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[2026] ACTSC 2
General information, not legal advice.
Supreme Court of the ACT
2026-01-20
McCallum CJ
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SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: Francis (a pseudonym) v Commonwealth (No 6) Citation: [2026] ACTSC 2 Hearing Date: 24 June 2024 Decision Date: 20 January 2026 Before: McCallum CJ Decision: (1) That the sum of $500,000 paid into court by the Commonwealth be paid out to the plaintiff. (2) That the Commonwealth pay the plaintiff’s costs of the separate question. Catchwords: CIVIL LAW – TORTS – PERSONAL INJURY – Damages – historic sexual and physical abuse – where parties had agreed to settlement of claim – where plaintiff was receiving pension for incapacity – what extent Commonwealth liability to pay judgment is discharged by statute – where Commonwealth settled matter “without admissions” – whether possible to determine amount awarded in respect of same incapacity STATUTES – INTERPRETATION – s 30K Veterans’ Entitlements Act 1986 (Cth) – meaning of “damages have been awarded” – whether term includes settlement payment and consent judgment – meaning of “incapacity” – whether “incapacity” confined to “incapacity for work” – meaning of “those damages” Legislation Cited: Safety, Rehabilitation and Compensation Act 1988 (Cth) s 48 Veterans' Entitlements Act 1986 (Cth) ss 5D, 13, 21A, 22, 23, 24, 30C, 30E, 30F, 30G, 30H, 30K, Pt II Divs 2, 3, 4, 5A Cases Cited: Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502 ENT19 v Minister for Home Affairs [2023] HCA 18; 278 CLR 75 Francis v Commonwealth (No 4) [2024] ACTSC 145 Friend v Comcare [2021] FCA 837 Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 262 CLR 362 Work Health Authority v Outback Ballooning Pty Ltd [2019] HCA 2; 266 CLR 428 Texts Cited: Department of Veterans’ Affairs, Approved Guide to the th Assessment of Rates of Veterans’ Pensions (5 ed, 1998) H Luntz, Assessment of Damages for Personal Injury and Death th (LexisNexis Butterworths, 4 ed, 2002) Parties: Alan Francis (a pseudonym) (Plaintiff) Commonwealth (Defendant) Representation: Counsel D Campbell SC w/ J Ronald (Plaintiff) J Davidson (Defendant) Solicitors Porters Lawyers (Plaintiff) Australian Government Solicitor (Defendant) File Number: SC 24 of 2023 McCALLUM CJ: Introduction
Alan Francis (a pseudonym) enlisted as a Junior Recruit in the Royal Australian Navy in 1969, when he was aged 15 years. He was sent to the Junior Recruit Training Establishment at HMAS Leeuwin, where he was stationed for about 12 months. He alleges that, during that time, he was subjected to repeated sexual and physical assaults. In November 1970, he was posted to HMAS Sydney, where he was subjected to bullying and further sexual assaults. The same occurred at HMAS Cerberus, where he was posted in late March 1971. At all of those times, Mr Francis was under the age of 18 years. He is now in his 70s. By these proceedings, Mr Francis has sued the Commonwealth of Australia seeking damages, including exemplary and aggravated damages, for personal injury arising from those historical sexual and physical assaults.
Separately during his service with the Navy, Mr Francis performed periods of “operational service” as a result of which he later became eligible for a veteran’s pension. In early 1971, when he was 17, he served in the Vietnam War. Based on his service records, that appears to have been while he was posted to HMAS Sydney. He performed further periods of operational service between 1972 and 1973. He receives a pension from the Department of Veterans’ Affairs for disabilities accepted to be related to those periods of service. A pension was first granted to Mr Francis with effect from 18 November 1997 to compensate him for the disability of hearing loss with tinnitus (evidently caused by exposure to live firings of small arms and main gun mounts without adequate protection).
In January 2003, Mr Francis applied for an increase in his pension for “disabilities that have not yet been accepted as service-related”, being “anxiety, alcohol drug problem”. That application was accepted. The decision-maker reframed the relevant disabilities in medical terms as “dysthymic disorder, alcohol abuse and drug abuse”. I will refer to those disabilities as the mental health disabilities. The effect of the granting of that application was to increase Mr Francis’s disability pension to “100% of the general rate” with effect from 16 October 2002.
On 20 February 2024, Mr Francis’s claim for damages for personal injury arising from the historical child sexual assaults was resolved on the terms set out in a consent judgment filed with the Court. The judgment was expressed to be “without admissions”. It provided for judgment in favour of Mr Francis against the Commonwealth in the sum of $1,675,000 inclusive of costs. The order for judgment was entered by the Registrar on 21 February 2024. As at that date, Mr Francis had received $628,809.94 in pension payments since the commencement of his increased pension on 16 October 2002 (including a component for his hearing loss).
