Unit Titles Bill — In Committee 
Unit Titles Bill — In Committee 
[Volume:661;Page:9858] 
Unit Titles Bill 
In Committee 
Part 1 Preliminary Provisions 
Hon MAURICE WILLIAMSON (Acting Minister of Housing) 
: 
 I will take a very brief call to explain to the Committee that I have tabled a Supplementary Order Paper Supplementary Order Paper 112. I say to members that this Supplementary Order Paper—although it looks like a very considerable Supplementary Order Paper; it is quite a few pages in length—is mainly very technical and minor in its overall impact. Many of the recommended changes are merely corrections to typographical and cross-referencing errors. Some of the recommended changes are drafting changes that reword or re-order or even move around clauses. All of the proposed amendments are consistent with the policy intent of the bill and with the changes recommended by the Social Services Committee. The committee made some quite good recommendations about changes and I understand that those corrections have been made. I hope that Moana Mackey from Labour has had her assurance about what those changes are from the officials because I am happy for the changes to be made available to her. In particular the majority of the proposed amendments ensure that people who need to use the processes in the bill have a clear idea of what they need to do and how they are required to do it. 
The proposed amendments also respond to issues raised by the Retirement Villages Association and the New Zealand Holiday Ownership Council where recommendations made by the select committee had not been fully implemented in what came back. Examples of changes were in management and governance amendments. The only significant amendment to the management and governance provisions was made to the way in which votes were counted for ordinary resolution. The select committee recommended that votes for an ordinary resolution should be counted according to ownership interests in addition to there being one vote per unit. This recommendation was not fully implemented but the amendment that has been put in the Supplementary Order Paper will achieve that implementation. So that is just a brief outline of what the Supplementary Order Paper is trying to do. It is mainly technical and minor. 
The Unit Titles Bill is wide ranging in bringing the whole unit titles legislation up to date. When the first legislation of this nature was passed most people had blocks of units that were three or four units big. Blocks were very small clustery things; now we have massive buildings in units. So this bill brings into modern parlance things like the duties and powers of body corporates and body corporate managers. It enables the making of joint decision-making body corporate processes to be more manageable and it provides incentives for participation by unit owners. The bill also has a disputes resolution process mandatory disclosure and new ownership structures. 
One matter that I think is important from another portfolio of mine from the portfolio of building and construction is mandatory long-term maintenance schedules. What happens with these big buildings is that tenants move into them but no one puts up a maintenance schedule with a funding plan of how that maintenance is to be done. Then 20 years later places are in a complete state of disrepair but no one is prepared to stump up or to say how they should have been maintained and who should have paid. 
There are a lot of really good things in this bill. I know that the legislation had its gestation when Labour was in Government and that we have carried on with the major ideas in it. I do not believe that this will be one of the pieces of legislation over which a big fight will occur in the Chamber but I am happy to let members go ahead with questions and try to get the Committee stage through. 
MOANA MACKEY (Labour) 
: 
 I am happy to stand and take a call on Part 1 of the Unit Titles Bill. I thank the Acting Minister of Housing for his comments. I think he outlined the changes in the Supplementary Order Paper as they relate to the entire bill not just to Part 1. 
Labour would like to put on record our disappointment that we were not given access to the Supplementary Order Paper earlier. I thank the Minister for allowing me to discuss it with the officials and with staff from his office but having received this Supplementary Order Paper only at question time today it has been very very difficult for me to go through what is very technical legislation and make sure that we are happy with everything in it. I have had a talk with the officials who have assured me that these are minor technical amendments. I note that many a career has been ended by minor technical amendments but that is all right—I am prepared to take the officials’ word that these amendments merely clarify the intentions of the Social Services Committee at that time. Labour will be supporting them. However I note that the date on the Supplementary Order Paper is 9 days ago yet it was made available to the Labour Party—and to other parties I assume—only today. I put on record my disappointment given that we are trying to be very conducive to getting non-controversial legislation through the House and that we have supported this bill all the way through. 
I do not intend to labour on Part 1 for very long. It is comprised mainly of definitions. However I will make a comment. There is a major change in the legislation to the definition of a “principal unit” in response to some of the submitters who came along to the Social Services Committee some of whom perhaps did not get exactly what they wanted out of this. The issue we had was whether open spaces could be considered a principal unit under this legislation. Certainly the existing legislation the Unit Titles Act—as the Minister in the chair the Acting Minister of Housing has said it is greatly outdated and was written a long time ago—was very unclear as to whether open spaces could be issued as a principal unit and sold independently of any buildings. 
We were alerted to examples of vineyards orchards and marinas where the subdivision had occurred under a unit title model as opposed to under a land subdivision model which clearly was not the intention of the Unit Titles Act. We had to make a call as to whether we would allow that to continue. Some submitters thought that it should be allowed to occur. In the end the committee decided that in any future developments it should not be allowed to happen. The one example that we thought merited being allowed to remain as a principal unit was car-parks. Clearly car-parks are sold on their own as principal units and we saw no harm in allowing that to continue. But in all those other areas we felt that it was important that open spaces go back to being a land subdivision issue not a unit title issue. 
