Supreme Court has final say: Napier City Council the victors in long running dispute

The Supreme Court has upheld the Court of Appeal’s decision and dismissed the appeal of Local Government Mutual Funds Trustee Limited (RiskPool), finding that Napier City Council is insured under its policy with RiskPool for non-weathertightness related defects.

The Supreme Court’s decision brings to an end a long running dispute of significance to councils and insurers in this space and provides certainty as to how these types of insurance policies will be interpreted in certain circumstances.

We have previously set out the background in some detail in our articles relating to the High Court decision and the Court of Appeal decision.

In summary, this case arose out of a c. $18M building defect claim against the Council by the Body Corporate and owners of units in a multi-unit apartment block called the Waterfront Apartments in Napier. The claim involved a mix of weathertightness, structural and fire-proofing defects. It settled at mediation for around $12M.

The Council made an insurance claim to its insurer RiskPool.  RiskPool declined cover.  It said that as the claim involved weathertightness issues, the entire claim was excluded under the weathertightness exclusion clause.

The Council disagreed. It said that it was covered for non-weathertightness defects, such as structural and fire-proofing defects.

High Court

The High Court found in favour of RiskPool. It upheld the insurers’ decision to decline indemnity in its entirety, finding that a single claim including a mix of defects could not be broken down into its component parts and some excluded under the protection wording while others were covered.

Court of Appeal

The Court of Appeal disagreed with the High Court.  It held that the exclusion clause only removed cover for the claim to the extent that it arose out of weathertightness defects, and that any other part of the claim that fell within cover, such as non-weathertightness defects, could not be excluded.

Supreme Court

The Supreme Court agreed with the Court of Appeal. It found that the purpose of the exclusion clause was only to exclude weathertightness defects, and that clearer language would be required to exclude non-weathertightness defects as well.


This is an important decision in the weathertightness/insurance/liability space.  It is common for building defect claims to be ‘mixed’.  The Supreme Court’s decision makes it clear that non-weathertightness defects that can be separated from weathertightness defects in terms of damage and loss will be covered under a professional indemnity insurance policy unless specifically excluded.

As with any coverage issue, the starting point will still be the terms of the insurance policy.  Subject to those policy terms, a careful analysis will still be needed as to what, if any defects, can be said to be non-weathertightness defects, which will usually require expert input.

Related news

Court of Appeal finds for council in pool fence dispute

In a win for councils nation-wide, in Tasman District Council v Buchanan, the Court of Appeal has overturned a decision relating to councils’ duty of care when inspecting residential swimming pools – holding that councils do not have a duty of care when carrying out pool inspections, and that the purpose of pool fencing legislation…

High Court throws out claim against Council

High Court throws out claim against Council because of lawyers’ failure to serve within time In a timely reminder to lawyers to pay close attention to service requirements under the High Court Rules, or otherwise risk facing a claim in negligence, the High Court in a decision last week declined the plaintiff’s application for an…

Welcome to the firm Cori

Cori brings with him over two decades of experience as an infrastructure funding, developments and property lawyer in local and international law firms, including an extended recent period working inhouse as one of the lead project and development lawyers at Auckland Council. His arrival is an exciting time for Rice Speir, as his wealth of…