Council payout may set legal precedent

A council has been forced to pay out more than $400,000 in a leaky building case that could set a precedent for future legal settlements.

Insurers for the Waikato District Council paid the $407,000 settlement - plus $65,000 in court costs - in a dispute over leaks at a $1.35 million riverside mansion near Hamilton.

A trust that owned the 10-year-old house took the council and others to task for negligence and other issues over its failure to do building inspections.

The council backed down on the eve of the court case, and paid out businessman and former home owner Victor Rutherford.

But the parties could not agree on costs.

Justice David Baragwanath ruled in the High Court at Auckland that Mr Rutherford was due a further $65,000.

The case was unusual because the house cladding was Hinuera Stone.

Most leaky buildings in New Zealand have a seamless plaster finish.

But the effect for Mr Rutherford was the same, when the cladding failed and water came into his house.

After repairs the house sold for only $850,000.

Auckland lawyer Paul Grimshaw, who represents about 600 leaky home owners, believes the settlement and costs in the case could set a precedent.

Few details have so far emerged of settlements over leaky buildings, as both owners and councils are usually keen to avoid publicity.

Councils have generally settled cases before they reach court, in case judges' decisions are used against them in future.