KEY POINTS:
If there was ever a group of New Zealanders deserving of Government assistance, it is the poor homeowners who have become the innocent victims of the leaky building crisis. These are ordinary New Zealanders for whom the Kiwi dream of homeownership has become a nightmare.
Sadly, having already
become the victims of incompetence within all levels of the construction industry, these homeowners are becoming the victims of a Government spin machine intent on creating the illusion of providing help while doing nothing to provide meaningful assistance.
This is particularly so with Building Issues Minister Clayton Cosgrove's persistent claim that delays in obtaining compensation through the Weathertight Homes Resolution Service can be attributed to lawyers and experts unnecessarily drawing out the process. That claim is simply untrue and a transparent attempt to deflect blame from the failure to ensure that the WHRS was properly resourced to deliver assistance to leaky building homeowners.
When the leaky building crisis first hit the headlines six years ago the Government's response was (eventually) the Weathertight Homes Resolution Services Act 2002.
This act allowed for the inspection of residential properties that registered for assistance by a qualified assessor and, if the property was found by that assessor to be a leaky building, the WHRS would provide the homeowner with mediation and/or adjudication assistance to obtain compensation from any person having legal liability.
Problems emerged straight away. It was clear from the outset that the Government had no idea of the scale of the problem and a backlog soon developed. It was common for homeowners to wait anywhere from 12 to 18 months for their property to be"assessed" by the service. After the assessments were completed, further problems emerged.
The WHRS Act does not provide any compensation to homeowners other than can be obtained from those parties who can be held legally accountable for the defects. The mere fact that a property is leaking does not automatically mean that there will be a viable defendant who can be held accountable.
Often those parties who are directly involved are no longer around.
To successfully pursue that claim though a mediation or adjudication the homeowner needs to have evidence to prove that the people involved in the design, construction and certification were negligent, that their negligence causes the homeowners' loss, and the amount of that loss.
The reports prepared by the WHRS assessors were not intended to provide that evidence but to simply advise the service whether the home was leaking, to identify the defects and estimate the costs of repair.
Even the information that was in the assessors' reports was often inaccurate. This was particularly so with the estimates of the repair costs.
More than one homeowner settled their claim based on the WHRS report only to find that the actual cost of repair was two or three times higher than the estimate.
As a result of the deficiencies in the assessors' reports it soon became apparent that homeowners needed to retain their own experts (at their cost) to provide proper advice.
The volume of cases (there are 3151 claims in the WHRS and many more before the other courts) has meant further significant delays in obtaining appropriate advice from the limited number of properly qualified experts.
But by far the biggest delay experienced by the homeowner in obtaining compensation has been in getting adjudication assistance from the WHRS. Since 2003, when the bulk of the assessment began to be completed, there have been serious delays in the appointment of adjudicators. Delays of between six and 12 months to even begin the adjudication process have been commonplace.
Even after an adjudicator is appointed it is a long wait for an available hearing date. Last year there were 22 adjudication determinations (decisions). There are at present 243 adjudication claims awaiting a hearing. At that rate, even if no additional adjudication claims were filed, it would take 10 years to hear the backlog.
Confronted with these delays, homeowners are left with the unenviable choice between continuing to live in their leaky home or trying to borrow money to complete the repairs while they wait, or mediating their claims from a position of weakness and accepting a significantly reduced amount to settle their claim sooner.
The creation of the new Weathertight Homes Tribunal and the appointment of four new adjudicators (essentially just replacing the adjudicators from the old WHRS) will do nothing to change these fundamental problems. Litigation is an inherently slow and costly process as anyone who has experienced it will tell you. Trying to rush the process will always risk injustice and further delays with appeals and judicial review applications from aggrieved parties.
The Government is not responsible for the leaky building crisis. It is accountable for its response. What is required urgently is a meaningful loans scheme for homeowners so that they can borrow the money necessary to repair their homes now rather than wait for the outcome of their adjudication or mediation.
Such a scheme was successfully implemented in Canada which went through a similar crisis eight to 10 years before New Zealand, so a model already exists. Fiddling around at the edges of this crisis is no longer an acceptable response.
* Tim Rainey is a partner with law firm Grimshaw & Co, an Auckland law firm which represents about 6000 leaky building claimants.
