Hugh Roderick Catherwood took Asteron Life Limited to the Court of Appeal, claiming it breached its contract. Photo / 123RF
Hugh Roderick Catherwood took Asteron Life Limited to the Court of Appeal, claiming it breached its contract. Photo / 123RF
A lawyer diagnosed with cancer and given a bleak long-term prognosis is suing his insurance company over a $1.2 million payout he didn’t receive, despite being in remission.
Hugh Roderick Catherwood claims his insurance company breached its contract when declining to pay him the full $1.2m in life insurance afterthe cancer diagnosis.
However, the company pushed back, stating he did not qualify for the payout as treatment was available to him that would likely increase his chance of survival.
Catherwood, a senior Christchurch lawyer, had maintained a life insurance policy since 1976, and in 2009 at the recommendation of his broker, entered into a life insurance scheme with Asteron Life Limited, the Court of Appeal has heard.
The policy provided a death benefit that would be paid should Catherwood die and promised to pay if he became terminally ill. In 2012, the benefit had reached more than $1.2m.
In July 2018, Catherwood’s wife passed away from breast cancer, prompting him to have medical tests, despite feeling healthy.
To Catherwood’s shock, the tests revealed a tumour at the top of his stomach, close to the oesophagus and diaphragm. In January 2019 he was diagnosed with oesophageal adenocarcinoma, a type of stomach cancer.
By the end of that month, Catherwood was having problems swallowing and was told he would likely die in 12 months if he didn’t get treatment.
The argument in the Court of Appeal at Christchurch boiled down to the interpretation of the life insurance policy wording. Photo / George Heard
Catherwood began eight weeks of chemotherapy followed by surgery in May of that year. He then had a further eight weeks of chemotherapy once he had recovered from surgery.
Although Catherwood was told his chances of survival would improve following the surgery and chemotherapy, he was still considered to have less than a 50 per cent chance of being alive in the next five years.
He made a claim under his trauma recovery insurance and received $564,185.
However, Catherwood said he should have received a full payment of $1.2m in life insurance from Asteron, as he met the definition of being terminally ill.
Asteron’s policy stated an insured person was “terminally ill” when “your life expectancy is, due to sickness and regardless of any available treatment, not greater than 12 months”.
Asteron refused to pay as treatment was available to Catherwood which would increase his chance of survival.
Catherwood took Asteron to the High Court for breaching the contract, however in a judgment released in December last year, Justice Rachel Dunningham ruled in favour of Asteron.
Catherwood, who is now cancer free, took his case to the Court of Appeal claiming Justice Dunningham failed to interpret the relevant definition and wording in Asteron’s life insurance policy.
On Tuesday at the Court of Appeal in Christchurch, Catherwood’s lawyer Henry Holderness said the words “regardless of” have “one ordinary and plain meaning”.
Asteron’s policy describes someone as being terminally ill when life expectancy is less than 12 months due to sickness regardless of available treatment.
Holderness said Justice Dunningham made an error in reaching the conclusion that the words “regardless of” meant despite available treatment.
The judge reached the view that because treatment was available to Catherwood he did not qualify for the life insurance payout.
Holderness disagreed with this and argued that the words “regardless of” should have been taken to mean “disregarding” or “not taking into account” available treatment, meaning Catherwood should receive the payout.
It was confirmed Catherwood would still receive the payout when he died.
Holderness described Asteron’s policies as a “labyrinth” and needing to be read in “great detail”.
However, Christine Meechan, KC, for Asteron, said for Catherwood to be successful in his appeal he would need to prove he had been diagnosed with cancer and despite treatment, would likely die within 12 months.
Asteron has since changed the wording in its policy, now defining “terminal illness” and “terminally ill” to mean “your life expectancy is, due to sickness and even with available medical treatment, not greater than 12 months”.
Meechan described the case as an “interpretation issue” but said the judge was correct in her understanding of the policy.
She said Holderness’ belief that the policy could be interpreted in only one way was “unrealistic” and it was reasonable for an insurer to not pay the full death benefit unless it was satisfied the insured would die.
Meechan said the idea of people being paid significant amounts of money when they are not going to die was not a reasonable expectation.
The judges reserved their decision.
Emily Moorhouse is a Christchurch-based Open Justice journalist at NZME. She joined NZME in 2022. Before that, she was at the Christchurch Star.
