Where a person receives compensation under the SRCA for an injury, loss or damage, and also receives damages from another source in respect of that same injury, loss or damage, section 48 of the SRCA applies to require the person to pay back either:

• The amount of compensation received under the SRCA; or

• The amount of damages received

whichever is the lesser

Section 48 of the SRC Act deals with the effect of a payment of damages after 1 December 1988. However, the transitional provisions of the SRC Act require that Delegates be able to apply the relevant provisions of the Commonwealth Employees' Compensation Act 1930 (the 1930 Act) and the Compensation (Commonwealth Government Employees) Act 1971 (the 1971 Act) for injuries that are covered under those Acts.
 

Operation of Subsections 48(8) and 125(1) of the SRC Act

New claims for injuries that pre-date the introduction of the SRCA must be examined using the legislation in force at the time.

Furthermore, Subsection 48(8) of the SRCA provides that if the damages award relates to a claim for damages made before 1 December 1988 (for an injury sustained before that date, whether or not proceedings for damages were actually commenced before 1 December 1988 or not), but the damages award was not paid until after that date, then the provisions of Section 99 of the 1971 Act continue to apply. In other words, any amounts of compensation paid prior to the date of the award of damages are recoverable by the Commonwealth and the offsetting arrangements provided for in Section 99 of the 1971 Act also continue to apply.

For the purposes of future categorisation of these payments, subsection 125(1) of the SRCA basically provides that any payment of compensation made under any of the earlier Commonwealth workers' compensation Acts (1912, 1930 or 1971) is, in effect, deemed to have been a payment under the SRCA once it is paid.

Recovery of damages under the SRCA and its predecessor Acts are covered in more detail on the CLIK pages 48.1-48.3.

Certain damages payments which cannot be recovered or offset – Subsection 99(11) of the 1971 Act and Subsection 48(7) of the SRC Act

Delegates should note that if the MRCC is satisfied that a part of a damages award can be identified as having been awarded for a loss for which there was, or is, no equivalent provision for payment under the 1971 Act or under the SRC Act, that part of the damages award is not recoverable by the Commonwealth, nor can it be offset against future compensation entitlements in 1971 Act cases.

For example, if in a 1971 Act damages case, a Court awarded an employee an amount of damages which included a payment for pain and suffering, it would not be appropriate for the Commonwealth to seek to recover that amount. Nor would it be appropriate to seek to offset that amount against the claimant's possible future compensation entitlements. This is because the 1971 Act made no provision for payment of compensation for non-economic losses such as for pain and suffering, loss of enjoyment of life etc.

Quick Reference Guide

The following table headed 'Quick Reference Guide' sets out the effect of payment of damages awards in common law actions. It shows whether compensation payments made prior to the date of payment of the damages award are recoverable by the Commonwealth and also shows whether the person who receives the damages award can have any possible further entitlement to compensation benefits under the SRC Act and, if so, under what circumstances.

Delegates should note that since both the 1930 and 1971 Acts have been repealed, possible entitlements will be determined in accordance with the transitional provisions of the SRC Act in relation to claims for which there was, or would have been, liability to pay compensation under those Acts where the entitlement arose before 1 December 1988. Any entitlements which arise after 30 November 1988 would of course be determined in accordance with the relevant provisions of the SRC Act.

Notes regarding the effect of legal costs

Delegates should note that any legal costs which are or were payable by the employee in relation to the action for damages should be deducted from the total amount of damages awarded prior to any offsetting taking place. In the first example above ('Straight' Damages), legal costs of say $30,000 may have been payable by the employee in obtaining the damages award of $250,000. In that example, the total amount to be offset in (past or) future compensation entitlements before further compensation could actually be paid to the employee would be $180,000 (i.e. $250,000 minus $30,000 costs minus $40,000 compensation recovered by the Commonwealth).

Similarly, in the second example above (Damages awards involving contributory negligence on the part of the employee), the employee in that case may also have incurred legal costs of say $30,000 in obtaining the damages award of $150,000 ($250,000 minus the amount deducted because of the employee's contributory negligence). In such a situation, it would be necessary for the employee to have offset a total of $108,000 ($150,000 minus $30,000 costs minus $12,000 compensation recovered by the Commonwealth) at 60 per cent of the total compensation 'expense' before he/she would again be entitled to full payment of compensation benefits.

Information required in 'damages' cases

It is important to note that full details of the damages award or settlement must be obtained in any cases in which compensation offsetting is relevant. The details required to be able to determine compensation claims correctly include:

• the gross amount of damages awarded (exclusive of any added interest)
• the date of payment of the damages to the employee/claimant or for his/her benefit (i.e. payment to the employee's or claimant's solicitors)
• whether the total amount of the damages award included costs (i.e. not just costs awarded by the Court but also solicitor/client costs) and, if so, the amount of costs included
• the amount of compensation recovered or which is proposed to be recovered by the Commonwealth
• advice as to whether there was a finding of contributory negligence on the part of the employee, and
• if so, full details of that finding.