This is the area where I need a little guidance maybe from other members who will be speaking on this part as to the status of the principal units that have already been created and that are open spaces which in the future will not be allowed to occur. As I understand it they will remain as principal units. They will not be retrospectively voided by this change that we are making today. I see the Minister nodding and I hope that is the case; certainly that was the intent of the select committee. This particular part took up a lot of the committee’s time and I acknowledge to the number of submitters who were adamant that the open spaces should be allowed to occur that we listened to their submissions and we took them under advisement. In the end we thought it was perhaps pushing the unit titles structure into an area where it had previously not been intended to move. In the past open spaces had been allowed to be issued as principal units but that probably was never the intention of Parliament when it passed this legislation many years ago. 
We made a number of other changes to the definitions in Part 1 for the most part simply to clarify the intent of Parliament and the intent of the select committee to make sure that there would be no further confusion as to what we meant in these definitions. In saying that Part 1 with the exclusion of the definition of a “principal unit” was relatively straightforward and I will be looking to take calls on further parts when we get into more of the detail of the bill. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to rise and take a call this afternoon on the Unit Titles Bill. Firstly I would like to sincerely thank the officials who supported us with this bill through the select committee process and also the submitters who came to the Social Services Committee and made submissions. A lot of them brought some very relevant points that we considered in the select committee deliberations and they influenced what we did with the bill and what has come forward to the House. I thank them for their submissions. They were very powerful submissions. We realise that many of the submitters put a lot of work effort and time into their submissions and no doubt cost as well as the costs to come here to make their submissions. We appreciate what they have done towards making this bill the way it is today. 
National went into the election on a platform of streamlining and simplifying regulations and this bill is just one more way of achieving that. 
Moana Mackey 
: Katrina this was our bill. 
KATRINA SHANKS 
: Labour began looking at this bill in 2004 but it is National that has delivered it in 2010. The bill is before the House now and is being presented by a great Government that once again is delivering on its promises. The initial Unit Titles Act 1972 was designed for small residential flats and was applied to a range of complex large and mixed-use developments. In 2007 there were 16500 developments and 95000 units. As members can see times have changed and it looks like over half a million people will be living in apartments town houses and high-rise buildings within 50 years so it important that we get this legislation right. The framework will stand true for a period of time. The bill will provide broader and more adaptable ways of setting up and managing multi-unit living both now and in the foreseeable future which is important. 
The bill has attracted enormous support throughout the sector and the industry. There has been consultation and feedback has been highly positive in terms of the direction of the policy initiatives that have been put in place. A range of problems were identified. They included issues with joint decision-making building maintenance financial management governance of developments information disclosure consumer protection and dispute resolution. Those issues have all been addressed in this bill. 
One thing I want to touch on is the definition of a “principal unit” in Part 1 which is what we are debating in the Committee stage at the moment. The issue was that the definition was too narrow and would restrict some current use of unit titles such as car parks. This issue was emphasised by the New Zealand Property Group in particular. The further issue in respect of the definition of a “principal unit” was whether the ability to create open space units would be retained although many car parks would still be allowed to be created. So there was a change that was needed. The definition of “principal unit” would be widened to include car parks whether or not they comprised open space. The recommendation did not include changes that would enable other forms of open space units to be created. When we are talking about definitions it is important that we get those right because they influence everything else going forward. 
The other little area I would like to touch on in this part of the debate is time-share developments. The New Zealand Holiday Ownership Council supported the bill but said it needed new definitions for time-shares. The Lake Edge Resort body corporate and Richard Martin made very strong very accurate formal submissions on this matter. They said that this legislation did not intend to impact them but in fact it did; they had slipped through the net. Because of those submissions the bill had to deal with the specific operating procedures of time-share developments. If this provision was not included it would have made running time-share resorts very difficult moving forward. The committee addressed that issue specifically in regard to the voting quorum and the body corporate’s ability to levy. We inserted a new schedule to provide specific modifications for time-share developments that are unit title developments. Other amendments were put in place as necessary for holiday homes and time-shares. It was interesting to consider the bill at the Social Services Committee. I look forward to talking about it further on during this debate. Thank you. 
Hon MARYAN STREET (Labour) 
: 
 I will make a couple of comments at the opening stage of the Committee stage of the Unit Titles Bill. I wish to respond in part to comments made at the outset by the Minister in the chair the Acting Minister of Housing. Even before that I want to draw it to the attention of the Committee—because the previous speaker Katrina Shanks seems to have forgotten this—that this legislation originated from the previous Labour Government. In fact it was introduced in May 2008 by the Hon Shane Jones who was the Minister for Building and Construction at the time. Why it has taken such a long time for the new Government to action this legislation is beyond me. The protestations from across the Chamber that this is a busy Government absolutely belie the fact that it was entirely possible for this legislation to be dealt with in an efficient way through the Social Services Committee. Again I say the reason why it has taken such a long time to emerge from the committee and get to this point in the legislative process is a mystery. 
Secondly referring to the comments of the Minister in the chair I would like to remind him of the origins of the expression now said with some humour “minor technical amendments”. If I remember this correctly—and I am happy to be corrected by those who have been here much longer than me—the origins of that phrase came from the fourth Labour Government when Stan Rodger was proposing the State sector bill in 1986 which he referred to as a “minor technical amendment”. That went down in the annals of Parliament as one of the understatements of all time. I remember writing a 20-page submission on behalf of the Labour Party at the time opposing the legislation. 
