The Anglican Church is asking for clarification in the High Court over whether it can fund the new so-called cardboard cathedral with insurance money from the severely damaged ChristChurch Cathedral.
The hearing in Christchurch follows another late last year in which Justice Chisholm questioned whether the money could be used on another site.
The church's lawyer, Jared Ormsby, told the court on Wednesday the money should be for the benefit of the wider Anglican parish, not just the damaged building.
Mr Ormsby said the cardboard cathedral is crucial for the survival of the congregation.
The Anglican Church plans to spend $4 million of the payout on the $5.3 million building made from giant cardboard tubes which is being erected near Latimer Square.
Francis Cook, a lawyer representing the Great Christchurch Buildings Trust, told the court spending insurance money on another building was dangerous and would put the future restoration or rebuild of ChristChurch Cathedral in jeopardy.
Justice Pankhurst has reserved his decision.