Mackey Moana: Unit Titles Bill — In Committee 
Mackey Moana: Unit Titles Bill — In Committee 
[Volume:661;Page:9865] 
MOANA MACKEY (Labour) 
: 
 I am happy to take a call on Part 2. 
Paul Quinn 
: Just one? 
MOANA MACKEY 
: No more than one I tell Mr Quinn; the excitement is only just beginning. 
Part 2 is a substantial part of the bill. The Social Services Committee certainly received a number of submissions on it and again I would like to address some of the concerns that submitters raised and give some of the reasons why the select committee dealt with the issues in the way it did. 
The first issue concerned clauses 28 to 31 which cover ownership and utility interest. We had a large number of submissions on that issue. The ownership interest is the interest that is assigned by a registered valuer to the principal and accessory units in a unit title development and it is based on a unit’s relative capital value. That ownership interest can be used to determine a range of things such as the owners’ share of common property or their voting share in any unit title development—so it is obviously very important—as well as any contribution they make to the capital improvement fund. 
The second part of that is the utility interest which is also assigned to principal and accessory units and in this particular area of interest the body corporate can vote to change the calculation of who pays what to a more fair and reasonable apportionment of the costs in that unit title development and to assess unit owners’ contributions for operational and maintenance expenses. Under this piece of legislation both of those interests may be assessed at any time as long as 3 years has elapsed since the last reassessment. 
I think it is fair to say that most submitters were generally supportive of what the bill was attempting to achieve there and they supported any moves to apportion operational and maintenance expenses more fairly amongst the owners of unit titles as well as to have time periods provided for reassessment. Obviously some submitters thought that 3 years was too long and some thought 3 years was too short but in the end the select committee had to balance the need not to put too much burden on a body corporate to be continually reassessing the apportionment of those costs with the need for those reassessments to be updated regularly because the costs would change over time. 
Some submitters raised the question about whether it was fair that unit title owners whose units attracted a higher capital value should shoulder more of the expense given that they benefited from having that higher capital value during resale. That was something we considered. Some submitters felt that there was not enough regulation of how that reassessment would be calculated. They wanted to see far more stringent rules put around how the reassessment could be calculated and what kinds of tests had to be met to make sure that that was done fairly. Some people thought that after the deposit of the initial unit plan no more assessment should be allowed—that once people had bought into a unit title development and had been told what their costs would be then those costs should not be allowed to be reassessed because they were essentially the costs that people had bought into. Those were all the kinds of issues that the select committee had to consider under advisement. 
We were given lots of examples where people felt that the legislation had been unfairly used. One of the main examples was about who had to pay for the maintenance of a roof. Should it be the people who own the top units should people in the top units have to pay more and the people in the rest pay a little bit less or should everyone pay the same? Well clearly everyone benefits from having an adequate roof on the top of a unit title development but those are the kinds of issues that bodies corporate will need to come to grips with and we needed to provide a framework in which they can do that with the utmost flexibility according to the wide range of unit title developments that exist in New Zealand. It is incredibly important that bodies corporate are able to apportion those expenses fairly and it is fair to say that in the past some of them have felt that they have not been able to do that under the existing legislation. One of the examples that officials gave us was of the situation where there is a lift an elevator in a building. Should the people on the ground floor who do not benefit from having that lift in the building have to pay for its maintenance or should everyone in the unit title development— 
Hone Harawira 
: Just riveting Moana; just riveting! 
MOANA MACKEY 
: I know it is riveting. I say to Mr Harawira that he can always leave. He does not have to be here if I am boring him—again. 
Paul Quinn 
: Don’t get personal. 
MOANA MACKEY 
: I am not getting personal. He just said that he finds this boring; it is actually incredibly important legislation I tell Mr Quinn that affects hundreds of thousands of New Zealanders. It took the select committee a long time to go through the legislation technically so if Mr Harawira finds it boring he can leave. He does not need to stay in the Chamber. 
Hon Maryan Street 
: He’s done it before—gone walkabout. 
MOANA MACKEY 
: He has done that before as my colleague said; it is what he did on the Auckland Governance Legislation Committee. I believe that submitters who raised genuine concerns deserve to hear why we did not address some of the concerns they raised and the reasons for that. That is why I am talking about their concerns I tell Mr Harawira but he can feel free to leave the Chamber at any point—or stand to make a contribution. 
Those were the issues we had to weigh up and I believe that the select committee came to a fair and reasonable position. We did not want to encumber bodies corporate with too much regulation and be overly prescriptive because of the range of bodies corporate out there. 
That leads me to clauses 61 to 66 which deal with the establishment and constitution of bodies corporate. At the moment a body corporate is automatically created once a unit plan is deposited and the body corporate as I have said is responsible for a range of maintenance functions for the common property and for the whole development. A number of submitters from very small developments felt that because of their developments’ size it was unfair that they should be made to form bodies corporate. That is something we considered at length but the fact is that under this legislation we have to do it this way; otherwise we undermine the whole thing. A body corporate is automatically created once a unit plan is deposited; if the developer selects to subdivide the land under unit title law then that is just the way it is. People buy into a unit title development knowing that and we on this side of the Chamber think that that is fair enough. A body corporate at any time later can decide to cancel its unit plan and re-subdivide the land re-subdivide the buildings and move to an alternative scheme. That is an option available to a body corporate later on. But we certainly considered the issues and concerns raised by members from very small developments. 
One of the purposes of this legislation is to reduce the costs on bodies corporate overall and they will be reduced. Members of small developments who had concerns about the costs being overly burdensome on them because there were so few people to shoulder those costs can take heart that costs will be reduced because of this legislation. As well developments that comprise nine or fewer units will not be required to form committees and they may opt out of auditing requirements. So the legislation does allow certain compromises for small developments but overall if a developer deposits a unit plan and decides to create a subdivision under a unit title then a body corporate will be formed and even small developments will need to go alongside that. 
The rights and responsibilities of unit holders are set out in clauses 67 to 71 and I alluded earlier to the fact that submitters wanted us to be clearer about the circumstances under which a body corporate was responsible and the circumstances under which an individual unit holder was responsible. So we amended clause 122 by adding a subclause that makes it clear under what circumstances the body corporate will be responsible for repairs and maintenance and under what circumstances the unit holder will be responsible. Unit owners must repair and maintain their own units so that they do not cause harm to other unit holders in a development. In general when the property is common then it is the responsibility of the body corporate to recover money expended for repairs except in the situation where a unit holder has caused damage to the property by his or her actions. In that case that unit owner will be held responsible. That was not clear in the earlier legislation and again we heard a number of cases—a number of horror stories actually—where the lack of clarity in the existing law had put a financial burden on people who clearly were not responsible for those elements. 
Again one of the most important aspects of clause 122 is that it makes it clear who is responsible for the expenditure that is carried out in a body corporate. I think we have managed to do that in a way that is flexible enough to encompass the range of body corporate sizes and structures that exist in New Zealand without putting too unfair a regulatory burden on them and without putting in place strict regulatory systems that some may find too inflexible to deal with in their own personal situation. As I said we have amended the legislation to make it far clearer particularly when there is that interaction between the unit owner and the body corporate about where exactly the responsibility lies for expenditure.