I will return to the point. The point is that we have just been delivered Supplementary Order Paper 112 in the name of the Hon Maurice Williamson which I understand was ready some 9 days ago and as far as Part 1 is concerned it has a number of amendments that we are advised are minor technical amendments. Although I am happy to proceed on the basis of the advice that the officials have given us—and they have assured my colleague Moana Mackey that they are indeed minor technical amendments—it is just a cautionary tale to recite some of that ancient history from the fourth Labour Government which caused it never to do such a thing again. Although there is some humour in that for the Minister in the chair I still wish to make the point about minor technical amendments being brought into the Committee at short notice when it would seem that the Minister had about 9 days to advise us of them. We would like to make sure that the process has some integrity around it and that the amendments are in fact minor technical amendments. 
With reference to Part 1 the Minister’s Supplementary Order Paper 112 amends clauses 3(a) 4 5(1) 5(2)(a) 5(2)(b) 5B(3) and 6A(b). All of those clauses are in Part 1 of the bill. 
As my colleague has said the Opposition is happy to support this legislation. However it is important to note two things. The first is that the origins of this legislation lay with the previous Labour Government which was trying at that time to ensure that the Unit Titles Act was updated to address contemporary building requirements. 
Hon GEORGE HAWKINS (Labour—Manurewa) 
: 
 The Unit Titles Bill as noted earlier was introduced into the House by the Hon Shane Jones. I think it was taken over by Phil Heatley who looked after it for a while and now the Hon Maurice Williamson is the Minister in charge of the bill. 
Although the Labour Party goes along with the bill quite willingly I have to say that the process has been really poor. The Social Services Committee looked at the bill came up with its report and away went the officials. Nine days ago the Government knew what amendments were going to go into this bill—9 days ago. But of course the Opposition did not get them until the day that the Committee of the whole House started its consideration of the bill. 
We had promises from John Key when he went around the country electioneering about the things National was going to change— 
Hon Darren Hughes 
: And Tim Macindoe. 
Hon GEORGE HAWKINS 
: Yes. Mr McClay looks away; he is putting his hand up. The trouble is that things have not changed. I know that when Labour was in Government sometimes we did those things but everything was going to change under National. Things were going to be different. 
We have a pile of amendments in Supplementary Order Paper 112. The amendments to clause 5(1) include a new definition of a “unit plan”. That is quite important. 
The Act that this legislation replaces the Unit Titles Act was passed in 1972. I think things have changed quite markedly since that time. The building industry the style of housing and the style of units that people live in are far different from what they were back in 1972. 
Todd McClay 
: You’ve noticed have you? 
Hon GEORGE HAWKINS 
: Yes I have noticed. 
Paul Quinn 
: Did you notice the leaky housing problem? 
Hon GEORGE HAWKINS 
: Yes I remember leaky houses. Houses were built using untreated timber approved by a National Government. That was its legislation and that member should not forget that. 
But when we get back to what this bill is about and when we look at the process I think we see that the Government should acknowledge that it is guilty for not having gone about it properly. When there is goodwill on both sides of the House for legislation the quickest way to wreck that goodwill is to try to be secretive until the last minute. That is what this Government has done. That is not good. If it wants people to support legislation and to work in a positive way it has to bring people into the picture a lot sooner. The National Government must bring the Opposition and other parties into the picture sooner. 
I thank the Hon Maurice Williamson because he made his officials available to brief our spokesperson on housing Moana Mackey and I think that is fine. But that was only one small step. We needed much more than that. I think the officials were put in a very bad light which was not their fault but because the Government did not do its job. Obviously we will have a lot to say about a lot of other things in Part 1 but I believe that the Acting Minister of Housing should answer those questions and tell the Committee why it took so long for him to make sure the Supplementary Order Paper was available. Why did that happen? Was it a printing problem? Was it a deliberate move by the National Government? Was the Government too busy dealing with other things such as mines and wrecking conservation land? I think the Minister should get up take a call and tell the Committee why it did not let the Opposition see the Supplementary Order Paper much earlier. 
TODD McCLAY (National—Rotorua) 
: 
 I will take a very brief call on the Unit Titles Bill at this stage of its movement through the House. I start by recognising the very hard work that was put in by officials of the Social Services Committee and also the officials who were seconded to the committee and gave us great advice. I think it is also important to recognise that both sides of the House worked very well on this legislation during the select committee’s deliberations. 
I also recognise that it was the previous Labour Government that first brought forward this idea and introduced it to the House. The very good news for members of the New Zealand public is they will not have to wait 11 years until it actually enters into law. We have an Acting Minister of Housing the Hon Maurice Williamson who has had the portfolio for less than a month I think and what progress we have seen! The bill went straight into the House and it will become law very very soon. 
The Unit Titles Bill is of course a technical piece of legislation and it is important that we get it right. I recognise members opposite for so graciously deciding to read the Supplementary Order Paper today. It sounds as though they have no difficulties or issues with it so it is good that they are supporting this legislation. 
I want to speak about only one aspect of change in Part 1 and that concerns time-share resorts. Richard Martin from the Lake Edge Resort in Taupo made contact with me very early in the process and of course the very hard-working and good MP for Taupo Louise Upston was aware that there was a piece of legislation that could have an effect upon time-sharing. Mr Martin made a number of concerns known to me and other members of the committee and he put in a submission. 
