Companies suing aluminium panel manufacturers over alleged fire risk hit roadblock

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London's Grenfell Tower was referred to by lawyers today as it was covered in similar cladding. Photo / Andrew Testa, The New York Times

A group of commercial property owners claim aluminium cladding used on buildings across the country has put lives and property in danger.

But their case against the manufacturers and suppliers of the material they say is highly flammable and ready fuel for fire has hit a roadblock, as a question of jurisdiction hangs in the balance.

Lawyers for the property owners, NZX-listed Argosy Property and Bay of Plenty-based apartment Cutterscove, argue the case has a place in New Zealand courts under consumer legislation.

The companies launched their case against German Manufacturer 3a Composites GmbH, supplier Terminus 2 and importer/distributor Skellerup Industries last year.

However, today in the Court of Appeal at Wellington, Cutterscove and Argosy, represented by Jim Farmer KC and his team, have had to argue if their case against the companies has a place in court in the first place.

Their appeal is part of a two-day hearing which is taking on two separate issues - one against a successful protest of jurisdiction from manufacturer 3a, and the other against a High Court decision declining the companies bid to act as "representative plaintiffs" in suing the relevant companies.

Cutterscove and Argosy previously submitted that the companies had breached the Consumer Guarantees Act and Fair Trading Act by providing the Alucobond PE brand panelling, a similar product that was used on London's Grenfell Tower, and had put people and property at risk.

About 70 people died during the 2017 Grenfell Tower blaze in London which was caused by a kitchen fire on the fourth floor of the 23-storey building. Although the cladding didn't cause the fire, it was found the material contributed to the rapid spread of the flames.

Manufacturer 3a had previously made a successful application against jurisdiction for the case which was the primary focus during the first day of the two-day hearing.

Farmer argued because the material was provided and distributed in New Zealand the jurisdiction fell within New Zealand's consumer law.

It was also alleged information provided by the manufacturers and distributors of the panels failed to mention potentially heightened risk because of the flammable core and the material went against building regulations.

Section six of the Consumer Guarantees Act was the crux of Farmer's argument, which states goods provided to the consumer must be of acceptable quality.

Argosy and Cutterscove believe the cladding was not acceptable and are attempting to sue the companies for breaching both Acts, negligence and negligent misstatement.

Buildings involved in the case are Cutterscove itself, a large multi-unit Mt Maunganui apartment complex, one of Auckland's biggest outdoor retail centres in Albany and Countdown's South Auckland distribution centre and head office.

Most of the cladding at Argosy's Albany and Māngere properties have been replaced.

Cutterscove, listed on court documents as Body Corporate 91535, and Argosy claimed the Alucobond cladding was combustible and the polyethylene core of the cladding was flammable and could contribute to a rapid spread of fire.

A report into London's deadly Grenfell Tower blaze in 2017 was cited by Farmer, as the building had exterior panels of similar make which were found to have been the main spread of the deadly fire.

One of the three respondents is German company 3A Composites, which manufacture aluminium composite panels, specifically Alucobond polyethylene core cladding.

The remaining two, Terminus and Skellerup, supplied the panels in New Zealand for building work.

Alan Galbraith KC, representing 3A, argued the case fell out of jurisdiction under both Acts because the panels are not goods at all, and cannot be directly enjoyed by the single consumer.

Both applicants do not qualify as consumers, and the panels weren't "goods".

Galbraith argued the panels weren't bought by Argosy, but were a part of buildings they had purchased, comparing the panels as part of the structure, not a chattel or goods to do with the building itself.

This meant, according to Galbraith, the panels fell outside of consumer law jurisdiction meaning the company could not face prosecution under the Consumers Guarantee Act and Fair Trading Act.

The hearing continues tomorrow.

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