Early Childhood Education Australia Pty Ltd v Secretary, Department of Education

Regulation of Family Day Care centres

1. Despite being in residential homes, family day care centre operators must be well-organised and diligent in adhering to systems and requirements primarily directed to ensuring the safety and well-being of children.
2. In Mother's Choice Family Day Care Pty Ltd v Secretary, Department of Education [2020] NSWCATAD 194 at [4]-[8] Senior Member Ransome summarised the National Law provisions as they apply to family day care centres: The legislative scheme The National Law establishes a uniform national scheme for the regulation of education and care services for children, including family day care. A family day care service is an "education and care service that ... is delivered through the use of 2 or more educators ... and [that] operates from 2 or more residences": s 5(1). In order to operate an education and care service a person must hold both a provider approval and a service approval issued under the National Law. Mother's Choice has the necessary approvals as outlined above. The National Law gives the "Regulatory Authority", who in NSW is the Secretary, Department of Education, power to grant, refuse or cancel a provider approval or a service approval: s 9 of the Children (Education and Care Services National Law Application) Act 2010 (the Application Act). The National Law provides that the Secretary may cancel a provider approval on various grounds, including where the approved provider has breached a condition of the provider approval: s 31(e). Under s 19(2) of the National Law, a condition of provider approval is that the approved provider must comply with the National Law and the Education and Care Services National Regulations (the Regulations). The National Law imposes a large number of regulatory requirements and requires strict compliance: 3 Angels Family Day Care Pty Ltd v Secretary, Department of Education [2017] NSWCATAD 265 at [22]; DPW v Secretary, Department of Education [2018] NSWCATAD 257 at [29]; Faaea v Secretary, Department of Education [2018] NSWCATAD 85 at [25]. If the Regulatory Authority is considering cancelling an approval, a show cause notice must be issued and, before making a final decision, any written response provided by the provider is required to be taken into account. The decision to cancel the provider approval is a reviewable decision for external review under s 192(b)(ii) of the National Law. 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: s 193 of the National Law. In NSW this Tribunal is the relevant tribunal by reason of s 5 of the National Law and s 8(b) of the Application Act.
3. The Respondent's power to cancel a provider approval is limited to only the grounds identified in s 31 of the National Law, viz: The Regulatory Authority may cancel a provider approval if - (a) the Regulatory Authority is satisfied that the approved provider or a person with management or control of an education and care service operated by the approved provider is not a fit and proper person to be involved in the provision of an education and care service; or (b) the Regulatory Authority is satisfied that the continued provision of education and care services by the approved provider would constitute an unacceptable risk to the safety, health or wellbeing of any child or class of children being educated and cared for by an education and care service operated by the approved provider; or (c) the approved provider has been found guilty of an indictable offence or an offence that if committed in this jurisdiction would be an indictable offence; or (d) the approved provider has been found guilty of an offence under this Law as applying in any participating jurisdiction; or (e) the approved provider has c condition of the provider approval; or (f) the approved provider has not operated any education and care service for a period of more than 12 months (including any period of suspension).
4. Section 31 is permissive insofar as the Regulator "may" cancel a provider approval but the power to cancel an approval is conditional upon at least one ground under s 31 being satisfied.

Not enforcement proceedings

1. These proceedings are not enforcement proceedings. Some contraventions of the National Law carry penalties of up to $50,000 for corporations. Proceedings for the imposition of penalties can only be brought in the District Court of NSW.
2. The Regulator may cancel a provider's approval if the provider "has been found guilty of an offence under this Law" (per s 31(d) of the National Law). ECE has not ever been found guilty of an offence under the National Law by a competent Court.
3. It is necessary to be clear about how the alleged contraventions of the National Law are relevant to these proceedings.
4. The Regulator relies upon the alleged contraventions of the National Law to establish that other grounds under s 31 of the National Law are engaged. That is, the Regulator relies upon the alleged non-compliance with the National Law and the Regulations to show that: 1. Ms Bak is not a fit and proper person to be involved in the provision of an education and care service (s 31(a)); and/or 2. the continued provision of education and care services by ECE would constitute an unacceptable risk to the safety, health or wellbeing of any child or class of children being educated and cared for by ECE (s 31(b)); and/or 3. ECE has breached a condition of the provider approval (s 31(e)).
5. In this context we note that some contraventions are admitted by ECE. It is sufficient for the Tribunal's purposes to assume that ECE has contravened the National Law on multiple occasions and that these contraventions contributed to the Regulator's decision to cancel ECE's approval.

