Christchurch Diocese has avoided censure for incorrectly using funds from an insurance payout to help pay for the Transitional Cathedral.

A High Court judgment released on Wednesday said it was sufficient for the Church Property Trustees (CPT), which holds property on various trusts for the diocese, to repay the $4 million it used from the quake-damaged Christ Church Cathedral insurance payout to construct the new building near Latimer Square.

The CPT repaid the money with funds diverted from a trust account after an interim High Court judgment in 2012 said the $39m payout for the Christ Church Cathedral could only be used for work on the existing structure or its successor in the Square.

The Great Christchurch Buildings Trust – a pressure group led by former MPs Jim Anderton and Philip Burdon – took legal action, believing the CPT should be penalised for its breach.

Justice Rachel Dunningham, who heard the respective arguments at a hearing in Christchurch in April, said the CPT would not be held liable.

The CPT was not at fault for under-insuring Christ Church Cathedral because it had based its policy on an estimate that did not reflect the value of the property.

CPT lawyer Jeremy Johnson said the church was pleased with a judgment that ended a judicial process spanning three years.

"One of the key issues was whether CPT should be liable for anything else even though it had repaid the money . . . by repaying it they basically did the right thing."

Mr Johnson said a decision on what the diocese had planned for the future Christ Church Cathedral was expected in the next few months.