Leaky tower owners going back to court

The Spencer on Byron Hotel in Takapuna. Photo / Dean Purcell

Owners of one of the country's tallest apartment towers will go into battle against city hall in the Supreme Court next year.

Investors in Takapuna's 23-level Spencer on Byron are fighting Auckland Council for their right to compensation over leaks throughout the complex. The Supreme Court this month granted them the right to fight.

"The approved ground is whether and to what extent the respondent local authority owed a duty of care to the body corporate and/or all or some of the appellant unit owners in exercising its regulatory functions under the Building Act 1991 in relation to the construction of the Spencer on Byron building which contains a mixture of non-residential and residential apartments," the court notice said.

Body Corporate 207624 and unit owners are the appellants and Justices Blanchard, Tipping and McGrath will hear the case in the first half of next year.

In May, the former North Shore City Council 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 in May got a far more powerful decision.

The litigation has not been 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 and where eventually owners of an apartment block on the North Shore could get compensation.

But 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.

Matt Josephson of Grimshaw & Co is representing the apartment owners.