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Cosgrove: Weathertight Homes Amendment Bill

Hon Clayton Cosgrove
Minister for Building Issues

Embargoed until 3pm, 31 August 2006 Speech

First Reading Speech of the Weathertight Homes Resolution Services Amendment Bill by the Building Issues Minister, Clayton Cosgrove

Madam Speaker, I move that the Weathertight Homes Resolution Services Amendment Bill be now read a first time.

Madam Speaker, at the appropriate time I intend to move that the Weathertight Homes Resolution Services Amendment Bill be considered by the Social Services Select Committee, that the Committee report finally to the House on or before 4 December 2006, and that the Committee have the authority to meet at any time while the House is sitting, except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders [192 and 195(1)(b) and (c)].

This timeframe is necessary because the legislation needs to be enacted as soon as possible, so that the enhancements to the Weathertight Homes Resolution Service (WHRS) can commence in early 2007 as has been publicly signalled.

Madam Speaker, with this amending legislation the government is improving the effectiveness and efficiency of the WHRS. The amendments follow a substantial review of the service. That review sought the views of industry representatives, consumer groups and territorial authorities, and included analysis of the needs of all the involved parties.

This Bill is central to the Government's commitment to actively help resolve the so-called leaky homes situation. The WHRS was set up in 2002 as a 'call to arms' to deal with a major problem. Although people have gained successful settlements so far, the service is too slow and is being drawn out by the lawyers and experts.

The review identified the need to strengthen and streamline the WHRS by improving the efficiency and effectiveness of each stage within the WHRS process, by allowing homeowners to claim for a similar range of damages that they would be able to claim in a court process, and by helping owners of units within multi-unit apartment complexes register claims and resolve disputes.

This Bill sets out to achieve all these outcomes. It will also contribute towards this Government’s strategic goal of supporting families young and old by helping to ensure homes are healthy and dry. And since buying a home is often the biggest single investment that Kiwis make, the Bill also contributes to this country's economic transformation because it is crucial that people have the confidence to invest.

The reforms in this Bill build on the Government’s commitment to homeowners to provide a speedier, lower cost alternative to the court system for resolving leaky building claims.

In essence, the provisions in this Bill will help owners of leaky homes resolve their disputes quicker, get compensation from the liable parties and get their houses repaired.

This is another way that the Government is ensuring New Zealanders have access to quality homes and buildings that meet their needs. The main components of the proposed legislation are as follows.

The Bill introduces a new streamlined dispute resolution process with compulsory pre-hearing conferencing for standard claims, before claims move to time-limited mediation. Claims that do not achieve a mediated solution move to adjudication.

The Bill also encourages informal dispute resolution and puts in place several mechanisms to speed up and streamline the claims processes, such as establishing a new process for low value claims.

Faster resolution of disputes will also be aided by the provision of comprehensive assistance and guidance for claimants and respondents. This includes more comprehensive WHRS assessment reports that can become expert evidence, potentially saving the parties thousands of dollars by not having to get their own specialist reports done. Importantly, the amendments allow claimants to claim for potential as well as actual non-weathertightness damage.

The Bill sets the objectives for a less adversarial, more investigative and swifter adjudication process. Collectively these measures move the service towards an investigative approach to dispute resolution, so that the process is not only less costly and faster for the parties, but also less litigious.

Adjudicators can currently award costs against a party they consider to have caused unnecessary costs either by acting in bad faith or through allegations or objections that are without substantial merit. These powers will remain in the Act.

However, the Bill introduces new offence provisions with fines attached for other negative behaviours such as failure to comply with an adjudicator’s order or summons - which will help adjudicators get on with the job.

The Government has also decided to make the adjudication function independent of the Department of Building and Housing. The Ministry of Justice will be responsible for establishing and administering the new Weathertight Homes Tribunal.

This will enhance consumer and respondent confidence in the adjudication service, improve acceptance of the authority of the adjudicators, and provide more institutional support for the adjudicators. It 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 Bill also removes obstacles for bodies corporate to bring claims for multi-unit apartment complexes by setting voting thresholds that are not unanimous, so that “hold out” situations are less likely to occur. This is especially important given that around 70 percent of claimants with the WHRS are unit title apartment owners.
Collectively the measures in the Amendment Bill will:

- reduce the average time for claims to be resolved

- result in homeowners and respondents incurring lower legal and evidential costs than at present in using the WHRS

- increase the proportion of disputes resolved through early negotiation

- ensure that homeowners receive an accurate and comprehensive assessment of the damage to their house, including what work is needed to repair it

- result in homeowners being better prepared for the dispute resolution process

- improve the independence of the adjudication process, and

- remove existing barriers to the registration of claims and resolution of disputes by owners of units within multi-unit apartment complexes.

The Bill will also improve the weathertightness information available to prospective homebuyers by requiring WHRS notices to be placed on local authority Land Information Memorandum (LIM) reports. The new requirement means potential buyers should know if the house is fixed, as the WHRS notice will be listed along with any related consented repair work and code compliance certification. An accompanying consumer education campaign will encourage prospective homebuyers to seek these reports before buying, in order to make informed purchase decisions.

The Government is also developing a financial assistance pilot for the worst affected owners of leaky homes. We have put aside $7.1 million in the last Budget for lending assistance under the two-year pilot. Housing New Zealand Corporation along with the Department Of Building and Housing are currently developing the eligibility criteria and lending conditions for the pilot financial assistance scheme. Work is progressing well and announcements will be made when final decisions have been made, which is likely to be well within the next couple of months.

It is also important to note that the WHRS was established as a specific solution to deal with a specific issue. Changes to the Building Act 2004 are now addressing the systemic failures across the building and construction sector that led to the leaky homes problem.

This includes the licensing of those who design and build whilst at the same time protecting the Do-It-Yourself (DIY) tradition, the review of the Building Code, an auditing and accreditation scheme for Building Consent Authorities, sector and consumer education, the investigation of a home warranty insurance scheme, and building product certification. These measures are part of the package of reforms to help ensure that homes are built right the first time.

This Bill therefore puts in a time limit so that homes built or altered after 31 December 2011 will no longer be eligible to use the WHRS. In essence, this means that the WHRS will cease around 2021.

Madam Speaker, I move that:
the Weathertight Homes Resolution Services Amendment Bill be considered by the Social Services Select Committee,
that the committee report finally to the House on or before 4 December 2006, and
that the committee have the authority to meet at any time while the House is sitting, except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders [192 and 195(1) (b) and (c)].


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