Hon CLAYTON COSGROVE (Minister for Building and Construction) Link to this
I move, That the Weathertight Homes Resolution Services (Remedies) Amendment Bill be now read a first time. After the bill has been read a first time, I intend to move that it be considered by the Social Services Committee. I also intend to move that the Social Services Committee be instructed to report back to the House by 18 June 2007 rather than within the default period of 6 months, and that the committee have the authority to meet at any time while the House is sitting, except during questions for oral answer, 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 is because the legislation needs to be enacted as swiftly as possible so that certainty can be restored to claimants that their Weathertight Homes Resolution Service claims can be resolved in one specialist jurisdiction, as intended by Parliament.
This bill amends the Weathertight Homes Resolution Services Act 2006 to make it clear that the remedies that may be claimed under the Act and ordered under the Weathertight Homes Tribunal have one purpose—that being to place it beyond doubt that the tribunal is able to award general damages, including those for mental stress or anxiety. The process set down by the Weathertight Homes Resolution Services Act 2006 acts as a one-stop shop dispute resolution process and as a specialist alternative to the courts.
General damages have been awarded in 21 percent of the settlements to date. In two District Court appeals under the Weathertight Homes Resolution Services Act 2002 the relevant section, section 42(1), has been interpreted to include the ability to award general damages, including those for mental stress and anxiety. However, a recent High Court decision—the Hartley decision, issued on 29 March 2007—held that general damages could not be awarded under the Weathertight Homes Resolution Service legislation as compensation for any mental anxiety or stress. The judgment sets a precedent that affects existing adjudications started, but not yet finished, under the Weathertight Homes Resolution Services Act 2002 and decisions made from now on by the Weathertight Homes Tribunal under the Weathertight Homes Resolution Services Act 2006. Existing settlements are not affected.
The decision is likely to deter people from using the Weathertight Homes Resolution Service process and force them to pursue their leaky building claim in the general courts, if they wish to claim for general damages. The precedent the High Court has now set for Weathertight Homes Resolution Service claims has caused concern among claimants who have found themselves faced with either having to abandon the Weathertight Homes Resolution Service process and go to court for the entirety of their claim, or having to go to court for general damages relating to mental anxiety or stress. Being able to claim compensation for mental anxiety or stress is an important principle of justice for Weathertight Homes Resolution Service claimants. Even though such damages are not always awarded, and the amounts awarded are just under $10,000 on average, claimants have valued the fact that their claims for such damages could be considered in adjudication.
This Parliament unanimously supported the new Weathertight Homes Resolution Services Act late last year. The new Act simply carried over the provisions of the old Act, which were understood to provide the ability to award general damages for mental anxiety and stress—a view that had been confirmed by two District Court appeal decisions in 2005. The process was working well in this regard. Without further legislative clarification, however, the High Court’s decision is the authoritative interpretation.
This amendment bill puts the intentions of Parliament and the Government beyond doubt, and asserts the supremacy of Parliament so that leaky home claimants can get on with settling their claims. The amendment bill specifically confirms and clarifies 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 the principles of law, but it does not give the tribunal any wider powers than the court in relation to remedies. This change will reinforce claimants’ confidence that their Weathertight Homes Resolution Service claims can be resolved in one specialist jurisdiction, without the need also to go through mainstream courts to seek general damages.
I want to thank John Gray of the Leaky Homes Action Group for the helpful focus he has provided on this matter as the leader of the major homeowner interest group. I also wish to acknowledge the individual homeowners, not all of whom are current claimants, who have written to me with well-reasoned pleas for an amendment such as this to be made. I also want to thank the Government support parties, who, in recognising the distress the High Court decision has caused to claimants, are supporting this bill. I commend the bill to the House.
Hon Dr NICK SMITH (National—Nelson) Link to this
This bill is another sad chapter in the ongoing bungles of this Government in dealing with the awful plight faced by thousands of New Zealanders who have leaky homes. This is the third attempt by the Government to try to get the law right in this area, but every time it is rushed, and every time the Government gets it wrong. Each time National has expressed concern about this mad rush, the Government has ignored us. The end result is that we have had one problem after another, and now we have found out again that the law is broken.
The first attempt was back in November 2002. At that time, the Government rushed the legislation through in just 3 weeks to address the leaky home issue. Then the current Minister, Clayton Cosgrove, came to the House last year to rush a bill through. On that occasion he said, after the third reading speech: “I’ve got it right; it’s all fixed; homeowners can have confidence.”
