty – the product and the system[687] This first subject area, the product and the system, is the most straightforward.The analysis and conclusions already reached in the judgment mean the findings mustbe against the plaintiffs' case and little is to be gained by repetition. As regardsproduct, the judgment has concluded the sheet was durable and fit for purpose.[688] The homeowners paid much attention to the adequacy or otherwise of thetesting behind the product, saying it fell below the standard expected of a reasonablemanufacturer. I doubt there is merit in the point as a standalone claim. If the sheet infact works and, for argument's sake that is a product of good luck rather than goodmanagement, the reality is nevertheless that the product works. A lack of testing couldnot be causative of loss. That said, I do not agree the testing fell below the necessarystandard. I accept Mr Cottier's evidence, and his comparative analysis as regards whatwas done, for example, by Dr Akers with his product. The homeowners' case waspremised on Harditex being more evolutionary than the judgment accepts it is. Finally,I did not accept it was an error to not test the facade. There was not a suitable test,166and it was not industry practice.[689] As regards the system, breach analysis engages with the topic of buildability,and the adequacy of the JHTI. The latter is to be addressed in the next section. Onbuildability, the judgment's conclusion is that the system could be installed safely by166 At [893]–[899].a reasonable, competent builder. Overall the system was fit for purpose which, for thefocus of this case, was to provide a waterproof cladding for a New Zealand residentialhome constructed in accordance with applicable standards and sound buildingpractice.Breach of duty – the technical literatureThe duty[690] The homeowners claim that technical literature produced by James Hardie toassist users of the product was deficient and did not discharge James Hardie'sobligation as a manufacturer to take reasonable care by providing appropriateassistance so as to ensure that its product would be installed correctly and safely. Noargument was advanced by James Hardie that if a general duty to take care was owed,it would not include this obligation to provide sufficient technical assistance.The alleged breach[691] The homeowners' case on the adequacy of the JHTI is set out well in theclosing submissions:167552. The technical literature accompanying a proprietary cladding systemsuch as Harditex should include sufficient information that a user ofthe product can install the system in a way that will perform itsfunctions adequately and with only normal maintenance.553. Mr Sutherland gave unchallenged evidence as to the standard ofliterature that would be expected from technical literature at the timeHarditex was on the market.554. NZS 3604: 1984 referred to a British Standard, BS4940: 1973"Recommendation for the presentation of technical information aboutproducts or services in the construction industry. Mr Sutherland'sevidence was that he would expect a manufacturer of a claddingproduct to follow this standard, which sets out the type of informationthat should be covered in technical information.555. In addition, as Harditex was an Alternative Solution under theBuilding Code once the Building Code came into force, it was criticalfor the Technical Information to provide full details to allow theminimum requirements of the Building Code to be met. This isconsistent with Mr Knox's statements that "my view is that theprimary function of product technical literature is to provide sufficient167 Footnotes omitted.guidance to a competent building professional that he or she is ableto integrate the product concerned (in this case Harditex) into abuilding such that the completed building will perform as requiredand desired" and "the best that is realistically possible is to covermost of the standard details that would be required to build a basicbuilding".559. Critical to the assessment of the JHTI is the fact that Harditex is asystem, and not just a sheet product, as outlined above. It wastherefore critical that James Hardie provided details which showedhow the sheets and various accessories should be assembled,integrated and finished.[692] For completeness I record the actual pleadings. For Bay Lair, the pleadingprovides:(e) the Harditex JHTI up to and including the Harditex July 1991Technical Information was inadequate and incapable of providing acladding system which was fit for its purpose as a durable andweathertight exterior wall cladding system and able to meetappropriate standards and requirements for building;(f) The Harditex JHTI up to and including the Harditex July 1991Technical Information failed to specify a method of installation of theHarditex cladding system which makes adequate allowance andtolerances for the typical conditions that exist on a building siteincluding climatic conditions, the skill and precision of a reasonablecladding installer and the tolerances to which buildings areconstructed.(g) The Harditex JHTI up to and including the Harditex July 1991Technical Information failed to provide details and specifications forimportant and commonly occurring details including face sealedwindow junctions, terminations of the horizontal control joints andexterior and interior corners.[693] Prior to that, [9]–[11] of the pleading set out a series of extracts from the 1988and 1991 JHTIs. The same pattern exists for the Woodhouse pleading, with the JHTIextracts coming from the 1993, 1994, 1995 and 1998 versions.[694] James Hardie raises an issue as to scope of this proceeding and therefore whichJHTIs should be considered by the Court. Its proposition is that because neither of theplaintiffs' houses, nor indeed the sample houses, were built at a time when the initial1987 JHTI was the operative document, it is irrelevant to the proceeding. The firstrelevant JHTI is 1991 which applied to Bay Lair. The homeowners contend that theclass action status of the proceeding alters this, although it has not been confirmed thatany of the class were built under the 1987 or 1988 JHTI.[695] The proceeding applies to the whole class. I accept that does not make theindividual circumstances of the plaintiffs irrelevant. Their litigation remains theprimary determinant of scope and relevance, but the wider class should not be ignored.It is likely that most or all of the JHTIs will be relevant to one of the properties andaccordingly I propose to consider them. Whether that generates an issue forsubsequent proceedings in terms of whether my conclusions are binding can bedetermined by the later Court. For clarity I note the JHTIs relevant to the plaintiffsare 1991 (Bay Lair) and 1998 (Woodhouse).The JHTI documents[696] A JHTI was first produced in 1987. Thereafter there were new or updatedversions in 1988, 1989, 1991, 1992, 1993, 1994, 1995, 1996 and two in 1998 whichwere the last versions. There was considerable development in the documents acrossthis period. For example, the 1987 JHTI was eight pages long with 10 diagrams ordetails. The last version was 41 pages long with 37 pages of technical informationand 69 diagrams or details.[697] Despite this significant evolution of the document from 1987 to 1998, bothparties addressed the topic of breach on an all-or-nothing basis. This makes the topicsomewhat difficult to address since the 1998 version is wholly different from the 1987one. Further, there seems a measure of agreement that the 1998 version is at leastclose to an adequate version. The judgment will set out the 1987 version and thentouch on key additions along the way before concluding on the 1998 JHTI.[698] The 1987 document stands apart as being a mixture of brochure and technicaldata. It was not called a Technical Information document. Recognising it had thisbrochure content, I assume the target audience was broad and included potentialhomeowners. By 1991 the JHTI was more clearly a document aimed at industryparticipants.[699] The brochure portion of this JHTI contains various general statements aboutthe qualities of Harditex fibre cement, highlighting its "proven durability" and safety,that it is unaffected by water, insects, termites or sunlight and will not split, rot, twistor warp. There are also claims that it is a suitable substrate for textured coatings, hasunsurpassed versatility and that it is the "complete cladding for today's architecture".This brochure component invites inquiries on the extensive range of James Hardie'sfibre-cement products.[700] Turning to what can be termed the technical component of the document, thefollowing is covered:(a) handling and storing instructions;(b) design considerations – only suitable for two-storey houses unless specificdesign, horizontal joint required for two storeys unless kiln-dried timber,not for pole houses because of excessive structural movement, andinformation on when horizontal and vertical expansion joints are required;(c) a description of the dimension, mass, and straight edge finishes of thesheet;(d) a list of accessories, being a Hardiflex nail, and reinforcing tape;(e) instructions on cutting and hole forming within a sheet;(f) framing and fixing procedures (expanded below);(g) how to do sheet jointing, with a warning about the dangers of finishingsheets above and below window and door lines. The identified danger ofnon-compliance is cracking due to structural movement. Details areprovided on how to avoid this; and(h) information on jointing and coating systems. It is noted the productrequires proven proprietary high-build flexible acrylic surface coatings.[701] In relation to the framing and fixing requirements ((f) above), the followingare noted:(a) Harditex must be framed in accordance with NZS 3604;(b) Harditex must not be fixed to timber with moisture content greater than24 per cent;(c) kiln-dried timber is preferable;(d) 45 mm framing is to be used with the centres for the noggins and the studsset out;(e) the need for rigid framing with all sheets supported; line and face accuracyto be checked;(f) when vertical expansion joints are needed;(g) building wrap specifications;(h) sheets to be dry and held firmly against stud when nailing; and(i) the required pattern of nailing, including where to commence nailing on asheet.[702] There are within the document six details which cover vertical sheet fixing,vertical expansion joint, internal and external corner details, and two options for sheetjoining.[703] Turning to subsequent JHTIs, the second version in 1988 was called TechnicalInformation, and covered five James Hardie products – HardiePlanks, rusticatedweatherboards, HardiePanels, Hardiflex and Harditex. The Harditex-specific materialwas not much changed from the 1987 document but overall had more informationincluding a general section which had aspects that were both product-specific andgeneral.[704] The 1991 version was Harditex-specific and was again called "TechnicalInformation". It was by now 20 pages, of which at least 11 contain technicalinformation. There are now 31 details, several of which provide alternative ways ofdoing a join. There are a number of details for deep reveal windows (ie windows setback rather than flush with the wall), and some transition details – ie, where Harditexmeets some other material.[705] The JHTIs continued to expand along similar lines through their next iterations,with further details being added. By 1995, for example, it was 33 pages and 69 details.[706] It is not possible to set out all the detail of the 1998 JHTI because of its length.It may assist, however, to note the contents page which itself is a full page of thedocument:(a) Introduction – including checklist of requirements and list of accessories;(b) Section One – product information, handling and cutting, and safety. Thetopics covered include bracing, sheet properties, finishing, handling andstorage;(c) Section Two – framing;(d) Section Three – sheet layout and fixing;(e) Section Four – control, expansion and corner joints;(f) Section Five – bracing systems;(g) Section Six – New Zealand Building Code compliance; and(h) Section Seven – finishing the system.The evidence168[707] A key witness for the plaintiffs was Mr Sutherland. He is an architect of60 years' experience, well recognised in his field. He has held various positions in theprofession and has been appointed an Officer of the New Zealand Order of Merit for168 There was an experts' conference. I did not find the product helpful. It largely represents arestatement of existing evidence and views.services to architecture. He was the Dean of Architecture at Unitec Auckland for manyyears.[708] From 1968–1984 Mr Sutherland was a director of JASMaD and in charge ofan information group within that organisation that wrote technical information forproducts. Mr Sutherland advises they won many awards in national trade literaturecompetitions. Mr Sutherland says that as a guiding document they used a Britishstandard, BS 4940: 1973. However, no documents or trade literature, award winningor otherwise, were produced as examples of how something should be done.[709] Mr Sutherland gives evidence that the JHTIs were deficient from start to finish.He contests the correctness of specific details that were included, but the moreimportant aspect is his position that the JHTIs all needed to be comprehensive, andwere not. The key reasons for Mr Sutherland's opinion were:(a) a viewpoint that a product's technical literature should be a comprehensivestand-alone document that does not rely on predecessors. It is not clearthe extent to which this view extends to a manufacturer relying oncontemporary documents available in the industry (such as good carpentryguides), but if it is a detail that is relevant, I apprehend Mr Sutherland'sopinion is that it does not matter that it is available elsewhere. It shouldbe in the JHTI;(b) a view that Harditex was a new product not an evolution;(c) the fact that it was an Alternative Solution under the Code. This meantthat documents needed to be comprehensive in order to satisfy theterritorial authority that, if built in accordance with its requirements, itwould satisfy the Code; and(d) a view that Harditex was a face-sealed system that did not drain. Thisincreased the necessity to provide workable details to prevent moisturepenetration.[710] Mr Sutherland was also critical of the JHTI referring to Harditex as a systembecause an essential component of the system, the coating, was not the subject of aJames Hardie warranty. It does not seem to me that takes one anywhere even if correct,but it was firmly adhered to.[711] Mr Sutherland is not a lone voice for the homeowners on this topic but his isthe most authoritative. The other evidence, which consisted of either or both acommentary on general inadequacy and missing information, or a criticism of aspecific detail, came from Mr Proffitt, Mr Peryer, Mr Wutzler, Mr Lalas, andMr Holmes.[712] The homeowners' closing submissions claim Mr Sutherland's evidence on theissue to be unchallenged. I do not accept that is so. Context is important – at issue isthe adequacy or otherwise of a document. The challenge is to its comprehensiveness.What is in the document is fact. The defendants led contrary evidence which said whythose witnesses thought it was comprehensive enough. Mr Sutherland was questionedabout aspects of his opinion, and I consider that met the obligations to put the case asagreed by the parties.169[713] Competing views come primarily from Mr Pynenburg, who was supported byMr Longman, Mr Sylvia and Mr Donnan. Ms Johnson also comments, as did Mr Knoxwho was the senior research and development manager for a period at James Hardiein Auckland. I see his evidence as relevant to why things were done, but consider careis needed because of his position before placing weight on his opinions on the meritsof the JHTI.170[714] Mr Pynenburg is an architect with 40 years' experience who, likeMr Sutherland, is a life member of the New Zealand Institute of Architects and has169 If explanation is needed for my different comments concerning the lack of cross-examination ofDr Lstiburek, the key lies in the nature of the evidence. Dr Lstiburek was giving science-basedopinion evidence where the underlying principles or their application were capable of challenge.Here Mr Sutherland is commenting on an area where it is more of a general assessment wherethere are just competing opinions.170 To avoid any incorrect impression being given, I record I considered Mr Knox a very good andreliable witness who was thoughtful and open to criticism of James Hardie's position and theproduct. However, it is not necessary to rely on his opinions on this topic so I put them to oneside.been its President. He was the founding Chair of the New Zealand RegisteredArchitects Board and has been a member of and adviser to various industry bodies.As with Mr Sutherland, he brings experience and standing to the issue. His opinion isthe opposite of Mr Sutherland's in that he considers the JHTIs were at all timesadequate. His opinion is based on:(a) a view that Harditex was not materially different from other sheet claddingthat had been around for many years (other than the flush jointing system);(b) the JHTI addressed from the outset the details relevant to the specificchanges which Harditex represented. As an example, Mr Pynenburgcomments on the oft-criticised fact that the 1991 JHTI introduced a detailfor an uncommon recessed window, but not one for the common flushwindow. In his opinion that was a correct approach because fittingaluminium windows into sheet walls was a long-established task.Recessed windows were new and different so a detail was appropriate.[715] Mr Pynenburg supported his evidence by a detailed analysis of how the initialJHTI addressed the key differences which Harditex represented. He assessed it asappropriately dealing with all new features, and thought everything else fitted withinexisting building experience.[716] The other witnesses who commented gave opinions which generally reflectedthe viewpoints of either Mr Sutherland or Mr Pynenburg.[717] An important witness on the content of the JHTIs is Mr MacIntyre. He wasthe development engineer at James Hardie responsible for building and productdevelopment in New Zealand across the range. Mr MacIntyre had died by the time oftrial; his evidence consisted of a brief prepared for earlier litigation so when referringto it I bear in mind the inability of the plaintiffs to question Mr MacIntyre.