Rights and best interests of the child

1. In deciding what is the correct and preferable decision in this matter we are required to hold the rights and best interests of the child as paramount (per Transcon Holding Pty Ltd t/as Sydney Multicultural Child Care Services v Secretary, Department of Education [2017] NSWCATAD 333 at [69]).

Co-regulatory model

1. The model of oversight of family day care services under the National Law has been described as "co-regulatory"; see Jump Start Family Day Care Pty Ltd v Department of Education and Training (Review and Regulation) [2019] VCAT 1631 at [4]. In a co-regulatory model, the Regulatory Authority regulates those with provider approval, and the approved providers in turn regulate their educators and staff deployed in centres.
2. This is a helpful description of the regulatory regime and reveals what appears to be the nub of the problems that have befallen ECE over a significant period.
3. ECE oversees the operations of multiple family day care centres in residential homes. This regulation by oversight includes: 1. approving and establishing centres and ensuring that the physical environment in each residential home meets the standards (such as ensuring that proper safety glass is used and so on); 2. ensuring that educators and staff are properly trained; 3. ensuring that practices and programs are properly established and diligently followed; and 4. ensuring that records are properly made and kept.
4. Proper regulation by ECE requires ECE to be systematic and proactive in ensuring that each centre is properly operated. If ECE was systematic and proactive then most, if not all, preventable problems could not occur.
5. The following extract from the Respondent's Statement of Facts Issues and Contentions document reveals the Regulator's underlying concern: Ms Bak has demonstrated that she does not have the management capability to operate an education and care service in accordance with the National Law; Ms Bak has not imposed clear guidance and does not have a clear understanding of the demarcation between educators and assistant educators, leading to multiple breaches of the National Law… … Instances of non-compliance with the National Law and Regulations by educators engaged by or registered with ECE have not been addressed over the long term by those persons at ECE responsible for monitoring compliance with the National Law and Regulations…. The frequency and scale of the contraventions of the National Law and Regulations by ECE is inconsistent with community expectations in relation to the provision of education and care services for young children, and allowing ECE to continue to operate would have an effect of undermining public confidence in the regulatory framework. ECE's repeated breaches demonstrate that, systemically, ECE is not able to ensure compliance with the National Law and Regulations; … even where individual instances of non−compliance have been rectified, the Applicant has failed to implement an effective system to ensure that similar instances of non−compliance do not occur in the future … in the premises of the matters set out in this paragraph above, if the Applicant continues to operate it poses an ongoing risk that any children in the care of the Applicant may not be appropriately cared for; in the premises of the matters set out in this paragraph above, should the Applicant continue to operate, significant and unjustified Departmental resources will have to be devoted to continued compliance monitoring and continued follow-up when the Applicant has not demonstrated an ability to improve its compliance with the National Law and Regulations.
6. Understandably, the Regulator appears to have run out of patience in waiting for ECE to fix what the Regulator says are systemic shortfalls.