Well, what is the story today? The Minister is back in the House, saying that we have to have another crack at it. He says it relates to a decision that was made by the court. Let me reflect on the date. The decision was given on 29 March. I say to the Minister that that was 2 months ago. How long will the Minister give the select committee to check whether this third time is right? Just 3 weeks! What has the Minister been doing, if this is so urgent? If there is such anxiety for those homeowners, how come the Minister has been sitting on his butt for 2 months but will give Parliament only a mere 3 weeks to address this issue?
I say further to the Minister that on the very specific issue of being able to make claims for general damages, I remind him of what he said in December. He said that homeowners would be able “to claim for a similar range of damages as that they would be able to claim in a court process,”. Does the Minister stand by that statement now? He has just told Parliament that he got it wrong—that he stuffed it up. What is worse is that he keeps doing that. We even had submitters, I tell the Minister, who came to the select committee during consideration of his previous bill, saying—and I will quote specifically from Mr Fuller—“This bill does not provide for general damages, and if the Minister had done his job properly he would have made changes to that bill so we would not be back in the situation when the ink is barely dry on your old Act, back patching it up.”
National members pointed out then, and we point out again today, that this bill is not adequate for dealing with this problem. We argued then that homeowners should be able to claim reasonable legal costs associated with their claim. The Minister refuses to allow that. My question for the Minister is how he expects the average homeowner, typically in a tribunal hearing—faced with as many as a dozen lawyers on behalf of builders, architects, developers, councils, and insurance companies—to be able to do that, without legal representation. Yet he continues, with this bill, to refuse the reasonable requests of the Leaky Homes Action Group to ensure that those provisions can be—
Hon Clayton Cosgrove Link to this
Ask David Moore. He settled a couple of days ago; got 100 percent of what he wanted—no lawyers. John Gray settled—no lawyer.
Hon Dr NICK SMITH Link to this
Let us look at the Minister’s record of settlement; let us look at the overexcited Minister’s record of settlements. The Government has allocated $100 million to the bureaucracy around leaky homes. That is how much money is to be spent. Of the 4,000 claims, how many have been settled? It is a mere 700. What is worse is that since Mr Cosgrove has held this portfolio the number of assessments being done each month has dropped by one-third. The madness is that the cost to the taxpayer of the bureaucracy of running the leaky homes tribunal is $108,000 a case and the average level of settlement is a mere $70,000. The taxpayer would have been better off just to write the cheque out for the poor homeowner than to run this overheated bureaucracy that has failed so badly for New Zealanders. [ Interruption]
I ask this question of the new member of the House Lesley Soper. She may not have been here for the previous debate. What we had earlier was the decision that this problem should be dealt with by the Department of Internal Affairs. That is what George Hawkins and the Government had said. Then they said: “Oops, stop; we do not want the Department of Internal Affairs. We want to give this job to the Department of Building and Housing.” Then last year the Minister said: “Oops, we got that wrong, too. Sorry, we are now going to give it to the Ministry of Justice.” So we can look at the game of pass the parcel that has been going on within the Government. How many Ministers have we had?
Hon Dr NICK SMITH Link to this
Well, in the nick of time, we might have a decent Minister. We started with Mark Burton. He was the first Minister responsible for this area, then responsibility for the tribunal went to George Hawkins. Then it went to Margaret Wilson, then it went to John Tamihere, then it went to Chris Carter, then it went to Clayton Cosgrove, and now it has gone—guess what—all the way back to Mark Burton. So we have had a game of pass the parcel where this problem has gone from Minister to Minister, and the poor old homeowner is yet to see any justice for what needs to be dealt with in respect of this important issue.
Lesley SoperHon Dr NICK SMITH Link to this
The member says that the Leaky Homes Action Group has praised this bill. It says this bill is needed. Yes, it is needed—it is needed because Clayton Cosgrove stuffed it up.
Hon Dr NICK SMITH Link to this
Actually, no. In fact, let us look at the reasons for the bill. They are to amend the Weathertight Homes Resolution Services Act 2006—to amend that Act. Who was the Government in 2006, I ask the member who is just piping up?
Hon Dr NICK SMITH Link to this
She says that, but it is this Act that we are amending. We are amending the 2006 Act, an Act that was passed through Parliament only in December. [ Interruption] Clayton Cosgrove says we should blame the High Court.
Hon Clayton Cosgrove Link to this
No, I said you don’t understand—you really don’t understand about court proceedings. You are a clot-head.
