Li and National Disability Insurance Agency (NDIS)
[2025] ARTA 132
•25 February 2025
Li and National Disability Insurance Agency (NDIS) [2025] ARTA 132 (25 February 2025)
Applicant/s: Daniel Li
Respondent: National Disability Insurance Agency
Tribunal Number: 2023/6073
Tribunal:Deputy President O'Donovan
Place:Brisbane
Date:25 February 2025
Decision:The Tribunal sets aside the decision under review and in substitution decides to approve a statement of participant supports in identical terms to the statements approved on 26 April 2023 but with an annual funding reduction of $31,692.72, based on a Compensation Reduction Amount of $1,238,551.36,
In relation to the Statement approved on 18 September 2024 the decision to approve is set aside and remitted to the Respondent for determination in accordance with these reasons.
Damien O’Donovan
........................................................................Deputy President O'Donovan
Catchwords
NATIONAL DISABILITY INSURANCE SCHEME – Applicant received a large damages sum prior to becoming a participant in the scheme – Damages held in trust – amounts paid out to family companies to provide care services – statement of participant supports approved included Compensation Reduction Amount calculated in accordance with relevant rules – applicant objected to Compensation Reduction Amount – Should Compensation Reduction Amount include legal costs and fund administration costs – is care provided by relatives a support of a kind funded under the Act – should discretion be exercised to reduce Compensation Reduction Amount – is a reduction appropriate in the special circumstances of the case – no exercise of discretion – Compensation Reduction Amount as calculated under the Rules – Decision set aside and substituted
Legislation
National Disability Insurance Scheme Act 2013 (Cth)
National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013Cases
Luo and National Disability Insurance Agency [2024] AATA 3402
Secretary, Department of Social Security v Hulls [1991] FCA 58
Secretary, Department of Social Security v Banks [1990] FCA 317Statement of Reasons
The applicant is a participant in the National Disability Insurance Scheme (Scheme)[1]. When a person becomes a participant in the Scheme, the CEO of the National Disability Insurance Agency (Agency), must facilitate the preparation of the participant’s plan. A plan consists of two statements. A statement of goals and aspirations that is prepared by the participant, and a statement of participant supports that is prepared with the participant and approved by the CEO. The statement of participant supports specifies the reasonable and necessary supports that will be funded under the Scheme. A decision to approve a statement of participant supports (Statement) can be reviewed in the Administrative Review Tribunal (Tribunal).
[1] herein referred to as ‘NDIS’ or ‘Scheme’.
When considering whether to approve a Statement and fund a reasonable and necessary support, it is relevant to consider whether a participant has received funding from other sources for the provision of the relevant support. This issue arises when a participant has recovered damages in relation to injuries suffered that led to the disability that underpins their participation in the Scheme.
The National Disability Insurance Scheme Act 2013 (NDIS Act) provides for the making of rules that can prescribe ‘[m]ethods or criteria to be applied or matters to which the CEO is to have regard, in deciding, the reasonable and necessary supports…that will be funded …under the National Disability Insurance Scheme’.[2]
[2] NDIS Act s 35(1)(a).
The rules made may relate to how lump sum compensation payments made to participants are taken into account. A set of rules have been made to deal with the issue, the National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (Rules).
In this matter, the applicant received a significant common law settlement eight years before his admission to the Scheme. The nub of the dispute is how this compensation should be taken into account in the funding under his 2023 approved Statement.
The applicant was born in May 2000. The applicant suffered serious injuries during his birth. In 2010, he was awarded a significant sum in settlement of a negligence claim he brought against Queensland Health. From birth, until the applicant became a participant in the Scheme in 2018, the applicant’s family provided him with the care he needed. After the applicant became a participant, he was provided increasing amounts of funded support. In 2023, the total reasonable and necessary support funding approved amounted to $419,904.41 annually, which included funding to meet his disability related needs.[3] His disability related needs include attendant care services. That such care is reasonable and necessary is not contentious. The issue between the parties is whether there should be a reduction in the amount of support funding as a consequence of the common law settlement entered into in 2010.
[3] T-Documents, T21, 267.
When the applicant’s 2023 Statement was approved, his funding was reduced by $28,168.01 to take account of the lump sum compensation the applicant received previously. This reduced the total amount of funding available under the plan. The respondent expects the applicant will make up the shortfall from the damages he received as a result of his common law proceedings. The applicant, by his parents, sought review of that decision.
The original decision to approve the Statement with a funding reduction to reflect a compensation reduction amount was affirmed on 12 July 2023. That is the decision the subject of this review.[4]
[4] T-Documents, T1E, 19-23. A decision to approve a statement of participant supports made on 18 September 2024 is also before the Tribunal by virtue of section 103 of the NDIS Act.
As the matter has progressed through the Tribunal, the respondent’s position has altered. The respondent now contends that if I apply the Rules according to their terms, the compensation reduction amount to be applied in the 2023 Statement is around $42,000 per year.[5]
[5] Tender Bundle A, tab 13, 393-409 (respondent’s statement of facts, issues, and contentions dated 8 July 2024) at [99].
The applicant’s position is that there should be no reduction of funding when the Rules are applied. The applicant’s view is that when the many years of gratuitous care provided by immediate family, and care provided by family and friends in exchange for informal, in-kind and cash payments, are taken into account, the compensation reduction amount calculated under the Rules is excessive. The applicant contends that the compensation reduction amount should be reduced to zero under Rule 3.10 which provides for a discretion that can be exercised ‘in the special circumstances of the case’.[6]
[6] Tender Bundle A, tab 11, 372-388 (applicant’s reply dated 23 October 2024) at [27] and [45].
There is also a question about whether the Tribunal has a residual discretion when approving a Statement to adjust the compensation reduction amount in the exercise of a more general discretion which is not limited by the terms of 3.10.
To reach a decision in relation to this matter, the starting point is the agreement between the parties concerning the reasonable and necessary supports that will be funded by the respondent. For the period 26 April 2023 to 25 April 2024 the total cost of supports that are reasonable and necessary totals $419,904.41.[7] The question then is whether a compensation reduction amount should be applied to that sum, and if so, what that amount should be. In order to deal with that issue, it is necessary to go through three steps.
[7] T-Documents, T21, 254-271.
First, the compensation reduction amount (CRA) needs to be calculated by applying the relevant Rules, which are annexed to these reasons for decision. The formula which is to be applied in this case is provided for by Rule 3.13, which is as follows.
