Assyrian Christian Schools Ltd v Minister for Education and Early Learning

Factual Background and Procedural History

1. On 18 December 2020 proceedings before the New South Wales Civil and Administrative Tribunal (hereinafter "NCAT") between the plaintiff and the Non-Government Schools Not-for-Profit Advisory Committee were resolved by way of consent orders. Part of those consent orders resulted in the Committee recommending to the Minister that she make for-profit declarations pursuant to s 83D(1) of the Education Act 1990 in relation to St Hurmizd and St Narsai Assyrian Christian College (collectively referred to as "the Schools") on the basis that they had operated on a for-profit basis between 1 January 2015 and 4 May 2020.
2. Pursuant to the agreed orders before NCAT, the Committee made the recommendation and, as a consequence, the Minister issued the recommended declarations on 11 March 2021. As a consequence of those declarations, the Minister invited the Schools to lodge submissions on the issue of recovery of financial assistance.
3. On 5 July 2021, the Schools wrote to the Minister providing submissions and an accountant's report to the effect that they could not repay the financial assistance and remain solvent. After receiving notes on the issue, the Minister made the decision sought to be quashed in relation to St Narsai Assyrian Christian College (the "St Narsai Decision") and in relation to the St Hurmizd Assyrian School (hereinafter "the St Hurmizd Decision"), which, as already stated, required the repayment of the assistance over seven years by way of reduction of future payments.
4. The Summons in this Court was filed on 7 March 2022 and was adjourned pending the outcome of the judgment in Malek Fahd Islamic School Limited v Minister of Education and Early Childhood Learning [2022] NSWSC 1176 (herein after "Malek Fahd"). The Court as presently constituted determined that matter on 1 September 2022.