During the negotiations for the settlement of the damages claim, Mr Francis was anxious to know what impact any settlement would have on his entitlements as a veteran. His lawyers attempted to resolve that issue in correspondence with the Department of Veterans’ Affairs. The Department informed them that the impact of any award of damages would depend on the nature and extent of the conditions claimed and any overlap with “DVA accepted conditions as well as the specific amount awarded”. In a later letter, the lawyers were told that offsetting would be applied “post-settlement based on the final settlement amount”. In the meantime, however, the Department offered to provide a provisional calculation based on an estimated settlement amount. Mr Francis’s lawyers provided a range of possible settlement amounts of “$500,000 to $1,500,000”. The Department provided provisional “clearance” estimates of $427,290.59 for a settlement of $500,000 and $458,445.59 for a settlement of $1,500,000, in each case with a commensurate reduction in future pension payments. It was stated that those estimates would “expire” on 11 December 2023.
Shortly before the settlement agreement was reached, Mr Francis’s lawyers sought an updated estimate based on settlement for $1,300,000 exclusive of costs. They also requested the Department to include in its response the calculations and statutory provisions relied upon. The Department gave an estimate of $467,495.74 valid up to and including 18 March 2024. I will return to consider the Department’s explanation of the method of calculation.
Mr Francis did not accept the correctness of the Department’s method. The Commonwealth nonetheless agreed otherwise to resolve the proceedings. To accommodate the outstanding issue as to any impact of the settlement on Mr Francis’s veteran’s pension, the consent orders made provision for part of the judgment sum, being the amount of $500,000, to be paid into court pending the determination of a proposed separate question as to “whether any part of [the judgment sum] is repayable by the plaintiff to the Department of Veterans’ Affairs”. That sum was defined in the consent judgment as “the disputed amount”.
The parties were in dispute as to the appropriate terms of the separate question. I resolved that dispute in an earlier judgment: see Francis v Commonwealth (No 4) [2024] ACTSC 145. I formulated the separate question as follows: To what extent, if any, is the Commonwealth’s liability to pay the judgment sum taken to be discharged by operation of s 30K of the Veterans' Entitlements Act 1986 (Cth)?
This judgment determines that question.
Legal framework in which the question arises
Mr Francis’s entitlement to a veteran’s pension is governed by Pt II of the Veterans’ Entitlements Act 1986 (Cth), which appears under the heading “Eligibility for pensions by way of compensation to veterans and their dependants”. Eligibility for a pension is addressed in Div 2 of Pt II, which imposes liability on the Commonwealth to pay “pension by way of compensation” to a veteran who is “incapacitated from a war‑caused injury or a war‑caused disease” (s 13).
Division 3 of Pt II addresses the process for making claims for pensions and applications for increases in pensions and the determination of such applications.
The rates of pensions payable to veterans are addressed in Div 4 of Pt II. Sections 22, 23 and 24 in that division specify, respectively, the circumstances in which a veteran will be entitled to the general rate of pension, the intermediate rate of pension and the special rate of pension for the same baseline incapacity. Mr Francis initially received the general rate of pension until the Veterans’ Review Board determined in February 2005 that he was entitled to receive the special rate provided for in s 24.
Division 5A of Pt II addresses the effect of certain compensation payments on rates of pension. The separate question to be determined in this judgment concerns the application of s 30K in Div 5A. The Commonwealth contends that the effect of that section is that the Commonwealth’s liability to pay the sum specified in the judgment entered on 21 February 2024 is discharged to the extent that the claimed incapacities have already been compensated for by payment of the pension.
Section 30K provides: 30K Discharge of liability of Commonwealth to pay damages If: (a) pension is payable, or has been paid, under this Part in respect of: (i) the incapacity of a veteran from a war-caused injury or disease; or (ii) the death of a veteran; and (b) damages have been awarded against the Commonwealth: (i) to a veteran in proceedings instituted to recover damages in respect of the same incapacity of the veteran from that or any other injury or disease; or (ii) to a dependant of a deceased veteran in proceedings instituted to recover damages in respect of the death of the veteran; and the liability of the Commonwealth to pay those damages (excluding any part of them that represents expenses incurred in medical or hospital treatment) is taken to have been discharged to the extent of the total of the amounts of the pension that have been paid to the veteran or the dependant.
I note that the section appears to have a typographical error in the inclusion of the word “and” at the end of s 30K(b)(ii). The section obviously should read if (a) and (b), “the liability of the Commonwealth…is taken to have been discharged” etc, not “and the liability of the Commonwealth” etc (emphasis added).
As submitted by the Commonwealth, the section operates as a deeming provision. The separate question as formulated seeks a determination as to its deeming effect. Lest that be thought to amount to a bare request for judicial advice, it is appropriate to record that the reason the separate question raises a matter properly for the Court’s determination is that the answer is necessary to determine the fate of the sum of $500,000 paid into court by the Commonwealth in accordance with the consent judgment.