3.13 … the CEO is to identify the compensation reduction amount as follows:
(a) calculate the amount of compensation fixed under the judgement or settlement;
(b) subtract the sum of the amounts (if any) payable in respect of the amount of compensation under the following:
(i) the Health and Other Services (Compensation) Act 1995;
(ii) the Health and Other Services (Compensation) Care Charges Act 1995;
(iii) Part 3.14 of the Social Security Act 1991;
(iv) a law of the Commonwealth, a State or a Territory, prescribed by the National Disability Insurance Scheme rules;
(c)subtract an amount that the CEO considers reflects the value of any period of preclusion:
(i) that arises from a Commonwealth, State or Territory statutory scheme of entitlements (for example, the Social Security Act 1991); and
(ii) is in respect of the injury;
(d) if no preclusion period has arisen for the purposes of paragraph (c) and the CEO is satisfied that:
(i) the participant claimed damages in relation to lost earnings or lost capacity to earn; and
(ii)the amount of compensation fixed under the judgement or settlement included an amount in respect of those damages;
subtract 50% of the amount of compensation;
(e) if the amount after applying paragraphs (a) to (d) is greater than the value of the reasonable and necessary supports that the CEO considers would have been provided to the participant and funded under the Act over the participant’s expected lifetime, had the participant been a participant from the time of the compensable event—replace the amount by that value;
(f) subtract an amount that the CEO considers equivalent to the total of the amounts that were paid by the participant for supports, being supports of a kind funded under the Act, after the compensable event and before becoming a participant;
(g) subtract any recoverable amount payable by the participant in respect of the compensation amount pursuant to section 106 or section 107 of the Act;
(h) subtract any amounts deducted by the Agency under section 105B of the Act;
(i)subtract the amount of any reduction in funding under paragraph 3.5 that occurred in relation to a previous plan of the participant.
To apply the formula, it is necessary to determine what the amount of compensation fixed under the settlement was, and in particular, whether it should include the legal costs component and funds earmarked for management of the settlement sum (paragraph (a)).
Applying the formula also requires a consideration of what amounts ‘were paid by the participant for supports, being supports of a kind funded under the NDIS Act’ (paragraph (f)). Two issues arise in relation to this question. The first is what amounts were paid for supports. For reasons that will be explained shortly, the applicant’s family made many informal arrangements for the applicant’s care. As a result, substantiation of the ‘amounts that were paid’ is highly problematic. The second is whether payments to family-owned companies that acted as intermediaries between the applicant and his parents and extended family (and others) as care providers, meet the description of payments for supports ‘of a kind funded under the NDIS Act’. The respondent’s view is that payments to family for care are not, absent exceptional circumstances, funded under the Scheme, and so they do not meet the requirements in the Rules for deduction from the CRA.[8]
[8] Respondent’s statement of facts, issues, and contentions dated 8 July 2024, [17].
The calculation made under Rule 3.13 is tied into the Statement approval process by Rule 3.5 which provides as follows:
3.5 In considering whether or not to approve a statement of participant supports in a plan for the participant (whether the first plan or a revised plan), the CEO is to take account of the compensation by reducing the funding for reasonable and necessary supports that would otherwise be approved by the appropriate compensation reduction amount under paragraphs 3.11 to 3.21.
However, a decision maker is not obliged to simply apply the compensation reduction amount determined by applying Rule 3.13. Rule 3.10 provides a discretion which allows the compensation reduction amount to be adjusted downwards if appropriate. It provides as follows:
3.10 For the purposes of paragraph 3.5, the CEO may ignore the whole or part of a compensation reduction amount that would otherwise arise under this Part if the CEO thinks it appropriate to do so in the special circumstances of the case (which may include financial hardship suffered by the participant).[9]
[9] Paragraph 3.5 provides that the CEO is to reduce the funding to a participant by the compensation reduction amount when considering whether or not to approve a statement of participant supports in that participant’s plan.
The applicant’s primary contention is that because so much care has been provided over the years on a gratuitous basis, or as a result of payments funded by the family, when the contribution of the family is examined, it is so large that it is inappropriate to make a further reduction from the fund. The applicant submits that the Tribunal should exercise the discretion that is available in the special circumstances of the case to avoid an obvious and unreasonable gap between what has already been expended by the family in supporting the applicant and what is taken into account in calculating the CRA. Essentially, the argument is that too much of what has already been contributed to the applicant’s care is being ignored in the calculation. The applicant also pointed to other features of his case that could be regarded as ‘special circumstances’.[10]
[10] Applicant’s reply dated 23 October 2024, [33].
The respondent argues that the CRA amount it derives by applying rule 3.13(f) is appropriate, and no additional adjustments should be made for special circumstances. Special circumstances must be unusual or out of the ordinary and there is nothing unusual about the applicant’s position which justifies reducing the CRA. In particular:
· There is nothing special about legal costs being met out of lump sum damages amounts (as occurred in this case);
· There is nothing special about family providing gratuitous care to a disabled family member, nor anything special about a family choosing to care for that family member within the family unit rather than using commercial care;
· There is nothing special about the family opting not to take common law compensation to reflect the past care they provided so as to bolster the lump sum available to their child for the rest of his life (as occurred in this case);
· There is nothing about the change in the applicant’s predicted life expectancy as determined when the damages were calculated for settlement purposes and the significant increase in life expectancy being used to calculate his CRA that amounts to a special circumstance;
· There is nothing special about the applicant receiving lower levels of NDIS funding in previous plans as compared to the level which is now accepted as reasonable and necessary.
In short, the respondent contends that there is no unfairness to the applicant in applying the Rules according to their terms and the discretion under Rule 3.10 is not available because the special circumstances threshold in Rule 3.10 has not been reached.
In the event that I find that there are no special circumstances which would trigger the discretion in Rule 3.10, the final step is to consider whether there is a more unconfined discretion available at the point of approval of the Statement. If there is such a discretion, a question arises about the appropriate way to exercise it having regard to the stricter requirements in the Rules. The answer to this question is affected by the fact that the Rules on their face, do not purport to lay down a binding process, merely to identify relevant considerations when exercising the discretion.[11]
[11] See Rules 1.2 and 1.3.
Before turning to these issues, it is appropriate to outline the evidence available to me and my findings of fact.
Evidence
In considering this application, I have had regard to the following documentary evidence:
· Joint Tender Bundle A (tabs 1 to 13, pages 1 to 409), which contains the T-Documents at tab 1 (T1 to T27, pages 1 to 305);
· Joint Tender Bundle B (tabs 1 to 8, pages 1 to 494)
· Joint Tender Bundle C (tabs 1 to 4, pages 1 to 64)
· Medical report of Michelle French & Associates dated January 2009 in relation to Master Daniel Li (Exhibit A1);
· Care Agreement between Perpetual Trustee Company Limited and Dydan Holdings Pty Ltd dated 5 July 2016 (Exhibit A2);
· Memorandum of advice of Mr G. Mullins dated 5 December 2009 (Exhibit R1);
· Letter to the participant’s carer dated 13 September 2024, advising that a Compensation Reduction Amount will be applied to the participant’s plan (Exhibit R2); and
· Participant’s plan dated 18 September 2024 and statement of participant supports for the period 13 September 2024 to 13 September 2025 (Exhibit R3).
