Local councils must accept responsibility for negligent inspection of leaky homes, ruled the Supreme Court.
North Shore City, now part of Auckland City, failed in a concentrated attack against a legal principle holding it liable for repair costs when a negligent council inspection fails to identify that a residential building under construction might in the future leak.
This legal principle arose from a 1990s court case against Invercargill City Council.
The Supreme Court ruled there was no good reason to depart from the 1990s rule. Home-owners should expect the rule would apply and not be retrospectively overturned. Councils owe a duty to take care when inspecting homes in the course of construction.
It did not matter that the leaky residential building is a stand-alone house or part of a block of apartments.
Not only is the first buyer entitled to sue, but also subsequent purchasers who have to bear the cost of repairs.
The multi-million cost of repairing leaky homes will fall on ratepayers to the extent that a local authority did not have insurance cover for its losses or was not able to recover a contribution from architects, engineers or builders held partly to blame in particular cases.
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