The Executor Estate of the late Mrs Maria Drakos; Secretary, Department of Social Services and (Social services second review)

The Executor Estate of the late Mrs Maria Drakos; Secretary, Department of Social Services and (Social services second review) [2020] AATA 2875 (10 August 2020)
Division:GENERAL DIVISION
File Number(s): 2019/4154
Re:Secretary, Department of Social Services
APPLICANT

AndThe Executor Estate of the late Mrs Maria Drakos
RESPONDENT

And
Venice Coulter
OTHER PARTY

And
Stamatis Drakos
OTHER PARTY

And
Christina Emmanuelidis
OTHER PARTY

DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:10 August 2020
Place:Sydney

I am satisfied that the preferable and correct decision is to set aside the decision under review, and to find that the age pension debt of $90,338.29 for the period 7 February 2013 to 6 December 2017 is fully recoverable from the Respondent.
[sgd]
Emeritus Professor P A Fairall, Senior Member
CATCHWORDS
Age pension debt – overpayment – whether age pension debt must be waived – whether special circumstances exist for the age pension debt to be waived – coding error which resulted in a failure to reassess the property at the conclusion of the applicable exemption period – income test – asset test – whether the debt is solely attributable to centrelink’s coding error – whether a daily fee can be construed as an accommodation charge – whether the overpayment of age pension was received in good faith – Respondent failed to notify Centrelink of significant change in circumstances – decision set aside – age pension debt fully recoverable from the Respondent
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – s 37
Social Security Act 1991 (Cth) – ss 8, 11, 1237A and 1237AAD
SECONDARY MATERIALS
Social Security Guide – paragraph 4.3.2.30
Aged Care Home Costs and Fees <
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
10 August 2020
INTRODUCTION

