CTG v NSW Department of Education, Early Childhood and Care Directorate

Jurisdiction

1. The jurisdiction of the Tribunal arises from the operation of both the National Law and the Application Act. The National Law provides for external review of the material decision. Section 192 (b) (iv) provides: 192 Reviewable decision - external review A reviewable decision for external review is - (a) a decision of the Regulatory Authority made under section 191 (other than a decision in relation to the issue of a compliance direction or a compliance notice); or (b) a decision of the Regulatory Authority under this Law as applying in any participating jurisdiction - (i) to suspend a provider approval under section 27; or (ii) to cancel a provider approval under section 33; or (iii) to suspend a service approval under section 72; or (iv) to cancel a service approval under section 79 or 307; or
2. Section 193 under Part 8 of the National Law provides for the manner of external review of a decision of the Regulatory Authority: 193 Application for review of decision of the Regulatory Authority (1) A person who is the subject of a reviewable decision for external review may apply to the relevant tribunal or court for a review of the decision. (2) An application must be made within 30 days after the day on which the applicant is notified of the decision that is to be reviewed. (3) After hearing the matter, the relevant tribunal or court may - (a) confirm the decision of the Regulatory Authority; or (b) amend the decision of the Regulatory Authority; or (c) substitute another decision for the decision of the Regulatory Authority. (4) In determining any application under this section, the relevant tribunal or court may have regard to any decision under this Law as applying in another participating jurisdiction of a relevant tribunal or court of that jurisdiction.
3. Section 5 of the National Law defines relevant tribunal or court. 5 Definitions (1) In this Law - …. relevant tribunal or court, in relation to a participating jurisdiction, means the tribunal or court declared by a law of that jurisdiction to be the relevant tribunal or court for the purposes of this Law or a provision of this Law;
4. Section 8 of the Application Act provides that NCAT is the relevant tribunal for the purpose of such an external review. 8 Relevant tribunal or court For the purposes of the definition of relevant tribunal or court in section 5 of the Children (Education and Care Services) National Law (NSW): (a) the District Court is declared to be the relevant tribunal or court for this jurisdiction for the purposes of section 181 of that Law, and (b) the Civil and Administrative Tribunal is declared to be the relevant tribunal or court for this jurisdiction for the purposes of Part 8 of that Law.
5. I note that the National Law makes no reference to the Administrative Decisions Review Act 1997 (the ADR Act). In this regard it could be argued that the Tribunal is not exercising administrative review functions but an external appeals function. Section 30 of the Civil and Administrative Tribunal Act 2013 additionally refers to administrative review by reference to the ADR Act. Section 31 however refers to the Tribunal's external appeal jurisdiction. Section 31 (1) provides the following: 31 External appeal jurisdiction of Tribunal (1) The Tribunal has external appeal jurisdiction over a decision (or class of decisions) made by an external decision-maker if legislation provides that an appeal may be made to the Tribunal against any such decision (or class of decisions).
6. The relevant legislation (the National Law) does not make a reference to an 'appeal' but rather uses the language 'external review' at sections 192 and 193.
7. Therefore in my view the Tribunal is exercising its review functions rather than appeal functions. Whilst the import of this position may be subtle, it alters the nature and onus of the proceedings slightly, and provides for the Tribunal to make the correct and preferable decision. For clarity I find that the nature of the jurisdiction of these type of recent proceedings to the Tribunal, for the reasons set out above, is in the form of administrative review.

The Hearing

1. The matter was heard on 22 December 2016. As I understand from the respondent, this was the first matter of this type to be considered by the Tribunal. Due to the timing of the hearing, and the need to consider a number of the matters outlined above, it was not possible to provide oral reasons at the conclusion of the hearing.
2. In addition over the Christmas New Year period the applicant filed further submissions and material dated 3 January 2017. It is not clear to the Tribunal whether this material was served on the respondent, but in any event both parties evidence was received and heard at the hearing.
3. The applicant represented himself at the hearing and gave evidence. The respondent was represented by a Solicitor from the Crown Solicitor's Office who were the solicitors on record. Whilst the respondent filed evidence at the hearing no witness was called to give gave evidence on behalf of the respondent.

