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.

Pre-1 December 1988 cases

The 1930 Act applied to employees of the Commonwealth from the date of its proclamation on 10 November 1930 until 31 August 1971. However, members of the Australian Defence Force were not covered by the provisions of that Act until 3 January 1949. [1] [2]

The 1971 Act applied from 1 September 1971 until 30 November 1988 to all Commonwealth employees (as well as full-time and part-time members of the ADF and Cadets). The SRC Act has applied similarly since 1 December 1988.

Guidance on 1971 Act Cases

The Safety, Rehabilitation and Compensation Act 1988 (SRCA), maintains the application of the provisions of the Commonwealth Employees (Compensation) Act 1971 (the 1971 Act) for those cases involving pre-1988 injuries.

Under the 1971 Act, compensation recovery occurs in much the same way as under the SRCA.

However, under the 1971 Act, compensation recovery does not operate for life, it simply requires repayment of the offset amount. (s99 of the 1971 Act).

Under the 1971 Act, DVA’s liability to pay any compensation to a person under the Act for a particular injury stops where that person receives compensation for that injury from another source. However, unlike other Acts, DVA’s liability to pay compensation resumes when the client can demonstrate with receipts (or similar documentary evidence) that all of the amount awarded by the courts/other compensation scheme etc. 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 at such time as the client can show that have disbursed their compensation on injury-related expenses.

In practice, some 30 years after the 1971 Act ceased to be the modern compensation legislation, it would be very difficult for a person 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.

Damages awards involving contributory negligence on the part of the employee

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.

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.