Anchor Consolidated Holdings Pty Ltd v Secretary, Department of Education

The applicant's case

1. In his written submissions of 12 September 2022, Mr Soryal said: 1. in October 2021, his son, who was overseas, ran into some health problems and he had to travel overseas to look after him. His son's health had in the meantime not improved in order for him to return to Australia; 2. the 'service is a great service and we intend to provide that service …'; 3. he has not received any calls from the respondent Department, even though his phone is on roaming; 4. his wife was unfortunately out when the authorised officers visited on 30 June 2022; 5. he has not listed his business for sale, because he has worked so hard on preparing the policies and paperwork; and 6. if his provider approval is restored, he will dedicate his time for the applicant's service when he returns in October 2022 after the doctors give his son the final approval to return to Australia.
2. In his submissions of 11 December 2022, Mr Soryal said: 1. the period during which the applicant's provider approval was suspended should not be counted; 2. in the excise of the discretion in s 31(f) of the National Law, the Tribunal should consider the 'extreme circumstances that forced them (sic) not to be able to run the service'. In this regard Mr Soryal submitted that: 1. since being registered, the applicant had demonstrated a serious approach to offer its service and keep its currency and abide by 'all the Department's regulations'; 2. at the beginning the applicant tried to market and employ staff but found the CCS approval was essential. Then, COVID-19 kept parents and educators away for fear of contacting the virus; 3. while it is easy to apply the law and cancel the applicant's provider approval, forcing the applicant to re-apply should be avoided by giving the applicant another chance to commence operation after the Christmas break; 4. the applicant has not risked the welfare or lives of any children - the only challenge facing the applicant is its failure to comply with the commencement condition in s 51(3) of the National Law, which may be pardoned by the harsh circumstances of COVID-19 and his family circumstances, which could happen to anyone; 5. he is a fit and proper person to be involved in the provision of an education and care service and he will provide the necessary documentation once he returns to Australia. He is also a man of good character, and his credentials remain current; 6. the physical environment of his premises is suitable for children and the applicant has adequate policies and procedures, which were included in the bundle of documents submitted by the respondent on 21/10/2022; 7. it is unfair to cancel the applicant's provider approval given the harsh circumstances of COVID-19 and the serious illness of his only son while out of Australia; 8. he would be returning to Australia in mid-January 2023 and the applicant's service would be operative from the beginning of February 2023 if the Tribunal 'is kind enough and change the date of the decision'; 9. the local community where the service is to operate from 'are well-informed' and while there is no legal requirement for an education and care service to obtain the Commonwealth Subsidy (CCS) before it can commence operation, all parents had asked for it. Hence, it is 'unreasonable, in fact, it is impossible that a family day care service can run without that approval'; and 10. 'the effect of the provider approval cancellation on the community is not as serious as it is on the applicant who will lose a lot of money, time and effort the decision of cancellation of the provider approval is confirmed …

