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Weathertightness Bill introduced to the House

23 August 2006

Weathertightness Bill introduced to the House

Building Issues Minister Clayton Cosgrove today introduced a Bill to Parliament to significantly improve the efficiency of the Weathertight Homes Resolution Service (WHRS), get leaky homes fixed faster and hold those responsible to account.

"New Zealanders need confidence in their homes," he said. "This Bill allows the Government to deliver on its proposals, speed up dispute resolution, make liable parties accountable, get homeowners compensation and homes fixed so Kiwi families can sleep at night."

The Weathertight Homes Resolution Services Amendment Bill amends the Weathertight Homes Resolution Services Act 2002. The key changes in the Bill are:

 A new streamlined process involving pre-hearing conferencing and time-limited mediation before claims automatically move to adjudication
 Beefed up assessment reports for all WHRS claimants so people can claim for potential as well as actual weathertightness-related damage
 The establishment of a new Weathertight Homes Tribunal to provide independent adjudication services
 A new streamlined process for lower-value claims
 Changing the voting thresholds to make it easier for a class action approach to be taken by owners of units within apartment blocks
 Requiring territorial authorities to place WHRS notices on affected property files and to make that information available on Land Information Memorandum (LIM) reports
 Clear objectives for adjudicators to take a more investigative approach
 Enhancing the power and authority of adjudicators, including new offence provisions when parties fail to appear when summoned or disobey an order of the Tribunal

"Although people have gained successful settlements through the WHRS, it is often too slow and drawn out, resulting in unnecessarily high costs. These enhancements will result in a more streamlined process and enable adjudicators to seek fines against those who deliberately hold up the process," Mr Cosgrove said.

The measures are expected to take effect early next year, once legislation is passed.

Mr Cosgrove said the proposed changes to the Act sit alongside other enhancements to the WHRS, including improved case management, better information and assistance for claimants, and a consumer education programme. The new requirement to place WHRS notices on LIM reports means potential buyers will know if the house is fixed, as it will be listed along with any consented repair work and code compliance certification.

The WHRS enhancements are part of a package of Government reforms aimed at ensuring homes are built right the first time. These include the licensing of those who design and build while protecting the Do-It-Yourself (DIY) culture, the review of the Building Code, an accreditation and auditing scheme for Building Consent Authorities, sector and consumer education, building product certification, and investigating home warranty insurance.

Background Information

What factors contributed to the so-called leaky homes problem?
Deregulation of the building industry in the early 1990's allowed "cowboys" into the sector, because anyone could just strap on a tool belt and call themselves a builder. The deliberate destruction of the apprenticeship system at that time also contributed to the non-weathertight house problems of today.

The Weathertight Homes Resolution Service (WHRS) was set up in December 2002 as a 'call to arms' to help homeowners deal with a very difficult situation. A review of the WHRS was initiated in 2005. Successful settlements have been achieved through the WHRS, but the Government recognises that improvements are needed.

What is the Weathertight Homes Resolution Services Amendment Bill?
In May 2006, the Government announced a major shake-up of the WHRS to ensure owners of leaky homes are better supported to fix their home as early and effectively as possible, and that liable parties are held to account. In July 2006, further measures to speed up the dispute resolution process and enhance consumer protection were announced. The Bill gives effect to those proposals. The Bill, and additional WHRS improvements, is part of the Government's suite of reforms to transform the building and construction industry to ensure that homes are built right the first time.

What does the Bill aim to achieve?
Improved assistance for claimants through better case management and assessment reports; faster mediation with reduced delaying tactics and clear incentives for parties to act in good faith; faster resolution of WHRS claims; the establishment of independent adjudication services through a new Weathertight Homes Tribunal; for adjudicators to take a more active, investigative approach when hearing cases; better information for consumers on whether houses have been subject to a claim, and for those in multi-unit complexes to benefit from a class-action approach to help resolve their disputes.

What will the timeframes for mediation be?
The Bill proposes that mediation be limited to 20 working days for general claims, and to 40 working days for multi-unit complexes. The Tribunal will have the power, if necessary, to vary the timeframe on a case-by-case basis.

How will the new Tribunal improve the dispute resolution process?
The 2005 review of the WHRS identified a need for a more active, investigative approach to adjudication. The Tribunal will help to achieve this, and placing it within the Ministry of Justice is a natural fit for the authority and independence of a judicial function.

Removing adjudication from the Department of Building and Housing will also strengthen the role of WHRS advisors by removing any perceived conflict of interest in the provision of both an advisory and an adjudication role by the Department.

The Department will continue to be responsible for the assessment of leaky homes, the provision of information, assistance and guidance, and mediation of disputes.

Will this reduce the legal costs to parties?

More comprehensive assessment reports for claimants, faster mediation, and greater powers for adjudicators to manage the adjudication process efficiently should reduce unnecessary legal costs. In general the WHRS will be a faster and less costly alternative to the general courts for claimants.

When will the changes take effect?

A bill is being introduced to Parliament today, 23 August 2006. These measures, including the Tribunal, will take effect early next year, once legislation is passed.


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