Hon Dr NICK SMITH Link to this
The member is now resorting to personal abuse; that is the standard Labour Party technique. The truth is that he told Parliament last year that people could claim general damages. He said that that is what his Act would enable.
Hon Clayton Cosgrove Link to this
And two District Court precedents agreed with me. But the High Court—
Hon Dr NICK SMITH Link to this
What has happened? The High Court has said he is wrong. [ Interruption] I say that, in relation to the High Court, if the Minister believes the law is OK he could appeal the decision to the Court of Appeal. He has not; instead, he has decided that his law was wrong and thus he has introduced this bill.
The last point I wish to make is that here we have this bill that is to be rushed through Parliament and reported back within 3 weeks. The next 2 weeks is an adjournment break. [Interruption] Well, I say to the Minister that he has known about this court decision for 8 weeks, so how is it fair to this Parliament for it to have only 3 weeks to try to address the issue?
Hon Clayton Cosgrove Link to this
They try to work. We’ll be there; you don’t have to turn up. We’ll be at the select committee—
Hon Dr NICK SMITH Link to this
I simply make the point that the Minister rushed the first legislation through on this issue, and he got it wrong. He rushed it through the first time and because of that rush he got it wrong. That is why we are here again. He rushed it through again last year and he got it wrong again, and he now wonders why members of the National Opposition say to him: “Slow down. Let us get this law right. Do not rush this process. There is not the need.”
Leaky homeowners deserve better law than we are getting. They certainly deserve better than the mess where only 10 percent of the claims have been resolved after $100 million and after 5 years. That is failure in anybody’s eyes. Sadly, leaky homeowners are not going to get a solution until this rotten Government is kicked down the tracks.
RUSSELL FAIRBROTHER (Labour) Link to this
The last time that man appeared before a High Court he was found guilty of contempt—contempt of court. What is more, the High Court did not believe his evidence, which is even worse. If a person is not believed in court, it means that he or she has given wrong evidence on oath. When it is evidence about one’s own actions, one cannot be mistaken, one must be deliberately misleading the court. That was the finding on that man the last time he was before the High Court.
His lack of knowledge on this legislation is abysmal and that should be taken into account when we consider the argument. He said to the Minister: “If you do not like the decision of Justice Stevens in the Hartley case, you can appeal it.” Hang on, whereabouts in the Hartley case is the Minister a party? Whereabouts in the Hartley case has the Minister a standing to appeal? He has no standing to appeal. The only ability the Minister has is to bring the matter to Parliament to amend the legislation. Of course, Nick Smith would not know that. His role in the High Court was as a defendant—an unfortunate, hapless defendant.
That last speaker criticised this Government for what was a failure of the Opposition to do its lawful duty. This House has an Opposition, the Queen’s loyal Opposition. The role of the Opposition is to examine Government initiatives and point out defects. Yet what did this Opposition do in respect of the original bill that went through in December? It voted for it. Did the loyal Opposition say it could not vote for it because there was a defect in it? No; it voted for it.
Well, what is the defect? It is not the case that claimants cannot currently claim general damages. The Hartley decision says that claimants who bring a claim before the Weathertight Homes Tribunal cannot claim general damages. Claimants have to start a fresh action in the general jurisdiction of the court to claim general damages. Nick Smith is arguing that claimants should have to run the gauntlet of two courts; they should have to get their facts established at the Weathertight Homes Tribunal, then go back to the District Court or the High Court to claim their general damages. That is an argument for running up the costs both to the Government—which he has so savagely and erroneously criticised—and to the parties. Nick Smith does not want these claims to be successful, because his builder mates are telling him that. We know that, because there is a bill before the Parliament right now whereby he protects those builder mates.
Hon Dr Nick Smith Link to this
I raise a point of order, Mr Speaker. The member has asserted in his speech that I am being influenced by builder mates in the views I have expressed in this House. The Standing Orders are very clear; a member cannot assert an improper motive. I am proud to have a large number of mates in the building industry, but the assertion that I am somehow improperly motivated by those friendships is quite against the Standing Orders.
RUSSELL FAIRBROTHER Link to this
Speaking to the point of order, I said that his builder mates have told him that. One would hope he would listen to his lobby group. One would hope he would at least listen to somebody—at least to his lobby group.
Eric RoyMr Deputy Speaker, I quite clearly heard the member say that Dr Smith has been influenced by his builder mates, and that is asserting an improper motive.
RUSSELL FAIRBROTHER Link to this
I withdraw, but I want to say that if this member had listened to the lobby groups, he would know that the best course he could take on this legislation is to say that his party will help the Minister to get it reported back by 18 June, because this is nothing but a good amendment.
