FEDERAL COURT OF AUSTRALIA Rowell v Health Insurance Commission [2002] FCA 693 STATUTES – construction – settlement of claims for personal injury by claimants agreeing to accept an amount to be determined in accordance with the settlement agreement – whether the amount payable to the claimants is ascertainable at the time the settlement agreement is made – whether the Commonwealth is entitled to reimbursement of the Medicare benefits paid by it in respect of the claimants' injuries WORDS AND PHRASES – ascertainable Health and Other Services (Compensation) Act 1995 (Cth) ss 3, 8, 23, 24, 28 and 38 Oil Basins Ltd v The Commonwealth of Australia (1993) 178 CLR 643 - cited Federal Commissioner of Taxation v Sara Lee Household and Body Care (2000) 201 CLR 520 - cited Wigan v Edwards (1973) 1 ALR 497 - cited Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 - cited PHILIP JOHN ROWELL as Trustee of the Dow Corning Australia Settlement Trust and as Trustee of the Expedited and Capitalized (Certain Australian Claimants, Dow Corning Breast Implants) Settlement Trust v HEALTH INSURANCE COMMISSION V 235 OF 2002 JUDGE: MERKEL J DATE: 3 JUNE 2002 PLACE: MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 235 OF 2002 BETWEEN: PHILIP JOHN ROWELL as Trustee of the Dow Corning Australia Settlement Trust and as Trustee of the Expedited and Capitalized (Certain Australian Claimants, Dow Corning Breast Implants) Settlement Trust APPLICANT AND: HEALTH INSURANCE COMMISSION RESPONDENT JUDGE: MERKEL J DATE OF ORDER: 3 JUNE 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT within 14 days the parties exchange and file their submissions as to the form of declaratory relief and the costs orders that appropriate to give effect to these reasons for judgment. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 235 OF 2002 BETWEEN: PHILIP JOHN ROWELL as Trustee of the Dow Corning Australia Settlement Trust and as Trustee of the Expedited and Capitalized (Certain Australian Claimants, Dow Corning Breast Implants) Settlement Trust APPLICANT AND: HEALTH INSURANCE COMMISSION RESPONDENT JUDGE: MERKEL J DATE: 3 JUNE 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT Introduction 1 The applicant and the respondent are in dispute as to whether the provisions of the Health and Other Services (Compensation) Act 1995 (Cth) ("the Act") apply to the amounts payable to Australian claimants as a result of the settlement of their claims against Dow Corning Corporation ("DCC") for loss and damage suffered as a result of defective breast implants. 2 The Act provides for the recovery by the respondent, as agent for the Commonwealth, of Medicare benefits paid by the Commonwealth in respect of a person's injury ("the compensable person") prior to compensation being paid to that person in respect of that injury. Under the Act the Medicare benefits paid by the Commonwealth in respect of an injury to a compensable person are to be reimbursed to the Commonwealth by the compensation payer at the time compensation becomes payable. Accordingly, the amount of compensation that will be paid to the compensable person will be reduced by the amount required to be reimbursed to the Commonwealth under the Act. 3 The applicant contends that the Act does not apply to the compensation payable pursuant to the settlement of the claims of the Australian claimants as the amount of compensation payable to them is not ascertainable, as required by the Act, at the date they settled their claims. The respondent disputes the applicant's contention, contending that the amount payable pursuant to the settlement is ascertainable and is therefore governed by the Act. Alternatively, the respondent contends that either the applicant or the Claims Administrator who is to determine the quantum of compensation payable to each Australian claimant pursuant to the settlement, is a "compensation authority" as defined in the Act with the consequence that the compensation payable falls within the provisions of the Act. 4 The applicant commenced a proceeding against the respondent seeking relief under the Administrative Decisions (Judicial Review) Act 1977 (Cth). The respondent contended that the proceeding was premature as it had not made a decision concerning the compensation payable to the Australian claimants. However, the respondent accepted, correctly in my view, that it was appropriate that the dispute between it and the applicant over the application of the Act to the compensation payable to the Australian claimants be resolved by the grant of declaratory relief: see Oil Basins Ltd v The Commonwealth of Australia (1993) 178 CLR 643 at 648-650. 5 Slater & Gordon, which acts as solicitors for approximately 2,500 Australian claimants, has applied for leave to intervene in the proceeding. The intervention was not opposed by the applicant or the respondent and submissions were made by Slater & Gordon to the Court in support of the applicant's contentions. Background 6 The claims of 3,181 Australian women, as well as the claims of in excess of 200,000 women from other countries, for loss and damage suffered as a result of defective breast implants manufactured by, or from breast implants made from materials manufactured by, DCC were settled by a settlement agreement known as the Dow Corning Settlement Option ("the Settlement Option"). The Settlement Option was part of a plan of reorganisation of DCC that was required to be submitted to the United States Bankruptcy Court as a result of DCC having filed for bankruptcy pursuant to Ch 11 of the United States Bankruptcy Code. 7 Chapter 11 of the Code provides a procedure which permits a corporation to extinguish its liability for past debts and lawsuits through a plan of reorganisation which regulates payments to existing and future creditors. Although the plan of reorganisation was approved by the Bankruptcy Court on 30 November 1999, and affirmed on appeal on 13 November 2000, it remains the subject of a further appeal and its terms and conditions cannot be effectuated until the appeal process is completed. The claims of 3,181 Australian claimants ("the Settlement Option claimants") were settled by that part of the Settlement Option known as the Dow Corning Settlement Option Regarding the Voluntary Australian Subclass ("the Australian Subclass Agreement"). That agreement provided for the payment