The respondent's case

1. As noted above, in support of his case, the respondent relied on the affidavit evidence of Sam Goldsmith (Mr Goldsmith). In that affidavit, Mr Goldsmith gave evidence of a letter he sent to Mr Soryal on 3 November 2022 and Mr Soryal's email response on the same day.
2. He also gave evidence of his telephone call with Mr Soryal the following day in which Mr Soryal confirmed that, for the reasons he had given previously, the applicant had never provided care to children since June 2018.
3. In its submissions the respondent contended that, based on the evidence before it and the proper construction of ss 31(f) and 51(3) of the National Law, the Tribunal must conclude that the applicant never operated any education and care service for a period of more than 12 months because: 1. the activities of the applicant since it received service approval does not amount to the applicant having operated any education and care service: citing DBU at [33]-[34] and [37] and Forever Family Day Care Pty Ltd v Secretary, Department of Education [2022] NSWCATAD 185 (Forever Family Day Care); 2. Mr Soryal, on behalf of the applicant, has admitted that the applicant has never provided education and care to any children; and 3. Mr Soryal's stated intentions as to the operation of the applicant's service when he returns to Australia (for example, enrol children for its service, appoint a full time co-ordinator, advertise for staff and to move into a formal office), are the subjective intentions of Mr Soryal and do not amount to the applicant having operated any education and care service: citing Forever Family Day Care at [53] and [55] and DBU at [38].
4. The respondent also submits that, if the Tribunal finds that the applicant has not operated an education and care service for more than 12 months, then the discretion to cancel its provider approval is enlivened and in the exercise of that discretion, the Tribunal should uphold the cancellation decision because: 1. unlike the remaining grounds for cancellation of a provider approval, s 31(f) of the National Law is not enlivened by any wrongdoing or impropriety on the part of the approved provider. Instead, it is enlivened solely by the approved provider failing to operate an education and care service for 12 months or more. It is a regulatory tool for those circumstance where, due to inactivity by the approved provider, the Regulatory Authority has been unable to assess the continuing currency of the provider's credentials and rate the service against the National Quality Standards. These credentials were assessed at the time provider approval and service approval was granted to the applicant which, due to inactivity during the subsequent years are out of date and possibly lost; 2. the applicant would be free to re-apply for a provider and a service approval and the decision of the Tribunal in confirming the decision to cancel its provider approval does not of itself put at risk the applicant's ability to operate an education and care service in the future. In November 2022, the cost of reapplying, for the approvals were $219 for a provider approval and $658 for service approval; 3. the very extended period of the applicant's inactivity weighs heavily in favour of exercising the discretion, especially as the applicant has never operated an education and care service in more than five years - citing Jessica Education Centre Ltd (KA Family Day Care) v Secretary, Department of Education [2020] NSWCATAD 99 at [22] and [38]; 4. minimal weight should be given to any impact of COVID-19 on the applicant's business as other family day care services in NSW were equally impacted and continued to operate by making appropriate adjustment to their respective services. In any event, it was not until around February 2020 that Australia and NSW felt the impact of COVID-19 and at that time the applicant had been an approved provider for two and a half years, which was sufficient grounds to enliven the cancelation of its provider approval under s 31(f) of the National Law; and 5. the difficult circumstances in which Mr Soryal found himself in were acknowledged, but they must be weighed against the intended scope of the application of s 31(f) of the National Law, the policy considerations that underlie that section and the lengthy period in which the applicant had not commenced operating; 6. there is no legal requirement for an education and care service to obtain the CCS subsidy before it commences operation. Hence it does not justify an indefinite suspension of the service while it awaits approval: citing Forever Family Day Care at [70]; DBU at [47] and Al Hamid (t/as Paradise for Children) v Secretary, Department of Education [2018] NSWCATAD 74 (Al Hamid) at [77]; 7. a cancellation of the applicant's provider approval will not cause any inconvenience to the local community as the applicant has at no time operated its service; and 8. given the long period of time that the applicant has not operated, a decision to set aside the cancellation decision would require additional monitoring by the respondent which is resource intensive and contrary to the intent of s 31(f) of the National Law and the intent of Parliament for a co-regulatory system, whereby an approved provider has a regulatory function of those persons it employees or registers for its service.

Has the applicant not operated any education and care service for a period of more than 12 months?

