Residents of a leaky Auckland building have won the right to carry on their court battle claiming negligence and compensation for the costs of repairs.
The building, Spencer on Byron, in Takapuna is a mix of hotel rooms and six penthouse apartments.
Many of the 250 owners and the body corporate took a case to the High Court against the former North Shore City Council and the builders, and won.
The council appealed to the Court of Appeal and won there.
The body corporate applied to the Supreme Court for leave to appeal, and the court on Thursday has allowed the appeal.
A majority of the court says the former council had a duty of care to the building owners.
It says the owners can go ahead with their claim against the council and other defendants, but notes at this stage, no findings have been made as to whether the council or anyone else was negligent.
Wayne Powell, a spokesperson for the residents and owner of a unit, says the decision is a major victory.
"It's been a long time waiting for a victory on this one. Our legal team were quietly confident all the way along, and we were quite confident once we actually were granted leave to apply to the Supreme Court we thought that we must at least have a 50-50 chance."
Mr Powell says residents would prefer an out-of-court settlement with the now Auckland Council, rather than proceeding with another court case scheduled for next year.
Other councils could be liable - lawyer
A lawyer representing the owners of the Spencer on Byron building says councils throughout New Zealand could have to pay out hundreds of millions of dollars for negligence following the Supreme Court ruling.
Paul Grimshaw expects the ruling will prompt a flurry of new cases and estimates each leaky commercial building could cost between $5 million to $20 million - but other parties involved, such as contractors and builders, will also be liable.
While councils have previously been liable for negligence for residential properties, the Supreme Court says that now applies to all types of buildings. Mr Grimshaw says that sets a major precedent.
"Whether it be a church, a hotel, a commercial building - any type of building that was built in the last 10 years - if it was inspected by the council, the council has a potential liability for that building if inspections were negligent."
Another lawyer who represented residents, Matt Josephson, says all councils will need to be more careful and tighten up regulations - because if they get it wrong now, they could be sued.