of compensation of US$23.1 million to the applicant, inter alia, as trustee for the Settlement Option claimants who had elected to settle their claims in accordance with the Settlement Option, subject to the approval by the United States Bankruptcy Court of the plan of reorganisation of DCC. 8 The Australian Subclass Agreement provided for staggered payments to the Settlement Option claimants of the total settlement amount over seven years from the "effective" date, which was a date after the final disposition of any appeal against the approval of the United States Bankruptcy Court of DCC's plan of reorganisation. The Australian Subclass Agreement also provided for the capitalisation of the total settlement amount payable to Australian claimants under the Settlement Option. Under that provision several United States insurance companies ("the US insurers") agreed with the applicant and the solicitors representing the Australian claimants to capitalise the total settlement amount payable under the Australian Subclass Agreement by payment to the applicant of the sum of US$18.15 million, which was agreed to be the present day value of the total settlement amount ("the Capitalisation Agreement"). 9 The capitalised settlement amount was to be paid to the applicant to be held by him in accordance with the terms of a deed known as the Expedited and Capitalised (Certain Australian Claimants, Dow Corning Breast Implants) Settlement Trust Deed ("the Trust Deed"). Pursuant to the Australian Subclass Agreement, the Capitalisation Agreement and the Trust Deed (which I refer to collectively as "the Settlement Agreement") the Australian claimants assigned and transferred their rights to receive staggered payments under the Australian Subclass Agreement to the US insurers in exchange for the right to receive payment from the applicant of the amount determined to be payable to them in accordance with the provisions of the Settlement Agreement. In substance, the Australian claimants substituted the rights they derived under the Settlement Agreement for the rights they derived under the Settlement Option. Consequently, the compensation entitlements of those claimants were no longer to be subject to the approval of the United States Bankruptcy Court to the reorganisation of DCC or to the staggered payment scheme under the Settlement Option. The implementation of the Settlement Agreement was, however, subject to the Victorian Supreme Court "permitting the Trustee to implement the Capitalised Trust" or to the plan of reorganisation of DCC becoming effective, whichever first occurred. 10 In addition to providing for the settlement of the claims of the Settlement Option claimants, the Settlement Agreement also provided for the settlement of the claims of Australian claimants who had not elected to be bound by the Settlement Option. An additional fifteen Australian claimants ("the Settlement Agreement claimants"), who are represented by Slater & Gordon, elected to participate in the benefits provided under the Settlement Agreement. 11 On 21 May 2001 the Supreme Court of Victoria authorised the applicant to implement the Settlement Agreement and to expedite the payment of compensation in accordance with the Settlement Agreement. The US insurers paid the capitalised total settlement amount of US$18.15 million, together with a further amount of US$250,000, to the applicant as trustee of the Trust Deed. The further amount was paid pursuant to the Settlement Agreement to enable settlement of the claims of the Settlement Agreement claimants. The total amount paid was converted to A$39,992,979.56, which is being held by the applicant in an interest bearing account pending payment of the claims of the Settlement Option claimants and the Settlement Agreement claimants. 12 The Trust Deed provides for the Settlement Option claimants and the Settlement Agreement claimants to present their claims for compensation to the applicant and for the determination of those claims by a Claims Administrator in accordance with the terms and conditions of the Settlement Agreement. The steps required to be taken in order to determine whether a particular claimant is entitled to compensation and, if so, the quantum of that compensation, are complex. In substance, the Claims Administrator is required to assess each claim and characterise the severity of the medical condition of each claimant by reference to a detailed Medical Conditions List. The nature and quality of the evidence provided by a claimant to establish her entitlement to compensation under the Settlement Agreement will be critical to the Claims Administrator's determination of the category into which the claimant falls for compensation purposes and, therefore, the quantum of the compensation that will be payable to the claimant. As the total amount available for payment, after the deduction of expenses, was limited to the capitalised total settlement amount together with the interest derived thereon, the actual amount payable to claimants was only capable of being ascertained after the quantification of all claims. The one exception to that process related to certain categories of "expedited claimants", the quantum of whose claims were fixed in amounts not exceeding $2,000. Thus, although the Settlement Agreement provided the mechanism by which the Settlement Option claimants and the Settlement Agreement claimants settled and received compensation in respect of their claims against DCC, the amount actually payable to those claimants was not capable of being ascertained at the date of the Settlement Agreement, although it was capable of being ascertained in accordance with the provisions of that agreement. 13 The Settlement Option remains subject to final court approval in the United States and has therefore not become unconditional. However, the claims of the Australian claimants are governed by the Settlement Agreement, which became unconditional after its implementation was authorised by the Supreme Court of Victoria. 