ECE's Interactions with the Regulator

1. The Regulator first granted approval to ECE in 2013. Since then there has been a great many interactions between ECE and the Regulator, including most notably: 1. between March 2013 and June 2019 there were 14 complaints about ECE raised with the Regulator. The Regulator investigated 10 of those complaints: 6 investigations were closed with no regulatory action required, and 4 investigations found non-compliance. In this same period ECE reported 4 serious incidents: only 1 of the 4 self-reported incidents was investigated and the Regulator took no regulatory action about that investigated matter; 2. in June 2014 the Regulator conducted a compliance visit and identified breaches of the National Law and the Regulations; 3. in August 2014 further non-compliances were identified following visits to centres; 4. in 2015 further non-compliances were identified following a compliance visit to the premises of an educator; 5. in late 2016 the Regulator determined that further monitoring of the service was warranted after further non-compliance was identified; 6. in February 2017 the Regulator rated ECE against the National Quality Standard for Early Childhood Education and Care and School Aged Care and also in accordance with the National Law and regulations. ECE's overall rating was "significant improvement required", which is the lowest available rating; 7. in August 2017 the Regulator issued a show cause notice to cancel ECE's provider approval. ECE responded to the show cause in September 2017. In January 2018 the Regulator decided not to cancel ECE's provider approval and instead scheduled a further assessment and rating; 8. in March 2018 the Regulator imposed a new cap of 12 educators. ECE's initial approval did not include any cap on the number of educators it could engage; 9. in May 2018 the Regulator undertook an investigation following an assessment and rating visit. In July 2018 the Regulator issued a Compliance Direction. ECE provided a satisfactory response to that Compliance Direction; 10. In September 2018 the cap on educators was increased to 30 educators following an internal review; 11. In January 2019 ECE applied to increase the cap to 60 educators, which was refused by the Regulator. ECE's application for internal review of that decision was unsuccessful and the cap remained at 30. ECE has applied for external review of this decision, which is one of the two matters now to be determined in this decision; and 12. In December 2019 the Regulator issued a notice to Ms Jundi, a former Operations Manager and nominated supervisor of ECE, requiring her to show cause as to why she should not be prohibited from being a nominated supervisor. Ms Jundi provided a response to this notice and ultimately a prohibition notice was not issued.

The conduct/contraventions by ECE

1. Ms McGarity was the Regulator's only witness in the proceedings. Ms McGarity is a Senior Field Officer in the Early Childhood Education Directorate of the Regulator, and she was assigned to conduct compliance activities relating to ECE in November 2019. Ms McGarity made one visit to ECE's head office in November 2019 and has not visited any of the centres operated by ECE. Ms McGarity said that she has, however, worked closely with the authorised officers who did visit ECE's centres and was responsible for collating the evidence obtained by those officers during their visits.
2. The Regulator did not lead any direct evidence from any of its officers who had visited ECE's centres.
3. The Regulator provided a table of what it claims to be 174 separate instances of non-compliance. The table, in the form of an aide-memoire, included extensive cross references to the documentary evidence relied upon by the Regulator.
4. It is not necessary for present purposes to recite or closely analyse the 174 alleged instances of non-compliance. We make the following general observations regarding the matters identified: 1. 61 instances arise from what appears the be co-ordinated visits to ECE's centres on a single day in July 2019; 2. 50 instances arise from what appears to be co-ordinated visits to ECE's centres and Principal office on a single day in November 2019; 3. 32 instances arise from further visits on a single day in March 2020; 4. 31 instances arise from further visits on a single day in May 2020; 5. even allowing for duplication or overlap, the number of instances relied upon is significant; 6. most of the instances listed are preventable matters about which ECE could and should have taken appropriate steps; 7. some matters could be explained by language difficulties. Recognising that ECE's centres draw workers and clientele from the Korean-speaking community, some alleged non-compliances go to the knowledge, or lack thereof, of educators about certain matters. These alleged deficiencies in turn relied upon inadequate oral answers to questions from the Regulator's officers during what ECE properly described as "unscheduled viva voce examination of the educator (with the benefit of an interpreter)"; and 8. the last 31 matters arise from visits conducted after the Tribunal had granted a stay on the Regulator's decision to cancel ECE's approval.
5. Whilst all aspects of the National Law and the Regulations are material, a large number of non-compliance matters were very minor or technical, for example: 1. Serving fruit loops with milk for morning tea, as well as providing peeled apple; 2. Educators at individual centres could not immediately show that glass shower screens met safety requirements. The Regulator does not allege that the glass itself did not comply, but that ECE breached the National Law because its educators could not immediately show that the glass met safety requirements; 3. An emergency evacuation bag contained expired baby wipes; 4. band-aids in a first aid kit were out of date; 5. in a visitors record book spanning two years, 1 educator assistant failed to sign out of the premises on one 1 occasion; and 6. In one centre children were using ripped cardboard blocks during play. The Regulator alleges that the relevant educator was therefore "unable to demonstrate that all equipment and furniture used in providing the education and care service were safe, clean and in good repair".
6. Mr Diggins, counsel for ECE, cross-examined Ms McGarity about several of the alleged breaches relied upon by the Regulator. Ms McGarity quite properly agreed that it would have been reasonable to deal with many of the identified breaches by way of an informal instruction to correct, or by further inquiry or by asking ECE to provide further information (such as further information about glass).
7. Some of the non-complying conduct is more significant. For example important medicines were out of date in first aid kits, some cupboards containing dangerous materials were not locked, and some dangerous trip hazards and choke hazards were present.

