GREGORY ALLEN PILKINGTON V FIDELITY LIFE ASSURANCE COMPANY LIMITED HC WN CIV 2012-485-2017

GREGORY ALLEN PILKINGTON V FIDELITY LIFE ASSURANCE COMPANY LIMITED HC WN CIV 2012-485-2017 [30 October 2012]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV 2012-485-2017[2012] NZHC 3170BETWEEN GREGORY ALLEN PILKINGTONPlaintiffAND FIDELITY LIFE ASSURANCECOMPANY LIMITEDDefendantHearing: 29 October 2012Counsel: H A Cull QC and P A Morten for PlaintiffA S Ross and G J Peachey for DefendantJudgment: 30 October 2012JUDGMENT OF SIMON FRANCE JIntroduction[1] The plaintiff and the defendant are parties to an insurance contract. The insurance contract includes an income protection component. This was triggered in 2004 when Mr Pilkington became unable to work for what can be described as stress related reasons.[2] Mr Pilkington's claim was initially accepted, which meant he was entitled tomonthly income payments of approximately $14,000. However, issues appear to have continually arisen between the parties over on-going entitlement to the money, and management generally of the claim. After various skirmishes, including proceedings that were settled on an interim basis, matters came to a head in February 2010 when the defendant stopped payments.[3] Mr Pilkington issued new proceedings, seeking to ensure on-going payments, and reimbursements of missed payments. The previously settled proceedings were revived. The defendant countered with proceedings seeking to cancel the contract, and claiming reimbursement of payments made either from the outset, or from other dates.[4] Mr Pilkington sought and obtained an injunction requiring Fidelity Life to continue paying out under the policy until the proceedings were resolved. The injunction was limited in that it involved payments of about 50 per cent per month, and was capped at $70,000. That figure was protected by way of an independent surety. An appeal against the injunction was dismissed; the Court of Appeal was influenced by the limited or capped nature of the orders, and the protection offered by the surety.1[5] In February of this year, immediately prior to trial, the parties reached a settlement.A new dispute[6] Disagreement has again risen. Since the settlement, monthly payments have not resumed. The defendant wishes Mr Pilkington to undertake various fresh assessments by nominated persons. Mr Pilkington disputes the defendant's capacityto make the demands it is making. He says:(a) he has provided numerous reports from various medical people throughout the year and these satisfy both the requirements of the policy and the requests of the defendant;(b) some of the requests are not in any event required by the policy, and some of the persons nominated by the defendant do not hold the appropriate qualification.1 Fidelity Life Assurance Company Ltd v Gregory Allen Pilkington [2010] NZCA 424, at [52].[7] Generally the plaintiff says the defendant is treating the matter as if it were a new claim, and this is contrary to the settlement agreement.The present application[8] The plaintiff again seeks an injunction ordering the defendant to:(a) maintain payments under the policy until the proceedings are resolved;(b) pay a lump sum the equivalent of missed payments, and interest thereon;(c) refrain from seeking to require the plaintiff to sign a particular consent form in relation to seeing a nominated physician.[9] As I understand it, the defendant's position is that pursuant to the policy, thefailure, as it sees it, of the plaintiff to provide the information it has sought, including reports from its nominated persons, means that any entitlements the plaintiff may have immediately cease. However, immediately prior to the hearing the defendant filed an undertaking to:(a) pay half the monthly entitlement until resolution, as long as the plaintiff co-operates to obtain an early fixture;(b) reimburse half the missed payments, without interest.[10] The plaintiff does not accept the limited offer, and pursues its application for an injunction requiring the defendant to make full monthly payments. The defendant indicates its offer remains in place as an undertaking the Court can act on.Principles[11] The principles were set out in the Court of Appeal judgment issued in relation to the earlier dispute between the parties. In that ruling it was acknowledged that there was Canadian authority supportive of a more flexible approach to mandatory injunctions to pay money in this context of income protection. However, the Court considered the principles set out in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd remained the law,2 and allowed all relevant considerations to be taken into account.Serious issue to be tried[12] I accept there is a serious issue to be tried as regards the correct interpretation of the policy, and the respective positions of the parties in relation to on-going and repeated assessments. There may also be an issue as to the meaning of cl 3.4(2) of the Deed of Settlement.[13] I do not consider myself in a position to accept the broader submission thatthe plaintiff's case is sufficiently compelling to make that a factor strongly supportive of interim relief of the type sought here. I note as relevant context that the defendant, as recently as February this year, accepted that the plaintiff'scondition triggered entitlements under the policy and withdrew challenges to the legitimacy of the policy. What is therefore at issue is continuing entitlement. There is a body of evidence to indicate that health professionals regard Mr Pilkington as still being affected by his condition, but that is not necessarily the same issue as what steps must be taken under the policy to maintain entitlement to payments.