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Recovery of Damages under DRCA

Section 48 of the DRCA provides that compensation under the DRCA is not payable where damages have been recovered for the same injury or death. This section contains provisions to recover compensation already paid and also sets up a bar to future compensation for these clients under the DRCA.

Where compensation is for the death of a person, section 17(5) payments to dependent children are not paid back to DVA from damages recovered, however no further section 17(5) payments will be made following a damages payment.

The question to consider when determining if compensation should be recovered under DRCA is:

"Do the conditions for which compensation has been claimed under the DRCA and through some other avenue relate to the same injury?"

That is, "has compensation been received more than once for the same injury?"  The medical evidence will show this. If the third party action was successful and the person has recovered damages for the same injury under DRCA, the previously paid compensation is recoverable and no further compensation is available with respect of the injury.

Settlement Deeds

Occasionally, clients may settle their claim with the Department of Defence outside of court.

In these situations, any settlement that aims to:

  • purport that the damages are ‘general’ in nature and not attributable to a specific injury; or
  • exempt the injured party from the operation of s48 in some other way

will not operate to exclude the operation of s48.

Sub-section 48(4) of the DRCA provides that ‘Compensation is not payable under this Act to the employee in respect of the injury, loss or damage… after the date on which the damages were recovered by the employee’; and the term ‘damages’ is defined (in section 4 of the DRCA) to include ‘any amount paid under a compromise or settlement of a claim for damages, whether or not legal proceedings have been instituted…’ .

Where the medical evidence relating to the original claim for damages (that has been settled) shows that the injury for which the damages were claimed is the same as the injury claimed under DRCA, any settlement amount is still referrable to that injury and section 48(4) applies. 

In terms of the investigation into the injury “behind” the settlement deed, we would expect:

  • the relevant incapacities would be described in a Statement of Claim that was prepared to commence court proceedings – this settlement of claim would be referred to in any Deed of Release; or
  • if a matter was to settle before a Statement of Claim was issued, the incapacities to be described in correspondence provided by the claimant in order to justify the payment of a settlement sum.

Given that the DRCA deals with compensation on an injury specific basis, ideally Deeds of Release prepared by Commonwealth agencies should clearly identify, or refer to an extrinsic document that clearly identifies, the incapacities, injuries etc for which a settlement sum is to be paid. 

In cases where a Deed of Release contains only non-specific information on the condition for which damages were recovered (e.g. 'psychological/psychiatric injury'), the person or their representative should be given the opportunity to provide further information, including any potential difference between the conditions referred to in the Deeds, and the conditions for which liability has been accepted under the DRCA. For example;

A Deed of Release is not clear in relation to the nature of the claim (i.e. the injuries that give rise to the claim) or the exact particulars of the action. Liability has been accepted under the DRCA for major depressive disorder.

The deed of Release states that the claim made against the Commonwealth alleged that:

  • while serving in the ADF, the person was subject to assault and bullying;
  • the person suffered psychological/psychiatric injury and economic loss as a result; and
  • the person is entitled to compensation from the Commonwealth

No further particulars of the relevant claim are provided within the Deed of Release. This creates difficulty in confirming the conditions for which the person may be preculded from receiving compensation.

Further information is sought, and the evidence provided through the representative showed that the settlement is more properly characterised as being paid in respect of PTSD only. On the basis of this evidence, compensation would be payable because the common law settlement and the compensation claim relate to different conditions.

However, if no further evidence was made available, the claim may be denied under Section 48 where a delegate thinks it more likely than not that the injury for which DRCA liability has been accepted is the same as the injury for which damages have been received.

Benefits and Payments Policy can provide advice on cases where information is not clear.