Weathertight Homes Resolution Services (Remedies) Amendment Bill

We should remind ourselves at the beginning of this Committee stage of what this bill is about. Thousands of homeowners for years have been waiting for some justice and some sensible response from the Government to get a solution to the plight of their leaky homes.

It is almost like Groundhog Day again in Parliament. In 2002 Labour put legislation through this Parliament in a mad rush to provide for the Weathertight Homes Resolution Service. That was a shambles. It did not resolve the problem. Then in 2006 the Minister in the chair, Clayton Cosgrove, again introduced a bill. There was a review period of about 12 months before that introduction, during which owners of leaky homes were told to wait and see, because Clayton Cosgrove would have the solution. We then passed that bill in 2006, and here we are, not much more than a year later, at the Labour Government’s third attempt to find a bill that will solve the problem for those thousands of homeowners.

I will highlight the statistics of the Government’s record on this issue. Five years down the track, the Government has spent $96.4 million on the bureaucracy of what was the leaky home resolution service—which is now the tribunal—yet over those 5 years less than one in six of the lodged claims has been resolved. What we find out is that it is actually costing the taxpayer $131,000 for each claim to be resolved—not to fix the house, but to pay for the Minister’s bureaucracy. It is madness, particularly when we read the figures that show the average settlement is $80,000.

I tell the Minister that it would have been better value for the taxpayer to send the damn cheque to the builder and get the house fixed, rather than fund his bloated bureaucracy.

💬 Hon Clayton Cosgrove: Are you proposing that?

What I am saying to the Minister is that I would be happy to. Maybe the chirpy Minister would like to tell the Committee whether he thinks taxpayers are getting good value for their money. Oh well, the Minister has suddenly gone silent. It is a perfectly reasonable question. We know that he has spent $96.4 million. I ask him whether he thinks taxpayers got value for money.

Let us look at the figures, even for the last month that he has been in charge. If we look at the number of successful claims—and the vote for this year is 23 million bucks, so we are looking at about $2 million a month—we see that the official figures on the website show that in the last month he has resolved 10 cases. Ten cases in a month is $200,000 a pop, I tell the Minister. Over 2 years ago the Minister told the House: “Clayton to the rescue! Now that I am in charge, this will all be fixed.”, and the situation has got worse.

Then if we look at the specific provisions in this part of this bill, we see that they are to fix up the mess that the Minister was advised of at the time of the Weathertight Homes Resolution Services Act, which was passed in 2006. The arrogant Minister, who is so typical of this Government’s Ministers, said in 2006 that, in terms of damages, the legislation included general damages claims. He was wrong. He refused to take on board the submissions that were made at that time, and that is why we are back in the pickle, back in the House—third time round—trying to amend this legislation.

So National simply says that the legislation has been a failure. If we reflect on the struggle it has been for those thousands and thousands of homeowners—

💬 Hon Clayton Cosgrove: Keep calm, keep calm.

The Minister sarcastically chips in. I ask him again whether he thinks it is good progress to have resolved less than one-sixth of claims, 5 years on. And on that basis, I tell the Minister, it will take us about 26 years to resolve this problem. By anybody’s interpretation, that is a failure. That is not good enough. Although National supports the extension for general damages that is in this bill, we say that anybody who thinks that this will resolve the problem for owners of leaky homes is simply dreaming. We know this from the record and we know from the poor progress that has been made. Just to revise, there have been 4,432 claims and, 5 years on, the Government has resolved 734 of them. This is the issue that the Prime Minister said in 2001 was a non-issue. This is the issue that George Hawkins, when he was Minister, said would be all over in 12 months. Five years down the track, it is not.

So National is saying that this bill should be passed. It should be passed quickly, because it is holding up the process further. I know that both adjudications and other hearings are being held back until this legislation is passed. But I just think we should see a little bit of humbleness from the Minister. He should acknowledge that this bill is before the House only because he got it wrong in 2006; that when he got it wrong in 2006, he ignored submitters to the select committee who claimed that the provision did not include compensation for general damages; and that if he had listened at that time, the owners of leaky homes would not now be held up further—waiting for legislation, waiting into the never-never for some sort of solution to this problem.

