CVN v New South Wales Department of Education, Early Childhood Education & Care Directorate

Relevant Legislative scheme in regard to decision to cancel a service approval

1. The Children (Education and Care Services National Law Application) Act 2010 states in its long title that it is 'An Act to apply as a law of this State a national law relating to the regulation of education and care services for children'. As stated in the Second Reading Speech: The bill lays the legislative foundation for nationally consistent standards to ensure quality education and care is provided by long day care, family day care, preschool and outside school hours care services. These national standards were agreed by the Council of Australian Governments in December 2009. (NSW Legislative Council, Parliamentary Hansard 23.11.2010)
2. The National Law implements a uniform national scheme for the regulation of education and care services or children. It replicates corresponding legislation enacted in other Australian jurisdictions.
3. The objects and guiding principles of the National Law are set out in section 3: (1) The objective of this Law is to establish a national education and care services quality framework for the delivery of education and care services to children. (2) The objectives of the national education and care services quality framework are - (a) to ensure the safety, health and wellbeing of children attending education and care services; (b) to improve the educational and developmental outcomes for children attending education and care services; (c) to promote continuous improvement in the provision of quality education and care services; (d) to establish a system of national integration and shared responsibility between participating jurisdictions and the Commonwealth in the administration of the national education and care services quality framework; (e) to improve public knowledge, and access to information, about the quality of education and care services; (f) to reduce the regulatory and administrative burden for education and care services by enabling information to be shared between participating jurisdictions and the Commonwealth. (3) The guiding principles of the national education and care services quality framework are as follows - (a) that the rights and best interests of the child are paramount; (b) that children are successful, competent and capable learners; (c) that the principles of equity, inclusion and diversity underlie this Law; (d) that Australia's Aboriginal and Torres Strait Islander cultures are valued; (e) that the role of parents and families is respected and supported; (f) that best practice is expected in the provision of education and care services.
4. To operate an education and care service, including a family day care service, a person or company must have a provider approval and a service approval. Pt 2 of the National Law sets out the provider approval process and this includes an assessment that the applicant is a fit and proper person. Part 3 of the National Law sets out the service approval process. The Regulatory Authority has the power to grant and cancel service approval (and provider approval) under the National Law. Section 9 of the Application Act declares that the Regulatory Authority is the Secretary of the Department of Education.
5. The conditions on which service approval is granted is set out in s.51 of the National Law. 51 Conditions on service approval (1) A service approval is granted subject to the condition that the education and care service is operated in a way that - (a) ensures the safety, health and wellbeing of the children being educated and cared for by the service; and (b) meets the educational and developmental needs of the children being educated and cared for by the service. (2) A service approval for a family day care service is granted subject to the additional condition that the approved provider must ensure that - (a) sufficient persons are appointed as family day care co-ordinators to monitor and support the family day care educators engaged by or registered with the service; and (b) each family day care educator is adequately monitored and supported by a family day care co-ordinator. (3) A service approval is granted subject to a condition that the service must commence ongoing operation of the service within 6 months after the approval is granted unless the Regulatory Authority agrees to an extension of time. (4) A service approval is granted subject to a condition that the approved provider must hold the prescribed insurance in respect of the education and care service. (5) A service approval is granted subject to any other conditions prescribed in the national regulations or imposed by - (a) this Law; or (b) the Regulatory Authority. … … … (Emphasis added)
6. Section 51(8) also imposes penalties for a breach of these conditions being $10,000 for an individual and $50,000 in any other case.
7. The Regulatory Authority has the power to suspend or cancel service approvals. s.77 Grounds for cancellation of service approval A Regulatory Authority may cancel a service approval if - (a) the Regulatory Authority reasonably believes that the continued operation of the education and care service would constitute an unacceptable risk to the safety, health or wellbeing of any child or class of children being educated and cared for by the education and care service; or (b) the service has been suspended under section 72 or 73 and the reason for the suspension has not been rectified at or before the end of the period of suspension; or (c) the service approval was obtained improperly; or (d) a condition of the service approval has not been complied with. s.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. s.79 Decision in relation to cancellation (1) After considering any written response from the approved provider received within the time allowed by section 78(2)(c), the Regulatory Authority - (a) may - (i) cancel the service approval; or (ii) suspend the service approval for a period not more than the prescribed period; or (iii) decide not to cancel the service approval; and (b) must give the approved provider written notice of the decision. 173 Offence to fail to notify certain circumstances to Regulatory Authority (1) An approved provider must notify the Regulatory Authority of the following in relation to the approved provider or each approved education and care service operated by the approved provider - (a) a change in the name of the approved provider; (b) any appointment or removal of a person with management or control of an education and care service operated by the approved provider; (c) a failure to commence operating an education and care service within 6 months (or within the time agreed with the Regulatory Authority) after being granted a service approval for the service. Penalty: $4000, in the case of an individual. $20 000, in any other case.

