Carter Holt Harvey's appeal against having to appear in court over the leaky schools case has failed in the Court of Appeal, which has ruled the arguments put forward are better explored at trial.

An estimated $44 million is spent repairing leaky Bay of Plenty schools.

The manufacturer of shadowclad building material tried to have the case taken against it by the Minster of Education, the Secretary of Education, the Ministry of Education and the board of trustees of Orewa Primary School, struck out.

The ministry is taking CHH to court over an estimated $1.5 billion bill it has paid for leaky schools, including about $44 million spent rebuilding schools in Tauranga including Tahatai coast School, Otumoetai College, Selwyn Ridge Primary School, and others.

In total 53 classrooms at 16 Western Bay of Plenty schools have been affected. Nationally there may be 1400 schools affected.

The ministry says the cladding sheets and cladding systems installed in various schools throughout New Zealand are defective and were designed and manufactured by Carter Holt in circumstances giving rise to a duty of care and other causes of action.

Schools owned or administered by parties related to the Ministry of have filed a product liability claim against four manufacturers, including Carter Holt Harvey Ltd.

CHH's action to strike out the claim in the high court was unsuccessful. In the court of Appeal is has been partially successful.

Carter Holt Harvey appealed the High Court decision that:

• Carter Holt owed a tortious duty of care to the respondents in respect of the pleaded loss for the purpose of the negligence claim.
• Carter Holt owed a duty of care to the respondents under the tort of negligent misstatement.
• Carter Holt owed a duty of care to the respondents under the tort of negligent failure to warn.
• Carter Holt had a claim under the CGA.

The longstop limitation period under s 393 of the Building Act did not apply to bar any part of the respondents' claim.

The Court of Appeal allowed the appeal against negligent misstatement. The claimants argued Carter Holt falsely stated the cladding was fit for purpose through its advertising materials and the claimants had relied on those statements.

The Court accepted Carter Holt's submission that the statements said by the claimants be negligent were not reasonably capable of being relied upon.

The statements were general and made to all consumers but The Court has determined this is insufficiently specific to create a duty of care in negligent misstatement.

The claim is that shadowclad and the cladding systems are inherently defective and have caused damage because shadowclad allows water to enter, particularly when it is installed without a cavity behind it.

Until 2005 shadowclad was a stand-alone product and Carter Holt did not provide any extra parts to go with the cladding sheets. Since 2005 Carter Holt has also provided flashings that could be installed with the cladding sheets as part of the cladding systems.

The claimants content that Carter Holt's cladding sheeting product is defective, and that the use of shadowclad in the construction of schools causes damage to those buildings and consequential health risks to the occupants.