Mackey Moana: Unit Titles Bill — Third Reading 
Text is incorporated into the Bound Volume 
Mackey Moana: Unit Titles Bill — Third Reading 
[Sitting date: 30 March 2010. Volume:661;Page:10217. Text is incorporated into the Bound Volume.] 
MOANA MACKEY (Labour) 
: 
 I am happy to finally be able to take a call in the third reading debate of the Unit Titles Bill. This legislation has been sitting on the Order Paper for a while and I think we are all very very pleased to finally see it passing into law. I will not say that we are pleased to finally see the back of it because that would not be true. It was very interesting. Certainly when members of the public come into our offices now with unit title questions members of the Social Services Committee will be more than well equipped to deal with those issues. In fact if anyone needs any help I suggest they forward their queries to Katrina Shanks chair of the Social Services Committee. She is available day and night to help members of the public with their queries on unit title legislation. 
I thank the Acting Minister Maurice Williamson who has just taken his seat. I thank him for his wonderful 2 weeks as Acting Minister of Housing— 
Hon Maurice Williamson 
: 5 weeks. 
MOANA MACKEY 
: Is it 5 weeks? It went so fast. It went so fast it went by in a blur. We had a wonderful time facing off against each other for that short period of time and he will be sadly missed. But he does remain in the portfolio of building and housing which of course has crossover to this legislation. 
I thank the members of the Social Services Committee and the officials and also all the submitters on this very technical but extremely important legislation. I think everyone in this House recognises that the Unit Titles Act 1972 is highly outdated. It is archaic and it certainly is not flexible enough or modern enough to deal with the range of unit title developments that exist in New Zealand today. 
I will touch on a couple of the important changes that this bill will make. The first is about ownership and utility interests. The ownership interest is the interest that is assigned by a registered valuer to the principal and the accessory units in a unit title development and the utility interest is also assigned to the principal and accessory units. But in this particular area of interest the body corporate is able to vote to change the calculation around who pays what and in what proportions so they can get a more fair and reasonable apportionment of costs. That is very important. I thank my colleague Chris Hipkins for raising this issue with me. A constituent came to see him about existing unit titles law. His constituent had strong concerns about the inability under existing law to make sure that those apportionments were fair and reasonable. So when we were working on that in the select committee we went back and made sure that the concerns raised by Mr Chris Hipkins’ constituent were addressed. I am very very pleased to say that they are addressed under this legislation. 
Under this legislation bodies corporate will be able to apportion those costs far more flexibly and fairly. That is not to say that there was unanimous agreement amongst submitters. Under the legislation that is about to be passed into law both those interests—the ownership interest and the utility interest—will be able to be reassessed at any time as long as 3 years have passed since the last assessment. Some submitters thought that that was too long; some submitters thought that that was too short. I think that it provides a very good balance between not putting too much of a burden on the body corporate to be constantly reassessing those interests but also making sure they are kept up to date. This comes down to issues as simple as the question of who should pay for a lift in a multi-storey development. Should the people on the ground floor who get no benefit from a lift have to pay the same amount for maintenance as the people who use it regularly? It sounds like a simple issue but that is the kind of thing that can bog bodies corporate down and it is important that the law is clear that it is up to the bodies corporate to be able to apportion those interests fairly. 
One of the other things I will mention is what this bill does about the establishment and constitution of bodies corporate. Under this legislation a body corporate is automatically created once a unit plan is deposited. From that point the body corporate is responsible for the range of maintenance functions for the upkeep of the property and of the whole development. Some submitters came along and quite fairly said that they were in a really tiny development. They asked why they should go through all the rigmarole of one of the big body corporate developments when they were talking of only a few units. We as a select committee considered that and decided that given that people know when they go into purchasing one of those units that it will be a unit title development under unit title law and that it will require the formation of a body corporate that that was probably fair enough. It is also important to say that at a later point a body corporate can decide to cancel its unit plan to subdivide its land or buildings and to take up some other alternative structure if that is the will of the body corporate. But it is important to point out that the most important thing about this law change is that it will reduce the costs on bodies corporate. So the concerns that small bodies corporate have about having to shoulder all those costs will be much reduced under this legislation. Not only that the bill allows that developments of nine or fewer units will not be required to form a committee if they do not wish to do so and they may opt out of auditing requirements. So we have recognised that the situation for smaller developments is different compared with bigger ones and we have given some relief in that respect. 
I will move on to an important part which is about the rights and responsibilities of unit holders. This is an area where we have seen quite a lot of litigation over the years particularly about leaky buildings. It was important that we got this absolutely right. We needed to be clear about exactly when a body corporate was responsible and when an individual unit holder was responsible. This legislation says that in general where that property is common property then it is the responsibility of the body corporate to recover the money expended for repairs except in a situation where a unit holder has caused the damage to the property by his or her actions. In that case the unit holder will be held responsible. 
That is not clear in the existing law that is about to be replaced. I want to make it very clear because it is an area where there has been significant litigation about leaky homes. This bill under clause 122(2) will impose an obligation on bodies corporate to “maintain repair or renew all building elements and all infrastructure that relate to or serve more than 1 unit.” This is a common-sense resolution of the matter which has been subject to considerable litigation as members will be aware. When there is a leaky building issue with the exterior of an apartment complex this may manifest in a manner that affects only one or two apartments and it may be tempting to say that only those people are responsible for the repairs. However we know that the reality is that unless this is remedied it will invariably affect the entire complex and the entire unit title development. Much of the litigation that has occurred in this area has focused on whether the body corporate should be allowed to contribute to the costs of rectifying these issues. There is competing precedent in this area because the High Court has taken two different views in the cases of Young and Sunset Terraces as to whether bodies corporate are able to do that. 
I think it is important that this House makes it quite clear that in this legislation we have taken the approach of Young in the Young High Court case and this will shift the focus on to rectifying the problem as quickly as possible. I think it is very important to point out that where there is conflicting precedent the High Court may look to this House to clarify whether the intention of Parliament was to follow the decision in the Young case in the High Court and that was the way the select committee went. 
The Minister has already mentioned long-term maintenance plans. This is a significant change in the law and it is important. In the past there have been cases where there has been a significant need for capital development in a unit title development but it has been blocked. Unit title holders can be hit with a very very large one-off cost and the fact that under the existing law any one person could object has resulted in work being blocked. Any one person could object when he or she found it difficult to pay that significant one-off cost and could vote against it and block that work being carried out—not because the work did not need to be carried out but because that person simply could not afford to pay the cost. 
When this legislation was introduced it contained a requirement for a long-term maintenance plan to be developed and a requirement for a fund to be put in place to pay for the long-term maintenance plan. Submitters to the select committee said that they did not feel it was necessary to legislate that in law. We looked at three options: one was the status quo in the Unit Titles Bill; the second was that a long-term maintenance plan had to be mandatory but the fund could be opted out of by a special resolution of the body corporate; and the third was to say that both the plan and the fund were mandatory but both could be opted out of by special resolution of the body corporate. 
The select committee weighed up the options and felt we should go down the path of saying that the long-term maintenance plan is mandatory and cannot be opted out of but the way in which it is paid for can be flexible. So under the legislation the fund is mandatory but by special resolution of the body corporate it can be opted out of. I think that provides the flexibility that is needed under this bill. 
There have been a number of changes regarding disputes resolution. The Tenancy Tribunal has been opened up to the unit title holders and the District Court has been made the court of first appeal instead of the High Court. All these things will make it cheaper and simpler for unit title holders. I commend the bill to the House.