Largely the concerns were that if the Unit Titles Bill was to go through in its current form and time-share resorts were included then it would be near on impossible for time-share resorts to make any decisions at all. 
Let us think of a resort in Taupo where there are 10 units 52 weeks per unit and 520 possible owners. A quorum of 75 percent would mean that 375 people would need to turn up to a meeting. The select committee looked at that listened to the concerns and made changes and I think this is good for business because New Zealand and tourism could do with a bit more investment in time-share accommodation particularly in my electorate as well as in Taupo. 
I commend the bill to the Committee. I think we have worked very well at the select committee and once the bill becomes law there will be much greater certainty around unit title developments in New Zealand. Thank you. 
SU’A WILLIAM SIO (Labour—Mangere) 
: 
 Thank you for the opportunity to take a call on the Unit Titles Bill. I have to agree with our spokesperson on housing Moana Mackey and other Opposition speakers that there is a bit of concern and it has been laid on the table with regard to the last-minute introduction of the Government’s Supplementary Order Paper 112. I appreciate the fact that the Acting Minister of Housing the Hon Maurice Williamson has given Moana the opportunity to meet with his officials and I also appreciate the fact that he has had to take over the portfolio from the previous Minister of Housing recently for reasons that are publicly known. But the fact remains that when we consider the Supplementary Order Paper tabled by the Government today—and I understand that it was ready 9 days ago—we see that it is 13 pages long. 
We have already heard from other speakers that this is a very technical bill. When quickly going through the Supplementary Order Paper I have to wonder whether the people who made submissions to this bill who had genuine concerns about the way we were modernising the Unit Titles Act of 1972 would have had the opportunity to make comments on what is now being amended by the Government. 
I look at the Supplementary Order Paper and I see that the amendment to clause 7B(5) is to omit this subclause and substitute the following subclause: “If the body corporate requests in writing the authority undertaking the public works must at its own expense prepare the new unit plan or amendment to a unit plan as the case may be.” On the face of it I ask myself what it means. I ask whether it refers to local territorial authorities and whether it covers all local territorial authorities. There is the case of Auckland which will be a super-city in the next few months. I ask whether that fact should not be spelt out in that particular clause. Should the local authority pay for public works as it states or should the body corporate pay? Those sorts of questions need to be raised. 
I note that the Minister said the amendments were very technical but it is for that reason that people like me are nervous about the substance of those particular amendments. The changes to wording in the series of amendments on pages 5 and 6 are significant and there are more significant changes later on in the Supplementary Order Paper. The reason I have raised this point is that we must consider that this legislation is the result of a major review that began in 2003 undertaken by the previous Labour Government. After that particular review this legislation was introduced into this House by the Hon Shane Jones in May 2008. We acknowledge that significant work was undertaken and it was done simply because we needed to ensure that we would do things right. 
The representative from Auckland and I have some nervousness about this Supplementary Order Paper because a lot of legislation has been rushed through in recent times particularly with regard to the Auckland super-city. A lot of legislation has been rushed through. It has been our experience in our electorates that whenever Governments rush through things of this nature there are bound to be mistakes. Who ends up paying for those mistakes? It is the public. I have to say that is of concern at this particular time. 
I do not know why it is difficult for members on that side of the Chamber to acknowledge the fact that significant work was undertaken by a Labour Minister and a Labour Government. I want to put that view on the table. It is OK for this Government to take credit for this bill and we are supporting it but it also needs to be acknowledged that significant work was undertaken by some people in Labour. 
I finish off by highlighting again that some other amendments on pages 10 and 12 contain significant changes to wording. The way that the Government has introduced this particular Supplementary Order Paper today at the last minute before the Committee stage does not bode well for the spirit of cooperation. Thank you. 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to Part 1 be agreed to. 
Amendments agreed to. 
Part 1 as amended agreed to. 
Part 2 Unit title developments 
DAVID SHEARER (Labour—Mt Albert) 
: 
 It is a great pleasure to take a call to support the Unit Titles Bill as an Auckland MP. As many speakers have already noted in many ways Auckland will be most affected by this legislation. The growth of multi-united residential areas in particular is a feature of the Auckland landscape. When we look forward to 2050 or 2060 it is estimated that about 500000 people in Auckland—about a quarter of the population—will be living in the units this bill is addressing. So it is very appropriate and very timely that we are addressing it today. It is 38 years since the original Act was passed in 1972. As previous speakers have said this piece of legislation was begun under Labour and its passage is continuing in a cooperative spirit under the current Government. 
I will speak on a couple of areas in Part 2. A couple of the real improvements to the legislation come through the fact that a body corporate will own common property. That is important because it basically enables the body corporate to act on behalf of all the other unit holders and for the good of the development as a whole. This bill very much updates what was there before. It defines “common property”; it broadens the definition to include building elements that will affect more than just one unit so in a sense the corporate owns the common property. What that means—and I think it is important—is that if an apartment block for example needs a new lift a roof repair or a piece of major reconstruction or change that will cost a large amount of money there is a responsible body that is able to take care of that repair or redevelopment. That is very important because otherwise it would fall on just one of the unit holders to have to do that but this way the cost is shared and the benefits to the apartment block in this case are shared across all the units. 
