Emeraldstar Pty Ltd and Secretary, Department of Health and Ageing

[2007] AATA 1990

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1990

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  2007/2776

GENERAL ADMINISTRATIVE  DIVISION		)
Re		EMERALDSTAR PTY LTD

Applicant

And SECRETARY, DEPARTMENT OF HEALTH AND AGEING

Respondent

DECISION

Tribunal Senior Member Bernard J McCabe

Date9 November 2007

PlaceBrisbane

Decision The decision under review is set aside. The Tribunal decides in substitution that the financial period in respect of the 2005-2006 year shall be extended so that it concludes on 31 March 2007.

.................[Sgd]..........................

SENIOR MEMBER

CATCHWORDS

AGED CARE – time limits to file financial statements – whether impracticable for applicant to comply with deadline – whether extension of time to file financial statements should be given – applicant encountered unexpected difficulties with accounting firm – decision set aside – extension of time granted to 31 March 2007

Aged Care Act 1997: s 96

WRITTEN REASONS FOR DECISION

28 November 2007  Senior Member BJ McCabe

1.      The applicant operates a nursing home on the Gold Coast. It did not comply with the time limits imposed by the legislation for filing its financial statements with the respondent. It asked for several extensions from the respondent: all but the last of these was granted. The applicant asked the Tribunal to reconsider the decision not to grant the extension.

2. The matter was dealt with on 9 November 2007. I decided to grant the extension of time. I gave oral reasons at the conclusion of the hearing. One of the parties asked for written reasons pursuant to s 43(2A) of the Administrative Appeals Tribunal Act 1975. The reasons below are based on my remarks recorded in the transcript.

3.      The applicant, Emeraldstar Pty Ltd, was in receipt of Conditional Adjustment Payments from the respondent. The payments were made under the Residential Care Subsidy Principles (the Principles) that were determined pursuant to s 96 of the Aged Care Act 1997. The Principles provided that a nursing home operator wishing to receive the payments was required to provide extensive financial reports. The reports are intended, in particular, to inform persons thinking of entering a particular home to make an assessment of that home’s financial health. The reporting obligations have become more stringent in the last few years.

4.      The applicant had trouble meeting the deadline in the 2004-2005 reporting year. The respondent acknowledged that new, more stringent reporting requirements made it more difficult for operators to comply in a timely fashion in that reporting period. It allowed extensions of time.

5.      The respondent warned the applicant and others in a letter dated 15 February 2006 that they should not expect the same leniency during the next reporting period – the period under review. It gave a global extension of time to 30 November 2006.

6.      I accept the applicant lodged its financial data with its accountants, PKF, in a timely fashion at or around the end of the financial year. I accept it had no reason to doubt its reports would have been completed and despatched to the auditor in a timely fashion and be available to the respondent by the expiration of the reporting deadline. As it happened, PKF ran into trouble. It was dealing with the books of a number of other nursing homes and it was struggling with the new requirements which, amongst other things, required PKF to convert the accounts over several years to comply with international accounting standards. Things got worse: a key staff member was injured and other personnel problems meant PKF was unable to complete the accounts in a timely fashion. When the accounts were finally delivered to the auditor, the auditing firm faced unexpected delays when it lost several key staff that could not be readily replaced.

7.      PKF had written in the meantime to the respondent seeking an extension. An extension was granted to 31 January 2007. The delays continued and it became apparent the reports would not be available by 31 January. PKF sought a further extension on the applicant’s behalf until 31 March 2007. The respondent declined the request. As a result, the applicant was ineligible to receive Payments under the Act until it lodged its reports.

8.      The power to grant an extension of time is found in section 21.26B(2)(a) of the Principles. That provision permits the Secretary to define a new reporting period if, on reasonable grounds, he or she believes it is impracticable for the approved provider to comply with usual rule. Mr Archibald, from PKF, said his client had done all it could to have the reports completed in accordance with the rules. He said the events at PKF and the auditors could not have been anticipated, and were beyond its control. He said once the material was lodged with PKF it would have been practically difficult (if not impossible) to engage alternative accountants and auditors who were able to comply with the time limits. He said the personnel problems at both firms was a practical obstacle to complying with the requirements. He said it was reasonable to give the extension.

9.      Mr Palfrey says the applicant had been warned about the respondent’s attitude. He said the applicant could have changed accountants. He also pointed to the respondent’s policy of not granting extensions once it established the approved provider has systems in place to meet the reporting requirements: see document T3 at p 109. He pointed out the importance of the reporting obligations under the Act.

10.     The word ‘impracticable’ is a common English word. Its meaning is well-understood. I am satisfied it was impracticable for the applicant to comply with the deadline in this case and that an extension should be given. The applicant took its obligations seriously and provided its material to a reputable firm of accountants in a timely fashion. It did not reasonably anticipate the difficulties that would be encountered in dealing with the material. I accept it would have been a difficult task indeed to change accountants after the problems became apparent. These were all matters that were not under its control, and it was not reasonable for it to have adjusted its systems to take those difficulties into account.

11.     While I acknowledge the respondent’s policy and the desirability of consistent administration, I also note the respondent had already acted inconsistently with the policy by granting one extension.

12.     Now the applicant is aware of the difficulties that might arise in preparing reports, it should seek assurances from its accountants and auditors about the adequacy of their systems. The applicant might not expect such lenient treatment in relation to future requests for extensions.

conclusion

13.     The decision under review is set aside. The Tribunal decides in substitution that the financial period in respect of the 2005-2006 year shall be extended so that it concludes on 31 March 2007.

I certify that the 13 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe

Signed:         .....................................................................................
  Associate

Date of Hearing  9 November 2007          
Date of Decision  9 November 2007
Written reasons for decision     28 November 2007
Applicant   Mr R Archibald, accountant
Solicitor for the Respondent     Clayton Utz solicitors