The former North Shore City Council has won a Court of Appeal case, striking out claims against it for damage to the leaky Takapuna high-rise hotel Spencer on Byron.
The council was partially successful in the High Court but now has a more powerful decision, issued last month.
The case was not about whether the tower leaked, but rather who should pay for it to be fixed.
The Court of Appeal said the crux of the case was whether the council owed a duty of care to unit buyers and whether it was fair, just or reasonable to impose that duty on the council when it was carrying out its regulatory functions on a commercial building, according to its obligations under the Building Act.
It cited the Sunset Terraces case which went to the Supreme Court.
The Court of Appeal decided the council could not be held responsible for commercial decisions made by the unit buyers.
"We do not consider the council ought reasonably to have foreseen that purchasers of the residential apartments would place reliance on the council in a situation where they were effectively buying into an entire complex in which the residential component represented only a small fraction of a building functioning as a substantial hotel," the court said.
Among those who have stayed at the Spencer on Byron are Newstalk ZB broadcaster Murray Deaker and his wife, Sharon.
Mrs Deaker told the Herald the couple enjoyed the place and praised the property.
"We love it. It's fabulous. There's no noise, the service is great and we have not experienced any leaks."
The hotel's general manager, Greg Remmington, could not say where water came in, how often or during what weather conditions.
"The building and apartments don't belong to us. I'm in a difficult position because we don't own it. But the issues are not affecting our operations."
The court decision may not be the end of the long-running case.
Owners of units might take the case to the Supreme Court. They have 20 working days to lodge an application after getting the ruling.
Matt Josephson, the Grimshaw & Co partner representing a group of private apartment owners and the larger body corporate, could not say if an appeal would be lodged.
For the purposes of the hearing in November, it was accepted that the tower had several defects, including water coming in through the roof, the exterior cladding, the decks, the balustrades and even the joinery.
The building has not been repaired, but defects and damage are widespread throughout the tower.
The future durability and functions of all the units depended on the integrity of the exterior of the building, the court heard.
The exterior face of the walls of each apartment was the common property of all unit owners.
Multiplex built the tower between January and July 2001, and the council inspected it and issued code compliance certificates.
The hotel has a tennis court, gym, swimming pool, 249 studio and one-bedroom units from the second to the 19th floor, hotel rooms and suites and six penthouse apartments which are privately owned.
Most investors bought properties in 2001 and were granted the right to use their units 15 days a year but not to live in them permanently, except for the six private units.
An owner cannot legally live there until the lease expires with NZ Castle Resort and Hotels. That deal entitles the hotel operator to run the business from the building and use the units.
The Court of Appeal ruled that owners could not rely specifically on the council's code compliance certificates when entering into deals to buy units in Spencer on Byron, so the owners' claim of negligence against the council failed.
Spencer on Byron has:
* 249 hotel rooms
* 6 private apartments
* 23 levels
This article has been changed from an earlier version, which incorrectly said Murray and Sharon Deaker lived in the Spencer on Byron in Takapuna and owned an apartment there. The mistake was made in editing.