The applicant’s father, Mr Wenlin Li and his trust manager, Mr Karl Rutherford gave evidence at the hearing and were cross-examined by the respondent.
Findings of Fact
The applicant was born on 11 May 2000. As a result of injuries sustained during his birth, the applicant has multiple profound and lifelong physical and intellectual injuries. His injuries and disabilities include:
· Mixed Athetoid Spastic Quadriplegic Cerebral Palsy;
· Dystonia;
· Epilepsy;
· Developmental delay; and
· Grade 3 – Hypoxic Ischaemic Encephalopathy.
As a consequence, he has severely impaired fine motor skills, has an inability to verbally communicate, an inability to independently mobilize and suffers urinary and faecal incontinence. He has undergone the insertion of a PEG feeding tube, and had his adenoids and tonsils removed.[12]
[12] T-Documents, T18A, [4].
The applicant, by his litigation guardian, sued the state of Queensland in negligence. The particularised damages claim sought a total of $11,687,172.85, which did not include legal costs or fund management expenses. Just over half of that sum was for future attendant care and assistance expenses as at 27 February 2009.[13]
[13] Ibid, 105.
In the course of the litigation, advice was obtained from counsel as to the likely quantum of damages that a court would award.[14]
[14] Exhibit R1, [84].
The advice received noted that ‘the majority of care has and will be provided at least until Daniel is the age of about 20 by his extended family.’[15] Counsel also noted ‘there was no significant history of paid care’.[16] The advice on the recoverable quantum from counsel was that damages if successful at trial were likely to be in the range of $4.6 million to $5.5 million. Of this sum, future domestic care was estimated to amount to $2.4 million to $3.2 million. Counsel assessed past domestic care and assistance provided between 11 May 2004 to December 2009 at $354,025. The sum was determined by a reference to a formula reflecting the additional care Daniel required over and above the care required by a child without his disabilities. The sum did not reflect actual past expenditure for domestic care. Past out-of-pocket expenses were detailed in the amount of $67,502.10.
[15] Ibid, [62].
[16] Ibid, [72]
Due to risks associated with the litigation, including in establishing both liability and the quantum claimed, the matter was settled for $4,500,000. The settlement sum was comprised of the following amounts:[17]
· Damages - $4,000,000
· Costs of Funds Management - $400,000
· Party/Party costs - $100,000
[17] T-Documents, T18C, 162.
Following settlement, the applicant paid his lawyers an additional $366,252.83 out of the settlement sum in costs and disbursements.[18] A small amount was paid back to Medicare and Medibank.[19]
[18] Ibid, T5, 42.
[19] Ibid, T4 at [12], T18A at [10], T18B, 161.
The applicant’s mother advised the court that:
My husband and I have provided significant amounts of gratuitous care and assistance to Daniel in the past. I have been advised that my husband and I am able to apply for a small portion of Daniel’s damages to be paid to me and my husband to reimburse us for the care that we have provided to Daniel.
I have instructed my solicitors not to apply to the Court for reimbursement of the care and assistance that we have provided to Daniel since his birth. [20]
[20] Ibid, T4, [24]-[25],
Based on counsel’s advice, the amount that the applicant’s parents were entitled to claim at that point was between $350,000 and $400,000.
The sum the applicant received was paid to, a trustee company, Perpetual Trustee Company Limited (Perpetual) to be managed on his behalf. For the next few years, the family accessed the funds under management very sparingly. However, from 2014 onwards, the family formulated plans to access and utilise funds to improve Daniel’s accommodation and to pay for care provided by family members and others. These are discussed in more detail below.
On 2 March 2018, the applicant became a participant in the National Disability Insurance Scheme (NDIS).[21] His first NDIS plan commenced in July 2018. Between 2018 and 2022 the applicant received plans that provided some attendant care with total supports (on an annualised basis) ranging from about $135,000 to $190,000.[22] From 2023, the funding in the applicant’s plan jumped considerably and the most recently approved plan, which commenced on 13 September 2024, provided total supports in the sum of $429,906.68.[23]
[21] Ibid, T18, 79.
[22] Applicant’s Statement of Facts, Issues and Contentions, [49].
[23] Exhibit R3.
When it approved the 2023 Statement, the Agency determined that it would deduct an amount ($28,168.01) to reflect the fact that the applicant had received a significant common law settlement sum which included a component for future care.[24] It reached that amount by applying Rule 3.13. It is the application of Rule 3.13 and the associated discretions which are the subject of challenge. During the course of this review, the respondent took the view that the amount deducted should in fact be approximately $42,000.
[24] Exhibit R2.
Consideration
As noted above, the first issue to be determined is what the CRA calculation is if Rule 3.13 is applied according to its terms.
Applying Rule 3.13
Rule 3.13 provides for the calculation of a CRA. It begins with the compensation amount and then subtractions are made by following each paragraph of the Rule. The result should reflect, in a rough way, the amount of compensation received by the applicant which relates to supports which are now to be provided by the Scheme. The premise is that unless there is an adjustment in the funding of reasonable and necessary supports to require funding from the damages pool already received, funding for the supports being provided will have been obtained from two sources.
(a) calculate the amount of compensation fixed under the judgement or settlement
The first step is to calculate the amount of compensation fixed under the judgement or settlement. As noted above, the global amount fixed was $4,500,000 however the following were specifically identified in the settlement approved by the Court:
· Damages - $4,000,000
· Costs of Funds Management - $400,000
· Party/Party costs - $100,000[25]
[25] T-Documents, T18C, 162.
The respondent contends that the entire $4,500,000 amounts to the ‘compensation fixed under the … settlement’. I do not agree. Member Bean determined in Luo and National Disability Insurance Agency[26], a costs order does not constitute part of the ‘compensation fixed under the settlement’, however amounts paid out of the settlement sum to lawyers do still form part of the compensation sum. I agree with those conclusions.
[26] [2024] AATA 3402, [19]-[20].
In the Rules, as in the NDIS Act, compensation is defined as follows:
compensation means a payment (with or without admission of liability) in respect of:
(a)compensation or damages in respect of personal injury
A payment in respect of the costs of recovering damages in respect of a personal injury is not covered by that definition. Equally, the costs of managing the damages paid in respect of personal injury is not covered by the phrase. Only the parts of the sum that compensate the claimant in respect of the personal injury they suffered are brought to account. Consequently, the starting point for the calculation is that $4,000,000 is the compensation fixed under the settlement.[27]
[27] The respondent referred to me some cases which approach issues concerning ‘lump sums’ in a different statutory context in a different way – Secretary, Department of Social Security v Hulls (1991) FCA 58 and Secretary, Department of Social Security v Banks [1990] FCA 317 – neither was of any assistance given the quite different words used in the relevant statute.
