Alan and Joan Sleight have been battling in court for more than three years after finding problems with repair work beginning in 2014.
In a reserved decision on Friday, Justice Gendall ruled insurer IAG, project manager Hawkins and builders Farrell Residential are jointly liable for repair costs of $389,848.
Son-in-law, Nigel Maxey said it shows IAG is responsible for defective work under its managed repair scheme.
"Alan and Joan should have been in control of their own lives, making decisions about how to live out their twilight years. Instead they've had an appalling nightmare to navigate over the last six years.
"It has been an incredible strain on the whole family."
He said it is a test case because many other homes are in the same position.
The problems started six months after the repair work began in February 2014.
Brick cladding needed to be replaced and a new foundation required, the $319,000 job should have been completed in around six months.
When it became apparent that the project was significantly behind schedule, Nigel got involved to help keep things moving and he found there were also issues with the quality of work.
"As we became increasingly concerned about the quality of work, we had to engage independent experts to check the work Farrells had done.
"It became clear there were major problems with the repairs, that the parties involved were either unwilling or incapable of resolving," he said.
They terminated the contract in 2015and went back to IAG.
"They basically said, sorry, the contract is between you and Farrell's, this is nothing to do with us.
"It has been a long and exhausting process, but the court has decided that the defendants were liable because the repair work did not meet the policy standard and they were in breach of the Consumer Guarantees Act."
