GL TRENDS UPDATE
NEW ZEALAND DEVELOPMENTS
WORKER TO WORKER CLAIMS
New Zealand has seen an increasing number of class action construction lawsuits in recent years. These lawsuits have included claims against building product manufacturers and suppliers and have typically been paid for by litigation funders. The continued appetite of litigation funders to bankroll such claims is questionable in view of several high-profile claims which came to inglorious ends in 2021. In June, an action on behalf of 134 homeowners against cladding manufacturer Carter Holt Harvey (CHH), seeking damages of between NZD40-50 million, was withdrawn. It was reported that costs were paid to CHH. In August, an action against cladding manufacturer James Hardie, with a quantum exceeding NZD200 million, came to an abrupt halt mid-trial. It was reported the litigation funders had paid James Hardie NZD1.25 million as part of the settlement.
The risk of a high volume of personal injury claims by labourers and tradespeople is a continuing one for any liability underwriters placing in the construction space. Those claims are associated with high quantum and defence cost exposures, due to the involvement of multiple defendants, potential workers’ compensation recovery action and the typical plaintiff profile (young, high relative earnings and disproportionate impact on employment capacity of even modest injuries). This risk is presently compounded by a lack of labour mobility due to lockdowns and border closures, meaning insureds may have to rely on inexperienced or inadequately qualified labour, potentially from outside the construction industry. That labour force profile will inevitably lead to more ‘time lost’ injuries and associated liability claims against contractors and principals.
Less than two weeks later, the High Court handed down judgment in a different action on behalf of 144 claimants against James Hardie. “The homeowners’ case”, stated the Court in its judgment, “fails in its entirety”. These developments, at the very least, are likely to give pause to those litigation funders contemplating fresh class actions against those involved in the construction industry in the years ahead.
These developments are likely to pause litigation funders contemplating fresh class actions against those involved in the NZ construction industry.
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