Reported Decision:
(2002) 12 ANZ Insurance Cases 61-542
New South Wales
Supreme Court
CITATION: Max Hams & Anor v CGU Insurance Limited [2002] NSWSC 843 FILE NUMBER(S): SC 50022/01 HEARING DATE(S): 27/8/02 JUDGMENT DATE: 27 August 2002 PARTIES :
Max Hams (First Plaintiff)
Judith Hams (Second Plaintiff)
CGU Insurance LimitedJUDGMENT OF: Einstein J
COUNSEL : Mr M Cashion SC (Plaintiffs)
Mr P Taylor SC (Defendant)SOLICITORS: Maurice Blackburn Cashman (Plaintiffs)
Deacons (Defendant)CATCHWORDS: Interest - S.57 Insurance Contracts Act, 1984 - Date from which it was unreasonable for insurer to have withheld payment on claim - discretionary judgment LEGISLATION CITED: Insurance Contracts Act 1984 CASES CITED: Bankstown Football Club Limited v CIC Insurance Limited (unreported NSW Supreme Court, Cole J, 17 December 1993)
CIC Insurance Limited v Bankstown Football Club Ltd (1997) 187 CLR 384
Harrison v Zurich Australian Insurance Limited (unreported, NSWSC 30 July 1996, BC 9603264)
Jiwira Pty Limited v MMI General Insurance Limited (unreported, NSWSC, 7 February 1997, BC 9700107)
Legal & General Insurance Australia Limited v Eather (1986) 6 NSWLR 390
Settlement Wine Company Pty Limited v National and General Insurance Co Limited (1994) 8 ANZ Ins Cas 61-209
Swanson v Guild Insurance Co Limited (unreported, QSC, 17 August 1990)
Zurich Australia Insurance Limited v Fruhauf Finance Corporation Pty Limited (1993) 7 ANZ Ins Cas 61-177DECISION: Interest under s 57 Insurance Contracts Act to be calculated from 21 June 2000. Orders made in terms of the short minutes
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST
Einstein J
Tuesday 27 August 2002 ex tempore
Revised 17 September 2002
50022/01 MAX HAMS & ANOR v CGU INSURANCE LIMITED
JUDGMENT
1 Following the delivery of the judgments already given in disparate issues, two matters remain for determination. The first concerns the plaintiff’s claim to interest. Section 57 of the Insurance Contracts Act 1984 appears to entitle a plaintiff to interest on the amount of a claim. The entitlement is only to interest for “the period commencing on the day as from which it was unreasonable for the insurer to have withheld payment of the amount” of the claim. It follows, I accept, that the entitlement requires the exercise of a discretionary judgment as to when, if at all, refusal to pay the claim was “unreasonable”.
2 The respective positions taken by the parties in terms of the claims to interest were that the plaintiffs assert an entitlement to interest under s 57 calculated from 21 June 2000. The proposition for which the plaintiff contends is that they accept that the defendant was entitled to a reasonable period within which to investigate the claim. However, in early June 2000 the plaintiff’s solicitors, it is common ground, sent a letter to the defendant’s dispute resolution officer, enclosing a copy of the report of Mr McConnell dated 30 May 2000. It is common ground that on 21 June 2000 the defendant advised the plaintiffs that it had rejected their claim.
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- Case
- [2002] NSWSC 843
- Decision Date
CaseChat Overview and Summary
The court had to determine whether the date from which interest should accrue was when the insurer received the claim or when it became unreasonable for the insurer to withhold payment. The interpretation of the relevant legislative provisions and the identification of the point at which the insurer's delay became unreasonable were central to the case.
The court held that the insurer's unreasonable withholding of payment was the appropriate starting point for the accrual of interest. The court found that the insurer's conduct, including its failure to provide reasons for non-payment, constituted unreasonable behaviour under the Act. The court exercised its discretion under section 57, finding that the insurer's conduct warranted the imposition of interest. The court ordered the insurer to pay interest on the claim from the date it became unreasonable for the insurer to withhold payment.
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