[718] By way of explanation for the sparse initial content of the JHTI, Mr MacIntyrestates:The Technical Information38 As far as we were concerned, there was nothing else particularly newabout the Harditex product when it was introduced. This is evidentfrom the first Harditex brochure published in 1987. It contains onlybasic information on how to install the product. Much of thatinformation talks about how to work safely and effectively with thefibre cement itself, rather than how to construct certain details.39 For example, the first brochure contains no information about how tobuild a horizontal control joint. It simply says that such joints arenecessary unless kiln-dried timber was being used and requires themonolithic area of cladding to be limited to 25m². Beyond that, themethod of detailing the control joint is left to the builder and designer.40 This was not because James Hardie did not know how to build such ajoint, or because it was not important to build the joint properly. Itwas because we expected (reasonably, in my opinion) that competenttradespeople would understand how to construct a joint of this kindand did not need to be told. As I have said, Harditex was not arevolutionary product, and the principles applicable to Harditexconstruction were more or less identical to those applicable to well-known and established sheet claddings. Also, if a builder was unsurehe could always contact James Hardie for assistance, or get thedesigner of the specific project to provide a detail. This was madeexplicit in the first few editions of the Harditex Technical Information,which said that the document was not comprehensive, and wasdesigned simply to assist competent tradespeople.[719] Mr MacIntyre says James Hardie's approach was borne out in the early days.There were few problems when the product was introduced because most buildersknew how to work with it. He attributes the growth of the document to a progressivediscovery that building competence was dropping away and matters considered goodbuilding practice were not being done. His specific example is head flashings. It hadnever been thought necessary to tell people to install them until in the early to mid1990s when James Hardie discovered some houses without them. Accordingly, fromthe 1995 JHTI they became mandatory.[720] Mr MacIntyre testifies that a second impetus for change to the content of theJHTI was the BRANZ appraisal process. From that point the JHTI needed to bereviewed by BRANZ which was of course privy to much knowledge of building trendsand issues. Accordingly, some of the impetus for more content came from BRANZ.[721] Mr MacIntyre also addresses the reasons for some changes that were made inthe 1998 JHTI. In the period prior to the 1998 version, James Hardie had beenaddressing two known industry issues. First it was recognised that 35 mm timber studswere proving too difficult for many builders to achieve a firm enough fix. JamesHardie accordingly initiated an industry-wide process to convince people to use45 mm, and undertook a national tour as part of this. By late 1997 James Hardieconsidered it had succeeded in its aim and so one of the changes in the 1998 JHTI wasto make 45 mm studs mandatory. The second issue was nail corrosion and stainlesssteel fixings. This was mainly an aesthetics issue. James Hardie initiated a series oftests that suggested there were problems with the mixed quality of the galvanisationof some nails. James Hardie accordingly sourced stainless steel nails which it thenmarketed as Harditex nails. These were made mandatory in the 1998 JHTI. A thirdchange concerned the horizontal joint. James Hardie had come to the view that the h-mould alternative of using a kiln-dried joist alternative was not working. Too oftenpouting was occurring. An h-mould was made compulsory.[722] While commenting on Mr MacIntyre's evidence, it is useful to note somecomments he makes on earlier topics. Mr MacIntyre adds his opinion on the validityof the h-mould design, and explains why it was not covered in early versions (becauseit or variations had been around from the 1970s). On the topic of sealing the sheet,the JHTI did not address it because coating systems differed in their requirements, andJames Hardie took the view it was the responsibility of the applicator to know whatwas needed. The Equus system, for example, had both normal sealing requirements(face and edges) but also some back face sealing requirements in some situations. Itwas for the builder to know the system to be used, and its requirements, and toanticipate them while constructing the house.Legislative and other background context[723] The relevant statutory context for much of the life of Harditex was the BuildingAct 1991. Buildings required a building consent from the relevant territorial authorityprior to the build starting. The territorial authority had to be:171satisfied on reasonable grounds that the provisions of the building code wouldbe met if the building work was properly completed in accordance with theplans and specifications submitted.171 Building Act 1991, s 34(3) (emphasis added).The specifications reference would include the JHTI. I agree with Mr Pynenburg thatthe wording of the test meant that the Authority could assume competent construction.[724] The Building Code was associated with the Act. It was a performance-baseddocument which focused more on outcomes than the process to get there.Mr Sutherland, in a 2003 Conference Paper, described it as "largely word not numberdriven."172 The Code set out the functional requirements and performance criteria abuilding had to meet. There were a number of chapters, called clauses, on specifictopics. Those referenced earlier in the judgment include B2 – durability, and E2 –external moisture. It can be recalled for external moisture the relevant criterion wasthat the exterior walls:shall prevent the penetration of water that could cause undue dampness ordamage to building elements.This makes plain the "outcome" focused style of the requirements. It is about whatmust be achieved, not how to get there.[725] For durability, the requirement was the building elements must continue to dotheir job for 50 years if they were a bracing element, or a feature that was difficult toaccess or replace, or the element was one the failure of which would go undetectedduring normal maintenance. Otherwise the durability requirement is 15 years.[726] Within this overview of the regulatory context, reference should be made tothe concepts of Acceptable and Alternative Solutions. Acceptable Solutions wererecognised designs that a territorial authority was obliged to accept. In the area ofcladdings, these were timber weatherboard, masonry veneer and stucco. If a consentapplication involved one of these claddings and the house was to be built in accordancewith NZS 3604, the territorial authority had to accept that aspect of the consentapplication.173172 John Sutherland "Leaking Buildings: An Industry in Denial" (paper presented to Facade Designand Procurement Conference, Bath, 2003).173 In addition to Acceptable Solutions claddings, there were also Verification Methods. If a producthad been shown to have been tested in accordance with an approved Verification Method, then itacquired the same mandatory status as an Acceptable Solution. The evidence is that this route wasrarely used.[727] All designs involving claddings other than the three mentioned were classed asAlternative Solutions. With these, the Authority instead was required, before issuinga consent, to make a decision on whether, if built properly according to the plans andspecifications, the house would meet the performance requirements of the Code.Assuming, as the evidence suggests, that there were more than 110,000 Harditexhomes built, that is the number of time decision-makers within territorial authoritieshave answered that Alternative Solution question in the affirmative as regards a designusing Harditex cladding.[728] Of course it would be wrong to suggest there would have been a detailedindividual analysis on each of these occasions. One factor seen by territorialauthorities as removing the need for a detailed individual analysis was the existenceof a BRANZ Appraisal Certificate. Manufacturers could choose to submit theirproduct for a BRANZ appraisal. James Hardie did so with Harditex (as it hadsuccessfully done with New Hardiflex). Although the formal certificate was not issueduntil 1995, BRANZ allowed James Hardie to claim its existence from 1993. TheCertificate provides that:New Zealand Building Code (NZBC)In the opinion of BRANZ, Harditex Wall Cladding, if used in accordance withthe statement and conditions of this Certificate, will meet the relevantprovisions ofNZBC B1 STRUCTURE, B2 DURABILITY & E2 EXTERNAL MOISTURESpecific NZBC compliance details are contained within this CertificateOther material[729] The best objective fact in favour of the homeowners' case is the evolution ofthe JHTI. The 1998 version is a very different document from the initial 1987 version,and undoubtedly a better, more comprehensive one. This inevitably suggests theearlier one may be deficient.[730] Related to that, however, is what other manufacturer literature looked like atthe time. Mr Sutherland considers what other manufacturers were doing is irrelevant.The focus, he suggests, must be on the JHTI only. However, the underlying questionis whether James Hardie in manufacturing and supplying this product breached thestandards expected of a reasonable manufacturer. It is relevant and helpful in thecontext to consider what other manufacturers were doing. Ignoring indicators such asother product literature is a certain way to reduce the topic to mere competingopinions.[731] It is common ground, or at least not seriously disputed, that the JHTIs were ascomprehensive as the technical literature of any contemporary cladding manufacturer.Further, no evidence was led that manufacturers in other areas of the building industry,windows for example, were different or better. Dr Lstiburek likewise observes theJHTIs were at least as good as those accompanying any overseas products with whichhe was familiar.[732] Mr Sutherland, I understand, despite his criticisms as to inadequacy,acknowledges the JHTIs were as good as or better than any comparable claddingliterature and explains this by reference to James Hardie's standing as the marketleader. Mr Longman was of a similar view, noting:In my opinion the earlier versions of the JHTI in the 1980s and early 1990swere also reasonable in terms of their length and content judged by industrystandards and expectations at the time. In my experience the James Hardie'sproduct literature, including the various versions of the JHTI (which includedmore and more useful content over time), were generally well regarded in theindustry and if anything had a reputation for being market leading as opposedto lagging behind.[733] Looking further for other sources of information on the topic, there is a letteron file from BRANZ to James Hardie. A caveat to reliance on this comment is that itis contained in a non-public letter to James Hardie, but there is no reason to doubt itsgenuineness. The BRANZ author observed in 1995:Thank you for the recently supplied Harditex and Villaboard TechnicalInformation. They are excellent pieces of Technical Literature – well laid outand thorough. (We wish all our customers literature were up to the samestandard.)A further context factor is that the preponderance of the evidence in this case fromthose who have actually built with Harditex is that the literature was sufficient.[734] To complete the identification of relevant context, I address the homeowners'proposition that Harditex's status as an Alternative Solution meant the literature hadto be more comprehensive. It is not, in my view, a logical analysis of the situation.The JHTI was part of the information available to the territorial authority. As noted,approval was given by territorial authorities probably more than 100,000 times.Logically, therefore, the JHTI as it was seen as adequate to enable territorial authoritiesto make their decision. There is nothing in this process that can be seen asnecessitating a more comprehensive document. The opposite is true. The territorialauthority was plainly satisfied with the information it already had.Assessment[735] The key issue is whether James Hardie was correct in its view that its duty wasto assist competent builders as regards the features of Harditex that were different fromprevious claddings used in New Zealand. In terms of evidence contrary to thatproposition, Mr Sutherland's view is of course due respect, and he has the extradimension of previously being involved in drafting these documents, and obtainingawards for that work. That may of course mean more that he recognises a goldstandard rather than what is needed to discharge the duty, but his is an opinion meritingserious consideration.[736] However, the two objective contemporaneous facts are, first, that there is noproduct literature before the Court, be it dealing with cladding or another industrysector, where a manufacturer does more than that which James Hardie was doing.Second, BRANZ, an independent organisation with expertise in the area, signed offon every JHTI from the 1991 version onwards. It seems to have been the BRANZassessment that the literature was superior to others.[737] None of this arguably would matter if the evidence was that builders found itinadequate, but that is not the evidence. Rather, the preponderance favours theopposite conclusion.[738] It could be argued that self-evidently JHTIs were inadequate because housesfailed, and this failure must reflect an incorrect standard or target group. Support forthis comes also from the acknowledgment by James Hardie of a growing awarenessof building standards deficits.[739] In relation to this it can be observed:(a) it is important not to confuse duty and breach. As at 1987 the evidencesuggests the appropriate target for a cladding manufacturer was thecompetent builder, and the appropriate task was to highlight and assist onthose matters that are new or different; and(b) it may be that what was required of a reasonable cladding manufacturermight have changed by the mid to late 1990s as the assumption of coreknowledge became less valid. But that would not change the duty as itexisted in 1987.[740] I accordingly conclude that the JHTI in 1987 discharged the obligation thatthen existed on a reasonable cladding manufacturer issuing a product such as Harditex.This reflects the earlier conclusion that Harditex was a modest development, from abuilding perspective, on earlier sheet claddings. It also accepts that a pivotal aspectof the house is the timber frame and that it was reasonable to assume knowledge of,and capacity to comply with, NZS 3604.[741] The evolution of the JHTI has been noted. Mr MacIntyre explains the increasewas reflecting James Hardie knowledge as to apparent issues that were arising. The1998 JHTI seemingly also reflects BRANZ input into matters that could also helpfullybe addressed. Witnesses such as Messrs Wutzler and Sutherland may be correct thatthere were further topics that could have been added, but it is not a duty to be perfect.[742] I am confident that from 1991 the document discharged any duty and that from1998 there cannot be a serious claim that it did not meet a manufacturer's obligations.The greatest uncertainty is from 1987 to 1991 when the document was its most sparse.These versions were not subject to any BRANZ assessment and the first version wasas much brochure as technical information.[743] My preference would be to restrict the conclusion, as James Hardie wanted, to1991 and subsequent as I am conscious there was insufficient analysis by the partiesas to the evolving changes. However, for the reasons given and relying onMr Pynenburg's evidence as supported by the objective factors previously outlined, Iconclude a breach of duty is not established for any of the JHTIs.[744] I conclude with two observations which go to causation. There is no basis onthe evidence in this case to conclude that the increased detail actually made anydifference. It has not been advanced, for example, that problems declined after themuch fuller, and in my view clearly adequate, 1998 version. Establishing a linkbetween the alleged missing detail in the earlier JHTI, and a failed house would notbe straightforward. Second, related to this, there is evidence that could support apositive conclusion that further detail would not make any difference. There arewitnesses such as Mr Proffitt with his bleak assessment of the quality of builders atthe time, and there is evidence such as the deconstruction of eight houses which revealsscant regard by builders to the requirements of the JHTI. Together they might suggestthe proposition that a better JHTI would be any form of panacea is optimistic andperhaps unreal.Breach of duty – the failure to modify product or warn consumers of the riskThe duty[745] A duty to warn is recognised in New Zealand as an element of a duty of care.A failure to warn breach was pleaded in the comparable cladding case of Carter HoltHarvey.174 In the context of dismissing a strike-out application, the Court of Appealobserved:[129] In the context of product liability of manufacturers as it has developed,the tortious duty of care may include a duty to warn customers or users if theproduct has dangerous features or potentially harmful qualities. Such liabilityhas been found to exist in a range of different factual situations.[130] The underlying rationale for the duty flows from an imbalance in theinformation held by a manufacturer (and hence knowledge) as compared withthe consumer or user about the risks or dangers inherent in the use of theproduct. The authorities suggest more than just an imbalance is required—themanufacturer will almost always possess greater knowledge about the product174 Carter Holt Harvey (CA), above n 153.they manufacture than the consumer. Traditionally therefore the duty to warnhas been held to arise in circumstances where the manufacturer holdsknowledge or information about the danger that the consumer could notreasonably be expected to possess. The imposition of a duty to warn is neededto address or rectify the imbalance.[746] The obligation is to take reasonable care in the manufacture and supply of theproduct. What steps are required to discharge the duty may vary as knowledgechanges. At a certain point a failure to warn may amount to a breach of the duty totake care. The proper focus here is on whether there existed facts that required aresponse from James Hardie in the form of a warning or even the more extreme stepof product withdrawal.[747] Because it is just a manifestation of the duty to take reasonable care, there areno special rules. In overseas jurisdictions, the relevant risk which might give rise to aduty to warn initially appeared limited to situations involving danger.175 However, inNew Zealand, at least in the building context, a distinction between dangerous defectsand other defects has long been abandoned, and that is equally so in this area of afailure to warn.176 It is not yet settled whether the obligation will arise when the personsubject to the duty "ought to have known" of the circumstances giving rise to the needto warn.