Jurisdiction

1. Under the National Law a decision by the Regulatory Authority to cancel a service approval is a reviewable decision for external review. See s.192(b)(iv). The relevant Tribunal to hear the review is the tribunal or court declared by a law of that jurisdiction to be the relevant tribunal or court for the purposes of this Law. See s5 definition section. Section 8 of the Application Act (NSW) provides that the relevant tribunal is the Civil and Administrative Tribunal for the purposes of the external review function.
2. Part 3 of the Civil and Administrative Tribunal Act 2013 provides for the jurisdiction of this Tribunal. Section 30 sets out the administrative review jurisdiction and refers to the Administrative Review Act 1997 and the circumstances in which the Tribunal has jurisdiction over a decision of an administrator. The National Law does not provide for 'an administrative review under Administrative Review Act 1997. However, s.31 of the Civil and Administrative Tribunal Act 2013 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).
3. The National Law does not refer to 'appeal' but rather 'external review'. The Tribunal considered this issue in CTP v NSW Department of Education, Early Childhood and Care Directorate (2017) NSWCATAD 60; "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: 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."
4. This Tribunal agrees it is exercising its administrative review function.

Hearing

1. The applicant was represented by Counsel and gave evidence. He was cross examined by the respondent. No other witnesses were called by the applicant. The respondent was represented by a solicitor from the Crown Solicitor's office. No witnesses were called by the respondent.
2. The applicant filed the following material:

• Application for administrative review attaching letter from his solicitor setting out grounds of application
• Affidavit of applicant dated 12 January 2017 attaching exhibits
• Written submissions prepared and filed by solicitor on 10 February 2017

1. The respondent filed the following material:

• The Section 58 documents
• Written submissions prepared and filed by solicitor on 31 January 2017
• Statement of Dayna Greenfield dated 3 February 2017 and letter from the Director of the NSW/ACT State Office of the Early Childhood and Child Care dated 2 February 2017 regarding the applicant's progress in obtaining CCB approval.

Applicant's case

1. The applicant submits that the service, ABC had commenced ongoing operation on the 12 September 2016 and prior to the cancellation decision made by the respondent. The applicant's submissions and affidavit refer to having policies and procedures in place, rental premises from which the service operates, a supervisor, one employed co-ordinator, two employed educators and three children in its care.
2. The applicant submits there is an application in progress for a CCB approval under Part 8 of A New Tax System (Family Assistance Administration) Act 1999 (Clth).
3. The applicant submits that on the day of the unscheduled site visit by the respondent officers on the 17 October 2016, he was away from the premises "conducting business, networking with potential clients and purchasing relevant supplies for the Service from the Auburn branch of OfficeWorks in NSW". The service's nominated supervisor was also away at the time of the visit on annual leave in Somalia.
4. The applicant acknowledges the service did not commence operation for over 12 months. The reason for not commencing in that time was the applicant was waiting for CCB approval which was needed for parents using ABC to obtain child care benefits from the Commonwealth Government. The applicant provided supporting documentation confirming his application for CCB approval and the application was still being considered by the relevant department.
5. Counsel submitted the breach of failing to commence operation is at the lower end of seriousness and should attract a period of suspension for 12 months rather than cancellation. Counsel also submitted the condition set out in s.51(3) of the National Law requiring an approved service commence operation in 6 months was the 'least important' of all the conditions listed in s.51. That is, Counsel suggested a type of hierarchy of conditions of which sub-section (3) was the 'least important'. Counsel provided no authority or any other basis for this statutory interpretation.
6. The applicant's submissions refer to the decision of Long Life Family Daycare v Director-General, Education Directorate (Administrative Review) (2016) ACAT 69 (Long Life). In that case the decision to suspend the service was affirmed and the suspension was reinstated for a further period of time. The applicant relies on this case for authority that suspension is the appropriate penalty for a breach rather than cancellation in the circumstances of this case.

