Whisk the cream, milk, flour, bay leaf, nutmeg, salt and pepper in a bowl. Put the sliced potatoes in a pot and pour the cream mixture over the potatoes. Cook over medium heat stirring gently until the cream comes to a simmer. Meanwhile, preheat the oven to 350 degrees F. Once the potatoes start to simmer, continue simmering until they just begin to soften, about 5 more minutes.

Prepare a 2 ½ quart baking dish by using a paper towel and about 1 tablespoon butter, rubbing the butter throughout the dish. Transfer the potato mixture to the baking dish and cover with aluminum foil. Bake in the preheated oven for 50 minutes. Sprinkle shredded cheese over potatoes and bake, uncovered, until cheese is just beginning to brown.