It has been a failure; $96 million has been spent on a very poor process. This bill patches up bad legislation. We want to see the Minister take some responsibility, and we are keen to get this law on to the statute book as soon as possible.

I will take just a short call because that speech from Nick Smith has been registered in this Committee by that member. He has only one speech, and that is to moan, carp, and complain. Nowhere in that speech did he tell members what he would have done. He got close to saying that he might write a cheque, but he will not say that, given the other election promises that he is about to embark on.

What this bill does, and I am sad that the member does not have an understanding of it, is to reconfirm a clause that was placed in the new legislation, that was transplanted across, and that was tested and upheld by two District Court decisions. Normally, when one writes a clause, it is unlikely that one has any sort of anticipatory caution when that clause has been tested by a court, not only once but twice. It was reconfirmed, tested, and upheld, and it was transplanted, therefore, into the new legislation.

Unless the member is clairvoyant—we know that he has some issues, but I do not know whether he is a clairvoyant—he would not have known that after the provision had been tested by two District Court decisions, found and confirmed to be correct, and transplanted into the new legislation, a High Court judge’s decision would overturn Parliament’s intent, even though the law had been tested by two District Court judges and upheld. Maybe the member can see into the future; the rest of us cannot. It was out of the blue.

💬 Hon Dr Nick Smith: So was the High Court wrong?

Yes, the High Court was wrong. That is why we are here today. Maybe the member needs to take note, read the Standing Orders, and find out why we are here. We are here to correct what the High Court did indeed get wrong. The High Court did not reflect Parliament’s intention as confirmed by two District Court decisions.

💬 Hon Dr Nick Smith: Your law was wrong.

Well, that is not what the District Court said—twice. But, of course, the member has a selective memory. I have a bit of a psychological hold over that member. No, I am wrong; actually, I have not. The whole House has a bit of a psychological hold over that member. The point is this—

💬 Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. I take some offence at the remarks from the Minister in the chair. In my speech, yes, I did give the Government a hard time about this issue, but I could make all sorts of personally derogatory comments, too. I think the sorts of comments that Mr Cosgrove has made are outside the bounds, and I take offence.

The CHAIRPERSON (H V Ross Robertson): I thank the member. I was considering them to be personal reflections, and the member will desist.

I withdraw. As I have said to the member, the reason we are here is to correct what the High Court judge did, what the High Court did, which was contrary to Parliament’s intent. I say again for the member, and I will use small words, that that intent in that clause was tested by two District Court judges in two cases and it was upheld. [Interruption] And the “tweeties” at the back there, would do well to learn by this.

I would also point out that it is interesting that one of the victims the member talks about is a guy called John Gray. John Gray is head of the Leaky Homes Action Group, which represents claimants every day for no cash and no salary—unlike that mob over there. What did John Gray say about this correction? He acknowledged that it could not have been anticipated. Unlike the member for Nelson, he does not have a crystal ball. He supports this move, because Parliament has moved swiftly to reconfirm what Parliament’s intention in both pieces of legislation was and is—that is, to provide for general damages, particularly for mental anxiety. So this is actually about assisting people.

I say to the member that the Weathertight Homes Resolution Service—and I am on record as saying this—was, yes, a rush; yes, a call to arms to try to assist people. I have said on record and publicly many times that when we move to try to assist people swiftly, sometimes we miss things. The service, though it resolved cases, did not perform in the way we wanted. So we reviewed it, we revamped it, and now it is about 2 months old and it is resolving cases.

I cite the case publicly, because I have permission to do so, of the Rev. David Moore of Christchurch. I cannot say, because I do not know, what he got in his resolution claim—it is confidential. But I know that in that claim he represented himself, he did not require lawyers, and he told me that he got swift justice under the new service and 100 percent of what he wanted.