Principles of statutory interpretation
The relevant principles are conveniently gathered in the recent decision of the High Court in ENT19 v Minister for Home Affairs [2023] HCA 18; 278 CLR 75. In that case, the majority (Gordon, Edelman, Steward and Gleeson JJ) said at [86]: The starting point for the ascertainment of the meaning of a provision is its text, while at the same time regard is to be had to its context and purpose. … Context should be regarded at the first stage and not at some later stage and it should be regarded in its widest sense, including by reference to legislative history and extrinsic material. (Footnotes omitted.)
Their Honours then cited the remarks of Kiefel CJ, Nettle and Gordon JJ in SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 262 CLR 362 at [14]: This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
Their Honours then noted the principle that legislation “must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals” and “on the understanding that a legislature ordinarily intends to pursue its purposes by coherent means”. Where conflict appears to arise, it “must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions”: at [87] quoting Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [70] (McHugh, Gummow, Kirby and Hayne JJ).
The discussion of principle in ENT19 concludes with a reminder that the ultimate task “in applying the accepted principles of statutory construction is to discern what Parliament is to be taken to have intended”: at [87]. A footnote to that statement includes reference to the judgment of Gageler J (as the Chief Justice then was) in Work Health Authority v Outback Ballooning Pty Ltd [2019] HCA 2; 266 CLR 428 at 460-461 [76] where, in a discussion of the difficulty of resolving questions of inconsistency in a matter involving s 109 of the Constitution, his Honour said: “[O]ne of the surest indexes of a mature and developed jurisprudence” is “to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning”. The responsibility of a court performing its constitutionally mandated function of authoritatively attributing meaning to a legislated text, to the extent necessary to resolve a dispute as to legal rights or legal obligations, is correspondingly “to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have”. That a finding of purpose can involve a “contestable judgment” only heightens that responsibility. (Footnotes omitted.)
Meaning of “incapacity” for s 30K
Mr Francis’s next argument is that, for the purposes of s 30K, the reference to pension payable or paid “in respect of the incapacity of a veteran from a war-caused injury or disease” means pension payable in respect of an incapacity for work, so that any deemed discharge of the Commonwealth’s liability to pay the damages awarded is confined to any amount attributed to the same incapacity for work.
The term “incapacity” is not defined in the Act, save for the explanation in s 5D(2)(a) that it refers to the effects of an injury or disease and not to the injury or disease itself. That the section is concerned with effect regardless of the cause of the effect is reinforced by the fact that, in s 30K(b)(i), the matter that enlivens the discharge of liability is recovery of damages in respect of the same incapacity “from that or any other injury or disease” (emphasis added).
It does not follow that the event (injury or disease) giving rise to “the same incapacity” as that in respect of which the pension has been paid is irrelevant in the application of s 30K. Some consideration of that event may be necessary to understand the nature and extent of the incapacity for which damages are awarded. For example, dysthymic disorder caused by historical child sexual assault might give rise to an incapacity to engage in sexual relations while dysthymic disorder caused by war service might give rise to an intolerance of public spaces or loud noises. The incapacities might be the same in both cases but they might not.
Mr Francis’s argument on this issue was, with respect, a difficult argument. He submitted that his construction (that “incapacity” in s 30K means “incapacity for work”) becomes clear from a consideration of the text of the section in the context of other provisions in Pt II, namely, ss 24, 30C, 30H and 30G.
Starting with s 24, I am unable to see how the terms of that section shed any light on the scope of the deeming effect of s 30K. The overall purpose of Pt II is to require the Commonwealth to compensate veterans for incapacities from war-related injury or disease. Section 24 is concerned with the special rate of the pension (as distinct from the general rate defined in s 22 and the intermediate rate defined in s 23).
Mr Francis relied on the fact that, in s 24, the special rate is defined by reference to incapacity to meet a specified threshold for undertaking remunerative work. But the use of that mechanism to determine whether a veteran is entitled to payment of the pension at a particular rate says nothing about the meaning of the word “incapacity” in that or any other section. This is not an instance for the application of the principle that the same word should have the same meaning wherever it appears in a statute. The word “incapacity” can be read to have the same meaning in each of ss 24 and 30K with no harm to the object of either section.
The other provisions relied upon by Mr Francis do not take the issue any further. It was submitted that a reading of s 30K that “incapacity” means “incapacity for work” would “work more harmoniously with s 30H” but it was not explained how. It was further submitted that such a construction “would not hinder the purpose underlying Pt II” (to prevent double compensation). Mr Francis relied in this context on the remarks of Rares J in Friend v Comcare [2021] FCA 837 at [94]. The plaintiff in that case had been a police officer. She made a claim for workers compensation which was accepted. She later made a complaint to the Human Rights Commission based on her treatment as a police officer. That complaint was the subject of successful conciliation resulting in the payment to her of a lump sum. The issue before Rares J was whether the payment of the lump sum was a recovery of “damages” within the meaning of s 48 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) because some part of it was “in respect of an injury... for which compensation is payable under this Act”.