It is a good amendment because it merely clarifies the rights of claimants, who have been put in the invidious position of owning a house that was purchased or built in good faith, then later on the defects show up and the ability to claim damages is now an issue. It has not been an issue for long, I have to say. The District Court has consistently found that general damages can be awarded. The problem started when a retired High Court judge, the honourable Sir Robert Smellie, postulated in an article in the second-rate legal journal New Zealand Lawyer that there may be the chance that general damages are not claimable in an action before the Weathertight Homes Tribunal. That argument was taken apart by Judge McElrea in the Waitakere City Council case; he carefully disassembled the argument advanced by Sir Robert Smellie by saying it was not consistent with the Act. He pointed out that many jurisdictions, not the courts, award general damages.
And what are general damages? This point was totally omitted by the last speaker. General damages are the automatic right to compensation, and they do not need to be pleaded in a case. The High Court has said that one can claim for special damages only, and the general right to be returned to the position one was in, by way of monetary compensation, is limited. It is limited by an article written by a retired High Court judge in a second-class journal, the New Zealand Lawyer; the article has influenced Justice Stevens by the strength of its reasoning. Justice Stevens has set a precedent in the High Court that remains until another High Court judge chooses to deviate from it or a poor litigant, a house owner, takes it by way of appeal.
The most appropriate action for a responsible Minister to take is to consult quickly with the groups affected—principally the Leaky Homes Action Group—and to bring in a simple bill that has five operative clauses. It is not a lengthy bill, and it merely restores what that party opposite believed was the case in December when it voted to support the original bill. It is not a case for National members to grandstand in a rhetorical, abusive way at the expense of the struggling, anxious, and stressed homeowners, who, even if they get a full hearing before the Weathertight Homes Tribunal, will always end up as losers, because there is no adequate monetary compensation for the stress of having one’s dream home start to crumble around one.
This bill is urgent, and should be passed with alacrity and in good conscience by both parties. National supported the legislation passed in December when it failed to see the defect; no reasonable reading of the bill in December revealed this defect. We now have one High Court decision, which stands until it is challenged. The cost of challenging is very expensive. The High Court decision says that if one wants general damages, one has to commence a separate proceeding in another court. That is ludicrously onerous and adds to the cost to the Government, because the Government pays for court costs, as it pays for the resolution service. So the running of the High Court or the District Court becomes clogged up if the court has to consider general damages separately.
General damages are a longstanding remedy in law, a longstanding right, and every claimant should be entitled to them. Every claimant under the speedy service of the Weathertight Homes Tribunal should be able to expect them. This judgment tells us that we need practical people hearing these disputes, not black-letter lawyers. We have practical people in the Weathertight Homes Tribunal who give good and prompt decisions, and assist those people who are troubled by the defects of the Building Act. It is lamentable that the Opposition chooses to make politics out of this issue.
Hon Dr NICK SMITH (National—Nelson) Link to this
The member said in his contribution that National had not drawn the defects of the Minister’s Weathertight Homes resolution Services Amendment Bill to his attention. For the purposes of assisting the debate, I seek leave to table the National minority view that was included in the Social Services Committee report on the bill, and that points out its defects.
Mr DEPUTY SPEAKER Link to this
Leave has been sought for that course to be followed. Is there any objection? There is.
JUDITH COLLINS (National—Clevedon) Link to this
Why is the previous speaker, Mr Fairbrother, such an angry man? Why is he so angry, and why were Government members so upset when Dr Nick Smith said that the defects were pointed out to the Government last year? Two Government members have stood up here and said that National did not tell them. Well, actually, we did. And there is this other little issue: we are the Opposition. Government members do not consult us about this legislation. They do not want to discuss it with us first, but they go to their support parties.
All Government members do—and they have shown it this afternoon—is insult and abuse members of the Opposition, whose support they will now seek for the Weathertight Homes Resolution Services (Remedies) Amendment Bill to go back to the Social Services Committee to try to fix up the very mess that we warned them about last year. That shows why Labour’s poll ratings are going further and further down. I think last time Labour was 13 points below National. Labour’s ratings are down because its way to win friends and influence people is to attack the very people whose help it needs.
We will not take it out on the poor old owners of leaky homes that that Minister and that party do not have the good grace to say to the National Party: “Thank you. You told us about it, we did not listen. Thank you for coming in and making sure that this matter gets resolved as quickly as possible.” They do not have the grace that anyone else is born with.
