Editorial: Glaring gaps in leaky homes plan

Those unfortunate enough to be burdened with leaky homes held high hopes for the Weathertight Homes Resolution Service. Finally, they had what was touted as a "speedy, flexible, and cost-effective" assessment and claims resolution procedure. So much for promise.

The service has proved to be less than nimble - some owners have queued for more than six months to get their homes assessed - and, worse still, has proved to be anything but cost-effective. Even at an early stage, it is clear the Weathertight Homes Resolution Services Act has major cracks of its own.

Significant problems have come to light in the first case to come through the resolution service. This resulted in the Waitakere City Council being ordered to pay more than $40,000 damages to the owners of a stucco-clad home in Glendene. Because the builders say they have no money, the council has been left to carry the can for its negligence in inspecting and approving the house.

On the surface, this appeared a triumph for the homeowners. Yet the cost nuances of the procedure mean it has been the most hollow of victories. That process involves little cost for homeowners through the assessment and voluntary mediation stages. But if the owners opt for compulsory adjudication, rather than mediation, they are on their own. In the Glendene instance, the owners say adjudication has left them with legal bills of $16,000 and not enough money to fix their house.

The act leaves little scope for the adjudicator to remedy that flaw. In most legal proceedings, the victorious party can expect to be awarded costs. But the leaky homes resolution legislation dictates this can happen only if costs have been incurred unnecessarily, through "bad faith" or allegations that are "without substantial merit". The result is that, in many cases, the home owners will have to pay sizeable legal fees. Any payment for damages, no matter how substantial, will be only partial compensation.

The Waitakere council has exacerbated the Glendene owners' plight by appealing against the adjudicator's decision. A costly court battle is inevitable and, again, the owners can claim no financial help. The city council, their courtroom adversary, is, paradoxically, their best bet for assistance. Clearly, if a builder or developer were the appellant, as might more commonly be the case, there would be no such prospect. Under the circumstances, it is little wonder that the unfortunate owners now envisage coming out of the "nightmare" with no money to fix their home.

Obviously, this is an untenable situation. It belittles the plight of homeowners, particularly the 2143 who, in good faith, have filed claims to the resolution service. These people have struggled for recognition from the start. The Government's initial reaction to the rotting homes crisis was to dismiss it as of little consequence. Now, a key element of its belated response has been shown to be lame.

The solution is relatively simple. Homeowners who seek adjudication should qualify for legal aid. This need not mean that the mediation option will be ignored. Adjudication already costs the homeowner $200. A higher, and perhaps refundable, sum could be charged to deter a wholesale stampede to that recourse. This would certainly be more palatable than the prospect of ruinous legal fees. The conditions under which costs might be awarded should also be brought more into the judicial mainstream.

This time, the Government must act quickly. On the present evidence, many already distraught homeowners will soon have even more pain heaped upon them. This cannot be countenanced, particularly as the inactivity of successive governments is to blame for much of this distress.