Respondent's case

1. The respondent noted from the applicant's affidavit the service, ABC may have been operating on a very small scale since September 2016. From the affidavit the service was registered with one educator and had a second educator for a period of 8 days in October 2016. The National Law requires a service to have 2 educators to be defined as a family day care centre. See s.5 of the Act. Therefore, if the service was operating it was doing so on a very small scale and only to assist these proceedings. Further, the strong inference is that if the service does not obtain CCB approval it is unlikely to continue to operate.
2. The applicant failed to commence operation for more than 12 months, twice the statutory period and this supports the respondent decision to cancel the service. That is, the condition regarding commencement of the ongoing operation of the service is one of the mandatory conditions imposed on all services under s51(1) - (4). The importance of these mandatory conditions is made clear in the legislation by the substantial penalties to be applied on a breach as set out in s.51(8) of the Act.
3. The applicant may commence operation without CCB approval. The CCB approval is subject to and controlled by Commonwealth legislation and is not part of the statutory scheme under the National Law.
4. To permit a breach of s.51(3) of the National Law on the basis that a provider is awaiting approval from the Commonwealth under another regulatory regime would undermine the operation of the scheme for provider and service approval under the National Law.
5. The respondent also relies on a letter from the Director of NSW Early Childhood and Child Care dated 2 February 2017. The letter is a response to an enquiry from the respondent about the status and history of the applicant's CCB approval for ABC service. The letter referred to a still incomplete application by the applicant and a history of outstanding issues. The letter was filed as an exhibit in the proceedings and the applicant was cross-examined by the respondent about the letter. The applicant agreed that the application was incomplete and the department had requested further information as set out in the letter. The salient part of the letter reads: "In relation to the particular application lodged by [ABC Service], I also note the following specific matters. Consistent with the department's normal process, the application was assessed and then an 'incomplete application letter' was sent to the applicant requesting amendments to the application and the submission of additional documents that were missing from the original application. During the course of the assessment the applicant made several changes to the application such as changing authorised personnel and changing the service address. Not only must the applicant be a suitable person to operate a child care service but also staff of the child care service must be suitable people to provide child care. The department made several requests to the applicant to either amend or resubmit the application and supporting documentation and outstanding issues still remained such as: Incomplete declarations - failure to list child services the applicant and key personnel had worked for in the past 5 years Signature form did not match the entity as shown in the application ASIC company extract information not matching information on other documents Copy of the provider approval certificate had not been provided Service fee schedule had not been provided Amendments to multiple documents had to be made such as:

• child endowment
• Coordinator agreement
• Home visit program
• Parent agreement
• Recruiting and retaining educators
• Parent handbook
• Compliance with the family assistance laws
• Educator agreement
• enrolment form required amendments As a result, on the 20 July 2016 the department invited the applicant to the CCB Assessment interview, to discuss in detail what was required to complete the application, and also provide an opportunity for the applicant to demonstrate their suitability and organisational capacity to effectively manage and supervise a child care service and comply with relevant laws. Prior to the interview the applicant was sent fact sheets pertaining to approved family day care services' obligations under family assistance law. At the interview, the applicant demonstrated minimal understanding about the obligations in relation to claiming child care free assistance or understanding of the responsibilities under family assistance law. After the interview the department provided the applicant with a comprehensive list of documents which had to be resubmitted and outstanding issues which has to be addressed. The department has to make several further requests to the applicant to provide revised documentation. As at 2 February 2017 the application remains under assessment".

Consideration

1. The applicant submits the service ABC was operating on an ongoing basis from the 12 September 2016. An unscheduled site visit was carried out by the respondent's officers on the applicant's premises on the 17 October. The officers found no indications of a service operating. The applicant was not at the premises. There was no educators or supervisors or children at the premises. A sign advertising the service was leaning against a side fence and not displayed. The applicant submits that he was away from the premises on this day and according to his affidavit, "conducting business networking with potential clients and purchasing relevant supplies". He supported this explanation with a receipt from OfficeWorks attesting to a stationary purchase dated the same day. He also states the nominated supervisor was away on annual leave in Somalia on this day.
2. The Tribunal finds the explanation and supporting evidence of the applicant regarding the unscheduled site visit to be lacking and insufficient and the Tribunal is not persuaded that the service was operating on the 17 October 2016.

Contravention of s.51(3) of the National Law

1. The applicant agrees that the ABC service did not commence ongoing operation by the agreed extension date of the 29 July 2016. The applicant was therefore in contravention of s.51(3) of the National Law. It follows that the respondent's decision to cancel the service approval under s77(d) of the National Law was a lawful exercise of their discretion.