Mrs Maria Drakos and Mr Constantine Drakos lived in their home in Earlwood, NSW for more than 50 years. They had three children: Ms Venice Coulter, Mr Stamatis Drakos, and Ms Christina Emmanuelidis. On 10 June 2009, Mrs Drakos appointed each of her children under a power of attorney, due to the declining state of her health.[1] In May 2010, she moved into residential aged care.[2]
[1] Transcript, page 54.
[2] [On 5 May 2010].
It appears that the heavy burden of managing her mother’s affairs fell largely upon Ms Coulter.
On 13 September 2012, Mr Drakos also moved to residential aged care. He died a few weeks later, in early October 2012.[3] Mrs Drakos became the sole owner of the Earlwood property under survivorship rules; she was the surviving joint tenant. At all subsequent times, the value of the property exceeded the asset test threshold for the age pension.
[3] See T12/335.
The Earlwood property was renovated and rented out from 7 February 2013 for $750 per week. According to the AAT1, it was recently sold for $1,400,000.
In November 2018, Mrs Drakos died.
As a result of a data matching exercise with the Australian Tax Office in 2017, Centrelink determined on 18 June 2018 that Mrs Drakos had an age pension debt of $90,338.29 for the period 7 February 2013 to 6 December 2017 (the debt period).[4]
[4] T5/131.
On 11 September 2018, an authorised review officer (ARO) affirmed this decision.[5]
[5] T10/191; (ARO notes): T9/188.
On 4 June 2019, the Social Services and Child Support Division of the Tribunal (AAT1) decided as follows:
The tribunal sets aside the decision under review and, in substitution, decides that so much of the age pension debt that accrued during the period 13 September 2014 to 14 March 2017 is waived pursuant to section 1237A of the Social Security Act 1991.[6]
[6] T2/4.
The AAT1 noted that its decision would reduce the total debt amount by about $54,500.[7]
[7] T2/10, at [31].
By application dated 11 July 2019, the Secretary, Department of Social Services, seeks review of a decision of the Social Services and Child Support Division of the Tribunal (AAT1) dated 4 June 2019.[8] The Department of Social Services is now referred to as Services Australia. For convenience, I shall simply refer to Centrelink.
[8] T1/1.
In November 2019, the General Division of the Administrative Appeals Tribunal (the Tribunal) stayed the AAT1 decision, thus preventing the distribution of the estate.
For reasons given below, I am satisfied that the preferable and correct decision is to set aside the decision under review, and to find that the age pension debt of $90,338.29 for the period 7 February 2013 to 6 December 2017 is fully recoverable from the Estate.
In this decision, I shall refer to the late Maria Drakos as the pensioner.
THE HEARING
The Secretary’s application for review was heard on 7 April 2020.
The following materials were before the Tribunal:
(a)Respondent’s Statement of Facts, Issues and Contentions;
(b)Applicant’s Statement of Facts, Issues and Contentions;
(c)witness Statement of Venice Coulter, dated 1 April 2020, and attachments;
(d)documents prepared by the Applicant and provided under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (the Act) - the ‘T-docs’;
(e)supplementary documents (ST1-ST7);
(f)certified death certificate for Mr Constantine Drakos;
(g)Centrelink customer record – nominee relationship status, dated 3 February 2020.
The Secretary was represented by Dr Stephen Thompson.
The estate of the late Mrs Drakos is represented in the present proceedings by a solicitor, Mr Farmakidis.
I note that at a preliminary stage, Dr Thompson raised an issue as to the jurisdiction of the Tribunal to hear the present matter, but indicated at the hearing that the jurisdictional issue had been resolved.[9] Both parties agree that the Tribunal has jurisdiction, and I am satisfied that this is so.
[9] Transcript, p 3; see ST7/481.
The case was argued before me on the basis that the substantial question for the Tribunal is whether the debt must be waived under s 1237A of the Social Security Act 1991 (Cth) (‘the SSA’); and if not, whether the debt should be waived under s 1237AAD of the Act.
Mr Farmakidis concedes that what he calls the ‘purported’ debt of $90,338.29 is correctly calculated, but says that Centrelink made a drastic coding error, and the entire debt is solely attributable to this error.[10] The error occurred when the property was incorrectly coded in 2012, resulting in a failure to reassess the property in 2014 at the conclusion of the applicable exemption period.[11] Moreover, Centrelink failed for more than four years to pick up or rectify the error, thus causing the debt to escalate. He says that Ms Coulter and her brother Stamatis Drakos were at all material times unaware that their mother was not, on the objective facts, entitled to receive the age pension. They acted with honesty and integrity in managing their mother’s affairs and the payments were received in good faith. Therefore, the debt must be waived.
[10] Respondent’s SFIC: para 4.6.
[11] Transcript, 7 April 2020, at p 4/25.
Moreover, he says that there are other features of the case which favour waiving part or all of the debt. Centrelink provided inadequate or misleading advice to Ms Coulter and her brother when they asked for financial guidance, which they relied upon, to their detriment. Moreover, in managing her mother’s taxation affairs, rental receipts for the Earlwood property were fully disclosed.