Meaning of “those damages”
The Commonwealth contends that the phrase “those damages” refers to the damages the proceedings were instituted to recover, so that if damages were sought in respect of “the same incapacity”, s 30K applies to the full extent of the pension paid for that incapacity, regardless of whether or not damages were in fact awarded for that incapacity.
The Commonwealth put four arguments to support that submission. The first was based on the syntax of the section. The section identifies the overlap in the following way: If pension is payable, or has been paid…in respect of the incapacity of a veteran from a war-caused injury or disease…and damages have been awarded against the Commonwealth to a veteran in proceedings instituted to recover damages in respect of the same incapacity…the liability of the Commonwealth to pay those damages … (Emphasis added.)
It may be accepted that, on a strict analysis of the syntax of that phrase, the words “those damages” refer to damages (any damages) awarded against the Commonwealth to a veteran in proceedings instituted to recover damages in respect of the same incapacity. The difficulty with the wording of the section is that it assumes, incorrectly, that the heads of damage sought (those the proceedings were “instituted to recover”) will exactly reflect the heads of damages ultimately awarded. On the analysis contended for by the Commonwealth, if a veteran instituted proceedings to recover damages for a physical injury and a psychiatric injury, and was awarded damages only for the physical injury, s 30K would deem the damages awarded to be discharged to the extent of any pension paid for the same psychiatric incapacity as that for which damages were sought but not awarded. To give the phrase that literal meaning would subvert the primary purpose of Pt II of imposing liability on the Commonwealth to compensate veterans for war-caused injury or disease. In that example, s 30K would operate to cannibalise the pension.
Secondly, it was submitted that, if the meaning of “those damages” was narrowed to mean the portion of the damages awarded for the incapacity, the parenthetic exclusion of expenses incurred in medical or hospital treatment would have no work to do as “the same incapacity” would not include out of pocket expenses such as medical expenses. That is an anomaly. However, the greater injustice to the language and purpose to the section would be to construe it in the manner explained above.
Thirdly, it was submitted that to construe “those damages” to mean only damages that overlap with the pension is to read into the section a requirement for the breakdown of the damages awarded in order to determine the overlap. I agree that, if the expression “those damages” is to be given the meaning I prefer, there is a requirement for such a breakdown but I do not agree that this is an example of inappropriately reading into the section words that are not there. It is simply a question of giving the section some practical operation. To give effect to the simple purpose of Pt II of ensuring that the Commonwealth compensates veterans but not twice for the same incapacity, the parameters of the duplicated compensation must be identified.
Answer to the separate question
Against those conclusions, it remains to determine the extent, if any, to which the Commonwealth’s liability to pay the judgment sum is taken to be discharged by operation of s 30K in the present case.
As already noted, the Department of Veterans’ Affairs estimated that, for a settlement of $1,300,000, the overpayment of the veteran’s pension would be $467,495.74 and that there would be a fortnightly reduction in the pension of $1,292.88. Following the entry of the consent judgment, the calculation was revised, presumably to reflect the increased amount of the settlement. I note in that context that the estimate of $1,300,000 was exclusive of costs whereas the judgment sum was inclusive of costs. On any view, any component for costs should not discharge any liability of the Commonwealth to pay damages.
The method of calculation adopted by the Commonwealth is set out in a letter from the Department dated 12 February 2024. The parties’ submissions did not descend to the detail disclosed in that letter. Based on my consideration of the letter, two issues arise. The first is the method of calculation. The second is the integers that have been used in the application of that method.
As to the method of calculation, the letter acknowledges that the legislation requires the Department to determine “the dollar amount a person has been, or would otherwise be, twice compensated, in order for that amount to be offset against ongoing payments”. The letter goes on to explain that, where the compensation is paid as a lump sum, the Veteran’s Entitlements Act requires that this amount be converted to a fortnightly equivalent amount in accordance with a formula determined by the Australian Government Actuary and a dollar-for-dollar reduction applied to the fortnightly rate of the veteran’s pension. The reference to a requirement to convert the damages sum to a fortnightly equivalent amount is a reference to s 30C of the Act.
The critical feature of that section is that it applies when “compensation payment is paid in respect of the incapacity of the veteran from injury or disease” and “the person is receiving, or is subsequently granted, a pension under this Part in respect of the same incapacity”. In short, it is directed to preventing double compensation.
The section specifies a complex method for determining and addressing any double compensation. It does not disclose all of the integers used in the calculation, instead leaving certain matters to be “determined by, or under the instructions of, the Commonwealth Actuary”. It is not necessary to explain the detail of the method, which in any event is opaque at least to the extent that it contemplates the application of actuarial methodologies.
To the extent that the method can be understood, it is not clear that it matches the rhetoric of the statute (that the deemed discharge of the liability to pay the damages awarded is only to the extent of avoiding double compensation for the same incapacity). However, s 30C discloses a legislative choice that the calculation of the notional overpayment and the method for its repayment will be undertaken on the instructions of the Commonwealth Actuary. Mr Francis did not attack the actuarial calculation indicated by the application of s 30C. Accordingly, it is neither necessary nor appropriate for me to go down that path.