But Shane Jones actually does say: “Thank you.”, which is very kind of him. Mr Jones wants to be the next Minister of Finance after Dr Cullen will finally get his marching orders very, very soon, and he is looking forward to that role. Suddenly, we keep hearing that Mr Jones is to be promoted. We are all told this, Mr Jones does not deny it, and what happens? Nothing—we still have the same tired old Ministers.
We have just seen how seriously this Government has taken the leaky homes issue. We need to consider who it puts in charge of this problem. First off, the Government put that very quiet Minister, the almost invisible Minister of Justice, Mark Burton, in charge.
Anne TolleyWell, Mrs Tolley might well ask. Mr Mark Burton was put in charge of the weathertight homes issue. After that, when Mr Burton did not seem to be cutting the mustard, the Government put one of its stunning members—one of its best members—in charge of the weathertight homes issue. That was Mr George Hawkins. That was when we knew that this Government was really, really serious about leaky homes. I think every homeowner in the country who had a leaky home thought: “Well, goodness gracious! Now we have George Hawkins on to it. George will fix it.” But, unfortunately, he did not. So we have now had three bills in 5 years from this Government—
No, I tell Mrs Tolley that it is not three Ministers; I think it is actually more like about six or seven Ministers so far. In fact, I lost count when Dr Smith was running off those names for us. So we have had all those Ministers, and still they cannot get it right.
I think it is quite interesting that Mr Cosgrove mentioned before that the bill would be rushed through and we will have the select committee report back by 18 June. He castigated the National Party for saying that that is not enough time. I will say why time is so important. It is not just so that the select committee can consider the bill—after all, we will probably do our usual minority report and point out the faults—it is so that submitters will get a chance to submit on the bill. One of the things we find is that a lot of very sensible advice comes from very sensible people during the select committee process.
This Minister is very lucky that we have on the select committee my colleague Bob Clarkson, who knows more about leaky homes than that Minister would know about anything else. Bob Clarkson knows about leaky homes and he knows how to fix them. I have seen him deal with a constituent who had a leaky home problem. The constituent had been told by all these action groups, the experts at the weathertight leaky homes service and others, that it would cost $140,000 to have that place fixed. The owners simply could not afford it. Unfortunately, the builder had gone into liquidation so they would not get any money there. What happened? Mr Clarkson got on to the job and is now having that property fixed for about $30,000.
That is the difference. It is a practical, sensible solution from a man who has nothing to gain from it and who does it out of the goodness of his heart, because he takes being an MP seriously. That is the sort of person we need in charge of this bill—not somebody who prances around, incredibly self-important, and gives everybody lectures because they happen to point out that it was absolutely obvious that there were defects in the earlier legislation.
Another example I will give to the House is that the last time the select committee dealt with the leaky homes issue—which I must say is starting to be a bit of a déjà vu experience; I have been to the committee three times while it has been dealing with this issue, with three different bills—we found out from the officials that it costs $8,000 to have a property assessed as to whether it is leaking. It costs $8,000. The assessors go around and bore all these holes in the property to try to seek out the water.
Well, Mr Clarkson, being the practical, sensible guy he is, found out that a water-seeking camera is being used by a company in Auckland. I will not name the company because we do not do commercials, but this is a sensible solution. Mr Clarkson brought this camera to the select committee so we could see it. This camera can be pointed at the wall and it can show exactly where the water is in the walls. The cost of this service is not $8,000. It is not $6,000. It is not even $2,000. It is not even $1,000. It is $800. That service can show exactly where the water is, so we do not have to go around drilling holes all over the place, hoping we will get lucky with the water.
The camera actually shows it. It is just like having an X-ray of a body to show where the bone is broken, rather than chopping up the arm to try to see where that bone might be broken. That is the difference. So Bob Clarkson is on to the technology—[Interruption] No, no! The Weathertight Homes Resolution Service does not want to know about this, because it does not cost $8,000. We know from this Government that if we spend more money, it must be better; that is its answer. So these poor old people are having their houses ripped apart, with holes being drilled everywhere, when they could have had a camera to show exactly where the water is.
One of these properties, Mr Clarkson found, had a great leak that the officials had been told about. Water was supposed to be running down walls and everywhere else, but, in fact, it was coming from a hole in the roof. All that was needed was to show exactly where the water was coming from—that it was coming from the roof. It was not coming out of the windows, but just happened to be running down inside the wall past the windows. So that saved those people a huge amount of money, and a huge amount of angst.