Cancellation or Suspension

1. Under s.193(3) of the National Law the Tribunal can either affirm or amend the decision of the Regulatory Authority or it can substitute another decision for the decision of the Regulatory Authority.
2. The applicant has requested that the Tribunal not cancel but rather suspend the service approval for a period of twelve months. This would give the applicant more time to obtain CCB approval.
3. The applicant has submitted that the Tribunal should regard any failure to commence operation within the prescribed time as a minor breach and not one warranting cancellation.
4. Section 63(1) of the Administrative Decisions Review Act 1997(NSW) guides the Tribunal as to what information it can take into account when making a decision. 63 Determination of administrative review by Tribunal (1) In determining an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law.
5. In considering a decision whether to suspend or cancel a service approval, it is reasonable and relevant in the Tribunal's opinion, for the respondent to have regard to the history of compliance of the applicant since attaining service approval.

Applicant's history of Compliance

1. The respondent granted the applicant a service approval to ABC on the 30 July 2015 subject to the condition that it commence within 6 months expiring on the 29 January 2016. ABC did not commence operation within this time.
2. The applicant sent the respondent a notification that it had not commenced operation on 10 April 2016. The notification was sent after the expiration of 6 months and in breach of s. 173(1) of the National Law. It is an offence under this section to fail to notify the respondent within 6 months.
3. On the 20 May 2016 the respondent agreed to extend the time for an additional 6 months expiring on the 29 July 2016. The notification of the extension to the applicant included the statement; "If you do not commence operating the service by this date we will assume that you no longer require this approval and will proceed to cancelling your approval". ABC did not commence operation within this time.
4. On the 6 September 2016 the respondent issued a Show Cause Notice to the applicant. On the 21 September 2016 the applicant advised the respondent that it had commenced operation on the 12 September 2016.
5. The respondent conducted an unscheduled visit on the 17 October 2016. The officers who attended the premises found no indication that a service was operating. The applicant provided reasons as to why he was absent from the premises this day and why the service was not operating. As already discussed in this decision the Tribunal is not satisfied the service was operating.
6. The applicant was given a significant period of time to commence the ongoing operation of XYZ. It failed in that regard in significant respects. These are matters that, in the Tribunal's view can be properly taken into account, in considering whether or not to cancel or suspend the service approval.

Other relevant matters

1. The Tribunal has noted the advice from the Commonwealth Government department that is processing the applicant's application for CCB approval. The letter from the department dated 2 February 2017 sets out the numerous outstanding issues with the applicant's application and supporting documentation. These include incomplete declarations and forms, documents not provided, amendments to multiple documents relating to child enrolment forms, recruiting and retaining educators and educator agreements. This evidence was not challenged by the applicant during the hearing. The letter also refers to the department arranging and having an interview with the applicant. It states: "the department invited the applicant to the CCB Assessment interview, to discuss in detail what was required to complete the application, and also provide an opportunity for the applicant to demonstrate their suitability and organisational capacity to effectively manage and supervise a child care service and comply with relevant laws. Prior to the interview the applicant was sent fact sheets pertaining to approved family day care services' obligations under family assistance law". At the interview, the applicant demonstrated minimal understanding about the obligations in relation to claiming child care free assistance or understanding of the responsibilities under family assistance law. (Emphasis added)
2. As set out above the guiding principles of the National Law include the safety, health and well-being of children attending education and care services. Given these principles it is a real concern to the Tribunal that the applicant demonstrated in the CCB approval process a 'minimal understanding' about the obligations relating to managing and supervising an approved family day care centre.
3. The Tribunal also agrees with the respondent that to permit a breach of s.51(3) of the National Law on the basis that a provider is awaiting approval from another regulatory authority may undermine the statutory scheme for provider and service approval.
4. This issue was addressed by the Tribunal in CTG v NSW Department of Education, Early Childhood and Care Directorate (2017) NSWCATAD 60: "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."
5. The applicant referred to the matter of Long Life Family Daycare v Director General Education Directorate (Administrative Review) [2016] ACAT 69. However, the applicant did not detail or elaborate on how Long Life supported its submissions. This case was decided on its facts that stemmed from the regulatory authority suspending a service that had been operating for some time. Much of the case involved a discussion on numerous compliance issues relating to the ongoing operation of the service. In the Tribunal's view, it does not assist the applicant on these facts.
6. For the reasons given, the Tribunal is satisfied that the cancellation decision is the correct and preferable decision and the Tribunal makes the following order:

Order 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: 05 April 2017