Eminem Kids Academy Pty Ltd v Secretary, Department of Education

The cancellation decision

1. On 17 June 2015, the Department assessed and rated the Mary Street Service to be "Working Towards the National Quality Standards". On 13 April 2017, the Northcote Street Service also achieved the same rating. On 18 June 2018, the Mary Street Service maintained the same rating. On 16 December 2020, the Northcote Street Service achieved "Meeting the National Quality Standards.
2. The Department carried out regulatory visits in November 2021 and issued emergency action notices in relation to both Services. The notices identified a number of areas of non-compliance with the National Law and Regulations.
3. On 19 January 2022, the Department issued a notice to Eminem that it intended to cancel Eminem's provider approval (the show cause notice) in relation to the Mary Street Service. The grounds of the proposed cancellation were the Secretary's findings that: 1. On twenty-two occasions the Mary Street Service had more children than were specified in its service approval: in breach of s 51(4A) of the National Law; 2. Discrepancies between enrolment records provided to the Australian Government and the Regulatory Authority demonstrate repeated breaches of s 295 of the National Law prohibiting a person giving false or misleading information or a document. The notice refers to alleged breaches on 6, 7, 8 and 9 July 2022; 3. Multiple issues giving rise to a breach of the obligation to protect children from harm and hazards pursuant to s 167 of the National Law; 4. Failing to ensure that the premises were in safe, clean and good repair contrary to cl 103 of the National Regulations; 5. Deficient recording of medication records in breach of cl 92(1) and 177(2) of the National Regulations; 6. Failing to obtain parental consent and conducting excursions from the centre in breach of cl 99 of the National Regulations; 7. Deficiency in authorisation for the transport of two children, contrary to s 102D of the National Regulations; 8. Failing to undertake risk assessments for transportation of children, contrary to cl 102B and 102C of the National Regulations; and 9. Incomplete record keeping, not completing evacuations rehearsals and risk assessments, contrary to cl 97(3), 151, 177(1)(h) and 177(2) of the National Regulations and ss 162(1), 168 and 169 of the National Law.
4. The show cause notice also relied on deficiencies identified in visits to the Northcote Street Service identified at visits between 18 and 25 November 2021, being: 1. Failing to ensure reasonable precaution is taken to protect children from hazards, including, unsecured foam, hanging pictures not properly secured creating choking hazards, accessibility of dangerous liquids to children and climbing hazards. 2. Failing to ensure the ratio between children and educators are met, contrary to s 169(1) of the National Law and cl 123 and 271(1) of the National Regulations; 3. The children in attendance exceeding the approved limit on 1, 6, 7, 8 July 2021, in breach of s 51(4A) of the National Law; 4. A supervisor leaving the Service devoid of any person with the management and control of the Service, in breach of 162(1) of the National Law; 5. Failure to keep enrolment records and produce the same, in breach of s 175 of the National Law; 6. Failure to keep the premises in good repair, in breach of cl 103 of the National Regulations; 7. Incomplete enrolment records relating to emergency contacts for children, in breach of cl 177 and 160 of the of the National Regulations; 8. Incomplete staff records, in breach of cl 145, 147, 160 170, and 177 of the of the National Regulations; 9. Failure to adhere to evacuation rehearsals, provide toilet paper and keep first aid kit supplies up to date.
5. The Department was of the view that Eminem had demonstrated a recurring pattern of non-compliance with the National Law and Regulations.
6. In response to the show cause notice, Eminem denied some of the allegations and in relation to others stated that it had taken extensive steps to ensure it remains fully compliant with the law. These steps included repairing and replacing equipment and other fixtures at the Service, updating its records and providing compliance training for all educators, suspending the operation of the Mary Street Service, addressing errors in attendance schedules and reporting to the Commonwealth, terminating staff and engaging a consultancy service.
7. The Department conducted a further compliance and monitoring visit on 4 March 2022 at the Northcote Service which identified a number of ongoing and further areas of non-compliance with the National Law and Regulations. On 16 March 2022 the Department determined to cancel the provider approval of Eminem. The decision was made on the basis that Eminem had breached a condition of its provider approval by failing to comply with the law in respect to the operation of its service. The Department formed the view that the nature of the non-compliance was systemic in nature and the provider approval was not being managed in a manner which complies with the National Law. Further reasons for decision note "the volume and nature of the breaches identified at your service and the contraventions by you as the approved provider in the context of providing education and care to children, represents a significant failure of governance and a lack of knowledge of, or regard to, regulatory requirements".
8. The decision detailed in excess of some thirty-six alleged breaches of the National Law and Regulations. In addition, the decision recorded that Eminem had failed satisfactorily to address each element of non-compliance set out in the show cause notice.
9. Eminem seeks an order staying the operation of the cancellation decision up to and including the date on which the Tribunal determines the substantive review application.