(b) subtract the sum of the amounts (if any) payable in respect government services
The amounts to be subtracted under paragraph (b) which relate to Medicare and Centrelink repayments are not controversial. The amount subtracted is $4,176.95.
(d) if no preclusion period has arisen for the purposes of paragraph (c) make a further deduction
Paragraph (c) of the Rules does not apply on the facts of this case.
Under paragraph (d) if paragraph (c) does not apply and the CEO is satisfied that:
(i)The participant claimed damages in relation to lost earnings or lost capacity to earn; and
(ii)The amount of compensation fixed under the judgement or settlement included an amount in respect of those damages;
then 50% of the amount of compensation must be subtracted.
It is clear from the advice provided by counsel that a future economic loss component was claimed in the settlement. Consequently, 50% of the amount of compensation must be subtracted.
In the applicant’s case that is $2,000,000.
(f) subtract the amounts that were paid by the participant for supports, being supports of a kind funded under the Act,
Paragraph (f) of the rule provides as follows:
(f)subtract [from the figure obtained using other elements of the formula] an amount that the CEO considers equivalent to the total of the amounts that were paid by the participant for supports, being supports of a kind funded under the Act, after the compensable event and before becoming a participant.
In the applicant’s first filed statement of facts, issues and contentions, the applicant claimed that certain amounts were paid for attendant care supports before the applicant became a participant. It was contended that amounts totalling between $960,000 and $1,600,000 were paid in cash to family and friends to provide supports to the applicant.[28] By the close of the hearing that submission had been modified. The applicant accepted that he was not in a position to establish that particular amounts had been paid for supports, but he could establish that care was given and the value of the cost of the care could be estimated. The applicant contended that this should be sufficient to make an appropriate deduction of around $1,400,000.
[28] Tender Bundle A, tab 8, 351-366 (applicant’s statement of facts, issues and contentions dated 19 March 2024), [66].
The difficulty with this submission is that rule 3.13(f) allows a deduction for ‘amounts that were paid by the participant for supports’. The calculation which that phrase demands is not an estimation of the value of the care given, but a determination of the amounts that were actually paid for supports. The applicant was not in a position to positively verify specific payments made prior to 2016. In the absence of verified payments, it is impossible for the Tribunal to now determine what amounts were paid for supports. In those circumstances, I cannot bring to account any of the very significant support that was provided to the applicant by his family and paid for by his family prior to 2016 when applying Rule 3.13.[29]
[29] This approach is also consistent with the evidence available about the care actually provided in this period. In the counsel opinion obtained for the purposes of the common law proceedings in 2009 (Exhibit R1), counsel noted ‘I am instructed that the majority of care has and will be provided, at least until Daniel is the age of about 20, by his extended family.’
The second contested issue concerning the figure to be used in paragraph (f) concerns significant payments made to family companies by Perpetual after 2016. The applicant claims, and the Agency originally accepted, that payments totalling $552,675.07, which were paid by Perpetual to two companies associated with his parents – Dydan Holdings Pty Ltd (Dydan) and DDL Services Pty Ltd (DDL) were ‘paid by the participant for supports…of a kind funded under the Act’. These payments can be categorised as follows:
(a) Three retrospective payments of $74,000, $74,000 and $72,000 from Perpetual to Dydan on 14 July 2016, for the care provided to Daniel from September 2014 to July 2016 (totalling $220,000);[30] and
(b) Twenty-one monthly payments of $15,841.67 from Perpetual to DDL between 1 December 2016 and 5 March 2018 (totalling $332,675.07).[31]
[30] T-Documents, T11, 57.
[31] Ibid.
These payments were treated as being available to lower the compensation reduction amount in the reviewable decision. However, the respondent now contends that those amounts should not be deducted when applying paragraph 3.13(f) as they do not meet the test in the Rule.
There is no doubt that money was paid out by Perpetual to those companies. What is contested is whether the payments were for ‘supports of a kind funded under the Act.’
The facts concerning these payments are as follows.
When Daniel’s parents made a decision to settle his damages claim and seek the Court’s approval of the settlement, they advised the Court that they would not be asking that a component of the damages award be directed to them to compensate them for services provided to Daniel. Daniel’s parents were motivated by a concern that the sum they were accepting in settlement was less than had been assessed by their lawyers as necessary to provide for Daniel throughout the course of his life.[32]
[32] Transcript, p 24, lines 25 to 34.
The settlement was entered into, and the net settlement sum was paid to Perpetual for it to manage the sum for the benefit of Daniel.
Following the settlement, Daniel’s parents took full responsibility for ensuring Daniel was well cared for. It was rare for his parents to draw down funds. Mr Li’s evidence was that his mindset was that the settlement sum Daniel had received might not be sufficient to guarantee him good care over the course of his life.[33] Consequently, it was prudent to be as thrifty as possible with the settlement sum.
[33] Transcript, p 18, lines 30 to 40; p 105, lines 29 to 35.
In about 2014, it would appear that that mindset began to change. Daniel’s parents adopted at a practical level, a different approach to the lump sum that Perpetual were managing.
They began to engage more with Perpetual in relation to funding certain projects to support Daniel. A plan was devised to extend the Li’s property to add a wing directed at meeting Daniel’s specific needs. Perpetual approved the proposal in principle, but progress on releasing funds was slow.[34] Various options for the financial structuring of the proposal were floated by the Li’s, including one which involved Perpetual buying the home on behalf of Daniel and funding the extension project in full. This proposal had a total cost of around $2 million. This was floated in April 2016.[35] By June 2016, nothing had been approved by Perpetual, and Daniel’s parents decided to abandon the development.[36]
[34] Tender Bundle B, tab 2, 193.
[35] Tender Bundle B, tab 2, 190.
[36] Transcript, p 103 line 26 to p 104 line 30.
At this point Mr Li’s attention turned to a different way that funds could be used in support of Daniel’s care. He resurrected an agreement that had been reached in August 2014 about the funding of care provided to Daniel but pursuant to which no payments had ever been made because Perpetual wanted to deal with a company that had an ABN and would enter into a signed carer agreement.[37]
[37] Transcript, p 104 line 43 to p 105 line 17.
In 2016, Mr Li sought backpay in relation to the agreement and demanded $220,000 for carer and case management costs incurred between September 2014 and 30 June 2016.
