A Dunedin man will have to return more than $370,000 to Asteron Life after the Court of Appeal agreed he was not entitled to claim all the benefits paid to him by the insurer.
According to court documents, financial adviser Peter Taylor took out an income protection policy with Asteron (then known as Sun Alliance) in 1994. He made a claim in July 2010 saying he had “…significant medical problems and was totally disabled”, and that he had stopped all work in December 2009.
Asteron accepted Taylor’s claim with supporting medical evidence and started making payments to him, including a backdated amount to 21 January 2010 of $51,835. Payments were made to Taylor from January 2010 until September 2014 when payments were suspended
Taylor provided monthly reports to Asteron describing his medical condition, whether he had been able to work, and income earned.
Court documents show Taylor later provided financial statements, including signed accounts for the year ended 31 March 2014 for a company called Peter J Taylor and Associates that had received income of commission payments totalling $551,491.
Not satisfied with Taylor’s explanation about the income, Asteron suspended payments to him in September 2014. In 2015 Taylor took Asteron to the High Court claiming he was entitled to be paid under the policy. The insurer counterclaimed for repayment of all sums paid to Taylor.
Taylor’s claim was unsuccessful, and Asteron’s counterclaim succeeded. Taylor was ordered by the High Court to pay Asteron $371,286.70 plus interest and costs.
Taylor’s subsequent challenge to the judgment was heard at the Court of Appeal on 17 June and was dismissed in a decision released 19 August. However, the ruling did grant appeal against a modest interest and costs component of $51,835.64 awarded to Asteron by the High Court – but left it to the parties to attempt resolution of the issue.
Court documents show Taylor did not establish he was ‘totally disabled’ between September 2014 (when Asteron suspended payment) and April 2016 (when Asteron cancelled the policy).
“Nor does the evidence establish that Taylor would be entitled to any payment in that period even if he were totally disabled,” said the court.
The court added that Taylor’s income from his insurance broking business – which he sold in June 2018 – was at a “…level that resulted in full abatement of any benefits he might otherwise have been entitled to under the policy during that period”.
Appeal Court judges also found Taylor’s medical condition did not meet Asteron’s policy definition of ‘totally disabled’ with Taylor’s staff saying he worked around four hours a day and was “actively involved in the business”. Disability payouts were only due if Taylor worked a maximum of 10 hours a week.
Because the Judge did not find Taylor’s initial claim made in July 2010 involved dishonest statements, Asteron’s claim, which was founded solely on the allegation that Taylor had dishonestly understated the hours he was working in his business, could not succeed in respect of the initial period of January 2010 to July 2010.
The Court of Appeal judgment said Taylor had not acted in good faith saying: “He is not able to resist repayment of money he has dishonestly secured because he says he has spent money on a holiday house, two luxury cars, and holidays to the Pacific. For that reason the defence is not available.”
Taylor may further appeal to the Supreme Court but would need a grant of leave from the Court to do so. The prospect of such a grant is considered unlikely.