So I say to the Committee tonight that we can, as Dr Smith has done, play politics. Tonight we can, as Dr Smith has, choose to put the boot in, but we cannot, as Dr Smith does, not propose another solution to the problem. We have our solution out there. Yep, we have revamped the system, I tell Dr Smith. Yep, he was right—the first one was not as good as it could have been. That is why we have revamped it, that is why we listened to every submitter whom we came across, and that is why we have spent a lot of time with people like John Gray from the Leaky Homes Action Group. He is a person I hold in high esteem—more so than that member—because John Gray has no axe to grind, and he does not get paid for his services. John Gray won his case under the old system, under his own steam. In addition to doing his job and being with his family, he spends every day representing and assisting claimants, and, I might say, assisting the department and giving advice— as he did when we revamped the second bill and, now, as we correct a court decision that did not reflect Parliament’s intent.

We have a choice here tonight. We can, as the member says, expedite this bill, or we can hear other proposals. The member could rise and tell us exactly what he would do, and what his proposal is. If my proposal is wrong, I would love to hear his. If my proposal is not cutting the mustard, I would love to hear his. The only thing that has come out of the mouth of that National member Dr Nick Smith is the boot going in and politics. And Bob Clarkson has said—I believe that he said this to the select committee—that we should write a big cheque. Well, that would of course be the easiest thing for Parliament to do; let us be plain about it. But if we wrote a big cheque, as National wants us to do, every builder who ripped somebody off, every designer who ripped somebody off, every architect who ripped somebody off, and every council that did not cut the mustard and inspect buildings correctly—all the people who did the wrong—would be let off the hook by the taxpayer, who was not responsible. Or we can provide an alternative resolution service for those who cannot go to court and cannot afford it. We can provide an alternative resolution service, let those claims be examined, and drill in to the liable parties and get the money from them. But if tonight it is National’s policy to write a big cheque, let all the dodgy builders and all the cowboy developers off the hook, and have the general taxpayer pay for the lot, then I would be grateful if Dr Smith and his colleagues would place that on the record. I would like to go out and tell communities that that is what their policy is.

In conclusion, I say that this bill simply reconfirms Parliament’s intent in the previous legislation, as tested and upheld by two District Court decisions. Two District Court decisions said that the provision was valid and that the intent was right—that general damages can be allowed and awarded. But then out of the blue a High Court judge made a judgment. Well, I am afraid that this is the highest court in the land—it is called Parliament—and Parliament’s intent was not reflected by that judgment. John Gray agrees with that, the victims who have written to me agree with that, and tonight we have a change to correct that situation, and to allow those claims to proceed.

I rise to speak to the Committee stage of Part 1 of this bill. Clause 4, which is the main provision, confirms the purpose of the bill. Any claim may include a claim for general damages for mental anxiety and distress, and the Weathertight Homes Tribunal may award such general damages for any eligible claim.

My colleague Bob Clarkson told the Social Services Committee many times that we would not need this clause if homes were simply fixed in a timely manner, to begin with. Homeowners become stressed, anxious, and upset only when they have a leaky home, and are in dispute as to who is responsible and who should fix it. This is what causes the stress and anxiety—the leaky home itself. All this bill does is create a law to allow homeowners to be compensated for the stress of having a leaky home.

A submission to the Social Services Committee from Local Government New Zealand, dated June 2003, raised this very issue. It stated: “The explanation for the bill states that it will return the law to what was intended by Parliament and the Government. We know that there are several aspects of the current Act that do not seem to be consistent with what Parliament and the Government intended. It is unfortunate that the Government has moved first to fix a matter of current profile in respect of claimant and cost awards, when there are other fundamental matters where the act does not perform as intended. For example, we had 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, where we believe the implementation of the Act in practice is not as intended by Parliament.”

This situation still has not changed in this 2007 amendment bill. The homes are still not getting fixed. It has been stated in this debate already that in many instances homeowners never receive a dollar in compensation, even though the courts award compensation to them. Even the Minister, in the second reading debate, confirmed that general damages for mental anxiety and distress would not add an extra dollar to the compensation received by some homeowners, but he did say that claimants valued these awards as an acknowledgment of the stress they have suffered. That is interesting—they value these awards as an acknowledgment of the stress that they have suffered.

