Government set to force mediation

By VERNON SMALL and ANDREW LAXON

The Government is threatening to force those responsible for leaky houses into mediation if a voluntary approach fails.

"We're not going to have shonky builders relying on the fact that there are lots of people around who cannot consult lawyers, to get away from their responsibilities," Associate Finance Minister Trevor Mallard said yesterday. "We are getting advice on the right way to do that now."

Internal Affairs Minister George Hawkins said the Government was trying to build on the goodwill that already existed.

However, experienced building disputes arbitrator Derek Firth - who warned in yesterday's Herald that mediation was no use without clear legal guidelines - said he could not see how the Government planned to force reluctant parties to the negotiating table.

People always went into mediation with a fallback option, such as arbitration or going to court, he said. Unless the Government clarified these options, its proposals would be "mediation in a vacuum".

The Government has agreed to subsidise mediation as a cheap alternative to legal action - an idea that has the backing of Local Government New Zealand and the Master Builders Federation.

Affected home owners had not been consulted, but Mr Mallard said it was clear they wanted a non-legal recourse. Mediation would initially be funded by the Government, but ongoing costs would depend on how many people used it.

The Cabinet had approved $3 million for the service with another $1 million coming from the Building Industry Authority.

Those using the service would be charged "a small and affordable" fee to discourage "frivolous claims". The ministers would not say how much.

Before mediation, initial screening would identify leaky buildings, which would be assessed to establish the cause of leaks.

If mediation failed "litigation through the courts becomes the main option", Mr Hawkins said.

"While the hope is mediation will keep as many people out of court as possible, some will want their day in court, as is their right."

Meanwhile, Christchurch lawyer Grant Cameron said he was considering a legal consortium to seek compensation for owners of leaky homes through negotiations with the Government.

Mr Cameron forced Government payouts over the Cave Creek platform collapse and patient abuse at Lake Alice hospital. He wants the Government to form a working party to analyse liability issues within a month and said the Government needed to take a wider legal perspective of the humanitarian, social and economic effects of the crisis.

"This is an unusual set of circumstances which has probably just gone beyond where the conventional legal system can viably assist."

Mr Hawkins said mediation was the first of a three-pronged approach. There was also a need to make sure any change to insurance cover for building certifiers did not disrupt the industry. And the Government also needed to make the regulatory system strong enough to avoid any repeat of the problems.

He did not expect the building industry to "grind to a halt" because building certifiers could not get insurance cover. So far only one certifier company had lost cover, and insurers would assess them on a case-by-case basis.

The "default" position was that local authorities made sure buildings were certified and had the capacity to do so.

Local authorities were assessing how many leaky houses existed, Mr Hawkins said. It was not the "tens of thousands" some claimed, but it was a big problem.

But National leader Bill English said it was extraordinary for Mr Hawkins to claim it was not as big a problem as the media had portrayed it.

"This flies in the face of expert opinion that says ... the problem is worse than anyone realises, with many home owners unaware of what may be happening to their own properties," he said.


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Further reading
Feature: Leaky buildings

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