The Supreme Court has overturned a Court of Appeal decision and ruled that the owners of several leaky apartments in a luxury hotel complex on Auckland's North Shore are allowed to continue their battle to sue the old North Shore City Council.

In a decision released this morning the Supreme Court ruled that the owners' appeal was allowed and it could be taken back to the High Court.

But it did not make any findings as to whether any of the defendants - including the former council - were negligent.

At the High Court the building's owners and the body corporate argued that the council and builders had been negligent and were liable for the cost of repairs to the 23-storey Spencer on Byron Hotel in Takapuna.


The building's owners and the body corporate won.

But the council appealed that decision to the Court of Appeal saying councils owed only a duty of care in respect of residential buildings, not mixed residential-commercial buildings.

The Court of Appeal ruled that the owners of three apartments in the building could not sue the council for negligence.

But the owners then appealed that ruling to the Supreme Court.

The Supreme Court had to decide whether the council owed a duty of care when approving plans and inspecting construction of a building which was not purely a residential building.

Repairs could cost $20 million.

The Supreme Court's decision, out today, said recognising a duty of care in respect of commercial or mixed use buildings was consistent with previous rulings in New Zealand.

Supreme Court judges, Justice Sian Elias, Justice Andrew Tipping, Justice John McGrath and Justice Robert Chambers, ruled the relationship between the owners and the council was close enough to give rise to duty of care.


They ruled there was no principled basis for distinguishing between the liability of those who played a role in the construction of residential buildings and the construction of non-residential buildings.

The Auckland Council took over the North Shore City Council in 2010 as part of the super city amalgamation.