Shanks Katrina: Weathertight Homes Resolution Services (Remedies) Amendment Bill — Second Reading 
Shanks Katrina: Weathertight Homes Resolution Services (Remedies) Amendment Bill — Second Reading 
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KATRINA SHANKS (National) 
: 
 I rise to speak to the second reading of the Weathertight Homes Resolution Services (Remedies) Amendment Bill. The weathertight homes legislation was initially drafted simply because leaky homes had been built and homeowners needed some sort of protection. My understanding of the situation is that approximately 15000 homes have been identified in effect as having leaky home syndrome. 
I understand that a leaky home is caused by moisture leaking into the home which cannot dry due to a lack of air movement. All homes leak moisture but they leak it to different degrees. While I was looking at this issue I learnt that brick homes leak 18 percent strut-frame homes leak 2 percent and Hardiflex homes leak 7 percent. They all leak moisture. When there is air movement that moisture is dried up. Therefore those houses are not considered to be leaky homes—because they do not leak. The problems arise when there is no air movement and the moisture then rots the timbers and walls. That is when we have leaky homes. 
The change in products that the industry uses has in some instances caused those leaks. For example Hardiflex was being used instead of weatherboards thus stopping any air movement; mitre joints and windows were leaking and had no still trays to capture any leaks; and battens that would have allowed for air circulation were not being used between the outer and inner walls. The list goes on but those are just some of the reasons why homes started to leak. Unfortunately builders built homes with those faults but the Building Industry Authority had told them how to build homes and what cladding materials were suitable. The authority got it wrong. 
The new bill has been introduced to allow awards for mental distress and anxiety in order to remedy some of these claims. So far 4600 homes have been registered as being leaky. This number grows weekly and the scary fact is that leaky homes are still being built today. That has been confirmed by Katrina Bach chief executive of the Department of Building and Housing. This figure will grow each year as the years pass. 
The amendment to the legislation basically makes clear what remedies can be claimed. My colleague Bob Clarkson has made the very valid point that if we could just fix the leaky homes then their owners would not need this legislation to begin with as they would not have stress and anxiety about their leaky homes. Those homes would simply be fixed to begin with. 
The original legislation the Weathertight Homes Resolution Services Act was introduced in 2002 and was passed very quickly. It has subsequently proved to be an extremely flawed Act. In 2006 the Weathertight Homes Resolution Services Amendment Bill was once again a rushed job. Six months later we are again looking to amend this legislation. 
Interestingly enough the section in the Act that is to be amended was also the subject of the National Party minority report. Our minority report reflected why this amendment is now necessary. It stated: “National is appalled at the lack of progress in resolving the plight of thousands of owners of leaky homes and is unconvinced this bill will provide a workable solution. 
National does not agree with the majority decision on homeowners being unable to claim legal costs. It is quite unrealistic to expect the average homeowner when confronted at adjudication by up to a dozen lawyers to represent themselves. The bill should make provision for reasonable legal costs as per any other jurisdiction. 
There is a real dilemma created by the Government’s decision in 2002 not to disclose publicly applications to the WHRS for resolution. Many homeowners made claims on the basis that it would not be disclosed but this bill now retrospectively forces disclosure. This concern must be balanced against the rights of new owners to know whether there has previously been a weathertight homes claim. 
National is further concerned at the juggling of the WHRS between departments. The service started as part of the Department of Internal Affairs was then transferred to the Department of Building and Housing and is now proposed to be transferred to Justice. It appears to be a game of pass-the-parcel with the losers being the owners of leaky homes. 
National views the whole Government response to leaky homes as inadequate and failing homeowners. A more substantive reform that puts the focus on fixing the homes rather than spending tens of millions on reports and process is required. 
 In summary National supports most of the bill as a small improvement but in no way a solution to the billion-dollar problem of leaky homes.” 
Maybe if the last amendment to the Act had not been rushed it might have been drafted correctly and we would not be standing here now debating yet another amendment. 
This amendment makes it clear that remedies that can be claimed under the Act can include general damages for mental stress and anxiety. This amendment was introduced due to a recent decision in the High Court and in fact reverses the effects of the decision made on 29 March 2007 in the case of  
Hartley v Balemi and others 
. The High Court case highlighted the fact that general damages could not be awarded as compensation for any mental stress or anxiety. The judgment sets a precedent that impacts on existing adjudication started under the Weathertight Homes Resolution Services Act 2002 and the administration of the Weathertight Homes Resolution Services Amendment Act 2006. 
So 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 according with principles of law. That order may include an award of general damages including those for mental anxiety or stress. 
What does this amendment impact upon? Firstly it impacts upon the 4600 leaky home owners identified. These people have incurred leaky homes through faulty building or products and in many instances through a combination of both. Secondly after a period of 4 years only 10 percent of claims have been resolved. They have been resolved in the court/tribunal system but not necessarily paid out. Many homeowners are still either out of pocket or living in homes that leak like sieves. 
It is people like the elderly who built their last home for their retirement and have no additional money to pay for repairs for whom I feel the most sorry. In many instances compensation will never be received even though it has been awarded through the courts. In reality the money will never change hands. What will those elderly people do? How will they fix their homes? How will they sell their homes? How will they afford to go into a retirement village if they choose to? 
On 1 June 2007 Local Government New Zealand raised the issue in a letter to the Social Services Committee. It said: “The explanation for the bill states that it will return the law to what was intended by Parliament and the Government. We note that there are several aspects of the current Act that do not seem to consistent with what Parliament and the Government intended. It is unfortunate that the Government has moved first to fix the matter of current profile in respect of claimants and cost awards when there are other fundamental matters where the Act does not perform as intended. For example we have previously submitted to the select committee that the Act needs amending to ensure that homes are actually getting fixed at the conclusion of the resolution process. We would agree that getting homes fixed is the intention of the Act and yet this matter was not addressed in the latest amendments to the Act. We have also previously submitted on cost-sharing and liability issues that we believe the implementation of the Act in practice is not as intended by Parliament.” 
It is no wonder that the level of frustration amongst homeowners is extreme. As with the 2006 amendment these changes are tinkering and will not solve the problem but they represent an opportunity to debate this issue. The Government is being incredibly optimistic that the Weathertight Homes Tribunal should substantially cease around 2021. At this rate it will take 7 years just to clear existing claims. A recent Cabinet paper quoted 15000 affected homes which would take at least 32 years to clear. 
The Weathertight Homes Tribunal will not be able to recapture claimants’ trust given this latest failure given the previous embarrassing gaffe from Helen Clark in 2002 that: “The seriousness of the situation appears to be a fraction of what the beat-up in the  
New Zealand Herald 
 implies.” and given this statement in that same month from Jim Anderton: “I am aware that while leaky building syndrome or weathertightness is a serious issue for those affected the numbers involved are not great.” He should tell that to the 15000 I mentioned. 
I will highlight one more adjustment that has been made to this bill. It is small but I believe that it will impact later. I refer to a change in clause 9 “Interpretation” and it concerns the term “relevant mental distress”. The word “claimant” has now been replaced with the word “claim”. This I believe will mean that a relative or any person who is not the principal claimant could also claim for damages in relation to stress and mental anxiety. The amendment made in this bill will mean that existing claimants can amend their claims so that they can take advantage of the new clauses. Therefore the amendment will cover all active claims and all claims coming after the amendment. However listeners must be aware that anything decided to date cannot be changed. 
Bill read a second time.