14 By letter dated 10 July 2001 the applicant informed the Australian claimants of his role as trustee under the Trust Deed and provided the claim documents they were to use in submitting their claims. The claimants were informed: "The settlement money has been paid into an account under the control of the Trustee of the Dow Corning Australia Settlement Trust and subject to the supervision of the Supreme Court of Victoria. Following the deduction of administration expenses as approved by the Court, the funds in this account will be distributed amongst all successful claimants according to their applicable categories of claim and the number of claimants in each category. It is not possible currently to estimate how much compensation each claimant will receive. Please note that apart from payments to expedited claimants, no claimant can be paid any compensation until the claims of all claimants have been finally assessed and any appeals determined. I currently estimate that this process will take until about the middle of 2002." 15 The documents provided included draft releases which were to be executed by the claimants in accordance with the terms of the Settlement Agreement. The claimants executed the releases and submitted their claims as requested. Although the claims process is nearing completion, no claims have been paid and no claimant has been informed of the amount of compensation that will be payable to her. The Act 16 Section 8 of the Act creates the liability of a compensation payer to pay the amount of Medicare benefits, being the benefits payable under Pt II of the Health Insurance Act 1973 (Cth), to the Commonwealth in certain circumstances. Section 8(1), relevantly, provides: "Subject to subsections (2), (3), (6) and (9), if: (a) a judgment or settlement is made in respect of an injury to a compensable person; and (b) medicare benefit has already been paid in respect of a professional service rendered to that person in the course of treatment of, or as a result of, the injury; and (c) …; there is payable to the Commonwealth an amount equal to the medicare benefit." 17 Section 8(2) provides that where there is an apportionment of liability that is fixed in a judgment or settlement, with the consequence that the settlement amount is reduced, the amount payable to the Commonwealth under s 8(1) is also reduced by the same proportion. 18 Sections 8(3) and (4) provide that if the amount fixed by a judgment for past medical care exceeds the amounts payable under s 8(1) the excess is payable by the compensable person. Section 8(6) provides for s 8 not to apply where there has been a bulk payment agreement with the respondent and is not presently relevant. 19 Finally, s 8(9) provides: "This section does not apply if: (b) the amount of compensation fixed by the judgment or settlement is a small amount; and (c) the amount of compensation so fixed is the entire amount of compensation for the injury to which the claim relates." Section 38 provides, inter alia, that an amount of compensation is a small amount if it is equal to or less than $5,000. Sections 8(9) and 38 only apply in their current form as from 1 January 2002. Prior to that date only payments of compensation of $150 or less were, subject to CPI indexation, excluded from the operation of the Act: see Reg 4 of the 1995 Health and Other Services (Compensation) Regulations. 20 The Australian claimants are plainly "compensable persons" as they are entitled to receive a compensation payment in respect of an injury. The applicant contended that as certain categories of expedited claimants only have to establish they had a DCC breast implant to gain the fixed compensation of $2,000 or less, that compensation is not in respect of an injury. The contention is misconceived as it looks to the proof required to establish the claimant's claim rather than at the claim, which is the source of the claimant's entitlement to compensation. It is abundantly clear that the claims of the Australian claimants were for compensation in respect of an injury and that any compensation payable is in respect of the injury claimed to have been suffered. 21 The parties are in dispute over whether amounts payable pursuant to the Settlement Agreement to the Australian claimants will be payable pursuant to a "settlement" or "judgment" as defined in s 3(1). Relevantly, that sub-section defines a "settlement" to mean: "…an agreement under which an amount of compensation that a party to the agreement agrees to pay to another person is fixed,…" 22 Section 3(4) provides: "A reference in this Act to an amount of compensation being fixed under an order or agreement is a reference to the amount being: (a) specified in the order or agreement, or in the law under which the order or agreement is made or to which the order or agreement relates; or (b) ascertainable, at the time the order or agreement is made, in accordance with the terms of the order or agreement, or in accordance with a law under which the order or agreement is made or to which the order or agreement relates." 23 The first issue is whether the amount of compensation payable pursuant to the Settlement Agreement is ascertainable, at the time the agreement is made, in accordance with its terms. 24 The parties are also in dispute over whether the compensation is payable pursuant to a "judgment". Section 3(1) provides: "judgment" means an order (by whatever name called) by a court or a compensation authority under which an amount of compensation payable is fixed, but does not include a reimbursement arrangement, a consent judgment or an order in the nature of a consent judgment." 25 A "compensation authority" is defined in s 3(1): "compensation authority means a person appointed, or a body established, by or under Australian law, being a person or body whose functions include determining amounts of compensation payable to persons." 26 Australian law is defined in s 3(1) as meaning a law of the Commonwealth, a State or a Territory. "Law" is defined in s 3(1): "law, in relation to the Commonwealth, a State or a Territory means a law (whether written or unwritten) of the Commonwealth, that State or that Territory, and includes a law (whether written or unwritten) in force in the Commonwealth, that State or that Territory or in any part of the Commonwealth, that State or that Territory." 27 The second issue involves determining whether the applicant or the Claims Administrator is a person appointed under unwritten law in force in the Commonwealth and is therefore a compensation authority and, if so, whether the compensation is payable under "an order (by whatever name called)". 