[748] The assessment of whether a particular risk called for a response is contextual.James Hardie refers to a statement from a High Court of Australia decision:177In deciding whether there has been a breach of the duty of care the tribunal offact must first ask itself whether a reasonable man in the defendant's positionwould have foreseen that his conduct involved a risk of injury to the plaintiffor to a class of persons including the plaintiff. If the answer be in theaffirmative, it is then for the tribunal of fact to determine what a reasonableman would do by way of response to the risk. The perception of the reasonableman's response calls for a consideration of the magnitude of the risk and thedegree of the probability of its occurrence, along with the expense, difficultyand inconvenience of taking alleviating action and any other conflictingresponsibilities which the defendant may have. It is only when these mattersare balanced out that the tribunal of fact can confidently assert what is thestandard of response to be ascribed to the reasonable man placed in thedefendant's position.175 Goldswain v Beltec Ltd [2015] EWHC 566 at [77].176 Carter Holt Harvey, above n 153, at [136]. See also Spencer on Byron, above n 159, at [146].177 The age of the decision is reflected in its use of the male pronoun – Wyong Shire Council v Shirt(1980) 146 CLR 40 at 47–48.This provides a useful statement of the task.The alleged breach[749] The homeowners' case, as set out in their closing submissions, is:In the context of the present case, James Hardie had a duty to take reasonablecare in the design, testing, manufacture, supply and marketing of Harditex.That duty extended to providing accurate information about the performanceand safety of the system and its product, including warnings about potentialcomplications and contraindication. The duty was not confined to the periodbefore Harditex was placed on the market, it was a continuing obligation toevaluate its performance and safety and to keep abreast of information aboutthe nature and extent of potential complications and to convey thatinformation to users of that system and products.[750] The breach is said to have arisen in three areas:(a) not informing consumers (and others) of problems with the Harditexsystem;(b) not informing consumers about the dangers of untreated timbers; and(c) not informing consumers of the weaknesses in Harditex as evidenced bythe improvements in Monotek.[751] By way of introduction the following are matters concerning which thehomeowners allege James Hardie had knowledge – joint cracking and failures,insufficient detailing in the JHTI, joint and system failures, dry rot and decliningbuilding standards. It is submitted that the Harditex Improvement Project whichcommenced around 1999 is evidence of James Hardie's awareness that its product wasnot fit for purpose. It is argued that James Hardie breached its duty by failing torespond to this.[752] The detail of what James Hardie should have done, and when, is somewhatelusive. It is one thing to say James Hardie knew of some instances of joint failures;it is another to articulate a proposition as to what level of failure was needed to requireJames Hardie to take what steps in relation to such a failure. I consider thehomeowners' case was lacking in this critical second aspect.The evidencePre-1999[753] The homeowners rely primarily on documents created as part of the HarditexImprovement Project to establish James Hardie's knowledge of defects. This sectionconsiders material arising before then. These documents were identified in anappendix to the closing submissions. Of them, the homeowners said:178As to what is said in them, in summary, of these documents for the period1994-August 1999, seven refer to "system failures", two others refer tofailures in terms such as "not regarded as minimal", two refer directly toliability and another to the need for James Hardie to set up a defence plan akinto Shingles, (Mr Mann said the provisioning for Shingles claims in FY 1998was most of $5.465M) one refers to defective componentry, two refer todoubts regarding re-coating and three refer to questionable quality of theHarditex literature or it being misleading. Observations include there being"growing performance issues", a "groundswell of dissatisfaction" and containthe warning that "performance leaking issues will substantially increase".There are observations as to the non-user friendly nature of Harditex in wintermonths, and that framing conditions of moisture and dimensional toleranceare difficult to meet in adverse conditions. There are observations that theCFAR's are incomplete and that technical research is ad hoc and inconsistent.[754] It will be helpful to traverse some of the documents for the purposes ofunderstanding the basis for the submission cited.[755] The first document is the 1994 "Harditex Business Plan", with its purposebeing to identify "a strategic marketing focus" for Harditex. The Executive Summarystates, on page two:In order to protect its position and to grow Harditex sales by 15% (above themarket) over the next 3 years this plan proposes several key initiatives in termsof product development and enhancements, system and product warrantees,distribution, industry education and promotion. This strategy is summarisedin the action programme shown in section 4 4.5.Given the products susceptibility to changes in design trends together withgrowing system failures it is important to protect and grow further thisextremely profitable product by actioning the elements of this plan[756] The homeowners rely on the reference to system failures. The document doesnot develop what is meant by that. I consider the context of the document means it is178 Footnotes omitted.likely a reference to jointing and coating, as they are the weaknesses mentioned withinthe plan.[757] The second document is a sales report for November 1994. The homeowners'closing submissions highlight it for the reference to Harditex issues being on the rise.The relevant passage reads:Harditex issues on the rise. In the main due to Plaster systems coating/jointissues. BRANZ advise these issues are becoming increasingly serious andhave mentioned likelihood of Fair Go becoming involved.[758] The next document is the 1995/96 Operating Marketing Plan, which relates toJames Hardie as a whole. The plan tracks through various James Hardie Products.The objectives for 1995/96 are listed and read:To reinforce Harditex as the ideal substrate for a monolithic cladding look.To extend the product life cycle as Harditex enters maturity.To minimise system failures and limit reputation damage as a result of thesefailures.[759] There is then within the document a section on issues and underlying causes.An entry under issues is "rising number of system failures", and the identifiedunderlying cause is incorrect fixing and jointing.179 The same ideas are contained inthe 1995 Business Plan to which the homeowners also referred.[760] The next document is an internal memorandum written by Mr Cottier, sentprimarily to persons based in Australia. His concern was that the company wasmaking an error in promoting a system when really it was selling a sheet. He was alsounhappy about the idea of approved coatings when what James Hardie was reallytesting was the flexibility of the coating in terms of building movement but otherwisedid not test the quality of coating products, nor control this aspect. He noted intensecompetition amongst coating providers, with cost cutting and bad practice commonplace.179 I note that the statement in the objectives reflects a common theme in the documents which isJames Hardie's concern that errors by others, particularly the coating part of the build, werecausing reputational damage to James Hardie.[761] A reply to this emanates from a New Zealand recipient. The homeowners relyon it for the acknowledgment within it that:Claims for failed or unsatisfactory jobs in New Zealand are not regarded asminimal, in fact we are quite mindful of the current and potential liability.This is probably the principal motivator for us reviewing our policy onHarditex.[762] For context, however, given the overall topic is James Hardie knowledge, theopening two paragraphs should be cited:Thank you for your recent memo on the subject of your concerns with thepromotion to date of Harditex. We share some of your concerns and believethat we have taken steps to address the major issues. The following is ourbrief observations of your main points and we trust that you will find ouractions satisfactory. We would welcome further critique.1. For some time we have been concerned that we have been promoting a"system" that we merely contributed to by supplying a base sheet. To rectifythis we have developed new literature, a copy of the final draft of which isenclosed. Launch date for this literature is Tuesday 1st August.[763] The documents covered thus far give a fair reflection both in terms of contentand context of the material which underpins the homeowners' case. The statementssay what they say, but it is notable they are mostly references to concern about thirdparty work rather than the James Hardie input into "the system". In particular, it is theperformance of coatings that is plainly the primary concern. Although furtherdocuments are relied on by the homeowners, the judgment will not refer further tobare statements of system failure where the context does not provide any reasonablebasis for knowing what is being referred to. I do not consider they can assist thehomeowners.[764] The homeowners next refer to a June 1995 Sales Report, which containsreference to "coating failures gaining momentum", "weather conditions becoming areal issue" and a "need to establish a defence plan for dealing with Harditexcomplaints similar to Shingles".180 My reading of the document is that the weatherreference relates to why sales are declining. The "defence plan" is the author'sthinking about a need to get ahead of the situation, so the author obviously foresees180 At some point, prior legal action had been taken against James Hardie in relation to a shinglesproduct it sold.legal claims. As the document is written, that could only relate to coating failures. Inthe February 1997 Sales Report (it would appear these are monthly documents) thereis a reference to complaints about "metal corrosion joint failures" being on theincrease.[765] An August 1997 document contains the minutes of a meeting James Hardieheld with a group of builders (from the Waikato branch of Master Builders). The areasof concern arising were specifications, jointing systems and applicators, and consumerperceptions. The main specifications issue was unhappiness with the moisture contentrequirements when the wood is not stored under cover by suppliers and arrivessaturated. The builders also noted difficulties in finding room on sites to stand thesheets to dry. There was further concern about changed specifications which seem tobe the requirement to use stainless steel nails, and new rules around relief joints.Another James Hardie employee, Mr Going, agreed horizontal relief joints should inthe past have been emphasised more, and now were.181[766] The next document to note is the June 1998 Business and Operating Plan for1999–2002. The document includes a review of the market position of James HardieNZ. The plan identified that profitability was at risk and there was a lack ofcompetitive advantage. Eight underlying causes are identified, one of which is:There is a developing groundswell of dissatisfaction with Harditex.[767] In 1998 James Hardie entered into a Harditex Premium Warranty trial whichconcerned working with jointing and coating manufacturers to assess whether, as thename suggest, a whole of system warranty might be possible. During this trial, housesdisplayed issues, particularly at joints where pouting and sheet compression were themost prominent failings. Two reports were obtained considering this issue: the firstwritten by Mr O'Sullivan, of Prendos Ltd. Mr O'Sullivan is a building surveyor witha prominent reputation and someone keenly interested in building standards. A secondBRANZ report was written by Mr Cooney, a retired civil and structural engineer andregistered building surveyor.182181 In his evidence Mr MacIntyre had listed horizontal joints as an example of a detail that was not anissue initially, but became so as building standards declined. Hence its later inclusion in JHTIs.182 I note that both report writers were called by the homeowners.[768] Mr O'Sullivan considered the primary cause to be shrinkage of the timberframe subsequent to coating. He also recommended a move to 45 mm studs (arequirement James Hardie implemented in the 1998 JHTI) and reduction in thepermissible moisture content of timber framing to a range of 12–16 per cent. Hedoubted the value of vertical relief joints.[769] Mr Cooney concluded there was insufficient data to conclusively understandthe cause of the issues while noting it was something he had seen on other houses builtin Auckland. He, however, thought it due to timber shrinkage after cladding and somepoor sheet fixing. He also recommended 45 mm studs and a moisture content of16 per cent.[770] My overall sense of the documentation so far relied on by the homeowners isthat it is evidence of some awareness of issues at a particular point in time on the partof some employee, but it is far from establishing anything close to entity knowledge.What is being talked about is often very general, and the scale of the issue being talkedabout is impossible to determine.[771] There is, however, some material that is of better value for the plaintiffs, andthis extract from a 1998 letter of Mr MacIntyre is an example. He is responding to aquery from Australia about expansion joints:New Zealand framing has for many years been reliant on wet Radiata Pineframing. It is only in the last 4 years kiln dried framing has been available.This has had a major influence on our traditional thinking. Even though kilndried framing is used more at present (about 60% of construction) it does notentirely solve the problem. This is because in the New Zealand climate dryframe can rapidly become wet and nullify most of the benefits of this dryframe use. There is a great deal of education to be done with builders toencourage them to close the frame in as soon as possible to keep dry.Another fact is that most floor joists (at least 80%) are still green frametherefore suffer from large vertical shrinkage with 12mm not beinguncommon. We therefore must insist on horizontal control joints at this joistlevel in 2 storey construction.In recent times we have published articles that the jointing of Harditex™ (notfixing) should not be undertaken until the frame has reached 18% moisturecontent. We dare not publish this in our literature as mandatory in NewZealand because in winter this figure is very difficult to achieve on a buildingsite. At this stage it is a guide only.[772] He concluded the email by observing:In summary the main reasons for our strict control and expansion joint regimeis the high drying shrinkage encountered in New Zealand framing timbers andthe high and frequent rainfall encountered on most New Zealand buildingsites.The Harditex Improvement Project (1999–2001)[773] Moving then to the Harditex Improvement Project, and onwards, it is sensibleto begin with an assessment of what the genesis for the project was. The homeownerssuggest it was driven by an awareness of Harditex's flaws, but I consider that is notcorrect. The situation was, I consider, more complex or nuanced, and involved manyfactors. In the 1998 Operating Plan previously noted, there is a recognition ofdeclining sales, increased low price import competition, the lack of new productdevelopment and commercialisation, the lack of a premium product, dissatisfactionwith Harditex, little apparent technical superiority and difficulties with order andinventory management systems. A plan some years earlier had already then referredto Harditex having reached maturity.[774] There can be no doubt that James Hardie was aware that there were issues withHarditex. It was no longer dominating the market and it seems that was a product ofmany factors, some of which were performance related, particularly coating. It wasalso the case that the leaky building crisis was starting to be more widely appreciated,and major players in the industry such as James Hardie would have been well awareof looming changes to the regulatory environment. Mr Rigby, who oversaw the projectat senior management level, identified the motivations for the Project as:(a) declining sales;(b) the fibre cement segment had "matured" and competitors were catchingup so a new generation product was needed;(c) installation standards were dropping and unfair reputational damage wasbeing experienced:(d) a system house cost around $70 per square metre but James Hardie wasreceiving only $13.50 of that; and(e) a new established competitor had entered the market.The aim of the project was to come up with a better and more differentiated flat sheetproduct.[775] Overall, the evidence on this was clear. All these factors, consistent one mightthink with how a large business such as James Hardie must operate, meant it was timeto look at the product and assess what to do with it, and that is what the HarditexImprovement Project was about. As will now be seen, part of that exercise was tocritique the existing product. That was an exercise that has produced a rich source ofmaterial for the homeowners. The preceding analysis is not directed to the value ofthat evidence. Rather, it rejects the proposition that the genesis for the project wasexisting awareness of a deficient product from a performance viewpoint.[776] As a general observation, there were many internal documents created duringthis period that contain statements critical of Harditex and its performance. WhilstJames Hardie would argue they reflect a culture of open discussion, and of breaking aproduct down to create a better one from the ashes as it were, it remains the case thatthe statements exist in the documents. However, it is often the case that the whole ofthe document provides a context which ameliorates the apparent starkness of thecritical observation.183[777] To provide an example of this pattern of stark criticism balanced by context,one document starts with a statement that there are a range of potential problems withHarditex, including poor fixing, stopping and coating, owner/developers and after-the-job problems such as creasing and tears. In some cases, it is being discovered that nohead flashings were installed. The homeowners fairly rely on these introductorycomments as evidence of awareness of wider system issues, albeit the scale of them183 In terms of format, many of the documents are discussion point documents for meetings, recordsof meetings, or overhead slides presumably for presentation at meetings. Sometimes authors areknown, many times not.cannot be determined. The conclusion to the document, however, balances this to theextent that it reveals James Hardie's perception of the problems:H/TexWe need a meeting with DEM KM GDH JGB & other interested parties toformulate answers & policies of how we handle complaints on HarditexSystem!– letters on builders who have fixed incorrectly – copy on file to come –JHBS.– Education to the trade on why they should do it correctly & consequencesif they don't– Have our own supply fix a Coating Service ? which we carry the can. i.e.warrantees on System– Educate the sales team to recognize the problems & work out solutions.Should our sheets be totally sealed, if so, with what? Must be [compatible]with a large variety of coating applications[778] The conclusion highlights an oft-repeated criticism of James Hardie – namely,that it always saw it as someone else's problem. In this document it is builders, trade,and the coating systems. The criticism is, I consider, a valid observation, but it is alsorelevant to determining whether James Hardie had knowledge of a flawed product. Asthis reflects, James Hardie believed its product was sound and it was those using itwho were making the errors.