The former North Shore City Council has lost a bid for the Government to pay compensation for a leaky building development of a block of apartments known as the Grange.
The Supreme Court has struck out the council's claim against the Attorney General, as a successor to the Building Industry Authority, which was dissolved in 2004.
The council had paid unit holders who claimed it was negligent in issuing building consent.
It in turn took legal action against the the BIA to get that money back, claiming the Authority owed the council a duty of care and should have told them there were potential problems with the council's building control practices.
The Supreme Court has ruled under the Act the BIA lacked the necessary control over the council to support a duty of care, when undertaking its 1995 review.