Taylor v Asteron Life Limited - [2018] NZHC 2939

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2015-485-1032

[2018] NZHC 2939

BETWEEN
PETER JAMES TAYLOR

Plaintiff

AND

ASTERON LIFE LIMITED

Defendant

Counsel:
Andrew Beck for plaintiffs

Christine Meechan QC for defendant

Judgment:

13 November 2018

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[On the papers]

[1] From August 1994 Asteron Life Ltd insured Mr Taylor against total disability, defined in the policy as being “ … unable to work in your usual occupation for more than ten hours per week”. The benefits payable were monthly payments of a specified amount.

[2] Some years later Mr Taylor became unwell. He made a claim pursuant to the policy. Asteron Life Ltd accepted the claim. From January 2010 it paid the monthly benefits.

[3] In September 2014 Asteron Life Ltd ceased paying the monthly benefits on the basis that it had sought but not received information from Mr Taylor as to his condition. This meant – it said – that Mr Taylor was in breach of the terms of the policy.

TAYLOR v ASTERON LIFE LIMITED [2018] NZHC 2939 [13 November 2018]

[4] In December 2015 Mr Taylor commenced this proceeding seeking a declaration that Asteron Life Ltd was not entitled to cease paying benefits. There has been much interlocutory skirmishing. Especially concerning discovery. This is the latest round.

[5] Recently, Asteron Life Ltd has become aware that the insurance broking business of which Mr Taylor was a shareholder and director, P J Taylor & Associates Ltd, has been sold. By notice of application filed on 24 September 2018 the defendant seeks discovery of:

The agreement for the sale and purchase and/or transfer of Mr Taylor’s broking business and any other documents which set out the terms of the sale.

[6] Mr Taylor’s notice of opposition filed on 4 October 2018 denies the defendant’s entitlement to this category of documentation on relevance grounds.

[7] Asteron Life Ltd’s argument is that in order for Mr Taylor to be entitled to cover, his medical condition must be the cause of his incapacity. It says that, upon the sale of the business, Mr Taylor may have been required to agree to a restraint of trade prohibiting him from competing with the purchaser, at least within a geographical area and for a period of time. The argument is that if that is correct then a significant cause of Mr Taylor’s incapacity is the contractual commitment he has made.

[8] In developing this argument the defendant relies heavily on this Court’s decision in Blanshard v National Mutual Life Association of Australasia Ltd.1

[9] In that case the parties had entered into insurance arrangements on materially similar terms. Harrison J summarised the facts that are relevant for present purposes as follows:

[2] In mid 1995 Mr Blanshard was diagnosed as suffering from Meniere’s disease, a disorder of the inner ear. It’s most prominent symptoms are vertigo
– a spinning sensation which affects balance functions – hearing loss, and tinnitus…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZHC 2939
Decision Date: 13 November 2018

CaseChat Overview and Summary

The plaintiff, Mr Taylor, commenced proceedings in the High Court of New Zealand seeking a declaration that Asteron Life Ltd was not entitled to cease paying benefits under a total disability insurance policy. Asteron Life Ltd had ceased paying benefits on the basis that it had not received information from Mr Taylor as to his condition, which it claimed was a breach of the policy terms. The defendant sought discovery of documentation related to the sale of Mr Taylor’s insurance broking business, arguing that the sale might have included a restraint of trade, which could have contributed to Mr Taylor’s incapacity. Mr Taylor opposed the application, arguing that the documents were irrelevant.

The legal issues before the court were whether the documents sought by Asteron Life Ltd were relevant to the current proceedings and, if so, whether there were any grounds to compel Mr Taylor to provide them. Asteron Life Ltd argued that the documents were relevant, as they might indicate whether Mr Taylor’s incapacity was due to his medical condition or the restraint of trade agreement. The court had to consider whether the principles in Blanshard v National Mutual Life Association of Australasia Ltd applied in this case and whether the sale of the business could be a defence to Mr Taylor’s claim.

The court found that while the Blanshard case provided some guidance, there were significant differences between the cases that might affect its applicability. The court noted that Blanshard had entered into the restraint of trade agreement before making the insurance claim, whereas Mr Taylor sold his business years after making his claim. The court also considered whether it would be fair to prevent Mr Taylor from selling his business years later, potentially jeopardising his insurance entitlements. The court concluded that it was difficult to imagine that the law would permit such an outcome. However, the court noted that it was not its role to determine the merits of the arguments. Instead, it had to decide whether the documents were relevant to the current pleadings. Since the sale of the business was not pleaded, the court found that Mr Taylor was entitled to argue that it was not before the court. Nevertheless, the court found that Asteron Life Ltd needed the documents to determine whether there was any foundation for a new defence. The court also noted that Mr Taylor, as a shareholder and director of the broking business, was likely to have possession or control of the documentation sought. Finally, the court considered the commercial sensitivity of the transaction and directed that the parties to the agreement be notified of the application and the orders made.

The court granted the application for further and better discovery, directing that Mr Taylor, if in possession of the documentation, must provide it to Asteron Life Ltd’s solicitors and counsel only, without copying or discussing it with any other party. The court also directed that Asteron Life Ltd notify the parties to the agreement of the application and the orders made. If Asteron Life Ltd’s advisers determined that there was a basis for persisting with the proposed new defence, an application for further directions could be made. At that point, the parties to the agreement could seek ongoing confidentiality orders if necessary.

Orders