I would like to know whether the Minister will look at this camera. I would ask whether he knows about it, because we are happy to arrange a demonstration, I am sure. Mr Clarkson can arrange a demonstration. He has no shares in the company that uses it and he gets nothing from it, but we just need a practical solution for a practical problem. I think that one of the things I would like to see from this Government is just a little bit of humility around this one. Those members could just come to us, get the expertise that we have in the form of Bob Clarkson—
As Mr Cosgrove says—“Bob the Builder”. Well, that is what he actually is, I tell Mr Cosgrove.
The other thing, I tell Mr Cosgrove, is that Bob Clarkson has built a stadium, so maybe Mr Mallard should have had a wee talk to him about that. Mr Clarkson built it, paid for it, and has now sold it and given almost half of the money away. A man like that is the sort of person we need in Parliament. We are happy to let the Government have some of that expertise—I see that Mr Mallard is saying that, yes, he would like some. I think we would be happy to look at that. Mr Clarkson will be on the select committee, and I will ensure that he will make available to the Minister the camera that he knows about, because clearly the Minister needs to know about this.
PITA PARAONE (NZ First) Link to this
Tēnā koe, Mr Deputy Speaker. I signal right from the start that it does not take too long to stand up in this House and express support for a bill, so I am indicating that I will not take too long. However, I note that the previous speaker alluded to some polls, and I want to remind that member that she and her party, prior to the last election, were putting their faith at that time in polls that indicated something quite different from the outcome. So all I say is that only one poll counts, and that poll is coming up in 2008.
New Zealand First is quite happy to support this bill, because the problem requires immediate attention. Although some comment has been made about the expediency with which this bill has been dealt with, as a result of the recommendation by the Minister, I support the Minister in the attention he has given this bill. That is particularly so when we read in the New Zealand Herald— that wonderful publication that supports a particular party in this House—that reports from leaky building experts actually praise the Government for moving fast to close the legal loophole that might deprive victims of rotting homes from getting money for their mental distress and anxiety. That view was expressed by John Gray of the Leaky Homes Action Group. When we have an industry leader like Mr Gray extolling the virtues of the time and action that the Minister has taken to ensure that this issue is rectified, then this House ought to support the Minister in his efforts.
I note that Opposition parties, on previous occasions when these issues were brought before the House, supported the legislation. This bill recognises that, yes, the High Court made a decision that was contrary to the intent of those previous efforts by this House to rectify this issue, and I think it is only proper that this House should now lend support to the efforts the Minister is making to remedy the issue.
I will not take too long, as I indicated, but I will say that New Zealand First will be supporting this bill, and the intent to have the select committee report back within the time limit the Minister has set. Kia ora.
SUE BRADFORD (Green) Link to this
The Green Party will also be supporting the Weathertight Homes Resolution Services (Remedies) Amendment Bill today, even though it does seem somewhat ridiculous that we are debating it so soon after we passed the last Weathertight Homes Resolution Services Bill in December 2006.
As the Minister has pointed out, the need for this new legislation has arisen because of a judgment made on 29 March 2007 in the High Court by Justice Stevens. The judgment was to the effect that Weathertight Homes Resolution Service adjudicators could not award general damages for the mental distress caused by finding oneself the proud owner of a leaky home. Justice Stevens believed that the primary purpose of the original Act was to offer speedy, flexible, and cost-effective procedures to deal with leaky homes, and that the awarding of general damages unnecessarily complicated and extended the stated purpose. He seemed to feel that having mental distress and anxiety included in damages not only lengthened hearings, which were supposed to be happening at maximum speed, but also highlighted the fact that adjudicators appointed under the Act were not necessarily lawyers and were not “appointed for this type of expertise.”
Although the Green Party can understand the learned judge’s reasoning, we are also well aware of the reality of the anguish that is caused when people see the value of their homes suddenly disappear due to poor building practices. I sat on the Social Services Committee that dealt with the earlier bill last year and sympathised hugely with submitters who had basically seen the value of their life-savings taken from them through no fault of their own at the same time that they were having to live with a huge sense of insecurity about every aspect of their future.
I believe that if parties are able to establish that genuine stress and anxiety have arisen from their leaky homes situation, then they should be compensated for it. I also think that was what we intended when we did the work on the earlier bill, and voted for it. While removing “general damages” from the menu of available remedies will deliver faster, more cost-effective resolutions, I do not think that these are just resolutions. The removal of general damages from this jurisdiction leaves claimants no alternative but to run parallel proceedings in the District or High Court if they are to seek compensation for mental distress and anxiety. That is hardly an efficient use of their already depleted resources, or the resources of those involved in the justice system.