The Scheme of the Act

1. In Malek Fahd, [1] the Court as presently constituted set out the scheme of the Act and its proper construction. The Court also dealt with the jurisdiction of the Court to issue orders in the nature of certiorari against the Minister, and to take into account, in so doing, error of law on the face of the record. As the Court there made clear, the face of the record included the reasons for decision. Obviously, the reasons for judgment on the issue of whether the amount is a debt is now subject to different analysis on a point not argued at first instance. [2]
2. The Court, as presently constituted, adheres to its analysis of the provisions of the Education Act and of the jurisdiction of the Court analysed in Malek Fahd that was directly relevant to the issue of whether certiorari would run, and the functions of the Minister, and the exercise of her discretion.
3. On 27 March 2023, Basten AJA dealt with an application of similar kind. [3] With great respect to his Honour, his Honour's analysis of the discretion available to the Minister in determining whether to recover amounts and, if so, the amounts to be recovered, is unassailable.
4. His Honour also took the same view, with respect, as to that there is no requirement to have, as a precondition to the recovery of amounts, a declaration under s 83D of the Education Act. His Honour came to the conclusion that there was no need for a declaration prior to the recovery of money or the exercise of the discretion so to do.
5. In the judgment in Malek Fahd, the circumstances of the exercise of the discretion was such that the Minister, commendably, afforded the school natural justice or procedural fairness. Such also was the situation with which Basten AJA was dealing in the Christian Community Ministries Ltd proceedings.
6. Notwithstanding that circumstance in each case, each of Basten AJA and I dealt with whether the Act required natural justice to be afforded. I took the view that it did. His Honour, Basten AJA, considered, that if, as each of us decided, the making of a declaration is not a precondition to recovery, then it is "not easy to understand how a precondition to the making of a declaration, being natural justice, becomes a precondition to recovery".
7. The difference, if there be one, between the conclusion of Basten AJA and myself may be academic. His Honour's judgment does not suggest that the Minister, in determining the rights and/or obligations of a school, should not afford natural justice. The difference between us is whether the Education Act prescribes that duty.
8. Ordinarily, an administrative decision affecting rights and obligations must be taken in circumstances where a person affected is to be given procedural fairness. Administrative decisions have imposed upon them a common law duty to act fairly by affording procedural fairness, where those decisions affect rights, interests or legitimate expectations, unless there is an express exclusion of the rules of procedural fairness, or they are excluded by words of necessary intendment. [4] Rather, the issue is whether the Education Act, itself, imposes such an obligation, as the Education Act does not exclude the common law obligation.
9. Because the issue was one that was not required to be determined and may never be required to be determined, given that the Minister seems always to afford natural justice or procedural fairness, it was unnecessary for the Court in Malek Fahd to explain, in full, the reasoning process by which that conclusion was reached. I adhere to the conclusion there reached and I do so for the reason that there are two circumstances where a school is denied financial assistance in accordance with the needs-based model that now operates.
10. The first circumstance is where the school, in its annual return to the Minister, signifies that it will be operating for profit, in which case, pursuant to the terms of s 83C(1) of the Education Act, the Minister must not provide financial assistance. This is financial assistance into the future.
11. Further, if a school is provided financial assistance in circumstances where, ex post facto it is determined that the school operated for profit then, pursuant to s 83J of the Education Act, the Minister may recover the amount of any financial assistance provided during the period when the school was operating on a for-profit basis.
12. There is no requirement for the Minister to issue a declaration either as to non-compliant status or for-profit status. Nevertheless, the Minister is required to determine whether the school operates for profit. The terms of s 83H of the Education Act permit the Minister to "carry out an investigation" if the Minister suspects that the school may be operating for profit, or may be non-compliant.
13. Unless the school in question has volunteered that it is operating on a for-profit or non-compliant basis, the only way in which the Minister could determine or be able to determine the status of the school is to carry out an investigation. It may be that the investigation is extremely cursory and involve only an examination of the profit and loss of the schools that is required to be submitted as part of its returns. Nevertheless, some investigation would be needed in order to make that determination.
14. If any investigation occurs (even a cursory one), the Minister is required to consult with the Advisory Committee and to have regard to any advice from the Advisory Committee. [5] The functions of the Advisory Committee are to provide advice to the Minister on compliance and make recommendations, and any other function relating to financial assistance, not inconsistent with the two primary functions. [6]
15. As a consequence the purposive construction that I adopted is to the effect that, other than in circumstances where the school volunteers that it is or will be for-profit or non-compliant, the Minister, if there is a suspicion that a school is not for profit, investigates that situation and, in doing so, consults with the Advisory Committee and is required to have regard to any advice of the Committee. The advice of the Committee may or may not recommend the issuing of a for-profit declaration, but the advice from the Committee will make findings as to whether the school in question was or was not operating for-profit or in a manner that was non-compliant.
16. Given the common law duty, and the procedure whereby the Committee is required to advise on for-profit or non-compliant status and the necessity to have an investigation in all cases other than funding into the future where a school volunteers that it will be operating for profit, or is operating for profit, I adhere to the view, with great respect to Basten AJA, that the procedures in the Division of the Education Act require notice and procedural fairness. An appeal lies from any recommendation of the Advisory Committee.
17. Nevertheless, as earlier stated, nothing seems to turn on the difference between the view expressed by Basten AJA and myself. The common law imposes a duty where there is no express provision excluding the rules of procedural fairness or it arises by necessary intendment. Further, it seems that the Minister always seeks and obtains the advice of the Advisory Committee and always, commendably, seeks a response to those recommendations from any person affected.
18. I should, for overabundant caution, note that the foregoing issue, perhaps of academic interest, is not a matter that affects the determination of the issues in these proceedings. In Malek Fahd, I commented that the complaint relating to disproportionality and unreasonableness seemed to be a complaint about the effect of the legislation, rather than the decision-making process of the Minister.
19. There are some, somewhat draconian, effects arising from the legislation, which may not have been intended. For example, regardless of the extent of the for-profit activity, unless the Minister forms the view that termination of financial assistance is not justified because of the minor nature of the relevant conduct, there is no discretion reposed not to terminate funding, although the Minister might suspend, reduce or impose conditions on the funding.
20. In a school where the level of funding is as high as those concerned in these proceedings (or as high as those concerned in the proceedings in relation to Malek Fahd - and I suspect most non-government schools), even though a "for-profit" activity may not be "minor", it may be that the Minister ought possess a discretion not to terminate and, rather, to recover the monies expended otherwise than in accordance with the requirements of the Act or a multiple thereof. Such a discretion may better reflect the stated purpose of the Education Act, to benefit school children. This, of course, is not an issue for the Court in these proceedings.