1. In our view this is a simple question, and the starting point is the terms of the relevant provisions of the National Law.
2. First, as we have already noted, s 18 of the National Law provides that (bold added): A provider approval authorises the approved provider to operate an approved education and care service … if the approved provider is the holder of the services for those services.
3. The term 'education and care service' is defined in s 5(1) of the National Law. That definition relevantly provides: education and care service means any service providing or intended to provide education and care on a regular basis to children under 13 years of age other than - (a) a school providing full-time education to children, …
4. The term 'family day care service' is also defined in s 5(1) of the National Law as follows: family day care service means an education and care service that - (a) is delivered through the use of 2 or more educators to provide education and care to children; and (b) operates from 2 or more residences;
5. This meaning of 'family day care service' falls within the meaning of an 'education and care services' and is not included in the exceptions that follow.
6. The word 'operate' is not defined in the National Law and should be given its ordinary meaning.
7. The on-line Macquarie Dictionary defines the word 'operate' to mean: operate /ˈɒpəreɪt/ (say 'opuhrayt) verb (operated, operating) -verb (i) 1. to work or run, as a machine does. 2. to work or use a machine, apparatus, or the like. 3. (sometimes followed by on or upon) to act effectively; exert force or influence: now the same causes are operating for war. 4. to perform some process of work or treatment. 5. Surgery to perform some manual act or series of acts upon the body of a patient, usually with instruments, to remedy deformity, injury, or disease. 6. (of medicines, etc.) to produce the effect intended. 7. Navy, Military a. to carry on operations in war. b. to give orders and accomplish military acts, as distinguished from doing staff work. 8. to carry on transactions in securities, or some commodity, especially speculatively or on a large scale. -verb (t) 9. to manage or use (a machine, etc.) at work: to operate a switchboard. 10. to keep (a machine, apparatus, factory, industrial system, etc.) working or in operation. 11. to bring about, effect, or produce, as by action or the exertion of force or influence. [Latin operātus, past participle, having done work, having had effect] -operatable, adjective
8. In our view, in the context of the National Law, the ordinary meaning of the word 'operate' is the carrying on of an education and care service, including a family day care service.
9. In this regard, s 18 of the National Law authorises an approved provider to operate (carry on) an education and care service where the authorised provider has received service approval from the Regulatory Authority for the service the subject of its application for service approval under s 43 of the National Law. That is, a grant of service approval by the Regulatory Authority respondent is what gives the approved provider the ability to commence operating its education and care service: see DBU at [38]. As explained by the Tribunal, a grant of service approval is the initial step, but does not mean that the approved service is actually operational. In the case of an approved family day care service this requires the approved service to have engaged or registered two or more family day care educators who are to provide education and care for children at their respective approved residence as part of the approved service of the approved provider: see DBU at [37] and CVM v Secretary, Department of Education [2017] NSWCATAD 108 (CVM) at [45].
10. Section 31(f) of the National Law, on the other hand is directed at an approved provider who has not operated 'any' education and care services for a period of 12 months or more. The period of 12 months or more in s 31(f) is specific and expressly includes any period of suspension of the provider's approval.
11. Furthermore, s 31(f) of the National Law applies equally where an approved provider has not sought or been granted service approval for an education and care service.
12. In this case, there is no evidence of the applicant having carried on (operated) its intended and approved family day care service. In our opinion, in the absence of any evidence of the applicant having engaged or registered two family day care educators, the applicant's 21 January 2023 offer of employment to Ms Shenouda as Service Co-ordinator was no more than a desperate attempt to have the applicant's provider approval restored. However, it did not evidence the applicant having commenced operation.
13. Nor does Mr Soryal contend to the contrary. Instead, he acknowledged on several occasions that the applicant has not at any time operated an education and care services since 15 June 2018. In our view, that admission is appropriately made. The reasons given by Mr Soryal for the applicant not having commenced operation are, in our opinion, matters to be considered in the exercise of the discretion in s 33(1) of the National Law and are of no relevance to the question as to whether the applicant has not operated any education and care service for 12 months or more.
14. Accordingly, we find that, as at the date on which the applicant's provider approval was cancelled (29 July 2022) the applicant had not operated any education and care service for 12 months or more.
15. We also find, having regard to the terms of s 31(f) which expressly provides that any period of suspension is included, that, as at the date of the respondent's decision to cancel the applicant's provider approval, the applicant had not operated any education and care services for four years. Again, the reasons for the suspension are matters which may be considered in the exercise of the discretion in s 33(1) of the National Law.

Discretion - should the applicant's provider approval be cancelled?

1. As noted by the respondent in exercising its discretionary power under s 33(1) that power must be exercised reasonably having regard to the objects and principles of the Act and in accordance with the scope and purpose of that section and other relevant provisions in that Act. In our view, matters relevant to the exercise of the discretion in s 33(1) include the following: 1. the objects and principles of that Act, the nature of the co-regulatory scheme within that Act and the legislative purpose of s 31(f) of that Act; 2. the period of time since the approved provider obtained service approval for its education and care service; 3. the steps taken by the approved provider during this period of time to commence operating the education and care service for which it received approval; 4. the reasons given by the approved provider as to why it has not commenced operating the education and care service for which it received approval; and 5. any other relevant matter (for example the applicant's history of compliance with the National Law and National Regulations).

