A supreme court judge has issued a stunning public condemnation of the National Disability Insurance Agency, finding it tried to recoup funds with “no proper basis” from a woman with profound disabilities, and then came dangerously close to contempt of court.

The criticisms, which are contested by the NDIA, relate to the treatment of Tegan Sharp, 25, a woman living with cerebral palsy.

Sharp is legally blind, deaf and has serious physical and mental disabilities that require ongoing and constant care, for which she received national disability insurance scheme (NDIS) funding last year.

The difficulties arose after an accident six years ago in which Sharp, who could not speak to communicate her pain, suffered third-degree burns while being showered by a paid carer.

She sought compensation from the care provider through the NSW supreme court, claiming the burns had caused new and lasting injuries along with significant psychological trauma, which required additional care. The compensation was to cover the additional care being provided by her family for free, including parental supervision during daily showers.

The parties agreed to settle in March, but the process was complicated by the NDIA’s insistence Sharp must use the compensation to pay back more than $100,000 of her NDIS funding.

“It’s been really bad. I’ve been stressed out ... not sleeping. I just can’t believe this is happening,” Tegan’s mother, Narelle, told Guardian Australia.

“I can understand if Tegan was hit by a bus and was entitled to compensation that way, but the thing that frustrates us is that she was always going to get NDIS, if she had the burns or not.”

The case prompted a scathing criticism from NSW supreme court justice Julia Lonergan, who found the NDIA had “no proper basis to claim any payback at all in the circumstances of this case”.

“On any analysis, gratuitous care provided by the parents and family of Tegan in the past and future would fit the description of ‘general supports’ that are specifically excluded from funding by NDIS, and this should be excluded from payback,” Lonergan said.

When asked to explain why they were requesting the money be paid back, the NDIA either did not respond or failed to address the points raised before the court.

The NSW supreme court subpoenaed the NDIA, but the agency failed to produce documents or show up to court.



“It seems to me on one analysis, this could be considered to be contempt of this court’s process on the part of the NDIA,” Lonergan found.

“I find it difficult to understand why an organisation constructed to assist in the funding and empowerment of people with disabilities to function in society, fails to respond to court process or to address proper, carefully considered correspondence from legal advisors to such persons.”

An NDIA spokeswoman said it was incorrect to suggest it was “pursuing paybacks” from Sharp. It said it was seeking reimbursement from the insurer who accepted Sharp’s personal injury claim. Sharp’s lawyers, however, say this will directly take away from the settlement due to their client.



The NDIA spokeswoman said the agency was only seeking to ensure the NDIS did not duplicate funding provided in the form of personal injury compensation. She said the NDIA was only seeking reimbursement for “NDIS funding provided for Ms Sharp’s injury while the matter was addressed through the courts”.

“The NDIA is seeking reimbursement from the insurer who accepted Ms Sharp’s claim,” a spokeswoman said. “This is because the NDIS does not duplicate funding provided through compensation from other sources, such as insurance payouts or supports provided by accident compensation schemes.”



It also said it was legally prevented from disclosing protected information, including in answer to subpoenas for civil matters.

“Once consent was provided for the release of the information, the NDIA provided the material to the participant’s legal representative,” the spokeswoman said.

The Sharp family’s lawyer, Evelyn Garnett, a senior associate working out of Carroll & O’Dea Lawyers Wollongong office, said the family were still uncertain what would happen to them.

“The Sharps still don’t know – because we still haven’t heard back from the NDIA since the judgment – they still don’t know whether the plan will be reviewed or reduced,” Garnett told Guardian Australia. “And we still don’t know if the NDIA claims the repayment or not.”

The judge also criticised the NDIA for creating that uncertainty, and asked that the NDIA use its discretion and stop seeking the money.

“It is ... highly unsatisfactory that the plaintiff and her tutor, her family and their legal representatives are left in unexplained, bureaucratic uncertainty as to what amount is to be repaid to the NDIA/NDIS,” Lonergan said.

“It seems to me ... that no sum at all is due to the NDIA/NDIS, either now or in the future, from the compensation figure agreed in this litigation.”

The NDIA spokeswoman said the agency was “carefully considering the comments of the court”.

“In future, the NDIA will provide appropriate representation to the court to assist in navigating complex issues.”