Ms Bak's evidence

1. Ms Bak gave evidence about the following matters: 1. ECE engages 10 educators and 4 staff members; 2. in August 2020 ECE had 112 children enrolled from 91 families; 3. ECE deploys auditors to visit educators under its monitoring, support and supervision policy; 4. the auditors provide assistance and support to educators and visit centres monthly or weekly if the educator's service needs serious improvement; 5. educators self-report daily via a Korean mobile phone application "Kakao Talk" which operates in a manner similar to Whatsapp; 6. Ms Bak conducts spot visits of centres to ensure compliance; 7. during 2019 ECE was subject to monitoring visits by the Regulator. All non-compliances identified by the Regulator have been rectified; 8. ECE has conducted weekly training sessions with educators since the stay order was made in April 2020; 9. the Regulator made compliance visits to ECE's centres in July 2019 and identified non-compliances. The response provided by ECE to the non-compliances addressed all the issues and these were marked as closed; 10. in the future ECE will undertake a rigorous recruitment and selection program for educators that will require them to demonstrate that they meet best practice standards and will continue their own professional development; 11. for educators to reregister and remain on the Family Day Care Scheme Register, educators will be subject to a yearly home visit risk assessment as well as re-induction training.
2. Ms Bak gave evidence at hearing and was cross examined extensively. In cross examination Ms Bak accepted that it was her role to ensure ECE's compliance with the relevant laws relating to operating a family day care centre. Ms Bak also acknowledged the obligation to keep an accurate register of educators and to be able to provide this register to the regulator on demand.
3. As Bak also indicated that all of ECE's educators speak Korean and that only some of ECE's policies have been translated from English to Korean.
4. Ms Bak claimed to be unable to ensure that ECE and its educators fully understood their obligations under the National Law. This is perhaps literally correct but the Regulator's concern is that ECE didn't take proper steps to understand whether educators understood ECE's policies. Ms Bak accepted that she didn't double-check whether educators actually understood their obligations and she agreed that she could have done more in this regard.

ACECQA Rating

1. In April 2018 an authorised officer of the Regulator inspected ECE for the purpose of assessing and rating the service. In June 2018 the Regulator gave ECE and overall rating of "significant improvement required".
2. In July ECE asked for a first tier review of the rating. ECE's overall rating did not change following this review.
3. In August 2018 ECE applied to ACECQA for a review of the Regulator's first tier review. ACECQA determined ECE's overall rating to be "working towards the National quality standard". In ACECQA's assessment ECE failed to meet 20 of the 40 elements making up the new National Quality Standards (NQS).
4. According to ACECQA's NQF Snapshot publication for Q1 2020 in May 2020, 50.4% of family day care services were assessed as "working towards NQS".
5. The evidence before the Tribunal is that ECE's current overall rating remains as "working towards the National quality standard".
6. We consider this rating by ACECQA to be quite important to our decision. So far as ACECQA is concerned, ECE is on par with 50.4% of family day care centres nationally.