Dr Thompson, for the Secretary, concedes that Centrelink made a coding error, but contends that there were other factors that led to the debt, which cannot be attributed solely to the administrative error of the Commonwealth. Ms Coulter misunderstood the relevant statutory provisions; and wrongly believed that her mother was paying accommodation charges for her residential care.[12] Moreover, she failed to seek advice from Centrelink when their father died, simply assuming that the advice previously given in relation to her father still applied. She disclosed the rental receipts for the Earlwood property to her accountant in preparing her mother’s annual taxation returns, but this does not amount to a valid disclosure for the purposes of social security law. It could not be said that Centrelink was on notice as to the receipt of rental income as a result of the tax returns.
[12] T5/152, at 153.
RELEVANT LEGISLATIVE PROVISIONS
Section 8(8) of the SSA provides:
Excluded amounts—general
(8) The following amounts are not income for the purposes of this Act:
…
(zn) while a person is accruing a liability to pay an accommodation charge—any rent from the person’s principal home that the person, or the person’s partner, earns, derives or receives from another person;
(zna) while a person is liable to pay all or some of an accommodation bond by periodic payments—any rent from the person’s principal home that the person, or the person’s partner, earns, derives or receives from another person;
(znaa) while a person is liable to pay all or some of a daily accommodation payment or a daily accommodation contribution—any rent from the person’s principal home that the person, or the person’s partner, earns, derives or receives from another person;
Section 11A(8) of the SSA provides:
Effect of absences from principal home
(8) A residence of a person is taken to be the person’s principal home during:
(a) if the Secretary is satisfied that the residence was previously the person’s principal home but that the person left it for the purpose of going into a care situation—any period during which:
(i) the person is accruing a liability to pay an accommodation charge…; and
(ii) the person, or the person’s partner, is earning, deriving or receiving rent for the residence from another person; and
Section 11A(9) of the SSA provides:
(9) A residence of a person is to be taken to continue to be the person’s principal home during:
(a) (omitted)
(b) if the person is in a care situation or residential care—the period of 2 years beginning when the person started to be in a care situation or residential care; and
(c) (omitted)
(d) if:
(i) the person is in a care situation or residential care; and
(ii) the person’s partner dies while in a care situation or residential care; and
(iii) the person’s partner had been in a care situation or residential care for less than 2 years;
the period of 2 years beginning at the time the person’s partner started to be in a care situation or residential care; and
Waiver provisions
Section 1237A of the SSA provides:
Waiver of debt arising from error
Administrative error
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
Section 1237AAD of the SSA provides:
Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
General knowledge that the age pension is subject to an asset test and an income test may reasonably be attributed to members of the community. The way in which the residential care rules interact with the asset test and income test, especially in relation to the principal residence, are less well understood.
The rules governing asset and income tests extracted above imply that the principle home is exempt under the asset test until the second anniversary of the date the homeowner moved to residential care; (s11A(9)); and for any period where rent is received for the residence and the person is liable to pay an accommodation charge: s 11A(8).
In relation to rental income, there is a parallel provision relating to excluded income derived from renting the former principal residence home, where the homeowner has moved to residential care and is incurring some form of accommodation charge.[13] Rent received under these circumstances is excluded income. Otherwise, the general rule is that rental income (other than excluded amounts) derived from renting the principal residence must be included under the income test in determining the amount of age pension payable.
[13] Section 8(8), SSA; see also Social Security Guide: 4.3.2.30 Income exempt from assessment. See Appendix to these reasons.
A reminder of these rules will assist an understanding of the rest of this decision.
I also note that there are a few important points to note about s 1237A. First, the terms are mandatory; the Secretary must waive the right to recover under certain circumstances. Second, this mandatory waiver only applies to that portion of the debt that is attributable to sole administrative error. Third, the Note to section 1237A(1) stipulates, in equally peremptory terms, that the subsection:
‘does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
THE AAT1 DECISION
The AAT1 decision divided the debt period into three periods:
(a)Period 1 (P1): 7 February 2013 – 13 September 2014;
(b)Period 2 (P2): 13 September 2014 – 14 March 2017;
(c)Period 3 (P3): 15 March 2017 – 6 December 2017.
The AAT1 found that the pensioner was overpaid a total of $90,338.29 for the entire debt period, but that so much of the debt as related to P2 had to be waived under s 1237A.
For P1, the AAT1 found that the rental income received from renting the home from 7 February 2013 for $750 per week was not taken into account when assessing her rate of pension.[14] The AAT1 accepted that Ms Coulter was unaware that rental income from the former principal home was relevant to the rate of pension payable, but there was no basis for waiving the debt.
[14] T2/7, at [13]; T11/198; ST3/476.
For P2, the AAT1 found that a coding error by Centrelink resulted in a failure to assess the house under the asset-test at the expiration of the applicable two-year exemption period.[15] The AAT1 stated:
