AMI Insurance has been ordered to pay for damage to a leaky building in the Auckland suburb of Epsom that was deliberately set alight.

AMI refused to pay out on the claim by the Devcich family trust, claiming that business broker Paul Devcich set fire to the house himself to get rid of the blighted property.

But Justice Graham Lang said in a judgment from the High Court at Auckland that while suspicion fell on Mr Devcich, he was not sufficiently sure that Mr Devcich had ignited the blaze to rule in AMI's favour.

He said that the standard of proof required for AMI to prove its case was not far off the criminal standard of proof beyond reasonable doubt.

During a two-week trial in June, the judge heard that a neighbour alerted the fire service to the blaze in Coronation Rd shortly after Mr Devcich left for work on April 24 last year.

Subsequent investigations by police and the fire service indicated that the blaze had been deliberately started with petrol.

Although the police decided not to prosecute Mr Devcich for arson, AMI rejected the Devcichs' claim for repairs to the fire damage to the house and to a subsequent burglary when nearly $20,000 of property was stolen.

AMI claimed that Mr Devcich had lit the fire himself, using some sort of timing device, while his wife was away in Australia.

The trust denied the allegation, saying it was more likely that two neighbours with whom the Devcichs had been "in a state of conflict" for a considerable time were responsible.

However, Justice Lang said it was unlikely that the dispute with the two men, who have permanent name suppression, was sufficiently serious to cause them to set fire to the Devcichs' home.

AMI claimed that Mr Devcich had a "strong motive" for burning down the house.

"This arises out of the fact that the house had high moisture readings, and he had also detected at least one leak.

"The property was also clad in plaster, so it immediately presented the perception of being a leaky home," Justice Lang said.

At the time the Devcichs were trying to sell the property for $890,000, without success.

AMI contended that a successful insurance claim would enable the Devcichs to live in rented accommodation at AMI's expense while the property was being repaired, which would also solve the moisture problems and the property could then be sold at full value.

Mr Devcich rejected AMI's allegations that a fire was a convenient way for him to solve the problems with the property.

The judge said he accepted AMI's argument that Mr Devcich had a motive for starting the blaze.

However, the judge said he had concerns about the timing of the fire, because he had concluded that Mr Devcich left the property 15-20 minutes before the fire ignited.

That would have meant that he would have to have used a delayed timing device or the assistance of another person and there was absolutely no evidence to support either of those theories.

The judge said he could not discount the possibility that an intruder lit the fire.

He said the evidence as a whole left him in a state of genuine uncertainty.

"I am not sufficiently sure that Mr Devcich started the fire to decide the case in AMI's favour.

"For that reason I have concluded that the plaintiffs are entitled to be indemnified by AMI under their insurance policies."

- NZPA