Orders
I certify that the preceding eighty-one [81] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum. Associate: Date:
Francis (a pseudonym)
Commonwealth
Turning to the application of the section, it is common ground that s 30K(a)(i) is satisfied; pension is payable, and has been paid, to Mr Francis under Pt II of the Act.
However, as to the balance of the section, there is no common ground. The parties raised three issues as to the proper construction of s 30K: (a) The meaning of the phrase “damages have been awarded”. Mr Francis contends that “awarded” means awarded by a court following a contested hearing and that the entry of a consent judgment is not an award of damages. It was submitted that, properly construed, the legislation requires that any offset to avoid double compensation for “the same incapacity” be raised by way of defence in the proceedings so that it can be determined in a transparent way rather than permitting the Commonwealth to invoke the deemed discharge of its liability “privately and administratively at its own discretion” after damages have been agreed. (b) The meaning of the word “incapacity”. Mr Francis contends that, assuming (contrary to his argument) that damages are taken to have been “awarded” for the purposes of the section, the reference to pension payable or paid in respect of the incapacity of a veteran from a war-caused injury or disease should be read narrowly to refer only to incapacity for work, so that any deemed discharge of the Commonwealth’s liability to pay the damages awarded is confined to any amount attributed to the same incapacity for work. (c) The meaning of the phrase “those damages”. The Commonwealth contends that the phrase “those damages” means the damages the proceedings were instituted to recover, meaning that it is the pleadings, rather than any break-down of the damages in fact awarded, that determine whether damages have been awarded “in respect of the same incapacity”. By that reasoning, the Commonwealth contends that s 30K deems payment of the damages awarded to the full extent of all pension amounts paid and payable in respect of the mental health disabilities. That approach produces the result that the whole of (indeed more than) the disputed amount is repayable to the Commonwealth. Because the proceedings were instituted to recover damages for those incapacities, it is not necessary (so the argument runs) to ascertain the extent of damages in fact awarded to compensate those incapacities.
I have concluded that each of those three contentions is wrong. A consent judgment is an award of damages. Section 30K applies to damages awarded for any incapacity, not just an incapacity for work. However, the Commonwealth’s liability is taken to be discharged only to the extent that damages were in fact awarded in respect of the same incapacity as that compensated by the pension. As I will explain, it is clear that the provisional estimates provided by the Department do not meet that test. It is not possible to determine the extent to which the Commonwealth’s liability is discharged in the present case because damages have been awarded by the entry of consent judgment in a lump sum “without admissions” and without any breakdown of the numerous heads of damage claimed or the period of injury or pain and suffering included in the settlement sum. What can be concluded as to any amount liable to be repaid is that it is not the amount specified by the Department.
My reasons for those conclusions are set out below. First, it will be helpful to state the principles that govern the issues of statutory interpretation raised.
Those are important principles in the present case, where the task is to construe a provision that sits in the part of a Commonwealth statute concerned with compensation to veterans incapacitated from a war‑caused injury or a war‑caused disease. The clear purpose of s 30K is to provide a mechanism to protect the Commonwealth from the risk of paying double compensation to a veteran for the same incapacity where there is more than one source of Commonwealth liability. It is no part of the statutory purpose to protect let alone enrich the Commonwealth at the expense of a veteran’s due entitlement to compensation for any incapacity. Meaning of “damages awarded”
Section 30K is enlivened where “damages have been awarded against the Commonwealth”. Mr Campbell SC, who appears with Mr Ronald for Mr Francis, submitted that, on its proper textual construction, the section only applies where damages have been awarded by a court after a contested hearing. He sought to draw a distinction between a judgment entered by consent in the terms “judgment for the plaintiff in the sum of” (which he submitted entails no “award”) and the determination of a trial judge to award damages. Mr Campbell maintained that a judgment entered by consent is not an award of damages because it is not a determination on the merits.
In oral submissions, Mr Campbell sought to derive contextual support for that submission by comparing s 30K with s 30G. Whereas s 30K makes no reference to damages paid by agreement, s 30G distinguishes between damages a person agrees to pay and damages awarded to the veteran in legal proceedings.
Section 30G addresses the circumstance where the liability to pay damages for the same incapacity as a veteran’s pension rests with a third party, that is, a person other than the Commonwealth. The section makes provision for the Commonwealth in that circumstance to recover the duplicated compensation from the third party. The mechanism for recovery is for the Veterans Affairs Commission, by written notice to the third party, to require them to pay to the Commonwealth “a specified amount of the damages”. However, the service of the notice does not, without more, create a liability to pay the specified amount. Under s 30G(3), the obligation to comply with the notice is enlivened only if “the person agrees to pay damages” etc or “damages against the person are awarded… in proceedings instituted in respect of the incapacity or death”. Section 30H, which addresses the circumstance where the damages have already been paid by the third party, draws the same distinction between damages a person agrees to pay and damages awarded.
