The Insurance Council of New Zealand (ICNZ) has successfully challenged Christchurch City Council’s bid to make building owners strengthen existing properties to 67% of new building standards, up from the current 34%.

In a judgement published last Tuesday the New Zealand High Court ruled the city authority cannot use building regulations to raise the requirement to a level above 34%.

ICNZ took the authority to court seeking a review of its earthquake-prone, dangerous and insanitary buildings policy.

Justice Graham Panckhurst agreed with ICNZ that the city authority’s move to require strengthening of earthquake-prone buildings to a higher standard than in the Building Act exceeds its powers.

The judgement provides clarity and removes “a significant risk” that commercial premiums on buildings across New Zealand would increase over fears of other cities following Christchurch’s lead, according to ICNZ CEO Tim Grafton.

Justice Panckhurst says ICNZ was concerned the authority’s move would “increase the cost of earthquake repairs for building owners, who will in turn seek to claim against their insurers. The estimated increase to the repair bill of insurers may be several hundred million dollars.”

He says building repairs were put on hold pending the court’s decision and ICNZ claims if 67% strengthening is required “the cost of reinsurance will increase and the willingness of reinsurers to invest in the New Zealand insurance market may be compromised”.

Christchurch City Council contended most owners want to strengthen to 67% or more.

Canterbury University and the body corporate of an apartment building joined the action, filing affidavits detailing what the dispute meant for them.

All the university’s 240 buildings suffered earthquake damage and the university council wants to strengthen repairable ones to 67%, which it considers necessary to recoup student numbers following a 13% decline in 2011.

It expects to make an insurance claim of about $NZ500 million ($404.9 million) and to spend the same amount from its own funds. The cost difference between 34% and 67% strengthening is $NZ140 million ($113 million).

In light of the judgement, Christchurch City Council GM Regulation and Democracy Services Peter Mitchell says the council will continue to encourage owners to think carefully about structural strengthening.