More leaky building suits for councils

16:00, Oct 11 2012

Councils could get sued more often for consenting faulty buildings after a landmark leaky homes decision, according to an Auckland lawyer.

A Supreme Court decision released yesterday says the residents and owners of leaky building Spencer on Byron in Takapuna can continue with a claim against the former North Shore City Council, now the Auckland Council.

It is mainly a hotel, but it also has six penthouse apartments. 

Owners of the building, as well as the body corporate, took legal action in the High Court, claiming the former North Shore City Council had been negligent and were liable for the cost of repairs.

The council applied to strike out these claims, claiming councils only owed a duty of care in respect to residential buildings - not buildings of a mixed residential-commercial nature.

The Court of Appeal accepted the council's submission, while rejecting the owners' claims.

The owners appealed to the Supreme Court, and in a majority decision released yesterday, the court found their claim should not have been struck down.

Looking at past judgements, the court found councils do have a duty of care to all building owners when inspecting buildings.

Paul Grimshaw, a lawyer from Grimshaw & Co, which specialises in leaky home litigation, said the case shows the council's duty covers all buildings they have checked.

"This case says this duty is extended to all owners of buildings - be they residential, commercial, hospitals," he said.

"That's why it is so significant."

Grimshaw said any owner of any building that has been built over the last 10 years now had the ability to sue the council.

"Before this case, it was limited to residential only."

Grimshaw said he has acted for the owners of 6000 leaky homes, and each of them have been taken through the courts.

Professor Rosemary Tobin from the University of Auckland, who was cited in the judgement, said the implications from the decision are yet to be seen.

"It is going to be very interesting. The council will be liable to commercial owners who built before 1991," she said.

Commercial building owners will only be able to sue under the Building Act of 1991 if they have already started their proceedings, because they have to be started within ten years, Tobin said. 

However, for commercial buildings inspected after the Building Act 2004 came into force, it is still a legal grey area.

"Because the issue of the 2004 act was not directly in front of the judges, they left it open," she said.

"Basically, if your commercial building inspection took place after the 2004 act came into force, you'll have to wait until someone else brings a case - or bring it yourself."

Tobin said councils could see more legal action bought against them from commercial business owners for buildings inspected before the 1991 act.

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