Mr Campbell submitted that the distinction is significant for the proper construction of s 30K because that section refers only to damages awarded against the Commonwealth; it makes no reference to damages the Commonwealth agrees to pay. He submitted that this was a “plainly deliberate choice by Parliament” reflecting an expectation that, where it is the Commonwealth that is liable for any damages that duplicate the compensation offered by the pension, that is a matter the Commonwealth can (and inferentially should) address in settlement negotiations. That cannot occur in the case of third-party liability, where the negotiation of damages is out of the Commonwealth’s control. It was submitted on that basis that the reference to “damages… awarded” in s 30K should be read (as it is for ss 30G and 30H) to refer only to damages awarded by the Court; it should not be understood to include damages the subject of a consent judgment.
The Commonwealth submitted that, in the absence of any special definition that applies for the purpose of s 30K, the ordinary meaning of damages should apply. By reference to the Australian Law Dictionary, the Commonwealth submitted that damages at common law means “a sum of money paid for the damage suffered or vindication of a claimants’ rights in contract and tort action, including pecuniary losses”. Damages have also been described as “a sum a court may award to a successful plaintiff in tort or breach of contract”: H Luntz, Assessment of Damages for Personal Injury and Death (LexisNexis th Butterworths, 4 ed, 2002) at [1.1.1]. It was submitted that the consent judgment entered by the Court for Mr Francis against the Commonwealth was an award of damages and, accordingly, that s 30K is engaged.
It is helpful in this context also to consider ss 30E and 30F, which address the circumstance where another person may be liable for the same incapacity of a veteran as that compensated for by the veteran’s pension, but the veteran has either not sued that third party or not prosecuted the claim properly. Section 30E allows the Repatriation Commission to serve a notice in such a case requiring the veteran to prosecute the claim against the third party. If the veteran fails to comply with the notice, s 30F creates a statutory right of subrogation, allowing the Commission or the Commonwealth to stand in the shoes of the veteran to prosecute the claim against the third party.
Reading Div 5A as a whole, it is clear that the purpose of ss 30E, 30F, 30G and 30H is to ensure that the Commonwealth does not bear the burden of compensating a veteran for an incapacity for which another party is liable in damages. That purpose is supported by mechanisms enabling the Commonwealth, where it has paid such compensation, to recover those payments.
Importantly, however, each of those provisions is predicated on the premise that the award of damages is (whether by agreement or award) for the same incapacity of the veteran as that which has been or is liable to be compensated for by the veteran’s pension.
I accept that the construction of s 30K contended for by Mr Francis is an available construction because of the absence of any reference in the section to damages payable by agreement. However, I do not think it is the correct construction. It may be accepted that the legislation reflects an assumption that, where the Commonwealth is the party liable to pay the damages, it will take the sensible and prudent approach of ascertaining the amount of damages attributable to the same incapacity as one compensated by the pension before settling the proceedings and will specify that amount in the settlement documents or otherwise bring it to account at that point, before the entry of a consent judgment. However, having regard to the comprehensive protection in Div 5A of the interest of the Commonwealth in not paying double compensation for the same incapacity, I think that contextual analysis must give way to the alternative construction, which sits more comfortably with the purpose of avoiding duplication in compensation, that s 30K is enlivened in the case of an award of damages reflected in a consent judgment, provided the amount awarded in respect of the relevant incapacity can be ascertained.
To operate coherently, Div 5A will be construed to ensure that a veteran will be compensated, but not twice, for any incapacity from a war-related injury or disease. It is not consistent with that purpose for the legislature to have carved out judgments entered by consent from the suite of liabilities against which the Commonwealth can offset a veteran’s duplicative pension. For that reason, I reject Mr Campbell’s first argument.
In oral submissions, Mr Campbell made what appears to have been a separate point derived from the principle of finality. If I have understood it correctly, the argument was that, the consent judgment having been entered, it is not open to the Commonwealth in effect to seek to go behind it by clawing back (my words) part of the amount agreed. In this context, Mr Campbell relied on the remarks of Brennan J in Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502 at 505: The Commissioner chooses not to impeach the first judgment for mistake; he chooses not to attack for mistake any agreement which led to the entry of the first judgment by consent. The first judgment stands. As the joint judgment demonstrates, the Commissioner's second action is founded on the same cause of action. The doctrine of res judicata applies and that action must be dismissed.
Mr Campbell submitted: [O]nce the Court has exercised its judicial power as a superior court of record, whether by consent or otherwise, whether expressed without admissions or otherwise, to enter a judgment for a specified amount, any of the controversies that relate to the causes of action to which the judgment relates have been quelled and merge in that judgment. The time for the Commonwealth to deal with this is before judgment, before merger, before quelling. And it makes a mockery of the concept of finality, which of course, is one of the principal reasons that the authorities all say, and it defeats the objects of quick, cheap, just and the like that is an aspect of modern litigation.