The cancellation decision

1. On 26 March 2020, the Regulator notified ECE of the decision to cancel ECE's provider approval under s 33 of the National Law. The Regulator relied upon ss 31(a), 31(b) and 31(e), viz: The Regulatory Authority may cancel a provider approval if - (a) the Regulatory Authority is satisfied that the approved provider or a person with management or control of an education and care service operated by the approved provider is not a fit and proper person to be involved in the provision of an education and care service; or (b) the Regulatory Authority is satisfied that the continued provision of education and care services by the approved provider would constitute an unacceptable risk to the safety, health or wellbeing of any child or class of children being educated and cared for by an education and care service operated by the approved provider; or … (e) the approved provider has breached a condition of the provider approval; …
2. Subsections 31(a) and 31(b) require evaluative judgements.
3. In reliance on s 31(a) the Regulator argues that Ms Bak is not a "fit and proper person" to be involved in operating family day care centres. The Regulator was required, and now the Tribunal is required, to consider whether Ms Bak has sufficient competency and 'fitness' to do so, which necessarily requires an evaluation against an objective standard.
4. Similarly subsection 31(b) requires an evaluation of whether the risk to the safety, health or wellbeing of a child or children is "unacceptable".
5. Subsection 31(e) is slightly different insofar as it implies a two-step process; firstly, consideration of whether or not the approved provider has breached a condition of the provider approval, and secondly whether the breach was sufficiently serious that the correct and preferable decision is to cancel a provider's approval. Obviously a minor technical breach of a condition will not warrant cancelation.

ECE's case

1. In its filed submission ECE submitted the following: 24. Many of the alleged breaches by the Applicant are matters capable of being dealt with by the issue of compliance notices by the Regulator pursuant to section 177 of the National Law - clauses 77, 79, 97(2), 97(4), 103, 104, 117, 177(2) and 164. The Applicant does not trivialise such alleged non-compliances. Nevertheless, that the legislation contemplates the issue of compliance directions as a response is a recognition that some non-compliances are more critical than others. Where the non-compliance is less critical, requiring corrective action to be taken is an appropriate and proportionate response. That is, even if the alleged non-compliances were established, their nature does not require the use of the ultimate sanction of cancellation of provider approval. There is some force to this submission.
2. The principal submissions of ECE are found in the following summary within ECE's written submissions: a. The evidential basis and/or reasoning for a number of the alleged non-compliances is weak. b. Some of the alleged non-compliances are now historical as the educators in question are no longer engaged by the Applicant. c. The alleged non-compliances relied on by the Respondent are not sufficiently serious to permit findings that it is not a fit and proper person or that children would be exposed to an unacceptable risk by its continued operation. d. The cancellation of the Applicant's provider approval is a disproportionate response to the alleged non-compliances. e. The Respondent has an array of alternative enforcement measures available to it under Part 7 of the National Law that would represent a more appropriate and proportionate response. These measures include compliance directions (s 176), compliance notices (s 177), notices of suspension (s 178) and emergency action notices (s 179). Further, the Respondent's compliance policy identifies a range of additional enforcement measures available such as administrative letters and caution letters.

Respondent's Case

1. The Regulator submits: The Applicant's case, to the extent it can be discerned from the material, appears to be a piecemeal attack on individual breaches, claiming that each has been rectified (after it was identified by the Department). In many cases, the Applicant's claimed evidence of rectification is inadequate. But even if it is accepted that certain of the breaches have been rectified (or are capable of rectification), the Applicant has not addressed the systemic issues with widespread non-compliance by the service with the National Law and Regulations over a sustained period. The widespread and frequent nature of the breaches and the fact that breaches have occurred at the residences of many different educators indicates that ECE and its person with management or control are not a fit and proper persons to provide education and care services under the National Law, and that continuation of the service will endanger the safety, health and wellbeing of children in its care

Is Ms Bak a fit and proper person?