[779] Five further documents can be used as representative examples of thehomeowners' basis for alleging actual or constructive knowledge of problems. Thedocuments are said to show James Hardie was aware of fundamental problems butpersevered with Harditex anyway. The first document is a set of notes dated30 September 1999. They are said to show both awareness of issues, and also a corelack of knowledge on James Hardie's part about its own product. This lack ofknowledge is submitted to reflect the absence of testing that should have been doneprior to the launch of the product:Joint & coating Systems(1) JH has not kept abreast/up to date with in changes in jointing &coating Systems(2) No performance criteria for inservice conditions of Harditex Joint &Coating Systems.(3) There is very limited [liaison]/relationship between JH & CoatingSystems manufacturer(4) lack of knowledge of integratory of the sheet edge after recessing.(5) Lack of knowledge of the technical [characteristics] of jointing &Coating SystemsRecommendations(1) determine the [characteristics] of the currently recommended jointing& coating systems(2) Establish a formal performance Specification for Joint/Coating[manufacturers]Action Plan– To contact & introduce JH evaluation programme. Begin obtainedsamples & specificationM.R.G. Selected – Fosroc, Nuplex, Resenes, Wattyl, ICI.[780] The second document contains notes of a project meeting held on16 September 1999:Gather information on the performance of Harditex in existing installations.Objective.To gather the experience of James Hardie, texture coating manufacturers,installers and BRANZ in order to identify the key contributing factors in thefield performance of HarditexPurpose.To ensure that all the factors influencing the system are identified and theobserved response of the Harditex system to these drivers is understoodTask.Convene a meeting to download all issues related to Harditex failuresIdentify common causes.Assign members of the group to research particular issuesReconvene, discuss and agree on the key technical drivers that affect Harditexmonolithic systems.Make recommendations for study and improvement[781] The third is an undated typed document labelled "Systems issues" under whichare recorded:– joint performance– surface finish– mechanical leaks.[782] After this list there is then a handwritten question suggesting a fourth:– product – ease of use?[783] The fourth document is a handwritten page noting:– The Harditex System Construction process is complex– Industry does not have a large pool of suitably trained and skilledinstallers;– In an increasing cost driven industry, short cuts are used to maintainbuilder margins.[784] Finally, it is important to refer to a document penned by Mr Knox. Mr Knoxwas head-hunted, for want of a better word, from a concrete construction firm and wasto become the successor to Mr MacIntyre. When he came to James Hardie he wasseen as a young talent who could shake up the thinking and advance matters.Mr Rigby, who recruited him, described him as a fresh set of eyes.[785] About four months after joining the company, Mr Knox wrote an issues papercalled "Framing and the Harditex Improvement Project". It was about timber framingand various industry players were consulted. In this paper Mr Knox concluded direct-fixed systems were flawed. The paper also appeared to regard Harditex as a face-sealed system (both points which James Hardie dispute). Of Harditex, Mr Knoxsuggests:The concept of direct applied cladding systems is proven to be unreliable andif any aspect of the design, construction process and componentry of thecurrent Harditex offer are not perfect, then the system is likely to be unreliable.Under Recommendations he wrote:RecommendationsA proposed method of overcoming these issues, which has been discussed, isto move the watertight skin away from the structural frame in order to createa cavity and a degree of separation between the frame and the watertight skin.This can be achieved by fixing a batten to the wall which will alleviatereflective movement in sheets caused by framing movement.The second proposal is to include a drainage system in the cavity provided, socondensate and moisture can escape, thus minimizing frame movement andimproving the prospect of durability of framing (thus should allow theconfirmation that environment is in fact H1).Along with these two system changes, it will be imperative that flashingsystems perform adequately. Therefore a new range of flashings shall beprovided.The above three would be classed as leadership or innovation. It isquestionable whether these are merely improvements or new system concepts.There is growing urgency to ensure these system developments areimplemented without delay.A secondary measure could be in partnering with say Winstone Wall Boardsand/or Timber Manufacturers in order to promote good construction practicefor timber and steel frame, and this may be an interim measure.One long term initiative could be to commission Forest Research to provide aspecification based on the Harditex system for the timber which is used, ie. toassess the environment and conditions (durability and stability) and give anopinion on the treatment level of timber that is required Should chemical freenot be acceptable, James Hardie could then take a leadership role indisallowing the use of chemical free timber with their products This may thenpull the industry into looking more closely at chemical free timber.There is also other long term developmental opportunity with Forest Researchfor funding, in terms of the adoption of overseas drying processes andmethodologies, and new age treatment products However for this to be ofbenefit we would need a clear strategy and purpose for doing thisAs we can see, our current system is behind the eight ball, if we wish toparticipate in our industry as a leader or innovator in fibre cement cladding wemust keep abreast of overseas developments and trends. This will require aconscious investment from the technical team, and if well done, will havevalue for the US and Australian Businesses.One final suggestion is that we might develop a template for cladding systemconcept and development, which may become a part of the PAC process[786] Coming as it does from a system designs engineer in James Hardie, andsomeone who was later to become a Development Project Engineer, this is a high-water mark document for the homeowners' case.[787] One of the persons consulted by Mr Knox in preparing the paper wasMr O'Sullivan of Prendos. Mr O'Sullivan was a vocal critic of the use of untreatedtimber, and an early and persistent advocate for the use of cavities. James Hardie wasone of the targets he sought to convince. Based on Mr O'Sullivan's evidence in thiscase, and his writings from that period, what Mr Knox wrote in this document suggestshe was influenced by Mr O'Sullivan's viewpoint.[788] While on the topic of Mr O'Sullivan, I observe that his views were notuniversally accepted. This is evidenced by the fact that the main regulatory change in2005 still allowed direct-fixed fibre-cement cladding in many situations. Likewise,BRANZ maintained its accreditation certificate for the life of Harditex. Eventuallythe regulatory solution swung Mr O'Sullivan's way, but I do not consider it can besuggested James Hardie was somehow at fault for choosing not to change becauseMr O'Sullivan suggested it was the way to go.[789] Continuing with the homeowners' case that by the end of the year 2000 JamesHardie had or should have had sufficient awareness of a faulty product to have acted,the closing submissions identify several matters that reinforce this proposition:(a) Mr O'Sullivan's various statements, known to James Hardie, concerningthe desirability of treated timber and cavities;(b) discussions within James Hardie about the need to update the JHTI;(c) discussions within James Hardie that reveal awareness of an initial lack oftesting and of the current need for more;(d) discussions within James Hardie about potential legal liability. This is saidto both be indicia of an awareness of real exposure and a topic that mustreflect internal uncertainty about the merits of the product; and(e) numerous references in documents to the need for urgent action.[790] It is fact that all these topics arose somewhere in one or more documents. Somedocuments expressed greater conviction about the existence of issues, or at leastgreater anxiety over them than did others, and some expressed themselves morecolourfully or emphatically than others. As an example, Mr Bloxham held a seniorposition in sales and marketing in James Hardie. His internal correspondence is a richsource for the homeowners. An internal memorandum he wrote in November 2001provides an example:Events continue to unfold and learning occurs weekly if not daily. AlthoughJames Hardie are without documented evidence at this point the followingissues may affect James Hardie's liability. Action may be required to avoidcreating further liability.1. The fibre cement clad medium density housing stock, that we haveknowledge of, affected within two years of construction in Aucklandalone exceeds 300 units and growing. Remedial costs may beapproaching $10m.2. Some of these homes are affected with rots that produce carcinogensand toxins requiring occupant relocation[791] Strong words indeed, but, as is frequently the case, the balance of the documentreflects a viewpoint of other persons being at fault. The memorandum sees the choiceof timber as the primary source of rot issues;184 it doubts cavities would solve thisissue; it notes increasing requests for James Hardie to attend the site, seen by the authoras an attempt to move liability around; it notes some cladding partners (coaters) areacting without integrity, and that none understand well the current timber issues; itrecords a concern James Hardie is being seen as condoning bad practice, and in thiscontext makes a point about the JHTI which the homeowners highlight:The "gaps", anomalies and partner integrity of our current published"Harditex" system is clearly unreasonable in today's environment.The memorandum continues on to note a contradiction between James Hardie's focuson its sheet, and the industry's focus on its system, and concludes that any site visitsneed to be better considered, and their scope clarified.[792] Next, in March 2002, in a monthly report, Mr Bloxham wrote:Issues• JHNZ "relationship" with Wattyl is extremely difficult to defend aftermonths of them being unable to supply a warrantable jointing systemto a couple of significant sites urgently requiring rework.• No attempt to date by SAP team to provide FMU & Contractingmodules which is an essential tool for these operations• Literature being mailed out in quantity daily still specifies chem. freetimber with no addendum alerting readers of the issues, this must nowbe deemed as technically irresponsible and I fear our legal obligations184 In another document Mr Bloxham refers to a Forest Research study which may suggest treatedwood was less effective than kiln-dried.on any buildings constructed in the last 6 months to our publishedspecification failing.[793] The homeowners understandably refer to the last bullet point. There are otherdocuments to like effect. There is no doubt Mr Bloxham had concerns about the stateof the literature, and particularly the situation with timber framing. The documentsgenerally do not explain what Mr Bloxham actually wanted done, but it is clear hewanted modifications.[794] As stated at the outset, I accept there are internal documents which suggest thatsome staff members, of at least reasonable seniority, had concerns about aspects of theHarditex system. This is not surprising in a way given that there was by now nationalconcern over leaky homes and James Hardie was a major industry player. Differentpeople within James Hardie inevitably had different takes and insights, and indeeddifferent stress levels and resilience to these matters.Senior Management[795] Before concluding on whether James Hardie had knowledge of risks, or oughtto have known of them, such as to require it to act by warning, it is necessary to setout evidence from members of the senior management team at James Hardie. Manybut not all of the documents to date have been documents internal to groups withinJames Hardie. Exceptions to this are business and operating plans which are company-wide documents. Further, within each group there would have been a seniormanagement person who presumably saw most of the group's documents.185[796] The defendant called three witnesses from the senior management team:(a) Mr Mann who was financial controller, and then Finance Manager andCompany Secretary from 1986–2001. He was a director of various entitieswithin the James Hardie Group, including James Hardie Building Products(now Studorp) from 1993–2001, and between 1998–2001 was a directorof James Hardie New Zealand Ltd and its holding company, James HardieNew Zealand Trustee Ltd.185 For the Harditex Improvement Project, that person was Mr Rigby who testified.(b) Mr Rigby who was initially Commercial and Product DevelopmentManager, and then Sales, Marketing, Planning and Product DevelopmentManager from January 1998 to December 2002; and(c) Mr Kidd who was General Manager, Sales and Marketing, in 2004–2005.This was immediately prior to Harditex withdrawal. Then from 2005 hewas the overall General Manager of James Hardie New Zealand.[797] Mr Mann describes the purpose of his evidence was:to give my perspective on the view within James Hardie management ofHarditex as a product; on management's awareness of some issues associatedwith buildings that were clad with Harditex; and on the nature and style ofmanagement at James Hardie.[798] The focus of the judgment will be on the first two aspects.[799] Mr Mann's primary responsibility as Finance Manager was to manage theaccounting for James Hardie Building Products. In this context he was one of the firstto hear about any threatened claim or litigation. Mr Mann describes a pattern ofmonthly management meetings within which financial updates were considered andat which each departmental head provided an update on their area. Following themeeting, the New Zealand General Manager provided a report to the Australianmanager.[800] Mr Mann says that if there were real concerns that a sub-standard James Hardieproduct was contributing to leaky building issues, it would have been raised at themeeting. To his knowledge it never was. To the extent this topic of leaky buildingscame up, the analysis lay the blame at the feet of faulty workmanship and timberframing issues. Mr Mann says that James Hardie was proud of Harditex which was asuccessful product. Issues with products were sometimes referred to seniormanagement, and two he noted with Harditex were mould, and jointing and coatingissues.186 In Mr Mann's view, the reported issues were small relative to sales, and186 James Hardie's analysis, well documented elsewhere, is that the presence of mould was down toa paint issue, and that the coating and jointing issues, mainly pouting, were aesthetic rather thanfundamental.provision was never made in the accounts for potential liability for moisture issueswith Harditex. Had that been seen as a real risk, provision would have been made.[801] Cross-examination of Mr Mann largely followed a pattern of putting to himdocuments he would have seen, or probably saw, over the years. These documentscontained reference to issues, or system issues. James Hardie is correct it was neverput to Mr Mann that he or the senior management team must have known there wereperformance issues with Harditex. Possibly the aim of the examination was more toestablish a "should have known" situation.[802] Mr Rigby joined James Hardie in 1998 from Firth Concrete, which is the firmfrom which he recruited Mr Knox. Mr Rigby was on the same level within themanagement team as Mr Mann. The Harditex Improvement Project was under hiscontrol.[803] The tenor of Mr Rigby's evidence is that the Harditex Improvement Projectwas not an initiative driven by a concern that Harditex was failing. To the extent thatthe project generated documents critical of Harditex, this was part of amanagement/project style that encouraged a ground up analysis and tested existingthinking. More generally, and in response to differing views from Mr O'Sullivan,Mr Rigby advances the proposition that James Hardie was a responsible and interestedleader in the building industry and at the forefront of efforts to resolve the leakybuilding crisis.187[804] Mr Rigby was asked about Mr Knox's framing paper where Mr Knox hadconcluded that the direct-fixed system was unreliable.188 Mr Rigby explained that itwas Mr Knox's role, to challenge, but that he disagreed with the paper. Further, afterdiscussion he considered Mr Knox agreed it was overstated.189 To the extent the Knoxpaper is relied on by the homeowners, I record that I accept Mr Rigby's evidence. It187 A significant portion of the evidence covers Mr Rigby's interactions with Mr O'Sullivan. Thereare differing recollections it is unnecessary to resolve. However, to the extent Mr O'Sullivanthought Mr Rigby had committed James Hardie to some Harditex change, I consider it amisunderstanding on Mr O'Sullivan's part, and something not reflective of how a large businesswould implement change.188 See above at [785].189 My words.was obvious it was a challenging paper written by someone who had only recentlyengaged with sheet cladding and timber framing. I accepted Mr Knox's own reviewof it that he gave while testifying in this case. He considers aspects of the paper wrongand notes the lack of actual evidence to support his generalised conclusions.[805] The topic of whether James Hardie should have led the market by stipulatingfor H3 treated timber was explored with Mr Rigby. He considered it was not aninitiative that James Hardie could just mandate. Untreated timber was permitted bythe code, and as a consequence there was not much treated timber available in themarket. Mr Rigby believed that it was an area that required collaboration with, andthe cooperation of, main timber suppliers.190[806] The third of these senior management witnesses is Mr Kidd. He was at JamesHardie, initially overseas and then in New Zealand, from 1996–2010. He was GeneralManager by the time Harditex was removed from the market. Prior to coming to NewZealand, he was not involved in the fibre cement aspect of the business and had nopersonal view on Harditex. The focus of his evidence is on the years 2004 and 2005and the decision to discontinue with Harditex.