The relevant principles

1. Unless a Tribunal makes an order staying the operation of the Department's decision to cancel provider approval, the making of an application does not affect the operation of that decision nor prevent the taking of action to implement that decision (s 43(2) of the NCAT Act). Section 43(1)(c) of the NCAT states: The Tribunal may make such orders (whether with or without conditions) staying or otherwise affecting the operation of a decision to which a pending general application ... relates as it considers appropriate to secure the effectiveness of the determination of the pending general application...
2. The NCAT Act does not specify the factors to be taken into account when determining whether to stay the operation of a decision.
3. The Appeal Panel summarised the principles relevant to stay applications in Bentran Pty Ltd v Sabbarton [2014] NSWCATAP 37 (Bentran) and in Burriss v Hallit [2014] NSWCATAP 39. As noted by the President in Burriss at [13], "the overriding principle in an application for a stay is to ask what the interests of justice require".
4. In Bentran, Wright J at [9] summarised the principles applicable to deciding whether a stay of a decision under appeal should be granted (citations omitted): (1) Generally a successful party is entitled to the benefit of the decision or orders that the party has obtained at first instance, but a stay may be granted where the appellant has demonstrated an appropriate case to warrant the exercise of discretion in its favour - s 43(2) and (3) of the Act. (2) In practical effect the onus is on an applicant for a stay to make out a case that it is appropriate for the court to make such an order. (3) The mere lodgement of the notice of appeal is insufficient, of itself, to demonstrate that it is an appropriate case to warrant the granting of a stay. (4) An order staying the operation of a decision or orders will generally be appropriate where such an order is reasonably necessary to secure the effectiveness of the appeal - s 43(3) of the Act. This is similar to, if not the same as, the considerations applied by the Courts that where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted, or where unless a stay is granted an appeal will be rendered nugatory, the discretion should generally be exercised in favour of granting a stay. (5) The Tribunal may also take into account the strength or otherwise of the case of the party seeking the stay. This consideration may be particularly relevant when it is plain that an appeal, which does not require leave, has been lodged without any real prospects of success and simply in the hope of gaining a respite against immediate execution of the decision. (6) The Tribunal's power to grant a stay includes a power to make such an order subject to such conditions as the Tribunal specifies. (7) In exercising the discretion, the Tribunal will also weigh the balance of convenience and the competing rights of the parties and may impose appropriate conditions so as to achieve a result that is fair to all parties. (8) Finally, the overriding principle in an application for a stay is to ask what the interests of justice require.
5. While Bentran was a decision on appeal, I am satisfied that the principles outlined are equally applicable in this type of matter. The Tribunal in Early Childhood Education Australia Pty Ltd v Secretary, Department of Education (NSW) [2020] NSWCATAD stated that in addition to those principles (at [10]) In applying these principles, it is necessary to have regard to the statutory context in which the cancellation decision was made, together with the objectives and guiding principles of the National Law, which are to ensure the safety, health and wellbeing of children attending care services; to improve the educational and developmental outcomes for children attending care services; and to promote continuous improvement in the provision of quality care services: ss 3(2)(a), 3(2)(b), 3(2)(c).