28 Division 1 of Pt 3 of the Act sets out the procedures that are required to be observed to enable payment of Medicare benefits payable to the Commonwealth under the Act. Section 11 provides that the Division operates if a person makes a claim against another person for compensation in respect of an injury, by claiming compensation from the other person. Section 23 provides that a "notifiable person" must notify the respondent in writing within 28 days after a judgment or settlement has been made in respect of the claim. It is an offence for a person to fail to comply with a requirement of s 23 (s 26(1)). In the present context the "notifiable person", as defined in s 3(1), is the person against whom the claim is made. 29 The notice provided for by s 23 is required to contain the information prescribed in s 23(3) which, relevantly in sub-section (f), requires provision of: "The amount of compensation to be paid under the judgment or settlement to the compensable person;" 30 Section 24 provides that the managing director of the respondent must give to the compensation payer, within 28 days after the respondent receives notice under s 23(1), written notice specifying the sum of the amounts (if any) that are payable to the Commonwealth under the Act in respect of the amount of compensation. 31 Section 28 provides that the compensation payer must pay to the Commonwealth the amount specified in the notice within 28 days after the date on which the notice was given. Under s 29(1) an amount that is payable to the Commonwealth under the Act is recoverable as a debt due to the Commonwealth. Settlement 32 The critical question is whether the Settlement Agreement "fixed" an amount of compensation that was agreed to be paid to the Australian claimants. Under s 3(4)(b) an amount is fixed under an agreement if it is: "ascertainable, at the time the…agreement is made, in accordance with the terms of the…agreement…" 33 In the present context I regard "ascertainable" as meaning that the amount is capable of being quantified as a certain, definite or known amount. 34 Under each of the Australian Subclass Agreement, the Capitalisation Agreement and the Trust Deed the amount of compensation that was agreed to be paid by the applicant, who is the compensation payer for the purposes of the Act, to the Australian claimants was an amount that was to be ascertained in accordance with the terms of those agreements. 35 Under cl 6(f) of the Trust Deed the applicant, as Trustee, must: "upon receiving properly executed releases in the form of Exhibits D1 and D2 to the Capitalisation Agreement, pay compensation in accordance with Paragraph 7 of the Agreement as authorised by the Claims Administrator in writing and at the level specified by the Claims Administrator in writing or where an appeal is brought pursuant to Section VII of Exhibit B, pay compensation specified in the determination of the Claims Review Panel;" 36 The claims procedures are complex. Clauses 1-4 of Sch A to the Trust Deed provide for the certification of the amount of compensation that is to be payable to the Australian claimants: "1. The Claims Administrator, or, where the Claims Administrator has delegated the implementation of the Claims Administration Procedures to the Claims Officers, the Claims Officers must make a decision in relation to each claim in accordance with the [Australian Subclass Agreement] and inform the relevant claimant of the decision. 2. If there is no appeal by the claimant, the Claims Administrator must supply a certificate to the Trustee authorising payment of the amount specified in the certificate. 3. On receipt of the certificate, properly executed releases in the form of Exhibits D1 and D2 to the Capitalisation Agreement, and in the absence of manifest error or fraud, the Trustee must pay the claimant in accordance with the certificate of the Claims Administrator. 4. If the claimant appeals in accordance with and as permitted by the [Australian Subclass Agreement] the decision of the Claims Review Panel must be communicated to the Claims Administrator. The Claims Administrator must advise the claimant of the result of the appeal. The Claims Administrator must also advise the Trustee. If the claimant succeeds in this appeal the Claims Administrator must provide a certificate to the Trustee specifying the amount to be paid to the claimant." 37 Thus, the amount payable to a claimant is only ascertained, subject to appeal, when a decision has been made in relation to each claim under cl 1 of Sch A. Prior to the decision being made by the Claims Administrator as to the amount of compensation payable in accordance with the terms of the Settlement Agreement it is not possible to ascertain: · whether a claimant would receive any payment at all; · whether a claimant had satisfied the Claims Administrator or a delegate of the matters required to be determined in order to determine the compensation category into which that claimant's claim fell; · the quantum of the fund available for the payment of compensation to the Australian claimants, which was to be the capitalised total settlement sum and interest thereon, less expenses and other deductions authorised to be made under the Trust Deed; · the quantification of the claims of other eligible claimants whose claims were required to be ascertained before the claims of each individual claimant, other than the expedited claimants, were quantified. 38 The applicant is obliged to pay the amounts specified in the certificate to the claimants after: · the Claims Administrator has quantified all of the claims and has supplied the certificate provided for in cl 2 or, if there is a successful appeal, the certificate provided for in cl 4; · he has received the executed releases in the form of Exhibits D1 and D2 to the Capitalisation Agreement. 39 The importance of the above matters is that the amount of compensation payable to each claimant was not capable of being quantified as a certain, definite or known amount at the date of the Trust Deed, of the Capitalisation Agreement, or of the Australian Subclass Agreement. The reason for that is that the quantum of the claims depended upon a number of events occurring after the Settlement Agreement including: the lodgement of such evidence or other material as each claimant was able to lodge; the Claims Administrator's assessment of the claims; the interest earned and the expenses to be deducted; and the decision of the Claims Administrator or, where there is an appeal, the decision of the Claims Review Panel. Thus, at the time of the Settlement Agreement the amount payable to each of the Australian claimants was a matter of speculation. That is not surprising as under the Settlement Option, and then under the Settlement Agreement, the Australian claimants were agreeing to a procedure, including the criteria, by which the quantum of compensation payable to them was to be determined. 