[807] Mr Kidd says in 2004 monolithic cladding sales were generally in decline, andthe company was struggling to achieve an uptake of Monotek. Harditex had, heconsidered, become synonymous with fibre cement products, and had suffered branddamage as a consequence. Mr Kidd says there was no collective view within JamesHardie that Harditex was a defective product:Our view, and my view, was that the instances of failed projects that had beenclad with Harditex were due to a combination of inadequate [house] designand workmanship practices, and to some extent with performance issuesarising out of the underlying timber framing or the jointing and coatingsystems. Harditex remained an important product for James Hardie. It hadperformed very well for a long time and we believed that it worked when itwas installed by a competent tradesperson in a properly designed and well-built house.190 James Hardie, as evidence of its claimed good citizenship in the building industry, cites theevidence about it following such a process in relation to shifting the industry from 35 mm to45 mm studs.[808] Mr Kidd then explains the strategy with Harditex and Monotek. It wasbelieved Harditex would become an Acceptable Solution under the revised Code andremain as a generic product with a product only warranty. Monotek would bemarketed as a "value-added proposition" at a higher price point with a comprehensivewarranty. Thinking changed, however, as Harditex sales declined and there wasongoing uncertainty about the final format of the new Acceptable Solution criteria.[809] Mr Kidd then reviews discussion with BRANZ over the appraisals for bothproducts, and the implications of delays in an appraisal for Monotek. He linked thesedelays to the fact that Monotek appraisal was going to include approved coatingsystems, and there existed no established method of testing their performance. Hisevidence then traverses the history of internal discussions and the cumulation offactors that saw Harditex removed. The point, as I understand it, to this evidence is tosupport the defendant's position that it was not discontinued because of known defects.Mr Kidd was not cross-examined on this evidence.[810] The homeowners point to two categories of witnesses that were not called:(a) Witnesses who make statements (in the documentation) that could be orare of assistance to the plaintiffs. In particular, reference is made to MrBloxham, and to Mr Going who was in the tier below Mr Rigby but aperson with whom Mr Rigby consulted; and(b) Witnesses who might have been thought to be in a position to support thelack of knowledge defence but were not called.[811] The Court is invited to draw adverse inferences. Reliance is placed on thispassage from Ithaca (Custodians) Ltd v Perry Corporation:191[153] The absence of evidence, including the failure of a party to call awitness, in some circumstances may allow an inference that the missingevidence would not have helped a party's case. In the case of a missingwitness such an inference may only arise when:(a) The party would be expected to call the witness (and this can be so onlywhen it is within the power of that party to produce the witness);191 Ithaca (Custodians) Ltd v Perry Corporation [2004] 1 NZLR 731 (CA).(b) The evidence of that witness would explain or elucidate a particularmatter is required to be explained or elucidated (including where adefendant has a tactical burden to produce evidence to counter thatadduced by the other party); and(c) The absence of the witness is unexplained.[154] Where an explanation or elucidation is required to be given, aninference that the evidence would not have helped a party's case is inevitablyan inference that the evidence would have harmed it. The result of such aninference, however, is not to prove the opposite party's case but to strengthenthe weight of evidence of the opposite party or reduce the weight of evidenceof the party who failed to call the witness.[812] I accept the absence of Mr Bloxham who works still for James Hardie is notsatisfactorily explained. The point on all this material, however, is that the inferencesought by the homeowners is in fact drawn by the Court. Namely, there were personswithin James Hardie who believed there were issues with Harditex needing to beaddressed. The evidence does not suggest their circumstances were such as to maketheir viewpoint any more authoritative than others, and what they have said is part ofthe record. I accept the homeowners have lost the opportunity to explore with, say,Mr Bloxham why he thought what he did, but am not willing to go beyond his writtengenerated assertions.[813] As for the lack of knowledge "defence", I am satisfied that persons able tospeak to the viewpoint and knowledge of senior management were called. Theseincluded the General Manager at the relevant time, the main financial officer, and thehead of the team responsible for the Harditex Improvement Project and thedevelopment of Monotek. That seems to me a reasonable group to make available forcross-examination.[814] Overall the witnesses left me in no doubt that there was no corporate beliefwithin James Hardie that Harditex was a defective product. The witnesses said thisclearly in their evidence, were not directly challenged on it, and were, in my view,very sound witnesses.[815] More generally, although there is a lot of talk in documents of system failures,and system issues, a very small percentage of that talk is linked to anything other thanfailings with the coating. These of course can have moisture implications but theprimary issue from James Hardie's viewpoint was that it looked bad and thisundermined the Harditex brand. That is not to say there were never issues aboutperformance, with rusty nails, and the 35 mm stud being examples. But overall thecontent of the document did not point to a knowledge of a failed product.Assessment[816] I turn to the three areas which it is alleged that James Hardie has breached itsduty by failing to react to an emerging situation –(a) whether there existed a body of knowledge that meant James Hardieshould have warned consumers about the dangers of Harditex;(b) whether James Hardie should have done something about untreatedtimber; and(c) whether the improved aspects of Monotek meant product modificationwas required in relation to Harditex.Knowledge of problems requiring consumers to be warned[817] It is necessary to begin by stating the obvious. Since the conclusion of thejudgment is that Harditex is not a fundamentally flawed product in terms ofweathertightness, it is unlikely that James Hardie breached its duty of care by notalerting the consumer or community or users to weathertightness deficits. Basically,if the Court's conclusions are correct, it follow James Hardie could not have known ofdeficits that did not exist. However, it is appropriate to consider further thehomeowners' case.[818] There is little in the documentation that suggests there was a belief, or shouldhave been a belief, that aspects of the Harditex product were failing or concerningwhich a risk required special action. Issues came up along the way, but were dealt byother means. Examples of this were mould (traced by James Hardie to issues withpaint), rusty nails (traced by James Hardie to galvanisation issues but responded to byobtaining and mandating a different option) and 35 mm timbers (permitted by theCode but recognised to be a difficulty for builders, so responded to by initiating anindustry-wide project to change views and then mandating bigger studs). It is possibleto debate whether the conclusions reached by James Hardie were correct, but in thiscontext a point to be made is that these other processes show that issuing warnings isjust one option, and possibly one of the last ones.192 Fixing the problem would seema better option, and if it is not a problem which creates a significant risk for existingdwellings, then nothing else is needed of the reasonable manufacturer.[819] Some contextual matters are relevant here. If one takes the Hunn Report'sconclusions, there is no real suggestion that faulty products are the cause of the leakyhome crisis. Harder to work with products, or products less tolerant of mistakes, nodoubt contributed, but that is not of itself a flaw with the product. Likewise, as notedbefore, in 2005 the new regulatory scheme made direct-fixed fibre cement likeHarditex an Acceptable Solution for some designs. It was not until 2011 that thegovernment concluded cavities were necessary in all cases. If James Hardieconsidered direct-fixed fibre cement to still be a sound cladding option, and it did, itwas not alone.Untreated timber[820] It was a regulatory change that allowed the use of untreated timber, and thereis no evidence that there is any untreated timber issue specific to Harditex. In otherwords, the problem is the reaction of the timber to moisture, not to Harditex or anyother cladding. I was pointed to no authority that would support the proposition thatin such circumstances Harditex breached its duty by not either warning consumers ofthe risk of untreated timber, or not mandating its use. I also observe it is also a riskthat is completely obvious – if timber is not treated, it is more vulnerable to the verythreats that were the reason it was previously treated. It is not an obvious subject fora warning.192 Note should be made to the evidence of Mr Tyson, the Managing Partner of a large internationalstrategic communications firm. He gave evidence on the processes that would be followed withina large company in terms of addressing something such as a product warning. I have not found itnecessary to rely on the evidence.[821] It could be argued that as awareness of the leaky house crisis emerged, theobligation to warn about untreated timber, or to mandate treated timber arose. Theproposition would be that once there became knowledge of a greater number of housesallowing moisture ingress, so there must have been awareness that using untreatedtimbers in houses increased the risks of damage. That was certainly Mr O'Sullivan'smessage. The proposition that there should have been this awareness must be correct,but it is still a considerable step to reason from that position to the proposition that aspecific manufacturer, no different from any other manufacturer, had a duty to warnof the perils of framing a house with material the regulatory scheme had specificallybeen amended to allow.[822] I accept it was within the capacity of James Hardie to either require treatedtimber (as it did with 45 mm studs), or to warn in its literature of the risks of usinguntreated timber. It is unclear to me on the evidence exactly when the point mighthave been reached, but in any event I do not accept there was a breach of duty. Acontrast can be drawn with the 35/45 mm stud issue. It was an issue directly linked tothe Harditex product and how it performed. Untreated timber has nothing to do withthe product and how it performed.[823] It is also relevant context to whether a duty arose that both Mr Rigby andMr Knox commented that by 2000 treated timber was being phased out (Mr Knoxthought aggressively so) and kiln-dried chemical-free timber was the predominantproduct available. It would not be reasonable to require a cladding manufacturer,whose product worked equally well with either permissible form of timber, to stipulatefor one type which was comparatively scarce. The effect would inevitably be toundermine sales of the product.[824] It has not been shown that James Hardie breached its duty by failing to stipulatefor untreated timber, or warning consumers of the dangers of using it.Monotek improvements[825] The existence of a better product cannot of itself require a manufacturer to givewarnings about the deficits in its lesser product. James Hardie rely on a passage fromthe Canadian Supreme Court.193Technological change is a modern-day reality that is characterized by the rapidpace at which improvements are made to products. The trial judge rightlynoted that manufacturers are constantly redesigning their products: [2003]R.J.Q. 2194, at para. 161. He was wary, and rightly so, of a tendency tocondemn a manufacturer simply because a different version of the originalproduct has since emerged on the market. Selling an improved or betterperforming version of a product does not render the previous versiondefective. Differences in quality and possible use between these two versionsof the product cannot be characterized as a latent defect.[826] It is unnecessary to address this further since the focus must be on Harditexand its performance, not on whether Monotek was better. As an example, the h-mouldfor Monotek had a sloping rather than flat surface. Conceptually this is a better designfrom a rainwater viewpoint. However, the earlier analysis of the building science ledto a conclusion that the existing flat h-mould surface worked. The better later onedoes not make the existing one defective, just not as good. The earlier conclusionsconcerning Harditex mean that the developments in Monotek, even if an improvement,did not require changes to be made to Harditex.Conclusion[827] First, some formal conclusions on knowledge.[828] The evidence shows James Hardie was a leading figure in the building industry,and involved in many aspects. It recognised, for example, that it had a role to play insolving the leaky home issue even if it did not believe its product was a cause. Myassessment is that James Hardie, as no doubt do numerous big industry players, hadvery knowledgeable employees who understood the area and kept abreast of issues.The company's position and activities meant its employees were in regular contactwith organisations such as BRANZ, an obvious source of input and information on193 ABC v Domtar Inc 2007 SCC 50, [2007] 3 SCR 461 at [49]. In that case a vendor was deemed,pursuant to the Civil Code, to have knowledge of the defects in aspects of the goods it was selling,and to have breached its duty to inform the purchaser of that defect.industry matters. James Hardie was regularly represented on industry forum bodiessuch as the Claddings Institute. It seemed to have regular contact with, and keepabreast of work done by, organisations such as Forestry Research.[829] I accordingly would first find as a fact that if there existed relevant industryinformation, James Hardie would know of it. Accordingly, if there was a publishedevidential basis that established a risk concerning which action should be taken, it isalmost certain James Hardie would know of that evidential base and have access to it.Further, even if not published material, James Hardie would also generally be awareof industry concerns. Its meeting with the Waikato Master Builders is an example ofthe type of contact that informed James Hardie of industry experiences and concerns.[830] Second, the senior management witnesses said that there was no understandingwithin James Hardie that Harditex was a flawed product from a performanceweathertightness viewpoint. I accept that and do not consider the internaldocumentation undermines that evidence. I accordingly find as a fact that seniormanagement did not know or believe there was a problem with Harditex.[831] Third, the technical teams also attributed issues to third party errors. That isnot to be confused with a belief Harditex was perfect or could not be better. Just thatit worked, and that emerging issues were down to declining building skills. Theevidence in the case is that the evolving JHTI was a response to that decline, as werethe BRANZ initiatives such as the Good Texture-Coated Fibre-Cement Practice Guideit published in 2001.[832] I move from these three formal conclusions on actual knowledge to the topicof whether James Hardie should have been aware of issues that in fact required a publicresponse in order to avoid breaching the duty of a reasonable manufacturer to takecare. Consistent with earlier conclusions in the judgment, I formally conclude therewere no issues that gave rise to a need to warn, or to change the product. It followsthat James Hardie ought not to have been aware of them.[833] The homeowners therefore fail in the claims in negligence under the three areasin which I have analysed the case.FAIR TRADING ACT CLAIMSThe Law[834] Focusing essentially on the JHTIs, the homeowners alleged that in numerousways James Hardie breached the Fair Trading Act. The two relevant provisions aress 9 and 10 which provide:9 Misleading and deceptive conduct generallyNo person shall, in trade, engage in conduct that is misleading ordeceptive or is likely to mislead or deceive.10 Misleading conduct in relation to goodsNo person shall, in trade, engage in conduct that is liable to mislead thepublic as to the nature, manufacturing process, characteristics, suitabilityfor a purpose, or quantity of goods.[835] To illustrate the claim, the pleadings in relation to Bay Lair say:33. At all material times James Hardie was in trade in relation to thedesign, development, manufacture, testing and supply of JamesHardie building products, approved accessories and systems, theHarditex 1987 and 1991 Technical Information documents and theHarditex Cladding System used at the property.34. James Hardie engaged in misleading and deceptive conduct in thedesign, development, manufacture, testing and supply of JamesHardie building products, approved accessories and systems, and inthe statements made in the James Hardie Technical Informationdocuments up to and including the Harditex July 1991 TechnicalInformation and the Harditex Cladding System used at the property(as pleaded below).[836] Preliminary issues requiring consideration are the scope of the concept of "intrade", who should be seen as the consumer of the literature, what is needed to showa particular plaintiff has suffered loss or damage by reason of a breach (the causationissue), and a Limitation Act defence.[837] Concerning the statutory concept of "in trade", it can be seen that thehomeowners claim breaches by James Hardie in relation to the design, development,manufacture, testing and supply of the Harditex sheet and system. This necessarilyrepresents a submission that all these activities fall within the concept of "in trade". Itis common ground that James Hardie was in trade in relation to the supply of Harditex,and in publishing the JHTIs. James Hardie otherwise submit that internal matters suchas design and testing are not conduct "in trade" for the purposes of FTA. They arematters that are preparatory to conduct in trade but do not themselves have that quality.[838] Trade is defined as:194 any trade, business, industry, profession, occupation, activity of commerce,or undertaking relating to the supply or acquisition of goods or services or tothe disposition or acquisition of any interest in land".[839] The requirement is that the impugned conduct be in trade. It is not enough thatthe entity in general is in trade. The following passage from Concrete Constructions(NSW) Pty Ltd v Nelson, commenting on equivalent Australian legislation, assists:195Indeed, in the context of Pt V of the [Trade Practices Act 1974] with itsheading 'Consumer Protection', it is plain that s. 52 was not intended to extendto all conduct, regardless of its nature, in which a corporation might engage inthe course of, or for the purposes of, its overall trading or commercialbusiness. What the section is concerned with is the conduct of a corporationtowards persons, be they consumers or not, with whom it (or those whoseinterests it represents or is seeking to promote) has or may have dealings inthe course of those activities or transactions which, of their nature, bear atrading or commercial character. Such conduct includes, of course,promotional activities in relation to, or for the purposes of, the supply of goodsor services to actual or potential consumers, be they identified persons ormerely an unidentifiable section of the public.