I am sure the claimants who have not received any compensation, who are out of pocket, and who still live in homes that leak like a sieve would not agree with him—especially the elderly couple who have no additional money to fix their leaky home. They poured their money, their savings, into their dream final home, but they have a leaky home. It leaks like a sieve and they have to live in it, day in, day out. They are now suffering from high blood pressure and sleepless nights. The stress and pressure on this elderly couple are incredible. This legislation has failed to produce a practical remedy for them. Will they value these awards as acknowledgment of the stress they have suffered? I do not think so.

As with the 2006 legislation, this amendment bill has been rushed through Parliament. It whizzed through the select committee, yet still will not deliver to homeowners its true intention. Once again, rushed legislation has been brought on through the case of Hartley v Balemi and others. We have just heard from the Minister that it was the High Court that was at fault. That is an interesting comment. So the judges in the High Court got it wrong—

💬 Hon Dr Nick Smith: Not the Minister’s fault; never the Minister’s fault.

Never the Minister’s fault. One of the issues that this bill is trying to fix is an error in the law—an error that was pointed out to the select committee in 2006 by the National Party in a minority report, which was ignored. So here we are, again, fixing this legislation, again; fixing an error and wasting Parliament’s time, when the legislation could have been drafted correctly the first time. But, no, this is another whiz bit of legislation being whizzed through Parliament, whizzed through the select committee.

No submissions were asked for, but we were allowed to get the Law Commission in to have a look at this new draft. The commission came up with suggested amendments, so it is lucky that we got it in. The Law Commission said that it should be simple and that it should be concise. It took out references to the case of Hartley v Balemi and others and made the legislation simple, because the intention was that lay people could read it for themselves, understand it, and go into a tribunal to represent themselves.

I have quite a simple question to ask the Minister—if he got it so right, and if it was only the judges’ fault, then why are we here? If the Minister had clearly stated his intent and there was no question in the bill as it was written, we would not be here fixing this mistake. He can prosper, and he can make personal attacks on members in this Chamber as he stands there, but the reality is that yet again we are here trying to fix a mistake that has been made in this legislation.

I was thinking that it is not unlike the community sector, which I have a personal interest in and am very passionate about. Often we hear people say they will accept a contract that will not quite work for them but they do so because they want to make some sort of difference—it is better than doing nothing. That is a bit how National Party members feel, yet again, on this legislation. We do not think this legislation will fix the problem; there is no way it is fixing people’s homes, but it is a little bit of something, and it is something that we have to do. As a consequence, we will go through this charade and actually make the Minister’s intentions clear to the judges whose job it is to administer it, yet again.

But there are questions that are not being addressed. The Minister can bandy around popular names like John Gray, who is doing a fantastic job in Auckland and I have spoken to him a few times, and think that will get him off the hook when the job is not being done correctly. But the reality is that people’s homes are not being fixed and they are in the same situation that they have been in for many years. This is probably when I should stand up and confess to a conflict of interest, because I think that is only fair. I have a leaky home in Auckland and I am currently in the process of getting it fixed, and it is one of many. So I stand here with some personal experience, but my experience is nothing compared to others in Auckland—and other places in New Zealand, but it is probably Auckland that I know better—who are dealing with far worse problems than I am. It is a home that I do not live in, so it is more as a homeowner that I am dealing with the situation, but I already have an understanding of the hours that are put in, and the anguish.

When I look at my neighbours and think about the fact that they cannot afford to pay for repairs and are having to take out extra loans, I am incredibly grateful for the salary that I have that means I can pay my extra bits each week. But if members look at the financial burden and the health burden on many people, and the effect those burdens are having on their lives through and through, this patch-up is, of course, necessary because of the botch-up before, but it is not fixing the problem.

The Minister can stand up and ask if the National Party will write a big cheque, and will it do this and will it do that, but he is in Government and it has been nearly 8 years. It is time something was done—something that is going to make a difference for these people. National members looked at the legislation that went through. I was on the Social Services Committee at the end of last year, when it considered this bill. It felt rushed. It felt like we were not getting through everything like we should. It felt like those people who submitted to us and pointed out to us some of these problems, which we are now fixing, were rushed through and were not listened to as clearly and as well as we would have liked them to be.