40 The position was less speculative in respect of the expedited claimants who, upon the acceptance or categorisation of their claim, were entitled to the fixed sums specified, which did not exceed $2,000. However, even those claims depended upon whether the Claims Administrator accepted the evidence or material lodged by a claimant in support of her claim and upon the Claims Administrator's categorisation of the claim. Until those events occur, whether compensation is payable and, if so, the amount of compensation that is payable to the expedited claimants, is not ascertainable. I would add that insofar as the compensation payable to any of the expedited claimants claims is $2,000 or less that is a "small amount" and is therefore not, relevantly, subject to the Act (see ss 8(9) and 38) if the agreement to pay that amount is made on or after 1 January 2002. The applicant conceded that all amounts payable under the Settlement Agreement, which was entered into prior to that date, exceeded he prescribed amount of $150 (as indexed) and therefore were not excluded from the operation of the Act as small amounts. 41 Thus, both at the date of each of the agreements comprising the Settlement Agreement, and when it was authorised by the Supreme Court of Victoria to be implemented, the amount of compensation payable to each of the Australian claimants was not capable of being quantified as a certain, definite or known amount. The legislature's requirement that the compensation payable be "ascertainable" at the time of the settlement agreement is an integral aspect of the statutory scheme which operates on the basis that a fixed amount of compensation is payable. For example, under s 23(f), the notice required to be given by a notifiable person within 28 days of a judgment or settlement must state the amount of compensation to be paid under the judgment or settlement. Section 24 requires that a notice be given within a further 28 days of the Medicare benefits that are payable in respect of the amount of compensation. Under s 28 the compensation payer must pay that amount out of the compensation payable within a further 28 days. It is clear from these provisions that the legislation has been drafted on the basis that the amount of the compensation payable is ascertained or is capable of being ascertained at the time of the settlement agreement, so that that amount may be notified under s 23(f) and the Medicare benefits may be deducted out of it and reimbursed to the respondent within the time provided by ss 24 and 28. 42 My view of the operation of the relevant provisions is also supported by the Explanatory Memorandum to the Health and Other Services (Compensation) Bill 1994: "The Bill provides for the recovery of medicare and nursing home benefits paid for services in respect of the person's compensable injury prior to compensation becoming payable. The amount of benefits that were paid will be reimbursed to the Commonwealth by the insurer, or other compensation payer, at the time compensation becomes payable." [Page 1] 43 The assumption made in the above passage is that the reimbursement will be made out of the amount of compensation that has become payable. In respect of the definition of a "settlement" the Explanatory Memorandum stated: "'settlement' refers to an agreement between parties where one party agrees to pay the other party an amount of compensation. The two key features of 'settlement' are: · it is the parties rather than the court or compensation authority that determines the quantum of the damages under the settlement, even if a court or compensation authority subsequently ratifies the agreement; and · a settlement is an agreement under which the amount of compensation is fixed. (The term 'fixed' is defined in subclause 3(4). For an explanation of the meaning of this term, refer to the clause notes on subclause 3(4)). [Page 5] … Subclause 3(4) defines the meaning of the term 'fixed' as it is used in this Bill. If an amount of compensation is 'fixed' by an order or agreement, this means that one of the following applies: · the total amount that must be paid under the order or agreement is stated in the order or agreement; or · the law under which the order or agreement was made states the total amount that must be paid under the order or agreement; or · at the time the order or agreement is made, it is possible to calculate the total amount that must be paid under the order or agreement by referring to the terms of the order or agreement; or · at the time the order or agreement is made, it is possible to calculate the total amount that must be paid under the order or agreement, by referring to the law under which the order or agreement was made. It should be noted that an agreement or order for the payment of compensation which does not 'fix' an amount of compensation may be a 'reimbursement arrangement'. Examples of the meaning of the term 'fixed': - if a settlement document states that the compensation payer will pay to the compensable person an amount equal to all of the injury-related costs that have been incurred by the compensable person up to the date of the settlement, and a stated dollar amount for future injury-related costs, an amount of compensation has been 'fixed'. In this example, the amount of compensation would be 'fixed' even if the agreement stated that the amount is to be paid in a series of instalments, rather than in one lump sum. The key point is that the total amount that is payable under the settlement is fixed under the agreement. - If an order states that the compensation payer must pay to the compensable person an amount equal to all of the injury-related costs that have been incurred by the compensable person up to the date of the order, and continue to meet all of the injury related costs incurred by the