Max Hams v CGU Insurance Limited

The case between Max Hams and CGU Insurance Limited was heard by the Supreme Court of New South Wales. Max Hams, the plaintiff, sought a declaration that interest was payable on a claim under a policy of insurance. The defendant, CGU Insurance Limited, denied liability for interest. The dispute centred on the applicability of section 57 of the Insurance Contracts Act 1984, which provides for interest to be payable on claims when an insurer unreasonably withholds payment.

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.