10 Ormiston J in V.L. Credits v Switzerland General Insurance assessed interest on the same principle; that is to say he allowed the insurer a reasonable time to investigate the claim and determined the date from which interest ran as being at the end of that time. His Honour appears to have selected a period of three months in a case involving arson as being a reasonable period during which the insurer was entitled to investigate the claim. He awarded interest after that period. His judgment does not suggest that that assessment was made on the basis of evidence as to what the insurer knew and what it did. Rather, it appears to have been selected by his Honour as being a reasonable period taking into account the type of case and the probable issues which had to be investigated. "
7 In my opinion it should now be accepted that the correct approach to be taken by the court on this question is that taken by Cole, J in Bankstown Football Club. In my assessment, the cases to which I have referred establish that the question of reasonableness is to be judged by reference to the true position in respect of the claim with allowance to be made for the insurer to have a reasonable period of time within which to investigate the claim and to consider its position. The discretionary determination is to be made having regard to the particular circumstances of the case, including the probable issues which require investigation. Under the Act the court is not required to evaluate and pronounce upon the opinion or decision-making process of the insurer. It is not relevant that the insurer acted bona fide in denying the claim, or when the judgment of the court established the insurer's liability to pay it. In short, the award will be calculated on the basis of what the court finds is a reasonable time for completion of the insurer's investigation of the claim. Put another way, in my opinion, the insurer is not automatically liable to pay interest from the day on which it became liable to pay to a person an amount under a contract of insurance. Under s 57(2) liability to pay interest is to be calculated with regard to the day on which it was unreasonable for the insurer to withhold payment of the amount after it had become liable to pay it in response to a claim.
8 Entitlement to insurance under the policy in this case is expressed to depend on facts of which the opinion of the insurer is an element. In Sayseng v Kellogg Superannuation Pty Ltd & Anor [2003] NSWSC 945 Bryson, J (para 81) adopted statements in Edwards v. The Hunter Valley Co-op Dairy Co. Ltd & Anor [1992] 7 ANZ Ins Cas 61-113 (McLelland J) pp 77,536 and 77,537, of which the following are relevant to the present question:
"Since the commercial purpose of the policy was, relevantly, to provide insurance against the risk of total and permanent disablement, and since the policy was expressed in terms requiring the formation by Zurich of a particular opinion as a condition of Zurich's own liability, there was clearly an implied obligation on Zurich to consider and determine whether it should form that opinion. That involved a consideration and determination of the correct question (see James Noel Eric Butcher v Port (1985) 1 NZLR 491 at 496, 504, and cf Wilson v Metro Goldwyn Mayer 18 NSWLR 730 at 734) …
However in the field of insurance, it is well established that where under a contract of insurance an element of the insurer's liability is expressed in terms of the satisfaction or opinion of the insurer, the insurer is obliged to act reasonably in considering and determining that matter …"
9 The plaintiff submitted that within three months after notification of the claim by William M Mercer Pty Ltd on 4 November 1998, the insurer ought to have completed its investigation. He put that in the circumstances interest should run from 21 March 1999, being the date on which the policy's definition of total and permanent disablement was actually satisfied. In the alternative, he submitted that interest should run from 17 September 1999, being the date three months after the insurer received from William M Mercer on 17 June 1999 the member's statement and medical report.
10 The trustee submitted that the relevant day was on or about 27 April 2000, being the date of the letter in which the insurer declined the claim.
11 Reliance was placed upon Bryson, J's findings (Sayseng paras 93, 94, 95) that, in reaching an opinion, the insurer was obliged to afford the plaintiff the opportunity to respond to the adverse reports of Dr Funnell of 12 January 2000 and of Ms Gosling shortly after 14 March 2000. It was put that had the insurer done so the plaintiff would have provided information which would have enabled it to resolve the conflict on the evidence before it, and to proceed to decide to pay the claim. It was put that the true position was reasonably discoverable by 27 April 2000, and that it was unreasonable to withhold payment after that date.
12 For the insurer it was submitted that interest should not run until after 30 November 2006, being the date the totality of the evidence relevant to the issue of total and permanent disablement concluded before me. It was put that as the insurer did not have available to it much of the evidence adduced at the hearing (including the oral evidence of the plaintiff, his wife, his daughter, medical practitioners and other experts), it was not unreasonable on the information it did have to have declined the claim on 27 April 2000, and to have adhered to that decision thereafter. It was argued that, consistently with Bryson, J's finding that the trustee's decision of 9 April 2001 to decline payment was reasonable, it was also reasonable for the insurer to have held the opinion that the plaintiff was not totally and permanently disabled within the meaning of the policy as each decision was based on substantially similar evidence. In this respect it was put that the finding that its decision was vitiated on the basis that the insurer had failed in its duty of good faith and fair dealing should not support a finding on the issue of interest that it was unreasonable for it to have withheld payment until 30 November 2006.
13 Alternatively, the insurer submitted that it should not pay interest from a date earlier than 27 April 2000. It relied, inter alia, on the facts that it was not until 1 October 1999 that the plaintiff provided the requested details and proof of age and identity, following which arrangements were made for Dr Funnell and Ms Gosling to examine the plaintiff. Dr Funnell reported on 12 January 2000, and Ms Gosling shortly after her examination on 14 March 2000. The last mentioned evidence, together with that earlier obtained, was considered and founded the opinion expressed on 27 April 2000. It was put that, in the circumstance, it was not unreasonable for the insurer to withhold payment until then.
Determination
14 Under the policy the insurer became liable to pay the claim for the agreed benefits once the plaintiff's condition became one of total and permanent disablement within the meaning of the policy. I held that the definition was fulfilled on 21 March 1999, being the date of expiry of the initial period of six consecutive months during which the plaintiff had been absent from work through injury.
15 By letter of 4 November 1998 William M Mercer notified the insurer of the claim. The insurer replied by letter of 6 November 1998 with its requirements for investigation and assessment.
16 With its letter of 17 June 1999 William M Mercer sent to the insurer the plaintiff's statement with an additional sheet of information and a statement by Dr Augusto Tablante. Their contents were summarised by Bryson, J (Sayseng paras 23, 24) thus:
"23. … In the Member's Statement, which was a standard form used by Hannover, Mr Sayseng said among many other things that the nature of his illness was "L4/5 Disc Degeneration/Spinal Canal Stenonis". He said that his job title was machine operator, that he was unfit for any work, that he was educated to first year tertiary level and had no other qualifications, training or skills. He was asked at question 19 "Please list any jobs you think you may be able to do in the future" and he answered: "Apart from manual/process work - none."
24 He enclosed additional pages listing doctors whom he had seen. These were Dr Vienna Esplago, Dr Agusto Tablante, Dr Peter Giblin, Dr Daryl Salmon, Dr Tan Letian and Dr William H. Wolfenden, and also Ms Linda Barca, Physiotherapist. Question 22 asked him to add any other comments and he said:
QUESTION 22