compensable person from the day on which the agreement is made, but does not state the total amount that the compensation payer must pay in the future, an amount of compensation has not been 'fixed' by the order." [Page 5-6] 44 It is also clear from the above passages and examples that it was intended that the reimbursement be made out of the sum that is quantified or quantifiable at the time of the settlement agreement. That assumption is also made in respect of the notification and payment procedures in ss 23, 24 and 28 of the Act. 45 Further, the view that, at the time the settlement agreement is made it must be possible to calculate the total amount that must be paid, is consistent with the ordinary and natural meaning of the words used. The fact that the compensation payable under the Settlement Agreement is ascertainable in accordance with its terms is not sufficient. If that was all that was required there would be no point in imposing the specific and additional requirement that the compensation is to be ascertainable at the time of the agreement. 46 Finally, a purposive approach to construction would not bring about a different result. The respondent contended that the purpose of the Act was: "to ensure that Medicare benefits paid for an injury would be refunded to the Commonwealth (as a priority) in relation to any agreed or ordered payment of a fixed or ascertainable sum pursuant to a claim for compensation in respect of that injury." 47 The respondent's submission fails to recognise the specific and additional legislative requirement that the sum be ascertainable at the time of the agreement. It is clear that, by imposing that requirement, the legislature intended to limit the application of the Act to settlement agreements where the amount payable is fixed, in the sense of ascertained or ascertainable at the time of the settlement agreement. Thus, where a claimant settled a claim by agreeing to a mechanism under which the claimant assumed the risk of whether compensation would be payable and as to the amount of compensation that is to be payable, the Act does not apply. 48 Accordingly, the amounts of compensation payable under the terms of the Australian Subclass Agreement, the Capitalisation Agreement and the Trust Deed are not amounts "fixed" under an agreement as defined in s 3(4) of the Act. 49 Counsel for the respondent, recognising the difficulties arising under s 3(4), contended that the relevant "settlement" is that made between the applicant and a claimant after the compensation payable has been certified by the Claims Administrator. Reliance was placed on the certification procedures, the terms of the releases that were required to be signed by claimants prior to being entitled to receive payment of the compensation certified to be payable, and upon a claimant's "acceptance" of the amount offered to her. Thus, the respondent contended: "it is clear that each woman is made an 'offer' as to the category to which she will be assigned, being an offer which she can accept or reject as she may be advised. The guidelines envisage that if she accepts the offer as to her level or category of compensation, she will thereupon be paid an amount by cheque. However, even if, as events have turned out, no dollar figure is actually offered to a woman at that stage or until after all appeals as to categorisation have been completed and the final size of the fund has been determined, nevertheless there will then be a further indication given to each woman as to the dollar amount which the Trustee proposes to pay to her. This amount will be offered in settlement of her claim. She will not be bound as a matter of law or otherwise to accept the amount offered. She may have or believe she has cause to complain to a Court about the amount offered. But, in any event, even it be thought that the women have no such right and are bound to accept the amount offered, they will by definition concur with the Trustee/Claims Administrator that the payment of that amount should occur and that this will effect their respective rights and duties, by discharging her claim. This constitutes an 'agreement' within the ordinary legal meaning of that term, as well as an agreement under which an amount of compensation is 'fixed' within the meaning of the Act. It remains such an agreement whether or not a further release is sought or given at that time." 50 The substance of the respondent's contention is that, notwithstanding the detailed and self-executing nature of the provisions of the Settlement Agreement, a further agreement is made by a claimant prior to receiving the amount payable to her. The respondent's contention is inconsistent with the provisions of the Settlement Agreement. Save for one possible exception, that agreement contains no provision for a claimant to agree to the amount determined to be payable in accordance with the terms of the agreement, nor does it confer any entitlement on a claimant to refuse to accept payment of that amount. The Settlement Agreement does not provide for an "offer" to be made by the trustee to settle for that amount nor is provision made for the claimant to agree to "accept" payment of the amount. Rather, the parties have agreed upon the mechanism by which claims are determined and they are bound by that agreement. 51 The possible exception arises in respect of the releases, Exhibits D1 and D2 to the Capitalisation Agreement, which were required to be executed by the Australian claimants pursuant to cl 6(f) of the Trust Deed and cl 3 of Sch A to that deed and to be procured to be executed by those claimants pursuant to cl 8(d), (e) and (f) of the Capitalisation Agreement. Clauses 8 (d), (e) and (f) of the Capitalisation Agreement provide that the solicitors acting for the Australian claimants procure, or in certain instances use their bests efforts to procure, releases from the Settlement Option claimants in the form of Exhibit D1 and from the Settlement Agreement claimants in the form of Exhibit D2. 