An early insurance payout in excess of $1.2 million hung on one of two meanings for the phrase ‘regardless of’ as Christchurch lawyer Hugh Catherwood unsuccessfully challenged Asteron Life’s refusal to pay out on the terminally-ill option of his life insurance.
In 2018, a routine medical examination identified Mr Catherwood as having an oesophageal adenocarcinoma with a tumour at the top of his stomach. The Court of Appeal was told he had for nearly fifty years paid for life cover. The policy in operation at time of his 2018 cancer diagnosis was an Asteron ‘SmartLife Policy’ offering several types of cover: trauma cover following major surgery, life cover payable on death, and terminal illness cover where the amount payable on death could be paid out early on becoming terminally ill resulting in a life expectancy of less than twelve months.
Mr Catherwood underwent comprehensive surgery to remove his tumour, followed by chemotherapy. Asteron paid $564,000 for a claim under his trauma recovery option.
A subsequent million dollar claim under his terminal illness option was disputed. Mr Catherwood’s surgeon considered likelihood of death within twelve months following surgery as being low; less than ten per cent.
Mr Catherwood said wording of his terminal illness cover was plain; payment was due where life expectancy, ‘regardless of’ any available treatment, was not greater than twelve months. Doctors had told him that without surgery he would be dead within a year. He was diagnosed with a terminal condition. That fact qualified him for a terminal illness payout, he said. It was a contractual entitlement, despite his successful surgery and survival beyond twelve months, he claimed.
‘Regardless of’ has two dictionary meanings, the Court of Appeal said. It could mean ‘disregarding’ or ‘despite.’ Mr Catherwood said ‘regardless of’ meant death was likely within twelve months disregarding available medical intervention; Asteron said ‘regardless of’ meant a payout was made if death was imminent despite possible medical treatment.
Asteron policy wording used the phrase ‘regardless of’ in other places, used in each instance to mean ‘despite,’ the Court of Appeal said. The same meaning applied to the policy’s terminal illness option, it ruled. Mr Catherwood did not qualify for a terminal illness payout. A terminal illness was diagnosed, but available medical treatment meant death was unlikely within the next twelve months.
Mr Catherwood, or his estate, may still collect in the future. The court was told his policy remains in force as he has continued paying premiums when due.
Catherwood v. Asteron Life Ltd – Court of Appeal (9.08.23)
23.134