[14] There is scope for legitimate debate about the meaning or impact of cl 3.4(2) of the settlement agreement. As for the requirements of the policy, it is not particularly clear in some of the terms it uses (medical referee being one). There may also be scope for argument around how often powers under the policy can be legitimately exercised. That will be fact specific and no doubt influenced by the2 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1988] 1 NZLR 16 (CA).expert opinion on Mr Pilkington's condition. Ultimately, whether Mr Pilkington or the insurer is in breach of the policy will be a trial issue, turning in large part on the proper interpretation.Balance of convenience[15] The defendant, if required to pay, risks the loss of its money if it ultimately succeeds. Whilst the plaintiff has given an undertaking as to damages, its value is hard to assess. Mr Pilkington describes in narrative terms the possible impact on him and his family of non-payment by the defendant of the monthly payments, but the reverse of those statements is that they cast doubts on the strength of any undertaking. I have no statement of assets and liabilities, and no budget.[16] The plaintiff's case for an injunction requiring payment of money focussed very much on the justice of the matter. Mr Pilkington's claim had been acceptedlong ago, but since then it had been, in the plaintiff's submission, constantly undermined. Serious allegations were made against him but withdrawn at settlement. He has been investigated and subjected to great anxiety, all in the context of a person repeatedly diagnosed with anxiety disorder. Now the defendant, despite settlement and despite numerous medical assessments from numerous independent experts, continues to deny liability. It has acted, in the plaintiff's submission, as ifsettlement has not occurred, and was again exacerbating Mr Pilkington's condition.[17] Immediate consequences deposed to by Mr Pilkington were the end of a home construction project with the loss of US$10,000 deposit, and the need to move from where the family had settled. This is because it is a resort area, and the spike in rentals during ski season would be too much in the absence of the regular payments. Mr Pilkington would again face disruption and relocation over a dispute which, each time it nears an actual hearing, the defendant settles.[18] I observe there is no evidence, and none could be expected, about the alleviated impacts of the proposal for partial payment advanced by the defendant. The offer came through shortly prior to the hearing, and it would not be reasonable to expect a response.[19] That said I consider the absence of proper evidence significant. Mr Pilkington received a significant sum of money as a result of settlement in February this year. In the absence of any evidence as to his current situation, I consider it would not be reasonable to require the defendant to pay the policy as ifthe plaintiff's arguments were correct.[20] More generally the balance of convenience favours the defendant. Mr Pilkington may lose the opportunity to purchase a particular house, but there is no evidence it is a unique property in any way. He may lose his deposit, but no doubt would seek to recover it if successful. He may, it seems, have to move from his present rental accommodation, and even his chosen city, but he can of course ultimately return there if successful. At the moment he is in a rental situation so is not losing his permanent home. In the end there is inconvenience, but little more (on the evidence available to me). On any standard analysis, damages would be an adequate remedy.[21] I do not dismiss the enhanced impact this non-payment may have on Mr Pilkington given his anxiety disorder, and given what has undoubtedly been a protracted battle with the defendant. But, if I proceed not on the basis of an overwhelming case but of a serious issue to be tried, the temporary impacts do not outweigh the consequences to the defendant. It will be required to pay money for an undetermined period concerning which, if it is successful, there are real questions as to its capacity to recover. By contrast, Mr Pilkington will suffer personal inconvenience but damages can address it.[22] I have not overlooked Mrs Cull QC's submission that, at least until August,any alleged non-compliance by Mr Pilkington could not have supported ceasing payments which should have started in April. This is contestable in that there appears to be a factual dispute about whether the required information has been provided. To order full repayment would be to treat the defendant as having no argument that the information provided by Mr Pilkington did not merit reinstatement of payments. I consider that is a trial matter.[23] Given the defendant's position, it is unnecessary for me to resolve whether I would have made any orders as to payment. The payments it has undertaken to make, approximately $7,000 per month, would appear on their face to be sufficientto remove any issue as to the plaintiff's ability to survive in the interim, albeit it may not be on the terms he wishes or considers he is entitled to.Conclusion[24] I direct, in terms of the defendant's undertaking:(a) that it immediately pay 50 per cent of all benefits that could have been paid from 5 April 2012 till now;(b) that it thereafter resume payment of 50 per cent of benefits that might be payable on a monthly basis, provided that the plaintiff submits the required form each month, completed by his GP.[25] The parties are to use their best endeavours to obtain a fixture. The defendant has flagged that if a fixture prior to the end of April 2013 is unavailable, it may wish to revisit its undertaking. Leave to apply to cease payment is given. Appropriate notice will be required.[26] The plaintiff's undertaking as to damages remains in place.[27] Concerning costs, I indicate that my assessment on this application is that they should lie where they fall. However, I formally reserve the question so that if it appears to the trial judge, having heard the matter, that because of the merits a different costs outcome is appropriate, that may be acted on.____________________________Simon France JSolicitors:H A Cull QC, Wellington, email: office@helencullqc.co.nzP A Morten, Barrister, Wellington, email: pmorten@missionchambers.comA S Ross, Partner, Chapman Tripp, Auckland, email: adam.ross@chapmantripp.comG J Peachey, Solicitor, Chapman Tripp, Auckland, email: gemma.peachey@chapmantripp.com