52 The Exhibit D1 release, which was to be executed by the 3,181 Settlement Option claimants, was substantially in the form of the release required under the Australian Subclass Agreement. That release was required to be executed: "in order to make a claim under and to qualify to receive benefits pursuant to the…[Australian Subclass Agreement] Settlement…" And was stated to be executed: "as consideration for the opportunity to participate in and receive benefits provided by the…[Australian Subclass Agreement] Settlement" 53 Significantly, the Settlement Option claimants are not required to execute a further release in consideration of the payment of the amount certified to be payable to them. Thus, as those claimants delivered their executed Exhibit D1 release to the applicant with their compensation claim as requested by him, their entitlement to be paid compensation arises upon a certificate being given by the Claims Administrator as to the amount of compensation payable to them. The source of the applicant's obligation, as the compensation payer, to pay that amount to the claimant is the Settlement Agreement and the making of that payment is not conditioned upon the execution of a further release or other acknowledgment by the claimant that she will accept that sum. 54 Accordingly, I do not accept the respondent's submission that there is a further agreement when a Settlement Option claimant accepts the amount certified in settlement of her claim. The initial certification and the subsequent payment of a claim or, where there is an appeal, the decision on appeal and subsequent payment of a claim, merely discharge by performance the payment obligation of the applicant under the Settlement Agreement: cf Federal Commissioner of Taxation v Sara Lee Household and Body Care (2000) 201 CLR 520 at 537. When a claimant receives that payment she is not accepting it under any new agreement; rather, she is accepting it as her entitlement under the Settlement Agreement. 55 It is arguable that cl 6(f) and cl 3 of Sch A of the Trust Deed require claimants to execute a release in the form of Exhibit D1 and Exhibit D2 to the Capitalisation Agreement. However, under the terms of the Capitalisation Agreement, pursuant to which the Trust Deed was entered into, Exhibit D1 is required to be executed by the Settlement Option claimants and Exhibit D2 is required to be executed by the Settlement Agreement claimants. As the Trust Deed was entered into to give effect to and implement the obligations under the Australian Subclass Agreement, as varied by the Capitalisation Agreement, the clear implication is that the Exhibit D1 releases were applicable in respect of Settlement Option claimants and Exhibit D2 releases were applicable in respect of Settlement Agreement claimants. 56 It follows that there is no agreement other than the Settlement Agreement under which an amount of compensation is agreed to be paid by the applicant to the Settlement Option claimants. In so far as the execution and delivery of the Exhibit D1 release might be said to give rise to a further agreement to accept payment of an amount of compensation the amount of compensation payable under that further agreement is not an ascertained or ascertainable amount at the time of that agreement. 57 The position in respect of the 15 Settlement Agreement claimants was different in one significant respect. Those claimants did not elect to be bound by the Settlement Option, including the Australian Subclass Agreement, pursuant to which the Capitalisation Agreement was entered into. Although they agreed to, and were entitled to, resolve their claims in accordance with the terms of the Settlement Agreement, their entitlement to be paid compensation was subject to the Settlement Agreement claimants executing the form of release in Exhibit D2, which states, inter alia, in the recitals: "WHEREAS, the Claimant has agreed to resolve her claims on the terms provided by this Release; NOW THEREFORE, as consideration for the benefits provided by this Release, the Claimant on behalf of herself and any and all Family Member Claimants releases the Released Parties as follows:" 58 Clause I provided: "SETTLEMENT AMOUNT TO BE PAID TO CLAIMANT Following the execution of this Release, the Claimant will be paid $______ ("Settlement Amount") from the fund established by AIU pursuant to a capitalization agreement dated _______ 2001, paragraph 2, for the settlement of the claims of Claimant and other similar claimants." 59 The release also releases the US insurers. The consideration for the release was stated to be given by "virtue of the valuable consideration as set forth herein". The consideration set forth was the amount of compensation certified to be payable. 60 Although the release is only to be executed by the claimant it is clear that when it was delivered to the Trustee it would be delivered as an acceptance of the Trustee's "offer" to pay the compensation certified by the Claims Administrator. Thus, the position of a claimant who executed the Exhibit D2 release is distinguishable from that of the Settlement Option claimant who executed the Exhibit D1 release as the execution of the Exhibit D1 release is not an acceptance of an offer to pay a specified amount. Rather, as explained above, the execution of the Exhibit D1 release is part of the process by which a Settlement Option claimant accepts the offer to participate in the benefits of the procedures by which the quantum of her claim is to be determined and paid. 61 It is unnecessary to set out all of the other terms of the Exhibit D2 release; they include, inter alia, provisions relating to confidentiality, warranties and discontinuance of proceedings. Relevantly, cl VII provides: "INTEGRATION CLAUSE This Release represents and contains the entire Release and understanding between the parties hereto with respect to the subject matter of this Release and supersedes any and all prior agreements and understandings that are inconsistent with this Release." 62 While there is some attraction in the view that the Exhibit D2 release contains promises by a party to a pre-existing contract to perform an existing duty with the consequence that the stated consideration is "merely illusory" (see Wigan v Edwards (1973) 1 ALR 497 at 512), the preferable view is that the delivery of the executed release was intended to be a settlement agreement under which the claimant would accept the sum specified in the release in full settlement of her claims for compensation as a result of the defective DCC breast implant upon the terms and conditions set out in the release. 