Due to the Department’s sole administrative error, Mrs Drakos’ former home was not reassessed under the asset test at the conclusion of the two year exemption period (13 September 2014), nor at any time during the period of investigation following the first data matching exercise (24 January to 29 May 2017). It was only on 18 December 2017 that the administrative error was identified and rectified.[16]
[15] See T12/346-7
[16] T2/8, at [16]. The 18 December date is supported by a file note, see T6/161.
The AAT1 was satisfied that Centrelink was aware in October 2012 that the pensioner’s husband had died and vacated the house and that the pensioner was in residential aged care. The pensioner, or those acting for her, did not contribute to the coding error or the reassessment failure in any way. The administrative error led to the P2 debt and was solely attributable to Centrelink. Had the house been assessed in September 2014 at the end of the exemption period, the pension payments would have been barred by the asset-test. The failure to reassess the house continued until 18 December 2017.
For P3, AAT1 found that the debt associated with this period was also tainted by sole administrative error, but the P3 debt was recoverable, because Ms Coulter was on notice or should have been, from 15 March 2017, when she received a letter from Centrelink regarding the matter. The payments received from 16 March 2017 were therefore not received in good faith.[17]
[17] T2/10, at [30].
The AAT also considered that the grounds for discretionary waiver under s 1237AAD were not made out, and this applied to the entire debt period.
ANALYSIS AND CONSIDERATION
During P1, the pensioner was overpaid about $400 per fortnight, a total of about $17,000. This was the difference between what she received and what she was entitled to under the income test. During P2, the house was no longer exempt under the asset-test aged care rules, and she was overpaid about $800 per fortnight, a total of about $54,500. This higher rate of overpayment continued in P3.[18]
[18] T15/396-7.
Period 1 (P1): 7 February 2013 – 13 September 2014
I agree with the AAT1 findings with respect to P1. The pensioner was under an obligation to report rental receipts to Centrelink.
Mrs Coulter and her brother Stamatis were mistaken about the application of the ‘special rule’[19] relating to aged care residents, because the pensioner was not paying an accommodation charge. Ms Coulter mistakenly believed that the daily care fee that the pensioner was paying was an accommodation charge, and that the special rule applied. She was mistaken. I do not accept the contention that Centrelink contributed to this error.
[19] This expression is discussed later.
At the hearing, much was made about the Financial Services Information (FSI) meeting between Ms Coulter and her brother and an official from Centrelink that took place on 18 September 2012, just before their father died but after he had moved into residential aged care.
The meeting had been arranged by Stamatis Drakos. He contacted Centrelink on 12 September 2012 to ask for the meeting. A Centrelink file note records:
Mother is in age care and Stan has been advised today by the hospital that customer needs to be put into high care nursing home tomorrow …Caller is wishing to discuss home/rental income etc as cust and partner now have to pay additional fees etc and will need additional income for this and wish to discuss options.[20]
[20] T13/373.
Mr Drakos moved to residential high care the day after his son contacted Centrelink and died a few weeks later, in early October.[21]
[21] See T12/335.
Ms Coulter gave evidence about the 18 September meeting. She said it was a relatively brief meeting with an official from Centrelink. At some point, she was given a document which summarised the issues discussed. [22] This document was included in the ‘T-docs’.[23] It is headed “Financial Information Service Record of Interview”: Record of Interview. Mr Drakos (senior) is described as ‘the customer’ and Mrs Drakos as ‘the partner’. The purpose of the meeting is described as being ‘residential aged care issues’.
[22] T4/113.
[23] T4/113.
The document is not accurately described as a record of interview. It is written at a level of abstraction, describing various rules and definitions, not all of which have relevance to the purpose of the meeting. It contains no record of anything said by Stamatis Drakos or Venice Coulter. It includes the usual disclaimers including the statement that “Centrelink cannot warrant that your information is complete, accurate or free from faults”.[24] It is hardly a record of interview. It does however convey important information which bears upon the present circumstances. The document contained the following passage:
If a person enters a government subsidised Aged Care Home, their former home remains exempt from asset test assessment by the Department of Human Services until the person has been in care for two years, unless the home has been sold beforehand. During this period, the Homeowner assets test threshold applies. At the end of the two year exemption period, the home will be assessed as an asset and the Non-Homeowner asset test threshold will apply. The home will always remain an exempt asset while the person’s partner still lives there.
A special rule applies, if a person enters high level care AND is paying an Accommodation Charge AND their former home is rented. While these conditions are met, the former home can be exempt from assets test assessment and the rent received is NOT assessed as income when calculating the rate of pension or the Income Tested Fee.[25]
[24] T4/115.
[25] T4/113.