Another provision that is useful is that large staged or mixed-use title developments will be able to be layered. That means that if there is for example a multi-use type of development we are able to have a smaller subsidiary group which will be able to have its own body corporate to manage its own interests. It is very important for a mixed-use building—perhaps a car park a shopping centre and an apartment block together—that people who have a common interest in a particular aspect of the operation can exercise those rights. So it really does protect the rights of people particularly people who have been badly affected individually by decisions that have been made and it gives them a great deal of protection within the body corporate. 
One other thing that I will touch on is the fact that body corporate decisions no longer need to be unanimous. I think that is a good provision. It eliminates the possibility of many of the decisions that need to be taken by the body corporate being held up by non-resident owners who often object to something that will benefit all the people in a particular apartment block. The change to the legislation means that the great majority of the people can benefit. Thank you. 
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. 
Hon MARYAN STREET (Labour) 
: 
 I take a call on the particular clauses in Part 2 of the Unit Titles Bill that deal with bodies corporate—that is clauses 80 and following. I address them because that issue was one of the inspirations I suppose for some of the amendments to this legislation in the first instance when it came to the previous Labour Government out of the review that had been called for by us in 2003. By the time the legislation emerged and the review had been conducted in a comprehensive way and then considered carefully it was very clear from the numbers of submissions and representations from people that the experience of those who were locked into body corporate arrangements—apartments in Auckland and elsewhere—had proliferated over the last 10 or so years. These people having been locked into those body corporate arrangements found themselves held hostage by the requirements for bodies corporate to make unanimous decisions and the movement of everybody jointly in order to receive any benefit from joint decision-making. 
The counting of votes is outlined in clauses 84 and 85. I do not need to rehearse the words on the page; suffice it to say that in circumstances where one party in the body corporate held out against improvements that were going to benefit everybody because that party had to shoulder an equal portion of the financial burden of that improvement then nobody could benefit because of that party’s holding out. These provisions in the bill we are currently debating are useful improvements. Although there are still protections around bodies corporate that relate to the number of people who must be present in order for a general meeting of the body corporate to be quorate and that require that a majority must be voting in an ordinary resolution in the body corporate one really important change is that special resolutions of a meeting of the body corporate do not require 100 percent agreement but may be passed by 75 percent of the eligible voters. Only the vast majority is now required so no longer is it possible for people to be held hostage by recalcitrant members of a body corporate who do not see the collective good as something to which they should contribute. This is an improvement and it is significant when we think of the numbers of apartment blocks that have proliferated in the last decade in particular in Auckland. It now becomes essential that we have this kind of provision which is a wee bit more flexible. 
The other two clauses that I wish to refer to in this part are to do with the long-term maintenance plan and the long-term maintenance fund. The Minister who was in the chair earlier the Acting Minister of Housing referred to these clauses in his opening comments and they are very sensible. They are important improvements because again they relate to the duration of somebody’s investment in one of these multi-unit apartment buildings. 
PHIL TWYFORD (Labour) 
: 
 I rise along with my colleagues to support the Unit Titles Bill and will address my comments specifically to clause 122 but let me join my colleagues in making some general statements. 
This bill is a long-overdue modernisation of the law in relation to unit titles. As David Shearer said it is particularly so in Auckland where we are seeing huge growth in the number of people living not in the half-gallon quarter-acre pavlova paradise but in multi-unit dwellings townhouses and apartment buildings. This is a long-overdue change to the rules that will make it much easier for people to own property and live together in apartment blocks. It is not just about the convenience for people who are living in these dwellings but we must make it easier and more desirable to live in multi-unit dwellings; we can develop our cities in medium-density and high-density ways. 
I will comment particularly on the issue of leaky homes which is something that has bedevilled this country for almost a decade. During the time of the previous Labour Government members on the opposite side of the House had a great deal of sport. They campaigned up and down the country raising expectations about how easy it would be to solve the problem of leaky homes. They generated very unrealistic expectations amongst owners of leaky homes and the New Zealand public generally that a National Government would solve the problem. A National Government would come and fix it would remedy the problem and would do it at the stroke of a pen. Well I think the Acting Minister of Housing is finding that the problem is a lot more difficult and intractable than I imagine colleagues like Nick Smith thought when they were campaigning on this issue in Opposition. PricewaterhouseCoopers has estimated that the national cost of the leaky homes problem is in the region of $11.5 billion. Some estimates go as high as $20 billion and up to two-thirds of that burden rests in Greater Auckland. 
I will move now to make some direct comments about clause 122. Members will see that clause 122 is particularly relevant to the leaky homes problem. The deficiencies in the legislation governing multi-unit dwellings have created a judicial and bureaucratic nightmare for the owners of leaky homes. It has been enormously difficult for people to get a resolution of the problems of leaky homes because of the current rules which are a nightmare. I am sure there would be very few members in this Parliament who have not been approached by members of the public in their electorates and elsewhere with heart-rending tales. Often they are people who live in multi-unit dwellings who have been unable to get their apartments or townhouses repaired because of disputes with other members of the body corporate. 
If we put politics aside I think we would all agree that we need to move beyond litigation with the leaky homes problem. We have to find solutions that are about fixing and repairing dwellings and helping people solve the problems. It is very clear that the courts have not been able to deliver timely and cost-effective results for New Zealanders affected by this problem. There will always be arguments about fairness because of the difficulty of apportioning liability amongst the different players but we must get to the point of repairing the houses. 
