22 May 2007

Added certainty for leaky home claimants

Building and Construction Minister Clayton Cosgrove today announced the introduction to Parliament of a bill to technically amend the Weathertight Homes Resolution Services Act 2006 to give added certainty to leaky homes claimants that the Weathertight Homes Tribunal is able to award general damages, including those for mental distress and anxiety.

The move follows a recent High Court decision, of 29 March 2007, that held general damages could not be awarded as compensation for any mental anxiety or stress under the legislation.

“The Weathertight Homes Resolution Service (WHRS) functions as a ‘one stop shop’ dispute resolution process as a specialist alternative to the courts, and has awarded general damages in 21 percent of the settlements to date," Mr Cosgrove says." Two previous District Court appeal decisions also interpreted the WHRS Act 2002 as 'including' such powers to claim general damages, so this High Court decision went against existing case and legal precedence."

Mr Cosgrove said the government was moving quickly to rectify the problem because the judgment sets a new precedent that affects existing adjudications already started, but not yet finished, under the WHRS Act 2002, and decisions made from now on by the Weathertight Homes Tribunal under the WHRS Act 2006. Existing settlements are not affected.

"Parliament unanimously supported the new WHRS Act late last year. The ability to award a range of general damages was simply carried over from the old WHRS Act that was working fine in this regard, until the recent High Court decision. The amendment bill introduced yesterday puts Parliament's and the Government's intention beyond doubt so that leaky homes claimants can get on with settling their claims," Mr Cosgrove says.

The amendment to the Act will specifically clarify that the Weathertight Homes Tribunal can make any order that a court of competent jurisdiction could make in relation to a claim in accordance with principles of law, but will not give the Tribunal any wider powers than the court in relation to remedies.

"This change will reinforce claimant confidence that their WHRS claims can be resolved in one specialist jurisdiction, without the need to go also through mainstream courts to seek general damages”, Mr Cosgrove says.

The amendment bill was introduced to the House yesterday (21 May 2007) and will be referred to the Social Services Select Committee for a short period for public submissions, before being progressed through the House as soon as possible.

Background Information

What is the Hartley High Court decision all about?
The High Court case of Hartley v Balemi and Ors considered a number of issues. The relevant decision leading to this legislation is that general damages could not be awarded as compensation for any mental anxiety or stress under the WHRS Act 2002. This judgment was made on 29 March 2007.
This judgment sets a precedent that impacts existing adjudications started under the WHRS Act 2002, and the administration of the WHRS Act 2006.

Why is an amendment being made to the WHRS Act 2006?
To make sure that Government’s original intent is carried out, an amendment to the Act will clarify that the Weathertight Homes Tribunal can make any order that a court of competent jurisdiction could make in relation to a claim in accordance with principles of law, and that order may include an award of general damages, including those for mental anxiety or distress.
The amendment would also restore to claimants the confidence that their claims can be resolved in one specialist jurisdiction.

Was the question of general damages considered during deliberations on the WHRS Act 2006?
Yes it was. No change was considered necessary for several reasons:
 The WHRS Act 2002 did not expressly exclude the power to award general damages for anxiety and stress.
 Two District Court appeal decisions made in 2005 had interpreted the WHRS Act 2002 as ‘including’ such powers.
 Adjudicators had been making modest awards in some determinations and their ability to do so had been upheld in the District Court appeals.

Where does Justice Steven’s judgment leave the Hartley claimants?
Justice Stevens’ judgment stands in relation to the Hartley claimants.

Will Justice Stevens’ decision affect the two earlier District Court decisions in which adjudicators were able to award general damages?
No.

What is the difference between provisions in the WHRS Act 2002 and WHRS Act 2006 regarding general damages?
There is no difference. As both Acts contain the same provision that “an adjudicator may make any order that a court of competent jurisdiction could make in relation to a claim in accordance with principles of law”, it is necessary to clarify that the adjudicator’s order may include an award of general damages for mental anxiety or distress.

What consultation has been done on the proposed amendment to the WHRS Act 2006?
It has been discussed with the Crown Law Office and the Ministry of Justice.

How have claimants reacted to the Hartley judgment?
Individual claimants have expressed their concern to the Minister and the Department of Building and Housing about the impact of this judgment on their claims. Some people suggested an amendment be made to the WHRS Act. Informal feedback from the Leaky Homes Action Group indicates that they support the proposed change in legislation to clarify the situation regarding awarding of general damages.

ENDS

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