While the document is not a model of clarity, the preceding passages correctly summarise in ordinary language the legal position described above relating to periods of absence from the principal residence.[26] I accept that the modelling contained in the spreadsheet was possibly confusing, but given that Mr Drakos died within a few weeks of this meeting, the scenario planning prepared for him as ‘the customer’ was in any event no longer relevant, or for that matter, reliable. Significantly, the pensioner was from early October 2012 the sole owner of a valuable Sydney property. Her circumstances had dramatically changed.
[26] See above para [24].
I am satisfied that there is no basis for any finding adverse to Centrelink arising from the 18 September 2012 meeting.
Mr Farmakis argued that in any event, the daily care fee can be properly ‘construed’ as an accommodation charge. Were that so, the so-called special rule would apply and the debt would be entirely expunged.
The definition of accommodation charge contained in the Aged Care Act 1997 (Cth) (AC Act) do not allow for an intermingling of these concepts. The daily care fee is explained in s 52D‑3 of the AC Act.
The basic daily care fee for a care recipient is:
(a) the amount determined by the Minister by legislative instrument; or
(b) if no amount is determined under paragraph (a) for the care recipient—the amount obtained by rounding down to the nearest cent the amount equal to 17.5% of the basic age pension amount (worked out on a per day basis).
Accommodation payments are defined in Part 3A.2 of the AC Act. There is no basis for construing the daily care fee as an accommodation charge. The payments are for different purposes. The daily care fee provides for the personal needs of the resident, the accommodation charges are intended to meet accommodation costs. The government website dealing with residential care explains this in simple plain English.[27]
[27] <accessed on 26 July 2020>.
Moreover, I reiterate that following the death of her father, a few weeks after the meeting, the pensioner’s situation was significantly altered in that she was now the sole owner of a valuable property with rental potential, and it would have been prudent to seek further guidance from Centrelink in light of the changed circumstances.
I note that when Mr Drakos died, Centrelink sent a supportive ‘bereavement letter’ to the pensioner, confirming a special one-off bereavement payment.[28] Ms Coulter gave evidence that she received this letter but did not read it carefully. Buried deep in the fine print, under the heading Changes to financial circumstance, there is reminder of reporting obligations.[29] “You should advise us of any changes to your income and/or assets as they may have an effect of any payment you receive or become eligible to.” Mr Farmakidis thought it was unfair to rely on this letter given the circumstances. I note that the Centrelink file note dated 19 October 2012 which states: “Where possible avoid contacts during bereavement period unless at customer request or to extend support.”[30] However, I do not think it is necessary to invoke this letter to support a reporting obligation where there is a significant change of circumstance. A person who neglects to report such a change can hardly complain if they are expected to pay back money received in error.
[28] ST1/460.
[29] ST1/464.
[30] T12/335.
The disclosure of rental receipts to an accountant for the purpose of reporting income to the Australian Tax Office cannot be regarded as sufficient disclosure for Centrelink reporting purposes. Payments of age pension during Period 1 were recoverable as a debt owed to the Commonwealth. There were no grounds to waive this component of the total debt.
In summary, Ms Coulter mistakenly but innocently believed that the primary residence was exempt from the asset and income tests on an indefinite basis; she wrongly believed that her mother was paying an accommodation charge when she was only paying a daily care fee; she did not seek fresh advice after her father died; and she did not update her mother’s details with Centrelink when her income and asset position changed significantly upon the death of her father. She did not interact with Centrelink on a regular basis to ensure that all reporting obligations were satisfied.
For all these reasons, I agree with AAT1 that the requirements of s 1237A are not satisfied with respect to P1.
Period 2 (P2): 13 September 2014 – 14 March 2017
According to the AAT1, the two year exemption period expired on 13 September 2014. In fact, it expired at midnight on 12 September 2014, and therefore, P2 should run from 13 September 2014-14 March 2017. Centrelink did not then assess the property, because the property was incorrectly coded in 2012 when Mr Drakos died. The AAT1 held that the pensioner did not contribute to this error in any way and received the pension payments in good faith. This portion of the debt had to be waived under s 1237A of the SSA. I regret that with respect I cannot agree with this analysis.
