Building products maker James Hardie Industries says it faces potential net costs of up to $US47.6 million ($A51.16 million) with a slew of leaky building cases and the New Zealand Ministry of Education’s class suit hanging over its head.
The Sydney-based company has taken a provision of $US20.4m over New Zealand leaky buildings constructed between 1998 and 2004 and a provision of $US15.2m over the ministry’s $NZ1.5 billion class suit against cladding manufacturers, according to its second quarter financial statements.
The company’s expense for the claims was $US300,000 and $US4.9m, respectively, in the reporting period.
The provisions are net of any recoveries James Hardie may claw back from third parties, and because of those uncertainties, the company says, it could face an additional loss of up to $US12m.
Despite having resolved a number of legacy product liability claims in New Zealand since 2002, the company’s New Zealand subsidiaries are becoming exposed to increased losses due to the insolvency of co-defendants and expiration of rights to third-party recoveries, it says.
In April, the ministry lodged a claim in the High Court against cladding manufacturers that supplied materials used in school buildings affected by weather-tightness failure, seeking remediation on 800 buildings across more than 300 schools.
Leaky buildings have been the subject of a raft of civil proceedings, and James Hardie has been named in five High Court judgments on other leaky building cases this year involving three Auckland apartment buildings, one apartment property in Mount Maunganui and one home in Wellington.