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

This matter concerned an appeal by the Executor Estate of the late Mrs Maria Drakos against a decision of the Administrative Appeals Tribunal (AAT) regarding an overpayment of age pension. The dispute centred on whether a significant debt arising from these overpayments should be waived, either wholly or in part, due to alleged administrative errors by Centrelink and the circumstances surrounding the pensioner's receipt of the funds. The case was heard by Emeritus Professor P A Fairall, Senior Member.

The primary legal issues before the court were whether the grounds for discretionary waiver of the age pension debt under section 1237AAD of the relevant legislation were made out, and specifically, whether the debt was solely attributable to Centrelink's administrative error. The court was required to determine if the pensioner had received the overpayments in good faith, and whether a coding error by Centrelink, which resulted in a failure to reassess the pensioner's former home as an asset after an exemption period expired, justified a waiver of the debt. The court also considered whether a daily fee paid by the pensioner could be construed as an accommodation charge for the purposes of aged care rules.

The court agreed with the AAT's findings that for the first period of overpayment, the pensioner was under an obligation to report rental receipts from her former home, and her mistaken belief that a daily care fee constituted an accommodation charge, thereby triggering a special rule, did not absolve her of this responsibility. The court found no basis for Centrelink contributing to this error. However, for the second period of overpayment, the AAT had found that a coding error by Centrelink led to the failure to reassess the pensioner's home under the asset test after the two-year exemption period expired. The court affirmed that this administrative error was solely attributable to Centrelink and that the pensioner or her representatives did not contribute to it. For the third period, while also tainted by administrative error, the court found the debt recoverable as the pensioner, through her representative, was on notice from a specific date regarding the matter and subsequent payments were not received in good faith.

Ultimately, the court upheld the AAT's decision that while a portion of the debt related to the second period was to be waived due to sole administrative error by Centrelink, the debt for the first and third periods remained recoverable. The court found that the grounds for a full discretionary waiver under section 1237AAD were not met, particularly as the debt was not solely attributable to administrative error across the entire period.