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In a landmark decision, the Supreme Court has paved the way for owners of non-residential buildings to sue councils for leaky building syndrome.
The court decided the owners and body corporate of an Auckland apartment block can continue their multi-million dollar battle against the now defunct North Shore City council for negligence.
The owners of the building and the body corporate claim the council breached its duty of care when it passed the building as compliant with the building code.
The building, Spencer on Byron, is a 23-storey mix of hotel rooms and six penthouse apartments.
In a judgment released today, the court decided 4-1 that non-residential properties should also be owed a duty of care by the council.
This leaves the door open to businesses, schools and other mixed-used buildings to claim against the territorial authorities for negligence.
Chief Justice Dame Sian Elias, Justices Andrew Tipping, John McGrath and Robert Chambers found in favour of the body corporate.
Justice William Young dissented.
The majority says a duty of care is owed regardless of the nature of the premises.
In his judgment, Justice Chambers pointed out the decision would be restricted to work done by councils while the Building Act 1991 was in force.
Justice Young says given commercial buildings are owned by investors or owner/occupiers, any losses are business in nature.
He says it is inappropriate to spread business losses across the community as ratepayers would foot the bill.
The Supreme Court, in an earlier decision known as Sunset Terraces, had decided residential owners could sue territorial authorities. It left open the question of whether businesses could also.
Access the full judgment here:
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