63 Upon delivering a duly completed Exhibit D2 release the applicant would become obliged to pay the specified amount under an agreement constituted by his offer to do so and the claimant's acceptance of that offer by executing and delivering the release. An agreement so made would appear to be "an agreement under which an amount of compensation that a party to the agreement agrees to pay to another person is fixed": see s 3(1). It would be fixed as the amount of compensation is "specified in the…agreement": see s 3(4). The immediate source of the respondent's obligation to pay the amount specified would be the agreement. It would not be to the point that the Settlement Agreement is also a source, albeit a less immediate source, of the obligation to pay. 64 However, for reasons that were not apparent from the evidence, the applicant adopted substantially the same settlement procedures for the 15 Settlement Agreement claimants as he adopted for the 3181 Settlement Option claimants. He forwarded to the Settlement Agreement claimants a form of release that was similar to the form of release sent to the Settlement Option claimants. Under that form of release, which was executed and returned by the Settlement Agreement claimants, those claimants gave releases to all relevant parties in respect of their claims in consideration "of the benefits provided" by the release. In substance those benefits were the entitlement to participate in the claims procedures provided for in the Settlement Agreement and to be paid the quantum of compensation determined by the Claims Administrator to be payable in accordance with the terms of that agreement. 65 The form of release executed by the Settlement Agreement claimants differs from the release in Exhibit D2 in two important respects. Firstly, it is given prior to the commencement of the claims procedure and not after the completion of that procedure. Secondly, the consideration is the entitlement to be paid an unspecified amount to be determined in accordance with that procedure rather than a specified amount that has been determined in accordance with that procedure. Although the form of release executed by the 15 Settlement Agreement claimants includes a specific provision that the claimant be "paid the sum determined by the Claims Administrator" from the fund established in accordance with the Capitalisation Agreement and the Trust Deed, that provision does not involve payment of an amount that is ascertained or ascertainable at the time of the agreement. 66 Although the Capitalisation Agreement and the Trust Deed provided for an Exhibit D2 release to be executed by the 15 Settlement Agreement claimants the applicant regarded those claimants as having complied with the requirements of the agreement and the deed and will not require any further releases to be executed prior to the payment of any claimant's entitlement. On 28 May 2002 the applicant sought and received authorisation from the Supreme Court of Victoria to substitute the form of release executed by the 15 Settlement Agreement claimants for the Exhibit D2 release. 67 Accordingly, it must follow that neither the Settlement Option claimants or the Settlement Agreement claimants have entered into a "settlement" as defined in the Act. A compensation authority 68 The respondents also argued that either the applicant or the Claims Administrator is a compensation authority as each was appointed or established under unwritten law in force in the Commonwealth to determine amounts of compensation payable to persons. "Unwritten law" means the non-statutory law (ie the law that is not contained in statutes, instruments under statutes, or prerogative instruments) as developed by the courts of the common law and equity: see Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 at 114. 69 There is a short answer to the respondent's argument. The trustee and the Claims Administrator are not persons appointed or established to determine amounts of compensation under any unwritten law. Rather, they are appointed or established to carry out that function under the Settlement Agreement. The only authority that the trustee or the Claims Administrator have to determine the amount of compensation payable is derived from that agreement. The fact that implementation of the agreement was authorised by the Supreme Court of Victoria does not have the consequence that the applicant and the Claims Administrator were "appointed" or "established" under that order. Further, the fact that the Settlement Agreement can be enforced by the unwritten law (ie common law or equity) also does not have the consequence that the applicant and Claims Administrator were appointed or established under the common law or equity. 70 In any event a certificate or decision as to the amount of compensation payable is not a judgment or an "order (by whatever name called)": see s 3(1). It is no more than a determination of an amount that is to be due and payable in accordance with the terms of the Settlement Agreement. If the determination is to be enforced it is enforceable by reason of the terms of the Settlement Agreement. Thus, the determination is not an "order" or a requirement, having the effect of an order, that the compensation payer pay the certified amount to the claimant. Conclusion 71 For the above reasons I have concluded that, on the basis of the agreements actually made, the Commonwealth has not become entitled to reimbursement under the Act of the Medicare benefits it paid from the amounts that will become payable to the 3,181 Settlement Option claimants and to the 15 Settlement Agreement claimants. 72 It is appropriate that within 14 days the parties agree on the appropriate form of declaratory relief to give effect to these reasons for judgment. Plainly, that relief is to be limited to the agreements actually made. As the applicant has succeeded it is appropriate that the respondent pay the applicant's taxed costs of the proceeding. The intervening party should bear its own costs. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel. Associate: Dated: 3 June 2002 Counsel for the Applicant: Mr B Quinn Solicitor for the Applicant: Ebsworth & Ebsworth Counsel for the Respondent: Mr A Cavanough QC with Mr M Fleming Solicitor for the Respondent: Australian Government Solicitor Solicitor for the Intervenor: Slater & Gordon Date of Hearing: 8 and 23 May 2002 Date of Judgment: 3 June 2002