Objects and principles of the National Law

1. In DBU, at [43], the Tribunal cited the following remarks of the ACT Civil and Administrative Tribunal in Long Life Family Daycare v Director-General, Education Directorate [2016] ACAT 69 at [12]: [I]t is evidence (sic) that the providers of child care services are responsible for the health and welfare of the children in their care. This … must require a high degree of probity, trustworthiness and compliance with the National Law.:
2. In DBU, at [44], the Tribunal went on to say: Indeed, the objectives and guiding principles of the National Law as set out in s 3 make clear the law is directed towards facilitating the implementation of a quality framework for the delivery of education and care services for children on a national basis which has at its forefront the rights and best interests of those children. To further those aims it is important that compliance with the law be implemented thoroughly and consistently throughout all Australian jurisdictions.
3. We agree with the Tribunal's remarks. As noted above, the focus of the national quality framework is on the delivery of education and care services nation-wide, and the continuous improvement in the provision of the quality of those services. As set out in s 3, the object of such delivery and continuous improvement is so that the educational and development outcomes for all children attending education and care services regulated under the National Law and the National Regulations are improved and that the quality of those services are continually improved.
4. As we have already noted, under-pinning the very detailed and prescriptive provisions of the National Law and the National Regulations is the National Quality Standard for the operation of an education and care service regulated under that Law and Regulations together with the assessment and ongoing assessment of those services against the rating levels prescribed in the Regulations.
5. The delivery of education and care services under the National Law is by approved providers who are authorised to provide the education and care services regulated under the National Law and National Regulations.
6. To achieve the early delivery and ongoing deliver of such education and care services, Parliament has made provision for strict time frames within which the Regulatory Authority is to consider and determine an application for provider approval (60 days) and service approval (90 days). Parliament has also made provision for a strict time frame within which an approved provider is to commence operating its approved service (6 months).
7. In CTG v NSW Department of Education, Early Childhood and Care Directorate [2017] NSWCATAD 60, at [59], the Tribunal made the following observation about the time frame in s 51(3) (the 6 month commencement requirement) and generally within the National Law: 59 The purpose of the time frames is to provide currency to the approval process, and avoid a situation whereby one set of regulatory compliance is satisfied whilst another parallel regime could (in some instances) remain in abeyance for considerable time, if not indefinitely. Currency of credentials, approvals, training and even some certainty of what is to be regulated or oversighted are in my view significant matters of public interest. They are matters consistent with the role for which approval is sought and in this instance the specific requirements of the Legislature in setting such specific standards.
8. A provider approval, once granted, remains in force until cancelled: s 17. However, this approval does not facilitate the delivery of an education and care service. This is facilitated through the approved provider obtaining service approval for the education and care service the provider intends to operate. And to ensure that there is an early delivery of service approval of an education and care service the approved provider intends to provide, the provider is required to commence operating that service within 6 months. These approval processes and time frames accord with the objectives and guiding principles in s 3 of the National Law.
9. Consistent with the objects of the Act and the other time frames within the National Law and National Regulations, Parliament has made a deliberate choice, that the Regulatory Authority be given the power to cancel a person's provider approval where the provider fails to operate any education and care services for 12 months or more. That power being s 31(f) of the National Law.
10. The circumstances where that power may arise are where the approved provider fails to seek or obtain any service approval, fails to commence operating its approved service, or ceases to operate its approved services. That is, Parliament's intent, as expressed in s 31(f), is that an approved provider who does not provide any education and care service for 12 months and more may have its provider approval cancelled.

The period of time since service approval was granted

1. As at the time of hearing it was almost four and a half years since the applicant was granted service approval for its family day care service. This is three years more than the time within which the applicant was to commence operating its approved family day care service as required under s 51(3) of the National Law and expressly stated in the notice of service approval provided to the applicant. It is also three and a half years more than the 12-month period prescribed in s 31(f) of the National Law.
2. n our view, in this application, a period of four and a half years where the applicant has not provided any education and care service is very substantial.
3. While the period of suspension is to be included in the calculation the period during which the approved provider did not provide any education and care service, in our view, the two and a half years after the applicant's voluntary suspension had expired in March 2020, is also a very substantial period of time during which the applicant did not provide any education and care service.

Steps taken by the applicant during this time to commence operating its approved service

1. On the material before the Tribunal, we are not persuaded that, from the time it was granted service approval, the applicant took any steps towards being able to commence operating its approved family day care service. In this regard, other than mere assertion, Mr Soryal, on behalf of the applicant, did not provide any evidence of having advertised its service generally or otherwise, having approached any potential family day care educators to be engaged or registered with its service, or that the applicant was approached by parents wishing to register their child(ren) with its service.
2. The only steps taken by Mr Soryal, on behalf of the applicant, appear to be an application to the Commonwealth for Commonwealth CCS approval. The National Law, as explained by the respondent, does not require Commonwealth CCS approval to: 1. commence the operation of an approved education and care service; or 2. continue the operation of such a service.
3. In our view, Commonwealth CCS approval was clearly a business decision taken by Mr Soryal on behalf of the applicant. We are not critical of that decision. However, under the National Law it is not a matter relevant to the applicant's obligation to commence operating its approved education and care service within six months of approval or otherwise.
4. The only other step taken by the applicant concerning its approved service was notifying the respondent, in early 2021, of the change of address of the principal office of its service. That notification was approved by the respondent. However, in the respondent's inspection of the new principal office of the applicant there was no evidence of any children having been educated or cared for by the applicant's approved service.

