Insurers Guarantee Fund NEM General Insurance Association Ltd v Manufacturers Mutual Insurance Ltd

The New South Wales Court of Appeal considered a dispute between the Insurers Guarantee Fund (IGF) and Manufacturers Mutual Insurance Ltd (MMI) and other insurers. The core of the disagreement concerned the extent of MMI's liability for a claim made by a third party against a company that had been insured by MMI. The IGF, as a statutory body, had stepped in to meet certain liabilities of MMI, which was in liquidation.

The central legal question before the Court of Appeal was whether MMI was entitled to recover from the other insurers, by way of contribution or indemnity, a proportion of the amount it had paid to the third party. This question turned on the interpretation of the relevant insurance policies and the principles of contribution and indemnity as they applied between insurers. Specifically, the Court had to determine if the policies issued by the other insurers covered the same risk as MMI's policy, and if so, whether MMI was entitled to share its loss.

The Court of Appeal held that MMI was not entitled to contribution or indemnity from the other insurers. It reasoned that the policies of the other insurers did not cover the same risk as MMI's policy. The Court applied the principle that contribution between insurers only arises where there is a common risk and a common insured. In this instance, the Court found that the other insurers' policies were not on risk for the particular liability that MMI had discharged, and therefore, no basis for contribution or indemnity existed.