By: Richard Leder, Simone Tagliaferro, and Rhyse Collins

Comensoli v WQA (a pseudonym) [2024] VSCA 104

At a glance

• The Victorian Court of Appeal has ruled that social security payments received by a plaintiff are not to be taken into account in quantifying economic loss, even when those payments are not repayable to the Commonwealth.
• To that effect, a plaintiff who had received Commonwealth support benefits may permissibly be compensated for more than they have lost.

Background

The respondent, ‘WQA’, settled a claim for damages against the applicants for injury alleged to have been suffered as a result of sexual abuse that took place between 1959 and 1961. That claim included damages for past loss of earnings from January 1964 (the presumed date the respondent would have entered the workforce) to October 2015 (the date the respondent reached retirement age).

Between June 1992 and August 1997, the respondent received a Newstart Allowance, and between September 1997 and at least October 2015, the respondent received a Disability Support Pension. Those payments were made in accordance with the Social Security Act 1991 (Cth) (the Act). The parties agreed the social security payments received by the respondent between 1997 and October 2015 (the Relevant Period) totalled $245,529 (termed the Disputed Amount) and had been received in relation to a condition that arose from the claimed injuries. Prior to settlement, it was known to the parties that those social security payments may be subject to the recovery provisions under Part 3.14 of the Act but that, under the repayment formula, there would be no repayment (as the preclusion period would have expired before the payments were made). On 2 June 2023, a clearance was issued by Services Australia confirming there was no repayment required.

In those circumstances, the applicants contended, and the respondent denied, that the social security payments retained by the respondent operated to offset the economic loss damages recoverable and the respondent would be doubly compensated if those payments were not taken into account.

The question of whether all or part of the Disputed Amount should be deducted from the settlement sum was reserved for judicial determination.

On 24 October 2023, Gorton J heard from the parties as to whether or not part or all of the Disputed Amount should be deducted from the settlement sum. He later made orders in favour of the respondent as follows:

• Should social security payments paid to the respondent during the Relevant Period be taken into account in the calculation of damages for past economic loss, in circumstances where they are not repayable to the Commonwealth? – No.
• Is the Disputed Amount or any part thereof payable to the plaintiff? – Yes.

Issue

The applicants contended the trial judge erred in concluding that the legislative intent of the Act was that the social security payments equal to the Disputed Amount were to be ignored in the assessment of economic loss damages, and in so deciding, did not apply the indicia set out by the High Court in Manser v Spry [1994] HCA 50 or the rule against double compensation if the legislative intention was not apparent.

Outcome

The Court (Beach, Kennedy and Walker JJA) delivered a joint judgment that, while granting the applicants’ leave to appeal, ultimately dismissed the appeal.

The Court noted cases of the present kind, where the preclusion period had fully elapsed, were likely to be the ‘smaller cohort of cases’, so their reasoning focused on scenarios where the preclusion period might operate to partly recover the social security payments. This in turn led the Court to consider the hypothetical outcomes of applying the arguments raised by the applicants, finding those arguments would result in complex calculations and evidentiary exercises that could not have been intended by the legislature. The Court formed the view that because social security payments were subject to recoupment generally, it was ‘inescapable’ that the correct approach was that they were not to be taken into account in the quantification of economic loss, irrespective of whether they were actually recoverable by the Commonwealth.

Ultimately, the Court determined that it was possible to discern a clear legislative intention from the Act that social security benefits which were not recovered by the Commonwealth were to be enjoyed independently of, and cumulatively upon, an injured party’s right to damages, with the result that they are to be ignored in the assessment of loss.

Therefore, while the Court accepted the cardinal concept that an injured party cannot recover more than they have lost, that was a common law rule which was amenable to clear legislative alteration, and a plaintiff who had received Commonwealth support benefits may permissibly be compensated for more than they have lost.

Richard Leder, Simone Tagliaferro and Rhyse Collins from Wotton + Kearney represented one of the applicants in this appeal.