Reasons given by the applicant as to why it had not commenced operating its service

1. As noted above, in seeking approval for a voluntary 12-month suspension in early 2019, the reasons given by Mr Soryal, on behalf of the applicant, was a failure to receive the Commonwealth CSS approval. As we have explained above, this has clearly been a business decision Mr Soryal made around the time the applicant was granted service approval (June 2018) and is one that he has maintained throughout these proceedings. Again, we are not critical of Mr Soryal.
2. However, as the objects of the National Law are directed towards facilitating the implementation of a quality framework for the delivery of education and care services and the strict time frames prescribed in that Law, we find, given the long period of time the applicant has not operated any education and care service, this business decision of Mr Soryal to await CCS approval should be given little, if any, weight in considering whether the discretion should be exercised in favour of the applicant.
3. The other reasons for not having commenced operating its approved education and care service is COVID-19 and Mr Soryal's absence overseas. Again, for the same reasons set out above, little, if any, weight should be given to these reasons.
4. COVID-19 impacted everyone. Yet essential services such as approved education and care services continued to operate to some extent to support essential workers during this difficult time. Again, in our view, Mr Soryal, made a business decision, on behalf of the applicant, not to commence the operation of the applicant's approved education and care service during this time. As we have noted, in March 2020, Mr Soryal asked if a further suspension could be made on behalf of the applicant. He was advised he could do so, but at no time did he do so or seek to have the period of time within which to commence operation of the applicant's service to be extended. Again, we are not critical of Mr Soryal and the business decisions he has made. However, it was this business decision which prevented the applicant from commencing its operation for more than two and a half years and not anything arising from the application of the National Law during the period of COVID-19.
5. We accept the evidence of Mr Soryal that he needed to travel overseas and care for his son who was ill. This, however, was not a reason given by Mr Soryal in his March 2022 response to the respondent's Show Cause Notice. Nor had he informed the respondent of his absence, instead the respondent was advised of his absence during a compliance visit, on 30 June 2022, to the applicant's principal office. It is of concern that Mr Soryal had not informed the respondent of his absence earlier around the time he left for overseas in November 2021.
6. In any event, at the time written submissions closed in this matter, Mr Soryal remained overseas and on the information before the Tribunal, at best, Mr Soryal had obtained a flight itinerary for a return to Australia on 22 February 2023. Even if Mr Soryal did return to Australia on this day, there is no evidence, other than mere assertion that the applicant could and would commence operation on Mr Soryal's return. Given the length of time since the applicant was granted approval of its intended education and care service and the lengthy inaction in preparing to commence operating that service, we can only conclude that the applicant was in no position to commence operation on Mr Soryal's return to Australia, or at any time prior thereto.

Any other matter

1. We accept that there has been no adverse finding made against the applicant or Mr Soryal. However, a decision to cancel the applicant's provider approval is not dependent on making such a finding.
2. However, we agree with the respondent that, given the long period of time since the applicant obtained both provider and service approval together with its almost total inaction during that time, its 2017 and 2018 approvals are no longer current. In our view, for the reasons we have already given, this lack of currency is also inconsistent with the objects and principles of the National Law, including the principle that the rights and best interests of the child are paramount.
3. Finally, as noted by the respondent, a cancellation of the applicant's provider approval does not prevent the applicant from making a fresh application for a provider approval and a service approval sometime in the future. While Mr Soryal argues that this is a waste of time and money, this might be so from his point of view. However, this would ensure the currency of the applicant's approvals, as intended by Parliament in adopting the National Law.

Conclusion

1. Accordingly, based on our findings set out above, we have decided that the discretion in s 31(f) should be exercised by cancelling the applicant's provider approval.

Conclusion and Order

1. For the reasons we have given above, we find that the correct and preferable decision is to cancel the applicant's provider approval. Hence, the appropriate order is to confirm the decision of the respondent under s 193(3)(a) of the National Law.
2. We make the following order: 1. The decision of the respondent, made on 29 July 2022, to cancel the applicant's provider approval is confirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 October 2023