With respect, the submission misconceives the Commonwealth’s position. It does not seek to go behind the judgment. It accepts that the judgment, having been entered, is final and payable. The Commonwealth seeks only to rely on the deeming effect of s 30K, which is directed to the discharge of part of the Commonwealth’s liability to meet the judgment.
However, there is force in a separate point made by Mr Campbell based on remarks in Chamberlain where the Court said that the “fact that a judgment is entered by consent may on occasion make it hard to say what was necessarily decided by the judgment”: at 508. The submission raises an important issue in the present case to which it will be necessary to return.
The remarks of Rares J at [94] invoked by Mr Francis were as follows (the submission focussed on the emphasised sentence: I reject Comcare’s argument that s 48 of the SRCA is intended to apply to any remedy for “damages”. Crucially, s 48(1) is intended to prevent double recovery or “double dipping”. That begs the question as to what the second dip is.
As his Honour went on to explain, that was not an easy question because, under the statutory regime under consideration in that case, the comparator for determining whether workers compensation was payable was the recovery of damages “in respect of an injury to the employee” being an injury “in respect of which compensation is payable under this Act”. However, the fact that the task is difficult or (as argued here) elusive does not obviate the need to undertake it. With respect, the point made by Rares J was not directed to question-begging in the formal, rhetorical sense. His Honour meant only that the legislative purpose of preventing double-dipping raises “the question as to what the second dip is”.
The Commonwealth submitted that the statutory context supports an interpretation of incapacity that is broader than just incapacity for work. Counsel for the Commonwealth relied in this context on s 21A of the Act, which requires the Repatriation Commission, when determining “the degree of incapacity of a veteran from war‑caused injury or war‑caused disease, or both”, to do so “according to the provisions of the Approved Guide to the Assessment of Rates of Veterans’ Pensions”.
Under the Guide, which is published by the Department of Veterans’ Affairs, the assessment of degree of incapacity comprises two elements, being medical impairment and lifestyle effects: at 5 of the Guide. Employment and domestic activities form part of the determination of lifestyle effects together with personal relationships, mobility and recreational and community activities: see Ch 22. The Guide provides that “ratings [of the effects of the accepted condition on the ability to work] do not confer on the veteran an earnings related benefit but are intended to compensate for the adverse effects (other than loss of income) of unemployment, reduced employment or diminished quality of working life”: at 274.
It may accordingly be seen that an incapacity for work is only one element of a veteran’s incapacity and is not intended to compensate for loss of income. The Commonwealth submitted on that basis that, for s 30K, incapacity is not restricted to incapacity for work but is concerned with incapacity “more generally”. I agree.
However, it does not follow that the Commonwealth’s liability to pay damages is deemed to be discharged by the whole amount of the pension that has been paid to Mr Francis on account of the mental health disabilities. Central to the operation of the deemed discharge of liability is the existence of double compensation in respect of “the same incapacity”.
Finally, it was submitted that the narrow interpretation of “those damages” is not necessary to achieve the purpose of the provision. I disagree, for the reasons already explained. As submitted on behalf of Mr Francis, the construction contended for by the Commonwealth would give rise to an absurdity and would not meet the statutory purpose of ensuring that veterans are compensated for war-caused incapacity. In circumstances where the consent judgment is for an indivisible lump sum and was agreed without admissions, it would allow the Commonwealth unilaterally and without transparency to determine the portion of those damages (if any) attributable to “the same incapacity” as is compensated for by the pension.
Notwithstanding the syntax of s 30K, I consider that the correct construction of the section is that the phrase “those damages” refers to the damages in fact awarded against the Commonwealth in respect of the same incapacity as one compensated for by the pension. It does not mean any damages awarded. The reference to damages awarded against the Commonwealth to a veteran “in proceedings instituted to recover damages in respect of the same incapacity” is a device for identifying the proceedings in question. That device creates a temporal anomaly because the damages the proceedings were instituted to recover are not necessarily the damages in fact awarded at a later point in time. Having regard to the purpose of Pt II, that anomaly should be resolved in favour of ensuring that the veteran is not deprived of full compensation for a war-caused incapacity.
The present case provides an example of the difficulty of the alternative construction. The damages the proceedings were instituted to recover include damages for pain and suffering, exemplary damages and aggravated damages. None of those heads of damage overlaps with any incapacity arising from the mental health disabilities compensated for by the pension. Furthermore, damages were claimed in respect of sexual offences committed over thirty years before Mr Francis was granted the veteran’s pension for the incapacities arising from his mental health disabilities. The risk that, by applying the algorithm derived from s 30K on the assumptions contended for, the Commonwealth will leave him undercompensated is patent.
What is clear from a consideration of s 30C and its application as explained in the Department’s letter dated 12 February 2024 is that, in the circumstances of this case, the methodology applied is problematic, for at least two reasons.
