Firefighters were called to the mental health ward on August 22, where they dealt with ``extreme smoke-logging''.
The blaze, which had been started on a mattress and plastic cover, had been extinguished by hospital staff, it was revealed at the time.
Four of them ended up in hospital after inhaling the toxic fumes and police launched an inquiry.
A middle-aged man was charged with arson and yesterday appeared before the Dunedin District Court, where the case reached its conclusion.
The finding of insanity had been made last year and yesterday's hearing in front of Judge Dominic Flatley was to determine whether the defendant needed to be detained in a hospital as a special patient.
According to a ``very experienced clinician'', the judge said, detention was not required to manage the man's ongoing risk or to protect the public.
The defendant was at present managed on a compulsory treatment order.
Such orders are made by the court so a patient can receive treatment for up to six months. The patient is not required to stay in hospital to undertake that treatment.
Counsel Sarah Saunderson-Warner said things were at present ``going very well'' for her client.
He had been ``completely compliant''with the order, she said.
Judge Flatley said the defendant had been ``very unwell'' in the past but was now well managed.
The treatment he received would be reviewed regularly, the court heard.
The judge permanently suppressed the man's name because of his mental health difficulties and the fact it was not in the public interest for his identity to be revealed.
Both Ward 9A and 9B at Wakari Hospital were fully operational shortly after the fire.