1. Ms Bak broadly accepted under cross-examination that she was responsible for ECE's compliance with the National Law and the Regulations.
2. The Regulator has sheeted home all of ECE's shortcomings to Ms Bak in order to show that she is not a fit and proper person (in turn to show that ECE's approval should be cancelled).
3. As noted above, the Regulator led very little direct evidence of ECE's conduct or Ms Bak's conduct. There is a large amount of evidence of documents generated by the Regulator's officers such as inspection reports, photographs, correspondence, file notes and the like. There are also several documents in evidence received by the Regulator's officers from ECE.
4. The Tribunal is not bound by the rules of evidence and can properly receive and consider this material but is concerned about the generality of the Regulator's evidence, particularly in light of the significant consequences for Ms Bak and ECE if the Tribunal finds that she is not a fit and proper person to be involved in the provision of an education and care service.
5. We don't need to reach a final conclusion about the generality of the Regulator's evidence because we are not satisfied on the evidence before us that s 31(a) is engaged. That is, even assuming that Ms Bak is responsible for all of ECE's shortfalls, we are not satisfied that the non-compliance by ECE supports the drastic step of cancelling ECE's approval.
6. All of the matters identified by the Regulator over time have been rectified. As Ms McGarity properly conceded, many of the matters relied upon by the Regulator would ordinarily be dealt with by alternative and less drastic means such as an informal instruction to correct, or by allowing an operator the opportunity to provide further information in an orderly timeframe.
7. The Regulator relies upon the cumulative effect of such a large number of small non-compliances - which is a logical and reasonable approach when dealing with systemic concerns under a co-regulatory model.
8. However, ACECQA currently assesses ECE as 'working towards National Quality Standard'. It is difficult to find that ECE's overall conduct and systemic concerns warrant cancellation when ECE has the same rating as 50.4% of family day care centres nationally.

Ms Bak's history of compliance

1. Section 13 of the National Law applied to the Regulator's consideration of whether Ms Bak was a fit and proper person and applies therefore to the Tribunal's present consideration. Section 13 is in the following terms: (1) In determining whether a person is a fit and proper person under this Division, the Regulatory Authority must have regard to - (a) the person's history of compliance with - (i) this Law as applying in any participating jurisdiction; and (ii) a former education and care services law of a participating jurisdiction; and (iii) a children's services law of a participating jurisdiction; and (iv) an education law of a participating jurisdiction; and Note : If a person has been served with an infringement notice for an offence under this Law, and the person has paid the penalty, the Regulatory Authority cannot consider that conduct when determining whether the person is fit and proper. See section 291(5). (b) any decision under a former education and care services law, a children's services law or an education law of a participating jurisdiction to refuse, refuse to renew, suspend or cancel a licence, approval, registration or certification or other authorisation granted to the person under that law; and (c) either-- (i) any prescribed matters relating to the criminal history of the person to the extent that history may affect the person's suitability for the role of provider of an education and care service; or (ii) any check of the person under a working with vulnerable people law of a participating jurisdiction; and (d) whether the person is bankrupt, or has applied to take the benefit of any law for the relief of bankrupt or insolvent debtors or, in the case of a body corporate, is insolvent under administration or an externally-administered body corporate. (2) Without limiting subsection (1), the Regulatory Authority may have regard to-- (a) whether the person has a medical condition that may cause the person to be incapable of being responsible for providing an education and care service in accordance with this Law; and (b) whether the financial circumstances of the person may significantly limit the person's capacity to meet the person's obligations in providing an education and care service in accordance with this Law; and. (c) whether the person has the management capability to operate an education and care service in accordance with this Law; and (d) any of the following actions taken under the A New Tax System (Family Assistance) (Administration) Act 1999 of the Commonwealth in relation to a child care service approved under that Act, operated by the person or in relation to which the person was a person with management or control-- (i) any sanction imposed under section 200 of that Act; (ii) any suspension imposed under section 201A of that Act; (iii) any infringement notice given under section 219TSI of that Act. (3) Nothing in subsection (1) or (2) limits the circumstances in which a person may be considered not to be a fit and proper person to be involved in the provision of an education and care service.
2. ECE submits that the reference to "the person's history of compliance with [the National Law] as applying in any participating jurisdiction" in s 13(1)(a) should be taken to mean whether the person has been found guilty of an offence under the National Law or the Regulation and should not be taken to mean that the Regulatory Authority (here the Respondent) has simply formed the view that the person has committed an offence.
3. For the most part we agree with ECE's construction. Section 13(1) identifies matters that the Regulator must take into account. Section 13(2) identifies matters that the regulator may take into account. The importance of a decision maker taking into account recorded breaches is obvious.
4. However ECE's interactions with the regulator, and Ms Bak's interactions with the regulator are matters that the regulator is entitled to take into account in determining whether Ms Bak is a fit and proper person, regardless of whether ECE or Ms Bak have ever been found to have contravened the National Law or the Regulations.