The Green Party therefore welcomes the Government’s decision to take action on the High Court ruling, in the interests of fairness to leaky home claimants, and we look forward to this bill going through the House in as short a time as practicable.
KATRINA SHANKS (National) Link to this
I rise to speak to the Weathertight Homes Resolution Services (Remedies) Amendment Bill. The legislation surrounding the leaky homes, from which this bill originated, was a knee-jerk, poorly thought-out, poorly written, and rushed piece of legislation. This may be reflective of the fact that there have been eight Ministers responsible for the leaky homes issue in the term of this Government.
In 2002 the original legislation, the Weathertight Homes Resolution Services Act, entered the House at the beginning of November and became law on 26 November that year—just a matter of 3 weeks. The Minister later accepted responsibility for the fact that this legislation had been a failure. In 2006 the Weathertight Homes Resolution Services Amendment Bill was once again a rushed job. Obviously, the Government had learnt absolutely nothing in terms of how to construct good legislation. Now, 6 months later, we are looking at another piece of legislation to amend this Act.
Reading the Hansard of 2006, I see that Nick Smith stated that the legislation had failed once again, and that it would fail again—and he was right. In the same , Judy Turner stated that the legislation would have to be reviewed—and she was also right, unfortunately. The explanatory note of the bill begins with a very bold statement: “This Bill amends the Weathertight Homes Resolution Services Act 2006 … to make clear the remedies that may be—claimed under the Act; and ordered by the Weathertight Homes Tribunal … in determining a claim adjudicated by it under the Act. In particular, the amendments make it clear that those remedies include general damages for mental distress and anxiety.”
This amendment has been introduced due to a recent decision in the High Court. These amendments, in fact, reverse the effects of the decision made on 29 March 2007 in Hartley v Balemi and Ors. This decision relates to the Weathertight Homes Resolution Services Act 2002. The High Court case highlighted that general damages could not be awarded as compensation for any mental anxiety or stress under the Weathertight Homes Resolution Services Act 2002. This judgment was made only 2 months ago.
The story goes like this. The appellants, David and Fleur Hartley, were awarded $90,000 in damages by the Weathertight Homes Tribunal in 2005. They had faced a repair bill of $284,000 for their Manukau home. The High Court in Auckland doubled the amount of compensation on appeal, but also ruled that no basis existed under leaky home law to award general damages as compensation for mental anxiety or stress. Justice Stevens went on to say: “In my judgment, general damages claims for mental stress do not fit comfortably within the overall scheme of the legislation and its underlying policy considerations.” This judgment sets a precedent that impacts on existing adjudications under the Weathertight Homes Resolution Services Act 2002 and the administration of the Weathertight Homes Resolution Services Act 2006.
Following the High Court decision, the Hon Clayton Cosgrove said that the ability to award a range of general damages was simply carried over from the old Weathertight Homes Resolution Services Act and that that had been working fine in this regard until the recent High Court decision. In other words, the Minister was saying that the problem with this legislation was caused by the High Court. In reality, the problem was the lax wording of the previous legislation. And what will the 2007 amendment do? It 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 the principles of law.” and the order may include an award of general damages, including those for mental anxiety or distress. The previous amendment was incorrectly thought to do this. In fact, the Minister said during the first reading of the Weathertight Homes Resolution Services Amendment Bill in 2006 that the amendments allow homeowners to claim for a range of damages similar to those they would be able to claim in a court process.
So now there are some questions that need to be asked. Firstly, was the question of general damages considered during deliberations on the Weathertight Homes Resolution Services Amendment Bill in 2006? The answer is yes. But no change was considered necessary, for several reasons. The Weathertight Homes Resolution Services 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 Weathertight Homes Resolution Services 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.
The second question is what the difference is between provisions in the Weathertight Homes Resolutions Services Act 2002 and the Weathertight Homes Resolutions Services Act 2006 regarding general damages. The answer is none. Both Acts claim the same provision—that an adjudicator may make an order that a court of competent jurisdiction could make in relation to a claim in accordance with principles of law. The new bill clarifies that the adjudicator’s order may include an award of general damages for mental anxiety or stress.
The third question is how claimants have 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 the judgment on their claims. Some people suggested that an amendment be made to the Weathertight Homes Resolution Services Act. Informal feedback from the Leaky Homes Action Group indicates that it supports the proposed change in legislation to clarify the situation regarding awarding of general damages. However, it should not have to do that. We should have got it right the first time. The legislation should have been right the first time.