[840] The homeowners rely on statements in various decisions that refer to theconcept of "in trade" as being "a broad term encompassing all kinds of commercialdealing",196 and cite particularly this passage from Peterson v Merck Sharpe andDohme, a first instance decision of the Australian Federal Court:197The respondents also submitted that so much of MSDA's activities as wereconstituted by the (internal) development of its marketing campaign did notamount to conduct "in trade or commerce" because such activities did notoccur "in the marketplace". Such a proposition is too sweeping. It is clearfrom Concrete Constructions that things said and done (and, for that matter,omissions) internally to a trading organisation may, in appropriatecircumstances, amount to conduct in trade or commerce within the meaningof s 52. All will depend on context.194 Fair Trading Act 1986, s 2.195 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at [7], cited in RobertHollyman Falsehood and Breach of Contract in New Zealand: Misrepresentations, ContractualRemedies, and the Fair Trading Act (Thomson Reuters, Wellington, 2017) at 141.196 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [26].197 Peterson v Merck Sharpe and Dohme (Aust) Pty Ltd [2010] FCA 180, (2010) 184 FCR 1 at [890](emphasis added).[841] I accept for present purposes the proposition that something internal may inappropriate circumstances amount to conduct in trade. However, there is nothingspecific in relation to the development of Harditex that suggests its design, planning,development or testing was conduct in trade. If it were, all product developmentwould be.[842] Peterson is actually an example of the limits of the concept of "in trade". Theissue there was whether product information associated with an anti-inflammatorydrug was misleading, essentially because of what it did not say about a side-effect.The plaintiff in that case had put in issue the marketing strategy in relation to the drugas a relevant category of information. However, the case does not suggest this strategycould amount to conduct in trade. This is clear from the balance of the paragraph fromwhich the earlier extract was used:198However, the limits of such a proposition do not need to be tested in thepresent case. To the extent that it was based on what was said to be MSDA'smarketing campaign for Vioxx, the applicant's case required that the "Vioxxrepresentations" be disseminated to pharmacists, medical practitioners andother health care professionals. His s 52 case did not involve the contentionthat, merely by internally developing that campaign or an associated strategy,MSDA would contravene the section. In one aspect of the way the applicantdeveloped his case, he did submit that an inference of external disseminationshould be drawn from the internal development of the marketing campaign.That is an evidentiary question to which I shall turn, but in no sense was theapplicant contending that the internal development of the campaign was, assuch, the conduct in trade or commerce on which he relied.[843] The only other authority relied on by the homeowners in support of their widerscope of "in trade" is an unreported New Zealand High Court decision NorbrookLaboratories Ltd v Bomac Laboratories Ltd (No 3).199 There Heath J held thatrepresentations made to a regulatory body in order to gain approval to release a drugwere conduct in trade.200 It can be observed that in that situation there is a much moreobvious and proximate connection to supply than the conduct identified here. Therethe conduct is acts done to obtain a licence to supply in trade. Further, and highlightingthat the concept of "in trade" is not one which has generally been extended back intothe development phases of a product, Jessup J in the Peterson case took the opposite198 At [890].199 Norbrook Laboratories Ltd v Bomac Laboratories Ltd (No 3) HC Auckland CP249-SW02,2 December 2002.200 At [215].view to that of Heath J and doubted that statements to the drugs regulator for thepurposes of approval were conduct in trade.201[844] I consider these authorities fall someway short of bringing within the definitionof conduct in trade, activity which on the plain definition would appear to fall welloutside it. I accordingly take the view that conduct such as design and testing, whereit is itself not the subject of a relevant representation within the JHTI, does not fallwithin ss 9 and 10 of FTA.[845] The second preliminary issue is the class of persons to whom the statementshould be regarded as being directed. This has already been considered in earlier partsof the judgment.[846] James Hardie says the JHTI was directed at, and correctly so, competentprofessionals. The homeowners respond by saying it was known, or should have been,that owner-builders were "a substantial part of their customer base". I am unclear asto the evidential basis for the "substantial" component of that statement, but alsoobserve it avoids the question. Is the reasonable target audience an owner-builder withno idea of how to build and no sound basis on which to be trying to do so? There isno evidence to suggest such a person should have been understood by James Hardieto be a likely consumer of this material.[847] The context in which a house is built tells against such a proposition. Theowner-builder has to submit plans for a consent to build. Those plans have to be of alevel that will satisfy the relevant territorial authority that if the house is built inaccordance with the plans and the JHTI, it will meet the performance requirements ofthe Code. The Code consists of, or incorporates, numerous standards, some of whichare highly technical and require specialist knowledge and skill. One is not talking hereabout putting together a kitset, an activity most people are willing to try (once) andwhere a reasonable literature producer should assume only a very rudimentaryknowledge. James Hardie were entitled to assume that only persons with the necessaryskill and knowledge would undertake construction of a home. I see no reason whythey should expect or cater for an owner/builder who did not meet that skill level. The201 Peterson, above n 197 at [887].homeowners' reliance on owner/builders does not therefore alter the correct analysisof who the target audience was, and should have been.[848] The defendant's further propositions on the topic are otherwise unanswered bythe plaintiffs:(a) the appropriate target audience was designers and builders capable ofreading a JHTI as a whole, and bring to the exercise knowledge of thebuilding industry; and(b) on reading the JHTI as a whole, any member of the target group wouldunderstand it augments other knowledge and literature. It was not acomprehensive building manual, nor intended to be, and this would beknown to the target audience.I agree.[849] The third preliminary topic is causation. Causation issues only arise once abreach is established. In order to prove breach it is necessary only to show that astatement was false or misleading, or likely to be. Reliance comes at the next stage,where s 43 provides the power to award compensation if the plaintiffs have sufferedor are likely to suffer loss because of a breach. It is notable in the present case thatneither the pleadings nor the homeowners' submissions undertake a reliance and lossanalysis for either of these plaintiffs. The closing submissions refer to causation as astage two issue (stage one being about establishing the breach) but that is not so forthe plaintiff properties. This is their whole case which is why, for example, specificrepair evidence was led.[850] The causation analysis is not straightforward. Neither plaintiff was the builderor the person who arranged for the building to happen. As regards Bay Lair, Ms Cridgeand Mr Unwin were the fourth owners (second substantial owners). Assuming amisstatement in the JHTI, neither would have seen such a statement until afterpurchase if at all. The causation route, therefore, is presumably through allegedreliance on the misstatement by the builder or designer. Neither of those people gaveevidence in relation to either house, despite being known for both. Further, on theevidence that is available, I would not be prepared to assume the builder relied onanything in the JHTI, especially in the case of Bay Lair.[851] Drawing on such causation analysis as was undertaken by the plaintiffs in thenegligence claim, I understand the case to be that James Hardie's breaches were acontributing cause to the loss. Bringing that across to the present topic, the argumentwould be that the misstatement in the JHTI contributed to the builder constructing adetail incorrectly, or the absence in the JHTI of instruction how to build a detailcontributed to the builder doing it wrongly. Built into this would have to be someacceptance by the Court that the builder (or designer) was engaging with the JHTI;otherwise perceived deficiencies in the JHTI would be at most an opportunity for lossrather than a cause.[852] The fourth topic is limitations.[853] The defendant raises an issue concerning a January 2020 amendment to eachof the plaintiff's statement of claim. The amendment introduces pleadings in relationto four JHTIs that were not previously the subject of pleadings. The four documentsare the JHTIs published in February 1988, March 1989, June 1996 and June 1998.202The affected paragraphs are noted below. I note none of these four JHTIs wereapplicable to the plaintiffs' properties.[854] Section 43A of the Act allows claims for up to three years after the date onwhich the loss or damage was reasonably foreseeable. The defendant submits that atits latest the start of this period must be when the original pleading, with its claims ofFair Trading Act breaches, was filed.203 It follows that fresh claims in relation to newdocuments first filed more than three years after the initial pleading are time barred.202 The relevant pleadings paragraphs are Cridge, second amended statement of claim, at [9A], [9B],[20(t)], [21(e)–(g)], [29(e)], [34], [35A], [35B], [37(i)(5)] and [37(w)]; and Fowler, secondamended statement of claim, at [11(b)–(c)], [12A], [12B], [15A], [22A], [36(c)], [36(g)], [48],[49(d)], [49(1)(5)]. These paragraphs were repeated in the next final version of each pleading.203 In Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541 at [170],it was said the date of the filing and the date of representative orders start statutory timeframesrunning.[855] The relevant principles concerning whether an amendment is a new cause ofaction are:204(a) A cause of action is a factual situation which entitles a party to obtain alegal remedy against another.(b) Only material facts are taken into account and the selection of those facts"is made at the highest level of abstraction".(c) An amended pleading will be "fresh" if it is something "essentiallydifferent". This is a question of degree.205 The necessary change incharacter could be brought about by alterations in matters of law, or offact, or both.(d) After the period of limitations has run, a plaintiff is not able to set up anew case "varying so substantially" from the previous pleadings; that is,new allegations that would involve the investigation of an area of fact ofa new and different nature, or a new and different legal basis.(e) It is possible for a different "fresh" cause of action to arise out of the sameor similar underlying facts, if the plaintiff seeks to derive a materiallydifferent legal consequence from the facts.206In summary, the Court of Appeal essentially concludes that the key question is whethera proposed amendment changes the essential nature of the claim and adds a new areaof factual inquiry.207[856] The issue raised by James Hardie is simply stated but capable of differentresolutions. The core allegations contained in the amendments are not fresh but204 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160, (2017) 24 PRNZ 81 at[1]. See also Ophthalmological Society of New Zealand Inc v Commerce Commission CA168/01,26 September 2001 at [22]–[24]; and Transpower New Zealand Ltd v Todd Energy Ltd [2007]NZCA 302 at [61].205 Smith v Wilkins & Davies Construction Co Ltd [1958] NZLR 98 (SC) at 961; and ISP ConsultingEngineers, above n 204 , at [26].206 ISP Consulting Engineers, above n 204, at [25].207 At [25].substantially reflect existing allegations. The documents in which they are found arenew and have independent relevance in that each may be, for some of therepresentative group, the JHTI operative at the time of building. That feature of newdocuments is capable of supporting a conclusion the amendments are time-based, butI prefer to focus on the concept underlying the idea of limitation. The amendmentsadd nothing substantively new to the proceeding as it existed prior to the amendment.They are just further examples of existing alleged issues.Alleged misstatements – Bay Lair[857] It is necessary to begin by noting that the plaintiffs' closing submissionsattempt no analysis of these claims. This part of the judgment, for its structure, willtherefore inevitably reflect the defendant's more detailed analysis.208[858] Concerning s 9 of the Fair Trading Act, the homeowners cite extracts from the1987, 1988 and 1991 JHTIs, all of which are relied on as if pleaded in full. For 1991,being the JHTI applicable to Bay Lair, the statements identified in the pleading asbeing misstatements are:(a) Harditex is an exterior cladding in its own right and does not rely solelyon textured coating for its performance as do many other systems;(b) the sheets provide a suitable substrate for textured coatings;(c) all the textured exterior finishes recommended for use with Harditex havemet the rigorous Harditex testing criteria;(d) offering the durability and peace of mind of fibre cement, Harditex is thecomplete cladding system for today's architectural trends;(e) Harditex sheets are immune to permanent water damage and will not rot;208 The lack of detailed submission possibly reflects the significant overlap between the claims andthe core case. The plaintiffs have not attempted to find in the FTA claims statements where thefalsity or deceptiveness does not depend on the homeowners establishing their core arguments.(f) within the normal range of applications, the life of the product is limitedonly by the durability of the supporting structure and the materials used inthat fixing;(g) accelerated durability testing is undertaken on the Harditex externalcladding system to ensure that each texture coating system tested hassufficient flexibility to accommodate sheet frame movement. Thisharsh test is designed to mirror the varying climatic conditions that occurin New Zealand. James Hardie is therefore very confident about theperformance of those proprietary systems which pass;(h) Harditex fibre cement withstands extreme conditions from blistering sun,salt laden air and pelting rain to moist steamy conditions. Fibre cement iscompletely unaffected by water. It never rots or decays.[859] There then follow 23 particulars, one of which includes nine sub-paragraphs,which appear to be homeowner submissions about why the JHTI propositions are falseor misleading. However, these particulars are not expressly linked to a particularstatement in the JHTI.[860] The defendant has grouped the pleaded particulars into topics in a mannerwhich satisfactorily covers the various issues:sheet – is not a suitable base; does not provide durability or peace ofmind; it is absorbent and adversely affected by water; it is notimmune to rot; it can suffer the effects of swelling, rotting anddecay; the wood fibres, when wet, are prone to decay andaffect bracing performance; the product is not proven giventhe inadequacy of testing; the sheets transfer moisture to otherbuilding elements; the sheets did not comply with AS/NZS2908.2:1992 in relation to thickness and dimensionaltolerance.system – is not suitable; does not provide durability and peace of mind;did not provide a complete cladding system for architecture;did not provide security or durability or "the security ofproven performance"; did not have proven performance orprovide durability; is affected by water; if installed inaccordance with JHTI is not capable of complying with B1,B2, E2 and F2 of the Building Code; the testing wasinadequate; does not appropriately manage water ingress;fails to adequately accommodate movement; theaccompanying literature could not provide a fit for purposecladding system;buildability – the JHTI does not specify a method of installation whichmakes adequate allowances and tolerances for the typicalconditions that exist on a building site.Bay Lair – the design and installation detailing for the h-joint wasinherently flawed; inappropriate and inadequate details forvertical control joints; inappropriate reliance (presumably inJHTI) on inseal and inappropriate reliance on exposedsealant; inadequate details for recessed windows*,transitioning between claddings and inadequate overhangdefects.* (Although pleaded as part of the Bay Lair case, it isacknowledged by the plaintiffs that those marked * are notpresent at Bay Lair.)[861] I address each topic, but restate an earlier observation. It is very difficult forthe Court to assess the merits of the pleaded particulars when they do not respond tospecific statements in the JHTI, nor identify those passages of the JHTI to which theycollectively respond, if that is their genesis. I recognise omissions cannot be connectedto a specific statement in the document, but otherwise consider the lack of detail a flawin the case.Sheet statements said to be false or misleading[862] The relevant content of the JHTI to which the pleading relates is found on thelast page. It is helpful on the first occasion to set out what is said in the JHTI:Not only do Fibre Cement building products look superb and have designflexibility, their inherent qualities and benefits give you great looks that last alifetime.Hardie's Fibre Cement withstands extreme conditions, from blistering sun,salt laden air and pelting rain to moist steamy conditions in bathrooms andkitchens. Fibre Cement is completely unaffected by water. It never rots ordecays.A tough match for timber, Fibre Cement won't burn. In fact, it's one of thesafest building materials you can use.With Hardies, great looks are made to last.So when it's a question of building or renovating, Hardies has the answer, witha range of quality building products for both the interior and exterior of yourhome.[863] The impact of the lack of detail in the homeowners' case is immediatelyapparent. James Hardie sets out its position on how a particular statement in the JHTIwould have been understood by the claimed target audience:Provided it is [properly] installed, texture coated and maintained inaccordance with the JHTI and good trade practice, Harditex is a durablesubstrate, which is immune to permanent water damage and will not rot orburn.209There is no homeowner response to this.