Mr Li also asked Perpetual to review the carer and case management payment from 1 July 2016. The review was sought on the basis that:
Daniel is now 16 years old weighs over 50kg. Daniel now constantly need two carers for safety while transferring him. We now have had to hire external carers to help us. We therefore need to factor this in for this new financial year. We are actually using an external carer for three hours a day on school days, and approx…5 hours per day on weekend and holidays at the moment and funded privately.[38]
[38] Tender Bundle B, tab 5, 213.
Mr Li sought total extra carer hours of 2,324 hours per annum and a total annual payment of $190,100 to be paid on a monthly basis at $15,840.67.
A previously agreed living expenses budget of $8,833.33 per month was to be left unchanged for the 2017 financial year.[39]
[39] Ibid, 214.
To implement the payment of backpay in the amount of $220,000, Mr Li advised Perpetual that the payments should be made to an existing family company and paid in three separate invoices for each year in an amount just below the GST threshold. The contracting party was Dydan Holdings Pty Ltd (Dydan).
Perpetual backdated the contract with Dydan to 1 September 2014. The critical terms of agreement were:
3. You [Dydan] will provide at your own expense and ensure that Daniel receives, full time care and support at all times that Daniel is under your care in order to allow him to live with you in comfort and dignity.
4. The parties anticipate that:
a.you will employ Daniel’s parents Wenlin Li and Lihua Wang to personally provide all the care required in excess of the care a child of Daniel’s age might normally require;
b. you may choose to employ or contract other people at your expense to provide some additional care services for Daniel.
…
9. You will invoice Perpetual as trustee for the services provided:
a. At the rate of $10,000 per month;
b. At the beginning of each month or at any other intervals agreed between You and Perpetual
Payments for care from 1 July 2016 were to be paid to another family company, DDL Services Pty Ltd (DDL). The arrangement with DDL was:
a.you [DDL] will employ Daniel’s parents Wenlin Li and Lihua Wang to personally provide all the care required in excess of the care a child of Daniel’s age might normally require;
b. you may choose to employ or contract other people at your expense to provide some additional care services for Daniel.[40]
[40] Tender Bundle B, tab 5, 213.
Perpetual agreed to pay $15,841.67 per month.
These arrangements were implemented.
There is no evidence that either company entered into formal downstream arrangements with the people who provided care to Daniel.
Payments appear to have been made to relatives and other carers but with no easily discernible pattern. Payments were made for ‘wedges’ which Mr Li accepted probably referred to ‘wages’. Payments were made to Daniel’s mother, his sister and other persons. The payments to Dydan and DDL totalled $552,675.
To be taken into account under paragraph (f) the payments to the family companies need to be for supports of a kind funded under the Act - after the compensable event and before Daniel became a participant.
The respondent submits in relation to the DDL payments:
....the Agency submits that the internal reviewer was wrong to have been satisfied that [the monthly payments totalling $332,675.07 to DDL] was a Rule 3.13(f) expense. The Agency makes that submission noting that, on its face, there was little-to-no evidence before the internal reviewer (and is little-to-no-evidence before this Tribunal) establishing that the $332,675.07 in payments were made in respect of a type of support that would be funded under the Act.
In this regard, while accepting that, if it was value for money, it is possible that a
reasonable and necessary support might involve the retention of a third party (pursuant to a retainer-type arrangement) to provide all care services for a participant, the NDIS would not fund such a retainer-type arrangement being entered into with family members for similar reasons to why family members are not (except in exceptional circumstances) funded to provide supports. For example, in the present case, it would be highly undesirable for the Applicant’s parents to be placed in a conflict of interest situation (in that the less they paid for the Applicant’s supports the more financial benefit they received from the monthly $15,481.67 payments).
There is also concern as to whether the amount of the payments represents value for money. To this end:
(a)there is no evidence showing that – in fact – expenses in the magnitude of $15,481.67 per month were being paid for by DDL Services for paid external care costs during the abovementioned time; and
(b)the fact that payments of $15,481.67 per month continued after NDIS funding was introduced in April 2018 raises considerable concern about the basis on which it could be found that such expenses were continuing to be incurred.[41]
[41] Respondent’s statement of facts, issues, and contentions dated 8 July 2024, [47]-[49].
The respondent submits in relation to the Dydan payments that there is little to no evidence that Dydan incurred such costs and if they were payments for gratuitous care then such payments were not in respect of a type of support that would be funded under the Act.
I don’t accept those submissions. I am satisfied that the payments have the character of being amounts that were paid by the participant for supports. . The terms of the contract bear that out. Given Daniel’s high level of disability, I am satisfied that Daniel did require very high levels of personal care and by 2016 multiple carers for manual handling. I am also satisfied that workers, including Daniel’s mother, were being paid to provide that care. It is regrettable that logbooks which are said to record who was providing care to Daniel and when, were never produced to the Tribunal. This failure generated understandable suspicion on the part the Agency.
However, notwithstanding the significant obscurity about arrangements for Daniel’s care resulting from the approach taken in relation to the disclosures of relevant documents in these proceedings, two things are clear. Daniel was well taken care of during the periods of the DDL and Dydan agreements. Second, from Daniel’s perspective, funds from his settlement were paid out to a third party to arrange care for him with the approval of his trustee. The trustee could not have made the payments in the absence of satisfaction that the payments were for the care described in the contracts. On this basis I am satisfied that the amounts identified were paid by Daniel for supports.
The question then is, were the payments for supports of a kind funded under the Act. There is no doubt that attendant care of the kind described in the contracts in broad terms is a support of a kind funded under the Act. However, the respondent takes issue with payments for services provided by relatives and contends that they are not supports ‘of a kind funded under the Act’ because the Agency, generally speaking, does not pay relatives for care.[42]
[42] Ibid, [17].
While it may be true that the NDIS would rarely pay for a support provided by family, its policies and guidelines do allow it to happen, although a case needs to be made to justify it.[43] That being the case, attendant care services provided by a relative do amount to a support ‘of a kind funded under the Act’. It is not the case that the applicant has to establish that the support would have been funded by the NDIS, only that it is a support of a kind funded under the Act.
[43] Ibid, [19], referring to Ch 11.1 of the NDIS Operation Guidelines.
The respondent also points out that there are doubts that the payments made constituted value for money.[44] Again, that is not the relevant question raised by paragraph (f). The question is, is it a support of a kind funded under the Act – not a support that would have been funded under the Act had the applicant been a participant at the time.
[44] Ibid, [49]
Taking the narrow construction of the concept of ‘supports of a kind funded under the Act’ urged upon me would adversely affect Daniel in this case. It would require me to ignore the fact that significant sums have been paid out of his common law damages settlement and are no longer available to him. I am satisfied that the amounts that were paid out meet the description of amounts that were paid by the participant for supports of a kind funded under the Act.
