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Leaky Building Update

There have been some important recent developments involving leaky buildings.

In a recent decision, the Supreme Court has increased the scope of a council’s liability in certain circumstances.

In Body Corporate No. 207624 v the North Shore City Council (concerning the Spencer On Byron) the Supreme Court held that councils owe a duty of care to all owners of buildings arising from functions carried out by them under the Building Act 1991 ("the 1991 Act"). This is an important development because previous Court decisions had drawn a distinction between residential and commercial properties when determining whether or not a council had a duty of care.

In the Spencer On Byron case, the property is used both as a commercial property and a residential one (a majority of the rooms were hotel rooms but there were also six residential/penthouse apartments). In the Court’s judgment it was determined that councils owe a duty of care in their inspection role to owners of premises, both original and subsequent, regardless of what the building is used for. It also stated that the same duty applied to building certifiers who may have been appointed by councils to carry out inspections on their behalf under the 1991 Act. The judgment relates only to the 1991 Act and it is yet to be seen if these principles will also apply to the Building Act 2004.

Limitations on claimant criteria

There are some hurdles to benefiting from the "Spencer On Byron" judgment:

  • The judgment applies only to building carried out whilst the 1991 Act was in force (prior to the 2004 Act).
  • Civil proceedings may not be brought against anyone under the 1991 Act 10 years or more from after the act or omission in question (for example up to 10 years after the date of the council issued code compliance certificate, if that is the document relied on in litigation).
  • The council’s responsibility is limited to the exercise of reasonable care solely in terms of ensuring construction in accordance with building code.

These constraints are likely to impose significant hurdles for claimants despite the recent decision. As things currently stand, proceedings relating to acts or omissions occurring before June 2003 may be time barred, and given that parts of the 2004 Act came into force in November 2004, the window for claims under the 1991 Act is small and constantly getting smaller.

On the other hand, the judgment opens up claims for past and present owners of both residential and commercial buildings and these issues do not apply solely to leaky buildings. Indeed other acts of negligence may also be pursued pursuant to these principles.

It will be interesting to see whether the Courts determine that the 2004 Building Act is to be applied in a similar manner.

The area of leaky homes/buildings and construction law in general is constantly evolving and highly technical. We have considerable experience in this field and are very happy to assist owners of leaky homes or buildings as well as parties accused of causing defects (be they builders, developers, sub-trades or architects).

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