[864] The JHTI propositions are false if they are read as an absolute without thequalifier that what is being talked about is a properly installed sheet. However, I acceptthe general qualification that James Hardie proposes. In doing so I have not ignoredthat the particular page is about fibre cement rather than Harditex, but the reality isthat the product is not sold to be used in its raw state. It is sold as a substrate and sothat affects the context. On balance, the statements are therefore not misleading. Forexample, stating the sheet "never rots" is fairly qualified in the way James Hardiesuggests, and when read that way is a correct statement.[865] One statement requires further analysis. The statement that the sheets are"completely unaffected by water" is problematic. A properly installed sheet isnevertheless still affected by water. The whole basis of Dr Straube's and DrLstiburek's endorsement of fibre cement is its capacity to manage moisture byabsorbing it, storing it and then ejecting it as vapour. The sheet will have differentqualities depending on its water content at any particular point in time. It may be lessstrong for the period of greater moisture but will regain its strength as it dries out. Itmay also swell, but again will shrink. Describing the sheet in this way may have beenintended to reflect the fact that if allowed to dry, the sheet will return to its initial state.It is, however, a clumsy shorthand for this proposition.[866] The next sheet proposition said to be misleading is that the sheet was provenby testing. That topic is briefly addressed in a section of the Appendix. There is nomisleading statement.209 The concept of "properly" is added to the quote to reflect other submissions made by JamesHardie.[867] The next sheet challenge is to the claim that Harditex has sufficient durabilityto meet the Code's bracing requirements. The challenge seems to reflect thehomeowners' claim that the Harditex sheet can decay. If it does, it will lack sufficientdurability. The decay thesis having been rejected, this challenge must fail. It can befurther noted that Harditex at all times had BRANZ appraisal saying it met the bracingrequirements of the Code (if installed as a bracing element and in accordance with therelevant requirements).[868] The final sheet challenge to be considered is the homeowners' assertion thatHarditex is moisture absorbent and transfers moisture to the timber framing, or wrap.It is difficult to ascertain what specific JHTI statement this challenge relates to. Mostof the moisture comments in the JHTI are about keeping the product dry, andpermissible moisture content. For the reason that there appears no relevant statement,the claim is rejected. Reference can also be made to the likelihood it is based on amisunderstanding of how moisture leaves the sheet.System statements said to be false or misleading[869] Taking the 1991 JHTI as an example, the concept of system appears innumerous places in the literature. First, and following on from a claim that Harditexis the preferred exterior cladding substrate for textured exterior finishes, of Harditexthe document asserts:(a) it is an exterior cladding in its own right and does not rely solely on thetextured coating for its performance as do many other systems;(b) it offers the durability and peace of mind of fibre cement, and is thecomplete cladding system for today's architectural trends; and(c) the Harditex System is comprised of four basic components – Harditexsheets, jointing systems, architectural shapes and coating systems.[870] Next, under a heading "jointing system", it is said the sheets are jointed withtape reinforced flexible compounds to give a long-term durable jointing system. Thisis to be done by approved applicators. Further on is an entire page dedicated to theCoating System (most of it is photos).[871] Some relevant text from this page includes:The coating system is to be applied only by approved applicators. The systemssuitable for use with Harditex are 100% pure elastomeric high build texturecoatings or flexibly modified plasters. These are fade-resistant, water-resistant and together with the tape reinforced joints are flexible enough toaccommodate thermal expansion and contraction that will occur in theframing and the Harditex sheets.The selected finish coat provides another dimension of weatherabilityproviding a tougher, harder-cured surface which is still flexible enough towithstand the thermal expansions and contractions of your building. Theapproved coating systems are highly resistant to ultraviolet light, salinity,alkali and chemical attack contributing to a long lasting, peel, fade and stain-resistant exterior.[872] On the following page of the JHTI there is a heading "System Guidelines"which is a list of what I would term "must dos". This includes ensuring the framingis thoroughly dry; that jointing, architectural shapes, and finish coatings are only to bedone by approved applicators; that the only coating systems to be used are thoseproven by test to resist expansion and contraction of framing and sheets; that low buildacrylics are not suitable finishes; and that only light to medium colours should be used.[873] The balance of the JHTI moves on to technical instructions which, aspreviously noted, have expanded from the 1987 JHTI to already now being 11 pageswith 35 illustrated details. This section starts with the claim that Harditex claddingsystems are suitable for both commercial and domestic applications, but notes thatbuilds of more than two storeys need specific design. "Systems" in this context canonly sensibly be read as meaning a system comprising the four system elements earlyidentified in the document – sheet, jointing system, architectural systems, and coatingsystems.[874] The first particular which James Hardie identifies, and then restates in itsqualified form, is:Provided it is properly installed (in accordance with the JHTI and good tradepractice), texture coated and maintained, the Harditex cladding system is fitfor the purpose of managing water ingress.[875] I observe the JHTI never expressly uses the term "fit for purpose". However,I accept it is an implied claim. The judgment as a whole responds to the propositionit is false and further comment is not needed.[876] The next system statement challenge that merits comment is that the Harditexcladding system did not provide, as claimed, "a complete cladding system forarchitecture". There is a statement expressly found in the 1991 JHTI:Offering the durability and peace of mind of fibre cement, Harditex is thecomplete cladding system for today's architectural trends.[877] In the absence of any submission on it, I assume the statement is also beingused by the homeowners as a vehicle through which to advance their case that Harditexis not fit for purpose. Possibly the complaint is to the use of the word "complete",which runs counter to the homeowners' case that the literature was incomplete. Thisis, however, speculation on my part because the homeowners do not explain it. It ishard otherwise to make anything of the statement which just seems a broad marketingtype proposition.[878] The remaining system statement challenges were that the system was notproven, and that the system cannot accommodate building movement. These areadequately addressed elsewhere in the judgment.Buildability statements said to be false and misleading[879] The plaintiffs under this section repeat their claims that the system did notallow for normal building conditions, required too much precision, and providedinadequate assistance on how to build. At the risk of repetition, I observe it is againunclear where in the JHTI the homeowners are saying that these misrepresentationsare made. Specific statements are not identified. I conclude therefore that thischallenge completely overlaps the negligence claim. I rely on the earlier analysis andsee no need for further comment.Bay Lair statements[880] The headings being used come from the defendant's submissions. The reasonfor adopting this approach has previously been stated, but in essence it is because theplaintiffs' submissions neither provide a framework or analysis. That said, Bay Lairis not a heading that is particularly helpful. Grouped within this category are claimsby the homeowners that the JHTIs expressly or by omission make misleadingstatements about a number of building details. In particular, the h-mould, the verticalcontrol joint, inseal strips, exposed sealant, soffit drip detail, overhang details andmaintenance.[881] To the extent some of these claims plead a specific detail or diagram as astandalone misrepresentation, the judgment has not sought to resolve the disputesabout the correctness or otherwise. The finer points of the dispute were very technical,and at times witnesses of equal qualification and experience just had different viewson it. As with other aspects of the Fair Trading Act cause of action, the overlap withthe negligence claim areas means it is not necessary to consider this separately.Other alleged misrepresentations[882] There are a number of other alleged misrepresentations not covered by thecategories already addressed. First, there are claims that statements by James Hardiein relation to two Standards are incorrect. Only one requires comment, namely theclaim that Harditex conforms with AS/NZS 2908.2:1992 Cellulose Cement Products– Flat Sheets.[883] Standard AS/NZS 2908.2:1992 relates to the required thickness of the sheet.Based on internal James Hardie documents, Mr Wutzler formed the view that thesheets were not compliant and James Hardie knew this (despite having a Certificate ofCompliance). The matter was explained at length by Mr Knox, and touched on byMr Cottier. The plaintiffs did not satisfy me there was an issue.210210 Mr Wutzler, it seems, read much of the disclosure. His evidence includes opinions on whatmessage should be taken from these documents in terms of what James Hardie knew. I do notaccept such evidence is admissible. The drawing of inferences is the Court's task. I note for therecord that I disagreed anyway with many of what I considered strained interpretations ofdocuments that Mr Wutzler contended for. This comment is equally true of his, and Mr Lalas',reading of the JHTIs. It was often unrealistic and ignored context.[884] Another alleged misstatement is that James Hardie advertised Harditex ashaving a BRANZ appraisal prior to the appraisal being formally issued. This does notarise for either of the JHTIs relevant to the plaintiff properties but applies to the June1993, August 1994 and July 1995 JHTs.[885] The statement made in the June 1993 JHTI was:BRANZ APPRAISALHarditex has received the following appraisals: BRANZ AppraisalCertificates Nos. 229 (1993) and No. 243 (1993).NEW ZEALAND BUILDING CODE (NZBC)Harditex, when used in accordance with this specification and the statementsand conditions of the BRANZ Appraisal Nos. 229 and 243 will meet therelevant provisions of:NZBC Clauses B1 StructureB2 DurabilityE2 External Moisture[886] It is difficult to resolve this claim of falsity as it is unclear what documentJames Hardie had from BRANZ. There is, however, clear evidence that BRANZ hadspecifically approved James Hardie claiming it had an appraisal. Further, BRANZmust have provided the actual Appraisal Certificate Number for James Hardie to use.The certificate number cited is the one ultimately issued. These matters lead me toconclude the statement is accurate, although I recognise the evidence is vague.Conclusion[887] The claims under the Fair Trading Act involve a large degree of overlap withthe inherent defects and the negligence claim. To the extent possible, the judgmenthas sought to identify challenged statements that might have some contentindependent of the core case issues. There are not a large number these and I haveconcluded none represent a breach of the Act. The Fair Trading Act claim accordinglyfails in its entirety.OVERALL CONCLUSION[888] The homeowners' case fails in its entirety.[889] On the evidence in this case it has not been shown that Harditex was a flawedproduct unable to deliver a watertight house. Witnesses of international standing haveestablished that the product was not conceptually flawed and could work. Analysis ofthe plaintiffs' houses, including six houses from the wider claim group, has revealed adisturbing pattern of incompetent building and poor texture coating that is more likely,in my view, to be the cause of the damage suffered by these properties.[890] The judgment concludes that Harditex was not as innovative a product as theplaintiffs claimed, but from a buildability viewpoint was more just another exampleof sheet cladding. That is not to say there were not new aspects such as the recessededges which allowed a monolithic finish, but in general a reasonably competentbuilder could and did use Harditex to build a sound waterproof house. It is appropriateto note that some of the plaintiff expert witnesses were not, in my view, reliable, andothers strayed outside their area of expertise. This significantly reduced the weightthat could be given to their evidence, and weakened the plaintiffs' case. That said,there was considerable strength in much of the expert evidence led by James Hardiefrom a collection of witnesses of clear standing in their field.[891] The claims are formally dismissed. The parties may file cost memoranda ifthat is necessary. I will leave it to counsel to agree a timetable._____________________Simon France JSolicitors:Parker & Associates, Wellington for PlaintiffsChapman Tripp, Wellington for DefendantAPPENDIX[892] In this part of the judgment I note a number of topics that were raised by theparties and which have not been the focus of analysis in the judgment.Testing of Harditex before its release on the market[893] An important aspect of the homeowners' case was that James Hardie did notdo the testing expected of a reasonable manufacturer before releasing Harditex on themarket. There are two aspects to this:(a) testing of the sheet; and(b) testing of a Harditex wall such as was done in the Helfen test.[894] The judgment reasoning did not need to analyse this because once theconclusion was reached that the product worked, it was not necessary to reach a viewwhether that was the product of a sound process or good fortune.[895] The testing of the sheet raises again the issue of what sort of evolution orinnovation Harditex represents. From James Hardie's viewpoint the technology beingused – autoclaving of fibre-cement sheets, and more recently autoclaving of asbestos-free fibre-cement sheets – was established and something with which it was familiar.This influenced the testing required.[896] The main homeowner witness was Dr Akers who was involved in thedevelopment of a premier Swiss product, Eternit. His initial evidence suggested thatthe testing process he had followed was far more thorough than was done for Harditex.In my view that impression was considerably weakened by the James Hardie witness,Mr Cottier. He compared the two testing regimes and satisfied me they werecomparable. My sense of Dr Akers' evidence is that he had moved somewhat to thatposition as well.[897] Concerning testing of the whole wall, this is the issue of whether there was asuitable test to enable such testing. It is common ground there was no specific test butplaintiff witnesses submitted what was called the SIROWET test could have beenused. This test has previously been referred to. It has subsequently been adapted tobe a test for residential homes built with a cavity – AS/NZS 4284. The writtendocumentation around the test suggested its initial role was in relation to largecommercial buildings, and I have previously cited from the current external moisturestandard which recognises this.211[898] Two homeowner witnesses, however, Mr Lalas and Mr Bennie, were involvedwith SIROWET from the start. Both said it was capable of being modified to use onresidential homes, and this was known. I have previously concluded that thesupporting evidence does not establish recognition of a role for SIROWET inresidential housing.[899] Mr Bennie's evidence on the ability to adapt SIROWET was not challenged,and given it now underpins AS/NZS 4824, it is evidence that should be accepted. I donot accept, however, it has been shown there was widespread understanding of this. Itis also clear that no cladding manufacturer was so using it. It does not seem to havebeen used in this way prior to 2000 at the earliest. I would not have concluded JamesHardie breached any duty in failing to conduct this test in the mid-1980s.BRANZ[900] As noted from 1995, and probably two years earlier,212 BRANZ maintained afavourable appraisal for Harditex. There were in fact two appraisal certificates beingfor bracing rules and for the product more generally. James Hardie relied on theappraisal as support for its proposition that Harditex was a sound product, compliantwith the Code and fit for purpose. The judgment reached conclusions that mirror theBRANZ assessment but has not relied on that assessment to reach that point.[901] The homeowners were critical of the BRANZ appraisal in two regards – theydisputed the basis on which BRANZ reached its opinion, and they questioned theindependence of BRANZ from James Hardie.211 At [586].212 Appraisal certificate was issued in 1995 and published in July 1996.[902] The Appraisal Certificate is four pages long and clear on its face as to its termsand scope. The appraisal describes itself as relating to the "Harditex Substrate forExterior Textured Coatings", and explains:The product has been appraised for use as a wall cladding substrate forproprietary jointing and textured coating finishing systems which meet the testcriteria for performance of James Hardie Building Products. The product hasbeen appraised for use as an exterior wall cladding over timber or steel framebuildings.This Certificate must be read in conjunction with the manufacturer's documentJames Hardie Technical Information – Harditex™, dated February 1996.[903] The opinion the Certificate represents is then set out:New Zealand Building Code (NZBC)In the opinion of BTL, if Harditex™ Substrate for Exterior Textured Coatingsis used and installed in accordance with the statements and conditions of thisCertificate, the relevant provisions of the following NZBC Clauses will bemet:B1 STRUCTURE; B2 DURABILITY; E2 EXTERNAL MOISTURE and F2HAZARDOUS BUILDING MATERIALS.Specific NZBC compliance details are contained within this Certificate.[904] In relation to the contents, the appraisal has a section entitled "ProductInformation" which contains a series of statements and information similar to materialin the JHTI. Topics covered include:(a) General, which notes it is a fibre cement wall cladding substrate finishedwith joint and coating systems which have been tested by James Hardie;(b) Description of the sheets including their composition and size;(c) Available accessories;(d) Handling and storage;(e) Design information – which says it must be fixed over underlay and thatthe Certificate must be read in association with the JHTI;(f) Framing which requires compliance with 3604, or an approved specificdesign. Moisture content, and stud and dwang gaps, are specified;(g) Control joints;(h) Jointing and coating systems;(i) Ground clearance;(j) Thermal bridging; and(k) Code Clauses.