Consideration

1. Several factors favour the exercise of the discretion to stay the operation of the cancellation decision.
2. First, there is a possibility that if the cancellation decision is not stayed, the substantive application may be rendered pointless. Eminem has voluntarily suspended the service approval for the Mary Street Centre in order to carry out renovations, but the Northcote Centre continues to provide education to approximately 45 children.
3. Eminem has provided various financial records which they submit demonstrate that the business will suffer significant financial impact. A letter from Vega Advisory dated 29 March 2022 states that if the provider approval is cancelled "this will make the business insolvent." Eminem submits that there will be an impact on the effectiveness of the determination of the review application because by the time the review is finalised the financial impact suffered and the loss caused by children having to find alternative education and care services, will have diminished the goodwill of the service.
4. I accept on the evidence that without a stay there will be a significant impact on the financial viability of the service and that the children presently attending will be required to find alternative education and services. However, the financial records provided by the applicant do not demonstrate the extent of the financial effect or at what point insolvency is expected.
5. I also accept Eminem's submission that there will be difficulties and inconvenience likely to be experienced by the children and parents of the 45 children presently attending Eminem. If the stay is not granted then parents will be forced to find alternative education and care services for their children. Eminem has provided references from parents expressing support for the service, however at this stage it is unclear to what extent the parents have knowledge of the scope of breaches alleged against Eminem.
6. Against these considerations is the risk posed to children in the care of the Eminem if the implementation of the cancellation decision were to be delayed. A significant public interest exists in ensuring the safety, health and well-being of children attending education and day care services. Eminem submits that the breaches alleged have been or are being addressed. However, I note that the breaches are serious and may represent a systemic and structural problem with the service. The breaches include the over-enrolment of children, failing to meet minimum supervision requirements, failure to remove physical hazards and keep the premises in good repair. Of particular concern is the alleged false reporting of data to the Australian Government in connection with claims of the Child Care Subsidy, incomplete authorisations, assessments and record keeping, conducting unauthorised departures from the service, the failure to conduct evacuation and lockdown rehearsals and a failure to keep a medication kits updated.
7. Ms Delialioglu, the director of Eminem sets out in her affidavits various explanations for some of the breaches and the steps which have been taken to remedy breaches. Mr Delialioglu attributes much of the blame for breaches to confused parents and educators and the COVID-19 pandemic. Ms Delialioglu states that the services are located in a Local Government Area which was classed as an area of concern at various points in time due to high rates of COVID-19 infections in the area. The area was also subject to stricter lockdown requirements. However, in relation to many of the breaches, including the misreporting of attendance dates to the Australian Government, it is not clear how the pandemic or the confusion of parents or staff is relevant to the breaches.
8. Further, Ms Delialioglu sets out in some detail in her affidavits the steps that have been taken or are being taking to rectify breaches. In response to the show cause notice Eminem previously advised that one of the steps they had taken to assist remedy the breaches was to retain DJMIR consultants to train staff in meeting the national quality standards. However, the consultant later ceased involvement to assist.
9. In a letter from DJMIR to Eminem dated 24 February 2022 a number of concerns were outlined as follows: On further investigation we discovered that the services had consistently held very poor assessment and ratings for many years and that there were some considerable discrepancies with Child Care Subsidy processing, which the department had raised with you as a further concern it appeared on multiple occasions.
10. The consultant concluded: My difficulty now that I have lost confidence that you will follow the plan set and not find some reason to abridge its implementation in some way or ignoring our advice as you have done previously. In this light I am unable to see how I can support the project any further. The entirety of this project rested on the department being satisfied that you were dedicated to addressing their concerns and that they could to a large extent rely on your and our undertakings to achieve the outcome. I am unable to see how the department can now be so satisfied.
11. The evidence from DJMIR indicates a reluctance of the applicant to previously follow through with rectifying breaches in circumstances where it indicated it would.
12. The Department also submits that Eminem has breached the interim stay by continuing to display a sign that they are taking enrolments at the premises. Eminem submitted that was an existing sign and had been overlooked and Eminem had not appreciated that by not removing it they were breaching the interim order.
13. I note, as this is only an interim application, the evidence in relation to why DJMIR ceased engagement has not yet been challenged or conclusively examined by the Tribunal. There will need to be in this case, an evaluation of the seriousness of all the breaches and the evidence overall. At this stage of the proceedings, it is not possible to conclusively determine one way or the other, whether there is a proper basis for finding that the breaches occurred.
14. Eminem submits that eight people will be deprived of employment due to the provider approval being cancelled. While I accept that a decision not to allow a stay would result in the eight people not being able to work at the service, I have no evidence before me about how the employees would be affected or whether they would find alternative employment.
15. Nonetheless, given the available material about the steps taken by Eminem to rectify the most recently identified contraventions, the significant financial impact that the cancellation will have and the obvious inconvenience it would cause to parents if the cancellation decision was implemented immediately, I am satisfied that with the imposition of significant conditions, as proposed by the Department, the risk can be reduced to one that is acceptable.
16. Further, I have made directions for the exchange of documents and listed the matter for hearing so that the matter may be finalised expeditiously.
17. The Department also proposed as am additional condition that the Mary Street service, which is presently suspended, not be allowed to reopen. In circumstances where the service is already suspended I find that condition to be reasonable.
18. Eminem sought that the condition in relation to ratio checks be limited to twice a day (as opposed to each hour) and I am satisfied that a check twice a day is also appropriate in the circumstances.

Orders

1. Accordingly I have made the following orders: 1. The Decision made on 16 March 2022 to cancel provider approval is stayed pending further order of the Tribunal on the following conditions: 1. The service is not to take new enrolments; 2. The service is not to undertake advertising for new enrolments; 3. The service is not to provide transportation to, or arrange transportation for, children attending the service; 4. The service is to undertake attendance and ratio check at 10 am and 4pm each day and record the same, providing records of the attendance and ratio checks to the Department by 10am the next business day commencing immediately; 5. The service is not to provide education and care to more than 49 children at any time; 6. The service is to undertake twice daily checks of the attendance records to ensure that they are being accurately completed. Any discrepancies are to be recorded and reported to the Department by 10am the next business day commencing immediately; 7. The service is to provide the Department with all educator staffing records and to advise within 24 hours of any new staff employment and to provide educator staffing records for the same within 48 hours; 8. The service is to provide (if it has not yet provided) to the Department, evidence of the security of the outdoor play area, including photographs of all entry and exit points being secure; 9. The service is to provide copies of all daily indoor and outdoor service checklists which detail that the service has been checked for safety and the protection of children from harms and hazards; and 10. The applicant is not to open the Mary Street Service or use the associated service approval.

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: 19 April 2022