Problem no 1 with the UTA - 286 musts

Problem no 1 with the UTA - 286 musts

The Act says you must.  But it doesn't matter if you do - or you don't

The word "must" is written in the UTA (Act) 286 times.  That a lot considering there are only 233 Sections in the Act.  So there is an average of at least one "must" per Section. 

But as you all know, there are no sanctions, penalties or fines if the body corporate chooses to ignore any of the "musts". 

For example, Section 116 says that a body corporate must have a long-term maintenance plan.  But many don't have one.

So you have to ask, why would anyone bother to follow the rules if they don't feel like it - when there is no penalty? After all, maybe it's not that important after all.

It isn't normal to allow a statute to have no sanctions

It is not normal to allow a statute to have no teeth.  It's easy to cite examples we are all familiar with, such as criminal law - where penalties are one of the most important elements - for good reason.  Or transport law where the police dish out speeding tickets as a revenue generator.  

As another example; you must pay your tax.  You must also pay it on time.  We all know what happens if you don't.   

But let's get closer to home.  Bodies corporate also have to comply with some sections of the Building Act 2004.  For example, if you don't maintain your BWOF, the fine for a single offence can be up to $20,000.  It can also be $2,000 a day for non-compliance.  Don't get a building consent and it's up to $200,000, or $10,000 a day. 

These sanctions are written right into the Building Act.  They're not left to the Regulations, which is a method often used to allow penalties to be updated (increased) more easily.  As an example of the use of Regulations for setting penalties, we can look to the RMA, which even has special regulations to list penalties - The Resource Management (Infringement Offences) Regulations 1999.

Then there is the Health and Safety in Employment (Asbestos) Regulations 2015. Take a look at that and you will see $50,000 penalties littered throughout the document.    

I'm sure you can all think of other examples.

The UTA is an outlier

So you will be getting my point.  The UTA is unusual.  It uses the word must 286 times but doesn't have any teeth to make sure people follow the rules.  So guess what.  They don't - because some people behave badly even when there are penalties. 

Under the UTA they are given free rein.

The solution

I fully accept that my series of problems with the UTA will appear to be a bit of a rant.  But on the other hand, I will also commit in each case to offering a solution. 

The obvious solution is to penalise bodies corporate if they don't comply.  We could impose fines of say $750 for not having an LTMP, $1,000 for not calling an AGM, $2,000 for not levying owners using the correct process and so on.

But to dish out penalties, there needs to be a transparent and consistent process.  Typically it starts with a complaint or audit, is then followed up with an enquiry and sometimes a call to comply. Perhaps followed by a hearing where a decision is made. There may also be an appeal process.

And when the final decision is made, the penalty is applied and interest is accrued if it isn't paid. 

One thing we know about owners is that they don't want to spend money if they can avoid it.  So hit them in the pocket and stuff gets done.  

The process calls for an independent authority to manage it

Typically, if you want to impose sanctions on a segment of society, the process can really only be managed by an independent authority. That's if it is to be consistent, transparent and give confidence to all parties.

So I suggest we need a central authority to administer the Unit Titles Act.  It might be called The Unit Titles Authority.

The REA.  A good example of an effective Authority

The Real Estate Agents Act 2008, was introduced at the same time as the Real Estate Agents Act 1972 was repealed. 

In the 1972 Act, the Real Estate Institute of New Zealand (REINZ) was given the authority and power to manage the industry, while licensing was controlled by a separate statutory authority, the Real Estate Agent's Licensing Board (REALB). Under the old Act, it was compulsory for every Real Estate Agent and Salesperson to be a member of the REINZ.  The REINZ managed complaints and discipline and in the worst case, an agent or salesperson could have their membership declined and would then be unable to practice.     

But by the mid-2000s, it was obvious that the system was broken.  The REINZ insisted that everything was fine because there had been few complaints.  Supposedly just a few each year.  However, MPs and Ministers knew otherwise because they were receiving complaints directly and there were many juicy headlines in the newspapers. 

Governments don't like bad headlines, so Clayton Cosgrove, the Labour Minister responsible for the industry at the time, decided that reform was required and the 2008 Act came into effect, along with the Real Estate Agents Authority (REAA). The REINZ was sacked from its 35-year role of managing compliance and discipline and this job was handed to the REAA (now called the Real Estate Authority REA).

The lesson learned

I don't claim to be a social scientist but it seems that the twentieth-century solution of allowing an industry to self manage, using its member's organisation, simply doesn't fit with twenty-first century society.   We only have to search the public REA complaints decision register to see how a modern regulatory authority transparently deals with complaints and discipline.  It may be a surprise to some, but those of us who have been around long enough know that the Real Estate Profession is now held in higher esteem than it once was.  It really was the wild west.

What we can take away from this, is that professional industry membership organisations are not able to fully protect clients of the profession - the wider public.  There are several reasons for this but with the old REINZ, it appeared to be a result of cronyism and a desire to protect the image of the Institute itself, the brands of its members and the profession in general.  All of this at the expense of the clients of the industry.

We have to congratulate Clayton Cosgrove on what turned out to be a complete and elegant solution. Perhaps we should ask him to come back and do something similar for the Unit Titles sector.

Then when the Act says that a body corporate "must.....", perhaps there will be a greater incentive for the owners to ensure their body corporate is compliant and the rules put in place - presumably for good reason - might actually be followed.

Ends

Prepared by John Bradley October 2020

Look out for Problem with the UTA #2 in my next newsletter.  Nobody knows who is supposed to pay for maintenance.

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The Plan Heaven team.

Disclaimer. Plan Heaven is not qualified in law and any comments made on this website should not be regarded as legal advice. Our comments are merely providing some thoughts on how the legislation might be interpreted and how we went about attempting to meet its requirements. You should not rely on this information in isolation and do you own homework and at all times if you wish to be sure of your position relating to legal matters you should seek advice from a suitably qualified lawyer.