First, it is clear that the calculation was applied adopting assumptions that are factually wrong. The formula converts the lump sum damages to a fortnightly rate and compares that rate with a notional percentage rate for the same compensable incapacity under the pension. In doing so, the formula assumes as a premise that the damages awarded for “the same incapacity” relate to the same period of time as the period for which compensation has been paid by the pension. That is clear from s 30C(f), which provides that the period of the deemed fortnightly damages payment begins on the earlier of the day of payment of the lump sum or the day the pension becomes payable.
The difficulty is that, as Mr Francis instituted proceedings to recover damages for historical child sexual assaults, it is clear that the damages sought covered a broader period of time. It is no answer to say that the Department is required to apply the algorithm instructed by the actuary. The problem is not with the application of the algorithm but with the integer for the compensation paid to the veteran for the same incapacity. The Commonwealth argues that is all damages awarded in the proceedings, but I have rejected that argument.
Separately, it is apparent that the Department assumed (perhaps not unreasonably, as they were not told otherwise at that stage) that the whole of the settlement sum of $1,300,000 reflected compensation in respect of dysthymic disorder and had complete overlap with the incapacity from that disorder for which Mr Francis receives the pension.
It follows that the calculation must have made the following untested assumptions: (a) That the psychiatric injury caused by the historical child sexual assaults had given rise to the same incapacity as the psychiatric injury caused by operational service as a member of the defence forces. In other words, that dysthymic disorder whenever or however caused gives rise to a single, indivisible incapacity. (b) That the incapacity was for the same period as that compensated by the pension. In other words, that although he was sexually assaulted as child in 1969, Mr Francis suffered no psychiatric injury until 16 October 2002, or at least was not compensated in the damages award for any injury before that date. (c) That, whatever other heads of damages might be reflected in the settlement of the damages claim, the lump sum agreed without admissions by either party would include complete compensation for that psychiatric injury.
As noted above, it may be accepted that Mr Francis did not inform the Department of any breakdown of the damages judgment. The issue now having been raised on behalf of Mr Francis, the Commonwealth has reaffirmed its position that the correct comparator is between the notional percentage rate said to reflect the portion of the pension attributable to the mental health disabilities and the whole of the settlement judgment sum. The Commonwealth’s insistence on seeking reimbursement by reference to that whole amount fails to grapple with the untested assumptions in the calculation and the historical aspect of the claim.
As already explained, the calculation assumes that every payment made by way of pension was duplicated in the damages award. That is not an inference that can properly be drawn in the circumstances of this case. The damages award is simply inscrutable, and deliberately so.
The second difficulty is the fact that the damages were agreed without admissions. There is an unhappy tension between the Commonwealth’s declining to support its agreed damages with any admissions but then making, in the words of Mr Campbell, a unilateral, private and arbitrary determination that the agreed damages included complete compensation for the incapacity that represents the same incapacity.
Mr Francis sought to support his contention (that the payments made for the same incapacity cannot be determined) from the appearance that the Commonwealth could not even get the determination right itself, as different figures have been nominated at different times. On 19 September 2023, the Department calculated the offset as $427,920.59 if the settlement was $500,000 and $458,445.59 if the settlement was $1,500,000. On 12 February 2024, the figure was $467,495.75 if the settlement was $1,300,000. After the consent judgment was entered, the figure became $628,000, which was later revised to $580,000.
If I have understood the methodology correctly, the explanation for the different amounts is twofold. First, as already explained, an integer used by the algorithm is the fortnightly equivalent of the lump sum settlement. Presumably the reason that is part of the calculation is that the calculation seeks to determine the rate at which the overpayment can be offset over time which, in turn, will depend on the amount the veteran is (notionally) receiving each fortnight from the lump sum payment. Secondly, because the period of repayment is the period of the veteran’s life (determined actuarially), the calculation is time-sensitive, hence different figures at different times. I may be wrong in those understandings. The point is that I do not think I can draw any conclusion from the fact that different figures were nominated at different times.
However, as submitted by Mr Campbell, the problem remains that the consent judgment is inscrutable. Where, as here, an award of damages is represented as an indivisible sum with no breakdown as to its constitution, the operation of 30K is frustrated. It is not possible in such a case to identify what portion of the damages award overlaps with the incapacities compensated for by the pension.
Accordingly, the answer to the separate question is as follows: Q: To what extent, if any, is the Commonwealth’s liability to pay the judgment sum taken to be discharged by operation of s 30K of the Veterans' Entitlements Act 1986 (Cth)? A: As the judgment sum is a lump sum entered “without admissions” with no break-down as to the heads of damage included, the application of s 30K is frustrated. Accordingly, it is not possible to identify any extent to which the Commonwealth’s liability to pay the judgment sum is taken to be discharged.
It follows that the disputed amount paid into court must be paid out to Mr Francis.