Documentary Evidence

1. The applicant filed the following material in addition to his oral evidence:

• Application for Administrative Review *including grounds) Exhibit A 1.
• Documents (titled s-58 documents) being material relevant to the approval / cancellation process from the applicant's perspective 'A 2'.
• Written submissions and material dated 3/1/2017 (see para 22)

1. The respondent filed the following material:

• The section 58 documents - inconformity with the ADR Act 'R 1'.
• Correspondence dated 16/12/2016 from the Commonwealth Department of Education and Training in respect of the 'proposed' cancellation of the respondent's approval. 'R 2'.
• Written submissions filed 19 December 2016.
• A copy of the decision in Long Life Family Daycare v Director General Education Directorate (Administrative Review) [2016] ACAT 69

Evidence at hearing

1. At the commencement of the evidence the respondent sought to tender the Commonwealth DET letter referred to in the paragraph above. There was discussion as to the import of the document and it's bearing if any on these proceedings. Of particular relevance to the Tribunal was the following passage from within the document. I offer no view on the merits of the proposed cancellation.
2. The letter goes on to provide information about the Commonwealth 'rebate' approval process concerning the Child Care Benefit referred to as 'CCB'. Operators such as the applicant often apply for approval for the Child Care Benefit so that they can offer the availability of eligible rebates to prospective customers. In this regard parents and carers in effect pay a reduced fee (after applying the rebate) if they place their child with a provider who is CCB eligible and they submit the rebate. As will be seen from the applicant's evidence, the lack of CCB approval is the predominant reason that the business had failed to commence six months after approval and had still not commenced operating at the time of the cancellation.
3. The letter was tendered as Exhibit 'R 2' ultimately without objection. In the Tribunal's view it provides some context for the lack of CCB approval and some overall observations about the operation of that process. The letter opines: The family assistance law does not prescribe a timeframe within which the department must complete the assessment of applications. The family assistance law requires that each application is assessed on its merits. The department endeavours to process applications in a timely manner, noting that the department receives a large number of applications.
4. The letter goes on to observe: Approval under family assistance law is not a requirement to operate, or begin operating, a child care service in Australia, but merely a requirement in order for parents to receive Commonwealth fee assistance for sessions of care provided by a service. Further, once granted, it is possible for approval under family assistance law to be granted with backdated effect.
5. It is this issue which is central to the applicant's case, and explanation for not commencing to operate, and the basis of his application to the Tribunal to restore the approval.
6. The applicant gave evidence at the hearing and stated that he was overseas from the third week of March 2016 until the end of the third week of June 2016. This evidence was offered as part explanation for delays from the applicant / provider's end. The applicant stated that he applied for CCB approval three weeks prior to seeking service approval. (The respondent's position is that CCB approval was sought one month after service approval).
7. The applicant gave evidence that in respect of some of the anomalies there was an error at the insurance company, in its processes and recorded data. No policy in respect of workers compensation and public liability had been issued for more than 1 year.
8. In written material tendered by the applicant as Exhibit A - 2 reference was made to 'document No 10' which is an e-mail chain between the applicant and officers of the respondent. In an e-mail dated 31 March 2016 the applicant responded to an e-mail from the respondent earlier that day, outlining why the service did not begin operating by 6 March 2016 (having been granted service approval on 6 October 2015).
9. The applicant responds by way of 11 dot points whereby he alludes to his business case (the need to have the CCB rebate in place due to the lower economic means of his target customer base,). The applicant also claims to have substantially satisfied the Commonwealth CCB requirements within 3 weeks of being granted service approval (20/10/2015) and that he has been given no estimate as to when that (approval) would be complete. The applicant also states that whilst he owns the premises that he proposes to operate from, they are currently subject to a lease with another Family Day Care / Childcare operation. The applicant concludes by stating: So, based on the above I decided to operate only upon receiving CCB approval.
10. As outlined above the applicant provided written submissions after the hearing. Whilst it is unclear that the respondent has been provided with these submissions, no prejudice attaches to setting out the substance. The delay is attributed to a lack of time / opportunity to respond to the respondent's written submissions served just prior to the hearing.
11. The submissions appear to infer a number of duties / obligations on the respondent regulator, and for example state: The respondent has responsibility to respond to Service Provider's notifications and / or requests with agreement (approval) or rejection and be supportive for legitimate requests.
12. The detailed submissions go on to address the respondent's written submissions paragraph by paragraph to the extent required. The submissions appear to base various statutory obligations on the respondent which on my assessment might be more in keeping with implied obligations or duties on the Commonwealth body (as that was the entity with which the applicant had - up until notice to show cause and cancellation - a live assessment process in train). I infer from the legislation no subsequent responsibility on the respondent during such a process other than to give due notice of a proposed action, and a right to respond coupled with a duty to take such a response into consideration in any subsequent decision.
13. The central aspect of the applicant's argument again rests with his argument that in essence, the service cannot practically operate with out CCB approval, and therefore the service provider should be able to retain service approval until such time as the CCB approval is granted. At that time the service would begin to operate. (See applicant's 3/1/2017 response to paragraph 3 of respondent's 19/12/2016 submissions). 3) My notification within the 6 months, parents need to pay only the gap, CCB backdated payments for more than 18 months is impractical. The approval process is a review of a large number of documents including subjective views of business plan and policies and procedures. Review comments are normal and I addressed them promptly at all times. If CCB approval may never be granted as per the respondent's submission, I will then have to terminate contracts with educators, employment contracts of staff and close the business. This is the risk I am trying to avoid.

