Supreme Court New South Wales Medium Neutral Citation: Ransley v Chubb Insurance Company of Australia Ltd [2015] NSWSC 1350 Hearing dates: 10 September 2015 Decision date: 10 September 2015 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Interest to run under s 57 of the Insurance Contracts Act 1984 from 20 December 2013 Catchwords: INSURANCE – calculation of interest under s 57 of the Insurance Contracts Act 1984 (Cth) – date from which it was unreasonable for insurers to withhold payment Legislation Cited: Insurance Contracts Act 1984 (Cth) Cases Cited: O'Neill v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1248 Category: Principal judgment Parties: Craig Anthony Ransley (Plaintiff) Chubb Insurance Company of Australia Limited (Defendant) Representation: Counsel: A P Coleman SC with K Williams (Plaintiff) A Leopold SC with S Lawrance (Defendant) Solicitors: Horton Rhodes Lawyers (Plaintiff) Clyde & Co (Defendant) File Number(s): SC 2015/31956 EX TEMPORE Judgment (REVISED) 1. In these proceedings, which were commenced on 2 February 2015, Mr Craig Ransley claims indemnity under a Directors' and Officers' Policy issued by the defendant, Chubb Insurance Company of Australia Ltd ("Chubb"), for costs he incurred attending an inquiry by the Independent Commission Against Corruption ("ICAC"). The ICAC inquiry was held in 2013, and concerned the granting of an exploration licence to a company of which Mr Ransley was a director, Doyles Creek Mining Pty Limited ("DCM"). 2. On 6 March 2015, Chubb filed a Commercial List Response, in which it did not dispute its liability to indemnify Mr Ransley (albeit in which it raised other issues which are not necessary for me to consider today). 3. It is common ground that the policy responds to Mr Ransley's claim for indemnity, at least to the extent of $751,622.17. 4. Mr Ransley contends that, in the events that have happened concerning another named insured under the policy, Mr Michael Chester, he is entitled to indemnity in a further amount of $137,884.56. That aspect of the case cannot be determined today. 5. On 30 July 2015, Chubb paid Mr Ransley $751,622.17. 6. The matter for consideration by me today is the date from which Chubb should pay interest on that sum. 7. Under s 57 of the Insurance Contracts Act 1984 (Cth), interest is payable from the date "from which it was unreasonable for [Chubb] to have withheld payment". 8. Very recently, Slattery J considered the authorities dealing with this question in O'Neill v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1248 at [27] to [35]. 9. The relevant principles are: 1. the matter is to be assessed objectively; 2. once the insurer's liability to indemnity has been determined or, as is the case here, admitted, the basis upon which the insurer did or could have defended the claim is to be ignored; 3. the question of reasonableness is to be assessed by reference to the true position as revealed by the determination or admission; and 4. the question must be considered in the context of the particular facts of the case, with allowance made for the reasonable time required by the insurer to investigate the case in question. 1. Under the policy, Chubb promised to pay the relevant legal expenses within 30 days of receipt of invoices from Mr Ransley. Mr Ransley submitted such invoices between 26 April 2013 and 8 November 2013. 2. ICAC published its report in August 2013. It made a large number of very serious findings concerning Mr Ransley's involvement in DCM's application for the exploration licence. 3. Whether such matters may or may not have formed a basis for Chubb to defend any proceedings brought by Mr Ransley for indemnity under the policy is, by reason of the authorities to which I have referred, to be ignored for present purposes. 4. However, in my opinion, it could not be said, looking at the matter objectively, that it was unreasonable of Chubb to withhold payment until such time as ICAC published its report, or until such time as Chubb had had reasonable opportunity to consider that report. 5. As I have said, ICAC published its report in August 2013; that is, almost midway between the dates on which Mr Ransley submitted his claims for payment. 6. On 20 December 2013, Chubb wrote to Mr Ransley denying its liability to indemnify him. Chubb explained its decision by reference to the ICAC findings. 7. Insofar as this letter reveals Chubb's subjective decision-making process, it is not relevant to the question that I must decide. But it is relevant to the question of what time was reasonable for Chubb to consider the ICAC report, and beyond which time it was unreasonable for it to withhold payment (bearing in mind that, now that Chubb has admitted its liability to indemnify Mr Ransley, I must ignore whether the contents of the ICAC report would or might have provided a basis for denying liability). The fact that Chubb was able to write its letter of 20 December 2013 suggests that, by then, it had had reasonable time to consider the ICAC report. 8. In those circumstances, my conclusion is that the date from which it was unreasonable for Chubb to withhold payment from Mr Ransley was 20 December 2013. 9. Interest under s 57 of the Insurance Contracts Act should run from that date. 10. I invite the parties to confer and agree as to the relevant calculation and to bring in short minutes of order. 11. Costs are reserved. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 September 2015