Clause 122 is I think an unambiguously good and constructive contribution to solving this problem. It takes a common-sense and pragmatic approach. The clause imposes an obligation on body corporates to maintain repair or renew all building elements and infrastructure in a building that relate to or serve more than one unit. It defines very broadly what a building element is and that it can include external and internal components or any parts of a building and land that are necessary to the structural integrity of the building. Obviously this can include roofs balconies decks cladding and other things but it certainly includes the exterior of buildings. I think this is a common-sense resolution of an issue that has been at the crux of a heck of a lot of litigation in recent years. When there is a leaky building problem or a weathertight problem that affects say the roof or the exterior wall but immediately affects only the unit title immediately adjacent to the leak no longer will that person be solely responsible for fixing the problem because it should be the responsibility of the body corporate. 
There has been litigation in this area. In  
Young v Body Corporate 12006 
 the High Court took a pretty common-sense approach ruling that the body corporate would and should be allowed to contribute to costs. But in the Sunset Terraces case the High Court found the opposite and took a very literal and hard-line approach. The judge said that there was a clear distinction between individual responsibility for individual units and the body corporate being solely responsible for common property. So clause 122 really follows the approach that the High Court took in the Young case. I think this is a practical fair and pragmatic contribution to solving the problem of leaky homes. It is very worthwhile. 
I will finish with a question that I would like to pose to the Acting Minister of Housing and hopefully he will be able to take a call when he is back in the chair and answer it. The Home Owners and Buyers Association of New Zealand which members will know is one of the most active advocates for the owners of leaky homes posed the question that my colleague Maryan Street made some comments about and that is to ask what amounts to a fair voting threshold. In the bill we see that special resolutions can be passed by a 75 percent majority of those in attendance but for those in attendance the quorum can be as low as 25 percent of the unit title owners. By my calculation that means that a special resolution could be passed by as little as 19 percent of the unit title owners. I know that the bill needs to solve the problem of hold-outs and I think that Maryan Street made the case for that very well but my question is why 75 percent of 25 percent. What is the basis for that calculation? I would be interested to know whether the Minister has a view about whether 19 percent of the unit title owners is a sufficient number for the passing of a special resolution. Thank you very much. 
MOANA MACKEY (Labour) 
: 
 I want to take a final call to address two areas that I think are important and need to be commented on. One area is the issue of long-term maintenance regimes which the Acting Minister of Housing alluded to in his opening comments. This was an area where we received a large number of submissions and it was probably one of the more contentious parts of the Unit Titles Bill. I think it is incumbent on this Committee to explain to the members of the public why the Social Services Committee went down the route that it did. 
This legislation originally had a mandatory long-term maintenance plan requirement and a mandatory requirement to create a fund to pay for that long-term maintenance plan. We received a large number of submissions that expressed support for the mandatory regime and we received a large number of submissions that opposed it. Although all submitters were supportive of the concept of long-term planning and saving the matter on which we had contention was about whether a body corporate should be forced to do that or left to its own devices to do it. The mischief I guess that led to these clauses being put into the legislation was that in the current situation the body corporate is not required to and often does not plan in advance for the repairs and maintenance of parts of the building. Where there is significant capital development that needs to be done it can mean a one-off charge to residents that is unaffordable and that causes them enormous anxiety. We then have the situation that my colleague Maryan Street referred to the situation when people hold out on their vote. We have changed that voting threshold in relation to the times when someone will say “I know that the roof needs replacing.” or “The outside needs repainting or re-cladding but I simply cannot afford this cost; therefore I am going to vote against it.” One of the things we have tried to do is put in place a requirement to make bodies corporate think longer term and allow a fund to be set up that saves for these developments that will have to happen over time in the life of a building so that unit owners are not confronted with large one-off levies that they refuse to pay cannot pay or struggle to pay. 
We looked at three main options for what we could do. The first option was that we could stick with what we were going to do which was that the long-term maintenance plan and the fund would both be mandatory. The second option was that we would make the long-term maintenance plan mandatory and the fund would also be mandatory but we would include an ability to opt out by special resolution of the body corporate. The third option was that we would make both the maintenance plan and the fund mandatory but both would have that opt-out provision by special resolution of the body corporate. 
I think we went down the middle route by saying that the bodies corporate should be required to have a long-term plan—we are talking about 10 years here. Bodies corporate should be required to plan long term they should be required to have a fund but we would allow bodies corporate to opt out by special resolution of the bodies corporate if they felt that it was ridiculous that they were being required to save large amounts of money. Again that comes back to the entire reason for this legislation which is that the range of developments that are currently covered by unit titles law are so diverse that we need legislation that is flexible. I think that that was a very very good decision by the select committee. We will require maintenance plans to be there and we will require the funds to be there. But in those unit title developments where the owners decide in fact that they do not need to be saving so much for whatever reason or that they could do it in some other way then they will be able to do that. I think we have found a good compromise there. 
The only other issue I will raise in Part 2—and there were a large number of issues in this part but I certainly do not want to delay the passage of this legislation—is an issue about easements that was raised with me. It was raised with me specifically by someone who was sitting there listening to the debate on unit titles and heard no one mention easements. It was an issue of extreme importance to that person. So if the person is still out there listening to this debate on the Unit Titles Bill then I say that I am going to talk about easements. I thank the officials for their advice on this matter. The question that I was asked— 
Chris Tremain 
: They’ll be gripping their seat as we speak. 
