Mercantile Mutual Insurance (Australia) Limited v QBE Workers Compensation (NSW) Limited

Mercantile Mutual Insurance (Australia) Limited appealed to the New South Wales Court of Appeal against an order of the District Court that required it to contribute to a payment made by QBE Workers Compensation (NSW) Limited. The dispute concerned the application of the double insurance principle and the right to contribution between insurers where an employee had received workers compensation payments and subsequently sought damages for personal injury arising from a motor vehicle accident.

The central legal issue before the Court of Appeal was whether QBE, as the workers compensation insurer, had a right to contribution from Mercantile Mutual, as the third party motor vehicle insurer, under the principles of double insurance. This required the court to determine whether both insurers were liable for the same risk, particularly in light of the operation of section 151B(1)(b) of the *Workers Compensation Act 1987* (NSW) and section 9(a) of the *Motor Accidents Act 1988* (NSW).

The Court of Appeal reasoned that section 151B(1)(b) of the *Workers Compensation Act* operates to discharge an employer's liability for damages if a statutory liability to pay workers compensation has been discharged. In this scenario, the employee had received workers compensation payments, thereby discharging the employer's liability for damages. Consequently, Mercantile Mutual, as the motor vehicle third party insurer, was not liable for the same risk as QBE, because the statutory scheme prevented the employer's liability for damages from arising in the first place. Therefore, the prerequisite for a right to contribution, namely that each insurer is liable for the same risk, was not met.

The appeal was allowed with costs, the orders of the District Court were set aside, and the respondent's notice of motion was dismissed with costs.