Evidence of other business activities by Ms Bak

1. The Regulator submitted that Ms Bak has not demonstrated that she has the management capability to operate an education and care service in accordance with the National Law because, inter alia, "Ms Bak has provided inadequate supervision and management of educators, and it is likely due to her other business endeavours".
2. Ms Bak is a director of several companies. Ms Bak gave brief evidence of the activities of Phytodermal Institute of Beauty Pty Led, National Institute of Vocational Training Pty Ltd and International College of Excellence Pty Ltd.
3. The Tribunal rejects this submission. To make good on this proposition the Regulator needed to lead evidence about, for example, how much time Ms Bak spends on these other activities. At best this submission by the Regulator is speculation.

Risk to children

1. There is no evidence of any immediate material threat to the safety of any children in the care of ECE. Similarly, there is no evidence of any previous contraventions or non-compliance issues that caused an immediate material threat to the safety of any child.
2. We also note that the Regulator could have issued a prohibition notice if it had formed a view that there was a relevantly unacceptable risk of harm (per s 182) or more seriously it could have removed children from the premises if there was believed to be an immediate danger to the safety of a child (per s 189).
3. The highest we can describe the risk to the ongoing safety of children, at least as we understand the case advanced by the Regulator, is that there is a higher concern for the safety of children in ECE's care based upon ECE's previous contraventions of the National Law and the Regulations. Based on the long history of difficulties, the Regulator's concern is completely understandable.
4. We cannot find on the present evidence that there is an "unacceptable" risk to the safety, health or wellbeing of any child or class of children. We rely heavily in this regard on the experience and expertise of the Regulator's officers and the fact that no officer appears to have tried to suspend ECE's approval or been so concerned for the safety of any particular child that they have been removed from a centre.
5. We also note that the cancellation order was issued in September 2019, that ECE responded to the notice in October 2019 and the decision to cancel ECE's approval was not made until March 2020, some 5 months later. Whatever the reason for this delay, the time taken to issue the cancellation notice does not reflect well on the apparent unacceptableness of the risk submitted by the Regulator.
6. We also note that since April 2020 ECE has been required to provide monthly reports to the Regulator as part of an interlocutory arrangement in these proceedings. As far as we are aware, ECE has continued to operate without significant incident.
7. In light of all the material before the Tribunal we cannot conclude that the continuation of ECE's provider approval poses an unacceptable risk to the safety, health or wellbeing of any child or class of children.

Breach of approval condition

1. The Regulator also submits that s 31(e) is engaged. The Regulator submits that ECE has breached a condition of its provider approval by failing to comply with the National Law.
2. Section 19(2) of the National Law requires that "a provider approval is subject to the condition that the approved provider must comply with [the National Law]".
3. This argument does not add any substantial weight to the Regulator's case.
4. Firstly, the Regulator's interpretation of s 31(e) is inconsistent with the terms of s 31(d), which says "the approved provider has been found guilty of an offence under this Law as applying in any participating jurisdiction." If the phrase "breached a condition of the provider approval" in s 31(e) is intended to capture breaches of the National Law, then s 31(d) is otiose.
5. Section 19(1) of the National Law allows the Regulator to grant provider approval subject to conditions determined by the Regulator - being conditions other than a condition that a provider comply with the National Law. Section 31(e) is more properly understood to refer to a breach of conditions determined by the Regulator.
6. Secondly, the Regulator relies heavily upon ECE's failure to comply with the National Law to argue that Ms Bak is not a fit and proper person (per s 31(a)). If the Regulator's case does not succeed under s 31(a), it does not rise any higher under s 31(e).
7. There was a contest in the evidence about whether ECE had deployed more than 30 educators at certain times. In short ECE argued that the 31st person was a relief educator rather than an educator.
8. We do not need to resolve this contest because, as we note above, these proceedings are not enforcement proceedings and breaches of conditions imposed under s 19 are punishable by penalties of up to $50,000.
9. For present purpose we will assume that for some relatively brief moments ECE did engage more than 30 educators when the cap of 30 educators applied. We do not consider that the cancelation of ECE's approval would be the correct and preferable decision in such a circumstance.