MOANA MACKEY 
: —I tell Mr Tremain that he can even get my  
Hansard 
 later and relive this experience—concerns the issue where private owners have an easement over a unit title development and the only way they can get to their properties is through that easement. So they are not part of the unit title development; they do not have any rights on that body corporate but they have an easement and they are not able to get to their property without that easement being there. 
Clauses 48 and 49 of the legislation deal with easements. They make it clear that the deposit of a unit plan has no effect on any easement or covenant to which the base land is subject or on any easement or covenant that is pertinent to the base land. I have spoken to officials about that and they have assured me that where an easement currently exists that right would be upheld. I also asked them what would happen to an easement allowed on land not in a unit title development and the land subsequently went into unit title development. I am assured that even though that situation is not covered by this legislation specifically it is covered by the Land Transfer Act. Again the right of that easement is there and permission would be needed from the people who relied on that easement in order for it to be taken away. I thank the officials for their advice on this matter and with that I will sit down. 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to Part 2 be agreed to. 
Amendments agreed to. 
Part 2 as amended agreed to. 
Part 3 Special provisions relating to leasehold land 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I will take a short call on Part 3 of the Unit Titles Bill this evening. I was speaking when I spoke last about the 75 percent and 25 percent provisions—the change in the threshold—in terms of coming to an agreement with the body corporate. I was saying I thought that that was a good decision in the sense that it allowed and enabled the body corporate to move forward and make decisions about property without needing absolutely everybody to reach a unanimous decision because essentially one owner could have held up the entire process. I acknowledge my colleague Phil Twyford’s question about why the threshold is set at 25 percent and I hope that an answer on that may be forthcoming in the next little while. But at least in this modern day and age that provision enables the great bulk of the people who are involved in the body corporate to be able to move on and make decisions about their particular property. 
I guess the counter to that though is the need to ensure that the 25 percent of voters—and it may not be 25 percent; it may be much less than that—do have some sort of a process ability or avenue for redress should they disagree with what is being brought forward. That is really what I would like to look at in the next couple of minutes. Basically we need to have a robust process to ensure that those who disagree with the majority can apply to have their views heard through preferably mediation but certainly the adjudication of the courts. There was some discussion on how this is to happen remembering that for much of the last 38 years the High Court was the body that heard a lot of those disputes. Considerable work has gone into this by the officials who have looked at a range of different options and different bodies that would be able to take care of disputes. They looked at the disputes tribunal for example. It was considered not to be the best option. It was a possible option but it certainly was not the best option because the disputes tribunal did not really offer any incentive to resolve disputes. In addition many of its decisions were not necessarily very transparent and were not published. 
What was decided upon was that the Tenancy Tribunal would better fulfil the objective of establishing a more holistic and effective disputes resolution service. It would be quick accessible and credible and it was proven. The Tenancy Tribunal has a very good record in resolving disputes from both landlords and tenants and in this case could be extended to a body corporate. The Tenancy Tribunal has a demonstrated approach to dispute resolution. It has information education and mediation services etc. The process is also very easy to understand and follow particularly as it is nearly always the case that the people who take their cases to the Tenancy Tribunal are not lawyers but are people who seek good and fair redress to a problem that they have. I think that that was a good decision. We are looking at the Tenancy Tribunal in the first instance taking the role of mediating any disputes particularly—as I was saying before—those between the 75 percent majority and the 25 percent who perhaps disagree and enable that to go forward in a way that will be to the benefit and certainly to the satisfaction of all concerned. 
I once again acknowledge the hard work of the officials on this very technical legislation and once again the cooperation that has occurred between members on both sides of the House both during the term of the previous Government and into that of this Government as well. I acknowledge Mr Phil Heatley who brought this legislation to Parliament just a few weeks ago. 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to Part 3 be agreed to. 
Amendments agreed to. 
Part 3 as amended agreed to. 
Part 4 Disputes cancellation and conversion 
MOANA MACKEY (Labour) 
: 
 I will take a short call on Part 4 of the Unit Titles Bill. It is about disputes resolution. I want to comment on the decision of the Social Services Committee in terms of whether the Tenancy Tribunal the High Court or the District Court would be the appropriate forum for disputes resolution. Clauses 155 to 159 make clear that this bill extends jurisdiction for non - title related disputes—that is an important distinction—under $50000 to the Tenancy Tribunal. That is an important change. Currently those disputes would have to go to court which can incur far greater cost because court lawyers are involved whereas that is not the case at the Tenancy Tribunal. The Tenancy Tribunal can also hear cases far more quickly. 
The primary concern that submitters raised was that the Tenancy Tribunal does not have the experience in unit title law to be able to adequately fulfil that function. That was certainly something that the previous Government considered and something that the current Government has considered. We are assured by officials that the very competent individuals who manage and run the Tenancy Tribunal will be well trained and well briefed in this law so that they will be able to pick up that role. And it does make sense; the Tenancy Tribunal is a very efficient forum. It is able to come to agreement on disputes involving lesser amounts of money far more easily than the courts. So non-title related matters under $50000 will go to the Tenancy Tribunal. The District Court will hear any matters transferred from adjudication any appeals on decisions that are made by the Tenancy Tribunal and any claims with a value of between $50000 and $200000. 
