Amendments to Weathertight Homes Resolution Service

The Weathertight Homes Resolution Services Amendment Bill 2006 (the Bill), which is expected to pass into law early in 2007, provides new criteria for eligibility of claims for mediation and adjudication services. To have an eligible claim, the claimant must own a dwellinghouse that must have been built (or altered) before 1 January 2012 and within 10 years of the claim being brought. Water must have penetrated the dwellinghouse because of some aspect of its design or construction (or alteration) or the materials used, and caused damage.

Importantly, multi-unit claims are now provided for within the extended version of the criteria for claims within the Weathertight Homes Resolution Service (WHRS).

New eligibility reports

Another change is that owners will be able to apply for an eligibility assessor’s report as opposed to a full assessor’s report. The purpose of the eligibility assessor’s report is to state whether or not in the assessor’s opinion the property meets the criteria for making an eligible claim to the WHRS. This is intended to enable claimants to proceed with earlier repairs to limit further damage.

Appointment of chief executive

A chief executive from a government department will be appointed to undertake important functions within the WHRS. They may assist the claimant and respondent by providing guidance on assessor’s reports, the advantages of early repair and informal dispute resolution, mediation, adjudication and the implications for claims which, on the face of it, are beyond the jurisdiction of the WHRS and need to be resolved through the courts (i.e. if the damage or deficiencies appear to not be related to weathertightness issues).

The chief executive will also evaluate claims. This replaces the role formerly undertaken by the evaluation panel under the original legislation.

The chief executive must give the claimant written notice stating whether or not the claim meets the eligibility criteria and the reasons for reaching that decision. If the chief executive decides a claim does not comply with the eligibility criteria, the chief executive will have to reconsider that decision if, within 20 days, the claimant writes to the Chair of the Weathertight Homes Tribunal requesting the decision be reconsidered.

The Bill also gives the chief executive the power to terminate claims if the claimant does not make sufficient efforts to resolve the claim. The claimant must be given notice and the opportunity to make submissions to the chief executive before a decision to terminate a claim is made. The chief executive can then act if the claimant takes no steps within 28 days. The decision of the chief executive is not reviewable, however a claimant can still continue their claim in the general courts (assuming it is still within time).

Tribunal within Ministry of Justice

The new Tribunal will be situated within the Ministry of Justice so as to enhance its independence in exercising its judicial functions. The Department of Building and Housing will continue to be responsible for the assessment of leaky building claims, as well as for the mediation of disputes.

The Tribunal must manage adjudication proceedings in a manner which is speedy, flexible and cost effective, but which complies with the principles of natural justice. To assist in this task the Tribunal may issue practice directions.

The Tribunal is also conferred with a wider range of powers so that it may now conduct the proceedings in a more inquisitorial manner. New offences, including disobeying a Tribunal order and failure to comply with a witness summons, are also created. The Tribunal must encourage parties to work together on agreed matters, only allow expert evidence where necessary and try to use conferences of experts.

The Bill also gives the Tribunal the power to refer a question of law arising from the adjudication procedure to the High Court. Given the number of complex legal arguments that arise in an adjudication, we believe that power may well be used regularly.

Category for low-value claims

There is a new category of low-value claims. The Tribunal is required to manage the adjudication process for low-value claims so it is much faster, simpler and cheaper than other non low-value claims. The low-value ceiling for a claim will be established by regulations.

For low-value claims the Tribunal is required to take practical steps to minimise the involvement of lawyers and other representatives, submissions on procedural issues and the adducing of evidence, and instead maximise the informal means available to resolve the dispute.

A claimant cannot apply to have low-value claims adjudicated unless the chief executive issues a certificate evidencing his or her satisfaction that the claimant has made reasonable attempts to resolve the claim under the low-value claims process.

It will also be the norm for low-value claims to be dealt with on paper unless the Tribunal is satisfied on reasonable grounds it is appropriate to hold a hearing. Notwithstanding this, the Tribunal will still need to ensure that the requirements of natural justice are adhered to.

Bodies corporate recognised

The Bill introduces five sets of criteria for five types of claims, which extend claims to include multi-unit complexes such as company share, cross-lease and unit title complexes.

The changes in the new Bill will allow bodies corporate to act as the representative of the unit owners in the WHRS. They will be able to bring claims in respect of the private units as well as the common areas in multi-unit complexes, as if these areas were a single dwellinghouse owned by the body corporate. This class action approach will not apply to claims for a dwellinghouse in a multi-unit complex where no other dwellinghouse or common area is affected, for separate dwellinghouses in a stand-alone complex, or for common-area-only claims.

To bring a claim in the WHRS, the body corporate will need to obtain a resolution from at least 80% of the persons entitled to vote at a general meeting of the body corporate authorising the body corporate to bring and resolve such a claim.

Additionally, the body corporate will require at least 75% of owners to provide written notice authorising the body corporate to act and consenting to a WHRS assessor performing invasive testing on their unit and/or the common property before a claim can be brought. These authorisation requirements override anything to the contrary in any rules of the body corporate.

When taking part in a representative claim brought by the body corporate, a unit owner can withdraw their authority to take part but this does not affect the ability of the representative to proceed with the remainder of the claim. Also, there is provision for new owners to be added to an existing claim; however the representative must notify the WHRS of any changes of ownership of units in a multi-unit complex following the commencement of a claim.

Defects noted on LIM

There is now a new requirement for Territorial or Building Consent Authorities to display particulars of weathertightness defects on LIM reports.

Multi-unit termination provisions

The Bill introduces new termination provisions for multi-unit complexes. These provide for the termination of any claims brought in respect of a dwellinghouse or of common property in a multi-unit complex if it is discovered that another unit or area in the complex that is not part of the claim has also suffered from weathertightness issues.

When a multi-unit claim is terminated, this does not prevent the representative from bringing a further claim with or without the addition of new owners. If any such claim is terminated then any new claim reactivating the terminated action will be treated as if it was brought when the terminated claim was originally brought. This protects the original claim from being outside the limitation period.

Time limits improved

The biggest practical changes the Bill introduces are the time limits on mediation and the creation of the Weathertight Homes Tribunal. The mediation process no doubt will be improved because it will be given an end in sight; the initiation of an adjudication after 20 days for a simple claim or 40 days for a multi-unit claim. The Tribunal itself is also likely to introduce systematic improvements in efficiencies.

These are likely to result from the Tribunal’s power to regulate its own decision-making processes and the sanctions it can now apply to non-attending parties.

It is important to note that the Tribunal, while it can award remedies to successful claimants or respondents, still does not have the power to award costs.