On that basis, the $552,675.07 paid to Dydan and DDL should be subtracted under paragraph 3.13(f). When other amounts paid for supports for Daniel are added back in, the total of verifiable payments for supports of a kind funded under the Act is $757,271.[45]
[45] T-Documents, T1A, 4-5.
Using these figures, the Total Compensation Reduction Amount calculated under Rule 3.13 which should be applied to the statement approved on 26 April 2023 should be calculated as follows:
Compensation Settlement
$4,000,000
Subtract Medicare Payment
$4,176.95
Subtract Centrelink Payment
$0.00
Subtract 50% (in absence of preclusion period)
$2,000,000
This results in a subtotal of $1,995,823.05.
From the subtotal, subtract $757,271.69, leaving a CRA amount of $1,238,551.36, if Rule 3.13 is applied. When divided by a life expectancy of 39.08 years (a figure which is not controversial), the result is an annual reduction in support funding for the 2023 Statement, of $31,692.72.
In circumstances where the applicant’s barrister assessed $2,457,000 as reflecting Daniel’s future domestic care needs from the age of 20,[46] and significant payments have already been made out of that fund earlier than expected, the amount calculated by the formula used in 3.13 produces a result that is broadly fair as between Daniel and the NDIS. The CRA results in a contribution from Daniel’s settlement fund for the future care that the NDIS will now fund. The CRA also reflects the fact that the amount available to Daniel has been depleted by payments for Daniel’s care approved by his trustee. This should be recognised.
[46] Exhibit R1, [73].
Exercise of discretion under Rule 3.10
The next issue is whether Rule 3.10 applies. Notwithstanding that deductions were made utilising Rule 3.10 in the decision of 26 April 2023, the respondent contends that the discretion is not available under the rule because the necessary statutory threshold for its exercise has not been reached.
Rule 3.10 provides as follows:
For the purposes of paragraph 3.5, the CEO may ignore the whole or part of a compensation reduction amount that would otherwise arise under this Part if the CEO thinks it appropriate to do so in the special circumstances of the case (which may include financial hardship suffered by the participant).
Rule 3.5 provides as follows:
In considering whether or not to approve a statement of participant supports in a plan for the participant (whether the first plan or a revised plan), the CEO is to take account of the compensation by reducing the funding for reasonable and necessary supports that would otherwise be approved by the appropriate compensation reduction amount under paragraphs 3.11 to 3.21.
The respondent contends that the discretion is not available, because the circumstances in this case do not have specialness required to trigger its availability.
The respondent contends as follows:
The concept of “special circumstances” has been discussed in a number of cases.
Broadly speaking, what it requires is something to take the case in question “out of the usual or ordinary case”.
In other words, to constitute “special circumstances”, the circumstances need to be “extraordinary”.
Whether a particular factual matter is “special” or “extraordinary” cannot be considered in a vacuum – it must be considered in context. That context, relevantly, includes the situation faced by “other persons in a comparable situation”
...
(a) The Rule 3.13 formula is ultimately designed to ascertain what component of a compensation sum relates to post-participant NDIS-type costs (with Rule 3.13(f) assisting to ascertain this by ascertaining the component of a compensation sum that relates to pre-participant NDIS-type costs). As such, the fact that gratuitous family care (which is not a support of the type funded by the Act) is not reduced during the course of the application of the Rule 3.13 formula calculation is hardly surprising or out of the ordinary.
(b) The finding that pre-participant gratuitous care is a “special circumstance” (or ought to be, in effect, recompensed via the exercise of the Rule 3.10 discretion) is otherwise not readily compatible with the scheme. The scheme is a forward looking funding scheme; it was not put in place to retrospectively fund (or recompense for) supports that would have been provided if a participant had been on the scheme earlier (or the NDIS had existed prior to 2013) – let alone retrospectively fund/recompense for supports that were not even supports of a kind that are funded under the Act.
…
Further, it is noted that the “special circumstances” waiver provision is apparently
directed to unfair situations (of a type not contemplated by – or out of the “ordinary” situation contemplated by - the Rules) that arise for participants. So much is apparent from the parenthesised part of Rule 3.10 (which suggests that special circumstances “may include financial hardship suffered by the participant”). This point is raised noting that, in this case, there is no apparent unfairness sustained by the Applicant by the application of Rule 3.10.[47]
[47] Respondent’s statement of facts, issues and contentions, [83]-[98].
When considering the nature of the discretion, it is necessary to consider the whole phrase. I can ignore a portion of the compensation reduction amount if I:
…’think it appropriate to do so in the special circumstances of the case’.
The threshold for making a reduction is the appropriateness of doing so. Appropriateness is to be assessed in ‘the special’ circumstances of the case. If the purpose of the Rule was to impose an onerous ‘special’ requirement before any reduction could be made, a different phraseology would have been used – for example ‘a portion of the compensation reduction amount can be ignored if there are special circumstances that make it appropriate to do so’. Whereas the way the words are organised, the expression ‘special circumstances’ carries a meaning more akin to the particular circumstances of the case. There is no requirement for an applicant to establish that their case is unique or highly unusual. Provided there is something different or not run of the mill about the case, then the discretion is available for exercise if it is appropriate to exercise it. I am satisfied that the discretion is available. Daniel’s funds have been spent at a very significant rate and unexpectedly in recent years and this may warrant consideration of a further reduction of the CRA.
The question then is, would it be appropriate to reduce the CRA. Mr Li on Daniel’s behalf contends that when the contribution of the family is looked at, its value is so great that there should be no contributions from the damages paid going forward. The argument is advanced in the following way.
Mr Li on behalf of Daniel asks the Tribunal to focus on the care that Daniel needed, the source of that care, and its value. He notes that the value of care given between the ages of zero and four has always been assumed to be zero. However, the care given between age four and the time at which the common law settlement was entered into, was valued at or around $354,025.00 (as per the counsel opinion that underpinned the common law settlement),[48] and all of it was provided by the Li family either directly or through informal arrangements with carers. The value of the care provided to Daniel until he became a participant in the NDIS was calculated by Mr Li at roughly $1.6 million.[49]
[48] Exhibit R1, [65].
[49] Applicant’s reply, [27].
In the first 4 years and 9 months of Daniel’s participation in the NDIS, the NDIS provided core supports funding between $140,000 and $187,000.[50] Using a 2018 report by occupational therapists Sarah Carew and Erin Pavey[51] as a basis for estimating how much care Daniel actually needed, Mr Li submits that this means within that four-year period, the Li family was contributing between $150,000 and $170,000 each year to his care.[52]
[50] Ibid.