In what I think is another good move the District Court will replace the High Court as the court of first instance. That is another important move to make dispute resolution much faster and far less costly. 
The High Court will now retain jurisdiction only over title issues. To clarify title issues are disputes that relate to the title of the land—for example over redevelopment cancellation of a unit plan or conversion to unit title tenure. Those disputes will remain with the High Court as will any claims with a value of over $200000. Those are very very good moves which will make it far easier to resolve disputes far more quickly. 
I acknowledge concerns raised by submitters who did not feel that the Tenancy Tribunal would have the skills to carry out this function. I feel confident from the assurance that we were given about the training those individuals will receive that that will not be the case. They will be adequately trained. I am sure that in the long-run members of the public will see the overwhelming advantage in terms of both the speed of resolution and the cost of resolution in transferring that amount of work to the Tenancy Tribunal and in making the District Court the court of first instance instead of the High Court. 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to Part 4 be agreed to. 
Amendments agreed to. 
Part 4 as amended agreed to. 
Part 5 General provisions 
MOANA MACKEY (Labour) 
: 
 Members will have to excuse me but I have screeds and screeds of paper in front of me. Because the Opposition wants to facilitate the passage of this legislation as quickly as possible I am struggling to find where I am up to in my notes. 
Chris Tremain 
: Page 159. 
MOANA MACKEY 
: I thank Mr Tremain very much. We are on to the general provisions. The only issue in this part that I want to talk about is minority relief. 
Chris Tremain 
: Just here to help. 
MOANA MACKEY 
: Oh Mr Tremain is just here to help; I thank him very much. 
The minority relief provisions in the Unit Titles Bill are very important and I want particularly to refer to the issue that my colleague Phil Twyford raised earlier which had been raised by the Home Owners and Buyers Association of New Zealand. The association was concerned that when we have a quorum of only 25 percent and now 75 percent of voters can make a decision that means that 19 percent of unit title holders will effectively be making a decision. This point was picked up by the Social Services Committee. It is a shift in power from the minority who in the past were able to hold up any changes to the majority. Because of that there are minority relief provisions in this legislation. It also became apparent when we were having our discussions that when we have small developments there may need to be provisions for majority relief as well. 
We have attempted in this bill to provide clarity around the disputes processes that minority shareholders can rely on if they feel they have been hard-done-by or that a decision has been made unfairly. We have added a new subsection to the provision currently in section 42 of the Unit Titles Act to allow for majority relief as well in the case where we have a small development of for example three owners. In that case the 75 percent threshold starts to become very very few people indeed. The new subsection allows for a decision to be made where 65 percent of the owners agree as opposed to 75 percent. In the case of a unit title development that has three units in order to have 75 percent agreement we would have to have 100 percent agreement which is certainly not what we intended. That majority relief now drops that down to 65 percent. 
We also had to address issues around time-share developments and issues that were raised by retirement village associations. We thought we had done this in the select committee. We were then contacted by the Retirement Villages Association which told us that it was worried that we had not done this and that there was still too much overlap with its own legislation. We apologise for that. The select committee thought it had managed to completely separate out the provisions of the two Acts. Supplementary Order Paper 112 in the name of the Hon Maurice Williamson makes the changes to ensure that what the select committee and this Parliament had intended does in fact happen. Again I say particularly to those submitters who were really concerned about the drop in the threshold for making decisions from 100 percent to 75 percent of owners and about what that might mean in terms of the rights of a minority to voice their concerns that they need to look at the provisions for minority relief set out in clauses 191 to 195 of the bill. I think we have struck a good balance. 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to Part 5 be agreed to. 
Amendments agreed to. 
Part 5 as amended agreed to. 
Schedule 1 agreed to.  
Schedule 1A 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to schedule 1A be agreed to. 
Amendments agreed to. 
Schedule 1A as amended agreed to. 
Schedule 2 
The question was put that the amendments set out on Supplementary Order Paper 112 in the name of the Hon Maurice Williamson to schedule 2 be agreed to. 
Amendments agreed to. 
Schedule 2 as amended agreed to. 
Clauses 1 and 2 
MOANA MACKEY (Labour) 
: 
 I am happy to take a call on the title and commencement of the Unit Titles Bill. Certainly the Labour Opposition is keen to see this legislation progressed as quickly as possible. The commencement cannot come soon enough as far as we are concerned. However I would make the point that this bill was reported back from the Social Services Committee some time ago. 
Given this legislation’s importance it is disappointing that it has taken as long as this for it to come back to the House. In fact we moved through this legislation with utmost haste at the select committee. We made sure we considered it properly but we were very very mindful that we needed to get the bill back to the House as quickly as possible. It is disappointing that it has now sat on the Order Paper and not been progressed. Certainly in terms of the commencement we hope that we will be debating the third reading of this bill next week and that it will not disappear into the ether again like it did after the select committee deliberations and after its second reading. 
I can think of no better title for this bill than the Unit Titles Bill. I think that that sums it up. This legislation will update a very important area of our law and one that has not been updated for a very very long time. The bill clarifies and streamlines the laws around unit title development. It will make it easier for body corporates to know exactly what they need to do and it will make it easier for them to plan for what they need to do. The bill should be progressed as quickly as possible. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Bill reported with amendment. 
Report adopted.