Error of Law or Jurisdictional Error

1. In each of the decisions under review, the Minister determined that the recovery of the money in the manner decided was a "balanced" method in light of the ongoing operation of the school. This decision followed upon the recommendation of the Advisory Committee that confined its view as to the difficulty faced by the Schools to the payment of an "upfront debt" and recommended reduction in funding over a period of seven years.
2. However, the submissions, based on expert reports, made clear that, whatever be the method of recovery, whether "upfront" or by reduction over years, the recovery of the financial assistance may or would cause the Schools to cease operating. At [48] of the defendant's submission to the Advisory Committee and/or Minister of 2 July 2021, on behalf of the Schools, the defendant said: "The impact of a decision to recover the financial assistance provided to [the Schools] during the Relevant Period under s 83J would be profound. As the detailed analysis contained in the report prepared by Resolve concludes, on each of the various scenarios considered, recovery of the financial assistance would cause the School to cease operating. That outcome is fundamentally at odds with a number of the objects of the decision-making under the Act identified …, especially given the unique role played by [the Schools] and discussed … ."
3. The scenarios to which the Resolve report refer include reduction of financial assistance over a period to repay the debt. It is now accepted that the Minister, on the basis of the recommendation provided to her, considered the impact of the upfront recovery of the debt, but did not consider the effect of the closure of the Schools on the reduction of intended financial assistance over the next seven years.
4. As such, each of the parties accepts that the Minister has made a decision on the basis of wrong facts or information. The Minister has exercised her discretion, albeit as a result of the recommendation provided to her, without having regard to the impact of the reduction over seven years on the future operation of the Schools.
5. There is no material before the Court and there was no material before the Minister which questioned the Resolve report and its opinion on the effect of a reduction in future funding to repay the debt.
6. As a consequence of the foregoing, independently of the parties, the Court is satisfied that the exercise of the discretion by the Minister on the basis of the recommendation of the Advisory Committee involved a number of legal errors: the decision was based upon an error of fact; there was a failure to take into account a relevant criterion, albeit not a mandatory criterion; and there was a failure to take into account the submission of the Schools on the issue of the effect of a reduction in their future funding as ultimately decided. In so doing, the Minister, in exercising the discretion in the absence of a consideration of those factors failed to afford the Schools procedural fairness and failed to respond to a substantial, clearly articulated argument relying upon established facts. [7]
7. For the foregoing reasons the Court on 4 April 2023 formed the view that the decisions of the Minister should be quashed and issued orders in accordance with the consent of the parties. Those orders were: 1. Pursuant to s 64(1) of the Civil Procedure Act 2005 (NSW), the name of the defendant in this proceeding be amended to "Minister for Education and Early Learning". 2. Pursuant to r 36.4(3) of the Uniform Civil Procedure Rules 2005 (NSW), the order in paragraph 1 take effect from the date of commencement of this proceeding, being 7 March 2022. 3. The decision of the Defendant made on 8 December 2021 pursuant to s 83J of the Education Act 1990 (NSW) to recover all of the financial assistance paid to St Hurmizd Assyrian Primary School between 2015 and 2020 in the amount of $9,301,772 by way of reduction of future amounts of financial assistance over a period of 7 years (the St Hurmizd Decision) is quashed. 4. The decision of the Defendant made on 8 December 2021 purportedly pursuant to s 83J of the Education Act 1990 (NSW) to recover all of the financial assistance paid to St Narsai Assyrian Christian College between 2015 and 2020 in the amount of $10,908,619 by way of reduction of future amounts of financial assistance over a period of 7 years (the St Narsai Decision) is quashed. 5. The Defendant is to redetermine the St Hurmizd Decision and the St Narsai Decision in accordance with the law. 6. The Defendant shall pay the Plaintiff's costs of the proceedings, as agreed or assessed.

Endnotes

1. Malek Fahd Islamic School Limited v Minister for Education and Early Childhood Learning [2022] NSWSC 1176.
2. Malek Fahd Islamic School Limited v Minister for Education and Early Learning [2023] NSWCA 143.
3. Christian Community Ministries Ltd v Minister for Education and Early Childhood Learning [2023] NSWSC 272.
4. Kiaoa v West (1985) 159 CLR 550 at 584; [1985] HCA 81; Annetts v McCann (1990) 170 CLR 596; [1990] HCA 57.
5. Education Act 1990 (NSW), s 83H.
6. Education Act 1990 (NSW), s 83K.
7. Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088; [2003] HCA 26; Minister for Aboriginal Affairs and Another v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40. 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: 30 June 2023