The Notice to Show Cause and Response

1. On 6 September 2016, 11 months after service approval was granted, the respondent issued a Show Cause Notice Cancellation of Service Approval pursuant to section 78 of the National Law. 78 Show cause notice before cancellation (1) This section applies if the Regulatory Authority is considering the cancellation of a service approval under section 77. (2) The Regulatory Authority must first give the approved provider a notice (show cause notice) stating - (a) that the Regulatory Authority intends to cancel the service approval; and (b) the reasons for the proposed cancellation; and (c) that the approved provider may, within 30 days after the notice is given, give the Regulatory Authority a written response to the proposed cancellation.
2. The Notice set the statutory requirements under the National Law. The Notice sets out that under the National Law a failure to notify the respondent of a service not commencing 6 months after approval constitutes an offence which attracts significant financial penalties for individuals and entities. The Notice also contained evidence that approximately one month prior to approval, the applicant was given information and material face-to-face outlining this requirement (business commencement within 6 months). The Notice afforded the applicant an opportunity to respond prior to any final decision.
3. The applicant responded by a two-page letter on Company Letterhead on 26 September 2016. The applicant advised that he notified the respondent of his intention to only commence operation once the CCB approval came through, and that he advised this one-week prior to the expiration of the 6 month period.
4. Various matters were raised along the lines of disputes and discrepancies concerning CCB requirements and that process. Consistent with the 31 March 2016 response the applicant advised that his circumstances had not changed and in the absence of any notification to the contrary appears to infer that as a result the respondent accepted those arguments.

Respondent's submissions

1. The respondent set out the timeline of its dealings with the applicant. On the respondent's submission service approval was granted on 6 October 2015. The respondent submitted that it initiated communications with the applicant on 30 March 2016 (approximately 1 week prior to the expiration of the 6 month period). At that time the respondent provided further information concerning the need to ensure that the business was operating prior to the expiration of the period referred to in the National Law as well as complying with the other mandatory conditions.
2. Then respondent submitted that the applicant did not formally apply for an extension, by not specifically requesting an extension, merely that he intended to commence operations once CCB approval was forthcoming. In addition the respondent submitted that the applicant did not seek these matters via utilising the appropriate form / method.
3. The respondent submitted that the National Law is, of its nature a law calling for strict compliance. In this regard the respondent referred to the case of: Long Life Family Daycare v Director General Education Directorate (Administrative Review) [2016] ACAT 69. At paragraph 12 the case observes: Even setting aside the issues of financial management, it is evidence (*evident) that the providers of child care services are responsible for the health and welfare of the children in their care. This too, must require a high degree of probity, trustworthiness and compliance with the National Law.
4. The respondent submitted that by making certain requirements of the scheme mandatory, then such requirements (or conditions) are of some importance to the statutory scheme. The importance of compliance with those matters is further illustrated by the significant penalty provisions imposed under the National Law for breaches or non-compliance with certain relevant conditions.
5. The respondent submitted that the scheme envisages that in particular cases the respondent may exercise its discretion detrimental to an applicant.
6. It submitted that a major factor going to the exercise of that discretion is the amount of time that an applicant is in breach of a condition. In the current matter the respondent submitted that: …the applicant has failed to commence operations for more than 14 months, particularly in circumstances where his prospects of commencing in the near future are uncertain, strongly militates in favour of the exercise of the discretion to cancel service approval under s.79.
7. In respect of a consideration of the applicant's grounds for not commencing the business (lack of CCB approval), the respondent submitted the following in support of the cancellation decision:

• The applicant may commence operation without CCB approval. To permit an ongoing breach of section 51 (3) on the basis that a provider is awaiting Commonwealth approval would undermine the operation of the scheme for service and provider approval, being matters which the respondent has regulatory responsibility.
• The delay in CCB approval is partially attributable to the applicant's apparent failure to put forward a comprehensive application absent of deficient documents. In this regard the respondent relied upon the views put forth by the Commonwealth DET in their letter of 16 December 2016 (Exhibit R 2). Such a delay it was submitted, is therefore not beyond the applicant's control.
• To reinstate service approval whilst CCB approval remains pending and potentially unachievable would create a situation whereby the respondent has regulatory authority and responsibility over a service which may not operate for an indefinite period, if at all. Such a situation would be prejudicial to the respondent.