In the first place, even assuming that Centrelink was solely responsible for the coding error and the consequences of that error (namely that the house was not brought up for reassessment in September 2014) it is hard to see any ground for mandatory waiver of all overpayments associated with P2.
The Centrelink error meant that the house was not assessed under the asset test. But at all material times the house was subject to the income test. This is implicit in the AAT1 decision relating to P1. The decision on P2 meant that the Estate would be allowed to keep the overpayments for P2 which were received at the full pension rate, without any offset for the rent which the pensioner (through her agent) failed to declare. This is problematic because the administrative error by Centrelink had no bearing on the obligation to declare rental income - hence the decision on P1.
Whether or not Centrelink failed to apply the asset test in September 2014 because of the coding error, the pensioner (through her agent) was required to disclose the rental income for P2. In that case, she would have received a reduced pension (as she did for P1), and the overpayment would have been less, by approximately $27,000. Given the AAT1 finding on P1, the finding on P2 represented something of a windfall for the Estate.
However, this counterfactual is somewhat academic, because in my view there is a more substantial reason why the ‘sole administrative error’ waiver is inapplicable to P2. It is very clear that the section does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
All of the factors referred to above pertaining to P1 apply with equal force here. In summary, Ms Coulter mistakenly believed that her mother was paying an accommodation charge when she was only paying a daily care fee, and therefore she wrongly believed that the primary residence was exempt from the asset and income tests on an indefinite basis. She did not update her mother’s details when her income and asset position changed significantly upon the death of her father nor did she seek fresh advice or interact with Centrelink on a regular basis to ensure that all reporting obligations were satisfied. The FIS meeting of 18 September 2012 was no longer a sufficient guide. She wrongly believed that her reporting obligations to Centrelink were discharged simply by filing an accurate tax return which included rental receipts.
For all these reasons, I cannot agree that the requirements of s 1237A are satisfied with respect to P2. The debt over this period was undoubtedly caused partly by these factors.
Period 3 (P3): 15 March 2017 – 6 December 2017
I note that on 15 March 2017, Centrelink wrote to Ms Coulter requesting certain information and on 16 March 2017, Ms Coulter filed certain documents. [31] It appears that the information was not actioned until the end of the year. The file note records:
[N]othing was done with them. This is actually accurate. There may be grounds to consider waiver for this portion.[32]
[31] T4/100-130.
[32] File note 14 March 2019: T12/356.
On 27 March 2017, Centrelink sent a letter to the pensioner indicating that the pension payments, which had been temporarily suspended after the request for information, had been restarted;[33] and on 29 May 2017, Centrelink wrote again to say that the review, foreshadowed on 13 February 2017, had been completed ‘and no further action is required by you’.[34] This comforting letter was to prove short-lived, in light of the subsequent decision in December to cancel the pension.
[33] T18/439.
[34] T18/442.
Because Ms Coulter was on notice of the overpayment due to the correspondence that was issued from Centrelink on 15 March 2017, AAT1 held that payments received after this date could not be regarded as having been received in good faith.
It is a reasonable proposition that a person who suspects that they might not be entitled to receive a payment does not receive the payments in good faith. Much will depend on the circumstances: a standard review may not be sufficient to arouse any suspicion that something is wrong. But it is unnecessary to dwell on this issue because the central problem remains. Section 1237A does not apply to P3 because the debt was contributed to by factors caused by the pensioner.
In conclusion, I find that there is no basis for mandatory waiver under s 1237A in relation to the entire debt period.
SPECIAL CIRCUMSTANCES
I turn to the question whether any part of the debt generated over the entire debt period should be waived pursuant to section 1237AAD. This involves a consideration of whether there are any special circumstances (other than financial hardship alone) that make it unjust, unreasonable or inappropriate to recover any portion of the total debt.
I am satisfied that the entire debt did not result wholly or partly from the pensioner or her children knowingly making a false statement or a false representation; or knowingly failing or omitting to comply with any reporting obligation.
A significant feature of the case is the overall dereliction by Centrelink to process information and review it in a timely manner.[35] The systems errors (if such they were) which resulted in a failure to code the property correctly or bring the file up for regular review, which I would expect to be standard practice, were a major contributing factor to this debt. However, for the reasons previously given, these errors do not provide a complete explanation for the creation of this debt.
