When Power Goes Wrong · Who Pays? · Part 17

Damages, compensation, settlement and ex gratia: are they the same thing?

No. A judgment for damages, a negotiated settlement, statutory compensation and an ex gratia payment arise from different legal bases and carry different implications about liability.

The words are often used interchangeably in public debate, but their legal meaning is different.

DamagesMoney awarded or agreed as a remedy for a recognised legal wrong.

SettlementA negotiated resolution of a disputed or potential claim, usually contractual in effect.

Statutory compensationPayment due or available under a legislative scheme where its criteria are met.

Ex gratiaA voluntary payment made without recognition of legal liability or obligation.

CO (18) 2 expressly defines an ex gratia payment as one made without the giver recognising liability or legal obligation, out of goodwill or a sense of moral obligation. Its approval thresholds are lower than ordinary claim-settlement thresholds: up to $30,000 by chief executive/delegate, more than $30,000 to $75,000 by the appropriation Minister, and more than $75,000 by Cabinet.

The label changes the legal story.A $100,000 court judgment, a $100,000 negotiated settlement and a $100,000 ex gratia payment are not juridically identical even though the recipient receives the same amount of money.

Before describing a government payment as “compensation”, identify whether it acknowledges liability, settles disputed liability, satisfies a judgment, or is expressly voluntary.

Cabinet financial rulesCO (18) 2 — settlement and ex gratia approval categories.

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