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Carter Holt Harvey's cladding sheets and systems used through 880 school buildings were "inherently defective" and the Ministry of Education is entitled to sue the building products maker, the Court of Appeal has been told.

In the second day of a three-day hearing, ministry counsel said that the product liability claim against Carter Holt is a preventative measure to recoup the costs posed by the faulty cladding.

Whether the cladding met industry norms and standards at the time, or if Carter Holt's contracts with merchants and building contractors limited its liability were a matter of debate, and would be decided by the evidence at trial.

Carter Holt Harvey is appealing its failed bid in the High Court to strike out a claim that its cladding contributed to a nationwide problem of leaky school buildings.

The company maintains it didn't have a duty of care as the manufacturer of the Shadowclad cladding sheets used in school buildings, because the sheets were only one component. That meant any liability arising from the construction of those buildings should fall with the parties undertaking the project, and if the Ministry of Education and school boards of trustees wanted extra protection, the opportunity was open for them to negotiate that through an extended warranty provisions.

In April 2013, the Education Ministry launched a $1.5 billion action against cladding manufacturers Carter Holt, James Hardie Industries and CSR to recoup the costs involved in a remediation programme for 800 buildings across 300 schools.

It has since reached confidential settlements with James Hardie and CSR and the ministry has launched more than 100 claims against parties in similar suits relating to leaky buildings.

The ministry has made its claims under the Consumer Guarantees Act and Fair Trading Act, saying the cladding used didn't comply with standards set under the Building Code or normal industry practice.

Sources: NZCity

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