[51] Tender Bundle A, tab 3, 307-326.
[52] Ibid.
When the care provided is valued in this way and the sources properly broken down, then the value of care already provided to Daniel from Li family sources (and including payments out of the compensation fund), is $2,197,538.[53] Mr Li submits that in these circumstances, it is inappropriate to seek further payments from Daniel’s lump sum. Daniel’s lump sum should be preserved to enrich his life going forward.
[53] Ibid,[28].
While I accept the factual position advanced by Mr Li on behalf of the applicant, I do not accept that in the circumstances of his case it is appropriate to reduce the CRA. There is no doubt that Daniel is very lucky to have the family that he has. The care that he has been provided with has been exceptional and his family has made significant sacrifices, particularly in the first decade and a half following his birth to make sure he was given the best possible care while ensuring he would have the resources available to be well looked after for the whole of his life. But the question is not whether Daniel’s lump sum should be preserved to reflect the contribution of his family to his care. The concern of the Rules is to ensure that when there are sources of alternative funding available which are designed to cover supports which the NDIS will provide, then those sources of funding are utilised to contribute appropriately to the cost of providing those supports, as they were designed to do when the compensation settlement was reached.
If the NDIS were the only source of funding for Daniel’s care, the NDIS would currently provide annual funding worth $458,074.96.[54] Around half of this amount comprises ‘Assistance with Daily Life’, which are supports to assist or supervise Daniel with his personal tasks during day-to-day life that enable him to live as independently as possible. This includes support with daily activities, personal tasks, and self-care, as well as a limited amount of short-term accommodation.[55]
[54] This figure is calculated by adding the reduction which is being currently applied of $28,168.01 (Exhibit R2) to the current funded supports of $429,906.68 (Exhibit R3).
[55] Exhibit R3, 9.
When he received his settlement sum, approximately $2.4 million to $3.2 million was identified by counsel as appropriate compensation for future domestic care. The services which it was expected Daniel would need to fund out of the common law damages sum are now largely funded by the NDIS.
In circumstances where the NDIS is making such a large contribution to supports which were to be provided from Daniel’s settlement, but which no longer need to be provided, I am satisfied that a contribution from the settlement sum to defray the cost of provision by the NDIS is appropriate.
The key question in determining whether the compensation reduction amount should be decreased from the amount calculated under Rule 3.13, is what funds in the settlement were earmarked for payment for care and support similar to what the NDIS will now provide and what is left of those funds. The question should be looked at entirely from Daniel’s perspective rather than his family’s. He has a set amount of compensation to fund attendant care. Some of it has been consumed. The remainder should be put towards that care in combination with the NDIS funds. That way funds that were provided by the defendant in the common law proceedings to look after Daniel’s future needs are applied as intended.
When the settlement was approved by the Queensland Supreme Court, roughly $2.4 million was available to Daniel for future paid domestic care.[56] $1 million was earmarked for future needs. Nothing falling within the broad category of future care was paid out until 2014. From 2014 until May 2021, sums were paid to Dydan and DDL. Sums were also paid out for a range of aids and consumables. When these are deducted from the $3.4 million earmarked for Daniel’s future needs, roughly $2,100,000 is left in the fund for future care purposes.
[56] When counsel opinion is considered, in light of the final settlement sum received,
From the family’s perspective, the reason that so much remains in the fund is attributable to their sacrifice and generosity. That is undoubtedly true. But at this point, the NDIS is making an enormous contribution to Daniel’s ongoing care. Components of the settlement that were claimed and paid to cover future needs have not changed their character because the NDIS is now involved. Accepting that the NDIS was not set up to take over as the sole source of funding for supporting people living with disability, funds that are still available from the settlement ought to be used to offset the costs of NDIS support, not to recognise the past contribution of the family.
In the present case, I am satisfied that the CRA calculated under Rule 3.13 is, if anything, on the low side. It would not be appropriate to reduce it further to recognise the family’s contribution to care. It is appropriate to apply the CRA formula under the Rules.
This should not be regarded as a lack of recognition of the huge contribution that Daniel’s family has made. It cannot be acknowledged enough.
This approach is recognition of the fact that the settlement sum was as large as it was, because it incorporated an estimate of the attendant care Daniel would require across his lifetime. The funds that were included in the settlement sum for that purpose, should be directed to that purpose. Which, in the current context, means to offset the contribution of the NDIS.
In essence, Mr Li on behalf of Daniel wants recognition of the family’s contribution to Daniel’s care and for this to come in the form of a reduced contribution from the common law settlement to Daniel’s ongoing expenses. That is not an appropriate way to approach the matter. The funds identifiable as related to funding future care in the settlement should be used to reduce the cost of care to be paid for by the Scheme. I do not consider it appropriate in the special circumstances of this case to reduce the CRA.
Having reached this conclusion, it is unnecessary for me to consider whether there is any additional residual discretion I could exercise at the point of approving the Statement. If there is such a discretion, I would not exercise it in the present circumstances.
Decision
My decision is to set aside the decision under review and in substitution decide to approve a statement of participant supports in identical terms to the statement approved on 26 April 2023 but with an annual funding reduction of $31,692.72, based on a Compensation Reduction Amount of $1,238,551.36,
In relation to the Statement approved on 18 September 2024, I set aside the Statement and remit it to the respondent for re-determination in a manner consistent with these reasons for decision.
Date(s) of hearing: 29 and 30 October 2024 and 13 November 2024 Date final submissions received: 21 and 26 November 2024 Representative for the applicant: Mr Wenlin Li (the applicant’s father) Counsel for the Respondent Mr Ben McGlade Solicitors for the Respondent: Moray & Agnew Solicitors Annexure A: Extract from the National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013
PART 1 What these Rules are about
1.1 The NDIS is designed to complement, not replace, existing compensation arrangements for personal injury. These Rules are about ensuring that where individuals receive compensation payments, the NDIS does not duplicate the funding for supports already provided for by these payments.
1.2 These Rules specify how compensation payments in respect of a compensable injury suffered by a participant are taken into account by the CEO in determining the reasonable and necessary supports that will be funded or provided under the NDIS.
1.3 These Rules are related to the National Disability Insurance Scheme (Supports for Participants) Rules 2013, and set out additional factors that the CEO is to take into consideration where the impairment of a participant was caused or aggravated by a personal injury and an amount of compensation was fixed, either by judgement or settlement, or where support is being provided under a Commonwealth, State or Territory statutory scheme. These Rules also apply where a person does not receive any compensation because they entered into an agreement to give up their right to compensation.