The fourth question is what the implications are and for whom. There are 15,000 leaky home owners identified. After 4 years only 10 percent of claims have been resolved. Things are so bad for the service that over the last year the number of claims it received was over three times the number it settled; over the last year it settled over 200 claims, yet picked up 584 others. In fact, here I could talk about Mrs Dicks and why she went through the courts to get resolution and closure.
Finally, should the homeowners have confidence in this legislation? When the original Weathertight Homes Resolution Service was set up, the Government said that the problem would be resolved within 2 years. Four years later only 7 percent of claims have been resolved. If I were a leaky home owner I would want to see better statistics than that—in fact, not just statistics; I would like to see action. The Weathertight Homes Resolution Services Act has been a failure, and this bill, like the last one, highlights Labour’s incompetence. Far from sorting through its backlog of cases, the service’s active claims have increased by 330 over the last year. The average number of assessments completed each fortnight has dropped by 33 percent to 27 percent. The average number of resolved claims each fortnight has dropped by nearly half over the time to fewer than five per fortnight.
It is no wonder the level of frustration amongst homeowners is extreme. As with the 2006 amendment, the changes in this legislation are tinkering and will not solve the problem. But the legislation represents an opportunity to debate the issue—a debate we would like to enter. The Government is being incredibly optimistic that the Weathertight Homes Resolution Service should substantively cease around 2021. At this rate, it will take 7 years to clear just existing claims. A recent Cabinet paper quoted 15,000 affected homes, which would take 32 years at least to clear. The Weathertight Homes Tribunal will not be able to recapture claimants’ trust given this latest failure and given previous embarrassing remarks like “the seriousness of the situation appears to be a fraction of what the beat-up in the New Zealand Herald implies.”
In that same month, Jim Anderton said: “I am aware that while ‘leaky building syndrome’ or ‘weathertightness’ is a serious issue for those affected, the numbers involved are not great.” The numbers may not be great but it is an important issue to those 15,000 homeowners who deserve better.
SHANE JONES (Labour) Link to this
I rise to support this Weathertight Homes Resolution Service (Remedies) Amendment Bill, to support the Minister who has brought it to our attention, and to point out three key things. That man, Mr Nick Smith, stood in this House and poured some form of political hemlock upon the anguished souls who have been stood up and disappointed by the High Court. Our colleague has come here with a solution to reverse a decision of the High Court and to amplify the original intention in the legislation, but Nick Smith refuses to support it. He goes one step further. He refers to a minority report that he sought to table on his understanding that it refers to some sort of prescient observation he made, but I can tell members, because I have it in front of me, that it says nothing of the sort.
In the absence of any dissension I will table the National minority report in relation to the Weathertight Homes Resolution Services Amendment Bill that I have in front of me.
Document, by leave, laid on the Table of the House.
The truth carries great weight.
However, I must turn my attention to Miss Judith Collins. In the context of fraternal relations at the Finance and Expenditure Committee, I want to say that Bill English is absolutely right. Her ambitions and her pretensions are inversely related to talent. She has become lunar. She is trying to climb to the moon on a spider web to enjoy her ambitions. Not even Tobey Maguire would be capable of coping with her—
Hon Trevor MallardI stand corrected.
However, I come back to the bill. This bill goes over territory that was already addressed in the first attempt. Two lower courts upheld the purpose and the intention of the legislation. The High Court, in a fit of enthusiasm, wandered off into territory inversely related to the actual intention of this court—the highest court in the land—and it falls to the sovereignty of Parliament to correct some of the wayward ways of that particular part of the judiciary in the context of this bill, which now remedies that situation. So there should not be a single person possessed of any thoughts of charity, concern, or compassion for the people who have suffered from this dreadful problem who would stand and oppose it. On the question of mental anxiety and other forms of distress, listeners may very well need to make a claim based on what that man, Mr Nick Smith, said.
Hon CLAYTON COSGROVE (Minister for Building and Construction) Link to this
I move, That the Weathertight Homes Resolution Services (Remedies) Amendment Bill be considered by the Social Services Committee referred to Social Services Committee
A party vote was called for on the question,
That the motion be agreed to.
Ayes 67
- New Zealand Labour 49
- New Zealand First 7
- Green Party 6
- United Future 2
- Progressive 1
- Independent 2 (Copeland, Field)
Noes 48
Motion agreed to.