Enclosing an insulated stainless steel chimney passing through a living space.

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We have an existing Selkirk insulated chimney (24 years old) passing through an attic space which we are currently developing as a living space. Our contractor has built a 2x4 chase around the chimney and the ceiling and walls have been insulated and vapour barriers installed. How do we treat the chase? The original literature which came with the chimney says that we should not insulate the chase if the insulation (combustible or not) comes within 2" of the chimney. Should we just vapour barrier the chase and drywall it?