Building product liability in New Zealand

On 9 May, in Body Corporate 91535 v 3A Composites GMBH [2024] NZSC 53, New Zealand’s highest Court declined to hear an appeal from the owners of buildings clad in alleged ‘combustible’ cladding, letting stand a lower Court decision that the Consumer Guarantees Act did not apply to building products installed as part of a building, while Fair Trading Act claims appeared finely balanced.

The upshot is that the owners’ case will return to the High Court for trial on Fair Trading Act and tort claims.

The Court did not consider the Consumer Guarantees claims had sufficient prospects of success to warrant appeal.

The proceedings relate to alleged flammability of Alucobond PE, a German manufactured cladding product installed on buildings in New Zealand.

The owners sought to appeal High Court and Court of Appeal decisions upholding the German manufacturer’s protest to jurisdiction although for different reasons. The Court of Appeal held that the Consumer Guarantees Act applies to overseas manufacturers of goods supplied in New Zealand, whereas the High Court did not, but the High Court and Court of Appeal agreed that Alucobond did not arguably qualify as [consumer] “goods” under the Act once affixed to a building.

The manufacturer, 3A Composites, sought leave to appeal the Court of Appeal’s conclusion that the owners’ Fair Trading Act claims were arguable. This was on the basis there was conduct in New Zealand which created a misleading impression in the market about the suitability of Alucobond products for certain uses, and about its regulatory compliance – an impression which influenced designers and others to recommend Alucobond products for use as cladding material on the owners’ buildings. As the owners’ tort claims were going to trial anyway, the Supreme Court thought their Fair Trading Act claims could and should also be determined.

Comment

Product liability essentially means that manufacturer’s, distributors, or suppliers are legally responsible if they make defective products available to the public which cause loss or damage as a result due to design defects, manufacturing defects and/or defects in marketing.

Proving the claim usually involves one or more of three conventional bases of liability: negligence, breach of contract/warranty and/or breach of consumer protection laws, principally the Consumer Guarantees Act 1993 and/or Fair Trading Act 1986.

This decision effectively confirms that offshore manufacturers are subject to the Consumer Guarantees Act. However, this is subject to the “building product rule”, that the CGA does not apply to building products used as part of a building (unless the building is easily movable and not designed for residential accommodation).

Plaintiffs in building products cases can recover damages for proven losses in tort/negligence, contract, and under the Fair Trading Act, which prohibits misleading or deceptive conduct in trade.

Written by Stuart Dalzell, Partner.

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