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

Guidance for Building Consent Authorities in the wake of Cyclone Gabrielle

Natural hazards at a time of significant uncertainty – guidance for Building Consent Authorities in the wake of Cyclone Gabrielle Cyclone Gabrielle was one of the largest natural disasters in the history of Aotearoa New Zealand.  Many North Island councils (as well as some South Island ones) have grappled with how to approach building consenting…

Building Act prosecution of Bella Vista Homes builder / developer finally at an end

The curtains have come down on one of the country’s longest running Building Act prosecutions after the Supreme Court had the final say and declined Danny Cancian’s application to bring a third appeal against his convictions. Background Mr Cancian, along with other defendants, including his company Bella Vista Homes Limited, was charged by Tauranga City…

Alcohol LAPse (pun intended)

Of the 33 provisional local alcohol policies (LAPs) developed since 2017, 32 have been appealed, with the average duration from notification of a provisional LAP to adoption being 790 days! Because of the time and costs involved in fighting these appeals, many councils (representing over 50% of New Zealand’s population) have halted or abandoned the…