1.4 The Act sets out a number of objects for the NDIS. The objects that are most important for these Rules are the following:
(a) supporting the independence and social and economic participation of people with disability;
(b)providing reasonable and necessary supports, including early intervention supports, for participants in the NDIS launch.
1.5 The Act sets out a number of principles for the NDIS. The principles that are most important for these Rules are the following:
(a) people with disability have the same right as other members of Australian society to realise their potential for physical, social, emotional and intellectual development;
(b) people with disability should be supported to participate in and contribute to social and economic life to the extent of their ability;
(c) people with disability and their families and carers should have certainty that people with disability will receive the care and support they need over their lifetime;
(d) people with disability should be supported to receive reasonable and necessary supports, including early intervention supports;
(e) reasonable and necessary supports for people with disability should:
(i) support people with disability to pursue their goals and maximise their independence; and
(ii) support the capacity of people with disability to undertake activities that enable them to participate in the community and in employment;
(f) the role of families, carers and other significant persons in the lives of people with disability is to be acknowledged and respected;
(g) people with disability should be supported to receive supports outside the NDIS, and be assisted to coordinate these supports with the supports provided under the NDIS; and
(h) the financial sustainability of the NDIS should be ensured.
PART 2 Outline of these Rules
2.1 Once a person becomes a participant in the NDIS, they develop a plan with the Agency. The plan comprises two parts:
(a) the participant's statement of goals and aspirations, which is prepared by the participant and specifies their goals, objectives, aspirations and circumstances; and
(b) the statement of participant supports, which is prepared with the participant and approved by the CEO, and sets out, among other matters, the supports that will be provided or funded by the NDIS.
2.2 These Rules are about how compensation payments in respect of an injury suffered by a participant are taken into account by the CEO in determining the reasonable and necessary supports that will be funded under the NDIS.
PART 3Compensation
Application
3.1 This Part applies in relation to a person who is a participant, or who later becomes a participant, if the impairment of the person was caused to any extent by a personal injury, and one of the following cases applies:
(a) the person received compensation under a judgement or settlement in respect of the injury in which:
(i) it is possible to identify the NDIS component of the amount of compensation (NDIS component is defined in paragraph 4.4); and
(ii) the component is either fixed by a non-consent judgement or is objectively identifiable (eg commutation of benefits under a statutory scheme); or
(b) the person received compensation under a judgement or settlement in respect of the injury that:
(i) does not satisfy paragraph (a) and
(ii) fixes an amount of compensation in respect of the injury; or
(c) the person is receiving compensation under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(d) the person:
(i) entered into an agreement to give up a right to compensation in respect of the injury; and
(ii) because of that agreement, there are amounts that the person did not receive by way of a compensation payment (even if the person received other amounts by way of compensation payment in respect of the injury); and
(iii) the CEO is not satisfied that it was reasonable, in the circumstances, for the person to have entered into the agreement.
Compensation, or forgone compensation, to be taken into account
3.4 If the person is already a participant and has a participant's plan, the CEO is to revise the plan.
3.5 In considering whether or not to approve a statement of participant supports in a plan for the participant (whether the first plan or a revised plan), the CEO is to take account of the compensation by reducing the funding for reasonable and necessary supports that would otherwise be approved by the appropriate compensation reduction amount under paragraphs 3.11 to 3.21
3.6 To avoid doubt, a compensation reduction amount may arise in relation to each amount of compensation fixed or foregone in respect of injury, including amounts to which different paragraphs of paragraphs 3.1(a) to (d) apply (for example, where a person receives a compensation amount awarded by a court and another amount as part of a settlement). In this case, more than 1 compensation reduction amount applies for paragraph 3.5. Paragraphs 3.15 and 3.20 set out special rules that apply when there are multiple compensation reduction amounts to which different paragraphs of paragraphs 3.1(a) to (d) apply.
3.7 The reduction in respect of:
(a)an amount of compensation under a judgement, settlement or agreement mentioned in paragraph 3.1(a) (b) or (d); or
(b)a lump sum received as compensation under a scheme mentioned in paragraph 3.1 (c);
may be amortised over a period no longer than the remainder of the participant’s expected lifetime in accordance with accepted actuarial standards, in consultation with the scheme actuary.
Special circumstances
3.10 For the purposes of paragraph 3.5, the CEO may ignore the whole or part of a compensation reduction amount that would otherwise arise under this Part if the CEO thinks it appropriate to do so in the special circumstances of the case (which may include financial hardship suffered by the participant).
Compensation reduction amount—other circumstances
3.13 In the case of a judgement or settlement mentioned in paragraph 3.1(b), the CEO is to identify the compensation reduction amount as follows:
(a) calculate the amount of compensation fixed under the judgement or settlement;
(b) subtract the sum of the amounts (if any) payable in respect of the amount of compensation under the following:
(i) the Health and Other Services (Compensation) Act 1995;
(ii) the Health and Other Services (Compensation) Care Charges Act 1995;
(iii) Part 3.14 of the Social Security Act 1991;
(iv) a law of the Commonwealth, a State or a Territory, prescribed by the National Disability Insurance Scheme rules;
(c) subtract an amount that the CEO considers reflects the value of any period of preclusion:
(i) that arises from a Commonwealth, State or Territory statutory scheme of entitlements (for example, the Social Security Act 1991); and
(ii) is in respect of the injury;
(d) if no preclusion period has arisen for the purposes of paragraph (c) and the CEO is satisfied that:
(i) the participant claimed damages in relation to lost earnings or lost capacity to earn; and
(ii) the amount of compensation fixed under the judgement or settlement included an amount in respect of those damages;
subtract 50% of the amount of compensation;
(e) if the amount after applying paragraphs (a) to (d) is greater than the value of the reasonable and necessary supports that the CEO considers would have been provided to the participant and funded under the Act over the participant’s expected lifetime, had the participant been a participant from the time of the compensable event—replace the amount by that value;
(f) subtract an amount that the CEO considers equivalent to the total of the amounts that were paid by the participant for supports, being supports of a kind funded under the Act, after the compensable event and before becoming a participant;
(g) subtract any recoverable amount payable by the participant in respect of the compensation amount pursuant to section 106 or section 107 of the Act;
(h) subtract any amounts deducted by the Agency under section 105B of the Act;
(i) subtract the amount of any reduction in funding under paragraph 3.5 that occurred in relation to a previous plan of the participant.
3.14 For paragraph 3.13(e), the calculation must be in accordance with any applicable actuarial model published by the Agency on its website at the time the calculation is undertaken.
3.16 If, by subtracting a particular amount under paragraph 3.13, the compensation reduction amount would be reduced to nil or less than nil, the CEO must:
(a) only subtract so much of the amount that would reduce the compensation reduction amount to nil; and
(b) not subtract any further amounts under paragraph 3.13.
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