Councils could get sued more often for consenting faulty buildings after a "landmark" leaky homes decision, an Auckland lawyer says.
A Supreme Court decision released yesterday said the residents and owners of leaky building Spencer on Byron in Takapuna could 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 was negligent and was liable for the cost of repairs.
The council applied to strike out the claims, saying councils owed a duty of care only 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 judgments, the court found councils did 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 showed the council's duty covered all buildings it had 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.'
Mr Grimshaw said any owner of any building built in the past 10 years could now sue the council. 'Before this case, it was limited to residential only.'
Mr Grimshaw said he had acted for the owners of 6000 leaky homes and each had been taken through the courts.
Professor Rosemary Tobin from Auckland University, who was cited in the judgment, said the implications from the decision were 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 would be able to sue under the Building Act of 1991 only if they had already started proceedings, because they had to be started within 10 years.
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.'
Prof Tobin said councils could have more legal action brought against them from commercial business owners for buildings inspected before 1991.
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