Section 48 deals with the effect of a payment of damages after 1 December 1988. However, the transitional provisions of the DRCA 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.

Cadets were not covered under the provisions of the 1930 Act. Therefore any claims for compensation by, or on behalf of, Cadets at that time were considered on an ex-gratia basis.

The 1930 Act cases

The 1930 Act only applied to ADF employees after an amendment commencing 3 January 1949.  There may be cases where the employee who had coverage under the 1930 Act, with either a right to, or made a claim, for compensation under the Act in respect of an injury for which compensation had been paid for the same injury by a third party. Section 17 of the Act provides that where a veteran is entitled to remedies against both the Commonwealth and a third party, and the employee chooses to institute proceedings against the third party, they are not entitled to recover both damages and compensation for the same injury.

 The 1971 Act cases

There may be times when a veteran makes a new claim for compensation under DRCA for an injury occurring prior to the commencement of the Act on 1 December 1988, for which compensation has been paid for the same injury by a third party.

Regardless of the date when third party proceedings commenced, or, the date when third party compensation was awarded, Subsection 48(8) of DRCA provides that in these cases the relevant provisions of the 1971 Act continue to apply and compensation is recoverable for the same injury under section 99 of the 1971 Act. Under these provisions, compensation recovery occurs in much the same was as under the DRCA.

It is important to note however that compensation recovery in these cases does not operate for life, it simply requires repayment of the offset amount. Liability to pay compensation under the 1971 Act resumes when the client demonstrates with receipts (or similar documentary evidence) that all of the amount awarded by a third party has been disbursed on injury-related expenses (i.e. medical treatment, aids and appliances, lost wages etc.) that would have been paid or reimbursed under the 1971 Act. This principle operates to allow DVA to pay for treatment costs etc. at such time as the client can show that have disbursed their compensation on injury-related expenses.

In practice, more than 30 years after the 1971 Act ceased to be the modern compensation legislation, it would be very difficult for a veteran who attempts to claim compensation based on an injury for which a 1971 recovery process was implemented to provide the required evidence to re-ignite their compensation and treatment eligibility for that injury.

Certain damages cannot be recovered or offset – Subsection 99(11) of the 1971 Act

Delegates should note that if they are 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 DRCA, that part of the damages award is not recoverable, 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.

Damages awards involving contributory negligence on the part of the claimant

Special arrangements applied in cases where it was found by a Court in awarding damages that there had been contributory negligence on the part of the claimant for damages. In such cases, it is common for a Court to reduce the amount of the damages award which would otherwise have been payable in proportion to the degree of negligence attributed to the employee's contribution to the cause of the accident. In these cases, subsection 99(4) provides that the earlier provisions do not apply, rather subsections 99(5) through to 99(7) will apply.

For example, a Court may have found that an employee should be awarded a total of $250,000 in damages for the effects of an accident and consequent injury to the employee. However, the Court may also have found that the employee was forty per cent negligent (i.e. 40 per cent responsible for the accident) and that the amount of damages payable to the employee should accordingly be reduced to $150,000 ($250,000 minus 40 per cent).

Assuming that an amount of say $20,000 had been paid in compensation benefits prior to the date of payment of the damages, the Commonwealth would, in such a situation, be entitled to be repaid $12,000 (60 per cent of $20,000) and the employee would be entitled to retain $8,000 (40 per cent of the compensation paid prior to that date).

Similarly, any compensation entitlements which the employee may have after the date of payment of the damages award would be reduced by 60 per cent (i.e. the employee is entitled to receive 40 per cent of the amount of compensation payable) until the nett amount of the damages award received by the claimant is offset. When the amounts which were/are actually paid or payable to the employee (60 per cent of the total amount of compensation otherwise payable) reaches the amount of damages actually received (60 per cent of the total or $150,000 in the example above), then he/she is entitled to receive the full amount of any further compensation benefits which may thereafter be payable.