9.6 Recovery of Damages Negates Entitlement to ADB (as well as SRCA)

Clause 10.5.13 of Defence Determination 2000/1 under the Defence Act says:

10.5.13 ADB not payable if damages are recovered

1.This clause applies if:

a)but for this clause, SIA or ADB would be payable to a member or a dependant in respect of an injury suffered by the member, and

b)the member or dependant recovered, or recovers, damages in respect of the injury.

The purpose of the clause is the same as for Section 48 of the SRCA i.e. to ensure a dependant does not draw double benefits for an employee's death.

2.If the member o — r dependant recovers damages after the commencement of this Determination, the member or dependant, as the case requires, must notify the Secretary in writing, within 28 days after the day the damages are recovered, of the recovery of the damages and the amount of damages.

This requirement to notify the Department of a damages settlement within 28 days of its finalisation, is essentially the same provision as for Subsection 48(2):

• except that the Defence Determination does not specify a penalty for failure to do so, i.e. as does Ss48(2). Since the ADB is not payable unless the SRCA S17 amount is also payable, the one penalty for non-disclosure does for both.

The Defence Act requirement that the dependant also notify the Department upon initiation of the action (rather than at the conclusion, as above) is contained in Clause 10.5.12. This Clause is analogous to Section 46 of the SRCA. Both the SRCA and the Defence Act require notification within 7 days.

3.If SIA or ADB was paid to the member o — r dependant before the damages are recovered, the member or dependant, as the case requires, must repay to the Commonwealth an amount equal to the amount (if any) of SIA or ADB that, when added to the amount of SRC compensation (if any) paid to the member or dependant, does not exceed the amount of the damages.

This subclause is directly analogous to the SRCA's Subsection 48(3) in that, amounts of compensation paid prior to the award of damages must be returned following settlement of the legal action.

4.SIA or ADB is not payable to the member or dependant after the day the member or dependant recovered, or recovers, the damages.

This subclause is directly analogous to Subsection 48(4) of the SRCA, i.e. ADB compensation is not payable after the date of the dependant's legal settlement. The loss of entitlement to ADB is absolute and permanent and does not depend on the amount of damages recovered.

5.Subclause (3) does not apply if the damages were recovered in proceedings instituted by the member under Section 45 of the SRCA, or by way of a settlement of the proceedings.

Subclause (3) relates to recovery of ADB paid, following settlement of a legal action.

Section 45 of the SRCA permits an employee to make a formal, irrevocable election to take legal action against the Commonwealth in lieu of accepting amounts under S24 and S27 (i.e. a permanent impairment lump sum). Subsection 44(1) does not prevent this limited action, which may be made on the basis of non-economic loss only, and is limited to a maximum of $110,000.

Subclause 10.5.13(5) of the Defence Determination is the counterpart of Subsection 48(4A) of the SRCA. The practical effect of both of them considered together, is that S45 actions have no effect on entitlements to compensation for death.

Thus, a S45 action (whether concluded before or only after the death), does not trigger a Subclause (3) recovery of whatever ADB compensation has already been paid to the dependant.

6.Subclause (4) does not apply if the damages were recovered:

a)as a result of proceedings begun by the member after making an election under Section 45 of the Act, or

b)as a result of proceedings begun or taken over by the Commonwealth against a person (other than the Commonwealth, a Commonwealth authority or an employee of the Commonwealth), or

c)in a settlement of those proceedings.

The effect of Subclause (6) is to negate the usual effect of Subclause (4) in certain circumstances. Subclause (4) removes the right to receive ADB once damages are received (from an action over the employee's death).

Therefore, ADB remains payable following:

a)A legal action under S45 of the SRCA i.e. in lieu of a lump sum payment:

–The nature of S45 actions and the special provisions made for them have been discussed in relation to Subclause (5) above.

b)Conclusion of a legal action originally open to the dependant but which has instead been taken over and concluded by DVA or the Department of Defence, i.e. in accordance with the powers granted at Section 50 of the SRCA.

–The operation of S50 is discussed elsewhere i.e. at 9.12 of this Handbook.

–Legal actions under S50, although formally in the dependant's name, are in fact an initiative of the Department.

7.If a member or a dependant satisfies the Secretary that a part of the damages recovered by the member or dependant was not in respect to death, permanent impairment or non-economic loss as a result of the injury, this clause has effect in relation to that member or dependant, as the case requires, as if the amount of the damages recovered by the member or dependant were an amount equal to so much (if any) of the damages as was in respect of death, permanent impairment or non-economic loss as a result of the injury.

Courts of law, when deciding an action for damages due to death, are not confined to award damages only under those heading — s (loss of income, support of children etc.) used by workers compensation legislation. Subclause (7) provides that if the damages awarded by the court lists as components of that award, compensation for matters that are not of a type which is provided for in the ADB or SRCA these parts of the damages award are not recoverable. As an example, an award of damages might include the cost of replacement of the vehicle in which the employee died, or the legal costs of bringing the action. Those components should therefore be deducted from the total damages awarded prior to calculating how much of that award is recoverable.

8.In this clause:

Damages does not include an amount of damages paid to the Commonwealth under Section 76 of the Veteran's Entitlements Act 1986.

Section 76 allows DVA to institute an action against a person who may have a legal liability to pay damages in respect to an injury suffered by a Veteran (i.e. a person entitled under the Veterans Entitlements Act [VEA]). The damages to be recovered by the VEA delegate are limited to the amount of pension paid to that Veteran up to the date of the award. The decision to institute that action is a decision of the Department, not of the Veteran.

The effect of Subclause (8) is therefore similar to that of Subclause (6)(b), i.e. it acts to prevent persons from being debarred from compensation for death or injury on the basis of actions initiated or taken over by the Commonwealth, (even though the Commonwealth is acting in the client's name.)