[35] T12/349.
My analysis leads me to the conclusion that Ms Coulter and her brother, invested with powers of attorney for their mother, made an innocent mistake which led them to believe that the principal home could be renovated and rented out without its inherent value or its rental potential affecting their mother’s age pension. They were wholly mistaken in this belief. On the other hand, Centrelink failed to code the property accurately and as a result did not bring the house up for reassessment at the expiration of the two year exemption period. This debt resulted from a series of interwoven mistakes. Both parties contributed, perhaps in varying degrees, to the creation of this debt.
Importantly, neither Mrs Coulter nor her brother Mr Stamatis Drakos consulted Centrelink after their father died, specifically in relation to their mother’s entitlements. I think this was a very significant failing. In any event, it meant that their mother had the benefit of a significant amount of money over the past five years to which she was not entitled. I cannot see that it would be unjust, unreasonable or inappropriate to require this money to be repaid.
It may be, had the true state of affairs been appreciated, other arrangements could have been made with the money, such as selling the house, or using it for family enjoyment, or paying the accommodation charge. Such arrangements may have been more fitting to the legal and factual circumstances, but can hardly amount to special circumstances.
I recognise the significant emotional strain and anguish that has fallen upon the children of the late Maria Drakos, and especially Ms Coulter. I note that around 2010 her marriage broke down and she lost her home in the property settlement and for a few months, moved back in with her parents, before finding new accommodation. She also suffers from chronic lung disease, and, from depression and anxiety. Ms Coulter provided a statement from Dr Zinta Harrington of Liverpool Hospital confirming the serious nature of her respiratory illness. These factors press upon the Tribunal, not only in terms of her present needs but also as mitigating any fault associated with the manner in which she managed her mother’s affairs. The present state of her health, chronic though it may be, does not provide a sufficient justification to waive such a large pension debt owed by her mother’s estate to the Commonwealth.
I wish to conclude by stating that Ms Coulter impressed me as an honest and sincere person, and a caring daughter. There is no evidence of dishonesty, guile or deceit on her part, or indeed on the part of any of the children.
A final observation is that there is a pressing need for transparency and clarity surrounding the costs and charges associated with residential age care. The recent rating system for aged care facilities may go some way to assisting consumers, at this vulnerable stage of life, making informed choices.[36]
[36] <accessed 27 July 2020>
In conclusion, I have explained why I do not agree with the decision of AAT1 that the debt must be waived for the period 13 September 2014 – 14 March 2017. I agree with the AAT1 that there are no special circumstances such that it would be unjust, unreasonable or inappropriate to recover the overpayment in full.
CONCLUSION
I set aside the AAT1 decision of 4 June 2019, and decide that the debt of $90,338.29 is fully recoverable from the Estate of the late Maria Drakos.
APPENDIX
4.3.2.30 Income exempt from assessment –
Rental income from former principal home for aged care residents
Rental income that a person receives while living in an aged care residence may be exempt from the income test in certain circumstances.
If the person is residing in the care situation (1.1.C.25) and entered the care situation before 1 January 2017, AND
·an accommodation charge (1.1.A.18) is payable, OR
·a daily accommodation payment/daily accommodation contribution (1.1.D.05) is payable, OR
·they are paying some or all of an accommodation bond (1.1.A.15) by periodic instalments,
then any rent received from the former home is exempted from the income test.
Act reference: SSAct section 8(8)(zn) while a person is accruing …, section 8(8)(zna) while a person is liable …, section 8(8)(znaa) while a person is liable …

I certify that the preceding 80 (eighty) paragraphs are a true copy of the reasons for the decision herein of

.............................[sgd]...........................................
Associate
Dated: 10 August 2020

Date(s) of hearing: 7 April 2020

Solicitors for the Applicant: Dr S Thompson

Solicitors for the Respondent: Mr F Farmakidis

Solicitors for the Other Party: Mr F Farmakidis

[2020] AATA 2875

10 August 2020

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Appeal

Procedural Fairness

Remedies

Statutory Construction

Standing

Date(s) of hearing:	7 April 2020
Solicitors for the Applicant:	Dr S Thompson
Solicitors for the Respondent:	Mr F Farmakidis
Solicitors for the Other Party:	Mr F Farmakidis