[905] Of these, illustrative passages can be taken from two sections:Joint and Coating SystemsThe joint and coating systems are applied by specialist independentcontractors. As these are outside the control of James Hardie BuildingProducts, all details and warranties must be given by these specialistcontractors.The textured coating system provides a decorative finish and resistance towind driven rain. The finishing systems must be maintained to protect thesheets and fixings for the life of the building.This Certificate does not cover the textured coating finishing or jointingsystems. Advice must be sought from James Hardie Helpline, 0800 808 868,for a list of manufacturers with tested coatings.Weathersealing and FinishHarditex™ sheets must be dry immediately prior to the joint and coatingsystems being applied.Harditex™ must be made weathertight by jointing, flashing, and sealing inaccordance [with] this Certificate and the manufacturer's technical literature,and applying and maintaining joint and coating systems in accordance withthe coating manufacturer's instructions.[906] I do not agree that it is flawed for BRANZ to rely on manufacturer-sourceddata and testing. It is unrealistic to expect any agency like this to undertake its owntesting from the outset of a product. What is needed is expert review, no doubt withsome targeted testing.[907] The homeowners draw support in their criticism of BRANZ from internalJames Hardie memoranda when particular authors express doubt over BRANZ ability.Mr Knox, when asked to comment, said it was not a general perception, and I acceptthat. The main document relied on is anonymous, and provides no reason to questionthe recollection of a sound witness. The document is likely to have arisen at the timeBRANZ was seeking participation in a publication, which ultimately happened, calledthe Good Texture-Coated Fibre-Cement Practice Guide.213[908] First published in 2001, it was an effort by BRANZ to lift building standardsand is quite a comprehensive building guide. James Hardie declined to participate onthe basis that involvement would mean disclosing a considerable amount of its fibre-cement intellectual property. The documents around the time indicate some withinJames Hardie thought this consequence of loss of intellectual property equallyoccurred through participation in an appraisal process. The knowledge BRANZacquired through that process was inevitably transferred, some argued, to competitorswhen BRANZ appraised their products. The documents speak for themselves and theviews of the authors, but it has to be noted generally they are drafts or discussionpoints. None seem a record of a concluded view that could be called a "James Hardie"view, and Mr Knox's evidence is to the opposite.[909] It is not necessary at this stage to provide the detail of the numerous challengesmade by the homeowners. As noted in the last point, the Certificate challengesreflected the core challenges to the product, and this was inevitable. If the product isflawed, BRANZ endorsement of it must equally be so. And the homeowners had topoint to how BRANZ could have erred. The focus was that BRANZ relied on thesame basis as James Hardie did for its claims, and so did not represent an independentreview.[910] There were comments both in the Hunn Report and in the Report on theWeathertightness of Buildings in New Zealand by a Select Committee on the issue ofBRANZ independence from commercial interests.214 The Hunn Report spoke of213 BRANZ, above n 55.214 Hunn Report, above n 1, at 30; and Government Administration Committee Weathertightness ofBuildings in New Zealand (March 2003) at 94–95.perceptions within the industry of a lack of independence, and the Select Committeecontemplated a process of independent verification of appraisals, although itselfdescribing BRANZ as New Zealand's primary source of independent technical advice.The overall evidence, however, did not point to any tenable basis on which to doubtBRANZ or its work.[911] A final topic to note is the issue of the appraisal remaining in place through tothe end of the life of Harditex. In June 2002 BRANZ advised manufacturers of a newset of criteria with which it said all appraised fibre-cement cladding systems wouldneed to comply. Following this notification, it was contemplated that within a fewweeks an appraisal contract for BRANZ to check compliance would have been agreed.It was expected the revised BRANZ criteria would be operative by the end of 2002.[912] For whatever reason, BRANZ did not ultimately pursue this change. It issuedthe criteria as a consultation document but then subsequently advised appraisal holdersthat the project was being reconsidered. Existing appraisals were re-issued. JamesHardie submits the documents show BRANZ still had much to do to be able to confirmits criteria – it was testing generic window details, assessing generic cavity-baseddetails, considering a requirement to seal the back of sheets, and still had no settledtest methodology for joints and coatings.215 Then, in 2003 BRANZ provided JamesHardie with the results of some joint testing it had done, and James Hardie repliedcritiquing what it saw as errors in the methodology.[913] There were further like exchanges on various topics but the end result is thatthe appraisal continued. Influencing this was that the External Moisture Clause of theCode was under review and it seems to have been generating uncertainty as to whichway it would go. BRANZ ultimately decided to leave its current appraisals in placeuntil the new external moisture Clause E2 was issued. This occurred in June 2004.[914] Following that, BRANZ said it would add a qualifier to existing appraisals butotherwise wait until the new Acceptable Solutions model came into force on1 February 2005. However, in April 2005 the product was withdrawn. This coincidedwith the need otherwise for a new appraisal certificate given the changes to E2.215 Various documents are referred to that underlie this submission.[915] If conclusions were needed, I would hold that the BRANZ appraisal providedindependent support for the conclusions otherwise reached in the judgment. I do notsee it as flawed that an organisation performing a function such as BRANZ draws onmanufacturer supplied testing and data, and suggest that is not uncommon. What isneeded is an expert capacity to review and assess that data. Comments made aboutthe independence of BRANZ exist, but there is not evidence in this case to cause meto devalue on that basis BRANZ opinion.Complaints system and number of houses[916] There was evidence about the reliability of the system by which James Hardierecorded complaints. This is a topic perhaps best seen as a claimed plank in thedefendant's case, and a claim resisted by the plaintiffs. James Hardie use it by pointingto the (estimated) number of houses built in Harditex and the (allegedly) low numberof complaints recorded. The homeowners challenge both parts of the equation.[917] Concerning houses built, the figures are an estimate. There is reasonably soundevidence about the amount of Harditex sheet sold – 8.5 million square metres.Translating that to a number of residential houses is speculative because it needs toexclude commercial use, account for varying house sizes, and recognise some housesuse more than one type of cladding material.[918] Various data sources were available to assist with the exercise – marketresearch surveys commissioned throughout the period by James Hardie to assist withits understanding of the market, and territorial authority records on a number of housepermits (378,285 over the 18 year period) being two such sources. From these figuresMr Schumacher calculated a figure in excess of 100,000 which would represent morethan a quarter of houses built in the time.[919] Ultimately, it was not an issue worthy of detailed consideration for severalreasons. Complaints received is of some relevance to whether there is an issue but islimited. The consumer may not, for example, have known the cause of or entityresponsible for the defect. Further, the latent nature of these defects is well knownand some may not have been discovered until searched for (there are aspects of thiswith the Woodhouse property). And, of course, not everyone formally complains.[920] Case-specific limitations include that James Hardie's complaints system wastargeted at product complaints. Matters regarded, by James Hardie, as third partyissues were not always, or perhaps seldom, recorded.[921] Conclusions I was drawn to were that for a period Harditex was a significantportion of the residential market, and that the complaints received and logged by JamesHardie were not of a type and scale to suggest to it that Harditex was a faulty product.I would not have attached much weight to the idea that the James Hardie complaintssystem helped show Harditex was a sound product.Repairs[922] Given the outcome of the judgment, this section is limited to the plaintiffs'properties concerning which there was not a significant divide between the parties.[923] There was an issue as to whether Woodhouse should be costed as two separateprojects (thereby replicating some costs) or a single project undertaken by two ownersseparately. Generally the answer must be the latter – they are separately titledproperties concerning which the owners can make their own decisions on the natureand timing of repairs. However, here, purely as a case-specific factual finding, I wouldhave concluded with a reasonably high level of conviction that Ms Fowler andMr Woodhead would do the repairs as a single project. Accordingly, for Woodhousethat would be the costing basis. It would apply only while they were the respectiveowners.[924] There was a dispute about post-remediation stigma damages. Post-remediationstigma allegedly arises from the very fact of remediation. It is separate from stigmaattaching to the monolithic nature of the house. The evidence and topic merit a morein-depth analysis than this summary represents. The case law appears divided overthe topic although in several cases they have been awarded.216 It must be, therefore,that they are to this extent a recognised head of damage.216 Morton v Douglas Homes Ltd [1984] 2 NZLR 548 (HC); Scott v Parsons HC Auckland CP776/90,19 September 1994; Evans v Gardiner (1997) 3 NZ ConvC 192476; Mikitasoy v Collins (No 4)(2009) 11 NZCPR 617 (HC); and Body Corporate 90247 v Manfrini Ltd [2014] NZHC 295.[925] It is, however, unclear the extent to which the Court in most of those casesheard detailed evidence disputing the existence of post-remediation stigma.217 Here,James Hardie called evidence from Mr Gamby who is one of New Zealand's mostdistinguished valuers, and Dr Rehm an Auckland-based academic with a body ofrelevant publications. Their combined evidence satisfied me that no allowance shouldbe post-remediation stigma.[926] Mr Gamby is an eminent New Zealand valuer. He disputes that there is anymarket evidence supporting discounting the value of a house for post-remediationstigma reasons. Contrary evidence had been presented by the plaintiffs through aWellington valuer, Mr Bills. I accept Mr Gamby's critical analysis of Mr Bills'methodology.[927] Dr Rehm is a senior lecturer in the Department of Property at the University ofAuckland. In 2019 he published a peer-reviewed research study which he describesas the only New Zealand empirical investigation into post-remediation stigma. Itanalyses 55,000 residential sales transactions in Auckland between 2011 and 2016.Based on this research Dr Rehm says there is no evidence that post-remediation stigmais a matter to be taken into account when valuing. Dr Rehm also critiqued Mr Bills'analysis and, similarly to Mr Gamby, disputed its reliance on certain Wellington salesand its interpretation of and reliance on some published literature.[928] The combined evidence of these two witnesses was compelling. I would nothave made any allowance for post-remediation stigma. For clarity I emphasise thatpost-remediation stigma is different from general market stigma which is recognisedto exist in relation to monolithic cladding, for which damages will not be awarded. Itwould apply to the post-remediation value of these properties since they are beingreclad in a monolithic finish, albeit over a cavity.[929] Turning to case-specific issues, there was a methodology dispute. For theplaintiffs Mr Scott did a scope of works exercise, and then Mr Hanlon, an independentquantity surveyor, priced the scope of the works. For James Hardie, the equivalentprofessionals adopted a more collaborative approach. It seems unnecessary for the217 Body Corporate 90247 v Manfrini Ltd, above n 216, is one where the existence was disputed.Court to venture an opinion on such a specialist topic. Instinctively it did not seem anexercise mandating independence between scoping and costing of that work, and theevidence did not seem to point that way, but beyond that I do not comment.[930] The approach of the homeowners' quantity surveyor was challenged as beingexcessive in its costings and allowances. In some aspects this was established. As anexample, Mr Hanlon added extra allowances for professional fees not provided for byMr Scott in his scoping exercise. As noted, he was working independently fromMr Scott by his own choice; it seemed to me if that were the basis of his approach heshould have costed the scope as done, or referred any alterations back to Mr Scott. Inhis reply evidence, Mr Hanlon sought to analyse differences between him and thedefendant witness Mr Chapman by reference to established repair costs in 14 otherproperties. The idea of using this as a comparison was sound but the clear outcome ofthe exercise was that Mr Hanlon's costings were shown to be significantly excessive.By contrast, Mr Chapman's were close to the average cost of repairing the14 properties. For this reason, in terms of the costing work, I had a clear preferencefor the approach of Mr Chapman and would apply his rates.[931] To the extent that specific decisions make any sense at this point, and for thebenefit of the parties:(a) I did not have a particular preference between the witnesses as regards thescoping assessment, other than Woodhouse should be assessed as oneproject. I have not analysed the differences between Mr Scott, and MessrsDonnan and Sylvia, to comment beyond that;(b) I preferred and would adopt Mr Chapman's assessments in preference toMr Hanlon. This includes on contingency;(c) it is reasonable to re-use the windows, or at least to cost on that basis withthe owner to choose whether to incur the extra cost; and(d) I have not formed a final view on betterment considering it unnecessary inthe circumstances to review the evidence in sufficient detail. Myimpression at trial was that there would be no adjustment or at the most avery modest adjustment.Evidence challenges[932] James Hardie maintained a number of evidence challenges. It is not necessarygiven the outcome to resolve all of them. I have commented already on the complaintconcerning the scope of the reply evidence. It was at times excessive but in part aninevitable product of the process. A detailed analysis of which aspects constituteexcess is not warranted. I have commented on matters such as lack of objectivity, andoutside scope of expertise to the extent necessary. There are no other matters ofsufficient importance to require decision.Recall application[933] This year a further class action concerning Harditex commenced in theAuckland High Court. The defendant in this litigation is also a defendant in thatproceeding. However, unlike here, James Hardie Australia is also an Aucklanddefendant. In March of this year, James Hardie Australia disclosed in that proceedingdocuments it had located relating to testing. One of the documents is the completeversion of a partial document that was available in this trial, and which had been thefocus of evidence.[934] The homeowners sought discovery of the Auckland tranche of documents. Thedefendant resisted on the basis that it came into its possession only as defendant in theother litigation. A hearing was scheduled. To put the matter in context, at this pointthe judgment in this case was largely written. Necessarily that means I had alreadyformed the views that are reflected in the judgment.[935] The need for a disclosure hearing was removed because the defendant obtainedpermission from James Hardie Australia to disclose the documents. It was agreed bythe parties that the entire tranche of documents would be admitted as evidence in thisproceeding. The homeowners then applied to recall a James Hardie witness,Mr Cottier. This was opposed.[936] The application was based on the proposition that the documents underminedaspects of Mr Cottier's evidence. It appeared from the documents he was moreinvolved in the Allunga Tully testing, or at least more aware of it, than had appearedat trial. It is also the homeowners' position that the documents undermine Mr Cottier'sgeneral evidence about the proven durability of the product. I accept Mr Cottier wasthe James Hardie witness most relevant to James Hardie's testing, and knowledge ofany defects of the product.[937] I declined the application. These are the reasons which can be broadly stated.The homeowners were seeking, in relation to the new evidence, not to lead evidenceof their own as to its significance but rather to impeach a defendant witness. In thecontext of the trial generally, that seemed to me of minor significance. Thehomeowners' application was primarily focused on the proposition that Mr Cottierhad, 30 years later, forgotten rather than deliberately misled. Without the plaintiffsbeing given the opportunity to ask Mr Cottier the question, I have no doubt that is theexplanation.[938] I consider an application to lead evidence from, for example, the plaintiffs' ownwitness Dr Akers about the significance of the documents would have had morestrength. The timing context was also important. The judgment was largely written.An application to recall one witness to deal with the implications of pre-release testing,and the fragility of his memory or otherwise, did not carry the potential to influencethe decisions reached. The parties of course did not know that, but it was myperspective.[939] I acknowledge some positive (for the homeowners) evidence might have beenobtained from Mr Cottier who is an experienced and knowledgeable witness.However, that seemed to me a thin basis for recall so many months after the trial. Iremain of the view that to have any real merit the plaintiffs had to have their ownevidence that sought to link the new disclosures to the key trial issues being theperformance of Harditex in service in New Zealand.[940] The application was declined. The parties were given time to makesubmissions on the evidence – three weeks for the plaintiff and two for the defendant.The judgment proper deals with the material (at [181]–[205]). The process itselfdelayed the release of the judgment by a considerable amount of time._____________________