The total amount that is payable under either subsection 17(3) or subsection 17(4) is to be shared among all of the dependants, both wholly dependent and partially dependent. Where compensation is payable to two or more dependants, subsection 17(8) gives broad discretion to determine the percentages of compensation payable to those dependants, having regard to any losses suffered by those dependants as a result of the cessation of the employee's earnings.
Subsection 17(8) uses the phrase 'as Comcare thinks fit' which gives determining authorities (i.e. DVA) discretionary powers and allows them to give broad consideration on how that discretion should be exercised. This broad discretion should be exercised on reasonable grounds such that there are similar outcomes for people in similar situations.
The following principles are to be applied by determining authorities when apportioning the amount of death lump sum compensation payable:
The lump sum payable has to be distributed among wholly dependent (if any) and partly dependent dependants of the deceased employee. Therefore, while subsection 17(8) requires determining authorities to 'have regard to any losses suffered by those dependants as a result of the cessation of the employee's earnings', it merely creates an obligation on the determining authority to consider each dependant (whether wholly or partially dependent on the employee) in apportioning the lump sum in the manner prescribed by subsection 17(8). In assessing a dependant's share of the lump sum, the determining authority could conclude that a 'zero' share is appropriate, given the actual level of financial dependence of the dependant.
Any lump sum compensation does not have to be distributed equally between the dependants. Determining authorities have discretion to determine the size of each dependant's share, so the shares may or may not be equal. This is made clear by the wording contained in subsection 17(8), 'Comcare shall determine the shares of those dependants in that amount as Comcare sees fit'.
The focus of the decision-making process when determining apportionment should be the losses suffered by each dependant as a result of the cessation of the employee's earnings
The wording in subsection 17(8) of the SRC Act, 'losses suffered by those dependants as a result of the cessation of the employee's earnings,' must be the focal point when deciding apportionment of the lump sum compensation under section 17.
Section 4 defines 'dependant' as being 'dependent for economic support'. Consequently the reference to 'cessation of earnings' in subsection 17(8) of the SRC Act makes it clear that apportionment of death lump sum compensation is based on the economic loss that results from the employee's death.
Determining the nature and extent of the economic loss may not be straightforward. For example, a child, who lives with one parent, may visit and stay with the other. Whilst at the other parent's home all expenses are met. In determining the relative loss of the child after the death of the non-custodial parent, it may be appropriate to consider not only child support payments, but also the value of economic support the child received while visiting the non-custodial parent.
Section 17 provides for the maximum payment of a specified lump sum. That sum is not reflective of the monetary value of the income lost as a result of the employee's death—otherwise the lump sum would vary depending on the dollar value of the income of the employee. For similar reasons, this section does not seek to replace the dollar value of the financial loss suffered by the dependant. Rather than the actual financial loss, the section seeks to allocate the lump sum in proportion to the relative loss suffered by each dependant.
It may be appropriate that, after considering the losses suffered by the dependants, each dependant will receive part of the lump sum. It may further be appropriate, after considering the relative positions of each dependant, to apportion the majority of the lump sum to the dependent spouse, given he or she will be responsible to provide ongoing economic support for the child or children while they continue to be dependent. A smaller proportion might then be allocated and held in trust for a wholly dependent child or children. This is only an example of what may be appropriate in one set of circumstances and is not intended to be prescriptive. The Determining Authority must exercise its discretion and apportion the lump sum as it thinks fit, having regard to any losses suffered by each of the eligible dependants.
The most appropriate way to ascertain the economic loss that a dependant has suffered as a result of the cessation of the employee's earnings is to consider all the sources of economic support that each dependant had at the date of the employee's death and to determine what proportion of support was constituted by the employee's earnings.
It will not be appropriate to consider superannuation (or life insurance policies etc.) as a form of economic support as there is separate legislation dealing with superannuation entitlement in the event of an employee's death. In ascertaining the totality of economic support available, the following should not be taken into account:
For a dependent child, consistent with subsection 4(7) of the SRCA, the following must not be taken into account:
When ascertaining the loss that each dependant has suffered, it is appropriate to give consideration to the length of time that the deceased employee could reasonably have been expected to continue supporting that dependant.
For a spouse or partner, it is reasonable to assume that the relevant period of loss is from the date of the employee's death until the date when he or she would have reached statutory retirement age. This is because that period has a causal connection with the cessation of the employee's earnings. This may also be the relevant period of loss for other dependants such as a disabled child whose economic dependence is likely to continue throughout their lifetime.
For a dependent child, it may be reasonable to assume, in many cases, that the relevant period of economic loss is from the date of the employee's death until the child reaches 18 years of age, unless they are in full time education. However, the use of this age is for illustrative purposes only, and not prescriptive. In determining the likely period of a dependant's economic dependence, the decision maker must exercise his or her discretion, having regard to the total circumstances of the case.
For example:
The period (in weeks) over which the employee could have been expected to continue to provide economic support is established considering:
The delegate retains discretion to adopt a different approach
The decision maker should clearly document the relative apportionment of the lump sum to all dependent dependants, especially in situations where the delegate has reasons to adopt a different approach to the apportionment of the lump sum between the various dependants, or if he or she considers that the application of the above principles would produce a result which would not reasonably correspond with the respective economic losses suffered by each of the dependants.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/20696%23comment-form
[2] https://clik.dva.gov.au/user/login?destination=node/20680%23comment-form
[3] https://clik.dva.gov.au/user/login?destination=node/20668%23comment-form
[4] https://clik.dva.gov.au/user/login?destination=node/20603%23comment-form
[5] https://clik.dva.gov.au/user/login?destination=node/20676%23comment-form