Alternative outcomes

1. It follows from the above that the cancellation of ECE's approval was not the correct and preferred decision.
2. ECE's submissions refer to an array of alternative measures that were available to the regulator to ensure compliance with the National Law, including compliance directions (s 176), compliance notices (s 177), notices of suspension (s 178), emergency action notices (s 179) and administrative letters and caution letters.
3. ECE submits that other alternative enforcement measures available to the Regulator "would represent a more appropriate and proportionate response".
4. In general terms we agree with this submission.
5. In our view the correct and preferrable decision by the Regulator was to amend ECE's provider approval to require ECE to implement a stringent supervision regime for its centres, under the indirect supervision of the Regulator, to ensure that ECE properly fulfilled its role in the co-regulation model described above.
6. The Tribunal is able to stand in the shoes of the Regulator and made a decision in substitution for the Regulator's decision. As such we propose to amend ECE's provider approval and impose new conditions upon ECE's approval that will apply until 31 December 2021.
7. The conditions to be imposed will contain the following key elements: 1. ECE is required to attend and audit every centre at least monthly; 2. The matters ECE is to review each month will be stated in the amended conditions, and will be objective and thorough; 3. ECE is required to provide to the Regulator written reports of its monthly attendances and audits, as well as any further information sought by the Regulator arising out of the content of any such materials; and 4. Any material breach of these conditions or material breach of the National Law by ECE or by Ms Bak will result in the cancellation of ECE's provider approval (subject to the requirements of s 32 and s 33 of the National Law).
8. We think the parties are in the best position to finalise the terms of the condition(s) to be imposed under the amended provider approval and will make procedural orders to require the parties to confer upon those terms and file either agreed or proposed conditions in a short period.
9. Upon receipt of either consent or competing proposed conditions the Tribunal will make final orders and will vacate the stay order made on 16 April 2020.

The Educator Cap Decision

1. The second decision about which ECE applies for external review is the decision by the Regulator to reject ECE's application to increase the cap on educators to 60.
2. Arguments and evidence about this decision did not feature prominently in the matters in contest between the parties.
3. We can readily state our conclusion that the correct and proper decision is to reject ECE's application for a higher cap.
4. ECE has escaped cancellation of its provider approval by only a small margin. The Regulator's concerns about ECE's systemic problems and the large number of apparent non-compliances with the National Law and the Regulations are reasonable and proper.
5. At the heart of the Regulator's concern, and the Tribunal's concern for that matter, is that Ms Bak and the employees of ECE have not developed and established sufficiently rigorous systems and procedures to ensure ongoing compliance with the National Law and the Regulations for each of the centres it operates.
6. There is no proper basis to potentially double ECE's operation by way of an increased cap.
7. Accordingly we make the following orders: 1. In matter 2019/00242605 the application for external review is dismissed. 2. In matter 2020/00102585 the decision by the Secretary of the Department of Education to cancel the provider approval of Early Childhood Education Australia Pty Ltd on 26 March 2020 is set aside. 3. The parties are to confer and attempt to prepare an agreed form of conditions to Early Childhood Education Australia Pty Ltd's provider approval by no later than 25 May 2021. 4. Parties to file either a single agreed form of proposed conditions to Early Childhood Education Australia Pty Ltd's provider approval, or their proposed form of conditions by no later than 1 June 2021. 5. If the parties are not able to agree upon the form of proposed conditions, any party may file a short submission supporting their proposed form, by no later than 1 June 2021.

Endnote

1. Early Childhood Education Australia Pty Ltd v Secretary, Department of Education (NSW) [2020] NSWCATAD 118. 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: 04 May 2021