Consideration

1. The Long Life Family Daycare case deals with a service which had been operating for some time, at the time of its suspension and the subsequent proceedings. In addition the service provider had CCB approval and had incurred 3 years of rebates at the time of suspension, in significant sums.
2. Much of that hearing focused in evidence of the applicant's conduct in the operation and compliance matters associated with the service. Unlike the present matter there was a significant volume of evidence and material both at hearing and in the material.
3. In the current matter the issue of CCB approval is a central issue for the applicant. In my view the applicant's evidence and material suggest that from his perspective it is not possible for the service to operate without the approval. No consideration was apparent of various alternates to enable operation of the service by the applicant. There was no evidence of marketing to commence the service (even on a small scale with one or two educators when noting the significant size of the approval).
4. The applicant did not appear to entertain that it was open to him to operate the service without CCB approval, rather that he would not operate the service until CCB approval was forthcoming, as that was consistent with the applicant's business model.
5. In my view the applicant had mischaracterised the respondent's obligations under the scheme and Law in that in my view he misunderstood or mischaracterised the respondent's duties and at no time acknowledged his own obligations under the scheme particularly in so far as the 6 month obligation / issue was concerned.
6. It was clear from the applicant's evince and submissions that he was not prepared to operate the service / business without prior CCB approval, and can therefore be reasonably inferred that if his application for CCB approval was to be rejected then the service would never commence.
7. Even though there was minimal evidence led on this issue, it seemed apparent from what was before the Tribunal that a significant number of practical aspects to the business (e.g.: lawful eviction of the current tenant, recruitment / employment of staff and marketing) would only progress further once CCB approval was granted. It also seemed evident that whilst there was some evidence and opinion as to the need for CCB approval in the applicant's business model, minimal grounds were put forth as to why the available reimbursement of CCB rebates was either unacceptable or as stated 'impractical'.

Further consideration

1. I am satisfied that the applicant was in contravention of section 51 (3) of the National Law and that the respondent lawfully exercised its discretion in accordance with section 77 (d) of the National Law, and I so find.
2. In my view the statutory provisions of the National Law as they relate to time frames in the conditions of approvals are quite clear. The system therefore is not designed to operate in order to facilitate the business variables of operators but clearly is designed with some flexibility to take these matters into account. It is therefore not a blunt bureaucratic instrument, but rather a regulatory scheme that have objects that go towards the provision of quality service in a somewhat protective environment. It is evident that the legislation should be applied and directed beneficially towards achieving the objects and guiding principles as set out in section 3.
3. 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.
4. I have considered whether it would be appropriate to set aside the decision and in the alternative suspend the applicant's authority. Whilst the respondent agreed that such a course would be open to the Tribunal, the respondent submitted that suspension (rather than re-instatement) is closer to the object of the National Law. In any event their preferred position and major submission was to affirm the decision to cancel.
5. I have considered this suspension proposal, however I am not satisfied that it would correct any of the issues that led to the decision of the respondent, and would (in my view) perpetuate and prolong the situation contrary to the matters set out at paragraph 59 (above) and elsewhere in these reasons. I therefore decline to re-instate the authority and impose a suspension.
6. If the applicant's desire is only to operate a service with CCB approval, then there seems to be no legal impediment to him reapplying for service approval and restarting or reactivating his CCB process. It would appear that various requisitions were in place and perhaps the timely attendance to these matters in any future application might assist the timely finalisation of such a CCB approval process.
7. Whilst these matters were canvassed at the conclusion of the hearing, I note that notwithstanding the lack of any apparent legal impediment, there is presumably some economic cost to such a course. In any event they will remain matters for the applicant to consider.

Conclusion

1. As I have found that the actions of the respondent were lawful (at paragraph 57 above), it remains for me to determine what is the correct and preferable decision.
2. Having considered all of the evidence and submissions given by the parties, and having regard to the objects and principles of the National Law, and the matters concerning the need for compliance as referred to in Long Life Family Daycare, for the reasons set out above I make the following order.

Orders 1. The decision of the respondent is affirmed. 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: 28 February 2017