The reality was that the Minister had put such a tight deadline on this bill being reported back and in that select committee, which is run by Labour, National members did not have the power to slow it down and make sure that we got it right. As a consequence, we see us going backwards. Yet again in that select committee, prior to Christmas, there was that point where we did not agree, and thought that the legislation was not everything that we wanted. However, we felt that something had to be done and this small step was way better than no steps, which had been happening pretty much previously.

So we will start looking at the money. I might stand to be corrected, but I was looking at a figure of $96.4 million going in. How does that relate to people and their homes that they are trying to get fixed? That is the key question.

I was not going to take an additional call, but after the speech from the Minister in the chair, the Hon Clayton Cosgrove, I feel compelled to respond on two important points. The first of those is that the Minister told the Committee that neither he nor his department had any idea that there was a problem with the provision in respect of general damages. I was accused of being clairvoyant, and all sorts of other derogatory things.

💬 Hon Clayton Cosgrove: “Clairvoyant” is not right.

Well, the Minister made other claims.

I would like to read this submission on the Minister’s original bill from the now-retired chair of the Leaky Homes Action Group. It said: “In the past there have been grey areas over what a mediator, an adjudicator, will allow in claims and there have been a number of inconsistent decisions in this regard. It is recommended that this bill is specific on this matter to avoid confusion. Claims of stress should be allowed by specifically providing for general damages.”

Well, hello, hello! I say to the Minister that that is a very specific submission from an organisation that only earlier in his debate he said was a respected organisation. Why did he not listen to that submission? Why did he not listen at that time? Leaky home owners would not be in this period of uncertainty, and we would not have had the decision of the High Court, if the Minister had made the law clear.

It is all very well for the Minister to stand up in the Committee and say it is all the High Court’s fault and Parliament’s intent was quite clear. Parliament’s intent cannot have been quite clear or the problem would not have occurred. What is more, I say to the Minister that he knew that the law was unclear, because that had been made very plain in the submissions.

So I ask the Minister in the chair again if he bothered to read the Leaky Home Action Group’s submission on the 2006 bill he was in charge of. I put the question to the Minister again—and I think the silence says it all. He did not bother to read the Leaky Homes Action Group’s submission. If he did, he would have known in 2006 that his bill was flawed, he would have fixed it, and we would not have had the High Court decision because Parliament’s intent was unclear.

The Minister then asked what National’s policy was. I am very keen to answer that. National thinks it is better to spend the $100 million - odd on fixing homes than on bureaucracy. National does not think it is smart to be spending more money on the adjudication process than it actually takes to fix the houses.

💬 Hon Clayton Cosgrove: So you’d abolish it?

No, I said we will spend the money on fixing the houses, and that makes pretty good sense.

💬 Hon Clayton Cosgrove: So you’d abolish it?

The Minister seems to disagree with that. I tell him that I look forward to debating all over New Zealand the fact that the 96 million bucks would have been far better spent on fixing some houses, rather than spending it on his 200 or 300-plus bureaucrats that he has expanded the department by.

The further point is that I also believe it is quite flawed for the Minister not to allow leaky home claimants to claim for legal expenses. I say to the Minister that it is totally unrealistic for him to line up a leaky home owner with sometimes as many as a dozen lawyers for other parties and expect that owner to get a fair deal. So a further part of National’s policy, as we indicated previously in 2006, is that we will allow leaky home owners to claim the reasonable legal costs of going through the tribunal process, because we think what the Government has done is grossly unfair to leaky home owners in that regard.

I come back again, though, to the real point on the minds of New Zealanders in respect of the tribunal, and that is the question of whether the Minister believes we are getting value for money, having spent $96 million and having resolved, over 5 years, less than one in six of the claims. I ask the Minister: when will we get some performance, how many claims will we resolve in the next year, and when can New Zealand’s leaky home owners finally expect to get some justice out of this tired, repeatedly mistaken Labour Government?

Part 1 agreed to.

Part 2 agreed to.

Schedule agreed to.

Clauses 1 to 3

The CHAIRPERSON (Hon Clem Simich): The question now is that clauses 1 to 3 stand part. There will be three votes. We will take clause 1 first.